Mauritius’ Trade Act of 2022

Part 1 – The New Trade Remedy Investigating Authority

 

The New Trade Act

Trade remedies, which are trade policy tools triggered by governments to protect their domestic industries, are a crucial element of today’s international trade environment.  Free trade promotes open and transparent competition, improves the supply of a variety of products, and leads to greater welfare for consumers. However, free trade can also lead to undesired externalities, such as import surges that threaten the domestic industry. Companies from third countries may engage in dumping, i.e. selling their products below normal value to gain market share and harm the competition. Finally, some nations provide subsidies that unfairly enhance the competitiveness of their domestic exports.

According to Government statistics, the domestic industry in Mauritius accounts for 40 percent of Gross Domestic Product. In an effort to ensure that the legal framework to implement trade remedies is adequate to protect its local industry, Mauritius has revamped its trade remedies legislation through the Act No. 19 of 2022, known as the Trade (Anti-Dumping, Countervailing and Safeguard Measures) Act 2022 (hereafter referred to as “the Act”). The Act, which entered into force on December 2, 2022, replaces the existing Trade (Anti-Dumping and Countervailing Measures) Act 2010. It is worth highlighting that since the implementation of the Trade Act in 2010, no anti-dumping investigation or investigations regarding subsidies has been carried out in the country.  Applications were, however, received for the imposition of safeguard measures from two industries. As highlighted by the Minister of Foreign Affairs, Regional Integration and Trade during the Second Reading of the Bill to Parliament, “[the] object of the [Trade Act of 2022] is to protect the Domestic Industry against the injurious effect of unfair trade practices, namely of dumped and subsidised imports; and of the injury caused or threat of injury that may be caused as a result of a surge in imports.”

Creation of the new Trade Remedy Investigating Authority

One of the salient elements of the new legislation is the creation of a dedicated authority in charge of administering the country’s trade remedies: the Trade Remedies Investigating Authority (Article 7.1). Under the Trade Act of 2010, the Investigating Authority was a single person: the Director of the Trade Policy Unit, International Trade Division which falls under the aegis of Ministry of Foreign Affairs, Regional Integration and Trade (MOFARIT).

Article 7.2 of the Act, establishes a new structure of the Authority, which will now be comprised of six government officials:

  1. A chairperson, who shall be the Director, Trade Policy, International Trade Division of the MOFARIT;
  2. A vice-chairperson, a public officer from the Ministry of Finance appointed by the Financial Secretary;
  3. A representative of the Ministry of Commerce and Consumer Protection;
  4. A representative of the Ministry of Industrial Development, SMEs and Cooperatives;
  5. A law officer designated by the Attorney-General; and
  6. A representative of Mauritius Revenue Authority, Customs Division, to be designated by the Director- General.

According to Article 8 of the Act, the Authority is in charge of:

  • Investigating those situations where dumping, subsidised imports or a surge of imports has been alleged or might be suspected;
  • Undertaking the necessary analysis to determine whether those situations should be addressed via trade remedies; and
  • Implementing the necessary anti-dumping, countervailing or safeguards measures, including the issue of directives and proposals for remedial action.

The Authority is expected to meet at least once a month or whenever the Chairperson deems necessary (Article 9.1.). The Act also includes provisions to ensure the impartial functioning of the Authority and its officers (Article 11) and the need to provide an annual report to the Minister for Foreign Affairs, Regional Integration and Trade and the end of the financial year (Article 12).

Introducing Safeguards in Mauritius

The second key novelty of the Act is the inclusion of safeguard measures as part of the overall trade remedies available under the domestic jurisdiction. Previous safeguard investigations were confined to the framework of trade agreements. Article 34.1 of the Act highlights that, for safeguards shall be applied if, (1) a significant increase in imports has occurred; (2) the surge in imports was caused by unforeseen events; (3) the domestic industry is experiencing or might experience injury; and  (4) such injury is caused by increased imports. Whilst the second element is inspired from Article XIX of the General Agreement on Tariffs and Trade 1994, it will be important to see how this is interpreted as it can be argued that the world is radically different from what it was back in 1995, when the World Trade Organisation was established.

The new Trade Act of 2022 maintains the requirements contained in the Trade Act of 2010 to accept applications made by, or on behalf of the domestic industry[1],if :

  • (a) the application is made by domestic producers whose combined output accounts for than 50 percent of the total production of like products manufactured by that portion of the domestic industry supporting or opposing the application; and
  • (b) the domestic producers expressly supporting the application account for at least 25 per cent of the total production of domestically produced like products (Article 5.3.(a) and 5.3 (b)).

Like its predecessor, the Trade Act of 2022 enables the Trade Remedy Investigating Authority to initiate an investigation without having received a written application by, or on behalf of, the domestic industry (Article 41.1).

The Act includes certain principles of Special and Differential Treatment, such as the exclusion of developing countries from the application of safeguards, provided that developing countries with less than 3 percent import share collectively account for a maximum of 9 percent of total imports of the investigated product, reflecting what it is established in Article 9:1 of the WTO Agreement on Safeguards.

Procedures and implications for the private sector

Finally, the Trade Act of 2022, following the determination from the Investigating Authority, gives the responsibility to the Minister of Foreign Affairs, Regional Integration and Trade to decide whether to impose the trade remedies. In the Trade Act of 2010, this responsibility relied only on the Director, Trade Policy, International Trade Division of the MOFARIT. The creation of the Trade Remedy Investigating Authority and the enactment of safeguard legislation expand the trade policy tools available for Mauritius to defend its domestic industry from unfair trade practices and unexpected import surges. The domestication of the safeguard legislation should prove particularly useful and beneficial for the manufacturing sector as over the last three years, imports of more than 350 products have surged by 200 percent in Mauritius.

International Economics Consulting Ltd (IEC) is an independent consultancy firm working with national and international development partners, governments, and the private sector to create value and promote sustainable growth and development. With extensive experience in trade policy, research and negotiations, IEC can support governments and businesses deal with unfair trade practices and unforeseen consequences of free trade by providing analytical expertise and support.

Authors:

Paul Baker, Chief Executive Officer |+230 263 33 24 | baker@tradeeconomics.com

Pablo Quiles, Manager of Trade Advisory Services |+230 263 33 24 | quiles@tradeeconomics.com

Smita Bheenick, Trade Specialist |+230 263 33 24 | bheenick@tradeeconomics.com

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

Footnotes: 

[1] Domestic industry is defined as:

(a) the domestic producers, as a whole, of like products, or those domestic producers whose collective output of like products constitutes a major proportion of the total domestic production of these like products for anti-dumping or countervailing investigations;

(b) the domestic producers as a whole of the like or directly competitive products, or those domestic producers whose collective output of the like or directly competitive products constitutes a major proportion of the total domestic production of these products for safeguard investigations

References: 

  1. The Trade (Anti-Dumping, Countervailing and Safeguard Measures) Act 2022 Mauritius National Assembly [Online]. Available at: https://mauritiusassembly.govmu.org/Documents/Acts/2022/act1922.pdf
  2. Parliamentary Debates (Unrevised Hansard), Mauritius National Assembly [Online]. Available at: https://mauritiusassembly.govmu.org/Documents/Hansard/2022/hansard3122.pdf

This article has also been published on the Mondaq website

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