Mauritius: China-Mauritius Free Trade Agreement: Opportunities for Trade in Services

In an effort to boost the international competitiveness of services, the Government of Mauritius has negotiated a series of comprehensive FTAs covering, as a key element of the same, trade in services chapters. Mauritius is also negotiating the inclusion of trade in services commitments in its FTA with the European Union, its most important partner.

In October 2019, Mauritius and China signed an FTA, which entered into force in January 2021. As stated in the Agreement’s preamble, one of the objectives of the FTA is to “strengthen their economic partnership and further liberalise bilateral trade and investment to bring economic and social benefits”. Chapter 7 of the Agreement covers the main provisions on the topic, including commitments on national treatment – i.e., the obligation to treat foreign services and services suppliers the same way that a country treats its own services and services suppliers.

In addition, the Agreement covers a series of commitments aiming to protect Mauritian services suppliers from opaqueness and impartial treatment. For example, Article 7.8(1) of the Agreement, on Domestic Regulations, makes the provision that all measures of general application affecting trade in services must be administered in a “reasonable, objective and impartial manner”. Article 7.8(5) further states, whenever a Party has undertaken specific commitments in a sector, and such sector is subject to licensing and qualification requirements, these shall not be applied in a manner that “nullify or impair its obligation under [the] Agreement”.

Moving forward, China and Mauritius will aim to strengthen their cooperation and explore possibilities for mutual recognition of respective vocational qualifications, opening up further the opportunities for trade between the two countries.

At the sectoral level, both parties agreed to remove restrictions in over 100 service sectors, such as financial services, telecommunications, Information and Communications Technology, Professional services, construction, and health services. Overall, China’s services liberalisation commitments under the FTA abundantly exceed its WTO accession commitments, and they are at the same level as some of China’s most ambitious FTAs, such as the Regional and Comprehensive Economic Partnership (RCEP). For example, the China-Mauritius FTA includes a specific list of requirements necessary for Mauritian firms to open a bank or a subsidiary in China, whilst the RCEP is silent in that regard.

It is worth highlighting that, unlike trade in goods, where trade preferences are usually granted through the schedule of concessions, in trade in services, the schedule of commitments do not usually grant trade preferences, meaning that they do not provide better treatment for firms from FTA Parties in comparison to those firms from non-FTA Parties. However, the schedule of commitments is a critical element to secure a minimum level of treatment that will have to be maintained in the future and will sustain future policy changes – even protectionists one. For example, in the case of opening a bank or a subsidiary in China, Mauritian firms will enjoy, as a minimum, the treatment provided in the schedule of commitments, whilst RCEP firms might face different requirements in the future.

Overall, the China-Mauritius FTA represents an opportunity for Mauritian firms to enter one of the most dynamic economies in the world, with the assurance that the treatment secured and recorded in the FTA’s schedule of commitments will be maintained and respected, thereby enhancing the certainty in business environment for companies. Such potential is being expanded by the recent announcement that Mauritius will host a clearing center for the Chinese renminbi, which will allow the countries to bypass the use of the US Dollar or the Euro and use the Mauritian rupee and the renminbi to denominate and settle their invoices. This center is expected to further strengthen the role of Mauritius as a gateway of Asian trade and investment flows into Africa.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about specific circumstances.

Authors:

Paul Baker

+230 263 33 24

baker@tradeeconomics.com

 Pablo Quiles

+230 263 33 24

quiles@tradeeconomics.com

This article has also been published on the Mondaq website.

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