Despite DR-CAFTA, the Dominican Republic has retained customs duty on various Salvadoran products.
The Dominican Republic's director of Foreign Trade, Yahaira Sosa, indicated that the measures taken are a response to subsidies paid by El Salvador's government to its exporters.
"She explained that the decision to retain the tariffs on paper, card, plastics and juices seeks to ensure a level playing field for bilateral exchange," reports Elsalvador.com.
Costa Rica’s Minister for Foreign Trade met with her Dominican counterpart to explore solutions to the export tariff problems.
Since last year, Costa Rican electrical conductor exporters have been subject to import restrictions and denied preferential customs tariffs.
“The Costa Rican Ministry of Commerce (Comex) claims that this contravenes the free trade agreement signed between Costa Rica, the USA and the Dominican Republic,” writes Nacion.com.
Dominican Republic agreed to enter an arbitration process with Costa Rica over a tariff conflict.
The Industry and Commerce Ministry of Dominican Republic issued a press release in which it agrees to the process, to “solve a conflict created by tariffs charged on Costa Rican electric conductors”.
They added that the country wants to “reach an understanding with Costa Rica to contribute to an adequate and effective management” of CAFTA-RD, the free trade agreement signed between the Central American nations, the U.S. and Dominican Republic, “by respecting and complying with all commitments established in it”.
The country argues that Dominican Republic introduced measures which affected the exports of electrical conductors and polypropylene sacks.
Back in November 27, Costa Rica had activated DR-CAFTA’s dispute resolution mechanism, arguing that Dominican Republic did not apply the rules of the treaty to these products.
The Dominican Customs Director had issued instructions to charge the full tariff to all products manufactured by Costa Rican companies Conducen SRL and Sajiplast S.A.
In spite of globalization driving various forms of private economic integration, there still remain custom and tariff barriers.
International commerce experts agree that in order to fully take advantage of the benefits of free trade agreements with extra-regional blocks, Central America must complete the economic integration process started on October 14, 1951.
A group of Democratic senators proposed a law to eliminate tariffs on textile products from 14 Asian countries.
Textile imports from those countries currently pay up to 28% when entering the United States.
Should the proposal be approved, a very likely scenario, the Central American countries would lose the trade advantage obtained with the U.S. free trade agreement, as production costs are lower in Asian countries, because of lower social costs and cheaper energy.
Costa Rica will import raw alcohol from Brazil to dehydrate it and re-export it to the US with zero-tariff, in accordance with DR-CAFTA rules.
The Brazilian president's visit to Costa Rica formalized at the government level what was already in the works between businesses in both countries.
In his article in Nacion.com, Juan Fernando Lara S. stated: "Recently, the Agro-Industrial Sugar Cane League (LAICA) obtained a contract from a Brazilian firm that will bring raw alcohol to the country. It will be dehydrated in Punta Morales and then it will be placed as ethanol in the United States."
Sardimar and Calvo Group are involved in a dispute over tariffs generated by the implementation of the multilateral treaty imposed by the US-Central America Treaty.
The Spanish-owned Calvo Group has a tuna processing plant in El Salvador from which it exports to Costa Rica - among other places - having paid the country a customs duty of 15% until January 2009, and afterwards taking advantage of CAFTA benefits by not paying the tariff for tuna in oil and paying 2.2% for tuna in water. This will obviously hurt the local sales of Costa Rican-owned Sardimar, which is protesting, stating that the situation violates the provisions of the General Treaty of Central American Integration since Calvo Group operates in a free trade zone in El Salvador and is exempt from most national and municipal taxes and Sardimar considers this a subsidy in disguise.
Central America is blessed with natural resources and has a population of approximately 35 million people.
Nonetheless, poverty is a merciless scourge. 50% of Guatemala's population is in the poverty threshold. Nicaragua is the second poorest country in the Americas, surpassed only by Haiti. 8 out of every 10 Nicaraguan live on less than $2 per day, and 48% are below the poverty line. Honduras barely does better than Haiti and Nicaragua.