EMBARGO: NOT FOR PUBLICATION
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PRESS/TPRB/15
13October 1995
TRADE POLICY REVIEW OFMAURITIUS: FOCUS ON
VALUE-ADDED EXPORTS AND SERVICES
Inthelast15years, thesmall island economy ofMauritius hasproved astriking example of
export-oriented development. Astable political environment andanample supply oflabour attracted
foreign investment inmanufacturing, leading toexceptional growth inthe1980s. Athree-fold increase
inpercapita income since 1980would nothavebeenpossible without theliberalization oftheforeign
exchange andtrade regimes, disciplined monetary andfiscal policies andpreferential access tothe
EUmarket.
According toaWTO Secretariat report onMauritius 'tradepractices andpolicies, Mauritius '
strong emphasis onexport promotion, tourism development anditsrecent initiatives topromote the
island asaregional trading centre havetransformed itseconomy. Sugar, thecountry 'straditional export,
along withclothing andtourism, arenowimportant sources offoreign exchange earnings. Since 1990,
however, theeconomy hasentered aconsolidation phase. Withfullemployment, wage increases have
outpaced productivity growth, thereby eroding some ofthecountry 'sexport competitiveness. Amajor
challenge ahead, saysthereport, isforMauritius toovercome these constraints onfuture growth.
Emphasisincurrenteconomicpolicy-makingisbeingplacedonmodernizationanddiversification,
greater integration oftheexport anddomestic markets andtheimprovement oftotalfactor productivity
byfocusing ontechnology, human capital formation andtherestructuring ofthecapital base.According
tothereport, theIndustrial Expansion Actof1993seeks, through fiscal incentives, tomove theeconomy
towards higher value-added production.
Such measures follow liberalization efforts taken since 1985, when Mauritius dismantled its
quantitative restrictions, lifted price controls onallbutessential items andreduced itsexport taxon
sugar. Other steps included theelimination ofimport licensing in1991 forallbutalimited range of
products subject tohealth, sanitary orstrategic control andaconcerted effort toharmonize standards
along international norms.
In1994, following theconclusion oftheUruguay Round, Mauritius consolidated itsgeneral,
preferential andfiscal duties, reduced thenumber oftariff ratesfrom60toeight andlowered duties
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onmore than4,000 items. Tariffs foragricultural products were bound ataceiling rateof122per
centwiththeexception ofcertain major imports including suchitems asfrozen beef, dairy products
andcertain grains. Applied ratesaregenerally below thebound levels. Inregard totrade inservices,
Mauritius made market access commitments toforeign service suppliers inthetourism and
telecommunications sectors.
According tothereport, theresults oftheUruguay Round will,intime, haveaclearimpact
ontheMauritian economy. Thephasing-out oftheMultifibre Arrangement (MFA) will,overtenyears,
gradually erode thepreferential access thatMauritius 'exports oftextiles andclothing enjoy under the
Lomé Convention, while theimplementation oftheAgreement onAgriculture, together withthereform
oftheEUsugar régime, mayweaken theprice thatMauritius receives foritssugar exports.
Thereport states thatsome aspects ofMauritius 'trade policies appear tobequestionable in
terms ofmultilateral principles. Most-favoured-nation principles andnational treatment donotseem
tobefullyobserved andtheuseofbound tariffs toprovide astable trading environment fordomestic
industries andtrading partners isverylimited. Thecommitments made inservices, however, may
helptocreate amore efficient infrastructure fortheeconomy. Thereport concludes that,asitintegrates
more completely intomembership oftheWTO, Mauritius willneedtoensure thatitsdomestic laws
andregulations arebrought fullyintoconformity withmultilateral rules.
Notes toEditors
TheWTO Secretariat 'sreport, together withareport prepared byMauritius willbediscussed
bytheWTO Trade Policy Review Body (TPRB) on17and18October 1995.
TheWTO Trade Policy Review Body conducts acollective evaluation ofthefullrange oftrade
policies andpractices ofeachWTO member atregular periodic intervals andmonitors significant trends
anddevelopments which mayhaveanimpact ontheglobal trading system.
Thetworeports,togetherwitharecordoftheTPRB'sdiscussionandoftheChairman'ssumming
up,willbepublished induecourse asthecomplete Trade Policy Review ofMauritius andwillbe
available fromtheWTO Secretariat, Centre William, Rappard, 154ruedeLausanne, 1211Geneva 21.
Thereports cover developments ofallaspects ofMauritius 'tradepolicies, including domestic
lawsandregulations, theinstitutional framework, trade practices bymeasure andbysector. Since the
WTO came intoforce, the"new areas" ofservices trade andthetrade-related aspects ofintellectual
property rights arealsocovered. Attached arethesummary observations from theSecretariat and
government reports. Fullreports willbeavailable forjournalists fromtheWTO Secretariat onrequest.
Since December 1989, thefollowing reports have been completed: 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, 1992 and1995), Kenya (1993), Korea, Rep.of(1992),
Macau (1994), Malaysia (1993), 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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TRADE POLICY REVIEW BODY
MAURITIUS
Report bytheSecretariat -Summary Observations
Mauritius inWorld Trade
Overthepasttwodecades,Mauritiushasbeentransformedfromaneconomybasedonproduction
andexports ofsugar toarelatively diversified structure, inwhich export-oriented manufacturing
(principally clothing) andservices (including tourism andoffshore facilities) contribute themajor share.
Percapita income, expressed incurrent U.S.dollars, nearly tripled intheperiod 1980-1993, with
particularly rapid growth upto1989.
Therapid growth ofthe1980s wasbased onacombination ofdisciplined macro-economic
policies withaflexibly managed exchange rate,astable political environment, favourable external
economic circumstances including preferential access forsugar andclothing exports totheEuropean
Community (under theLomé Convention) andastrong emphasis onexport promotion. Anample
supply oflabour uptothelate1980s facilitated wage restraint. With fullemployment, theeconomy
hasentered aphase ofconsolidation, aswage increases, haveoutpaced productivity growth anderode
export competitiveness; thechallenge nowfortheMauritian authorities istoovercome theseconstraints
onfurther growth.
Inthesame period, theshare ofexports hasrisenfromunder 50toover60percentofGDP.
TheEuropean Union (EU) stillaccounts forover70percentofmerchandise exports, although the
share oftheUnited States hasincreased considerably since1980andnewmarkets, particularly ineastern
andsouthern Africa, havegrown rapidly. Sugar, which accounted for90percentofexports in1970,
nowrepresents 25percent,while clothing exports haveboomed. Despite adoubling ofearnings from
tourism since 1987, boththecurrent account andtrade balances havetypically beenindeficit, given
thehighimport content ofmanufacturing, heavy expenditure ontransport equipment andsignificant
outlays onpayments forfreight.
Policy Framework
Mauritius isamulti-party parliamentary democracy andbecame aRepublic on12March 1992.
ThePresident, elected byamajority oftheNational Assembly forafive-year term, isHead ofState.
Legislative power isexercised byParliament, composed ofthePresident andtheNational Assembly.
International treaties, including thoserelating totrade, aresigned bythePresident, orhisrepresentative,
andgenerally havetoberatified byParliament. Thelegislative process requires thatinternational
treaties become partofdomestic law.
Primary responsibility fortheformulation oftrade policy lieswiththeMinistry ofTrade and
Shipping, which isalsoresponsible forenforcing theprovisions oftheFairTrading Actandthe
Consumer Protection Act. Consultations between Ministries andtheprivate sector oneconomic and
trademattersareheldintheJointEconomicCommission.TheNationalEconomicDevelopmentCouncil
debates issues anddevelops strategies toimprove efficiency. Billsontradepolicies mustbesubmitted
totheSolicitor-General forvetting, approved bytheCabinet andpassed byParliament. TheMinister
ofFinance mayapprove dutyexemptions andconcessions recommended bytherelevant Ministries
under incentive schemes andhasthepower, rarely exercised, tograntbothdutyincreases andreductions
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onanadhocbasis. ThePrime Minister 'sOffice authorizes allforeign investment, although proposals
forindustrial projects arescreened byacommittee under theMinister ofIndustry.
IntheUruguay Round, Mauritius bound tariffs on76six-digit industrial tarifflines, equivalent
to1.5percentofthetariff, ataceiling level of65percent. Agricultural tariffs havebeenbound
ataceiling rateof122percent,except for17major import items including frozen beef,dairy products,
potatoes, certain temperate fruits, wheat, maize andrice,bound at37percentandseven items, including
tea,at82percent. Applied ratesaregenerally wellbelow bound levels. Anadditional 17percent
levy, applying toallimports except essential items, hasbeenbound under "other duties andcharges";
however, thisdutywasinpractice abolished in1994. Under theGATS, Mauritius made significant
commitments ontourism andtelecommunications.
Mauritius isafounding member oftheWTO. Itisalsoamember oftheLomé Convention,
theCommon Market forEastern andSouthern Africa (COMESA) andtheIndian Ocean Commission.
Mauritius maintains bilateral trade agreements withtheCentral African Republic, Egypt, Hungary,
Madagascar, Pakistan andZimbabwe andisabeneficiary oftheGSPschemes ofAustralia, Austria,
Canada, theEU,Japan, Norway, Switzerland andtheUnited States.
Trade Policy Features andTrends
Thecurrent long-term goalofMauritius 'trade policy isgreater integration oftheexport and
domestic markets andreduction oftheemphasis onexport orientation. Diversification isconsidered
vitalinthelightofchanges intheinternational trading environment; inparticular, theIndustrial
Expansion Actof1993 seeks tomove theeconomy towards higher-value-added production. Since
1992, policy hassought todevelop thetertiary sector oftheeconomy totakeadvantage ofMauritius '
location.
Recent evolution
Inthepastdecade, Mauritius 'traderégime hasbeenextensively liberalized. In1984and1985
quantitative restrictions weredismantled, pricecontrols lifted onallbutessential items andtheexport
taxonsugar reduced. Since theSugar Industry Efficiency Actcame intoforce in1989, theexport
dutyonsugar hasbeen lowered and,asof1994, proceeds have been usedtofinance ownership
restructuring andmodernization within theindustry. Import licensing, which hadapplied tothevast
majority ofimports, waseliminated in1991 forallbutalimited range ofproducts subject tohealth,
sanitary orstrategic controls. Credit policy, previously usedtoallocate preferential financing topriority
sectors, inparticular export industries, wasliberalized in1992 and1993. In1994 athree-column
tariff, consisting ofgeneral, preferential andfiscal duties, wasconsolidated intoonecolumn, the
number oftariff ratesreduced from 60toeight andduties lowered on4,400 items. Atthesame
time, themaximum customs dutywaslowered from 600to100percent, animport levyabolished,
andtheincidence ofspecific duties reduced totwoitems covering thong-type sandals andtheirstraps.
Type andincidence oftrade policy instruments
Thecurrently applied tariff haseight ratesranging from zeroto80percent. Goods subject
toratesof55or80percentimported from"non-scheduled" suppliers (including Japan, Switzerland
andtheRepublic ofKorea) bearanadditional dutyof20percentage points. Thesimple average tariff
onimports from"scheduled" suppliers is29percent. Nearly 20percentoftariffs arezeroandover
twothirds are20percentorless; however, 23percentarelevied at55or80percent. There is
asignificant tendency totariff escalation andpeaks occur particularly onclothing.
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Excise duties areinprinciple applied tobothimports andlocal production ofawide range
ofalcoholic beverages, tobacco products andmotor vehicles; anadditional 40percentage point excise
dutyislevied onvehicles imported from "non-scheduled" sources. There areseveral instances of
significant differences intheapplication ofexcise duties between imported andlocally produced goods.
Whiletariffsareusedbothtoprotectdomesticproducersandasameansofraisingfiscalrevenue
(trade taxes account fornearly halfofgovernment revenue), dutyexemptions designed topromote
export orother priority sectors areextended under various investment incentive schemes inspecific
cases oronadiscretionary basis. Although discretion hasapparently beenreduced, theassociated
lackoftransparency isanunsettling feature ofMauritian trade practice.
Customs valuation isbased onahybrid oftheBrussels Definition ofValue andtheWTO
procedures; Mauritius plans toadapt itslegislation totheWTO provisions by1January 2000. In
practice, Customs accepts thedeclared value inmostcases; additional payments incaseofdoubt are
made onsome 5percentofshipments. Computerized customs processing allows import declarations
tobeprocessed intenminutes andgoods tobecleared within oneortwodays.
Mauritius hasnotapplied anyimport quotas since 1985. However, withthedismantling of
import licensing in1991, certain import prohibitions wereintroduced. Anumber ofproducts require
approval bytheregulatory authorities, mainly forhealth, safety orsecurity reasons. Forcertain foods,
suchaspotatoes andspices, licensing isenforced inorder toprotect self-sufficiency objectives inthe
domestic market.
Mauritius hasanumber ofState-trading enterprises andsoleimporters. TheState Trading
Corporation istheonlyauthorized importer ofration (20-45 percentbroken) rice,basmati rice,wheat
flour andpetroleum products. TheAgricultural Marketing Board holds monopoly import privileges
foragriculturalproductswhichcompetewithdomesticallyproducedgoodsforwhichtherearemarketing
schemes andguaranteed prices. Importation ofcement isshared between theStateTrading Corporation
andtheprivately owned Mauritius Portland Cement Company. Inaddition, theTeaBoard, theTobacco
BoardandtheMeatAuthoritycontrolimportswithintheirjurisdictionandtheMauritiusSugarSyndicate
isthesolesupplier ofsugar fordomestic consumption.
Price controls cover ninelocally produced and32imported products, including rice,flour,
sugar, potatoes, onions, infant milkpowder andanumber ofother manufactured items. Prices are
fixed, according totheauthorities, toensure supply atreasonable prices, including where lackof
competition makes consumer protection necessary. Theauthorities havestated theirintention tophase
outprice controls.
InMarch 1995, public tendering procedures werecentralized. National firms donotreceive
preferential treatment inpublic procurement contracts except where authorized byforeign development
agencies. Foreign suppliers havetypically obtained between 15and20percentofcentral government
contracts.
Mauritius isintheprocess ofrevising itshealth andsanitary regulations andadopting
international standards inallrelevant areas. Testcertificates issued bystandards organizations from
originating countries arerecognized. Safety regulations on,forexample, electrical equipment have
beenbased ontheexporting country 'scertificate. TheMauritius Telecommunications Authority type
approves alltelecommunications equipment andhasnotconcluded anymutual recognition agreements
forcertification, although foreign typeapproval maybeaccepted. Control offood, drugs andchemicals
withpotential adverse effects onhealth isunder thepurview oftheMinistry ofHealth. Certificates
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ofanalysisfromrecognizedforeigninstitutionsareacceptedbuttheHealthInspectoratesamplesimported
foodtoensure thatshipments comply withlocalfoodregulations.
Withtheremoval oftheexport dutytraditionally collected onsugar, therearenoexplicit taxes
onexports. There arenodirect export subsidies butMauritius grants special taxtreatment, implicitly
based onexport performance, topromote investment inexport-oriented sectors.
Astrong institutional framework exists toputacomprehensive environment policy intopractice.
Mauritius hassigned theprincipal multilateral environmental agreements. Government policy isto
apply the"polluter pays" principle aswidely aspossible. Bylaw,mostneweconomic activities with
apotentially significant impact ontheenvironment mustfileanenvironmental impact assessment for
approval. Conservation measures, suchasabanonthesaleorexport ofcoralandshells andprohibitions
onspear fishing, havebeenputintoeffect. Special taxcredits andaccelerated depreciation allowances
areavailable tointroduce anti-pollution equipment andtechnology designed toprotect theenvironment.
Since 1976, Mauritius hasbeenamember oftheWorld Intellectual Property Organization
(WIPO) andisasignatory totheParis andBerne Conventions. TheCopyright Act,enacted in1986,
wasamended in1988 tobring theperiod ofprotection intoconformity withtheBerne Convention,
andtheNational Computer Board isreviewing theActtoensure adequate protection ofcomputer
programmes. Patent holders mayfilesuitagainst anyinfringement inthedomestic courts. Under
theCustoms Act1988 (Section 63), Customs havetheright toprohibit imports thatviolate trade
mark laworfalsely indicate origin.
Although exclusive agency rights maybegranted byoverseas suppliers, parallel imports are
allowed. Legislation toprotect consumers from fraudulent andanti-competitive practices hasbeen
introduced. Exclusive salesagreements ormonopolies likely toprevent ordistort competition inthe
production andsupply ofgoods andservices areprohibited. However, sofarnocompetition authority
exists thatmight investigate abuses ofmarket power.
Sectoral policies
TheMauritian economy rests onfourpillars; sugar, which stillprovides 25percentof
merchandise export earnings, clothing exports, tourism andmore recently, offshore services. Apart
fromthesugar sector, which hashistorically beentaxed inorder tofinance overall development, the
Governmenthasusedfiscalinstruments,creditpolicyanddutyexemptions,behindhightariffprotection,
topromote export andpriority sectors.
Mauritius presents many aspects ofadualeconomy. Theintroduction in1970 ofExport
Processing Zone (EPZ) status extended toexport industries anumber ofincentives designed toattract
foreign investment. Since themid-1970s, areduced corporate taxrateof15percenthasbeengranted
forthelifeoftheexport company. Customs dutyandsales taxareexempted on"scheduled" raw
materials andequipment. Over time, dutyandtaxexemptions havebeen extended tonon-sugar
agriculture, hotel services, Pioneer Status enterprises ("infant industries") and,mostrecently, tothe
fisheriessector.Withaviewtobeginningtoredressthedualismencouragedbysuchschemes,incentives
were consolidated, butnotrationalized, under theIndustrial Expansion Actof1993 aimed atthe
integration oftheEPZandnon-EPZ sectors.
TheIndustrialDevelopmentCommitteescreensapplicationsforinvestmentinindustriesoperating
under incentive schemes. Foreign investment isparticularly encouraged inexport andPioneer Status
enterprises. Theinvestment promotion agency, MEDIA, promotes investment inpriority sectors,
identified asactivities thatwillaccelerate technological development inmanufacturing. Import duties
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havebeeneliminatedonproductsconsideredconducivetothedevelopmentofhigh-technologyorpriority
sectors. Shipments ofelectronics products, asapriority sector, areeligible forapartial rebate of
freight charges.
TheEPZDevelopment Authority provides technical advisory andconsulting services aimed
atimproving quality in,andhence theinternational competitiveness of,theclothing industry. Exports
ofcertain items ofclothing arerestricted intheUnited States andCanadian markets, although
quantitative limitations appear torepresent aconstraint foronlyafew. Theadministrative procedure
forallocating quotas todomestic producers reduces thescope forflexibility among manufacturers.
TheExport Service Zone Scheme, inexistence since 1981, initially extended taxincentives
toanumberofserviceindustries,althoughlimitingforeigninvestmentto30percentequityparticipation.
Inthelastfewyears, theservices sector hasbeengiven aboost withtheestablishment in1989 ofa
frameworkforoffshorebankingandotheroffshoreservices,inparallelwiththeliberalizationoffinancial
markets. Foreign anddomestic banks areaccorded equal treatment; foreign banks mayestablish
bothsubsidiaries andbranches. Tourism, fromwhich Mauritius derives substantial foreign exchange
earningsis,despiteconcernsaboutenvironmentaleffects,stillverymuchagrowthindustry,withforeign
investment playing animportant rôleinitsdevelopment, although certain tourism-related activities
arelimited tonationals. Mauritius participates intheGATS Negotiating Group onBasic
Telecommunications andhasscheduled specific commitments inthesector, primarily allowing for
interconnection withthepublic switched network.
Temporary measures
Mauritius currently hasneither anti-dumping, countervailing, norsafeguard legislation butthe
Government isconsidering theintroduction ofsuchlegislation inviewoftherecent tariff reductions.
In1994, atemporary dutyincrease onironbarsfrom40to50percentwasaimed atcountering alleged
dumping.
Trade Policies andForeign Trading Partners
Mauritius owes much ofitsrecent economic success topreferential market access accorded
byitsmajor trading partner, theEuropean Union. Inrecent years, withaneyeonthefuture, Mauritius
hasshifted itsattention toitsstrategic location, focusing onitspotential forbecoming aregional trading
centre. Thus, Mauritius hasestablished theonlyfreeport (primarily handling re-exports) intheIndian
Ocean andtrade withCOMESA partners hasexpanded rapidly.
Theresults oftheUruguay Round will,intime, haveaclearimpact ontheMauritian economy.
Thephasing-out oftheMultifibre Arrangement (MFA) will, overtenyears, gradually erode the
preferential access thatMauritius 'exports oftextiles andclothing enjoy under theLomé Convention,
while theimplementation oftheAgreement onAgriculture, together withthereform oftheEUsugar
régime, islikely toweaken theprice thatMauritius receives foritssugar exports; further adjustment
willtherefore berequired.
Some aspects ofMauritius 'trade policies appear tobequestionable interms ofmultilateral
principles. M.f.n. andnational treatment donotseem tobefullyobserved; theuseofbound tariffs
toprovide astable trading environment fordomestic industries andtrading partners isverylimited;
andtheuseoftaxincentives anddutyexemptions forinputs notconcerned intheproduction process
appearstocontradictexistingrulesonexportsubsidies.Thecommitmentsmadeinservicesmayproduce
amore efficient infrastructure fortheeconomy. Asitintegrates more completely intomembership
oftheWTO, Mauritius willneedtoensure thatitsdomestic lawsandregulations arebrought fully
intoconformity withmultilateral norms.
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TRADE POLICY REVIEW BODY
MAURITIUS
Report bytheGovernment -Summary Extracts
Introduction
Mauritius isatropical island ofvolcanic origin withalandareaofapproximately 1865 sq.
kilometres.Agricultureoccupies48%ofthetotallandarea,woodlandtakesupsome35%whilebuilt-up
areaclaims 13%. Allarable lands arefullycultivated andarebeing encroached uponbydemographic
pressure forhousing purposes andindustrial demand formore space.
With itssmall size,bothinterms oflandmass andpopulation (1.1million inhabitants), lack
ofnatural resources andtheinherent disadvantages ofanisland statecharacterised byremoteness from
boththesource ofsupply ofitsrawmaterials andthemarkets foritsexport products, Mauritius has
todepend heavily ontrade foritseconomic development andsocial progress.
Mauritius isexposed tothevagaries oftheweather. Usually, theisland isvisited between
December andApril bycyclones which affect thecountry, especially sugar intheagricultural sector.
During thepre-cyclone period, theisland alsosuffers fromdroughts which again haveanadverse effect
onthatsector.
However,thegeographyoftheislandprovidessomenaturaladvantages,suchasbeautifullagoons
andbeaches withtemperature ranging from21ocinwinter toanaverage of29ocinsummer which have
helped thetourism sector todevelop andexpand.
Since achieving independence in1968, Mauritius hasimplemented anumber ofnational
development plans todevelop itseconomy. Itisatpresent implementing itssixth plan.
Overthelasttwentyyears,Mauritiushasundergonemajorstructuralchangesfromanagricultural
monocrop economy withagrowing population, highunemployment andlowpercapita income toa
generally satisfactory position offairly stable population, nearfullemployment andadiversifying
economy withemphasis ontheservices sector. Inthisprocess Mauritius hasbeen helped byits
membership ofcertain preferential trade agreements.
Theeconomy ofMauritius hasbeendominated bysugar asthemain croptillthelate1960s.
Mauritian sugar, infact,hashadaguaranteed market andenjoyed preferential prices through various
agreements suchastheImperial Preference Regimes, theCommonwealth Sugar Agreement andthe
Sugar Protocol annexed totheLomé Convention. During theperiod 1964-72, sugar accounted for
over25%ofgross domestic product (GDP), whereas thesmall manufacturing sector, excluding the
sugar industry, contributed about 7%toGDP. Thissector consisted ofanumber ofsmall industries
engaged inthefood, beverages, tobacco and,footwear sectors andtherepair andassembly ofmachinery
andtransport equipment.
Thestable levelofearnings which Mauritius derives fromitsmembership oftheSugar Protocol
haveunderwritten thesocio-economic development ofMauritius. These earnings havecontributed
towards thefinancing ofthemanufacturing sector especially intheEPZ. Thisprocess hasbeenassisted
bythepreferential access which Mauritius enjoys intheEUmarkets foritsmanufactured products
under thesuccessive Lomé Conventions. Inaway, themembership ofMauritius tothese important
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trade andaidinstruments hashelped mitigate theinherent disadvantage which Mauritius suffers as
asmall island state.
In1970GovernmentlaunchedtheExportProcessingZoneSchemetoencouragethedevelopment
ofthemanufacturing sector. TheEPZhastransformed theeconomy where manufacturing forexport
hasbecome theleading sector. Actually theEPZaccounts for67%oftotalexport earnings andprovides
employment tosome 91,000 people ofwhich 70%arefemales. However, EPZactivities arehighly
concentrated inthemanufacture oftextile products which areprone tovarious adverse effects onthe
international market.
Moreover, atpresent theEPZindustries faceanumber ofproblems suchasthevulnerability
ofthegarments industry todemand fluctuations intheU.S.andtheEEC; shortage oflabour onthe
localmarket; andtheinternational competitiveness ofMauritian exports. Infact,themanufacturing
sector hasreached aturning point owing tonewdevelopments intheinternational trade scenario
especially inthewake oftheGATT Agreement, theNorth American FreeTrade Agreement (NAFTA),
thecreation ofSingle Europe andtheadvent ofmarket economy intheEastandCentral European
countries, among others.
Itisfeared thattheagreements resulting fromtheGATT Uruguay Round willseriously erode
thetrade preferences which Mauritius receives under theLomé Convention. Itwillalsobeaffected
asanet-food importing country. Unless the"acquis" under thepreferential agreements arepreserved
andmeasures taken onthelocalfronttomaintain thecompetitiveness ofMauritian products ontheir
traditional markets, themanufacturing sector ismost likely tofacedifficulties.
Conscious ofthefactthatMauritius cannot sustain itseconomic growth byrelying solely on
theagricultural andmanufacturing sectors, itisimplementing strategies fordiversifying theindustrial
baseandpromoting theservices sector, inparticular. Tourism andtheoff-shore business sector are
alsoexpected toplayanincreasingly important rôle.
Theshare oftheservices sector intheGross Domestic Product (GDP) ismore than50%and
accounts for35%ofthetotaltrade. With aviewtopromoting theservices sector, Government has
created theFreeport Authority, theMauritius 0ffshore Business Activities Authority inorder toturn
Mauritius intoaninternational financial andbusiness centre. Other measures include thelaunching
oftheStock Exchange ofMauritius (SEM) withtheobjective offurther democratising theeconomy
andtoeffectively regulate theissuance ofsecurities andtheirtrading generally andtopromote the
financial centre inparticular.
Toovercome itsinherent development constraints andinorder tobenefit fromeconomics of
scaleandforeigninputsforitsindustrialtransformation,Mauritiusisactivelypromotingandparticipating
inregional cooperation andeconomic integration. Itforms partofsome regional groupings inAfrica.
Italsoproposes toplayaleading roleinthecreation oftheIndian Ocean Rimgrouping.
Theauthoritiesconsiderstrongandsustainedeconomicgrowthasbeingcentraltothemaintenance
ofpolitical andsocial stability inamulti-racial society likethatofMauritius. Theeconomic well-being
ofthepopulation, especially theimprovement ofitsstandard ofliving, hasalsostrengthened multi-party
democracy inMauritius.
Theobjective oftheGovernment ofMauritius istoimprove thequality oflifeofthepopulation
through asustainable levelofexport-led economic growth andtheparticipation oftheentire population
intheprocess ofeconomic development.
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Objectives ofTrade Policies
Mauritius practises anopentrading system andhasalongtradition ofinternational trade.
Thetrade policies ofMauritius aregeared towards securing theimport requirements ofits
population andtheprotection ofconsumer interest aswellaspromotion ofMauritius overseas asa
business centre from where export andre-export activities canfullytakeplace.
Tothisend,theprocedures fortheconduct ofinternational tradehavebeensignificantly relaxed.
Price controls exercised untiltheearly 1980'shavebeendismantled withexception made forcertain
sensitive items. Customs duties havebeenreduced onalmost allimported goods withtheexception
ofafewitems. Inrespect oftheagricultural sector, dueconsideration isgiven tothespecificity of
Mauritius, asmall island state, inthedetermination ofcustoms duties.
Import andexport licensing hasbeenabolished withtheexception ofafewproducts thatrequire
ameasure ofcontrol. Control onforeign exchange regulation hasbeenrelaxed tofacilitate international
financial transactions. Steps arebeing taken tofurther facilitate tradepractices through theinstallation
oftheTradenet system which willprocess trade documentation electronically andprovide up-to-date
information ontrade.
Theultimate objective ofMauritius istoestablish adynamic andoutward-looking economy.
Thisobjective isexpected tobeachieved byaliberal economic policy andthrough theliberalisation
offoreign trade. Inthisrespect, Mauritius willavail itself fullyoftheopportunities offered inthe
Lomé Convention (Title IV:General Provisions forleastdeveloped, landlocked andisland ACPStates)
andtheGATT Uruguay Round Accord (Articles 6(4)(b), 9(4)and15oftheAgreement onAgriculture),
wherein provision ismade forspecial anddifferential treatment. Moreover, thelegislative and
administrative framework governing theagricultural sector inMauritius privileges those categories
ofproducers whoarevulnerable, bearing inmind thatMauritius isprone tonatural disasters.
Thestrategy ofopenness ofitseconomy isaimed atallowing Mauritius tobecome acompetitive
trade partner using fullyitscomparative advantage andtointegrate itself intheworld trading system
whilst atthesame timeensuring thatallcategories ofproducers aregiven afairdealandachance
toparticipate inthedevelopment process.
Relevant Background Against Which theAssessment ofTrade Policies hasbeen Carried Out
Wider Economic andDevelopmental Needs, Policies andObjectives
Theeconomic development ofMauritius during thepasttwenty-five years orduring thefirst
phase ofindustrial development maybeattributed tothree main factors namely:
(i) important amounts offoreign investment attracted bythecountry 'spolitical andsocial stability
aswellasthestaple levelofforeign exchange earnings generated bytheexport ofsugar under
theSugar Protocol;
(ii) anabundant andliterate reserve oflabour; and
(iii) preferential market access to:
(a) theEuropean Union under theLomé Convention and
(b) theUSforsugar under aquota system andtextile under abilateral trade agreement.
END