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WT/TPR/S/190/DMA 1 October 2007 ORGANIZATION (07-4028) Trade Policy Review Body

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WT/TPR/S/190/DMA 1 October 2007 ORGANIZATION (07-4028) Trade Policy Review Body RESTRICTED WORLD TRADE WT/TPR/S/190/DMA 1 October 2007 ORGANIZATION (07-4028) Trade Policy Review Body TRADE POLICY REVIEW Report by the Secretariat DOMINICA This report, prepared for the second Trade Policy Review of Dominica, has been drawn up by the WTO Secretariat on its own responsibility. The Secretariat has, as required by the Agreement establishing the Trade Policy Review Mechanism (Annex 3 of the Marrakesh Agreement Establishing the World Trade Organization), sought clarification from Dominica on its trade policies and practices. Any technical questions arising from this report may be addressed to Mr. Angelo Silvy (tel. 022 739 5249), and Ms. Katie Waters (tel. 022 739 5067). Document WT/TPR/G/190/DMA contains the policy statement submitted by Dominica. Note: This report is subject to restricted circulation and press embargo until the end of the first session of the meeting of the Trade Policy Review Body on Dominica. Dominica WT/TPR/S/190/DMA Page iii CONTENTS Page I. ECONOMIC ENVIRONMENT 1 (1) STRUCTURE OF THE ECONOMY, OUTPUT, AND EMPLOYMENT 1 (2) FISCAL POLICY 3 (3) MONETARY AND EXCHANGE RATE POLICY 4 (4) BALANCE OF PAYMENTS, TRADE AND INVESTMENT FLOWS 5 (5) OUTLOOK 7 II. TRADE AND INVESTMENT POLICY FRAMEWORK 7 (1) GENERAL CONSTITUTIONAL AND LEGAL FRAMEWORK 7 (2) TRADE POLICY FORMULATION AND IMPLEMENTATION 8 (3) FOREIGN INVESTMENT REGIME 9 (4) INTERNATIONAL RELATIONS 11 (i) World Trade Organization 11 (ii) Preferential agreements and arrangements 12 III. TRADE POLICIES AND PRACTICES BY MEASURE 13 (1) MEASURES DIRECTLY AFFECTING IMPORTS 13 (i) Customs procedures, documentation, and registration 13 (ii) Customs valuation 14 (iii) Rules of origin 14 (iv) Tariffs, and other charges on imports 15 (v) Other levies and charges 18 (vi) Import prohibitions, restrictions, and licensing 20 (vii) Contingency measures 22 (viii) Technical regulations and standards 23 (ix) Sanitary and phytosanitary measures 26 (2) MEASURES DIRECTLY AFFECTING EXPORTS 27 (i) Documentation, export taxes, and restrictions 27 (ii) Export subsidies, financing, support, and promotion 27 (3) MEASURES AFFECTING PRODUCTION AND TRADE 28 (i) Legal framework for business and taxation 28 (ii) Incentives and assistance 30 (iii) Competition policy and regulatory issues 33 (iv) Government procurement 34 (v) Intellectual property rights 35 IV. TRADE POLICIES BY SECTOR 38 (1) AGRICULTURE 38 (2) MANUFACTURING 39 (3) SERVICES 40 (i) Main features 40 (ii) Telecommunications 40 WT/TPR/S/190/DMA Trade Policy Review Page iv Page (4) FINANCIAL SERVICES 42 (i) Onshore financial services 42 (ii) Offshore financial services 44 (iii) Air transport 45 (iv) Maritime transport 46 (v) Tourism 47 (vi) Professional services 49 (vii) Other offshore services 50 REFERENCES 51 APPENDIX TABLES 53 TABLES I. ECONOMIC ENVIRONMENT I.1 Basic macroeconomic indicators, 2000-06 1 I.2 Balance of payments, 2001-06 5 I.3 Investment flows, 2001-05 6 II. TRADE AND INVESTMENT POLICY FRAMEWORK II.1 Ministries and agencies dealing with trade 8 II.2 Notifications to the WTO, 2001-07 11 III. TRADE POLICIES AND PRACTICES BY MEASURE III.1 Structure of the tariff, 2006 15 III.2 Summary analysis of the MFN tariff, 2006 16 III.3 Other taxes and levies on imports 19 III.4 Goods subject to prohibitions, licensing, or other restrictions, 2007 21 III.5 Goods under CARICOM Article 164 exceptions 23 III.6 Credits and trade under the Fiscal Incentives Act No. 42 of 1974 31 III.7 Dominica's membership in international agreements on intellectual property rights 36 IV. TRADE POLICIES BY SECTOR IV.1 Telecommunications statistics, 2002-06 41 APPENDIX TABLES I. ECONOMIC ENVIRONMENT AI.1 Merchandise exports and re-exports by group of products, 2000-06 55 AI.2 Merchandise imports by group of products, 2000-06 56 AI.3 Merchandise exports and re-exports by trading partner, 2000-06 57 AI.4 Merchandise imports by trading partner, 2000-06 58 Dominica WT/TPR/S/190/DMA Page 1 I. ECONOMIC ENVIRONMENT (1) STRUCTURE OF THE ECONOMY, OUTPUT, AND EMPLOYMENT 1. Services accounted for 66.2% of GDP in Dominica in 2005, followed by agriculture (18.5%), manufacturing (8.1%), construction (8.4%), water and electricity for (6.4%), and mining and quarrying (0.9%).1 No employment or wage change statistics are available. 2. Although the contribution of agriculture to GDP declined from 30% in the mid 1980s to 18.5% in 2005, its share of GDP continues to be higher than in other OECS countries. Moreover, agriculture still employs around one third of the labour force and is an important earner of foreign exchange. The banana industry has been declining since the 1990s for a number of reasons, among which are the erosion of preferential access to its main export market, the United Kingdom, the changing demography of the farming community, high production costs, and low productivity.2 Agricultural production includes dasheens, grapefruit, plantains, coconuts, cocoa beans, coffee, sweet potatoes, mangoes, oranges, and limes. 3. Dominica's growth performance continues to be below the OECS average. During the period under review, Dominica's economy overcame a major economic crisis. Output fell by some 10% in 2001-02; growth resumed in 2004 and 2005. Gross capital formation declined sharply during the crisis but it has been recovering since 2003. Private consumption held its contribution to GDP relatively stable during the period. The shares of both imports and exports fell as a consequence of the crisis, but, while the share of imports recovered with resumed economic growth, the share of exports continued to decline (Table I.1). Table I.1 Basic macroeconomic indicators, 2000-06 (EC$ and per cent) 2000 2001 2002 2003 2004 2005 2006 Real sector Nominal GDP at market prices (EC$ million) 732.2 718.6 688.1 709.7 770.1 810.7 860.0 GDP per capita, at market prices (EC$) 10,236 10,075 9,854 10,164 10,936 11,479 12,039 GDP per capita, at basic prices (EC$) .. .. 8,238 8,323 8,683 9,015 9,562 Real GDP at market prices (EC$ million) 537.5 517.4 496.6 507.4 539.3 557.3 583.0 Real GDP at basic prices (EC$ million) 456.4 437.4 415.2 415.6 428.2 442.7 463.0 GDP growth (real, at market prices) 0.6 -3.8 -4.0 2.2 6.3 3.3 4.6 GDP growth (real, at basic prices) 1.3 -4.2 -7.8 0.1 3.0 3.4 3.0 GDP components (% of GDP) Total consumption (% of GDP) 86.2 92.8 92.2 86.5 88.1 94.8 90.0 Private consumption (% of GDP) 63.7 70.5 70.8 67.4 70.0 76.7 71.2 Government consumption (% of GDP) 22.5 22.3 21.4 19.0 18.1 18.1 18.7 Gross capital formation (% of GDP) 28.1 23.9 20.7 25.0 27.3 28.5 28.8 Transport equipment (% of GDP) 5.0 3.1 3.8 3.4 3.5 5.2 4.5 Other equipment (% of GDP) 7.0 4.4 4.1 7.1 8.6 7.8 8.0 Construction (% of GDP) 16.0 16.4 12.8 1.9 15.3 15.5 16.2 Exports of goods and services (% of GDP) 53.3 50.5 48.4 45.0 45.6 41.9 44.2 Goods 20.2 16.7 17.1 15.6 14.9 14.0 13.5 Non-factor services 33.1 33.8 31.3 29.4 30.7 27.9 30.7 Table I.1 (cont'd) 1 The totals do not add to 100% because it is necessary to subtract the financial intermediation services indirectly measured (FISIM), including total property income receivable by financial intermediaries minus their total interest payable (ECCB, (2006). 2 IMF (2006). WT/TPR/S/190/DMA Trade Policy Review Page 2 2000 2001 2002 2003 2004 2005 2006 Imports (% of GDP) 67.5 62.3 61.3 56.5 61.0 65.2 63.0 Goods 48.1 43.5 40.2 39.9 44.8 48.5 46.2 Non-factor services 19.4 18.8 21.1 16.6 16.2 16.7 16.8 Gross national savings (% of GDP) 6.0 5.2 3.1 9.0 6.6 1.8 .. Foreign savings (% of GDP) 22.1 18.7 18.9 20.3 20.8 25.9 23.4 Consumer price index (period average) 0.9 1.6 0.2 1.5 2.4 1.7 2.6 Consumer price index (end of period) 0.9 1.6 0.4 2.8 0.8 2.7 1.6 Implicit gross value added deflator (end period) 0.7 2.0 -0.2 0.9 2.1 1.9 1.4 General government finance (% of GDP) Current revenue 34.4 28.2 28.0 28.8 30.5 31.5 31.3 of which, tax revenue 29.2 22.7 23.5 25.3 26.6 28.3 28.8 of which taxes on international trade 14.3 11.9 12.4 13.0 13.7 13.9 7.7 of which Consumption tax 8.0 6.9 7.5 7.4 7.3 7.1 1.2 Import duties 4.0 3.0 2.8 3.0 3.3 3.4 3.3 Service charge on imports 0.9 0.9 0.8 1.2 1.5 1.5 1.5 Current expenditure 36.2 33.1 30.2 32.6 30.3 29.3 28.4 Current account balance -1.8 -5.0 -2.1 -3.8 0.2 2.2 2.9 Primary balance 0.6 -4.0 -0.7 1.8 3.9 5.8 10.3 Overall fiscal balance (% of GDP) -5.3 -9.6 -5.1 -4.4 -1.5 2.6 6.3 Total public debt (% of GDP) 112.0 127.4 131.9 131.2 119.2 117.3 110.0 Money and interest rates Money supply, M1 (end of period) -13.0 1.4 16.4 1.2 3.1 28.6 -3.5 Broad money, M2 (end of period) 5.2 8.7 6.9 0.9 6.0 6.8 9.6 Prime lending rate (% per annum) 9.5-10.5 9.5-10.5 8.5-10.5 8.5-10 8.5-10 8.5-10 8.5-10 Other lending rates 7.5-20.8 7.5-20.8 7.5-20.8 5-20.8 7.5-20 7.5-18.2 7.5-18.2 Savings rate 4-5.5 4-5.5 3-5.5 3-5.5 3-4.25 3-4.25 3-4.25 .
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