US embassy cable - 04SANTODOMINGO5156

UNCLAS SANTO DOMINGO 005156 
 
SIPDIS 
 
SENSITIVE 
 
STATE FOR WHA, WHA/CAR, WHA/EPSC, EB/TPP/BTA (MATTHEWMAN), 
EB/CBA; WHITE HOUSE FOR USTR (R VARGO, S CRONIN -- SEE PARA 
5); NSC FOR SHANNON AND MADISON;LABOR FOR ILAB; USCINCSO 
ALSO FOR POLAD;TREASURY FOR OASIA-LAMONICA 
USDOC FOR 4322/ITA/MAC/WH/CARIBBEAN BASIN DIVISION 
USDOC FOR 3134/ITA/USFCS/RD/WH; DHS FOR CIS-CARLOS ITURREGUI 
 
E.O. 12958: N/A 
TAGS: ETRD, PREL, BEXP 
SUBJECT: DOMINICAN AMCHAM MEETING TURNS UGLY OVER SUGAR AND 
FTA 
 
1.  (SBU) At the American Chamber of Commerce,s September 
13th board meeting, Charge and Embassy staff were subjected 
to a harsh rant by sugar interests. The meeting was to have 
focused on DR-CAFTA, but it became a forum for a discussion 
of the demands of the sugar sector for protection and the 
recently proposed 25% tax on drinks sweetened with high 
fructose corn syrup (HFCS).  Alfonso Paniagua, sugar lobbyist 
and Vice President of Costasur/Central Romana argued loudly 
against removing the 25% tax from pending tax legislation. 
Although the majority of the participating board members 
spoke moderately and in favor of DR-CAFTA, several others 
joined Paniagua in his argument that the Dominican sugar 
industry cannot compete with an "extremely subsidized8 
product (HFCS). 
 
2.  (U) The Charge noted that in the World Trde Organization 
the United States is negotiating to liberalize agricultural 
trade.  She thanked the AmCham for their letter to the 
Dominican Congress requesting rejection of the 25 percent tax 
on fructose-flavored drinks.  She said that the U.S. 
Government, through USAID, is investing approximately 3 
million dollars per year in trade capacity building programs 
to help the Dominican Republic become more competitive.  The 
Embassy understands that with the agreement, some sectors 
will benefit more than others.  She indicated that a 15-year 
period had been negotiated for phasing in imports of corn 
syrup, affording the domestic sugar industry a long period of 
time for adjustment.  She emphasized that the Dominican 
Republic cannot afford to miss the opportunity to implement 
the FTA with the United States. 
 
3. (SBU) Haydee de Rainieri, Vice President of the 
tourism-related Punta Cana Group, asked what would happen if 
the DR-CAFTA were to fail.  The Charge responded that failure 
would stiffen opposition in the United States to giving the 
Dominican Republic another chance at a FTA.  There is already 
a long list of countries seeking to negotiate with us.  The 
Dominican Republic must take the opportunity "now, while the 
window is open." 
 
4. (U)  AID's Joseph Goodwin described various trade capacity 
building programs currently underway, and cited a study done 
by AID in 2003 estimating that if DR-CAFTA is not approved, 
the Free Trade Zone Industry here will lose at least 40,000 
jobs. 
 
5.  (SBU) AmCham member Luis Heredia Bonetti, a leading 
attorney, asked whether it might be possible to add a 
protocol to the FTA specifying that both sides are interested 
in seeing the elimination of agricultural subsidies through 
the WTO.  The Charge agreed to forward the question to USTR. 
 
6.  (U) Further discussion showed that board members were 
divided on the sugar issue; Frank Rainieri, tourism 
entrepreneur heading the Punta Cana Group, suggested that the 
sugar issue be renegotiated at the WTO, since sugar was the 
only sticking point among AmCham members. There was no 
definitive reaction to his suggestion. 
KUBISKE