RESTRICTED
WORLD TRADE G/SCM/Q2/MUS/2
16September 1996
ORGANIZATION(96-3611)
Original: English Committee onSubsidies andCountervailing Measures
SUBSIDIES
Replies toQuestions from theUNITED STATES Regarding theFull
andComplete Notification ofMAURITIUS1
Thefollowing communication, dated 9September 1996, hasbeenreceived fromthePermanent
Mission oftheMauritius.
_______________
Questions
Mauritiushasnotifiedthatitneithergrantsnormaintainsanysubsidieswhichsatisfythereporting
requirements ofArticle XVI:1 oftheGATT 1994 andArticle 25.2oftheAgreement onSubsidies and
Countervailing Measures.
1. Could Mauritius please explain thebasis onwhich ithasdetermined thateachofthefollowing
programmes failstomeetthenotification requirements referenced above?
A. TheSugar Efficiency Act-especially, fiscal incentives anddutyexemptions fornon-sugar
agriculture; export dutyrebates tosugar producers based ontheextent towhich theydiversified
outofsugar.
Answer
(i) Theincentives given upuntilfinancial year1993/94 intheSugar Industry Efficiency
(SIE) Act1988andsome other Actsrelated torebates onexport dutypayable whenever
theproducers liable tosuchdutyachieved acertain levelofperformance orundertook
tocarry outspecific developmental schemes.
(ii) Therebate inrespect ofcrops other thansugar canewasmainly applicable when two
conditions were simultaneously met. Firstly, aspecial percentage ofcane land
(i.e.interlines andrational land) wasusedforthecultivation oftheother crops and
secondly, when suchlandwasrented outtogrowers. These growers being small farmers
whoearnthemajor partoftheirliving from thecultivation offoodcrops.
(iii) Theobjectives oftheSIEAct1988 were to:
(a) foster efficiency insugar operations;
1G/SCM/N/3/MUS.G/SCM/Q2/MUS/2
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(b) optimize theuseofsugar by-products which hasapositive incidence onthe
environment; and
(c) enhance agricultural output perunitareaperunittime,
andnottodiversify outofsugar.
(iv) Theabove-mentioned points were allmade attheTrade Policy Review exercise on
Mauritius. Inthisregard, themisunderstanding onthestatus oftheSIEAct1988 was
cleared.
(v) TheFinance Act1994 hasabolished theexport dutyonsugar asfrom financial years
1994/95, consequently therebates referring tothisdutyintheSIEAct1988arenolonger
inforce.
B. Support fortheTeaSector -especially, price guarantees forgreen leaftea;fiscal incentives
provided tosmallholders foradopting mechanical harvesting; provision free-of-charge ofclean
citrus plants.
Answer
With respect toprice guarantees forgreen leaftea,theguaranteed green leafprice scheme
initially covered thesupply ofgreen leaffrom anareaof2,446.50 acres ofteaplantations detailed
asfollows:
TeaPlanter Group Acres
Smallholders onState TeaLands 2,225.40
Private Small Planters inCo-operatives 204.14
Individual Private Small Planters 16.96
InFebruary1995,anagriculturaldiversificationprogrammeaimedatreplacingteawithsugarcane
andother cashcrops onStateTeaLands wasstarted andby30June1996 theareauprooted stood at
1,287 acres. Itisestimated thatanother 900acres willbeuprooted inthecurrent financial year.
Theareaunder teaonStateTeaLands likely tobemaintained is170acres asthesmallholders
cultivating these plots havenotyetopted infavour ofsugarcane orother cashcrops.
Attempts havebeenmade toconvince theprivate planters operating either inCo-operatives
orindividually tomove outofteabuttheresponse hasnotbeenencouraging.
Accordingly, itisforecast thattheguaranteed green leafprice scheme willbeapplicable to
thesupply ofgreen leaffrom atotalareaofonly(170.00 +204.14 +16.96) i.e.390.96 acres, say
400acres ofteaplantations. Itisexpected thatthere would stillbesome operators willing tomove
intosugarcane and/or other cashcropproduction inwhich casethefigure of400acres willdecrease
further.
Theabove substantiates thatMauritius would bedecreasing itssupport totheteasector, as
farastheprice guarantees forgreen tealeafareconcerned, bymore than90percentbytheendof
thecurrent financial year.G/SCM/Q2/MUS/2
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Withrespect tofiscal incentives provided tosmallholders foradopting mechanical harvesting,
theGovernment hasalready reviewed itspolicy forgranting suchincentives. Asamatter offact,such
incentives arenolonger being provided since February 1995.
Withrespect totheprovision free-of-charge ofclean citrus plants nosuchsupport iscurrently
being provided since February 1995.
Ithastobepointed outthatthesupport fortheteasector wasgranted atatimewhen thetea
sector wasinsevere economic difficulties anditissubmitted thatalltheincentives andmeasures fall
under thepurview ofArticle 6oftheAgreement onAgriculture (Domestic Support Commitments).
C. AidtotheFisheries Sector -especially, fiscal incentives, including dutyconcessions onimports
ofinboard andoutboard motors, a75percentreduction inportfeesandfiscal concessions
intheformofa15percentincome taxrate, granted under theAgricultural Development
Certificate(ADC)Scheme;termloansfromtheDevelopmentBankofMauritiusatconcessionary
rates; anddutyexemptions forimports offishing vessels under anADC.
Answer
Thepercapita consumption offishandfishproducts hasincreased overtheyears whereas
local production hasremained stagnant (even decreased). Tomeetconsumer demand fishandfish
products havetobeimported.
Topromote thefishing activity forsupply ofthelocalmarket andraisethestandard ofliving
offishermen, theGovernment came withapackage ofincentives toprovide newimpetus tothefisheries
sector.
Incentives
1. Artisanal fishery
(a) Customs dutyconcession onoutboard andinboard engines is75percent;
(b) Loan facilities through theDevelopment Bank ofMauritius uptothesumofRs200.00
is10percentinterest ratepayable overfiveyears.
2. Other fisheries
(a) Duty freeconcession fortheimport offishing vessels torenew oldones;
(b) Duty freeconcessions onsafety andfishing equipment;
(c) 75percentreduction inportfees;
(d) Loan facilities fromtheDevelopment Bank ofMauritius uptoRs10Million at15per
centinterest ratepayable infiveyears.
(e) Companies holding anAgricultural Development Certificate arerequired topayincome
taxattherateof15percentasperIncome TaxAct1974 subject totheDevelopment
Incentive Actof1974.
Mauritius issituated inadisadvantaged region andnatural resources arelimited. Furthermore,
thecoastal regions aretheleastdeveloped onesinMauritius andallfishermen andfishing activities
areconcentrated inthese regions. Hence, theaimofthese concessions istoincrease fishproductionG/SCM/Q2/MUS/2
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fromallsectors forlocalconsumption, thereby providing assistance toasegment ofthemostvulnerable
population. Without theabove incentives, thefisheries sector andthecommunity offishermen will
notbeinaposition tosurvive.
D. Export Processing Zones, Pioneer Status Enterprises andtheIndustrial Expansion Actof1993
-especially, incentives fortheprinting andelectronics sectors, e.g.,printing companies or
those assembling electronics areeligible forthefirsttenyears oftheiroperation fora15per
centtaxrateandtaxexemption ondividends paidtoshareholders: expatriate workers inhigh
technology sectors receive additional taxbenefits; scheduled imports aredutyfree;suspension
ofduties onimported printing machinery andrelated inputs andoncomputers. Since 1994,
50percentoffreight charges onelectronic products, including watches, havebeenmade eligible
forrebate.
Answer
(i) Incentives areprovided notonlytotheprinting andelectronics sectors butalsotoseveral
other sectors suchaslightengineering, jewellery andoptical goods. Theincentives
arebased onanon-discriminating principle. Thustheincentive of15percenttaxrate
forthefirsttenyears ofoperation forthePioneer enterprises isnolonger applicable
asallmanufacturing enterprises, except those intheEPZsector, arenoweligible for
a15percenttaxrateforthewhole lifeofthecompanies;
(ii) Webelieve thisisquite understandable when onebears inmind thespecific situation
ofMauritius asaSmall Island State devoid ofanyrawmaterials. These companies
operate essentially fortheexport markets andassuch, theirscheduled imports which
aretransformed intoproducts destined forexport needtobedutyfree.
(iii) The50percentoffreight charges onelectronic products isnotviewed asasubsidy
bearing inmindthatanexport subsidy exists whenever the"internal transport andfreight
charges onexport shipments, provided ormandated bygovernments, onterms more
favourable thanfordomestic shipments". Annex I(c)oftheAgreement onSubsidies
andCountervailing Measures refers.