Bernardo Vega agrees that to settle the impasse over the FTA, the DR cannot violate what has been agreed to with the IMF, that is, the gradual elimination of tax exemptions over a 13-month period. Vega says the focus needs to be geared towards the FTA and IMF, not FTA at the cost of the IMF. The economist says that if Central America obtains the FTA and the DR is left out, then the situation of investment in Central America would improve and that of the DR would worsen. As a negative aspect of not signing the FTA, Vega predicts that our exports, including free-zone exports, would decline. But the worst consequence, he says, would be that we would continue to build public works without holding tenders.
Vega comments what is fueling the row is the fact that the sugar cane interest groups are not interested in the passing of the FTA, and are betting that if the DR is left out of the accords, then so will be Central America. This would leave the DR at a disadvantage with Colombia, which country is moving ahead with its FTA.
Vega says that the best scenario, although the least likely, would be for the DR, Central America and Colombia to forego their FTAs, with the US and Europe settling their impasse over farm subsidies and the conclusion of the Free Trade Agreement of the Americas that would regulate trade overall in the region. But, he said, that is a risk the country cannot take.
In his opinion, the DR needs to eliminate the surcharge on corn syrup imports that was inserted after the signing of the FTA. He says that to “compensate” the sugar sector with tax breaks is not appropriate because they would only lose income if the US Congress passes the FTA, which is unpredictable, and corn syrup imports would not be applied until many years in the future.
Vega says that tax reform that eliminates taxes to improve competitiveness should benefit all the industrial sectors, not only the sugar sector.
The Department of Customs and Department of Taxes (DGII) estimated that if Congress approves the ample concessions to the sugar industry that would be granted in exchange for the removal of the surcharge on corn syrup imports, these could add up to RD$4.5 billion.
Listin Diario editorial today says that the measures proposed in the tax concessions bill would enable Dominican farming sector to compete with Central American exports and centers the debate instead on whether the government can back with actions its talk about improving local competitiveness.