Re-adjusting the Trade Agenda

Mauritius stands at a very challenging phase of its economic history as it has to forge its future on a new paradigm.  For almost two centuries our trade relations as well as the framework of our economic development have been based on a North-South axis.  This model is no longer relevant in the new global economic environment which keeps on evolving rapidly. 
The world market, which was until recently shaped and dominated by bi-polar forces, namely Europe and the US, has now come under multi-polar influences in which the emerging economies carry significant weight.  Indeed, the centre of gravity of world geopolitics has shifted from the West to the East.  The nature of world trade, which was traditionally composed of tangible goods, now includes intangible activities like trade in services and trade in ideas.  Even the mode of production, which was hitherto modeled on the conventional dynamics of comparative advantage has exploded into a vast array of global value-chains where the focus of the economic activity is more on the production processes than on the product itself.  The nobel-prize winning economist, Prof. Joseph Stiglitz has forecast that the future of the world will be configured by two key factors: the comparative advantage of American high-tech innovation and the emergence of Chinese mega-cities.
These developments have deep implications for the future of Mauritius.  International trade, which is central to the development of Mauritius, has witnessed major shifts in trade policy formulation and trade policy instruments.  In the first instance, trade preferences which, for several decades, have governed the export strategy of Mauritius, have been extensively eroded following worldwide tariff liberalization. As a country deficient in raw material, the focus of Mauritius, in terms of trade policy instruments, should be on securing flexible rules of origin that will enable our domestic industries to carry out processing on manufacturing activities on the basis of imported inputs.  As an example, the flexibility to utilize third-country fabrics has immensely helped our domestic industries to take advantage of AGOA benefits.
Secondly, the concept of free zones and global value chains, supported by technological innovation, are new phenomena that are outpacing the conventional method of production and trade.  It is no longer necessary to produce an entire product in Mauritius.  In the global value chains in which the production is fragmented in different free zones scattered across the world, the strategy of Mauritius must be to hook up to one of the production phases in the global chains with the help of technological ingenuity.  Thirdly, in terms of developing future  marketing strategy, we are already looking towards the cost-effective  of focusing our networking and market intelligence on selected mega-cities, which sometimes have population levels exceeding those of smaller countries.
The new vision of Mauritius must be to propulse the island as modern and vibrant economy resilient to the challenges of the 21st century.  On the multilateral front, whilst the Doha Development Agenda has yet to be concluded, we can draw satisfaction from the Bali package.  I am glad to say that Mauritius is first among those African countries ready to implement the Trade Facilitation Agreement.  Given the inherent weaknesses of Mauritius in terms of geographical isolation and remoteness from main market centres, Trade Facilitation Agreement will help the business community in lowering trade transaction costs and contribute to the efforts of the island in becoming a regional trade hub.  We are also positioning ourselves to assist countries in the region that may seek support on implementing measures to facilitate trade.
At regional level, Mauritius is deploying several efforts to accelerate the economic integration process.  The COMESA FTA and the SADC FTA, which we concluded more than a decade ago, are now bearing the fruits to our business community.  Mauritius is fully supportive of the Tripartite initiative which aims at harmonizing the trade regimes of COMESA, SADC and EAC through the establishment of a single and enlarged Free Trade Area.  This integrated market, which will encompass 26 member states of the three regional blocs with a population 600 million people and a total GDP approaching US $ 1 trillion, will open an immense trade and investment opportunities to our business community.  As a long term goal and in line with our Africa Strategy, Mauritius is committed to the establishment of a Continental Free Trade Area, which upon its completion towards the end of this decade, will help Mauritius to develop trade and economic relations across the frontier with 54 African States.
Despite the reconfiguration of the global market, Mauritius must continue with its efforts to consolidate its position on its traditional markets.  The EU remains a key partner in our trading equation.  Mauritius took the lead in signing an interim Economic Partnership Agreement with the EU in 2009.  This has enabled us to preserve our market access on the EU market and also to deepen our preferential benefits through a 100% trade coverage and less stringent rules of origin, especially for the exports of garment, canned tuna and agricultural products.
AGOA preferences play a central role in our trade and economic relations with the US. Right now, our focus is to ensure that AGOA preferences, due to expire in September 2015, are renewed ahead of time so as to ensure there is no trade disruption. This issue will figure prominently at the forthcoming US-African Leaders Summit scheduled in August 2014 in Washington.  Mauritius would also like to see the renewal of the third country fabric provision given that around 90% of apparel trade under AGOA makes use of this provision which helps Sub Saharan African countries remain competitive on the US market.
On the bilateral front, Mauritius is pursuing with its efforts to develop synergies with emerging economies.  Mauritius wants to base its trade and economic relations on firm footings by concluding bilateral framework agreements with India, Pakistan, China, Tunisia, Turkey, Malaysia, Gabon and Ghana before engaging in similar initiatives with other trading partners.  While Mauritius has already signed bilateral trade agreements with Turkey and Pakistan, discussions are in progress with its other trading partners.  During his recent visit to India, the Mauritian Prime Minister had a tête à tête with his Indian counterpart, Sri Narendra Modi and both leaders agreed to create a special unit that would operate under both Prime Ministers’ Offices to fast-track progress on a number of issues under DTAA.
As a net-food importing and net-energy importing country, Mauritius is following two-pronged objectives to reduce its import bills for food and fossil fuels on the one hand, and to enhance its security for food and energy on the other hand.  In the present economic context, marked by depression of sugar-price and erosion of preferential access on the EU market, Mauritius has taken several measures to uphold the agricultural sector by encouraging diversification and food production.  This will go hand-in-hand with Government’s effort to create a green economy through Maurice Ile Durable initiative by cultivating crops for food and bio-fuel and by harnessing renewable energy through solar farms.  A clean and green Mauritius is essential not only for our tourist industry but also for the preservation of environment and eco-system and enhancement of the quality of life of all Mauritians.
Mauritius has travelled a long way in evolving from a low-income agricultural-based economy to a middle-income diversified economy.  We are now striving to become a high-income country despite the hurdles and unique developmental challenges that we have to face as a small island.  While re-adjusting and re-engineering our economic activities in the traditional sectors of sugar and textile, the foundation of our new economic strategy will rest on services, innovation, ICT, knowledge and Ocean-based economy.  As our human capital is the most precious resource for harnessing new economic pathway, Government must continue in investing massively in education, training and skill development.  While re-adjusting its trade agenda, Mauritius must be motivated not only by the quest for new markets and new products but also by the constant search for innovative economic activities and technology-blended trade.