WORLD TRADE  
ORGANIZATION  G/SCM/N/211/DOM 
24 June 2010 
 (10-3466) 
Committee on Subsidies and 
Countervailing Measures Original:   Spanish 
 
 
 
SUBSIDIES 
 
Continuation of Extension under SCM Ar ticle 27.4 of the Transition Period  
for the Elimination of Export Subsidies Pursuant to the  
Procedures in Document WT/L/691  
 
DOMINICAN REPUBLIC 
  
 The following communication, dated 17 June 2010,  is being circulated at the request of the 
delegation of the Dominican Republic.  
_______________ 
 
 
 Pursuant to Article XVI:1 of the GATT 1994 and Article 25.2 of the WTO Agreement on 
Subsidies and Countervailing Measures (SCM Agreem ent), and in accordance with paragraphs 1(c) 
and 2(a) of General Council Decision WT/L/691, da ted 27 July 2007, the Dominican Republic hereby 
submits the updated annual notification for the cale ndar year 2009, for the continued extension of the 
transition period for the elimination of subsidies with  regard to the programmes listed in the Annex to 
that Decision.  Also included as an integral part of  this notification, in accordance with paragraph 1(f) 
of the Decision, is an action plan for elimina ting the export subsidies under the notified programme. 
  This updated notification is being submitte d so that the Committee on Subsidies and 
Countervailing Measures may verify, in its annual review, that the transparency and standstill 
requirements set forth in paragraphs 2 and 3 of Decision WT/L/691 have been fulfilled. 
 G/SCM/N/211/DOM 
Page 2  
 
   In accordance with the format of the ques tionnaire in document G/SCM/6, prepared and 
adopted by the Committee on Subsidies and Coun tervailing Measures, the Dominican Republic 
hereby notifies the following:  
1. Title of the subsidy programme, if relevant, or brief description or identification of the 
subsidy 
 Law No. 8-90 to "promote the establishment of new free zones and expand existing ones", 
which establishes a tax-exemption programme fo r enterprises manufacturing goods or providing 
services related to goods production, located with in geographic areas known as free zones, and the 
production of which must be mainly for export. 
 
2. Period covered by the notification 
 This notification covers th e period up to 31 December 2011. 
 
3. Policy objective and/or purpose of the subsidy 
 The objectives of the programme are, inter alia , job creation, workforce training, 
development of social support programmes, prom otion of balance-of-payments equilibrium and 
establishment of regional community development programmes.  
4. Background and authority for the subsidy (including identification of the legislation 
under which it is granted) 
 The underlying reasons for this programme were to provide training, to transfer technology, 
to attract local and foreign investment, and to creat e employment at various points within the national 
territory, including in economically deprived ar eas, such as the border areas with Haiti.  This 
programme was created under Law No. 8-90 of 15 January 1990.  5. Form of the subsidy (i.e. gran t, loan, tax concession, etc.) 
 Enterprises manufacturing goods or providing services and operating under Law No. 8-90 are 
exempt from payment of income tax and customs duties on the importation and exportation of the raw materials, equipment and machinery used to pr oduce these goods.  The subsidy is therefore a tax 
concession.  6. To whom and how the subsidy is provided (whether to producers, to exporters, or 
others;  through what mechanism;  if the latter, how determined) 
 The programme exempts natural and legal pe rsons eligible under the free-zone regime 
established by Law No. 8-90, who largely export go ods produced within free zones, from the taxes 
and duties specified in point 5 of this questionnaire. 
 
7. Subsidy per unit, or in cases where this is not possible, the total amount or the annual 
amount budgeted for that subsidy (indicating, if possible, the average subsidy per unit in 
the previous year).  Where provision of p er-unit subsidy information (for the previous 
year, or both) is not possible, a full explanation 
 Law No. 8-90 does not provide for the auditing, on the basis of either units or operating 
results, of manufacturing operations  conducted within free zones by enterprises operating under the 
free-zone regime, with a view to estimating the fiscal cost to the Dominican State of attracting private investment for the creation of sources of employment.  G/SCM/N/211/DOM 
 Page 3 
 
 
   
8. Duration of the subsidy and/or any other time-limits attached to it, including date of 
inception/commencement 
 Enterprises eligible for the benefits grante d under Law No. 8-90 are entitled to a free-zone 
operating licence, normally valid for up to 20 years in  the border region with Haiti and 15 years in the 
rest of the country.  Beyond this period , permit holders may apply for a renewal. 
 
9. Information on paragraph 2(a) of General Council Decision WT/L/691 
 In order to comply fully with paragraphs 1(e) and (f) of General Council Decision WT/L/691, 
the Dominican Republic has implemented the following measures: 
 
(a) All resolutions and/or operating licences issued under the free-zone regime 
established by Law No. 8-90 contain the following paragraph:  "As of 2015, the Dominican Republic will reserve the right to  review and/or withdraw some of the 
incentives contained in Law No. 8-90, pursu ant to the Decision of the World Trade 
Organization (WTO) Committee on Subs idies and Countervailing Measures, 
contained in document G/SCM/120, concerning the extension provided for in Article 27.4 of the Agreement on Subsidi es and Countervailing Measures, adopted by 
the WTO General Council on 27 July 2007". 
(b) The Dominican Republic has recently drawn up a new draft law on free zones which 
provides for the complete dismantling of export subsidies.  The draft law will shortly 
be submitted for review and approval by the Congress of the Republic and the 
Executive. 
10. Statistical data permitting an assessment of th e trade effects of the subsidy.  The specific 
nature and scope of such statistics is left to the judgement of the notifying Member.  To 
the extent possible, relevant and/or determin able, however, it is desirable that such 
information include statistics of production , consumption, imports and exports of the 
subsidized product(s) or sector(s): 
(a) For the three most recent years fo r which statistics are available; 
(b) for a previous representative year, which, where possible and meaningful, 
should be the latest year preceding the introduction of the subsidy or preceding the last major change in the subsidy. 
  
  G/SCM/N/211/DOM 
Page 4 HISTORICAL OVERVIEW OF FREE ZONES 
  
Evolution of the Main Variables of Free Export Zones 
1995-2009 
 
 
Average weekly salary 
(RD$) Year Existing 
industrial 
estates Enterprises Jobs Exports 
(US$ million) Foreign 
exchange 
(US$ million) Workers Technical 
staff Surface area 
of industrial 
premises in 
use (sq. ft.) Textile exports 
(US$ million) 
1995 33 469 165,571 2,907.40 509.00 539.96 1,095.89 14,120,000 1,731.00 
1996 36 436 164,639 3,107.30 545.00 576.92 1,257.00 13,782,496 1,753.50 
1997 40 446 182,174 3,596.40 701.00 634.27 1,441.12 15,603,755 2,185.10 
1998 43 496 195,193 4,100.00 826.50 638.32 1,556.90 17,540,407 2,348.92 
1999 44 484 189,458 4,331.50 887.30 701.21 1,587.22 16,820,049 2,393.11 
2000 46 481 195,262 4,770.60 1,018.60 716.51 1,629.85 21,068,186 2,555.42 
2001 51 512 175,078 4,481.60 977.90 775.49 1,662.93 21,738,332 2,314.40 
2002 53 520 170,833 4,317.30 886.50 786.56 1,671.53 21,923,764 2,226.80 
2003 54 531 173,367 4,406.76 810.84 961.34 2,010.79 22,066,221 2,196.40 
2004 58 569 189,853 4,685.24 863.40 1,131.25 2,539.82 24,332,619 2,120.56 
2005 57 556 154,781 4,749.65 1,005.43 1,347.09 2,702.67 24,540,453 1,904.64 
2006 56 555 148,411 4,678.60 973.70 1,465.19 3,009.97 26,338,045 1,734.40 
2007 53 526 128,002 4,525.22 1,010.90 1,480.37 3,127.22 24,609,123 1,366.87 
20081/ 48 525 124,517 4,354.10 954.30 1,652.80 3,533.22 25,299,745 1,144.72 
2009* 47 553 112,618 3,784.93 886.40 1,811.36 3,689.56 29,839,403 993.00 
% growth 
2008-2009 -2.1 5.3 -9.6 -13.1 -7.1 9.6 4.4 17.9 -13.3 
 
 Source for exports and foreign exchange :  Central Bank . 
 1/ Revised export and foreign exchange figures. 
 * Preliminary export and foreign exchange figures. 
  G/SCM/N/211/DOM 
 Page 5 
 
 
  Contribution of Free Zones to th e Gross Domestic Product (GDP) 
of the Dominican Republic 
1995-2009 
(RD$ million, current values) 
 
Year GDP Free zones Contribution (%) 
1995 211,024.60 8,765.20 4.2 
1996 233,833.30 9,380.50 4.0 
1997 274,423.90 11,510.80 4.2 
1998 311,282.80 15,159.60 4.9 
1999 343,745.30 16,728.80 4.9 
2000 388,301.90 19,990.30 5.1 
2001 415,520.90 21,026.40 5.1 
2002 463,624.30 25,249.90 5.4 
2003 617,988.90 46,076.50 7.5 
2004 909,036.80 66,405.10 7.3 
2005 1,020,002.00 49,395.80 4.8 
2006 1,189,801.90 53,296.30 4.5 
2007 1,364,210.30 51,917.00 3.8 
2008 1,576,162.80 56,084.60 3.6 
2009* 1,678,762.60 50,939.10 3.0 
Source :  Central Bank.  
* Preliminary figures. G/SCM/N/211/DOM 
Page 6  
 
  Comparison of Domestic and Free-Zone Exports 
1995-2009 
(US$ million) 
 
Year Domestic 
exports Var. % 
Domestic Free-zone 
exports Var. % 
Free zones Total 
exports Free-zone 
exports/total 
exports (%) 
1995 872.1 --- 2,907.4 --- 3,779.5 76.9 
1996 945.5 8.4 3,107.3 6.9 4,052.8 76.7 
1997 1,017.3 7.6 3,596.4 15.7 4,613.7 78.0 
1998 880.3 -13.5 4,100.0 14.0 4,980.5 82.3 
1999 805.2 -8.5 4,331.5 5.6 5,136.7 84.3 
2000 966.1 20.0 4,770.6 10.1 5,736.7 83.2 
2001 794.7 -17.7 4,481.6 -6.1 5,276.3 84.9 
2002 847.7 6.7 4,317.3 -3.7 5,165.0 83.6 
2003 1,064.0 25.5 4,406.8 2.1 5,470.8 80.6 
2004 1,250.7 17.5 4,685.2 6.3 5,935.9 78.9 
2005 1,395.1 11.5 4,749.7 1.4 6,144.8 77.3 
2006 1,931.4 38.4 4,678.6 -1.5 6,610.0 70.8 
2007 2,635.1 36.4 4,525.2 -3.3 7,160.3 63.2 
20081/ 2,393.9 -9.2 4,354.1 -3.8 6,748.0 64.5 
2009* 1,678.4 -29.9 3,784.9 -13.1 5,463.3 69.3 
Source :  Central Bank of the Dominican Republic . 
1/ Revised figures. 
*Preliminary figures. 
 
 
Comparison of Domestic and Free-Zone Exports2009 
 
  Free-zone exports 
69% Domestic exports 
31%  G/SCM/N/211/DOM 
 Page 7 
 
 
  Free-Zone Exports 2002-2009 by Principal Activities 
(US$ million) 
 
Activity 2002 2003 2004 2005 2006 2007 20081/ 2009* Share 
% 
2009 
Clothing and textiles 2,226.8 2,196.4 2,120.6 1,904.6 1,734.4 1,366.9 1,165.7 939.0 24.8 
Footwear 201.5 202.6 234.7 315.3 276.1 258.7 234.7 214.0 5.7 
Electrical goods 498.9 577.6 630.5 700.3 695.7 743.3 794.7 496.1 13.1 
Tobacco and tobacco 
products 303.4 287.6 308.6 334.1 366.9 393.6 429.9 386.3 10.2 
Medical and 
pharmaceutical products 317.9 320.7 288.3 284.1 293.9 774.0 855.6 976.1 25.8 
Jewellery 438.1 466.8 601.0 602.9 625.9 678.4 505.4 435.9 11.5 
Other 330.8 355.0 501.5 608.3 685.7 310.3 368.1 337.5 8.9 
Total 4,317.3 4,406.8 4,685.3 4,749.7 4,678.6 4,525.2 4,354.1 3,784.9 100.0 
 
Source :  Central Bank of the Dominican Republic . 
1/ Revised figures.  
*Preliminary figures.  
 
Distribution of Free-Zone Exports 2009 
by Principal Activities 
 
Tabaco y 
derivados
10%Productos 
eléctricos
13%Prod. Médicos y 
Farmacéuticos
25%Otros
9%
Calzados
6%Confecciones y 
Textiles
25%Joyería
12%
 
 
_______________ 
 Jewellery 
12% Other 
9% 
Clothing and 
textiles 
25% 
Footwear
6% 
Electrical 
goods 
9% Medical and 
pharmaceutical 
products 
25% 
Tobacco 
and 
tobacco 
products 
10% G/SCM/N/211/DOM 
Page 8  
 
  The Dominican Republic's Action Plan for Elimin ating the Export Subsidies Pertaining to the 
Subsidy Programme under Law No. 8-90 on Free Zones 
 
 
(a) Description of programme 
 
 Law No. 8-90 to "promote the establishment of new free zones and expand existing ones", 
which establishes a tax-exemption programme fo r enterprises manufacturing goods or providing 
services related to goods production, located with in geographic areas known as free zones, and the 
production of which must be mainly for export. 
 
 The underlying reasons for this programme were to provide training, to transfer technology, 
to attract local and foreign investment, and to creat e employment at various points within the national 
territory, including in economically deprived ar eas, such as the border areas with Haiti.  This 
programme was created under Law No. 8-90 of 15 January 1990. 
 
 Enterprises manufacturing goods or providing services and operating under Law No. 8-90 are 
exempt from payment of income tax and customs duties on the importation and exportation of the raw materials, equipment and machinery used to pr oduce these goods.  The subsidy is therefore a tax 
concession.  (b) Description of national legal procedures for eliminating subsidies 
 
 The National Council for Free Export Zones is the official body responsible for ensuring the sound growth and development of the free- zone sector in the Dominican Republic. 
 
 Article 19 of Law No. 8-90 provides that the National Council for Free Export Zones shall be 
responsible for regulating and implem enting this Law and that it shall: 
 
(a) Review, assess and recommend to the Execu tive the setting up of free export zones, 
as provided for in Chapter 3 of Law No. 8-90; 
(b) review, assess, approve or reject applica tions for licences to establish enterprises in 
free zones, and the renewal of such licences upon expiry; 
(c) formulate a comprehensive policy for the pr omotion and expansion of the free-zone 
sector; 
(d) participate in the negotiation of local a nd international agreements and treaties 
relating to free export zone operations a nd activities and generate the statistics, 
procedures, and controls needed to en sure the proper implementation of signed 
agreements and treaties; 
(e) regulate and define relations between ope rators and free-zone enterprises, and 
between free-zone enterprises and the Nati onal Council for Free Export Zones or any 
other entity the activities of which are closely related to the operation of free export zones;  and 
(f) enforce the present law and any related legal provisions and take the necessary 
measures in the event of violation. 
 
 Under Decree No. 468-06 of October 2006, th e Executive set up a co mmission comprising 
the National Council for Free Export Zones, the Do minican Association of Free Zones (ADOZONA)  G/SCM/N/211/DOM 
 Page 9 
 
 
  and the National Competitiveness Council, which is re sponsible for drafting new free-zone legislation 
in accordance with internationa l trade rules.  The National Council for Free Export Zones is 
responsible for coordinating this commission.   This new law must be approved by both houses of the National Congress, i.e. the Chamber of 
Deputies and the Senate, and ratified by the Executive.  It is likely to be reviewed during the session 
beginning in August 2010 and could therefore ente r into force in November of the same year. 
 
(c) Description of actions taken or under way 
 
In order to comply fully with paragraphs 1( e) and (f) of General Council Decision WT/L/691, 
the Dominican Republic has implemented the following measures:  
(a) All resolutions and/or operating licences issued under the free-zone regime 
established by Law No. 8-90 contain the following paragraph:  "As of 2015, the 
Dominican Republic will reserve the right to  review and/or withdraw some of the 
incentives contained in Law No. 8-90, pursu ant to the Decision of the World Trade 
Organization (WTO) Committee on Subs idies and Countervailing Measures, 
contained in document G/SCM/120, concerning the extension provided for in Article 27.4 of the Agreement on Subsidi es and Countervailing Measures, adopted by 
the WTO General Council on 27 July 2007". 
(b) The Dominican Republic has recently drawn up a new draft law on free zones which 
provides for the complete dismantling of export subsidies.  The draft law will shortly be submitted for review and approval by the Congress of the Republic and the Executive. 
__________