Dominican Republic 2014 | ECONOMY | FOCUS: REGIONAL FTAS

Free trade agreements (FTAs) go beyond commerce by setting the legal groundwork for the sustainable development of participating nations.

Special trade facilities such as free trade agreements (FTAs) are vital in getting export goods to market. Yet for emerging markets, in-built programs develop broader ties with other economic blocs, institutionalizing best practices that benefit the broader economy. Such agreements open up Dominican commerce to 876 million consumers worldwide, also inviting FDI to the free trade zones (FTZs) link in the commercial chain. Meanwhile, nations unable to effect their own economies of scale prudently leverage their trading partners. The Dominican Republic exports a plethora of finished and semi-finished goods from minerals to agricultural products, electric components, jewelry, and pharmaceuticals, many of which are manufactured in around 50 FTZs. The main export destinations are the US (including Puerto Rico), the UK, Canada, Haiti, Belgium, Luxembourg, South Korea, and the Netherlands. The US takes around a 43% share of Dominican exports, while 70% of imported consumer goods derive from it. The US is the seventh largest market for US exports in the Western Hemisphere. Preferential commercial terms have specifically fostered growth of the Dominican textile industry, in particular for FTZs, where many local textile enterprises operate.


The pioneering CAFTA-DR with Central America and the United States was signed on August 5, 2004 by the US, El Salvador, Guatemala, Honduras, Nicaragua, Costa Rica, and the Dominican Republic. It features broad tariff reduction for both imports and exports. The Dominican Republic and Costa Rica respectively joined in 2007 and 2009. The CAFTA-DR zone is the US's third largest in the Latin America region after Mexico and Brazil. By 2015, 100% of US consumer and industrial goods exports to the other partners will be tariff-free. In 2013, it was the 14th largest US export market in the world. CAFTA-DR environmental dimension addresses conservation, sustainable development and instilling green practices in the private sector.


Regarding trade with Europe, the Lomé and Cotonou agreements signed by the EU and 78 African, Caribbean, and Pacific countries benefit the Dominican Republic in the context of ACP (Africa, Caribbean, and Pacific) countries established a legal framework for trade and investment. Consequently, Dominican exports of fruit and textiles, but also nation-branding products, like tobacco and rum, have risen.


This Economic Partnership Agreement (EPA) was signed by the 15 CARIFORUM states and the EU's 27 members in 2008 to engender a more equitable partnership, of mutual preferential trade. Its asymmetrical approach acknowledges the EU's and Caribbean's relative states of development, whereby the demands made of the latter party are lighter, yielding Caribbean nations 100% duty- and quota-free access on all products. Meanwhile, Caribbean signatories are to cut import tariffs within 25 years of signing, excepting sensitive goods and services (17% of total goods). The FTA also encompasses areas that either hinder or enhance trade, including innovation and intellectual property, and environmental and labor conditions. EU support for the Caribbean in 2012-15 with $146 million have created structures that assist member states in fully implementing the EPA. Promoting regional integration CARIFORUM states are obliged to extend to each other the same preferences received by the EU. The Central America-Dominican Republic FTA was signed on April 16, 1996 (ratified in 2002) between the members of the Economic Integration System for Central America, namely Costa Rica, El Salvador, Honduras, Nicaragua, and Guatemala. It exposed the Dominican Republic to a potential market of over 40 million consumers. The recent signing of a letter of intent for an FTA by the Dominican Republic and Taiwan confirms the efficacy and appeal of such mechanisms.