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MAK

In the smallest of nutshells imaginable, the Minister of Finance, also Prime Minister of our Republic, in his recent budget speech laid down his course of action with respect to what, to be generous in terms, is qualified as the country’s Africa strategy. One shall refrain from using the fallacious official term Mauritius-Africa strategy for, as has repeatedly been highlighted by the undersigned, such a term conveys the impression, involuntary perhaps, that this country does not form part of the African continent.

‏In barely nine sentences contained in 5 meagre paragraphs (25-29), the Minister of Finance spelt out the so-called strategy by laying emphasis on the setting up of joint commissions (instruments of yesteryears!) with six individual countries of the continent, besides the Special Economic Zone in Senegal. Now, that could hardly constitute a continental strategy. A major development on the continent spearheaded by the African Union (AU) and supported by the United Nations Economic Commission for Africa (UNECA) is the projected Continental Free Trade Area (CFTA) by the end of this year. The AU summit, held last week, in its Decision 6 reaffirms its commitment to conclude negotiations of the CFTA by December 2017 and calls upon Member States to undertake nationwide stakeholder sensitisation activities to bring awareness and ownership of the process. Surely, Mauritius is at the table of negotiations to attain the CFTA as laid down in the Abuja Treaty of 1994 establishing the African Economic Community. Yet, not a mention thereof in the strategy outlined in the budget speech!

‏On the contrary, immediately closing the paragraphs on Africa, is an undertaking to “also pursue negotiations on Free Trade Agreements (FTA)with China and the European Free Trade Association”. (Paragraph 30). It is assumed that before venturing into such an enterprise, all factors have been thoroughly analysed with a balance sheet of pros and cons.

‏A quick desk study reveals the following:
‏A China-Mauritius FTA would, at first glance, benefit Mauritian exporters of fish and seafood, sugar, apparel and jewellery. However, China accounts for only 2 percent of Mauritian exports. In comparison, China accounts for 18 percent of all Mauritian imports. This imbalance means that, in the immediate short-run, Chinese exporters would benefit more from the elimination of tariffs than would Mauritian exporters in an FTA. In any bilateral negotiation towards such a FTA, Mauritius would have little room to manoeuvre. That is for the simple reason that Mauritius has a far more liberal import tariff structure. Almost 91 per cent of Mauritian tariff lines are already zero and by contrast only 6 per cent of China’s tariffs have duties at zero, 63 per cent of its tariff lines are between 1 and 10 per cent and 31 per cent greater than 10 per cent. According to IMF statistics Mauritius imported for $833 million from China, equivalent to about 18 per cent of all imports into the country as opposed to a paltry export revenue of $46 million, representing just over 2 per cent of all exports.

‏A greater priority for Mauritian exporters should be the African market, which already accounts for 20 percent of Mauritian exports (in 2016, $434m of exports against import of $603m) and is forecast to grow rapidly on the basis of a population that will double by 2050. Ensuring access to the African market and the successful implementation of the CFTA should be an important trade policy priority for Mauritius.

‏Moreover, Mauritius should be cautious of how a Mauritius-China FTA would be perceived within its African market. There is a risk that certain trading partners would see a Mauritius-China FTA as increasing the risk for trade deflection of Chinese products through Mauritius.A consideration for Mauritius would, therefore, be to first focus on the consolidation of the African market with the CFTA, before then working with African trading partners to collectively explore new trading arrangements with China.

‏It should also be underlined that no African country currently has an FTA with China. For purposes of trade policy coherence, it does not make sense for individual countries to have FTAs with China as they run the risk of locking in not only China's access to their own markets but potentially access to other African markets through regional trade agreements and the CFTA when the latter falls into place. This is why the AU and the UNECA advocate for FTAs with  major entities such as Europe, US etc with Africa as a whole (as opposed to individual countries) that are based on a limited reciprocity model to ensure that development considerations are strongly reflected.

‏Since 1980, the continent continues to play its part in support of our sovereignty over the Chagos and has again demonstrated its steadfastness towards us at the latest UN General Assembly vote  on 22 June.
 Could we then for Heaven’s sake stop paying lip service and truly integrate the continent by developing an all-encompassing Africa policy in the short, medium and long terms? For a start by introducing African studies in our education system from primary level….

‏Vijay Makhan
10/7/2017