At a parallel conference on free zones held during the National Competitiveness Council workshop, the challenges ahead were discussed. Speaking on challenges to the sector from the World Trade Organization, Colombian customs lawyer and former Finance and Commerce Minister, Martin Gustavo Ibarra told the audience that the Dominican Republic has 134 products that can compete in the United States and other markets. Ibarra said that the Dominican Republic has advantages that place it is a favorable position regarding China, Nicaragua, Honduras and Bolivia.
Ibarra said that a study to identify 50 products that could compete in the US market uncovered 134 such products. The results of the study were turned over to the Mejia administration, and described how the country could reduce tariffs and taxes and modernize the customs systems.
The latter is very necessary since the Dominican Republic is far behind the Central American countries in this respect.
Currently, the WTO is demanding that the DR eliminate some of the incentives that are given to the free zone companies and a modification of the tax system that is applied to the free zones. The result will be the convergence of the tax systems of the free zones and the rest of the national tax system.
Just how to do this and maintain competitiveness is the key point in the current discussions. Although at present clothing exports account for 46% of the total exports and 100% of these go to the United States market, the customs expert pointed out that items that remain attractive for export include surgical instruments, measuring instruments, machinery and electronic materials and jewelry. In fact, the expert said that the DR has 170 products that it can export to great advantage.
Three key points worth special mention by the expert are the fact that the Dominican Republic is just three hours by air from the United States and at an average freight cost of just 59? a pound. Excepting Mexico and Canada, the Dominican Republic is the closest country to the largest market in the world. And lastly, the Dominican Republic has 60 free zones that offer excellent tax benefits and that have preferential access to US markets because of the Caribbean Basin Initiative and the soon to be in place DR-CAFTA agreements.