US launches forced labour probe across 60 economies; India exports may face scrutiny: GTRI

India’s electronics manufacturing sector depends on Chinese components, cables and sub-assemblies, which could face investigation if they originate from regions linked to labour transfer programmes.

A fresh US trade investigation into alleged forced labour practices across global supply chains could bring scrutiny to exports from about 60 economies, including India and China, according to think tank Global Trade Research Initiative (GTRI).

The probe, launched by the Office of the United States Trade Representative (USTR) on March 12 under Section 301 of the US Trade Act, will examine whether countries have failed to prevent goods produced using forced labour from entering international trade and reaching the US market.

This marks the second Section 301 investigation launched by the US this month.

According to GTRI, while China is expected to face the most intense scrutiny due to longstanding allegations of forced labour in the Xinjiang Uyghur Autonomous Region, exports from other countries that rely on Chinese inputs could also come under review.

“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.

Supply chain scrutiny

The investigation will examine whether countries allow goods produced with forced labour to enter global supply chains in two ways, directly through production using forced labour or indirectly by importing materials produced with forced labour and using them to manufacture goods later exported to the US.

Washington argues that products linked to forced labour can distort global markets by lowering production costs and undercutting legitimate manufacturers.

If the probe concludes that a country’s policies are “unreasonable or discriminatory” and restrict US commerce, the United States could impose tariffs or other trade restrictions on imports from the countries involved.

China likely to be key focus

Analysts expect China to be central to the investigation due to persistent allegations of forced labour involving Uyghur and other Muslim minorities in Xinjiang.

Beijing has repeatedly rejected the accusations, saying the programmes in the region are designed to provide employment and vocational training.

Several Chinese products have already been flagged as high risk in global supply chains, particularly cotton and cotton textiles, as Xinjiang produces about 20% of the world’s cotton as well as polysilicon used in solar panels.

Potential implications for India

GTRI said India could face scrutiny even though forced labour is prohibited under the Bonded Labour System (Abolition) Act, 1976, because several export sectors depend heavily on imported Chinese components.

“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, India’s electronics manufacturing sector depends on Chinese components, cables and sub-assemblies, which could face investigation if they originate from regions linked to labour transfer programmes.

The textile and garment industry could also face tighter scrutiny, as Indian manufacturers frequently use Chinese yarn and fabric that may be linked to cotton produced in Xinjiang.

Parallel US investigation

The forced labour probe comes days after the USTR initiated another Section 301 investigation on March 11, examining whether industrial policies in 16 economies, including India and China, have created excess manufacturing capacity that harms US industries.

The Section 301 process typically includes public consultations, evidence gathering and hearings before the USTR decides whether to take trade action.