DOMINICAN REPUBLIC: ‘For us, CAFTA is crucial’
The only non-Central American country in the trade pact, the Dominican Republic stands to gain a great deal from its inclusion in the Central American Free Trade Agreement, or CAFTA.
Ambassador Flavio Dario Espinal Jacobo says, “For us, CAFTA is crucial.” He explains that some 84 percent ($4.5 billion a year) of all exports from the Dominican Republic go to the United States, and CAFTA provides a permanent trade agreement to protect those exports from US tariffs.
The CAFTA accord, recently approved by Congress, replaced the Caribbean Basin Initiative of the 1980s, which had provided access to American markets for goods produced in the Caribbean, but was due to expire in 2007.
The ambassador points out that CAFTA not only secures trade with America, but also turns the Dominican Republic into a secure place to invest for companies from America, Europe and elsewhere, in part by reducing restrictions on the origin of raw materials for products exported to the United States. This is especially important for the textile industry, which accounts for half Dominican-US exports, allowing companies there to produce cloth as well as ready-made clothing. (The new rules allow for manufacturers to use material from NAFTA or CAFTA member countries.)
The recent approval of CAFTA by Congress comes at an opportune moment for the Dominican Republic, which was a star economic performer in the late 90s but from 2000 to 2004 went from crisis to crisis, and was unable to meet its IMF obligations on two occasions, undermining international and domestic confidence in the country. In the same period, some one million people fell below the poverty line.
“There was a lack of coordination between monetary and fiscal policies,” the ambassador explains. External debt doubled to $7.6 billion while three major banks fell into financial difficulties.
Change started with the August 16, 2004 election of a new government headed by President Leonel Fernandez Reyna. “Now there is a turnaround,” the ambassador says.
”This government is serious about maintaining its IMF agreements. Stability of the currency and low inflation are here to stay.”
Economic growth rates have picked up sharply, returning to the levels of the 90s, when growth averaged 7 percent and were the highest in Latin America and the Caribbean. In 2004 GDP grew 1.7 percent, whereas in the first third of this year it grew at an annual rate of 5.4 percent and in the second third should grow by 7 percent, the ambassador says. At the same time, inflation has been reduced to an annual rate of 8 percent.
“People are now confident in government policy,” the ambassador says, although “we still have a long way to go to increase employment and reduces prices.”
The ambassador says that major problems facing his country include servicing the swollen foreign debt and dealing with rising fuel costs. But he is confident that these difficulties can be managed by the new administration.
Asked about the competitive advantages of the Dominican Republic, he mentions several. They include a stable political situation (unlike neighboring Haiti), proximity to the United States, a diversified economy (including a strong tourism sector), advanced telecommunications, five airports with good connections to America, Latin America and Europe, and a government that understand the role and issues of the private sector.
On the security front, the ambassador says his government “is 100 percent committed to cooperate with the United States.” This includes in areas of common concern, such as the volatile situation in Haiti as well as typically Caribbean problems, such as drug trafficking.
And then there is baseball. Not a common strategic issue with the United States, Dominicans are proud of the fact that over 100 players of the 700 in America’s professional leagues are from the Dominican Republic, including such stars as Baltimore Orioles slugger Sami Sosa. “This gives us visibility,” the ambassador says with a smile.
Biography of Flavio Darío Espinal
Flavio Darío Espinal obtained his Law Degree (Summa Cum Laude) at the Pontificia Universidad Católica Madre y Maestra (PUCMM). He holds a Master Degree in Political Sciences from Essex University in England and for his PHD in Government, Dr. Espinal attended the University of Virginia, in the United States. He has been awarded with three renowned international scholarships and programs such as the LASAPAU-Fulbright Scholarship and Research Scholarships from the Bradley Foundation, The Dupont Foundation and the Institute of World Politics of the United States.
During the years 1996-2000 he served as Ambassador of the Dominican Republic to the Organization of American States (OAS) where he held several positions: Chair of the Permanent Council, Chair of the Committee on Legal and Political Issues and the Chair of the Committee on Hemispherical Security. In the process of the “Summits of the Americas”, he was co-coordinator of the Civil Society Agenda, representing the Dominican Republic. While holding these chairs, Ambassador Espinal acted as Chairman of several important hemispherical reunions that dealt with issues such as Justice, Democracy, Human Rights and the Development and Strengthening of the Interamerican System.
Dr. Espinal has worked as an attorney at law in his native city of Santiago and in Santo Domingo, Capital of the Dominican Republic as well. He has served as Counselor for several private corporations and for international organizations such as the Interamerican Development Bank, the United Nations Programs for Development (PNUD) and the Organization of American States (OAS).
His Book “Constitutionalism and Political Processes in the Dominican Republic” received the annual essay award, “Pedro Henriquez Ureña 2001-2002”. He has published numerous articles and essays about politics and constitutional issues in different academic media and national newspapers. At the moment his articles appear on a regular basis at El Caribe newspaper and is co-conductor of the television program “En Contexto” that is transmitted every week at CDN (Cadena de Noticias).
Dr. Espinal was the Director of the University Center of Political and Social Studies (CUEPS) and of the Center for the Study, Prevention and Resolution of Conflicts (CEPREC) of the Pontificia Universidad Catolica Madre y Maestra (PUCMM). He was also the Director of the Law School of this university and taught Introduction to Law, International and Public Law and Constitutional Law.
On November 23, 2004 was appointed Ambassador of the Dominican Republic to the government of the United States of America.