US Imposes 10% Tariffs on India, 16 Other Nations Over Forced Labor Imports

New Delhi: The US has imposed 10% tariffs on goods purchased from India and 16 other countries over what it described as their failure to impose bans on imports made with forced labour. The duty is lower than the 12.5% tariff it had proposed in June under an investigation done under Section 301 of its Trade Act.

Pakistan, Bangladesh, Cambodia, Sri Lanka and the UK have also been slapped with 10% tariffs.

“Based on the findings in the investigation of India, including India’s adoption of a forced labor import prohibition…and considering the public comments and testimony, the advice of the Section 301 Committee, as well as the advice of advisory committees, and in accordance with the specific direction of the President, the Trade Representative has determined to impose 10% tariffs on products of India, except…,” the US Trade Representative said in its final report Friday.

On June 14, India amended its foreign trade policy to prohibit the import of goods produced using forced labour. Washington had initiated another probe in March alleging excess capacity in certain goods. The US is yet to issue the draft report on excess capacity.

Trading partners that have made commitments to adopt, and effectively enforce, forced labor import prohibitions will have a 10% tariff, and trading partners that have failed to adopt a forced labor import prohibition will face a 12.5% tariff rate, it said.

The two investigations came after the US Supreme Court, in February, dismissed last year’s “reciprocal tariffs” using emergency as illegal and the American administration responded by levying 10% tariffs on all countries till July 24.

“I am encouraged by the trading partners who have moved quickly to adopt forced labor import prohibitions, and look forward to ensuring their effective enforcement,” said USTR Jamieson Greer, adding that today’s action will begin to correct “what is both a human rights abuse and distortive trade practice to improve the welfare of workers everywhere”.

The USTR said that Cambodia, Guatemala, Honduras, India, Sri Lanka, and Trinidad and Tobago, have undertaken commitments regarding forced labor import prohibitions or imposed such prohibitions “following government-to-government consultations”.

As per the USTR, to date, 10 trading partners have agreed to enact such a ban in their Agreements on Reciprocal Trade and other countries have enacted such bans in response to these investigations in recent weeks.

“The Trade Representative has determined, in accordance with the specific direction of the President that the tariff rate to be applied, and the scope of tariffs and exemptions are appropriate to obtain the elimination of the acts, policies, and practices determined to be actionable in the investigation,” it said.

The new tariffs come at a time when negotiations between India and the US for a proposed trade agreement are progressing well and the framework deal is ready to will be signed at the right time.

Commerce and industry minister Piyush Goyal and Greer met last month to discuss issues related to the first phase of the bilateral trade agreement (BTA).