Have ratified ILO treaties on forced labour: India on USTR probe charges
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Context
The recently initiated a investigation against India, alleging "structural excess capacity" and "forced labour" practices. India strongly rejected these claims, asserting that its trade surplus is a natural macroeconomic phenomenon rather than a result of unfair market manipulation. The government highlighted that its domestic legal framework aligns fully with global labor standards, pointing to its ratification of key treaties.
UPSC Perspectives
Economic
The concept of a trade surplus or deficit is driven by broader macroeconomic realities rather than isolated trade policies. The US sustains a massive trade deficit primarily because the US Dollar is the world’s dominant reserve currency, accounting for 56% of global foreign exchange reserves. This status allows the US to borrow cheaply and consume more than it produces. The accused India of maintaining structural excess capacity (building production facilities far beyond domestic needs to flood foreign markets). However, India countered this by showing that its merchandise export-to-GDP ratio is only around 12%. This proves that India's manufacturing sector is heavily anchored in meeting domestic demand rather than export-dumping. For UPSC Mains, understanding how a nation's currency dominance impacts its balance of payments and trade deficit sustainability is a crucial macroeconomic concept.
International Relations
The use of of the US Trade Act is a unilateral tool that allows the US President to impose tariffs outside the multilateral dispute resolution framework of the . By initiating these probes to protect American jobs, the US is effectively challenging the foundational principles of comparative advantage (where countries export goods they can produce most efficiently). India argues that targeting bilateral trade surpluses ignores generalized global economic conditions and a developing nation's import profile. Unilateral probes often serve as protectionist measures disguised as fair-trade enforcement, aimed at re-shoring supply chains. This highlights a growing global trend where developed nations bypass rules-based multilateral institutions in favor of aggressive bilateral trade posturing.
Governance and Labor
Developed nations frequently weaponize labor and environmental standards as non-tariff barriers against developing economies. The US probe alleged "forced labour" in global supply chains to justify potential tariffs. India strongly refuted this by showcasing its binding commitments under the . Specifically, India has ratified the (No. 29) and the (No. 105). These ratifications mean India's domestic legal framework, including fundamental rights like Article 23 (Prohibition of traffic in human beings and forced labour), is legally aligned with global standards. For the UPSC exam, aspirants must track India's status on the eight core ILO conventions, as compliance is increasingly used as leverage in international trade negotiations and Free Trade Agreements (FTAs).