US embassy cable - 04SANTODOMINGO5727

C O N F I D E N T I A L SECTION 01 OF 02 SANTO DOMINGO 005727 
 
SIPDIS 
 
DEPT PASS USTR FOR VARGO,RYCKMAN, MALITO, CRONIN; DEPT FOR 
WHA, WHA/CAR, WHA/EPSC, EB/TPP/BTA; NSC FOR SHANNON AND 
MADISON; 
USCINCSO ALSO FOR POLAD;TREASURY FOR OASIA-LCARTER 
USDOC FOR 4322/ITA/MAC/WH/CARIBBEAN BASIN DIVISION 
USDOC FOR 3134/ITA/USFCS/RD/WH; DHS FOR CIS-CARLOS ITURREGUI 
 
E.O. 12958: DECL: 06/04/2014 
TAGS: ETRD, PGOV, DR 
SUBJECT: DEMARCHES TO DOMINICANS ON HIGH FRUCTOSE CORN SYRUP 
 
REF: STATE 220252 
 
Classified By: DCM Lisa Kubiske.  Reason:  1.4 (a) and (d). 
 
1.  (U)  Summary.  EcoPol counselor delivered talking points 
urging rapid repeal of the 25 percent 
tax on fructose-sweetened drinks to Deputy Foreign Minister 
Alejandra Liriano on 
October 14.  She accepted the document and undertook to pass 
it on.  EcoPol counselor 
and poloff met Senator Alejandro Santos, chair of the special 
committee 
considering repeal, on October 18.  Santos said that the 
7-member committee appointed to 
study the repeal measure is stacked in favor of the FTA, but 
that the votes are not yet there 
 in the broader Senate to pass the repeal measure.  He and 
other Senators continue to work 
toward repeal.  Santos released to the press on October 19 
the text of USTR Amb. Zoellick's 
October 4  letter to U.S. congressional leaders counseling 
against inclusion of the 
Dominican Republic in CAFTA if the 25 percent tax is 
retained. End summary. 
 
2.  (C) EcoPol counselor delivered reftel talking points 
urging rapid repeal of the 25 percent 
tax on fructose-sweetened drinks to Deputy Foreign Minister 
Alejandra Liriano on 
October 14.  She accepted the document and undertook to pass 
it on. 
 
3.  (C) On Monday, October 18, after senators returned from 
their constituencies, EcoPol 
counselor and poloff met with Senator Alejandro Santos (PRD - 
Salcedo), president of 
the Senate Trade Committee and chair of the special committee 
appointed by Senate 
President Bautista to examine the draft proposal to repeal 
the 25 percent tax. Santos, 
a proponent of the free trade agreement (FTA), initially 
asked whether there 
was any prospect that the U.S. authorities might offer to 
show some flexibility concerning the 
desires of the sugar sector -- as a means of moving enough 
senators away from their previous 
vote, delivered less than 3 weeks ago.  Emboffs told him that 
there was no chance; 
the decision of President Fernandez to appeal directly to 
President Bush on behalf of the 
sugar sector had further diminished Dominican credibility in 
Washington.  Every day that passed 
was reducing the chances for the Dominican Republic. 
Planning for regional meetings on 
sanitary and phytosanitary standards did not include the 
Dominican Republic, and unless 
the tax were repealed quickly, the country would not be 
included in December consultations 
on trade capacity building.  Santos asked whether there might 
be some prospect of 
help, however modest, that would permit the sugar sector to 
adjust to losses caused by 
the FTA; emboffs said that was highly unlikely, given the 
vigorous attacks of the sector 
over a period of months. 
 
4.  (C)  Santos says that the 7-member committee appointed to 
study the repeal measure is 
stacked in favor of the FTA, with only one firm proponent of 
the 25 percent tax.  For now, 
however, he does not see sufficient votes for repeal in the 
broader Senate.  The committee 
heard out sugar sector representatives this morning and plans 
to meet with the association 
of free zone manufacturers (ADOZONA), who made a vigorous 
public presentation on 
October 13 arguing the need to preserve jobs and promote 
competitiveness with the FTA. 
He expects to meet again with ADOZONA president Arturo 
Peguero and to urge the industrialists 
to approach their legislators in systematic fashion to argue 
in favor of repeal and the FTA.In 
his public comments Santos stresses "the need to save the 
FTA." 
 
5.  (C)  Emboffs discussed with Santos the full set of 
talking points (reftel) and again stressed 
the urgency of the measure.  The agreement with the Dominican 
Republic is only one part 
of a much wider trade strategy for the United States; further 
delay could well lead to a 
situation in which the advantage of the "demonstration 
effect" to other trade partners of dropping the country 
for manifest inability to deliver on its commitments could 
outweigh the diminishing interest 
in keeping the Dominican Republic. 
 
6. (C) Santos concluded that the committee has less time to 
act than members had thought.  Some 
had suggested waiting until after the U.S. elections, he 
commented -- a notion that emboffs 
dismissed as dangerous and counterproductive.  Santos will 
suggest that Senate president Andres 
Bautista invite the Ambassador to meet soon with the full 
Senate of 32 members, in closed session 
in Bautista's office.  He believes that the most effective 
approach would be to focus on the 
advantages to the country of the FTA, avoiding polemics. 
 
7.  (SBU) Santos inquired whether he might release to the 
press the text of USTR Amb. Zoellick's 
letter of October 4 to U.S. congressional leaders 
transmitting CAFTA texts and recommending against 
inclusion of the Dominican Republic if the tax is retained. 
Emboffs encouraged him to do so, and 
the story ran prominently in all major newspapers on October 
19, along with Santos' comment to 
journalists about the "need to save the FTA." 
 
 
HERTELL