The China-Mauritius FTA officially signed in 2019 took effect on Friday, January 1 2021. The trade agreement is expected to open up the 1.4 billion-consumer market to Mauritius.
This is Beijing’s first FTA with an African country. According to Gyude Moore, a senior fellow at the Centre for Global Development and former Liberian government minister, China signed the China-Mauritius FTA because of its governance, and double taxation agreement that would favour Chinese manufacturing firms on the island.
“China could have picked Mauritius for a number of reasons. It’s a small country, has better governance and a number of double taxation agreements that could be a benefit to Chinese firms establishing manufacturing bases there.”
Terms of the China-Mauritius FTA
Mauritius Foreign Affairs Minister says the China-Mauritius FTA will allow Mauritius to export up to 96% of approximately 8,547 products in the next six years. Further, it will eliminate duties on 88% of tariff lines, with the remaining 12% being lifted within 5 to seven years.
China will also grant Mauritius a tariff-rate quota of 50,000 tonnes of sugar over the next eight years, allowing it to expand its sugar market. Sugar and sugar confectionery is its 4th largest export product and accounted for 10% of its exports in 2019. Further, the China-Mauritius FTA will also cut tariffs on other exports like fish and fish products, live animals and instant noodles.
The trade partners will also lift restrictions on over 100 service sectors, including financial services, telecommunications, and construction services.
Overall, the Economic Development Board believes the deal could unlock up to $304 million in exports for Mauritius.
These measures will hopefully bridge trade imbalance between Mauritius and China. Data from trading economics shows that in 2019, Mauritius exported goods worth $32.03 million to China while importing $935.04 million from Beijing.
The Achilles Heel of the China-Mauritius FTA
While there are high expectations of the the deal’s benefits to Mauritius, there are gaps in the nature of products, limiting its benefits to Mauritius.
China already excels in Mauritius leading exports products like garment and sugar. Former Finance Minister Rama Sithanen believes that such leaves Mauritius with niche options like rum, fish and jewellery.
“Our potential for exports to China is very narrow; we won’t be able to export garments, they do that; China is also great at producing food and agricultural products such as sugar nor will it be technology, China is arguably the best in the world at that. What will benefit are more niche products such as rum, fish and jewellery, if these can just capture a tiny sliver of that big market that’s a big benefit to us,” L’express quotes Sithanen.
However, Mauritius could benefit from Chinese investment in its service sector.