Former Dominican ambassador in Washington, DC, Bernardo Vega speculates in an op-ed contribution in El Caribe newspaper that it is almost certain that the US Trade Representative office will announce that El Salvador, and possibly also Nicaragua have met with the requirements for entering DR-CAFTA and will begin to benefit from the treaty. He comments that President Leonel Fernandez has decided to maintain the 13% exchange commission on imports and postpone the DR’s fulfillment of the requirements to implement the treaty until July, including the intellectual property law, and incongruities regarding Law 173 for the representation of foreign companies.
He speculates that come July there is the possibility that the government may lobby for increased taxation with a second reform bill, hoping that the May 2006 congressional election may bring more PLD men and women to Congress, or an increase in tax collections, or a reduction in government spending.
Vega commends El Salvador for hiring legal counsel to get the head start and be ready to start CAFTA on their part.
Meanwhile, he writes that while the DR will continue to enjoy the benefits of the Caribbean Basin Initiative, apparel producers in El Salvador and Nicaragua will have an advantage over us that will lead to investments being diverted in that direction.
He also says that unfortunately, the Dominican government will be able to continue buying and building without obligatory tenders and the general climate for foreign investment will be less attractive than it would have been had we entered DR-CAFTA at the start.
He comments that the exchange commission plus the tariff that will be applied on American products over the next six months add up to RD$6.8 billion. He speculates that if the tax collections exceed current estimates, it will be time to eliminate the commission and move ahead with DR-CAFTA. “We do not gain anything whatsoever by postponing our participation in free trade,” he concludes.