The World Trade Organization has ruled that the exchange surcharge imposed in the Dominican Republic on imports is a discriminatory tax against freedom of trade, Juan Guiliani Cury, deputy minister of Foreign Relations for economic affairs told El Caribe newspaper.
The surcharge was disputed by Honduras in the specific case that the tax affects imports of cigarettes from Honduras. On 9 December 2003 Honduras took the DR to the WTO court on grounds of applying discriminatory procedures to calculate the value of imported cigarettes, including the selective tax on consumption, and for requiring a discriminatory stamp to be placed on imported cigarettes, as well as requiring that a bond be deposited by the importers to be able to sell in the Dominican market, as well as the 10% exchange surcharge and the 2% temporary surcharge on imports. The Honduras position is in support of the British American Tobacco multinational, the leading vendor of cigarettes in Central America, which seeks to increase its market share in the DR and complains about discriminatory trade barriers. BAT seeks to compete with the strong local business group, E Leon Jimenes that manufactures Marlboro cigarettes. In 2003, some 173.5 million boxes of cigarettes were manufactured in the DR.
The WTO determined that the 2% temporary surcharge is inconsistent with trade rules, but because it expires in December, will not press this issue.
Guiliani said that if the DR and Honduras do not reach a friendly agreement before the 20 October deadline, the trade body will issue a resolution addressing the matter.
El Caribe points out that a definite WTO ruling could mark the end of the Dominican government being able to secure significant revenues through the exchange surcharge. El Caribe newspaper estimates that it has represented RD$9.24 billion for the government from January to July 2004.