DOMINICAN REPUBLIC INCHES CLOSER TO LIFTING CONTROVERSIAL HFCS TAX

Inside U.S. Trade
December 10, 2004


The Dominican Republic this week moved closer to repealing a controversial soft drink tax and guaranteeing that its bilateral free trade agreement with the U.S. will be packaged with a separate U.S. FTA with five Central American countries (DR-CAFTA).

On Dec. 7, the Dominican Republicís Senate gave first approval to legislation repealing a 25 percent tax on soft drinks made with imported high fructose corn syrup (HFCS) and could give final approval of the tax as early as today (Dec. 10), private-sector sources said.

The Bush Administration has long threatened to drop the Dominican Republic FTA from the DR-CAFTA package and seek congressional approval only for the Central American deal if the HFCS tax is not eliminated. However, a new wrinkle may be emerging that could complicate the Dominican Republicís inclusion, as drug producers in the Dominican Republic have now publicly stated their opposition to the deal and are backing legislation that could irritate U.S. brand-name drug makers.

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On pharmaceuticals, private-sector sources said pharmaceutical makers in the Dominican Republic have now publicly expressed their opposition to the DR-CAFTA package. Private-sector sources said Dominican Republic drug producers were hoping the fight launched by sugar and HFCS producers to implement and defend the HFCS tax would have been enough to derail the FTA.

However, one source said drug makers are now forced to fight their own battle and are expected to press for approval of legislation to alter existing Dominican Republic intellectual property laws, which would draw the ire of U.S. brand-name drug manufacturers.

The legislation Dominican Republic producers are expected to press would decriminalize IPR violations and automatically grant so-called mandatory licenses if no government approval was given after 180 days had elapsed following the submission of a license request, the private-sector source said.

Currently, drug makers in the Dominican Republic can ask the government to approve a mandatory license that allows a drug maker to produce a specific pharmaceutical even if the patent holder has not granted permission to do so. The private-sector source said the Dominican Republicís current practice is simply not to take any action on such requests, thus drug makers have decided to push legislation that would turn the existing administrative delays into an approval of a license request.

The proposed legislation is not new, but the private-sector source said Dominican Republic drug makers are expected to launch a new effort to pass the proposed changes.


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