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POLICY REVIEWS: FIRST PRESS RELEASE, SECRETARIAT AND GOVERNMENT SUMMARIES
Mauritius: October 1995
In the last 15 years, the small island economy of Mauritius has proved a striking example of export-oriented development. A stable political environment and an ample supply of labour attracted foreign investment in manufacturing, leading to exceptional growth in the 1980s.
13 October 1995
Focus on value-added exports and services Back to top
In the last 15 years, the small island economy of Mauritius has proved a striking example of export-oriented development. A stable political environment and an ample supply of labour attracted foreign investment in manufacturing, leading to exceptional growth in the 1980s. A three-fold increase in per capita income since 1980 would not have been possible without the liberalization of the foreign exchange and trade regimes, disciplined monetary and fiscal policies and preferential access to the EU market.
According to a WTO Secretariat report on Mauritius' trade practices and policies, Mauritius' strong emphasis on export promotion, tourism development and its recent initiatives to promote the island as a regional trading centre have transformed its economy. Sugar, the country's traditional export, along with clothing and tourism, are now important sources of foreign exchange earnings. Since 1990, however, the economy has entered a consolidation phase. With full employment, wage increases have outpaced productivity growth, thereby eroding some of the country's export competitiveness. A major challenge ahead, says the report, is for Mauritius to overcome these constraints on future growth.
Emphasis in current economic policy-making is being placed on modernization and diversification, greater integration of the export and domestic markets and the improvement of total factor productivity by focusing on technology, human capital formation and the restructuring of the capital base. According to the report, the Industrial Expansion Act of 1993 seeks, through fiscal incentives, to move the economy towards higher value-added production.
Such measures follow liberalization efforts taken since 1985, when Mauritius dismantled its quantitative restrictions, lifted price controls on all but essential items and reduced its export tax on sugar. Other steps included the elimination of import licensing in 1991 for all but a limited range of products subject to health, sanitary or strategic control and a concerted effort to harmonize standards along international norms.
In 1994, following the conclusion of the Uruguay Round, Mauritius consolidated its general, preferential and fiscal duties, reduced the number of tariff rates from 60 to eight and lowered duties on more than 4,000 items. Tariffs for agricultural products were bound at a ceiling rate of 122 per cent with the exception of certain major imports including such items as frozen beef, dairy products and certain grains. Applied rates are generally below the bound levels. In regard to trade in services, Mauritius made market access commitments to foreign service suppliers in the tourism and telecommunications sectors.
According to the report, the results of the Uruguay Round will, in time, have a clear impact on the Mauritian economy. The phasing-out of the Multifibre Arrangement (MFA) will, over ten years, gradually erode the preferential access that Mauritius' exports of textiles and clothing enjoy under the Lomé Convention, while the implementation of the Agreement on Agriculture, together with the reform of the EU sugar régime, may weaken the price that Mauritius receives for its sugar exports.
The report states that some aspects of Mauritius' trade policies appear to be questionable in terms of multilateral principles. Most-favoured-nation principles and national treatment do not seem to be fully observed and the use of bound tariffs to provide a stable trading environment for domestic industries and trading partners is very limited. The commitments made in services, however, may help to create a more efficient infrastructure for the economy. The report concludes that, as it integrates more completely into membership of the WTO, Mauritius will need to ensure that its domestic laws and regulations are brought fully into conformity with multilateral rules.
Notes to Editors:
The WTO Secretariat's report, together with a report prepared by Mauritius will be discussed by the WTO Trade Policy Review Body (TPRB) on 17 and 18 October 1995.
The WTO Trade Policy Review Body conducts a collective evaluation of the full range of trade policies and practices of each WTO member at regular periodic intervals and monitors significant trends and developments which may have an impact on the global trading system.
The two reports, together with a record of the TPRB's discussion and of the Chairman's summing up, will be published in due course as the complete Trade Policy Review of Mauritius and will be available from the WTO Secretariat, Centre William, Rappard, 154 rue de Lausanne, 1211 Geneva 21.
The reports cover developments of all aspects of Mauritius' trade policies, including domestic laws and regulations, the institutional framework, trade practices by measure and by sector. Since the WTO came into force, the "new areas" of services trade and the trade-related aspects of intellectual property rights are also covered. Attached are the summary observations from the Secretariat and government reports. Full reports will be available for journalists from the WTO Secretariat on request.
Since December 1989, the following 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), Côte d'Ivoire (1995), Egypt (1992), the European Communities (1991, 1993 & 1995), Finland (1992), Ghana (1992), Hong Kong (1990 & 1994), Hungary (1991), Iceland (1994), India (1993), Indonesia (1991 and 1994), Israel (1994), Japan (1990, 1992 and 1995), Kenya (1993), Korea, Rep. of (1992), Macau (1994), Malaysia (1993), Mexico (1993), Morocco (1989), New Zealand (1990), Nigeria (1991), Norway (1991), Pakistan (1995), Peru (1994), the Philippines (1993), Poland (1993), Romania (1992), Senegal (1994), Singapore (1992), South Africa (1993), Sweden (1990 & 1994), Switzerland (1991), Thailand (1991), Tunisia (1994), Turkey (1994), the United States (1989, 1992 & 1994), Uganda (1995), Uruguay (1992) and Zimbabwe (1994).
TRADE POLICY REVIEW BODY: MAURITIUS
Mauritius in World Trade
Over the past two decades, Mauritius has been transformed from an economy based on production and exports of sugar to a relatively diversified structure, in which export-oriented manufacturing (principally clothing) and services (including tourism and offshore facilities) contribute the major share. Per capita income, expressed in current U.S. dollars, nearly tripled in the period 1980-1993, with particularly rapid growth up to 1989.
The rapid growth of the 1980s was based on a combination of disciplined macro-economic policies with a flexibly managed exchange rate, a stable political environment, favourable external economic circumstances including preferential access for sugar and clothing exports to the European Community (under the Lomé Convention) and a strong emphasis on export promotion. An ample supply of labour up to the late 1980s facilitated wage restraint. With full employment, the economy has entered a phase of consolidation, as wage increases, have outpaced productivity growth and erode export competitiveness; the challenge now for the Mauritian authorities is to overcome these constraints on further growth.
In the same period, the share of exports has risen from under 50 to over 60 per cent of GDP. The European Union (EU) still accounts for over 70 per cent of merchandise exports, although the share of the United States has increased considerably since 1980 and new markets, particularly in eastern and southern Africa, have grown rapidly. Sugar, which accounted for 90 per cent of exports in 1970, now represents 25 per cent, while clothing exports have boomed. Despite a doubling of earnings from tourism since 1987, both the current account and trade balances have typically been in deficit, given the high import content of manufacturing, heavy expenditure on transport equipment and significant outlays on payments for freight.
Mauritius is a multi-party parliamentary democracy and became a Republic on 12 March 1992. The President, elected by a majority of the National Assembly for a five-year term, is Head of State. Legislative power is exercised by Parliament, composed of the President and the National Assembly. International treaties, including those relating to trade, are signed by the President, or his representative, and generally have to be ratified by Parliament. The legislative process requires that international treaties become part of domestic law.
Primary responsibility for the formulation of trade policy lies with the Ministry of Trade and Shipping, which is also responsible for enforcing the provisions of the Fair Trading Act and the Consumer Protection Act. Consultations between Ministries and the private sector on economic and trade matters are held in the Joint Economic Commission. The National Economic Development Council debates issues and develops strategies to improve efficiency. Bills on trade policies must be submitted to the Solicitor-General for vetting, approved by the Cabinet and passed by Parliament. The Minister of Finance may approve duty exemptions and concessions recommended by the relevant Ministries under incentive schemes and has the power, rarely exercised, to grant both duty increases and reductions on an ad hoc basis. The Prime Minister's Office authorizes all foreign investment, although proposals for industrial projects are screened by a committee under the Minister of Industry.
In the Uruguay Round, Mauritius bound tariffs on 76 six-digit industrial tariff lines, equivalent to 1.5 per cent of the tariff, at a ceiling level of 65 per cent. Agricultural tariffs have been bound at a ceiling rate of 122 per cent, except for 17 major import items including frozen beef, dairy products, potatoes, certain temperate fruits, wheat, maize and rice, bound at 37 per cent and seven items, including tea, at 82 per cent. Applied rates are generally well below bound levels. An additional 17 per cent levy, applying to all imports except essential items, has been bound under "other duties and charges"; however, this duty was in practice abolished in 1994. Under the GATS, Mauritius made significant commitments on tourism and telecommunications.
Mauritius is a founding member of the WTO. It is also a member of the Lomé Convention, the Common Market for Eastern and Southern Africa (COMESA) and the Indian Ocean Commission. Mauritius maintains bilateral trade agreements with the Central African Republic, Egypt, Hungary, Madagascar, Pakistan and Zimbabwe and is a beneficiary of the GSP schemes of Australia, Austria, Canada, the EU, Japan, Norway, Switzerland and the United States.
Trade Policy Features and Trends
The current long-term goal of Mauritius' trade policy is greater integration of the export and domestic markets and reduction of the emphasis on export orientation. Diversification is considered vital in the light of changes in the international trading environment; in particular, the Industrial Expansion Act of 1993 seeks to move the economy towards higher-value-added production. Since 1992, policy has sought to develop the tertiary sector of the economy to take advantage of Mauritius' location.
In the past decade, Mauritius' trade régime has been extensively liberalized. In 1984 and 1985 quantitative restrictions were dismantled, price controls lifted on all but essential items and the export tax on sugar reduced. Since the Sugar Industry Efficiency Act came into force in 1989, the export duty on sugar has been lowered and, as of 1994, proceeds have been used to finance ownership restructuring and modernization within the industry. Import licensing, which had applied to the vast majority of imports, was eliminated in 1991 for all but a limited range of products subject to health, sanitary or strategic controls. Credit policy, previously used to allocate preferential financing to priority sectors, in particular export industries, was liberalized in 1992 and 1993. In 1994 a three-column tariff, consisting of general, preferential and fiscal duties, was consolidated into one column, the number of tariff rates reduced from 60 to eight and duties lowered on 4,400 items. At the same time, the maximum customs duty was lowered from 600 to 100 per cent, an import levy abolished, and the incidence of specific duties reduced to two items covering thong-type sandals and their straps.
Type and incidence of trade policy instruments
The currently applied tariff has eight rates ranging from zero to 80 per cent. Goods subject to rates of 55 or 80 per cent imported from "non-scheduled" suppliers (including Japan, Switzerland and the Republic of Korea) bear an additional duty of 20 percentage points. The simple average tariff on imports from "scheduled" suppliers is 29 per cent. Nearly 20 per cent of tariffs are zero and over two thirds are 20 per cent or less; however, 23 per cent are levied at 55 or 80 per cent. There is a significant tendency to tariff escalation and peaks occur particularly on clothing.
Excise duties are in principle applied to both imports and local production of a wide range of alcoholic beverages, tobacco products and motor vehicles; an additional 40 percentage point excise duty is levied on vehicles imported from "non-scheduled" sources. There are several instances of significant differences in the application of excise duties between imported and locally produced goods.
While tariffs are used both to protect domestic producers and as a means of raising fiscal revenue (trade taxes account for nearly half of government revenue), duty exemptions designed to promote export or other priority sectors are extended under various investment incentive schemes in specific cases or on a discretionary basis. Although discretion has apparently been reduced, the associated lack of transparency is an unsettling feature of Mauritian trade practice.
Customs valuation is based on a hybrid of the Brussels Definition of Value and the WTO procedures; Mauritius plans to adapt its legislation to the WTO provisions by 1 January 2000. In practice, Customs accepts the declared value in most cases; additional payments in case of doubt are made on some 5 per cent of shipments. Computerized customs processing allows import declarations to be processed in ten minutes and goods to be cleared within one or two days.
Mauritius has not applied any import quotas since 1985. However, with the dismantling of import licensing in 1991, certain import prohibitions were introduced. A number of products require approval by the regulatory authorities, mainly for health, safety or security reasons. For certain foods, such as potatoes and spices, licensing is enforced in order to protect self-sufficiency objectives in the domestic market.
Mauritius has a number of State-trading enterprises and sole importers. The State Trading Corporation is the only authorized importer of ration (20-45 per cent broken) rice, basmati rice, wheat flour and petroleum products. The Agricultural Marketing Board holds monopoly import privileges for agricultural products which compete with domestically produced goods for which there are marketing schemes and guaranteed prices. Importation of cement is shared between the State Trading Corporation and the privately owned Mauritius Portland Cement Company. In addition, the Tea Board, the Tobacco Board and the Meat Authority control imports within their jurisdiction and the Mauritius Sugar Syndicate is the sole supplier of sugar for domestic consumption.
Price controls cover nine locally produced and 32 imported products, including rice, flour, sugar, potatoes, onions, infant milk powder and a number of other manufactured items. Prices are fixed, according to the authorities, to ensure supply at reasonable prices, including where lack of competition makes consumer protection necessary. The authorities have stated their intention to phase out price controls.
In March 1995, public tendering procedures were centralized. National firms do not receive preferential treatment in public procurement contracts except where authorized by foreign development agencies. Foreign suppliers have typically obtained between 15 and 20 per cent of central government contracts.
Mauritius is in the process of revising its health and sanitary regulations and adopting international standards in all relevant areas. Test certificates issued by standards organizations from originating countries are recognized. Safety regulations on, for example, electrical equipment have been based on the exporting country's certificate. The Mauritius Telecommunications Authority type approves all telecommunications equipment and has not concluded any mutual recognition agreements for certification, although foreign type approval may be accepted. Control of food, drugs and chemicals with potential adverse effects on health is under the purview of the Ministry of Health. Certificates of analysis from recognized foreign institutions are accepted but the Health Inspectorate samples imported food to ensure that shipments comply with local food regulations.
With the removal of the export duty traditionally collected on sugar, there are no explicit taxes on exports. There are no direct export subsidies but Mauritius grants special tax treatment, implicitly based on export performance, to promote investment in export-oriented sectors.
A strong institutional framework exists to put a comprehensive environment policy into practice. Mauritius has signed the principal multilateral environmental agreements. Government policy is to apply the "polluter pays" principle as widely as possible. By law, most new economic activities with a potentially significant impact on the environment must file an environmental impact assessment for approval. Conservation measures, such as a ban on the sale or export of coral and shells and prohibitions on spear fishing, have been put into effect. Special tax credits and accelerated depreciation allowances are available to introduce anti-pollution equipment and technology designed to protect the environment.
Since 1976, Mauritius has been a member of the World Intellectual Property Organization (WIPO) and is a signatory to the Paris and Berne Conventions. The Copyright Act, enacted in 1986, was amended in 1988 to bring the period of protection into conformity with the Berne Convention, and the National Computer Board is reviewing the Act to ensure adequate protection of computer programmes. Patent holders may file suit against any infringement in the domestic courts. Under the Customs Act 1988 (Section 63), Customs have the right to prohibit imports that violate trade mark law or falsely indicate origin.
Although exclusive agency rights may be granted by overseas suppliers, parallel imports are allowed. Legislation to protect consumers from fraudulent and anti-competitive practices has been introduced. Exclusive sales agreements or monopolies likely to prevent or distort competition in the production and supply of goods and services are prohibited. However, so far no competition authority exists that might investigate abuses of market power.
The Mauritian economy rests on four pillars; sugar, which still provides 25 per cent of merchandise export earnings, clothing exports, tourism and more recently, offshore services. Apart from the sugar sector, which has historically been taxed in order to finance overall development, the Government has used fiscal instruments, credit policy and duty exemptions, behind high tariff protection, to promote export and priority sectors.
Mauritius presents many aspects of a dual economy. The introduction in 1970 of Export Processing Zone (EPZ) status extended to export industries a number of incentives designed to attract foreign investment. Since the mid-1970s, a reduced corporate tax rate of 15 per cent has been granted for the life of the export company. Customs duty and sales tax are exempted on "scheduled" raw materials and equipment. Over time, duty and tax exemptions have been extended to non-sugar agriculture, hotel services, Pioneer Status enterprises ("infant industries") and, most recently, to the fisheries sector. With a view to beginning to redress the dualism encouraged by such schemes, incentives were consolidated, but not rationalized, under the Industrial Expansion Act of 1993 aimed at the integration of the EPZ and non-EPZ sectors.
The Industrial Development Committee screens applications for investment in industries operating under incentive schemes. Foreign investment is particularly encouraged in export and Pioneer Status enterprises. The investment promotion agency, MEDIA, promotes investment in priority sectors, identified as activities that will accelerate technological development in manufacturing. Import duties have been eliminated on products considered conducive to the development of high-technology or priority sectors. Shipments of electronics products, as a priority sector, are eligible for a partial rebate of freight charges.
The EPZ Development Authority provides technical advisory and consulting services aimed at improving quality in, and hence the international competitiveness of, the clothing industry. Exports of certain items of clothing are restricted in the United States and Canadian markets, although quantitative limitations appear to represent a constraint for only a few. The administrative procedure for allocating quotas to domestic producers reduces the scope for flexibility among manufacturers.
The Export Service Zone Scheme, in existence since 1981, initially extended tax incentives to a number of service industries, although limiting foreign investment to 30 per cent equity participation. In the last few years, the services sector has been given a boost with the establishment in 1989 of a framework for offshore banking and other offshore services, in parallel with the liberalization of financial markets. Foreign and domestic banks are accorded equal treatment; foreign banks may establish both subsidiaries and branches. Tourism, from which Mauritius derives substantial foreign exchange earnings is, despite concerns about environmental effects, still very much a growth industry, with foreign investment playing an important rôle in its development, although certain tourism-related activities are limited to nationals. Mauritius participates in the GATS Negotiating Group on Basic Telecommunications and has scheduled specific commitments in the sector, primarily allowing for interconnection with the public switched network.
Mauritius currently has neither anti-dumping, countervailing, nor safeguard legislation but the Government is considering the introduction of such legislation in view of the recent tariff reductions. In 1994, a temporary duty increase on iron bars from 40 to 50 per cent was aimed at countering alleged dumping.
Trade Policies and Foreign Trading Partners
Mauritius owes much of its recent economic success to preferential market access accorded by its major trading partner, the European Union. In recent years, with an eye on the future, Mauritius has shifted its attention to its strategic location, focusing on its potential for becoming a regional trading centre. Thus, Mauritius has established the only freeport (primarily handling re-exports) in the Indian Ocean and trade with COMESA partners has expanded rapidly.
The results of the Uruguay Round will, in time, have a clear impact on the Mauritian economy. The phasing-out of the Multifibre Arrangement (MFA) will, over ten years, gradually erode the preferential access that Mauritius' exports of textiles and clothing enjoy under the Lomé Convention, while the implementation of the Agreement on Agriculture, together with the reform of the EU sugar régime, is likely to weaken the price that Mauritius receives for its sugar exports; further adjustment will therefore be required.
Some aspects of Mauritius' trade policies appear to be questionable in terms of multilateral principles. M.f.n. and national treatment do not seem to be fully observed; the use of bound tariffs to provide a stable trading environment for domestic industries and trading partners is very limited; and the use of tax incentives and duty exemptions for inputs not concerned in the production process appears to contradict existing rules on export subsidies. The commitments made in services may produce a more efficient infrastructure for the economy. As it integrates more completely into membership of the WTO, Mauritius will need to ensure that its domestic laws and regulations are brought fully into conformity with multilateral norms.
TRADE POLICY REVIEW BODY: MAURITIUS
Mauritius is a tropical island of volcanic origin with a land area of approximately 1865 sq. kilometres. Agriculture occupies 48% of the total land area, woodland takes up some 35% while built-up area claims 13%. All arable lands are fully cultivated and are being encroached upon by demographic pressure for housing purposes and industrial demand for more space.
With its small size, both in terms of land mass and population (1.1 million inhabitants), lack of natural resources and the inherent disadvantages of an island state characterised by remoteness from both the source of supply of its raw materials and the markets for its export products, Mauritius has to depend heavily on trade for its economic development and social progress.
Mauritius is exposed to the vagaries of the weather. Usually, the island is visited between December and April by cyclones which affect the country, especially sugar in the agricultural sector. During the pre-cyclone period, the island also suffers from droughts which again have an adverse effect on that sector.
However, the geography of the island provides some natural advantages, such as beautiful lagoons and beaches with temperature ranging from 21oc in winter to an average of 29oc in summer which have helped the tourism sector to develop and expand.
Since achieving independence in 1968, Mauritius has implemented a number of national development plans to develop its economy. It is at present implementing its sixth plan.
Over the last twenty years, Mauritius has undergone major structural changes from an agricultural monocrop economy with a growing population, high unemployment and low per capita income to a generally satisfactory position of fairly stable population, near full employment and a diversifying economy with emphasis on the services sector. In this process Mauritius has been helped by its membership of certain preferential trade agreements.
The economy of Mauritius has been dominated by sugar as the main crop till the late 1960s. Mauritian sugar, in fact, has had a guaranteed market and enjoyed preferential prices through various agreements such as the Imperial Preference Regimes, the Commonwealth Sugar Agreement and the Sugar Protocol annexed to the Lomé Convention. During the period 1964-72, sugar accounted for over 25% of gross domestic product (GDP), whereas the small manufacturing sector, excluding the sugar industry, contributed about 7% to GDP. This sector consisted of a number of small industries engaged in the food, beverages, tobacco and, footwear sectors and the repair and assembly of machinery and transport equipment.
The stable level of earnings which Mauritius derives from its membership of the Sugar Protocol have underwritten the socio-economic development of Mauritius. These earnings have contributed towards the financing of the manufacturing sector especially in the EPZ. This process has been assisted by the preferential access which Mauritius enjoys in the EU markets for its manufactured products under the successive Lomé Conventions. In a way, the membership of Mauritius to these important trade and aid instruments has helped mitigate the inherent disadvantage which Mauritius suffers as a small island state.
In 1970 Government launched the Export Processing Zone Scheme to encourage the development of the manufacturing sector. The EPZ has transformed the economy where manufacturing for export has become the leading sector. Actually the EPZ accounts for 67% of total export earnings and provides employment to some 91,000 people of which 70% are females. However, EPZ activities are highly concentrated in the manufacture of textile products which are prone to various adverse effects on the international market.
Moreover, at present the EPZ industries face a number of problems such as the vulnerability of the garments industry to demand fluctuations in the U.S. and the EEC; shortage of labour on the local market; and the international competitiveness of Mauritian exports. In fact, the manufacturing sector has reached a turning point owing to new developments in the international trade scenario especially in the wake of the GATT Agreement, the North American Free Trade Agreement (NAFTA), the creation of Single Europe and the advent of market economy in the East and Central European countries, among others.
It is feared that the agreements resulting from the GATT Uruguay Round will seriously erode the trade preferences which Mauritius receives under the Lomé Convention. It will also be affected as a net-food importing country. Unless the "acquis" under the preferential agreements are preserved and measures taken on the local front to maintain the competitiveness of Mauritian products on their traditional markets, the manufacturing sector is most likely to face difficulties.
Conscious of the fact that Mauritius cannot sustain its economic growth by relying solely on the agricultural and manufacturing sectors, it is implementing strategies for diversifying the industrial base and promoting the services sector, in particular. Tourism and the off-shore business sector are also expected to play an increasingly important rôle.
The share of the services sector in the Gross Domestic Product (GDP) is more than 50% and accounts for 35% of the total trade. With a view to promoting the services sector, Government has created the Freeport Authority, the Mauritius 0ffshore Business Activities Authority in order to turn Mauritius into an international financial and business centre. Other measures include the launching of the Stock Exchange of Mauritius (SEM) with the objective of further democratising the economy and to effectively regulate the issuance of securities and their trading generally and to promote the financial centre in particular.
To overcome its inherent development constraints and in order to benefit from economics of scale and foreign inputs for its industrial transformation, Mauritius is actively promoting and participating in regional cooperation and economic integration. It forms part of some regional groupings in Africa. It also proposes to play a leading role in the creation of the Indian Ocean Rim grouping.
The authorities consider strong and sustained economic growth as being central to the maintenance of political and social stability in a multi-racial society like that of Mauritius. The economic well-being of the population, especially the improvement of its standard of living, has also strengthened multi-party democracy in Mauritius.
The objective of the Government of Mauritius is to improve the quality of life of the population through a sustainable level of export-led economic growth and the participation of the entire population in the process of economic development.
Objectives of Trade Policies
Mauritius practises an open trading system and has a long tradition of international trade.
The trade policies of Mauritius are geared towards securing the import requirements of its population and the protection of consumer interest as well as promotion of Mauritius overseas as a business centre from where export and re-export activities can fully take place.
To this end, the procedures for the conduct of international trade have been significantly relaxed. Price controls exercised until the early 1980's have been dismantled with exception made for certain sensitive items. Customs duties have been reduced on almost all imported goods with the exception of a few items. In respect of the agricultural sector, due consideration is given to the specificity of Mauritius, a small island state, in the determination of customs duties.
Import and export licensing has been abolished with the exception of a few products that require a measure of control. Control on foreign exchange regulation has been relaxed to facilitate international financial transactions. Steps are being taken to further facilitate trade practices through the installation of the Tradenet system which will process trade documentation electronically and provide up-to-date information on trade.
The ultimate objective of Mauritius is to establish a dynamic and outward-looking economy. This objective is expected to be achieved by a liberal economic policy and through the liberalisation of foreign trade. In this respect, Mauritius will avail itself fully of the opportunities offered in the Lomé Convention (Title IV: General Provisions for least developed, land locked and island ACP States) and the GATT Uruguay Round Accord (Articles 6(4)(b), 9(4) and 15 of the Agreement on Agriculture), wherein provision is made for special and differential treatment. Moreover, the legislative and administrative framework governing the agricultural sector in Mauritius privileges those categories of producers who are vulnerable, bearing in mind that Mauritius is prone to natural disasters.
The strategy of openness of its economy is aimed at allowing Mauritius to become a competitive trade partner using fully its comparative advantage and to integrate itself in the world trading system whilst at the same time ensuring that all categories of producers are given a fair deal and a chance to participate in the development process.
Relevant Background Against Which the Assessment of Trade Policies has been Carried Out Wider Economic and Developmental Needs, Policies and Objectives
The economic development of Mauritius during the past twenty-five years or during the first phase of industrial development may be attributed to three main factors namely:
(i) important amounts of foreign investment attracted by the country's political and social stability as well as the staple level of foreign exchange earnings generated by the export of sugar under the Sugar Protocol;
(ii) an abundant and literate reserve of labour; and
(iii) preferential market access to:
(a) the European Union under the Lomé Convention and
(b) the US for sugar under a quota system and textile under a bilateral trade agreement. Back to top