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Miami-Dominican Republic Annual Report:No. 3 Trade partners- Slowing the trade pace

July 27th, 2006

Experts say CAFTA could help the Dominican Republic jumpstart its trade with South Florida.

Two-way trade between the Miami Customs District and the Dominican Republic grew just 5 percent in 2005, setting the stage for the Caribbean country to be pushed aside by more vibrant trade partners.

The Dominican Republic, traditionally South Florida’s second most important trader after Brazil, found itself in the No. 3 spot as Venezuela jumped ahead in 2005. Even more, in trade statistics for the first quarter of 2006, the Dominican Republic had fallen back yet another spot, behind Colombia.

South Florida’s exports to the Dominican Republic rose 5.5 percent last year to reach $2.2 billion. Imports, however, fell nearly 2 percent to close 2005 at $1.93 billion. The exchange favored Florida, which ended up with a $260 million trade surplus with the small country.

Experts predicted that trade results will expand significantly once the Central America Free Trade Agreement, which includes the Dominican Republic, is implemented. Manny Mencia, Enterprise Florida’s vice president of international trade and business development, said the CAFTA countries combined represent a significant trade bloc.

The free trade accord lifts tariffs on about 80 percent of products arriving from the Dominican Republic. The remaining 20 percent will gradually phase out over 10 years. About 80 percent of goods and 99 percent of agricultural products from the Dominican Republic traditionally have entered the United States duty-free thanks to special treatment under the Caribbean Basin Initiative and the Generalized System of Preferences.

CAFTA has already been ratified by the Dominican Republic and the United States, but the Dominican Congress has not yet given its stamp of approval. It was expected that the country could join El Salvador, Guatemala, Honduras and Nicaragua which have already signed off on the pact by the end of the summer. Only Costa Rica has failed to ratify the accord.

Once a producer of sugar, coffee and tobacco, the Dominican Republic has become an apparel supplier for the United States although the Caribbean country is facing fierce competition from China’s textile industry. In 2005, the Miami Customs District imported $1.2 billion in garments. Men’s suits were the leading commodity, worth nearly $478 million. That reflected a 16 percent drop from 2004.

The biggest import surge came from leather used for upholstery. South Florida received nearly $28 million-worth of Dominican leather last year. That was a colossal jump from the $1.8 million in leather imports recorded in 2004.

The Dominican Republic has also become a major U.S. supplier of medical instruments. The Miami Customs District imported $197.5 million worth of surgical equipment in 2005, up nearly 14 percent from a year earlier.

Florida retailers are also becoming major buyers of Dominican-made jewelry, which saw a 53 percent gain to end the year at nearly $36 million, and footwear, which rose 15 percent to total nearly $22 million.

On the export side, automobiles, computers and fabrics were the top commodities in 2005.

More than $123 million-worth of passenger vehicles were exported to the Dominican Republic, an 83 percent jump from a year earlier. Shipments of computers from South Florida, meanwhile, rose 55 percent to surpass $50 million. Combined, exports of cotton and knit fabrics fell 43 percent to $188.2 million.

South Florida also shipped $21 million in cotton to the Caribbean country, a gain of 124 percent compared with 2004 figures.

The U.S. Department of State said DR-CAFTA countries are key export markets for U.S. manufacturing sectors such as information technology, agriculture, construction, pharmaceuticals and paper products. .

The Dominican Republic saw strong growth in the 1990s until a banking crisis threw the country into an economic tailspin. The country is still working to regain its momentum.