Business Information
INTERNATIONAL TRADE AGREEMENTS
Mauritius being a member of various regional groupings is signatory of a series of international trade agreements which provide PREFERENTIAL MARKET ACCESS to key export markets such as the US, EU, India and Sub-Saharan Africa, comprising markets such as the Common Market for Eastern and Southern Africa (COMESA) and the South African Development Community (SADC).
Multilateral
US Market: The Africa Growth and Opportunity Act (AGOA)
The AGOA was enacted in the year 2000 with the main objective of giving Sub Saharan African countries duty-free and quota-free access to the US market, subject to its rules of origin. The latest version of the law, AGOA III, extending the law until 2015, was voted in June 2004 by the US Administration.
AGOA provides for duty free and quota free access into the US market for the following products:-
• apparel assembled from fabrics made in Sub-Saharan Africa, using either US or Sub-Saharan African yarn.
• apparel cut and assembled in Sub-Saharan Africa, made from US fabrics, which are themselves made from US yarn / thread
• apparel assembled in Sub-Saharan Africa, made from US fabrics, which are themselves made from US yarn/thread and cut in US
• apparel made from fabrics, or yarn, not available in commercial quantities in US, such as silk, linens, fine count knitted cotton fabrics, Cotton Velveteen, Harris Tweed, lightweight high thread count poly-cotton woven fabric, etc.
US Generalised System of Preferences (GSP) Program
The Generalised System of Preferences (GSP) Program, under the AGOA, has been extended until 2015, and covers a wider range of products, including leather items (bags, footwear, gloves and garments), watches and watch parts. Therefore, the GSP Program for AGOA beneficiaries will not require renewal at the end of every year, as is the normal practice.
European Union (EU) Market
ACP-EU Partnership Agreement
Exports from Mauritius enjoy duty-free and quota access to the European Union (EU) subject to satisfying the rules of origin criteria through the Cotonou Convention. The new Partnership Agreement has been signed between the seventy-seven member African, Caribbean and Pacific (ACP) group of states and 25 EU countries.
Currently, the EU is negotiating new Economic Partnership Agreements with the ACP countries. These are based on a regional configuration. Mauritius forms part of the Eastern and Southern African block comprising mostly of COMESA countries.
The objectives of EPAs , as stated, are:
• to promote sustained growth;
• to strengthen the economic development of countries which make up the ESA EPA by strengthening the trade policy environment and supporting poverty reduction programmes;
• to increase the production and supply capacity of the ACP countries;
• to foster the structural transformation of the ESA economies and their diversification, to allow them to be more competitive in a global environment and reduce the economic vulnerability of the region;
• to support regional integration;
• to strengthen the trade negotiating capacities of the region and member States so that they can play a more meaningful role in negotiations of RTAs as well as bilateral and multilateral trade and development agreements;
• and to promote and enhance co-operation in trade-related areas, including rules of origin, TBTs/NTBs and SPS issues.
The negotiations on Economic Partnership Agreements (EPAs) between ACP (Africa, Caribbean, Pacific) countries and the European Community (EC) were launched in Brussels on 27 September 2002. The Cotonou Agreement provides for the basic procedures of the negotiations, including that EPAs shall enter into force by 1 January 2008 at the latest.
Regional
The Common Market for Eastern and Southern Africa (COMESA)
COMESA is a regional grouping of 20 African states which has been established to promote both intra-COMESA trade among members and regional integration.
Thirteen out of the twenty member states currently operate as a Free Trade Area (FTA) for goods imported from within the COMESA, provided the rules of origin criteria are satisfied. They are Burundi, Comoros, Djibouti, Egypt, Kenya, Libya, Madagascar, Malawi, Mauritius, Rwanda, Sudan, Zambia and Zimbabwe. The remaining countries apply a reduction in their import tariffs for eligible products ranging from 60 to 90% on COMESA originating goods (except for Swaziland which has obtained a provisional derogation from the COMESA secretariat).
All goods are freely traded between Mauritius and the 13 COMESA members party to the Free-Trade Area (FTA). For imports from COMESA members that are not yet party to the FTA, Mauritius grants preferential treatment of 90% tariff reduction, on a reciprocal basis.
COMESA Rules of Origin
Products are eligible for tariff reduction/elimination within COMESA if they satisfy one of the following criteria:
• they should be wholly produced, or
• the c.i.f value of imported material content should not exceed 60% of the total cost of the materials used in the production of goods; or
• the local value added content in the process of production should account for at least 35% the ex-factory cost of the goods (except Egypt where the local value added should at least be 45%) ; or
• the process of production should lead to a change in tariff heading of the processed goods; or
• the goods should be designated in a list by Council of Ministers to be goods of particular economic importance to the development of the member states and the local value added should not be less than 25%.
The Southern African Development Community (SADC)
The Southern African Development Community (SADC) comprises 13 member countries, including South Africa. The SADC Trade Protocol has as main objective the enhancement of intra - regional trade among member countries through the implementation of tariff reduction schedules.
The Protocol paves the way for Free Trade within SADC member countries in year 2008, whereby 85% of the total intra-SADC trade will have been liberalised provided the rules of origin criteria are met. The remaining 15%, constituting the sensitive products, will have tariff barriers removed from 2008 to 2012.
SADC Rules of Origin
The originally agreed Rules of Origin (RoO) under SADC were very simple and similar to COMESA, however, sector wise and product specific RoO were adopted and these vary widely across chapters, headings and subheadings. These RoO have been made more restrictive with the Change in Tariff Heading criterion being replaced with multiple transformation rules and/or descriptions of required production processes.
As at January 2007, the following 14 countries were signatories to the Protocol. They are Angola, Botswana, Demoratic Republic of Congo, Lesotho, Madagascar, Malawi, Mauritius, Mozambique, Namibia, South Africa, Swaziland, Tanzania, Zambia and Zimbabwe. However, Angola, the Demoratic Republic of Congo and Madagascar are currently not applying the SADC Trade Protocol.
Indian Ocean Commission (IOC)
Together with Madagascar, Seychelles, Comoros and Reunion, Mauritius forms part of IOC whose objective is to enhance cooperation among member states on a range of fronts, mainly diplomatic, economic, cultural and scientific cooperation. Among other achievements, customs duties have been removed reciprocally in Madagascar and Mauritius on originating goods under the aegis of IOC.
Under the IOC Agreement, all goods are freely traded subject to meeting rules of Origin Criterion which are similar to the COMESA RoO.
Bilateral
CECPA between Mauritius and India
The Comprehensive Economic Cooperation and Partnership Agreement (CECPA) between Mauritius and India aims at strengthening the economic ties between the two countries and at exploring the vast possibilities that exist for enhancing cooperation in trade in goods and services and for promoting investment flows as well as facilitating the exploration of opportunities in third countries.
The Preferential Trade Agreement (PTA) on Goods is expected to be signed this year. Under the PTA, duty will be eliminated or phased down on a number of products. Such goods will nevertheless have to meet a 40% Value Addition and a Change in Tariff Heading Criterion.
The CECPA will also cover areas of trade in services, investment and Economic Cooperation.
Pakistan
Mauritius and Pakistan are currently finalising a Bilateral Trade Agreement, which is expected to be signed this year. The agreement also covers investment and development issues, to promote economic growth.
A number of products manufactured in Mauritius will be granted preferential access into Pakistan under this agreement, provided they meet the 35% value addition criteria.
Dial Mauritius
Dial Mauritius