Gambling with Giants: Mauritius’ Risky Sega with Trade Powerhouses

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By Dr Hans Seesaghur

Mauritius has long prided itself on its liberal trade regime and investment-friendly climate. However, its economic model, rooted in services (notably tourism and finance), sugar exports, and limited light manufacturing, offers little resilience against the kind of asymmetrical trade relationships that standalone FTAs with manufacturing giants tend to create.

A critical aspect often overlooked in the Mauritian political narrative around trade agreements is the gross imbalance in manufacturing capacity. To understand the potential impact of these agreements, it is crucial to consider the sheer scale of disparity in manufacturing capacity between Mauritius and its bilateral trade agreement partners. As of per United Nations Statistic Division data of 2023, China leads the world with a manufacturing output of approximately US$4.68rillion, representing 31.6% of global output. India follows closely among emerging leaders, producing around US$500 billion and ranking fifth globally. Turkey stands at approximately US$200 billion in output, ranked around 15th to 16th place. Pakistan, while lower ranked globally, has robust textile and agriculture-based industries. Meanwhile the UAE is increasingly gaining ground in high-tech and energy-intensive manufacturing

In stark contrast, Mauritius is not ranked within the top 100 manufacturers globally, with its output falling well below US$1.7 billion. This places Mauritius in a fundamentally different industrial category, where even the notion of competing on equal terms becomes tenuous.

The challenge becomes even more acute when we consider that Mauritius has signed trade agreements with countries that are among the top 20 largest exporters in the world. According to 2024 data, China tops the list with over $3.57 trillion in exports, followed by India ($443 billion), Turkey ($294 billion), and the UAE ($603 billion). Even Pakistan, though not ranked among the top 20, exported over $32 billion, reflecting a significantly larger and more diversified industrial base than Mauritius. These countries are not only manufacturing powerhouses but also command global supply chains, backed by economies of scale, advanced logistics, and competitive industries.

By contrast, Mauritius lacks the scale, complexity, and sectoral depth to fully leverage the tariff-free access provided by these agreements. Its merchandise exports remain narrowly concentrated, consisting mainly of tuna, sugar, and garments, products that are vulnerable to price fluctuations, seasonal demand, and market saturation. According to the latest trade data (2020–2024), Mauritius’ exports to bilateral trade agreement partners such as China, India, Pakistan, and Turkey have either stagnated or declined, while imports from these countries have surged. This imbalance underscores the country’s limited export capacity and its inability to enforce reciprocal trade benefits, ultimately eroding its trade leverage and deepening dependence on external markets.

From Hub to Hiccup: How Mauritius is losing the race for Regional Relevance

The contrast is stark when compared with the strategic prudence of major African economies like Nigeria, South Africa and Kenya. Despite their larger populations, more diversified economies, and broader industrial bases, these countries have largely avoided signing standalone FTAs with global manufacturing powers. Instead, they have focused on regional and continental integration mechanisms. This reluctance stems from two major concerns, one being to protect local industry and second preserving policy space. By avoiding unilateral liberalization, these countries safeguard their emerging industrial sectors from being overwhelmed by a flood of cheaper imports. Without binding standalone trade agreements, these countries retain greater freedom to shape industrial policy, offer subsidies, and implement import restrictions to build domestic capabilities.

FTA advocates often argue that such agreements will spur foreign direct investment into Mauritius, particularly in export-oriented manufacturing. However, the promised scale of investment has not materialized. Investors remain cautious due to high logistics costs, a limited pool of skilled labor, inadequate infrastructure, and regulatory uncertainty. Moreover, the illusion of Mauritius as a “gateway to Africa” through standalone FTAs has lost its shine, especially in light of new U.S. tariffs under Trump-era trade measures and China’s removal of 100% tariffs for 52 other African countries. Larger economies like Kenya and South Africa are asserting themselves more forcefully as regional hubs, bolstered by larger domestic markets and superior maritime connectivity.

Trading Smarter, Not Softer: Turning FTAs into Engines of Innovation

Rather than withdrawing from these bilateral trade agreements, which could send adverse diplomatic signals, Mauritius should recalibrate its approach to the three standalone trade agreements namely those with China, India and the UAE.It has to upgrade existing agreements to introduce new cooperative dimensions that go beyond tariff reductions. These upgrades should aim to build domestic capacity, improve skillsets, and support local industries.

With China, Mauritius must push to incorporate a dedicated cooperation chapter on artificial intelligence (AI), robotics, and smart manufacturing within the existing FTA. As a global frontrunner in AI development, China unveiled its new AI strategy in July 2025, positioning itself as a leader willing to share technological advances with international partners. Its strengths in industrial automation and research infrastructure span both civilian and commercial domains. Mauritius stands to benefit significantly by securing provisions for the establishment of joint AI research labs on its territory in partnership with leading Chinese institutions, alongside structured technology transfer schemes tailored to local industrial needs. Priority sectors could include smart port logistics, precision agriculture, and AI-assisted healthcare, areas where Chinese expertise can catalyze domestic innovation while modernizing critical industries in Mauritius.

With the UAE, the focus should be on embedding Mauritius into the Gulf nation’s ambitious vision of becoming a global digital and fintech hub. The UAE made history by establishing the world’s first Ministry of Artificial Intelligence and has since emerged as a regional leader in AI, digital finance, and Industry 4.0 technologies. This progress is backed by substantial investments in tech startups, smart cities, and next-generation infrastructure. An updated CEPA should feature a forward-looking digital economy chapter, with concrete provisions for capacity-building programs targeting Mauritian civil servants, entrepreneurs, and youth. Potential initiatives could include startup incubators co-financed by UAE innovation funds, AI bootcamps delivered by Emirati institutions, and public-private partnerships to modernize public services and port management in Mauritius. These initiatives would enable Mauritius to leapfrog into the digital economy and transform its CEPA from tariff-reduction tools into platforms for co-innovation and long-term resilience.

With India, Mauritius should develop a sector-specific partnership centered on pharmaceuticals. India is not only the world’s leading supplier of generic medicines but also a global promoter of traditional wellness systems under its AYUSH framework. Mauritius, with its biodiversity and interest in wellness tourism, could establish joint ventures for herbal medicine production, clinical research collaborations, and Ayurveda training institutes. The CECPA with India should be upgraded to include cooperation in pharmaceutical certification, fast-track regulatory alignment, the setup of Indian institutions in Mauritius for Mauritian pharmacists, biochemists, and researchers. These targeted initiatives would support import substitution in the health sector, create value-added jobs locally, and position Mauritius as a small but credible player in the regional wellness and pharma supply chain.

Such initiatives would lay the foundation for a truly competitive industrial base. Even if AGOA were to lapse tomorrow, a deliberate shift toward workforce upskilling and value-added production would position Mauritius for sustained economic growth. In fact, the long-term benefits of diversification could far exceed the short-term gains from the textile sector’s approx. 18% share under AGOA, delivering broader resilience, higher-quality jobs, and greater export sophistication.

Strength Before Access: The Missing Link in Mauritius’ Trade Policy

Mauritius’ current list of trade agreements is unsustainable. It exposes the country to disproportionate external competition while offering limited developmental returns. The often-repeated narrative of Mauritius as a “bridge between continents” must be anchored in economic realities, not diplomatic slogans. Without a competitive industrial base, trade liberalization risks becoming a gateway not to opportunity, but to deindustrialization.

If Mauritius is to benefit meaningfully from its bilateral trade agreements, it must adopt a more prudent, development-oriented approach. Agreements should no longer be viewed as static contracts, but as dynamic instruments that evolve with national priorities. Built-in review mechanisms must be negotiated to allow for mid-term adjustments based on trade imbalances, sectoral performance, and feedback from domestic industries.

Equally urgent is the need for a deliberate national effort to strengthen export capacity, diversify product offerings, and build domestic manufacturing value chains. Tariff elimination alone cannot offset structural weaknesses in production, logistics, and innovation. Without a coordinated industrial and trade policy, Mauritius will be only an importer.

Rather than embracing trade liberalization indiscriminately, Mauritius must approach with a clear understanding of its economic identity and production constraints. This is how Mauritius can shift from being a passive market for foreign goods to a platform for innovation, knowledge, and sustainable growth.

Otherwise, Mauritius risks trading away more than tariffs, it risks trading away its very capacity to produce, innovate, and sustain itself.

Dr Hans Seesaghur, an International Affairs Specialist and Sinologist, formerly served as the China Chief Representative of the EDB Representative Office China (Shanghai). He also formerly held the position of Economic and Commercial Counsellor at the Embassy of Mauritius to Beijing.

Mauritius Times ePaper Friday 29 August 2025