Dominican Republic Signs onto CAFTA

The Office of the U.S. Trade Representative (USTR) has issued a press release announcing that on August 5, 2004, the U.S., the Dominican Republic, Costa Rica, El Salvador, Guatemala, Honduras, and Nicaragua signed the U.S.-Dominican Republic-Central America Free Trade Agreement (DR-CAFTA). The USTR notes that the DR-CAFTA, a regional trade agreement among all seven signatories, will create the second-largest free trade zone in Latin America for U.S. exports.

(See ITT's Online Archives or 06/02/04 news, 04060205, for BP summary on the U.S.' signing of CAFTA with Costa Rica, El Salvador, Guatemala, Honduras, and Nicaragua on May 28, 2004.)

As a result of its signing of the DR-CAFTA, the Dominican Republic assumes the same set of obligations and commitments as Costa Rica, Honduras, El Salvador, Guatemala, and Nicaragua. However, as with each of the Central American countries, the Dominican Republic has individual market access schedules for goods, agriculture, services, investment, and government procurement.

Next Step is Submission of DR-CAFTA Legislative Package to Congress

U.S. government sources state that the next step is for the President to formally submit a single legislative package to Congress to implement the DR-CAFTA (DR-CAFTA, implementing legislation, and statement of administrative action).

Highlights of Dominican Republic's Integration into DR-CAFTA

According to the USTR, highlights of the Dominican Republic's market access schedules include (partial list):

Most U.S. consumer/industrial goods exports will become duty-free immediately. Eighty percent of U.S. exports of consumer and industrial goods will become duty-free in the Dominican Republic immediately, with remaining tariffs phased out over 10 years. According to the USTR, tariffs on U.S. autos and auto parts will be phased out within 5 years. The USTR also states that the Dominican Republic will join the World Trade Organization (WTO) Information Technology Agreement.

Expanded markets for U.S. farm exports, etc. More than half of current U.S. farm exports to the Dominican Republic will become duty-free immediately, including corn, cotton, wheat, soybeans, many fruits and vegetables, and processed food products. According to the USTR, tariffs on most U.S. farm products will be phased out within 15 years, with all tariffs eliminated by 20 years. Duty-free access under tariff-rate quotas will be established for U.S. beef, pork, poultry, rice, and dairy products.

Sugar. In the first year, additional sugar market access for the Dominican Republic will amount to about 0.12 percent of U.S. sugar production. There is no change in the high above-quota U.S. tariff on sugar.

Textiles and apparel. Textiles and apparel will be duty-free and quota-free immediately if they meet DR-CAFTA's rule of origin. The USTR notes that the DR-CAFTA benefits for textiles and apparel will be retroactive to January 1, 2004. The Dominican Republic can participate in the CAFTA cumulation provisions, which will allow woven apparel from the Dominican Republic to contain a capped amount of Mexican and Canadian inputs. The Dominican Republic's ability to use cumulation provisions will not go into effect until cumulation provisions go into effect for the other CAFTA parties, and will expire if the Dominican Republic does not conclude an FTA providing reciprocal benefits to U.S. producers within a few years.

Haiti. The Administration will work with the Congress to enable Haiti to continue to be eligible to receive Caribbean Basin Trade Partnership Act (CBTPA) benefits for apparel containing inputs from the Dominican Republic.

Access to services. The Dominican Republic will accord substantial market access across its entire services regime, offering new access in sectors such as express delivery, transport, telecommunications, financial services, etc.

Digital products. State-of-the-art protections and non-discriminatory treatment are provided for digital products such as U.S. software, music, text, and videos. Protections for U.S. patents, trademarks, and trade secrets are strengthened.

USTR press release (04-66, dated 08/05/04) available at http://www.ustr.gov/releases/2004/08/04-66.pdf.

USTR fact sheet (dated 03/15/04) available at http://www.ustr.gov/new/fta/Cafta/2004-03-15-factsheet.pdf.

Additional USTR materials regarding the DR-CAFTA are available at http://www.ustr.gov/new/fta/cafta.htm.