An Expanding Circle of Free Trade in Latin
America
Growing the Size of the CAFTA Market
Integrating the Dominican
Republic (DR) with the U.S.-CAFTA (U.S.-Central America Free Trade Agreement) would expand the FTA by some 40%, creating a free
market for U.S. goods andservices that would become the 2nd
largest U.S. export market in Latin
America.
Free trade with the current CAFTA
countries plus the DR would create a major market: a U.S. export market larger than
current U.S. exports to Thailand, Russia, India and Indonesia
combined.
The DR is already the fourth
largest U.S. trading partner in Latin America, after Mexico, Brazil and Colombia. The DR is among the world’s fastest-growing economies, and is already an important market for U.S. agricultural, fish, apparel, textiles
and forestry products. For example, the DR is the 8th largest U.S. export market for corn, and the 5th
largest export market for U.S. soybean meal.
But while most Dominican products
enter the U.S. duty-free under various preference programs, tariffs on U.S. goods remain high. Average Dominican tariffs on
U.S. goods are 8.6%, while some above-quota tariffs on U.S. farm products are well over
100%.
Major U.S. beneficiaries from a
free trade agreement would include sectors such as computers, telecommunications equipment, air conditioning and refrigeration
equipment, textile fabrics, building materials, electrical power systems, food processing and
packaging, wheat, beef, pork, dairy, soybean meal, corn, rice, beans, fresh fruits, and
wine.
The Competitive Liberalization Strategy: Producing
Results
As a direct result of the launch
of U.S. negotiations with CAFTA, the Dominican Republic and other countries in the region have become much more active in
pursuing a free trade agenda in cooperation with the United States.
The DR is joining the free-trade
bandwagon in the Hemisphere, not just in linking to CAFTA, but also working closely together with the United States to push for
ambitious market-opening results in ongoing World Trade Organization (WTO) and Free Trade Area of
the Americas (FTAA)negotiations.
The Dominican Republic Has Made Real Progress Toward Trade
Reform
The DR has worked hard to
demonstrate its readiness for an FTA since President Mejia first presented his request to President Bush in July 2002. Since then,
there have been a number of positive exchanges through the bilateral Trade and Investment
Council (TIC) process to enhance the bilateral trade dialogue and address problem areas. The U.S.
uses such bilateral dialogues to address bilateral trade issues, and to work on deepening the
trade relationship.
For example, the DR was moved on
the U.S. Special 301 (Intellectual Property) from the Priority Watch List to the standard Watch List, largely reflecting progress
on patent protection. The United States will continue to raise important bilateral issues
(such as improved protection for U.S. intellectual property, especially confronting broadcast
piracy, and improved access for U.S. agricultural products) in both the bilateral TIC process and as
key U.S. objectives in FTA discussions.
Broad Bipartisan Support
There is bipartisan support for
including the Dominican Republic in the CAFTA. Many Republican and Democratic members of the House of Representatives have
written the President to express their strong support for a closer trade relationship with the DR
as part of the CAFTA negotiations.
The U.S. Chamber of Commerce has
expressed its strong support for expanding U.S. trade with the DR, and the trade ministers of the five Central American
countries currently negotiating CAFTA have also sent a letter of support.
The Dominican Republic is an
important trading partner for many parts of the United States. For example, the DR is the 2nd
largest export market for the state of Florida
and for Puerto Rico.
These communities recognize that most Dominican goods already
enter the United States dutyfree through preference programs, while U.S. exports face high tariffs
and other barriers in the Dominican Republic.
According to a recent Cato
Institute paper by Dan Griswold, taken together as a group, the recently completed Chile and Singapore FTAs, the ongoing Morocco,
Central America (CAFTA), South African Customs Union (SACU), and Australia FTA
negotiations, and the proposed Bahrain FTA would constitute the 4th
largest U.S. export market and the world’s
9th largest
economy in terms of purchasing power.
The Administration will continue
to consult closely with the Congress on the mechanisms for joining the Dominican Republic with CAFTA.
Joining the Dominican Republic with CAFTA would create the 2nd
largest U.S. trading partner in Latin America, behind only Mexico.
