WORLD TRADE  
ORGANIZATION  G/SCM/N/146/DOM 
5 July 2006 
 
 (06-3238) 
Committee on Subsidies and 
Countervailing Measures Original:   Spanish 
 
 
 
SUBSIDIES 
 
Extension under SCM Article 27.4 of the Transition Period  
for the Elimination of Export Subsidies Pursuant to the  
Procedures in Document G/SCM/39  
 
Updating Notification  
 
DOMINICAN REPUBLIC 
 
  The following communication, dated 30 June 2006,  is being circulated at the request of the 
delegation of the Dominican Republic.  
_______________ 
 
  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 2006. 
 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 
and to attract local and foreign investment in orde r to create employment at various points within the G/SCM/N/146/DOM 
Page 2  
 
  national territory, including 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 a ggregate services for the production of such 
goods 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 materi als, equipment and machinery used to produce 
these goods.  
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 in Law No. 8 90 that largely export go ods produced within the 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 per-unit s ubsidy 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 the free zones by the enterprises operating 
therein with a view to estimating the fiscal cost  to the Dominican State of attracting private 
investment for the creation of sources of employment.  
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. 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 determinable, ho wever, it is desirable that such information 
include statistics of production, consumption, im ports and exports of the subsidized product(s) 
or sector(s): 
(a) For the three most recent years for 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.   
  III.  HISTORICAL OVERVIEW OF THE FREE ZONES 
 Table No. 1 
 
Evolution of the Main Variables of Export Free Zones 
1994-2005 
 
Average weekly salary 
(RD$) 
Year Existing 
industrial 
estates Enterprises Jobs Exports 
(millions of 
US$) Foreign 
exchange 
(millions of 
US$) Workers Technical 
staff Surface area 
of industrial 
premises 
in use 
(sq.ft) Textile 
exports 
(millions of 
US$) 
1994 32 476 176,311 2,716.10 441.40 496.74 807.69 12,700,000 1,616.40 
1995 33 469 165,571 2,907.40 509.00 539.96 1,095.89 14,120,000 1,786.60 
1996 36 436 164,639 3,107.30 545.00 576.92 1,257.00 13,782,496 1,802.10 
1997 40 446 182,174 3,596.40 701.00 634.27 1,441.12 15,603,755 2,272.50 
1998 43 496 195,193 4,100.00 826.50 638.32 1,556.90 17,540,407 2,395.00 
1999 44 484 189,458 4,331.50 887.30 701.21 1,587.22 16,820,049 2,385.20 
2000 46 481 195,262 4,770.60 1,018.60 716.51 1,629.85 21,068,186 2,451.18 
2001 51 512 175,078 4,481.60 977.90 775.49 1,662.93 21,738,332 2,274.48 
2002 53 520 170,833 4,317.30 886.50 786.56 1,671.53 21,923,764 2,173.30 
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 4,685.24 869.50 1,131.25 2,539.82 24,332,619 2,120.56 
2005* 57 556 154,781 4,734.70 991.00 1,372.56 2,834.78 24,540,453 1,904.64 
Growth % 
2004-2005 -1.7 -2.3 -18.5 1.1 14.0 21.3 11.6 0.9 -10.2 
 
/ Revised export and foreign exchange figures 
 
* Preliminary export and foreign exchange figures 
 G/SCM/N/146/DOM
Page 3 G/SCM/N/146/DOM 
Page 4  
 
  Balance of Exports Versus Imports for the Free Zones 
1994-2005 
(Millions of US$) 
 
Year Exports Imports Balance 
1994 2,716.01 1,911.50 804.5 
1995 2,907.40 2,006.20 901.2 
1996 3,107.30 2,146.30 961.0 
1997 3,596.40 2,416.70 1,179.7 
1998 4,100.00 2,700.70 1,399.3 
1999 4,331.50 2,834.30 1,497.2 
2000 4,770.60 3,062.50 1,708.1 
2001 4,481.60 2,826.40 1,655.2 
2002 4,317.30 2,600.30 1,717.0 
2003 4,406.80 2,530.90 1,875.9 
2004 / 4,685.24 2,519.90 2,165.3 
2005* 4,734.68 2,407.34 2,327.3 
 
/ Revised figures 
* Preliminary figures 
Source :  Central Bank of the Dominican Republic 
 
 
 
 
 
 
 
Exports Versus Imports for the Free Zones 
1994-2005 
Imports Exports G/SCM/N/146/DOM 
 Page 5 
 
 
  Comparison of Domestic and Free-Zone Exports 
1994-2005 
(Millions of US$) 
 
Year Domestic 
exports Var. % 
Domestic Free-zone 
exports Var. % 
Free zones Total exports Free-zone 
exports/total 
exports 
1994 736.4 --- 2,716.0 --- 3,452.4 78.7 
1995 872.1 18.4 2,907.4 7.0 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 4,980.3 82.3 
1999 805.1 -8.5 4,331.5 5.6 5,136.6 84.3 
2000 966.1 20.0 4,770.6 10.1 5,736.7 83.2 
2001 794.6 -17.7 4,481.6 -6.1 5,276.2 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* 1,397.9 11.8 4,734.7 1.1 6,132.6 77.2 
 
/ Revised figures 
* Preliminary figures 
Source :  Central Bank of the Dominican Republic 
 
 
  
 
     
 
    
 
     
 
    
__________ 
 
Comparison of Domestic Expor ts and Free-Zone Exports 
(2005) 
 
Domestic exports 
23% 
 
Free-zone exports 
77%