To enforce the prohibition of import of goods made with forced labour and avoid 12.5% additional tariffs proposed by the US, India had come out with detailed guidelines to identify such products.
Through a Trade Notice, the Directorate General of Foreign Trade has inserted a paragraph in the Handbook of Procedures of the Foreign Trade policy (FTP) that empowers it to launch an investigation on its own or on receipt of complaint to determine whether goods imported into India have been produced fully or partially with forced labour.
“India’s notification signals that it is strengthening its domestic legal framework in line with international standards, a step that could strengthen its position in future trade negotiations and market-access discussions,” founder of Global Trade Research Initiative (GTRI) Ajau Srivastava said.
The Office of US Trade Representative (USTR) in its report early June on failure to enforce a prohibition on the importation of goods produced with forced labor that covered 60 countries including European Union (EU) had said that India’s failure to impose and effectively enforce a forced labor import prohibition is unreasonable and burdens or restricts U.S. commerce.
While the USTR found that all countries had failed to effectively enforce prohibition of goods made with forced labour, those who had rules or laws in place to tackle them were treated differently.
The USTR proposed 10% extra duties on Canada, Ecuador, the European Union, Indonesia. Mexico and Pakistan as they had laws but no effective enforcement. On the remaining 54 countries including India with no legal mechanism on forced labour imports, 12.5% duties were proposed.
US authorities consider products such as cotton, textiles, solar-panel polysilicon, seafood, metals, batteries and electronics vulnerable to forced-labour risks, particularly when linked to China’s Xinjiang region, Srivastava said.
Currently the USTR is holding consultations with stakeholders to finalise the extent of duties it would actually impose on these 60 countries. The US probe was conducted under Section 301 of the Trade Act.
Another investigation under Section 301 on policies supporting excess manufacturing capacities in key trade partners is also in progress. These investigations are part of the US government effort to build a fresh tariff architecture after the US Supreme Court struck down reciprocal tariffs. These additional tariffs would now be the basis of trade deals that the US will negotiate.
For the purpose of enquiry, the DGFT has been empowered to seek information, documents or clarifications importer, exporter, manufacturer, expert bodies, international organisations for its enquiry. Based on the investigation the DGFT can recommend prohibition of such imports.
The priority should be to build credible traceability and due-diligence systems that protect legitimate trade while ensuring that forced-labour rules do not become arbitrary non-tariff barriers, Srivastava added.
