Mauritius WT/TPR/S/5
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II. TRADE POLICY REGIME: FRAMEWORK AND OBJECTIVES
(1) General Framework
1. After settlement bytheDutch (1638 to1710), Mauritius wascolonized bytheFrench in1766,
andin1810, following theNapoleonic wars, theisland came under British rule. Under theTreaty
ofParis(1815)theFrenchlegalsystemwaspreservedandculturalrightssafeguarded.In1885Mauritius
adopted itsown Constitution allowing forrepresentative government. Independent from the
United Kingdom since 12March 1968, Mauritius isamulti-party parliamentary democracy which,
following constitutional amendments, became aRepublic on12March 1992.
2. ThePresident, whoistheHead ofState, iselected byamajority ofallthemembers ofthe
Assemblyforatermoffiveyears.ThePresident,appointsasPrimeMinisterthememberoftheNational
Assembly whoappears tohimbestabletocommand thesupport ofthemajority oftheAssembly.
TheDeputy Prime Minister, Attorney-General, andother Ministers, ofwhom there maynotbemore
than24,areappointed bythePresident, ontherecommendation ofthePrime Minister. TheCabinet,
consisting ofthePrime Minister andtheCouncil ofMinisters, iscollectively responsible totheNational
Assembly. TheAssembly, whose termisfiveyears, consists of62elected representatives; inaddition,
uptoeight"bestlosers"maybeappointedtoensurefairandadequaterepresentationofeachcommunity.1
3. Legislative power isexercised byParliament, composed ofthePresident andtheNational
Assembly. Bills, except those relating totheConstitution, require onlyasimple majority. Regulations
aremade under specific provisions provided forinanActandarealsopublished asGovernment Notices
intheGovernment Gazette. TheConstitution istheSupreme Lawofthecountry. Amendments
regarding some provisions oftheConstitution require athree-quarter majority and,inrespect ofother
provisions, atwo-thirds majority, intheNational Assembly.
4. International treaties, including those relating totrade, aresigned bythePresident, orhis
representative and,generally, havetoberatified byParliament. Thelegislative process requires that
international treaties become partofdomestic law. Government has,inprinciple, agreed toenact
necessary legislation fortheincorporation oftheWTO Agreement intodomestic legislation.
5. Thejudiciary inMauritius consists oftheSupreme Court, aCourt ofCivil Appeal, aCourt
ofCriminal Appeal andlower courts. TheChief Justice oftheSupreme Court isappointed bythe
President following consultations withthePrime Minister.2
(2) Structure ofTrade Policy Formulation andImplementation
6. Primary responsibility fortheformulation oftrade policy lieswiththeMinistry ofTrade and
Shipping, which isalsotheauthority empowered tosigntrade agreements.3Periodic consultations
1TheConstitution; andEconomist Intelligence Unit(1995).
2ThePresident alsoappoints anOmbudsman, whocannot beagovernment official. Thisoffice investigates
complaints andallegations ofinjustice, fraud orcorruption brought against anyofficer orauthority intheexercise
oftheir administrative function.
3TheMinistry ofTrade andShipping consists ofsixdivisions: Foreign Trade, Import, Prices andConsumer
Protection, Legal Metrology, Industrial Property andShipping.WT/TPR/S/5
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areheldwithother Ministries, including Finance, Economic Planning andDevelopment, Agriculture,
Health, Industry andExternal Affairs, aswellastheDepartment ofCustoms andother public agencies.
7. Theprivate sector, including theChamber ofCommerce andIndustry, contributes tothe
formulationoftradepolicy,throughdirectconsultationswiththeMinistryandthroughtheJointEconomic
Council which meets toco-ordinate economic policy, including trade.4
8. There arenopermanent advisory orreview bodies empowered toconsider trade policies.5
However, sub-committees weresetup,under theaegis oftheMinistry ofTrade andShipping, inthe
course oftheUruguay Round toco-ordinate anegotiating position. These committees stillmeetto
deliberate thelegislative andpolicy changes required tomeetWTO obligations andadopt appropriate
policies intheareas oftextiles, agriculture, services, intellectual property andtheimplementation of
theUruguay Round Final Act. AnIndustrial Council, withrepresentatives fromvarious government
agencies,advisetheMinistryofIndustryontheappropriateincentiveframeworktodeveloptheindustrial
sector.IncentivesavailableundertheAgriculturalDevelopmentCertificateSchemearesubjecttoreview
toensure thatobjectives aremetbytheMinistry ofAgriculture andNatural Resources whose
recommendations aresubmitted totheMinistry ofFinance forapproval. Ajointprivate/public High-
Powered Committee advises theGovernment onagriculture policy.
9. Whenlegislationisrequiredtoimplementtradepolicies,BillsmustbesubmittedtotheSolicitor-
General forvetting, thenapproved bytheCabinet andpassed byParliament. Anexamination to
determine which trade lawsneedtobebrought intoconformity withWTO obligations has,todate,
identified theCustoms, Copyright, Patent andTrade Mark Actsforreview (Table II.1liststhemain
lawsrelated totrade).
10. TheSchedules totheCustoms Tariff Act1970, asamended in1994, setoutcustoms duties
andspecific concessions andexemptions. According toSection 15oftheCustoms Tariff 1988, the
Minister ofFinance mayamend theSchedules byregulation. Adhoctariff changes require onlythe
approval oftheMinister, whose discretionary power isusedsparingly, andcome intoforce upon
publication intheGovernment Gazette. Inaddition totheexisting tariff exemptions andconcessions
intheTariff Act,temporary exemptions orconcessions onduties mayberequested fromaCommittee
within theMinistry ofFinance. IftheCommittee 'srecommendations fortheconcession isapproved,
theconcessional ratemaybeissued asanamendment totheCustoms Schedules.
11. Incentiveschemesinvolvingtariffreductionsorexemptionsmadeavailableonspecifiedproducts
formanufacturing firms arerecommended bytheMinistry ofIndustry andIndustrial Technology, those
under agricultural incentive schemes arerecommended bytheMinistry ofAgriculture. All
recommendations require approval bytheMinistry ofFinance prior toentering intoforce.
4TheJointEconomicCouncil(JEC)isajointprivatesector/Governmentbodydesignedtopromotetheinterests
oftheprivate sector andfreeenterprise inMauritius by,interalia,putting forward recommendations regarding
legislation andother measures. Inaddition totheMauritius Chamber ofCommerce andIndustry, itsmembership
includestheMauritiusChamberofAgriculture,theMauritiusSugarProducers'Association,theMauritiusExport-
ProcessingZoneAssociation,theAssociationdesHôteliersetRestaurateursdel'IleMaurice,theMauritiusBankers'
Association, theInsurers 'Association andtheMauritius Employers 'Federation.
5ANational Economic Development Council, withmembers appointed bythePrime Minister, acting intheir
personal capacity, provides aforum fordebate onvitaleconomic issues withamandate todevelop a"strategic
plan" forimproving economic performance.Mauritius WT/TPR/S/5
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Table II.1
Trade lawsandregulations inMauritius
Customs procedures andvaluation TheCustoms Act1988
Customs Regulations 1989
TheCustoms Tariff Act1994
Taxes andcharges TheSales TaxAct1982
TheExcise Act1994
Export duties TheSugar Act1959
TheSugar Industry Efficiency Act1988
TheSugar Industry Efficiency Amendment Act1993
Import andexport control TheSupplies Control Act1974
Standards andregulations TheInternational System ofUnits Act1983
TheMauritius Standards Bureau Act1993
TheFood Law1995
TheLegal Metrology Act1985
Industrial incentives TheFreeport Act1992
TheIndustrial Expansion Act1993
Competition law FairTrading Act1979
Consumer Protection Act1991
Source: Information provided bytheauthorities.
(3) Trade Policy Objectives
(i) General
12. Formore thantenyears thetrend ofeconomic policy inMauritius hasbeentowards promoting
aliberal trading environment withastrong emphasis onexport orientation. In1992 thelegislative
andregulatory framework foroffshore andfree-port activities wasputinplace inorder todiversify
theeconomy bygenerating backward linkages intolocalbusiness services, andtoposition Mauritius
asaregional trading centre. Regional (inter-African) trade co-operation isviewed asanimportant
vehicle forincreasing competitiveness andexpanding markets.
13. TheGovernment'soverallaimisthecontinuedindustrialization,modernizationanddiversification
oftheeconomybycreatinganenvironmentfor"flexiblespecialization",althoughitmaintainsapragmatic
approach towards adopting policies.6Thecurrent long-term goaloftrade policy within thecontext
ofoverall economic policy istheintegration oftheoffshore anddomestic markets, agoalwhich will
tendtoreduce theovert emphasis onexport orientation. Thistrend wasinitiated withtheadoption
oftheIndustrial Expansion Act(1993) which explicitly extends previous export incentives tolocal
industry (Chapter IV(4)(ii)). AnAdHocCommittee, within theMinistry ofFinance, isincharge
oftariff restructuring andintends tofurther reduce dispersion while, according totheauthorities,
deliberately building intariff escalation topromote domestic value added. Thesignificant revenue-
generating effects oftariffs forgovernment income represents apotential constraint totheprocess of
dutyreduction.
6Republic ofMauritius (1993 a),p.145WT/TPR/S/5
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(ii) Mauritius intheUruguay Round
14. Theauthorities notethatduring theUruguay Round negotiations Mauritius sought tosafeguard
itsrights under existing trade agreements andtosecure special anddifferential treatment asasmall
island developing country.
15. Mauritius bound ratesonten(four-digit) industrial products tariff items (or76six-digit tariff
lines, equal to1.5percentofitstariff) (Chapter IV(2)(ii)(b)); bindings oncustoms duties areatceiling
levels, setat65percent,andabound rateof17percenthasbeenscheduled under "other duties and
charges".
16. Inagriculture, Mauritius hasmade fulluseoftheexemptions allowed todeveloping countries.
Accordingly, while Mauritius doesnothavespecific reduction commitments inrespect ofdomestic
support andexport subsidies, itisnevertheless constrained bythegeneral disciplines under theUruguay
Round Agreement onAgriculture; forexample, theuseofexport subsidies other thanthose under
theprovisions ofSpecial andDifferential Treatment, suchascertain marketing-cost reduction and
transportation measures, isprohibited. Intheareaofagricultural import tariffs, allrateshavebeen
bound ataceiling level of122percent, withtheexception of17items ofmeat, dairy products,
vegetables, fruitandgrain bound at37percentandseven items, covering teaandtropical orpreserved
fruitandjuice, bound at82percent. According totheauthorities, these bindings afford protection
toteaandagro-industry products andtopoultry andsugar.7
17. Under theGeneral Agreement onTrade inServices (GATS), Mauritius made significant
commitments intourism andtelecommunications (Chapter V(4)(i) and(ii)). Intelecommunications,
market access isgoverned bythelicensing requirements oftheTelecommunications Act1988. Under
itscommitments, Mauritius isobliged tomaintain transparency andtoallow interconnection withpublic
networks andthecross-border movement ofinformation.
18. TheMauritian authorities aregenerally satisfied withtheresults oftheUruguay Round,
particularly thestrengthened trade rules anddisciplines. Nevertheless, theyhavesome concern that
thephasing-out oftheMultifibre Arrangement (MFA) willerode thepreferential access thatMauritius '
exports oftextiles andclothing enjoy under theLomé Convention intotheEUmarket; andthatthe
implementation oftheAgreement onAgriculture, together withthereform oftheEUsugar régime,
willweaken theprice Mauritius receives foritssugar exports totheEU.Theauthorities alsosuggest
thatasanetfoodimporter Mauritius could beadversely affected bythehigher foodprices thatmight
result from theAgreement onAgriculture.
(iii) Sectoral
19. Mauritius 'policy objectives intheagricultural sector include itsmodernization andincreased
efficiency, including theprovision ofinputs atreasonable prices, anddiversification, while increasing
theprofitability ofthesugar sector inlightofpossible reductions inguaranteed prices forexports to
theEU. Major policy instruments adopted towards these goals include fiscal incentives (corporate
taxreductions, dividend anddutyexemptions onimported equipment) available since1983fornon-sugar
agriculture under theAgricultural Development Incentive Scheme, andreduced export duties onsugar
(Chapter IV(3)(ii)).
7Republic ofMauritius (1994b).Mauritius WT/TPR/S/5
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20. Inorder toencourage local production andreduce foodimports, theGovernment hasset
guaranteed prices forcertain foodcrops. State-trading operates inthemarketing ofimported andlocally-
grown foods, several ofwhich areunder pricecontrol, asareimports ofstaple riceandflour. Consumer
subsidies forthese latter products wereeliminated in1993butreinstated in1995. Useoftheinterlines
ofsugar canefields fortheproduction offoodcrops forlocalconsumption hasbeensuccessful incertain
cases, increasing thereturn toagricultural land, andtheexport ofhorticultural crops hasbeenassisted
bytheintroduction ofanairfreight rebate scheme in1991.
21. With anindustrial sector dominated bylabour-intensive clothing manufactures, andthe
Government 'spastemphasis onexport-led growth, diversification isconsidered vitalinlightofchanges
intheinternational trading environment. Current policies focus lessonproviding fiscal advantages
solely onthebasis ofexport performance andmore ontheintegration oftheindustrial base. Various
incentive schemes, consolidated under theIndustrial Expansion Act1993, extend fiscal andduty
exemptions todomestic industries adopting skill- orcapital-intensive technologies orthose catering
toEPZfirms(ChapterIV(4)(ii)).Measurestoenhancelabourproductivityincludeagovernment-assisted
skills training programme (Chapter IV(4)(i)). Electronics, printing andjewellery havebeenidentified
aspriority sectors where Mauritius maydevelop acompetitive advantage, andaccordingly, additional
financial benefits areaccorded tothose industries (Chapter V(3)(ii)(b)). Inthelargest manufacturing
sector, textiles andclothing, theplanistofoster inter-linkages within thesector sothatgreater
specialization, economies ofscaleandproduct differentiation canoccur. Measures arebeing adopted
toreorient thesector towards more up-market goods, pursue amore aggressive marketing strategy,
upgrade skills andrestructure production facilities toencompass higher technology andautomation.
22. Bysetting uptheoffshore business andfree-port authority in1992, Mauritius istrying totake
advantage ofitslocation indeveloping thetertiary sector ofitseconomy. Itsgeographic situation in
theIndian Ocean lends itselftofree-port activities, trans-shipment andre-export, anditsdistance from
other markets doesnotpresent acostimpediment totheprovision ofoffshore financial services. In
addition tofree-port andoffshore services, theGovernment seeks toencourage thedevelopment of
support services toindustry, liberalize thefinancial sector, interalia,through theeventual merging
ofonshore andoffshore banking facilities, assist thegrowth oftourism through incentives towards
hoteldevelopment andmodernization, improve regional transportation linksandadopt market opening
measures inthetelecommunications sector.
(4) Trade Agreements
(i) Multilateral agreements: GATT andtheWTO
23. Ongaining independence on12March 1968, Mauritius applied theGATT defacto; on
2September 1970 Mauritius succeeded totheGATT under Article XXVI:5 (c).8Mauritius signed
theMarrakesh Agreement andtheFinal Actandbecame afounding member oftheWorld Trade
Organization. ASub-Committee onthelegalaspects oftheWTO Agreement isassessing theneed
foradapting theprovisions ofdomestic legislation toconform toWTO obligations.
8BISD 18S/23; 16S/12.WT/TPR/S/5
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(ii) Regional agreements
(a) TheLomé Convention
24. Themostimportant inter-regional agreement towhich Mauritius isasignatory istheEEC-ACP
Agreement (known astheLomé Convention) between 70African, Caribbean andPacific (ACP) States
andtheEuropean Union.9
25. Under theSugar Protocol annexed totheLomé Convention, Mauritius benefits fromguaranteed
prices (significantly higher thanworld prices) forasetvolume ofsugar exported totheEU
(Chapter V(2)(i)). Clothing exports which meettherules oforigin enjoy dutyandquota-free access
under theConvention. Lomé IV,covering aten-year period beginning on1March 1990, improved
theprovisions ofaccess byreducing restrictions oncertain agricultural products, e.g.molasses, fruit
andvegetables.10Thegradual abolition ofquotas onrumandaliberalization oftheorigin criteria
onfishery products, along withanautomatic derogation from thequota forcanned tuna, represent
other improvements ofparticular relevance toMauritius.
26. Anadditional aspect oftheLomé Convention isthefinancing made available bytheEuropean
Union, primarily under itsmain assistance vehicle, theEuropean Development Fund (EDF). Under
LoméIII(1986-90),theEDFprogrammedECU31millionforindustrialandagriculturaldiversification
inMauritius. Under Lomé IV,ECU 34million (outofatotalECU 10billion forACP States) has
beenallocated toMauritius tocontinue these diversification projects, ofwhich 14million isallocated
toirrigation, 5million toroadconstruction and4million tosolidwaste management. TheEuropean
Investment Bank (EIB) hasallocated afurther ECU 20million; these commercial loans tendtobe
channelled totheDevelopment Bank ofMauritius.
(b) TheCommon Market forEastern andSouthern Africa
27. Mauritius isalsoaparty totheregional co-operation agreement which promotes tradebetween
eastern andsouthern African states. TheCommon Market forEastern andSouthern Africa (COMESA)
which came intoforce inDecember 1994 replaced thePreferential Trade AreaforEastandSouthern
Africa (PTA) (Table II.2). Under theCOMESA Treaty, member States haveundertaken tophase out
allcustoms duties andequivalent charges onimports from members bytheyear2000 andestablish
acommon external tariffby2004.11Atarget wassetformember States toapply a70percentreduction
rate(reduction fromthe1984baserate)byOctober 1994. Mauritius applied thisratefrom25November
1994.
9Mauritius ratified theYaoundé Convention in1970, thefirstCommonwealth country toestablish formal
trade relations withtheEEC, twoyears before Britain joined.
10GATT (1991), p.69.
11Initially, thePTA applied tariff reductions onlyonselected products; thiswasextended toallgoods in
1991. Itshould benoted thatneither thePTA northeCOMESA Treaty have beennotified totheGATT/WTO.Mauritius WT/TPR/S/5
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Table II.2
Main trade-related elements oftheCOMESA Treaty
Chapter Content
Co-operation inTrade Liberalization andDevelopment
(Chapter 6)Reduction andelimination oftariff andnon-tariff barriers;
establishment ofacommon external tariff andrules oforigin; rules on
dumping, subsidies, safeguard measures andanti-competitive practices;
m.f.n. principle andnational treatment; trade promotion.
Monetary andFinancial Co-operation (Chapter 10) Clearing andpayment system (e.g. Clearing House); harmonization of
monetary andfiscal policies; formation ofanexchange rateunion;
freemovement ofcapital.
Common Market Customs Co-operation (Chapter 7) Customs co-operation, harmonization ofcustoms procedures and
suppression ofillicit traffic.
Simplification andHarmonization ofTrade Documents
andProcedures (Chapter 9)Simplification andharmonization oftrade documents.
Least-Developed Countries andEconomically
Depressed Areas (Chapter 22).Measures tostrengthen thecapacity oftheleast-developed member
States andeconomically depressed areas, particularly through
encouraging investment, promoting newtechnologies, andsupporting
theactivities ofChambers ofCommerce andIndustry.
Development ofthePrivate Sector (Chapter 23) Strengthening oftheprivate sector; co-operation among Chambers of
Commerce.
Investment Promotion andProtection (Chapter 26) Promotion andprotection ofprivate investment; double taxation
agreements; multilateral investment agreements.
FreeMovement ofPersons, Labour, Services, Right
ofEstablishment andResidence (Chapter 28)Progressive liberalization ofmovement ofpersons, labour andservices
within theCOMESA area.
Sanctions (Chapter 31) Enforcement ofobligations under theTreaty.
Implementation andMonitoring Arrangements
(Chapter 32)Periodic monitoring oftheimplementation oftheTreaty.
Economic Community forEastern andSouthern Africa
(Chapter 34)Progressive transformation intoanEconomic Community.
Source: WTO Secretariat.
28. Non-tariff barriers onimports fromfellow members aretobeeliminated uponentry intoforce
oftheTreaty. Exceptions arepossible onsafety andsecurity grounds and,foraspecified period to
bedetermined bytheCOMESA Council ofMinisters, forreasons ofinfant industry protection and
intheevent ofbalance-of-payments difficulties. Safeguard measures areallowed foraperiod ofup
tooneyearincases ofserious economic disturbances; theymust betaken onanon-discriminatory
basis. Injurious dumping andtrade-distortive subsidies areprohibited andmayattract offsetting levies.
Co-operation intheareaofcustoms management istobestrengthened andmember States arecommitted
tosimplifying andharmonizing trade documents andprocedures, andcombatting illicit traffic.
29. TheCOMESA Secretariat ismandated tofollow upandmonitor theimplementation ofthe
Treaty. Tothiseffect, theSecretary-General istoprepare "acomprehensive andmeasurable
implementationprogramme"withcleartargetsspecifiedfortwo-yearstages.Thetransitiontoafollowing
stage isconditional onafinding bytheCouncil ofMinisters thatthetargets havebeenattained and
member States 'obligations fulfilled.WT/TPR/S/5
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(c) TheIndian Ocean Commission
30. Mauritius isafounding member oftheIndian Ocean Commission (IOC), established in1982,
which includes Madagascar, theSeychelles, theComoros, andFrance onbehalf ofRéunion. TheIOC,
whose secretariat islocated inMauritius, istheEU'smainpartner inregional co-operation intheIndian
Ocean. TheIOChasbeenallocated anaidbudget ofECU 30million under Lomé IV,which finances
projects invarious sectors, including fisheries, small craftindustries, tourism andenvironmental
protection andthepromotion ofregional trade andinvestment.12
(iii) Bilateral trade agreements
31. Mauritius maintains bilateral trade agreements withtheCentral African Republic, Egypt,
Hungary, Madagascar, Pakistan andZimbabwe.
32. Mauritius isabeneficiary oftheGeneralized System ofPreferences (GSP) Schemes ofAustralia,
Austria, Canada, theEuropean Union, Japan, Norway, Switzerland andtheUnited States.
12Mauritius participates intheInitiative toFacilitate Cross-Border Private Investment, Trade andPayments
inEastern andSouthern Africa andtheIndian Ocean, commonly referred toastheCross-Border Initiative (CBI).
Co-sponsored bytheECCommission, theInternational Monetary Fund, theWorld Bank andtheAfrican
Development Board, theCBIrepresents a"pragmatic approach", within theframework oftheCOMESA, that
strengthens themomentum towards economic integration already established within theobjectives setbyregional
organizations:thePTA/COMESA,theSouthernAfricanDevelopmentCommunity(SAC)andtheIOC.Sponsors
have agreed tocompensate participating countries fornetlosses incurred during thephase from liberalization
toresponse ineconomic activity.