Articles on Trade with the US and the DR-CAFTA

18 May 2008 - Doreen Hemlock

SANTO DOMINGO, Dominican Republic - One year into a free trade accord with the United States, commerce, investment and business confidence are up in this Caribbean nation.

The Dominican economy is humming, growing 10 percent last year and likely 5 percent this year, among the highest rates in Latin America.

Problem is, analysts say, free trade can't take all the credit — nor all the blame for Dominican shortcomings. Many factors influence business, and one year is too short to measure the full effect of a pact that phases in over 20 years.

Early signs indicate that hopes of U.S. and Dominican officials are panning out: U.S. sales to the tropical nation are rising as tariffs fall on such items as automobile parts. Dominicans are seeing U.S. investment rise in hotels, real estate and more. And business confidence is stronger now that Dominican goods get U.S. duty-free access permanently and U.S. firms can rely on a special panel to resolve disputes.

31 August 2007 - www.usda.gov
 
Agriculture Secretary Mike Johanns today announced that he will travel to El Salvador, Guatemala and Honduras Sept. 4-7, 2007, to highlight early successes of the Dominican Republic-Central America-United States Free Trade Agreement (CAFTA-DR).

The Central America-Dominican Republic-United States Free Trade Agreement, which was signed on August 5, 2004, is designed to eliminate tariffs and trade barriers and expand regional opportunities for the workers, manufacturers, consumers, farmers, ranchers and service providers of all the countries. CAFTA-DR will immediately eliminate tariffs on more than 80 percent of U.S. exports of consumer and industrial products, phasing out the rest over 10 years. Eighty percent of CAFTA-DR imports already enter the United States duty free under the Caribbean Basin Initiative, Generalized System of Preferences and Most Favored Nation programs; the CAFTA-DR will provide reciprocal access for U.S. products and services.

Click on the following link to read the final version of the DR-CAFTA agreement: http://www.ustr.gov/

The United States concluded free trade agreement negotiations with El Salvador, Guatemala, Honduras and Nicaragua in December 2003 and with Costa Rica in January 2004. In May 2004, the six countries signed the United States-Central America Free Trade Agreement. During 2004, the United States and the Central American countries integrated the Dominican Republic into the free trade agreement. On 5 August 2004, the seven countries signed the Dominican Republic-Central America-United States Free Trade Agreement (DR-CAFTA). The U.S. Congress approved the DR-CAFTA in July 2005, and the President of the U.S. signed it into law on 2 August 2005. All of the signatory countries have ratified the agreement, with the exception of Costa Rica.

Updated - 10 June 2007

The Dominican Republic's main advantage in the context of the DR-
CAFTA treaty is generally agreed to be its strategic geographical
position.

The country is at a central point between the US and the Central
American continent, with rapid maritime links to both US ports
(including Puerto Rico) and most of the Central American member
states. This makes possible prompt delivery of goods in all directions.
The main ports in the DR are Punta Caucedo on the south coast, to the
east of the capital Santo Domingo, Haina, to the west of the capital,
and Manzanillo, in the far north west of the country. Puerto
Multimodal Caucedo, on the southeast coast, is a hi-tech, newly
constructed mega-port designed for the 21st century, owned and
operated by DP World, one of the three largest port companies in the
world. Other ports are Puerto Plata in the north, Sanchez in the
northeast, San Pedro de Macoris in the south east and Barahona in the
south west.

Reviewed - 12 June 2007

What can the Dominican export sector and overseas investors in the DR look forward to with the implementation of DR-CAFTA?

According to the US Congressional Research Service, the Dominican Republic is the 26th largest US export market (fifth in the Western Hemisphere) and ranks as the 38th largest import country (seventh in the Western Hemisphere). More so than any of the Central American countries, Dominican trade is dominated by the United States. The United States absorbs 85% of the DR’s exports, with 10% going to other developed countries and only 5% entering developing countries. The Dominican Republic imports 49% of its merchandise goods from the United States, 17% from other developed economies, and 34% from various developing countries. Although the largest of the DR-CAFTA trading partners, US exports actually declined by nearly 1% in 2003 because of a severe recession in the Dominican Republic. The joint-production arrangements of U.S.-Dominican trade are evident in apparel and jewelry-making industries. Apparel and textiles constitute 20% of U.S. exports and 50% of U.S. imports. Other significant US exports include various types of machinery, refined oil products, and plastic. Other important US imports include medical instruments, electrical machinery, tobacco, and plastic. In many ways, the structure of the U.S.-Dominican trade is similar to that of US-CAFTA trade, and hence the economic logic of “docking” it to the Central American agreement.

Reviewed - 12 June 2007

The DR-CAFTA agreement required important reforms of the domestic legal and business environment that could encourage a more competitive business development and spur investment, protect intellectual property rights, and promote transparency and rule-of-law. Indeed, the strengthening of Dominican institutions is regarded as the strongest point of the FTA for the Dominican Republic.

Reviewed - 12 June 2007

Florida already has extensive commercial, transportation, cultural and linguistic as well as family, and other ties with the DR-CAFTA countries. Florida's airports offer more direct flights to Dominican Republic and Central American destinations than all other airports in the United States combined. Florida accounts for about a third of the DR-CAFTA countries’ total merchandise trade with the rest of the world, and half of their trade with the United States – more than $16 billion a year – Florida’s role as the commercial gateway of the Americas is becoming even more prominent.

With the implementation of DR-CAFTA, Florida is likely to become a focal point for trade communications with the DR-CAFTA countries. According to the Florida-based CAFTA Intelligence Center, companies from all over the world are choosing to establish operations in Florida in order to access these rapidly-growing markets.

Puerto Rico is the Dominican Republic’s second largest trading partner, after the United States.

In 2005 Puerto Rico exported US$845,215 and imported US$643,923 worth of goods from the DR. The main exports to Puerto Rico are electrical components, clothing and engine parts. Imports from PR are electrical components, medical equipment, telecommunications equipment, clothing and footwear. Exports from the DR peaked in the mid/late 1990s and are experiencing a steady decline, while imports from PR are on the increase, after a brief lull in the last few years.

Reviewed - 12 June 2007

The local coordinator for the Office for Trade Agreements, Julio Ortega Tous of the Ministry of Foreign Relations says that the country has resumed consultations for the signing of a free trade agreement with Canada and has plans to start conversations for another one with Mexico, as both would complement the DR-CAFTA agreement with the US and the Central American nations. DR-CAFTA has already been passed but the government has postponed its implementation for the second half of 2006. Ortega Tous explains that this then would make for a complete Central America-US-Mexico-Canada trading block. He highlights the fact that DR-CAFTA stipulates that Central America and the DR will have a three-year period, which began on 1 January 2004, for the parties to reach an agreement with Canada and Mexico. Ortega pointed out that the DR is behind in these negotiations, compared to Central American countries. He explained that reaching these treaties is important because of the rules of origin. That is raw materials, goods and services produced by those countries can be accepted as inputs in production for export to the US market.

16 January 2006 - DR1 Daily News