RESTRICTED  WORLD TRADE  
ORGANIZATION  WT/TPR/G/207 
20 October 2008  
 
(08-4975) 
Trade Policy Review Body Original: Spanish 
   
 
  
 
TRADE POLICY REVIEW 
 
Report by 
 
THE DOMINICAN REPUBLIC 
 
  
 
Pursuant to the Agreement Establishi ng the Trade Policy Review Mechanism 
(Annex 3 of the Marrakesh Agreement Establishing the World Trade 
Organization), the policy statement by the Dominican Republic is attached. 
 
 
Note: This report is subject to restricted circ ulation and press embargo until the end of the first 
session of the meeting of the Trade Policy Review Body on the Dominican Republic. The Dominican Republic WT/TPR/G/207 
 Page 3 
 
 
 CONTENTS 
 
  Page 
I. INTRODUCTION 5 
II. MACROECONOMIC ENVIRONMENT 6 
(1) T HE CRISIS  6 
(2) S TABILIZATION AND GROWTH  6 
III. ELEMENTS OF THE DOMINICA N REPUBLIC'S TRADE POLICY 10 
(1) N EGOTIATIONS  10 
(2) T RADE POLICY  11 
(3) S ECTORAL POLICY  15 
IV. CONCLUSIONS 18 
  
 The Dominican Republic WT/TPR/G/207 
 Page 5 
 
 
 I. INTRODUCTION 
1. One year after its previous Trade Policy Revi ew in 2002, the Dominican Republic suffered 
one of the most serious economic a nd financial crises of its history following the bankruptcy of three 
banks owing to a combination of fraud, excessive lo ans to related parties, and poor management of 
public finances.  This crisis led to high inflati on, a sharp depreciation in the exchange rate, capital 
flight, a twofold increase in the public debt in the space of a single year, and a slowdown in the 
country's economic growth.  The Government's commitment to drawing up and implementing an 
economic programme aimed at re-e stablishing fiscal, monetary and financial discipline and to 
introducing structural reforms in a number of areas contributed to a marked and rapid recovery of the 
economy and of international reserv es, and hence lower inflation and interest rates, a more stable 
exchange rate, and the recovery an d consolidation of economic growth. 
2. Thanks to a combination of prudent monetary and fiscal policies and structural reforms in 
fiscal management and banking supervision, the count ry's economic, political and social stability were 
restored.  Over the past three years, economic growth  has been restored and consolidated, with twelve 
consecutive quarters posting a growth rate of more th an 5 per cent and the average growth rate for the 
period 2005-2007 reaching 9.5 per cent, among the highest in the world.  The inflation rate was also 
reduced to a single digit after reaching 48.7 per cent in 2003 and 28.7 per cent in 2004, while at the 
same time there was a decrease in unemployment and poverty, an improvement in the financial 
position of the commercial banks, a nd a reduction in the quasi-fiscal deficit of the Central Bank and 
the non-financial public sector. 
3. The Dominican Republic has also undertaken a num ber of important structural reforms to the 
institutional framework governing the management of public finances and the financial sector.  Fiscal 
management reforms have sought to  bring together under one roof the management of expenditure, 
revenue and public debt, while the financial sector  reforms aim to enhan ce transparency, and to 
consolidate governance and strengthen regulation and supervision in the banking sector.  The 
Government's efforts have been rewarded by renewed confidence among economic operators as well 
as a resumption of investment flows into the c ountry and increased deposits in the banking system. 
4. In the international trade area, the Dominican  Republic is pursuing its policy of openness by 
unilaterally reducing its tariffs, and by stepping up  integration at the multilateral and hemispheric 
levels through participation in the Doha Round, and the negotia tion and conclusion of regional 
agreements with the United States and Central America (DR-CAFTA), the European Union, the 
Caribbean and Canada. 
5. Similarly, the Dominican Republic, aware that foreign direct investment means growth in 
productivity and the transfer of technology, pr ovides a legal framework conducive to foreign 
investment, that guarantees equal treatment for domestic and foreign investors with few sectoral 
restrictions and full freedom to repatriate capital. 
6. In spite of its significant economic achievements over the past four years, the country remains 
vulnerable and faces major challenges in different areas of society in general, and in particular the 
economy.  Although they have progressed considerab ly over the past few years, poverty, governance 
and institutional performance indicators are still be low the regional averages.  However, these 
weaknesses are being tackled through structural reforms such as those mentioned above, with a 
special emphasis on improving access to educati onal and employment opportu nities and on improving 
the access by the most disadvantaged sectors of soci ety to drinking water, sewage, electricity and 
telephony. WT/TPR/G/207 Trade Policy Review 
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II. MACROECONOMIC ENVIRONMENT 
(1) THE CRISIS  
7. From 1996 to 2000, the Dominican Republic expe rienced solid economic growth, to the point 
where between 1996 and 1998, it had become one of the most dynamic economies in the world.  
Unemployment fell, inflation was low, the exchange  rate was stable, and the balance of payments 
situation was sustainable.  The country's econom ic success during that period was based on the 
performance of the most open sectors of the economy such as tourism, the free zones, telecommunications and, to a lesser extent, constr uction.  In 2001, the ec onomy began to slow down 
as a result of external factors, such as the economi c slowdown in the United States and Europe and the 
increase in oil prices following the terrorist attacks of 11 September. 
8. The economy finally went into a slump in 2003, immediately after the second Trade Policy 
Review, as a result of the increase in the fiscal deficit, the nationalization of two electricity distribution companies, and the bankruptcy of one of the country's leading banks as well as two other smaller banks, rescued by the moneta ry authorities at a cost amounting to 21 per cent of GDP.  The 
Central Bank financed this rescue by increasing its  monetary liabilities.  The combination of these 
factors and the issue of large quantities of Central Bank certificates to compensate for the 
monetization created by the rescue of the banks led to a significant increase in the consolidated public 
sector debt and the quasi-fiscal deficit of the Central Bank. 
9. From 2002 to 2003, the total public sector debt in creased from 18.1 per cent of GDP to 32 per 
cent, while the Central Bank debt increased from 1. 7 per cent to 11.9 per cent.  Meanwhile, the quasi-
fiscal deficit went from 0.2 per cent to 2.2 per cent in 2003 and 3.4 per cent in 2004.  Similarly, as a 
result of the relaxation of monetary and fiscal polic y, average inflation increased from 10.5 per cent in 
2002 to 42.7 per cent in 20 03, falling back to 28.7 per cent in 2004,  while the peso depreciated rapidly 
from 17.76 per dollar in December 2002 to 48.62 pe r dollar in June 2004, and real and nominal 
interest rates rose. 
10. With the deterioration in consumer and corpor ate sector confidence, private consumption, 
investment and economic activity declined, and for f our consecutive quarters growth was negative.  In 
2003, GDP fell by 0.3 per cent following a 5.8 per cent increase in 2002.  The economic slowdown and the sharp depreciation of the peso led to a surplus in the current account of the balance of 
payments of 6.2 per cent of GDP in 2003, and 5.8 per cent in 2004, expenditure on imports of goods and services having decreased while exports increased. 
(2) S
TABILIZATION AND GROWTH  
11. The second half of 2004 saw the beginning of a process of stabilization, which was boosted 
by the conclusion of a new agreement with the International Monetary Fund.  The stabilization 
programme focussed on restoring fiscal and monetary discipline, restructuring the external and domestic public debt, and introducing a series of structural reforms in various areas of public 
administration. 
12. The authorities drew up and implemented a progra mme aimed at reducing the fiscal deficit, 
clearing up arrears in the servicing of the public de bt, and stabilizing and reducing the debt/GDP ratio.  
From 2004 to 2007, the authorities reduced the consolidated public sector deficit from 6.5 per cent of GDP to 1.7 per cent, and the non-financial public sector deficit from 3.14 per cent of GDP to a surplus of 0.15 per cent.  Meanwhile, the primary balance went  from a deficit of 1.64 per cent to a surplus of 
1.35 per cent. The Dominican Republic WT/TPR/G/207 
 Page 7 
 
 
 13. To correct the fiscal imbalance in 2004, the au thorities increased the rate of the value added 
tax (ITBIS – Tax on the Transfer of Industrialized  Goods and Services) from 12 to 16 per cent and 
extended the tax base to certain services, to increa se selective taxes on beer, alcohol and cigarettes, 
and to update the adjustment for inflation of fuel taxes.  Growth in public expenditure was curtailed 
by freezing government salaries, better targeting the LGP subsidy, and postponing low-priority 
investment projects and recurrent expenditures. 
14. Since 2004, one of the Government's fundamental  objectives has been to restore the social 
expenditure eroded by the crisis.  This led to a change in priorities when it came to allocating 
resources, ultimately resulting in a significant change  in the composition of public spending.  Thanks 
to this restructuring of expenditure coupled with  the increased resources made available by the tax 
reforms, social expenditure has recovered over the p ast few years.  In 2002, it reached a historical 
peak of 7 per cent of GDP, falling to 5.6 per cent in 2003 before steadily recovering to reach 8 per 
cent in 2007.  The main beneficiaries of this increase were education, health, and the local 
communities. 
15. As regards the contribution of tax policy to  maintaining stability, during the period 2004-
2007, total primary expenditure remained within a ra nge of 15 to 16.4 per cent of GDP.  Expenditure 
on wages and salaries, which had reached more than 5 per cent of GDP in the execution of expenditure for 2002, fell back to 3.6 per cent by the end of 2007.  Expenditure on goods and services 
increased from 1.7 per cent of GDP in 2002 to 2 pe r cent in 2005 and 2.5 pe r cent in 2007.  Capital 
expenditure rose from 4.1 per cent of GDP in 2002 to 4.7 per cent in 2007. 
16. Meanwhile, interest payments on the debt rose to 1.8 per cent of GDP in 2004.  Following the 
restructuring of the debt in 2005, interest paymen ts fell to 1.3 per cent of GDP for that year, and 
continued to decrease thereafter, reaching 1.2 per cent in 2007. 
17. In the tax administration area, measures such as increased penalties for failure to pay taxes 
and improved tax collection mechanisms also helped the tax situation.  In 2005 and 2006, additional 
tax measures were taken to stre ngthen public finances and offset the loss of tariff revenue following 
the entry into force of the Central Am erica Free Trade Agreement (DR-CAFTA). 
18. In order to resolve the non-financial public sector's short-term liquidity problems and 
strengthen the sustainability of the public debt in  the medium and long term, a financing strategy was 
devised with a view to ensuring a reduction in th e consolidated public sector debt from 53.1 per cent 
of GDP in 2004 to 40 per cent in 2007.  To achieve this, a cap was placed on debts approved by the 
National Congress and on debt outlays, and the domestic  and external public debt was restructured. 
19. These measures made it possible in 2005 to defe r debt commitments with the Paris Club and 
the London Club for a total of US$136 million and US$198 million respectively.  At the same time, approximately 98 per cent of the US$1.1 billion wort h of debts with the country's bond holders was 
renegotiated and it was possible to obtain pa rtial disbursements from the Inter-American 
Development Bank and the World Bank.  At the same time, the Petrocaribe Agreement with 
Venezuela came into force, opening up credit lines with the local bank for some US$200 million. 
20. In order to send economic operators clear si gnals of the Government's commitment to 
medium- and long-term macroeconomic stability , the authorities redesigned the institutional 
framework governing the management and control of  the fiscal sector by enacting a number of laws:  
Organic Law of the Ministry of Finance;  Orga nic Budget Law;  Public Credit Law;  Law on the 
Treasury;  Law Establishing the State Financial Administration System;  Public Planning and WT/TPR/G/207 Trade Policy Review 
Page 8 
 
 
Investment Law;  Law on Governme nt Procurement;  Law Establishi ng the Ministry of the Economy, 
Planning and Development;  and the Central Bank Recapitalization Law.  The purpose of these 
reforms was to improve the process of drawing up, assessing, recording and controlling the State 
budget as well as financing, procurement and contracts procedures, and internal  auditing procedures.  
The idea was to pave the way for more efficient m echanisms for the control of expenditure and to 
improve the transparency and accountability of public finances. 
21. A policy strategy was devised for the monetary sect or to tackle the monetary excess generated 
by the banking crisis of 2003.  The bankruptcy of  three private commercial banks requiring liquidity 
assistance to the tune of 21 per cent of GDP led to an unprecedented increase in monetary aggregates 
in the Dominican Republic.  In 2003, currency issu e and the circulating medium (M1) increased by 
101.8 per cent and 77.8 per cent respectively, tri ggering strong inflationary and exchange rate 
pressures.  In an effort to relieve these pre ssures, the Central Bank stepped up its open market 
operations and introduced new monetary policy in struments such as permanent liquidity facilities 
comprising an overnight deposit window and a Lombard window.  In spite of the monetary efforts to tackle the crisis in its initial stag e, the rate of inflation reached 42. 7 per cent in 2003 and 28.7 per cent 
in 2004. 
22. In addition to its impact on inflation and domes tic production, the banking crisis considerably 
undermined the confidence of economic operators in  government policy.  In an environment of 
negative expectations and excess liquidity, the Domi nican peso depreciated rapidly.  The nominal 
exchange range, which stood at RD$20.2/US$ at the end of 2002, peaked at RD$50.43/US$ in 
February 2004.  In an effort to stave off the a ttack on the Dominican peso, the Central Bank began to 
loose net liquid international reserves.
1  After reaching a historical annual peak of US$962.2 million 
in 2001, net liquid international reserves fell to US$376 million in 2002, and to minus 
US$95.4 million in 2003.  2004, in particular the latter part of the year, saw the beginning of a process 
of reconstitution of reserves, and net internati onal reserves reached US$191.4 million by the end of 
the year. 
23. An important consequence of th e banking crisis was the increase in the quasi fiscal deficit 
from 0.2 per cent of GDP in 2002 to 3.4 per cent in December 2004.  The demonetization of the 
excess liquidity resulting from the banking crisis le d to an increase in Ce ntral Bank securities and 
circulation.  From December 2002 to December 2004,  the total value of certificates issued by the 
monetary authorities grew from RD$6,905,300,000 to RD$101,966,300,000. 
24. In this environment of high liquidity, fiscal deterioration and lack of confidence among 
economic operators, the Central Bank used currency issue as an operational target of its strategy 
aimed at achieving its ultimate objective of price stability.  Consistently achieving this and other 
targets was a decisive factor in the recovery of macroeconomic stability.  The inflation rate fell from 28.7 per cent at the end of 2004 to 7.4 per cent in 2005 and 5 per cent in 2006.  In 2007, the economy 
was affected by an adverse domestic and external  environment which pushed inflation up to 8.9 per 
cent by the end of the year. 
25. But not only did these monetary policies gra dually bring down inflation and stimulate 
economic recovery, they also helped to stabilize the exchange rate.  After reaching a peak of 
RD$50.27/US$ at the end of February 2004, the averag e selling exchange rate in the banking market 
gradually fell to RD$33.44/US$ in December 2005, and RD$33.3/US$ in December 2006.  In 
December 2007, the average nom inal exchange rate reached RD$33.67/US$.  The appreciation 
recorded between 2004 and 2007 was due to a strong influx of capital which enabled the Central Bank 
                                                     
 
1 Net liquid international reserves were defined in the framework of the agreem ent with the IMF as net 
international reserves minus certain items such as the st atutory reserve in dollars for financial intermediaries. The Dominican Republic WT/TPR/G/207 
 Page 9 
 
 
 to reconstitute its net international reserves.  These reserves increased from US$191.4 million in 
December 2004 to a historical peak of US$1,625,800,000 in December 2007. 
26. One of the consequences of the rapid recovery of the Dominican economy, the appreciation of 
the exchange rate, the increase in domestic demand a nd the rise in oil prices was an increase in the 
current account deficit of the balance of payments , which went from minus 3.2 per cent of GDP in 
2002 to a surplus of 4.8 per cent in 2004 and a deficit of 5.4 per cent in 2007.  The increase in the current account deficit was largely due to the rise in  the trade balance deficit following the increase in 
international oil prices.  The share of fuel imports  in total imports went from 21.6 per cent in 2002 to 
an average of 32.1 per cent for 2005-2006.  However,  foreign direct investment inflows were more 
than sufficient to finance the negative current ac count balance and to enable the Central Bank to 
accumulate international reserves. 
27. The Central Bank's monetary policy strategy helped  to deal successfully with inflationary and 
exchange rate pressures and to in crease international reserves without  any major deterioration of the 
quasi-fiscal deficit.  On the contrary, the quasi-fisc al deficit decreased gradually from 3.4 per cent of 
GDP in 2004 to 1.8 per cent in 2007.  This was ac hieved largely thanks to the decrease in interest 
rates during the period in question.  The weighted av erage interest rates for auctions of Central Bank 
instruments decreased from 25.45 per cent in Dece mber 2004 to 9.53 per cent in December 2007.  
The decrease in these rates was transm itted to the active rates of the financial system, whose weighted 
average fell from 30.88 per cent to 16.44 per cent over the same period of time. 
28. The sharp fall in the financial system's interest  rate on loans revived the private sector local 
currency loan portfolio.  Private sector loans incr eased from 8.5 per cent in 2005 to 22.4 per cent in 
2006 and 33.2 per cent in 2007.  The increase in th e loan portfolio revitalized consumption and 
private investment, and contributed decisively to the economic growth that took place between 2005 and 2007. 
29. In addition to the monetary measures aimed at  restoring macro-economic stability, during the 
period under consideration, a number of steps were taken to strengthen the institutional framework for 
monetary policy and banking supervision.  In 20 07, a draft law amending th e Monetary and Financial 
Law was submitted to the Congress with a view, inter alia , to strengthening the autonomy of the 
monetary authorities.  Meanwhile, the chief executi ves of Baninter, including its chairman, were 
jailed, having been tried and hande d prison sentences of five to ten years by the Dominican courts.  
The conviction delivered had already become res judicata , having exhausted the different stages of 
the legal procedure.  The executives of one of the other two banks were sentenced in the second 
instance to eight years, and have now app ealed to the Supreme Court of Justice. 
30. Thanks to its fiscal policy, its structural re forms, its monetary policy strategy, and its 
strengthened banking supervision regulations, the Dominican Repub lic was able to successfully 
overcome the serious economic crisis facing the coun try from 2003 to 2004.  And it is thanks to these 
policies that the Dominican Republic has experience d such a spectacular economic recovery over the 
past four years. 
31. At the same time, the economic policy package implemented by the authorities over the past 
four years has led to an appreciation and stabiliza tion of the exchange rate, reduced inflation, a 
decrease in the external public debt, an accumulatio n of net international reserves, significantly lower 
banking interest rates and a decrease in th e quasi-fiscal deficit of the Central Bank. WT/TPR/G/207 Trade Policy Review 
Page 10 
 
 
32. However, the recent bouts of instability in the world economy in connection with the 
subprime crisis in the United States and high intern ational commodity prices, in particular oil, food, 
metals and raw materials, have presented the Domi nican economy with new challenges.  The rise in 
world prices has led to a significant increase in  the pressure on domestic prices through imported 
inflation.  While the inflation rate for 2007 was 8.9 per cent, only 5.7 per cent of that figure was 
attributable to internal factors. 
33. The first few months of 2008 saw an increasingly rapid deterioration in the current account of 
the balance of payments and an increase in inflatio nary and exchange rate pressures.  This adverse 
international environment coincided with increased tax expenditure in connection with the Dominican 
electoral cycle.  Faced with adverse domestic a nd external environments, the Central Bank applied a 
restrictive monetary policy during the first half of 2008.  In January and February 2008, the short-term 
interest-bearing deposit rate, which is a proxy for the monetary policy rate, was increased by 200 basis points.  Similarly, to reduce liquidity in the economy, the Central Bank increased the issue of investment certificates and reduced its net inte rnational reserve holdings by 10.5 per cent during 
the first quarter of 2008. 
34. Both the issue of certificates and the sale of reserves as well as the increase in the policy 
interest rate aim to slow down the economy through reduced private consumption.  Added to this is 
the contractionary effect of the fiscal adjustme nt plan that the government introduced during the 
second half of the year.  The result of this combin ation of policies should be a slowdown in domestic 
demand which should help to contain inflationary and exchange rate pres sures and maintain the 
macroeconomic stability achieved through the meas ures taken during the post crisis period. 
III. ELEMENTS OF THE DOMINICAN REPUBLIC'S TRADE POLICY 
(1) N
EGOTIATIONS  
35. As a founding Member of the World Trade Organization (WTO) since 1995, the 
Dominican Republic has maintained its firm comm itment to the multilateral system, which it sees as 
its trade policy platform and the basis for its relations  with its trading partners.  It also continues to 
support the negotiating process under the Doha Deve lopment Round, since it understands that the 
results of that process will contribute to lowering trad e barriers, in particular those which limit market 
access for goods and services from the developing countri es.  In addition, it promotes cooperation to 
facilitate the implementation of the legal and admi nistrative instruments needed to modernize trade 
mechanisms. 
36. The Dominican Government trusts that th is opening up will be accompanied by the 
elimination of barriers to trade in goods and services  – which are making it difficult to enjoy the better 
access conditions achieved through the dismantling of tariffs and service liberalization commitments 
– and by the establishment of technical and ec onomic cooperation between the developed countries 
and the small and vulnerable economies as a ke y element in achieving their objectives. 
37. Since its last Trade Policy Review, the Domini can Republic has intensified its negotiation of 
regional agreements with its main trading part ners, and now has integration arrangements with 
Central America (Central American Common Market – CACM), the Caribbean Community 
(CARICOM), the United States, and the European Uni on.  Of particular note with respect to this 
effort to integrate the Dominican economy into the world economy are DR-CAFTA, concluded with 
the countries of Central America (CACM) and the Un ited States in 2004, and the recently finalized 
Economic Partnership Agreement (EPA) between th e Caribbean Forum countries and the European 
Union, for which the negotiations were completed in December 2007. The Dominican Republic WT/TPR/G/207 
 Page 11 
 
 
 38. The objective of these trade negotiations at the regional level derives from the need to open 
up new markets for Dominican products and to guarantee the durability of preferences in the country's main export markets.  The trade agreements conc luded by the Dominican Republic essentially provide 
for stable and long-term preferential access, and the id ea is to incorporate in the legal texts most of the 
disciplines covered by the WTO multilateral framewo rk.  They also form a cornerstone of the 
country's economic development policy in that they r esult in a wide range of trade partnerships.  For 
example, the Economic Partners hip Agreement with the European Union provides for such 
partnerships with the 27 countries of the Euro pean market plus the 15 member countries of 
CARICOM, and in the medium term it could op en up the market to include the other 78 ACP 
countries.  At the same time, DR-CAFTA, with the five member countries of the Central American 
Common Market and the United States, is helping to consolidate a trade area regulated by duly 
negotiated sets of rules and a time-frame fo r short and medium-term tariff reduction. 
39. In addition to these agreements, the Dominican  Government, in an effort to strengthen 
relations with its main trading pa rtners, initiated negotiations in 20 06 with a view to concluding an 
agreement with the Separate Customs Territory of  Taiwan, Penghu, Kinmen and Matsu.  Starting in 
2007, it also entered into negotiations with Canada to conclude a free trade agreement as part of the 
policy of regionalizing open trade. 
40. These regional trade negotiations are seen by th e Dominican authorities as a step forward in 
adapting to the country's commitments at a multilateral level.  They should therefore be seen as an effort to build up trade links that will contribut e to modernizing its economy, to making its national 
production structure competitive at the world leve l, to making the necessary adjustments to its 
legislation, and to progressively reducing the trad e-distorting tariff barriers that are undermining the 
development of the non-traditional goods and services export sectors. 
41. With this objective in mind, and to deepen and consolidate this process, numerous laws have 
been enacted since 2002 which promote openness, c onsolidate the reforms, and provide the legal 
instruments needed to provide trade and investme nt with guarantees in the framework of the legal 
commitments set forth in the multilateral, regiona l and bilateral agreements concluded by the 
Dominican Republic. 
42. In fact, the regional agreements have been an  intermediate stage on the way to multilateral 
trade in that they have given rise to a number of st ructural and legal adjustments which have enhanced 
the level of domestic and external competition.  Th e process has helped to improve, legal certainty for 
investors, and its objective is to boost productivit y and trade, and to stimulate economic growth. 
(2) T
RADE POLICY  
43. The Dominican Republic's trade policy is shaped by a steady process of economic 
liberalization.  Its multilateral, regional and bilate ral agreements have helped to provide access for its 
exports to other markets, and vice versa.  This, in its  turn, has helped to reduce the cost of inputs used 
in production for the local market as well as exports , and has enhanced variety, quality and access at 
lower prices for domestic consumers.  This policy of openness is reflected in the high share in GDP of exports and imports of goods and non-factor services, which stood at approximately 74 per cent 
during the period under consideration. 
44. The Dominican Republic's economic growth over the past 20 years has been sustained by 
exports of goods and services.  The export sector gr ew considerably during  this period.  Goods 
exports increased from US$5,374,0 00,000 in 2002 to US$6, 790,000,000 in 2006, while exports of WT/TPR/G/207 Trade Policy Review 
Page 12 
 
 
services increased from US$3,070,700,000 in 2002 to US$4,690,000,000 in 2007.  The increase in 
domestic goods exports – in particular manufactur ed goods and food products – was noteworthy, 
reaching an annual rate of 19.5 per cent during the period. 
45. Dominican exports are highly diversified and c over several areas of economic activity.  In 
terms of share in total exports, among the most impo rtant sectors in 2006 were articles of apparel and 
clothing accessories (24.8 per cent), medical, surgical, veterinary, jewellery and footwear instruments 
and appliances (22 per cent), food products such as s ugar, cocoa, bananas and tobacco (13.8 per cent), 
and transport machinery and equipment (10.4 per cen t).  At the same time, the Dominican economy is 
one of the leaders in the exportation of tourism se rvices, real estate services and telephone traffic. 
46. In an open economy geared towards foreign trade, imports of final goods, inputs and 
machinery are useful in boosting the potential fo r production and consumption.  Imports of goods 
have grown at an annual average rate of 12 per cen t since the last Trade Policy Review.  National 
goods imports have predominately been in the area s of machinery and transport (24.5 per cent of 
national imports), chemical products (9.6 per cent), o il (30 per cent) and food products (11.6 per cent). 
47. During the period 2002-2006, the country's trade balance deficit averaged US$3,941,500,000, 
while the balance of services record ed an average surplus of US$2,45 1,300,000 chiefly thanks to the 
growth in tourism service exports. 
Tariffs 
48. The Dominican Republic has continued its process of liberalization thr ough unilateral tariff 
reduction and the conclusion of trade agreements.  Simple average MFN tariffs fell from 8.6 per cent 
in 2002 to 7.4 per cent in 2007, while the average ef fective tariff rate fell quite sharply over the same 
period, from 9.4 per cent to 5.3 per cent. 
49. The share of tariff lines that benefit from duty -free treatment rose from 13.4 to 54.5 per cent 
as a result of the DR-CAFTA Agreement and the willingness of the Dominican government to extend this same tariff treatment to the rest of the world in general.  This has meant the elimination of the 
tariffs applied to a considerable number of inputs and capital goods, bringing down the costs of inputs 
needed by domestic producers that  target the local mark et while helping to make exporters more 
competitive. 
50. The decrease in the average applied tariff was ch iefly the result of this reduction to zero, in 
2007, of the tariff rates applied to some 2,903 tariff lines which had previously been subject to rates of 
3 and 8 per cent.  There are currently 3,804 MFN ta riff lines with a zero rate.  This tariff reduction 
reflects not only an interest in reducing effective pr otection in some cases, but also in ensuring that 
sectors producing potentially exportable products are competitive in foreign markets.   
Customs procedures 
51. The modernization of customs procedures initiated during this period with a view to 
facilitating trade and making it more predictable rema ins one of the chief instruments for helping the 
Dominican Republic to become a regional strategi c centre for attracting productive investments in 
goods and services and providing incentive for co mmercial activities targeting foreign markets. 
52. The most significant achievements since 2002 have  been the elimination of the consular 
invoice;  the introduction of the Single Customs Declaration (DUA) which replaces the Single Export Form No. 3256 and the Import Declaration Form No. 3480;  electronic transmission of the declaration 
and other documents to the Directorate-General of  Customs (DGA);  electronic payment of taxes;  The Dominican Republic WT/TPR/G/207 
 Page 13 
 
 
 reduced clearance times;   the introduction of post-shipment inspection of goods;  and the 
establishment and start-up of a regional customs training centre with the support of the World Customs Organization (WCO). 
53. At the institutional level, a law was promul gated which grants budgetary autonomy to the 
DGA, and a number of decrees and decisions were issued with respect to important and specific 
aspects of the customs process, thereby enhancin g the fluidity of the process and speeding up 
clearance formalities and security procedures as re quired by the economic operators involved.  
Significant process was also made in the followi ng areas:  (i) implementation of transparency 
instruments to facilitate trade;  (ii) applicati on of information technologies;  (iii) setting up of 
temporary import facilities;  (iv) development of risk management programmes;  (v) online 
certification of origin;  (vi) regulation of urgent shipments, x-ray scanning;  (vii) interconnection of 
the DGA with other government institutions, among other measures;  and (viii) modification of customs service fees.  The aim is to deepen and expand trade facilitation activities at the national and international levels in order to enhance business opportunities. 
54. In October 2005, the Dominican Republic a nd the United States signed a Customs Mutual 
Assistance Agreement which en ables customs officers from the two countries to exchange 
information and documentation with a view to prev enting various offences.  The agreement lays the 
groundwork for cooperation and i nvestigation in areas such as smuggling and other forms of 
commercial fraud, money laundering and security.  In these areas, the Dominican government is ready 
to conclude similar agreements with its main trading partners. 
Trade facilitation 
55. At the multilateral level the Dominican Republic  has actively supported the trade facilitation 
negotiations because of the importance to its exporters  and importers of regular, straightforward, fair, 
transparent and efficient cross-border procedures th at enable them to take full advantage of the 
opportunities created by the opening up of trade.  It is currently setting up a National Trade 
Facilitation Committee. 
56. The One-Stop Window for Foreign Trade Operations (SIVUCEX) established by 
Decree 248–98 and brought into operation on 3 Octobe r 2005 was created with a view to simplifying, 
expediting and centralizing export formalities with th e government bodies concerned.  It involves the 
centralization of documentation and procedures in a single web portal and the Single Administrative 
Document form.  The introduction of SIVUCEX s hould boost national competitiveness by reducing 
transaction time and costs. 
Rules of origin 
57. The Dominican Republic applies rules of origin in  the framework of the trade agreements that 
it has concluded with CARICOM, Central America (CACM) and Panama, and DR-CAFTA.  The commitments assumed under the Economic Partnership Agreement (EPA) provide for rules of origin 
that are to be applied as from the entry into force of the Agreement.  The government has notified the 
WTO of the preferential rules of origin in its FTA s with CARICOM and Centra l America, and intends 
to do the same for DR-CAFTA and Panama. 
58. An important element of the origin commitmen ts is the full accumulation provided for under 
the EPA.  DR-CAFTA also contains provisions that enable exporters of made-up textile articles to 
accumulate with Mexican and Canadian suppliers .  The Dominican Republic considers that the WT/TPR/G/207 Trade Policy Review 
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principle of accumulation should be extended to othe r products and to all of the countries with which 
its trading partners, in their turn, have free trade agreements. 
59. With the implementation of DR-CAFTA, the Dominican Republic introduced substantial 
changes in its origin certification procedures for the parties to the Agreement.  More specifically, it 
eliminated government certification and shifted th e responsibility for certification to the exporter, 
importer, or producer of the goods.  The Dominican authorities consider that the extension of this 
mechanism to other trade agreements would co ntribute to simplifying the process of issuing 
certifications of origin, thereby speeding up tr ansactions with its main trading partners. 
Technical barriers to trade 
60. The Dominican Republic has made progress in th e area of technical barriers to trade, 
including the establishment in 2006 of the National Committee for the Implementation of the Agreement on Technical Barriers to Trade.  This Committee oversees the implementation and 
administration of the WTO TBT Agreement and recommends suitable measures and processes in the framework of its multilateral and regional comm itments.  A number of initiatives have been 
undertaken with a view to strengthening the TBT in stitutional framework and to  ensure that trading 
partners are promptly and properly notified.  The truth is, however, that the country still has its 
shortcomings in this area, particularly as rega rds the institutional framework and trained staff. 
Contingency measures 
61. Since the last Trade Policy Review, the Domi nican Republic has adopted no anti-dumping, 
countervailing or safeguard measures.  It is curre ntly in the process of setting up the institutional 
framework necessary for implementation of such measures – by Law 01-02 creating the Commission 
for the Regulation of Unfair Trade Practices and Safeguard Measures – and for the implementation of the accompanying legislation.  The members of this  Commission were appointed by Decree 43-08 of 
23 February 2008, and ratified by the national congress. 
Government procurement 
62. The Dominican Republic has introduced far reachin g changes in this area as well, with the 
adoption of new government procurement legislatio n in the form of Law 340-06, amended by Law 
446-06.  This legal framework, which modern ises government procurement procedures while 
promoting transparency and guaranteeing challe nge procedures, eliminates any discrimination 
between products/services or suppliers on the grounds  of nationality.  The only restriction is the 
requirement of partnership with local suppliers. 
63. This new policy has helped to improve the gove rnment procurement system by facilitating the 
participation of companies in the government  procurement process and ensuring transparent 
information mechanisms.  These include the publicati on on the web portal of each institution and in 
national newspapers of calls for tender as we ll as purchases and concessions relating to goods, 
services and public works.  A single register of suppliers of goods, services, works and concessions 
has also been introduced so that each institution does not have to have  its own register.  In addition, 
the web portal www.comprasdominica.gov.do
 has been developed and put into operation, enabling 
suppliers and citizens in general to follow the procee dings and learn the outcome  of challenges, and to 
obtain together any other information rela ted to the subject or the institution. The Dominican Republic WT/TPR/G/207 
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 Intellectual property 
64. The Dominican Republic recognises intellectual property rights as an essential tool in 
promoting economic activity and growth.  The so lid legal structure built up since 2000 in the 
industrial property and copyright area has created an environment conducive to related activities.  
Moreover, the commitments assumed in that area go beyond the obligations contained in the TRIPS 
Agreement.  Thanks to these initia tives, it has been possible to reduce cases of piracy and to transform 
the Dominican Republic into a safe environment for all business transactions of that nature. 
Competition policy 
65. Competition policy is set forth in Article 8 of the Constitution of the Dominican Republic, 
which provides for freedom of enterprise and the pr ohibition of monopolies.  However, in order to 
provide this policy with a legal framework, th e General Law on Competition No. 42-08 was adopted 
in January 2008.  The objective being to bring order to the markets.  Through this Law, the Dominican Government is seeking, to promote effi ciency and innovation in the domestic market and 
thus to raise the living standard of the country's population. 
66. The Dominican Republic adopted new consumer  protection legislation in September 2005 
which guarantees equity and legal certainty for su ppliers and consumers of goods and for service 
users, whether public or private, national or foreign.  The purpose of this law is to eliminate discriminatory or abusive practices that could arise from sectoral laws. 
(3) S
ECTORAL POLICY  
Agricultural sector 
67. The Dominican Republic's agricultural trade po licy is governed by the commitments assumed 
in the different trade agreements, both mu ltilateral (i.e. the Uruguay Round Agreement on 
Agriculture), and bilateral and regional, such as the FTA with Central America and CARICOM and 
with Central America and the United States (DR-CA FTA), and the EPA with the European Union. 
68. For the majority of products in the agricultu ral sector, prices are determined by the free 
market.  Only in specific instances or for specific reasons associated with the country's food security, 
such as a hurricane or the recent ri se in the prices of certain products, are producer prices fixed.  
Government intervention in the local market reflec ts these conditions and is limited to certain basic 
household items. 
69. During the period under review, the State de veloped a number of support programmes aimed 
at improving the sector's productivity and competitiveness, both in the domestic market and abroad.  
These programmes are also geared towards ensuring the quality and safety of agricultural products by 
strengthening all of the instituti ons, organizations and mechanisms involved in implementing sanitary, 
phytosanitary and food safety measures. 
70. The Dominican Republic has achieved consider able progress in the SPS area, including the 
establishment of the National Committee for the App lication of Sanitary and Phytosanitary Measures 
in 2005.  This committee is responsible for monitoring, implementing and administering the 
WTO SPS Agreement, and for recommending suitable measures and processes in the framework of its 
multilateral and regional commitments.  It has cont ributed to improving the number and quality of 
risks analyses conducted.  However, the country s till has its shortcomings in this area, and has WT/TPR/G/207 Trade Policy Review 
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adopted initiatives aimed at strengthening the institutional structure governing sanitary and 
phytosanitary measures and at ensuring that its trad ing partners are promptly and properly notified. 
Free Zones 
71. The free zones sector contributes significantly to the Dominican economy by creating jobs, 
generating foreign exchange, and st imulating technology transfer.  At the end of 2007, a total of 
52 per cent free zone parks were in operati on, hosting 530 companies and employing 128,000 
workers.  These free zones generate d exports for a total of US$4,563, 000,000 worth of exports (63 per 
cent of goods exports).  Free zone exports were broadly distributed over several sectors of economic 
activity, such as made up textile articles and footwear, electronic goods, jewellery, tobacco 
manufacturing, medical and pharmaceutical products and services.  The last four of these sectors 
accounted for 54 per cent of foreign direct investment in 2005. 
72. Starting in 2001, the incentives under the speci al free manufacturing zone regime were 
maintained thanks to extensions granted by th e WTO to a group of developing countries.  The 
Dominican Republic recognizes that for the countri es concerned, the subsidies granted cannot be 
considered a permanent structure.  However, if they  had to dismantle those subsidies, certain countries 
would be vulnerable with respect to others  for which no such dismantling is foreseen, and 
consequently, with respect to those countries th e subject will continue to be addressed at the 
multilateral level. 
73. Free-zone subsidies in particular, and tax in centives in general, have been introduced and 
strengthened in the developing countries largely ow ing to the tax policies that prevail in many 
developed countries in which the payment of corpor ate taxes is deferred pending the repatriation of 
profits.  The extent to which the developing countries are able to get rid of their special regimes will depend on the extent to which these policies ar e dismantled in the industrialized countries. 
74. As regards the lack of integration of free- zone companies with the other sectors of the 
economy, it should be noted that all of the companies that target competitive markets will obtain their inputs from the least expensive source of supply, regardless of the regime under which they are 
operating:  this is precisely the principle unde rlying the multilateral liberalization process. 
Services 
75. The services sector is extremely important to the economic development of the 
Dominican Republic as a supplier of jobs, a growth engine and a source of foreign exchange:  it 
accounts for 52 per cent of GDP and 60 per cent of employment with respect to the economically 
active population.  Tourism alone accounts for appr oximately one-third of exports of goods and 
services.  During the period 2002-2006, the Domini can Republic advocated the opening up of services 
sectors at the multilateral level and focused its pol icy efforts on strengthening the domestic legal 
framework and the GATS rules. 
76. The free trade agreements with CARICOM and Ce ntral America contained legal texts relating 
to services, but in neither case did the parties esta blish schedules of commitments.  Subsequently, 
with the entry into force of DR-CAFTA, services co mmitments were extended to the other parties to 
the Agreement, as with the EPA between the Europ ean Community and the Caribbean Forum, except 
that in that case, there are deadlin es for implementing the commitments. 
77. The Dominican Republic maintains an open policy in the services sector which is reflected, in 
the case of the telecommunications sector, in the str ong growth and foreign inv estment participation.  
This has led to a substantial increase in tele density and a decrease in the rates for public The Dominican Republic WT/TPR/G/207 
 Page 17 
 
 
 telecommunications services as a result of greater competition in the telecommunications market.  
The same policy is applied, inter alia , to the financial, banking, air transport, and tourism sectors. 
78. The Dominican Republic is also seeking furthe r multilateral opening with regard to WTO 
commitments to boost its trade in dynamic service s ectors in which it has a special interest, such as 
tourism, the movement of natura l persons, construction, information technology, and distribution.  
Moreover, in the framework of its trade policy the Dominican Government is also seeking to 
incorporate in the negotiation of bilateral and region al agreements a broad sectoral liberalization offer 
in a number of areas linked to the flow of trade in services. 
79. At the end of 2004, the electricity industry was in the midst of a serious financial 
sustainability crisis because of the inability of di stribution companies to collect charges for the 
electricity produced.  Apart from imposing a heavy tax burden on the central government, this situation made it impossible to provide quality ser vices.  The Government reacted by adopting a 
concrete strategy and by implementing a number of measures aimed at safeguarding the electricity industry from the impact of high oil prices and dealing with the systemic problem of the sector's financial recovery. 
Foreign investment 
80. The Dominican Republic views the policy of attr acting foreign direct investment (FDI) as a 
key component of its strategy of competitive integra tion in the international economy.  In 2007, it 
managed to attract 1,698,000,000 dollars worth of FDI, a historical record for the country. 
81. 2003 saw the promulgation of Law 98-03 establishing the Dominican Republic Export and 
Investment Center (CEI-RD) as the official body  responsible for the promotion of domestic and 
foreign investment in the country.  Its main func tions are to improve the investment climate and 
provide investors with guidance and information in achieving their business objectives.  Under this 
Law, all of the functions relating to the foreign investment registry which had hitherto been the 
responsibility of the Central Bank ha ve been shifted to the CEI-RD. 
82. The Foreign Investment Law of 1995 (Law No. 16- 95) allows for investment in all sectors of 
the economy except activities affecting public health  and the country's environmental balance.  
Foreign investors have access to the same procedural  remedies as local investors.  Moreover, in the 
negotiation of the agreements on reciprocal promo tion and protection of investments, a number of 
alternative mechanisms were made available, su ch as the United Nations Commission on International 
Trade Law (UNCITRAL) and the Additional Facility of  the International Centre for the Settlement of 
Investment Disputes (ICSID). 
83. The Dominican Republic has signed an agreement with Canada to avoid double taxation, and 
at the beginning of 2008 it was exchanging proposals with other countries. 
84. The Government of the Dominican Republic is currently making efforts to attract foreign 
investment in strategic sectors, such as the electronics industry, the medical devices sector, 
information technology based services, tourism and mining.  This political strategy geared towards 
developing investment should lead to a significan t growth in employment opportunities and intensive 
transfer of knowledge technologies while at the sam e time providing the incentive needed to create 
industrial clusters to enable this investment to be linked up to the national production machinery, as 
envisaged in Decree 465-08, promulgated by the Office the President of the Republic. WT/TPR/G/207 Trade Policy Review 
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IV. CONCLUSIONS 
85. Since its last Trade Policy Review in 2002, the Dominican Republic has stepped up its trade 
liberalization efforts through unilateral tariff reduc tion, the signing of regional free trade agreements, 
and support for the conclusion of the Doha multilatera l negotiations.  The Government authorities feel 
that the country's economic and so cial development depends largel y on further integration of its 
production activity in the international economy an d better market access for goods and services for 
which it has a comparative advantage.  Thus, it plan s to continue with the liberalization process by 
concluding new multilateral, regi onal and bilateral trade agreemen ts, by introducing structural 
reforms, by encouraging technological development, and by improving the training of its labour force 
through increased investment in education. 
86. The commitment of the Dominican Government  authorities to macroeconomic stability is 
reflected in the country's economic recovery sin ce 2005.  The Dominican Government reaffirms its 
commitment to pursuing its policies of fiscal and m onetary prudence, floating exchange rate, effective 
banking supervision, and guaranteed free operation of the markets to ensure that the Dominican 
economy remains one of the fastest growing and a ttractive economies for foreign investment in the 
region. 
 
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