Dominican Republic WT/TPR/S/105
Page 55
IV. TRADE POLICIES BY SECTOR
(1) INTRODUCTION
1. Since the previous Review of the Dominican Republic in 1996, sectoral GDP has, in broad
terms, continued to shift away from primary activit ies towards the services sector (Table IV.1).  The
relative contribution of manufacturing to total GDP has tended to decrease, reflecting in part the
downward tendency in the share of GDP generate d in free-trade zones (FTZs).  In contrast, GDP
growth rates have been high for construction and infrastructure-related activities.
Table IV.1
GDP shares, 1995-01
(Per cent based on 1970 prices)
1995 1996 1997 1998 1999 2000 2001
GDP (1970 RD$ million) 4,579.3 4,907.4 5,307.6 5,702.0 6,147.2 6,593.0 6,772.3
Agriculture 12.6 12.8 12.3 11.5 11.4 11.2 11.4
Farming 6.0 6.4 6.1 5.6 5.5 5.2 5.5
Livestock 6.0 5.9 5.7 5.4 5.4 5.5 5.4
Forestry and fishery 0.5 0.5 0.5 0.6 0.5 0.5 0.5
Mining 2.7 2.6 2.5 2.0 1.8 1.9 1.6
Manufacturing 18.2 17.5 17.4 17.1 16.8 16.9 16.2
Free-trade zonesa3.7 3.5 3.5 3.5 3.2 3.1 2.9
Construction 9.7 10.2 11.1 12.3 13.4 13.2 13.0
Commerce 12.1 12.3 12.5 13.0 13.1 13.3 13.0
Hotels, bars and restaurants 5.7 6.0 6.5 6.3 6.4 6.8 6.4
Transport 6.8 6.8 6.7 6.8 6.7 6.8 6.6
Communications 3.5 3.8 4.2 4.7 5.0 5.4 6.5
Electricity and water 1.9 2.0 2.0 2.1 2.1 2.1 2.4
Finance 4.9 4.7 4.4 4.3 4.2 4.0 4.0
Real estate 5.2 5.0 4.7 4.5 4.2 4.0 4.0
Public administration 8.5 8.4 8.0 7.8 7.5 7.3 7.7
Other services 8.3 8.1 7.8 7.6 7.3 7.1 7.2
a Salaries and wages at 1970 prices.
Source: Central Bank of the Dominican Republic.
2. The services sector is the cornerstone of the economy, both in terms of value added and of
employment;  tourism also plays a key role for foreign earnings.  Since 1996, the services sector's
legal and institutional framework has been reformed and state involvement has decreased.  In
particular, new legislation for the telecommunications and electricity industries opened them to
private, including foreign, investment.  The State maintains ownership of certain basic infrastructure,notably maritime and air ports, which is being upgraded by granting concessions to private operators.
Inefficiencies and lack of competition persist in ce rtain activities;  for example, chronic problems in
the electricity sector are a handicap for the rest of the economy, and the cost of supplying financial
services appears high.  Policy changes since the end of the Uruguay Round have made conditions for
foreign participation in Dominican services far more liberal than those implied by its GATScommitments;  the Dominican Republic ratified the Fourth Protocol to the GATS (on
telecommunications) and is in the process of ratifying the Fifth Protocol (on financial services).
3. In agriculture, export-oriented units continue to  operate side-by-side with small family farms
producing mainly crops for home consumption along with coffee and cocoa for export.  Since 1996,WT/TPR/S/105 Trade Policy Review
Page 56
the agriculture sector has come under strong pressure from low world commodity prices and weather
phenomena;  as a result, export revenue has shrunk (see also Chapter I(3)).  Agriculture remains key
for employment, although this has tended to fall.  While the sector has been liberalized to some
degree, it continues to receive support through measures such as above-average tariffs, and tax
incentives.  Sugar, the sector's most important export product, benefits from preferential access to the
United States.
4. The manufacturing sector continues to generate the lion's share of Dominican merchandise
exports, although high reliance on imported inputs ma kes the sector's contribution to net exports much
lower.  Manufacturing firms are subject either to the general trade and investment regime or to the
special FTZ regime.  A wide gap still persists between the two regimes, despite trade liberalization,
which has led to the emergence of two different manufacturing subsectors:  one, under the generalregime, comprising mostly Dominican firms engaged in food processing to supply the domestic
market;  and the other, located in FTZs, largely made up of foreign firms producing textiles, jewellery
or electronics for export.  As the largest investment source and export market for FTZs is the
United States, FTZ activity is strongly dependent on the U.S. business cycle and policy changes
affecting access to the U.S. market.
5. No accurate measures exist of the net benefits generated by FTZs over the years, but available
data suggest that FTZs have been a major source of job creation and net exports;  arguably, FTZ have
also promoted in job training, technology transf er, and more entrepreneurial, outward-looking
attitudes in the economic agents operating within them.  However, by assisting FTZs to draw in
resources (including workers, managers, and domestic capital), government policy has in practice
disadvantaged competing producers outside FTZs.  Compared with FTZ producers, other operators
must also bear a more than proportional share of the cost of providing public services.  Althoughsmall in global terms, the Dominican Republic's FTZs, like equivalent regimes elsewhere, embody
export subsidies that add to distortions in world markets.  Multilateral initiatives to address this
problem could lead to the reorganization of Domi nican manufacturing, and carry restructuring costs,
but in the long run they would generate significant benefits for the domestic economy as resource
allocation improves.
(2) A
GRICULTURE AND RELATED PRODUCTS
(i) Main features
6. The agriculture sector (including fisheries, forestry, and livestock) remains important in the
Dominican economy in terms of output and employm ent.  In 2001, the sector accounted for 11.4% of
GDP, compared with 12.6% in 1995, and employed more than 16% of the economically activepopulation.  However, earnings from agricultural exports have decreased considerably since 1997,
particularly due to falling international prices for the Dominican Republic's major export crops.
7. Sugar, coffee, cocoa, and tobacco are the Dominican Republic's main traditional agricultural
export products.  In 2001, exports of these traditional crops (including their related manufactured
products), totalled US$173 million, representing 3.2 % of the value of total exports.
1  In addition, the
Dominican Republic exports a range of other agricultural products such as bananas, cassava, dry
coconuts, mangoes, melons, pineapples, plantains, vegetables, and yams.  According to Central Bank
data, imports of agricultural products amounted to US$471.5 million in 2000;  corn, wheat, and dairy
products were the most important goods and the United States was the major source.
                                                     
1 Trade data are based on information from the Dominican Central Bank, unless otherwise indicated.Dominican Republic WT/TPR/S/105
Page 57
8. Nearly 2.6 million hectares, equivalent to about 53% of the Dominican Republic's national
territory, are used for agricultural production.  Large farms, with an acreage of more than
100 hectares, make up about 45% of this total;  medium-sized farms, with an acreage between 5 and
100 hectares, account for 43%;  and farms with less than 5 hectares make up 12%.2  Large farms tend
to concentrate on the production of tobacco, sugar and livestock, whereas coffee, cocoa and goods for
domestic consumption are produced in small and medium-sized farms. Despite the DominicanRepublic's rapidly growing economically active population, total employment in the agriculture sector
fell from 502,000 in 1996 to 474,000 in 2001.
9. Hurricane George significantly affected agricultural output in the Dominican Republic, in
1998 and 1999, severely damaging farming and livestock production, and causing losses estimated at
a minimum of US$400 million.  As a response, the Dominican authorities implemented a series ofemergency assistance programmes, in some cases with support from foreign governments.
(ii) Policy objectives and instruments
10. The Ministry of Agriculture is responsible for the formulation of policies for the agriculture
sector;  its main advisory body is the Agriculture National Council (CAN).  The CAN was created by
Law No. 8-65 of 8 September 1965;  its members include representatives of the Ministries ofAgriculture and the Environment, Banco Agrícola, the National Institute of Water Resources, and
numerous producer associations.  In addition, agencies such as the Dominican Sugar Institute and the
Tobacco Institute participate in the formulation of sectoral policies.
11. After the conclusion of the Uruguay Round, the Dominican Republic pursued Article XXVIII
renegotiations for various agricultural goods to allow it to amend its Schedule of Commitments.  As a
result, various products in Annex 1 of the Agreement on Agriculture carry tariff rates either above or
below the bound rate of 40% (Chapter II(2)(iii)(b)).
12. The Dominican Republic maintains import tariff quotas on chicken meat, corn, dry beans,
garlic, onions, powdered milk, rice, and sugar (Cha pter III(2)(iv)).  Tariffs on some agricultural
products traditionally destined for domestic consumption, such as rice and beans, are still significantly
higher than the average tariff for the sector.  While the average for agricultural products (WTO
definition) is 12.9%, out-of-quota tariffs are 118% for chicken meat, 92% for beans, and 107% forrice.  Import permits are required for pesticides and most agricultural goods.
13. The Dominican Republic has notified to the Committee on Agriculture that it does not
provide export subsidies.
3  The Dominican Republic has not introduced any special safeguard
measures since joining the WTO.
14. The Ministry of Agriculture offers various technical assistance services with a view to
modernizing the agriculture sector.  Some of these services, such as training on land preparation,
target in particular small and medium-scale producers, while other programmes are more general,
such as assistance to control plagues and diseases.  In 1999, government expenditure for agricultural
measures exempt from the reduction commitment (green box) amounted to RD$440 million, of which
RD$259 million were spent for infrastructure services.4
15. The authorities emphasized that no export taxes are collected on agricultural products.
                                                     
2 Oficina Nacional de Planificación (2000b), p. 28.
3 WTO document G/AG/N/DOM/3, 5 April 2001.
4 WTO document G/AG/N/DOM/4, 12 April 2001.WT/TPR/S/105 Trade Policy Review
Page 58
16. Agricultural producers are eligible for a number of fiscal incentives.  Since 1997, a zero tariff
rate is applied on certain imported inputs and capital goods for agricultural use, first under
Law No. 150-97 of 7 July 1997, and currently under Law No. 146-00 of 27 December 2000.
Agricultural products are exempt from the value-added tax (ITBIS);  the authorities noted that
collecting the ITBIS on those products would not be cost effective.  Furthermore, primary agricultural
producers are exempt from the 1.5% advance payment on gross income tax;  the authoritiesemphasized that this exemption is not extended to processors.
17. The Government intervenes in the marketing of rice, as well as beans, garlic, onions, and
potatoes, when there is excess production.  In certain cases, producers are paid a support price
equivalent to the production cost, with the aim of  guaranteeing producers a minimum revenue level
while minimizing the impact on the market.  Government intervention takes place through the PriceStabilization Institute (INESPRE) and targets small producers.  The authorities indicated that the
marketing strategy seeks to re-define INESPRE's role in order to enhance transparency in the internal
market, and establish a price mechanism that benefits both producers and consumers.
18. Credit provided by public institutions is considered a vital tool for the development of the
sector. The Central Bank, through the Developmen t and Project Financing Department (DEFINPRO),
and the Agriculture Development Bank (BDA) are the main public entities providing agriculture
credit.  According to the aut horities, credit disbursement under the DEFINPRO scheme for
agricultural producers amounted to RD$110 million in 2001.
19. Agricultural research is undertaken by the Dominican Agriculture and Forestry Research
Institute (IDIAF), as main public institution, and various private-sector organizations.  IDIAF follows
the priorities set by the National Council for Agriculture and Forestry Research (CONIAF),
established by Decree No. 687-00 of 2 September 2000, which is composed of representatives of allmajor public and private institutions involved in agricultural research and presided by the Minister of
Agriculture.  IDIAF's assignment from the State Budget for 2002 amounts to RD$157 million.
According to the authorities public expenditure fo r agricultural research amounted to RD$74.9 million
in 1999.
5
20. Both of the free-trade agreements the Dominican Republic has concluded, with the Central
American Common Market and CARICOM, exclude various agricultural goods from duty-free
treatment;  these products are subject to phased-out tariff reductions, preferential tariffs higher than
0%, or MFN treatment.  Agricultural products covere d by such provisions in both agreements include:
beans, dairy products, garlic and onions, rice, and tobacco.  Under the FTA with CARICOM,
preferential treatment for various agricultural products may be temporarily suspended in order toprotect agricultural producers.
21. In view of the sector's importance, the Dominican Republic is an active participant in the
ongoing WTO negotiations on agriculture.  With other developing countries, it submitted three
proposals on special and differential treatment, green box measures, and market access.
6  Th e  f i r s t
proposal underlines the importance of special and differential treatment for developing countries inagricultural trade policies and calls for the establishment of a "development box" to protect and
enhance developing countries' food production capa city.  The proposal further suggests that food
staples should be exempted from liberalization and domestic production capacity of developing
countries encouraged and helped to become more competitive.
                                                     
5 WTO document G/AG/N/DOM/4, 12 April 2001.
6 WTO documents G/AG/NG/W/13 and G/AG/NG/W/14, both 23 June 2000, and G/AG/NG/W/37,
28 September 2000.Dominican Republic WT/TPR/S/105
Page 59
22. The second proposal identifies various perceived problems and shortcomings of the green box
and recommends aggregating all domestic support categories in to one 'general subsidies' box with a
set of criteria to spell out what should make up the programmes legal within this one box.
Furthermore, it is proposed that the Due Restraint Clause protecting green box subsidies from
challenge, and which is in place until the end of 2003, should be terminated as soon as possible;  the
clause should be a special and differential treatment provision that protects developing countries intheir efforts to increase food security, ensure rural employment, and increase domestic production
capacity.  In the third proposal, on market access, the Dominican Republic calls for the elimination of
tariff peaks, tariff escalation, and export subsidies; increased tariff quotas;  the simplification of
complex and non-transparent tariffs;  and the substantial reduction of domestic support.
23. In the context of the preparations for the 1999 Ministerial Conference in Seattle, the
Dominican Republic, together with other developing countries, raised concerns that although the SPS
Agreement provided that the special needs of developing countries must be taken into account in the
preparation and application of SPS measures, this had rarely been done in practice.
7  They proposed
that if an SPS measure created a problem for more than one developing country, then it should be
withdrawn.
(iii) Key subsectors
(a) Sugar
24. Sugar is the most important agricultural produ ct exported by the Dominican Republic.  The
area used for sugar cultivation was about 196,000 hectares in 1998.  Production of raw sugar
amounted to 435,000 tonnes in 2001 of which 156,000 tonnes were exported (Chart IV.1).  The total
value of sugar and sugar derivative exports for 2001 was US$88.8 million;  the United States is the
main export market for Dominican sugar.
25. Due to damage caused by Hurricane George, sugar production fell sharply between 1997 and
1999, and has been recovering only slowly since then.  For 2002, the National Sugar Institute
(INAZUCAR) predicts a harvest of slightly over 4 million tonnes of sugar cane and production of
492,000 tonnes of raw sugar.  Total domestic consumption of sugar remained unchanged for the last
two years at 320,000 tonnes.  The Dominican Republic also produces various sugar-related productsfor the domestic and international markets, such as molasses, inverted sugar syrup and furfural (a
liquid aldehyde used as a solvent).
26. The Dominican sugar industry is governed by the National Sugar Institute, established by
Law No. 618 of 16 February 1965.  INAZUCAR's board is composed of the Minister of Finance, who
presides it, the Minister of Agriculture, the Institute's Executive Director, three representatives of thesugar industry, and one representative respectively of the sugar farmers and the trade union.
INAZUCAR's responsibilities include making recommendations to the President of the Republic,
providing technical and marketing assistance to Domi nican sugar producers, issuing permits for sugar
imports, and allocating among domestic producers the sugar export quota assigned to the Dominican
Republic.
27. Bound rates for sugar were renegotiated after the conclusion of the Uruguay Round
(section (ii) and Chapter III(2)(iii)).  The renegotiated final bound rate for sugar is 85% with the
implementation period ending in 2004.
8
                                                     
7 WTO document WT/GC/W/354, 11 October 1999.
8 WTO document G/MA/TAR/RS/54, 3 November 1998.WT/TPR/S/105 Trade Policy Review
Page 60
01224364860
1995 1996 1997 1998 1999 2000 20011,5002,0002,5003,0003,5004,000
Production and exports of crude sugar only.0140280420560700
1995 1996 1997 1998 1999 2000 2001200270340410480550Chart IV.1
Production, export and export price for  sugar and coffee, 1995-01 
(a) Sugara
'000 tonnes US$/tonne
(b) Green Coffee 
'000 tonnes US$/tonneProduction Export Export price (right-hand scale)
a
Source: WTO Secretariat estimates, based on data from FAO, FAOSTAT;  Banco Central de la Republica Dominicana;  Instituto 
Azucarero Dominicano;  and USDA, Economic Research Service. U.S. raw sugar price
(right-hand scale) Dominican Republic WT/TPR/S/105
Page 61
28. The Dominican Republic maintains an import tariff quota on sugar.  A 20% in-quota tariff is
levied on the first 25,000 tonnes, allocated on a first-come, first-served basis.  The out-of-quota tariff
is 100%, subject to reduction to 85% by 2004 for quantities exceeding 30,000 tonnes.  Sugar imports
in 2001 amounted to 30,000 tonnes, declining for the second consecutive year.  Pursuant to
Decree No. 751-00 of 11 September 2000, sugar imports require a permit from INAZUCAR.  Sugar is
among the products exempt from free trade within the FTAs with the Central American CommonMarket and CARICOM.
29. The Government intervenes in sugar production and marketing through the "zafra" decree,
issued annually at the beginning of the sugar harvest;  the decree establishes the volume the producers
are authorized to process for export.  A special export permit issued by INAZUCAR is required.  The
permit is issued after the exporter has registered the sales contract with INAZUCAR.  INAZUCARalso administers Dominican sugar exports to the United States, which are subject to a quota.
30. The Dominican Republic's quota allocation for 2001/02 is 185,335 tonnes.
9  According to the
authorities, capacity of the sugar mills is the main criterion for allocation of the quota.  For 2001/02,
49.5% of the quota has been allocated to the Central Romana Corporation and 16.4% to Central
Azucarero Consuelo.  The additional income associated with this quota is considerable;  for 2001 itamounted to about US$32 million.
31. Sugar is one of the products for which price controls are allowed with a view to protecting
consumers, as provided by Law No. 13 of 27 April 1963.  Price controls are implemented by joint
resolutions of the Ministry of Industry and Trade and INAZUCAR.  In mid 2002, the prices
established for producer-wholesaler, wholesaler-r etailer, and retailer-consumer stood at RD$330,
RD$360, and RD$400 per quintal.  Law No. 491 of 27 October 1969 governs the relationship between
private cane producers and processors and sets the price for cane based on sugar content.
32. In the course of the government's privatization policy, twelve state-owned sugar mills were
leased for 30 years to private enterprises in December 1999.  The Dominican Republic is a member of
the International Sugar Organization.
(b) Coffee
33. Dominican coffee exports have declined over recent years, reaching a record low of
4,000 tonnes in 2001, down from 28,000 tonnes in 1995 (Chart IV.1).  Further impaired by falling
international prices and Hurricane George in late 1998, the revenue generated from coffee exports fell
sharply, from US$81.6 million in 1995 to US$6.4 million in 2001.  Coffee production ranged between
36,000 tonnes in 2001 and 57,000 tonnes in 1998 (October-September coffee years).  While exports
of roasted coffee have tended to increase, from a low base, most exports still take place in the form ofgreen coffee, reflecting tariff escalation in importing countries.
34. The coffee sector is governed by the Dominican Coffee Council (CODOCAFE), formerly the
Coffee Commission, created by Law No. 79-00 of 25 September 2000.  CODOCAFE's main
responsibility is to formulate the Dominican coffee policy, administer the coffee funds created with
exporters' contributions, and allocate the export quotas set by the International Coffee Organization.The Council is presided by the Ministry of Agriculture, and includes coffee producers, exporters, the
Banco Agrícola, the Central Bank and CEDOPEX.  There is no special domestic legislation governing
the commercialization of coffee in the Dominican Republic.
                                                     
9 United States Trade Representative, Press release 01-74, 21 September 2001.WT/TPR/S/105 Trade Policy Review
Page 62
35. The import tariff on coffee is 20%.  Coffee is among the products excluded from
liberalization in the Free Trade Agreement with the Central American Common Market.  The
Dominican Republic is a member of the International Coffee Organization.
36. Coffee exports require a phytosanitary certificate issued by the Dominican Coffee
Commission.
(c) Tobacco
37. Tobacco production fell sharply between 1998 and 1999, due to damage caused by Hurricane
George, and has not recovered since (Table IV.2).  Export earnings fell from US$40 million in 1998
to US$8 million in 2001.  As at 2000, the area used for tobacco cultivation was around
23,600 hectares.  In line with the decline in producti on of tobacco leaves, exports of tobacco products
dropped from US$53 million in 1997 and in 1998 to US$20 million in 1999 and 2000.
Table IV.2
Production and export of tobacco leaves, 1995-01
1995 1996 1997 1998 1999 2000 2001
Production ('000 tonnes) 19.4 29.1 36.5 43.3 16.5 17.2 17.5
Exports (volume) ('000 tonnes) 9.0 14.5 15.1 9.7 10.6 11.9 6.4
Exports (value) (US$ million) 16.8 27.5 38.7 39.8 33.2 24.2 7.8
Average export price (US$/tonne) 1,870.4 1,901.5 2,559.2 4,086.0 3,140.8 2,032.1 1,223.9
Source: FAO;  Dominican Central Bank;  and WTO Secretariat calculations.
38. Law No. 5961 of 15 June 1962 created the Tobacco Institute (INTABACO) as an autonomous
institution to oversee the tobacco industry.  INTABACO's main functions include to gathering and
maintaining statistics, improving growing methods, disease control, and arranging credit forproducers.  Tobacco exports require an inspection certificate from INTABACO.
39. Pursuant to Article 110 of the Health Law of 7 February 2001, exporters of tobacco must be
registered with the Ministry of Health.  The Health Law further establishes that tobacco products must
be labelled in Spanish and, pursuant to Article 124 of the Law, carry a health warning.
40. Tobacco imports into the Dominican Republic are subject to a tariff of 18%.  In both of the
free-trade agreements the Dominican Republic has concluded, with CARICOM and the CACM,
tobacco and tobacco products are exempt from liberalization.
41. Domestic sales of tobacco products are subject to the Specific Consumption Tax;  the current
tax rate, as established by the Tax Reform Law of 27 December 2000, is 50% for most tobacco
products.
42. In addition to exporting tobacco to the United States, the Dominican Republic is also a major
importer of U.S. tobacco.  According to Central Bank data, Dominican tobacco imports amounted toUS$5.6 million in 2001.  Most of the imported tobacco is used as cigar wrapping in free-trade zones
and re-exported to the United States, or exported to the European Union and other markets.
(d) Cocoa
43. Apart from a significant decline in production in 1999, largely due to damage caused by
Hurricane George, Dominican cocoa production has mainly been stable in recent years (Table IV.3).The area cultivated has been constant at 120,000 hectares.  Cocoa exports amounted to US$38 millionDominican Republic WT/TPR/S/105
Page 63
in 2001.  The United States receives more than 90% of the cocoa beans exported by the Dominican
Republic.
Table IV.3
Cocoa beans production and export, 1995-01
1995 1996 1997 1998 1999 2000 2001
Production ('000 tonnes) 64.7 67.2 58.3 67.7 43.0 57.1 83.7
Exports (volume) ('000 tonnes) 49.9 51.1 45.4 53.4 20.0 30.3 39.7
Exports (value) (US$ million) 54.4 58.2 54.1 79.3 20.2 21.7 38.0
Average export price (US$/tonne) 1,091.2 1,138.9 1,192.5 1,483.6 1,010.4 714.5 957.5
Source: FAO;  Dominican Central Bank;  and WTO Secretariat calculations.
44. Production and commercialization of cocoa is governed by the Cocoa Commission,
established by Decree No. 2280 of 19 August 1976.  The Commission is composed of representativesfrom the Ministry of Agriculture, which presides it, cacao producers and exporters, the Central Bank,
Banco Agrícola, and CEDOPEX.  A phytosanitary certificate issued by the Cocoa Commission is
required for cocoa exports.  Imports of cocoa are subject to a tariff of 14.%.
(e) Other crops and products
45. Rice is the Dominican Republic's main staple food.  Traditionally, an important objective of
Dominican agricultural policy has been to generate a high degree of self-sufficiency in rice
production.  According to the authorities, rice production in 2000 amounted to 594,000 tonnes with a
value of RD$3.2 billion.  Imports of rice require an import permit issued by the Ministry of
Agriculture.  Rice imports are subject to reference prices (Chapter III(2)(ii)).  In 2000, the
Dominican Republic imported rice for US$24.8 million.
46. The Dominican Republic's banana exports reached 101,000 tonnes in 2001, earning
US$35 million, up from 63,000 tonnes in 2000.  Domestic production in 2001 amounted to
445,000 tonnes.  Imports of bananas are subject to a tariff of 20%.  The Dominican Republic had
reserved its third-party rights in the dispute settlement case concerning the importation of bananas to
the European Union.
10
47. Since the early 1990s, exports of various non-traditional agricultural goods, particularly fruit,
have increased in importance.  Growth rates have been particularly high for melons and pineapples(Table IV.4).
Table IV.4
Exports of selected non-traditional agricultural products, 1996-01
(US$ million)
1996 1997 1998 1999 2000 2001
Melons 3.5 4.9 4.3 7.5 11.1 10.5
Plantains 2.3 1.8 0.3 2.9 15.7 3.1
Pineapples 3.7 4.2 5.3 7.6 6.6 10.0
Dry coconuts 6.5 6.5 6.2 6.0 6.3 5.0
Guineos (specialty bananas) 12.0 9.9 13.0 16.6 19.3 13.5
Source: WTO Secretariat, based on data provided by the Dominican authorities.
                                                     
10 Further details may be found in WTO documents WT/DS16/4, 24 October 1995, and WT/DS27/2,
28 February 1996.WT/TPR/S/105 Trade Policy Review
Page 64
48. In 2000, the production of livestock contributed 5.4% to Dominican GDP, down from 6% in
1995.  Despite the relatively high importance of domestic production, exports of livestock are minor.
In 1999, the Dominican Republic exported live animals, meat and meat products for US$3.4 million.
49. The contribution of forestry and fisheries to Dominican GDP has traditionally been very low
and amounted to less than 0.5% in 2000.  The fisheries industry is governed by Law No. 64-00 of
August 2000, which also created the Ministry of the Environment and Natural Resources toamalgamate all state agencies with responsibility in the area of natural resources.
50. To preserve and control coastal areas, and to protect species, Decree 11-01 of 11 November
2001 established export taxes on fish and seafood.  Exports of live fish are subject to an export tax of
RD$0.03 per kg;  exports of crustaceans and molluscs face an export tax of 5% ad valorem .  The
authorities noted that the Dominican Republic was making efforts to ratify the Convention on the Lawof the Sea, and to reach bilateral agreements to exploit marine resources with other countries.
(3) M
INING AND ENERGY
(i) Mining and mineral processing
51. The contribution of the mining sector to the GDP has declined in re cent years, from 2.7% in
1995 to 1.6% in 2001.  While ferro-nickel and doré (a gold and silver alloy) have traditionally beenthe Dominican Republic's major mining products for export, cement, gypsum, salt, marble, sand and
gravel are mainly produced for the domestic market.  In 2001, the Dominican Republic exported
mining products for US$140 million;  most of this  was ferro-nickel after the production of doré
had been suspended in 1999 (Table IV.5).  Employment in the mining sector fell from about 8,900 in
1996 to some 5,800 in 2001.
Table IV.5
Mineral exports, 1996-01
(US$ million)
1996 1997 1998 1999 2000 2001
Total 267.5 243.8 147.6 150.8 237.4 145.2
Ferro-nickel 218.8 216.5 132.1 143.9 237.4 145.2
Doré 48.7 27.3 15.5 6.9 0.0 0.0
Silver 45.7 1.9 1.5 0.8 0.0 0.0
Gold 3.0 25.4 14.0 6.1 0.0 0.0
Source: Dominican Central Bank.
52. Sluggish international demand and low international prices have led to a reduction of
Dominican mining output since 1997.  In February 2002, the country's largest mining company and
only nickel producer, Falconbridge Dominicana, resumed mining operations after the company had
shut down its plants in October 2001 in response to low world market prices for nickel.  Nickel
production was 21,700 tonnes in 2001.
53. Production of gold and silver was suspended in 1999 due to deterioration of the plant and low
prices on the world market.  The operation of Rosario Dominicana, owned by the Central Bank, is in
the process of being transferred to Placer Dome, a Canadian firm.  The firm plans to invest some
US$336 million and start operations within three years under a 25-year lease.  Output will consist of
doré, gold, and zinc.  The authorities expect that this and other investment in mining will reverse the
downward trend in the sector's GDP share.Dominican Republic WT/TPR/S/105
Page 65
54. The mining sector in the Dominican Republic is governed by the Mining Law (Law No. 146)
of 4 June 1971 and Decree No. 207-98 of 3 June 1998.  The Law governs all mining operations,
except petroleum and other hydrocarbons, medicated mining water, radioactive substances, and sand
and construction material.  According to Article 1 of the Law, all natural mineral substances that are
found in the ground or subsoil of the national territory belong to the State.  Any national or foreign
person or company may register the discovery of mineral deposits and request exploration orexploitation concessions.
55. The Directorate-General of Mining of the Mini stry of Industry and Trade is responsible for
the administration of the mining sector.  The Ministry of Industry and Trade awards exploration
concessions to applicants according to the rules and regulations established in the Law and based on
information provided by the Directorate-General.  Exploitation concessions are granted for a period of75 years.  Foreign private participation is permitted in all areas of the mining sector, except for the
disposal of radioactive and toxic waste not produced in the Dominican Republic.
56. Under Article 119 of the Mining Law exports of mineral substances in their natural state or in
form of metalliferous concentrates are subject to a specific tax of 5% f.o.b.
57. Presidential Decree No. 613-2000 of 25 August 2000 created the National Council for the
Development of the Mining Industry.  The Council is headed by the President of the Republic and
includes the Ministers of Industry and Trade and of the Environment and Natural Resources, the
Central Bank Governor, the National Coordinator of Lomé IV, and others.  The Council formulates
policies for the mining sector and seeks schemes to encourage its development.  Presidential Decree
No. 613-2000 also created the Mining Corporate Unit to oversee and serve as the operative
counterpart in mining activities where the State participates as an investor.
58. With a view to promoting mineral processing in the Dominican Republic, Decree No.  947-01
of 19 September 2001 allows for the establishment of Mining Industry Parks in ten specific
geographic areas (Chapter III(4)(ii)).  Enterprises in these Parks are granted the advantages laid out in
the Free Trade Zone Law, such as duty-free import of equipment, and tax exemptions
(Chapter III(3)(iv)).  Contracts to establish, whic h are subject to approval by the National Council for
Free Trade Zones, have a duration of ten years and are renewable for four periods of equal duration.Moral or natural persons that possess exploration or exploitation licences are excluded from
benefiting from these advantages.
(ii) Electricity
59. Since the Dominican Republic's previous Review, major changes have been made to the legal
framework for the electricity industry, which is now governed by the Elec tricity Law (Law No. 125-
01) of 27 July 2001 and its Regulations.  Among other things, the Law aimed to address the industry's
persistent crisis since the 1970s, caused by sharp increases in fuel prices, insufficient generating
capacity, and excessive losses in the transmission and distribution systems.  Through the adoption of
the new Law, the authorities sought to guarantee a stable level of electricity supply, promote private
participation in the industry's development, encourage competition among generators, and regulatetransmission and distribution prices based on economic efficiency criteria.
11
60. The National Energy Commission, established by the Electricity Law, and the
Superintendency of Electricity, created by Decree No. 118-98, have overall responsibility for
regulating the Dominican energy sector.  The Nati onal Energy Commission is in charge of drafting
and coordinating the legal framework and advising th e executive branch on all related issues.  The
                                                     
11 Superintendency of Electricity/Pellerano & Herrera (2001), p. 15.WT/TPR/S/105 Trade Policy Review
Page 66
Commission is composed of the Ministers of Indus try and Trade, Finance, Agriculture, Environment,
and the Presidency;  the Governor of the Central Bank; and the Director of the Dominican Institute of
Telecommunications.
61. The Superintendency of Electricity is a semi-autonomous body operating under the Ministry
of Industry and Trade.  It is responsible for monito ring compliance with legal provisions;  authorizing
modifications to electricity rate levels that are subject to regulation;  supervising market behaviour inorder to avoid monopolist practices;  imposing penalties in case of non-compliance with the Law;  and
deciding about requests for provisional concessions of electricity generation, transmission, and
distribution.  The Electricity Law further established the Coordinating Agency as the institution in
charge of planning and coordinating operations between generation, transmission, and distribution
companies in order to guarantee electricity supply at a minimum economic cost.
62. The Electricity Law allows foreign investment in distribution and all forms of electricity
generation except for hydroelectricity.  The latter and the transmission of energy are reserved for the
state.  The Law does not provide for different treatment of foreign-owned enterprises.  Pursuant to the
Law, no authorization is needed for the generation of electricity but generators that feed electricity
above a certain power threshold into the transmission system require a concession.  Prices may be setfreely with the exception of prices for transmission and distribution services that are subject to
authorization.
63. In the course of the Government's privatization programme (Chapter III(4)(iii)), the state-
owned Dominican Electricity Corporation (CDE) was sp lit into five independent enterprises;  50% of
the capital was sold to private investors, who acquired effective control over the respective
companies.  Two of these newly created companies are engaged in the generation of electricity and
three are distribution companies.  The State is still involved in various activities in the electricityindustry.  The production of hydroelectricity is under government responsibility through the state-
owned Dominican Hydroelectric Generation Company.  Furthermore, the State owns the transmission
system and, through the state-owned company CDEEE, implements programmes for rural and
suburban electrification in favour of low-income communities.
64. The industry has been growing rapidly in recent years:  in 2001, it contributed 2.4% to GDP,
up from 1.9% in 1995;  and energy production reached nearly 9,700 GWh (Table IV.6).  Much of the
recent expansion in generating capacity has been linked to investment by independent power
producers (IPPs).  Notwithstanding changes to the legal framework and sizeable investment, chronic
and prolonged power cuts have continued to affect many production activities and countless domestic
consumers.  The lack of reliable electricity has forced users to keep back-up generators, which hasincreased energy costs to business and other users.  As a result, the performance of the electricity
subsector and the Government's approach to it have  become one of the main policy issues in the
Dominican Republic.
65. As a result of additions in recent years installed power generating capacity appears to exceed
demand.  Thus, unreliable supply does not seem to be caused by physical constraints.  The problem iscomplex but the information available suggests that the main causes include droughts periodically
reducing hydroelectric power, energy sales contracts that discourage bringing into line the highest
cost (marginal) generating capacity, a large number of unregistered customers, and customers that are
registered but not metered.  Moreover, IPPs have s hut down generating plants claiming that input-fuel
subsidies and electricity bills have gone unpaid (an IPP involving Enron Corporation has been
particularly vocal in this respect), apparently foll owing steep increases in electricity charges.  CDE
appears to account for a significant proportion of ch arges owed to IPPs;  it seems to have been owedDominican Republic WT/TPR/S/105
Page 67
for energy supplied to distributors, which in turn withheld reimbursement while awaiting payment by
final consumers (apparently including a number of public enterprises).
Table IV.6
Production and sales of electricity, 1995-01
1995 1996 1997 1998 1999 2000 2001a
(In gigawatt-hours)
Production 5,765 6,903 7,546 7,928 9,290 9,705 9,673
Public production 4,188 4,041 3,918 4,580 5,549 5,265 4,840
Hydroelectric 762 1,087 839 922 1,370 933 781
Thermal 2,846 2,336 2,466 2,420 2,019 2,218 2,726
Gas turbines 573 613 609 1,227 2,122 2,107 1,326
Diesel 6 6 5 11 8 7 8
Private sector production 1,577 2,862 3,628 3,348 3,741 4,440 4,833
Less 2,473 3,269 3,524 3,333 4,324 4,380 3,345
CDE internal consumption 234 211 211 236 240 236 231
Lossesb2,239 3,059 3,312 3,098 4,071 4,144 3,114
Sales 3,292 3,633 4,023 4,595 4,974 5,325 6,329
Residential 1,301 1,392 1,441 1,513 1,671 1,938 2,786
Commercial 375 419 449 474 569 614 820
Industrial 1,081 1,247 1,392 1,582 1,740 1,864 1,909
Public sector and street lights 535 575 741 1,026 994 909 814
a Preliminary statistics.
b Residual, mostly accounted for by transmission losses and unregistered line connections.
Source: Dominican Central Bank.
66. In an effort to solve the country's power supply problems, the Government intends to
investigate contracts awarded to IPPs, and appears interested in renegotiating some of them;  it is
apparently also considering the further capitalization of CDE to address the Corporation's financial
problems.  In addition, measures have been taken to upgrade the transmission and distribution system
as well as against fraud and illegal connections.  Despite existing problems, private firms have
continued to invest heavily in the Dominican Republic's electricity infrastructure.
(iii) Hydrocarbons
67. Energy demand in the Dominican Republic is met mainly by imported petroleum.  In 2001,
imported crude petroleum and derivatives were about US$1,233 million (Table IV.7).  The import
tariff on crude petroleum and most petroleum products is 3%, except on seven items of oil (not crude)
from petrol and bituminous minerals, for which it is 14%.  The Dominican Republic's largest refinery,REFIDOMSA, is a joint venture between the Government and Shell.
68. Under the San José Pact, the Dominican Republic and nine other Central American and
Caribbean countries share the maximum 160,000 petroleum barrels per day supplied by Mexico and
Venezuela.  Petroleum is priced at market rates, with part of the revenue used to finance development
projects.  The Caracas Energy Cooperation Accord, signed in October 2000 with the same beneficiary
countries, adds 20,000 barrels per day of Venezuelan petroleum.  While this petroleum is also priced
at market rates, the accord provides for the possibility of credit buying.
69. Pursuant to Law No. 112-00 of 1 November  2000, consumer prices for petroleum and
petroleum products, as well as their marketing margins, are fixed by the Ministry of Industry andWT/TPR/S/105 Trade Policy Review
Page 68
Trade.  Prices are adapted on a weekly basis, depending on international petroleum prices and the
exchange rate.
Table IV.7
Petroleum statistics, 1995-01
1995 1996 1997 1998 1999 2000 2001
(in million U.S. dollars)
Imports of crude oil and derivativesa604 767 814 648 840 1,505 1,233
Crude oil 264 297 294 184 242 409 307
Refined derivatives 340 470 520 464 598 1,096 926
(in million barrels)
Imports of crude oil and derivativesa33.8 35.4 40.4 44.2 45.1 .. ..
Crude oil 16.2 15.0 16.3 15.9 14.4 .. ..
Refined derivatives 17.6 20.4 24.1 28.3 30.7 .. ..
Refinery output 7.6 6.5 5.1 1.5 4.1 .. ..
Domestic consumption 25.2 26.9 29.2 29.8 34.8 .. ..
Gasoline 6.2 6.7 7.2 7.7 8.3 .. ..
Diesel 7.4 8.7 10.2 10.8 13.6 .. ..
Fuel oil 6.8 6.1 6.3 5.1 5.3 .. ..
Kerosene 2.3 2.5 2.6 2.7 2.8 .. ..
Liquid petroleum gas 2.5 2.9 2.9 3.5 4.7 .. ..
.. Not available.
a Includes crude oil imported by Dominican Electricity Corporation (CDE).
Source: Central Bank of the Dominican Republic.
(4) MANUFACTURING
(i) Main features and domestically oriented sector
70. Although value-added in real terms has increased, the relative contribution of the
manufacturing sector to Dominican GDP decreased from 18.2% in 1995 to 16.2% in 2001.  The most
important activities of the domestically oriented manufacturing sector include the processing andpackaging of agricultural products, production of chemical goods, and processing of minerals
(Table IV.8).
71. Based on the ISIC definition of the sector, the average tariff for manufacturing was 8.6% as at
January 2002 (Chart IV.2).
12  Goods subject to particularly high import tariffs include meat products
(22.1%), bakery products (20%), soft drinks (20%), and carpets and rugs (20%.).  On the other hand,various products crucial for the agriculture sector, such as agricultural machinery (0.2%) and
fertilizers and inputs (0%), facing relatively low tariffs.
72. The privatization policy following the adoption of the Public Enterprise Reform Law in 1997
led to a significant reduction of state activities in the manufacturing sector.  However, the
Government retains significant interest in several of the privatized enterprises as the principal modechosen for privatization required that at least 50% of the capital of newly created companies had to
remain in state hands.
                                                     
12 Based on the WTO definition for agricultural products, the average tariff for the non-agricultural
sector was 7.9%.Dominican Republic WT/TPR/S/105
Page 69
Table IV.8
Value-added in the manufacturing sector (excluding free-trade zones), 1995-00
(Per cent)
Sector 1995 1996 1997 1998 1999 2000
Contribution of manufacturing to GDP (1991 RD$ million) 21,260 22,730 25,963 27,114 27,672 29,061
Milling industries 2.3 2.0 1.9 1.7 1.9 1.9
Sugar refinement 4.8 5.3 5.1 3.8 2.9 3.2
Other food products 26.2 24.2 23.5 22.6 25.2 26.5
Beverages and tobacco production 18.9 20.7 17.1 18.5 19.6 20.0
Textile manufacturing 4.4 4.0 7.0 6.4 6.8 6.5
Petrol refinement 2.1 2.0 1.8 1.8 1.7 1.7
Chemical industries 13.2 13.2 13.1 12.5 11.4 12.2
Plastics and rubber products 3.8 3.8 5.7 3.1 1.8 1.0
Non-metallic mineral products 8.1 7.5 8.5 8.3 9.8 10.2
Basic metal industries 3.0 3.6 3.6 4.1 5.2 5.3
Other manufacturing industries 13.3 13.6 12.9 17.2 13.8 11.6
Source: Dominican Central Bank.
73. Besides tariff protection and special export regimes, public measures to promote the
Dominican Republic's industrial development include export marketing support (Chapter III(3)(v)),
official export finance programmes (Chapter III(3)(vi)), small-enterprise development programmes
(Chapter III(4)(i)(a)), and research assistance activities (Chapter III(4)(i)(b)).
(ii) Free-trade zones
74. Since the end of the 1960s, the Dominican Republic has developed an extensive system of
free-trade zones (FTZs), which have grown rapidly in terms of export value and employment
(Table IV.9).  In 2001, more than 500 enterprises with about 175,000 employees operated in FTZs.
The share of exports from FTZs in total exports increased from 77% in 1996 to 85% in 2001.  The
authorities indicated that less than 3% of the production in FTZs was sold on the Dominican market.
Table IV.9
Key indicators on the Dominican Republic's free-trade zones, 1995-01
Year 1995 1996 1997 1998 1999 2000 2001a
Number of free-trade zones 33 36 40 43 44 46 51
Number of enterprises 469 436 446 496 484 481 512
Total employment 166,000 165,000 182,000 195,000 189,000 197,000 175,000
Contribution to GDP (%) 3.7 3.5 3.5 3.5 3.2 3.1 2.9
Total imports (US$ million) 2,006 2,146 2,417 2,701 2,834 3,062 2,847
Total exports (US$ million) 2,907 3,107 3,596 4,100 4,331 4,771 4,538
of which:
Textiles and clothing 1,731 1,754 2,185 2,349 2,393 2,555 2,343
Shoes 330 265 311 349 358 296 303
Electronic products 350 241 300 362 446 555 485
Tobacco products 121 236 281 329 320 318 359
Jewellery 110 145 179 240 281 427 543
Pharmaceutical products 126 154 191 229 271 340 326
Other 140 313 151 243 263 270 180
Free-trade zone exports / total exports (%) 76.9 76.6 77.9 82.3 84.3 83.2 85.1
a Preliminary figures.
Source: National Council for Free Trade Zones, Central Bank.WT/TPR/S/105 Trade Policy Review
Page 70
75. The contribution of FTZs to Dominican GDP has declined since the mid 1990s:  they
contribute some 3% of GDP, and employ some 6% of  the labour force.  This reflects the widespread
use of labour-intensive activities in those zones.  Moreover, as noted in Chapter I, FTZ value added is
computed as net export earnings;  the authorities estimate that including all the usual components ofvalue added, the share of FTZs in GDP would be similar to their share in employment.
76. As described in Chapter III(3)(iv), enterprises located in FTZs benefit from considerable
incentives, most notably exemption from import tariffs and taxes.  The Dominican Republic notified
WTO Members about the measures maintained unde r the Free Trade Zones Law (Law No. 8-90) of
8 January 1990, and requested an extension of the transition period provided for in Article 27.4 of the0510152025
37 34 33
Manufacture of food products, beverages and tobacco
Textile, clothing and leather industries
Wood and wood products industry, including furniture
Paper and paper products;  printing and publishingManufacture of chemicals and chemical products derived from petroleum 
and coal, rubber and plastics
Manufacture of non-metallic mineral, except petroleum and coal
Basic metal industries
Fabricated metal products, machinery and equipmentOther manufacturing industriesChart IV.2
Tariff protection in the industrial sector, 2001a
Per cent
31
32
3334
35
36
3738
3931 32 35 36 38 39Overall
average
8.6%
a              By 4-digit ISIC category.
Source :  WTO Secretariat estimates, based on data supplied  by the Dominican Republic authorities.Dominican Republic WT/TPR/S/105
Page 71
WTO Agreement on Subsidies and Countervailing Measures in January 2001.13  The Ministerial
Conference directed the Committee on Subsidie s and Countervailing Measures to extend the
transition period under this Article for certain export subsidies provided by Members.14  In the context
of this Review, the Dominican authorities indicated that they had engaged consultants to study options
for the modification or elimination of any subsidy that might be WTO inconsistent.
77. The industrial structure of the FTZs still differs substantially from the domestically oriented
manufacturing sector.  Output and exports are largely concentrated in textiles, jewellery and electronic
products.  More than half of the enterprises located in FTZs are engaged in the production of textiles.
Since the mid 1990s, however, the Dominican Republic has to a certain extent managed to diversify
the exports of its FTZs.  Based on the data in Table IV.9, the Herfindahl-Index, measuring the
concentration of Dominican FTZ exports, fell from 0.40 in 1997 to 0.31 in 2001.15  Moreover, local
value-added as a share of total exports increased from 25% in 1993 to 34% in 2000.
78. Since 1993, the total number of enterprises operating in Dominican FTZs has remained
relatively stable, indicating that growth has taken place through the expansion of existing enterprises
rather than through market entries.  Of the 51 FTZs located in the Dominican Republic in 2001, 26
were administered by private operators, 22 by public operators, and three by private-public jointventures.
79. As at 2001, total accumulated investment of enterprises located in Dominican FTZs
amounted to more than US$1.3 billion. The main investor was the United States, with
US$728 million, followed by the Dominican Republic with US$376 million.  The United States is
also the main recipient of exports from Dominican FTZs and the most important provider of imports,
creating a heavy dependence on the U.S. business cycle and U.S. trade policy changes.
80. Policies of foreign trading partners, as reflected in the U.S. Caribbean Basin Initiative and
Caribbean Basin Trade Partnership Act, the Cotonou Convention, and the Generalized System of
Preferences, continue to have an important imp act on Dominican manufacturing export performance
and have fuelled the expansion of FTZs in the Dominican Republic.  For example, Dominican
manufacturing exports to the U.S. under the CBI and CBTPA amounted to nearly US$2 billion in
2001.  The authorities indicated, however, that certain provisions in these schemes, most notably the
yarn-forward requirement, hinder the development of stronger backward linkages to the "national"
economy.  Under the two free-trade agreements the Dominican Republic has concluded, with
CARICOM and the Central American Common Market, products originating in FTZs are exempt
from duty-free treatment.
81. For apparel and textile exports to the United States, a special export permit is required from
the National Council for Free Trade Zones.  The quota for textile exports is assigned by the Textile
Commission of the National Council for Free Trade Zones in accordance with the Regulations on the
Allocation of the Textile Quota (Decree No. 06- 91 of 21 May 1991).  The Commission is composed
of various representatives of the public and private sector.  According to the authorities, historic
export performance is the main criterion for the allocation of the quota. Exports of apparel and textilesfrom Dominican FTZs amounted to US$2.3 billion in 2001;  for most product categories the fill rate
of the Dominican quota was below 80%.
                                                     
13 WTO document G/SCM/N/74/DOM, 8 January 2002.
14 WTO document WT/MIN(01)/17, 20 November 2001.
15 An index value of 1 would mean total concentration of exports in one branch, while a value close to
0 would describe a high degree of diversification.WT/TPR/S/105 Trade Policy Review
Page 72
(5) SERVICES
(i) Principal characteristics
82. In 2000, the services sector contributed 55% to Dominican GDP, about the same share as in
1995.16  While commerce has traditionally been the Dominican Republic's most important service
subsector, growth rates during the 1990s were particularly high in communications and tourism-
related services such as transport and the hotel and restaurant industry (Table IV.10).
Table IV.10
Value-added of Dominican services sectors, 1995-01
(1970 RD$ million)
Sector 1995 1996 1997 1998 1999 2000 2001
Commerce 554.8 603.9 664.2 743.3 805.7 875.8 878.9
Hotels, bars and restaurants 259.4 292.6 343.6 359.7 392.4 450.0 430.4
Transport 310.6 335.3 356.6 389.8 414.7 449.1 447.5
Communications 159.7 185.7 221.5 266.7 308.3 355.7 442.0
Finance 224.6 228.8 236.2 245.7 256.0 264.4 271.9
Real estate 238.2 243.5 249.3 254.5 260.4 266.4 272.4
Public services 387.7 409.8 422.7 444.9 458.7 478.4 520.8
Other services 380.5 397.4 415.3 431.5 450.0 469.2 485.4
Source: Dominican Central Bank.
83. According to Central Bank data, the Dominican Republic exported services amounting to
US$2,999 million and imported services to US$1,295 million in 2001.  Employment in the sector
grew faster than in others;  in 2001, 62% of the economically active population worked in the services
sector, up from 54% in 1996.
84. As a consequence of the Government's privatiza tion policy, state involvement in services has
decreased since 1999.  However, the State remains invo lved in the provision of services as owner of
banks, maritime ports, and hotels.  The Foreign Investment Law of 1995 eliminated virtually all
exemptions to market access and national treatment;  sectoral exceptions continue to exist for radio
broadcasting and in the transport sector.
(ii) Commitments under the GATS and other agreements
85. The Dominican Republic's Schedule of Specific Commitments under the WTO General
Agreement on Trade in Services (GATS) includes commitments in seven of the twelve categories of
services (Table IV.11).17  In general, the Dominican Republic's GATS commitments tend to bind the
policy framework in place at the time of the Uruguay Round negotiations.  In most cases, recent
changes have made the applied policy more liberal than those commitments.
                                                     
16 Following the UN System of National Accounts, the construction, electricity, water industries are
counted as being part of the industrial sector.
17 WTO documents GATS/SC/28, 15 April 1994, GATS/SC/28/Suppl.1, 28 July 1995,
GATS/SC/28/Suppl.2, 11 April 1997, and GATS/SC/28/Suppl.3, 26 February 1998.Dominican Republic WT/TPR/S/105
Page 73
Table IV.11
Summary of the Dominican Republic's commitments under the GATSa
Market access National treatment
Modes of supply:
Cross-border supply 1 1
Consumption abroad 2 2
Commercial presence 3 3
Presence of natural persons 4 4
Commitments (■ full;  ◨ partial;  □ no commitment; – not appearing in Schedule)
Horizontal□□◨◨□□□◨
Commitments in specific sectors
1. Business services
A. Professional services
Legal advisory and information services; financial auditing
services;  accounting review services; compilation of financial 
consulting services;  corporate tax preparation and reviewservices;  individual tax preparation and planning
services; other tax-related services■■■□□■□□
Market research and public opinion polling services;
management consulting services■■■◨■■■◨
Architectural services; integrated engineering services;
urban planning and landscape architectural services■□■◨■□□◨
Engineering services ■□□◨■□□◨
Medical and dental practice services; social services □■■◨□□□◨
Related scientific and technical consulting services;
technical testing and analysis services■□■□■□□□
Advertising services ■■■□■■□□
Building cleaning services □□■□□□□□
B. Computer services
Consultancy services related to the installation of computer 
data processing services;  data base services;  maintenance 
other computer services□□■□□□□□
C. Research and development services
Research and development services on natural sciences;
research and development services on social sciences and
humanities;  interdisciplinary research and development
services■□■□■□■□
F. Other business services
Various agricultural, mining and manufacturing services ■□■□□□□□
2. Communications services
C. Telecommunications services
Voice telephone services;  packet-switched data transmission, 
services;  telegraph services;  facsimile services;  private
leased circuit services;  connection and interconnectionservices; paging services;  mobile maritime and air-to-
ground telecommunication services□□◨◨□□□◨
D. Audiovisual services
Radio and television cable services; sound and images
transmission services, on a fee or contract basis;  othercommunication services◨■■◨◨■■◨
3. Construction services
Construction work □□■◨□□■◨
A. General construction work for buildings □□■◨□□■◨
B. General construction work for civil engineering □□■◨□□■◨
C. Assembly and erection of pre-fabricated constructions □□■◨□□■◨
Table IV.11 (cont'd)WT/TPR/S/105 Trade Policy Review
Page 74
Market access National treatment
Modes of supply:
Cross-border supply 1 1
Consumption abroad 2 2
Commercial presence 3 3
Presence of natural persons 4 4
Commitments (■ full;  ◨ partial;  □ no commitment; – not appearing in Schedule)
D. Building completion and finishing work □□■◨□□■◨
Building completion and finishing work; renting services
related to equipment for construction or demolition of
buildings;  construction buildings; civil engineering
works;  other engineering works□□■◨□□■◨
E. Other construction services □□■◨□□■◨
Special trade construction work;  installation work □□■◨□□■◨
4. Distribution services −−−−−−−−
5. Education services −−−−−−−−
6. Services related to the environment −−−−−−−−
7. Financial services
Wholesale deposit services;  other bank deposit services;
other deposit services□□◨◨□□◨◨
Central bank deposit services; central bank reserve
management services■□□◨■□□◨
Financial leasing services with option to buy and factoring;
insurance (including reinsurance) and pension fund services,
except compulsory social security services□□◨◨□□□◨
Mortgage loan services ◨□◨◨◨□□◨
Personal instalment loan services ◨□◨◨□□□◨
Credit card services ■■◨◨■■□◨
Closed-end investment trust services;  open-ended investment
and other unit rust services□□◨◨□□□◨
Property unit trust services □□◨◨□□□◨
Services related to securities markets;  services auxiliary to
insurance and pension funding□□◨◨□□□◨
8. Social and health services
A. Hospital services □■■◨□□□◨
B. Other human health services □■■◨□□□◨
9. Tourism and travel-related services
A. Hotel and restaurant services
Hotel and similar accommodation services;  food serving
services;  beverage serving services for consumption on
the premises□■■◨□□■◨
B. Travel agencies, tour operators and tourist guides services ■□■◨■□□□
Motor vehicle rental services □□□◨□□□◨
10. Leisure and sports services −−−−−−−−
11. Transport services
Other non-scheduled passenger transportation;  transport services
by railways;  cargo handling services;  storage and warehouse services;  supporting services for railway transport; supporting 
services for water transport; freight transport agency services;  other 
services; freight transportation; maritime freight  transportation; rental of sea-going vessels with crew; towing and pushing services;■■■◨■■■◨
12. Other services −−−−−−−−
a The only authentic source of information on these commitments is the Dominican Republic's Schedule of Specific Commitments
contained in WTO documents GATS/SC/28 (15 April 1994), GATS/SC/28/Suppl.1 (28 July 1995), GATS/SC/28/Suppl.2(11 April 1997), and GATS/SC/28/Suppl.3 (26 February 1998).
Note: Subsectors not listed under each sector do not appear in the Schedule either.
Source: WTO Secretariat.Dominican Republic WT/TPR/S/105
Page 75
86. The Dominican Republic's free-trade agreements, with the Central American Common
Market and CARICOM, also contain provisions on trade in services.  Chapter X of the agreement
with the CACM establishes the principle of MFN treatment between the parties;  it also creates a
Committee on Trade in Services as a forum for futu re negotiations.  Chapter XI of the agreement
regulates the presence of natural persons.  Annex II to the agreement with CARICOM establishes the
principle of national treatment between the parties;  Article X of the Annex contains regulations onthe presence of natural persons.
87. Dominican legislation contains a number of provisions with implications for the supply of
services through the presence of natural persons.  Article 143 of the Labour Code (Law No. 16-92) of
29 May 1992 stipulates that administrators, managers, directors and other persons who exercise
administrative functions should preferably be Dominicans.  Pursuant to Article 135 of the Code, atleast 80% of the workers in a company must be Dominicans.  To encourage foreign direct investment
and to expedite procedures for business persons, Decree No. 950-01 established that residency permits
can also be issued by the Office for the Promotion of Investment in the Dominican Republic.
(iii) Banking and insurance
88. The contribution of the financial services su bsector to Dominican GDP fell from 4.9% in
1995 to 4.0% in 2001.  The total assets of the Dominican financial sector amount to RD$218 billion,
equivalent to 62.4% of the Dominican Republic's 2001 GDP.
89. The Dominican Republic's GATS commitments for financial services are relatively limited.
Sectoral commitments were made for only few subsectors, such as central bank deposit and reserve
management services and credit card services.  The Dominican Republic participated in the extended
GATS negotiations on financial services, and signed the Fifth Protocol to GATS;  however,
ratification of the Protocol was still pending as at July 2002.
(a) Banking
90. The Dominican Republic's banking sector comprises 12 banks authorized to offer universal
services, which hold about 74% of total assets, and 18 savings and loan associations with about 16%
of total assets.  The remaining assets are held by numerous development and mortgage banks and
other financial institutions of limited size.  Three banks are state-owned;  Banco de Reservas is themost important.  Furthermore, two foreign banks, which authorized to offer universal services, have
branch offices in the Dominican Republic.  There is no universal deposit insurance scheme in the
Dominican Republic.
91. The banking sector is monitored by the Superintendency of Banks in accordance with the
Banking Law (Law No. 708) of 14 April 1964.  The Superintendency is a technical supervisory bodyoperating as a semi-autonomous dependency of the Ministry of Finance.
92. Registration and approval procedures for banks are laid out in the Banking Law.
Authorization for the incorporation of a new bank is granted by the Monetary Board
(Chapter I(2)(iii)), following a recommendation of the Superintendency of Banks.  Any request must
be submitted to the Superintendency and the Monetary Board, accompanied, inter alia , by:
information on the company's name, capital endowment, and executive staff;  a specification of the
envisaged operations;  and a copy of the company's st atutes.  According to Article 13 of the Law, the
Monetary Board analyses the request taking into account public interest, which is not defined in the
Law, general economic and legal conditions, and the quality of the request.  The minimum capital
requirement is established by the Monetary Board;  currently it is set at RD$900 million for banks thatWT/TPR/S/105 Trade Policy Review
Page 76
wish to offer universal services and RD$18 million for development and mortgage banks.  Minimum
capital requirements are the same for national and foreign-owned banks.
93. Pursuant to Article 12 of the Banking Law, foreign banks may establish subsidiaries or branch
offices in the Dominican Republic.  In addition to the information required for the incorporation of a
new bank, foreign companies must submit:  the parent bank's original charter, and authorization of the
regulatory authority of its country of origin;  certified financial statements for the preceding fiveyears;  the names of the bank's legal representatives in the Dominican Republic;  and information on
working capital assigned to the subsidiary or branch  office.  Branch offices or agencies of foreign
banks are not required to have their own directorate;  however, their representatives must be
domiciled in the Dominican Republic.  In this context the authorities emphasized that, to date, no
request by a foreign bank to establish subsidiaries or branch offices in the Dominican Republic hasbeen denied.
94. Monetary Board Decision No. 309-05 of 9 March 2000 lays out rules for the establishment of
representative offices of foreign banks, which are allowed only to engage in the provision of
technical, economic and financial advice to their clients.  As at July 2002, three representative offices
were in operation.
95. Once established, foreign banks and their subsidiaries and branches are subject to the same
legal regulatory framework as Dominican-owned banks, as well as to the jurisdiction of the
Superintendency of Banks and the Monetary Board, and may provide the same services.  There are no
national ownership requirements on head offices, subsidiaries or branch offices.  There is no
obligation on Dominican companies to employ specific banking institutions for their operations.
96. The Dominican Republic's banking sector is characterized by relatively large spreads, which
stood at 12% in May 2002.  Limited competition, a relatively small domestic market, and high reserverequirements are among the factors contributing to the large difference between deposit and lending
rates.
97. In order to promote and regulate the trade of equities in the Dominican Republic, a Stock
Market Law (Law No. 19-00) was adopted on 18 April 2000.  The Law established the
Superintendency of the Stock Market as an autonomous public organization.
(b) Insurance and bonding
98. As at May 2002, there were 30 insurance companies, three of which were foreign-owned, and
four reinsurance companies operating in the Dominican Republic. At end-2001, Dominican insurance
companies held assets of RD$9.3 billion, equivalent to 2.1% of GDP.  Two insurance companies have
been incorporated since 1996.
99. The Dominican insurance sector is governed by the Law on Private Insurance (Law No. 126)
of  10 May 1971.  The Superintendency of Insuran ce, a semi-autonomous institution operating under
the Ministry of Finance, is responsible for th e enforcement of the Law and for regulating the
Dominican insurance sector.
100. Licences for insurance providers are granted by the Superintendency of Insurance.  Any
interested legal or moral person must meet a minimum capital requirement of RD$500,000 for the
incorporation of either an insurance or reinsurance company.  Foreign investors that wish to
incorporate a Dominican company face the same capital requirement;  in addition they must have
been in operation in their home country for at least five years.  Insurance companies are not allowedDominican Republic WT/TPR/S/105
Page 77
to offer services other than insurance or reinsurance.  Insurance premiums must be approved by the
Superintendency.
101. The authorities noted that a new Insurance and Bonding Law is in the process of ratification.
This draft Law raises the minimum capital requiremen t for the incorporation of an insurance company
in the Dominican Republic to RD$8.5 million.
(iv) Telecommunication
102. The Dominican telecommunications industry has expanded rapidly in recent years.  Growth
rates have been particularly high for mobile connections, which increased more than fifteen-fold
between 1996 and 2001 (Table IV.12).  The number of mobile connections was estimated to be
1.27 million in 2001, and fixed connections about 955,000.  The industry accounted for 6.5% of
Dominican GDP in 2001, up from 3.5% in 1995.  The authorities indicated that as at June 2002,
eleven concessions to provide any type of telecommunication services had been issued of which four
were operational.  The State is not involved in the provision of telecommunication services.
Table IV.12
Telephone connections in the Dominican Republic, 1996-01
('000)
Net 1996 1997 1998 1999 2000 2001
Mobile 82.5 141.5 209.3 424.4 705.4 1,270.1
Fixed 618.5 704.3 772.1 826.7 894.1 955.1
Total 701.0 845.9 981.5 1,251.1 1,599.5 2,225.2
Source: INDOTEL.
103. The telecommunications subsector is regulated by the Telecommunications Law
(Law No. 153-98) of 27 May 1998, and a number of regulations issued by the Dominican Institute of
Telecommunications (INDOTEL).18
104. INDOTEL, which replaced the Directorate-General of Telecommunications, has overall
responsibility for regulating telecommunications in the Dominican Republic.  The
Telecommunications Law established INDOTEL as a decentralized state entity with functional,
jurisdictional, and financial autonomy.  INDOTEL's responsibilities include the promotion of
investment in telecommunications, the supervision of service providers, the management of the wavespectrum, dispute settlement, and the administration of the Telecommunications Development Fund
(FDT).  INDOTEL's budget is financed by a por tion of the 2% Contribu tion to Telecommunications
                                                     
18 The most important of these regulations are:  the Regulations concerning the Authorization to
Provide Telecommunication Services in the Dominican Republic (Resolution 4-00), the Regulations on theSolution of Disputes between Consumers and Operators of Public Telecommunication Services (Resolution 71-
01, modified by Resolution 1-02), the Regulations on the Telecommunications Development Fund (Resolution17-01), the Regulations Establishing the Prohibition of the Interception of Public Telecommunication Services(Resolution 73-01), the Regulations on the Provision of Cable Services (Resolution 45-01), the Regulations on
the Provision of FM and AM Services (Resolutions 54-01 and 68-01), the Regulations for Radio Services
(Resolution 39-01), the Regulations on the Use of the Radio Wave Spectrum (Resolution 7-99), and theRegulations on the Contribution to Telecommunication Development in the Dominican Republic (Resolution98-01).  There are also established policies and norms re garding the National Frequency Attribution plan and the
Technical Routing Plan.WT/TPR/S/105 Trade Policy Review
Page 78
Development (CDT) levy19, central government allocation, and revenue generated from the granting
of concessions.
105. Pursuant to Article 39 of the Telecommunications Law, service providers are free to set prices
or rates for public telecommunications services.  INDOTEL may intervene, however, in the setting of
prices if they deem that sufficient conditions do not exist to ensure effective and sustainable
competition.  Interconnection charges are freely negotiated between companies as well as accountingrates for international services.   When providers cannot agree on interconnection fees, these may be
fixed by INDOTEL.
106. Any provision of public telecommunication services requires a concession, which is issued by
INDOTEL in line with the Regulations concerning the Authorization to Provide Telecommunication
Services in the Dominican Republic (Resolution 4-00).  Terminals, equipment or systems to beconnected to a public telecommunications network, or which use the electromagnetic spectrum, must
have the corresponding standardization certificate.
107. The privately owned company CODETEL enjoyed de facto monopoly status until 1990, when
competition was introduced and new firms entered the market.  CODETEL's share of the Dominican
telecommunications market is currently over 70%.
108. The Fund for the Development of Telecommunications (FDT) was created in 1998 to finance
telecommunications projects in low-income areas.  The Fund is administered by INDOTEL, with
financial resources coming mainly from the CDT levy.  INDOTEL prepares a biannual project plan
and adjudicates projects on a least-cost basis by public bidding.  The Fund's resources amount to
RD$360 million.
109. The Dominican Republic participated in the Negotiating Group on Basic
Telecommunications.  The Fourth Protocol to the GATS was ratified with the enactment of theTelecommunications Law.  The Dominican Republic's Schedule of Commitments in
telecommunications services allows the commercial  presence of foreign companies, provided that
they establish legal domicile in the Dominican Republic and obtain a concession from the
telecommunications regulatory body.
20  There are no limitations to national treatment.
110. In addition, the Schedule provides for measures to prevent major telecommunications service
providers from engaging in anti-competitive practic es.  Such practices specifically include anti-
competitive cross-subsidization;  using information obtained from competitors in an anti-competitive
manner;  and not making available to other service providers on a timely basis technical information
about essential facilities and commercially relevant information.  Also, upon request, interconnection
with a major supplier, under non-discriminatory term s and in a timely fashion, should be ensured at
any technically feasible point in the network.
(v) Transport
(a) Introduction
111. The contribution of transport services to GDP has remained relatively stable since 1995,
amounting to 6.6% in 2001.  The improvement of the Dominican Republic's transport infrastructure isa priority of the current administration.
                                                     
19 The CDT levy is currently 2%, assessed on end-user telecommunication services and net
international settlements.
20 WTO document S/GBT/W/1/Add.30, 12 February 1997, and GATS/SC/28/Suppl.2, 11 April 1997.Dominican Republic WT/TPR/S/105
Page 79
112. The Dominican Republic's road structure consists of 12,600 kilometres of roads, of which
6,200 kilometres are paved. The Dominican Republic also has 757 kilometres of non-electrified
railway, of which 240 kilometres are operated by sugar companies in various gauges.  The
government is currently planning to construct a further railway line connecting Jimani, at the
Haitian border, with Barahona.
113. The Dominican Republic's Schedule of Commitments provides for no limitations on market
access and national treatment for mode 1, 2, and 3 supply of numerous transport services.21
(b) Maritime transport
114. The Dominican Republic does not have a national merchant fleet.  Nineteen shipping
companies are represented in the Dominican Republic.  There are eleven maritime ports, which are all
state-owned.  However, the authorities indicated that they were considering their full privatization andthat several new port projects were being developed by the private sector, including the construction
of a multi-modal port with deepwater approach located on the Cauceda peninsula.
115. The Dominican Republic's main maritime ports in volume terms are Haina East, Haina West,
and Pedernales;  the latter is particularly important for exports (Table IV.13).
116. Maritime transport is governed by Law No. 3003 of  12 July 1951, Law No. 70 of
18 December 1970, and a number of decrees.  In addition, numerous other laws and regulations,
including the Commercial Code, the Insurance Law, and the Tax Reform Law, contain individual
provisions related to maritime transport.  The Dominican Republic has been a Member of the
International Maritime Organization since 1953, and has signed several international conventions on
maritime transport.
22
Table IV.13
Dominican ports, handled cargo, 1997-01
('000 tonnes)
1997 1998 1999 2000 2001
Ports Import Export Import Export Import Export Import Export Import Export
Haina East 3,460 388 3,890 458 4,094 380 4,253 401 4,097 480
Haina West 3,220 375 3,118 276 5,170 189 5,567 259 5,465 153
Santo Domingo 767 79 845 62 1,099 79 993 63 826 65
Macoris 879 94 881 34 1,013 8 1,377 38 1,741 102
Puerto Plata 1,231 128 1,269 119 1,527 139 1,435 148 1,214 181
Manzanillo 220 51 176 46 216 42 255 27 283 28
Pedernales 0 0 271 330 6 371 405 729 9 1,038
Total .. .. 10,719 1,672 13,603 1,609 14,245 2,170 14,057 2,596
.. Not available.
Source: APORDOM.
                                                     
21 WTO document GATS/SC/28, 15 April 1994.
22 The Dominican Republic has signed:  the Inter-American Convention for the Facilitation of
International Maritime Transport, the Convention on Civil Liability for Oil Pollution Damages, the Convention
relating to Intervention on the High Seas in Cases of Oil Pollution Casualties, the United Nations Convention onthe Law of the Sea, the International Convention for the Prevention of Pollution from Ships (MARPOL), theInternational Convention for the Safety of Life at Sea (SOLAS), and the International Convention on LoadLines.WT/TPR/S/105 Trade Policy Review
Page 80
117. The Dominican Ports Authority (APORDOM), established by Law No. 70, has overall
responsibility for all issues relating to the ports of the Dominican Republic.  The State, through
APORDOM or the customs authorities, also operates ten of the eleven ports.  The fees to be paid for
services of public ports are defined by Decree 572-99 of 30 December 1999. There are no limitations
to private sector or foreign ownership of ports.
118. Decree No. 947-01 of 19 September 2001 allows the Dominican Ports Authority to enter into
concession contracts for maritime ports with operators of Mining Industry Parks established under this
Decree.  These contracts have a duration of ten years and are renewable for four periods of equal
duration.
119. The Government is currently undertaking efforts to upgrade the Dominican Republic's port
infrastructure.  In January 2002, construction started for the harbour project San Pedro de Marcoris,for which a total investment of US$170 million is envisaged.  The port of Manzanillo was granted
in concession to an international consortium in 2000 for a renewable period of ten years.  The
Government plans to establish free-trade zones in the vicinity of both ports and to improve the
surrounding road infrastructure.
120. Law No. 3003 establishes that maritime cabotage as  well as pushing and towing services may
be provided only by Dominican enterprises.  For these services, the Dominican Republic's GATS
commitments provide for national treatment in cross-border supply, consumption abroad, and
commercial presence.
(c) Air transport
121. Air transport in the Dominican Republic is governed by the Civil Aviation Law
(Law No. 505) of 10 November 1969 and Law No. 8 of 19 November 1978, which established the
Airport Commission as the entity responsible for the management of all airports.  The Directorate-General of Civil Aviation, established by the Civil Aviation Law, is responsible for the
implementation of laws and regulations for air navigation, safety, and air traffic control over the
Dominican Republic.
122. The Civil Aviation Law does not contain any regulation on prices.  Air rates and routes are
subject to approval by the authorities.  Article 128 of the Law establishes that national air transport isreserved for companies that are owned by natural or moral Dominican persons.  International air
transport and related services are subject to the granting of a concession.  The Dominican Republic's
GATS Schedule does not contain specific commitments on air transport.
123. The Dominican Republic has ten major airports;  Las Américas Airport in Santo Domingo
and Gregorio Luperón Airport in Puerto Plata are the most important, receiving 2.8 and 2 millionpassengers per year, respectively.  Both airports are served by numerous international airlines.  In the
course of the Government's privatization policy, six airports, including both major airports, were
granted in concession to Aerodom, a private international consortium, for 25 years from July 1999.
23
The concession includes the operation of passenger terminals and airfield facilities.  The concessioncontract requires Aerodom to undertake a programme of airport development, including facilityexpansion and renovation.
                                                     
23 The original concession contract provided for a duration of 20 years for four airports;
Decree No. 66-01 of March 2001 extended the contract to two additional airports  and a duration of 25 years.See. IDB (2002).Dominican Republic WT/TPR/S/105
Page 81
124. By the same token, the state-owned aviation company Compañía Dominicana de Aviación
was scheduled for privatization;  as at mid-2002 the Commission for the Reform of Public Enterprises
had received offers from various foreign aviation companies.  The authorities indicated that Compañía
Dominicana de Aviación does not enjoy any special privileges.
125. The Dominican Republic has concluded open sk ies agreements with Chile (1997), the
members of the Central American Common market (1998), and the United States (1999);  the latter,however, has not yet been ratified.  It has also concluded bilateral agreements on air transport services
with France, Germany, Italy, Mexico, Peru, Spain, the United States, and Venezuela. The authorities
also indicated that they had signed memoranda of  understanding with Chile, Columbia, the Dutch
Antilles, Panama, and the United Kingdom.
(vi) Tourism
126. Since the beginning of the 1990s, tourism has been one of the most dynamic sectors in
Dominican Republic.  In 2001, an estimated 2.8 million tourists visited the Dominican Republic, up
from 1.9 million five years earlier, generating around US$2.7 billion of foreign exchange income
(Table IV.14).  Much of the recent boom in construc tion appears to be related to the fast growth of
tourism.  Accommodation capacity increased from to 36,000 hotel rooms in 1996 to 54,000 in 2001.Employment in tourism-related activities such as commerce and hotels, bars and restaurants has
grown by about 50% since 1996.  About 29% of foreign tourists come from the United States,
followed by Germany (14.5%), Canada (12.4%), and France (8.5%).
Table IV.14
Tourism, 1996-01
1996 1997 1998 1999 2000 2001
Number of international arrivals ('000) 1,948 2,185 2,309 2,649 2,972 2,778
Non-resident foreigners ('000) 1,575 1,754 1,890 2,148 2,460 2,294
Non-resident Dominicans ('000) 373 431 419 502 513 484
Accommodation capacity (rooms) 36,273 40,453 44,665 49,623 51,916 53,964
Rate of occupancy (%) 72.8 76.3 69.7 66.9 70.2 66.3
Generation of foreign exchange (US$ million) 1,763 2,099 2,142 2,524 2,918 2,690
Contribution to GDPa (%) 6.0 6.5 6.3 6.4 6.8 6.4
a Contribution of hotels, bars and restaurants.
Source: Central Bank of the Dominican Republic;  and World Tourism Organization.
127. After strong growth since the second half of  the 1990s, tourism slowed down markedly in
2001.  Tourist arrivals dropped by 6.7% and hotel occupancy declined from 70% to 66%.  Due to the
global economic downturn and the relative weakness of the Euro, the tourism industry had already
experienced a slowdown in the first quarters of 2001, but subsequently suffered most directly from the
aftermath of the 11 September events in the United States.
128. The Dominican tourism sector has a high level of  foreign investment.  For example, 14 of the
30 hotel chains operating in the Dominican Republic are Spanish-owned.  However, the authorities
noted that several foreign firms act as operators and service providers, rather than as owners;
partnerships between foreign and Dominican investors are frequent.
129. The State owns a number of hotels, which have a total capacity of about 1,000 rooms.  While
some of these hotels are operated by private enterprises, others are run by the state company
CORPHOTELS.  The authorities are considering the pr ivatization of all remaining state-owned hotels.WT/TPR/S/105 Trade Policy Review
Page 82
130. The Ministry of Tourism has overall responsibility for regulating the tourism sector.  It
promotes national and international tourism and supervises all tourism-related investments and
infrastructure constructions. In order to promote international tourism in the Dominican Republic, the
Ministry maintains 22 representative offices, in Europe, Japan, and American countries.
131. The Dominican tourism sector is governed by various laws and regulations, the most
important being: the Tourism Development Law (Law No. 158-01) of 9 October 2001 and its
Regulations;  Rule 2115 establishing classification and norms for hotels;  Rule 2116 establishing
classification and norms for restaurants;  Rule 2117 regulating car rentals;  Rule 2122 regulating
travel agencies;  and Rule 2123 regulating gift shops.
132. The Tourism Development Law aims to promote tourism development in specifically defined
priority regions.  In particular, the Law offers exemptions from income tax and a 50% reduction ofITBIS for enterprises investing in tourism-related ac tivities in the stipulated regions. In order to
administer the benefits, the Law establishe d a Council for Tourism Development (CONFOTUR),
composed of representatives from various ministries and the National Hotel and Restaurant
Association (AS ONAHORES).  In a ddition, the Law created a Fund for the Promotion of Tourism, to
promote tourism to the Dominican Republic internationally in a more effective manner.
133. Foreign investors in tourism are granted national treatment by the Foreign Investment Law.
There are no restrictions to foreign participation, under any statute, for travel agents and tour
operators.  The authorities indicated there are no nationality requirements for tourist guides:
regardless of their nationality, they must meet the same requirements, including an academic degree,
and command of Spanish and at least two foreign languages.  Pursuant to Article 41 of the Law on the
Environment and Natural Resources, an environmental impact study is required for touristic
development projects and hotel construction.
134. The Dominican Republic's GATS Schedule contains a number of commitments on tourism
and travel-related services.
24  It provides for no limitations on market access for mode 2 and 3 supply
of various hotel and restaurant services, and for mode 1 and 3 supply of most services of travel
agencies, tour operators and tourist guides.
135. In the context of the preparations for the 1999 Ministerial Conference in Seattle, the
Dominican Republic, together with El Salvador and Honduras, tabled a proposal for a GATS annex
on tourism.25  Such an annex was considered necessary in order to better deal with the "specific and
heterogeneous nature of tourism as a cluster" and to monitor progressive liberalization and
compliance with commitments undertaken under tourism and travel-related services.  The draft
elaborated measures to ensure that progressive liberalization was effective and consistent with theneeds for sustainable development of the sector through cooperation and the prevention of anti-
competitive practices;  it contained provisions on competitive safeguards;  consumer protection;
access to and use of information;  access to air transport infrastructure and ancillary services;  and
cooperation for sustainable development of tourism.
                                                     
24 WTO document GATS/SC/28, 15 April 1994.
25 WTO document WT/GC/W/372, 14 October 1999.Dominican Republic WT/TPR/S/105
Page 83
SELECTED BIBLIOGRAPHY
Banco Central de la República Dominicana (1999), Situación de la Pobreza y Distribucion del Ingreso
en la República Dominicana, Santo Domingo.
Banco Central de la República Dominicana (2002a), Mercado de Trabajo 2001 , Santo Domingo.
Banco Central de la República Dominicana (2002b), Informe de la Economia Dominicana Enero ,
Santo Domingo.
Consejo Nacional de Zonas Francas de Exportación (2001), Informe Estadistico 2000 ,
Santo Domingo.
Consejo Nacional de Zonas Francas de Exportación (2002), Informe Estadistico 2001 ,
Santo Domingo.
Dirección General de Normas y Sistemas de Calidad (2000), Catalogo de Normas Digenor.
Finger, J. Michael;  Francis Ng;  Isidoro Soloaga (1998), Trade Policies in the Caribbean Countries:
A Look at the Positive Agenda , [online].  Available at:  http://www.worldbank.org/research/trade/
pdf/CARIBPPR-F.pdf
IDB (1999), Foreign Investment Regimes in the Americas:  A Comparative Study , [online].  Available
at:  http://alca-ftaa.iadb.org/eng/invest/
IDB (2000), Integration and Trade in the Americas , Washington, D.C.
IDB (2002), Dominican Republic – Privatization of International Airports , Environmental and Social
Impact Report, [online].  Available at:  http://www.iadb.org/exr/doc98/pro/rdr0136.pdf.
IMF (2001), T he Dominican Republic – Stabilization, Reform, and Growth , Washington, D.C.
Lizardo, Magdalena and Rolando Guzman (2001), Patrones de Integración a la Economía Global:
¿´Qué comercializa América Latina?  ¿Qué hacen sus trabajadores?   El Caso de la República
Dominicana , Santo Domingo.
Oficina Nacional de Estadística (2000), República Dominicana en Cifras 1999 , Santo Domingo.
Oficina Nacional de Planificación (2000a), Estructura Económica, Funcional y Geográfica del Gasto
Publico Social en la República Dominicana (1978-1999) , Santo Domingo.
Oficina Nacional de Planificación (2000b), La Economía Dominicana en el 2000 , Volumen 2,
"Desempleo Agropecuario en la Década de los Noventa:  Diagnostico y tendencias relevantes", Santo
Domingo.
Oficina Nacional de Planificación (2000c), La Economía Dominicana en el 2000 , Volumen 3, "El
Resultado Exportador de la República Dominicana en el Década de los Noventa" (Evaluación de la
Competitividad Internacional), Santo Domingo.
Oficina Nacional de Planificación (2002), Proyecto Presupuesto de Ingresos y Ley de Gastos
Públicos del Gobierno Central , Santo Domingo.WT/TPR/S/105 Trade Policy Review
Page 84
Secretaría de Estado de Agricultura (2001), Sistema Nacional de Investigaciones Agropecuarias y
Forestales de la República Dominicana , Santo Domingo.
Superintendency of Electricity/Pellerano & Herrera (2001), Summary of the General Law of
Electricity of the Dominican Republic , Santo Domingo.
UNCTAD (2001), World Investment Report , Geneva.
U.S. Trade Representative (2001), Foreign Trade Barriers – Dominican Republic , [online].  Available
at:  http://www.ustr.gov/html/2001_domrep.pdf.
UNDP (2001), Human Development Report , New York.
WTO (1996), Trade Policy Review – Dominican Republic , Geneva.
WTO (2001a), Trade Policy Review – Canada , Geneva.
WTO (2001b), Trade Policy Review – United States , Geneva.
WTO (2002), Trade Policy Review – European Union , Geneva.