WORLD TRADE  
ORGANIZATION  G/SCM/Q3/MUS/15 
G/SCM/Q4/MUS/8 16 January 2007 
 
 
(07-0207) 
Committee on Subsidies and Countervailing Measures Original:   English 
 
 
 
REQUESTS PURSUANT TO ARTICLE 27.4 OF THE AGREEMENT 
ON SUBSIDIES AND COUNTERVAILING MEASURES 
 
PROCEDURES FOR EXTENSIONS UNDER ARTICLE 27.4  
OF THE AGREEMENT ON SUBSIDIES  
AND COUNTERVAILING MEASURES 
 
Replies to follow-up questions posed by the UNITED STATES
1 
  
 The following communication, dated 8 January 2007,  is being circulated at the request of the 
Delegation of Mauritius.  
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Export Enterprise Programme
 
Pioneer Enterprise Scheme  
Export Promotion  
Freeport Scheme  
 
Q1. Please explain whether Mauritius undertook  commitments to provide export subsidies 
to new beneficiaries beyond the year 2009.  
Reply
 
 
 By virtue of the Mauritius Finance Act 2006, Mauritius has not undertaken any commitment 
to provide export subsidies beyond 2009 to now bene ficiaries.  However, depending on circumstances 
prevailing then, the prospect of having new be neficiaries cannot be excluded at this stage. 
 
Q2. Please provide the amount of subsidy (inc luding the amount of revenue foregone) under 
each these programmes for each year from 2001 through 2005. 
 
Reply  
  Data on the amount of subsidies (includi ng the amount of revenue forgone) are not 
systematically compiled in Mauritius.  However, a Tax Expenditure Framew ork is being established 
to record annually the amount of such revenue fo rgone.  Nonetheless, statistical data drawn from 
available records for 2001 and 2004 are submitted below.  
                                                     
 
1 G/SCM/Q3/MUS/14 - G/SCM/Q4/MUS/7. G/SCM/Q3/MUS/15 
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   Customs Duty forgone
 
 2001 2004 
EPZ U$S 30 m (approx.) U$S 25 m (approx.) 
Pioneer Status Certificate U$S 2.4 m (approx.) U$S 4.1 m (approx.)  
Q3. Are there more specific economic, financ ial and development statistics to which 
Mauritius can point that demonstrate that the programmes in questions have had a positive 
impact and will continue to do so into the future? 
Reply
 
 
 These subsidy programmes have had positive im pact on the Mauritian economy in terms of 
employment, exports and investment.  The benefits for the year are summarized in the table below.  
The programmes have led to the creation of enterpri ses.  The total number of EPZ enterprises reached 
506 in 2005.  Some 66,930 people we re employed in the EPZ sector, representing 13.2 per cent of 
total employment.  61 per cent of these workers were females. 
  EPZ exports represented 46 per cent of total expo rts and investment in the sector was 6 per 
cent of total investment.  The contribution of EPZ to GDP was 7.4 per cent in 2005.  
 Export Enterprise Programme
 
 
 2005  
Number of enterprise 506 
Employment 66,931 
% of female employment 61% 
% of total employment   13.2% 
Export (fob Rs million) 28,954 
% of total export 46% 
Investment (Rs million) 2,391 
% of total investment 6% 
Share in GDP 7.4% 
 
 Pioneer Status Enterprises  
 
 The number of pioneer enterprises has also increased between 2001 and 2005, thus leading to employment creation.  The table below summarise s the benefits arising from the Pioneer Status 
Scheme. 
 
 2001
 2005  
Number of enterprises 233 265 
(of which less than 10 employees) 153 183(69%) 
Employment 2,858 3,550 
o/w female workers  845 
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   Export promotion  
 
Export Tax Credit Claimed by Companies  
 Number of Companies Export Tax Credit 
(Rs 000) 
FY 2003/2004 9 755 
FY 2004/2005 16 2,645 
FY 2005/2006 20 4,947 
 
Q4. Please describe the timeframe for completing  the review of the existing tax incentive 
schemes.   
 Reply
 
  As at present, the Finance Act 2006 provides for the phasing out of the subsidies programmes 
by 2009.  However, it is expected that the Govern ment of Mauritius may reassess the situation in light 
of our financial economic and development needs and related circumstances. 
 
Q5. Mauritius’ notification states the in centives granted under these programmes will be 
administered for an indefinite period of time.  If an extension was granted, what steps will Mauritius take to ensure that the benefits  under these programmes will not exceed the 
suggested 2018 extension request?    
 Reply
 
  Keeping in view the economic trajectory of Ma uritius in the light of the current economic 
reforms being implemented (as stipulated in the 2006 Budget Speech and related legislative 
enactments), the subsidies programmes are expected to be phased out well before 2018.  The Finance 
Act 2006 already reflects this tendency, and it is envi saged to include in this Act provisions to ensure 
that the programmes do not exceed the suggested timeframe.  However and as suggested above, a 
pertinent decision, which would be compatible with  our WTO obligations, would be taken in light of 
our specific financial, economic an devel opment needs and related circumstances. 
 Q6. If any additional extension is granted, please explain whether new applicants would be 
accepted or whether the extension period would be  used to phase out the subsidies for existing 
beneficiaries?   
Reply
 
 
 As stated in the response to Question 1, Ma uritius has not taken any commitment to provide 
export subsidies to new applicants beyond 2009 in conformity with several reform programmes, 
including tax and fiscal reforms, announced in  the 2006 Budget Speech and related legislative 
amendments.  In this regard, Mauritius will need international assistance and support, especially in 
trade-related infrastructure, capacity-build ing and accompanying measures to boost up the 
competitiveness of firms.  Aid for Trade would therefore be an important component in determining the level of transition period required by Mauritius to effectively adjust to emerging challenges.  
Therefore, at this stage one cannot exclude th e possibility of extending such benefits to new 
applicants while still complying w ith the transparency and standstill requirements so as not to make 
the scope, coverage and intensity of benefits more favourable than what they were in 2001. 
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   Moreover, if the extension were granted, Maur itius will ensure that such extension period will 
be used to phase-out the subsidies for existing beneficiaries.  
Q7. What is the relationship between the four  programmes for which an extension is being 
granted and how do their respective roles in  Mauritius's development strategy specifically 
differ?  
 
Reply
 
 
 Being a small vulnerable economy limited by th e size of the local market and far from the 
main external market, Mauritius is confronted  by inherent diseconomies of scale.  The 
four programmes have contributed significantly to move our economy from the dependence on sugar 
to a more diversified economy that is resilie nt to shocks.  They have also contributed: 
 
• to overcome the problems of high unemployment in the mid 80's, especially unskilled 
female unemployment; 
• to create a number of SMEs; 
• to boost our export of manufacturing products; 
• to increase our GDP;  and 
• to stabilize our exchange rate. 
 
 As stated above, subsidy programmes are expect ed to be phased out by 2009.  However, in 
view of the heavy investment undertaken by the firms which have benefited from those schemes, a 
transition period is required to adjust to the refo rm.  Our firms will need international support and 
financial assistance to make this transition smoother. 
 
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