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Daily News - 17 April 1998

Central America and DR to be one free trade zone
Central American leaders were in Santo Domingo on 16 April for the signing of the Central American free trade agreement with the Dominican Republic. Dominican negotiator Federico Cuello explained that the agreement is a state of the art treaty that incorporates all contemporary trade schemes such as those contained in the NAFTA agreement. The agreement covers goods, services and investment transactions. The agreement creates a US$50,000 million market and integrates 40 million consumers. While up to 20 products may be exempt from the duty free treatment, by year 2004 all products will benefit from free trade status. In year 2005, the Americas should become a free trade area.
Presidents José Figueres of Costa Rica; Armando Calderón of El Salvador, Carlos Flores of Honduras; Arnoldo Alemán of Nicaragua and Minister of Economy Juan Mauricio Wurmser for Guatemala signed the 122 page agreement, a follow up to the November Declaration of Santo Domingo issued during the Central American chief of states meeting in the capital of the Dominican Republic.
The signatory governments now have a 120 day period in which to present a list of up to 20 goods that will be exempt from the duty free treatment. This deadline coincides with the August opening of the new Congress in the Dominican Republic. The final draft will be presented to the new Congress that initiates 16 August for ratifying.
The Presidents left together at 9 am on board a Chilean Air Force jet to participate in the discussions on free trade talks for the whole hemisphere in the Summit of the Americas that open in the Chilean capital Santiago on April 18-19.
Following the signing of the treaty, the statesmen issued a joint statement demanding that the U.S. give Honduran nationals the same migratory status awarded to other Central American nations.

President Fernández comments on free trade agreement
President Leonel Fernández said that even though the Dominican Republic and Central American countries do not share a common currency, the free trade agreement signed on 16 April is the start of a relationship where all will benefit from economic growth and trade expansion. He compared the signing of the agreement to riding the engine of the train to globalization, rather than in the last carriage as has been traditional.
"We are advancing on an irreversible road, the road of openness and liberalization of markets," said Fernández. He said that the signatory nations have the firm decision to provide the conditions for competitive markets to develop, and the will to eliminate obstacles in the way. Fernández said that open markets will bring new jobs and wealth.
Furthermore, he said that this first step toward a strategic regional alliance, as proposed in the November Declaration of Santo Domingo, will bring increased production and the incorporation of new technologies in the region. He said it will provide the framework for the development of joint trade policies to present a united front before international organizations in which the DR is a member, such as the World Trade Organization, and for joint negotiation in the Free Trade Area of the Americas.
"The FTAA is a great common goal of our hemisphere," said Fernández. "The challenge for our countries is how to go about it in order to guarantee the greater benefits for our people."
Fernández said that the experience of the European integration process has taught that the conditions that favor international trade are more or less the same that facilitate intra-regional trade, and these also boost domestic commerce.
He said that the economic globalization that characterizes the present geopolitics of the world requires the creation of organized regional blocs that trade among each another and use modern criteria to negotiate and prosper amidst a world of trading blocs.
"The signing of this agreement by the Dominican Republic with Central America sets a transcendental mark in our economic history," said the President.
"For the first time our country has a multilateral trade tie, covering goods, services and investment. This is a step towards the strategic alliance of the Caribbean," said the President, explaining that the government has the firm purpose of signing a free trade agreement with the Caribbean Community, for which negotiations are advanced. It is expected that this agreement could be signed in August.
The Central American leaders are due to sign a framework free trade agreement with South American trade bloc Mercosur in Buenos Aires later this month.

DR rated the best-priced Caribbean island by Frommer
Arthur Frommer's web site's Daily News Magazine refers to the Dominican Republic "as one of the best-priced islands --maybe even the winner -- in the Caribbean. In today's issue, http://www.frommers.com/newsletters/04-15-98/article1.html, they mention the low-season bargain prices available at Metro and Costa Caribe hotels in the Juan Dolio beach area.

U.S. union protests against Korean free zone in DR
The Union of Needletraders, Industrial and Textile Employees (UNITE) is financing a tour of two fired employees of a Korean-owned baseball cap factory in the Dominican Republic. The union is protesting that the workers are paid poverty wages and receive abusive treatment in the Korean-owned factory, BJ&B. The factory employs over 2,000 people, mostly young women. The report states that workers there typically earn approximately US$40 after 56 hours of work each week. It complains that the company consistently breaks Dominican labor laws, such as forcing overtime work, paying less to women than men. The union criticizes what they describe as disturbing conditions inside BJ&B, such as worker reports that floor supervisors hit and shout at them and they are forced to endure humiliating remarks.
Students at US universities pay about US$20 for the caps made at BJ&B, which are extremely popular. The universities make US$1.50 for a licensing fee. The union is sponsoring the tour of Kenia Rodríguez, 19 and Roselio Reyes, 20, who were reportedly fired for refusing to work forced overtime. The students will be meeting with university students and administration beginning with Harvard, Brown and Georgetown. Next week they plan on visiting Duke, Cornell, Rutgers and the University of Illinois.

Race Track looses money, but Equus makes money on Loto
Equus Gaming Company, a publicly traded partnership with horse racing and gaming interests in the Puerto Rico (El Comandante Race Track) and the Dominican Republic (V Centenario Race Track), announced operating revenues of V Centenario in the Dominican Republic improved by US$452,000 (9%) from US$5,036,000 in 1996 to US$5,488,000 in 1997, while operating costs in 1997 remained at the same level as in 1996. The increase in revenues was partly attributed to net fees earned under a contract for the distribution system of an electronic lottery that commenced in November 1997. Also, the company reports that the Dominican government agreed to invest from July 1997 to January 1998 a portion of its tax receipts to improve racing in the Dominican Republic and is currently evaluating the extension of this economic assistance beyond January 1998.
Nevertheless, V Centenario had net losses of US$1,100,000 in 1997 and US$1,494,000 in 1996.
Thomas B. Wilson, president of Equus, indicated that the racing program of V Centenario has been expanded via television throughout the Dominican Republic and that the agency network has been expanded from 220 in 1996 to 302 in 1997, with a planned increase to 450 agencies by the end of 1999. Also, it is planned that a telephone betting system in the Dominican Republic will be installed during 1998 to capture the upper income market.

International subsidiaries contribute to GTE profitability
GTE Corp. announced its first quarter, 1998 financial results by reporting a record consolidated revenue growth of 11 percent and earnings per share (EPS) growth of 10 percent from core operations, continuing its double digit core EPS growth for the eleventh consecutive quarter. International operations achieved revenue growth of US$103 million, or 16 percent, contributing US$767 million for the first quarter of 1998. This growth was fueled by local price increases in the Canadian and Dominican (Codetel) operations, wireless customer growth of 33 percent and access line growth of 5 percent, as well as US$50 million associated with new long-distance revenue
settlement arrangements in one of GTE's Canadian operations. Normalized revenue growth, excluding these settlement arrangements, would have been 8 percent. The net income, excluding special and extraordinary charges for the current quarter from all international operations including affiliates, was US$85 million, 15 percent higher than the year-ago quarter, reflecting strong growth in the Canadian and Dominican Republic operations as well as in CTI,
a GTE affiliate in Argentina. During the first quarter, the Taiwan
nationwide PCS joint venture, in which GTE holds a 12 percent interest, began commercial operations attracting nearly 400,000 customers. Revenues from domestic network services, including both GTE's wireline and wireless operations, increased US$228 million for the quarter to US$3.8 billion.
Contributing to wireline growth was a 10 percent increase in business lines and an 11 percent increase in second lines. Revenue from new services such as CentraNet(R), vertical services, voice mail, CyberPOP and other enhanced offerings increased US$88 million or 25 percent. Additional wireline revenue from start-up opportunity investments added almost US$100 million over the year-ago quarter with the long distance business generating growth of 168 percent or an increase of US$76 million and the video service offering adding
$7 million over the year-ago quarter.
With 1997 revenues of more than US$23 billion, GTE is one of the world's largest telecommunications companies and a leading provider of integrated telecommunications services.

DR gets most of deported criminals prior to suspension of program
46.7% (6,582) of the 14,076 criminals deported by the US to 15 Caribbean countries from 1993 to 1997 are Dominicans, according to the Ministry of Foreign Relations. Jamaica is the second largest recipient nation of deported nations, with 34.3% (4,836), followed by Haiti with 7.3% (1,036). Most of those deported had drug trafficking sentences. The New York authorities have decided to discontinue the program whereby sentenced criminals were deported before completing their sentence after several beneficiaries of the program returned and were arrested for committing the same crime.

Computer tax could be reduced to almost nothing
The Chamber of Deputies approved a bill whereby the tax on personal computers would be reduced to 1.5%, down from 10%. The bill also establishes the elimination of the payment of value-added tax on computers. The bill establishes spare parts, accessories and software programs would be either fully tax exempt or partially tax exempt. The bill was submitted by deputy Pelegrín Castillo. It now goes to the Senate for study. The author of the bill justifies its passing saying that PCs are essential for studying and producing in the modern world.

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