Why in News?
The United States’ new forced labour tariffs under Section 301, covering more than 60 countries, face legal pushback from Brazil and Australia over WTO compliance.
Key Highlights
- Tariffs are imposed under a Section 301 forced labour enforcement investigation, covering over 60 trading partners.
- Brazil and Australia are contesting the tariffs’ compliance with WTO rules.
- The dispute remains open, legally and diplomatically.
Section 301 (U.S. Trade Act, 1974)
- Empowers the Office of the United States Trade Representative (USTR) to investigate and respond to unfair foreign trade practices.
- Authorises the U.S. to impose tariffs or other trade restrictions if another country’s actions are found to burden or restrict U.S. commerce.
- Frequently used in disputes involving intellectual property, market access, subsidies, and labour practices.
World Trade Organization (WTO)
- Established in 1995, succeeding the General Agreement on Tariffs and Trade (GATT), 1947.
- Headquarters: Geneva, Switzerland.
- Objective: Ensure rules-based, predictable, and non-discriminatory international trade.
- Functions include administering trade agreements, resolving disputes, monitoring trade policies, and providing technical assistance.
Value Addition
- Most-Favoured-Nation (MFN) Principle (Article I, GATT): WTO members must treat all trading partners equally unless an exception applies.
- Dispute Settlement Understanding (DSU): Discourages unilateral trade retaliation and requires members to resolve disputes through the WTO mechanism.
- Relevance for India: Increasing use of unilateral tariffs by major economies can affect export competitiveness and test the credibility of the multilateral trading system.
[2018, GS2, 15 marks] What are the key areas of reform if the WTO has to survive in the present context of ‘Trade War’, especially keeping in mind the interest of India?”