(Analysis) Mauritius has failed to benefit from AGOA in sectors other than the textile and clothing industries, according to recently released trade data by the United States International Trade Commission. This data indicates that despite AGOA’s ostensibly broad product coverage, the country’s exports are still largely concentrated in the garment industry which in 2003 accounted for 90% of exports to the US. (For a disaggregated trade profile, click here). Over the first three months of 2004, this proportion crept up further to 91% of total US-bound trade.

From agro-processing to apparel manufacture

The dominance of the textile-clothing sector in Mauritius has its roots in the 1970s, when this small Indian Ocean State set out to diversify its largely agro-based economy (mainly sugar) by encouraging the establishment of export-oriented textile and clothing companies. Specially-earmarked export processing zones (EPZ) were established, and the 1980s in particular saw considerable FDI inflows, especially from the Far East. This grew the country's clothing and textile sectors into a formidable force.

The country's initial focus on commodity garments was successful, but the resultant boom in exports eventually lead to a tightening of the labour supply market. To counter these influences, production of lower value-added commodity type textiles and clothing relocated offshore, mainly to nearby Madagascar. Here, low-cost labour and an abundance of industrial sites led to the proliferation of commodity-type clothing manufacturers, ably assisted by the fact that Madagascar qualified for LDC status under AGOA.

For the period January to March 2004 (see table), besides clothing, Mauritius exported agricultural and animal products (mainly primates, and cane sugar), electronic products and minerals (non-industrial diamonds), although exports from these sectors together accounted for less than 10% of total exports to the US so far this year.

As is indicated by the data in the table, only the textile-clothing sector has really benefited from AGOA. AGOA extends duty-free market access to approximately 7,000 tariff line items, of which roughly 2,400 were previously not eligible for GSP benefits (also duty-free market access). Thus, the right column in the table reveals the extent to which exports fall into these “new” categories. The middle column provides an indication of AGOA exports on a sector-by-sector basis, although these products were part of the original GSP.

Performance of the textile and clothing sector

Mauritius’ US$ 62mn worth of textile and clothing exports to the US in January-March 2004 show a 17% year-on-year decline. However, the proportion of AGOA-eligible exports from this sector has increased from US$ 30,7mn (or 40%) to US$ 38mn (or 61%) during this period, which may be indicative of the fact that Mauritian exporters are increasingly sourcing regionally-produced fabrics for their US-bound exports. The special rule permitting ‘lesser-developed’ countries the use of third country fabrics does not apply to Mauritius, and its intended phase-out in September 2004 would have been of little direct consequence to the country. However, current indications are that the flexible dispensation relating to apparel will indeed be extended by a further three years, which could see Mauritian exporters lose market share over the next year or two to other AGOA-eligible producers in the region.

A closer look at US-bound exports from the Mauritian textile and clothing sector provides an indication of the type of products successfully exported to the US.

The largest clothing export categories, in descending order of 2004 exports (January – March), were:

men’s shirts of cotton, not knitted - US$ 16,2mn, of which US$ 15,7 AGOA eligible (normal tariff:19.7%);

women’s trousers of cotton, not knitted – US$ 15,9mn of which only US 5,6mn AGOA-eligible (normal tariff:16.6%);

men’s cotton trousers – US$ 11,2mn of which US$ 9mn AGOA-eligible (normal tariff:16.6%%);

knitted sweaters – US$ 7,3mn of which US$ 6,1mn AGOA-eligible (normal tariff:16.5%);

cotton T-shirts - US$ 3,2mn of which US$ 2,1mn AGOA-eligible (normal tariff:16.5%);

men’s cotton shirts, knitted - US$ 2,3mn of which US$ 1,7mn AGOA-eligible (normal tariff:19.7%).

While Mauritius has grown AGOA-eligible exports from US$ 39mn (out of a total of US$ 275mn) in 2001 to US$ 135mn (out of a total of US$ 298mn) in 2003, the concentration of Mauritius’ exports to the US in the clothing industry is largely in line with the country’s domestic industrial capabilities. These in turn were brought about by economic policies that steered the country away from its reliance on the sugar industry.

But the dominance of once sector has been replaced by that of another, with the result that Mauritius has become vulnerable to global developments in the textile and clothing industries. For example, the WTO’s Agreement on Textiles and Apparel (formerly known as the Multi-Fibre Agreement) sees the phasing out of quotas by January 2005, which is likely to have a direct impact on Mauritius. It seems that AGOA has done little to increase Mauritius’ overall exports to the US, even in the clothing industry. It has, however, lowered the average tariff faced by Mauritian exports by increasing the share of goods entering the US duty-free.

[ Eckart Naumann ]

Latest AGOA Trade Data on AGOA.info


Click here to view a sector profile of Mauritius’ bilateral trade with the United States, disaggregated by total exports and imports, AGOA exports and GSP exports.

Other regularly updated trade statistics on AGOA.info include: