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FTAA.sme/inf/90
August 12, 2003

Original: Spanish
Translation: FTAA Secretariat

FTAA – CONSULTATIVE GROUP ON SMALLER ECONOMIES

CARICOM AND THE DOMINICAN REPUBLIC

HEMISPHERIC COOPERATION PROGRAM
PRESENTATION OF PROJECTS
 


Introduction
 
  1. Project title

    Analysis of the fiscal impact of trade liberalization and tax reform

  2. Background

    For the smaller economies of the Hemisphere, such as the Dominican Republic and the CARICOM states, the trade liberalization currently under negotiation in the FTAA will entail a significant fiscal loss due to the elimination and/or reduction of import customs tariffs, which will erode the main sources of revenue on which the countries’ national budgets depend.  


  3. Rationale

    The Dominican Republic and CARICOM states need technical assistance that will enable them to assess the fiscal impact that the trade liberalization process, when implemented in January 2005, will have on their economies. It is necessary to study potential alternative sources of revenue to to replace revenue generated by customs tariffs.

     
  4. Objectives of the Project

    1. General

      To receive the necessary technical assistance (human, financial, technical, technological, information) that allows these countries to gauge the scope of the fiscal impact of the FTAA upon its entry into force and to prepare for possible gradual tax reform scenarios (in acccordance with the graduated tariff reduction).

    2. Specific

      • To provide technical assistance for conducting the necessary impact studies;

      • To provide technical assistance for developing programs that identify and make the maximum use of current and potential sources of revenue.


  5. Inputs: resources needed for the project
     

    1. Financial and technical resources to conduct fiscal impact studies

    2. Specialized technical assistance
       
    3. Technical assistance for developing training programs

     
  6. Expected results

    1. To determine the fiscal impact that trade liberalization, in the framework of the FTAA, will have on our economies,

    2. To identify alternative sources of fiscal revenue to mitigate the negative fiscal impact of the elimination of tariffs. 

     
  7. Other relevant information

 
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