Excess capacity and exploited labour? America’s Section 301 probes can’t survive the scrutiny of facts

The randomness of Donald Trump’s tariffs has underscored that a state of flux for businesses is the only constant. That this has been inflicted by one of the chief architects of the World Trade Organization (WTO)’s rules of global trade is ironic, as it has left us with this mockery of a rules-based order.Last April, the US President alleged that foreign trade and economic practices had created a national emergency and imposed tariffs across imports from all countries. Ten months later, the US Supreme Court ruled that they were unlawful.

Soon after, Trump threatened other “powerful alternatives” and imposed a 10% tariff on all imports on the ground that the US had a balance-of-payment crisis. This action too has no legal basis and 24 US states have challenged it in US courts. Meanwhile, Section 301 proceedings under the US Trade Act have been initiated.

These empower the US Trade Representative (USTR) to investigate the ‘unfair trade practices’ of other countries. One initiated move alleges “structural excess capacity and production in manufacturing sectors” while another is on the “failure to impose and effectively enforce a prohibition on the importation of goods produced with forced labour.” India has been named in both, along with other countries.India has faced Section 301 proceedings before with respect to intellectual property and its digital services tax, but these did not result in any punitive unilateral US tariffs. From 1995 till 2017, when Trump first took office, the US used its Section 301 proceedings as a complement to WTO dispute settlement.