By  on April 29, 2008

GENEVA — The Indian Ocean island state of Mauritius wants to revive its textile and apparel industry after the sector lost thousands of jobs and Hong Kong-based firms halted operations when the global quota regime ended in 2005, a new report said.

The World Trade Organization study said in the run-up to lifting quotas among WTO members, the apparel and textile industry in Mauritius faced challenges such as rising production expenses and the emergence of lower-cost competitors. As a result, between 2001 and 2006, the industry shed 27,000 jobs. Apparel manufacturing fell to 49,373 jobs from 75,766 and textile positions declined to 6,826 from 8,180, the report said.

According to WTO data, the country's apparel exports declined to $745 million in 2005 from $938 million in 2004, but rebounded to $772 million in 2006, accounting for more than one-third of overall export revenues.

The 144-page study outlines a series of measures Mauritius has taken to revive the sector. These include restructuring of enterprises, promotion of high-value products, skills upgrading and development of vertically integrated factories.

To entice foreign investors, the government has introduced a corporate tax exemption until June 30, 2016, and instituted special investment tax credits at spinning mills for operations that start before the end of this June. Similar incentives also apply to weaving, knitting and dyeing companies. Other incentives include the purchase of land at concessionary rates, no tax on dividends or capital gains, duty free raw material and equipment imports and concessionary electricity rates, the report said.

Although the study indicates that Mauritius has reduced its average industrial tariffs to 6.8 percent from 20.6 percent in 2001, duties on imported apparel and footwear remain high at 34 percent and 50.7 percent, respectively.

The report highlights that Mauritius also benefits from preferential access to the U.S. market under the Generalized System of Preferences program and the Africa Growth & Opportunity Act. However, the study said it is not designated a least developed nation, which means Mauritius "cannot use non-qualifying, third-country textile inputs in the manufacture of AGOA-eligible apparel."

Peter Allgeier, U.S. ambassador to the WTO, said during the review session that in 2007 the value of U.S. imports from Mauritius under AGOA and GSP programs "was $120 million, representing 64 percent of U.S. total imports" from the island nation. Much of this trade "was concentrated in the apparel sector," he said.

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