India asks US to reconsider proposed 12.5% additional tariff

New Delhi: India has asked the US to reconsider a proposal to slap an additional 12.5% tariff on New Delhi for alleged failure to bar imports made with forced labour, expressing willingness to engage the US Trade Representative (USTR) to address any specific concern through dialogue.

The extra tariff proposal under the Section 301 investigation lacks legal basis, evidence and policy consistency, New Delhi argued in a formal submission with the USTR on its findings.

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The USTR in March launched the investigation against dozens of economies that allegedly failed to impose a prohibition on import of goods produced with forced labour. Subsequently, on June 3, the USTR released its findings pertaining to investigations of forced labour and proposed the extra tariffs on 54 economies. It proposed a 10% extra US levy on imports from Canada, Ecuador, the EU, Indonesia, Mexico and Pakistan. Imports from 48 others, including India and China, are proposed to face 12.5%. Section 301 investigations determine if the US' rights under any trade agreement are being denied, or an act, policy, or practice of a foreign government is burdening or restricting the American commerce, including services and investment.

Public hearings on the report will be held on July 7. The USTR will make a final decision on the proposed tariffs, after considering various submissions, comments and testimony. Currently, Indian exports to the US face a temporary 10% reciprocal tariff.

Gaps flagged

In its submission, New Delhi said "a mere absence of a forced labour import prohibition, without meeting the evidentiary basis of other statutory requirements, cannot be construed as 'unreasonable' within the meaning of Section 301 of the Act". The USTR, India underscored, has not undertaken an economy-specific analysis of laws and practices across the 60 investigated economies. Instead, it has made a sweeping determination that all such approaches are inadequate without considering the specific measures being implemented by the economies.

"In relation to India, there is inadequate and insufficient evidence that the lack of forced labour import ban causes an alleged unfair comparative advantage to the detriment of the US industry. Evidence across sectors of major exports of India to the US does not suggest any linkage with forced labour inputs," it added.

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The evidence cited by the USTR does not establish the required causal link between the alleged absence of forced labour import prohibition and its impact on US commerce, it said.