A small dot in the ocean, Mauritius has a disproportionately high ambition of becoming a trading nation. When the Arabs visited the island in the 10th century, this uninhabited place – then known as Dina Arobi – was simply a point of relay for the southbound Arab dhows, stopping now and then to replenish with fresh water or to repair the wind-battered vessels. It was not until the advent of French colonisers, as from 1715, that the economic life started taking shape on the island.
Mahe de Labourdonnais (1735-1747), with the assistance of lascars (Indian seamen) and others, built the harbour of Port Louis and laid down the basic infrastructure for maritime trade. In as much as the island flourished as an entrepôt, it became increasingly reliant on import of foodstuffs and basic commodities to satisfy the needs of the local population. To overcome the cost of growing import and with the objective of generating government revenue, the French wanted export of coffee to become the mainstay of the economy. Coffee beans of Moka variety were imported from Yemen and were experimented in the lower Plaines Wilhems which eventually came to be known as Moka.
After a short while, coffee was replaced by sugarcane, a highly remunerative crop which resisted the cyclonic climate better. Since then, sugar-cane reigned supreme and became the backbone of Mauritian economy. When the British took over control of the island in 1810, they further consolidated the sugar economy. Two factors contributed to the expansion of sugarcane cultivation: import of cheap labour from India and the entitlement to imperial preference (which would later become Commonwealth preference).
For almost two centuries, sugar would remain a pervasive element of the Mauritian economy. It was pampered with remunerative export prices and a secure metropolitan market. It was, so to say, immune from foreign competition. The trade regime that was in force in the colony of Mauritius was a simple equation: use the export earnings from sugar to pay import bills for products sourced from abroad. This tendency continued for several years after independence. When UK joined the European Economic Community in 1973, all its schemes of trade preferences that were applicable to its former colonies in Africa, Caribbean and Pacific, were incorporated into the Yaoundé Convention, which eventually succeeded by the Lomé Convention and later on by the Cotonou Agreement.
The seamless succession of contractual agreements between the EU and the ACP gave Mauritius an immense opportunity to spur its trade and economic development. By virtue of this treaty, the Mauritian sugar enjoyed a guaranteed market, which fetched an export price well above the world rate. The Mauritian apparels, thanks to duty-free and quota-free access on the EU market, were able to compete with low-cost producers/exporters of textile and clothing. In a preferential environment, export outlets for sugar and apparels have not posed major difficulty for Mauritius. The concern of the Mauritian authorities has rather been more on the import front with the objective of ensuring the regularity of supply of vital commodities. This explains why the trade history has been mostly dominated by institutional instruments like the Supply Control Act and the
Supplies Department which are now overtaken by import regulations, State Trading Corporation and Agricultural Marketing Board.
The entry into force of the WTO in 1995 would trigger a process of dismantling of all the privileges and preferences enjoyed by Mauritius so far. The Multi-Fibre Arrangement, which imposed quota restrictions on exports of textile and clothing originating from the competitors of Mauritius, was gradually phased out by 2004. Mauritian exporters of apparels were thus exposed to tough international competition.
The Sugar Protocol was found to be in non-conformity with multilateral trade rules and, therefore, it was programmed to be terminated. This provoked a price depression for Mauritian sugar on the EU market. The non-reciprocal trade arrangement under the Cotonou Agreement (in which the EU was the only one to grant concessions to the ACP and not vice versa) was considered to be discriminatory and inconsistent with the WTO rules and, therefore, it has to be replaced by the Economic Partnership Agreement (EPA) which introduced the principle of reciprocity (Give-and-take).
The economic shocks, endured by Mauritius in the post-WTO era, brought a compelling need to re-think our trade policies and economic strategy. At the WTO, particularly in the context of the Doha Round which was launched in 2003, Mauritius took a pro-active stance to push development agenda and special circumstances of small economies rather than contending itself with a defensive attitude to the erosion of preferences. In terms of external trade relations, Mauritius re-adjusted its diplomatic compass: while consolidating its presence on the traditional markets of the EU and the USA, it re-deployed its efforts in market diversification, both at regional and bilateral levels. It got involved in major regional trade initiatives, namely the SADC FTA, the COMESA FTA, the Tripartite FTA and the Continental FTA.
On bilateral front, it started a process of trade dialogue as from 2004 with a number of emerging economies. It concluded a Preferential Trade Agreement (PTA) with Pakistan in 2007; it signed a Free Trade Agreement (FTA) with Turkey in 2011. It is engaged in high level negotiations with India in order to expedite the conclusion of a Comprehensive Economic Partnership Agreement (CECPA).
Mauritius is also diversifying its export basket. In addition to sugar, garments and tuna, it is multiplying its efforts to transform itself into a service-oriented economy.
Trade in services, henceforth, appears high on the agenda of talks with its trading partners. Mauritius even dared to participate in the plurilateral negotiations on services with a select group of developed economies. The next challenge for Mauritius will be to mainstream trade-related issues of Ocean
Economy in future trade initiatives. It is indeed a tall order.
With the growing phenomenon of global economy, Mauritius is taking keen interest in the supply-chain-trade by ambitioning to become a regional hub in the international production networks. Building on its past experiences of export processing zone and Freeport operations, it wants to be part of the major trade highways that harness cross border flows of intermediate goods and services. Supply-chain-trade is indeed a complex nexus that interplays with investment, knowhow, technology, logistics, production, specialisation, distribution, delivery and movement of people. Mauritius has made a modest move in this direction by envisaging to set up special economic zones in some African countries.
As a small island (in terms of landmass), Mauritius cannot afford to vegetate in insularity and persist with an inward-looking mentality. To evolve as a trading nation, it must think big and play global. Once a port of call for traders on their voyage along the famous Spice Route from Europe round the Cape of Good hope to the East Indies, Mauritius has now the potential to become a trading centre in the emerging Maritime Silk Road.