NEW DELHI, Mar 15: A second trade investigation launched by the US into alleged forced labour practices across 60 economies, including India and China, is expected to place particular scrutiny on Beijing amid allegations of forced labour in the Xinjiang region, think tank GTRI said on Sunday.
India’s exports of solar panels, electronics and garments to the US may also face closer scrutiny under this new US investigation into forced labour in global supply chains, the Global Trade Research Initiative (GTRI) said.
On March 12, the United States Trade Representative (USTR) launched a Section 301 probe, covering 60 economies. This is the second Section 301 probe this month.
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.
The probe will examine whether countries allow goods produced with forced labour to enter global supply chains.
It will look at two situations – whether forced labour is used directly in production, and whether countries import materials produced with forced labour from other countries and use them to produce goods that are later exported to the US.
“The focus is likely to be on products that use imported inputs from China, suspected of being made with forced labour. If such inputs are used in goods exported from India to the US, those shipments could come under investigation,” GTRI founder Ajay Srivastava said.
He said the US argues that if such goods enter international trade through third countries, they can still distort markets by lowering production costs and undercutting legitimate producers.
The Section 301 process normally includes public consultations, evidence gathering and hearings before the USTR decides whether action is required.
If the investigation concludes that a country’s policies are “unreasonable or discriminatory” and restrict US commerce, Washington could impose tariffs or other trade restrictions on imports from the countries involved.
He added that China is likely to be central to the probe because of long-running accusations involving Uyghur and other Muslim minorities in the Xinjiang Uyghur Autonomous Region.
Beijing rejects the allegations, saying the programmes are designed to provide employment and vocational training.
Several Chinese products have therefore been flagged as high-risk in global supply chains, particularly cotton and cotton textiles, as Xinjiang produces about 20 per cent of the world’s cotton and polysilicon used in solar panels.
He said that while India prohibits forced labour under the Bonded Labour System (Abolition) Act, 1976, it could still face investigations because many Indian export industries rely on imported intermediate inputs from China.
“For instance, India’s solar panel exports to the US often rely on imported polysilicon or solar cells sourced from Chinese supply chains, some of which have faced scrutiny over alleged forced labour in Xinjiang,” Srivastava said.
Similarly, electronics manufacturing in India depends heavily on Chinese components, cables and sub-assemblies, which could face investigation if they originate from regions linked to labour-transfer programmes.
In the textile and garment sector, Indian manufacturers frequently use Chinese yarns and fabrics, which may become subject to tighter traceability rules if linked to cotton produced in Xinjiang, he said.
On March 11, the USTR announced the first Section 301 investigations under which it will examine whether industrial policies in 16 economies, including India and China, have created excess manufacturing capacity that harms US industries. (PTI)
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