The Dominican Association of Exporters (Adoexpo) issues a statement today whereby it comments that the DR-CAFTA free trade agreement signed with the United States can be an important instrument for economic and social development of the DR. It has the potential to foster an increase in trade, exports and influx of investments from abroad and locally, and to generate increased jobs and wealth contributing to improve the quality of living of Dominicans.
Nevertheless, Adoexpo points out that while the free trade agreement has this potential, experience has shown differently. The organization points to the recent experience with the trial run with the free trade agreement with Central America, which has resulted in a growing trade deficit, despite the DR being an equal in size and development with Central American countries.
Adoexpo explains that the main reason is the enormous inequality between the tax structure in the DR and that in Central America, where Dominican companies are at a disadvantage. Adoexpo warns that the consequences of the implementation of the DR-CAFTA with the US will be considerably worse for the DR. Its recommendations so that the positive expectations of the DR-CAFTA can become reality are the following:
Total revoking of the 13% exchange surcharge on raw materials, machinery and others.
Zero tariffs on capital goods and machinery.
Compensation mechanism or exemption of ITBIS on all inputs used for export products.
Exemption on the payment of the selective luxury tax (IVSS) to property that will be used to produce.
Income tax (ISR) exemption to export sales so as to equal DR legislation with its competitor nations in Central American and promotion of a rapid convergence of national producers to the regime of free zones.
Soft loans for export production, restoring the role of Definpro.
Authorize 5% of capitalization expenditures for improvements and restoration of production systems.
Fulfillment of Electricity Law regarding the approval of non-regulated users in order that industries may have access to competitively priced power.
Adoexpo says that if the country does not rise to the challenges and become an efficient exporter, it will become more dependent on foreign aid and the population will become poorer.