The Wolf Has Arrived!

Long before 2004, when the Dominican Republic-Central America-United States Free Trade Agreement (CAFTA-DR) was signed, the government and the private sector were advised about the need to unconditionally comply with a competitive schedule to be able to confront the challenges that would come with complete exemption of the tariff clauses contained in that agreement.

For 2015, a total of 962 products corresponding to 1,018 tariff classes will enter the Dominican market tax free, or with zero duty, which would mean a loss of hundreds of jobs due to lack of competition from national producers against their American and Central American counterparts.

Before that treaty, the commercial exchange between the Dominican Republic and the United States and the majority of Central America produced a surplus, an outlook now reverted, which has exacerbated the chronic deficit in the checking account balance of payments that, instead of being relieved, tend to worsen. This year, 97 percent of all tariff classes contained in the CAFTA-DR will enter into free trade, which means that goods such as metals, cement, doors, windows, tiles, books and personal hygiene products will go through customs without being taxed, while national manufacturers face problems caused by elevated electricity costs and harsh bureaucracy.

Instead of taking advantage of a vast market integrated by 350 million consumers, Dominican industry is confronting serious difficulties in order to avoid being removed from the national market because of failure to compete. Here, one is reminded of the story of the boy who cried wolf — until today, when the ferocious animal is watching the doors to customs.

Jose del Castillo, the minister of Industry and Trade, was completely right in stating that CAFTA-DR also presents an excellent opportunity for Dominican producers to increase their imports. But it’s obvious that it’s too late, unless the government and private sector redouble their efforts.

It hurts to say, but the Dominican Republic occupies spot 105 in the global competitiveness ranking, very far behind the United States (5), Costa Rica (54), Guatemala (86), El Salvador (97) and Nicaragua (99), and only in front of Honduras (111), which [will] require working night and day to rectify such a difficult situation.

There is still time for the agricultural, livestock, industrial and agro-industrial sectors to combine forces against the government and obtain not only the level of competitiveness to defend their prevalence in the local market, but also to increase the export of goods to the United States and Central America. One must do what one can.