Editorial-28/07/2026
Forced labour farce: On India and the U.S.’s new tariffs
Balancing Human Rights, Trade Rules, and Strategic Partnership
Introduction
The recent decision by the United States to impose additional tariffs and import restrictions on products allegedly linked to forced labour has triggered fresh trade tensions with India. While Washington presents these measures as part of its commitment to ethical trade and global human rights, India views them as selective, protectionist, and inconsistent with the principles of a rules-based international trading system.
The controversy highlights a larger dilemma confronting global trade today: Can human rights concerns legitimately justify trade restrictions, or are such measures increasingly becoming instruments of economic protectionism? For India, the issue is particularly significant because labour-intensive exports—including textiles, garments, leather, handicrafts, gems and jewellery, and agricultural products—constitute major sources of employment and foreign exchange.
The debate extends beyond bilateral trade disputes and touches upon questions of WTO compatibility, supply-chain transparency, labour standards, geopolitical competition, and the future architecture of international commerce.
Background
Over the past decade, Western economies have increasingly linked trade policy with labour rights, environmental sustainability, and human rights compliance.
The U.S. has strengthened its legal framework through measures such as:
- Uyghur Forced Labor Prevention Act (UFLPA)
- Tariff enforcement under customs laws
- Supply-chain due diligence requirements
- Enhanced import inspections
Although these measures were initially directed primarily at products linked to Xinjiang in China, they have gradually expanded their scope to scrutinize global supply chains.
India fears that many exporters could become indirect casualties because global value chains often involve multiple countries, making traceability difficult.
Understanding Forced Labour
The International Labour Organization (ILO) defines forced labour as:
"Work or service exacted from any person under the menace of any penalty and for which the person has not offered himself voluntarily."
Forced labour includes:
- Debt bondage
- Human trafficking
- Child labour under coercive conditions
- Forced prison labour
- Modern slavery
According to the ILO:
- Nearly 28 million people worldwide are estimated to be trapped in forced labour.
- The illegal economy generated through forced labour exceeds hundreds of billions of dollars annually.
Eliminating forced labour forms part of:
- Sustainable Development Goal (SDG) 8
- ILO Core Labour Standards
- UN Guiding Principles on Business and Human Rights
Why Has the U.S. Imposed New Tariffs?
The U.S. argues that:
1. Ethical Supply Chains
- Consumers increasingly demand ethically produced goods.
- Governments seek to prevent products made through forced labour from entering domestic markets.
2. Human Rights Diplomacy
The Biden and Trump administrations alike have increasingly used trade policy to promote human rights objectives.
3. Domestic Political Considerations
Labour unions and manufacturing industries support stronger import restrictions against countries perceived to have lower labour standards.
4. Strategic Competition
Human rights have become an important dimension of strategic rivalry, particularly with China.
Countries trading extensively with Chinese supply chains face greater scrutiny.
India's Concerns
India has strongly opposed the broader application of such trade restrictions.
1. Protectionism in Disguise
India argues that labour standards should not become non-tariff barriers.
Developed countries often invoke ethical concerns selectively while protecting domestic industries.
2. WTO Principles
The WTO is built upon:
- Non-discrimination
- Most Favoured Nation (MFN)
- National Treatment
- Predictable tariffs
Unilateral restrictions undermine multilateral trade governance.
3. Burden on MSMEs
India's exports are dominated by:
- Small enterprises
- Informal manufacturers
- Rural producers
Many lack sophisticated traceability systems demanded by developed markets.
Compliance costs could become prohibitive.
4. Supply Chain Complexity
- Products often contain components sourced from multiple countries.
- Tracing every input to verify labour conditions is technically challenging.
5. Employment Risks
Labour-intensive sectors employ millions.
Reduced exports may adversely affect:
- Women workers
- Rural artisans
- Migrant labour
- Small manufacturers
Economic Implications for India
Textiles
India's textile industry contributes substantially to exports and employment.
Higher tariffs could reduce competitiveness against:
- Bangladesh
- Vietnam
- Mexico
Leather Industry
India's leather exports rely heavily on U.S. markets.
Tariffs could reduce orders and investment.
Gems and Jewellery
Global buyers increasingly demand ethical sourcing.
Certification requirements may increase compliance costs.
Agricultural Products: Certain agricultural commodities could face additional inspections regarding labour practices.
Strategic Implications
Impact on India-U.S. Partnership
India and the U.S. have expanded cooperation in:
- Defence
- Indo-Pacific security
- Technology
- Semiconductor supply chains
- Critical minerals
Trade disputes risk creating friction in an otherwise expanding strategic relationship.
China Factor
Ironically, excessive restrictions on Indian exports may strengthen China's competitive position in certain sectors.
This would contradict broader U.S. efforts to diversify supply chains away from China.
WTO Dimension
The central question is whether human rights-based trade restrictions comply with WTO rules.
Countries may invoke:
- Article XX (General Exceptions)
- Public morals exception
However:
- Restrictions should be
- Non-discriminatory
- Necessary
- Proportionate
- Not arbitrary
Many developing countries argue that unilateral tariffs often fail these tests.
Human Rights vs Protectionism
The debate reflects two competing philosophies.
Human Rights Perspective
Countries should not profit from:
- Forced labour
- Modern slavery
- Human trafficking
Consumers deserve ethically produced goods.
Developing Country Perspective
Labour standards should improve through:
- Capacity building
- Technology transfer
- International cooperation
—not punitive tariffs.
India's Labour Reforms
India has undertaken several reforms aimed at improving labour governance.
These include:
Labour Codes
Four Labour Codes seek to simplify labour regulation while expanding social security coverage.
Digital Compliance
Digitisation has improved:
- Labour inspections
- Wage payments
- Registration systems
Social Security Expansion
Greater formalisation through:
Child Labour Reduction
Stronger legal provisions have reduced hazardous child labour in many sectors.
Challenges Within India
Despite reforms, concerns remain regarding:
- Informal employment
- Bonded labour
- Migrant worker vulnerabilities
- Seasonal agricultural labour
- Supply-chain monitoring
Addressing these domestic issues is important not merely to satisfy trading partners but to uphold constitutional values and ensure inclusive development.
Way Forward
1. Strengthen Supply Chain Traceability
India should promote:
- Blockchain-enabled traceability
- Digital certification
- ESG reporting
2. Support MSMEs
Government assistance should include:
- Compliance training
- Certification support
- Financial incentives
3. Bilateral Dialogue
India and the U.S. should establish dedicated mechanisms to:
- Resolve disputes
- Share evidence
- Harmonise compliance standards
4. WTO-Based Solutions
Disputes should preferably be resolved through multilateral institutions rather than unilateral tariffs.
5. Improve Labour Standards
Greater investments are needed in:
- Labour inspections
- Worker welfare
- Skill development
- Occupational safety
6. Diversify Export Markets
India should expand access to:
- Africa
- Latin America
- Middle East
- ASEAN
- European Union
to reduce dependence on any single market.
Conclusion
The controversy over the U.S.'s forced labour-linked tariffs illustrates the growing intersection of trade, ethics, and geopolitics. While combating forced labour is a legitimate global objective, unilateral trade restrictions risk undermining the multilateral trading system and disproportionately affecting developing economies. India must respond through a dual strategy: strengthening domestic labour governance and supply-chain transparency while firmly advocating for fair, non-discriminatory, and WTO-consistent trade practices. A cooperative framework that balances human rights with developmental realities is essential to ensure that ethical trade does not become a pretext for economic protectionism, thereby preserving both global justice and an open, inclusive international trading order.
Download Pdf
