Gfa Final Report Final
Gfa Final Report Final
Gfa Final Report Final
Final Report
Prepared by
Dr. Ana María Pacón, LL.M.
October 2019
This project is
funded by
the European A project implemented by Consortium Partner
Union GFA Consulting Group GmbH
Study to assess the socio-economic impact of the international exhaustion of
Trademark rights in Mauritius
Final Report
October 2019
Prepared by:
Dr. Ana María Pacón, LL.M.
Disclaimer
The contents of this publication are the sole responsibility of the contractor and can
in no way be taken to reflect the views of the European Union.
Address
TABLES
Table 1 : Mauritius merchandise exports and imports, and exports and imports of
commercial services 2007-2017 (Million dollars)............................. 4
Table 2 Registration of new motor vehicles 2014 – 2017 and Registered motor
vehicles 2017..................................................................................22
Table 3 Automobile sector: Entreprises ranking by turnover. Million Rs 2017 .....23
Table 4 Total imports by section / main commodities, 2013 – 2017 Value (c.i.f.)*:
(Rs. Million) .....................................................................................23
Table 5 Budgetary Central Government Revenue, 2014 - 2016/17 (Rs million) ..24
Table 6 Repair of motor vehicles and motorcycles ...............................................24
Table 7 Production account of the industry group: Manufacture of motor vehicles,
trailers and semi-trailers / Manufacture of other transport
equipment, large establishments, 2016 Rs Million ........................25
Table 8 Biggest companies in the health sector ...................................................30
Table 9 Employment in large establishments1 by industry group March 2013 -
March 2017 .....................................................................................33
Table 10 Price difference between medicaments .................................................33
As for the relevant stakeholders operating with foreign trademark licenses, the
information required is that of each of the products identified with those trademarks and,
first, the value of the respective imports.
As the information by company and at the trademark level was not available, it was
agreed to use alternative information to indirectly estimate the costs and benefits
resulting from the transition from the national to the international exhaustion of trademark
rights regime. Depending on the types of activities selected, it was more or less
complicated to find suitable proxy variables. Consequently, quantitative impact estimates
are an approximation.
The choice between the regime of national or international exhaustion of trademark law
is a State decision that requires taking into account all available sources of information;
of a political, historical, economic and even of sociological nature.
It is attributed to Sir Winston Churchill the assertion that war is too important to be left to
the military, a phrase that can be extended to all professions and State decisions. That
is, the government should not wait for a mathematical formula to take a decision, but
should gather opinions from different professional approaches and stakeholders, to
weigh them out and decide thinking about the long-term benefit of the country.
In the present case, the historical context places the decision in the aftermath of a break
in the orientation of world trade policy in 1994. It was a break because the previous
orientation was towards free trade.
This orientation begins as far back as the eighteenth century, with Adam Smith and the
beginning of the modern economy, followed by David Ricardo and the controversy over
TRIPS is the first international agreement requiring its Members to implement a detailed
set of substantive norms - in all intellectual property (IP) categories - within their national
legal systems, as well as requiring them to establish enforcement measures and
procedures meeting minimum standards. In addition TRIPS allow each Member to use
the WTO Dispute Settlement system for IP matter.
The process did not end with the TRIPS Agreement which instead fostered the beginning
of a new era that has not yet ended, in which the developed countries have kept
struggling to promote a new wave their strengthening of intellectual property rights’
systems, beyond the provisions set forth by TRIPS and the treaties of the World
Intellectual Property Organization (WIPO) in the frame of the Free Trade Agreements
(FTA).3
Hence, in Braithwaite and Davos (2000) developed countries pressed to conceive new
rules and regulations, while developing countries tend to accept them but trying to reduce
their impact incorporating other principles, among them the exhaustion of intellectual
property rights at national and international level.4 In this line, Álvaro Díaz of the UN-
ECLAC indicates that, in the debate on Free Trade Agreements, the United States
underlines the principle of national exhaustion of rights while the countries of Latin
America and the Caribbean emphasize the principle of international exhaustion of the
rights. Indeed
“The countries of the region need to pursue intellectual property policies that facilitate
the creation of a new intellectual property system for the twenty-first century, one that
will help the region to achieve its goals in terms of growth, equity and democracy. The
challenge consists of striking a new type of balance between the protection of
2. Factual background
Mauritius is an island state of 1.3 million inhabitants in 1,979 square km, which implies
that the population density is high, about 650 per square kilometre.
The country’s economy has made great strides since its independence in 1968, and in
2017 real gross domestic product (GDP) growth reached 4%. The main drivers of growth
were to be located at the services sector, especially finance, the trade and
accommodation services. The latter benefited from a buoyant tourism sector; a key
sector supported by the recent acceleration in the global economy. Tourist arrivals
increased by 5.2% in 2017 to reach 1.34 million—a number equivalent to the island’s
entire resident population.6
Mauritius has a liberal economic and trade policy, with a trade-to-GDP ratio of 98%
(World Bank, 2017). The country is a member of the WTO, as well as other regional
economic groups (COMESA, SADC, IOC). Mauritius aims to transform the island into
an open and globally competitive economy and to fully integrate it into the world trade
system through its trade policies. Comparatively, the island does not have many trade
barriers and customs duties are low (the average applied tariff is only 0.9%).7
Mauritius has been a Member of the WTO since 1995, and of the General Agreement on
Tariffs and Trade (GATT) since 1970.8
The country's main trade partners are the European Union (led by France and the United
Kingdom), China, India, South Africa and the United States.9
The island imports petroleum products (petroleum/oil and derivates), fish, vehicles,
medicine and radio transmission equipments.10
Mauritius imports more than it exports, and the current account deficit continued to be
supported by financial and capital net inflows, including net inflows to the large offshore
corporate sector. Thus, the overall balance of payments remained moderately in surplus,
and gross international reserves rose to $ 6.1 billion in January 2018 (equivalent to over
10 months of imports).
Table 1 shows that the export of services grew strongly between 2007 and 2011, and
the country maintains a positive balance of services.11
Table 1 : Mauritius merchandise exports and imports, and exports and imports of commercial services 2007-
2017 (Million dollars)
Year 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
X 2238 2384 1939 2261 2565 2649 2869 3094 2662 2376 2363
M 3894 4651 3733 4386 5149 5354 5397 5610 4790 4655 5253
Trade deficit - - - - - - - - - - -
1656 2267 1794 2125 2584 2705 2528 2516 2128 2279 2890
Xs 2194 2530 2225 2656 3215 3364 2734 3119 2802 2835 2981
Ms 1562 1910 1586 1951 2428 2382 2143 2426 2188 2038 2231
Services balance 632 620 639 705 787 982 591 693 614 797 750
X Total 4432 4914 4164 4917 5780 6013 5603 6213 5464 5211 5344
M Total 5456 6561 5319 6337 7577 7736 7540 8036 6978 6693 7484
Balance in - - - - - - - - - - -
Current C 1024 1647 1155 1420 1797 1723 1937 1823 1514 1482 2140
Source: World Trade Organization, World Trade Statistical Review 2018, available at:
www.wto.org/statistics
X and M = merchandise exports and imports
Xs and Ms = exports and imports of commercial services
10 See http://www.mauritiustrade.mu/en/trading-with-mauritius/mauritius-trade-profile#classification_by_products.
11 See http://www.mauritiustrade.mu/en/trading-with-mauritius/mauritius-trade-profile#classification_by_products
6000
5000
4000
3000
2000
1000
0 X M Xs Ms
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Source: World Trade Organization, World Trade Statistical Review 2018, available at:
www.wto.org/statistics
X and M = merchandise exports and imports
Xs and Ms = exports and imports of commercial services
These rights are limited, however, by the principle of trademark exhaustion, also
referrred to as trademark first sale, which provides that the right „to control distribution of
trademarked product does not extend beyond the first sale of the product“ and that „the
resale by the first purchaser of the original article under the producer’s trademark is
neither trademark infringement nor unfair competition“.12
The core function of trademarks is to serve as indicators of the commercial origin and
quality of the products and/or services it is used for, not to lead its holder to generate
market division by controlling the distribution of its offer. Being this so, the principle of
trademark exhaustion finds its rationale in assuring the whole legal system while
preserving a healthy degree of workable competition in the market at distribution level,
all in all in benefit of the end consumers. And so, whether third parties resell trademarked
products after their first authorized sale in the market with or without trademark owners’
12 Ghosh, Shubha/Calboli, Irene, Exhausting Intellectual Property Rights. A Comparative Law and Policy Analysis,
Cambridge University Press, 2018, p. 66.
The exhaustion of intellectual property rights constitutes a legal figure created initially by
jurisprudence and then incorporated by legislation as a remedy against the possible
abusive exercise of intellectual property rights that may prevent the free movement of
goods: a person who legitimately put on the market a product protected by an intellectual
property right cannot prohibit that product from being able to continue circulating in the
market (for example, it can be resold), since it is considered that its right has been
exhausted at the time when its owner (or someone with its authorization) legally put it in
the market.
It is possible to freely sell, purchase or hire a used book, car or laptop due the exhaustion
doctrine, which allows a market for reselling products. Should it not be for the exhaustion
doctrine, the market for reselling or renting products would either not exist or would look
very different.14
The question of geographic area is at the heart of how intellectual property affects the
movement of goods across national borders and national policies on international trade
and business practices of intellectual property owners. 15
The term „parallel import“ describes situations where goods sold abroad at a lower price
are imported by an unauthorized dealer and compete domestically with the local
authorized distribution system.17
16 See Ghosh, Shubha/Calboli, Irene, op.cit., pp. 65-85; Heath, Christopher, Heath, Christopher (eds.), Parallel Imports
in Asia, Kluwer Law International, The Hague/London/New York, 2004, pp. 25-185.
17 Katz, Ariel, The economic rationale for exhaustion: distribution and post-sale restraints, in: Calboli, Irene/Lee,
Edward, Research Handbook on Intellectual Property Exhaustion and Parallel Imports, Edward Elgar Publishing
Limited, Cheltenham, UK, 2016, p. 30.
The ability to use intellectual property rights to avoid parallel imports has been discussed
for decades, and is still being discussed. A patent grants to its holder the right to
monopolize the commercialization of the product protected by the patent, which
constitutes an argument to obtain an exception to the economic principle of the free
circulation of goods in international trade. That is why discussions on parallel imports
have focused on patent law and less attention has been paid to trademark law.18 Thus,
the issue of international exhaustion of trademark law does not appear as a matter of
controversy in bilateral trade negotiations between developing countries and the United
States, where the prohibition of parallel imports in the patent field is often a prerequisite
for starting negotiations.19
Demand conditions can vary considerably in different countries, and are determined
above all by so-called demand elasticity (which is greater depending on the number of
alternative offers for the same economic necessity). So, for a monopolistic exporter, it
makes economic sense to set higher prices in industrialized countries with a relatively
inelastic demand than in countries with relatively elastic demand. In these countries,
18 For example, on an article of the WTO dealing with the TRIPS Agreement, there is no reference to trademark law
and there are 23 references to patents, available at:
https://www.wto.org/spanish/tratop_s/trips_s/art27_3b_background_s.htm.
19 Cimoli, Mario/Coriat, Benjamin/Primi, Annalisa, Intellectual Property and Industrial Development: A Critical
Assessment. Initiative for Policy Dialogue. Working Paper Series, 2008, available at:
http://policydialogue.org/files/publications/papers/ch_19_CimoliCoriatPrimi_jan_08ver6as_.pdf
In addition, the intensity of competition, the cost of production, the level of VAT, and the
purchasing power and willingness to pay of consumers20 are also significant for the
differences in demand conditions.
Moreover, when national licensees, rather than holders of intellectual property rights,
provide marketing support, there can be significant differences in marketing costs. These
differences in market cost are transmitted to the price charged by the national licensees.
Where local marketing costs are lower, the selling price is lower, and result in a price
difference with countries where the costs are high enough to cover cross shipping and
various transaction costs.
It could even happen that licensees in export markets sell to parallel importers at prices
that exclude some or all of the local marketing expenses incurred in the export market,
making dumping possible.
Price differences in specific sectors (mainly the pharmaceutical) can also be caused by
government price regulations based on national health policy decisions.21
In addition, differences in selling prices for the same product may arise as a result of
proprietors not owning investments in marketing, advertising, repair and warranty
services,22 but rather to national licensees and independent distributors who reimburse
their costs according to the individual expenses incurred through the sale cover the
trademarked products.
Transportation costs are mainly influenced by the ratio of the specific value of the product
to its physical weight. In addition, sensitivity and perishability of the goods can cause
increased transport costs.
Further costs that the parallel importer has to cover arise by overcoming market entry
barriers in the importing country. If parallel trade is not conducted within a free trade
20 However, the behavior of the consumer is not determined solely by his solvency. Especially with certain luxury and
trademarked articles, the so-called snob effect can be observed, according to which consumers pay attention to a
good only after a certain price, because they assume that the corresponding product is not acquired by a broad
layer.
21 See Vautier, Kerrin M., Economic Considerations on Parallel Imports, in: Heath, Christopher (eds.), op. cit., pp. 1, 5.
22 See OECD (eds.), Synthesis Report on Parallel Imports, 2002, p. 8.
23 According to SJ Berwin & Co/IFF Research, The economic consequences of the choice of regime of exhaustion in
the area of trademarks, London, 1999, p. 79 (cited as the NERA study), parallel transport of motor vehicles, non-
alcoholic drinks and electrical and domestic appliances is associated with relatively high transport costs.
The tradability of protected products presupposes that they are transportable and that
there is a sufficiently broad customer base. Tradeable are medicines and most consumer
goods. On the other hand, capital goods that enter into production processes of other
companies as intermediate consumption are in principle not suitable for parallel imports.
To define the scope of the customer base, among other things, customer demand and
the existence of parallel high and low-price markets are relevant. Consumer demand is
important in that it determines the size of the sales market and thus the volume of trade
that is effectively affected. If the priority of consumers is to maintain a certain standard
of warranty and other services, and consumers are prepared to pay more for their
products, then this will be as negative for the parallel importer as consumers are for
goods to order the private use also over the Internet.25
Positive demand effects, on the other hand, result for the parallel importer in parallel
high- and low-price parallel markets and price elasticity of demand. The more price-
elastic the demand is, the greater the additional quantity demanded for the cheaper
products.
The real importance of global and national parallel trade is difficult to ascertain, as
parallel imports as legal components of trade are not specifically identified in the trade
balance. Empirical studies on the worldwide extent of parallel trade do not exist, to the
extent of our knowledge. Indeed, and according to the studies to date, parallel trade in
The subject of the parallel trade is primarily high-quality technical goods with luxury and
prestige character as well as pharmaceuticals. According to the referential studies of
international scope, in particular, car components and auto spare parts, compact discs
and records, clothes, motorcycles, shoes, sporting goods, perfumes and cosmetics,
consumer electronics, photographic equipment, optics, watches, tires, food and
champagne will have varying market shares in the countries imported from 3% and 15%
in parallel.27 It has also been found that parallel imports can account for up to 20% of
trade in specific products. Unfortunately, there is currently a lack of meaningful empirical
research on the extent of parallel trade in developing and emerging countries. The study
by the OECD does not provide any reliable material on the importance of parallel imports
in these countries.28
International titleholders generally benefit from parallel import bans because they are
enabled to pursue a differentiated price policy geared by demand elasticity. If parallel
import bans exist in the industrialized countries as countries with relatively inelastic
demand, the IPR holder in these countries may charge higher prices because he is not
under pressure to lower his prices for the protected products due to the lack of parallel
import competition.
In some cases, parallel importers benefit to a significant extent from parallel imports,
whose gross profits and revenues increase with increasing penetration rates. After
experience in the pharmaceutical industry, the price difference is almost completely
exploited by the parallel importers.
Allowing parallel imports to these countries through open parallel import schemes in
developing countries is seen by developing countries as being in the interest of their
consumers, as they can benefit from lower prices and wider product range. Parallel
imports are particularly important in the pharmaceutical sector as a means to ensure
access to affordable essential medicines against epidemics.
These effects occur when parallel imports to the developing country are in fact attractive
and profitable because the developing country has a higher price level and a large and
efficient market. In addition, the transaction costs incurred in parallel trade must be
relatively low.
There are different opinions about the positive or negative effects of the application of
international exhaustion of trademark law, and there are economic arguments in pro and
against it. These arguments may relate to parallel imports in the developed world or in
developing countries; or refer to any restriction on free trade or, in particular, to the
prohibition on parallel imports.
• Those who import in parallel take indirect and undue advantage of advertising,
marketing and other expenses incurred by authorized sellers. A parallel importer
does not incur these expenses, since it does not deal with problems such as
supply, services, quality control, storage facilities, etc.
• The entry of parallel imports generates the emergence of direct competition for
the official distribution network (controlled by the owner of the trademark), which
triggers intra-trademark competition (horizontal competition among resellers of
the same products) beyond the owner's control.
• Only the owner of the trademark, and not the parallel importers, can adequately
assume the handling of certain products in terms of packaging, deposit
conditions, and other aspects.
Actually, the International Trademark Association (INTA) “supports the principle that
international exhaustion should not apply to parallel imports in the absence of clear proof
that the trademark owner expressly consented to such imports, and that the burden of
proof should be on the party seeking to demonstrate such consent”.31
29 Ferrero, Gonzalo, Importaciones paralelas y agotamiento de derechos de propiedad intelectual. Themis: Revista de
Derecho, N° 41. Lima, 2000, available at: https://dialnet.unirioja.es/descarga/articulo/5109665.pdf
30 NERA, op.cit.
31 INTA, Harmonization of Trademark Law and Practice Committee, Model Free Trade Agreement, New York, 2011.
• The intellectual property owner will be forced to withdraw the product from low
priced markets altogether, denying access to beneficial products, or may be
compelled to converge prices internationally to stop leakage from the lower priced
market to the higher priced market, and such a convergence will inevitably
exclude less developed regions, or may also reduce the investment in
manufacture, supply and customer service in certain countries, further reducing
consumer welfare.
But international studies were written in developed countries, considering the hypothesis
of retaliation of other countries that have to protect their national enterprises who invest
in trademarks around the world. Also, studies carried out by international organizations
refer to the international community and not to a little economy in an island. Thus, the
cited studies that lead to the conclusion that "moving towards an international exhaustion
of rights would bring no real benefits to consumers" have been made to answer the
question about the impact on the welfare of consumers of the imposition of an
international exhaustion regime in the economy of a large group of developed countries,
not just in one little country.
For the reasons indicated, it is important to focus on the analysis on the position of the
private sector from Mauritius, expressed in a position paper.33
32 International Chamber of Commerce, ICC, Commission on Intellectual and Industrial Property. Policy statement.
Exhaustion of intellectual property rights. Washington, 2000.
33 MCCI, MCCI Position Paper, International Exhaustion of IP Rights in Mauritius, MCCI Position Papers/ 2016/ No. 1,
November 2016.
The main arguments of those who promote parallel imports are the following:34
• The parallel importer generates an increase in the supply of the product, and
induces price competition with sellers that are integrated into the official network.
Price competition may also further occur between the sellers that are members
of the same network, which undoubtedly will directly benefit the consuming
public.
• Increasing the supply, satisfies the demand of the public and decreases the
prices to the consumer.
• The obligation of the State to protect consumers is not only to protect them from
possible harm, but also to promote their freedom to choose between different
products and alternative suppliers, which can occur through parallel imports.
An argument of a generic nature that encompasses the previous ones, is based on the
contradiction between the right of trademarks and the economic principle of free
movement of goods. It is derived from the fact that the prohibition of parallel imports is a
restriction to free trade and the assertion that free trade is an optimal situation, of
maximum global benefit, and that the benefit of free trade is evengreater in a small
country. This topic is analyzed under the heading of qualitative evaluation of the
arguments in favour of international exhaustion.
34 Ferrero Diez Canseco, G. Importaciones Paralelas y Agotamiento de Derechos de Propiedad Intelectual. THEMIS,
Revista de Derecho, N° 41, 2000, available at: https://dialnet.unirioja.es/descarga/articulo/5109665.pdf
The first graph represents a situation of autarky, without international trade. The balance
point between supply and demand is marked with the letter A, the quantity produced and
consumed will be Qa, and sales will be made at the price Pa. The benefit or surplus of
the consumer, is measured by the area of the upper triangle and that of the producer by
the lower triangle.
Figure 2
Price
Domestic offer
Consumer
surplus
A
Pa
Producer
surplus
Domestic demand
Quantity
Qa
Source:Own elaboration
If the market opens up to international competition, there will be imports if the world price
is lower than the domestic price, otherwise there would be no incentive to import.
To study the impact of imports (which include parallel imports) in Mauritius, the simplest
and most appropriate assumption is that, given the small size of the national economy in
relation to the rest of the world, any quantity of the product that it demands can be bought
without affecting the international price. For this reason, the following graph shows the
Figure 3
Price
Domestic offer
1
A
Pa
2
4 5
Pm International price
3 Domestic demand
Quantity
Qp Qa Qc
Due to imports, the price of the product falls to the level of the international price Pm, the
quantity consumed rises from Qa to Qc and domestic production falls to Qp. The
difference between the quantity demanded and the quantity offered is covered by
imports.
The fall in the domestic price means that the surplus of the consumer rises and that of
the producer goes down.
In the graph it can be seen that the consumer surplus indicator, which was represented
by area number 1, increases in areas 2, 4 and 5; and the surplus or benefit of the
producer is reduced in area 2. This last area does not mean a net gain for the economy,
because the consumer's profit is made at the producer's expense; but there is a net gain
that is measured by the sum of areas 4 and 5, which corroborates that if a country is
opened to international trade there is a net benefit to society and, on the contrary, any
restriction on imports harms the consumers.
Under the current regime of national exhaustion of trademark law, there are imports, but
parallel imports are restricted. Therefore, the following graph is based on a global supply
Figure 4
Price
Domestic offer
Domestic demand
Quantity
Q2 Q1 C1 C2
This price reduction in turn reduces the surplus of the domestic producer in area 1 and
that of the importers with trademark licenses in area 3.
In contrast, the surplus of consumers increases by an amount equal to the sum of the
areas 1 + 2 + 3 + 4.
Since two groups of economic agents have the indicated losses due to the price
reduction, the net benefit for the national economy as a whole is equal to the sum of the
2 + 4 areas.
It should be remembered that this is a partial static equilibrium model, very useful for
estimating the short-term impact on the market of a product that has no greater effect on
Therefore, it is convenient to use the model with specific products, not with a group of
products, as in the five sectors to study. It would have been ideal to carry out the
consultancy with the products identified with foreign trademarks registered in the
Customs of Mauritius.
However, the representative of a foreign trade mark registered in Mauritius, even if it is
not registered at Customs, can prevent the entry of parallel imports into the country, so
that the study should be based on interested parties operating with trademark licenses
foreign and not only in trademarks registered at customs.
On the other hand, about 1,000 trademarks are registered each year in favor of non-
residents in Mauritius (Annex III) while only 400 foreign trademarks are registered in
Customs (Annex IV), so it was not possible to extrapolate and calculate the economic
impact based on these 400 foreign trademarks.
In particular, it should not be forgotten that the partial equilibrium model is short-term,
and that it does not take into account the possible long-term impacts or the possible
indirect effects of the release of parallel imports, such as:
Furthermore, to try a quantitative estimate of the different impacts that parallel imports
can have, it is necessary to know the following variables:
Unfortunately, this information was not available. In particular, that of elasticities, whose
estimation requires econometric research. In the study of the pharmaceutical sector,
35 Marshall, Alfred, Principles of Economics. Eighth Edition. Palgrave Classics in Economics, 1920, available at:
http://www.library.fa.ru/files/Marshall-Principles.pdf
Considering all the parameters involved and economic data available at stage, the model
demonstrates that there is a positive net impact on the well-being of the population, but
the quantitative estimate of the impact would be less than the actual impact. A more
accurate estimate would require the application of a dynamic general equilibrium model,
much more complicated than the one used.
The situation of five sectors is presented in some detail below, to estimate the possible
consequences of the international exhaustion of trademark law in Mauritius. As already
stated, the five sectors correspond with the main areas where trademarks play a vital
role on the market and consequently could be the most affected by the introduction of an
international regime of parallel imports.
In Mauritius there are several car dealers that cover the most popular trademarks in the
world, which benefits the consumer by the multiple options to choose according to their
acquisition capacity. Dealerships have thrived selling a variety of cars, from luxury cars
to compact cars, in differentiated markets.
The total number of registered vehicles increased to 19,109 in 2017, 5.2% higher than
18,170 in 2014 (Table 2), which would show a moderate increasing trend. However,
there are very optimistic opinions, such as The Top 100 Companies (2017 set a new
record regarding car sales on the island with 11,151 units sold) and the one transcribed
below:
36 DCDM Research. Business Magazine. Mauritius The TOP 100 Companies, 2018 Edition. La Sentinelle Editions,
2018.
37 The National Transport Authority, Ministry of Public Infrastructure and Land Transport, Mauritius.
38 Moorghen, Shanda, Automotive Industry: facing the challenges, 2017, available at:.
https://www.lexpress.mu/node/307525.
Source: Own elaboration based on data from the Ministry of Finance and Economic
Development, Annual Digest of Statistics – 2017, Port Luis, Mauritius, 2018, Tables 13.1
and 13.2, pp. 164-165.
There are several entities involved in car dealership covering most of the popular
trademarks in the world, and it seems that the automotive market in Mauritius is
becoming more and more competitive for suppliers.
However, in Mauritius at the very least, car dealers manage to thrive by selling a
variety of different cars, ranging from luxury cars to compact cars suited to the
streets of Port Louis. They each have their own markets even though the major
companies in the Mauritian automotive industry control the lion’s share of the
Source: Own elaboration based on data from DCDM Research. Business Magazine.
Mauritius The Top 100 Companies, 2018 Edition.
Source: Own elaboration based on data from Ministry of Finance and Economic
Development, Statistics Mauritius, 2018. Digest of Industrial Statistics, p. 121
40 Zappalaglio, Andrea, The exhaustion of trademarks in the PRC compared with the US and EU experience: a
dilemma that still needs an answer. European Intellectual Property Review (EIPR), September, 2016, p. 3, available
at: https://www.researchgate.net/publication/308618825.
In a similar period, from 2014 to 2016-2017, the collection of Motor vehicles taxes
increased 8.8%, from Rs 1,345.0 million to Rs 1,463.4 million (Table 5). This value
represents 1.74% of total taxes, and 58.0% of what is collected by Taxes on use of goods
and permission to use goods.
The data of Wholesale & retail trade, Repair of motor vehicles and motorcycles of the
Annual Digest of Statistics, include the total of the commerce sector in Mauritius and do
not correspond only to the automotive sector. However, they allow to obtain some data
of the “Repair of motor vehicles and motorcycles” activity.
Gross Value Wholesale & retail trade; repair of motor 43,738 45,914 48,990 52,287
Added at vehicles and motorcycles
current
basic prices. Of which: Wholesale and retail trade 40,968 43,006 45,844 48,884
Rs million
Repair of motor vehicles and motorcycles 2,770 2,908 3,146 3,403
Source: Own elaboration based on data from the Ministry of Finance and Economic
Development, Statistics Mauritius, 2018, Digest of Industrial Statistics, pp. 90, 96 and
128
1/ Revised 2/ Forecast
This activity, which is not export-oriented, is not included in the Production account of
Non-EOE Sector by industry group, presented in Table 7.
Table 7 Production account of the industry group: Manufacture of motor vehicles, trailers and semi-trailers /
Manufacture of other transport equipment, large establishments, 2016 Rs Million
Gross Value
Gross
output at Intermediate added at Compensation Taxes on
operating
basic Consumption basic of employees production
surplus
prices prices
Non-
1,845.9 805.4 1,040.6 265.4 5.0 770.2
EOE*
Industrial
171,748.6 107,017.4 64,731.2 25,193.7 327.8 39,149.8
Sector
Source: Own elaboration based on data from the Ministry of Finance and Economic
Development, Statistics Mauritius, 2018, Digest of Industrial Statistics, p. 87
* Non-Export Oriented Enterprises
A characteristic of the perfect competition model is the trend towards the disappearance
of the profits of companies, so it is valid to consider that the elimination of profit is a limit
to the impact of parallel imports on the income of companies operating with foreign
trademarks.41
If it is assumed that the prohibition of parallel imports makes it possible to obtain profit
margins in the market for imported trademarked products, the increase in competition
(caused by parallel imports) will reduce those profit margins. The maximum impact would
be the zeroing of those margins, because, if there are no positive profit margins, no
entrepreneur will be interested in importing in parallel.
Therefore, it is possible to estimate that the maximum cost that foreign trademark
representatives could face would be the loss of the Profit Before Tax of the biggest
companies in the sector, Rs 846.07 million (Table 3).
The proposed economic model was designed for a single product, which is imported and
competes in the domestic market with a national product that is a perfect substitute for
imported goods. But, the domestic automotive industry is oriented to the national market,
and includes goods and services that are substitutes or complement the imports of
foreign trademark representatives.
As for considering different goods, it is normal to use the model for a set of different
products, as in the case of determining the exchange rate for the balance between the
supply and demand of currency, which includes all imported and exported products.
40 Zappalaglio, Andrea, The exhaustion of trademarks in the PRC compared with the US and EU experience: a
dilemma that still needs an answer. European Intellectual Property Review (EIPR), September, 2016, p. 3, available
at: https://www.researchgate.net/publication/308618825.
41 See Samuelson, Paul A., Economics, an Introductory Analysis, McGraw-Hill Company, New. York, 1948.
42 National Standard Industrial Classification of all Economic Activities.
The proposed method to estimate the impact that parallel imports could have on national
production, in the five sectors considered,43 begins by multiplying that price difference
by the gross output at basic prices of the Non-EOE of 2016.
But, in the case of the Mauritian automotive sector, the value of the gross output does
not include the vehicle repair service, which is an important activity of the sector and
must be taken into account.
The data calculated in Table 6 do not include Intermediate Consumption, but must be
added to the gross output, for the sake of better information.
Therefore, the price difference of 5.9% must be multiplied by Rs 5,175.9 million, which
is the sum of gross production at basic prices (Rs 1,845.9 million, Table 7), the Gross
Value Added at current basic prices (Rs 2,908 million, Table 6) and the Gross Fixed
Capital Formation at current prices (Rs 422 million, Table 6).
The result is Rs 305.86 million, which corresponds to the sum of areas 1 and 2 of The
economic model of supply and demand.
Area 2 represents the reduction in the cost of production caused by the decrease in the
sale price, which can be calculated by multiplying the gross output by the supply elasticity
and the price differential squared. Considering the price reduction of 5.91% and a supply
elasticity equal to 0.2 (13.1 Quantitative estimation of costs and benefits by sectors), a
value of Rs 1.80 million is obtained for area 2 of the model, so that the cost of national
producers is estimated at Rs 304.05 million.
8.3.3 Consumers
As indicated, the loss of representatives of foreign trademarks would be equal to or less
than the profit before tax of Rs 846.07 million. This cost of exclusive distributors is
equivalent to a transfer to consumers, who would receive a benefit of the same amount
for this concept. This benefit is represented by the area 3 of The economic model of
supply and demand.
As indicated, the value of Rs 305.86 million corresponds to the sum of areas 1 and 2 of
the economic model of supply and demand, and the benefit obtained by the consumer
(both for the implicit transfer of the loss of domestic producers as for the replacement of
part of the national production by imports) is equal to the same amount for this concept,
Rs 305.86 million.
The total consumer benefit (the sum of areas 1, 2, 3, and 4) is estimated at 305.86 +
846.07 + 50.00 = Rs 1,201.9 million.
The annual net benefit for Mauritius is represented in the graphic model by the sum of
the areas 1 and 4, since areas 2 and 3 are transfers from importers and domestic
producers to consumers.
44 Anderson, Patrick L./McLellan, Richard D./Overton, Joseph P./Wolfram, Dr. Gary L, Price Elasticity of Demand,
1997, available at: https://scholar.harvard.edu/files/alada/files/price_elasticity_of_demand_handout.pdf.
Mauritius, yet being a small island with a per capita gross domestic product of US $ 5,406
in 2003, managed to create a health care system that has brought important
achievements to put Mauritius at the highest level of health among the countries. The
general state of health in the population of Mauritius has been improving and is on good
terms for the current years. In Mauritius, public health services are financed by taxes and
are free, since health is considered to be a human rights problem.
In the opinion of foreign trade officials of the United States, the pharmaceutical sector of
Mauritius has relevant characteristics for the interest of the service providers or North
American investors.
Mauritius has a well-developed health system. About 73% of the health needs of the
population are catered to by public health institutions and 27% by the private sector.
Non-communicable diseases, such as cardiovascular diseases, diabetes, cancer,
and chronic respiratory diseases account for 80% of total mortality in Mauritius every
year.
Public hospitals are free in Mauritius, but there are also several private clinics.
Mauritius’ healthcare infrastructure includes five major public hospitals, six
specialized public hospitals, 18 private multi-specialty clinics, 11 private specialized
clinics, and 28 medical laboratories. There are more than 4,500 beds in both public
and private hospitals. The Government has announced plans to upgrade the
healthcare infrastructure, and tenders are issued on a regular basis for medical
equipment as well as for the procurement of pharmaceuticals and disposables.45
And in the opinion of the officials of The Economic Development Board (EDB) the
pharmaceutical sector of Mauritius has bright development prospects.
Over the years the number of private institutions has doubled and future projections
indicate that the sector is expected to substantially contribute to GDP and become a
pillar of the economy.
45 Export.gov Helping US Companies Export. Healthcare Resource Guide: Mauritius, available at:
https://2016.export.gov/industry/health/healthcareresourceguide/eg_main_116239.asp#P179_12554.
Private institutions have multiplied and are expected to continue growing until they
become an important sector of the national economy.
According to the Ministry of Health there are 33 pharmaceutical companies that are
registered for the Ministry48 and are authorised to import pharmaceutical products to
Mauritius.
▪ The state health services employed over 650 doctors and 17 pharmacists.
▪ The private sector employed over 400 doctors and 275 pharmacists.
▪ Also, it provides primary and secondary services with 14 private clinics, 20 private
medical laboratories and absorbs 32% of the total expenditure on health.
▪ In terms of manufacturing capabilities, there is no Research and Development for
discovering new active substances, no Production of pharmaceutical starting
materials (APIs).
▪ There is production of formulations from pharmaceutical starting material and
repackaging of finished dosage forms.
▪ The percentage of market share by volume produced by domestic manufacturers is
0.9% and 2% by value produced.
▪ Private health expenditure as % of total health expenditure (% of total expenditure
on health): 53.8%.
▪ Market share of generic pharmaceuticals [branded and INN] by value (%): 65%.
▪ Private out-of-pocket expenditure as % of private health expenditure (% of private
expenditure on health): 81.88%.
▪ Premiums for private prepaid health plans as % of total private health expenditure
(% of private expenditure on health): 10.13%.
Information from more recent years is very aggregate and not very useful for measuring
the specific contribution of the pharmaceutical sector to the economy. For example, in
Coke and refined petroleum products / Chemicals and chemical 2,456 2,378 2,433 2,429 2,328
products / Basic pharmaceutical products and pharmaceutical
preparations. *
Source: Own elaboration based on data from *Survey of Employment and Earnings.
Digest of Industrial Statistics-2017
http://statsmauritius.govmu.org/English/Publications/Documents/Regular%20Reports/in
dustry/Digest_%20Industrial_Prod_Yr17.pdf and from **Ministry of Finance and
Economic Development. 2019. Digest of Labour Statistics. (2017-2018). Port Louis,
Mauritius, available at:
http://statsmauritius.govmu.org/English/StatsbySubj/Documents/labour%20-
%20digest/Digest_Labour_Yr17.pdf
http://statsmauritius.govmu.org/English/Publications/Documents/Regular%20Reports/la
bour/Digest_Labour_Yr18.pdf
1 Excluding government ministries and departments. 2 Revised. 3 Provisional.
Gaviscon 125 85 40 47
Given the dispersion of prices, an attempt was made to use the information included in
the Pharmaceutical Country Profile for calculations of the final benefit to consumers, from
which the following quote is extracted:50
Pricing
The Median Price Ratio is used to indicate how prices of medicines in Mauritius
relate to those on the international market. That is, prices of medicines have been
compared to international reference prices51 and expressed as a ratio of the
national price to the international price. For example, a price ratio of 2 would mean
that the price is twice that of the international reference price. Since prices have
been collected for a predefined basket of medicines, the Median Price Ratio has
been selected to reflect the situation in the country.
As for patient prices, the Median Price Ratio in the public sector was 0 for
originators and 0 for generics as all medicines are provided for free. On the other
hand, prices in the private sector are high (19.3 for originators and 6 for generics).
Public sector availability of originator medicines was 0%, while availability of the
Lowest Priced Generic (LPG) medicines was 68.6 %. Availability in the private
sector was higher for originator medicines but lower for the LPG (55.7% for
originator and 54.9% for generics).
Being the Median Price Ratio of 6 for generics, the average price difference is very high
(500%) in relation to the cases at stake. For example, in the case of the product
BACTRIM the Median Price Ratio was equivalent to a difference of 916% in prices in
2008, while the data collected in Mauritius is 150% in 2019.
Therefore, it seems more convenient to assume that the difference in average prices is
equal to the percentage of the profit obtained by representatives of foreign trademarks
in relation to turnover.
To estimate the impact on importers of products with foreign trademarks and the benefit
to consumers, the data of the Top 100 Companies52 was taken. Logically, the turnover
must be greater than the sales of the imported trademark products, but it can be assumed
that there is no overestimation in the profit before tax. Indeed, the market for products in
which there is no trademark exclusivity of the distribution must be competitive and,
50 Ministry of Health and Quality of Life-World Health Organization, Pharmaceutical Country Profile. Mauritius.
51 The International reference price is the median of prices offered by international suppliers (both for profit and not
profit) as report by MHS International Price Indicator Guide
(http://erc.msh.org/mainpage.cfm?file=1.0.htm&module=DMP&language=English). For more information on the
methodology WHO/HAI pricing survey, you can download a free copy of the manual at
http://apps.who.int/medicinedocs/documents/s14868e/s14868e.pdf.
52 DCDM Research, Business Magazine, Mauritius The Top 100 Companies, 2018 Edition, op. cit.
Consequently, it was estimated that the cost for foreign trademark representatives in the
pharmaceutical sector is equal to the loss of the Profit Before Tax that appears in Table 8 of
the biggest companies in the health sector, Rs 606.00 million.
Source: Mauritian Central Statistical Office. Statistics Mauritius. Ministry of Finance and
Economic Development, Digest of Industrial Statistics-2017. Port Louis, 2018, p. 87,
available at:
http://statsmauritius.govmu.org/English/Publications/Documents/Regular%20Reports/in
dustry/Digest_%20Industrial_Prod_Yr17.pdf
Among the Non-EOE, the pharmaceutical industry appears together with the group of
rubber and plastic products in the NSIC 21-22 category (Table 11), so there is no data
for the pharmaceutical national production. Only the sum of the data of the NSIC 21 and
NSIC 22 industrial groups is available. In the absence of more information, it was
considered that half of the value of the statistical data corresponds to the pharmaceutical
industry.
The reduction in sales prices of domestic production cannot be greater than the
estimated differential price for products imported with foreign trademarks, which is equal
53 Mauritian Central Statistical Office. Statistics Mauritius. Ministry of Finance and Economic Development, Digest of
Industrial Statistics-2017. Port Louis. (2013-2017), 2018, p. 87, available at:
http://statsmauritius.govmu.org/English/Publications/Documents/Regular%20Reports/industry/Digest_%20Industrial_
Prod_Yr17.pdf
The proposed method to estimate the impact that parallel imports could have on national
production, in the five sectors considered, begins by multiplying that price difference by
gross production at basic prices of the Non-EOE of 2016. In the pharmaceutical sector,
the value of the gross output is half of the statistical data of Rs 1,503.2 million in Table
11, equal to Rs 751.6 million.
The result is Rs 85.81 million, which corresponds to the sum of areas 1 and 2 of The
economic model of supply and demand.
Area 2 represents the reduction in the cost of production caused by the decrease in the
sale price, which can be calculated by multiplying the gross output by the supply elasticity
and the price differential squared.
Considering the price reduction of 11.42% and a supply elasticity equal to 0.2 (13.1
Quantitative estimation of costs and benefits by sectors), a value of Rs 0.98 million is
obtained for area 2 of the model, so that the cost of national producers is estimated at
Rs 84.83 million.
9.3.3 Consumers
According to the proposed model, the total benefit for the consumer is equal to the sum
of areas 1, 2, 3 and 4 of The economic model.
Area 3 is the loss of representatives of foreign trademarks Rs 606 million (Table 8). This
cost of exclusive distributors is equivalent to a transfer to consumers, who would receive
a benefit of the same amount for this concept, due to the reduction of 11.42% of the
average price of pharmaceutical products.
The resulting consumer benefit would be higher, in an amount that depends on the price
elasticity of demand. The elasticity values - calculated for different developed countries,
are concentrated in the range between 0.1 and 0.2. 54 The latter were chosen, given that
the authors agree that the elasticity is greater in the countries with the lowest income
level.55 The additional benefit of consumers, for this concept is Rs 6.92 million, value
represented by the area 4 of The economic model of supply and demand.
The sum of areas 1 and 2 of the economic model of supply and demand represents the
benefit obtained by the consumer for the implicit transfer of the loss of domestic
54 Siminski, Peter, M., The Price Elasticity of Demand for Pharmaceuticals amongst High Income Older People in
Australia: A Natural Experiment, Working Paper 08-02, Department of Economics, University of Wollongong, 2008, p. 4;
Yeung, Kai/Basu, Anirban/Hansen, Ryan N./Sullivan, Sean D. Price Elasticities of Pharmaceuticals in a Value-Based-
Formulary Setting. NBER Working Paper No. 22308, 2016, available at: https://www.nber.org/papers/w22308.pdf.
55 National Economic Research Associates (NERA), The Economic Consequences of the Choice of a Regime of
Exhaustion in the Area of Trademarks, Final Report for DGXV of the European Commission, 1999, available at:
http://www.eurasiancommission.org/ru/act/finpol/dobd/intelsobs/Documents/NERA%20study_TM_exhaustion%20(m
ain).pdf
So, the total consumer benefit (the sum of areas 1, 2, 3, and 4) is estimated at 85.81 +
606.00 + 6.92 = Rs 698.7 million.
The annual net benefit for Mauritius is represented in the graphic model by the sum of
the areas 1 and 4, since areas 2 and 3 are transfers from importers and domestic
producers to consumers.
1. Sustainable export growth through five successive stand-by arrangements and two
structural adjustment programmes between 1980 and 1986.
2. Establishment of key institutions like the Mauritius Export Development and
Investment Authority for export promotion.
3. Monetary measures such as the devaluation of the rupee to make Mauritian exports
internationally competitive.57
The policy of trade liberalization and export promotion was successful in the textile and
garment industry in terms of income generation, job creation and capacity building for
local entrepreneurs. The export-oriented policies led to the fact that for some thirty years
the textile and clothing sector in Mauritius was the most developed in Africa South of the
Sahara.58
In addition to these policies, other factors contributed to the success of the textile and
clothing sector in Mauritius:59
1. The European Union and the United States imposed import quotas on exports from
third countries, while Mauritius had preferential access to these two main markets
through trade agreements the Benin/Cotonou Convention and The African Growth
and Opportunity Act (AGOA), respectively.
2. The appreciation of the Taiwanese dollar and the devaluation of the Mauritian
Rupee reduced the competitiveness of Taiwan and increased that of Mauritius in the
world market, which encouraged Taiwanese investment in Mauritius.
3. During the 1990s, political uncertainty about the future of the reintegration of Hong
Kong in China encouraged investors to seek a safe haven and move to Mauritius.
Peedoly, Aveeraj S. describes the rapid result of the policy followed and the
environmental factors:
At the turn of the twenty-first century, Mauritius was the world’s second-largest
fully fashioned knitwear producer, the third-largest exporter of new wool products
and Europe’s fourth-largest supplier of T-shirts.60
56 Joomun, Gilles, The Textile and Clothing Industry in Mauritius, in: Jauch, Herbert/Traub-Merz, Rudolf (eds.), The
Future of the Textile and Clothing Industry in Sub-Saharan Africa Friedrich-Ebert-Stiftung, Bonn, 2006, p. 193.
57 Joomun, Gilles, The Textile and Clothing Industry in Mauritius, op.cit., p. 193.
58 Ghosh, Shubha, The Implementation of Exhaustion Policies: Lessons from National Experiences, op. cit.
59 Joomun, Gilles, The Textile and Clothing Industry in Mauritius, op.cit., p. 194.
60 Aveeraj S. Peedoly, The Textiles and Clothing Industry and Economic Development: A Case Study of Mauritius, in:
Lal, Kaushalesh/Mohnen, Pierre A. (eds.), Innovation Policies and International Trade Rules, Palgrave Macmillan,
Macmillan Publishers Limited, 2009, p. 49, available at: https://link.springer.com/chapter/10.1057/9780230246201.
This fact forced investors and the government to rethink the textile and clothing sector in
the country. In 2003 the Textile Emergency Support Team was set up and an
independent assessor analysed the textile and clothing sector of Mauritius to formulate
a diagnosis of companies using Ramsey Productivity Models (RAPMODS),62 a tool for
measuring the contribution of each unit of input to final output.
The analysis led to the implementation of measures to facilitate the transition of textile
companies to produce superior quality goods and compete successfully in the
international market. According to Peedoly, Aveeraj S.: The experience, quality and
reliability of Mauritian producers has allowed them to secure market niches.63
Another effect was the investment in other countries with lower wage costs. According
to James: The growth of Madagascar’s clothing industry is also largely attributed to
foreign investment from Mauritius, which was attracted by Madagascar’s cheap labour
supply.64
Source: DCDM Research. Business Magazine. Mauritius The Top 100 Companies, 2018
Edition
65 The Mauritius Chamber of Commerce and Industry, MCCI Annual Report 2015-2016, 2017, available at:.
https://www.mcci.org/media/139082/mcciannualreport2015-2016.pdf
Source: Own elaboration based on data from The Mauritius Chamber of Commerce and Industry.
MCCI, 2017, Annual Report 2015 | 2016, Port-Louis, p. 89
As can be seen in Table 14, employment in the industrial group wearing apparel is more
than six times that of the textile group, and this ratio has decreased from 7.10 times in
2014 to 6.14 in 2017.
Table 14 Employment in large establishments1 by Industry group March 2000, and march 2013 - 2017
NSIC 2000 2013 2014 2015 20162 20173
Source: Own elaboration based on data from Mauritian Central Statistical Office. Cited by:
Sawkut, Rojit, The Textile and Clothing Sector in Mauritius, op. cit.
1 Excluding government ministries and departments. 2 Revised 3 Provisional
The compensation to employees in 2016 was 4.27 times higher in the industrial group
wearing apparel than in the textile group, as shown in Table 14. The values of production
indicators (gross output, Intermediate and value added) more than tripled those of the
textile group.
The added value represents around 40% of gross output in both sectors, and only
compensation to employees represents 24% in the textile group and 31% in the wearing
apparel group.
Table 15 Production account of the Industrial Sector by industry group, 2016 (R Million)
Industry group Gross output at Intermediate Value added at Compensation of
basic prices Consumption basic prices employees
Source: Own elaboration based on data from the Ministry of Finance and Economic
Development. Annual Digest of Statistics – 2017. Port Luis, Mauritius, 2018.
While employment remained practically unaltered, fixed capital formation fell sharply in
2015, and it seems that investment prospects for 2019 are negative among
entrepreneurs.66
Table 16 Gross Domestic Fixed Capital Formation at current prices by type and use
Source: Own elaboration based on data from the Mauritius Chamber of Commerce and Industry.
MCCI, 2017, Annual Report 2015 | 2016, Port-Louis
The crisis endured by the sector must be considered a crisis of growth, because at the
end of the 20th century the employment grew and wages increased, and this contributed
to the loss of competitiveness; but this was also an important contribution to the well-
being of the population. Hourly labor costs increased at an average of 5 percent per
annum over the period 1990–2000, from US$ 0.76 to US$ 1.17.67
66 News on Sunday. Janvier 2019. Textile Investment News. Perspectives 2019 - Textile and Manufacturing Industry -
Ahmed Parkar: “The market is very unstable”
67 Sawkut, Rojit, The Textile and Clothing Sector in Mauritius, in: Zhihua Zeng, Douglas, Knowledge, Technology, and
Cluster-based Growth in Africa,The World Bank, Washington, 2008.
That is why it is difficult to estimate monetary costs and benefits with a straightforward
theoretical study based on supply and demand curves, because "the product" to be
studied (female dress, following the example) includes products that in no way fulfil the
hypothesis that they are perfect substitutes, which implies the hypothesis that a woman
who buys a dress from i.e. the DIOR trademark is willing to replace it with a daily common
dress.
On the other hand, after the crisis of growth, the textile sector of Mauritius has
concentrated on the export of high-end products, and this trend should continue in the
future according to the indications of several experts, among others Sawkut (2007):68
Consequently, for most of Mauritian textile production the market is the world, not the
country; and this market will not be affected (positively or negatively) by parallel imports
that may reach Mauritius. Within the country, the EOE will not receive any negative
impact from the application of the international exhaustion regime.
Therefore, it was necessary to use another way of estimating the impact of parallel
imports.
In the absence of more information, it was considered that the sales of foreign
trademarks representatives in the domestic market came from imports of the sector, plus
distribution and sales costs. It was estimated that the difference between the average
price of these sales in the domestic market and possible parallel imports should be
reduced, taking into account that it is an efficient sector that competes in the international
market.
In the absence of more information, it was considered that the sales of foreign
trademarks representatives in the domestic market came from CIF imports of the sector
(Rs 5,517 million), plus 50% of distribution and sales costs (Rs 8,275.5 million) . The
impact of parallel imports was estimated at 5% of sales, an intermediate percentage
68 Sawkut, Rojit, The Textile and Clothing Sector in Mauritius, opt. cit., p. 107.
The result is Rs 70.97 million, which corresponds to the sum of areas 1 and 2 of The
economic model of supply and demand.
Area 2 represents the reduction in the cost of production caused by the decrease in the
sale price, which can be calculated by multiplying the gross output by the supply elasticity
and the price differential squared. Considering the price reduction of 5% and a supply
elasticity equal to 0.2 (13.1 Quantitative estimation of costs and benefits by sectors), a
value of Rs 0.35 million is obtained for area 2 of the model, so that the cost of national
producers of textiles and wearing apparel is estimated at Rs 70.62 million.
10.3.3 Consumers
According to the proposed model, the total benefit for the consumer is equal to the sum
of areas 1, 2, 3 and 4 of the The economic model of supply and demand.
69 Mauritian Central Statistical Office. Statistics Mauritius. Ministry of Finance and Economic Development, Digest of
Industrial Statistics-2017. Port Louis. (2013-2017), 2018, p. 60, available at:
http://statsmauritius.govmu.org/English/Publications/Documents/Regular%20Reports/industry/Digest_%20Industrial_
Prod_Yr17.pdf
The resulting consumer benefit would be higher, in an amount that depends on the price
elasticity of demand. The estimated values for the elasticities of the textile sector are
found around the unit, average value among those calculated for Textile Expenditure by
ESCAP.70 So the value of one was adopted.71 The additional benefit of consumers, for
this concept is Rs 10.34 million, value represented by the area 4 of The economic model
of supply and demand.
The sum of areas 1 and 2 of The economic model of supply and demand, represents the
benefit obtained by the consumer for the implicit transfer of the loss of domestic
producers and for the replacement of part of the national production by imports. As
indicated, is equal to 29.59 + 41.38 = Rs 70.97 million.
So, the total consumer benefit (the sum of areas 1, 2, 3, and 4) is estimated at 70.97 +
413.78 + 10.34 = Rs 495.1 million.
The annual net benefit for Mauritius is represented in The economic model by the sum
of the areas 1 and 4, since areas 2 and 3 are transfers from importers and domestic
producers to consumers.
70 Economic and Social Commission for Asia and the Pacific (ESCAP), Unveiling Protectionism: Regional Responses
to Remaining Barriers in The Textiles and Clothing Trade, United Nations Publication, 2008, p. 153.
71 Martinez, Lauren A., The Country-Specific Nature of Apparel Elasticities and Impacts of the Multi-Fibre Arrangement,
Honors Projects. Paper 49, 2012, available at: http://digitalcommons.macalester.edu/economics_honors_projects/49
The main concern of the government in relation to food and beverages is to guarantee
the supply of basic food products at affordable prices, thus controlling domestic
production and imports of staple foods; like onions, potatoes, garlic and its seeds, wheat
flour, bread, rice and fish. Mauritius is a net importer of food and beverages.73
In order to control the exploitation of the fishing resource, the government developed a
Fisheries Master Plan. The main beneficiaries of the program are the fishermen and the
coastal communities of the region.74
Some of these companies belong to important business groups that work in different
sectors of the economy.75
72 World Trade Organization Secretariat, Trade Policy Review. Report by the Secretariat. Mauritius, 2015, available at:
https://docsonline.wto.org/dol2fe/Pages/FE_Search/FE_S_S009-
DP.aspx?language=E&CatalogueIdList=130110,127036,51175,61348,65698,8452&CurrentCatalogueIdIndex=0&Ful
lTextHash=&HasEnglishRecord=True&HasFrenchRecord=True&HasSpanishRecord=True
73 World Trade Organization Secretariat, Trade Policy Review. Report by the Secretariat. Mauritius, 2015, available at:
https://docsonline.wto.org/dol2fe/Pages/FE_Search/FE_S_S009-
DP.aspx?language=E&CatalogueIdList=130110,127036,51175,61348,65698,8452&CurrentCatalogueIdIndex=0&Ful
lTextHash=&HasEnglishRecord=True&HasFrenchRecord=True&HasSpanishRecord=True.
74 FAO. Mauritius and FAO, available at: http://www.fao.org/3/a-az485e.pdf
75 For example, the Leal Group includes companies in the sectors: medicine, consumer goods, automotive, information
technology, engineering and tourism. Its Consumer Goods Department (66% of the group's total turnover) represents
multinational companies such as DANONE, UNILEVER, DIAGEO, GSK or BEIERSDORF. In addition, it creates new
products in infant nutrition, baby care, personal care, feminine hygiene, products for the care of the home, food, wine
and liquors. See http://www.lealgroup.com/default.aspx
There is a significant national production of food and beverages, which employs 13,873
people, including those who work in NSIC 10 and 1176 (Table 19). However, according
to the work cited,77 39.2% of these people (5,444) worked in export-oriented companies
in the food group, that does not compete with the imports of companies that operate with
foreign trademarks.
Table 19 Number of large establishments and employment,1 by industry group, March 2013 – 2017
NSIC 2013 2014 2015 20162 20173
10 Food products, number of large establishments 110 109 109 108 107
Source: Own elaboration based on data from Annual Digest of Statistics 2017, pp. 33-
34
1 Refer to establishments employing 10 or more persons, excluding government
ministries and departments. 2 Revised 3 Provisional78
76 NSIC: National Standard Industrial Classification of all Economic Activities. NSIC 10: Food products. NSIC 11:
Beverages. Mauritian Central Statistical Office. 2018. Statistics Mauritius. Ministry of Finance and Economic
Development, Digest of Industrial Statistics-2017. Port Louis. p. 60, available at:
http://statsmauritius.govmu.org/English/Publications/Documents/Regular%20Reports/industry/Digest_%20Industrial_Pro
d_Yr17.pdf
77 Mauritian Central Statistical Office. 2018. Statistics Mauritius. Ministry of Finance and Economic Development,
Digest of Industrial Statistics-2017. Port Louis. p. 60, available at:
http://statsmauritius.govmu.org/English/Publications/Documents/Regular%20Reports/industry/Digest_%20Industrial_
Prod_Yr17.pdf
78 Source: Mauritian Central Statistical Office. Statistics Mauritius. Ministry of Finance and Economic Development.
2018. Digest of Industrial Statistics-2017. Port Louis. (2013-2017), available at:
It should be noted that there was a relatively large reduction in the number of sugar mill
workers, because it was reduced by 238 (18%) in the same period and, nevertheless,
employment in the sector remains practically constant. 79
Table 20 Production account of the Industrial Sector by industry group, 2016 (Large establishments. Rs
Million)
Gross Intermediate Value Compensation Taxes on Gross
output80 at consumption added82 of employees production operating
Industry group surplus
basic at basic
prices81 prices
http://statsmauritius.govmu.org/English/Publications/Documents/Regular%20Reports/industry/Digest_%20Industrial_
Prod_Yr17.pdf
79 Mauritian Central Statistical Office. Statistics Mauritius. Ministry of Finance and Economic Development, Digest of
Industrial Statistics-2017. Port Louis. (2013-2017), 2018, p. 60, available at:
http://statsmauritius.govmu.org/English/Publications/Documents/Regular%20Reports/industry/Digest_%20Industrial_
Prod_Yr17.pdf
80 Gross output of industries covers the market value of goods and services produced, including work-in-progress and
products for own use.
81 The basic price is the amount receivable by the producer, exclusive of taxes on products but including any subsidy
on these products.
82 The value added for a particular producer is equal to the gross output at basic prices less the value of intermediate
consumption at purchaser's prices.
As shown in Table 20, the gross output of food and beverages represents an important
39.19% of national manufacturing. The participation in terms of added value is also
important, 31.98%, but the compensation to employees is considerably lower, 17%,
reflecting the greater occupation of unskilled labor in food production. On the other hand,
the contribution to the collection exceeds 30% and the profit rate is even higher, 42.54%.
Therefore, parallel imports could generate a cost of Rs 754.3 million in domestic sales
of foreign trademarks representatives in Mauritius.
Second, it is quite unlikely that small food producers in Mauritius will be affected by
imports of foreign-trademarked products. Rather, large domestic producers could
compete with these imports and, therefore, be affected by parallel imports.
Table 21 Production account of Non-EOE Sector (excluding Sugar) Large establishments, 2016 Rs Million
Gross Value
Gross
output at Intermediate added at Compensation Taxes on
NSIC operating
basic Consumption basic of employees production
surplus
prices prices
Source: Own elaboration based on data from Ministry of Finance and Economic
Development, Statistics Mauritius, 2018. Digest of Industrial Statistics, p. 87
* Food products (excl. sugar)
** Beverages and tobacco products
*** Total Non - EOE (excluding Sugar)
To estimate the maximum impact of parallel imports to domestic production, the price
diferential of 2.87% is multiplied by the gross production at basic prices.
For food NSIC 10, the result is Rs 624.78 million, which corresponds to the sum of areas
1 and 2 of The economic model of supply and demand.
Area 2 represents the reduction in the cost of production caused by the decrease in the
sale price, which can be calculated by multiplying the gross output by the supply elasticity
and the price differential squared. Considering the price reduction of 2.87% and a supply
elasticity equal to 0.2 (13.1 Quantitative estimation of costs and benefits by sectors), a
value of Rs 1.79 million is obtained for area 2 of The economic model, so that the cost
of national producers of food is estimated at Rs 622.99 million.
But statistical information on domestic beverage production (NSIC 11) is recorded along
with the NSIC 12 of tobacco products. It is necessary to subtract the corresponding gross
output value but, the available statistics do not include it. Thus, in the Mauritius Tobacco
Atlas it is indicated that the production data is n / a, although it does state that “There
were less than 1000 metric tons of tobacco produced in Mauritius in 2014”.84
In the absence of more information, an estimate was made with additional data:
▪ The FAO web portal indicates that approximately 1,200 cigarettes are produced per
kilogram of tobacco leaves, which is equivalent to 60 packs.85
83 Mauritian Central Statistical Office. Statistics Mauritius. Ministry of Finance and Economic Development, Digest of
Industrial Statistics-2017. Port Louis. (2013-2017), 2018, p. 60, available at:
http://statsmauritius.govmu.org/English/Publications/Documents/Regular%20Reports/industry/Digest_%20Industrial_
Prod_Yr17.pdf.
84 Mauritius Tobacco Atlas, available at: https://tobaccoatlas.org/country/mauritius/.
85 Food and Agricultural Organization, available at: http://www.fao.org/3/y4997s09.htm.
With these data, a sales value of Rs 6,300 million was obtained, which is approximately
half of the Groos output of Table 21. So, the cost for domestic beverage producers can
also be estimated multiplying the price diferential of 2.87% by Rs 6,059.2 million, half of
the Gross output. The result is Rs 173.90 million, which corresponds to the sum of areas
1 and 2 of The economic model of offer and demand. Area 2, which represents the
reduction in the cost of production caused by the decrease in the sale price, was
calculated in the same way as food. A value of Rs 0.50 million was obtained for area 2
of the model, so that the cost of domestic beverage producers was estimated at Rs
173.63 million.
Adding the value of the cost for domestic food producers Rs 623.96 million to the cost of
beverage producers Rs 173.63 million, the cost of the food and beverage sector of Rs
796.11 million is obtained.
11.3.3 Consumers
According to the proposed economic model, the total benefit for the consumer is equal
to the sum of areas 1, 2, 3 and 4 of the graph.
Area 3 is the loss of representatives of foreign trademarks (Rs 754.3 million). This cost
of exclusive distributors is equivalent to a transfer to consumers, who would receive a
benefit of the same amount for this concept.
The resulting consumer benefit would be higher, in an amount that depends on the price
elasticity of demand. The estimated values for the elasticities of the food and beverages
sector are found around the unit, so the value of one was adopted. 87 The additional
benefit of consumers, for this concept is Rs 10.81 million, value represented by the area
4 of The economic model of supply and demand.
The sum of areas 1 and 2 represents the benefit obtained by the consumer for the implicit
transfer of the loss of domestic producers and for the replacement of part of the national
production by imports. As indicated, is equal to 624.78 (Food) + 173.63 (Beverages) =
Rs 796.11 million.
So, the total consumer benefit (the sum of areas 1, 2, 3, and 4) is estimated at 796.11 +
754.3 + 10.81 = Rs 1,563.5 million.
The annual net benefit for Mauritius is represented in the economic model by the sum of
the areas 1 and 4, since areas 2 and 3 are transfers from importers and domestic
producers to consumers.
86 WHO, Report on the global tobacco epidemic. Country profile Mauritius, 2017, available at:
https://www.who.int/tobacco/surveillance/policy/country_profile/mus.pdf?ua=1.
87 Martinez, Lauren A., The Country-Specific Nature of Apparel Elasticities and Impacts of the Multi-Fibre Arrangement,
Honors Projects. Paper 49, 2012, available at: http://digitalcommons.macalester.edu/economics_honors_projects/49
That some goods are more or less tradable depends, above all, on the relationship
between the cost of transfer and the value of the product, and a measure of this
relationship is the percentage difference between the CIF and FOB prices.
In the case of the importation of cosmetics, the incidence of transfer costs is very low
because, in general, they are products of little weight and volume in relation to their
monetary value. In fact, in 2017 the difference between the CIF and FOB prices
represented 6.6% of the FOB, a percentage lower than that of most imported products.88
Also, the fact that cosmetics do not deteriorate easily, reduces transfer costs and makes
products more tradable than perishable goods; such as fruits, flowers and vegetables;
whose freight rates are so high that in Mauritius it was considered necessary to create a
compensation mechanism, the Freight Rebate Scheme and the Speed to Market
Scheme.89
This explains why there are pages on the Internet that offer a wide variety of cosmetic
products directly to the consumer, so that the product arrives from the factory (anywhere
in the world) to the address of the final consumer with only one intermediary.
For example, an office in Lisbon90 offers more than 3,000 products of the best
international trademarks, with free and fast shipping for high value orders: “Mauritius
Deliveries in 4 Days Free and Fast Shipping for orders above 117.07USD”. And
continues to introduce new trademarks and products to its offer, according to the latest
trends and to what consumers request. Inform the client with experts trained by
representatives of beauty and hairdressing trademarks, such as MESOESTETIC,
INSTITUT ESTHEDERM, NUXE, SESDERMA, BIODERMA, ISDIN, PHYTO, LIERAC,
CRESCINA, VIVISCAL and HELIOCARE. Currently all its products come from Europe,
Another example is a company,91 which offers a greater number of trademarks than the
other one, and shipments at a cost of US $ 6.00 for orders whose amount is less than
US $ 35.00 and without cost for larger amounts, although the delivery times of the
product are higher.
Finally, even in Mauritius, an online makeup products store has been headquartered
since 2003, with a customer service team available every day, including Saturdays,
Sundays and holidays.92
State statistics (as will be specified below) do not distinguish a cosmetic sector, but rather
large groups of products that include cosmetics.
91 https://www.cosmostore.org/
92 https://www.simple.mu/about-us/
93 DCDM Research. Business Magazine. Mauritius The Top 100 Companies, 2018 Edition. La Sentinelle Editions.
94 See https://maps.me/catalog/shops/shop-beauty/country-mauritius/.
95 See: Gmdu.net. global trades from here, available at: https://www.gmdu.net/join-31-join-118-p1.html.
Jean-Michel Janvier Trading Company, Perfume, hair shampoo, skin lotion, Not
Distributor/ Wholesaler beauty mask, nail varnish, lipstick Provided
Amenities Product Distributor/ Wholesaler wooden hangers & craft, bath & toilet, 5 - 10
Resource Ltd hotel linen, slippers, caps
Mauritius Cosmetics Ltd Distributor/ Wholesaler Health & beauty care, food 101-500
Antz Design Ltd Distributor/ Wholesaler Health & Nutritional Products, 5-10
Cosmetics and Network Marketing
Cosmo Products Co Ltd Distributor/ Wholesaler Cosmetics, perfumes, baby products 5-10
(powder, cream, etc)
IBL Ltd (BrandActiv) Distributor/ Wholesaler/ Food & Beverage, Frozen & Chilled 101-500
Exporter and Personal & Home Care
Source: Own elaboration based on data from Gmdu.net. global trades from here,
available at: https://www.gmdu.net/join-31-join-118-p1.html
In addition, companies engaged in distributive trade sell cosmetic products, but the most
important item in their sales is usually food and beverages, not cosmetics; so here they
are included only as a reference. For example; a company, markets a wide variety of
fast-moving consumer goods in Mauritius, Madagascar and Seychelles; it is divided into
In summary, the available information does not allow to compile a list of the main
representatives of foreign trademarks in Mauritius and the corresponding turnover.
Customs data is the most detailed source of information available, in which the imported
products are grouped by tariff items. Therefore, in Table 23 the sector data are
presented, from HS Code 33011200 to 33079090.
Table 23 Imports of cosmetics, HS Code 33, 2017, in Rs
Cost
HS Code Description of goods Kg Free on board insurance
freight
Essential oils of orange (incl.
33011200 1,637 424,079 469,744
concretes and absolutes)
Essential oils of lemon (incl. concretes 76,325
33011300 75 89,921
and absolutes)
Essential oils of citrus fruit excl 1,498,445
33011900 3,852 1,618,696
bergamot, orange, lemon or lime
Essential oils of peppermint (menta
33012400 203 276,088 286,267
piperita) (incl. concretes & absolutes
Essential oils other than those of
33012900 12,145 5,726,563 6,168,941
citrus fruits, excl 330121-330126
Aqueous distillates and aqueous
33019010 2,917 3,220,257 3,415,836
solutions of essential oil
Aqueous distillate & soln of essential
33019090 62,756 10,763,886 11,312,892
oil unsuitable for medicinal use
Odoriferous alcohol preparation for
33021010 the manufacture of alcoholic 12,103 7,078,743 7,769,544
beverages
Odoriferous substances excl.
33021090 191,678 58,958,674 67,985,730
alcoholic for food or drink industries
Odiferous substances and mixtures
33029000 146,108 74,681,603 79,562,550
thereof not for food or drink industry
33030000 Perfumes and toilet waters 740,807 582,902,731 602,876,081
33041000 Lip make-up preparations 59,954 29,651,415 31,740,759
33042000 Eye make-up preparations 61,350 26,651,475 28,508,381
33043000 Manicure or pedicure preparations 77,235 26,164,068 28,114,723
Beauty or make-up powders, whether
33049100 110,722 18,429,602 19,728,949
or not compressed
Beauty/make-up preparation excl lip,
33049900 1,359,003 889,680,334 926,664,593
eye, manicure or pedicure preparation
33051000 Shampoos 842,700 154,858,295 164,177,065
Preparations for permanent waving or
33052000 28,693 3,969,129 4,313,849
straightening of the hair
33053000 Hair lacquers 37,702 8,155,698 8,731,229
The statistical information of the cosmetic sector is included in the industrial groups 19-
21 Coke and refined petroleum products / Chemicals and chemical products / Basic
pharmaceutical products and pharmaceutical preparations; 96 so, it does not reflect with
minimum accuracy the reality of the sector.
Statistical information of the production index is available for the sub-group 2023 Soap
and detergents, cleaning and polishing preparations, perfumes and toilet preparations,
which increased by 2.1% in 2017.
As for the production of the companies, they can offer a wide variety of products; such
as ARCHEMICS,97 a chemical products company, whose cosmetic production is
marginal, since it also produces adhesives; goods for industrial cleaning, the textile and
construction sector, and professional hair care. Likewise, a holding which includes 280
companies is located in nine sectors: agriculture, construction, commerce, financial
services, hospitals, logistics, manufacturing, real estate and, finally, in the life sector that
includes businesses that offer clinical research and development for the cosmetic and
pharmaceutical industries, in an international expansion strategy based on innovation:
• One company of the holding performs clinical research and research and
development for the cosmetic and pharmaceutical industries. It operates in three
areas of activity: pharmaceutical, cosmetics and nutraceuticals. Its clients for
clinical trials now include world leaders in cosmetics and pharmaceuticals. CIDP
is present internationally for its subsidiaries, namely, in India, Singapore, Brazil
and Romania, and works for more than 70 clients in more than 20 countries.
96 Ministry of Finance and Economic Development, Annual Digest of Statistics – 2017. Port Luis, Mauritius, 2018.
97 See https://www.archemics.mu/content/about-us.
98 https://www.iblgroup.com/sites/default/files/IBL_INTEGRATED_REPORT_2017.pdf
99 http://www.mcbstockbrokers.mu/downloads/News/MCOS%20Rights%20Issue%20160718.pdf
There is no turnover value for the sector, and it is necessary to have some estimate to
calculate the impact on the representatives of foreign trademarks. It was decided to start
from the information of Customs, which is the most reliable at stake, and assume that
turnover can be estimated by adding marketing costs to the value of the sector's imports.
The very particular characteristics of the market of cosmetic products suggest that these
costs are important:
The price of lipstick, makeup and various skin care products is driven largely by
advertising and marketing. Manufacturers know that cosmetics are often an impulse
purchase, for which consumers are usually willing to pay more. They enlist celebrities
in the marketing game, adding to the price. As a result, the average retail markup on
cosmetics is about 50 to 60 percent.101
Taking into account a difference between the CIF value of imports and billing of 50%
and, given that the value of imports in 2017 was Rs 2,746 million, the estimated turnover
is Rs 5,492 million.
Nor is there information on the difference between the average domestic price and the
lowest average in the international market, the average at which parallel imports could
enter. While there is a large dispersion in the prices of cosmetic products, both in
Mauritius and in the international market, it is unlikely that the difference between the
averages could be high. Indeed, as indicated at the beginning of this section, imports
through the Internet increase the level of competition in this market, so the difference
100 https://www.marketscreener.com/MAURITIUS-COSMETICS-LIMIT-20705910/company/
101 https://money.howstuffworks.com/personal-finance/budgeting/5-retail-markups9.htm
To prepare this report it has been necessary to make risky estimates, based on
inaccurate information, but always with data that set limits on the value to be estimated
or suggest an order of magnitude. But in this case, the information does not reflect with
minimum accuracy the reality of the sector, so it was decided not to give an estimate of
the costs of parallel imports for domestic producers.
12.3.3 Consumers
According to the proposed model, the total benefit for the consumer is equal to the sum
of areas 1, 2, 3 and 4 of the graph.
Areas 1 and 2 correspond to the impact of parallel imports on the national production of
cosmetics, an impact that has not been possible to estimate, and will not be taken into
account.
Area 3 is the loss of representatives of foreign trademarks (Rs 274.6 million). This cost
of exclusive distributors is equivalent to a transfer to consumers, who would receive a
benefit of the same amount for this concept.
The benefit to the resulting consumer would be greater, in an amount that depends on
the price elasticity of demand. A product which essentially falls into the category of
conspicuous consumption, say a cosmetic product, is likely to have high elasticity, so the
value of 2 was adopted. The additional benefit of consumers, for this concept is Rs 13.73
million, value represented by the area of triangle 4 in the graph of the economic model
of supply and demand.
Therefore, the total benefit for the consumer (the sum of areas 3 and 4) is estimated at
274.6 + 13.7 = Rs 288.33 million.
The annual net benefit for Mauritius is represented in the graphic model by the area of
tria 4, since area 3 is equivalent to a transfer from importers to consumers. Therefore,
the net profit is estimated at Rs 13.73 million.
With the objective, among others, of knowing the companies that would be directly
affected by the parallel imports, exclusive importers were interviewed, who indicated that
their companies would be seriously affected.
However, most representatives of foreign trademarks in Mauritius argue that there is not
a price difference, and none of those who accepted that there is a difference provided
an estimated percentage on the average of said difference.102
In the absence of information, it was necessary to apply values similar to the usual price
differences in other countries103 or the average ratio between profit and turnover of the
main companies in the sector.104 Likewise, average values of the elasticities of other
countries were taken.105
The data, estimates and hypotheses used are found in the studies by sector, under the
title Social costs and benefits of the eventual transition to international exhaustion of
trademark rights.107 The results of the calculations performed are shown in the Tables
24 and 25 that summarize the costs and benefits.
The procedure executed to obtain the estimations incorporated into these tables
comprised the following:
1. To study the sectors that, according to the international experience and the
information obtained in Mauritius, would be the most affected by the introduction of
an international regime of parallel imports, namely: automobiles and their spare parts,
pharmaceutical, textile, food industry, and cosmetics
2. Identify statistical information that could approximately reflect that of the stakeholders
operating with foreign trademark licenses.
3. Using the information corresponding to the largest companies in the selected sectors.
When apparently reasonable results were not obtained, the convenience of using
alternative data was analysed.
To estimate the impact on importers of products with foreign trademark and the benefit
to consumers, the data of the Top 100 Companies108 was taken. Logically, the turnover
must be greater than the sales of the imported trademark products, but it can be assumed
that there is no overestimation in the profit before tax. Indeed, the market for products in
which there is no trademark exclusivity of the distribution must be competitive and,
therefore, of reduced profits; while the interdiction of parallel imports makes possible a
margin for higher profit margins in the market of trademarked products.
Consequently, it was estimated that the cost for foreign trademark representatives is
equal to the loss of their earnings before taxes in the automotive, pharmaceutical, and
food and beverage sectors. The corresponding values are included in the Cost column
of Table 24.
In the cases of textiles and cosmetics, it was not possible to use these data, because
the aforementioned publication does not include information on cosmetics and 80% of
the production of the textile sector goes to export, which will not be affected by parallel
imports. As indicated when presenting these sectors, the alternative considered was to
take the value of imports, increased by a percentage that covered the marketing costs.
To estimate the impact that parallel imports could have on national production, it should
be taken into account that EOEs will not be adversely affected by parallel imports since,
by definition, their market is international, not domestic. In any case, the impact would
be positive if parallel imports reduce the price of their inputs.
On the other hand, it is likely that the products of small producers in Mauritius are not
substitutes for imported products with a foreign trademark and, therefore, will not be
affected by parallel imports; while large domestic producers could compete with these
imports and, therefore, be affected by parallel imports.
Therefore, it seems appropriate to use the data from the Production Account of the non-
EOE sector (excluding sugar) 2016, large establishments, which are shown in Table
25.109
To calculate the cost to national producers, the price diferential (as taken from the Table
23) is multiplied by the Gross output at basic prices. The corresponding value is included
in the Cost to national producers column of the Table 25.
There are no estimated values of the price elasticity of the supply of the sectors in
Mauritius, and the estimated values for other countries are not reliable because they
differ so much from each other.110
On the other hand, estimates of the price elasticity of the supply of industrial groups are
calculated, almost always, assuming that an increase in prices will cause an increase in
supply. Therefore, elasticity depends on the ability of producers to respond more or less
quickly to the price increase and raise the amount of product they bring to the market.
The supply is supposed to be elastic when the inputs on which production depends
(especially raw materials) can be easily found at existing market prices, if the production
109 Mauritian Central Statistical Office. Statistics Mauritius. Ministry of Finance and Economic Development, Digest
of Industrial Statistics-2017. Port Louis. (2013-2017), 2018, p. 76, available at:
http://statsmauritius.govmu.org/English/Publications/Documents/Regular%20Reports/industry/Digest_%20Industrial_
Prod_Yr17.pdf
110 Edgerton, Jesse, Estimating Machinery Supply Elasticities Using Output Price Booms. Federal Reserve Board,
Staff working papers in the Finance and Economics Discussion Series (FEDS), Washington, D.C., 2010, p. 3,
available at: https://www.federalreserve.gov/pubs/feds/2011/201103/201103pap.pdf
111 See World Health Organization (WHO), Pharmaceutical pricing policy. 9.3, available at:
http://apps.who.int/medicinedocs/documents/s19585en/s19585en.pdf
The total benefit for Mauritius consumers is equal to the sum of the estimated benefits
for each of the sectors, presented in Tables 24 and 25. In the same way, the net benefit
for the society is equal to the sum of the net benefits of sectors.
Table 26: Total benefit to consumers and net social benefit, Rs million
Automotive
51.80 1,201.9
Pharmaceutical
7.90 698.7
Textile and Clothing
10.70 495.1
In summary, the sum of the values of the Tables 24 and 25 shows that, for consumers,
the total estimated annual benefit of adopting the international exhaustion regime is close
to Rs 4,250 million and the net benefit to society would be about Rs 100 million per year.
Therefore, in the cited document there are two conditions (a source of supply is an
evident condition) for parallel imports to exist: easy access between the market of origin
and Mauritius, and a substantial difference between the prices of both markets.
Access to Mauritius is not easy, because its insular geography increases transport costs,
so that those threatened by competition from parallel imports enjoy the shelter of natural
elements. The level of this protection depends on the relationship between transportation
costs and the price of each particular product.
Consequently, the main driver of parallel imports is the difference between the prices in
the market of destination and the price of origin of parallel imports; engine that acts when
the importers can earn in the operation, that is, when the difference between prices is
substantial, high enough to cover the costs and risks of the import operation. If there is
no substantial difference between these prices, there are no parallel imports and there
are neither costs nor benefits.
112 Kitchen, Philip/Eagle, Lynne/Rose, Lawrence/Moyle, Brendan, The Impact of Gray Marketing and Parallel
Importing on Brand Equity and Brand Value. Research Memorandum 38, The University of Hull Business School,
UK, 2003, available at:
https://www.researchgate.net/publication/242642165_The_Impact_of_Gray_Marketing_and_Parallel_Importing_on_
Brand_Equity_and_Brand_Value.
In this case, different scenarios can be drawn according to the way in which
representatives of foreign trademarks react to the authorization of parallel imports. One
possible way of reacting is to diversify its offer by including lower-priced vehicles (even
lower-quality ones) to better take advantage of the different income levels of the
population. That is, introducing themselves into the business of parallel imports, for which
they have the advantage of a better positioning in the market.
At this point, it is convenient to consider the Chinese experience, but not exactly that of
the great country but that of its free trade zones, which are more similar territories to the
geography of Mauritius.
Indeed, a recent pilot scheme launched in the new Shanghai Free Trade Zone (SFTZ),
later extended to Tianjin, Guangdong and Fujian, admits the parallel imports of cars,
especially luxury cars that are much more expensive in the PRC than in the US.
(…)
For some time, the issue of parallel imports in China has been somehow underestimated.
However, the rise in prices following the economic growth, development, increasing
wealth and the abolition of many restrictions to the establishment of foreign business in
the country have begun to attract more foreign entrepreneurs and, therefore, more
parallel traders. One of the most interesting openings of the Chinese market to parallel
imports occurred in the context of the Shanghai Free Trade Zone (SFTZ). This one is the
first free-trade zone in mainland China and features among its goals the promotion of
trade and investment in China.
Recently, on 15 January 2015, the SFTZ launched a pilot programme for the
parallel imports of cars, allowing car dealers to import vehicles directly from
overseas without authorisation from any particular car maker. The goal of the plan
was to exploit the huge price differential between the luxury cars sold in the US
and those marketed in China. For example, an Audi Q7 sports utility vehicle costs
$48,300 in the US and parallel importers sell it in China for $106,000, i.e. at a
price that is 20 per cent cheaper than that charged by the official German
manufacturer’s authorised retailers. At the end of May 2015, the Chinese
Government announced that the programme would be extended to the city of
Tianjin, and the pilot project was launched on 8 June and later extended to Fujian
and Guangdong’s FTZs.114
113 Centre for Science and Environment (CSE), Clunkered: Combating Dumping of Used Vehicles -- A roadmap for
Africa and South Asia, 2018, available at: https://www.cseindia.org/clunkered-combating-dumping-of-used-vehicles-
8863.
114 Zappalaglio, Andrea, The exhaustion of trademarks in the PRC compared with the US and EU experience, op.
cit., p. 3.
As for the expenditure on advertising that has been incurred to publicize the foreign
trademark in the domestic market, the experience of other countries that have gone
through the regime of international exhaustion of the trademark right, suggests that it is
likely to increase, since the companies must invest to maintain the loyalty of their
customers and inform consumers of possible quality differences between products; as
well as to make changes in the labeling or marking, packaging, color or special shape of
the products, and all this without greatly increasing the price.116
It should be remembered that, although the exclusive right over the trademark is
exhausted internationally, its owner maintains the right to prohibit third parties from
making acts of using the trademark that may harm the value of the trademark or
confusing the consumer public about the true origin of the trademark product.
On the other hand, the use of trademark law to prevent access to products that save or
preserve lives, as is the case of pharmaceutical products, would require a different
response, one that takes into consideration not the value of the trademark, but rather the
value (commercial value, intrinsic features and qualities) of the underlying product or
service.117
About 27% of the health needs of the population are catered to by the private sector.
115 Moorghen, Shanda, Industry: facing the challenges, 2017, available at: https://www.lexpress.mu/node/307525.
116 Kitchen, Philip/Eagle, Lynne/Rose, Lawrence/Moyle, Brendan, The Impact of Gray Marketing and Parallel
Importing on Brand Equity and Brand Value. Research Memorandum 38, The University of Hull Business School,
UK, 2003, available at:
https://www.researchgate.net/publication/242642165_The_Impact_of_Gray_Marketing_and_Parallel_Importing_on_
Brand_Equity_and_Brand_Value.
117 Ghosh, Shubha, The Implementation of Exhaustion Policies: Lessons from National Experiences. ICTSD
Programme on Innovation, Technology and Intellectual Property, 2013, available at:
https://www.ictsd.org/sites/default/files/downloads/2014/01/the-implementation-of-exhaustion-policies.pdf
118 Ministry of Finance and Economic Development, Three-Year Strategic Plan 2017/18-2019/20, available at:
http://budget.mof.govmu.org/budget2017-18/2017_183-YearPlan.pdf
In the past few years several global companies have invested in “centers of excellence”
to cater to the growing healthcare needs of both national and international patients. In
2017, Mauritius attracted more than 11,500 foreign patients for treatment in specialty
areas such as cosmetic surgery and procedures, orthopedics, cardiology, fertility
treatment, and ophthalmology.
As of July 2018, there were 371 registered private drugstores and 38 registered
pharmaceutical wholesalers in Mauritius. Of the US$ 114 million of pharmaceuticals
imported in 2017, the private sector accounted for 75% of the import value. Mauritius
imports the vast majority of its pharmaceuticals.
The medical device manufacturing industry has also experienced a sustained growth
over the last few years. Due to the preferential market access that Mauritius enjoys with
the EU, leading medical device manufacturers (mostly from France and Germany) have
established operations here. They produce high-precision medical devices such as
catheters/stents; cardiovascular, orthopaedic, and ophthalmic equipment; dental
implants; artificial skin; and biomedical products.
The aforementioned argument of Peedoly, Aveeraj S., raised ten years ago, could be
inscribed in the theory of industrialization by substitution of imports, applied to countries
that maintain a reduced exchange rate due to the inflow of foreign currency from the
export of natural resources. Theory that, after decades, was presented as the so-called
Dutch disease; because of the abundant foreign exchange income generated by the
exploitation of the North Sea oil. But the basic argument is different, because it is not a
matter of compensating a high exchange rate, but rather facilitating the transformation
of the textile production of Mauritius, of competition via prices (based on cheap labour)
to the competition for quality in high-end products.
In 2018, after nine years, in the opinion of the Manufacturers Association of Mauritius
(AMM), a local manufacturer often rivals locally with international products and
trademarks, and proposes a temporary collaboration between the public and private
sectors:
… the AMM has identified its added value for local manufacturers with four thrusts
leading to collaborative projects over the next three years: train, innovate,
internationalise, maximise the social and environmental responsibility.121
In summary, the AMM requests a temporary subsidy so that the Non-EOE can face the
current competition of textile imports, become EOE and sets out to compete in the
international market; but they are not representatives of foreign trademarks and do not
receive, nor will they receive, any negative impact of parallel imports.
On the other hand, those who support the transition to the new regime of international
exhaustion of trademark rights consider that there are notable differences in prices,
which would be affecting the country's competitiveness. The fact that companies in the
sector have applied to be included in the Single Amnesty Program of the Competition
Commission is an indication that their domestic sales prices are higher than international
120 Peedoly, Aveeraj S., The Textiles and Clothing Industry and Economic Development: A Case Study of
Mauritius, op. cit., p. 141, available at: https://link.springer.com/chapter/10.1057/9780230246201
121 Le Défi Media Group. (multimedia news provider) https://defimedia.info/bruno-dubarry-manufacturing-sector-
needs-national-strategy
Whoever might be right in this discrepancy of opinions, there do not seem to be any
sound economic reasons for those who engage in distributive trade to oppose the regime
of international exhaustion. In fact, assuming that there are large price differences and
that parallel imports occur, it is possible that distributive trade entrepreneurs have greater
gains in the new situation. For example, if they take advantage of parallel imports to
expand the range of products they offer and attract new customers for products with
famous trademarks at reduced prices.
In the denied assumption that distributive trade entrepreneurs do not take any action to
adapt to the new situation, they could see their sales level reduced if there are parallel
imports.
In the first place, it is necessary to distinguish between national production destined for
export and that destined for the domestic market.
Exporters would not be affected, unless they can buy cheaper inputs through parallel
imports, which would represent a positive impact.
Domestic producers, whose market is not the world but the island of Mauritius, would be
affected by increased competition if cosmetic products enter the country at a lower price.
However, it must be taken into account that these domestic producers have already had
to endure competition from exporters from Mauritius itself, as it is normal practice for
export balances to be sold at a reduced price in the country of origin, which makes it
difficult that parallel imports enter to compete massively in the national market.
In this sense, it should be noted that the national production benefits from the findings
made in phytotherapy research centres created to supply the demand for new
ingredients for the cosmetic and pharmaceutical sectors, sectors where it is necessary
to innovate to compete in the world market.123 This makes the national producers
interested in bringing out to the world new aromas, cosmetics, medicines and therapies
implementing local medicinal plants.
It is difficult, therefore, that domestic producers with such a level of competitiveness may
be affected by the eventual additional competition from parallel imports. Thus, the impact
on national production and employment would be minimal in this sector.
Rather, since the trademark in the cosmetic sector is an important factor in the
establishment of prices, the indicated difference could be high. On the other hand, they
are very tradable products, which would make the difference quite low.
In the sector of importers that sell in the domestic market, it is expected that the
appearance of parallel imports will result in an increase in the total volume of imports of
cosmetic products, an increase in import operations and, consequently, a higher level of
imports job.
Finally, given the greater magnitude of the world market, it is convenient that the country
concentrates on the production of high-end goods, those whose high prices make the
incidence of the transaction costs of exports lower. As we have seen, this is the case of
many cosmetic products, and the growth of production in recent years shows that
entrepreneurs have responded accurately to the particular conditions of geography.
However, it was found that the Position Paper cited included similar arguments to those
of the International Trademark Association (INTA) and the International Chamber of
Commerce (ICC).
Most of the arguments are based on studies on the exhaustion of patent (non-trademark)
rights and, for example, refer to what an international monopolist would do to
demonstrate that parallel imports should be banned in developed countries.
124 CIDP, Group Communication & Business Development, Editorial - Journal for Clinical Studies – April., op. cit.
125 MCCI Position Paper, International Exhaustion of IP Rights in Mauritius, November 2016. MCCI Position
Papers/ 2016/ No. 1.
• The citation127 of the OECD document128 “The high entry cost together with
rapidly decreasing margins from parallel imports due to country size are likely to
limit the number of parallel imports in a small country - the resulting oligopolistic
market structure could leave little benefit for the customer” refers to the low
probability of parallel imports entering a small country, something that may be in
the interests of the current representatives of foreign trademarks, but in no way
allows concluding that parallel imports could raise consumer prices in Mauritius.
On the other hand, the comparison with a Mediterranean country, with borders
with four developed countries and with a GDP equal to 65 times that of Mauritius,
does not allow to reach that conclusion either.
• The Position Paper also cites the document of Müller-Langer, “Does Parallel
Trade Freedom Harm Consumers in Small Markets?” and reproduces the
affirmation “Parallel trade limits the scope for third-degree price discrimination in
the sense that the price in a low-income country with a high price elasticity of
demand is likely to increase as a result of parallel trade, whereas the price in a
high-income country with a low price elasticity of demand is likely to fall”.129 But,
it happens that the economic model used by Müller-Langer considers only two
countries, that the producer has the patent and the legal monopoly of the market
in both countries, and that using his monopoly power discriminates prices to
maximize his total utility. The application of this model to the case of Mauritius
implies that the rest of the world is the producer country, and that parallel exports
start from Mauritius and the products return to the producing country. It is not
"international exhaustion of rights in Mauritius" but the exhaustion in the rest of
the world that allows the author to conclude that the "parallel trade flowing from
low-income countries to high-income countries should be prohibited".130 In short,
126 “The Economic Impact of Pharmaceutical Parallel Trade, Special Research Paper, LSE, p. 15 (sic).
127 OECD Economic Surveys: Switzerland, 2004, p. 120.
128 Giorno, C./Jimenez, M./Gugler, P., Product Market Competition and Economic Performance in
Switzerland, OECD Economics Department Working Papers, No. 383, OECD Publishing, Paris, 2004, available
at: https://doi.org/10.1787/336304241158.
129 Müller-Langer, Frank, Does Parallel Trade Freedom Harm Consumers in Small Markets? Croatian Economic
Survey 2008, 2008.
130 Müller-Langer, op.cit., p. 25.
• It is noted that companies that import in parallel exploit a price difference between
the exporting and importing countries of approximately 21 percent of the price of
the original manufacturer in Sweden. However, this fact is an argument in favour
of international exhaustion, because it shows that the "exclusive" distributor was
taking advantage of that margin or higher and that parallel imports could reduce
that margin in favour of Swedish consumers.
• The following argument is an extension of the previous one: "Unless parallel trade
can operate dynamically on prices, it creates inefficiencies because most, but not
all, of the financial benefits accrue to the parallel trader rather than the heath care
system or patient".The parallel importer increases competition, which benefits the
consumer, but it is criticized that its benefit is greater than that of the consumer.
The logical conclusion would be that more parallel importers are required, and no
less, to reduce the financial benefits that the first parallel operator receives.
• Then it is pointed out that economic theory “suggests”, does not demonstrate, the
risk of shortages if there is international exhaustion of patent law (not the right of
trademarks) in a developed country.
• Finally, a real fact stands out: Parallel importers get a free ride in the market
demand and the trademark image of the product created by the authorized
distributor, without sharing the efforts and expenses of marketing
communications that have generated the demand and the associated image.133
In the face of increased competition, authorized channels will have to face the
cost of marketing to maintain their sales.
The studies cited in the Position Paper refer to the possible effects of parallel imports of
products with patent in force in developed countries, not to products with a foreign
trademark in the Mauritius market.
Consumers may purchase parallel imported trademarked goods without being aware of
the difference between these goods and those purchased through 'official' distribution
channels. If problems arise, and customers find that they do not get the expected post-
sale service and warranty protection, it may be the goodwill established by the 'official'
distributor/trademark owner which will suffer.134 Indeed, the quality of goods imported in
parallel may be lower than those sold in the countries of origin or those imported through
official distribution channels, forcing consumers to be diligent in obtaining adequate
information before buying, and obliges the State and official distributors to provide that
information to consumers. In this sense, by means of a relevant example and
emphasizing an aspect as serious as the passenger safety of vehicles, there are some
official distributors that discriminate against developing countries.135 This has been
verified in Latin America by an independent institution, Latin NCAP, that crash tests
vehicles in order to provide accurate information for consumers about the safety
performance of their cars.136
In summary, the valid arguments included in the Position Paper coincide with the main
arguments of those who promote parallel imports, some of which involve costs for
stakeholders operating with foreign trademark licenses and others imply a greater risk of
confusion for the consumer. However, the costs are those normally assumed by
companies in a competitive regime, and the risks of confusion are those incurred by
diligent consumers.
134 Philip Kitchen/Lynne Eagle/Lawrence Rose/Brendan Moyle,The Impact of Gray Marketing and Parallel
Importing on Brand Equity and Brand Value. Research Memorandum 38. The University of Hull Business School,
2003.
135 Millicent Awialie Akaateba. 2012. Comparing Road Safety Performance of Selected EU and African Countries
Using a Composite Road Safety Performance Index. Journal of Natural Sciences Research ISSN 2225-0921 Vol.2,
No.8. Available at: https://pdfs.semanticscholar.org/542b/784b81932619abce2a44e51c6090d97e9a09.pdf
136 Latin NCAP offers consumers the opportunity to compare the safety performance of similar mass vehicles with
their chosen vehicle. Available at: https://www.latinncap.com/en/results
Indeed, the balance between the protection of intellectual property and the principle of
free trade is difficult, by which goods must circulate between countries in the same way
as within their country of origin: no obstacles to export in the country of origin, borders
or destination.
From this point of view, the argument in favor of the application of international
exhaustion of trademark rights derives, as a logical conclusion, from the priority accorded
to freedom of trade; so it would only be necessary to demonstrate that free trade is better
than imposing restrictions on the transit of goods and services, to conclude that it is
appropriate to authorize parallel imports.
The most discussed trade restriction has been the imposition of tariffs on imports, a
subject that is briefly presented below. It should be noted that the argument begins,
paradoxically, stating that the country that imposes tariffs gets a benefit.
This was what happened before the Second World War, which was preceded by a
commercial war; with tariffs, other restrictions on trade and combat devaluations. The
experience of both wars led most nations to sign the General Agreement on Tariffs and
Trade (GATT) consecrating the general principle that goods should circulate between
countries as they circulate within each one, without any restriction,139 and the principle
of free circulation of goods and services is the basis for the creation of the WTO and of
137 Philip Kitchen, Lynne Eagle, Lawrence Rose and Brendan Moyle, The Impact of Gray Marketing and Parallel
Importing on Brand Equity and Brand Value. Research Memorandum 38. The University of Hull Business School,
UK, 2003, available at:
https://www.researchgate.net/publication/242642165_The_Impact_of_Gray_Marketing_and_Parallel_Importing_on_
Brand_Equity_and_Brand_Value
138 Krugman, Paul R./Obstfelt, Maurice, Economía Internacionel. Teoría y Política. McGrow-Hill/Interamericana de
España, S. A. Madrid, 1995.
139 The last of the recitals of the General Agreement on Tariffs and Trade of 1947 is: Being desirous of contributing
to these objectives by entering into reciprocal and mutually advantageous arrangements directed to the substantial
reduction of tariffs and other barriers to trade and to the elimination of discriminatory treatment in international
commerce.
In the study Trade, Growth and the Size of Countries,140 a step is taken in the analysis,
since it is affirmed that trade restrictions tend to cause more damage in small countries
than in large ones. The assertion is demonstrated with an economic model and factual
evidence. Some conclusions of the study are cited below:
• In a regime of free trade, small countries can prosper, while in a world of trade
barriers, being large is much more important for economic prosperity.
• small countries have a particularly strong interest in maintaining free trade, since
so much of their economy depends upon international markets.
• the costs of smallness can be avoided by being open. In other words, the impact
of size on growth is decreasing in openness.
• The city-states of Italy and the Low Countries of the Renaissance in Europe
represent a clear example of a political entity that could prosper even if very small
because they were taking advantage of world markets. Free trade was the key to
prosperity of these small states. A contemporary observer described Amsterdam
as a place were “commerce is absolutely free, absolutely nothing is forbidden to
merchants, they have no rule to follow but their own interest. So when an
individual seems to do in his own commercial interest something contrary to the
state the state turns a blind eye and pretends not to notice”. 43 The other reason
why city-states could afford to be small is that the state did not provide many
public goods, so that not much was lost in terms of tax burden from being small.
Thus, the combination of a small states who provided very few public goods and
complete freedom of trade allowed for the city state to reach unprecedented level
of wealth based on trade.
In this line of thinking, Stucki141 specifically questions the ability of the owners of
trademark rights to avoid parallel imports because the economic function of trademarks
is limited to:
140 Alesina, Alberto/Spolaore, Enrico/Wacziarg, Romain, Trade, Growth and the Size of Countries, in: Aghion,
Philippe/Durlauf, Steven N. (eds.), Handbook of Economic Growth, Volume 1B, Chapter 23, 2005, available at:
https://www.anderson.ucla.edu/faculty_pages/romain.wacziarg/downloads/2005_handbook.pdf.
141 Stucki, Marc, Trademarks and Free Trade. An Analysis in Light of the Principle of Free Movement of Goods, the
Exhaustion Doctrine in EC Law and of the WTO Agreements, Stampfli Verlag AG, Bern, 1997.
2) Represent the value of the investments made by the owner to maintain the quality of
their products, which allows them to fight against piracy and unfair competition.
Consequently, any sign, or any combination of signs, capable of distinguishing the goods
or services of a company from those of other companies may constitute a registered
trademark.
Given this definition, Stucki's question is: Why should a trademark right empower its
owner to prohibit the importation of legally acquired, non-counterfeit products that legally
bear an identical, although usually foreign mark?
It should be mentioned that, in the conflict between trademark law and the economic
principle of freedom of trade, the United Nations (UN) considers that restrictive business
practices include:
From another point of view, it should be noted that Mauritius has concentrated on high-
end production, and this trend should continue in the future, so that what was affirmed in
a World Bank study applies to several productive sectors: 143
For most of Mauritian production, the market is the world, not the country itself; and this
worldwide market will not be affected (positively or negatively) by parallel imports that
may reach Mauritius.
142 United Nations Conference on Trade and Development, The United Nations Set of Principles and Rules on
Competition, available at: https://unctad.org/en/Pages/DITC/CompetitionLaw/The-United-Nations-Set-of-Principles-
on-Competition.aspx.
143 Sawkut, Rojit, The Textile and Clothing Sector in Mauritius, op. cit.
It is not clear that the companies that represent foreign trademarks will suffer a significant
economic impact, since they will be in a privileged position to assume the trade of parallel
imports, and thus expand their offer in the market with products of different qualities and
prices.
As for advertising expenses incurred to publicize the foreign trademark in the domestic
market, the expenditure is likely to increase, since the companies must invest to maintain
the loyalty of their customers and inform consumers of possible differences in quality
between products.
It must be remembered that, although the exclusive right over the trademark is exhausted
at the international level, its owner maintains the right to prohibit third parties from making
acts of using the trademark that may damage the value of the trademark or confusing
the consumer about the true origin of the product.
The merchants who are exclusively dedicated to the activity of importing and selling the
products, without any transformation, will not be negatively affected by the legalization
of parallel imports. Rather, they could benefit from the increase in imported volume.
The state may incur a higher cost of control to maintain the validity of quality standards
and prevent the entry into the country of counterfeit products.
Parallel imports should not be expected to affect the research and development activities
of export pharmaceutical products, or services designed to meet the growing health care
needs of domestic and foreign patients.
Likewise, those who carry out parallel imports will also require the services associated
with these activities, such as marketing, which will offset the reduction in the advertising
demand of the companies affected negatively.
It is possible that the smaller companies that sell in the domestic market competing
against low cost producers, have to go through a process of adaptation to the new
conditions. If this is the case, the government could adopt temporary policies and
measures that help the industry correct weaknesses.
The danger that must be avoided is that, after three years, the beneficiary companies try
to maintain indefinitely those collaborative projects, which would be a permanent burden
for the other sectors of the economy, given that "there is no free lunch" (sic). To compete
in the world market, it is convenient that all productive sectors are highly competitive
because, if not, exporters (and the country) will be penalized by the higher cost of inputs
purchased from less competitive producers.
Finally, an island in the middle of the ocean offers the natural protection of the freight to
the national production destined to the internal market, and it is also a natural barrier for
those who produce for the world market. And, given the greater magnitude of this market,
it is convenient that the country concentrates on the production of high-end goods, those
whose high prices make the incidence of transaction costs of exports lower. In addition,
exporters should be able to purchase their inputs at the lowest prices on the world
market, which can be achieved through greater trade freedom from parallel imports.
However, from what has been stated in the previous analysis, it is not expected a
significant impact of the eventual opening of the market of Mauritius to parallel imports
that could justify the abandonment of the market by the companies of each of the sectors
considered.
In fact, even in the pharmaceutical sector (where apparently parallel imports could be
important due to the large difference between domestic and external prices) the impact
would not be so high, given that the prices of products with a patent in force would not
be affected by the parallel effect. Imports, and those that import and distribute these
products with patent in force would have no reason to exit the market.
And in all sectors, unless employers decide not to take management measures
appropriate to the new situation, it seems unlikely that representatives of foreign
trademarks can be drastically affected by parallel imports. As indicated, one possibility
is to take advantage of their position in the market to expand their offer by carrying out
these parallel imports themselves. It is possible that this happens in the automotive
sector, given that:
… in Mauritius at the very least, car dealers manage to thrive by selling a variety of
different cars, ranging from luxury cars to compact cars suited to the streets of Port
Louis. ... For the time being, the industry has been better off with the increased
competition.145
Some vehicle importers have expressed concern about the increased competition that
parallel imports would generate. However, they have already overcome a greater
challenge, the unfair competition of the "Discharge of used cars"; and a fortiori, they will
not succumb to the lesser impact of parallel imports.
The textile sector of Mauritius, which has focused on the export of high-end products,
will not leave the business because of parallel exports, because these will allow it to buy
its inputs at the lowest prices in the world.
In general, it is difficult for companies that participate in the economic dynamics of growth
in Mauritius, to abandon the business perspectives that are open to all sectors at present.
15.1 Objective
The Madrid Protocol is an international treaty, administered by the International Bureau
of the World Intellectual Property Organization (WIPO), that aims to facilitate obtaining
and maintaining trademark registrations.
If any country or group of countries join the Madrid Protocol after protection has been
obtained, then the trademark owner can apply to have its trademark protection extended
to the new contracting party by way of a subsequent designation.
This procedure takes place instead of filing separately in the trademark Offices of the
various Contracting Parties, in different languages and paying fees to each Office, in
different currencies. Different national/regional procedures, involving different languages
and fees payable in different currencies, give rise to translation and exchange-related
expenses.
The companies most affected by the considerable cost involved in registering and
maintaining marks abroad are Small and Medium Enterprises (SMEs). While a large
company may afford to devote considerable funds to protect its marks abroad, an SME
can ill-afford the registration of marks abroad, due to the high procedural costs. The
Madrid system is used by one-third of worldwide applicants seeking protection of their
marks through the Madrid system. Of these, about 80 per cent may be categorized as
an SME, having a small portfolio of one or two marks.
In the current economic context, the possibility of providing easy, low-cost protection for
marks provides a welcome advantage for companies and individuals as a factor that will
favour exports.
Moreover, the holder does not have to wait for the Office of each Contracting Party in
which protection is sought to take a positive decision to protect the mark. If no refusal is
notified by an Office within the applicable time limit, the mark is automatically protected
in the Contracting Party concerned. In some cases, the holder does not even have to
wait until the expiry of this time limit in order to know that the mark is protected in a
Contracting Party, since he may, before the expiry of the time limit, receive a statement
of grant of protection from the Office of that Contracting Party.
A further important advantage is that amendments subsequent to registration, such as a
change in the name or address of the holder, or a modification (total or partial) in
ownership or a limitation of the list of goods and services may be recorded with effect for
several designated Contracting Parties through a single, simple and centralized
procedure before the International Bureau of the World Intellectual Property Organization
(WIPO) (the International Bureau) and with the payment of a single fee. Moreover, there
is only one expiry date and only one registration to renew, which makes for easy portfolio
management.
International registration can also be to the advantage of trademark Offices. The Offices
do not need to examine for compliance with formal requirements, or to classify the goods
or services, or publish the marks, as such formalities will have already been undertaken
by the International Bureau, and they can focus on their substantive examination. Here
it must be differentiated between those Offices that only do a formal examination of the
application and those ones that do a formal and a substantive examination.
Moreover, they are compensated for the work that they perform; the individual fees
collected by the International Bureau are transferred to the Contracting Parties in respect
of which they have been paid, while the complementary and supplementary fees are
distributed annually among the Contracting Parties not receiving individual fees, in
proportion to the number of designations made of each of them.
15.4 Disadvantages
One of the challenging characteristics of the Madrid Protocol is the dependency of the
international registration on the home application or registration. This can lead to a
problem dubbed as a "central attack." That is, if the basic application or registration is
amended, denied, withdrawn, or cancelled during the five years after the International
Registration (IR) is issued, the associated international registration is treated likewise,
and rights in the designated contracting parties are similarly affected. That means that
all foreign applications and registrations that are based on the IR will be automatically be
cancelled as well. The cancelled local trademarks can be converted to standard national
marks, but at significant expense and effort.148 This “dependency” lasts for the first five
years after an international registration issue.
Once the international registration has been in effect for five years, it becomes
independent from the basic registration. At that point, the possible limitation,
abandonment or cancellation of the basic application or registration no longer has any
effect on the international registration.
Another limitatation of the Madrid Protocol is that the owner of the International
Registration cannot transfer ownership of any dependent trademarks to an owner that is
not resident in a Member country. This means, for example, that trademarks obtained
under the Madrid Protocol cannot be transferred to a South African owner without first
withdrawing the marks from the Madrid System at great expense.149
The treaty will enter into force three months after the date of deposit of the instrument of
accession.
The instrument of accession may contain certain declarations. Some declarations can
be made only at the time of accession while others may be submitted after the accession.
The main substantive obligation deriving from accession to the Madrid system will be to
give effect to Article 4(1) of the Agreement and the Protocol. Under this provision, a mark
registered in the International Register, in which the Contracting Party has been
designated, must be protected from the date of international registration (or, in the case
of a Contracting Party designated subsequently, from the date of that subsequent
designation), in the same way as if that mark had been applied for directly with the
national or regional trademark Office. That Office is, however, fully entitled to carry out
a substantive examination of the mark and may, within the period stipulated, refuse to
grant protection to the mark (either totally or partially). If the Office does not issue a
provisional refusal within the applicable period, the mark is deemed to be protected in
the same way as if it had been registered directly with that Office.
Then acceding to the Madrid system, the country must also be in a position to give full
effect to the provisions of the relevant treaty. The International Bureau will provide any
necessary advice and technical assistance required for that purpose. One service that is
offered to potential members of the Madrid system is to analyse the domestic legislation
and provide comments on its compatibility with the Madrid system. Model Provisions
have been established to provide information and assistance to these potential
members. See Annex VI for such Model Provisions.
151 For a complete list of possible declarations a Contracting Party may make in connection with accession, please
see: http://www.wipo.int/madrid/en/madridgazette/remarks/declarations.html.
As regards the workload of the national trademark Office, accession to the Madrid
system has been seen not to bring an overwhelming number of new applications, but
rather a gradual increase in registration activity. Moreover, although the Office should
carry out, in respect of the marks filed through the Madrid system, the usual substantive
examination, it will not need to carry out the formalities examination, or to publish the
mark, since those procedures will already have been conducted by the International
Bureau.
16. Conclusions
1. The national exhaustion regime of trademark law imposes a restriction on
international trade.
3. With a mathematical model and empirical evidence it is shown that large countries
are in advantage to achieve economic prosperity and the cost of being a small country
can be avoided with openness.154
4. The Government of Mauritius has embraced radical changes in its economic policy
through structural reforms with greater emphasis on open and competitive sectors
that are fully integrated into the global economy.
152 See, for example, the experience of Japan. Madrid Experience Sharing Report.
Japan’s Experience in Joining and Using the Madrid System, available at:
http://www.ipo.gov.tt/downloads/Madrid_Protocol/wipo_pub_2014_madrid_japan.pdf.
153 Krugman, Paul R. And Maurice Obstfelt. 1995. Economía Internacionel. Teoría y Política. McGrow-
Hill/Interamericana de España, S. A. Madrid
154 Alesina, Alberto, and Enrico Spolaore and Romain Wacziarg. 2005. Trade, Growth and the Size of Countries, in
Aghion, Philippe and Steven N. Durlauf (Ed) Handbook of Economic Growth, Volume 1B. Ch. 23. Available at:
https://www.anderson.ucla.edu/faculty_pages/romain.wacziarg/downloads/2005_handbook.pdf
8. The core function of trademarks is to serve as indicators of the commercial origin and
quality of the products and/or services it is used for, not to lead its holder to generate
market division by controlling the distribution of its offer.
9. Some countries follow the principle of national exhaustion (like Mauritius, Cambodia,
Laos), while others follow international exhaustion (Singapore, United States,
Canada, Mexico, Australia, New Zealand, Andean Countries).
11. The previous international experience and the information obtained in Mauritius led
to the conclusion that the industrial sectors that would be most affected by the
implementation of an international regime of parallel imports would be: automobiles
and their spare parts, pharmaceuticals, textiles, food and beverages, and cosmetics.
12. In all five sectors, quantitative estimates of the impact on foreign trademark dealers
are an approximation.
13. The impact on domestic producers is also an approximation, the accuracy of which
depends on the extent to which the statistical data correspond to the production of
substitutes for products imported with foreign trademarks.
15. A reduction in the price of vehicles in Mauritius, caused by parallel imports, may
affect the prices of complementary goods and services.
16. The automotive sector has proven to know how to respond to adverse situations
(“Dumping of used cars”). In the case of parallel imports, different scenarios can be
drawn. One possible way of reacting is to diversify its offer by including lower-priced
vehicles (even lower-quality ones) to better take advantage of the different income
levels of the population.
17. The difference between the current prices of pharmaceutical products in Mauritius
and the prices at which they could be imported in parallel vary greatly between
medicines.
18. The textile sector is much more exporter than importer: The total value of exports
and re-exports is five times greater than imports. The market is the world, not the
19. Employment in the industrial group wearing apparel is more than six times that of
the textile group, the compensation to employees is 4.27 times higher in the wearing
apparel than in the textile group, and the values of production indicators (gross output,
Intermediate and value added) more than tripled those of the textile group.
20. A characteristic of the textile sector, and in particular of the industrial group wearing
apparel in which the production of Mauritius concentrates, is the heterogeneity of its
products.
21. In the food and beverage sector, a part of the stakeholders is of the opinion that
there are no large price differences between international prices and prices in
Mauritius. If this is the case, parallel imports are not likely to occur. But if they occur,
foreign trademark distributors can expand the range of products they offer and attract
new consumers at a reduced price.
23. For consumers, the total estimated annual benefit of adopting the international
exhaution regime is close to Rs 4,250 million. The net benefit to society would be
about Rs 100 million per year (Table 26).
25. However, if the authority perceives great fear among those affected, the measure
can be applied gradually, starting in only one sector of the production, as a pilot
project, or grant transition deadlines for stakeholders to design their strategies.
26. Most of the arguments gathered in Mauritius against the regime of international
exhaustion of trademark law refer to patent law and its possible negative impact on
the economy of developed countries, not to trademark law in the economy of
Mauritius.
28. The net benefit for the society of Mauritius is positive, the majority of the inhabitants
will benefit, but the government will have to assume costs to overcome some
inconveniences, such as:
▪ The owner may oppose the marketing of the imported product when there is a risk of
creating confusion in the public about the essential characteristics of the product or
its commercial origin.
▪ The authority will not allow a trademarked product to be presented with substantial
modifications that could damage the reputation of the trademark.
▪ Neither is advertising permitted that could mislead the consumer about the
commercial origin of the product.
▪
Recommendation 5: Train public officials in sensitive sectors that may be affected, such
as food and health sectors, so that measures to ensure guarantees for food safety and
public health are reinforced.
17.3 Enforcement
Recommendation 6: Train staff to meet the needs of the titleholders, whose intellectual
property rights are infringed.
Are wholesale prices for your products higher than comparable foreign wholesale prices:
Yes No Difference (%+ or %-)
How many times have your company initiate a complaint against a parallel importer?
The Government of [name of State] hereby declares that [name of State] accedes
to the Protocol Relating to the Madrid Agreement Concerning the International
Registration of Marks, adopted at Madrid on June 27, 1989.
(Signature)*
(Capacity)
* This instrument must bear the signature of the Head of State, Head of Government or Minister of Foreign Affairs.
NOVEMBER 2017
Table of Contents
INTRODUCTION
[Name of the country or intergovernmental organization] is not yet party to the Madrid
System for the International Registration of Marks (“the Madrid System”). If and when
[name of the country or intergovernmental organization] becomes party to the Madrid
System, it will accede to the Protocol Relating to the Madrid Agreement Concerning the
International Registration of Marks (“the Madrid Protocol”) only.
This document provides information on the Model Provisions. The Model Provisions are
the minimum requirements that should be included in the legislation of a member of the
Madrid System. It is very important that [a country] [an intergovernmental organization],
at the time of accession to the Madrid Protocol, has legislation that is fully compatible
with the Madrid Protocol. Each member will need to decide how this may be done.
One possibility is to have a bill of accession acknowledging the Madrid Protocol, placing
all relevant provisions of the Madrid Protocol in a Chapter to the Regulations. This
chapter could be entitled, for example, “International Registration of Marks under the
Protocol Relating to the Madrid Agreement Concerning the International Registration of
Marks”.
Another option may be to have all relevant provisions of the Madrid Protocol in the
Trademarks [Law] itself. The more detailed provisions of the Madrid System may be
1. DEFINITIONS
2. LANGUAGE
(1) Any international application for transmittal to the International Bureau through
the intermediary of the [Registrar] shall be in [English] [French] [Spanish].
(2) Any communication concerning an international application or an international
registration addressed to the International Bureau by the [Registrar] shall [, subject to
Rule 17(2)(v) and (3), and Rule 6(2)(ii) of the Common Regulations,] be in [English]
[French] [Spanish].
6. HANDLING FEE
[The prescribed fee shall be due and payable to the [Registrar] in connection with the
filing of an international application originating in [name of the country or
intergovernmental organization].]
16. APPEALS
[Any person aggrieved with any decision made by the [Registrar] concerning
international registrations designating [name of the country or intergovernmental
organization] may appeal therefrom to the [Court]. Appeals against those decisions shall
be governed by the provisions of the [Law] regarding appeals, mutatis mutandis.]
18. INVALIDATION
Where the effects of an international registration are invalidated in [name of the country
or intergovernmental organization] and the invalidation is no longer subject to appeal,
the [Registrar] shall, provided that the [Registrar] is made aware of that decision, notify
the International Bureau in accordance with Rule 19 of the Common Regulations.
21. REPLACEMENT
(1) (a) Where:
i) a mark registered in [name of the country or intergovernmental organization]
is also the subject of an international registration, and the protection resulting
therefrom extends to [name of the country or intergovernmental
organization], and
(ii) the same person is recorded as holder of the registration in [name of the
country or intergovernmental organization] and of the international
registration, and
(iii) all the goods and services listed in the registration in [name of the country or
intergovernmental organization] are also listed in the international
registration in respect of [name of the country or intergovernmental
organization], and
(iv) the extension of that international registration to [name of the country or
intergovernmental organization] took effect after the date of registration of
the mark in [name of the country or intergovernmental organization],
22. TRANSFORMATION
(1) (a) Where an international registration designating [name of the country or
intergovernmental organization] is cancelled at the request of the Office of origin, in
accordance with Article 6(4) of the Madrid Protocol, for all or some of the goods and
services listed in the international registration, an application may be made to the
[Registrar], within three months from the date on which the international registration was
cancelled, by the person who was the holder of the international registration at the date
of its cancellation, for registration of the same trademark (“an application resulting from
transformation”), for goods and services covered by the list of goods and services
contained in the international registration.
(b) Subject to paragraphs (2) and (3), the provisions applicable to a
trademark application filed directly with the [Registrar] shall apply mutatis mutandis to an
application resulting from transformation.
(2) (a) An application resulting from transformation shall be made on Form […] and
shall, in addition, include the following:
(i) a statement that the application is made by way of transformation,
(ii) the international registration number of the international registration which
has been cancelled,
(iii) the date of the said international registration or the date of the subsequent
designation, as appropriate,
(iv) the date on which the cancellation of the international registration was
recorded,
(v) where applicable, the date of any priority claimed in the international
application and recorded in the International Register.
For further information, reference is made to Rule 6 of the Common Regulations and to
the Guide to the International Registration of Marks under the Madrid Agreement and the
Madrid Protocol (“the Guide”).
INTRODUCTION
International registrations designating [name of the country or intergovernmental
organization] should be subject to examination as to substantive grounds for refusal in
Accordingly, once the international registration has passed the ex officio examination
and there are no grounds for refusal, the [Registrar] shall publish the international
registration for opposition.
Opposition procedures shall be governed by the provisions of the [Law], mutatis
mutandis.
Model Provision 15(1)(i): Protection Granted to All of the Goods and Services
Following the notification of a provisional refusal, all the procedures before the [Registrar]
have been completed and the mark is finally protected in [name of the country or
intergovernmental organization] for all the goods and services for which protection has
been requested, then the [Registrar] is required to send a statement of grant of protection
to that effect to the International Bureau. This is in accordance with Rule 18ter(2)(i) of
the Common Regulations.
Please note that this statement provided for by Model Provision 15(1)(i) follows the
earlier notification of a provisional refusal, so it is not the same statement as provided for
in Model Provision 14 above.
Model Provision 15(1)(ii): Protection Granted to Some of the Goods and Services
Following the notification of a provisional refusal, all the procedures before the [Registrar]
have been completed and the mark is protected for some of the goods and services in
[name of the country or intergovernmental organization], then the [Registrar] is required
to send a statement of grant of protection to that effect to the International Bureau. This
is in accordance with Rule 18ter(2)(ii) of the Common Regulations.
The Office may use Model Form 5 to send a statement of total or partial grant of
protection following a provisional refusal (see Part VI).
MODEL PROVISION 24: CONFLICT BETWEEN THE [LAW] AND THE MADRID
PROTOCOL
It is useful to have a provision along the lines of that proposed in Model Provision 24 to
address situations of conflict between the [Law] and the Madrid Protocol.
CLASSIFICATION
The classification of goods and services will be controlled for international applications
by the International Bureau in association with the Office of origin in accordance with
Article 3(2) of the Madrid Protocol. In the event of disagreement with the [Registrar], the
opinion of the International Bureau will prevail.
However, where [name of the country or intergovernmental organization] is designated
in an international registration, the [Registrar] would not be bound by the indication of
classes of goods and services with regard to the determination of the scope of protection
of the mark (Article 4(2) of the Madrid Protocol).
CERTIFICATE
Under the Madrid System, the [Registrar] is required to issue, as the case may be, either
notifications of provisional refusal (Article 5 of the Madrid Protocol, Rules 16 and 17 of
the Common Regulations) or statements of grant of protection (Rule 18ter of the
Common Regulations), which will provide precise information about the scope of
protection of the mark in [name of the country or intergovernmental organization]. The
statement of grant of protection would be equivalent to the [national] [regional] certificate
that the [Registrar] will issue for [national] [regional] registrations.
There are possibly [five] declarations that may be of interest for [name of the country or
intergovernmental organization].
The declarations mentioned below that are set out in the Articles in the Protocol must be
signed by the same authority which may sign the instrument of accession, namely the
Head of State, Head of Government or the Minister of Foreign Affairs. For other
declarations, for example, under Rule 20bis(6) of the Common Regulations, it will be up
to the Contracting Party to decide who should sign, the entities mentioned above or the
IP Office.
Model Form 2: Dates on which Opposition Period Begins and Ends (Rule 16(1)(b) of
the Common Regulations)
Model Form 3A: Total Provisional Refusal of Protection (Rule 17(1) of the Common
Regulations)
Model Form 3B: Partial Provisional Refusal of Protection (Rule 17(1) of the Common
Regulations)
Model Form 7: Further Decision Affecting the Protection of a Mark (Rule 18ter(4) of
the Common Regulations)
Model Form 11: Declaration That a Change in Ownership Has No Effect (Rule 27(4) of
the Common Regulations)
Model Form 12: Final Decision That a Change in Ownership Has No Effect
(Rule 27(4)(e) of the Common Regulations)
Model Form 13: Declaration That a Limitation Has No Effect (Rule 27(5) of the Common
Regulations)
Model Form 14: Final Decision Stating That a Limitation Has No Effect (Rule 27(5)(e)
of the Common Regulations)
Model Form 2: Dates on Which Opposition Period Begins and Ends (Rule 16(1)(b)
of the Common Regulations) [Note for filing]
This form may only be used where an Office has previously notified the International
Bureau of possible oppositions using Model Form 1, but the dates of the opposition
period were not known at that time. This form may be used by the Office to communicate
those dates to the International Bureau.
Model Form 2: Dates on Which Opposition Period Begins and Ends (Rule 16(1)(b)
of the Common Regulations)
Model Forms 3A and 3B: Total or Partial Provisional Refusal of Protection (Rule
17(1) of the Common Regulations) [Note for filing]
An Office can use this form to communicate to the International Bureau a decision to
refuse protection of the international registration in the Contracting Party, following ex
officio examination (ex officio provisional refusal), opposition (provisional refusal based
on opposition), or both.
The Office would need to specify to the International Bureau whether the provisional
refusal is total, meaning for all the concerned goods and services, or only partial, for
specific goods and services. To do this, the Office can choose between using Model
Form 3A or 3B:
– Model Form 3A should be used where the Office is refusing protection for all the
concerned goods and services (total refusal).
– Model Form 3B should be used where the Office is refusing protection for only
a part of the goods and services (partial refusal).
Once all procedures before the Office have been completed, the Office shall
communicate to the International Bureau a statement regarding the final decision on the
status of protection of the mark. At that time, the Office should use Model Form 5
(Statement of grant of protection following a refusal) or Model Form 6 (Confirmation of
total provisional refusal).
Where the provisional refusal is based on an opposition, alone or together with an ex
officio refusal, the name and address of the opponent should also be provided.
Where a total refusal affecting all the goods or services is being notified, the indication
under item V should read “all goods (or all services) in class X”.
In cases of partial refusal, a clear indication of those goods and/or services that are
affected or those that are NOT affected should be provided.
Where the provisional refusal is based on an earlier mark, the indication required under
item VII may be given by annexing a printout from the register or database.
If the Office requires that the holder accept a specific disclaimer to overcome the
provisional refusal, the Office should indicate the disclaimer under item IX (iv) “Other
requirements, if any”.
Model Form 3A: Total Provisional Refusal of Protection (Rule 17(1) of the
Common Regulations)
I. Office making the notification:
Model Form 3B: Partial Provisional Refusal of Protection (Rule 17(1) of the
Common Regulations)
IV. Protection is granted to the mark that is the subject of this international registration for
all the goods and/or all the services for which protection has been requested.
IV. The Office has completed all its procedures and this is the decision by the Office:
Total protection is granted for all the goods and/or services (Rule 18ter(2)(i))
Partial protection is granted to the following goods and/or services
(Rule 18ter(2)(ii)):
V. Disclaimer or Reservation:
Please specify the element(s) of the mark for which protection cannot be granted:
Please also specify, by checking only one of the options below, whether the disclaimer
or reservation applies to:
All of the goods and/or services
Only the following goods and/or services:
IV. The Office has completed all its procedures and this is the decision by the Office:
Protection of the mark is refused for all the goods and/or services.
V. Where a further review or appeal against this decision before an authority outside the
Office is still possible, the Office should provide the following information, where
available:
(i) Time limit for requesting review or appeal:
(i) Authority to which such request for review or appeal should be made:
IV. Facts and decisions affecting the basic application, the registration resulting therefrom,
or the basic registration and their effective date:
Please briefly state these facts and decisions:
Voluntary information:
Not resulting from an action brought by a third party
Resulting from an action brought by a third party, for example, an opposition or a
request for cancellation (“central attack”).
Model Form 10: Invalidation (Rule 19 of the Common Regulations) [Note for filing]
This form may only be used where the competent authorities of a designated Contracting
Party have invalidated (including, for example, revoked, annulled or canceled) the effects
of an international registration in its territory in accordance with Article 5(6) of the Madrid
Protocol and Rule 19 of the Common Regulations, and the invalidation is no longer
subject to appeal.
Invalidation can be pronounced because the holder has not complied with provisions of
the law of the Contracting Party, for example, concerning the use of the mark, the mark
has become generic or misleading or because it has been established that the mark
should have been refused when the designation was originally examined.
Where all the goods or services included in a given class are affected, the indication
should read “all goods (or all services) in class X”. In all cases, a clear indication of those
goods and/or services that are affected or those that are NOT affected should be
provided.
Model Form 10: Invalidation (Rule 19 of the Common Regulations)
I. Office making the notification:
VI. Date on which the invalidation was pronounced and its effective date:
– Date on which the invalidation was pronounced:
– Effective date of the invalidation (if possible):
Model Form 11: Declaration That a Change in Ownership Has No Effect (Rule 27(4)
of the Common Regulations) [Note for filing]
This form may only be used where the Office of a designated Contracting Party, which
has been notified by the International Bureau of a change in ownership, declares that
this change in ownership has no effect in its territory.
Any such declaration must be sent to the International Bureau before the expiry of
18 months from the date on which the International Bureau sent the notification of the
change in ownership to the Office.
The goods and/or services to be indicated under item VI are those goods and/or services
in the international registration concerned that were the subject of the change in
ownership and that are affected by the declaration. Where all the goods or services
included in a given class are affected, the indication should read “all goods (or all
services) in class X”.
Model Form 11: Declaration That a Change in Ownership Has No Effect (Rule 27(4)
of the Common Regulations)
I. Office making the declaration:
Model Form 12: Final Decision That a Change in Ownership Has No Effect
(Rule 27(4)(e) of the Common Regulations) [Note for filing]
This form may only be used where the Office of a designated Contracting Party, which
has previously made a declaration under Rule 27(4) using Model Form 11, now wishes
to communicate a final decision relating to that declaration.
The goods and/or services to be indicated under item IV are those goods and/or services
in the international registration concerned that were the subject of the change in
ownership and that are still affected by the declaration. Where all the goods or services
included in a given class are affected, the indication should read “all goods (or all
services) in class X”.
Model Form 12: Final Decision That a Change in Ownership Has No Effect
(Rule 27(4)(e) of the Common Regulations)
Model Form 13: Declaration That a Limitation Has No Effect (Rule 27(5) of the
Common Regulations) [Note for filing]
This form may only be used where the Office of a designated Contracting Party, which
has been notified by the International Bureau of a limitation of the list of goods and
services under Rule 25, declares that this limitation has no effect in its territory.
Any such declaration must be sent to the International Bureau before the expiry of
18 months from the date on which the International Bureau sent the notification of the
limitation to the Office.
The goods and/or services to be indicated under item VI are those goods and/or services
for which the international registration concerned continues to have effect in the
Contracting Party. Where the international registration is limited to the goods or services
included in a given class or classes only, the indication should read “limited to class X
only; other classes deleted” or “limited to classes X, Y, Z only; other classes deleted”.
Model Form 13: Declaration That a Limitation Has No Effect (Rule 27(5) of the
Common Regulations)
I. Office making the declaration:
Model Form 14: Final Decision Stating That a Limitation Has No Effect (Rule
27(5)(e) of the Common Regulations) [Note for filing]