Trade liberalization is increasingly important to U.S. services providers. The sector accounts for more than three-quarters of the U.S. economy and four out of five jobs. Globally, the United States is the largest services exporter and maintains a services trade surplus. The Dominican Republic- Central America Free Trade Agreement (DR-CAFTA) sets a new, higher standard for services provisions of trade agreements. It demonstrates the countries’ commitment to encouraging new trade and investment that will grow their economies into the 21st century.

DR-CAFTA levels the playing field for U.S. services.

• The U.S. services market is largely open to imports from all countries, including Costa Rica, El Salvador, Guatemala, Honduras, Nicaragua and the Dominican Republic. The same cannot be said for current U.S. access to those countries’ services markets.
• DR-CAFTA breaks new ground for U.S. services export opportunities to the region. In a chapter devoted to services, DR-CAFTA provides more comprehensive liberalization than the current World Trade Organization (WTO) services agreement and enhances regulatory transparency in the region.
• Costa Rica, the Dominican Republic, El Salvador, Guatemala and Honduras have committed to loosening restrictions on dealer protection regimes. These regimes lock U.S. firms into exclusive or inefficient distributor arrangements. Liberalization of these restrictions was a priority for many U.S. firms doing business in the region.
• Express delivery services providers achieved their key objectives for DR-CAFTA. DR-CAFTA recognizes express delivery as a unique services sector; guarantees market access and national treatment in the region for U.S.-based firms; and contains commitments to limit unfair regulation and taxation and to facilitate customs clearance, improve regulatory certainty and reduce cost for U.S.-based firms.

Elimination of trade barriers promises growth for U.S. exports.

• Services sectors are important to the economies of Costa Rica, El Salvador, Guatemala, Honduras, Nicaragua and the Dominican Republic, but there is considerable room to grow. Through the greater transparency and “negative list” approach of DR-CAFTA, U.S. services exporters and investors will be in a much better position to understand new market opportunities in the region and take advantage of them.
• The potential benefits to U.S. distribution services are a good example of how the elimination of trade barriers promises growth for U.S. exports. Dealer protection regimes in Central America have proven so difficult and costly that at least one U.S. firm has abandoned its operations there as a result. DR-CAFTA creates a new legal regime and strengthens the power of U.S. firms in future distribution agreements. Consequently, it will increase the number of products U.S. firms distribute in Central America.

DR-CAFTA meets Trade Promotion Authority (TPA) negotiating objectives for services.

• The principal negotiating objective established by Congress for services in TPA is the reduction or elimination of barriers to international trade in services, including regulatory and other barriers that deny national treatment and market access or unreasonably restrict the establishment or operations of services suppliers.
• Our negotiators have met this objective in DR-CAFTA. It guarantees national and most-favored-nation treatment for covered services.
• TPA further instructs U.S. negotiators to achieve increased transparency and opportunity for the participation of affected parties in the development of regulations and to establish consultative mechanisms among parties to trade agreements to promote increased transparency in developing guidelines, rules, regulations and laws for government procurement and other regulatory regimes. Regulatory transparency is particularly important to the services and investment trades because many services are regulated heavily due to their impact on public health, consumer welfare and safety.
• DR-CAFTA achieves TPA objectives. The chapter on transparency requires designation of contact points for inquiries about regulation, prompt publication of adopted regulations, advance publication of regulations under consideration and reasonable notice of proceedings held to adopt or modify regulations.

Services sectors endorse DR-CAFTA.

• Congressional approval of DR-CAFTA will promote economic growth and better working conditions in these developing countries. It also will help sustain our economic growth. DR-CAFTA should not be viewed by Congress in isolation. It is an important building block in our overall trade strategy to open markets for U.S. companies and workers through a network of free trade agreements and through the WTO — a strategy that promotes economic growth in the United States.
• Support for DR-CAFTA has been voiced by the Advisory Committee for Trade Policy and Negotiations, the Industry Sector Advisory Committee on Wholesaling and Retailing, and the Industry Sector Advisory Committee on Services.

DR-CAFTA serves as a model of how developing and industrial nations can work together to find consensus on trade liberalization in nonagricultural and nonindustrial markets. As such, it demonstrates that developing countries can make important commitments in trade agreements with larger developed economies in sectors with growing importance to American trade and investment and hence create economic growth.