U.S. 12.5% 'Forced Labour' Tariff Proposal on India and 53 Nations (Current Events of National And International importance)
U.S. 12.5% 'Forced Labour' Tariff Proposal on India and 53 Nations (Current Events of National And International importance)
Why In News:
The United States has proposed a 12.5% tariff on goods from India and 53 other nations on the grounds of 'forced labour' in supply chains — even as India-US trade negotiations are ongoing.
Legal and Policy Framework:
WTO Consistency: Unilateral tariffs based on 'social clause' standards (like forced labour) can be challenged at the WTO under GATT Article I (MFN) and Article III (National Treatment). However, Article XX(e) provides a general exception for goods produced by prison labour.
India's Trade with the U.S.:
Bilateral Trade (2024–25): India-US bilateral trade stood at approximately $131.84 billion, making the US India's largest trading partner.
Key Indian Exports at Risk: Textiles, handicrafts, chemicals, auto components, pharmaceuticals, and engineering goods — sectors that U.S. could scrutinise for supply chain labour conditions.
GSP (Generalised System of Preferences): India lost US GSP benefits in 2019. This tariff is separate — a new trade pressure instrument.
Key Facts for Prelims:
WTO Dispute Settlement: India can challenge unilateral tariffs under WTO's Understanding on Rules and Procedures Governing the Settlement of Disputes (DSU). However, WTO Appellate Body has been non-functional since 2019.
India's FTA Status with US: India and the US do not have a comprehensive Free Trade Agreement (FTA). Trade negotiations are ongoing.