US embassy cable - 05SANTODOMINGO2622

UNCLAS SANTO DOMINGO 002622 
 
SIPDIS 
 
DEPT FOR WHA, WHA/CAR, EB/TPP/BTA/EWH; 
USTR FOR R VARGO, A MALITO 
TREASURY FOR L CARTER 
 
E.O. 12958: N/A 
TAGS: EFIN, ETRD, PREL, DR 
SUBJECT: DOMINICAN SENATE AND AGRICULTURE GROUP ASK 
PRESIDENT FOR CAFTA COMPENSATORY MEASURES 
 
 
THE SENATE SPEAKS 
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1.  On May 6, 20 of the 32 Dominican senators voted and 
published a resolution declaring the urgent need to pass 
legislation granting local industry assistance to compensate 
for expected losses to help compete under the CAFTA, a 
regional free trade agreement with the United States.  The 
resolution sets submission to Congress of the legislation as 
a precondition for CAFTA ratification.  It stresses the need 
to involve the Fernandez administration along with Congress 
and the private sector in identifying appropriate 
compensatory measures, and indicates that the measures should 
be in agreement with the CAFTA, the WTO and the IMF Stand-by 
agreement. 
 
2.  The compensation debate is not new, having been a topic 
of discussion particularly evident since the repeal of a 
protectionist 25% tax on fructose sweetened beverages late 
last year.  This is, however, the most formal notice coming 
out of the Senate  that it wants the executive branch 
involved in defining compensatory measures legislation and 
that it will not ratify CAFTA until the other legislation is 
submitted to Congress. 
 
AGRICULTURE CLAMORS, AGAIN 
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Local papers carried a full-page announcement on May 9 by the 
lobbying confederation Agricultural Emergency Committee (CEA) 
demanding Congress and the presidency address "the great 
disparity between costs of agricultural production for U.S. 
and other CAFTA producers and those faced by Dominican 
producers."  The CEA claims that the only way that the 
Dominican Republic will be able to compete is by subsidizing 
or otherwise supporting agriculture producers.  The CEA 
proposed to the Senate a program of subsidies and other 
benefits for Dominican producers that it asserts will put it 
on equal footing with the other CAFTA countries.  The 
announcement gives "examples of assistance in the United 
States," consisting of a list of ten agriculture products 
with an estimate of subsidies received in support from U.S. 
Government.  Several of the products, including garlic, 
onions, pork, beef and chicken, receive no direct U.S. 
government subsidies according to the Embassy's Agricultural 
Attach.  The CEA announcement does not explain the figures 
and does not offer an estimate of the offset needed by 
Dominican producers. 
 
COMMENT 
----------------- 
Embassy officers have been in regular contact with the chair 
of the Senate committee reviewing the issue of compensation 
for Dominican industry related to CAFTA, but have not seen 
andy bargaining numbers.  In a political environment where 
members of congress and various administration officials have 
commented that fiscal reform should wait until after May 2006 
elections, the Fernandez administration faces touch choices 
and the even tougher requirement to start making those 
choices. 
KUBISKE