US opens trade probe into India, EU, China and others over forced labour policies

The US has launched a trade investigation into 60 economies, including India, China, the EU, UK and Japan, to determine if their policies fail to prevent goods produced with forced labour.

The office of the United States Trade Representative (USTR) on Thursday evening said it has requested consultations with the governments concerned and will hold public hearings on April 28 as part of the investigations under Section 301(b) of the Trade Act of 1974.

“The investigations will determine whether acts, policies, and practices of each of these economies related to the failure to impose and effectively enforce a ban on the importation of goods produced with forced labour are unreasonable or discriminatory and burden or restrict US commerce,” it said.

This comes a day after Washington announced a fresh probe into excess industrial capacity in 16 major trading partners including India under Section 301, which is designed to address unfair foreign practices affecting US commerce and could lead to new tariffs. New Delhi is evaluating the US announcement to initiate investigations under Section 301 on excess capacity, said an official.

“They have reached out and we have to respond in 30 days,” said the official, adding that all angles – economic and legal – are being evaluated.

It is understood that the labour probe is a negotiating tactic as some countries have already worked out a deal with the US while others like India are in the works. New Delhi is likely to go ahead with a deal if the assured preferential access comes through.

The probe is seen as part of the Donald Trump administration’s efforts to find ways to reimpose tariffs after the US Supreme Court last month struck down the sweeping “reciprocal” tariffs Trump imposed last year without explicit congressional approval. “These (investigations) will keep coming,” a trade expert told ET on condition of anonymity. “Many of these can easily allow for very adverse findings against India.”

On the forced labour issue, USTR said the failure to prevent trade in products produced with forced labour may negatively affect American commerce.

“In markets without forced labour import prohibitions, US exports are required to compete with products produced wholly or in part with forced labour, including products that have been denied entry to the US market and subsequently re-exported,” it said.

The conditions of competition may skew to favour artificially low-cost imports produced by forced labour or incorporating forced labour inputs. Companies that do not use or rely on imports produced with forced labour may lose sales or revenues or even be pushed out of the marketplace, according to USTR.

Trade representative Jamieson Greer had last month announced plans for multiple Section 301 probes after the Supreme Court order.

“We expect these investigations to cover most major trading partners and to address areas of concern such as industrial excess capacity, forced labour, pharmaceutical pricing practices, discrimination against US technology companies and digital goods and services, digital services taxes, ocean pollution, and practices related to the trade in seafood, rice, and other products,” the USTR had said.