The United States continues to be the Dominican Republic’s largest trading partner and with the potential of a free trade agreement with Canada and negotiation talks with Mexico in the works the DR is looking to strengthen its presence in the North American markets. In 2007 highly touted DR-CAFTA came into effect and though it is still too early to tell the agreement has begun to pay dividends for the Dominican economy. According to published reports by the Central Bank, foreign direct investment (FDI) to the DR increased significantly in 2007. The period in question represents the date after DR-CAFTA came into effect and according to the report, FDI reached US$1.7 billion in 2007. This figure represents a 16.3% increase from 2006 and an absolute value increase of US$238.7 million in comparison to 2006 when FDI was US$1.5 billion. FDI was directed specifically into the real estate sector (US$723.3 million) for a relative growth of 120% and absolute growth of US$394.8 million. Tourism experienced a growth of US$163.5 million, or 58.1% for a total FDI of US$445 million. Telecommunications also experienced an FDI boost of 22.2% or 75.8 million. Total FDI in telecommunications equaled US$417 million. Eddy Martinez, director of the DR Center for Exports and Investment (CEI-RD) says that this record level of FDI is due to the country's entrance of DR-CAFTA. Martinez says that this figure is expected to increase in 2008 due to the DR's new agreement with the European Union. He added that this places the DR in a unique position, as the country now has access to both the US and European markets. Speaking on the needs of the system, Martinez said that all the country needs now is the application of active policies aimed at attracting investment. This is the new challenge the country faces. According to Martinez, the strength of the euro and US dollar compared to the peso is attractive to investors. He added that these investments would help maintain the DR's economic stability.

The signing of the DR-CAFTA has come at a time when capital inflows for investments are helping to maintain the appreciation of the Dominican peso in regards to the US dollar. As a consequence, imports from the US are up to all time highs. The trend for increased imports is expected to escalate as US stores such as Walmart and Pier 1 are expected to open in the country.

Trade with Canada is also expected to increase with the signing of a FTA a priority for Dominican government trade negotiators.

Furthermore, Mexico has become a major investor in the DR, with large investments such as Codetel Claro telecom company and Cemex, plus several tourism ventures paving the way for more Mexican businessmen to focus on the DR

Updated 26 March 2008