This comes at a time when US chief negotiators are holding three-day talks with Indian counterparts in New Delhi to finalise a bilateral trade agreement (BTA). An official recently told ET that New Delhi is set to keep the focus of the negotiations on getting relief on Section 301 probes and achieving lower tariffs than its competitors.
Also read: As India-US trade talks resume in New Delhi, here’s what Section 301 means for the deal
As India looks to firm up the deal if it gets “terms fair, equitable, and balanced,” the official said that US Trade Representative Jamieson Greer could visit India once the broad contours of the agreement are finalised.
According to a Bloomberg report, India has denied the allegations under the forced labour clause and asked Washington to terminate the investigations, saying the issues should be addressed within the framework of ongoing trade negotiations rather than through unilateral measures.
“For economies that impose a forced labor import prohibition, that have committed to impose and enforce such a prohibition through an Agreement on Reciprocal Trade, or economies that have imposed a partial regime with the effect of preventing the importation of certain forced labor goods, the US Trade Representative proposes 10% as the rate of additional duties,” USTR said in a notice.
For other economies, the USTR has proposed 12.5% as the rate of additional duty, along with a textile mechanism that would allow for a certain volume of apparel and textile imports from certain economies to the US at a reduced Section 301 tariff rate.The trade body has also determined to propose responsive actions in these investigations.
What is Section 301?
Section 301, part of the US Trade Act, 1074, is a trade enforcement tool that authorises the USTR to investigate the acts, policies, and practices of foreign governments and determine whether those acts, policies, and practices are unreasonable or discriminatory and burden or restrict US commerce.
If a government investigation concludes that unfair trade practices exist, the Section allows US to respond by imposing additional tariffs or other trade-related measures on the country concerned.
The move announced on Wednesday is a major step in US President Donald Trump’s push to reinstate the country-wise tariffs he imposed during his first year in office before they were deemed unconstitutional by the Supreme Court.
Also read: US may have shaved its metal tariffs but the steel wall facing Indian exporters remains standing
New US tariffs under review
The US government agency notified that the fresh levies would not go into effect immediately and are subject to a public comment and review period before implementation. This could result in changes before any duties are codified.
Written comments are due to be submitted by July 6, and a Section 301 panel is expected to convene public hearings beginning on July 7, according to the notice.
“The failure of our most important trading partners to address the importation of goods made with forced labor is unacceptable. This creates a dynamic where American workers are forced to compete globally on an unlevel playing field,” Greer said in a statement. “We will no longer tolerate this disparity.”
Greer added that the goal was to complete a series of trade investigations to allow Trump to quickly enact new tariffs after the outgoing measures expire.
What does the Section 301 investigation reveal about India?
The USTR report alleged that New Delhi has failed to impose and effectively enforce a forced labor import prohibition.
The agency also alleged that the failure to impose and effectively enforce the same is “unreasonable” and burdens or restricts US commerce.
Greer called on each of the trading partners to “ensure that trade does not perversely encourage and entrench forced labor globally.”