New Delhi, 12 Mar

The US Trade Representative (USTR) on 11 March said it has launched a fresh round of Section 301 trade investigations targeting policies and industrial practices of 16 economies, including India and China.

Following a decision of the US Supreme Court striking down sweeping tariffs of the Trump administration, US President Donald Trump has announced 10 per cent tariffs on all countries for 150 days from 24 February.

Now, initiation of this probe marks a significant escalation in trade scrutiny. Here are a few questions and answers to understand the issue.

WHAT IS THIS INVESTIGATION?

The United States Trade Representative (USTR) has announced that it has initiated investigations against its trading partners, including India, China, Japan, and the European Union (EU), to look into and address unfair foreign practices that are adversely affecting American manufacturing.

The probe targets policies and industrial practices of 16 economies.

The probe covers sectors, including steel, aluminum, automobiles, batteries, electronics, chemicals, machinery, semiconductors, and solar modules.

WHICH 16 ECONOMIES ARE COVERED UNDER THE PROBE?

There are 15 countries and the 27-nation EU bloc. The nations are China, Singapore, Switzerland, Norway, Indonesia, Malaysia, Cambodia, Thailand, South Korea, Vietnam, Taiwan, Bangladesh, Mexico, Japan, and India.

WHY THIS PROBE?

After the US Supreme Court struck down tariffs imposed bythe Trump administration, he signed a proclamation to impose a temporary import duty of 10 per cent on all countries to replace the tariffs invalidated by the Court. After that, the President had stated that the US has other alternatives to impose such levies.

On 20 February, a White House Fact Sheet stated that the President has directed the Office of the USR to use its Section 301 authority to investigate certain unreasonable and discriminatory acts, policies, and practices that burden or restrict US commerce.

WHAT IS THE INVESTIGATION PROCESS?

Under Section 301 of the US Trade Act of 1974, the US government may investigate whether foreign trade practices are unreasonable or discriminatory and harm American commerce.

The investigations will determine whether those acts, policies, and practices are unreasonable or discriminatory and burden or restrict US commerce.

"The probe will examine whether policies such as industrial subsidies, state-supported manufacturing expansion, activities of state-owned enterprises, market-access barriers, currency practices or suppressed domestic demand have contributed to global manufacturing overcapacity that burdens US commerce, think tank GTRI said.

If such practices are confirmed, Washington may impose retaliatory trade measures, including additional tariffs, quantitative restrictions or other trade barriers.

According to the GTRI, as per a defined process, public dockets for written submissions will open on 17 March, allowing companies, trade groups and governments to submit their comments on the probe.

Written submissions and requests to participate in hearings must be filed by 15 April. Public hearings will take place from May 5-8 at the US International Trade Commission in Washington. Rebuttal submissions must be filed within seven days after the hearings conclude. After consultations with the governments concerned, the USTR will determine whether the practices under investigation warrant retaliatory action.

WHAT DOES THIS MEAN FOR INDIA?

The Global Trade Research Initiative (GTRI) stated that the US investigation identifies several sectors in India where structural excess capacity or export surpluses may exist. These include solar modules, petrochemicals, steel, textiles, health-related goods, construction materials and automotive products.

According to the US notice, India's solar-module manufacturing capacity is already nearly three times domestic demand, suggesting the possibility of export-driven production surpluses. Similar concerns are raised about expanding capacity in petrochemicals and steel, GTRI Founder Ajay Srivastava said.

Apex exporters' body FIEO said the investigation seems largely aimed at addressing global concerns around structural overcapacity in manufacturing.

"India's export growth is largely demand-driven and diversified, so we do not see any immediate concern, though the situation will need to be watched," FIEO Director General Ajay Sahai said.