RESTRICTEDWORLD  TRADE
ORGANIZATIONWT/TPR/S/105
9 September 2002
(02-4688)
Trade Policy Review Body
TRADE POLICY REVIEW
DOMINICAN REPUBLIC
Report by the Secretariat
This report, prepared for the second Trade Policy Review of the
Dominican Republic, has been drawn up by the WTO Secretariat on its own
responsibility.  The Secretariat has, as required by the Agreement establishing
the Trade Policy Review Mechanism (Annex 3 of the Marrakesh Agreement
Establishing the World Trade Organization), sought clarification from the
Government of the Dominican Republic on its trade policies and practices.
Any technical questions arising from this report may be addressed to
Mr. A. Klau (tel. 739 5706) and Mr. R. Valdés (tel. 739 5346).
Document WT/TPR/G/105 contains the policy statement submitted by the
Government of the Dominican Republic.
Note: This report is subject to restricted circulation and press embargo until the end of the meeting 
of the Trade Policy Review Body on the Dominican Republic.Dominican Republic WT/TPR/S/105
Page iii
CONTENTS
Page
SUMMARY OBSERVATIONS ix
(1) I NTRODUCTION ix
(2) E CONOMIC DEVELOPMENTS ix
(3) I NSTITUTIONAL ENVIRONMENT x
(4) M ARKET ACCESS FOR GOODS x
(5) O THER MEASURES AFFECTING TRADE IN GOODS xi
(6) S ECTORAL POLICIES xi
I. ECONOMIC ENVIRONMENT 1
(1) I NTRODUCTION 1
(2) M AIN ECONOMIC DEVELOPMENTS 1
(i) Output and employment 1(ii) Fiscal policy 4(iii) Monetary and exchange rate policies 5(iv) Balance of payments 7
(3) M
ERCHANDISE TRADE AND INVESTMENT FLOWS 9
(i) Composition of trade 9
(ii) Direction of trade 9(iii) Foreign direct investment 10
(4) O
UTLOOK 10
II. TRADE POLICY REGIME:  FRAMEWORK AND OBJECTIVES 11
(1) I NTRODUCTION 11
(2) T RADE POLICY FORMULATION AND IMPLEMENTATION 11
(i) General legal and institutional framework 11(ii) Trade policy objectives and formulation 12(iii) Main trade laws and regulations 12
(3) I
NTERNATIONAL RELATIONS 14
(i) World Trade Organization 14
(ii) Preferential agreements 17(iii) Other arrangements 19
(4) F
OREIGN INVESTMENT REGIME 20
III. TRADE POLICIES AND PRACTICES BY MEASURE 22
(1) O VERVIEW 22
(2) M EASURES AFFECTING IMPORTS 23
(i) Procedures 23(ii) Customs valuation and rules of origin 24(iii) Tariffs 25(iv) Tariff quotas 31(v) Other charges affecting imports 32
(vi) Import prohibitions, restrictions, and licensing 33
(vii) Local-content schemes 34(viii) Contingency measures 34(ix) Standards and other technical requirements 35WT/TPR/S/105 Trade Policy Review
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(x) Government procurement 38
(xi) Other measures 40
(3) M EASURES AFFECTING EXPORTS 40
(i) Registration and documentation 40(ii) Export taxes, charges, and levies 41
(iii) Export prohibitions and other restrictions 41
(iv) Subsidies, free-trade zones, and similar arrangements 41(v) Export promotion and marketing assistance 44(vi) Export finance, insurance, and guarantees 44(vii) Measures applied in foreign markets 45
(4) O
THER MEASURES AFFECTING PRODUCTION AND TRADE 47
(i) Incentives 47(ii) Regional assistance 48(iii) State-trading enterprises, state-owned companies, and privatization 48(iv) Competition policy 50(v) Intellectual property rights 50
IV. TRADE POLICIES BY SECTOR 55
(1) I
NTRODUCTION 55
(2) A GRICULTURE AND RELATED PRODUCTS 56
(i) Main features 56(ii) Policy objectives and instruments 57(iii) Key subsectors 59
(3) M
INING AND ENERGY 64
(i) Mining and mineral processing 64(ii) Electricity 65(iii) Hydrocarbons 67
(4) M
ANUFACTURING 68
(i) Main features and domestically oriented sector 68
(ii) Free-trade zones 69
(5) S ERVICES 72
(i) Principal characteristics 72(ii) Commitments under the GATS and other agreements 72(iii) Banking and insurance 75
(iv) Telecommunication 77
(v) Transport 78(vi) Tourism 81
SELECTED BIBLIOGRAPHY 83APPENDIX TABLES 85
CHARTS
III. TRADE POLICIES AND PRACTICES BY MEASURE
III.1 Distribution of MFN tariff rates, January 2002 28
III.2 Tariff escalation for selected manufactured products, January 2002 29III.3 In-quota and out-of-quota tariff and fill rates 32III.4 Public procurement, 1995-00 39III.5 Breakdown of total exports, 1993-01 42Dominican Republic WT/TPR/S/105
Page v
Page
IV. TRADE POLICIES BY SECTOR
IV.1 Production, export and export price for sugar and coffee, 1995-01 60
IV.2 Tariff protection in the industrial sector, 2001 70
TABLES
I. ECONOMIC ENVIRONMENT
I.1 Basic economic indicators, 1995-01 2
I.2 Employment indicators, 1996-01 3I.3 Government finances, 1996-01 5I.4 Balance-of-payments, 1996-01 8
II. TRADE POLICY REGIME:  FRAMEWORK AND OBJECTIVES
II.1 Main laws and regulations relating to foreign trade, May 2002 13
II.2 Dominican Republic's notifications under the WTO Agreements, May 2002 14
III. TRADE POLICIES AND PRACTICES BY MEASURE
III.1 Products subject to minimum prices 25
III.2 Summary analysis of the Dominican Republic's tariff, January 2002 26III.3 Import-related fiscal revenue, 1995-01 27III.4 Tari ff-rate quotas in the Dominican Republic's Schedule of Commitments 31
III.5 Products subject to import permits 34
III.6 Exports to the U.S. under the CBI and CBTPA for selected products by HS-2 digit, 1996-01 46III.7 Privatization of state-owned enterprises 49III.8 The Dominican Republic's participa tion in international IPR agreements 51
III.9 Overview of IPR protection in the Dominican Republic, 2001 52
IV. TRADE POLICIES BY SECTOR
IV.1 GDP shares, 1995-01 55
IV.2 Production and export of tobacco leaves, 1995-01 62IV.3 Cocoa beans production and export, 1995-01 63IV.4 Exports of selected non-traditio nal agricultural products, 1996-01 63
IV.5 Mineral exports, 1996-01 64
IV.6 Production and sales of electricity, 1995-01 67IV.7 Petroleum statistics, 1995-01 68IV.8 Value-added in the manufacturing sector (excluding free-trade zones), 1995-00 69IV.9 Key indicators on the Dominican Republic's free-trade zones, 1995-01 69
IV.10 Value-added of Dominican services sectors, 1995-01 72
IV.11 Summary of the Dominican Republic's commitments under the GATS 73IV.12 Telephone connections in the Dominican Republic, 1996-01 77IV.13 Dominican ports, handled cargo, 1997-01 79IV.14 Tourism, 1996-01 81
APPENDIX TABLES
I. ECONOMIC ENVIRONMENT
AI.1 Exports (f.o.b.) by product, 1998-01 87
AI.2 Imports (f.o.b.) by product, 1998-01 88AI.3 Exports (f.o.b.) by partner country, 1998-01 89AI.4 Imports (f.o.b.) by partner country, 1998-01 90WT/TPR/S/105 Trade Policy Review
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GLOSSARY
(The translation into English should not be considered official)
Agreement on Customs Issues for Free Trade Zones Acuerdo de Asuntos Aduanales para Zonas Francas de
Exportación
Agricultural and Forestry Development Centre Centro para el Desarrollo Agropecuario y Forestal,
CEDAF
Association of Dominican Agroenterprises Junta Agroempresarial Dominicana
Bidding Committee Comité de Licitación
Central Bank (of the Dominican Republic) Banco Central (de la República Dominicana)
Certificate of Industrial Operation Certificado de Insc ripción Industrial
Chamber of Commerce Cámara de Comercio y Producción de Santo Domingo
Civil Registry Registro Civil
Commercial Code Código de Comercio
Commission for Agricultural Imports Comisión de Importaciones Agropecuarias
Commission for National Trade Negotiations Comisión Nacional de Negociaciones Comerciales,
CNNC
Commission for the Reform of Public Enterprises Comisión de Reforma de la Empresa Publica, CREP
Commission for the Reform of Ports and Airports Comisión de Reforma Po rtuaria y Aeroportuaria
Commission for the Regulation of Unfair TradePractices and Safeguard MeasuresCommission for Tariff Analysis Comisión de Estudio Arancelarios
Coordination Council for Border Development Consejo de Coordinación de la Zona Especial de
Desarrollo Fronterizo
Copyrights Law Ley de Derecho de Autor
Council for Tourism Development Consejo de Fomento Turístico, CONFOTUR
Court of First Instance Tribunal de Primera Instancia
Customs Declaration Declaración del Valor en Aduana, DVA
Customs Law Ley para el Regimen de las Aduanas
Customs Reform Law Ley de Reforma Arancelaria
Decree Eliminating Export Licences Decreto que elimina la Licencia de Exportador
Decree on Foot and Mouth Disease Decreto sobre Fiebre Aftosa
Department of Inland RevenueDirectorate-General of Civil Aviation Dirección General de Aviación Civil
Directorate-General of Customs Dirección General de Aduanas
Directorate-General of MiningDirectorate-General of Norms and Quality Systems Dirección General de Normas y Sistemas de Calidad
Directorate-General of Taxes Dirección General de Impuestos Internos
Directorate-General of Telecommunications Dirección General de Telecomunicaciones
Dominican Agriculture and Forestry Research Institute Instituto Dominicano de Investigaciones Agropecuarias
y Forestales, IDIAF
Dominican Centre for Export Promotion Centro Dominicano de Promoción de Exportaciones,
CEDOPEX
Dominican Coffee Council Consejo Dominicano de Café
Dominican Corporation of State Enterprises Corporación Dominicana de Empresas Estatales
Dominican Electricity Corporation Corporación Dominicana de Electricidad, CDE
Dominican Exporters Association Asociación Dominicana de Exportadores, ADOEXPO
Dominican Hydroelectric Generation Company Empresa de Generación Hidroeléctrica Dominicana,
EGEHID
Dominican Industry Association Asociación de Industrias de la República Dominicana,
AIRD
Dominican Institute of Industrial Technology Instituto Dominicana de Tecnología Industrial,
INDOTEC
Dominican Institute of Telecommunications Instituto Dominicano de las Telecomunicaciones,
INDOTEL
Dominican Postal Institute Instituto Dominicano de Postal
Dominican Ports Authority Autoridad Portuaria Dominicana, APORDOM
Dominican Telephone Company Companía Dominicana de Teléfonos
Draft Monetary and Financial Law Anteproyecto de Ley Monetaria y FinancieraDominican Republic WT/TPR/S/105
Page vii
Export Promotion Law Ley de Reactivación y Fomento de las Exportaciones
Finance Programme for Free Trade Zones Programa de Financiamiento para Empresas
Industrales de Zonas Francas
Foreign Investment Law Ley de Inversión Extranjera
Free Trade Zone Law Ley de Zonas Francas
Fund for the Promotion of Tourism Fondo Oficial de Promoción Turística, FOPT
Government Supply Commission Comisión de Aprovisionamiento del Gobierno
Health Law Ley General de Salud
Import Declaration Form Formulario de Declaración de Importación
Industrial Property Law Ley de Propiedad Industrial
Insurance and Bonding Law Ley sobre Seguros y Fianzas de la República
Dominicana
Institute for Market Regulation Instituto de Ordenamiento de Mercado
Inter-American Convention for the Facilitation ofInternational Maritime TransportConvenio Interamericano para Facilitar el Transporte
Acuático Internacional
Labour Code Código Laboral
Law on Animal Health Ley de Sanidad Animal
Law on Customs Duties Ley de Arancel de Aduanas
Law on the Environment and Natural Resources Ley sobre Medio Ambiente y Recursos Naturales
Law on Plant Health Ley de Sanidad Vegetal
Law on Unfair Trade Practices and Safeguard Measures Ley sobre Prácticas Desleales de Comercio y Medidas
de Salvaguardia
Mining Industry Parks Parques Mineros Industriales
Minister Secretario de Estado
Ministry of Agriculture Secretaría de Estado de Agricultura
Ministry of Defence Secretaría de Estado de las Fuerzas Armadas
Ministry of the Environment Secretaría de Estado de Medio Ambiente
Ministry of Finance Secretaría de Estado de Finanzas
Ministry of Industry and Trade Secretaría de Estado de Industria y Comercio
Ministry of Health Secretaria de Estado de Salud Pública y de Asistencia
Social
Ministry of the Presidency Secretaría Técnica de la Presidencia
Ministry of Tourism Secretaría de Estado de Turismo
Monetary Board Junta Monetaria
National Cocoa Commission Comisión Nacional del Cacao
National Commission on Norms and Quality Systems Comisión Nacional de Normas y Sistemas de Calidad
National Copyright Office Oficina Nacional de Derecho de Autor, ONDA
National Copyright RegisterNational Council for Agriculture Consejo Nacional de Agricultura,CAN
National Council for the Development of the MiningIndustryConsejo Nacional para el Desarollo Minero
National Council for Free Trade Zones Consejo Nacional de Zonas Francas de Exportación,
CONAZONA
National Council of Foreign Trade Consejo Nacional de Comercio Exterior
National Council of Magistrates Consejo Nacional de Magistratura
National Council for Micro, Small and Medium-SizedEnterprisesConsejo Nacional para la Micro, Pequena y Mediana
Empresa
National Energy Commission Comisión Nacional de Energía
National Frequency Attribution Plan Plan Nacional de Atribución de Frequencias
National Export Finance Programme Programa Nacional de Finaniamiento a las
ExportacionesAsociación Nacional de Hoteles y Restaurantes
National Office for Industrial Property Oficina Nacional de la Propiedad Industrial, ONAPI
National Sugar Institute Instituto Nacional de Azúcar, INAZUCAR
Office for the Promotion of Investment in theDominican RepublicOficina para la Promoción de Inversiones de la
República Dominicana, OPI - RD
One-Stop Office for Exporters Sistema Integrado de Ventanilla Unica de Comercio
Exterior, (SIVUCEX)
Patent Law
Ley sobre Patentes de InvenciónWT/TPR/S/105 Trade Policy Review
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Price Stabilization Institute Instituto Nacional de Estabilización de Precios,
INESPRE
Public Enterprise Reform Law Ley General de Reforma de la Empresa Publica
Regulations on the Allocation of the Textile Quota Reglamento de Distribución de la Cuota Textil
Regulations for the Free Trade Zone Law Reglamento para la Aplicación de la Ley sobre Zonas
Francas
Regulations Establishing the Prohibition of theInterception of Public Telecommunications ServicesRegulations for the Export Promotion Law Reglamento para la Aplicación de la Ley de
Reactivación y Fomento de las Exportaciones
Regulations for the Financing of Post-Shipment Credits Reglamento de Financiamiento a las Exportaciones
Post-embarque 52/VF-DR
Regulations on the Foreign Investment Law Reglamento de la Ley sobre la Inversión Extranjera
Regulations on the Interconnection of Public
Telecommunications ServicesReglamento General de Interconexión para las Redes de
Servicios Públicos de Telecomunicaciones
Regulations on Merchandise Re-exports Reglamento de los Depósitos para la Reexportacion
Mercancías
Regulations for the National Export FinancingProgrammeRegulations on Pesticides Regulación de Pesticidas
Regulations on Public Procurement and Contracts Reglamento de Compras y Contrataciones de Bienes y
Servicios de la Admi nistración Publica
Regulations on the Provision of Cable Services Reglamento de la Difusión por Cable
Regulations on the Provision of FM and AM Services Reglamento de Servicio de Radiodifusión Sonora de
Frequencia Modulada y Amplitud Modulada
Regulations for Radio Services Reglamento para el Servicio de Radioaficionados
Regulations on the Solution of Disputes betweenConsumers and Operators of Public TelecommunicationServicesReglamento para la Solución de Controversias entre los
Usuarios y las Prestadores de Servicios Públicos deTelecomunicaciones
Regulations on the Telecommunication DevelopmentFundReglamento del Fondo de Desarrollo de
Telecomunicaciones
Regulations on the Use of the Radio Wave Spectrum Reglamento de Uso del Espectro Radioeléctrica
Security Market Law Ley de Mercado de Valores
Single Export Form Formulario Unico de Exportador
Specific Consumption Tax Impuesto Selectivo al Consumo, ISC
Standards and Quality System Division Dirección General de Normas y Sistemas de Calidad,
DIGENOR
State Sugar Council Consejo Estatal del Azúcar
Superintendency of Banks Superintendencia de Bancos
Superintendency of Electricity Superintendencia de Electricidad
Superintendency of the Stock Market Superintendencia de Valores
Tax Reform Law Ley de Reforma Tributaria
Tax Code Código Tributario
Technical Routing Plan Plan Técnico Fundamental de Encaminamiento
Telecommunications Development Fund Fondo de Desarrollo de Telecomunicaciones
Telecommunications Law Ley General de Telecomunicaciones
Textile Commission Comisión Textil
Textile Coordinator Coordinador Textil
Tobacco Institute Instituto del Tabaco, INTABACO
Tourism Development Law Ley de Fomento al  Desarrollo Turístico
Value-added Tax Impuesto sobre el Transfer de Bienes y Servicios, ITBISDominican Republic WT/TPR/S/105
Page ix
SUMMARY OBSERVATIONS
(1) INTRODUCTION
1. Since its previous Trade Policy
Review in 1996, the Dominican Republic has
sustained a fast pace of economic growth
driven in good part by continued efforts toopen and restructure its economy.  Its trade
and investment regimes are largely liberal
although issues remain in areas such as
customs valuation, export subsidies,
privatization, and domestic competition.Participation in the global economy is intense,
and is reflected in high levels of trade in goods
and services, investment flows, and
remittances from nationals living abroad.
Under the Free Trade Zone (FTZ) regime mostmerchandise trade is exempt from the general
trade regime, in order to deal with its anti-
export bias regime.  Liberalization has been
largely autonomous;  preferential trade
agreements and multilateral commitments
have played complementary roles.
2. The Dominican Republic is
approaching a juncture where the duality and
enclave features of its economy may have to be
addressed.  Activities in FTZs and tourism are
responsible for the lion's share of Dominican
exports, and are important generators ofemployment and investment, but their
backward linkages to the rest of the economy
remain weak.  Moreover, the benefits granted
in FTZs have made it more difficult for
"domestic" sectors to attract resources, andseveral of these have stagnated, at best.  The
distortions associated with a narrowly
focused, export-led growth strategy, and
persistent inefficiencies in sectors like
electricity, may well become obstacles for thefurther improvements in living standards
coveted by the Dominican Republic.
(2) E
CONOMIC DEVELOPMENTS
3. With a per capita GDP of some
US$2,400 and a population of about 9 million,
the Dominican Republic is the largest
economy in the Central American-Caribbeanregion.  Since the beginning of the 1990s, ithas also been one of the world's fastest
growing economies;  its average real growth
rate between 1996 and 2000 was 7.6%.
Economic activity was particularly sustained
by a boom in private investment.  GDP growth
dropped in 2001, to 2.7%, but picked up againin the first half of 2002.  Despite the
economy's strong growth performance, about
a quarter of the Dominican population still
lives below the national poverty line.
4. Since 1995, the Dominican Republic
has posted a fiscal deficit only twice.  Fiscal
reforms in 2000 have led to significantly
reduced reliance on customs duties for
government income and less distortionary
resource allocation.  As a result of the reformpackage, the share of customs duties in total
government revenue decreased from about
26% in 2000 to 16% in 2001;  reduced fiscal
revenue from lower tariffs was compensated
by increased income from internal taxes.
5. The Dominican Republic has three
principal foreign exchange markets (anofficial, market-based rate, a free exchange-
house market, and a free commercial bank
rate);  the spread between the markets is very
narrow.  It maintains no controls on foreign
exchange transactions but purchases offoreign exchange are subject to a fee set at
4.75%, which is under review.  Real interest
rates remain relatively high, having ranged
between 13% and 21% since 1996.  Inflation
has been moderate;  the average increase ofthe consumer price index is estimated at 6.9%
during 1996-01.
6. The Dominican Republic's current
account has registered considerable deficits in
recent years, due mainly to persistent andgrowing trade deficits.  They have been
financed largely by current transfers, most of
which are remittances by Dominicans living
abroad, and inflow of foreign investment
capital.  In contrast to merchandise trade,
services have shown successive surpluses,
largely due to income from the tourism sector.
7. The Dominican Republic's main
export products are clothing and electronicWT/TPR/S/105 Trade Policy Review
Page x
goods produced in the FTZs, agricultural
goods and their related manufactures, and
ferro-nickel.  Despite a relatively limited
contribution to GDP, FTZs remain crucial for
the Dominican Republic's export performance.
The United States is by far the DominicanRepublic's most important trading partner,
with an estimated share of 95% in FTZ trade
and about 52% in "domestic" trade.
Intermediate and capital goods dominate
Dominican imports.
(3) I
NSTITUTIONAL ENVIRONMENT
8. The Ministry of Foreign Affairs is the
lead agency for all issues related to foreign
trade.  The Dominican Republic became a
WTO Member in March 1995;  it has beenactive in the extended negotiations on
telecommunications and financial services.  As
an international treaty, the WTO Agreements
take precedence over domestic legislation.
9. The Dominican Republic has
increasingly sought to foster regional
economic integration;  in 1998 it concluded itsfirst free-trade agreements, with the
Caribbean Community (CARICOM) and the
Central American Common Market (CACM).
The Dominican Republic has formally asked to
be part of the proposed U.S.-Central AmericaFree Trade Agreement and attaches great
importance to the ongoing negotiation for the
Free Trade Area of the Americas.
10. The Foreign Investment Law of 1995
accords national treatment to foreigninvestors.  A privatization programme,
initiated by the Public Enterprise Reform Law
of 1997, has significantly reduced government
involvement in economic activities.  The
principal mode of privatization choseninvolves at least 50% of the newly created
companies remaining government-owned but
management control passing to private
investors.  State enterprises continue to
operate in electricity generation and
transmission, financial services, and maritime
ports.(4) M
ARKET ACCESS FOR GOODS
11. The Dominican Republic grants at
least MFN treatment to all its trading
partners.  Tariffs are the Dominican
Republic's main instrument of border
protection;  the average applied MFN tariff is8.6%.  Agricultural goods (WTO definition)
are levied an average tariff of 12.9%, while
non-agricultural products excluding petroleum
face an average tariff of 7.9%.  The
Dominican Republic maintains tariff quotas ona number of agricultural products, with
current out-of-quota rates of up to 118%.
12. A wide gap exists between applied and
bound rates, which somewhat undermines the
predictability of market access conditions.  Inthe Uruguay Round, the Dominican Republic
bound all its tariffs.  While non-agricultural
goods were bound at a general ceiling rate of
40%, final bound rates for agricultural
products, some of which were subject to
renegotiations, range from 5% to 99%.
13. Tariff reductions under preferential
agreements have contributed to improved
access to the Dominican market for some
trading partners.  Duty-free access is offered
to most imports from the Central American
Common Market and from CARICOM.
14. The Dominican Republic obtained an
extension until July 2001 on the application of
the WTO Agreement on Customs Valuation.
Since then, the Dominican Republic has been
applying the Agreement with the exception of alist of 24 tariff subheadings, including used
vehicles and sound reproducers, for which it
obtained permission to use reference prices
until July 2003.  The provisions of the WTO
Agreement on Customs Valuation are alreadyapplied for preferential imports.
15. Irrespective of their origin and in
accordance with the national treatment
principle, imports are subject to domestic
taxes, most notably a 12% tax on the transfer
of industrialized goods and services.  In
addition, various goods such as alcoholicbeverages, electric household goods, tobaccoDominican Republic WT/TPR/S/105
Page xi
products, and vehicles are subject to specific
consumption taxes ranging from 15% to 80%.
16. The use of non-tariff trade barriers
appears limited.  The Dominican Republic
maintains various import restrictions and
prohibitions, which apply equally to alltrading partners, for reasons of security,
health, and environmental protection.  The
Dominican Republic has not made recourse to
contingency measures.  The Dominican
Republic is not a party to the PlurilateralAgreement on Government Procurement;  its
regulations on public procurement grant
preferences to local suppliers.
(5) O
THER MEASURES AFFECTING
TRADE IN GOODS
17. The Dominican Republic has placed
great emphasis on export promotion;  FTZs
constitute the most important instrument to
this end.  The Free-trade Zones Law of 1990
provides for substantial benefits to exporting
enterprises located in FTZs, most notably
wide-ranging tax and tariff exemptions.  In2001, more than 85% of the Dominican
Republic's total exports came from FTZs, up
from 52% in 1990.  Since 1996, FTZs have
also been increasingly used as an instrument
of sectoral and regional policy.  In 2001, theDominican Republic notified the WTO that its
FTZ regime provided export subsidies, and
subsequently requested an extension of the
transition period to eliminate them.
18. Dominican exports benefit from
preferential access to foreign markets under
various unilateral schemes such as GSP
schemes, the Lomé IV Convention, and the
U.S. Caribbean Basin Initiative (CBI).  The
CBI, enhanced by the Caribbean Basin TradePartnership Act, is by far the most important
preferential scheme granted to the Dominican
Republic;  it covered Dominican exports
valued at US$2.4 billion in 2001.
19. Since 1996, efforts have been
undertaken to streamline export procedures
through the introduction of a single exportform and the creation of a one-stop office forexporters, but certain procedures still appear
cumbersome.  To promote exports of non-
traditional goods, two official export finance
programmes were instituted in 1999;  no
government-supported export insurance
programme is in place.  As an additional toolfor export promotion, a duty-drawback scheme
for enterprises located outside FTZs was
established in 1999, however, it has been used
only to a limited extent.  Other than the free-
trade zone and rebate regimes, no fiscalincentives linked to export performance are in
place.  Export taxes are maintained for certain
mineral products, live fish, and crustaceans.
20. The Dominican Republic does not yet
have a legal framework for competition policy,apart from sector-specific regulations.
However, the authorities indicated that
comprehensive legal provisions for
competition policy were under preparation.  In
2000, the Dominican Republic adopted new
legislation to improve the protection of
intellectual property rights;  it has alsostrengthened enforcement measures.
(6) S
ECTORAL POLICIES
21. The economic importance of
agriculture has been decreasing in recent
years, although the sector still contributesabout 11% to GDP, employs about 15% of the
labour force and generates 10% of
merchandise export earnings.  The sector
benefits from above-average border
protection, but may have been penalized inrelative terms by privileges granted to other
producers, notably in FTZs.  The Dominican
Republic's main agricultural exports, sugar
and coffee, have also come under considerable
pressure in recent years from low worldmarket prices and damage caused by
Hurricane George in 1998.
22. Manufacturing production, which
contributes about 16% to GDP, has a strongly
dual nature, defined by whether firms are
located in FTZs or elsewhere.  Investment in
FTZs is largely made up of foreign firmsproducing textiles, jewellery or electronics for
export, whereas non-FTZ enterprises,WT/TPR/S/105 Trade Policy Review
Page xii
comprising mostly Dominican firms, engage
mainly in food processing to supply the
domestic market.  The manufacturing sector,
largely FTZ firms, generates the lion's share
of Dominican exports.  However, high reliance
on imported inputs and weak backwardlinkages limit the sector's contribution to net
exports and domestic welfare and make it
highly dependent on foreign business cycles
and, potentially, unilateral policy changes in
trading partners.
23. The services sector is the cornerstone
of the Dominican economy, both in terms of
value added and of employment.  Since 1996,
growth rates have been particularly high in
communication and tourism-related services,such as transport and the hotel and restaurant
industry.  With international arrivals
approaching three million, tourism also plays
a key role for foreign earnings.  However,
inefficiencies and lack of competition persist
in certain services activities;  for example,
chronic problems in the electricity industryare a handicap for the rest of the economy,
and the cost of supplying financial services
appears high.24. Since 1996, the legal and institutional
framework for services has been reformed and
the State has reduced its involvement in the
sector to certain basic infrastructure, notably
maritime ports;  this infrastructure is being
upgraded by granting concessions to privateoperators.  Pursuant to the Foreign Investment
Law, market access to most services is
guaranteed to foreign investors on a non-
discriminatory basis.  Although market access
in banking may be subject to a public interesttest, access appears not to have been impaired
in practice.
25. The Dominican Republic made
commitments in seven of the twelve categories
of services of the GATS.  Policy changes sincethe end of the Uruguay Round have made
conditions for foreign participation in
Dominican services far more liberal than
those implied by its GATS commitments.  The
Dominican Republic ratified the Fourth
Protocol to the GATS (on telecommunications)
but is still in the process of ratifying the FifthProtocol (on financial services).