China signed a free trade agreement (FTA) and Mauritius on 17 October. The agreement covers trade in goods and services and investment and economic co-operation. It is the seventeenth FTA signed by China and its first FTA with an African nation. The FTA will become operational following ratification by both countries.
The FTA will enable Mauritius to benefit from duty free access on the Chinese market on some 8,227 products, representing 96% of the Chinese tariff lines. The duties applicable on 88% of these tariff lines will be eliminated with immediate effect, while the remaining tariffs will be eliminated over a five to seven-year period.
As regards trade in services, Mauritius service providers will have access to more than 40 service sectors, including financial services, telecommunications, ICT, professional services, construction and health services. Mauritius will also be able to establish businesses in China as wholly-owned entities or in joint partnership with Chinese operators.
In respect of investments, the agreement has been greatly upgraded from the 1996 China-Mauritius bilateral investment protection agreement in terms of protection scope, protection level and dispute settlement mechanism. Mauritian authorities also expect to have more investment in the services sector from China in view of the predictability and legal security that the FTA will provide to investors.
Regarding the Economic Co-operation chapter of the FTA, Mauritius and China have agreed to collaborate in 10 areas, including industrial development to increase competitiveness; to develop manufacturing based on innovation and research; to conduct exchange of specialists; to have an exchange of researchers for disseminating know-how and for support in technology and innovation; and to co-operate in the financial sector.
Negotiations on the FTA were launched in December 2017 and the two sides formally concluded the negotiations on 2 September 2018, after four rounds of intensive talks.
The Mauritian Prime Minister’s Office noted that the agreement would: “lay the basis for the opening of an Economic and Trade Office by the Economic Development Board in Shanghai and would facilitate promotional activities of the government of Mauritius in key target cities in line with the ‘Go East Strategy’ to explore avenues to increase FDI and trade between Mauritius and China.”
“This is very positive news,“ said Mark Ray, Managing Director of Sovereign (China) Ltd., “but it remains to be seen which sectors China will actually open up – what’s written in the agreement and what’s being practiced may be different in some cases.
“When looking at potential FTA benefits, you need to examine whether or not your products or services are included, whether the FTA includes any other benefits such as withholding or dividend tax reductions, and also examine customs registration processes that may require additional registration to invoke treaty status. If you are unsure about this process, you should seek professional advice.”