The American Chamber of Commerce luncheon held yesterday had the President of the Senate, Andres Bautista, and the President of the Chamber of Deputies, Alfredo Pacheco, as guest speakers. Bautista spoke about the implementation of DR-CAFTA and productive re-conversion, indicating that the benefits of the treaty for the DR will depend on the country’s capacity to design and execute adequate policies and procedures directed at solving structural restrictions the limit competitiveness. He mentioned the commercial relations existing between the DR and the US and referred to the Caribbean Basin Initiative (CBI) of the 1980s. Compared to the CBI, which was a unilateral and temporary preference system established by the US, DR-CAFTA is a multilateral treaty with permanent characteristics that will guarantee the stability of thousands of jobs generated in the industrial free zone system. Bautista indicated that healthy and sustainable development can only be attained with an increase in competitiveness and productivity and that DR-CAFTA means that the DR must adapt to changes that have taken place in the world economy. Bautista later outlined legislative action accomplished and pending in Congress. He said that it was essential to provide productive sectors with infrastructure and the adequate legal and institutional framework to take advantage of the agreement. The Senate has passed initiatives and has approved financing operations to increase competitiveness. It has also been involved in the design and adoption of a national strategy for competitiveness and is working on the legal framework for the National Competitiveness Council, which has been operating for several years and should become the necessary forum for the private and public sectors to adopt a national agenda to this end. Pending is the adaptation of existing legislation, to reduce the costs of business transactions in the country, the creation of an arbitration system, and the availability of a quick and flexible program for the assistance in the preparation of business and investment proposals. The Senate is working on a bill to create adequate conditions for the national productive sector to reconvert itself and adapt to the demands of a more open market. Bautista referred to the importance of agriculture in the DR, indicating that 34% of the population is rural, and agribusiness is the third most important sector conforming the GNP (11.8%) without considering the contributions of the agricultural industry as applied to manufacturing and free zones. He indicated that the rural population lives and works in conditions of inequality, which is evident in basic services such as health, education, electricity, recreation, housing, roads, tap water systems, access to production means-land, financing and technology-and markets. He presented a proposal for production development as an initiative for the rural population and other vulnerable sectors that see DR-CAFTA as a threat rather than an opportunity. His proposal is directed at supporting agricultural producers in the adoption of technological innovation, the diversification of activities and productive transformation required by the opening of the Dominican economy within the DR-CAFTA framework. He specifically mentioned the following: 1) a fund for the promotion of technological innovation; 2) the diversification of production and incentives for productive investment in the rural areas; 3) risk management of agricultural work.
For his part, Alfredo Pacheco spoke about institutional reform, especially those directed towards improving the rule of law and the fight against corruption as crucial for the economic development of the region. Pacheco also mentioned the CBI, launched by President Ronald Reagan in 1984, which was a unilateral guarantee of tax-free imports of many Dominican products into the US. Other preferential access was established with European countries through the Lome Convention. Both systems contributed to the DR’s economic growth during the past decades and thanks to the CBI, the DR transformed from an exporter of primary agricultural goods to an exporter of textile goods and services. However, statistics show that national exports stalled and the change of the export profile did not respond to the business and investment strategies of the local industry, which has remained focused on satisfying the demands of the national market. The positive impact of this transformation was limited to the employment of local labor. Pacheco said that the DR is the country with the greatest economic development in Latin America in the last 40 years with an average rate of 5.4% according to a recent CEPAL report. This contrasts with the decrease in the human development index prepared by the United National Development Program (UNDP) which shows that the higher the nation’s GNP, there is greater deterioration in health, education, employment, life expectancy and other development indicators. Pacheco believes that the adaptation of the free zone law and the promotion of exports law are priorities in order to create a legal framework for the industrial development in the country that would integrate industries within and outside the free zones parks. He also indicated that a World Bank (WB) report on NAFTA’s effects in Mexico ten years after its implementation show that the benefits could have been greater with more aggressive: 1) strengthening of public institutions; 2) training of the workforce; and 3) improvement of infrastructure services. The WB is already warning that in order for the DR to take real advantage of DR-CAFTA, we must: 1) improve the investment climate, including the competitiveness law which would be a tool to assure the free and loyal competition between national and foreign companies; 2) improve the quality of public institutions by increasing transparency and the application of government regulations; 3) improve the systems of measurement, quality of health and sanitary regulations as well as simplify customs procedures; 4) increase the productivity of the workforce through more and better education and access to health services; 5) reduce the costs of transactions and take better advantage of logistics.