Chapter 3: Selling <= st1:place w:st=3D"on">U.S. Products and Services

Using an Agent or Distributor &= nbsp; &nbs= p; &= nbsp; &nbs= p; &= nbsp;

Although the use= of an agent or a distributor is not required, U.S= . exporters wishing to market a product or service in the Dominican Republic on a regular basis, without opening offices or maintaining a joint venture, should find an agent or a distributor.

The Dominican Agent/Distributor Law (Law 173, April 1966) was designed to protect Dominican citizens who work as agents or distributors for foreign companies. Law 173 is complicated and potentially very costly to foreign suppli= ers, and U.S. firms should = seek legal counsel before appointing an agent or distributor in the Dominican Republic. Under Law 173, agents and distributors may claim the right to compensation linked to a multiple of annual sales if the U.S. exporter decides to term= inate the relationship. Foreign Investment Law No. 16-95 allows foreign firms to assume direct representati= on of their products manufactured abroad or in the Dominican Republic without = Law 173's lengthy residency requirements and without the requirement of two-thi= rds Dominican ownership of distribution companies.

However, upon CAFTA-DR implementation this law will suffer significant modifications in its structure, the Dominican Republic will not be able to apply Law 173 to any covered contract signed after the = date of entry into force of the Agreement. The following will be the most significant amends:

· Law 173 shall apply principles of general cont= ract law to the covered contract

· Treat the covered contract in a manner consist= ent with the obligations of the Agreement and principle of freedom of contract.=

· Treat the termination of the contract either on its termination date, or accepting as a just cause for a goods or services supplier to terminate the contract or allow the contract to expire without renewal.

· If the covered contract has no termination dat= e, allow it to be terminated by any of the parties by giving six months advance termination notice.

· Allow disputes arising form the contract to be resolved through binding arbitration; and

· Allow the parties to establish in the contract= the mechanisms and forums that will be available in the case of disputes.

Establishing an Office &= nbsp; &nbs= p; &= nbsp; &nbs= p; &= nbsp;

Steps to establi= shing an office through incorporation of a local subsidiary (other than free-zone investments governed by law 8-90):

Requirements and procedures:

1. Articles of incorporation are the basic document of Dominican companies. They are signed by the founders of= the company and represent a private contract among the signers.

2. A certificati= on from the Trademark Department at the Secretariat of Industry and Commerce should be obtained for any trademark to be used and protected within the Dominican Republic. The certification states that the proposed name is available for use.<= /o:p>

3. The shares is= sued by the company must be fully subscribed and paid. The founder must make a sworn declaration of receipt of the payments before a notary public.

4. A written lis= t of the initial shareholders is prepared by the founder(s) stating the names, personal circumstances, residence of each shareholder, and the number of sh= ares subscribed to and paid for by each.

5. Payment of the capitalization tax should be made at the Department of Internal Revenue (Direccion General de Impuestos Internos).

6. At least one shareholders’ meeting must be held.&= nbsp; At the meeting, a written list of shareholders in attendance is prepared. The articles of incorporation and the declaration made to the notary are formally approved. If share payments i= n kind are involved, the meeting approves an inventory and estimate and appoints an appraiser to verify the estimate. The Board of Directors and officers of the company are elected. If no payments in kind are involve= d, the shareholders then authorize the deposit of documents and the publication of= a notice announcing the company's formation.

7. When payments= in kind are made for shares, a second shareholders’ meeting must be held= not earlier than five days after the first.&nb= sp; At this meeting the appraiser's report is approved.

8. The articles = of incorporation, the list of shareholders, and the minutes of the first and second (if any) shareholders’ meetings are registered at the Civil Registry (Oficialia Civil). Evidence that the capitalization tax has been p= aid must be presented and filed at this time.

9. An authorizat= ion for the deposit of documents is required from the Gift and Estate Tax Secti= on of the Income Tax Department (Seccion de Impuestos a la Propiedad y Obsequi= os del Departamento= de la Direccion General de Impuestos Internos).&= nbsp; Internal Revenue stamps a copy of the articles of incorporation, and= the list of shareholders must accompany this request.

10. The Civil and Commercial Court of First Instance (Corte Civil y Comercial de Primera Instancia) and the Justices of Peace (Juzgados de Paz) having jurisdiction = over the domicile of the company and any of its branches must receive the follow= ing documents:

- the articles of incorporation

- the list of shareholders

- a copy of the receipt of payment of the capitalization tax

- an abstract of= the sworn declaration made to the notary

- the list of shareholders present at the shareholders’ meeting(s) together with th= e
resolutions adopted and=

- the letter of approval from the Income Tax Department

11. A notice of formation of the company containing the required information must be publis= hed in a general circulation newspaper.

12. Prior to commencing operations, the company must:

- Obtain an authorization to start business and, in the case of an industrial operation, obtain a certificate of industrial registration from the Secretariat of Sta= te for Industry and Commerce (Secretaria de Estado de Industria y Comercio).

- = Register the name of the company in the Busine= ss Registry (Registro Mercantil) maintained by the Santo Domingo Chamber of Commerce.

Franchising &= nbsp; &nbs= p; &= nbsp; &nbs= p; &= nbsp; &nbs= p;

After several ye= ars of continuous growth, the franchising sector has slowed down in the Dominican Republic. There are approximately 120 franchises established in the Dominican market, with more than 400 stores in operation providing more than 4,000 direct job= s.

Restaurant franc= hises include Domino's Pizza, Pizza Hut, McDonald's, Burger King, TGIF, Baskin-Robbins, Kentucky Fried Chicken, Taco Bell, Mrs. Field’s, Outback, and Tony Roma’s. Non-food franchises include Radio Shack, GNC Vitamin, Payless Shoes, Sir Speedy, Dry Clean USA, Mr. Movies, Bombay<= /st1:place>, Meineke Mufflers, and a number of up-scale clothing outlets, including Liz Claiborne, Benetton, and Tommy Hilfiger.

Direct Marketing = &nb= sp; = &nb= sp; = &nb= sp;

Since mail order sales and catalogs have not been very popular, Dominican businesses in retailing have been compelled to think of other ways of transmitting their message to customers and achieving sales growth. Some local firms have used direct mailings of promotional materials = and telephone marketing. Local cr= edit card companies sometimes target cardholders with direct mailings offering g= oods and services.

<= span lang=3DEN-US style=3D'mso-bidi-font-family:Arial;layout-grid-mode:line'>Av= on, J= afra and Amway have established successful direct marketing organizations.

Joint Ventures/Licensing = &nb= sp; = &nb= sp; =

There is conside= rable joint venture/licensing activity in the Dominican Republic, including= both manufacturing and services. The Foreign Investment Law provides for opportunities in this area. Before negotiating a joint venture or licensing= partnership, legal counsel should be consulted to minimize potential conflicts, unexpect= ed taxes, withholding expenses on royalties, contributions to capital and rela= ted aspects of these ventures.

For steps to establish an office through incorporati= on of a local subsidiary (other than free-zone investments governed by Law 8-9= 0), please contact the U.S. Commercial Service in Santo Domingo.

Selling to the Government &= nbsp; &nbs= p; &= nbsp; &nbs= p; &= nbsp;

Dominican Law no= . 322 of 1981 states that foreign individuals or firms must be associated with Dominican or "mixed capital" enterprises in order to bid on or execute Dominican government-funded projects. There are exceptions, and variatio= ns on levels of participation required for complex projects, and many direct opportunities for foreign bidders exist when project financing is from multilateral banks or foreign government aid sources; in those cases, the bidding process is generally open and transparent, and payment is guarantee= d by outside sources.

The Fernandez Administration has tried to establish a more favorable credit reputation and resolve some of the systemic problems affecting irregularities in public contracting in the Dominican Republic. Several unresolved payment dispute= s from former Administrations remain.

Distribution and Sales Chann= els &= nbsp; &nbs= p; &= nbsp; &nbs= p;

There are several methods for U.S. exporters to enter the Dominican market. One can use locally appointed distributors, a wholly owned subsidiary, joint venture partners, or Dominic= an importers and wholesalers who also own retail outlets. The subsidiary and j= oint venture mechanisms have been enhanced through foreign investment Law no. 16= -95. The fundamental purpose of this law is to place foreign investors on an equ= al footing with local businesspeople, thus guaranteeing equal protection under= the law in terms of their respective rights and obligations. A distribution agreement is not re= quired for any of the above.

Selling Factors/Techniques &= nbsp; &nbs= p; &= nbsp; &nbs= p; &= nbsp; &nbs= p;

At the retail sa= les level, Dominicans prefer seeing the product and expect reliable after-sales service. Quality and responsiveness in after-sales service are becoming increasingly important ingredients in effective marketing strategies. In sa= les of services and manufactured goods, Dominicans often rely on networking, as well as on close family and personal relationships. These characteristics in turn crea= te the need for local agents and distributors or direct, in-country operations to = make and sustain these contacts.

Electronic Commerce = &nb= sp; = &nb= sp; =

E-commerce in the Dominican Rep= ublic is still in an early stage of development.= Dominican businesses are very conservative and have been slow to integrate electronic commerce transactions into their operations. Currently, only a few industry sec= tors offer e-commerce capability, which is mostly business to consumer (B2C).

There is very little business to business (B2B) e-commerce and the B2C segment has experienced the largest growth. Within the B2C segment, the ban= king sector is the industry where e-commerce has shown the most growth and impac= t. Virtually all banks and most financial service institutions in the Dominican Republic have websites to assist clients with tasks, such as, paying utility bills, monitoring their accounts status, and transferring of funds, among others. =

Another industry that has been steadily increasing its B2C e-commerce activity is t= he hospitality industry. A major= ity of the hotels have web-based room-booking capability and several fast food restaurants offer on-line ordering. Because there are more than one million Dominicans living overseas and sending goods and money remittances with regularity, several business are offering on-line ordering of products and services. These products can = be ordered and paid overseas but delivered in the DR. The largest local supermarket chain launched this service in 2004 and has reported increased sales through their website (www.mandalo.com).

Regarding Government to Citizens (G2C) e-commerce, in 2006 the Dominican Government started the implementation of a Government Portal where government agencies= are providing services and information to the general public. The project initiated with only a = call center and has expanded to provide on-line information and services. This project has simplified the process of government procedures (such as paying taxes and requesting/renewing official documents) and citizen requests.

There are no statistics for the number of e-commerce transactions executed in the= DR, but local business contacts have indicated that most of the e-commerce B2C transactions are with business outside the country, among which the most popular are Amazon and E-Bay.

Trade Promotion and Advertising = &nb= sp; = &nb= sp;

Most businesses = in the Dominican Republic use major local newspapers, television channels and radio stations to adver= tise their products. When marketin= g to all social classes, television and radio are the media most used for produc= ts.

The following ar= e web links to some of the major newspapers and publications in the Dominican Republic:

Listin Diario &#= 8211; daily newspaper: http://www.listin= diario.com

Periodico Hoy – daily newspaper: http://www.hoy.com.do

Periodico El Car= ibe and Cadena de Noticias – daily newspaper and news network: http://www.elcaribecdn.com.do/<= o:p>

DR 1 Daily news – excerpt in English of Dominican news: h= ttp://www.dr1.com

Companies already in the Dominican Republic are well a= ware of the benefits of participating in local trade promotion events. There are many industry-specific expositions in the D= ominican Republic.

Pricing &= nbsp; &nbs= p; &= nbsp; &nbs= p; &= nbsp; &nbs= p; &= nbsp;

The Dominican Republic is a price-sensitive market whe= re the price is usually as important as quality and service, if not more. Dominicans are familiar with U.S. pr= icing practices. Many successful new retail outlets, however, are concentrating on quality goods and service support, as Dominican consumers become more affluent and sophisticated.

Sales Service/Customer Support &= nbsp; &nbs= p; &= nbsp; &nbs= p; =

Dominican customers are increasingly demanding consistent support and service. Service and customer support are still a developing concept. Several leading wholesale and retail companies maintain sales volumes without discounting. This is partly attributable to a good reputation for quality service and support.

Protecting Your Intellectual Property = ; &n= bsp; = ; &n= bsp;

Protection of pa= tents and trademarks may be sought by registering them at the National Office for Intellectual Property Rights of the Secretariat of State for Industry and Commerce, ONAPI (Oficina Nacional de Propiedad Intelectual.)

For protection of copyrights, U.S. firms must contact The National Office for Copyright (“ONDA,” or the Oficina Nacional de Derecho de Autor of the Secretariat of State for Culture).

The Dominican Republic is a member of the World Trade Organization and the World Intellectual Prop= erty Organization (WIPO). The coun= try is signatory of the Bern Convention on Copyrights and the Paris Convention on Patents and Trademarks. It has acceded to the WIPO Copyrights Convention of= 1996 and to the WIPO Phonograms and Performances Convention of 1996.<= /span>

Law 65-00 on copyrights was implemented in August 2000 and establishes procedures and sanctions to protect copyrighted materials; March 2003 regulatory changes to Patent Law 20-00 appear to be compliant with standards of WTO Trade Related Aspects of Intellectual Property Rights (TRIPS).

As of this writing, the Dominican Republic remains on the Special 301 Watchlist d= ue to inadequacy of IPR enforcement, in particular of broadcast piracy. The 20= 06 Special 301 Review Committee will determine the country's ranking for the coming cycle.

CAFTA-DR requires partner countries to maintain TRIPS-compliant law and enforcement = for intellectual property. In add= ition, it requires the authorities to protect for five years any proprietary information submitted for patents for pharmaceutical products and for a per= iod of five years not to accept as justification for commercial licensing the f= act that a product has been licensed for distribution in another country.<= /o:p>

Due Diligence &nbs= p; &= nbsp; &nbs= p; &= nbsp; &nbs= p; &= nbsp; &nbs= p;

U.S.= companies may find it ne= cessary to obtain more information on a Dominican company with which they plan to do business. For a small fee the= U.S. Commercial Service can provide an International Company Profile (ICP), which provides a commercial report on a local company’s background.

Local Professional Services &nb= sp; = &nb= sp; = &nb= sp;

A local attorney can be an important partner in establishing operations and advising on doing business in the Dominican Republic. Accounting firms may also be of assistance with financial issues. It is advisable to retain professional advice at an early stage of a business venture to ensure smooth start‑up and compliance with local laws. Lists of lawyers and accounting firms familiar with U.S. businesses are available at the U.S. Commercial Service, Santo Domingo.=

Web Resources &nbs= p; &= nbsp; &nbs= p; &= nbsp; &nbs= p; =

US Commercial Servic= e Caribbean: www.BuyUSA.gov/caribbean
American Chamber of = Commerce of the Dominican Republic: www.amcham.org.do
Santo Domingo Chamber of Commerce and Production (Camara de Comercio y Produccion de Santo Domingo): www.ccpsd.org.do=
Santiago Chamber of = Commerce and Production (Camara de Comercio y Produccion de Santiago): www.camarasantiago.com
Ce= nter of Export and Investment of the Dominican Republic (Centro de Exportacion e Inversion de la Republica Dominicana - CEI-RD):

www.CEI-RD.gov.do<= /p>

Central Bank of the = Dominican Republic: www.bancentral.gov.do

Return to table of contents<= /span>

Opportunities &= nbsp; &nbs= p; &= nbsp; &nbs= p; &= nbsp; &nbs= p; =

Due to the steady growth seen in the printing and graphic arts industry in the DR = over the last few years, export opportunities for US firms are prevalent through= out this sector. Among the many opportunities existing in this sector, it is expected that the demand for printing and graphics products will grow in la= rge part due to advertising campaigns for the upcoming presidential elections t= o be held in May 2008 and the implementation of the Fiscal Expense Vouchers (comprobante fiscal) by the Dominican Internal Revenue General Directorate (Direccion General de Impuestos Internos – DGII) required to all natu= ral persons and companies that perform asset transfer operations or provide services. This new procedure = is currently increasing the demand of printing paper and new printing equipment (numbering machine). Overall, industry sources also anticipate a 25-30% increase in imports over the next three years, especially when the CAFTA-DR= is implemented.

Upon CAFTA-DR implementation, printing paper, paper board products and consumable supplies originated in other countries will continue to pay 3-20% in import= taxes creating a competitive advantage for US products.

Resources = &nb= sp; = &nb= sp; = &nb= sp; =

U.S. Commercial Service Santo Domingo

Yira Roa, Commercial Specialist

E-mail: yira.roa@mail.doc.gov

Sector covered: Printing and Graphics Arts Equipment and Supplies sector

Asociacion Dominicana de Industrias Graficas y Afines - ADIGA (Dominican Association of Printing and Graphics and related products): adiga@verizon.net.do

Food Processing & Packaging Equipment

&= nbsp;

Overview = &nb= sp; = &nb= sp; = &nb= sp; =

Millions of US dollars

	2005	2006 (e)	2007 (e)
Total Market Size	39	39	43
Total Local Production	-	-	-
Total Exports	-	-	-
Total Imports	39	39	43
Imports from the U.S.	13.5	13.5	15

Exchange rate: &= nbsp; RD$33 – US$1

Sources: &= nbsp; U.S. Im= port and Export Merchandise trade statistics

= Dominican Republic Customs Directorate

Posit= ive macro-economic indicators such as the stable exchange rate (RD$33=3DUS$1), = lower interest rates and lower inflation have created confidence in the business community, which is reflected in increases in the commercial activity. This in turn, reactivates projects= in the food processing and packaging sectors.= Also, companies in the sector are making the necessary investments in technology and equipment to face the competition and the opportunities that will derive from the implementation of the CAFTA-DR agreement and other tra= de agreements that the = Dominican Republic is a part of.

The o= verall sector of food processing and packaging equipment is estimated to reach US$= 39 million in 2006, maintaining the same level of activity as in 2005. U.S. ex= ports for the complete sector accounted to US$13.4 million in 2005 and are expect= ed to end 2006 at the same level of activity.=

The f= ood packaging and labeling equipment sub-sector accounts for 32 percent of the total sect= or (approximately US$19 million) in 2006.&nbs= p; US exports on this sub-sector are approximately US$6 million for 2006 (no variation from U= .S. exports on these items in 2005).

Best Prospects/Services= &= nbsp; &nbs= p; &= nbsp; &nbs= p; &= nbsp;

Ø Poultry equipment

Ø Machines for filling, closing, sealing, labeling bottles and cans

Ø Machines to clean or dry bottles or other containers

Ø Parts for machinery.

Opportunities &= nbsp; &nbs= p; &= nbsp; &nbs= p; &= nbsp; &nbs= p; =

One of the opportunities that FCS has highlighted is the supply of equipment to the Dominican poultry industry. T= he Dominican poultry industry is the most important livestock industry in the country; it is well developed and often vertically integrated.

Total production for 2006 is estimated at 170 million broilers per year equivalen= t to approximately 265,000 MT of poultry meat.&= nbsp; About 35-40 percent is ready to cook (RTC) and the rest is marketed = live at farm level. In addition, 2= 006 data show that there are approximately 60,000 grandmothers in production and 5.2 million layers. Total egg production is estimated at 1.6 billion table eggs per year.

Resources = &nb= sp; = &nb= sp; = &nb= sp; =

U.S. Commercial Service Santo Domingo

Maria Elena Portorreal, Senior Commercial Specialist

E-mail: maria.elenaportorreal@ma= il.doc.gov

Sector covered: Food Processing & Packaging Equipment

Ministry of Agriculture: www.sea.gov.do<= /o:p>

Computers & Peripherals

Overview = &nb= sp; = &nb= sp; = &nb= sp; =

Millions of US dollars

	2004	2005	2006 (estimated)
Total Market Size	71.9	75.9	83.3
Total Local Production	6.8	7.0	7.3
Total Exports	0	0.2	0.2
Total Imports	65.1	69.1	76.2
Imports from the U.S.	42.3	45.2	51.9

Exchange rate: = RD$33 – US$1

Sources: = U.S. Import and Export Merchandise trade statistics

= Dominican Republic Customs Directorate

The Dominican market for computers and peripher= als increased from 42.3 million dollars in 2004 to 45.2 million dollars in 2005= and is expected to reach 51.9 million dollars in 2006. The Fernandez government considers= it very important for the Dominican Republic to try to close the technology gap and is taking steps to increase the use of computers in the country. The government has also reactivated the Instituto Tecnologico de las Americas, = or ITLA (Technological Institute of The Americas), which is a government-spons= ored technological school specializing in information technologies. The President of the Dominican Rep= ublic has also created a Presidential Office for the Information and Communication Technologies (Oficina Presidencial de Tecnologias de la Informacion y Comunicacion), which is in charge of promoting these technologies in the country.

The Dominican Republic market for computers and peripherals is heavily dependent on imports. There are no duties on the importation of computer and peripherals products into the country. The mark= et is very receptive to U.S. products which the Dominican Republic imports computers and peripherals mainly from the United States are by far the lead= ers in the market.

Best Prospects/Services= &= nbsp; &nbs= p; &= nbsp; &nbs= p; &= nbsp;

The most promising sub sectors for U.S. exporte= rs are: 1) hardware equipment (PCs, notebooks and PDA’s) and 2) peripher= als (printers, scanners and data-show projectors)

Opportunities &= nbsp; &nbs= p; &= nbsp; &nbs= p; &= nbsp; &nbs= p; =

The Dominican government organizes in a yearly basis, two trade fairs to encourage the use of PC’s in the country. One targets Dominican teachers and= the other targets government employees. The government at fairs provides a voucher of RD$5,000.00 to be used towards the purchase of a PC and a printer, as well as a free one-years internet subscription. The government also provides the opportunity of a five-year finance package with zero percent down payment.

The Dominican government has announced that it seeks to implement a national plan for e-government that will develop and maintain Internet-based e-government systems. This plan may entail significant e= xport opportunities for U.S. suppliers of Information Technology (IT) hardware, software, networking, consulting and IT related services.

Resources = &nb= sp; = &nb= sp; = &nb= sp; =

Trade Specialist who handles Computers a= nd Peripherals: Isolda Frias de Gottschalk: isolda.frias@mail.doc.gov

Oficina Presidencial de Tecnologias de la Infor= macion y Comunicacion: www.optic.gov.do

Instituto Tecnologico de las Americas: <= span lang=3DEN-US style=3D'mso-bidi-font-size:11.0pt;mso-bidi-font-family:Arial'= >www.itla.edu.do

Secretaria de Estado de Educacion, Ciencia y Tecnologia: www.seescyt.gov.do

Automotive Parts and Service Equipment

Overview = &nb= sp; = &nb= sp; = &nb= sp; =

Millions of US dollars

	2004	2005	2006 (estimated)
Total Market Size	79.1	87.9	109.8
Total Local Production	0.3	0.3	0.3
Total Exports	0	0	0
Total Imports	78.8	87.6	109.5
Imports from the U.S.	55.2	61.7	77.3

Exchange rate: = RD$33 – US$1

Sources: = U.S. Import and Export Merchandise trade statistics

= = &nb= sp; Dominican Republic Customs Directorate

In 2004, the market started to recuperate after= the economic situation of 2003 and in 2005 increased by 12 percent. Industry experts are confident tha= t the market will continue growing and it will increase by 25 percent per year ov= er the next three years as a result of the Central American Free Trade Agreeme= nt-Dominican Republic (CAFTA-DR).

In the Dominican Republic the market of Automot= ive Parts and Service Equipment is largely supplied by imports, and there is on= ly a limited local production of batteries and radiators. In 2006 the total impo= rt market for these products is expected to be US$109.5 million, a 25 percent increase from US$87.6 million in 2005.

In the Dominican Republic the demand for Automo= tive Parts and Service Equipment is linked to the aging car population, the grow= th in total vehicle population, and the deterioration of Dominican streets and roads. There are no restrictions for importation of these products into the Dominican Republic, the market is largely supplied by imports and it is dominated by Asian products. Roughly 60% of the Asian automotive spare parts come from US dealers/exporters because of the proximity to the U.S. that permits rapid delivery time and the provision of credit facilities (60-90 d= ays)

Best Prospects/Services= &= nbsp; &nbs= p; &= nbsp; &nbs= p; &= nbsp;

Ø Batteries

Ø Tires

Ø Engines and engine parts

Ø Electrical motor parts

Opportunities &= nbsp; &nbs= p; &= nbsp; &nbs= p; &= nbsp; &nbs= p; =

When the CAFTA-DR is in effect, the import tax = on American products exported to the Dominican Republic will be eliminated. As a result, the prices of spare p= arts are expected to decline, and imports from the United States are expected to increase significantly.

Resources = &nb= sp; = &nb= sp; = &nb= sp; =

Trade Specialist who handles the Automotive Sector: Isolda Frias de Gotts= chalk: isolda.frias@mail.doc.gov<= /span>

Hotel and Restaurant Equipment

&= nbsp;

Overview = &nb= sp; = &nb= sp; = &nb= sp; =

Millions of US dollars

	2004	2005	2006 (estimated)
Total Market Size	14.5	19.5	22.5
Total Local Production	1.5	1.5	1.5
Total Exports	-	-	-
Total Imports	13	18	21
Imports from the U.S.	8.9	13	15

Exchange rate: &= nbsp; RD$33 – US$1

Sources: &= nbsp; &nbs= p; U.S. Import and Export Merchandise trade statistics

= Dominican Republic Customs Directorate

Tourism continues to be an import= ant segment of the Dominican economy. Year 2006 ended with positive growth rates in terms of arrivals of visitors to the DR, arrivals reached 3.95 million visitors in 2006, a 8% increase over 2005.

Hotel rooms availability increased to reach 57,181 rooms in 2006, a 1.5% growth f= rom 2005 to 2006.

The GDP sector of hotel, bars and restaurants grew by 8.4% in the period of January-September of 2006 according to a report prepared by the Central Ban= k of the Dominican Republic.

The import market and imports from the U.S. are expected to increase by 20 perc= ent over the next three years as a result of new tourism development projects a= nd the Central American Free Trade Agreement-Dominican Republic (CAFTA-DR).

Upon CAFTA-DR implementation, hotel and restaurant equipment originated in other countries will continue to pay 20% in import taxes creating a competitive advantage for US products.

Best Products/Services &= nbsp; &nbs= p; &= nbsp; &nbs= p; &= nbsp;

Ø Restaurant equipment and parts

Ø Bed & table linen & towels

Ø Table and kitchen glassware

Ø Kitchen appliances

Opportunities &= nbsp; &nbs= p; &= nbsp; &nbs= p; &= nbsp; &nbs= p; =

Tourism investment is expected to increase during 2007 in resort hotels, specifical= ly on the east coast. The invest= ments in these areas, as well as in other areas of the country, present a variety= of new opportunities for those who support the development of tourism infrastructure and supply equipment for new hotels or expansion projects. Some of the projects include the H= otel Westin Roco Ki Beach and Golf, Hotel Riu Palace Punta Cana, Hotel Moon Pala= ce, among others.

Resources = &nb= sp; = &nb= sp; = &nb= sp; =

U.S. Commercial Service Santo Domingo

Maria Elena Portorreal, Senior Commercial Specialist

E-mail: maria.elenaportorreal@ma= il.doc.gov

Sectors covered: Hotel & Restaurant Equipment and the Travel & Tourism Initiative

Association of Hotels and Restaurants of the Dominican Republic: www.asonahores.com. Asonahores organizes an annu= al trade exposition for the sector. This year’s event will be held in August 2007.

Caribbean Traveling Network holds a tourism trade event annually, Expo Feria Vacacion= es CTN, which will be held from May 18-20, 2007 in Santo Domingo.=

E-mail: ctn@verizon.net.do=

Ministry of Tourism: www.dominicana.com.do=

Medical Equipment

&= nbsp;

Overview = &nb= sp; &= nbsp; &nbs= p; &= nbsp; &nbs= p; &= nbsp;

Millions of US dollars

	2004	2005	2006 (estimated)
Total Market Size	210.8	216.4	221.1
Total Local Production	450.0	455.0	456.0
Total Exports	405.0	409.5	411.2
Total Imports	165.8	170.9	176.3
Imports from the U.S.	99.5	102.5	105.8

Exchange rate: = RD$33 – US$1

Sources: = U.S. Import and Export Merchandise trade statistics

= = &nb= sp; Dominican Republic Customs Directorate

The market for medical equipment in the Dominic= an Republic has recuperated after the economic problems experienced by the cou= ntry in 2003. The total market for 2006 has experienced a 5% increase when compa= red with 2004 and import from the U.S. is expected to increase by 10 percent per year over the next three years as a result of the Central American Free Tra= de Agreement-Dominican Republic (CAFTA-DR).

The Dominican market is mainly supplied by impo= rts, about sixty percent of which comes from the U.S. The import market is expected to g= row 10 percent over the next two years and U.S. suppliers will continue playing a large role. In the Dominican Republic there is extensive production of surgical instruments and supplies. However, 95 percent of this production is exported through the Free Trade Z= one (FTZ) Program. Some of the pr= oducts that are manufactured at the FTZ are: wound management products (wadding, gauze, and bandages), general surgery and minimally invasive surgery Instruments, ophthalmic surgery instruments, disposables (syringes, needles, catheters, surgical gloves, clothing for operating rooms, and surgery spong= es). There is limited manufacture of su= rgical supplies beyond the FTZs and this production is not sophisticated, mainly textile products (gauzes, bandages, and surgical drapes).=

There are no import regulations for the enforce= ment of quality, technical, or safety standards. American standards for medical equ= ipment are currently accepted and respected in the Dominican Republic. To succeed = in the Dominican market of Medical equipment surgical instruments and supplies= , an American company must have a local distributor or agent. Exporting directly to the private hospitals is extremely difficult and procurement practices in public hospit= als indicate that all purchases must be done to a local company. These importers and distributors usually have sales agents who distribute the products to s= mall retailers throughout the country. Local distributors also conduct promotional activities directed to encourage physicians and nurses to use and recommend their products.

Best Products/Services &= nbsp; &nbs= p; &= nbsp; &nbs= p; &= nbsp;

Ø Laser surgery equipment and apparatus

Ø Homecare equipment (for respiratory and sleep related illnesses)

Ø Surgical Instruments

Ø Disposable supplies

Ø Aids to daily living, and

Ø Mobility products

Opportunities &= nbsp; &nbs= p; &= nbsp; &nbs= p; &= nbsp; &nbs= p; =

The government has announced the implementation= in 2007 of the Social Security Law No. 87-01, which will change the structure = and cost of the health care system in the country. The Social Security Law comprises a Basic Healthcare Plan, which will include the entire Dominican population (= 9.1 million inhabitants) and will cover the basic care for illness, surgeries, = and accidents. Total expenditures= for Health Care Services for 2006 were estimated to be approximately US$315 million; however, the cost estimated for 2007 under the plan for the Administration of the Basic Healthcare Plan US$1,169 million. The main reas= on for this huge increase is the extensive coverage of the new Basic Healthcare Plan as stated by Law 87-01.

Resources = &nb= sp; = &nb= sp; = &nb= sp; =

Trade Specialist who handles Medical Equipment: Isolda Frias de Go= ttschalk: isolda.frias@mail.doc.gov<= o:p>

Secretariat of State of Public Health: www.saludpublica.gov.do

Superintendence for Healthcare and Labor Risks:= www.sisalril.gov.do

Air Conditioning and Refrigeration Equipment & parts

&= nbsp;

Overview = &nb= sp; = &nb= sp; = &nb= sp; =

Millions of US dollars

	2004	2005	2006 (estimated)
Total Market Size	41.2	47.2	48.7
Total Local Production	9.4	10.9	11.2
Total Exports	0.4	1.2	1.8
Total Imports	32.2	37.5	39.3
Imports from the U.S.	15.1	21.4	23.9

Exchange rate: RD$33 R= 11; US$1

Sources: = U.S. Import and Export Merchandise trade statistics

= = &nb= sp;Dominican Republic Customs Directorate

The Dominican Republic’s total imports of air conditioning and refrigeration equipment in 2005 were US$39 million. The U.S. is the princip= al supplier to the Dominican Republic of air conditioning and refrigeration equipment, with an estimated 57 percent of the import market in 2005. This market share is expected to maintain its levels in 2006 and to increase substantially upon CAFTA-DR implementation since the majority of US manufacturers of air conditioning a= nd refrigeration products will enter duty free into the Dominican Republic. Air conditioning and refrigeration equipment originated in other countries will continue to pay 5-30% in import taxes creating a competitive advantage for US products.

There are opportunities for U.S. exporters of air conditioning and refrigeration equipment in several sectors of the Dominican economy. In the tourism industry, there are a number of projects on going, involving U.S. partnerships, inclu= ding new and expansion of hotels and resorts. In addition, there are good sales potential for equipment sold to restaurants. Refrigeration equipment for commercial purposes is in growing demand by retail outlets, such as supermarkets and convenience stores (colmados). Due to increased demand for labor and time-saving products and services, the number of mini-supermarkets and convenience stores has increased markedly.

Despite the past economic problems that the country faced, the consensus wi= thin the air conditioning and refrigeration equipment industry is that the indus= try is goring and will to do it, at an annual rate of eight to ten percent. Imp= orts of air conditioning and refrigeration equipment from the U.S. are expected = to grow at an annual rate of 10-12 percent.

Best Products/Services &= nbsp; &nbs= p; &= nbsp; &nbs= p; &= nbsp;

The most promising sub-sectors within this sector are:

Ø Refrigeration Equipment: Residential, especially freezers and refrigerators.

Ø Refrigeration Equipment: Industrial/ Commercial (Cold storage equipment for the = food industry).

Ø Air Conditioner= s, both residential and commercial.

Opportunities &= nbsp; &nbs= p; &= nbsp; &nbs= p; &= nbsp; &nbs= p; =

The construction activity after thr= ee years of contraction is emerging again. Private investment as well as public investment in several major projects, represent business opportunities for = U.S. companies in the sector. More specifically, there are a number of tourism industry projects on-going in the Dominican Republic, some involving U.S. partnerships (see opportunities in the Building Products and Hotel and Restaurant Equipment Best Prospects sectors). Tourism investment is expecte= d to increase during 2007 in resort hotels, specifically in the east coast. The investments in these areas, as well as in other areas of the country, prese= nt a variety of new opportunities for those who support development of tourism infrastructure, such as the air conditioning and refrigeration industry.

Resources = &nb= sp; = &nb= sp; = &nb= sp; =

U.S. Commercial Service Santo Domingo

Sheila de Andujar, Commercial Specialist

E-mail: Sheila.andujar@mail.doc.gov=

Sectors covered: Air Conditioning & Refrigeration Equipment <= /p>

Travel and Tourism Services

&= nbsp;

Overview = &nb= sp; = &nb= sp; = &nb= sp; =

	2004	2005	2006 (estimated)
Dominican Arrivals to the U.S.	181,000	221,000	232,000

Source: U.S. Department of Commerce, ITA, Office of Travel & Tourism Industries=

Dominican visitors to the US increased by 23% from 181,000 to 221,000 from 2204 to 20= 05 (calendar year). = DR arrivals in 2005 represent a top record in arrivals for the DR.<= /span>

Most recent statistics from the period of January to May 2006 show a 5% increase over the same period in 2005.

The Dominican Republic represents the 6^th largest visitor group from Latin America and the Caribbean (Mexico, Brazil, Venezuela, Colombia, Baham= as) according to the 2005 statistics. This represents also a step up from the 7^th place in 2004= .

Destinations such as New York City and Miami are still the most favorite for Dominican travelers.

Air service from the Dominican Republic to the US is increasing, including the offer of more flights and connections.

Best Products/Services &= nbsp; &nbs= p; &= nbsp; &nbs= p; &= nbsp;

Ø Wholesale of travel products and services

Ø Transportation services (air travel and ground transportation)<= /o:p>

Ø Car rentals

Ø Hotel industry

Ø Attractions / theme parks

Ø Convention Center / Visitors Bureau services (meeting management services)

Opportunities &= nbsp; &nbs= p; &= nbsp; &nbs= p; &= nbsp; &nbs= p; =

With the creation of the Visit USA Committee, the Commercial Service in Santo Doming= o is working on new ways to promote US destinations in the Dominican Republic, promoting US travel industry shows in the US such as La Cumbre and PowWow f= or travel agents and tourism press and with the organizing training sessions f= or travel agencies.

Resources = &nb= sp; = &nb= sp; = &nb= sp; =

U.S. Commercial Service Santo Domingo

Maria Elena Portorreal, Senior Commercial Specialist

E-mail: maria.elenaportorreal@ma= il.doc.gov

Sectors covered: Travel & Tourism Services and Hotel & Restaurant Equipment=

Caribbean Traveling Network holds a tourism trade event annually, Expo Feria Vacacion= es CTN, which will be held in May 18-20, 2007 in Santo Domingo. E-mail: ctn@verizon.net.do=

Travel Industry Association: www.tia.org<= /o:p>

Office of Travel and Tourism Industries: www.tinet.ita.doc.gov

Agricultural Sectors &= nbsp; &nbs= p; &= nbsp; &nbs= p; &= nbsp; &nbs= p;

Wheat

In spite of the increased internati= onal price of wheat over the last three years, the market size for wheat has remained around 350,000 MT/year. We expect consumption to increase gradually as pasta and confectionary product= ion continue to expand. It is imp= ortant to note that some flour and related products continue to enter the Haitian market. Barring increased sub= sidies for European exports or more competitive prices from Canada, the United Sta= tes should remain the predominant supplier to this price-sensitive market. Total wheat imports in 2006 are ex= pected to equal around 350,000 MT with a value of US$67 million.

Millions of US dollars

Wheat
	2004	2005	2006 (estimated)
Total Market Size	56.00	71.00	69.00
Total Local Production	0	0	0
Total Exports	2	2	2
Total Imports	54.00	69.00	67.00
Imports from the U.S.	54.00	69.00	67.00

Exchange Rate: &n= bsp; RD$ 34 – US$1

Source: &= nbsp; &nbs= p; (e) Unofficial estimate based on January-October USDOC/U.S. Census Data and FAS Santo Domingo estimates.

Soybean Meal

The United States is the Dominican Republic's principal supplier of soybean meal. It is used mainly in fe= ed formulation for poultry and swine. The market is dependent on the poultry sector, which consumes about = 70% of all feed ingredient imports. The swine and cattle sector consume 20% and 10%, respectively. Based on the increased poultry and= swine production and Jan-Oct U.S. export data, imports should reach US$76 million= .

Millions of US dollars

Soybean Meal
	2004	2005	2006 (estimated)
Total Market Size	65.20	61.50	76.00
Total Local Production	0	0	0
Total Exports	0	0	0
Total Imports	65.20	61.50	76.00
Imports from the U.S.	41.88	61.50	76.00

Exchange Rate: &= nbsp; RD$ 34 – US$1

Source: &= nbsp; &nbs= p; (e) Unofficial estimate based on January-October from U.S. Census Data <= span lang=3DEN-US style=3D'mso-bidi-font-family:Arial'>and FAS Santo Domingo Est= imates.

Corn

As with soybean meal, corn is used primarily for poultry and swine feed formulation= .

Consumption in 2006 is expected to = exceed the all time high of 2002, with a volume of one million tons and a value ov= er US$ 100 million. Despit= e high corn prices, the Jan-Oct volume of U.S. corn exports is above last yearR= 17;s level.

Millions of US dollars

Corn
	2004	2005	2006 (estimated)
Total Market Size	118.01	96.00	127.00
Total Local Production	0.01	0.01	0.01
Total Exports	2.00	2.00	2.00
Total Imports	120.00	94.00	125.00
Imports from the U.S.	93.14	94.00	125.00

Exchange Rate: = RD$ 34 – US$1

Source: = &nb= sp; (e) Unofficial estimates based on January-October from U.S. Census Data = and FAS Santo Domingo Est= imates.

Consumer Oriented = Products

Imported consumer-oriented products, a= nd mainly the ones from the United States, are seen as high quality products. = The demand for these products exceeds US$285 million. The U.S. market share is about 38%= . Currently, the major competito= r is the EU, particularly Spain, as the ownership of most of the supermarkets and resorts is Spanish and they try to source products from their home country.=

Supermarkets are becoming = more important in the distribution process of consumer-oriented products at the expense of the traditional system of warehouses and mom n' pop grocery stores. Small and medium-sized supermarkets are now associated to take advantage of the economy of scale of buying together and distributing the products to each supermarket member. As the tourist industry expands, t= he number of hotels sourcing product from the United States, directly or throu= gh a local distributor, is also increasing.

After the DR-CAFTA agreement is implemented, we estimate that the imports of consumer-oriented products from the United States will increase by at least= 15 million dollars. <= /span>

Millions of US dollars

Consumer Oriented Products
	2004	2005	2006 (estimated)
Total Market Size	500.00	550.00	585.00
Total Local Production	500.00	500.00	500.00
Total Exports	200.00	200.00	200.00
Total Imports	200.00	250.00	285.00
Imports from the U.S.	74.00	97.90	108.00

Exchange Rate: RD$ 34 – US$1

Source: = &nb= sp; (e) Unofficial estimates based on January-October on U.S. Census Data and FAS Santo Domingo Est= imates.

Softwood and Treat= ed Lumber

U.S. exports of softwood lumber and plywood have been steadily increasing over t= he last few years but are still low compared to a decade ago. The current high tariffs on all wo= od products continue to constrain the industry’s growth.

The Dominican Republic is the 15th largest U.S. trade partner of forest product= s in the world and the fourth largest export market for U.S. softwood and treated lumber after Canada, Mexico and Japan.&nbs= p; The market is divided the following way: softwood lumber (pine), 65%; hardwood (mostly Mahogany), 20%; panel products (plywood), 15%. =

Dominican imports of forest products (softwood lumber and plywood) are estimated at U= S$36 million in 2005. With a= US$28 million in softwood lumber purchases in 2005; the Dominican Republic was the third largest market in the Western Hemisphere. Imports have increased in 2006 due= to government infrastructure projects.

U.S. panel products on the other ha= nd hold only thirty percent of the Dominican market with strong competition with le= ss expensive Brazilian (45%) and Taiwanese (25%) products. The US$ 12-15 million hardwood mar= ket is almost exclusively Mahogany coming from Central and South America.

Millions of US dollars

Softwood and Treated Lumber
	2004	2005	2006 (estimated)
Total Market Size	41.70	38.50	54.00
Total Local Production	0	0	0
Total Exports	2.00	2.00	2.00
Total Imports	39.70	36.50	52.00
Imports from the U.S.	35.60	32.50	46.60

Exchange Rate: RD$ 34 – US$1

Source: &= nbsp; &nbs= p; (e) Unofficial estimates based on January-October from U.S. Census Data = and FAS Santo Domingo Estimates.

Dairy Products

There = is a US$80 million dollar market in imported dairy products in the Dominican Republic = with non-fat dried milk occupying a prominent position. Although there are some import restrictions to protect local producers, the DR-CAFTA agreement will gradua= lly open the market. In 2005, dai= ry exports from the United States reached an all time high of US$18.6 million. When the market opens for U.S. products, imports are anticipated to increase. Currently, U.S. mar= ket share is approximately 22%, with the EU and New Zealand as the major competitors.

Millio= ns of US dollars

Dairy Products
	2004	2005	2006 (estimated)
Total Market Size	73.50	83.00	78.00
Total Local Production	N/A	N/A	N/A
Total Exports	2.00	2.00	2.00
Total Imports	75.00	85.00	76.00
Imports from the U.S.	16.28	18.60	17.00

Exchange Rate: &n= bsp; RD$ 34 – US$1

Source: &= nbsp; &nbs= p; (e) Unofficial estimates based on January-October data from UN, U.S. Census Data and FAS Santo Domingo Estimates.

Rice

The Dominican Republic has consistently been a net rice importer except in 2002. All rice imports are fr= om the United States due to quality, proximity and phytosanitary reasons. One of t= he most important reasons is that U.S. rice is free of Trogoderma spp. = We anticipate 2006 imports will rea= ch about 36,000 MT in 2006 valued at US$13 million.

Millions of US dollars

Rice
	2004	2005	2006 (estimated)
Total Market Size	139.50	140.60	140.00
Total Local Production	101.80	120.00	125.00
Total Exports	0	0	0
Total Imports	37.70	20.60	15.00
Imports from the U.S.	35.70	20.60	15.00

Exchange Rate: RD$ 34 – US$1

Source: = &nb= sp; (e) Unofficial estimates based on January-October on U.S. Census Data and FAS Santo Domingo Est= imates.

Pulses, Dried Bean= s

The Dominican Republic was self suf= ficient in red pinto beans for many years. Nonetheless, dried bean imports in the last five years has averaged 9,000 MT valued at US$9 million/year. According to U.S. data, 2005 exports reached 18,800 MT priced at almost US$13 million. However, according to Domini= can Customs’ data, it appears that about one half of this quantity may ha= ve originated from Canada, railed to the Gulf ports and exported abroad. Occasionally when export volumes a= re limited in North America, Chilean pinto beans have been imported into the Dominican market. The Dominic= an market prefers North American products for its quality, phytosanitary standards, proximity, and price, compared to the South American product. Preliminary estimates for 2006 show exports at about 12,500 MT valued at US$7.5 million.

Millions of US dollars

Pulses, Dried Beans
	2004	2005	2006 (estimated)
Total Market Size	53.00	52.70	53.00
Total Local Production	45.00	40.00	45.50
Total Exports	0	0	0
Total Imports	4.00	12.70	7.50
Imports from the U.S.	4.00	12.70	7.50

Exchange Rate: RD$ 34 – US$1

1/ Does not reflect Dominican Customs’ data.<= /p>

Source: &nb= sp; = (e) Unofficial estimates based on January-October on U.S. Census Data and FAS Santo Domingo Est= imates.

Return to table of contents

Chapter 5: Trade Regulations and Standards

Import Tariffs

Trade Barriers

Import Requirements and Documentat= ion

U.S. Export Controls

Temporary Entry

Labeling and Marking Requirements<= /a>

Prohibited and Restricted Import= s

Customs Regulations and Contact I= nformation

Standards

Trade Agreements<= /li>
Web Resources

Import Tariffs = &nb= sp; = &nb= sp; = &nb= sp; = &nb= sp;

Taxes and duties for imported goods (agricu= ltural and non-agricultural) are calculated on the "ad-valorem price," i= .e., CIF (Cost+Insurance+Freight) price in US dollars multiplied by the unified foreign exchange rate. All duties and taxes are collected in Dominican pesos. There are generally two taxes on imports except for those subject to exemptions provided by law. These taxes are the following:

A) Tariff (Arancel): This= is the basic import tax which can be as low as 0 percent and as high as 20 percent.

B) Luxury Tax (Impuesto Selectivo al Consumo): This is a consumption tax for luxury imports or “non-essential” goods that ranges between= 15 and 60 percent. This tax is calculated on the CIF price. = Luxury goods include, among others, perfume, whiskey, and tobacco.

The Dominican import tariff structure will = change when the CAFTA-DR enters into force. Please contact the U.S. Commercial Service for more information.

Trade Barriers = ; &n= bsp; = ; &n= bsp; = ; &n= bsp; = ;

In order to protect local producers, import duties on certain agricultural products (such as milk, rice, etc.) and certain consumer goods carry higher duty rates. In addition to im= port duties, certain items such as beverages and tobacco, perfumes, jewelry, and some agricultural products carry a luxury tax (from 15-60%).

When CAFTA-DR enters into effect a large number of agricultural items could immediately access to the Dominican market with no tax. A small number of agricultural products that = have been protected would gradually have free access in the next five up to twen= ty years.

Special import permits apply to certain specific products such as drugs and pharmaceuticals and agricultural chemicals.

Import Requirements and Documentation &= nbsp; &nbs= p; &= nbsp;
A) Commerce/Industry:

Import licenses are not required for most products, except pharmaceutical products (drugs, cosmetics and skin care products) and agro-chemicals. For pharmaceutical products a license must be obtained at the Secretariat of St= ate for Public Health for each trademark/product imported by the company. The license is valid for a period = of five years.

As of June 2006 the country eliminated the “Consular invoice” as a requirement for imports coming into the country. This l= ong awaited decision is the result of the requirements imposed by the CAFTA-DR.= The consular invoice, which generally meant an extra cost of US$200 per shipment (but that could go up to US$400) had been considered for a long time an unnecessary hurdle to trade by American exporters.

B) Agriculture:

Although, the "No objection" and other types of permits are not within the World Trade Organization (WTO) commitments, the Dominican government requir= es them for imports of agricultural commodities. The phytosanitary certificates iss= ued by recognized authorities in the country of origin must accompany live plants = and agricultural material used in planting.&nb= sp; Imports of animals normally require certificates of origin and other veterinarian documentation to assure disease-free status. Testing is done at the port of ent= ry to reconfirm pest-free status. T= ariff rate quotas were proposed for ten agricultural goods (rice, beans, sugar, chicken and parts, pork, corn, onions, milk powder and garlic). Other products that often encounter non-tariff barriers are meats and dairy products. Imports of food and agricultural products are normally facilitated through local distributors. Agro-chemicals and fertilizers require an import license from the Secretariat of State for Agriculture issued for every shipment.

U.S. Export Controls &nbs= p; &= nbsp; &nbs= p; &= nbsp; &nbs= p; &= nbsp; &nbs= p;

There are no specific U.S. export controls regarding the Dominican Republic.

The Bureau of Industry and Security (BIS) of the U.S. Department of Commerce is responsible for implementing and enforcing Export Administration Regulations (EAR). www.bxa.doc.gov <= /span>

Temporary Entry &n= bsp; = ; &n= bsp; = ; &n= bsp; = ; =

Commerce/Industr= y:

Temporary entry of goods was adopted by Customs as a business facilitation service. Temporary entry is permitted for exhibition = or demonstration purposes, as well as for other temporary work purposes in the Dominican Republi= c. Customs does not assess duti= es on temporary goods, but they must be returned. A bond or other suitable security = for all or a portion of the value of the goods must be posted at the time of temporary entry. The security will be refunded upon meeting all the terms of temporary entry and proof of shipment out of the country. If the company wi= shes to sell the products or machinery after making temporary entry, valuation a= nd all relevant duties are determined in accordance with previously noted cust= oms procedures. Temporary entry admittance is granted for a period of ninety (90) days. If more time is needed, a renewal = is required at the end of the ninety days.

Labeling and Marking Requirements &= nbsp; &nbs= p; &= nbsp;

Although there is legislation requiring that labels be in Spanish and state volume, product composition contents and expiration date, U.S. labeling requirements and standards are generally accepted in practice. = DIGENOR officials have stated that products meeting U.S. standards in labeling and marking should have little difficulty in complying with relevant Dominican regulations. However, DIGENOR is currently revising the Dominican Standard (NORDOM 53) and is planning to enforce this norm, which mandate Spanish lab= eling. This norm has been in place for ye= ars, but it has not been enforced and follows the Codex Alimentarius standard.

There are special rules for unpacked foods as well as pharmaceutical products but these are more in the area of registration and prior import license approval rather than in marking and labeling requirements. <= /span>

Prohibited and Restricted Imports &nb= sp; = &nb= sp; =

There are few restrictions on imports, although= the Ministry of Agriculture requires discretionary import licenses for most agricultural products. These appear to limit imports of many items that the government perceives as competitive with domestic production. Import of automobiles over five ye= ars old is prohibited, as well as import of used clothing. However, the provision regarding used clothing is frequently overloo= ked.

No regulations are in place regarding Genetically Modified Organisms (GMO) from the Ministry of Environment. Nonetheless, Plant Health requirements from the Ministry of Agriculture import requirement for some seeds restrict seed imp= orts containing GMOs. This regulat= ion has not been enforced yet.

Customs Regulations and Contact Information &n= bsp; = ; <= /span>

There are 24 existing Customs offices in the Dominic= an Republic: eleven at ports, seven in airport zones, and six on the border wi= th Haiti. The principal offices handling the majority of the cargo are:&nb= sp; Port of Haina Oriental, Port of Haina Occidental, Caucedo Multimodal Port, Las Americas International Airport and the Port of San Pedro de Macor= is.

Customs officials indicate that the average clearance takes three days from submission of complete documentation. Clearances can be made in hours if importers make use of express clearance procedures. Anecdotal evidence confirms this information.

Many importers are using one of the following express clearance procedures:

Advance Declaration (Declaracion Anticipada) - Impor= ters may submit customs documentation 25 days prior to the arrival of the shipme= nt.

Express Dispatch (Despacho Expreso) - This mode incl= udes advance declaration of the goods and the verification of the shipment by customs officials at the importer's warehouse. Shipments may be dispatched in four hours when using Express Dispatch.

Customs Contact Information:

Miguel Cocco, General Director

General Directorate of Customs

Av. Mexico, Edificio Impuestos Internos

Santo Domingo, Dominican Republic<= /p>

Phone: (809) 688-7070 ext. 258 and 259

Fax: (809) 687-3486

= Web: www.dga.gov.do

Standards &= nbsp; &nbs= p; &= nbsp; &nbs= p; &= nbsp; &nbs= p; &= nbsp;

&= nbsp;

Overview &= nbsp; &nbs= p; &= nbsp; &nbs= p; &= nbsp; &nbs= p;

The Dominican Republic generally accepts U.S. certifications and standards. The Dominican Standardization System follows international guidelines and it is compatible with the purposes of GATT’s Code of Standards. The DIGENOR (Dirección General de Normas & Sistemas de Calidad) is the governmental body overseeing the formulat= ion, publication, and implementation of quality norms in the Dominican Republic. The DIGENOR was cre= ated on May 20, 1997 in accordance with Law 602. Rather than creating new standards specific to the Dominican Republic, DIGENOR follows international standards= .

The Dominican Standardization System (NORDOM or Normas Dominicanas) consists of 619 mandatory and vol= untary standards.

Standards Organ= izations &= nbsp; &nbs= p; &= nbsp; &nbs= p;

DIGENOR is the only national institution that compiles and publishes standards in the Dominican Republic= . It is the center for information for international standards and serves as:

-The National Inquiry Point under = the WTO Agreement on Technical Barriers to Trade.

-Contact Point for Codex Alimentar= ius Commission (developer of food standards.)

-Local Agent for the International Organization for Standardization (ISO.)

DIGENOR also has membership in the Pan-American Stand= ards Commission (COPANT) and receives assistance from the National Association of Drinking Water Supplies Agencies (ANDESAPA), and the Wastewater Equipment Manufacturers Association (CAPRA.)

For the inclusion of standards for healthcare products such as cosmetics and pharmaceuticals, DIGENOR has created a joint commission with the Drugs and Pharmacy Department of the Secretariat of Public Health.

NIST Notify U.S. Service

Member countr= ies of the World Trade Organization (WTO) are required under the Agreement on Technical Barriers to Trade (TBT Agreement) to report to the WTO all proposed technic= al regulations that could affect trade with other Member countries. = Notify U.S. is a free, web-based e-mail subscription service that offers an opportunity to review and comment on proposed foreign technical regulations that can affect your access to international markets. Register online at Internet URL: http://www.nist.gov/= notifyus/=

&= nbsp;

Conformi= ty Assessment &nb= sp; = &nb= sp; = =

Due to a lack of resources at DIGEN= OR, products are typically tested in private foreign laboratories.

Product = Certification &= nbsp; &nbs= p; &= nbsp; &nbs= p; &= nbsp;

DIGENOR is the institution author= ized to provide product certification. The Seal of DIGENOR Compliance (Sello de Cal= idad DIGENOR) is the certification that DIGENOR provides to manufactured products that meet Dominican standards. Any company interested in obtaining this certification for its product should present documentation indicating that a laboratory accredited by an international institution has tested and approved the product. In the case of pharmaceuticals and cosmetics, the products must also receive a certification of approval (Regi= stro Sanitario) from the Drugs and Pharmacy Department of the Secretariat of Pub= lic Health. This is a straightfor= ward process, which requires only the presentation of documents from an accredit= ed international organization such as the Food and Drug Administration. Without this “Registro Sanitario”, pharmaceutical and cosmetic products are not allowed to e= nter the Dominican Republic.

Accreditation &= nbsp; &nbs= p; &= nbsp; &nbs= p; &= nbsp; &nbs= p;

&nb= sp;

There are no testing laboratories= in the Dominican Republic. Therefore, DIGENOR will accept documents and assessments prepared by international accreditation bodies or testing laboratories. However the Dominican government h= as indicated that they are in the process of accrediting one laboratory, which will be ready in 2007.

Publication of Technical Regulations &= nbsp; &nbs= p; &= nbsp;

In the Dominican Republic, the fi= nal regulations are published and available to the general public for a small fee. Because the country does= not create new standards, but follows international standards, there is no need= for public discussion of any technical regulations.

Contacts = ; &n= bsp; = ; &n= bsp; = ; &n= bsp; = ;

Dr. Julio Santana de Leon

Director

Direccion General de Normas y Sistemas de Calidad (DIGENOR)

Secretaria de Estado de Industria y Comercio (Secretary of Industry and Commerce)=

Edificio Oficinas Gubernamentales “Juan Pablo Duarte”, 11^th f= loor

Santo Domingo, Dominican Republic

Phone: (809) 686-2205

Fax: (809) 688-3843

E-mail: digenor@verizon.net.do

Web Page: www.= digenor.gov.do

Dr. Diaz Guzman

General Director

Direccion General de Drogas y Farmacias (Drugs and Pharmacy Directorate)

Secretaria de Estado de Salud Publica (Secretary of Public Health)

Av. San Cristobal No. 48, Ensanche La Fe

Santo Domingo, Dominican Republic

Phone: (809) 566-4263 and 541-3121 ext. 2= 266

Fax: (809) 549-3285

E-mail: digenofar@yahoo.com

Web Page: www.sespas-rd.com

U.S. Department = of Agriculture

Foreign Agricultural Service (FAS)

Ave. Pedro Henri= quez Urena No. 133

Edificio Empresa= rial Reyna I, 4th Floor

Santo Domingo, D= om. Rep.

Telephone: (809) 227-0112 Ext. 275=

Fax: (809) 732-9454

E-mail: agsantodomin= go@usda.gov

Web Page: www.usemb.gov.do/FA= S

Contact: Jamie Rothschild, Agricultural Attaché

E-mail: Jamie.Rothsc= hild@usda.gov

U.S. Department of Commerce

U.S. Commercial Service

Laura Gimenez - Commercial Attaché

American Embassy Santo Domingo

Unit 5515 Box 508

APO AA 34041

Phone: (809) 227-2121 Ext. 236

Fax: (809) 920-0267

Web site: www.BuyUSA.gov/caribbean<= /o:p>

E-mail: laura.gimenez@mail.doc.gov

Trade Agreements &nb= sp; = &nb= sp; = &nb= sp; =

= The Dominican Republic is a member of the World Trade Organization. In 1998, the Dominican Republic jo= ined with Costa Rica, Nicaragua, Honduras, El Salvador and Guatemala in establis= hing a Central American-Dominican Republic Free Trade Area, which entered into f= orce in 2004. The Dominican government signed a similar agreement with CARICOM in 2000.

At the Summit of= the Americas in Quebec, Canada, in April 2001, the Dominican Republic joined wi= th other Western Hemisphere governments in committing itself to completing negotiation and implementation of a Free Trade Agreement of the Americas (FTAA), a negotiation still in process.&nb= sp;

In = August 2004, the United States, the Dominican Republic and five Central American countries signed a Free Trade Agreement (CAFTA-DR). It is expected that the agreement = will enter into force in 2007.

Return to table of contents<= /a>

Chapter 6: Investment Climate

Openness to Foreign Investment

Conversion and Transfer Policies

Expropriation and Compensation

Openness to Foreign Investment &nbs= p; &= nbsp; &nbs= p; &= nbsp;

While the Dominican government welc= omes foreign investment, significant systemic problems can make investing in the country a risky undertaking. Foreign investors cite a lack of clear, standardized rules by which to compete and a lack of enforcement. Complaints have included corruptio= n, requests for bribes, delays in government payments, failure of the Dominican government or of Dominican private sector entities to honor contracts, disregard for Dominican court rulings, non-standard procedures in Customs f= or valuation of imported goods. In 2006, the Dominican Republic dropped from 85 to 99 among the 163 countries included in Perceived Corruption Index of international non-governmental organization Transparency International. The legal and regulatory cha= nges necessary for entry into force of the free trade agreement between Central American countries, the Dominican Republic and the United States (CAFTA-DR)= are expected to be completed in early 2007. These changes are expected o= ver time to allow better regulation and to provide further opportunities for investment.

Under the Foreign Investment Law (N= o. 16-95), unlimited foreign investment is permitted in all sectors, with the exception of the disposal and storage of toxic, hazardous or radioactive wa= ste not produced in the country; activities negatively impacting public health = and the environment of the country; and the production of materials and equipme= nt directly linked to national security unless authorized by the President. There are no limits on foreign con= trol of firms, or screening of foreign investment in the open sectors. In practice, while improvements ha= ve been made, it is often difficult and time consuming for investors to identi= fy all the steps needed to set up a company and to obtain the necessary licens= es and permits to operate in the Dominican Republic. A partial privatization of state-o= wn enterprises (called “capitalization”) was carried out in the la= te 1990’s; foreign investors purchased shares and obtained management control of formerly state-owned enterprises engaged in activities such as electricity generation, airport management and milling sugarcane. An important point of contact for potential investors is the Center for Investments for Exports of the Domini= can Republic (CEI-RD).

In 2005, foreign direct investment = flow into the Dominican Republic totaled US $1.02 billion according to the Domin= ican Central Bank.

Conversion and Transfer Policies &= nbsp; &nbs= p; &= nbsp; &nbs= p;

The Dominican exchange system is a = market with free convertibility of the peso. The economic agents perform their transactions of foreign currencies under the conditions freely negotiated by them.

The Central Bank uses the weighted = average of the market exchange rate to set the rate for its own operations. Importers may obtain foreign curre= ncy directly from commercial banks and exchange agents.

The Central Bank participates in th= is market in pursuit of monetary policy objectives, buying or selling currenci= es and performing any other operation in the market. Some industries, particularly those operating in free trade zones (zonas francas), complain that the Dominican authorities carry out operations through the Central Bank and the government-owned Banco de Reservas that result in an overvalued peso, penalizing export sectors and the tourism sector.

Resolutions 64-06 and 106-06, issue= d by the board of Aeronautica Civil (Civil Aviation), require all airlines serving t= he Dominican market to pay in U.S. dollars a $2.50 charge for both entry and e= xit of each passenger. Some airli= nes are challenging in the courts the requirement to pay in U.S. currency, but = the fines for failure to comply are punitive and compel the airlines to comply until the courts decide otherwise.

Expropriation and Compensation &nb= sp; = &nb= sp; =

More than a few U.S. investors have outstanding disputes with the Dominican government concerning unpaid govern= ment contracts or expropriated property and businesses. Property claims make up the majori= ty of expropriation cases. Most but= not all confiscations have been used for purposes of infrastructure or commerci= al development. In some cases, c= laims have remained unresolved for many years.&n= bsp; Investors and lenders have typically not received prompt or adequate payment for their losses, and payment has been difficult to obtain even in cases in which a Dominican court has ordered compensation or the government= has recognized a claim. In one ca= se, the Dominican Supreme Court in 1970 ordered the government to compensate a = U.S. family for expropriating land and businesses. The Dominican government compensat= ed owners only for the expropriated land but to date has not offered compensat= ion for the businesses. In another case, a U.S. company has yet to receive full payment for providing advocacy work for the previous administration. Dominican government offices responsible for the settlement process = have acknowledged the debt but continue to allege that various procedural errors have held up payment. =

The past three Dominican administra= tions have expropriated fewer properties than their predecessors and have general= ly paid compensation in those cases. Discussions of the U.S.-Dominican Trade and Investment Council meeti= ngs in October 2002 prompted the Dominican government to establish procedures u= nder a 1999 law to issue bonds to = settle claims against the Dominican government dating from before August 16, 1996, including claims for expropriated property.

With assistance from the U.S. Agenc= y for International Development (USAID) the Dominican government identified and analyzed 248 expropriation cases; most (65.5 percent) were resolved by payi= ng claimants with bonds or by dismissing the claim. However, as noted in paragraph 9, a number of U.S. claims against the Dominican Republic remain.

Dispute Settlement &nb= sp; = &nb= sp; = &nb= sp; =

In preparation for the entry into f= orce of CAFTA-DR, the regional trade agreement with the United States, the Dominican Congress passed legislation to comply with the dispute settlement chapter of the agreement. Upon entry into force of the agreement, U.S. businesses will have mechanisms to settle busi= ness related disputes, (see Chapter 20 of the CAFTA-DR agreement). Currently, quite a few U.S. invest= ors, ranging from large firms to private individuals, have disputes with the Dominican government and parastatal firms involving payments, expropriation= s, or contractual obligations. B= oth free trade zone companies and non-free trade zone companies have problems w= ith dispute resolution. U.S. firms indicate that corruption in Dominican businesses, government and judiciary = impede their access to justice so as to defend their interests. The Embassy expects that the entry= into force of the CAFTA-DR agreement will be accompanied by an increase over the short term in the number of disputes, as terms and conditions change.

CAFTA-DR provides dispute settlement mechanisms, but the Dominican government has not established domestic capac= ity in this area. The authorities= state that they are in the process of hiring and training personnel to handle this aspect of the agreement.

In April 2002, the Dominican Republ= ic associated itself with the International Center for the Settlement of Investment Disputes ("ICSID", also known as the "Washington Convention"). In August = of the same year the country implemented the New York Convention on Recognition and Enforcement of Foreign Arbitral Awards (the New York Convention). The New York Convention provides c= ourts a mechanism with which to enforce international arbitral awards.

Performance Requirements and Incentives &= nbsp; &nbs= p; =

Foreign investors receive no special investment incentives and no other types of favored treatment. There are no requirements for investors to export a defined percentage of their producti= on, except for firms operating in the regime of free zones (zonas francas). Free zone firms are required to ex= port at least 80 percent of their production.&n= bsp; Foreign companies are unrestricted in their access to foreign exchange. Law 69 requires loc= al sourcing when components are of approximately equal cost and quality compar= ed to imports, but this law has not appeared to hinder investors. There are no requirements that for= eign equity be reduced over time or that technology be transferred according to defined terms. The government imposes no conditions on foreign investors concerning location, local ownership, local content, or export requirements.

The Dominican labor code establishe= s that 80 percent of the labor force of a foreign or national company, including f= ree trade zone companies, be composed of Dominican nationals (although the mana= gement or administrative staff of a foreign company is exempt from this regulation). The Foreign Inve= stment Law provides that contracts licensing patents or trademarks, leases of machinery and equipment, and contracts for provision of technical know-how = must be registered with the Directorate of Foreign Investment of the Central Ban= k.

The Secretary of Industry and Comme= rce (SEIC) issued Resolution 148-06 of December 20, 2006 and Resolution 23-07 of January 18, 2007, imposing new requirements on contractual arrangements for domestic transportation of fuels. Resolution 148 subjects contract disputes between petroleum and truc= king companies to SEIC oversight. Resolution 23 imposes an economic needs test for changes in the structure of the fuel transport fleet.&nbs= p; In the cases in which the SEIC receives requests for licenses for new fuel-transporting units, the requests must be supported with arguments that justify the need to expand their fleets.&n= bsp; Resolution 23 appears to impose quantitative limits on the amount of fuel each truck can hold. It freezes the volumes and contract arrangements existing in January 2007.

Right to Private Ownership and Establishm= ent &= nbsp; &nbs= p;

The Dominican Constitution guarante= es the freedom to own private property and to establish businesses. The Foreign Investment Law provides foreign investors the same rights to own property as are guaranteed by the Constitution to Dominican investors. Public enterprises are not given preference over private enterprises. An area of conce= rn, however, is the legitimacy of property titles. The Dominican Republic has a histo= ry of problems resulting from duplicated property titles. In an effort to combat this proble= m, the authorities are working with the Inter-American Development Bank to create = an electronic database of all property titles within the country. This project will authenticate and reissue electronically generated property titles to owners. It is not yet clear how conflicts between titles will be resolved.

Protection of Property Rights &= nbsp; &nbs= p; &= nbsp; &nbs= p; &= nbsp;

The Dominican Republic has laws with sanctions adequate to protect copyrights and has improved the regulatory framework for patent and trademark protection, but United States industry representatives continue to cite a lack of enforcement of intellectual prop= erty rights (IPR) as a major concern. The government commi= tted in a side letter to CAFTA-DR to take measures to halt television broadcast piracy and agreed to report on its efforts in this regard in a quarterly re= port to the Office of the U.S. Trade Representative (USTR). The Dominican authorities have del= ivered these quarterly reports since January 2005. The Embassy has noted improved coordination in this regard among various government agencies including the Secretariat of Industry and Commerce, the Attorney General’s Office, = the Patent Office and the Copyright Office.&nb= sp; In 2005 the authorities advised cable television operators of their legal responsibilities regarding copyright and secured a formal agreement w= ith the operators' association in August 2005. Since that time authorities have seized equipment from various operators found to be infringing the laws. The authorities temporarily closed= down several broadcasters found to be violating the law.

To fulfill CAFTA-DR requirements, t= he Dominican Congress passed legislation in November 2006 to strengthen the IPR protection regime by criminalizing end user piracy and requiring authoritie= s to seize, forfeit, and destroy counterfeit and pirated goods as well as the equipment used to produce them. CAFTA-DR mandates both statutory and actual damages for copyright and trademark infringement, and it requires measures to help ensure that moneta= ry damages can be awarded even when it is difficult to assign a monetary value= to the infringement.

The U.S. pharmaceutical industry has expressed concern that the sanitary authority of the Dominican RepublicR= 17;s Department of Health continues to approve the import, export, manufacture, marketing, and/or sale of pharmaceutical products that infringe patents dul= y registered in the Dominican Republic. The Industrial Property Law, which was overhauled in 2000, has only rarely been applied in legal proceedings, so the effectiveness of the law has not been thoroughly tested. In o= ne case in which a Dominican defendant was found guilty of patent infringement, the Dominican Patent Office issued a subsequent opinion, based on obsolete sections of Dominican law; a Dominican judge cited the newly issued but incorrect opinion to suspend the patent.&n= bsp; The decision was ultimately reversed by a court of appeals, but the process took several months and added to the uncertainty about the degree of protection offered to industrial property in the Dominican Republic.

CAFTA-DR requires that test data su= bmitted to the Dominican government for the purpose of product approval be protected against unfair commercial use for a period of 5 years for pharmaceuticals a= nd 10 years for agricultural chemicals. Despite vigorous resistance from Dominican pharmaceutical manufactur= ers, appropriate legislation modifying the industrial property law was passed in November 2006. Trademark infringement is now a criminal offense.&nb= sp; At the same time various other dispositions of intellectual property laws were strengthened. The Dominican Congress abolished criminal penalties for patent infringement, a measure applauded by Dominican firms engaged in pharmaceutical piracy or gr= ay marketing. Patent viola= tions must be pursued entirely through civil actions.

Piracy of copyrighted materials is = common in the Dominican Republic, despite a strong copyright law passed in 2000, t= he appointment of a specialized IPR prosecutor with nationwide jurisdiction in 2003, and some improvement in enforcement activity. Audio recordings and software are frequently copied without authorization. The authorities on occasion will s= eize and destroy such pirated goods.

The copyright and telecommunications authorities cooperated closely in 2005 in a campaign to oblige cable televi= sion operators and broadcasters to obtain licenses for re-broadcasting satellite signals and for broadcasting cinematic films. Several firms were closed, fined or warned. Concerning broadcast = piracy cases, U.S. industry representatives point to extended delays in the judici= al process when cases are submitted for prosecution.

Transparency of Regulatory System = ; &n= bsp; = ; &n= bsp;

In recent years the Dominican gover= nment has carried out a major reform effort aimed at improving the transparency a= nd effectiveness of laws affecting competition. Nonetheless, efforts to establish = the rule of law in many sectors of the economy have been impeded or in some cas= es soundly defeated by special interests.&nbs= p; Many investors, both Dominican and foreign, consider that influence through political contacts will predominate over formal systems of regulati= on.

On November 20, 2002, Congress pass= ed the Financial and Monetary Law (Law 183-02) to regulate banks and other key pla= yers in the financial sector. The = IMF standby agreement negotiated in 2003 and 2004 required additional regulation and improved supervision of the banking sector, and authorities have requir= ed banks to meet improved capital ratios on a schedule designed to meet international standards in 2006. The Superintendent of Securities does not regulate the issuance or trading of commercial paper outside the formal securities exchange. Issues traded on the exchange are regulated, although the regulatory entity is weak, and these account for a = very small portion of total trades.

Efficient Capital Markets and Portfolio Investment&nb= sp; =

During the 1990s, a period of stron= g GDP growth and largely successful economic reform, Dominican authorities failed= to detect years of large-scale fraud and mismanagement at the privately owned Banco Intercontinental (Baninter), the country’s third largest bank.<= span style=3D'mso-spacerun:yes'> The failure of Baninter and two ot= her banks in 2003 cost the government in excess of US$ 3 billion, severely destabilized the country’s finances and shook business confidence. The failures affected national fin= ances and business confidence, causing a crisis of devaluation, inflation and economic hardship. Upon taking office in August 2004, Leonel Fernández’s administration formulated with the International Monetary Fund a comprehensive program aim= ed at addressing the weaknesses in macroeconomic policies and in a wide range = of structural areas. Business confidence gradually returned, but effects of the 2003-2004 economic crisis linger.

&n= bsp;

In early 2005, the IMF board approv= ed a 28-month Standby Agreement worth approximately US$660 million. Quantitative targets have generall= y been met with large margins, especially on the monetary side. Dominican authorities have had more difficulty in making required structural changes. In mid-2005, the Dominican governm= ent requested the first of several postponements in the IMF review process. At the September 2006 IMF-World Ba= nk annual meeting in Singapore, an IMF Deputy Managing Director praised the success of the Dominican program in restoring high growth, low inflation, financial stability, and a strong balance of payments. He encouraged the Dominicans to persevere with the implementation of sound policies to consolidate further = the public finances and ensure that the gains achieved so far are sustained. The Director noted that these effo= rts needed to be supported by putting in place the structural and institutional reforms called for in the program and by making every effort to address the financial problems of the electricity sector. A combined fifth and sixth review originally scheduled for December 2006 has been delayed twice because of the failure of the authorities to meet fiscal and structural targets. The combined review is expected to= go to the IMF board in February of 2007.

The Dominican securities market, th= e Bolsa de Valores de Santo Domingo, was founded in 1991. Since beginning operations, the Bo= lsa has handled initial offerings of commercial paper. The relatively inexperienced Superintendency of Securities (SIV) contends with a very aggressive private banking sector that maintains a non-transparent, unregulated secondary securities market. This legal= but unregulated trading of securities generally escapes supervision. The Capital Market Law and its reg= ulations and the Monetary and Financial Law 183-02 are not specific on how to regula= te the market in commercial paper.

The private sector has access to a = variety of credit instruments. Foreign investors are able to obtain credit on the local market but tend to prefer = less expensive offshore sources. T= here are 14 multi-service banks, 15 development banks, 18 savings and loan associations, a mortgage bank, 69 finance companies, 23 loan houses, and a national housing bank. The Ce= ntral Bank regularly issues certificates of deposit, using an auction process to determine interest rates and maturities.

Political Violence = ; &n= bsp; = ; &n= bsp; = ; &n= bsp;

There have been occasional spontane= ous outbreaks of protest in some of the poorer areas of the Dominican Republic = over spiraling electricity costs and lengthy rolling blackouts. Occasional labor protests have been peaceful.

Corruption &= nbsp; &nbs= p; &= nbsp; &nbs= p; &= nbsp; &nbs= p; &= nbsp;

Corruption remains an endemic probl= em in government, in the private sector, and within law enforcement agencies nationwide. Corruption and th= e need for reform efforts are openly and widely discussed. A respected Dominican non-governme= ntal organization supported by USAID sponsored research in 2004 that established= the fact that during the previous 20 years, only one government official had be= en convicted of corruption. That individual was released after serving only six months of the sentence.

The Dominican Congress ratified the= UN Convention against Corruption on October 26, 2006. The UN Convention has a broader sc= ope on corruption than do other agreements; it includes provisions regarding money= laundering, obstruction of justice, private sector corruption, and asset recovery.

In April 2005 the President establi= shed a National Ethics and Anti-Corruption Commission empowered to receive complai= nts about action and decisions of government officials.

The letter of agreement with the IMF stipulates that the authorities will obtain the passage of legislation criminalizing the theft of electricity.&nb= sp; This legislation is also a requirement of a World Bank lending progr= am for electricity sector reform. As of February 2007 the Senate had passed a version of the legislation with ma= ny changes, some of them likely to undermine the intent of the administration’s submission. The House of Representatives appeared likely to postpone considerati= on of the text.

In June 2005 a group of former offi= cials including a former minister, transport union leaders and businessmen were convicted of fraud in handling government subsidies for the purchase of bus= es for public transport. The min= ister was sentenced to three years of house arrest and a fine. The verdict was confirmed on appea= l but then sent back by divided vote of the Supreme Court in early February 2007 = with instructions for technical revision.

Many Dominican elected and appointed officials do not distinguish between the public interest and their own financial and personal interests in the private sector. Reports from the private sector re= veal that some officials work in both sectors simultaneously and have much influ= ence over the bidding process of certain contracts. The new government procurement law= is intended to end this common practice, but it appears that time will be requ= ired to standardize the new procedures. For example, in January 2007 a city council in one division of the capital issued an invitation to tender that was explicitly limited to Domin= ican companies only, an apparent violation of the new law.

Bilateral Investment Agreements &nbs= p; &= nbsp; &nbs= p; &= nbsp;

On September 6, 2005, the Dominican Congress ratified the Free Trade Agreement with the United States and five Central American countries (CAFTA-DR).&nbs= p; Implementation is expected in early 2007. The Dominican Republic has bilater= al investment treaties with Chile, Ecuador, France, Spain, and bilateral trade agreements with several Central American countries, but these do not provide the level of protection to investors generally offered by U.S. bilateral investment treaties. An agree= ment for the exchange of tax information between the United States and Dominican Republic has been in effect since 1989.

The Dominican government has expres= sed interest in negotiating bilateral agreements with Canada and Mexico.=

OPIC and Other Investment Insurance Programs&nbs= p; =

The Overseas Private Investment Cor= poration has been active in the Dominican Republic with both insurance and loan programs. The Dominican gover= nment is a party to the Multilateral Investment Guarantee Agency (MIGA) Agreement.

Labor &= nbsp; &nbs= p; &= nbsp; &nbs= p; &= nbsp; &nbs= p; &= nbsp; &nbs= p;

The Dominican Constitution provides= the right of workers to strike and the right of private sector employers to lock out workers. The Dominican La= bor Code, which became law in June 1992, is a comprehensive piece of legislation that establishes policies and procedures for many aspects of employer-emplo= yee relationships, ranging from hours of work and overtime and vacation pay to severance pay, causes for termination, and union registration. The Labor Code requires that 80 pe= rcent of non-management workers of a company be Dominican nationals.

The Labor Code establishes a standa= rd work period of 8 hours per day and 44 hours per week and stipulates that all wor= kers are entitled to 36 hours of uninterrupted rest each week. An ample labor supply is otherwise available, although there is a scarcity of skilled workers and technical supervisors. Some labor short= ages exist in professions requiring lengthy education or technical certification. Most employers= have found the local work force competent, trainable, and cooperative. Foreign employers are not singled = out when labor complaints are made. Organized labor represented an estimated 8 percent of the work force. The Labor Code specifi= es that 20 or more workers in a company may form a union. Before a union may officially call= a strike, however, it must have the support of an absolute majority of all company workers, unionized or not; it must have previously attempted to res= olve the conflict through mediation; it must have provided written notification = to the Ministry of Labor of the intent to strike; and it must have waited 10 d= ays from that notification before striking.&nb= sp; In part due to these stringent requirements, brief work stoppages are more common than lengthy strikes.

Collective bargaining is legal and = may take place in firms in which a union has gained the support of an absolute major= ity of the workers. Few companies= have collective bargaining pacts. = The Labor Code stipulates that workers cannot be dismissed because of trade uni= on membership or union activities; however, in practice, it appears that some firms have fired workers associated with union activities. The Dominican labor code establish= es a system of labor courts for dealing with disputes. While cases did make their way thr= ough the labor courts, the process was often long and cases remained pending for several years. Both workers a= nd companies reported that mediation facilitated by the Secretariat of Labor w= as the most effective method for resolving worker-company disputes.

Many of the major manufacturers in = the Free Trade Zones have voluntary codes of conduct that included worker rights protection clauses generally aligned with the International Labor Organizat= ion (ILO) Declaration on Fundamental Principles and Rights at Work. Workers are not always aware of su= ch codes or the principles they contained.

Foreign-Trade Zones/Free Ports &nb= sp; = &nb= sp; =

The Dominican Republic's free trade= zones (FTZs) are regulated by Law 8-90, which provides for 100 percent exemption = from all taxes, duties, charges and fees affecting production and export activit= ies in the zones. These incentive= s are for 25 years for zones located near the Dominican-Haitian border, and 15 ye= ars for those located throughout the rest of the country. This legislation is managed by the= Free Trade Zone National Council (CNZF), a joint private sector/government body = with discretionary authority to extend the time limits on these incentives. Companies in the FTZs must export = at least 80 percent of their products.

Foreign currency flows from the fre= e trade zones are handled via the free foreign exchange market. Foreign and Dominican firms are af= forded the same investment opportunities both by law and in practice. The CNFZ’s Annual Statistical Report for 2005 noted a Free Zone Sector with a total of 57 free zone parks= and 556 operating companies. Of t= hose companies, 256, or 47 percent are from the United States. The total cumulative investment in= Free Trade Zones is almost US$ 2.0 billion at year-end 2005, of which 72 percent represents foreign investment. Over 49 percent of foreign investment came from the United States, followed by companies registered in South Korea, Sweden, Netherlands and Switzerland. In general, firms operating in the= free trade zones experience fewer bureaucratic and legal problems than do firms operating outside the zones. = In 2006, free zone exports totaled US$4.49 billion, compared to US$4.73 billio= n in 2005.

The FTZ sector has experienced a lo= st of 45,000 jobs nationwide from 2004 to 2006. The expiration of the benefits of= the United States Generalized System of Preferences, the dismantling of the Multi-Fibre Arrangement, and the progressive increase in local manufacturing costs and goods transportation are some of the major factors affecting the = free zone companies’ profitability. Exporters/investors seeking further information from the CNZF may contact:

Consejo Nacional = de Zonas Francas

Leopoldo Navarro = No. 61

Edif. San Rafael, piso no. 5<= /span>

Santo Domingo, Dominican Republic

Phone: (809) 686-8077

Fax: (809) 686-8079 and 688-0236

Web-site Address: www.cnzfe.gov.do

= Foreign Direct Investment Statistics &nb= sp; = &nb= sp; =

Foreign direct investment in the la= st few years has been largely concentrated in tourism, free trade zone activity, electricity generation, real estate development and communications. The Dominican government has made a concerted effort to attract new investment, taking advantage of the new for= eign investment law and of the country's natural and human resources. The decision in the late 1990̵= 7;s to privatize or "capitalize" ailing state enterprises (electricity, airport management, and sugar) attracted substantial foreign capital to the= se sectors.

Foreign Investment Data (in million= s of U.S. dollars)

Source: preliminary data from Centr= al Bank of the Dominican Republic

2005 Numbers

- - - - - - - - - - -

FDI Stocks 8,858.9

FDI Stock /GDP 30 percent

FDI Net Flows 1023.1

YEAR 2005 FDI flows by source count= ry

(in millions of U.S. dollars)

- - - - - - - - - - - - - - - - - -= -

United States 254.6

Canada 194.9

Spain 220.6

United Kingdom 100.7

France 80.9

Holland 38.5

Chile 8.5

Switzerland 52.8

Italy 15.2

Others 109.1

- - - - - - - -

Total 1023.1

FDI by Sector (in millions of U.S. = dollars)

YEAR 2005

Preliminary data from Dominican Cen= tral Bank

Tourism 315.2

Trade 190.6

Communications 111.8

Electricity 43.3

Finance 65.6

Free Trade Zones 174.7

Minerals 27.6

Real Estate 94.2

Others .1

Total 1023.1

Major Foreign Investors

Following are some of the largest c= ompanies registered as foreign businesses by the Central Bank of the Dominican Repub= lic:

American Movil (Mexican) (Compania Dominicana de Telefonos (CODETEL)), formerly owned by Verizon (U.S.), is the main telephone se= rvice provider.

Central Romana Corporation (U.S.): A diversified operatio= n that includes an international airport (La Romana), a hotel, sugar plantati= ons, a mill and real estate businesses, among other activities.

E. Leon Jimenes (ELJ), Cerveceria Nacio= nal Dominicana, C. por. A., C. por A. (a former local partne= r of Phillip Morris, of the U.S.). This company produces cigars and beer. In November 2006, Phillip Mor= ris sold its interest in ELJs beer business to assume 100 percent percent ownership of ELJ’s cigarette business.

Xstrata (Switzerland), formerly Falconbridge Dominicana (Canada) produces ferro-nickel for export from the Dominican Republic.=

Shell Company (Netherlands/England) shares ownership with= the Dominican government of the only petroleum refinery in the country (50 percent each) and is a distributor of petroleum products. Shell is interested in sellin= g its 50 percent share in the refinery, its downstream operations and lubric= ants businesses in the Dominican Republic.

Citibank (U.S) has operated in the Dominican Republic for= many years. It maintains corporate operations but recently sold off its ret= ail banking operation in the Dominican Republic to the Bank of Nova Scotia (Scotiabank).

Esso Standard Oil (U.S is a long-time distributor of petr= oleum products.

Chevron-Texaco Caribbean (U.S.) is another long-time distributor of petroleum products.

Colgate Palmolive, Inc. (U.S.)is a leading manufacturer i= n the Dominican Republic of soaps and toothpaste.

Bank of Nova Scotia (Canada) is one of the longest establ= ished foreign commercial banks in the Dominican Republic. Known as Scotiabank. It expanded its retail busine= ss significantly in 2003-2004 when it purchased assets from the failed Ba= nco Intercontinental (Baninter).

AES (U.S.). Through local subsidiaries, AES operates the electricity distribution network in the eastern half of the country (EDESTE) and owns and operates electricity generation plants. The Trust Company of the West (U.S.) owns 50 percent of the equity of EDESTE.

Ashmore Energy (U.K.), formerly Prisma Energy (U.S.) oper= ates a 180MW electricity generating plant in Puerto Plata. (Formerly known as Smith-Enron)

Coastal (U.S.). A major investor in electricity generatio= n.

Seaboard (U.S.). A major investor in electricity generati= on.

Tricom (40 percent owned by Motorola - U.S.). Second larg= est provider of long distance and cellular telephone services in the Domin= ican Republic. Citigroup of New York owns a sizable share of Tricom's debt.=

Cogentrix (U.S./Dominican.) operates a 300MW electricity generating plant.

Trilogy (U.S.), formerly Centennial is a cell phone opera= tor and long distance calling card provider.

CEMEX (Mexico) is the largest cement producer in the Domi= nican Republic.

Aerodom (Canadian/Dominican) operates five major airports= in the Dominican Republic, including Santo Domingo’s Las Americas International airport (second in passenger volume).

Major League Baseball (MLB). Many of the U.S. MLB teams ha= ve multi-million dollar baseball facilities that recruit and train players for the U.S. clubs.

Major deals in 2006

The following transactions were ann= ounced in 2006:

Verizon (U.S.) sold all operations to American Movil (Mex= ico) through a complicated set of offshore transactions. Dominican authorities asserte= d that tax liabilities of more than $525 million were due. After lengthy discussions, the authorities agreed to accept a payment of $170 million from Verizon as= a settlement.

Xstrata (Switzerland) bought Falconbridge (Canada), which includes Falconbridge Dominicana.

Citibank (U.S.) sold its retail banking operations to Ban= k of Nova Scotia (Scotiabank, Canada).

Centennial Dominicana sold all operations to Trilogy (U.S= .).

Cogentrix owners Goldman Sachs, sold to a consortium that includes Basic Energy (D.R.), Seaboard (U.S.), and the Soros Group (U.= S.).

Ashmore Energy (U.K.) bought Prisma Energy, which include= s the Smith-Enron plant in Puerto Plata, Dominican Republic.

Web Resources &nbs= p; &= nbsp; &nbs= p; &= nbsp; &nbs= p; &= nbsp;

Centro de Exportación e Inversión de la Republica Dominicana (CEI-RD)

(Export and Inve= stment Center)

Plaza Independen= cia

Santo Domingo, Dominican Republic

Contact: Eddy Martinez, Director

Phone: 809/ 530-= 5505

Fax: 809/ 530-82= 08

Website: www.c= ei-rd.gov.do

Return to table of contents<= /a>

	2004	2005	2006 (estimated)
Total Market Size	252.6	269.2	309.6
Total Local Production	9.6	10.8	12.5
Total Exports	3.2	4.1	4.7
Total Imports	246.2	262.5	301.8
Imports from the U.S.	85.2	87.1	97.2

January 1=	New Year's Day=
January 6=	Day of the Epi= phany
January 21	The Virgin of Altagracia
January 26	Duarte's Birth= day
February 27	Dominican Independence
April 6	Good Friday
May 1^st.	Dominican Labo= r Day
June 7	Corpus Christi=
August 16=	Dominican Restoration Day
September 24	The Virgin of Mercies
November 6	Constitution D= ay
December 25	Christmas Day<= o:p>

= <= ![endif]> Doing Business in Dominican Republic: A Country Commercial Guide for U.S. Companies

INTERNATIONAL COPYR= IGHT, U.S. & FOREIGN COMMERCIAL SERVICE AND U.S. DEPARTMENT OF STATE, 2005. ALL RIGHTS RESERVED OUTSIDE OF THE UNITED STATES= .

Chapter 1: Doing Busines= s In Dominican Republic

Market Overview &= nbsp; &nbs= p; &= nbsp; &nbs= p; &= nbsp; &nbs= p;

Market Challenges &= nbsp; &nbs= p; &= nbsp; &nbs= p; &= nbsp; &nbs= p;

Market Opportunities &= nbsp; &nbs= p; &= nbsp; &nbs= p; &= nbsp;

Market Entry Strategy= &= nbsp; &nbs= p; &= nbsp; &nbs= p; &= nbsp;

Chapter 2: Political and Economic Environment=

Chapter 3: Selling <= st1:place w:st=3D"on">U.S. Products and Services

Using an Agent or Distributor &= nbsp; &nbs= p; &= nbsp; &nbs= p; &= nbsp;

Establishing an Office &= nbsp; &nbs= p; &= nbsp; &nbs= p; &= nbsp;

Franchising &= nbsp; &nbs= p; &= nbsp; &nbs= p; &= nbsp; &nbs= p;

Direct Marketing = &nb= sp; = &nb= sp; = &nb= sp;

Joint Ventures/Licensing = &nb= sp; = &nb= sp; =

Selling to the Government &= nbsp; &nbs= p; &= nbsp; &nbs= p; &= nbsp;

Distribution and Sales Chann= els &= nbsp; &nbs= p; &= nbsp; &nbs= p;

Selling Factors/Techniques &= nbsp; &nbs= p; &= nbsp; &nbs= p; &= nbsp; &nbs= p;

Electronic Commerce = &nb= sp; = &nb= sp; =

Trade Promotion and Advertising = &nb= sp; = &nb= sp;

Pricing &= nbsp; &nbs= p; &= nbsp; &nbs= p; &= nbsp; &nbs= p; &= nbsp;

Sales Service/Customer Support &= nbsp; &nbs= p; &= nbsp; &nbs= p; =

Protecting Your Intellectual Property = ; &n= bsp; = ; &n= bsp;

Due Diligence &nbs= p; &= nbsp; &nbs= p; &= nbsp; &nbs= p; &= nbsp; &nbs= p;

Local Professional Services &nb= sp; = &nb= sp; = &nb= sp;

Web Resources &nbs= p; &= nbsp; &nbs= p; &= nbsp; &nbs= p; =

Chapter 4: Leading Sectors for U.S. Export and Investment

Building Products

Overview = &nb= sp; = &nb= sp; = &nb= sp; =

Best Products/Services &= nbsp; &nbs= p; &= nbsp; &nbs= p; &= nbsp;

Opportunities &= nbsp; &nbs= p; &= nbsp; &nbs= p; &= nbsp; &nbs= p; =

Resources = &nb= sp; = &nb= sp; = &nb= sp; =

Printing & Graphic Arts Equipment and Supplies

Overview = &nb= sp; = &nb= sp; = &nb= sp; =

Best Prospects/Services= &= nbsp; &nbs= p; &= nbsp; &nbs= p; &= nbsp;

Opportunities &= nbsp; &nbs= p; &= nbsp; &nbs= p; &= nbsp; &nbs= p; =

Resources = &nb= sp; = &nb= sp; = &nb= sp; =

Food Processing & Packaging Equipment

Overview = &nb= sp; = &nb= sp; = &nb= sp; =

Best Prospects/Services= &= nbsp; &nbs= p; &= nbsp; &nbs= p; &= nbsp;

Opportunities &= nbsp; &nbs= p; &= nbsp; &nbs= p; &= nbsp; &nbs= p; =

Resources = &nb= sp; = &nb= sp; = &nb= sp; =

Computers & Peripherals

Overview = &nb= sp; = &nb= sp; = &nb= sp; =

Best Prospects/Services= &= nbsp; &nbs= p; &= nbsp; &nbs= p; &= nbsp;

Opportunities &= nbsp; &nbs= p; &= nbsp; &nbs= p; &= nbsp; &nbs= p; =

Resources = &nb= sp; = &nb= sp; = &nb= sp; =

Automotive Parts and Service Equipment

Overview = &nb= sp; = &nb= sp; = &nb= sp; =

Best Prospects/Services= &= nbsp; &nbs= p; &= nbsp; &nbs= p; &= nbsp;

Opportunities &= nbsp; &nbs= p; &= nbsp; &nbs= p; &= nbsp; &nbs= p; =

Resources = &nb= sp; = &nb= sp; = &nb= sp; =

Hotel and Restaurant Equipment

Overview = &nb= sp; = &nb= sp; = &nb= sp; =

Best Products/Services &= nbsp; &nbs= p; &= nbsp; &nbs= p; &= nbsp;

Opportunities &= nbsp; &nbs= p; &= nbsp; &nbs= p; &= nbsp; &nbs= p; =

Resources = &nb= sp; = &nb= sp; = &nb= sp; =

Medical Equipment

Overview = &nb= sp; &= nbsp; &nbs= p; &= nbsp; &nbs= p; &= nbsp;

Best Products/Services &= nbsp; &nbs= p; &= nbsp; &nbs= p; &= nbsp;

Opportunities &= nbsp; &nbs= p; &= nbsp; &nbs= p; &= nbsp; &nbs= p; =

Resources = &nb= sp; = &nb= sp; = &nb= sp; =

Air Conditioning and Refrigeration Equipment & parts

Overview = &nb= sp; = &nb= sp; = &nb= sp; =

Best Products/Services &= nbsp; &nbs= p; &= nbsp; &nbs= p; &= nbsp;

Opportunities &= nbsp; &nbs= p; &= nbsp; &nbs= p; &= nbsp; &nbs= p; =

Resources = &nb= sp; = &nb= sp; = &nb= sp; =

Travel and Tourism Services

Overview = &nb= sp; = &nb= sp; = &nb= sp; =

Best Products/Services &= nbsp; &nbs= p; &= nbsp; &nbs= p; &= nbsp;

Opportunities &= nbsp; &nbs= p; &= nbsp; &nbs= p; &= nbsp; &nbs= p; =

Resources = &nb= sp; = &nb= sp; = &nb= sp; =

Agricultural Sectors &= nbsp; &nbs= p; &= nbsp; &nbs= p; &= nbsp; &nbs= p;

Wheat

Soybean Meal

Corn

Exchange Rate: = RD$ 34 – US$1

Consumer Oriented = Products

Softwood and Treat= ed Lumber

Dairy Products

Exchange Rate: &n= bsp; RD$ 34 – US$1