India has told the US that Washington’s investigation into its industrial policies and use of “forced labour,” which allegedly harms American trade, does not meet the legal requirements under the law invoked to launch the probe. New Delhi has also rebutted all allegations made by the US as grounds for the probe.
For self-initiation an act, policy, or practice of a country that hurts American trade must be clearly pointed out but broad accusations have been made in both cases.
New Delhi flags legal gaps in self-initiated probes
India has maintained that the initiation notices do not meet the legal standard for Section 301 investigations, especially concerning self-initiation. For self-initiation an act, policy, or practice of a country that hurts American trade must be clearly pointed out but broad accusations have been made in both cases.
In its submission to the Office of US Trade Representative (USTR), which is steering the probe, the Ministry of Commerce and Industry stated that the Initiation Notice is premised on aggregate macroeconomic indicators without identifying any specific act, policy or practice of India that could be considered “unreasonable or discriminatory” and that “burdens or restricts United States commerce,” as required by Section 301(b) of the Act.
The US launched two investigations under Section 301 of the Trade Act: one on excess manufacturing capacities in 16 economies and another on forced labour issues against 60 economies. This was done to retain leverage in trade negotiations after the US Supreme Court invalidated reciprocal and other country-specific tariffs. Also, under Section 122 of the Trade Act it imposed 10% additional duties on all imports after the verdict. Under Section 122 tariffs up to 15% can be imposed for 150 days but Section 301 has no limits.
India has also said that there is nothing inherently unfair or inequitable for a country to let its businesses make investments or establish production facilities in certain key sectors. On the issue of structural excess capacity India has said that any increase in nominal capacity cannot be treated as “structural excess capacity”, particularly in countries where the demand is projected to grow.
US points to India’s excess capacity in trade gap
The US had blamed structural excess capacity in India for its trade surplus of $ 42 billion with the US. The US had also pointed to surplus other trade partners enjoy.
“India, which has a significantly smaller trade share with the US in comparison to the other trading partners, cannot be attributed to playing a role in widening the US trade deficit. The role of certain non-market economies could be another potential factor,” it said.
On the probe by USTR relating failure to take action against forced labour, the submission by India has said the Initiation Notice assumes that forced labor taints the entire supply chain and results in an automatic competitive advantage to Indian exporters to the detriment of the US industry and workers. However, no evidence is provided to suggest such linkage as unfairly affecting the competitiveness of the US industry.