Mauritius Summary
Introduction
Despite its small land area and population of only 1.18 million, Mauritius, strategically located between Africa, Asia, and the Indian sub-continent, is one of the few African economic success stories, with an annual growth rate of 5% and GDP per capita of $3,600. Since gaining independence in 1968, Mauritius has transitioned from a low-income, mono-agricultural sugar-based economy to a more diversified, export-driven middle-income country, unlike most of its fellow African states. The government remains strongly focused on increasing and diversifying exports and securing foreign investment. The Export Processing Zone (EPZ), established in the 1970s, today accounts for 70% of the countries' exports, which are predominantly textiles and also include food, jewelry, electronics and engineering; 12% of its GDP; and employs 30% of the workforce.
Its record of political stability and democracy has provided an attractive business climate for foreign investment, and tourism and services have also grown in the wake manufacturing and industry. Its modern port, airport and telecommunications links have brought the country to the attention of the international community both as a strategic area for investment and as a well-positioned leader to help facilitate African economic growth.
Preferential Market Access
With an economy based largely in the sugar and textile industries, much of Mauritius's more recent growth is attributed to its penetration of the EU market under the Small Island Provisions and the US market through the Africa Growth and Opportunities Act (AGOA) initiatives. Both allow unilateral quota-free, duty-free market access to textile exports. The country performed well in textiles and tourism before AGOA and EU preferential trade initiatives were launched, but many of its textile companies are now focused on developing high-end production, while they are seeking low-cost labor for lower-end production by investing in other parts of Africa.
As a member of COMESA, (Common Market for Eastern and Southern Africa), Mauritius enjoys tariff-free trade with 8 other African countries and reduced-tariff trade with 11 others. It is also a member of the South African Development Community (SADC), and Indian Ocean Commission (IOC), both of which have plans to eliminate trade barriers between their members.
Trade Provisions for Sugar and Tuna
There is some fear among financiers in the country that preferential trade advantages in some sectors may soon wane. Mauritius, for example, currently represents 6 percent of the European Union's canned-tuna imports, a market share sustained largely due to an agreement reached during the WTO's 2001 ministerial meeting at Doha, where fish imports from the ACP countries (Africa, Caribbean, Pacific) were granted favored access to the European market. In December 2002, however, several EU members (including Germany and Great Britain) decided to also offer reduced European customs taxes to tuna imports from Thailand and the Philippines, causing concern for the potential loss of EU sales among ACP commerce ministers.
When Brazil and Australia complained to the WTO about annual EU subsidies of 3.6 million tons of sugar exports, Mauritius joined a group of several sugar-producing ACP states in 2002 to defend the Brussels policy in a trade battle over European sugar export subsidies from which they benefit. [2]
As a technique to maintain its market position, Mauritius is promoting development of its higher-end value-added food industries, such as specialized sugars, pre-peeled pineapples, fruit and vegetable pickles, pastes, powders, and chips.
Tariff and Non-tariff Barriers to Trade
In March 2002, Mauritius submitted a joint proposal along with nine other developing countries suggesting a possible modality for upcoming trade negotiations concerning manufactured goods. The proposal builds upon a concept of less reciprocity for developing nations in terms of reducing tariff and non-tariff barriers. The EU has alternatively proposed a harmonization of tariff rates that will simultaneously give favorable conditions to products coming from the developing countries, while the US has suggested the gradual reduction of all tariffs to zero by 2015.
The developing countries group, including Mauritius, has frowned on these latter proposals, however, wary that the reciprocal adjustments demanded would more severely impact the typically high tariff structure of the developing countries. Therefore the group advocates a simpler and smaller percentage tariff cut, with the onus for the most part on developed nations to diminish trade barriers. Decisions about negotiations on these non-agricultural market access (NAMA) issues were meant to be made at the WTO ministerial meeting in Cancun in September 2003; they were not discussed since the meeting adjourned when countries could not agree on modalities to discuss investment issues, the first topic addressed. NAMA issues remain on the agenda for the Doha Development Round.
The recent increase in demands for poor countries to reduce their trade barriers in the WTO in exchange for subsidy concessions from developed countries prompted the Mauritian government to take a defensive stance, arguing that 'liberalization works against vulnerable countries like Mauritius', and that 'the WTO [should not be] allowing the law of the jungle where the strongest dominate the weakest.' [3] The government claims that it is preparing the economy to face difficult adjustments by developing its services industries, which are already the largest economic sector, and continuing to restructure the sugar and textile industries. [4]
Intellectual Property Rights
Mauritius is party to the 20-member Common Market for Eastern and Southern Africa (COMESA), which has applied as a region to the WTO for permission to begin making generic drugs for the treatment of HIV/AIDS. A plan for a domestic manufacturing licensing system was submitted in November 2002, which would permit one country to produce cheap generic drugs and export them to the other member states. An agreement reached before the Cancun ministerial conference in September 2003 set up a framework for parallel importing of generic drugs between developing countries, however, there are currently no plans in any of the COMESA states to issue licenses for generic production and export.
Conclusion
Mauritius continues to specifically target the development of niche markets in textiles, while more generally maintaining a stable and attractive business climate. Boosted economic cooperation between Mauritius and several nearby countries including Mozambique, Kenya and Pakistan is expected in the near future. Demonstrating its commitment to fostering competition and safeguarding consumer interests, and acknowledging the large stake the highly export-dependent country remains upon the rules of international trade, the Mauritian parliament passed a bill in April 2003 to check market monopolies, and Mauritian trade delegates have stayed very active promoting African and small-developing-country interests in both WTO and bilateral trade affairs.
Last updated April 2004.
[1] Some Progress, Some Uncertainties Ahead of AGOA Forum in Mauritius. AllAfrica, Inc. 10 January 2003.
[2] Mario Osava and Gustavo Capdevila. Trade: Brazil Takes Aim at EU on Sugar Subsidies. Inter Press Service, Rio de Janeiro. 7 February 2003.
[3] Mauritian president defends invite to WTO boss for Independence Day celebration. L'Express web site, Port Louis, 12 Mar 04.
[4] Premier expects 'positive developments soon' over Chagos dispute. L'Express web site, Port Louis, 13 Mar 04.
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