S. Rosunee, Department of Textile Technology, Faculty of Engineering, University of Mauritius Abstract The Maurtian economy grew rapidly during the early 1990's as the country embraced trade liberalisation and became increasingly integrated in the world economy. For most of the 1990's, annual growth was of the order of 5% to 6% , mainly due to the strong export performance of the textile and clothing industry aided by preferential access to the European Union. Despite this remarkable achievement, Mauritius now faces an economic slowdown due to a number of factors, both internal and external.

In early 2000, the country was poised to take advantage of the Africa Growth and Opportunity Act (AGOA) but up to now Mauritian manufacturers have been unable to make a significant impact in the huge American market. The textile and apparel quota system will be eliminated on January 1, 2005 as agreed by the 'Uruguay Round' of trade talks. Currently, Mauritian manufacturers are witnessing the adverse effects of competition from low cost producers on the domestic industry with quotas; what will be the outcome without quotas? This paper also outlines the strategies being implemented to sustain the industry's competitiveness.

1.0 Introduction Over the past three decades, the textile and clothing industry has been an engine of economic growth, generated thousands of new jobs and propelled this island-nation towards prosperity. The industry accounts for 12% of gross domestic product (GDP), employs nearly 77,000 people out of a workforce of 550,000 and generates about 65% of export earnings (USD 1.1 billion). Employment in this sector increased by about 13% from 1995 to 1999 but it has now stabilised mainly through gains in productivity [1].

With trade liberalisation, the Mauritian textile and clothing industry is now faced with a number of short and medium-term challenges, on both the internal and external fronts.

These relate mainly to elimination of trade preferences, exchange rate fluctuations, relatively slow pace of restructuration and diversification, increased competition from low-cost manufacturers, rising costs of air and sea freight, and low penetration of new markets.

Faced with growing unemployment (about 10%, March 2004), accelerated economic growth to create jobs and improve standard of living is on top of government's agenda [2]. Textiles and apparel will remain one of Mauritius's key manufacturing sectors but a new mindset is critical for the renewed health of the industry. The sector has no option but to invest in product and design innovation through research, new technology, highly skilled workers and successful marketing. How we innovate, how we use materials and machines in new ways and anticipate consumer demands will dictate the future of the Mauritian textile and clothing industry. Table 1 illustrates the importance of textiles and clothing manufacture in a number of developing economies.