In a 17-point joint statement at the end of Mejia's official visit to Brazil, President Hipolito Mejia committed the Dominican Republic's support in the event the United Nations decides to expand the number of permanent members of the Security Council, should Brazil seek to occupy that position. The President Mejia and Brazil President Luiz Ignacio Lula da Silva also committed to work together to strengthen the ties between both countries. Hoy newspaper reports that the joint statement includes a clause in which it calls the imbalances in current trade regulations "unjustifiable". The contention springs from the fact that these regulations allow the use of all kinds of subsidies and barriers on products for which developing countries are more competitive, particularly farm products. At the same time, Mejia said he backs the Brazilian position regarding the FTA of the Americas. Previously, Brazil has been critical of US protectionism. President Mejia agreed to coordinate positions regarding the WTO Doha Round and the FTA of the Americas. In the 17-point joint declaration, Mejia agreed that rules to guarantee special and differentiated treatment for developing countries are important in free trade negotiations. In other agreements, Brazil commits to donate Brazilian medicine to combat HIV-AIDS and malaria and an extradition treaty between the two countries was formalized.
As reported in El Caribe newspaper, President Mejia indicated that US Trade Representative Robert Zoellick would soon travel to the Dominican Republic to participate in talks in preparation for the signing of a bilateral free trade agreement. To this end, the DR will begin formal talks with the US in January. The bilateral accord must be concluded by March in order to be "docked" to the CAFTA treaty being negotiated with Central America. President Mejia spoke to reporters of the AFP press agency in Brazil, justifying the FTA with the US on grounds that "they are big consumers."
The governments of Canada and the Dominican Republic have decided to postpone negotiations that would lead to the signing of a free trade agreement, in order to concentrate on discussions within the framework of the Free Trade Agreement of the Americas (FTAA), reports Diario Libre. Canada's Ambassador in the Dominican Republic, Adam Blackwell, explained that they will wait to see the results of the eighth Free Trade Area of the Americas (FTAA) ministerial meeting set for Miami, Florida on 20-21 November. He clarified that the postponement would not deter ongoing efforts to reach the targeted US$200 million in bilateral trade for this year and emphasized that Canada is currently leading in recent foreign investments in the DR, with US$2.5 billion invested from 1990 to the first half of 2002. This is 36% of a total direct foreign investment of US$7 billion registered for the period. The Canadian diplomat stressed that these successful business relations are based on the fact that the two economies' export products and services complement each other well.
Diario Libre reports that the government is funding the Professional Winter Baseball Championship. The newspaper points out that the broadcasts of the games are carried by RNN (Channel 27) and Isla Vision (Channel 53) of Telecable - both of which stations are administered by the government. Other radio stations that have been taken over by the government, such as Radio Cadena Comercial, Radio Clarin, La Voz del Tropico and Radio Millon, are also transmitting the games. Edenorte and Edesur, the power distributors now managed by the government, are the leading commercial sponsors of the tournament. While Edesur is the sponsor of the Escogido team, Edenorte is the sponsor of Los Gigantes.
The Supreme Court of Justice has announced that the preparation of legal cases will no longer be a secret procedure. Supreme Court Resolution 1920-03 orders judges preparing their cases to hold open sessions. The same procedures will be observed for bail petitions, also. The resolution furthermore establishes the right of the individual to not testify against himself.
The secretary general of the PLD presented yesterday on TV a video showing the chief of the Dominican army, Major General Jorge Radhames Zorrilla Ozuna, holding an envelope with the emblem of the PRD party and removing from it a RD$20 bill as a charitable donation to an elderly man. The video was apparently shot during the major general's tour of slum areas last Tuesday, 11 November, the day of national strike. Reynaldo Pared Perez formally requested that President Hipolito Mejia replace the army chief, who happens to be ardently in favor of the re-election of President Mejia. The PLD stressed that the Constitution bans members of the military from taking the side of any political party.
PLD Presidential candidate Leonel Fernandez urged yesterday that the government implement the necessary fiscal reform without delay. The government's economic team had announced the measures would be postponed until July 2004, two months after the Presidential election. "We request that the government stop using these band-aids of improvised measures, and that we undertake the complete reforms for the welfare of the country," stated the former President during a luncheon for the Dominican-Canadian Chamber of Commerce. Fernandez said that the sources of funding of the present fiscal deficit need to be identified, including the revenues that will cover the quasi-fiscal debt of RD$21 billion generated by the savings certificates issued by the Central Bank this year. Fernandez criticized the imposition of measures such as the temporary increase in customs' exchange rate surcharge from 4.75% to 10%, the pending 5% tax on exports and the 2% surcharge on imports, among others. As reported in Hoy newspaper, the former President said: "This country needs the tributary reform to happen now, in November, but the government, which is responsible for the economic problem, is not assuming that responsibility and plans to postpone discussions of reform until after the electoral period." Fernandez feels the Mejia government would not undertake the reforms either if it lost the election in May 2004. In Fernandez' view, the recent collapse of various banks is an indication that the authorities need to establish rigorous mechanisms to regulate banking in the private and public sectors. He explained that the present debt of the government with private banking institutions has surpassed RD$17 billion and the Central Bank will have to dish out RD$21 billion in 2004 on the savings certificates it issued this year. Furthermore, he said, the high interest rates being charged by the commercial banks are a restraint on the development of business in general.
In its 17 November Country Risk rating report, the Economist Intelligence Unit says that if IMF support is not restored, there will be a high risk of payment difficulties in 2004. The business information arm of The Economist Group focuses on how political issues are influencing economic outlook. "Despite his growing unpopularity and fierce opposition from within his own party, Hipolito Mejia intends to run for re-election… The government will struggle to meet IMF fiscal targets. Tax collection is depressed and the government is reluctant to make cuts in public spending ahead of the election. After a contracting of 3.4% in 2003, the economy is likely to experience negative growth again in 2004 as inflation erodes real purchasing power, and high interest rates and a loss of confidence curb investment." EIU is, however, optimistic that recovery could be a prospect for 2004, based on the assumption that "the incoming government manages to restore confidence." According to EIU, former President Leonel Fernandez of the PLD is the favorite to win the presidency. The IMF suspended its two-year standby agreement following the government's surprise decision to buyback the two Union Fenosa power distributors without the IMF's approval.
Customs announced it would calculate import taxes on the base of RD$40.34. Hoy newspaper points out that this would translate into a short-term increase in government revenues, but in the medium term the higher rate would cause a reduction in total imports, and thus in government taxes. The exchange rate recently surpassed the RD$40 mark, a new record for the country.
Apparel exports to the US were down 0.3% during the first nine months this year compared to the same period last year. According to a report in El Caribe based on data from the US Department of Commerce, these exports totalled US$1.584 billion from January-September 2003, down from US$1.589 billion for the same period in 2002. These numbers represent a drastic change from the export trend at the start of the year, as the first half of the year saw an increase of 4.2%. Free zone manufacturers interviewed by the newspaper explained that the US has become a volatile client, reflecting the uncertainties in that country, especially the war in Iraq. Arturo Peguero, president of the Dominican Association of Free Zones, says that original forecasts for a good year, as a result of January's figures, have done a turn-around. Peguero also points to the menace of growth of Chinese exports, which this year have risen 50%. The DR has dropped to eighth spot in apparel exports to the US. The leading exporters in the garment industry are China, Mexico, Hong Kong, Vietnam, Honduras, Indonesia and India.
Tourists from Europe would be wise to check with Dominican sources prior to arriving with their euros, as it is likely to be more advantageous to exchange their euros at home, carrying with them US dollars for their travel to the DR. Today, the Central Bank posted a buy-rate of RD$39.38 to US$1, but the spread for buying euros is significant. While the official rate is RD$40.61 to one to buy euros, the sell-rate is RD$46.08. See http://www.bancentral.gov.do/tasa_cambio.html
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