Note: Advance written questions by WTO Members and replies provided by Mauritius to these 
questions, and to other questions raised during the meeting are reproduced in document 
WT/TPR/M/90/Add.1.WORLD TRADE
ORGANIZATIONWT/TPR/M/90
17 January 2002
(02-0245)
Trade Policy Review Body
2 and 5 November 2001
TRADE POLICY REVIEW
MAURITIUS
Minutes of Meeting
Chairperson:  H.E. Mr. Pekka Huhtaniemi (Finland)
Page
I. INTRODUCTORY REMARKS BY THE CHAIRPERSON 3II. OPENING STATEMENT BY THE REPRESENTATIVE OF MAURITIUS 4III. STATEMENT BY THE DISCUSSANT 7
IV. STATEMENTS BY MEMBERS OF THE TRADE POLICY REVIEW BODY 11
V. REPLIES FROM THE REPRESENTATIVE OF MAURITIUS AND
ADDITIONAL COMMENTS 16
VI. CONCLUDING REMARKS BY THE CHAIRPERSON 20WT/TPR/M/90
Page 3
I. INTRODUCTORY REMARKS BY THE CHAIRPERSON
1. The second Trade Policy Review of Mauritius was held on 2 and 5 November 2001.  The
Chairperson welcomed the delegation of Mauritius, headed by H.E. Mr. J. Cuttaree, Minister of
Industry and International Trade, and the discussant , H.E. Mr. Ransford Smith (Jamaica).  As usual,
the discussant would speak in his personal capacity and, in accordance with established procedures,
he had made available in advance a broad outline of the themes he intended to raise (document
WT/TPR/D/69).
2. The Chairperson recalled the purpose of the Trade Policy Reviews and the main elements of
the procedures of the meeting.  The Report by the Government of Mauritius was contained in
document WT/TPR/G/90 and that of the Secretaria t in document WT/TPR/S/90.  Copies of advance
written questions, submitted by Argentina;  Australia;  Canada;  the European Union;  Hong Kong,
China;  Japan;  Switzerland;  and the United States were transmitted to the delegation of Mauritius.These, and replies provided by the representative of Mauritius, are reproduced in
WT/TPR/M/90/Add.1.WT/TPR/M/90
Page 4
II. OPENING STATEMENT BY THE REPRESENTATIVE OF MAURITIUS
3. The representative of Mauritius noted that his country's territory comprised Rodrigues,
Agalega, Tromelin, Cargados Carajos and the Chagos Archipelago.  He recalled Mauritius' historical
background and geographical features.
4. In thirty years, the perception of Mauritius had changed from "an island of disaster" to "a
passport to paradise".  Mauritius was a multi-party parliamentary democracy based on the
Westminster pattern, and had invested in institution building to consolidate democracy through,inter alia,  good governance, rule of law, and inclusive decision-making process.  In recent years,
public- and private- sector consultations on matters of major economic interests had become a regular
feature.  Mauritius had set up a Standing Coordination Committee on WTO matters, comprising both
public and private sectors, to deal with implementation, follow-up, and coordination of trade policy
issues.  A National Economic and Social Council had also been set up to foster dialogue betweenpublic and private sectors and trade unions so as to ensure peace, mutual understanding, and social
cohesion in the Mauritian multi-cultural society.
5. Since 1995, the annual growth rate had averaged 5.7%, marked by a significant drop to 2.1%
in 1999, due mainly to the severe drought and ensuing cyclone, which had halved Mauritius'
agricultural output.  Whilst international trade had been on the upswing, the trade deficit haddeteriorated from Mau Rs 7 billion in 1995 to Mau Rs 13.7 billion in 2000.  The Government had
taken a number of measures to introduce financial and monetary disciplines, and bring public deficit
down to 3% of GDP by 2005.  Debt service ratio stood at 7% compared with 9% a decade earlier.
External debt had dropped from 25.5% of GDP in June 2000 to 22.6% in September 2001, whilst
public deficit had dropped from 8.8% to 5.3% of GDP in the same period.
6. In spite of the favourable investment climate, good economic performance, political and
social stability, high literacy, and the possibility for foreigners to invest in almost all sectors of theeconomy, Foreign Direct Investment (FDI) flows between 1993-98 had not exceeded 2.5% of gross
domestic capital formation, placing Mauritius at a low rank among developing countries, including in
Africa.  A new Investment Promotion Act had been  voted in 2001, leading to the setting-up of a
Board of Investment (BOI) on 15 March 2001.  Between 15 March and 30 September 2001, the Board
had approved projects equivalent to Mau Rs 1.39 billion, of which 1.02 billion in the form of FDI.
7. An Average annual wage increase of 7.5% between 1988-97 compared with a productivity
increase of 3.5%, had impacted on Mauritius' competitiveness.  The unemployment rate, which had
been 5.1% in 1995, stood at around  8% in 2001.  Mauritius had to work constantly for a viable price-
management system through appropriate policies and measures:  it was at the cost of much effort that
the Government had been able to contain inflation below 7%.  Traditional sectors, such as sugar andtextiles and clothing, the main generators of grow th and employment, were being restructured to meet
the challenges of globalization.  Trade continued to be of the highest importance, with merchandise
trade representing some 90% of GDP.
8. Thanks to judicious utilization of sugar proceeds, Mauritius had been able to pursue export
diversification.  Between 1993-00, the contribution of sugar to the total value of merchandise exportshad dropped from 26% to 22%, compared with 90% three decades earlier.  Sugar, however, remained
a leading and multifunctional sector, central to energy policy, food security, and sustainable
development concerns, and accounted for some 80% of cultivated land with large linkages to the rest
of the economy.  Therefore, predictable and secured preferential market access for sugar remained
imperative.  The Government had implemented a five year restructuring plan aimed at significantlyimproving competitiveness and at diversification within the sugar industry, i.e., molasses, special
sugars, rum, and ethanol.  However, Mauritius, like other small islands developing states (SIDS) andWT/TPR/M/90
Page 5
landlocked countries, given its major physical constraints might not attain the competitiveness levels
of  large multi-commodity exporting developing and developed countries.
9. Manufacturing accounted for some 75% of merchandise exports, with textiles and clothing as
a major contributor.  The export-processing zones (EPZ) subsector had grown at an average rate of
6.2% over 1995-00.  Further growth would depend on Mauritius' ability, as a small supplier, to adapt
its manufacturing policy to changing external realities with a view to focusing on market and product
diversification.  A high powered Committee, comprisi ng the Government, the private sector and trade
unions, was analysing constraints in the textile industry, and would come up at the end of 2001 with
an action plan aimed at giving a new dynamism to the industry.  The objective was to make Mauritius
a competitive exporter, and an important player in the development of a regional textile and apparel
industry.
10. The share of tourism, the third largest source of  foreign exchange earnings, in GDP had
increased from 4.1% in 1995 to 5.5% in 2000.  Cautious about the social impact of rapid tourist
expansion on local population and domestic resources, the Government aimed to promote high-
spending up-market tourism with minimal social and environmental impact.  Mauritius was also
concerned about possible repercussions of recent international events and the economic recession on
its leisure industry.
11. Financial services, including offshore business, free-port activities, fund management, stock
exchange and insurance, contributed for about 14% of real GDP and had grown by about 7% on
average.  Mauritius had already initiated necessary legal and institutional reform for sound
development, had participated in the WTO extended negotiations on financial services since 1998,
while making substantial efforts to develop financial services.  A Financial Services Commission had
recently been set up to regulate the non-bank financial services, to study new avenues for their
development, and to elaborate policies directed at ensuring fairness, efficiency and transparency offinancial and capital markets.
12. Mauritius supported regional initiatives as building blocks to the multilateral trading system,
and saw such initiatives as a step towards integrat ing the multilateral trading system.  Mauritius was a
member of the Southern African Development Co mmunity (SADC), the Common Market for Eastern
and Southern Africa (COMESA), the Indian Ocea n Commission (IOC), and the Indian Ocean Rim
Association for Regional Cooperation (IOR-ARC).
13. Mauritius had also benefited from a number of bilateral initiatives, in particular with the
United States and the EU.  The Lomé Conventions  and the Cotonou Agreement with the EC had been
instrumental to Mauritius' economic development.  Mauritius had used the proceeds from preferential
access to invest in and diversify, to the extent possible, its economy, particularly in the absence ofmeaningful FDI inflows.  Mauritius was concerne d, therefore, that continued erosion of trade
preferences would have a negative impact on the acces s of its goods to the EU market.  Noting that in
spite of trade preferences, ACP countries had conti nued to lose market shares, Mauritius would work
to consolidate trade relations with the EC, and belie ved that  securing the ACP-EC waiver remained a
priority.  The representative mentioned that the precedent created by its examination, and the delaythat had characterized the process, could not be good for the multilateral trading system.  Mauritius
called on the understanding of all Members to settle this matter before Doha.  He recalled that for
many years, Mauritius had exported sugar, textiles, and clothing to the United States, and noted that
the African Growth and Opportunity Act (AGOA), aimed at facilitating the access of Mauritian
products from sub-Saharan African countries into the U.S. market, was an extremely importantinstrument for fostering trade, as it would make th e U.S. market the most important market for the
clothing and apparel industry originating in Mauritius.WT/TPR/M/90
Page 6
14. Since 1995, Mauritius had made serious efforts to implement its WTO obligations
notwithstanding its institutional and human capacity constraints.  It had ratified the Agreements onBasic Telecommunications, and Information Technology, and had participated in the extended
negotiations on financial services.  The Customs Act, defining regulations for the import and export of
goods, had been amended to provide for the introduction of the Agreement on Customs Valuation.
Mauritius appreciated observations made by Members so far on its draft legislation on TRIPS,
reviewed in June 2001, and was working towards presenting it for adoption by the National Assemblyin the weeks to come.  An Anti-Dumping, Safeguard and Countervailing Measures Bill was being
finalized.
15. Mauritius had also embarked on a systematic rationalization of its customs tariff structure,
which had changed significantly over the past five years.  The percentage of tariff lines not attracting
duty had increased from 28% in 1999 to 55% in 2001.  Average customs duty revenue collected haddeclined considerably, and stood at around 6% of imports compared with 12% in June 1998.
16. Development prospects and quality of life would increasingly hinge on Mauritius' ability to
access information and master new technologies.  The Government was developing a new policy
framework for that purpose.  Telecommunications would play an important role in government efforts
to attract individual and corporate investors and to secure market access in the IT sector.  Mauritiushad moved from a teledensity of around 13 in 1995 to 24 in 2000.  The SAFE project, to be
operational shortly, would link South Africa to Malaysia via Mauritius by submarine fibre optic cable;
it would provide high speed connectivity, and was expected to boost e-commerce for Mauritius.
Mauritius wished to be fully entrenched in the do t.com development.  Success in this area would
depend, however, on major players' readiness to forge strategic alliances with Mauritius.  India had
provided considerable financial, technical, and human support in this regard.
17. Mauritius was committed to a rules-based multilateral trading system, and believed that
challenges were related to avoiding marginalization, and keeping pace with an increasingly liberalized
international environment.  Referring to the Secretariat Report statement on the importance of
Mauritius' participation in the multilateral trading system and in various regional agreements, he
stressed that, given its small and export-oriented economy, Mauritius would find it difficult to
maintain the development momentum and to meet the challenges of globalization without secure andpreferential market access, and assistance to meet adjustment costs and improve competitiveness.
Mauritius' sustainable economic momentum would depend not only on trade opportunities provided
by the multilateral trading system, but also, and more significantly, on how the multilateral trading
system would address its concerns.  In this respect, the one-size-fits-all approach was both unsuitable
and unworkable.
18. In conclusion, he recalled that at its first TPR in 1995, Mauritius had already stressed the
fragility of its economic success, and at the second WTO Ministerial Conference, Ministers had
recognized the need to address the issue of LDCs ' marginalization.  Hence, Mauritius fully endorsed
the establishment of a work programme for small economies, and believed that such a programme
should result in concrete and practical measures addressing their immediate and longer-term concerns.WT/TPR/M/90
Page 7
III. STATEMENT BY THE DISCUSSANT
19. The discussant recalled that the economic situation of Mauritius was typical of small
developing countries.  Since its first Trade Policy Review, in 1995, Mauritius' economy  had grown at
an average rate of 5.7%.  This impressive growth was surpassed by only a handful of Members.  Since
1995, merchandise trade had accounted on average for 90% of GDP, and had grown at an average
annual rate of 9.5% between 1995 and 2000.  The erratic evolution of  the current account balance
was rooted in a persistent merchandise trade deficit, which was wholly or partially offset each year bya surplus on trade in services.  He invited the Mauritian delegation to comment on changes in the
structure of production and trade, reflected in the healthy upward trend in net services exports since
1995.
20. Mauritius had run a deficit on merchandise trade each year between 1994 and 1999, while the
services account had registered a surplus each year over the same period, due to a significant extent,to earnings from tourism, which had grown at an annual average rate of 9.8% between 1995 and 2000.
Tourism and a smaller but growing financial services subsector were also major contributors to
overall GDP growth, accounting for 74% of real GDP.  The remainder of GDP was accounted for by
manufacturing at 20%, and agriculture at 6%.  There remained structural limits in diversifying the
goods sector, in which the process was one of change rather than diversification.  Mauritius hadmoved from reliance on sugar for 90% of its merchandise exports three decades earlier, to reliance on
textiles and clothing for 70% of merchandise exports at present.  An important aspect of
diversification was the increasing emphasis on services, which accounted for three quarters of GDP,
however, tourism was the third largest earner of fo reign exchange, behind textiles and clothing and
sugar.
21. Labour market rigidities had resulted in real wages increases outpacing growth in
productivity.  Mauritius had become a high-cost country as regards competitiveness of its majormerchandise exports, textiles and clothing, and sugar.  Unemployment had passed from 5% in 1995 to
8% in 2000.  The Government Report acknowledged that to remain competitive, export processing
zone (EPZ) companies had been delocalizing their low-cost activities to neighbouring countries.  The
discussant sought Mauritius' comments in this regard.
22. In spite of political and social stability, incentive schemes, and strong growth performance,
Mauritius had attracted, on average, only US$29 milli on of direct investment over 1993-97, placing it
low among developing countries, including in Africa, in terms of capital inflows.  Data on investment
flows seemed to support the view  that, in the absence of exploitable natural resources and large
domestic markets, many developing countries would find it difficult to share global growth in direct
investment flows.  He asked Mauritius about possible reasons for its failure to attract higher levels offoreign direct investment.  Over 1995-00, direct investment by Mauritians overseas had amounted to
almost 10% of direct investment inflows.  The moderately high level of gross domestic capital
formation stood at 25% with the private sector accounting for more than 70%.  He asked whether
Mauritius would need to attract more foreign direct investment to sustain recent growth rates, and, if
that was the case, what was the Government's strategy, and expected prospects.
23. The Government Report noted that despite the introduction of a value-added tax (VAT) and
various increases in excise rates, Mauritius' budgetary position had continued to be weak, with an
overall budget deficit of 3.8% in 1997-98, and of 6% in 2001-02.  The Secretariat Report had
suggested that the fiscal deficit might rise to between 6% and 9% of GDP because of planned
increases in social expenditures, and that a restrictive monetary policy might help to contain inflation.He asked what would be the impact of a restrictive monetary policy on capital formation and
necessary investment to sustain growth in the context of low direct capital inflows.  He noted that, like
for other small economies, Mauritius' options on the revenue side were limited, and that according toWT/TPR/M/90
Page 8
the Secretariat Report, customs duties and taxes on imports, including excise duties and the VAT,
accounted for some 50% of total tax revenue.  Therefore, it would be difficult to increase revenuesignificantly in the short to medium term.  He sought comments on constraints and options available
in this respect.  Referring to the Secretariat Report, he stated that further reduction of the public deficit
was hampered by the proliferation of exemptions and concessions, and delayed implementation of the
privatization programme.
24. Mauritius, as a small developing and geographically isolated island, placed a high priority on
international trade, and was an active participant in multilateral and regional organizations and
arrangements.  Trade was clearly a dominant engine of Mauritius' economic growth.  Merchandise
exports accounted for 50% of GDP and, in recent years, services exports had amounted to as much as
half of merchandise trade.  As the Secretariat Report had acknowledged, this was not surprising given
Mauritius' small domestic market, a population of just over one million, and its limited naturalresources, including land.
25. Mauritius had joined the GATT in 1970, and was a founding Member of the WTO.  Mauritius
was a signatory to the Agreement on Trade in Information Technology Products, which foresaw
promotion of domestic production of capital-int ensive, higher-value-added goods.  Mauritius
participated in:  the Common Market for Eastern and Southern Africa (COMESA), a free-trade areaand a prospective customs and monetary union;  the Southern African Development Community
(SADC), entailing the establishment of a free-trade area under its Trade Protocol;  the Indian Ocean
Commission (IOC), promoting commercial exchange s, including through elimination of customs
duties on a reciprocal basis;  and the Abuja Treaty on African Economic Community, providing for
the creation of a pan-African common market.  Mauritius was also a signatory to the
Cotonou Agreement, successor to the Lomé Conv ention, providing for rollover of non-reciprocal
trade preferences, including preferential access for textiles and clothing, and sugar, under acommodity protocol.  The Cotonou preferences would remain in place until the entry into force, in
2008, of the WTO-compatible Economic Partnership Agreements to be negotiated between the EU
and the ACP countries.  He recalled the basic provisions of the EU Everything-But-Arms (EBA)
initiative.  Mauritius was concerned that, as a result of this initiative, the sugar and textiles and
clothing industries, which accounted for approximately 85% of merchandise export earnings, wouldcome under severe competitive pressures.  Mauri tius was a beneficiary of the AGOA, which provided
for free access to a range of manufactured products originating in beneficiary African countries, and
was a beneficiary of several GSP programmes.  Mauritius' sugar and textiles and clothing industries
had enjoyed growth and development, thanks to pr eferential access, primarily to the EU market.
26. Agriculture employed 10% of Mauritius' labour force and accounted for 25% of foreign
exchange earnings.  Agricultural policy sought to ensure food security and to diversify production
away from sugar, which accounted for 80% of land use and more than half of agricultural income.
Mauritius emphasized the multifunctional role of agriculture and of its sugar industry.  Sugar from
Mauritius entered the EU market under the EC-ACP Sugar Protocol and the Special Preferential
Agreement.  The share of sugar in total GDP had declined from 25% in the 1970s to 7% in 1999,while sugar revenues, after having risen steadily since the mid-1990s, had fallen back to about the
mid-1990s level.  He noted that the continuing freeze of sugar price in the EU, and further
liberalization of agriculture, would have far-reaching implications for Mauritius, which was engaged
in a major reform programme to rationalize its sugar industry, reduce costs, and improve
competitiveness.
27. Since 1995, the manufacturing sector had grown at a rate of 6% per year.  Although the sector
was dominated by the textiles and clothing industry, Mauritius also produced chemicals and chemical
products, paper and printing, optical goods, electronics, and information technology products.
Export-processing zones (EPZ) were key compone nts of its manufacturing industry.  ProductionWT/TPR/M/90
Page 9
therein accounted for half of the total value-added in manufacturing, and  textiles and clothing
accounted for 80% of EPZ exports.  Total exports of textiles and clothing had increased by 66%between 1995 and 1999.  As in other sectors of th e goods producing economy, rising production costs,
especially for labour, were cited as problems facing the textiles and clothing industry, as well as
limited production base, low technology and insufficie nt higher-value-added production.  Preferences
had been instrumental in development and export growth, broader liberalization processes, therefore,
posed a threat to Mauritius' textiles and clothing industry.  In this respect, the Secretariat Report notedthat: “the dismantling of the Multi-fibre Arrangement (MFA) and post-Lomé ACP-EU Agreements
will increase competition in traditional markets,  mainly the EU, where Mauritius is the largest
exporter of textiles and clothing among ACP count ries.” Mauritius promoted production of higher-
value-added and capital intensive goods to lessen dependence on traditional markets and foster
regional trade as well as delocalization of low-value-added production to lower-cost neighbouringcountries.  Noting the importance of preferential access and incentive schemes provided to Mauritius'
producers, including the 500 industries in the export-processing zones, the discussant invited
Mauritius to comment on the role of preferences and incentives.
28. Tourism was the third largest source of foreig n exchange earnings for Mauritius.  Tourist
arrivals were expected to grow at 8% over the next few years.  However, constraints related to sizeand absorptive capacity were relevant in this sector , which played an important role in diversification
of the economy.  Mauritius was receiving each year a number of tourists close to 60% of its own
population (1.19 million), had received over 650,000 tourists in 2000, and expected 700,000 arrivals
in 2001.  Mauritius' strategy was to promote low-im pact, high-spending tourism so as to ease the
impact on physical infrastructure, and minimize the environmental impact on the marine eco-system
as well as social dislocation.  This was likely to confine its tourism product to a narrow but lucrative
segment of the market, with possible implications for volatile earnings in a sector whose health oftenreflected the crests and troughs of the external economic environment.
29. Financial services, including off-shore business, free-port activities, fund management,
insurance, and banking, had grown annually by 10% in the past three years, and were expected to
contribute slightly more than 10% of GDP in 2001.  According to the Government Report, in less than
ten years the offshore sector had attracted the elite of multinational bankers and investmentcompanies, and was providing international services ranging from asset holding to trading and fund
management.  The Government had enacted an Economic Crime and Anti-Money-Laundering Bill to
prevent and combat malpractices.
30. Mauritius faced erosion of preferential margins resulting from trade liberalization in
agriculture and industrial products.  Predictability was impaired by the prospective phasing out ofsome arrangements, while uncertainty was created by unilateral changes.  Competitive conditions in
major markets were affected by a growing number of reciprocal arrangements, involving major
developed and developing countries.  He asked Mauritius' view regarding:  (i) regionalism as a
building block towards multilateralism;  (ii) the relationship between competitiveness and
diversification;  and (iii) the potential for further liberalization, particularly on the import side.
31. He recalled the main features of Mauritius' trade policy:  low level of bindings, 14.6% of all
tariff lines, with ceiling bindings applicable to a range of agricultural products (122%) and
non-agricultural products (65%);  an increase in the number of prohibited goods from 13 in 1995 to 24
in 2001;  a list of controlled goods subject to permits with specific conditions and restrictions
applicable, in some cases, to their importation;  some apparent variation in the application of exciseduties between imports and exports;  differential import duties to be phased out between scheduled
and non-scheduled territories;  and a tariff structure carrying a large number of bands and a high
dispersion of rates.  More than half of Mauritius' tariff lines were duty-free.  Mauritius faced a more
demanding external environment.  Structural re form, with emphasis on improving the allocation ofWT/TPR/M/90
Page 10
resources, reducing dependence on sugar, and expanding the services sector, had worked quite well,
as testified by economic data.
32. Should preferential access and associated margins for Mauritius' manufactures continue to be
eroded, satisfactory performance of the economy w ould depend, to a great extent, on growth and
development of services.  As a result, the pace of liberalization would have to ensure adjustment by
enterprises and industries, minimal social dislocation, and sufficient levels of investment inflows,
while positioning Mauritius as a stable, efficient hub for investment and a supplier of goods andservices to regional and other markets.  Concerns remained as to whether the "Mauritian miracle"
would persist in a more competitive international en vironment without recognition, at all levels, of its
specific constraints, and without measures to reduce their impact.WT/TPR/M/90
Page 11
IV. STATEMENTS BY MEMBERS OF THE TRADE POLICY REVIEW BODY
33. The representative of Switzerland recalled Mauritius' active participation in the WTO, and
appreciated its efforts to promote multifunctionality and non-trade concerns in agriculture.  The
second international conference on Non-Trade Concerns, hosted by Mauritius in May 2001, had been
an important step towards better understanding of those issues.  Switzerland also welcomed Mauritius'
support for the extension of protection of geographical indications under the TRIPS Agreement, and
noted its efforts to bring national legislat ion into conformity with the Agreement.
34. The representative of Japan welcomed reduction of tariff rates and increase in the number of
duty-free lines as well as efforts made by Mauritius to shorten time for custom clearance by
streamlining documentary control based on the risk level.  Japan noted that local companies producing
primarily for the domestic market were eligible for reductions of income tax:  by 30% when exports
accounted for between 10% and 30% of output;  and by 40% reduction when more than 50% ofoutput was exported.  Such a system could correspond to export subsidies prohibited under Article 3.1
of the Agreement on Subsidies and Countervailing Measures (SCM).  Japan sought Mauritius' views
on this matter.  Japan agreed with the multifunctiona lity of agriculture, and believed that coexistence
of various types of agriculture should be a common goal for all countries.  Japan hoped that Mauritius'
agricultural reform would be successful.  Japan noted Mauritius' active participation in the servicesnegotiations, and asked whether Mauritius intended to relax restrictions on tourism services.
35. The representative of Argentina noted Mauritius' active participation in the WTO, and
welcomed the establishment of the Standing Committee on WTO matters.
36. The representative of the European Union (EU) encouraged Mauritius to further liberalize and
diversify its economy to keep up with global market changes.  Mauritius should engage fully in WTO
negotiations to ensure that its concerns would be addressed.  Regional integration should aim at full
participation of the Southern/Eastern African region into the world economy.  The EU agreed withMauritius on multifunctionality of agriculture, and shared the objective of obtaining the ACP-EC
waiver as soon as possible.  The Sugar Protocol played an important role for Mauritius, which
benefited from the largest quota under the Protocol, with an estimated value of € 150 million
annually.  Under the Lomé/Cotonou Agreement, textiles and clothing exports enjoyed duty-free and
quota-free access to the EU market.
37. The EU asked Mauritius to elaborate further on plans to reduce reliance on trade taxes, and
wondered whether it had considered reviewing its cu rrent tax system, or changing levels of fiscal
incentives.  The EU was concerned about rates applied to alcoholic beverages, and sought information
on whether Mauritius envisaged reducing high applied rates and improving bindings, while noting
that for industrial tariffs the share of customs duty in total tax revenue had declined markedly.  TheEU also sought information about differences in the application of excise duties between imported
and locally produced goods, and on Mauritius' plans to equalize the excise rate.  The EU encouraged
Mauritius to apply for GPA membership, and enquired  about its intention to ensure that the Central
Tender Board Act (CBTA) would be in conformity  with the GPA.
38. The representative of Canada commended the economic and trade policy reforms undertaken
by Mauritius since 1995, including reducing the public deficit and lowering tariff rates.  Canada
encouraged Mauritius to further reduce tariff rates,  particularly in the manufacturing sector, and to
work towards rationalization of duties and excise taxes, while urging binding of more tariff lines and
narrowing the gap between applied and bound rates to enhance predictability, transparency, and
stability for importers and exporters, and attract investment.  Mauritius' intervention at the TRIPSNational Implementation Review Process, held in  the June 2001 TRIPS Council, had clearly shown
that Mauritius took implementation seriously.  Canada congratulated Mauritius for its commitments inWT/TPR/M/90
Page 12
the negotiations on financial services.  Canada encouraged Mauritius to develop opportunities for the
private sector to participate in areas that had traditionally been in the public realm.
39. The representative of Hong Kong, China appreciated Mauritius' commitment to the
multilateral trading system.  Hong Kong, China acknowledged Mauritius' capacity constraints, and
believed that technical assistance was necessary.  In the WTO negotiations attention should be paid to
development needs of small developing-country Members, and a balanced agenda serving interests of
all Members should be sought.  In this connection,  Hong Kong, China noted that the draft Ministerial
Declaration for Doha had incorporated a work programme for small economies, with a view to
enhancing their integration into the multilateral trading system.  Hong Kong, China commended
Mauritius' efforts to reduce reliance on sugar, to open-up its services sector, and to continue its trade-
related reform.
40. Hong Kong, China encouraged Mauritius to further simplify its tariff structure by reducing
the number of tariff bands, narrowing its high tariff dispersion, and increasing coverage of its tariff
bindings.  Excise duties on imported goods were higher than those applied on locally produced goods,
Hong Kong, China urged Mauritius to review its ex cise duties regime in the light of the national
treatment principle.  The number of products subject to import ban, or import control by means of
permit had increased since 1995.  Hong Kong, China en couraged Mauritius to critically review these
restrictions and work towards  liberalization.
41. The representative of Australia acknowledged Mauritius' economic reforms and its high
economic growth as well as its active participation in the multilateral trading system.  Australia
recognized difficulties faced by developing countries in liberalizing agriculture.  However, it
considered that market distortions and production inefficiencies inherent in protectionist measures
were more harmful in the long term.  Australia al so encouraged Mauritius to ensure that non-trade
concerns in agriculture were addressed in a non-trade distortive manner.  While accepting thatregional and bilateral arrangements were beneficial for developing countries, Australia encouraged
Mauritius to be sure that its regional arrangements did not interfere or diminish the value and role of
the multilateral trading system.
42. The representative of the United States recalled that the AGOA would help Mauritius to
diversify its exports through expanded market access, and was expected to bring vertical integration in
the local textile industry.  Mauritius had adopted the method of valuation based on transaction value
as of 1 January 2000.  Implementation of the Trade Net Customs Clearance System, allowing
electronic pre-submission of documents, thus di minishing customs clearance times, was welcomed, as
well as Mauritius' participation in the extended WTO negotiations on financial services, and its
participation in the Information Technology Agreemen t.  The United States encouraged Mauritius to
finalize as soon as possible its new legislation on patents and trade marks, and to draft legislation on
industrial designs, geographical indications, and layout designs of integrated circuits, to comply with
its obligations under the TRIPS Agreement.
43. The United States also urged Mauritius to equalize excise duties applied on imports and on
locally produced goods, and to consider reducing the number of products subject to price controls.The United States encouraged Mauritius to become either an observer or a member of the GPA, to
support the proposed Agreement on Transparency in Government Procurement, and to reduce
restrictions on foreign investment in the tourism sector, on foreign participation in tour operators, and
in other services.
44. The representative of Kenya considered Mauritius' economic development as inspiring to
other African countries.  Average growth of 6% per year was the target set under the United Nations
New Agenda for Africa (UNNAA) to a ssist poverty eradication.  Diversification into higher-value-WT/TPR/M/90
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added manufacturing, and services was noteworthy.  Mauritius had also delocalized low-value-added
labour-intensive activities to neighbouring countries.  Referring to the UNCTAD report, he noted thatthe phenomenon of the flying geese syndrome had finally arrived in Africa, through Mauritius;  and
invited Mauritius to extend its delocalization horizons to Kenya.  He noted that the African Economic
Community (AEC) would replace the OAU in 2002.
45. The representative of India recalled that, due to a very narrow resource base and a small
domestic market, Mauritius' possibilities for diversification were limited, and production and exports
were heavily concentrated on a limited number of products.  India recognized the dilemma between
multilateral trade liberalization and the decline in pr eferential margins in traditional markets.  The
establishment of a thriving competitive modern society with a high level of economic growth, and the
ultimate objective of improving standards of living and quality of life, through a liberal economic and
trade policy was welcomed.  India hoped that the WTO would address concerns of small islandeconomies in an effective manner.
46. The representative of Barbados noted that, in spite of its open trade regime, FDI in Mauritius
had remained low.  This could be explained by the lack of exploitable natural resources, small
domestic market and uncertainty of market access rather than inappropriate legislation.  Small
economies faced difficulties in achieving self-sustained development, and had few options indiversifying their economies.  Reliance on tourism would make Mauritius even more vulnerable to
external shocks.  Tariff reduction and divestment of public assets alone would not solve problems
faced by small economies.  Two issues remained to be tackled:  adjustment to the erosion of trade
preferences, and attraction of more foreign investment.
47. The representative of Benin stated that Mauritius' successful trade policy was followed with
interest by other African countries.  Benin supported the request for an action plan aimed at
addressing concerns of small economies, like Mauritius.
48. The representative of Djibouti acknowledged Mauritius' active participation in the WTO, and
noted that for African countries the main issue was related to trade facilitation, and in particular better
knowledge of market-access conditions and SPS requirements in developed countries markets.
49. The representative of the Congo recalled similarities between his country's and Mauritius'
economy, which were both based on a mono-crop agriculture sector, limited domestic market, high
production costs, and few export products.  The Congo welcomed efforts made by Mauritius to
comply with its WTO obligations.
50. The representative of Gabon noted that there were many similarities between Mauritius and
his country, and acknowledged efforts made by Mauri tius to be fully integrated into the multilateral
trading system.  Gabon shared Mauritius' view on multifunctionality of agriculture.
51. The representative of Jamaica said that the trend toward market liberalization and the
consequent erosion of preferences had had profound effects on small economies.  Regional
arrangements played a critical role in building competitiveness;  ensuring market diversification;  and
facilitating full and effective participation in the multilateral trading system.  Preferential market
access had facilitated diversification and structural change, while providing necessary time to  adjustto increasing market competition.  Concerns and constraints of small developing economies had to be
recognized at the multilateral level.  Jamaica welcomed the work programme to help small developing
economies to participate effectively in the multilateral trading system.
52. The representative of Madagascar referred to ties between the two countries, which were both
engaged in the development of the Indian Ocean region, and commended Mauritius for its role inWT/TPR/M/90
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defending developing countries' interests and economic performance.  Mauritius faced challenges
derived from a demanding external economic environment.  To help Mauritius' integration into theglobal economy, the international community should take its constraints into account and take
appropriate actions.
53. The representative of Morocco congratulated Mauritius for its economic reforms, and
measures taken to comply with its WTO commitments.  Morocco, as a net food importer, shared
concerns expressed by Mauritius in the areas of  agriculture, services, including tourism, and off-shorezones.
54. The representative of Nigeria recalled Mauritius' economic policy and developments,
commended the tariff reduction on a wide range of products, and measures taken to implement its
WTO commitments.  Mauritius had also become a signatory to the Agreement on Information
Technology.  Nevertheless, Mauritius faced cha llenges arising from globalization and the EU-EBA
initiative.  Nigeria supported Mauritius' proposal for an action plan aimed at addressing the concerns
of small economies in a comprehensive manner.
55. The representative of Pakistan welcomed Mauritius' efforts to implement WTO obligations
and commitments, and to be an integral part of the multilateral trading system, in spite of external and
internal constraints.  It was not easy for small developing countries to implement WTO Agreements,while ensuring social development.  Pakistan supported  Mauritius' request for technical assistance.
56. The representative of Norway recalled that Mauritius' active participation in the global trade
regime had helped it to pursue its economic and social objectives, and had contributed to its economic
diversification.  Mauritius had implemented a successful export-led strategy.  The contribution of the
services sector, amounting to 74% of real GDP, was particularly impressive.  Mauritius was a net
services exporter.  Norway understood the difficulties faced by Mauritius in agriculture, which
resulted, as in other small economies, from diseconomies of scale and scope, high unit costs of inputfactors and transport, related to size, remoteness, and vulnerability to natural disasters;  and
dependence on one or a few export commodities.  While diversification efforts should be encouraged,
Members should ensure that market access for key commodities were not eroded.
57. The representative of Turkey welcomed Mauritius' economic performance, its active
participation in the multilateral trading system, and its efforts to pursue liberalization in spite of
constraints faced as a small developing economy.
58. The representative of Uruguay, referring to the Secretariat Report, recalled the high
proportion of trade in goods to Mauritius' GDP, and noted that Mauritius was a net services exporter.
As a small developing country relying on agriculture exports, Uruguay believed that the best way to
integrate into the multilateral trading system was to  further liberalize trade in agriculture, through
elimination of subsidies by developed countries to allow developing countries to be competitive.
Uruguay rejected the concept of multifunctionality of agriculture, and believed that this principle was
a disguise for protectionism.
59. The representative of Zimbabwe welcomed Mauritius' macroeconomic policies in spite of
constraints faced as a small developing economy.  Mauritius was also an active member of regional
organizations, which were building blocks towards integration into the global economy.  Zimbabwe
supported the work programme on small economies, as presented in the draft Ministerial Declaration
to be discussed at Doha.
60. The representative of Cyprus acknowledged efforts made by Mauritius to define adequate
national policies, in spite of constraints faced as a small island economy, while implementing itsWT/TPR/M/90
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WTO commitments and obligations.  He recalled bilateral cooperation between the two countries, and
their shared view on the multifunctionality of agriculture.
61. The representative of Malaysia commended the diversification of Mauritius' economic
activities.  Malaysia supported the work programme for small developing countries.  However, trade
preferences were a provisional stage towards full trade liberalization.  Malaysia had experienced the
phasing-out of trade preferences, yet had managed to export accordingly.  Therefore, Malaysia
encouraged Mauritius to further liberalize its domestic economy.  The WTO negotiations onagriculture should aim at full liberalization.
62. The representative of the Dominican Republic underscored similarities between the two
countries with regard to implementation of macroeconomic policies and plans.  He also recalled
efforts made by the Dominican Republic to encourage the development of the tourism sector.WT/TPR/M/90
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V. REPLIES FROM THE REPRESENTATIVE OF MAURITIUS AND ADDITIONAL
COMMENTS
63. The Chairperson invited the representative of Mauritius to focus his responses on three main
themes:  (i) economic environment;  (ii) trade policies and measures;  and (iii) sectorial policies and
measures.
(1) ECONOMIC ENVIRONMENT
64. Mauritius faced a number of permanent constraints linked to its geographical realities,
including scarcity of land, which influenced policies and shaped the economic and business
environment.  Mauritius faced challenges related to erosion of preferential margins and increased
competition;  reduction of revenue flows resultin g from the lowering of customs tariffs;  the
requirement to contain budget deficit;  the need to find resources to fuel growth and launch new
activities;  mounting pressure on scarce resources, high production costs, and the need to improveproductivity of the labour force.  Mauritius had already embarked on second generation reform
programmes with the objective of setting  foundations for a more dynamic and competitive economy.
65. Mauritius aimed to adapt its educational system to the requirements of the new economy.
Education reform and enhanced training would re duce the skills mismatch that had developed over
the years, and provide the necessary skilled manpower for economic growth.  A key component ofthis strategy was the creation of the University  of Technology (UTM) to provide education and
training at diploma, degree, and post graduate  levels, with emphasis on science and technology.
66. A Model Factory had also been set up at the Clothing Technology Centre to initiate local
enterprises to latest technologies and best practices management to address the problem of
multi-skilling, re-skilling, and skills realignment in the clothing subsector.  An intensive training
programme had been designed to retain operators  and turn them into multi-skilled operators capable
of dealing with the different facets of construed manufacture with higher value-added content tosupport product upgrade and diversification within the sector.  A new project, financed by the
European Commission under the 8
th European Development Fund to the tune of € 7 million, had also
been set up to provide SMEs with necessary expertise and support systems in areas such as quality
and standards of products and processes;  skills development;  and technical assistance for investment
in technology.
67. Mauritius had also embarked on a thorough and critical review of its tax system with a view
to rationalizing its fiscal incentive regime.  A first draft report of the study by UNCTAD on the
review of the fiscal incentive regime was expected by December 2001.  Draft legislation would be
introduced in the National Assembly shortly on competition, protection against unfair trade practices,
and on TRIPS-related legislation, namely on patents, industrial designs and trade marks layoutdesigns (topographies) of integrated circuits;  and geographical indications.
68. Production processes were constantly reassessed.  A whole array of technical, legislative,
administrative, technological, and educational and vocational measures were being, and would be
taken to enhance competitiveness.  Diseconomies of scale, absence of raw materials, and distance
from export and import markets inevitably boosted production costs.  Trade preferences wouldcontinue to play a key role in shaping future trade prospects and any brutal disruption would have a
severe negative impact on the fragile socioeconomic fabric of Mauritius.  Referring to the
Secretariat Report, the representative pointed out that increases in wages had outstripped productivity
gains in real terms.  Mauritius was currently reviewing the Labour Act, and modifications had already
been made to legislative provisions governing the sugar sector.  Nonetheless, wage setting had to beWT/TPR/M/90
Page 17
seen against the context of a democratic set-up whereby modernization and adjustment of the
economy necessitated public support through sharing of benefits.
69. In the absence of exploitable natural resources and large domestic markets, many developing
countries would find it difficult to share in the global growth of direct investment flows.  He recalled
that up to mid-1976, Mauritius' economy had been dominated by sugar, a subsector characterized by
almost entirely local investment.  The beginning of industrialization had been characterized by FDI
from Hong Kong, China and Chinese Taipei, in the textiles and apparel subsector, as well asinvestment from Europe.  However, gradual eros ion of preferential margins and profound changes
over the past decade in Europe had led European and other international foreign investors to search
for new locations.  Thanks to COMESA and the SADC Trade Protocol, investment from India for
activities producing for export to the African continent had become possible.  Despite these
difficulties, the economy had generated sufficient funds to ensure satisfactory growth.  Nevertheless,development of new subsectors, like informat ion and communication technology, would require
substantial FDI inflow.  At the international level, the Government was striving to enhance
development of this subsector, to secure market access and investments, and the improvement of the
legal and administrative framework.
70. Participation in regional trading arrangements was part of the Mauritian response to the
changing global environment.  Regional and subregional integration was one of the key tools for
economic operators, particularly those operating in small economies, to prepare for their integration
into international markets.  Strengthening the interface between economies of different sizes and
levels of development as, for example, in the SADC region would lead to greater economic and policy
cohesion, and would facilitate integration into the multilateral trading system.
71. SADC and COMESA had to work together and synchronize the timing and the scope of their
integration process.  At the last meeting of the African Trade Ministers in Abuja, the subregionalblocs of the African continent had been urged to harmonize trade liberalization programmes with a
view to convergence.  In the area of regional development, Mauritius was giving a new impetus to
regional cooperation in particular through the reactivation of a plan to develop the special economic
zone (SEZ) of 100,000 hectares in Mozambique.
72. The discussant enquired whether the source of wages outstripping productivity in Mauritius
was to be found in labour unions' activities, and wondered whether organized labour did not impede a
solution to the issue of low productivity.  He noted that participation of Mauritius in regional
agreements had attracted investment, and asked whether Mauritius' participation in Trade-Related
Investment Measures (TRIMs) and the Agreement on SCM had affected its ability to provide
attractive investment packages.
73. The Chairman asked Mauritius to comment on l ack of investment in the tourism sector.
74. The representative of Mauritius stated that his country had been able to mobilize local groups
for investment in the hotel business.  The Govern ment policy did encourage FDI in the hotel sector.
The Minister of Tourism was currently considering projects from foreign investors.  Although
Mauritius realized that flexibility in the wage-se tting mechanism could be favourable to investment,
trade unions played a role in Mauritius' democracy, and contributed to its social stability, which was
also important for investment.  Recognizing the importance of this issue, the Government had
mandated the tripartite National Economic and Social Council to address it.  Mauritius had
streamlined its investment packages to align them with the WTO Agreements.  In this respect,
Mauritius wished to have some flexibility, and hoped that the UNCTAD Report would help to addressthis issue.WT/TPR/M/90
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(2) TRADE POLICIES AND MEASURES
75. Tariffs had been lowered as a result of on-going tariffs reform, and the coming into force of
the SADC Trade Protocol and the COMESA Free Trade Area.  Current high tariff rates (55% and
above) applied mainly on non-essential consumer goods, and had been maintained for revenue-raising
reasons.  Composition of the tariff bands had changed.  Mauritius had pursued tariff reform, although
its implementation had been marred by severe reve nue and budget deficits, presently at 6.5% of GDP.
Since 1999, Mauritius had been lowering overall tariff levels and intended to pursue liberalization in abalanced manner.
76. Non-tariff measures were in accordance with GATT/WTO provisions for health, security, and
environmental reasons, and were aimed at achieving legitimate national policy objectives.  The value
added tax (VAT) Act 1998 had come into effect from 7 September 1998, while the Sales Tax Act of
1982 had been repealed.  Mauritius had initiated a rationalization programme on excise taxation inorder to equalize excise rates on imported and locally produced products.  Mauritius had bound duties
for industrial products on several tariff lines, availing itself of the flexibility generally given to
developing countries in the scheduling of WTO commitments.  Mauritius would pursue its active
participation in the MTS, while keeping a balance between its rights and obligations.
77. Section 4 of the Customs Tariff Act gave discretionary power to the Minister of Finance to
remit or refund customs duties leviable under the Act.  This measure, introduced in 1970, had been
used mainly to remit duty on investment goods, raw materials, and other imported inputs used by
local industries, and was meant to boost the initial industrialzation process of Mauritius.  It was now
very rarely used as duties on such goods had been virtually removed as part of the tariff reform.
78. This section of the Act had been maintained to cater for practical cases, such as refund of duty
incorrectly charged or remission of duty to natural persons and charitable and like institutions on
humanitarian grounds.  The Value Added Tax Act of 1998 provided for no discretionary power ofremission, and only a very limited number of items required an import permit.  Whenever import
prohibitions applied, they were in conformity with GATT provisions, directed at protecting public
health, public safety, and the environment.  There we re no restrictions to the importation of chocolate
confectionery and no controls on other types of sugar and chocolate confectioneries and
bubble/chewing gums.  In line with the Governme nt policy to discourage acquisition of smoking
habits among school children, prohibition applied only to confectionery in the form of cigarettes.
Permits were required for export of certain products, mostly for sanitary, phytosanitary,
environmental, and food-security reasons.
79. The State Trading Corporation (STC) was a parastatal body created by an Act of Parliament
in 1982 to import staple commodities as well as strategic products, such as petroleum.  Theresponsibility of the STC was to ensure regularity of supplies of essential products as well as
reliability of suppliers, whilst operating on sound commercial principles.  In order to obtain the best
possible prices, the STC launched open international tenders for its purchases.  This system of
procurement was transparent and in conformity with WTO provisions.  State-trading enterprises did
not have the capacity to distort trade, but acted as shock absorbers whenever there was an upsurge ofbasic commodity prices.  They provided security of supply whenever there was a shortage of such
goods in the market or when the free market operators were not prepared to venture in the absence of
commercially viable terms of business.
(3) S
ECTORAL POLICIES AND MEASURES
80. A strategic plan for 2001-05 had been prepared for the sugar sector.  The Sugar Industry
Efficiency Act 2001, had been voted in and was aimed at, inter alia,  maintaining efficiency andWT/TPR/M/90
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viability of the sugar industry, while further promoting democratization of ownership.  The
Government was preparing a strategic plan for the non-sugar agricultural sector.  Procedures relatingto land conversion had been reviewed to ensure optimal use of land.
81. In the manufacturing sector, the action plan, to be published at the end of 2001, was aimed at
making Mauritius a competitive exporter, and an important player in the development of a regional
textiles and apparel industry.
82. Tourism would be governed by a new Tourism Bill to be introduced in the National Assembly
soon.  The law would enable the tourism sector to respond to new exigencies of a competitive and
growth-fostering industry.
83. The whole financial services landscape had also been stimulated through the restructuring of
regulatory and supervisory institutions, and the adoption of the Financial Services Development Act,
the Companies Act, and the Trusts Act.  It would be further consolidated by the forthcomingenactment of an Insolvency Bill, a Securities Bill, a new Insurance Bill and a Collective Investment
Schemes Bill.  Legislation was expected to set the stage to move on to a higher growth trajectory,
both in terms of value-added and high-skilled job creation, to enhance open market operations, and to
make monetary policy more effective.  Greater competition in the money and capital markets would
induce banks to lower the lending and deposit interest rate spread, and eventually lead to morecompetitive interest rates conducive to growth.
84. The Government was trying to develop new economic sectors.  In this context, high priority
was accorded to the development of the Information and Communication Technology (ICT) sector to
transform the country into a Cyber Island.  The Government had already prepared a paper on
Mauritius' objectives, including having on-line services by 2005, in the e-sector.  The Government's
decision to open up the Internet service provider (ISP) market to a pro-competitive and duly regulated
environment, and the reduction in the annual licence fee, would ease the process for rapiddigitalization of Mauritius' economy.
85. In conclusion, Mauritius' experience since the Uruguay Round had demonstrated that, in a
rapidly liberalizing world, costs of adjustment for small economies could be extremely high.  Hence,
the second TPR had highlighted the importance of trade preferences for Mauritius.  Vulnerability of
Mauritius' economy had also been acknowledged.  While remaining fully committed to theestablishment of a fundamental development agenda in the WTO, Mauritius reiterated that it was
imperative that specificities of small island economies were recognized and that their concerns were
addressed by the international community.
86. The discussant asked whether Mauritius intended to synchronize its tariff commitments under
the WTO Agreements with those foreseen in its engagements under regional agreements, such as
COMESA.  He also enquired whether Mauritius pla nned to put in place trade remedies legislation to
deal with unfair trade practices, or intended to use the tariff regime as a defence mechanism.
87. The representative of India acknowledged Mauritius' active participation in the WTO, and
hoped that problems faced by small economies could be resolved with international support in the
near future.
88. The representative of Mauritius replied that synchronization of tariffs had to be discussed
with its regional trading partners.  Legislation on anti-dumping was expected to be finalized by the
end of 2001.WT/TPR/M/90
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VI. CONCLUDING REMARKS BY THE CHAIRPERSON
89. We have had open and fruitful discussions on Mauritius' trade policies and practices.  This
second Trade Policy Review of Mauritius has been thorough and comprehensive;  this was made
possible by the full engagement of the Mauritian delegation, led by Minister Cuttaree, and by the
active involvement of many Members.  Members were impressed by the sustained strong growth of
Mauritius' economy over the past two decades.  This performance was attributed to sound
macroeconomic policies and preferential market access.  Noting that despite its economic success, andpolitical and social stability, Mauritius had attracted less foreign direct investment (FDI) than other
developing countries, Members queried its failure to attract higher levels of FDI.  Clarification was
sought about further steps to take up challenges faced by the economy, including labour market
rigidities, and high production costs.
90. Members appreciated Mauritius' active participation in the multilateral trading system.  There
was also recognition of the constraints facing Mauritius due to it being a small developing country
located on a remote group of islands, and of the need for assistance to enhance its integration into the
multilateral trading system.  Members were supportive of Mauritius' initiatives towards regional and
bilateral agreements to expand its trade, and its position on regionalism as a building block towards
multilateralism.  However, some concern was expressed about Mauritius' participation in variousoverlapping regional agreements.  Members commended Mauritius on its efforts to adjust to erosion
of preferential margins due to multilateral trade liberalization and increasing participation of
developed countries in regional and bilateral agreements, and sought information on the importance of
preferential market access for the Mauritian economy.
91. Noting that customs duties accounted for about 50% of Mauritius' tax revenue, Members
enquired about its plans to reduce its reliance on border taxes.  They encouraged Mauritius to further
liberalize its trade regime through simplification of its tariff structure, dismantling of non-tariffmeasures on imports and exports, and elimination of differing tariffs and excise duties.  Suggestions
were made that Mauritius narrow the gap between bound and applied rates, and increase the coverage
of its tariff bindings on non-agricultural products.
92. Some Members joined Mauritius in its support for the multifunctionality of agriculture while
some others viewed this concept as an excuse for barriers to trade, and urged Mauritius to liberalize
its agriculture sector.  Members pointed out that the textile, clothing, and sugar industries, the main
sources of earnings from merchandise exports, were highly protected, and enquired about Mauritius'
plans to further liberalize these industries and diversify its exports away from these products.
Clarification was sought about Mauritius' plans for fu ture structural reforms in its services sector and
for further commitments under the GATS, particularly  in areas such as tourism, telecommunications,
and financial services.
93. Members also sought further clarification on, inter alia :
- business environment;
- elimination of elements of duality in the economy through transformation
from export- to outward-orientation;
- incentive schemes, including export subsidies and credit, and duty and tax
concessions;
- state-trading enterprises and implementation of the privatization programme;WT/TPR/M/90
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- government procurement and eventual participation by Mauritius in the
Plurilateral Agreement on Government Procurement;
- adoption of legislation on competition and on contingency trade remedies;
and
- revision and adoption of legislation to comply with obligations under the
WTO Agreement on TRIPS.
94. Members appreciated the responses provided by the delegation of Mauritius during the
meeting, and look forward to later replies to some questions.
95. In conclusion, this Review has given Members an opportunity to better understand the
challenges facing Mauritius.  Members commended Mauritius on its transformation from a mono-
crop, to a relatively diversified economy with four pillars, and appreciated its steps to adjust to
changes in the international environment.  Member s encouraged Mauritius to further liberalize and
diversify its economy.  In my personal capacity, I advocate that all Members support Mauritius in its
efforts by securing market access for its products and assisting it to meet adjustment costs and
improve competitiveness.
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