In 1995, the United States trade deficit with the Dominican Republic was $381
million, $87 million greater than that in 1994. U.S. merchandise exports to the
Dominican Republic were $3 billion, up $218 or 7.8 percent from 1994. The
Dominican Republic was the United States' thirty-second largest export market in
the world and seventh largest export market in Latin America in 1995. U.S.
imports from the Dominican Republic totaled $3.4 billion in 1995, an increase of
9.8 percent from 1994.
The stock of U.S. foreign direct investment in the Dominican Republic was
$1.2 billion in 1994, 14 percent greater than in 1993. U.S. direct investment in
the Dominican Republic is concentrated largely in manufacturing, wholesale and
Tariffs on most products fall within a 5 to 35 percent range. However, the
Government of the Dominican Republic (GODR) imposes a 5 to 80 percent selective
consumption tax on "nonessential" imports such as home appliances, alcohol,
perfumes, jewelry, automobiles and auto parts. U.S. producers of many other
products may face an additional de facto trade barrier in the form of a
highly-discretionary customs valuation system. In addition, import licenses have
been required for some agricultural items, such as fruit juice.
The Dominican government continues to require importers to obtain a consular
invoice and "legalization" of documents with attendant fees and delays from a
Dominican Consulate in the United States. Bringing goods through Dominican
Customs can be a slow and arduous process.
STANDARDS, TESTING, LABELING AND CERTIFICATION
Arbitrary customs clearance procedures sometimes hold up merchandise for
lengthy periods. U.S. agricultural exports are sometimes subject to
arbitrarily-enforced and non-scientifically-based phytosanitary measures. The
GODR generally accepts U.S. certifications and standards.
Government procurement is often conducted without the benefit of open
bidding. The processes by which contractors and/or suppliers are chosen are
generally opaque. Foreign firms without local agents are at a severe
disadvantage. The need for U.S. firms to conform to the Foreign Corrupt
Practices Act can hinder access to the selection process for government
contracts. There is no explicit "Buy Dominican" policy.
The Dominican Republic does not have aggressive export-promotion schemes
other than the exemptionsgiven to firms in the free trade zones. A tax rebate
scheme designed to encourage exports is considered a
failure and is usually avoided by exporters. The government agency charged
with export promotion (CEDOPEX) is considered ineffective by most business
LACK OF INTELLECTUAL PROPERTY PROTECTION
Although Dominican law provides for the protection of intellectual property
rights, enforcement is weak and government agencies charged with administering
the law are not given sufficient resources to effectively enforce Dominican IPR
The piracy of computer software, video and audio tapes, and compact disc
technologies continues with little enforcement action by the Dominican
government. A 1993 U.S. Government review of the Dominican Republic's trade
preferences under the Generalized System of Preferences (GSP), based on a
petition from the Motion Picture Export Association of America claiming
widespread cable television piracy, was terminated in 1994 when the Dominican
Government took steps to address U.S. concerns. Larger cable television
companies now generally pay fees and royalties, although smaller systems may
still be pirating signals and programs.
Existing law provides for broad exclusions of subject matter from
patentability, and include onerous local working requirements. Dominican patent
protection law continues to be inadequate with respect to the term of
protection. Piracy is widespread.
Trademark enforcement is inadequate, particularly in the area of well-known
apparel and athletic shoe brands, which are counterfeited and sold on the local
Until recently, foreign participation in the financial services sector was
restricted by law. The new foreign investment law, and a new financial-monetary
code now before the Dominican Congress, allow foreign involvement. However, the
practical impact of these changes is not clear. New restrictions of an informal
nature which serve to protect Dominican banks may arise. There is no secondary
securities market in the Dominican Republic so questions of brokerage services
and securities underwriting, trading, etc., do not arise.
New Foreign Investment Law
The new law passed in December 1995 is designed to remove old barriers to
investment and to provide equal access for foreign investors to all sectors of
the economy except toxic waste disposal, public health and environment, and
defense, which require express authorization from the Office of the President.
Foreigners may register investments of cash, trademarks, or technology in new or
existing companies or real estate (with some limitations).
Investors may remit the full amount of capital and capital gains as well as
fees for technology transfer and royalties from previously-registered contracts.
The law grants a five-year term for the gradual repatriation of non-remitted
accumulated profits resulting from application of the old law. Foreigners may
represent their products directly without need for a local agent. However,
licensors must compensate licensees for the termination of any representation
Investors no longer need the authorization of the Foreign Investment
Directorate to invest but must register any investment with the Central bank
within 90 days.
The Dominican Republic levies a a value-added eight percent Tax on the
Transfer of Industrialized Goods and Services (ITBIS). The ITBIS expressly taxes
"the importation of industrial goods." Very few imported goods and very broad
categories of domestic goods are exempted from the ITBIS. Services appear to be
equally taxed. For imports, the tax is levied on the c.i.f. value plus all
customs duties and internal taxes on imports. For domestic goods, the tax base
is the sales price price plus related costs such as transportation. The
discrimination against imported products under the ITBIS effectively increases
the protection afforded to many domestic industries. Exports are exempt from the
ITBIS. Exporters can either deduct or receive reimbursement for the taxes they
pay on the transfer of goods related to their production activities.