DOMINICAN TECHNICAL SECRETARY OPTIMISTIC ON CAFTA

UNCLAS SECTION 01 OF 02 SANTO DOMINGO 000456

SIPDIS

STATE FOR WHA/CAR, WHA/EPSC, EB/TPP/BTA, EF/IFD/OMA; STATE
PASS AID/LAC; NSC FOR SHANNON AND MADISON; LABOR FOR ILAB;
TREASURY FOR OASIA-LCARTER, RTOLOUI, DDOUGLASS; COMMERCE
FOR USPTO

E.O. 12958: N/A
TAGS: DR EFIN KIPR PREL
SUBJECT: DOMINICAN TECHNICAL SECRETARY OPTIMISTIC ON CAFTA
RATIFICATION, BROADCAST PIRACY AND IMF STANDBY AGREEMENT

REF: SANTO DOMINGO 6915


1. (SBU) Summary: Dominican Technical Secretary Temistocles
Montas told the DCM January 28 that President Fernandez will
present the Central American Free Trade Agreement (CAFTA-DR)
for ratification during the annual presidential address to
Congress on February 27, saying that that agreement is
absolutely essential to the country's future. He agreed that
protection of intellectual property rights is an important
element of the agreement and that stopping television
broadcast piracy should receive greater attention. Montas
said that President Fernandez is optimistic that the IMF,s
Executive Board will approve a new Standby Agreement for the
Dominican Republic when it meets January 31, and commented
that the Standby will transform the Dominican economy when
fully implemented.

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CAFTA to move forward
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2. (SBU) Dominican Technical Secretary Temistocles Montas
told the DCM January 28 that President Fernandez will present
the Central American Free Trade Agreement (CAFTA) for
ratification during the annual presidential address to
Congress on February 27, adding that the administration will
be pressing all sectors to support the free trade agreement
as essential to the country's economic growth and stability.
He said that being left out would be "disastrous" for the
country. Montas said that a group of senators, including
Senate President Andres Bautista, traveled last week to Chile
to discuss aspects of the free trade agreement with the
United Nations, Economic Commission for Latin America and
the Caribbean (ECLAC). ECLAC,s message was that the
Dominican Republic could not afford to be left out of CAFTA
and Montas said that the Fernandez administration is
prepared to take the necessary steps to see that the
agreement is approved by congress.



3. (U) Explaining the dynamics for ratification of the
agreement in U.S. Congress, the DCM told Montas that
intellectual property rights infringement and specifically
television broadcast piracy was a continuing concern in the
United States. Secretary Montas acknowledged that broadcast
piracy was a long running problem that potentially threatened
President Fernandez,s agenda to make the Dominican Republic
a top choice for film companies searching for new locations.
He agreed that broadcasters violating IPR should be held
accountable and assured the DCM that his office would
instruct the Dominican Institute of Telecommunications
(Indotel) to take appropriate steps to stop piracy. He asked
for a list of television channels and others who were acting
illegally. The Embassy is following up.

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Benefits of a new IMF Standby Agreement
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4. (SBU) The IMF,s Executive Board is scheduled to review a
new Standby Agreement for the Dominican Republic on January
31, and Montas expects it to pass without difficulty now that
a couple of last-minute problems have been resolved. Montas
said that relatively minor amounts of Dominican arrears with
official creditors in Spain and Canada were recently
discovered for which the current administration could find no
records. He lamented that controls had slipped to such a
degree under the Mejia administration and that loan approvals
were bypassing the Technical Secretariat and being approved
directly by the Minister of Finance. Despite what Mejia's
Finance Ministry had maintained, he said the majority of
loans were not taken from international financial
institutions at favorable rates, but were made by private
banks with less transparency and at higher costs.


5. (SBU) Montas said that the IMF agreement would help
reestablish economic growth and stability. Perhaps most
importantly in Montas's opinion, the agreement will force
institutional reform. The program, he said, will change the
way the government manages the economy, reducing the
president,s inordinate decision-making power regarding
lending and granting greater independence to the Banking
Superintendency. The new IMF agreement will require the
government to clarify the decision-making process for loan
approvals and will help avoid the free spending habits of the
previous administration. Montas stated that with the changes
envisioned in the new agreement, the current administration
will be in a position in four years to hand over a government
structure completely different and improved from the one it
inherited.
HERTELL