Former DR Ambassador to the US Bernardo Vega writes today on the bad timing of sugar mills owners when they supported a modification of the tax reform to include a surcharge on bottled drinks that are manufactured with corn syrup instead of sugar. Vega says that the sugar industrialists should have waited until the US Congress passed the FTA, an event that he estimates will not take place until after February 2005, if it happens. “To do so now creates pressure in Washington to eject us from the agreement, leaving Central America with advantages over our free zones,” he writes. The corn lobby, he explains, is one of the strongest and the FTA already has many enemies in Washington. He said that Mexico did not introduce their surcharge until six years after NAFTA was signed.
According to Vega, as a result of introducing the surcharge so early in this administration, despite the fact that the President himself was against the surcharge, he had to stand while two of his cabinet officers defended it. Furthermore, PRD legislators of the same political rank were utterly critical of the FTA, instead of supporting the agreement that was so adamantly defended by their former leader, ex-President Hipolito Mejia. Vega also notes how, for the first time, the American Chamber of Commerce is opposing the interests of one of its principal partners. He believes that the efforts of the two private sugar-producing groups have also divided the nation’s business sector.
Vega comments that the FTA will only affect 10% of the total amount of sugar produced because, of the 530,000 tons of sugar produced (of which 185,000 tons are exported to the US and 290,000 are consumed locally), only 60,000 or 10% is sold to soft drink bottlers and those making sweets. He furthermore highlights that Central America opted to increase their sugar quota from 126,000 tons to 225,000 and to let internal sugar sales go to the cheaper corn syrup imports. This did not happen for the DR.
Vega says the President should send a law to Congress to suppress the surcharge on bottled drinks and that it should be ratified. Then, when the US Congress has ratified the FTA, they should wait to see what happens at the World Trade Organization regarding the corn syrup surcharge imposed in Mexico. Then the corn syrup tax could be proposed. “It does not make sense that our Congress be the first to pass the FTA when it could be modified in Washington, as was done with the NAFTA, because this would imply a double and unnecessary toll or one unnecessary toll, in retrospect, if it is not passed.
Vega says that if the sugar industry pushes for the agreement to be revised in order to increase the sugar quota, the country runs the risk that Washington will make increased demands in other areas.