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India wary as US drags labour issues into trade talks

The Hindu BusinessLine | 1 December 2021

India wary as US drags labour issues into trade talks

by Amiti Sen

Labour issues may emerge as a tricky area for India in its efforts to further trade ties with the US as the Joe Biden government is keen to make “worker-centric” matters part of the bilateral trade discussions.

New Delhi put up a strong resistance to the proposal of bringing labour into mainstream trade discussions during US Trade Representative Katherine Tai’s recent visit, but the US wants to pursue the matter further in future talks, a source tracking the matter told BusinessLine. “If labour is discussed on a different platform, it would mean cooperation. But if discussed on a trade platform, it may lead to trade barriers,” the source said.

Both environment and labour are big items on the agenda of the Biden government as Americans feel that their businesses will get a level playing field when labour and environment issues are addressed, he added.

Tai, in one of her addresses in New Delhi, had pointed out that she and the US President were convinced that the US trade policy required a fundamental shift to ensure that policies and actions were focussed on the impact that trade and trade agreements had on real, working people.

“Part of that means engaging in new ways with you all, and my Indian government colleagues, to connect trade more directly to working people,” she said, adding that the approach of the governments should be worker-centric.

Industry concerned

he Indian industry is wary of linking labour issues with trade as co-operation in the area of curbing child labour has already made life difficult for some sectors such as granite, leather and carpet.

“Due to a handful of unscrupulous players employing child labour, the entire industry suffered. In several cases even after concrete action was taken by the government to address the problem, the action against the sector continued as getting de-listed after being identified as an offender is so difficult,” the source added.

Mexico experience

If labour issues are linked to trade, it could take the form of non-trade barriers such as imposition of regulations on minimum wages and working hours and trade restrictions if those are not fulfilled, he added.

“In the trade agreement that the US has with Mexico, it has made the country take commitment on minimum wage rates. This may either drive investments away from the country or force the industry to create fake records. India does not want to be in such a situation,” the source said.

At the meeting of the India-US Trade Policy Forum, while there was no decision on making a separate working group on labour and environment, the US mentioned both issues in the list of areas for further bilateral cooperation.

“The Trump government did not care much about labour or environment. So, they did not focus on these issues with India. But the situation is different now and has to be suitably tackled,” the source said.

 source: The Hindu BusinessLine