Free Trade Agreements

Since the 1990s, the Dominican Republic has carried out important reforms in trade policies in order to increase the economy’s competitiveness and achieve greater participation in international markets. For this reason a large number of measures have been adopted to free up trade and eliminate a wide variety of trade and customs restrictions as to contribute in augmenting and strengthening the export capacity of the country. Thus, the Dominican Republic maintains an active role in commercial negotiations with an eye towards diversifying the international market for its products.

Unilateral preferential programs and free trade agreements in which the country participates are detailed below.

Preferential Programs: The Caribbean Basin Initiative (CBI)

The Caribbean Basin Initiative (CBI or ICC, for its acronym in Spanish) has its origins in the 1983 Caribbean Basin Economic Recovery Act that came into effect in January 1984. It was a unilateral and temporary program from the United States government whose objective was to promote economic development in the region through the entry for the majority of products coming from Central America and the Caribbean, and making them exempt from the payment of customs charges within the territory of the United States. This program was modified by the Caribbean Basin Economic Recovery Act (LRECC, for its acronym in Spanish), commonly referred to as “ICC II” and became permanent beginning August 1990. In 2000, the US government passed a Commerce and Development Law, which expanded the trade benefits of this program under the Caribbean Basin Trade Partnership Act (CBTPA). The expansion extended to certain products that previously were not included in the ICC, however, the preferential treatment was only in force until 2008, when in January of that year the Dominican Republic – Central America Free Trade Agreement (CAFTA-DR) was initiated, thus those countries ceased to benefit from the preferences granted by the CBTPA. However, this program allowed for the joint production between Haiti (a beneficiary of CBTPA) and the Dominican Republic, so that the former could continue to benefit from the preferences of the CBTPA, provided that the products in question were subject to some type of processing in Haiti.

For more information: Acuerdo de Asociación Comercial de los Estados Unidos de la Cuenca del Caribe (CBTPA)

Economic Partnership Agreement between the CARIFORUM States and the European Union

This is the agreement that came about to replace the trade preferences listed in the Cotonou Agreement (the successor of Lomé IV), that permitted the tariff-free export of main agricultural and mining products from countries in Africa, the Caribbean and the Pacific (ACP) to the European Union (EU). During its term this agreement had various revisions. The main objectives of this convention were to promote economic cultural and social development among the ACP states and to eradicate poverty, and support sustainable development, among other objectives.

In general, the EU would maintain preferential and non-reciprocal access to products from the countries of the ACP, without quantitative restrictions. In the year 2000, the EU and 78 ACP countries signed a replacement of the Lomé IV Convention, which is currently known as the Cotonou Agreement. The new agreement maintains the reciprocity of tariff preferences, but has flexibility in regards to the times of execution for the CARIFORUM countries. The agreement was not intended to replace the 1998 agreement between the Dominican Republic and CARICOM, but complements it, mostly in the area of services. Contrary to the agreement with CARICOM, products manufactured in tariff-free zones are considered of origin and have the right to a preferential tariff treatment. It has a term of 20 years (until 2020) and contains a clause that allows for revision each five years

For more information: Convención de Cotonou

Free Trade Agreement between Central America and the Dominican Republic (Central America- DR)

This agreement was signed April 1998 and is considered one of the first agreements of its kind which the Dominican Republic is part of. It seeks to stimulate the expansion and growth of the trading of goods and services between the countries, as well as to mutually eliminate obstacles to trade and promote and protect foreign investments. Its application is bilateral between each country, any time the goods have been prepared outside of special systems. Products like rice, rum, tobacco, flour and sugar were excluded from the negotiation. Similarly, the list of activities for services were not negotiated. However, the agreement with Central America continues under the framework of CAFTA-DR and includes more far-reaching provisions both in terms of services and goods.

For more information: Acuerdo de Libre Comercio entre Centroamérica y República Dominicana (Centroamérica – RD).

Free Trade Agreement between the Caribbean Community and the Dominican Republic (CARICOM-DR)

In August 1998, the Dominican Republic signed a Free Trade Agreement with the Caribbean Community (CARICOM). This agreement established an area of free trade of goods and services, investment and cooperation. Products originating in the Dominican Republic have free access to the more development countries in CARICOM (Barbados, Guyana, Jamaica, Trinidad and Tobago and Suriname) and differentiated treatment until 2005 with the lesser-developed countries (Antigua and Barbuda, Belize, Dominica, Grenada, Montserrat, Saint Kitts and Nevis, Saint Lucia and Saint Vincent and the Grenadines).

Although those involved had to eliminate all tariffs in their products (except for onions, garlic, beans, coconuts, rice and products from tariff-free zones) at the moment the agreement came into effect, or in some cases beginning in 2004, in February 2015 this had still not been done by the less developed CARICOM members, according to the Information System About Foreign Trade (SICE, for its acronym in Spanish). The only legal instrument to establish commitments about trade services between the Dominican Republic and the CARICOM countries is the agreement signed by the European Union and CARIFORUM. However, it includes a plan of action that establishes the free movement of factors of production such as people and capital within the region.

For more information: Acuerdo de Libre Comercio entre la Comunidad del Caribe y República Dominicana (CARICOM – RD)

Free Trade Agreement between the United States, Central America and the Dominican Republic (CAFTA-DR)

The Dominican Republic – Central America Free Trade Agreement (CAFTA-DR) was signed August 2004. Its implementation implicated important changes in the law of each country, in particular in the areas of customs procedures, intellectual property, telecommunications and public contracts. Within this context, changes made through CAFTA-DR facilitate liberalization in the framework of other trade agreements such as the Generalized System of Preferences (GSP) and the Caribbean Basin Trade Partnership Act (CBTPA). Unlike the agreement between the Dominican Republic and Central America, the goods produced under the benefit of tariff-free zones receive preferential treatment in the framework of CAFTA-DR. Similarly, the agreement covers goods, services and inversions, among other topics. Regarding the reduction of tariffs, this agreement includes preferential access to the elimination of tariffs of all goods that enter the market of the United States and vice versa. The timetable for tariff reduction occurs during a period of 20 years until 2025 and entails 6,793 products.

For more information: Acuerdo de Libre Comercio entre Centroamérica, Estados Unidos y la República Dominicana.

Partial Agreement between the Dominican Republic and Panama

The agreement was signed July 17, 1985 and came into force November 2, 2003. This agreement gives tariff preferences to a limited number of products. Specifically, 120 products from both countries, 24 products from the Dominican Republic and 26 products from Panama, as well as 29 products coming from tariff-free zones. The initial duration of the agreement was 10 years, but in 2013 was extended by another five years. The agreement also contains provisions on competition and dispute settlement.

For more information: Acuerdo de Alcance Parcial entre la República Dominicana y Panamá

References:
Centro de Exportación e Inversión de la República Dominicana (CEI-RD)
Ministerio de Industria y Comercio de la República Dominicana (MIC)
Ministerio de Relaciones Exteriores de la República Dominicana (MIREX)
Sistema de Información Sobre Comercio Exterior (SICE)
Secretaría de Integración Económica Centroamericana (SIECA/CAFTA-RD)
Conferencia de las Naciones Unidas sobre Comercio y Desarrollo (UNCTAD)
Asociación Dominicana de Zonas Francas (ADOZONA)
U.S. Customs and Border Protection (CBP)
Organización Mundial del Comercio (OMC)
Revisión de políticas de comercio de la República Dominicana
Organización Mundial del Comercio
Revisión de políticas de comercio de la República Dominicana