do business in the Dominican Republic - Pellerano & Herrera

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DOING BUSINESS INTHE DOMINICAN REPUBLIC52During the months that Central America had been negotiating the FTA, theGovernment of the Dominican Republic started to get close to the relevant authoritiesof the United States in order to achieve that the country be included in this agreement.In this manner, after having initiated talks in 2003 and several negotiation rounds,an agreement was reached in March 2004 for the signature of a FTA between theDominican Republic and the United States.The objectives of the agreement are the following:1) To promote fair competition within the free trade area;2) To significantly raise investment opportunities within the territories of the parties;3) To protect and enforce in an effective and appropriate manner intellectualproperty rights;4) To create effective procedures for the application and enforcement of the FTAso as to facilitate its joint administration and the solution of controversies; and5) To provide guidelines for bilateral, regional and multilateral cooperation.StructureThe FTA comprises the following Chapters:1. Initial Provisions2. General Definitions3. National Treatment and Market Access4. Rules of Origin and Procedures of Origin5. Customs Administration and Trade Promotion6. Sanitary and Phitosanitary Measures7. Technical Obstacles to Trade8. Trade Protection (Safeguards,Anti-Dumping)9. Government Contracts10. Investment11. Cross-border Trade in Services12. Financial Services13. Telecommunications14. Electronic Commerce15. Intellectual Property16. Labor17. Environment18. Transparency19. Administration of the Agreement and Creation of Trade Related Capacities20. Conflict Resolution21. Exceptions22. Final Provisions23. AnnexesIn relation to the Chapter on Market Access, it specifies the method for the reductionof custom and other duties for both agricultural and industrial products.Theagreement contains the product lists for each country,where it can be appreciatedhow all of each country's products will be freed from duties.
Pellerano & HerreraAttorneys at law53As to market access of Dominican agricultural products, duty reduction has beendivided into 11 stages or “baskets”, which comprise, as applicable, immediateaccess (duty free), or access within 5, 10, 12 and 15 years. Furthermore, a 20-yearperiodhas been set for sensitive goods (rice, chicken, powder milk and mozzarellacheese).In addition,in this sector certain protection mechanisms by way of quotaswere provided, as well as special safeguards for some products.In the textile sector, some advantages could be obtained regarding woven fabricsand knitted fabric.Furthermore,the subject of accumulation was dealt with,so thatfor woven fabrics the Dominican Republic may benefit from accumulation in relationto Mexico and Canada.The Chapter on Rules of Origin is one of the most important of the FTA.The agreementprovides the minimum transformation requirements that materials have tofulfill to become a final product of a given country.The Chapter on Investment establishes the principle of no discrimination forinvestments and investors of any of the parties in relation to the nationals of theother party.Furthermore,the best treatment that a country grants to third countrieswill also be granted to the other party and,for the United States,the best treatmentgranted to any State within the Union.In addition,the States maintain their right of regulation over investments,providingthat in principle no financial damage caused to investors may be deemed as expropriation.ThisChapter has two important annexes:Annex I, which includes reserves for discriminatory treatment provided incurrent legislation, andAnnex II, which reserves the right to adopt new discriminatory provisions orcontrary to the general FTA provisions.The Chapter on Services is also an important sector that deserves particular protection,giventhat our economies are largely services-oriented.Here reserves couldbe made in areas such as distribution, maritime and air transport, free zones andaudiovisual services.Furthermore, the Dominican Republic reserved the right to put in place morerestrictive or discriminatory measures in areas such as demarcation of borderingland, purchase of public companies, air services, fishing, communication, governmentfinances, social services and minority-related decisions.An Annex on Professional Services was also approved in this Chapter, which seeksto promote the mutual recognition of professional licenses.In this regard, another important aspect relates to the commitments undertakenregarding Law 173, which were the following:1) They only apply to relations with United States companies;2) There will be no retroactive effect;3) After the date of entry into force of the agreement, the parties may by mutualconsent apply Law 173 to their contracts; and4) The compensation will be established on a per case basis.The Chapter on Government Contracts provides that public entities shall make
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