IMPACT OF DEEP TRADE AGREEMENTS ON THE DOMINICAN REPUBLIC’S EXPORT SECTOR - FIRM LEVEL ANALYSIS - Executive Summary

Jul 19, 2026

This policy note assesses how the depth of key trade agreements affects the Dominican Republic’s exporting firms. It examines three PTAs—those with Central America, with the USA and Central America (CAFTA-DR), and with the EU and select CARICOM members (EU-Cariforum)—using firm-level customs data from 2002–2020. Results show an overall unambiguously positive impact, with heterogeneous effects by firm size, SEZ status, GVC participation, destination and sector. It also analyzes SPS, TBT and trade facilitation provisions shaping export performance.

LanguageEnglish

CategoryResearch & Report

FormatPDF

Pages31

Reading Time1 h 18 min

Executive Summary

Objectives and scope

Key findings by firm and destination

Provisions in SPS, TBT and trade facilitation

Introduction

Growth of preferential trade agreements

Public Disclosure Authorized Public Disclosure Authorized IMPACT OF DEEP TRADE AGREEMENTS ON THE DOMINICAN REPUBLIC’S EXPORT SECTOR: FIRM LEVEL ANALYSIS 1 June 2023 1 This policy note has been prepared by Rodrigo Deiana (Consultant, Trade and Regional Integration Global Unit) Alvaro Espitia (Consultant, Trade and Regional Integration Global Unit), Alejandro Forero (Consultant, Trade and Regional Integration Global Unit) and Nadia Rocha (Lead Economist, Trade and Regional Integration Global Unit) . List of abbreviations CAFTA CARICOM CARIFORUM DR DTA EU FTA GVC LAC NTM PSA PTA SEZ SPS STE TBT TF TRIMs USA WTO Central American Free Trade Area Caribbean Community Caribbean Forum Dominican Republic Deep trade agreement European Union Free trade agreement Global value chain Latin America and the Caribbean Non-tariff measures Partial Scope Agreement Preferential trade agreement Special economic zone Sanitary and phytosanitary measures State trading enterprise Technical barriers to trade Trade facilitation WTO Agreement on Trade-related Investment Measures United States of America World Trade Organization Executive Summary This policy note evaluates the impact that the depth of key trade agreements signed by the Dominican Republic (DR) had on the country’s trading firms.2 To do so, the note considers the policy areas covered by three PTAs–with Central America, with the USA and Central America (CAFTA-DR), and with the EU and select members of CARICOM (EU-Cariforum) . The analysis is conducted using firm-level customs data between 2002 and 2020 and looks at the average impact of deeper PTAs on firm exports as well asdisaggregated effects based on firm-level characteristics such as size, destination markets or product sectors. Additionally, the analysis takes a detailed look at the provisions in three crucial policy areas (SPS, TBT and trade facilitation) and how these affect Dominican exports. In addition to the results of this econometric analysis, the policy note provides key definitions and an overview of deep trade agreement dynamics in the LAC region and the Dominican Republic as well as key definitions. The Dominican Republic’s trade profile has evolved over time as the country signed new PTAs. Since 2003, the Dominican Republic has diversified its exports away from textiles into more sophisticated sectors such as foodstuffs, machinery/electricals, and chemicals. The growth and change in the export basket composition has helped the DR develop comparative advantages in new sectors, yet they depend on the performance of large firms. The three key PTAs analyzed in this note include many more policy components than tariff reductions (i.e., the “shallow” component of trade agreements) and yield additional impacts on trade performance and partnerships. The more recent EU-Cariforum and DR-CAFTA agreements include 13 of the 14 policy areas that fall under the WTO mandate. While the former lacks provisions concerning local content requirements and export performance, the latter lacks provisions related to competition policy and state trading enterprises (STEs) . The DR-Central America agreement covers 12 policies but lacks provisions on export taxes and competition (policy areas related to state trading enterprises) . Analysis shows that DTAs have been beneficial to the Dominican Republic’s export sector, albeit with heterogeneous effects. The overall impact of deeper trade agreements is unambiguously positive. However, firms are impacted differently depending on their size, SEZ status, participation in GVCs and specific sector. Large firms tend to perform better, with compounding effects for location within SEZs and GVC participation. Product sectors exhibited mixed performances, with some showing strong export growth under deeper agreements (e.g., animal and vegetable products, footwear, textiles) and others a significant reduction (e.g., minerals, plastics, wood)

FAQs

Which trade agreements are analyzed in this policy note?

The note evaluates three PTAs: those with Central America, CAFTA-DR (with the USA and Central America), and EU-Cariforum (with the EU and select CARICOM members).

What data and period are used for the firm-level assessment?

The analysis uses firm-level customs data covering 2002 to 2020 to estimate average effects and disaggregated impacts by firm characteristics and sectors.

How do different policy areas (SPS, TBT, and trade facilitation) affect exports?

The note finds that more TBT and trade facilitation provisions increase exports, while SPS measures have the opposite effect.

Jul 19, 2026

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