Dominican Republic and Haiti: Country Studies

Dominican Republic and Haiti: Country Studies
trade deficit. Exports of one of the country's major earners of
foreign exchange, nickel, suffered a price drop of 27 percent
in the first half of 1998. As a result, nickel exports fell 38.4 percent
in 1998. Exports of coffee were adversely affected by a 10
percent decline in international prices. However, the price
decline was offset by a 46.1 percent increase in production,
which enabled coffee exports to equal their 1997 value. The
1997-98 coffee crop was one of the best in fifteen years, bringing
in US$81 million from exports. Tobacco exports decreased
27.4 percent during 1998. The value of cocoa exports, however,
increased by 46.1 percent as a result of world price rises and a
greater volume of exports. The export of sugar and sugar products
in 1998 decreased 29.6 percent as a result primarily of a
24.0 percent cut in the Dominican international sugar quota.
Exports of other lesser or nontraditional products increased
7.2 percent in spite of a 20.3 percent decrease in fourth quarter
production resulting from the damaging effects of Hurricane
Georges. Thus, the overall decrease in value of national
exports in 1998 was 12.7 percent that of 1997.
Perhaps the silver lining in the Asian crisis was the deep
plunge in oil prices since 1997, which reduced the Dominican
Republic's fuel bill by approximately 20 percent to US$336 million
in the first half of 1998. Total domestic imports in 1998
amounted to US$7.6 billion, of which capital goods rose by
51.3 percent, and consumer goods increased by 19.3 percent.
The 15 percent increase in the value of imports over 1997 is
attributable in part to the effects of Hurricane Georges. Freezone
exports increased 14.0 percent, earning 18.6 percent
more in 1998 than in 1997, largely the outcome of new enterprises
opened in 1998. These factors kept the trade deficit from
worsening.
In a measure designed to facilitate trade and improve its balance
of payments, in August 1997, the Dominican Republic
signed a trade agreement with the Caribbean Community and
Common Market (Caricom—see Glossary). This agreement
resembles the free-trade accord signed with the Central American
Common Market (CACM) in April 1997 and is subject to a
successful conclusion of negotiations over exemptions and liberalization
of capital and labor flows between the Dominican
Republic and Caricom. The two agreements aim at establishing
the Dominican Republic as a bridge for promoting trade links
between the Caribbean and Central America. In the late 1990s,
for example, Haiti bought more than 75 percent of Dominican
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