Economic Governance and Management 594. The SADC plays a significant role in Mauritius’s development strategy. The SADC encourages local and foreign investors to establish production, marketing and logistics operations in Mauritius to penetrate African markets, including opportunities for domestic enterprises to export to Southern and Eastern Africa at preferential rates. Membership of the SADC helps to diversify exports and markets and is compatible with the goal of transforming Mauritius into a duty free island. 595. The SADC lists five targets in the process of regional integration. These are: (i) a free trade area by 2008; (ii) a customs union by 2010; (iii) a common market by 2015; (iv) a monetary union by 2016; and (v) a currency and economic union by 2016. The CSAR identifies the obstacles faced by the SADC in achieving a free-trade area. One is to replace tariff barriers with nontariff ones. 596. Mauritius’s trade with the SADC has increased significantly since 2000. However, Mauritius has a significant trade imbalance. Its exports to the SADC amounted to Rs6.2 billion, or 8 per cent of national exports, while its imports amounted to Rs10.5 billion, or 7.4 per cent of total imports, in 2007. Its exports were mainly to Madagascar and South Africa, while exports to the other SADC members were negligible. Eighty-five per cent of Mauritius’s imports from the SADC came from South Africa. The trade imbalance with the SADC has had a negative influence on domestic producers, who have lost their domestic market share. The result is that Mauritius has resorted to protectionist measures on textiles and has imposed duties on some textiles from South Africa. 597. The responses to questions on membership of the SADC revealed that: • • • • 224 Chapter 4 Over half the respondents had no opinion about whether trade liberalisation should be accelerated. This suggests limited familiarity or interest in the SADC. Twenty-six per cent of the respondents support accelerating the process of liberalising trade, compared with 17 per cent that oppose it. Thirty-two per cent of the respondents oppose imposing residual tariffs on products from South Africa, while 23 per cent support such measures. About one-third of respondents favour, and 17 per cent oppose, extending the one-year respite to local manufacturers before establishing the duty free regime. Chapter 4 Economic Governance and Management 598. Like the SADC, COMESA aims at creating an economic community in Eastern and Southern Africa. COMESA became a free-trade area in October 2000 and is moving towards establishing a customs union. A major obstacle in COMESA is to replace tariff barriers with nontariff ones. The SADC has a similar problem. 599. Mauritius has a trade surplus with COMESA, unlike its situation with regard to the SADC. Its exports in 2007 amounted to Rs5.1 billion, or 8 per cent of total exports, while its imports were valued at Rs3.9 billion, or 3.2 per cent of its total imports. Seventy-five per cent of its exports to COMESA went to Madagascar, while its imports were mainly from the Seychelles, Egypt and Madagascar. Its imports from Egypt have been a source of concern because of their negative effect on similar domestically produced goods. The two countries reached a bilateral agreement in 2002. Mauritius would reimpose tariffs on four imports from Egypt. The four years have elapsed, but the duties are still in effect. 600. The findings from the questionnaire on COMESA are that: • • • • Twenty-three per cent of respondents believe that Mauritius has a competitive disadvantage in COMESA because of low wages and large domestic markets in other COMESA countries. Thirty-eight per cent feel that Mauritius can tap into profitable markets in COMESA. Views are equally divided on the wisdom of imposing residual tariffs on imports from Egypt. Sixty-five per cent of respondents did not answer the question about whether they supported the idea of COMESA becoming a customs union, while 20 per cent favoured the idea. 601. The CSAR notes that, over and above its interest in opening markets in the SADC and COMESA, Mauritius is interested in gaining access to the wider African market. The strategy is to attract FDI in order to set up production facilities in order to export to other African countries. This strategy is directed particularly at Asian investors and is an integral part of the goal of transforming Mauritius into a bridge between Africa and Asia. An example of this is the economic cooperation zone established by the Chinese group, Tianli, with a view to using Mauritius as a platform to penetrate the African market. 602. A specific reason for penetrating the African market was to establish Enterprise Mauritius (EM) in 2005. The EM is a joint effort between the government and the private sector. The government holds 60 per 225