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Overview

Dominican Republic (DR) – Central American Free Trade Agreement (DR-CAFTA): Understanding the Reasons Why the DR Joined the CAFTA Negotiations?. Overview. Understanding the Proliferation of Preferential Trade Agreements (PTAs) in Latin America

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Overview

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  1. Dominican Republic (DR) – Central American Free Trade Agreement (DR-CAFTA): Understanding the Reasons Why the DR Joined the CAFTA Negotiations?

  2. Overview Understanding the Proliferation of Preferential Trade Agreements (PTAs) in Latin America Free Trade Area of the Americas (FTAA), Central American Common Market (CACM), Caribbean Community (CARICOM), and Caribbean Basin Initiative (CBI) The Economic Transition of the DR Structural/debt problems in 1980s, neoliberal reforms in 1990s Impact of global competition, World Trade Organization DR Economic Crisis of 2003-2004 Causes and recovery efforts Implications for further economic growth DR & Central America Free Trade Agreement (CAFTA) Difficulties in negotiations and implementation Expected gains, losses, and challenges Preliminary Results

  3. Caribbean Basin

  4. PTAs in Latin America Free Trade Area of the Americas (FTAA) A. Enterprise Americas Initiative (EAI) under Pres. H.W. Bush B. Summit of the Americas 1994 set a goal for 2005 C. Subregional Components-Building Blocks or Impediments? D. The Rift - MERCOSUR/Venezuela vs. rest of Americas Central America Common Market (CACM) A. First Stage (1960-1980) - initial success followed by turmoil B. The revival of CACM in 1990s/shift in focus C. Invitation for participation to other Caribbean neighbors D. CA-DR FTA established links between nations FTAALogo

  5. CARICOM Full members Associate members Observers

  6. PTAs in Latin America Caribbean Community (CARICOM) A. Established in 1973 and sought to establish a customs union and policy/functional cooperation B. The DR-CARICOM FTA in 1998 C. DR attempts to join CARICOM D. Internal problems with CARICOM Caribbean Basin Initiative (CBI) A. CBI -unilateral program initiated by U.S. in 1983 B. Security aspect- the use of trade and aid to counter leftist movements C. “Carrot and stick” approach D. DR’s ability to take advantage of CBI arrangements (apparel and light industry)

  7. The Economic Transition of the DR Structural/debt problems in 1980s A. “Big government” in early 1980s leads to increasing balance of payments, currency devaluation, increase in government subsidies, and inflation. B. Stand-by IMF agreement of 1985 C. Beginning of transformation away from primary export products D. The economic dictatorship returns to power Neoliberal reforms in 1990s A. The first phase of reform effort (1991-1995) - “New Economic Program” B. The new government (1996-1999) C. The Public Enterprise Reform General Law of 1997 D. Nontariff barrier removal/ PTAs

  8. The Economic Transition of the DR Impact of global competition A. U.S. and CBI B. China/Asia C. Central America World Trade Organization A. Quotas B. Effects

  9. DR Economic Crisis of 2003-2004 Highlights A. Banco Intercontinental (BANINTER) collapse B. Government intervention C. Economic Impact Recovery Efforts A. IMF standby agreements B. New regulatory framework and restructuring C. Renewed growth and importance for the DR-CAFTA

  10. DR & CAFTA Members

  11. DR & CAFTA DR-CAFTA Overview A. Replacement of previous PTAs B. Liberalization C. Duty Free Status D. Economic factors into entering the PTA Difficulties in negotiations and implementation A. Tax on products with corn syrup B. Vehicle Tax C. Chevron transportation issue

  12. DR & CAFTA DR expected gains A. Guaranteed access to the U.S. market B. Potential increases in FDI C. Lower costs and greater quality of products and services due to increased competition D. Greater transparency E. Diversification and specialization of the market F. Opportunities for job creation, poverty reduction, stemming migration DR expected losses A. Government loss of tax revenues B. Small and medium size farms will lose local markets

  13. DR & CAFTA DR challenges A. Adjusting to the demands of free trade B. Expanding access through improved infrastructure C. Introducing deep reforms to aid rural development D. Assuring access to quality global services E. Modernizing and expanding public education F. Strengthening state institutions G. Dedicating attention to vulnerable and transitioning sectors H. Facilitating and promoting commerce and inversion

  14. DR & CAFTA Initial Results A. Overall DR-CAFTA results B. DR total export results C. DR textile trade balance decrease C. U.S. increase in balance of trade E. Unresolved issues

  15. “DR-CAFTA is not the solution, but it is a tool we can use for the benefit of the Dominican Republic. If we can’t provide the proper trade and legal environment, then we won’t see the benefits. DR-CAFTA gives us the opportunity to do things right.” – Jesus de los Santos

  16. QUESTIONS?

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