The president of the American Chamber of Commerce, Kevin Manning said yesterday that the tax reform pushed forward by the Fernandez administration has reduced the DR’s competitiveness when compared to its Central American competitors, in a year when the free trade agreement the country has signed with the United States is to start. Manning expressed his concerns about Congress having instated a six month transitory 13% new tax on imports, to comply with government request for more revenues. “Instead of improving competitiveness, we are making the country less competitive,” he said. He said that the January tax reform increased the tax protection for companies whose inputs are imported, while imports that compete with the final product pay taxes, which is detrimental to consumers. He expressed his concern that the country may be taking steps backwards. Manning spoke on occasion of the workshop “Business Opportunities within the Framework of DR-CAFTA” presented by consultant Martin Ibarra Pardo at the Jaragua Hotel, and sponsored by the American Chamber of Commerce. Manning expressed his concern that the new 13% tariff could be in violation of the World Trade Organization commitments signed by the country.
William Malamud, executive vice president of the American Chamber of Commerce, commented that the World Trade Organization had already determined that an existing 2% tax on imports was in violation of these agreements.
As reported in the Listin Diario, Malamud highlighted that what is important is to determine if the DR will begin to implement DR-CAFTA in July or would this happen later. Malamud said that there is time to be ready by July if details and laws can be finalized. There are reports from El Salvador that that country will be ready to implement the agreement early in the spring. Manning called for the private sector to be included in the negotiations needed to bring the DR-CAFTA into existence, and for a renewed series of meetings with the United States Trade Representative.
During the presentation of the opportunities for the Dominican Republic, Martin Ibarra said that one of the country’s strengths was the possibility of achieving the convergence and strengthening linkages of manufacturing industry outside duty free zones and those within free zones.
Ibarra highlighted that what needs to be done is to be aware of the opportunities in order to reorient exports to favor the products that have most demand in the US market and in which the DR could be competitive. He mentioned that the DR is the country with the most free zones in the region, 48, and with the most jobs, or about 200,000. He said the potential is there to capitalize on the DR-CAFTA and double those numbers.