US buyers could intensify supply chain scrutiny post Section 301 tariffs on India: FIEO
This comes after the US last week replaced 10% global tariffs under Section 122 with new tariffs
The country’s top export promotion council, Federation of Indian Export Organisations (FIEO) on Monday advised exporters to maintain detailed employee data such as wage records, age verification and supplier declarations as strong labour and supply chain documentation would become a “commercial necessity” for exporters aiming to cater to the US market.
“Strong labour and supply chain documentation will become a commercial necessity. US buyers are likely to intensify supply chain scrutiny after Section 301 measures. Exporters should maintain employee and wage records, proof of voluntary employment, age verification, contractor or subcontractor details and supplier declaration,” FEIO said.
“High-risk inputs such as cotton, polysilicon, minerals and other sensitive material require traceability. Unsupported broad declarations should be avoided and any exception statement must cite precise Harmonised Tariff Schedule (HTS)…,” the export promotion council told exporters while advising them on compliance and due diligence beyond tariffs.
This comes after the US last week replaced 10% global tariffs under Section 122 with new tariffs on 60 countries on grounds that countries have failed to take measures to prevent imports of goods produced through forced labour. India is facing an additional 10% tariffs over the standard Most favoured nation rate (MFN).
Concerns over fresh scrutiny come as the United States Trade Representative (USTR) claims that countries that import goods made by forced labour get an artificial cost advantage, forcing American workers to compete on an uneven playing field. Experts said forced labour tariffs are supply chain duty as the main target remains China and the US aims to nudge countries to reduce their dependence on China.
The US State department maintains that the Chinese government uses forced prison labour to produce goods in Xinjiang province and injects them into international supply chains, “spreading China’s forced labor complicity around the globe”.
FIEO suggested that exporters should particularly focus on strengthening quality assurance, delivery reliability, component traceability and buyer-specific compliance documentation in case of electronics, electrical and technology products as Taiwan, Korea, Japan and Mexico have “supply chain advantages”.
“The US importer legally pays customs duty, but may seek price reduction, cost sharing and delayed orders or supplier switch. The commercial burden depends on bargaining power, purchase contract and alternate supplier and demand elasticity,” the council said.
The Commerce and Industry Ministry earlier this month prohibited the import of goods manufactured using forced labour. The Directorate General of Foreign Trade (DGFT), in an order dated July 13, inserted a new paragraph in the Foreign Trade Policy (FTP) regarding “forced labour”, stating that the import of goods produced or manufactured, “wholly or in part”, through the use of forced labour is “prohibited”.
Trade experts had said that the DGFT measure will take effect in 30 days, adding that the order establishes a legal framework rather than an immediate import ban and that its effectiveness will depend on how the government conducts investigations, the evidence required to establish forced labour, and the products it ultimately targets.
US authorities, typically, consider products such as cotton, textiles, solar-panel polysilicon, seafood, metals, batteries and electronics vulnerable to forced-labour risks, particularly when linked to China’s Xinjiang region.
The country’s top export promotion council, Federation of Indian Export Organisations (FIEO) on Monday advised exporters to maintain detailed employee data such as wage records, age verification and supplier declarations as strong labour and supply chain documentation would become a “commercial necessity” for exporters aiming to cater to the US market.
“Strong labour and supply chain documentation will become a commercial necessity. US buyers are likely to intensify supply chain scrutiny after Section 301 measures. Exporters should maintain employee and wage records, proof of voluntary employment, age verification, contractor or subcontractor details and supplier declaration,” FEIO said.
“High-risk inputs such as cotton, polysilicon, minerals and other sensitive material require traceability. Unsupported broad declarations should be avoided and any exception statement must cite precise Harmonised Tariff Schedule (HTS)…,” the export promotion council told exporters while advising them on compliance and due diligence beyond tariffs.
This comes after the US last week replaced 10% global tariffs under Section 122 with new tariffs on 60 countries on grounds that countries have failed to take measures to prevent imports of goods produced through forced labour. India is facing an additional 10% tariffs over the standard Most favoured nation rate (MFN).
Concerns over fresh scrutiny come as the United States Trade Representative (USTR) claims that countries that import goods made by forced labour get an artificial cost advantage, forcing American workers to compete on an uneven playing field. Experts said forced labour tariffs are supply chain duty as the main target remains China and the US aims to nudge countries to reduce their dependence on China.
The US State department maintains that the Chinese government uses forced prison labour to produce goods in Xinjiang province and injects them into international supply chains, “spreading China’s forced labor complicity around the globe”.
FIEO suggested that exporters should particularly focus on strengthening quality assurance, delivery reliability, component traceability and buyer-specific compliance documentation in case of electronics, electrical and technology products as Taiwan, Korea, Japan and Mexico have “supply chain advantages”.
“The US importer legally pays customs duty, but may seek price reduction, cost sharing and delayed orders or supplier switch. The commercial burden depends on bargaining power, purchase contract and alternate supplier and demand elasticity,” the council said.
The Commerce and Industry Ministry earlier this month prohibited the import of goods manufactured using forced labour. The Directorate General of Foreign Trade (DGFT), in an order dated July 13, inserted a new paragraph in the Foreign Trade Policy (FTP) regarding “forced labour”, stating that the import of goods produced or manufactured, “wholly or in part”, through the use of forced labour is “prohibited”.
Trade experts had said that the DGFT measure will take effect in 30 days, adding that the order establishes a legal framework rather than an immediate import ban and that its effectiveness will depend on how the government conducts investigations, the evidence required to establish forced labour, and the products it ultimately targets.
US authorities, typically, consider products such as cotton, textiles, solar-panel polysilicon, seafood, metals, batteries and electronics vulnerable to forced-labour risks, particularly when linked to China’s Xinjiang region.
