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Dominican Republic Cafta Agreement Essay

2718 words - 11 pages

In the last twenty years, the economy of the capitalist world has been influenced by two trends; one is neoliberalism, an expansion of “laissez-faire” and the other is globalization, defined as the trade of products to make them accessible worldwide. The Dominican Republic is a model of a mixed economy recently showing signs of globalization resulting from a tendency towards this sector such as the free trade agreement, the DR-CAFTA. With the ongoing inflation and fluctuating prices, the Dominican Republic has open its boundaries in order to expand its economy, and to provide the local consumer a larger variety of imported products (CIA). The DR-CAFTA, a bilateral trade agreement between the United States, Dominican Republic, Nicaragua, Honduras, El Salvador, and Costa Rica was implemented completely in all the countries (except Costa Rica) as of May 1, 2007. The DR-CAFTA expects bilateral free trade between all of the member countries. Benefits are expected for the United States and member countries. While the United States will help decrease its trading deficit, Latin America is expected to purchase American goods which will help to enrich the ever changing Latin American market (Ancochea). With the DR-CAFTA, countries such as the Dominican Republic will benefit not only from its “tax free” products, but the Dominican consumers will be able to buy products at a lower price, as a result of the increased competition in the retail market. This will help the Dominican Republic set up a more competitive retail business and thus low-income families will be able to use their money more efficiently. The DR-CAFTA comes to the Dominican Republic with good intentions and so speculations about whether it will abrupt the Dominican economic growth should be at a minimal level. Although it is often regarded that the DR-CAFTA will help bring monopolistic ventures, it is evident that such bilateral agreement will have a profound positive effect in the following areas; domestic agricultural, in local labor sector, and in the trading opportunities and capacities local business will enjoy under the DR-CAFTA.With the DR-CAFTA trade regulations, most of the economic sectors will benefit. It will restrict certain products and services in order to leave a margin of competiveness for the locals. With this the Dominican market will not suffer a severe blow and will thus be able to compete against American companies, whom have certain quotas and controls to help prevent monopolistic ventures. The NAFTA (North American Free Trade Agreement), which was the backbone for the DR-CAFTA, produced positive results. Although the benefits cannot be addressed from the American or the Canadian perspective, it can be done by looking at the effects in Mexico. Mexico, alike the Dominican Republic, is considered a third world country and its’ economy is based mainly based on agriculture and services (CIA). According to the Mexican Ministry of Economy, ten years...

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