The two-way trade deal being negotiated between India and the United States can only be finalized once the US Trade Representative’s Section 301 investigation is over, an Indian trade official said on Monday.
The investigation, initiated by the US Trade Representative against India and other countries, is looking into unfair trade practices.
The Indian trade official also stated that New Delhi will seek further assurances from Washington that it will not be subject to additional tariffs in the future after the trade agreement. Reuters The news agency reported.
What is a Section 301 investigation?
In March, the US Trade Representative launched two unilateral Section 301 investigations against a number of countries, including India. This has occurred due to excess capacity and the failure to eliminate forced labor in global supply chains.
According to the US Trade Representative, the section was imposed due to a failure to “effectively enforce the ban on the import of goods produced with forced labor.” In a statement issued by the US Trade Commission, it said it had concluded under Section 301 of the US Trade Act of 1974 that the actions, policies and practices of the 60 economies were “unreasonable and constitute a burden or restriction on US trade”, making them enforceable under US trade law.
“The failure of our most important trading partners to address the importation of goods made with forced labor is unacceptable. This creates a dynamic in which American workers are forced to compete globally on an unlevel playing field,” USTR Ambassador Jamison Greer said in the statement.
As a result, the US Trade Representative on June 2 proposed 12.5% tariffs on 54 countries, including India, for allegedly failing to ban the import of goods produced using forced labor, PTI reported. However, this is still a proposal and not final, and the USTR said interested parties can submit requests to appear at the hearings and certification summaries by June 22.
Why did the investigation start?
While the interim framework for an India-US trade deal was agreed upon and announced on February 7, the US Supreme Court, nearly two weeks later, ruled against Trump’s reciprocal tariffs, which were imposed under the International Emergency Economic Powers Act 977.
While Trump imposed 10% tariffs on all 150 countries after the court ruling, these new duties expire on July 24, and the changing tariff landscape may prompt the two sides to reconsider the previous agreement. The February Joint Statement on the Framework issued by India and the United States includes a paragraph stating that in the event of any changes in the tariffs agreed upon by either country, the United States and India agree that the other country may modify its obligations.
Moreover, with the reciprocal tariffs now eliminated, the Trump administration is left with no option to use the Section 301 mechanism to impose new tariffs. The United States could use this as a pressure tactic to negotiate with its trading partners.
