Focus: FTAs

Way to Exchange

Way to Exchange

Apr. 28, 2013

CLOSE TO HOME

In 1998, 14 states signed up to the CARICOM and later in 2001 the Dominican Republic joined as well. The current members are the Dominican Republic, the Bahamas, Barbados, Guyana, Jamaica, Surinam, Trinidad and Tobago, Antigua and Barbuda, Belize, Dominica, Grenada, Montserrat, St Kitts and Nevis, St Lucia, and St Vincent and the Grenadines. It was established along the WTO guidelines and promotes the trade of good and prevents unfair trade. It also promotes equal trade between developed states and differentiated trade with less developed members.

TO THE NORTH

The geographical location of the US in comparison to the Dominican Republic and the Caribbean as a whole naturally leads to an extensive amount of trade. This has led to bilateral agreements between CAFTA-DR and the North American Free-Trade Agree (NAFTA) to help facilitate and maintain trade between the member states. Trade between the US and the Dominican Republic totaled $10.5 billion for 2012. The main products the US imports are sugar, coffee, and tobacco. As José del Castillo Saviñón, the Minister of Industry and Commerce, told TBY, “It encouraged an exporting culture in the country and increased the presence of Dominican products in the US, a country that today receives 80% of our exports." The US has a strong presence in the Dominican market as well with a 43% market share, and 70% of all consumer goods coming into the country are from the US. All this has helped to make the Dominican Republic the ninth largest export market in the Western Hemisphere for the US.

ACROSS THE POND

As trade relations with its neighbors continue to prosper, the Caribbean has been looking across the Atlantic for new markets. In 2008, an Economic Partnership Agreement (EPA) was signed between the EU and CARIFORUM, which is the latest agreement in the long history of the ACP-EU Development Cooperation. This was a major deal as the EU is the second largest trading partner after the US, with trade between the two communities totaling €8 billion annually. The main exports from the Caribbean to the EU are oil, gas, minerals, bananas, sugar, and rum, while the EU exports boats, automobiles, phones equipment, dairy, and spirits. The agreement was set up with the idea of opening up trade in services and investment as well as making it easier for European companies to do business in the Caribbean, with governments making direct policy changes to ensure fair competition. The FTA was set with more in mind than just barrier-free trade, going beyond that by defining the development of the Caribbean as important as trade itself as the EU agreed to lend financial support when needed. The EPA liberalizes trade, but also protects less-developed countries. Products that are similar to what are produced in less-developed countries are subject to restrictions for up to 25 years, while some products are completely excluded from the agreement.

EAST IS EAST

The Dominican Republic is currently a part of four trade agreements or partnerships, but it is still looking to the future for more. Its closest neighbor is a possible new partner, “We aim to reach a similar agreement with Haiti…with an average trade balance of $1.3 billion a year both in the formal and informal markets," José del Castillo Saviñón told TBY. The Dominican Republic is not just looking to its closest neighbor either, “We have intensified diplomatic and trade relations with China, and today we already have a representative office in that country."

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