As India and the United States work toward finalising the first phase of a Bilateral Trade Agreement (BTA), a fresh trade challenge has emerged that could complicate negotiations. The United States Trade Representative (USTR) has determined that India, along with dozens of other economies, has failed to adequately prevent the import of goods produced through forced labour, opening the door to potential new tariffs and trade measures.
The USTR's findings, announced on June 2, have drawn significant attention because they do not accuse India of exporting products made with forced labour. Instead, the agency's concerns focus on India's inability to effectively prohibit imports of goods manufactured using forced labour in other countries.
The development comes at a sensitive time in India-US economic relations. Both countries are currently engaged in discussions aimed at securing the first tranche of a Bilateral Trade Agreement while also addressing trade tensions stemming from US President Donald Trump's reciprocal tariff policy unveiled earlier this year.
According to the USTR, the acts, policies and practices of 60 economies concerning the failure to impose and enforce effective bans on imports made with forced labour are "unreasonable" and place burdens on US commerce. India is among 54 economies identified by the agency as lacking adequate mechanisms to prevent such imports.
The list includes several major trading partners of the United States, such as China, Japan, Australia, Bangladesh, Saudi Arabia, Singapore, the United Kingdom and the United Arab Emirates. The USTR argues that weak enforcement allows products made through forced labour to enter global supply chains, creating unfair competition for businesses that adhere to labour standards.
In its findings, the agency stated that such failures undermine international efforts to eradicate forced labour, distort market conditions and reduce the profitability of companies that comply with ethical labour practices. It further warned that the continued entry of such goods into global markets contributes to the circumvention of existing import restrictions.
"The failure of our most important trading partners to address the importation of goods made with forced labor is unacceptable. This creates a dynamic where American workers are forced to compete globally on an unlevel playing field," US Trade Representative Jamieson Greer said while announcing the findings.
The investigation was launched on March 12 and involved extensive consultations. The USTR reviewed testimony from nearly 60 witnesses and examined around 500 comments and rebuttal submissions before reaching its conclusions.
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