2005News

DR-CAFTA or no DR-CAFTA?

The United States Trade Representative spokesperson Christin Baker has gone on record stating the US government would announce whether any of the DR-CAFTA signatories would be ready by 1 January before the end of the year. “After 1 January, the United States will put the agreement into force with the other countries on a rolling basis,” she stated. As reported, only El Salvador has made sufficient progress in adopting the new rules and regulations. “We want to reward countries as they become ready and look forward to continued progress with the others. Countries can continue to enjoy existing preferences while they work with the United States to come on board. Preserving benefits during a brief transition period is a non-disruptive way to move countries over the goal line while keeping the Administration’s commitment to Congress to ensure full implementation of all obligations,” according to Baker.

Despite achieving the approval of the fiscal reform as a prerequisite for the implementing of DR-CAFTA, now the government announces that it will not be until July 2006 when the nation would enter. This means the government will have a windfall of revenues. The fiscal reform increases taxation, and with the agreement not being implemented, the government will keep major revenue-producers, such as the exchange commission tax.

Nevertheless, Industry and Commerce Minister Francisco Javier Castillo has told reporters that the DR had fulfilled the pre-requisites for entering the trade agreement on 1 January. The high-ranking government official made the announcement during a meeting of the National Development Council that was debating the 2006 budget. Castillo said that the decision was taken in accord with the provisions of the DR-CAFTA legislation that allows countries to delay the application of the treaty. Countries that choose to do so have to notify the treaty holder, in this case the Organization of American States (OAS), and will enter into DR-CAFTA after 90 days. Castillo said that the Dominican Republic would notify the OAS on 1 April of its intentions to enter the DR-CAFTA agreement. He emphasized the fact that the Dominican Republic had deposited all the necessary documentation within the required time frame in order to begin on 1 January 2006.

One of the main requirements holding up implementation in the Dominican Republic is the passing of the procurement law that would oblige the Dominican government to hold tenders for purchases and contracting of major public works.