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Mauritius: October 1995

“ Mauritius now sought to integrate its economy through a shift towards more outward-oriented policies, including trade liberalization; there had been a positive response to the Uruguay Round and a strong commitment to the principles of the multilateral trading system. Economic diversification was also being pursued through development of the free port and the offshore services sector.”

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Summary of Secretariat report
  > Summary of Government report

23 October 1995

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The Trade Policy Review Body of the World Trade Organization (WTO) conducted its first review under WTO procedures in its examination on 17 and 18 October of Mauritius' trade policies. The text of the Chairman's concluding remarks is attached as a summary of the salient points which emerged during the two-days of discussion.

The review enables the TPRB to conduct a collective examination of the full range of trade policies and practices of each WTO member country at regular periodic intervals to monitor significant trends and developments which may have an impact on the global trading system.

The review is based on two reports which are prepared respectively by the WTO Secretariat and the government under review and which cover all aspects of the country's trade policies, including: its domestic laws and regulations; the institutional framework; bilateral, regional and other preferential agreements; the wider economic needs and the external environment.

A record of the discussion and the Chairman's summing-up, together with these two reports, 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.

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), Mauritius (1995), 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).

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The TPRB has conducted the first review of Mauritius' trade policies and practices. These remarks are intended to summarize the salient points. As usual, they are made on my own responsibility and do not substitute for the Body's collective evaluation.

The discussion developed under four themes:

General policy orientation

Members recognized that Mauritius' structural adjustment programmes of the 1980s had laid the foundation for a decade of high growth and had enabled Mauritius to take full advantage of access opportunities for its exports, in particular through trade preferences in the EU market. However, a dual economy had developed, with continued protection for domestic production. Members urged the authorities to be especially aware of this development and pursue appropriate corrective measures.

Mauritius now sought to integrate its economy through a shift towards more outward-oriented policies, including trade liberalization; there had been a positive response to the Uruguay Round and a strong commitment to the principles of the multilateral trading system. Economic diversification was also being pursued through development of the free port and the offshore services sector. Some members noted, however, that while trade liberalization had been significant, tariff escalation and effective rates of protection still appeared high; the plethora of incentives tended to detract from the transparency of the system and added an element of discretion.

Reform of the trade régime had included the removal of quantitative restrictions, the lowering of maximum and average tariffs and the abolition of the import levy and export tax on sugar. The majority of price controls had also been dismantled; however, concern was expressed in regard to remaining controls. Some members identified the heavy budgetary reliance on tariff revenue as a potential constraint to further reduction and simplification of tariffs. A number of members also noted that policies to address human resource development and labour mobility would be needed to ensure the reform of factor markets in the quest for greater productivity.

In reply, the representative of Mauritius emphasised that the focus of his Government's policies was on improving productivity and competitiveness in all sectors, while minimizing the transition costs to a free-trade environment. Mauritius' strategy stressed investment in training, education and upgrading of skills as means of encouraging a more competitive economy. In addition, emphasis was placed on the development of telecommunications and promoting the transfer of technology. In this context, he stressed the need to maintain a sound macroeconomic framework that would assist in the development of efficient factor markets; thus, in particular, monetary policy had sought to reduce inflation and encourage savings. The share in GDP of the tertiary sector had increased consistently in the past years, with tourism the fastest-growing element. Stock market activities were being encouraged. The offshore services sector had progressed well and policies were being directed to integrate the offshore and domestic sectors, while the freeport authority was a focal point for transshipment and re-export activities. On the specific issue of women's rights, new legislation had been introduced to ensure equal treatment and employment opportunities.

Specific trade policy instruments

Members congratulated Mauritius on being a founder member of the WTO and the commitments taken in that capacity. They stressed the need for Mauritius to rapidly integrate its trade laws with WTO provisions, recognizing Mauritius' request for technical assistance in this context. New or amended laws should be duly notified.

While Mauritius' tariff reform was appreciated, the low level of bindings in industry was a cause for concern. Although tariffs on agricultural products were bound, the ceiling rates were considerably higher than the applied rates, allowing for the risk of irregular customs conduct. Mauritius was encouraged to harmonize the bound and applied rates.

Members commented on the discrimination in duty treatment between scheduled and non-scheduled suppliers and on the differential application of excise duties as between domestic and imported products. Mauritius was urged to eliminate these discriminatory elements and apply m.f.n. and national treatment principles.

Members recognized the efforts undertaken by Mauritius to adapt and improve standards and regulations in conformity with the relevant WTO instruments. Some noted that the continued operation of state trading enterprises, accompanied by import licensing, price controls and consumer subsidies, brought into question the operation of the market mechanism and ran counter to trade liberalization. Questions were also raised as to current procedures related to trade remedies, e.g. anti-dumping, and the prospective introduction of legislation in this field.

Members noted that Mauritius already had legislation and enforcement procedures against infringement of intellectual property rights, but sought clarification on specific aspects of the existing legislation, and on the changes necessary to ensure compatibility with the WTO provisions. A question was also raised on the consistency of environmental trade measures with WTO articles.

In reply, the representative of Mauritius spoke of the efforts being made to integrate its legislation into the WTO system. Mauritius had already notified many of its existing laws and procedures to the WTO; a sub-committee was studying other notification requirements. Mauritius was seeking technical assistance in integrating certain other areas, including customs valuation. The export ban on corals and shells for environmental reasons had been notified under Article X and justified under Article XX of the GATT.

Tariffs were the main trade policy instrument. The level of bindings offered by Mauritius reflected its level of development; in many cases applied rates were well below bound levels. Bound rates had been negotiated in the Uruguay Round and no further timetable for harmonization of bound and applied rates could be foreseen as yet, although this could be linked to the introduction of anti-dumping or countervailing legislation. The distinction for tariff purposes between scheduled and non-scheduled territories had historical roots. It was not the intention to foster discrimination; the differentials had been reduced over time. Mauritius recognized that it should introduce corrections in order to bring the tariff system into line with m.f.n. principles.

State-trading entities were maintained to ensure regular supplies of basic commodities at reasonable prices for the population; price controls were linked with their operation, but it was the intention to liberalize prices once there was adequate competition in the market. The Government's intention was to move further towards privatization, while safeguarding against abuses and the creation of private monopolies. Mauritius was examining the report of a committee on the Government Procurement Agreement with a view to considering membership. Mauritius had used International Trade Centre services for many areas of trade development.

Sectoral policies

Members noted the efforts made by Mauritius to promote industrial diversification, particularly to seek a smooth transition in the course of the phasing out of the MFA. They stressed the need for a clear, non-discretionary, transparent incentive structure.

Members welcomed the elimination of the export duty on sugar. While there seemed to be considerable investment initiatives in the sugar sector, it was not clear what was being done to increase production of other food crops and to allow for the integration of the rural economy. Diversification was seen as relevant in light of the concern expressed by Mauritius and other net food-importing countries, regarding the impact of higher world prices on their import bill. A number of participants noted that import prohibitions and licensing were in use to ensure food security and self-sufficiency. Members noted that Mauritius should ensure that its agricultural practices were in conformity with its WTO obligations and that its ultimate goal should be to liberalize imports and allow the market mechanism to operate. Members also questioned the need for the re-introduction of consumer subsidies on basic foodstuffs.

In services, members welcomed the fact that Mauritius had made commitments in the tourism and telecommunications sectors. However, its regulatory regime did not extend national treatment to foreign suppliers in all the scheduled areas and further liberalization was encouraged through improvements in Mauritius' GATS commitments. Financial services had been extensively liberalized and an offshore sector established which had already exhibited exceptional growth.

In response, the representative of Mauritius noted that the Industrial Expansion Act of 1993 had grouped all incentives, making the system both more transparent and less subject to discretion. He added that agricultural diversification had to be seen in the context of the importance of the sugar sector for the island's ecosystem. Mauritius was conscious of the fact that the production of foodcrops had its limits and could not substitute for imports; thus for products such as meat and milk, self-sufficiency could not be attained. Although some bound agricultural tariffs were high, applied rates related to imported foods were invariably very low or zero. Mauritius had a good record of compliance with sanitary and phytosanitary norms, but nevertheless an overhaul of the regulations was envisaged to bring Mauritius' rules into full conformity with WTO obligations in this area. Emphasis was laid on the care being given to the ecological aspects of agricultural development.

In relation to the services sector, the representative of Mauritius replied that no changes to Mauritius' GATS schedule were currently envisaged.

External environment

The results of the Uruguay Round were expected to lead to some erosion of preferences, particularly in the areas of textiles, clothing and sugar. In this regard, some members urged the early lifting of restrictions on Mauritius' clothing exports. Some members also expressed the view that small island developing countries warranted special consideration within the WTO system.

A number of members noted Mauritius' increasing involvement in regional arrangements; they recognized that this could support the trade liberalization effort and urged that it conform with the rules and discipline of the multilateral system.

The representative of Mauritius replied that Mauritius' trade policy remained outward-looking. In this context, Mauritius was actively participating in various regional economic groupings, including COMESA, SADCC and the Indian Ocean Commission, which it saw as complementary to its participation in the multilateral system. He believed such initiatives, which were not inward-looking in nature, were in line with Article XXIV of GATT, and could be seen as an initial stage towards further multilateral economic integration. Back to top