DOMINICAN PRESIDENT INAUGURATES U.S. PLANT, AGAIN

UNCLAS SANTO DOMINGO 001051

SIPDIS

SENSITIVE

DEPT FOR WHA, WHA/CAR, WHA/EPSC, EB/TPP

E.O. 12958: N/A
TAGS: ECON ETRD KTEX DR
SUBJECT: DOMINICAN PRESIDENT INAUGURATES U.S. PLANT, AGAIN
ENDORSES FREE TRADE

REF: FULL TEXT IN SPANISH AVAILABLE ON SIPRNET SITE

HTTP://WWW.STATE.SGOV.GOV/P/WHA/SANTODOMINGO


1. (U) At the February 21 ground-breaking for a large
U.S.-owned textile mill, President Leonel Fernandez
characterized the project as one aspect of the Dominican
Republic's response to the challenges of competition and
globalization. He expressed confidence that the free trade
agreement with the United States and Central America would be
ratified this year.


2. (U) Fernandez said that the investment in the central
provincial town of Bonao by U.S.-owned Sara Lee Corporation
was a demonstration of increasing confidence in the Dominican
economy and offered further opportunity for progress. He
spoke of a new, export-oriented strategy to boost Dominican
competitiveness and applauded the success of Dominican free
zones over the past two decades.


3. (U) The President sketched out the benefits to the region
of the U.S. Caribbean Basin Initiative and he emphasized
benefits gleaned by Mexico from NAFTA. China and India would
be major challengers in the textile and garment sectors as
trade increases world wide. Regional partners are well aware
of this; Dominican Technical Secretary of the Presidency
Temistocles Montas traveled to Guatemala the previous weekend
to participate in regional consultations sponsored by the
Inter-American Development Bank concerning the impact of
China on the Central American economy and its free zones and
factories.


4. (U) Fernandez emphasized the importance of the CAFTA.
"Well before the signature of that agreement, we were
advocates for the view that the country's economic
development is linked to that regional pact. . . We are
confident that the agreement will be completed both in the
United States and here in the Dominican Republic this year,
and the legislative ratification will be a guarantee for
future investment and new employment." Sara Lee's investment
was a vote of confidence in that future; with implementation
of CAFTA, foreign investment would return to the Dominican
Republic and put an end to the economy's current difficulties.


5. (U) Fernandez recalled his recent encounter with
Microsoft's Bill Gates, on vacation in the Dominican
Republic. The President recounted a visit during his previous
term to Seattle, where his staff reported with delight that a
baseball cap for sale in the Microsoft gift shop carried the
tag "Made in the Dominican Republic". Fernandez expressed his
wish that in the future, Microsoft would be offering for sale
computer software also originated in the Dominican republic.


6. (SBU) Comment: Sara Lee is investing USD 72 million in
this new textile mill in Bonao. It will constitute Sara Lee's
first textile mill but its sixth investment in the country.
The groundbreaking ceremony was well attended by senior
government officials including Secretary of Industry and
Commerce Francisco Javier Garcia. It was clear from their
comments that there was widespread support for CAFTA
ratification in general, but that the administration as yet
had no concrete plan or roadmap to accomplish that goal.
HERTELL