The United States Trade Representative (USTR) said it has launched an investigation into 16 nations, including India, over unfair trade and manufacturing practices.
United States Trade Representative Jamieson Greer said that the probe will be conducted under Section 301 of the Trade Act of 1974.
Greer said that the investigation is likely to uncover a variety of unfair trading practices.
“We expect that this investigation will uncover a variety of unfair trading practices related to excess capacity and production in manufacturing. Our view is that key trading partners have developed production capacity that is really untethered from the market incentives of domestic and global demand,” Greer said.
According to the United States Trade Representative (USTR), the investigation will cover China, the European Union, Japan, South Korea, Vietnam, Mexico, Taiwan, Singapore, Switzerland, Norway, Indonesia, Malaysia, Cambodia, Thailand, Bangladesh, and India.
List of countries the United States Trade Representative will investigate:
- China
- European Union
- Japan
- South Korea
- Vietnam
- Mexico
- Taiwan
- Singapore
- Switzerland
- Norway
- Indonesia
- Malaysia
- Cambodia
- Thailand
- Bangladesh
- India
The USTR said it will follow several steps before taking action. It will open a public docket for written comments and requests from the 16 nations accused of unfair trade practices to attend the hearing around March 17. The deadline to submit comments or request to speak is April 15. Public hearings will start around May 5. After the hearings, there will be a review period and consultations with affected trading partners.
After completing all these processes, the USTR said it will publish its findings and determine whether to recommend action to US President Donald Trump.
What could the USTR do if it finds India engaging in unfair trade practices?
Although the probe is currently in the investigation stage, the United States has already alleged that India maintains “structural excess capacity” that negatively affects American commerce.
If the USTR concludes that India’s trade or manufacturing practices are unfair, the United States could impose additional tariffs on Indian goods. These would be added to the existing 18% tariff, making Indian products more expensive for American buyers and potentially weakening India’s competitiveness in the U.S. market.
Apart from tariffs, the USTR could also consider restrictions on Indian service providers operating in the United States, which could negatively impact India’s $250 billion-plus IT and services sector, accounting for nearly 8% of the country’s GDP.
The U.S. government could also suspend certain benefits that India currently receives under existing trade agreements or preferential trade programs. This could significantly raise costs for Indian exporters and potentially reverse progress made in recent trade negotiations.
Another option is for the USTR to negotiate a binding agreement with India, under which the Indian government would commit to removing the practices considered unfair or provide compensation to the United States.
Additionally, the US could choose to file a formal complaint against India at the World Trade Organization (WTO) and seek resolution through the organization’s dispute settlement process. A complaint filed by the United States would trigger a lengthy, multi-stage legal process that could place significant scrutiny on India’s industrial policies.
