PRESS/TPRB/16
23October 1995
TRADE POLICY REVIEW BODY
Review ofMauritius
TPRB 'sEvaluation
TheTrade Policy Review Body oftheWorld Trade Organization (WTO) conducted itsfirst
review under WTO procedures initsexamination on17and18October ofMauritius 'trade policies.
ThetextoftheChairman 'sconcluding remarks isattached asasummary ofthesalient points which
emerged during thetwo-days ofdiscussion.
Thereview enables theTPRB toconduct acollective examination ofthefullrange oftrade
policies andpractices ofeachWTO member country atregular periodic intervals tomonitor significant
trends anddevelopments which mayhaveanimpact ontheglobal trading system.
Thereview isbased ontworeports which areprepared respectively bytheWTO Secretariat
andthegovernment under review andwhich cover allaspects ofthecountry 'stradepolicies, including:
itsdomestic lawsandregulations; theinstitutional framework; bilateral, regional andother preferential
agreements; thewider economic needs andtheexternal environment.
Arecord ofthediscussion andtheChairman 'ssumming-up, together withthese tworeports,
willbepublished induecourse asthecomplete trade policy review ofMauritius andwillbeavailable
from theWTO Secretariat, Centre William Rappard, 154ruedeLausanne, 1211 Geneva 21.
Since December 1989, thefollowing reports havebeencompleted: Argentina (1992), Australia
(1989 &1994), Austria (1992), Bangladesh (1992), Bolivia (1993), Brazil (1992), Cameroon (1995),
Canada (1990, 1992&1994), Chile (1991), Colombia (1990), Costa Rica(1995), Côted'Ivoire (1995),
Egypt (1992), theEuropean Communities (1991, 1993&1995), Finland (1992), Ghana (1992), Hong
Kong (1990 &1994), Hungary (1991), Iceland (1994), India(1993), Indonesia (1991 and1994), Israel
(1994), Japan (1990, 1992and1995), Kenya (1993), Korea, Rep.of(1992), Macau (1994), Malaysia
(1993),Mauritius(1995),Mexico(1993),Morocco(1989),NewZealand(1990),Nigeria(1991),Norway
(1991), Pakistan (1995), Peru(1994), thePhilippines (1993), Poland (1993), Romania (1992), Senegal
(1994), Singapore (1992), South Africa (1993), Sweden (1990 &1994), Switzerland (1991), Thailand
(1991),Tunisia(1994),Turkey(1994),theUnitedStates(1989,1992&1994),Uganda(1995),Uruguay
(1992) andZimbabwe (1994).
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REVIEW OFTHE TRADE POLICIES AND PRACTICES OFMAURITIUS
Concluding remarks bytheChairman oftheTrade Policy Review Body
TheTPRB hasconducted thefirstreview ofMauritius 'trade policies andpractices. These
remarks areintended tosummarize thesalient points. Asusual, theyaremade onmyownresponsibility
anddonotsubstitute fortheBody'scollective evaluation.
Thediscussion developed under fourthemes:
General policy orientation
Members recognized thatMauritius 'structural adjustment programmes ofthe1980s hadlaid
thefoundation foradecade ofhighgrowth andhadenabled Mauritius totakefulladvantage ofaccess
opportunities foritsexports, inparticular through trade preferences intheEUmarket. However, a
dualeconomy haddeveloped, withcontinued protection fordomestic production. Members urged
theauthorities tobeespecially aware ofthisdevelopment andpursue appropriate corrective measures.
Mauritius nowsought tointegrate itseconomy through ashifttowards more outward-oriented
policies, including trade liberalization; there hadbeenapositive response totheUruguay Round and
astrong commitment totheprinciples ofthemultilateral trading system. Economic diversification
wasalsobeing pursued through development ofthefreeportandtheoffshore services sector. Some
members noted, however, thatwhile trade liberalization hadbeensignificant, tariff escalation and
effective ratesofprotection stillappeared high; theplethora ofincentives tended todetract fromthe
transparency ofthesystem andadded anelement ofdiscretion.
Reform ofthetraderégime hadincluded theremoval ofquantitative restrictions, thelowering
ofmaximum andaverage tariffs andtheabolition oftheimport levyandexport taxonsugar. The
majority ofprice controls hadalsobeendismantled; however, concern wasexpressed inregard to
remaining controls. Some members identified theheavy budgetary reliance ontariff revenue asa
potential constraint tofurther reduction andsimplification oftariffs. Anumber ofmembers alsonoted
thatpolicies toaddress human resource development andlabour mobility would beneeded toensure
thereform offactor markets inthequest forgreater productivity.
Inreply, therepresentative ofMauritius emphasised thatthefocus ofhisGovernment 'spolicies
wasonimproving productivity andcompetitiveness inallsectors, while minimizing thetransition costs
toafree-tradeenvironment.Mauritius'strategystressedinvestmentintraining,educationandupgrading
ofskills asmeans ofencouraging amore competitive economy. Inaddition, emphasis wasplaced
onthedevelopment oftelecommunications andpromoting thetransfer oftechnology. Inthiscontext,
hestressed theneedtomaintain asound macroeconomic framework thatwould assist inthedevelopment
ofefficient factor markets; thus, inparticular, monetary policy hadsought toreduce inflation and
encourage savings. Theshare inGDPofthetertiary sector hadincreased consistently inthepastyears,
withtourism thefastest-growing element. Stock market activities werebeing encouraged. Theoffshore
servicessectorhadprogressedwellandpolicieswerebeingdirectedtointegratetheoffshoreanddomestic
sectors, while thefreeport authority wasafocalpoint fortransshipment andre-export activities. On
thespecific issue ofwomen 'srights, newlegislation hadbeenintroduced toensure equal treatment
andemployment opportunities.
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Specific trade policy instruments
MemberscongratulatedMauritiusonbeingafoundermemberoftheWTOandthecommitments
taken inthatcapacity. They stressed theneedforMauritius torapidly integrate itstrade lawswith
WTOprovisions,recognizingMauritius'requestfortechnicalassistanceinthiscontext.Neworamended
lawsshould bedulynotified.
While Mauritius 'tariff reform wasappreciated, thelowlevelofbindings inindustry wasa
cause forconcern. Although tariffs onagricultural products were bound, theceiling rates were
considerably higher thantheapplied rates, allowing fortheriskofirregular customs conduct. Mauritius
wasencouraged toharmonize thebound andapplied rates.
Members commented onthediscrimination indutytreatment between scheduled andnon-scheduled
suppliers andonthedifferential application ofexcise duties asbetween domestic andimported products.
Mauritius wasurged toeliminate thesediscriminatory elements andapply m.f.n. andnational treatment
principles.
Members recognized theefforts undertaken byMauritius toadapt andimprove standards and
regulations inconformity withtherelevant WTO instruments. Some noted thatthecontinued operation
ofstatetrading enterprises, accompanied byimport licensing, price controls andconsumer subsidies,
brought intoquestion theoperation ofthemarket mechanism andrancounter totrade liberalization.
Questions werealsoraised astocurrent procedures related totrade remedies, e.g.anti-dumping, and
theprospective introduction oflegislation inthisfield.
Members noted thatMauritius already hadlegislation andenforcement procedures against
infringement ofintellectual property rights, butsought clarification onspecific aspects oftheexisting
legislation, andonthechanges necessary toensure compatibility withtheWTO provisions. Aquestion
wasalsoraised ontheconsistency ofenvironmental trade measures withWTO articles.
Inreply,therepresentativeofMauritiusspokeoftheeffortsbeingmadetointegrateitslegislation
intotheWTO system. Mauritius hadalready notified many ofitsexisting lawsandprocedures tothe
WTO; asub-committee wasstudying other notification requirements. Mauritius wasseeking technical
assistance inintegrating certain other areas, including customs valuation. Theexport banoncorals
andshells forenvironmental reasons hadbeennotified under Article Xandjustified under Article XX
oftheGATT.
Tariffs were themain trade policy instrument. Thelevel ofbindings offered byMauritius
reflected itslevelofdevelopment; inmany cases applied rateswerewellbelow bound levels. Bound
rateshadbeennegotiated intheUruguay Round andnofurther timetable forharmonization ofbound
andapplied ratescould beforeseen asyet,although thiscould belinked totheintroduction ofanti-
dumping orcountervailing legislation. Thedistinction fortariffpurposes between scheduled andnon-
scheduled territories hadhistorical roots. Itwasnottheintention tofoster discrimination; the
differentials hadbeenreduced overtime. Mauritius recognized thatitshould introduce corrections
inorder tobring thetariff system intolinewithm.f.n. principles.
State-trading entities were maintained toensure regular supplies ofbasic commodities at
reasonable prices forthepopulation; price controls were linked withtheiroperation, butitwasthe
intention toliberalize prices oncethere wasadequate competition inthemarket. TheGovernment 's
intention wastomove further towards privatization, while safeguarding against abuses andthecreation
ofprivate monopolies. Mauritius wasexamining thereport ofacommittee ontheGovernment
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Procurement Agreement withaviewtoconsidering membership. Mauritius hadusedInternational
Trade Centre services formany areas oftrade development.
Sectoral policies
Members noted theefforts made byMauritius topromote industrial diversification, particularly
toseekasmooth transition inthecourse ofthephasing outoftheMFA. They stressed theneedfor
aclear, non-discretionary, transparent incentive structure.
Members welcomed theelimination oftheexport dutyonsugar. While there seemed tobe
considerable investment initiatives inthesugar sector, itwasnotclearwhatwasbeing donetoincrease
production ofother foodcrops andtoallow fortheintegration oftheruraleconomy. Diversification
wasseenasrelevant inlightoftheconcern expressed byMauritius andother netfood-importing
countries, regarding theimpact ofhigher world prices ontheirimport bill.Anumber ofparticipants
noted thatimport prohibitions andlicensing wereinusetoensure foodsecurity andself-sufficiency.
Members noted thatMauritius should ensure thatitsagricultural practices were inconformity with
itsWTO obligations andthatitsultimate goalshould betoliberalize imports andallow themarket
mechanism tooperate. Members alsoquestioned theneedforthere-introduction ofconsumer subsidies
onbasic foodstuffs.
Inservices, members welcomed thefactthatMauritius hadmade commitments inthetourism
andtelecommunications sectors. However, itsregulatory regime didnotextend national treatment
toforeign suppliers inallthescheduled areas andfurther liberalization wasencouraged through
improvements inMauritius 'GATS commitments. Financial services hadbeenextensively liberalized
andanoffshore sector established which hadalready exhibited exceptional growth.
Inresponse, therepresentative ofMauritius noted thattheIndustrial Expansion Actof1993
hadgrouped allincentives, making thesystem bothmore transparent andlesssubject todiscretion.
Headded thatagricultural diversification hadtobeseeninthecontext oftheimportance ofthesugar
sector fortheisland 'secosystem. Mauritius wasconscious ofthefactthattheproduction offoodcrops
haditslimits andcould notsubstitute forimports; thusforproducts suchasmeat andmilk, self-
sufficiency could notbeattained. Although some bound agricultural tariffs werehigh, applied rates
related toimported foods wereinvariably veryloworzero. Mauritius hadagoodrecord ofcompliance
withsanitary andphytosanitary norms, butnevertheless anoverhaul oftheregulations wasenvisaged
tobring Mauritius 'rulesintofullconformity withWTO obligations inthisarea. Emphasis waslaid
onthecarebeing given totheecological aspects ofagricultural development.
Inrelation totheservices sector, therepresentative ofMauritius replied thatnochanges to
Mauritius 'GATS schedule were currently envisaged.
External environment
Theresults oftheUruguay Round were expected toleadtosome erosion ofpreferences,
particularly intheareas oftextiles, clothing andsugar. Inthisregard, some members urged theearly
lifting ofrestrictions onMauritius 'clothing exports. Some members alsoexpressed theviewthatsmall
island developing countries warranted special consideration within theWTO system.
Anumber ofmembers noted Mauritius 'increasing involvement inregional arrangements;
theyrecognized thatthiscould support thetrade liberalization effort andurged thatitconform with
therules anddiscipline ofthemultilateral system.
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Therepresentative ofMauritius replied thatMauritius 'tradepolicy remained outward-looking.
Inthiscontext, Mauritius wasactively participating invarious regional economic groupings, including
COMESA,SADCCandtheIndianOceanCommission,whichitsawascomplementarytoitsparticipation
inthemultilateral system. Hebelieved suchinitiatives, which werenotinward-looking innature, were
inlinewithArticle XXIV ofGATT, andcould beseenasaninitial stage towards further multilateral
economic integration.
END