RESTRICTEDWORLD  TRADE
ORGANIZATIONWT/TPR/S/90
5 October 2001
(01-4676)
Trade Policy Review Body
TRADE POLICY REVIEW
MAURITIUS
Report by the Secretariat
This report, prepared for the second Trade Policy Review of Mauritius, has been
drawn up by the WTO Secretariat on its own responsibility.  The Secretariat has,
as required by the Agreement establishing the Trade Policy Review Mechanism
(Annex 3 of the Marrakesh Agreement Establishing the World Trade
Organization), sought clarification from  the Government of Mauritius on its
trade policies and practices.
Any technical questions arising from this report may be addressed to
Mr. J. Degbelo (tel. 739 5583) or Mr. C. Boonekamp (tel. 739 5226).
Document WT/TPR/G/90 contains the policy statement submitted by the
Government of Mauritius.
Note: This report is subject to restricted circulation and press embargo until the end of the meeting
of the Trade Policy Review Body on Mauritius.Mauritius WT/TPR/S/90
Page iii
CONTENTS
Page
SUMMARY OBSERVATIONS vii
(1) T HE ECONOMIC ENVIRONMENT vii
(2) I NSTITUTIONAL FRAMEWORK vii
(3) T RADE POLICY INSTRUMENTS viii
(4) S ECTORAL TRADE POLICIES ix
(5) T RADE POLICY AND TRADING PARTNERS x
I. ECONOMIC ENVIRONMENT 1
(1) M AJOR FEATURES OF THE ECONOMY 1
(2) R ECENT ECONOMIC DEVELOPMENTS 3
(3) T RADE PERFORMANCE AND INVESTMENT 4
(i) Trade in goods and services 5(ii) Investment 6
(4) O
UTLOOK 8
II. TRADE REGIME 9
(1) I NSTITUTIONAL FRAMEWORK 9
(2) P OLICY FORMULATION AND IMPLEMENTATION 9
(3) T RADE POLICY OBJECTIVES 11
(4) L AWS AND REGULATIONS 12
(5) T RADE AGREEMENTS AND ARRANGEMENTS 14
(i) Multilateral agreements 14(ii) Regional agreements 16(iii) Other agreements or arrangements 21
III. TRADE POLICIES AND PRACTICES BY MEASURE 23
(1) I
NTRODUCTION 23
(2) M EASURES DIRECTLY AFFECTING IMPORTS 24
(i) Registration, documentation, and procedures 24(ii) Tariffs, other duties, and taxes 25(iii) Rules of origin 32(iv) Local-content and local-purchase requirements 33(v) Import prohibitions, restrictions, and licensing 33
(vi) Contingency trade remedies 36
(vii) Government procurement 37(viii) Other measures 38WT/TPR/S/90 Trade Policy Review
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(3) M EASURES DIRECTLY AFFECTING EXPORTS 38
(i) Registration, documentation, and procedures 38(ii) Export taxes, charges, and levies 38(iii) Export prohibitions, licensing, and other restrictions 38(iv) Export subsidies, and duty and tax concessions 39
(v) Export promotion and assistance 41
(vi) Other provisions 42
(4) M
EASURES AFFECTING PRODUCTION AND TRADE 42
(i) Incentives 42(ii) Standards and other technical requirements 43
(iii) Competition policy and regulatory issues 47
(iv) State-owned enterprises and privatization 50(v) Intellectual property rights 51
IV. TRADE POLICIES BY SECTOR 54
(1) I
NTRODUCTION 54
(2) A GRICULTURE AND RELATED ACTIVITIES 54
(i) Overview 54
(ii) Key subsectors 57
(3) M ANUFACTURING 66
(4) S ERVICES 70
(i) Overview 70(ii) Tourism 71
(iii) Financial services 73
(iv) Telecommunications and postal services 76(v) Transport 78
REFERENCES 81
APPENDIX TABLES 83
CHARTS
III. TRADE POLICIES AND PRACTICES BY MEASURE
III.1 Applied MFN tariff distribution, 2001 28
III.2 MFN tariff distribution by sector, 2001 29
IV. TRADE POLICIES BY SECTOR
IV.1 Sugar proceeds, 1994-2000 59
IV.2 Average comparative prices for raw sugar, 1990-2000 60IV.3 Distribution of tourist arrivals by country of residence, 1994-99 72Mauritius WT/TPR/S/90
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TABLES
I. ECONOMIC ENVIRONMENT
I.1 Mauritius at a glance, 1995-2000 1
I.2 Balance of payments, 1994-99 4
I.3 Foreign direct investment in Mauritius, 1994-2000 6
I.4 Direct investment abroad, 1994-2000 7II. TRADE REGIME
II.1 Main trade-related laws and regulations in Mauritius, as at May 2001 12
II.2 Status of selected notification requirements to the WTO, as at April 2001 15
II.3 Investment treaties and agreements, as of 30 November 2000 22
III. TRADE POLICIES AND PRACTICES BY MEASUREIII.1 Scheduled territories, as at May 2001 26
III.2 MFN tariff escalation by ISIC 2-digit heading, 2000/01 29
III.3 Conditions on imports of controlled goods, as at May 2001 34III.4 Quotas on potatoes, 1995-2001 36III.5 Activities of the Central Tender Board, 1995-2000 38III.6 Export-controlled goods, as at end 2000 39III.7 Refunds under the Freight Rebate Scheme, 1994-2000 40
III.8 Grants received by MEDIA, 1995-2001 42
III.9 Compulsory standards, as at May 2001 43III.10 Inspection, certification and treatment fees and charges, as at May 2001 45III.11 Imports requiring origin labels, as at May 2001 47III.12 Imported commodities subject to the maximum mark-up system, as at May 2001 48
III.13 Purchases by the State Trading Corporation, 1991-2000 50
III.14 Onions and garlic imported by the Agricultural Marketing Board, 1995-2001 51III.15 Registration of intellectual property rights, 1995-99 52
IV. TRADE POLICIES BY SECTOR
IV.1 Land conversion tax 56
IV.2 Subsidies for planting materials and products subject to price controls, 1995-99 56IV.3 Basic statistics on the sugar industry, 1994-98 57IV.4 Tea area, production and sales, 1995-98 61IV.5 Tobacco and cigarettes, 1997-99 crops 62IV.6 Food crops:  area and production, 1996-98 64
IV.7 Census of animals belonging to members of the MMPA, 1996-98 66
IV.8 Manufacturing sector:  basic statistics, 1996-99 66IV.9 Main economic indicators of the EPZ sector, 1994-99 67IV.10 Evolution of main EPZ clothing exports, 1995-99 68IV.11 Utilization of U.S. quotas on textiles and clothing by Mauritius, 1998-2000 68IV.12 Main indicators in the tourism branch, 1995-2000 71
IV.13 Main indicators of insurance services, 1994-99 75WT/TPR/S/90 Trade Policy Review
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Page
APPENDIX TABLES
I. ECONOMIC ENVIRONMENT
AI.1 Commodity exports, 1994-2000 85
AI.2 Commodity imports, 1994-2000 86AI.3 Exports by destination, 1994-2000 87
AI.4 Imports by origin, 1994-2000 88
III. TRADE POLICIES AND PRACTICES BY MEASURE
AIII.1 MFN tariff statistics, by HS 2-digit, 2000/01 89
AIII.2 Excisable goods, locally manufactured or imported, 2000/01 93
AIII.3 Controlled imports, as at May 2001 97
AIII.4 Incentive schemes, as at May 2001 102
IV. TRADE POLICIES BY SECTOR
AIV.1 MFN tariff statistics by ISIC categories, 2001 106Mauritius WT/TPR/S/90
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SUMMARY OBSERVATIONS
(1) THE ECONOMIC ENVIRONMENT
1. Sound macroeconomic policies have
contributed to sustained strong economicperformance in Mauritius for two decades;  on
average the economy has grown at nearly 6%
a year.  Concurrently, Mauritius has
successfully diversified its economy away from
sugar.  Textiles and clothing, tourism,financial services, and sugar are now the four
pillars of the economy.  In consequence, the
share of agriculture in real GDP has declined,
from around 12% in 1990 to some 6% now.
The services sector, dominated by tourism andfinancial services, is the most important in the
economy, accounting for around 74% of real
GDP.  Services exports are more than one
third of total foreign exchange earnings, with
tourism contributing the largest and
increasing share.  Manufacturing is the source
for some 75% of merchandise exports;  itcontributes around one fifth of real GDP, with
textiles and clothing accounting for more than
40% of manufacturing output.
2. Nevertheless, Mauritius faces
challenges.  Its economy has elements ofduality:  companies producing for the
domestic market are fairly highly protected,
while export enterprises are granted incentives
under various schemes, including the Export
Processing Zone Scheme.  This has led totensions in resource allocation between the
export and domestic sectors, and highlights
the task of transforming the economy away
from export- to outward-orientation.
Mauritius has also become a "high-cost"producer, as real wages have grown faster
than productivity.  In addition, Mauritius faces
a changing international environment,
including the narrowing of preferences for
some of its exports, and the consequentincrease in competition.  Added to these
factors is a scarcity of arable land and of
skilled labour.  In response to these
challenges, Mauritius has been promoting
(mainly by means of incentives) domestic
production of capital-intensive higher-value-
added goods and the geographicaldiversification of exports.  There has also been
a certain delocalization of low-value-added
labour-intensive activities to neighbouring
countries.
3. The high ratio of merchandise trade to
GDP (around 90% on average since 1995)indicates the importance of external trade to
Mauritius.  Normally it has run trade deficits,
which have been offset from time-to-time by
traditional surpluses on the services account.
The bulk of domestic production is exported,clothing accounting for some 60% of foreign
exchange earnings from merchandise exports
followed by sugar (22%).  Mauritius' main
imports include machinery and transport
equipment, textiles, and food.
4. The European Union (EU) is
Mauritius' major trading partner:  it is the
market for the bulk of Mauritius' sugar output
and for a large share of textiles and clothing
exports;  it supplies around one third of
Mauritius' imports.  The major single
destinations of Mauritian exports include theUnited Kingdom, France, and the
United States.  Delocalization of certain
manufacturing activities (combined with their
vertical integration) to neighbouring countries
has contributed to the promotion of trade withcountries such as Madagascar, to which
Mauritius exports semi-finished products and
yarns.  The sources of imports are more
diversified, with France being the only country
supplying more than 9% of the total value ofMauritius' merchandise imports.
(2) I
NSTITUTIONAL FRAMEWORK
5. The Republic of Mauritius is a multi-
party parliamentary democracy.  The
Constitution is the supreme law, followed bythe Acts, Regulations, and Rules.
International treaties, including the WTO
Agreements, must be enacted into domestic
law to have standing before national courts.
The Ministry of Industry, Commerce and
International Trade is responsible for the
formulation, review, and assessment of tradepolicies.  The WTO Standing Co-ordination
Committee, chaired by the Minister ofWT/TPR/S/90 Trade Policy Review
Page viii
Industry, Commerce and International Trade,
and comprising representatives from the
public and private sectors, deals with the
implementation, follow-up, and coordination
of trade policy issues falling under the WTO
Agreements.  Given Mauritius' membership ofseveral groupings, a Regional Co-operation
Council, chaired by the Minister responsible
for Foreign Affairs, has been established to
forge a coherent regional strategy for the
country.
6. The Board of Investment (a one-stop
shop) became operational on 15 March 2001
under the authority of the Finance Minister.  It
aims to promote Mauritius as an international
investment, business, and service centre.  Withthe exception of specified activities in the
tourism subsector, acquisition of real estate,
and activities still under state monopoly,
foreigners are free to invest in almost all areas
open to Mauritians.
7. Mauritius is an original Member of
the WTO and an ITA signatory.  It accords atleast MFN treatment to all its trading
partners.  As a small-island developing
country with limited natural resources,
Mauritius relies on international trade, and
participates actively in the multilateral tradingsystem and in various regional groupings to,
inter alia, secure and increase market access
for its products.  Mauritius believes that non-
reciprocal trade preferences are still
important to its economy and that they shouldbe enhanced and consolidated.  It is also of the
view that in considering any future
multilateral trade negotiations, priority should
be given to implementation issues and to
difficulties faced by "small and vulnerableeconomies".
8. Mauritius is a member of, inter alia,
the Common Market for Eastern and Southern
Africa (COMESA), the Southern African
Development Community (SADC), the Indian
Ocean Commission (IOC), and the Regional
Integration Facilitation Forum (RIFF).Mauritius considers its participation in
regional agreements as a step towards
building resilience for full integration into theworld economy.  Nevertheless, membership of
various regional agreements with differences
in geographical coverage, trade liberalization
agenda, provisions on rules of origin, and in
goals, is difficult to manage.
(3) T
RADE POLICY INSTRUMENTS
9. Since its last Trade Policy Review in
1995, Mauritius has continued to implement
trade-related reform, although border
protection remains relatively high in some
areas.  A reduction in maximum tariff rates,and an increase in the number of duty-free
lines, have contributed to lowering the simple
average MFN tariff to some 20%;  this is fairly
high, particularly given that over 50% of lines
bear a zero rate.  Nearly all rates are advalorem;  these rates range to 80%, with high
dispersion.  Specific duties are collected on
two tariff lines, with the highest ad valorem
equivalent being around 360%.  Since 1995,
the number of tariff bands has remained
unchanged at eleven, including the zero rate
and the ad valorem equivalents of the twospecific duties.  Using the WTO definition, the
simple average tariff is 20.5% on agricultural
imports, and 19.8% on imports of non-
agricultural products.
10. Mauritius has bound nearly 15% of all
its tariff lines.  It bound tariffs at a ceiling rate
of 65% on some 1.6% of its total tariff lines for
non-agricultural products; all agricultural
tariff lines (WTO definition) are bound at
ceiling rates ranging from 37% to 122%.Other duties and charges on all these products
are bound at zero or 17%.  An increase in the
coverage of bindings and the narrowing of the
gap between bound and applied rates would
enhance predictability of Mauritius' tariffregime.
11. Mauritius has taken steps to
harmonize differing customs duties based on
source ("scheduled", i.e. Commonwealth and
certain major trading partners, and "non-
scheduled" territories, i.e. other countries).  As
from the 2000/01 Budget, the tariff differentialhas been reduced from 20 to 10 percentage
points and applies to only one band:  productsMauritius WT/TPR/S/90
Page ix
liable to the MFN tariff rate of 65% carry a
lower rate of 55% when they are imported
from scheduled territories.  Differing excise
duties also apply to imports and locally
produced goods.  In September 1998, a value-
added tax of 10% replaced the sales tax;  itapplies to imports and locally produced goods.
Customs duties and taxes account for some
50% of total tax revenue.  Since
1 January 2000, Mauritius has applied the
provisions of the WTO Customs ValuationAgreement.
12. The liberalization reforms have fallen
short of further dismantling non-tariff
measures maintained on various grounds.  The
number of products subject to import ban, orimport control by means of permit, has
increased.  Import quotas still apply to table-
potatoes and salt. Several parastatal bodies,
including the State Trading Corporation and
the Agricultural Marketing Board, purchase,
import, and store "strategic" products
(including flour, ration rice, petroleumproducts, cement, table potatoes, onions, and
garlic).  Price controls, consisting of a fixed
maximum price system (on imports and locally
produced goods) and a maximum percentage
mark-up system (only on imports), are alsomaintained on some of the strategic products;
the controls are to be abolished gradually
after the enactment of competition legislation,
a draft of which is being vetted by the Office of
the Attorney General.  A permit is required forthe exportation of products of "strategic
importance" and of goods eligible for
preferential-quota treatment in importing
countries.  Mauritius applies no duties, taxes
or charges to its exports.
13. Incentives (including duty and tax
concessions) are available under various
schemes to local producers, mainly
manufacturers, and to exporters, with a view
to encouraging investment and improving the
international competitiveness of Mauritian
products.  In addition, partial refunds of airfreight costs are granted to exporters of
selected agricultural products.  The incentives,
together with elimination/reduction of tariffson inputs, increase effective protection for
local processing industries.
14. Mauritius does not have legislation on
contingency trade remedies;  it has not taken
any anti-dumping, countervailing or safeguard
actions.  The legislation on governmentprocurement has been revised several times in
recent years;  a High Powered Committee is
currently reviewing the legislation, to ensure
conformity with international norms and
practices.  Twelve compulsory standards (upfrom seven in 1995) apply both to imports and
locally produced goods.
15. Mauritius has revised its Copyright
Act.  Further, with a view to meeting its
obligations under the WTO Agreement onTrade-Related Aspects of Intellectual Property
Rights (TRIPS), Mauritius is also finalizing
new legislation on patents and trade marks,
and is drafting legislation on industrial
designs, geographical indications, and layout
design of integrated circuits.  Counterfeiting
mainly affects copyrights and trade marks.
(4) S
ECTORAL TRADE POLICIES
16. Agriculture, though declining in
share, remains a leading sector of the
Mauritian economy.  The export-led strategy
implemented by Mauritius, and preferentialmarket access provided by developed
countries have contributed to the
diversification within and away from the sugar
industry.  The 1988 Sugar Efficiency Act has
also played a role by promoting sugar andnon-sugar agriculture;  the Act provides for a
land conversion tax on the use of agricultural
land for other purposes, and tax rebates for
cultivation of crops other than sugar cane.
Other incentives available to producers ofagricultural goods include the Agricultural
Development Scheme and the Technology
Diffusion Scheme.  The Freight Rebate Scheme
is available to exporters of selected
agricultural products.
17. For food security purposes, import,
export, and price controls are maintained, andstrategic reserve stocks are required, onWT/TPR/S/90 Trade Policy Review
Page x
certain agricultural products.  Public
enterprises, including marketing boards, still
hold a monopoly over the importation of
certain food products, including flour and
certain rice.  Customs tariffs on agricultural
imports range from zero to 80%;  the 80% rateapplies, inter alia, to cane or beet sugar,
chemically pure sucrose (in solid form), and
molasses resulting from the extraction or
refining of sugar.  Imports of some products
are prohibited, including sugar and chocolateconfectionery;  quotas are maintained on
imports of potatoes and on exports of chilled
fish.
18. Export Processing Zones companies
account for the bulk of manufacturing, whichis dominated by textiles and clothing.  In
response to the changing international
environment (e.g. the dismantling of the
Multifibre Arrangement and post Lomé
ACP-EU Agreements), and to rising
production costs, Mauritius' manufacturing
policy has focused on market and productdiversification (e.g. sectoral integration and
shift to higher-value products, delocalization
of low-cost activities to neighbouring
countries), and on improvement of
competitiveness (through, inter alia, variousincentive schemes, and elimination or
reduction of customs tariffs on inputs and
equipment).  Certain manufactured products
are subject to import and export controls, to
the maximum mark-up (under price controls),and to compulsory standards.  Customs tariffs
on manufactured products range from zero to
80%, with the highest rates applying to
textiles, clothing and leather products, as well
as to metallic and non-metallic furniture andfixtures.  The highest ad valorem equivalent of
the two specific duties on manufactured
products (about 360%) applies to straps of
thong-type sandals.
19. Mauritius is a net exporter of services.
Commitments made by Mauritius under GATS
largely reflect the current state ofliberalization of the sector;  monopolies orexclusive rights held by public enterprises
limit competition in certain branches
(telecommunications, postal, and
transportation services) and contribute to high
production costs.  Measures affecting presence
of natural persons are unbound.  Mauritiusmaintains MFN exemptions on financial
services under Article II of GATS.
(5) T
RADE POLICY AND TRADING
PARTNERS
20. Mauritius' participation in the
multilateral trading system and in various
regional agreements reflects its interests as a
small, export-oriented economy with
advantages in a few products, sugar, textiles
and clothing in particular.  As part of itseconomic success is due to preferential market
access granted by major trading partners,
Mauritius is taking steps to adjust to changes
in this international environment.
21. The adjustment needs to emphasize the
streamlining and rationalization of existing
incentives so as to lessen the aspects of dualityand improve resource allocation.  The
resultant reduction/elimination of duty and tax
concessions could contribute to reducing the
public deficit and to facilitating further tariff
reforms, which are currently hampered byfiscal concerns as customs duties account for
about 50% of tax revenue.
22. Elimination of non-tariff barriers and
of differing customs duties (by source) would
enhance the transparency of Mauritius' traderegime.  The regime might also play a greater
role in attracting investment as more tariffs
are bound, the gap between applied and bound
rates narrows, and GATS scheduling
increases, including perhaps in the context ofintroducing greater competition in service
subsectors such as telecommunications.
Overall, such adjustments could contribute to
an improved exploitation of Mauritius'
comparative advantages, and facilitate the
transformation from an export- to an outward-
oriented economy.