World Trade Organization |
RESTRICTED |
| |
WT/TPR/G/190/DMA | |
|
(07-3990) |
|
|
Trade Policy Review Body |
Original: English |
TRADE POLICY REVIEW Report by Dominica |
Pursuant to the Agreement Establishing the Trade Policy Review Mechanism (Annex 3 of the |
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.
CONTENTS
Page
I. INTRODUCTION 5
II. RECENT ECONOMIC PERFORMANCE 5
III. CHALLENGES FACING
IV. GOVERNMENT’S MEDIUM TERM DEVELOPMENT STRATEGY 6
V. SECTORAL DEVELOPMENTS AND PROGRAMMES 7
VI. THE ENABLING ENVIRONMENT AND THE CLIMATE FOR INVESTMENT 10
VII. TRADE POLICY AND NATIONAL ECONOMIC DEVELOPMENT 11
VIII. REGIONAL INTEGRATION 12
IX. BILATERAL/HEMISPHERIC AND PREFERENTIAL TRADE ARRANGEMENTS 13
X. MULTILATERAL TRADING SYSTEM - THE WTO 13
XI.
XII. CONCLUSION 14
I. INTRODUCTION
1. Following the first trade policy review of
2. There were continuing efforts to deepen the regional integration process at the Caribbean Community (CARICOM).
3.
4. For the medium term 2005-2010 Dominica has articulated a growth and development strategy that provides an overarching and strategic perspective on the management of
II. RECENT ECONOMIC PERFORMANCE
5. During the period 2001 – 2003 Dominica experienced serious economic difficulties.
6. To combat the severe macro-economic and financial difficulties, the Government of Dominica embarked on an Economic Stabilisation and Adjustment Programme introduced in the Budget address of June 2002. The Government programme was supported by the International Monetary Fund (IMF) Stand-By Arrangement. The region also responded to
7. In 2003 Government adopted a two-pronged approach to addressing the worsening economic difficulties. First, it strengthened fiscal policy to reduce the financing gap and engender additional external financial support. Second, once the fiscal efforts showed results, it embarked on a more comprehensive reform programme to foster growth and move towards debt sustainability. This programme has been supported by a three-year Poverty Reduction and Growth Facility Programme (PRGF) of the IMF.
8. Strong performance in the fiscal area permitted the removal of the adjustment measures that were causing most hardship to the public. Improved macro-economic conditions and stronger tax administration, including the expansion of the tax base resulted in higher-than-anticipated revenue collection. Greater financial discipline and increased attention to cash flow management resulted in more effective control of current expenditure.
9. By mid-2003, the Government concluded that the very high level of public debt constituted the most severe obstacle to
III. CHALLENGES FACING DOMINICA
10. The challenges facing
In that regard the main challenges facing
· Continuing sound fiscal management to consolidate progress towards reducing the government’s financing requirements to sustainable levels and reducing public sector indebtedness;
· Reducing poverty levels through growth and employment generation, and improving the effectiveness of the social services and social assistance programmes;
· Improving the law and order apparatus, including the effectiveness of the judicial and land administration systems in swift enforcement of property rights and contracts;
· Improving the efficiency of institutions and simplifying procedures that make the enabling environment for private enterprise with a view to shortening the process and reducing the cost of establishing new and expanding existing businesses.
IV. GOVERNMENT’S MEDIUM TERM DEVELOPMENT STRATEGY
11. In 2006 the Government of Dominica completed its medium term strategy for growth and poverty reduction over the next five years. The Growth and Social Protection Strategy (GSPS) document provides the framework for
12. Priorities set in this document make poverty reduction the direct focus of the Government’s economic and social policy. Government regards the pursuit of sustained strong economic growth to be the main strategy to alleviate poverty.
The GSPS seeks to foster growth in the economy by building on four pillars:
1. Fiscal policy and administrative reform;
2. Enhancing the investment climate for private enterprise development;
3. Sectoral strategies for growth; and
4. Strategies for poverty reduction and social protection.
The main objectives of the GSPS include:
· Reduction in unemployment and underemployment.
· The attainment of sustainable growth and development.
· A reduction in vulnerability to shocks – economic and natural disasters.
· An improvement in international competitiveness and export performance.
· An improvement in the effectiveness of social protection programmes.
V. SECTORAL DEVELOPMENTS AND PROGRAMMES
13. The attainment of sustained economic growth over the medium term will be based on increased levels of activities in all sectors, in particular tourism, agriculture, manufacturing and energy. Improving export performance is critical for growth and increasing international competitiveness is a major challenge if
(a) Agriculture
14. The agricultural sector continues to make a significant contribution to GDP of Dominica (17% of GDP). The level of contribution to the national economy has, however, been falling steadily over the last decade. The sector continues to operate in a very challenging local and global climate. Locally challenges include relatively high cost of production; low labour productivity; an aging farmer population; low investment; and lack of proper land use planning. Globally the sector faces preference erosion and increased competition in traditional markets.
15. The objectives for the agricultural sector for the medium term are to achieve sustained growth in production and exports, to further diversification of the sector and to increase employment and incomes. To achieve these objectives Government has provided significant investment in infrastructure such as access roads, irrigation, packing houses, testing facilities and plant tissue cultivation. The capacity to provide critical extension services to the farmers has been improved. There have also been activities to facilitate new investment in the sector; to infuse a more business oriented approach among farmers; and to attract young persons through a Young Farmers Programme.
16. The transfer of modern agricultural technologies is also a strong feature of the development objectives for the agricultural sector. Greater emphasis is being placed on research and development through the construction of a molecular laboratory and a certified citrus propagation facility with the aim of producing new crops and disease resistant seedlings.
17. A National Symposium on Agriculture was held in March 2007 which identified several opportunities for investment in the sector. A comprehensive agricultural sector policy is in the final stages of preparation.
(b) Tourism
18. Government has identified tourism as having the potential for the most rapid growth in the economy because of
19. A Tourism Master Plan for the sector has been completed. This is based on a Tourism 2010 Policy document which was completed in 2005. This plan will underpin the strategic actions that Government will seek to implement into the medium-term with a view to making a profound positive impact on the sector.
These strategic actions would be geared towards achieving the following:
1. providing adequate resources for a more “competitive destination management and marketing” and developing the tourism infrastructure;
2. Effectively positioning the destination and its product to meet the demands of its specialty market;
3. Successfully incorporating local community involvement in tourism and fostering opportunities for local entrepreneurs;
4. Overcoming constraints to investment in the sector, such as limited air access and high energy costs.
20. A number of activities have already been initiated towards achieving the above targets. An eco-tourism development programme is at the final stages of implementation. Under this programme over $18.9m was spent on strategic marketing, enhancing natural sites and attractions, implementation of several community based tourism projects, renovation of the main ferry terminal and restoration of historical sites.
21. A major re-branding and repositioning exercise for destination
22. On April 2007 Parliament approved a Discover Dominica Act which created the Discover Dominica Authority. This new authority is charged with tourism marketing and product development.
(c) Manufacturing
23. The development of agro-industries is a major part of the development of the manufacturing sector. An Agro-Processing Sector Policy was formulated in July 2002 and a number of specific measures were identified for boosting agro-processing output. Agro-processing provides good opportunities for employment generation during the medium-term since it is a natural resource based industry that can be internationally competitive, and there are good market prospects for agro-industry products (tropical fruits and vegetables) in North America,
24. Government’s strategy towards agro-processing is broadly the same as for the manufacturing sector as a whole – to reduce barriers to growth and create an environment that will enhance the performance and competitiveness of manufacturing firms, and contribute to efforts to attract investment.
The strategy will be achieved by:
· Developing a private sector strategy for facilitating development of manufacturing, including the creation of a business incubator service;
· Improving the operating environment from a policy and regulatory perspective, including the streamlining of business-related bureaucratic processes;
· Improving the competitiveness of its economic infrastructure, particularly in regard to transportation and electricity;
· Ensuring that the education system prepares individuals to make effective contributions to a modern, productive workforce;
· Assisting small firms with market research and intelligence through national and regional institutions; and
· Working with the private sector organization towards improved and institutionalized relations between the private sector and Government.
(d) Energy
25.
26. In 2005
27. The project is estimated to cost approximately US$18.0 million, with the bulk of the financing provided by the
28.
29. The GOCD has also looked at wind and solar energy as other alternative sources. Government has facilitated the electricity company with feasibility studies for the development of a wind farm, with funding from the OAS. The use of solar power in housing and commercial building has also been explored
VI. THE ENABLING ENVIRONMENT AND THE CLIMATE FOR INVESTMENT
30. The Government of Dominica has made improving the investment climate a priority of its medium term Growth and Social Protection Strategy. Administrative transparency and efficiency that affect the time and cost of doing business have been identified as the essential aspects of investment climate that need to be addressed.
31. A comprehensive analysis of
· Create more comprehensive guidelines for business activity – to include information on critical procedures, including the process of receiving incentives, and on the whole finding how to start and operate a legal business;
· Improve the availability of legislation – making copies of important legislation more easily available;
· Establish timeframes for government decisions, on the basis of a process reengineering exercise that will identify constraints and bottlenecks; and
· Improve dialogue between the public and private sectors with a view to increasing mutual understanding and beneficial engagement.
32. Efforts to improve the investment climate include the reform of the Customs and Excise Division. The reform of Customs hinges on the introduction and use of trade facilitation software, ASYCUDA World. The entire system is expected to include software, hardware, specialised technical assistance from UNCTAD, training of staff, employment of new staff with IT specialised skills and upgrading of existing infrastructure. Another area of reform is land tenure and administration. Government has undertaken institutional and administrative review of all departments involved in land administration and planning with a view to streamlining and modernising their operations.
33. A key objective of
· Streamline regulations and procedures relating to private sector activity;
· Strengthen public service delivery mechanism;
· Improve the judicial and land administration systems; and
· Encourage the private sector to identify and articulate issues and proposals for other improvements in business environment.
VII. TRADE POLICY AND NATIONAL ECONOMIC DEVELOPMENT
(a) Goals and Objectives
34. The main goal of
Some of the key objectives which will be pursued are:
· Increased efficiency, productivity and competitiveness of local production;
· Diversification of the range of export-oriented products to encompass traditional and non-traditional manufactured and agricultural goods;
· Diversification of the range of markets to which
· Increased output and exports from the services sector in
(b) Export Development
35. Export development is a key objective of
· The production of high quality goods and services at competitive prices;
· The modernization of production facilities and processes;
· The introduction of new and innovative products;
· The application of modern management practices in production, marketing, finance, human resource development, and industrial relations; and
· Application of state of the art technological processes.
36.
· Enhanced international competitiveness;
· Export development by increasing the capacity and competence of local producers; increasing the local content of exported goods; and broadening the export base.
37. A national core team made of key stakeholders will be established to formulate the strategy.
(c) Institutional Framework
38. The Ministry of Foreign Affairs, Trade and Labour (FATL) has the lead responsibility for the formulation and implementation of trade policy in
39. In 2004, Cabinet advised approved the creation of a framework for trade policy management in
VIII. REGIONAL INTEGRATION
(a) The OECS Economic
40. For
41. The OECS Member States have more in common in terms of the structure of their economies, the constraints and limitations faced and the opportunities and challenges that are laid before them.
42.
43. OECS Heads of Government have agreed to create an OECS Economic Union through the revision of the existing treaty and deeper harmonisation of policies and measures. The draft treaty has been approved for consultation with all stakeholders at the national level over a period of one year. It is expected that the revised treaty will be signed in 2008.
(b) The CARICOM Single Market and Economy (CSME)
44. As a small island developing state facing monumental challenges in the international economic environment, the CSME together with the OECS Economic Union offers the best option for
45. Since the last review CARICOM has made significant advancements in the establishment of the CSME and
46.
47. As one of the Less Developed Countries (LDCs) of CARICOM,
IX. BILATERAL/HEMISPHERIC AND PREFERENTIAL TRADE ARRANGEMENTS
(a) CARICOM Bilateral Arrangements
48. As a CARICOM less developed country
(b) CARIFORUM-EU Economic Partnership Agreement (EPA)
49. The negotiations between CARIFORUM and the EU for an Economic Partnership Agreement are a major priority area for
X. MULTILATERAL TRADING SYSTEM - THE WTO
50.
51. With regards to the ongoing negotiations, balancing the development deficit of the Uruguay Round Negotiations remains the single most important objective for
52. As a small developing state
XI. DOMINICA AND THE AID FOR TRADE INITIATIVE
53. Paragraph 57 of the Hong Kong Ministerial Declaration lays down the broad framework for the new Aid for Trade mechanism under the WTO.
“………. Aid for Trade should aim to help developing countries, particularly LDCs, to build the supply-side capacity and trade related infrastructure that they need to assist them to implement and benefit from WTO Agreements and more broadly to expand their trade. Aid for Trade cannot be a substitute for the development benefits that will result from a successful conclusion to the DDA, particularly on market access. However, it can be a valuable complement to the DDA”
54. As a small vulnerable economy
55.
(a) Policy support, such that agencies including the IMF/World Bank can provide advice to governments upon request, for the mainstreaming of trade into their domestic policies such that export in their competitive areas can be enhanced;
(b) Infrastructural financing and support (“hard” technical assistance), such as improving roads, ports, airports, public utilities, trade-related laws, and regulations (all “hard” infrastructure that can be used to enhance trade);
(c) Trade Adjustment financing for severance of workers in industries that close due to trade liberalisation. Donors could also help developing countries that so request it to set-up unemployment insurance programmes;
(d) Supply side support, such as assistance (financial and technical) to firms and small industries to build the capacity to become globally competitive. This should include technical and financial assistance to set up programmes that increase investment in research, education, and worker training.
56. In addition to the above the Aid for Trade initiative should be aligned with
57. There also needs to be a pragmatic and concrete legal and institutional framework to ensure that the AFT agenda has a strong institutional back bone. This should include an effective monitoring and enforcement mechanism in order to ensure that AFT plays a complementary role in the development of beneficiary countries and will not be used to compromise on the real developmental issues of the Doha Round, such as preference erosion, effective special and differential treatment provisions and adequate flexibility for small developing countries.
XII. CONCLUSION
58. The current international economic environment poses many threats to the economic survival of
59. The implications of the new international economic environment for
60. There are opportunities however to be found for
61.
__________