Dominican Republic Repeals HFCS Tax

Repeal sets up inclusion of Dominican Republic for CAFTA. Compiled by staff

Published on: Dec 29, 2004

The Dominican Republic voted to lift its tax on imports of high fructose corn syrup. The Chamber of Deputies approved the repeal, leaving no outstanding issues to prevent the DR from being included in the Central American Free Trade Agreement (CAFTA).

The measure, which the chamber passed Monday by an overwhelming margin, now awaits the signature of Dominican Republic President Leonel Fernández. Approval of the bill by Fernández would likely ensure the Dominican Republic’s inclusion in the Central American Free Trade Agreement (CAFTA).

In November, U.S. Trade Representative Robert Zoellick outlined a plan to exclude the Dominican Republic from CAFTA if the country did not repeal its 25% tax on products containing HFCS. Sen. Charles Grassley, R-Iowa, and other lawmakers supported the action, stating the tax violated the Dominican Republic’s trade obligations under the World Trade Organization.

Senate Finance Chairman Grassley says the Dominican Republic's decision to repeal the tax "sends an important signal that the Government of the Dominican Republic is willing and able to fulfill the obligations required to be a full partner in the Central American Free Trade Agreement."

"The Dominican Republic has been a valuable customer for U.S. feed grains and we hope this issue will finally be resolved so the DR can move forward with the other CAFTA countries," says Kevin Natz, special assistant – trade policy for the U.S. Grains Council. Through the free trade negotiations with the DR, the U.S feed grain industry locks in zero tariffs for corn, sorghum, barley and malt, as well as many related products.

"The Dominican Republic in recent years has become an important market for U.S. feed grains, importing growing quantities of U.S. corn amounting to over 1 million metric tons annually," he adds. "By adding the DR to CAFTA, the U.S. will have duty free access to the six Central American countries for more than 2.6 million metric tons of corn immediately upon implementation of the agreement. In total, that makes for the second largest feed grain market in Latin America behind Mexico."

There is support for CAFTA from the countryside, although several individuals are certain trade agreements aren't benefiting farmers as promised. In an editorial in Wednesday's Grand Forks Herald, North Dakota Democrat Senator Byron Dorgan blamed free trade agreements for the shrinking trade surplus. Dorgan explains that trade agreements have brought one-way trade. "And when other countries failed to open their markets to our exports, our government did nothing," the article says.

Dorgan claims the Bush administration promises CAFTA will be good for family farmers. But he doesn't buy it. "I'm not going to support any new trade agreements until the trade ambassador's office begins to fix the problems of the old agreements," he says.