The Republic of Mauritius

Trade-Related Intellectual Property and E-commerce Sub-Council

Trade Report from the Cape Town Round of the WTO Negotiations
by Siyaduma Biniza*

* Siyaduma Biniza is a final-year student at the University of Cape Town studying towards a B. Soc. Sci. in Philosophy, Politics and Economics. This Trade Report has been prepared for the Applied International Trade and Bargaining Course (a WTO simulation).

Table of Contents
Letter to the Trade Minister ....................................................................................................................... 2 Introduction ..................................................................................................................................................... 3 Section One: Economic Context .............................................................................................................. 3 Economic Summary and Objectives .................................................................................................. 3 General Strategy ........................................................................................................................................ 5 Double-Tax Treaties ............................................................................................................................... 5 Small Island Developing State (SIDS) Challenges......................................................................... 6 Food Security ............................................................................................................................................ 7 Information Communication Technology (ICT) and E-Commerce ......................................... 8 Legislative Capacity Related to E-Commerce and Intellectual Property Rights .................. 9 Section Two: Agenda Setting and Bargaining Round ................................................................... 10 Challenges, Strategies and Outcomes of Agenda Setting ...................................................... 10 Challenges .............................................................................................................................................. 10 Strategies ................................................................................................................................................. 12 Outcomes ................................................................................................................................................ 16 Assessment of Mauritius Position at the End of Agenda Setting Round ......................... 18 Challenges, Strategies and Outcomes of Bargaining................................................................ 19 Challenges .............................................................................................................................................. 20 Strategies ................................................................................................................................................. 21 Outcomes ................................................................................................................................................ 24 Assessment of Mauritius Position at the End of Bargaining Round ................................... 38 Section Three: Conclusion ........................................................................................................................ 41 Executive Summary and Recommendation ................................................................................. 41 Bibliography ................................................................................................................................................... 43

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Letter to the Trade Minister

The Cape Town Round of the WTO negotiations began with some challenges for Mauritius. Firstly, the Republic of Mauritius only had one delegate pursuing all its national interests at the negotiations. This meant that the rounds success depended heavily on co-ordinating my strategy with other countries. Moreover, this required extensive bargaining with other countries for interests in other sub-councils that Mauritius had no representation in. Secondly, due to the transitory state of Mauritius small economy and its unique challenges, it was difficult to position domestic interests within the pre-existing WTO discourse and the agenda. Mauritius economy is not strictly similar to other SubSaharan African states and other developing countries. Firstly, it is small and highly liberalised. But at the same time the economy is extremely vulnerable to external shocks and it does not benefit from economies of scale like other larger developing economies; because Mauritius is a small island developing economy. Therefore, pursuing domestic interests required a multi-framework strategy and extensive planning. Moreover, this meant that Mauritius had to win the trust and support of all its alliances, and rely on good faith due to limited room for bargaining power, even though every alliance was made with strategic pre-emptive commitment devices. Lastly, due to limited representation, I had the challenge of getting all the important information need to adjust my strategy at every milestone during the negotiations. Therefore, I had to overcome the challenges of positioning Mauritius interests within the World Trade Organisations discourse, maintaining useful alliances and strategically co-ordinating to secure national interests. However, as this report will illustrate, the efficacy of my strategy and its efficient implementation resulted in overall success in the Cape Town Round of WTO negotiations.
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Introduction
The recent history of the Republic of Mauritius economy shows that it has performed well above average in comparison to other Sub-Saharan African countries. But the country faces new challenges as the world recovers from the 2008 global recession and more recent Eurozone crisis. Furthermore, as a small island developing state (SIDS), Mauritius faces unique vulnerabilities related to its location, size, and both its human and natural resources. Therefore Mauritius faces vastly different challenges to those faced by developing countries (DCs) and less developed countries (LDCs). Thus, this report assesses the performance and the success of Mauritius strategy during the Cape Town Round of World Trade Organisation (WTO) negotiations; paying special attention to the unique vulnerabilities and challenges faced. This report is divided into three sections. The first section is a brief summary of the economic context in Mauritius and the general goals that were pursued at the WTO. The second section deals with the challenges, strategies and outcomes during the agenda setting and bargaining stages of the negotiations; and an assessment of Mauritius position at the end of each round. Finally the report concludes with an executive summary and recommendations.

Section One: Economic Context

Economic Summary and Objectives
The Mauritian economy has shown resilience against the 2008 global recession, and the most recent European downturn; mostly due to a resurgent textile industry and the strong performance of its financial sector1. The resurgence of the textiles industry has

See (Sobhee 2009) Structural transformations and macroeconomic reforms for a brief background on Mauritius economy in The economic success of Mauritius: lessons and policy options for Africa.
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ameliorated the resilience of the Mauritian economy. However, tourism has taken a slump after the 2008 global recession even though it still forms an integral part of the services trade2. Furthermore, the economy has lost ground in international economic rankings even though it remains high amongst other African countries. For example, Mauritius is still the highest African country in the World Banks Ease of Doing Business rankings and the Ibrahim Index of African Governance3. The economy has maintained relatively high growth mostly due to economic restructuring that has been effective at mitigating exogenous shocks and global economic changes whilst allowing diversification of the economy4. This has allowed Mauritius to exploit new opportunities that offer higher returns; and thus diversifying remains a strong interest of the economy. For example, new opportunities in knowledge economics, information and communication technology (ICT) and financial services have become the most important; thus government has focused on developing Mauritius into a cyber hub and a gateway between Asia and Africa5. Thus, improving the strength of Mauritius financial services industry and expanding the services sector by developing opportunities in ICT and other high-return services has been the core of my focus during the Cape Town Round of WTO negotiations. Furthermore, mitigating the challenges related to isolation of Mauritius from international markets, the economys smallness, and human and natural resources has also been a high priority during the negotiations.

See (Sobhee 2009) op. cit. See (Desai and Tulsidas 2012) The Mauritian Economy: 2012 Outlook an investment outlook report. 4 See (Sobhee 2009) op. cit. 5 See Policy lessons for Africa section in (Sobhee 2009) op. cit.
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General Strategy
Double-Tax Treaties As part of it economic restructuring to improve global competitiveness, Mauritius has undertaken significant liberalisation policies to stay keep up with the global trends. But this this has significantly reduced fiscal revenues. However, the strong financial sector and efficient tax regime have offset losses to fiscal revenues due to liberalisation6. This strength has been further improved by Mauritius 33 double-tax treaties7, which take advantage of Mauritius strong off-shore banking regime and its financial services industry strength. Therefore, Mauritius has the interest in further improving the services sector by increasing its set of double-tax treaties. These double-tax treaties have attracted flows of foreign direct investment (FDI) through Mauritius due its strong offshore banking regime and the tax benefits resulting from these treaties 8 . Furthermore, Mauritius has a

comparative advantage because it is a politically stable low-tax area; and it is the only International Financial Centre that is member to all the significant African regional organisations such as the Common Market of Eastern and Southern Africa (COMESA), the Southern African Development Community (SADC) and the African
Source: Positioning Mauritius in the world (Acanchi, 2011)

Union (AU)9. Moreover, in addition to their expansion of Mauritius financial services industry, double-tax treaties are an important source of tax revenues through resident based taxation, i.e. taxation of foreign businesses and persons doing business in
See Shortcomings of reforms in (Sobhee 2009) op. cit. See Mauritius a report by (AfDB/OECD 2008) in African Economic Outlook. 8 See (Aycock 2008) Anxious to keep a place in the sun, in the Financial Times Special Report on Mauritius. 9 See Comparative Advantage section by (Balloo and Sood 2012) in Double Tax Treaties in Africa Mauritius and Seychelles.
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Mauritius. Thus, Mauritius tax treaties are of great importance and I had a clearly defined interest in expanding the set of double-tax treaties and extending the timelimit of those which already exist. Small Island Developing State (SIDS) Challenges Aside from the global pursuit of double-tax treaties, the Government of Mauritius has been at the forefront of the SIDS-network. The network of Small Island Developing States (SIDSs) is a global grouping of Small Island developing economies, which advocates for the development needs of SIDS pertaining to their size, location, environment and social composition. The small size of SIDSs means that they cannot fully benefit from liberalisation through economies of scale10. In addition, their isolated location means they cannot participate in highly beneficial regionalism. Furthermore, rising fuel and energy costs hinder the SIDSs integration into global trade as a consequence of their geographic isolation; whilst environmental degradation has led to alarming rates of rising sea-levels and natural disasters which are more severe than previously experience11. Map of Small Island Developing States

Source: Food and Agriculture Organisation (www.fao.org/sids/map/world.gif)

See the (SIDS 2005) report, International Meeting to Review the Mauritius Strategy for the further Implementation of the Programme of Action for the Sustainable Development of Small Island Developing States of 13 January, 2005, A/CONF.207/CRP.7. 11 See (SIDS 2005) op. cit.
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Therefore, SIDSs face severe geographic and environmental challenges. Moreover, innovation and development in SIDSs is hindered by dwindling human capital and the lack of scientific and technological education12. As a result the SIDSs have collectively committed themselves to mitigate the unique challenges they face which can be only achieved through co-operation and multilateralism
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. Thus, during the WTO

negotiations, I had an indispensable interest of collaborating with other SIDSs to lobby for our common interests and overcome the unique vulnerabilities Mauritius faces as a SIDS. Food Security Mauritius is a net food importer with some self-sufficiency in a few meat products but highly dependent on imports for its demand of staple foods such as rice and grains14. In the past Mauritius has depended on foreign exchange earnings from sugar exports to indirectly finance its imports-dependent demand for food15. However, revenues from sugar exports have declined drastically due to liberalisation and the phasing out of the preferential market-access agreements (PMAs) that Mauritius benefitted from16. This means that export revenues can no longer ensure food security to satisfy the domestic demand; especially in the context of rising food prices. Therefore Mauritius is challenged by its over-dependence on imports, low-levels of sufficiency, and soaring food prices. Moreover, Mauritius is also concerned with mitigating economic and geographic challenges related to its environmentally vulnerable agro-industry and

See (Bunwaree 2005) Reversing the Decline-Smallness and Human Capital in Mauritius a paper presented at the IRFD World Forum on Small Island Developing States of 10-13 January 2005. 13 See (SIDS 2005) op. cit. 14 See section 2.2 of (Ministry of Agro Industry and Fisheries 2008) Blueprint for a Sustainable Diversified Agri Food Strategy for Mauritius 2008-2015. 15 See section 2.1 of (Ministry of Agro Industry and Fisheries 2008) op. cit. 16 See (Bunwaree 2005) op. cit.
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isolation from larger markets in addition to its small geographic terrain which is not suitable for certain crops17. Therefore, Mauritius has an interest in continued governmental support of the agroindustry in exporting countries as this will reduce the price of its food imports; especially in the European Union (EU) market where Mauritius imports most if its agricultural products 18 . Furthermore, since the State Trading Corporation and Agricultural Marketing Board has the prerogative of importing strategic goods19, which includes staples and other vital food products, Mauritius has an interest in securing the prerogative of state trading enterprises (STEs) in agriculture. Moreover, STEs are vital because they often have a monopoly on certain products, which can be used as an effective mechanism to regulate demand, supply and prices20. Thus, I had an interest in securing the prerogative of STEs and finding diverse means to ensure sustainable food supplies as an integral domestic interest for Mauritius.
Source: Positioning Mauritius in the world (Acanchi, 2011)

Information Communication Technology (ICT) and E-Commerce Because we are in the phase out stages of its PMAs in textiles and sugar the Government of Mauritius has had to various strategies to diversify the economy through expansion of its services sector, which accounts for most of the domestic
See paragraph 5.0 (Ministry of Agro Industry and Fisheries 2008) op. cit. See Mauritius section of (World Trade Organisation 2003) World Trade Profiles. 19 See (Ntagungira 2008) Development of National AGOA Export Strategy (Mauritius 2008-2012) a report on the African Growth and Opportunity Act of the United States. 20 See (Mitra and Josling 2009) Agricultural Export Restrictions: Welfare Implications and Trade Disciplines a position paper in the International Policy Council Agricultural and Rural Development Policy Series.
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production, by pursuing new opportunities in developing an information economy21. Therefore I had an interest in pursuing a strategy to develop Mauritius into an information and business hub thus expand its services sector, which depends mostly on financial services and tourism as previously discussed. Since these interests require heavy investment I also have an interest in utilising existing trade ties to attract FDI. Furthermore, I had an interest in attracting FDI from India to setup call-centres and other business process outsourcing-specific factors of input attracting FDI from China to develop its computer production industry. Moreover, I had an interest in attracting FDI to develop Mauritius ICT infrastructure that is necessary to increase E-Commerce activity which can be integral to expand services in Mauritius economy. Legislative Capacity Related to E-Commerce and Intellectual Property Rights The Government of Mauritius has committed itself to reviewing the existing intellectual property rights (IPR) legislation and establishing an Intellectual Property Office and a National Intellectual Property Council22, which is intended to strengthen the domestic framework for IPR and harmonise domestic legislation and legislative capacity with the international standards. This is also vital to facilitate e-commerce which is largely challenged by global piracy. Therefore, I had an interest in ensuring that Mauritius has all the necessary financial and technical assistance to improve its legislative capacity and the existing legislation towards this end. Furthermore, the legislative capacity of countries has implications in their ability to utilise E-commerce which is affected by compliance with legal frameworks guiding

See (Sobhee 2009) op. cit. See (Ministry of Foreign Affairs, Regional Integration and International Trade 2011) Mauritius a foreign policy document for The Republic of Mauritius.
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acceptable transaction methods like the Electronic Transaction Act (ETA)23. The ETA deals with security challenges and combats cyber-crime in various ways to ensure a safe and regulated environment e-commerce; this is important for facilitating Ecommerce. Moreover, although e-commerce is an effective way to diversify the

economy and strengthen the tourism sector, Mauritius needs to take steps to ensure consumer and business security to facilitate further investment and utilisation in ecommerce. Therefore Mauritius security measures need to be harmonised with global standards for greater consumer and investor confidence in its E-commerce.

Section Two: Agenda Setting and Bargaining Round

Challenges, Strategies and Outcomes of Agenda Setting
The strategy I took during the Agenda Setting stage of the negotiations was focused on the abovementioned interests and ensuring that Mauritius diplomatic strengths were evident to all delegations present at the Cape Town round. Furthermore, my motions had a strong emphasis on the Doha Development Agenda calling for full cognisance of the developing world in international trade. This was going to be my position so as not to isolate Mauritius and to ensure that I had the backing of the majority who were DCs and LDCs. Thus, although there were initial challenges with articulating Mauritius interests within the WTO discourse and garnering support for my motions, I was able to positively contribute towards the agenda; and I had a resounding success at making my presence felt during the agenda setting round. Challenges Alliance-formation was of vital importance for securing Mauritius interests because Mauritius only had a delegation in the Trade Related Aspects of Intellectual Property
See the Information and Communication Technologies Authority (2004) The ICT Sector in Mauritius, an overview of the state of ICT in Mauritius.
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Rights and E-commerce Sub-council (hereinafter referred to as the TRIPS sub-council). But my attempts at alliance-formation with Mauritius traditional trade partners in the EU such as France, the United Kingdom and Netherlands were ineffective because the EU members cannot undertake any bilateral actions without the whole EUs support. This made co-ordinating with these traditional trade partners almost impossible and unrealistic. Furthermore, alliance-forming difficulties were exacerbated by the absence of India from the TRIPS sub-council. But this became an opportunity to further Mauritius interest in other sub-councils where India had a delegation. Map of Mauritius Export Partners

Source: International Trade Centre (www.intracen.org/mat/)

Nevertheless, the presence of China, and Antigua and Barbuda in the TRIPS sub-council was an opportunity that I embraced fully because these countries were best suited for alliance-formation for various reasons. Firstly, China is one of Mauritius major trading
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partners. Secondly, Antigua and Barbuda is a SIDS with similar, if not common, interests to Mauritius. Therefore this was an opportunity for co-ordinating with these delegations and collectively bargaining to lobby for an agenda in our interests. Furthermore, the active role played by Estonia as a poorer member of the EU, also offered me a chance to align Mauritius with the EU; albeit limited due to the virtually inexistent trade ties between Estonia and Mauritius. I also had the challenge of articulating Mauritius interests in the context of the vaguely developmental agenda established in the Doha Round for the TRIPS sub-council. However, as mentioned earlier, I was intent on ensuring that delegations were cognisant of the Doha Development Agenda at every step of agenda setting across all levels of negotiation. Moreover, since I was the only representative Mauritius had, this required highly extensive co-ordination with allies in other sub-councils to ensure that the developmental agenda was being recalled within the various discourses of each sub-council. Strategies Therefore, within the TRIPS sub-council, I decided to focus on three important interests that were: promoting e-commerce, increasing legislative capacity to advance IPRs protection, and TRIPS-related public health issues. This allowed me to narrow down and refine the extensive agenda within the TRIPS sub-council so that I could articulate Mauritius interests within the pre-existing discourse. Furthermore, this allowed me to align Mauritius with the three aforementioned countries that were in the TRIPS subcouncil. This is evident in the motions forwarded by Mauritius some of which are:
1. We agree to discuss liberalization of all sectors related to e-commerce in developing countries and LDCs, specifically telecommunication and banking; to attract FDI in infrastructure to promote e-commerce.

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2. We agree to discuss the technical assistance for developing and LDCs to establish better understanding of Intellectual property protection and rules of engagement. 3. We would like to discuss adjustments to the quota requirements on the production of generic pharmaceutical under compulsory licensing for exports to developing countries and LDCs. 4. We agree to discuss ensuring that any e-commerce regulation and law is in line with standard environmental procedures and the developmental agenda already finalized within the WTO.

Firstly, all these motions dealt directly with some the interests outlined earlier in this report. These include Mauritius interests in expanding its services sector through development of ICT and e-commerce and mitigating Mauritius SIDS challenges and legislative capacity-building. Secondly, these motions also allowed me to develop alliances primarily with Antigua and Barbuda, China and Estonia and other delegations by aligning our interests within the negotiations. The promotion of ecommerce was in line with the interests of China, Antigua and Barbuda, the United States of America (US) and Estonia. In addition, increased respect of IPR was important to send signals for further co-operation between Mauritius, Estonia and Germany; which was intended to allow me to develop an alliance relationship with the EU. Lastly, TRIPS-related public health concerns were in the interest of SIDS, and other DCs and LDCs in general, because public health challenges exacerbated their human capital problems24. Thus, my strategy was intended to articulate Mauritius interests within the current TRIPS sub-council discourse whilst allowing for strategic alliances. However, these were not the only interests that I needed to secure. So I had to extend my strategy beyond the TRIPS sub-council to secure Mauritian interests in other sub-councils. Therefore I decided to rally all the other SIDSs in the Cape Town Round so that we could lobby our interests across all sub-councils and also increase the lobbying power of SIDSs through collective bargaining. This was extremely useful because of highly converging interest of all the SIDSs. So I contacted
24

See (Sobhee 2009) op. cit.

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the delegations from Cuba, Fiji, Papua New Guinea and Singapore who the only other SIDSs in the Cape Town Round outside the TRIPS sub-council; and I established a SIDSnetwork. I established the SIDS-network for the purpose of co-ordinating strategies with allies with common interests as well as securing Mauritius interests outside the TRIP subcouncil 25 . I therefore prepared an agreement amongst the SIDSs to facilitate information-sharing and co-ordinating strategies26. In addition, the SIDSs signed an agreement at the onset of the agenda setting stage of negotiations, which guided the SIDSs throughout the Cape Town Round of WTO negotiations. This agreement was a commitment device for all SIDSs to ensure that each SIDS shared information and kept SIDS-specific information confidential to facilitate the pursuit of each members interests in alignment with other SIDSs. Moreover, this was intended to consolidate the bargaining interests and lobbying power of all SIDSs. Thus, the SIDSs met regularly and shared information and developed strategies to forward SIDSs interests across all sub-councils where we had representation. This left the SIDSs without representation in two sub-councils. Moreover, because of converging interests and the fact that each SIDS faced the same challenge of being a lone-delegate, my strategy to pursue Mauritius interests in other sub-councils was ameliorated by the consolidated strategy of all SIDSs27 ensuring greater creativity and a larger network of influence. Furthermore, because I drafted the rules and I was in control of the administrative documents, I alone explicitly knew the rules set out in the

See Reminder: SIDS Meeting, Bargaining Round and SIDS Meeting announcements in the Diplomatic influence section of the Annex. 26 See the SIDS Agreement in the Non-Trade Related Agreements section of the Annex. 27 See the Summary of Small Island Developing State (SIDS) Interests and Strategies in the Diplomatic Influence section of the Annex.
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SIDS agreement and their exact implementation; so I could manipulate the rules and use them to my advantage if the need arose as a strategic move. Lastly, Mauritius is also a member of the African Union (AU). Therefore, during the Cape Town Round of WTO negotiations, I was also part of the AU grouping of countries present at the negotiations which was established by the delegations from Botswana and Ghana. The AU also signed an agreement, similar to the SIDS agreement, which set out rules of engagement and confidentiality. In addition, the AU group had delegations from other delegations that SIDSs had no representation in and each sub-council had an AU representative reporting on the developments on a weekly basis. I was appointed as one of the AU delegates reporting on the TRIPS sub-council28. Therefore, each member was committed to sharing the information that they were privy to in good faith hoping that other delegations would have the same commitment as outlined by the AU agreement. This was necessary for ensuring that each members interests were sought after by consolidating the similar, yet sometimes diverging, interests of the AU states.

28

See African Union Meeting in Diplomatic Influence section of the Annex.

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Moreover, because all AU delegations except Egypt and South Africa had lonerepresentation, the AU depended on extensive and committed co-ordination. Thus, the AU offered an opportunity to have Mauritius interests sought after, especially in the Agriculture and the Services, Labour and Environment (SLE) sub-councils; in return for my commitment to ensuring that other AU members interests were secured in the TRIPS sub-council. As a result, through extensive co-operation, Mauritius was able to ensure that all of its interests were sought after. Outcomes The Agenda Setting Round ended with Mauritius having made a considerable mark in the negotiations. I had gained prestige amongst other countries for advocating for Doha Developmental Agenda which won the support of the many LDCs and DCs that were in the majority within the negotiations. Moreover, I had not only been able to steer the agenda towards greater cognisance of the DC and LDC needs but, I was also able to articulate Mauritius interests within the pre-existing WTO discourse of the Doha Round whilst introducing more recent developments in world trade. In addition, I had established a highly effective and efficient network of co-operative ties with the SIDSs that represented considerably strong voting leverage through scattered regional blocs in the Caribbean, Australasia, Southeast Asia and Africa. Moreover, through my co-operative strategy with the SIDSs, Mauritius was able to ensure that its interests in expanding its service sector were articulated by Singapore in the SLE sub-council. Furthermore, Mauritius interests in expanding market access represented by Cuba in the Non-Agricultural Market Access (NAMA) sub-council; and general international trade interests were secured by Papua and New Guinea and Fiji in the sub-council in-charge of Harmonisation of Regional Trade Agreements sub-council.

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Lastly, Mauritius interests in the TRIPS sub-council were successfully pursued through my diplomatic efforts that won over the support of Estonia and China29 in addition to Antigua and Barbudas co-operation. Furthermore, some of Mauritius interests in food security were sought after by the AU. But the AU was dealt an insurmountable blow by Botswanas violation which undermined the agreement resulting in a unanimous vote of no confidence. Thereafter, the AU lost much of its legitimacy and many members lost commitment to the group. After the AUs diplomatic and co-ordination failure I established a network of all LDCs and DCs that were present at the Cape Town negotiations30. I established the network exclusively for information-exchange purposes and so that delegations could lobby for support of any motions they felt were in the interest of LDCs and DCs before they were voted on. But I also strategically added Bulgaria in this network. I added Bulgaria because the delegation, which was a member of the TRIP sub-council, was not actively engaged in the negotiations but very active in relaying information from the subcouncil to the rest of the EU. Thus, adding Bulgaria in the online LDCs and DCs network was strategically useful for creating a leak; so that the EU would be privy to the coordinated strategy of LDCs and DCs, which offered a chance for co-operation and foreign aid offers. This was resoundingly successful and Bulgaria repeatedly consulted before bringing forward developing world-friendly amendments or motions of particular interest to the EU31.

See the China and Estonia Dataset in the Diplomatic Influence section of the Annex. See the Welcome to the DCs and LDCs Tab and WTO Trade Profiles announcements as well as This is a list of all Developing Countries (DCs) and Least Developed Countries (LDCs) in the Cape Town Round of the WTO negotiations in the Diplomatic Influence section of the Annex. 31 See the RE: MOTION SP5 in the Diplomatic Influence section of the Annex.
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Vote Influence in TRIPS Sub-council

Percentage of Vote Convergence with Mauritius 120 100 80 60 40 20 0 20-8-2012 1-9-2012 TRIPS Sub-council Weeks 3-9-2012 SIDS solidarity China Solidarity EU Solidarity

Assessment of Mauritius Position at the End of Agenda Setting Round

Mauritius was in a considerably secure position at the end of Agenda Setting. I had also gained enough prestige within the TRIPS sub-council and within the Ministerial Council (MC). I made Mauritius presence felt through key amendments to motions and diplomatic efforts to secure Mauritius interests and also rally the support of other DCs and LDCs. One such occasion was a key amendment to a Irish motion for the establishment and enforcement of an international labour standard within services industries, which feature in international trade, with the aim of reducing worker exploitation and abuse. Mauritius amended this motion to remove the establishment of a labour standard within services completely, which needed a two-thirds majority vote but did not pass even though it got a majority vote32. Therefore this amendment, which was the only amendment that did not strictly fail, failed only because the EU and US voted against it and it did not achieve two-thirds of the votes in its favour. Nevertheless my amendment was successful in drawing the
32

See Irish Labour Motion in Diplomatic Influence section of Annex.

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attention of all LDCs and DCs to this crucial motion that was against their interest, which might have passed by strict majority otherwise. Thus the motion, and all its amendments by developed countries, failed outright. Notwithstanding the resounding success of my co-ordination and diplomatic strategies, more work was required during the Bargaining Round to further fulfil what was needed to secure Mauritius interests.

Challenges, Strategies and Outcomes of Bargaining

Mauritius position at the end of Agenda Setting Round meant that its allegiances and co-operative strategies as well as competitors were blatantly apparent. Thus, my strategy at the Cape Town Round of the WTO relied heavily on Mauritius diplomatic influence and co-ordination power. In this regard, at the onset of bargaining, I had already established Mauritius as an active intermediary between Asian countries and other African countries which had gained diplomatic headway for Mauritius. Due to my diplomatic efforts, DCs and LDCs keenly offered their support for Mauritius, because I had established a perception of Mauritius as an advocate for the developing world; mostly due to my articulation of the consequences that the negotiations had for DCs and LDCs33. This was useful for securing both Mauritius interests as a SIDS and in advocating for full cognisance of the development agenda thus securing Mauritius developmental interests as well. In addition, this very co-operative strategy relied on my ability to consolidate the converging interests of all other SIDSs to lobby their respective regional groups and ensuring Mauritius interests and those of other SIDSs. Moreover, I intended on using existing international trade ties to both strengthen Mauritius

See Attention GPA Motion, In preparation for MCs, SP5-9-18, In preparation for MC (from SP5), SP5-9-20 and Financial Services [Motion 58] by Switzerland announcements and attachments in the Diplomatic Influence section of the Annex.
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comparative advantage and diversify its economy whilst dealing with some of the unique vulnerabilities it faces as a SIDS. Therefore, instead of pursuing Mauritian interests through every action, I separated its interests according to different frameworks under which they could be pursued. Primarily, I pursued Mauritius interests through bilateral and plurilateral endeavours outside of the TRIPS sub-council and the MC. This is shown by the various agreement concluded as discussed in the outcomes section below. A secondary strategy was focused on the sub-councils and the MC. Therefore, the greatest challenge, which I met with resounding success, was co-ordinating this seemingly scattered strategy to secure national interests and creating an environment for greater co-operation in future international trade for Mauritius. Challenges My biggest challenge during the Bargaining Round was consolidating the scattered progress, at various levels of the WTO negotiations, and securing national interests. Moreover, I faced the challenge of a lone-delegation with representation in the TRIPS sub-council only. Furthermore, I had to stay vigilant of being taken advantage because I had limited access to vital information at the various levels of negotiation as a lonedelegation. Therefore, given that there were delegations with up to 22 votes and 11 delegates in all the sub-councils, I was at a great comparative disadvantage. However, the most aggravating challenge I faced was negotiating with delegations that had little to no grasp on their countries interests. Furthermore, because Mauritius traditional trade partners in the EU were weakly co-ordinated making it almost impossible to conclude any plurilateral agreement, I had to face the challenge by pursuing Mauritius interests through alternative means.

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Strategies There were three groupings that I used to my advantage in securing Mauritius interest. The most effective grouping was the network of SIDSs which met regularly, shared vital information and co-ordinated the strategies of all SIDSs to secure individual interests which were very convergent. The SIDS network was vital because it gave me trustworthy representation and security for Mauritius interests in other sub-councils where Mauritius had no delegation. The SIDS network was trustworthy because all the SIDSs faced very similar challenges and vulnerabilities as mentioned earlier and thus most of their individual interests were converging. Furthermore, the group of SIDS was small enough to overcome co-ordination challenges evident in larger groups. However, the Singaporean delegation was very inactive. Singapore had the worst cooperation in all the SIDSs co-ordination efforts. Nevertheless, I directed the progress of the SIDS network by ensuring that all member countries submitted a summary of their interests within the WTO34 which was used to create an overall summary of the SIDS network strategy and interests. The summary of all SIDS interests took into account all individual interests, and it was publicly available for all SIDSs, which was vital in guiding all SIDSs actions during the Cape Town Round of negotiations 35 . Thus, the SIDS network met regularly to deliberate on strategies, important motions and their consequences for SIDSs, and important treaties that were in SIDSs interests36. In addition to establishing the SIDSs network, I established a network of all LDCs and DCs as previously mentioned. I established this network because I had realised the importance of information to securing its interests; and the declining dependability of the AU had left me without some vital information. Even though Mauritius was
See Individual SIDS Strategies in Diplomatic Influence section of the Annex. See the Summary of Small Island Developing State (SIDS) Interests and Strategies op. cit. 36 See SIDS Meeting 10 Mins Before MC, Botswanas Motion on Sugar and SIDS on Services announcements and attachments in the Diplomatic Influence section of the Annex.
34 35

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receiving very useful information from the SIDS network, there were no SIDS in a few of the instrumental sub-councils which deal with Agriculture and WTO Rules for Dispute Settlement and Implementation Issues. Furthermore, the inadequate co-operation of Singapore meant that Mauritius interests in the SLE sub-council were not sought after. Therefore, I needed to ensure that I was privy to vital information from all sub-councils so that I could adjust my strategy accordingly to mitigate possible harm or favour that arose from these sub-councils. Moreover, the LDC and DC network was extremely useful for lobbying for Mauritius interests in that it allowed me to gain further support and leverage for any motions I brought forward by garnering support from the member countries. The way in which I established the network positioned Mauritius in such a way that it could disseminate key information on motions with enough rhetoric, whether it was useful or not for all LDCs and DCs, to gain the support of these countries. This also became very vital because I now had enough leverage against developed countries. This was shown by the great support offered by DCs and LDCs for Mauritius motion that was seconded by Antigua and Barbuda, which sought to establish a working group that would deal with Intellectual Property infringements in the industries related to green technology and renewable energy. This motion was amended by Ireland, which failed, and later Mauritius version of the motion passed with both the EU and US voting against the motion which effectively showed the voting strength that DCs and LDCs held in the Cape Town Round37. Thereafter, I had gained considerable prestige and invigorated the confidence of DCs and LDCs against their fears that OECD countries had the power to control negotiations.

See Mauritius 5A Amendment in SP5-9-18 and TRIPS and Environment (Minutes from MC) in the Diplomatic Influence section of the Annex.
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Furthermore, the fact that Bulgaria was privy to DC and LDC-related strategic information put me in a powerful position. The Bulgarian delegation was not actively engaged in the negotiations and this information offered the delegate a chance to engage in the discussion and also offer EU advice on how to deal with LDCs and DCs that dominated the voting role. But Bulgarias delegate repeatedly consulted me before structuring an EU counter-strategy, which gave me a chance to see what the best effort the EU would give against the LDC and DC lobbying power38. Moreover, because the Bulgarian delegate thought herself to have been accidentally added to the network she shared the information with the EU offering my correspondence with her as insider information that she was privy to; without knowing the strategic function she served. Lastly, Mauritius was part of the AU group which met to deliberate on sub-council events and motions that were important to AU members. This group was of primary importance for its lobbying of Mauritius interests in the Agriculture Sub-council because most of the active AU members were in that sub-council. In addition to meeting weekly and reporting on individual sub-council events, the group also had the right to information on financial incentives offered to individual members. This was extremely useful for realising competing interests as well as co-operative countries within and outside the AU at the WTO negotiations. For example, Mozambique held a motion that I brought forward in the TRIPS subcouncil, after I seconded his amendment to the motion. Thereafter, the Mozambican delegate was financial incentive agreement to ensure that the motion was rolled back at the MC meeting when it was mean to be up for a vote. Thus, I was able to utilise information from the AU group to spot its competitors and co-operator to Mauritius
38

See RE: Services in the Diplomatic Influence section of the Annex.

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interest allowing me to adjust my strategy accordingly. However, co-ordination in the AU was very volatile due to complex and diverging interests. Nevertheless, I quickly learned how to deal with the competing interests. Thereafter I purposefully raised vague motions in the TRIPS sub-council. The motions were purposefully vague motion with the hopes that other delegates would amend the motions and add the details that were necessary. Thus, after seconding an amendment and many further strategic amendments by other allied delegations, which made the motions clearly what I had in mind when submitting the motion. I would then add a final inconsequential or clarificatory amendment that would be seconded by most of the strategic amenders to the original motion resulting in the motion being passed with Mauritius still holding the motion 39 . Thus my dynamic strategy was vital to securing some of Mauritius interests. Outcomes Double-Tax Treaties

As previously mentioned, Mauritius has liberalised it economy extensively to stay abreast with the global trends in international trade. But, even though this has led to a loss in fiscal revenues from tariffs and customs duties, Mauritius strong financial sector and off-shore banking regime has allowed Mauritius to secure 33 double-tax treaties40. These double-tax treaties and Mauritius strong off-shore banking regime make for a good mix of policies that attract both FDI and redirected investment into its partner territories. For example, India and Indonesia received 78% of their collective FDI (which was the bulk of FDI for India) from investments through Mauritius in 200441. Thus, I pursued more tax treaties with countries such as Pakistan; and extended existing tax
See Motion Holding Strategy (Minutes from SP) in the Diplomatic Influence section of the Annex. See (Aycock 2008) op. cit. 41 See (Aycock 2008) op. cit.
39 40

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treaties countries with countries such as India whilst. This will grow Mauritius financial services sector and take advantage of its strong off-shore banking regime. Therefore, I undertook a two-fold strategy in pursuing this national interest. Firstly, I sought to extend some expiring double-tax treaties for ten years. However, I bargained with countries to secure this interest in order to pursue other interests. Most of my rhetoric in this regard was based on the bargaining chip that the greatest beneficiary to the double-tax treaty is the other signing partner instead of Mauritius using the fact that these double tax treaties attract FDI through Mauritius and into the other party. This was central to my ensuring that its other interests were secured since this became an essential bargaining chip because most countries in the Cape Town Round sought to secure FDI as their national interest. So I would bargain to establish a double-tax treaty or extending a pre-existing one in return for an FDI arrangement to incentivise investment into Mauritius to secure the other general goals mentioned above. But I used the benefit of asymmetric information to conceal the fact that foreign governments would lose out on tax revenues from their domestic firms investments in Mauritius whenever I was negotiating. For example, I was able to secure Mauritius interest in expanding and diversifying its services sector. I did this by extending the expiry date on the existing double-tax treaty in return for concluding an agreement to establish computer software development and business process outsourcing (BPO) industries after bargaining with India. So the double-tax treaty was extended for FDI-friendly tax exemptions and staggered rebates in the abovementioned industries42. Therefore I successfully concluded an agreement that extends the double-tax treaty by ten years and offers impressively favourable tax

See Article 3.2 in the Bilateral Treaty between the Republic of India and the Republic of Mauritius in the Trade Related Agreements section of the Annex.
42

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concessions for Indian nationals willing to invest in Mauritius computer software development and BPO industries. In addition to this, the agreement stipulates a work force requirement in favour of Mauritian nationals43. This is intended mitigate human resource challenges, such as unemployment and unskilled labour, whilst expanding Mauritius services sector by establishing computer development and BPO industries. Moreover, I was able to regain preference for Mauritius waning clothing and textiles by securing market access into Indias clothing and textiles industry; and offering tax rebates for Mauritian invests in India 44 . This is crucial because the phasing out of Mauritius PMAs needs to be mitigated through a long-term strategy to regain preference of Mauritius clothing and textiles. Thus, the bargaining outcomes of the extension of the double-tax treaty with India are exponentially vital for securing more than one of Mauritius interests. Additionally, the double-tax treaty between Pakistan and Mauritius was also extended by ten years. In this extension, Mauritius was able to expand the currently existing preferential trade agreement (PTA) between Pakistan and Mauritius into a free trade agreement (FTA), whilst protecting some of its vital goods45. The strategic decision to expand the PTA into an FTA was justified by the need to expand on the limited scope of the PTA because of the considerable progress that both Pakistan and Mauritius have made since the implementation of the PTA in 2007. Moreover, this strategic move was justified by the success and experience gained from the implementation of the PTA and the higher potential of an FTA. In addition to this, the FTA is intended to create an

See Articles 3.5 and 3.6 in the Bilateral Treaty between the Republic of India and the Republic of Mauritius op. cit. 44 See Article 3.7 in the Bilateral Treaty between the Republic of India and the Republic of Mauritius op. cit. 45 See the Bilateral Treaty between the Islamic Republic of Pakistan and the Republic of Mauritius and its relevant annexes in the Trade Related Agreements section of the Annex.
43

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enabling environment for diversifying Mauritius energy sources because of the large natural gas reserves in Pakistan. I also pursued new treaties as a second approach to Mauritius interest in double-tax treaties. Therefore, I was successful at concluding eight vital tax treaties with Turkey, the Mercosur group of countries, Egypt, and South Korea. Mauritius already has strong trade ties with Turkey which culminated in an FTA that was signed in 2011. But Mauritius and Turkey had not yet signed a double-tax treaty, which was neither being negotiated nor awaiting signature at the time of Cape Town Round of WTO negotiations. Nevertheless, I was successful in negotiating a double-tax treaty with Turkey46; to create an enabling environment for further trade. Moreover, this was done to further strengthen Mauritius financial services industry as mentioned above. Mauritius has also been able to strategically secure a double-tax treaty with the Mercosur group of countries which includes Argentina, Bolivia, Brazil, Paraguay, Uruguay and Venezuela. I pursued this double-tax treaty in a two-fold strategy to create a catalytic environment for FDI from Mercosur into Mauritius and regaining preference for Mauritius sugar exports into Mercosur with Brazil in particular. Firstly, the double-tax treaty is intended to increase FDI flows from Mercosur into Mauritius specifically into Mauritius sugarcane industry and also establishing a biofuels and renewable energy industry in Mauritius. Mauritius strategy to diversify the economy and develop into a regional information hub requires heavy investment, which should ideally be in renewable and sustainable energy sources to improve economic growth and environmental sustainability 47 . Therefore this double-tax

See the Bilateral Double-Tax between the Republic of Turkey and the Republic of Mauritius in the Trade Related Agreements section of the Annex. 47 See the (Ministry of Renewable Energy & Public Utilities 2009) Republic of Mauritius Long-Term Energy Strategy 2009 2025 Chapter 5.
46

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agreement is intended to attract FDI from Brazil specifically, since Brazil is a leader in biofuels and other forms of environmentally energy sources 48 . Furthermore, this agreement also stipulates a workforce requirement that is intended to help transfer technological skills and develop skilled labour in Mauritius49. In addition to this, the Mercosur group of countries have also pledged to offer tax concessions for investments by their citizens into Mauritius sugar exporting industry. This is intended to increase the production capacity and skills in the sugarcane export industry of Mauritius. Secondly, the agreement establishes a FTA between the Mercosur group of countries and Mauritius. This agreement also offers preferential market access for Mauritius sugar exports into Mercosur50. These arrangements are vital to further increase the strength and comparative advantage of Mauritius sugar production. Moreover, the agreement is vital to regain preferences for Mauritius sugarcane exports which have losing preference due to the phasing out of the Lom Agreement51. However, this arrangement was concluded through my strategic action during the WTO negotiations. Before I had amended a motion by China in the TRIPS sub-council, which sought to create a working group to deal with IPR infringements in industries related to green technology and renewable energy, I bargained with a few countries that I intended to add to the working; one of these countries was Brazil52. Thus on the morning before the relevant TRIPS and sub-council meeting; I extended diplomatic effort to these countries

See (Kogan 2010) Overview of the Copenhagen Conference section in Climate Change: Technology Transfer or Compulsory License?. 49 See Articles 2.8 and 2.10 of the Plurilateral Double-Tax and Free Trade Treaty between Mercosur and the Republic of Mauritius in the Trade Related Agreements section of the Annex. 50 See Article 2.4 of the Plurilateral Double-Tax and Free Trade Treaty between Mercosur and the Republic of Mauritius op. cit. 51 See (Ministry of Foreign Affairs, Regional Integration and International Trade 2011) op. cit. 52 See TRIPS and E-Commerce Lobby (E-Mails) in the Diplomatic Influence section of the Annex
48

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and offered each country a chance to signal an interest to make a reciprocal deal with Mauritius which Brazil responded to53. Then I amended the Chinese motion and managed to lobby enough support for the motion to pass by strategically adding Germany, the US and Norway to the working group. Adding these countries allowed the motion to pass because the EU and US have a combined majority vote in the sub-council. Thereafter, I lobbied for the motion in the DCs and LDCs network 54 . My lobbying was successful because, after a failed amendment by Ireland at the MC, my version of the motion passed with both the EU and US voting against the motion55. Thus, I then approached Brazil to negotiate a double-tax treaty as a reciprocal benefit of adding Brazil in the working group. But since I knew that Brazil cannot get into any unilateral agreements; the arrangement with Brazil was extended to include all the Mercosur member countries. Thereafter, I had to convince the rest of the Mercosur member that this agreement was also in their favour. But this was eased by the confidence of the Brazilian delegation which has greater influence within Mercosur. Moreover, since the relationship between Mauritius and Brazil was established on environmental consciousness ground; Brazil was willing to advocate for an FTA between both parties, which allowed for preferential market access for Mauritius sugarcane exports into Mercosur primarily for the production of biofuels. Furthermore, Brazil was willing to make an agreement that would allow FDI into environmentally-friendly energy research to establish biofuel and renewable energy production in Mauritius56.

See TRIP an Environment Lobby Response (E-Mails) in the Diplomatic Influence section of the Annex. See TRIPS and Environment op. cit. 55 See Working Group Lobby Influence (Minutes from the MC) in Diplomatic Influence section of the Annex. 56 See the Plurilateral Double-Tax and Free Trade Treaty between Mercosur and the Republic of Mauritius op. cit.
53 54

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Thirdly, Egypt and Mauritius are both members of the COMESA with an FTA existing between both countries; and other members of COMESA. However, Mauritius has not reaped the full benefit of this regional trading bloc as a result there has been little trade between Mauritius and other member states57. Therefore, in order to take advantage of Mauritius comparative advantage in services, more specifically financial services, I concluded a double-tax treaty with Egypt 58 . Furthermore, this double-tax treaty is intended as a mechanism to attract more FDI into Egypt that is recovering from the economic consequences of the Arab Spring and its dramatic regime change. Moreover, this is intended to allow more trade between Mauritius and other African countries. Lastly, following a failed extension and FDI arrangement between Mauritius and China, I pursued a dual agreement with South Korea. This agreement establishes a double-tax agreement with South Korea in return for an FDI arrangement to attract FDI into Mauritius and develop a computer manufacturing industry59. This agreement has been concluded establishing a double-tax treaty between South Korea and Mauritius as well as extensive tax concessions and exemptions for South Korean investment into Mauritius computer manufacturing industry60. The agreement also includes workforce requirement ensuring skills and technical transfers61. Furthermore, this is intended to allow Mauritius to fully utilise its comparative advantage to other African states. Small Island Developing State (SIDS) Challenges

Aside from these treaties, I pursued a strategy in attempt to overcome the unique vulnerabilities and developmental challenges Mauritius faces as a SIDS; which pertains
See (Sobhee 2009) op. cit. See the Bilateral Double-Tax between the Republic of Egypt and the Republic of Mauritius in the Treaties section of the Trade Related Agreements section of the Annexs. 59 See Article 3.1 in the Bilateral Double-Tax between the Republic of South Korea and the Republic of Mauritius in the Trade Related Agreements section of the Annex. 60 See the Bilateral Double-Tax between the Republic of South Korea and the Republic of Mauritius op. cit. 61 See Article 3.3 in the Bilateral Double-Tax between the Republic of South Korea and the Republic of Mauritius op. cit.
57 58

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to its size, location, environment and social composition as mentioned above. In this regard, I also signed onto a Trade Facilitation62 treaty drafted by Fiji. This treaty, which established a bureaucratic customs union, also has provisions that state a commitment by developed countries, and some developing countries, to assist the implementation of this bureaucratic customs union through skills transfers, training and funding to DC and LDC party countries. Therefore, with the signing of this treaty, which is intended to harmonise bureaucratic customs process for party countries, allows for trade facilitation between party countries, reducing inefficiencies and promoting trade flows. Thus, Mauritius will be able to overcome the challenge of isolation and economies of scale. Further challenges Mauritius faces relate to innovation and development being hindered by dwindling human capital and the lack of scientific and technological education. In this regard, I finalised each new double-tax treaty with an FDI arrangement that requires FDI to be accompanied by technical assistance. In addition, Mauritius has been able to negotiate a workforce requirement for all FDI which ensures greater skills transfer and employment opportunities. Moreover, SIDSs also committed themselves to mitigate some of the unique challenges they face as SIDSs through co-operation and multilateralism. Thus, many of the newly enacted trade laws from the Cape Town Round have now introduced special and differential treatment for Small Vulnerable Economies (SVEs) into the discourse, which will go a long way towards mitigating the challenges SIDSs face. This was most useful during the final MC meeting where the OECD countries were success at passing a motion calling for extensive liberalisation of financial services by all WTO member countries. However, this liberalisation was aimed at modes 3 and 4 which would result

62

See the Inside Treaty on Trade Facilitation in the Treaties section of the Annex.

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in more competitive OECD banks being afforded national treatment within all DCs and LDCs. Therefore, because Mauritius has a strong off-shore banking regime63, I tried to amend the motion to limit it to mode 1 which would be in Mauritius favour. But the mounting amendments and the financial incentives handed out by OECD countries made it clear to me that this motion would pass against Mauritius favour. This motion had been flagged as one of the important motions that I would lobby against, which failed. Nevertheless, my lobbying was very effective throughout most of the Cape Town Round as illustrated by the graph of votes in solidarity with Mauritius during the MCs.

Vote Influence in Ministerial Council

Percentage of Vote Convergence with Mauritius 100 90 80 70 60 50 40 30 20 10 0

SIDS Solidarity China Solidarity India Solidarity

Ministerial Council Meeting Dates Source: WTO Secretariat Cape Town Round, 2012

Therefore, in collaboration with Fiji and Antigua and Barbuda, I was success in advancing an amendment that afforded Mauritius (and other SIDSs) the same kind of special and differential treatment as LDCs64. In addition to this, Mauritius also received US$ 650 million in foreign aid from Belgium and the US to mitigate the potential

63 64

See (Aycock 2008) op. cit. See Services Liberalisation (Minutes from the MC) in the Diplomatic Influence section of the Annex.

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disadvantages of this motion65. Thus, even though this motion was not in Mauritius favour, the foreign aid would go a long way in improving competitiveness. Moreover, because of Mauritius relatively strong financial sector 66 , my amendment through Antigua and Barbuda offers Mauritius LDC-equivalent treatment putting Mauritius in a better position over all. Moreover, as the graph above shows, when Mauritius could not count on support from India and China, its traditional trading partners, Mauritius had the support of all the SIDS. Lastly, I has signed onto an inside treaty that calls for liberalisation of services across modes 1, 2 and 467. These are modes which will benefit Mauritius because of our liberalised economy. Moreover, this treaty relates to liberalisation in Construction, Healthcare, Financial, and ICT, which Mauritius has comparative advantage in allowing further expansion of its services sector. Furthermore, where Mauritius is at a disadvantage, this treaty will allow limited investment in these sectors. Since this treaty also has a workforce requirement; future investments will have technical skills transfer which is in Mauritius interest to overcome its human resource challenges. Thus, this treaty will allow Mauritius to not only gain access to more markets but it will also mitigate its challenges in human resources and develop its healthcare industry. Similarly Mauritius signed onto a treaty, drafted by Fiji, which establishes a plurilateral pharmaceutical company68. This company has the right to issue compulsory licenses. This is vital since an earlier motion , which was hijacked by Mozambique, dealt with the same challenge of access to limited generic drugs that Mauritius faces as public

See European Union (Belgium) and Summary of Foreign Aid Agreements between the United States of American and the Republic of Mauritius on Economic Aid and Development in the Non-Trade Related Agreements section of the Annex. 66 See (Desai and Tulsidas 2012) op. cit. 67 See the Services Inside Treaty in the Treaties section of the Annex. 68 See Pharmaceutical Company Treaty in the Treaties section of the Annex.
65

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health concern affecting its human resource wealth69. Moreover, because China and India are party to this treaty, it will be very useful as these countries have large production capacity. Furthermore, because this plurilateral pharmaceutical company has an addition focus on research Mauritius will be able to mitigate future public health challenges whilst developing a healthcare industry. Food Security

Mauritius is a net food importer with growing self-sufficiency in beef and complete self-sufficiency in poultry 70 . In addition, as a SIDS, Mauritius is concerned with mitigating economic and geographic challenges, specifically in its vulnerable agroindustry sectors and isolation from large markets that enjoy economies of scale; and its small geographic terrain which is not suitable for certain crops71. In this regard, I signed onto a Food Security Treaty72, which was drafted by Fiji. The vital clause in this treaty, which overcomes Mauritius challenge of being isolated from international economies, is that signatories to the treaty agree to:
make their land and infrastructure available for the effective transport of agricultural produce or capital between member parties of this treaty. [Parties] will not charge taxes on the transport of produce or capital for any produce or capital involved in trade flows between any member countries of the treaty.

This is vital because it ensures that food imports from signatories to this treaty will be significantly cheaper. Furthermore, this treaty has had a significant number of countries signing to it at the Cape Town Round which expands the benefits and its scope. Mauritius has an interest in ensuring the prerogative of STEs is secured to ensure sustainable food supplies. Therefore, working together with Fiji and other SIDSs and

See (SIDS 2005) op. cit. See the Ministry of Agro Industry and Fisheries (2008) op. cit. 71 See the Ministry of Agro Industry and Fisheries (2008) op. cit. 72 See the Inside Treaty - Food Security in the Treaties section of the Annex.
69 70

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the developing countries, I was able to secure this interest from being undermined by a Cypriot motion disbanding all cartels including STEs. This interest was secured by Fijis amendment of the Cypriot motion by exempting agriculture and agro-food sectors from the list of actionable measures against cartels outlined by the Cypriot motion. I seconded the amendment which passed solely because of the SIDSs diplomatic efforts by informing delegates of the consequences of the Cypriot motion. It is important to note because this was a very contentious motion with many countries seeking to protect their interests in natural resources and other sectors where countries have state and private cartels looking after their domestic interests. But it was only the Fijian motion, which was extensively lobbied for in all the networks including the AU, SIDS, LDC and DC networks - resulting in the amendment being passed as WTO law without support from many developed nations; most notably the US and EU73. Lastly, Mauritius was offered foreign aid, along with all other SIDSs, to support a Spanish motion adjusting AMS commitments. This motion allows the EU to keep all amber box trade distorting - subsidies whilst going against Japans; and allows the EU to maintain blue box non-trade distorting - subsidies. Therefore, this motion is in Mauritius interest as net food importer from the EU. Moreover, Mauritius was incentivised with US$ 325 million from Spain and the US to support a motion that was in its favour. ICT and E-Commerce

The most important interest for Mauritius is the diversification of its economy by focusing on expanding its services sector which accounts for most of its domestic production. So I pursued a strategy to develop the economy into an information and business hub and making use of its successful financial services sector to expand the
73

See Cyprus Cartel Motion (Minutes from MC) in the Diplomatic Influence section of the Annex.

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services sector. Therefore, I have been successful at signing an agreement to attracting FDI from India to develop its computer software development industry and investment in call-centres and other business process outsourcing-specific factors of input as mentioned above. In addition, in collaboration with other SIDS, I concluded an agreement to attract FDI from the US to develop Mauritius ICT infrastructure. This agreement is a commitment by the US to develop the ICT sector and improve efficiency and profitability. Therefore, the US has pledged US$ 185 million in foreign aid for the development of Mauritius ICT infrastructure. In addition to this, the US has agreed to offer tax concession for investments up to US$100 million in order to attract FDI into Mauritius ICT industry74. This was achieved through collective bargaining with other SIDSs to support the US in passing WTO law extending the moratorium on customs duties in the E-Commerce industry indefinitely. The extension of the moratorium is also in Mauritius interest since Mauritius has a highly liberalised economy and a comparative advantage in ICT in relation to other African countries 75. To secure the aid and FDI arrangement above, Mauritius was instrumental in creating an aid spiral between the EU and the US which had conflicting interest concerning the extension of the moratorium. Mauritius formed a solidarity group comprised of AU countries76. Then through diplomatic effort as a result of my correspondence with the EU and US each party made a financially incentivised offer to lobby support during negotiations. Since the EU and the US were at opposing ends of the motion on ECommerce; Mauritius was able to play the two off using diplomatic effort to increase the financial incentive through an iterated game between the EU and US.

See the The United States of Americas Foreign Direct Investment Agreement with Antigua and Barbuda, Cuba, Fiji, Haiti, Papua New Guinea, Mauritius and Singapore in the Trade Related Agreements section of the Annex. 75 See (Sobhee 2009) op. cit. 76 See Bloc-Voting Agreement in the Diplomatic Influence section of the Annex.
74

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Finally, the EU offered the voting bloc US$200 million each, which was surpassed by the US with an offer of US$220 million. However, Mauritius was also part of a SIDS voting bloc which was also collectively bargaining with the US for financial incentive to support the US. Therefore because the AU voting bloc was comprised of 14 countries while the SIDS voting bloc was comprised of 6 countries; the USs final offer for the SIDS was US$ 185 million and an FDI arrangement (n). Thus, I finally chose to sign the SIDS agreement because it further secured Mauritius interests by improving its ICT infrastructure so n was greater than 35. This is illustrated in the game theoretic diagram below; where player one is (AU and Mauritius) and player two is (SIDS and Mauritius). Game-Theoretic Diagram of Decision to Support the US or the EU Mauritius

EU

US

AU

SIDS

AU

SIDS

(200, 0)

(0, 0)

(220, 0)

(0, 185+n)

Legislative Capacity and E-Commerce Transaction Security

Mauritius needs some financial and technical assistance to strengthen the domestic framework for IPR so that Mauritius can harmonise its domestic legislation and legislative capacity with the international standards. This is vital for facilitating ecommerce which is predominantly challenged by global piracy. So Mauritius needs to ensure that it can offer comprehensive protection of IPR.

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Furthermore, since the e-commerce and IPR are rapidly changing spheres in international trade, Mauritius has an interest in continued technical assistance from developed countries so that it can utilise the development advantages from these sectors to strengthen its economic growth. Therefore, Mauritius has an interest in WTO legislation requiring financial and technical assistance in order to improve its Internet security frameworks establishment. Thus, I forwarded a motion through the TRIPS subcouncil, which purposefully vague as mentioned above. The motion simply read:
We agree to establish a fund and a working group to develop the security measures in LDC's and DC's ICT/E-commerce industries.

However, this motion passed quite late in the bargaining round. Therefore I had to pursue its interests through other means in case this motion was not considered at the MC. So before the last MC I met with all the other SIDSs to draft a comprehensive strategy for the final MC and see which motions we felt indifferent about. Moreover, we also decided to choose motions that were in our favour and use the asymmetric information about these motions to lobby for foreign aid incentives to support these motions. Thus, after the final MC we had sign foreign aid agreements, some for motions which did not make it to the vote, concluding the round with US$ 3 billion77.

Assessment of Mauritius Position at the End of Bargaining Round

I ended the bargaining round having achieved most of my strategic goals. I have also fostered a close working relationship with other SIDSs. The collective bargaining effort of all SIDSs has been very helpful and effective. Each SIDS has contributed extensively towards Mauritius goals and I have done likewise to all other SIDSs interests. For example, Cuba was highly successful at introducing SVEs as an addition category of special and differential treatment in the WTO discourse; while Antigua and Barbuda has
77

See the various foreign aid agreements in the Non-Trade Related Agreements section in the Annex.

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been extremely useful in information gathering and sharing; while Fiji and Papua New Guinea have been extremely useful at co-ordinating the SIDSs strength of being dispersed across various regional groups to create treaties that will integrate SIDSs into international trade. Thus the successful relationship created amongst the SIDS and their efficacy has contributed vastly to my pursuit of Mauritius interests. But this has not been without my personal endeavour. Firstly, the SIDS network was only possible because I established the network in the early stages of the Cape Town Round of the WTO negotiations. Secondly, the effective communication and coordination between Mauritius, as an AU member and a SIDSs, and other countries was integral for lobbying the interests of all SIDSs; and especially useful in creating an AU voting bloc that was able to secure both foreign aid and pass WTO legislation in its interests and that of other SIDSs. Moreover, my active role in ensuring that all delegates of from LDCs and DCs knew about the various consequences of motions being considered at the MC was very useful in ensuring that the developing world was able to co-ordinate its voting power and lobby for developing state interests at the WTO. This is exemplified by my continued information-sharing, which included extensive economic analysis that was unbiased but lobbied for its interests and that of other DCs and LDCs, and active participation at the MC78. For example, a motion by Ireland was brought to the MC. The motion called for extensive liberalisation in services, which was clearly against the interest of LDCs and DCs. Because, although liberalisation can lead to more FDI and development for ICT, banking and other service under modes 3 and 4, there are concerns net foreign currency losses and balance of payment challenges in addition to a loss in competitiveness in developing economies due to rising barriers to entry79.

78 79

See SP5-9-1,8 SP5-9-16, SP5-9-20 and 1015 Agenda in the Diplomatic Influence section of the Annex. See Recent studies on competitiveness in services and developing countries in (Seyoum 2007)

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Therefore, I was able to inform DCs and LDCs of the detrimental effect of this motion deterring these countries from being offered foreign aid incentives to pass motions that were not in their interests at the MC. As a result, Mauritius was regularly the first country to amend motions at MC into its best form in relation to DCs and LDCs, after which there would be many further amendments. Thereafter, I would take a chance using an iterated game theoretic strategy and my lobbying to make information symmetrical ensuring that the most favourable version was passed. As a result the original detrimental versions of motions failed regularly. Thus my active role in the Cape Town Round of the WTO has earned Mauritius a great deal of prestige and successfully secured the national interests in the context of the WTO. However, I had the disheartening challenge of a failed negotiation with the Chinese delegation. I approached China trying to reach an agreement that would attract FDI into Mauritius to develop computer manufacturing; using an extension of the existing double-tax treaty as a mechanism to bargain with China for this. But the Chinese delegation would not settle on an agreement without me offering China first right of refusal for any such investments in future. This did not make any sense for me since the arrangement strictly dealt with an environment to foster FDI through tax concessions. Moreover, since this would violate the most favoured nation principle, it would be illegal in the WTO. But since the Chinese delegation demanded first right of refusal and refused to change their proposed workforce requirement from a 50:50 split between Chinese and Mauritius employees; I was put in a position to deny the agreement. So China and Mauritius could not settle on an agreement because I was bargaining for an adjustment of the workforce requirement to an 80:20 split between Mauritian and Chinese nationals considering the fact that the Chinese decedents make up less than 5% of the population. Moreover, there a current challenges and protests that the

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government is facing regarding the Jinfei project which is seen as unbeneficial to the local population80. Thus I had to forgo the agreement with China. I then pursued an agreement to secure these interests with South Korea and Taiwan instead. South Korea responded which lead to the successful conclusion of an agreement as mentioned above.

Section Three: Conclusion

Executive Summary and Recommendation
The success of my strategy in the Cape Town Round was mainly because of the effective and efficient co-ordination with the SIDS group. This smallness of the group meant that it could overcome the collective action game problem of co-ordination. Moreover, the convergent interests made co-operation and co-ordination easier because each member became fully invested as it became more apparent that securing individual national interests relied on consolidating the groups power. This was very useful since, even though there were commitment devices outlaid in the SIDS agreement, enforcement of the agreement was unnecessary. Furthermore, my leadership and guidance ensured that each SIDS was only aware of the common interests. Thus, co-operation became imperative to securing each SIDSs national goals; and each member took on their responsibility resulting in greater cohesion. Due to limited representation in other sub-councils, the SIDSs worked tirelessly to ensure that they were privy to important information and events in other sub-councils. This was essential for gaining full knowledge of the direction that negotiations were going and commitment to sharing strategies, information and confidentiality further ameliorated this strength of the group.
See Mauritius: China and India invest in island by (Mallinder 2010).

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However, aside from co-ordination, I relentlessly pursued bilateral agreements. This was initially focused on co-operation with Mauritius tradition trade partners such as India, China and the EU. But the latter two trading partners were unsuccessfully bargained with. Therefore, I changed my strategy to pursue new trade ties which was very successful. Thus, two indispensable success factors in the Cape Town Round were the extensive cooperative co-ordination of Mauritius strategy with other closely allied delegations and consolidation of a vastly array of interests through the most useful bargaining chip, i.e. the double-tax treaties. In conclusion, future delegations should ensure that they are well prepared with all the relevant information on how double-tax treaties are indispensable in bargaining with other delegations to secure national interests. Mauritius is a small economy with comparative advantages in sugar exports and textiles; which are limited by the small population and production capacity that does not benefit from economies of scale. However, the financial services sector is the strongest strength that is not challenged by the same limitations as Mauritius comparative advantages in sugar and textiles. So, future delegations need to be prepared to take advantage of this strength, which cannot be done without strong diplomatic skill. Moreover, the development of Mauritius information economy will become another viable strength, which signifies the development of the economy into a tertiary sector-driven economy. Thus, Mauritius is at a defining moment quite concomitant with previous economic restructuring in the development of its tertiary sector; and this will become an indispensable strength in the future considering the comparative advantage Mauritius will have over other African countries. But the greatest challenge that might arise is the higher integration of Mauritius into the global economy which could make the economy more sensitive to external shocks.
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