Mauritius: What Mauritius will have to deal on with the next US President

A group of six Chagossians based in the Seychelles when visiting the archipelago after the British government allowed them to visit the islands for a week in May 2015.
analysis

Whether Trump stays on or the world witnesses a new Biden presidency, here are the biggest issues that Mauritius will have to deal with the next US president about, and how resolving these outstanding issues in the US-Mauritius relationship might be affected by whoever ends up in the White House after the election.

Mauritius' high-risk strategy over the Chagos

Whether it is Joe Biden or Donald Trump, another file on his table will be the increasingly bitter dispute with Mauritius over the Chagos. Over time, Port Louis' position seems to have shifted on this question. And in some ways been based on a strategic misunderstanding. In Port Louis, the assumption always was that Diego Garcia was intended purely against the Soviet Union in Africa. Hence, throughout the 1980s, Port-Louis demanded the Chagos back to turn the Indian Ocean into a demilitarized 'zone of peace'; a position that was echoed by India as well as the Soviets. The problem with that assumption was that the decision to put a military base on Diego Garcia was because of the 1962 Sino-Indian war more than anything the Soviets were doing. At the time, Indian Prime Minister Jawaharlal Nehru pleaded for US fighter jets to intervene whereas Washington decided to send a ship instead. By the time it got to India the war between the Indians and the Chinese was already over. Hence the decision in 1966 to turn Diego Garcia into a military base closer to India, China, and the Middle East. That was why when the Cold War ended in 1991, Port Louis, thinking the Soviets were no longer a problem, was surprised when its request to get the Chagos back was ignored by Washington.

1991 marked a new Mauritian strategy to get back the Chagos. "The Gulf War against Iraq's invasion of Kuwait showed Mauritius that the importance of Diego Garcia for the US was not diminishing and gradually all major parties have come to align themselves on letting the US keep the base" explains Vijay Makhan, former foreign secretary of Mauritius and deputy secretary-general of the African Union. Since then, the importance of Diego Garcia has only grown: it's in a region containing 35 percent of the world's population, 16.8 percent of its proven oil reserves, 28 percent of fish production, within striking distance of Chinese installations in Africa and Asia and key maritime chokepoints in the Indian Ocean that hosts 80 percent of the world's oil shipping and a key route for China's ambitious Belt and Road project but just outside the range of Chinese anti-ship missiles in the pacific as well as being an insurance policy in case China were to attack the US' main naval pacific naval base on the island of Guam. Until recently, Mauritius' strategy on the Chagos was to push the UK out while at the same time court the US.

As from 2004, Port -Louis started telling the US it had no problem with keeping the base. In 2006 it asked for a treaty to at least get the outer islands in the Chagos back - like the Farquhar, Aldabra, and Desroches is- lands were handed back to Seychelles in 1976. The most recent offer was an official letter sent by Prime Minister Pravind Jugnauth to Donald Trump on 11 July 2017 stating his support for the continued operation of the US base. In 2019, Jagdish Koonjul, Mauritius' representative at the UN, made this offer publically, with Port Louis ready to sign a 99-year lease with the US. Mauritius knew that the US was paying $63 million a year for a much-smaller base in Djibouti. The courting of the US was going on while Mauritius was hammering on the UK at the United Nations and the International Court of Justice - where Mauritius once again re-iterated its offer to keep Diego Garcia open. On this score, will Biden or Trump make a difference? "I don't think whether it's Biden or Trump will make much difference, this level of strategy is decided at the Pentagon and the State Department," says Ram Seegobin of the left-wing party LALIT.

The problem is that Mauritius seems to be shifting away from its strategy of attempting to drive a wedge between the US and the UK through maximizing London's embarrassment at international fora; it's now attacking both the UK as well as the US. On 3 November, Jugnauth said that the US had to sink any boat that Mauritius sends to the Chagos, and last month called the US and the UK "hypocrites". According to Makhan, "as a head of government, maybe he should have kept his tongue in his pocket".

"AGOA was introduced by a Democratic Party President Bill Clinton."

The increasingly strident tone is upping the ante around the dispute and there are plenty of ways that Port-Louis can end up suffering and this is where whoever ends up in the White House will matter. The first AGOA, unlike strategic decisions, who kick out of AGOA is solely in the hands of the US president whoever that might be. And the US has a track record of withholding the benefits of AGOA over policies the US president did not condone: in 2015 the US threatened to kick out South Africa until Pretoria agreed to allow the US to export chickens there at the expense of South African chicken farmers, it also chucked out Burundi. South Sudan, Gambia, the Democratic Republic of the Congo and Swaziland over democratic failings and threatened to chuck Rwanda out for not accepting second-hand clothes imports. AGOA explicitly contains a clause stating that a country wanting to benefit from it must not "engage in activities that undermine the national security or foreign policy interests of the United States". In other words, Mauritius explicitly lambasting the US over the Chagos is not without its risks. And whether to use AGOA or not to hurt Mauritius will solely be in the hands of the next US President, whether it be Trump or Biden. Another potential chokepoint is the fact that the US is one of the largest sources of money flowing into Mauritius' offshore sector. A study by the India-based Centre for Budget and Governance Accountability found that no less than a third of all the funds routed to India through Mauritius between 2004 and 2014 came from US-based companies.

Mauritius-US trade and AGOA

One of the biggest issues that Mauritius will have to deal with the next US President on is the extension of the African Growth and Opportunity Act (AGOA) which has been a key pillar of US-Mauritian economic relations. It was established in 2000 to bolster economic development in Africa by giving exports from Sub-Saharan African states duty-free access to the US market. In the case of Mauritius, a special exception was carved out to allow Mauritian exports access to the US market even though the bulk of the raw materials for its textile industry did not come from Africa, but rather, Asian suppliers. Mauritius lobbied hard for both AGOA as well as its special treatment under the arrangement. Initially, the exception was accorded to Mauritius for a year between October 2004 and October 2005, but the time was too short for textile orders - which take six to nine months - to flow in. But as of 2008, Mauritius obtained its special exception allowing it to thrive under AGOA.

AGOA has been a lifeline for Mauritius' otherwise embattled textiles exports industry. By not levying tariffs on Mauritian textile exports, AGOA allowed them to remain competitive with Asian textile giants that were outcompeting Mauritian textiles everywhere else. Just to take one example, in 2013, Mauritian-made jeans were being supplied to the US at $6.61 each, whereas Chinese-made jeans cost $6.66. Without tariffs, the Chinese-made jeans would have been 13 percent cheaper. The result of AGOA is that Mauritian textile exports to the US exploded by 420 percent between 2001 and 2014, with the US emerging as the single largest market for Mauritian textile exports which earned $454 million in 2018. In short, it is the US market and AGOA that is now keeping the Mauritian textile industry alive.

"The US is one of the largest sources of money flowing into Mauritius' offshore sector."

The problem is that AGOA has to be periodically renewed. It was supposed to expire in 2008 but was renewed until 2015. The thing that has to be kept in mind is that AGOA was introduced by a Democratic Party President Bill Clinton and in 2015 before Donald Trump took office, was renewed by another Democratic Party President Barack Obama until 2025. The problem is that whether it is Trump or Biden that wins the White House, it will be under his watch - and it will be his call - on whether to extend AGOA further or let it die, plunging Mauritian textile exports - already struggling with a collapse in orders due to Covid-19 - into a death spiral along with the 46,032 direct jobs it accounts for. Does it make a difference if it's Trump or Biden? The problem is that Africa has not figured in this election much. "Africa does not seem to have caught the attention of Biden so far so we have yet to see what his policy looks like," says Makhan, "whereas on the other hand, Trump has not shown much interest in Africa at all during his mandate". Unlike previous US presidents, Trump has no specific economic policy outreach program towards Africa; Bill Clinton had AGOA, George W. Bush had his campaign against HIV/ AIDS and Barack Obama championed electrification under the Power Africa project. Trump just had the Prosper Africa program to encourage US investments in African states. "This was just thought up by mandarins at the state department and former National Security Adviser John Bolton to pacify African states outraged by Trump insulting of certain African states as 'S***holes'" says Makhan, "there is little interest in Washington to renew AGOA now, it will all depend on how successfully African states lobby for it to be extended, and we see little of that right now".

"AGOA is slightly more under threat if Trump wins," says Seegobin of the left-wing party LALIT, which has been critical of AGOA, "but that's because of his general attitude to trade and bringing back manufacturing to the US, and in any case, it's the Democratic Party that tends to be more interested in things like AGOA".

The Trade War against China

Mauritian exports may have benefitted from AGOA, which made Chinese exports to the US less competitive, but the trade war on China launched by Donald Trump has been more of a mixed bag for Mauritius. In September 2019, Trump announced hikes in tariffs on 87 percent of textile exports and 52 percent of footwear exports from China, which accounts for 40 percent of total textile exports to the US. The trade war with China forced US companies to turn to other suppliers such as Cambodia, Vietnam, Indonesia, India and Mauritius. "This was not by design, other states and the Mauritian textile industry just happened to be a collateral beneficiary of that" Makhan points out. Added with the AGOA advantage, the pricing out of China in the US textile market opened up more opportunities for other exports such as Mauritius.

However, Trump's anti-China stance has not come without its downside for Mauritius. One of the largest beneficiaries of AGOA was the Hong-Kong-based Esquel Group, which ran one of the oldest and largest textile operations in Mauritius. This year, Esquel announced that it was closing its factory in Mauritius citing falling orders from abroad - textile orders fell by up to 40 percent due to Covid-19 - and plans to respond to tariffs on its Chinese-made products in the US - exports to the US make up 41 percent of Esquel's revenue base - through investing in an automated plant in China's Guilin to bring down its costs. What was less reported was that Trump's trade war also added to the pressure on the Group as a whole, with the US in July this year sanctioning the Esquel Group, along with 11 other Chinese firms, arguing that they benefitted from forced labor in China's Xinjiang province, where Esquel has three spinning mills. The Esquel Group in a statement in September responded that "the allegation that Esquel Group uses forced labor in Xinjiang is false". Also in July, the Trump administration started imposing the same tariffs on Hong Kong-based firms as those on other Chinese ones. The result of Esquel leaving Mauritius was 1,700 Mauritian textile workers losing their jobs.

The Climate Crisis As a small island state, one of the biggest issues that Mauritius faces with the US is climate change. And this probably is the one area where the difference between a Trump and a Biden presidency would be the starkest as far as Mauritius is concerned. "Mauritius is a small country that accounts for just 0.01 percent of global greenhouse gas emissions so there is not much we can do," says Sunil Dowarkasing, a senior manager at Greenpeace and a former environment adviser to the Mauritian government, "the problem is that we are suffering from climate apartheid where bigger states do the polluting and we small island states will pay the heaviest price". He points out that sea levels have risen by 6.8 millimeters (mm) each year in Mauritius between 1970 and 2018, more than the global average of 3.6 mm. The average temperature in Plaisance has gone up by 1.32 degrees Celsius, compared to the global average of 1.1 degrees. The result is rising sea levels, coral bleaching, beach erosion, and saltwater creeping into fresh water supplies of Mauritius.

The contrast between Trump and Biden is stark: voting in the US election took place on the same day that the US officially leaves the Paris Accord which pushes states to cut down on global greenhouse gas emissions to limit global warming to 1.5 degrees after Trump decided to exit the Paris Accord back in 2017 . Since taking office in 2016 until May this year, Trump has overturned 64 environmental regulations in the US. "If this continues, the US will go from accounting for 15 percent of global emissions to 18 percent by 2018," says Dowarkasing, "on the other hand, Biden has pledged to rejoin the Paris Accord if he is elected, that would be a good step for us". In terms of climate change at least, a Trump presidency may see the problems of Rivière-des-Galets - a village on the south coast whose residents are constantly threatened by rising sea levels - become more common around Mauritius. Whereas a Biden presidency might help avoid that eventuality

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