INTERNATIONAL MONETARY FUND
WASHINGTON, D.C. 20431   

Mr. Elbio Rosselli
World Trade Organization
Centre William Rappard
Rue de Lausanne 154
CH � 1211 Geneva 21
Switzerland

Dear Mr. Rosselli:

I am writing in response to your letter dated May 14, 2004, requesting a response from the Fund under Paragraph 8 of the Cooperation Agreement between the Fund an the WTO to the questions raise by the Panel that was established on January 9, 2004 in order to examine measures imposed by the Dominican Republic on the importation an internal sale of cigarettes.

1. You have asked that the Fund provide information as to how the "Comisi�n Cambiaria a las Importaciones" (the "exchange commission") is being implemented by the Dominican Republic. Based on both our review of the relevant regulations and our consultations with the authorities of the Dominican Republic, we can advise you as follows:

(a) The "exchange commission" is levied under the legal authority of the Banco Central de la Republica Dominicana (BCRD). Since its introduction in January 1991, the commission has undergone a number of changes in the way that it is levied. Initially, the commission was payable on sales of foreign exchange and was calculated as a percentage of the selling rate.

(b) Since August 2002, however, pursuant to the Agreement between the BCRD and the Directorate General for Customs (DGC) of August 22, 2002, the commission has been collected in its entirety by the DGC. Moreover, although the commission is still referred to as an "exchange commission" (because it is levied on the basis of the legal authority vested in the BCRD to charge a commission on sales of foreign exchange), the commission in no longer payable on sales of foreign exchange. Rather, it is payable as a condition for the importation of goods, and the amount of the commission is now calculated exclusively on the CIF valuation of the imported goods as determined by the DGC (Article 1 of the Agreement between the BCRD and the DGC). By Notice of Resolution No. 1 of the Monetary Board of October 22, 2003, the rate of the commission was increased to ten percent in October 2003.

2. You have also asked whether the exchange commission, as currently applied by the Dominican Republic, is considered by the Fund to be an "exchange control" or "exchange restriction" under the Articles of Agreement of the International Monetary Fund.

As applied since August 2002, the exchange commission is no longer a measure subject to Fund approval. As noted above, the commission is no longer payable on sales of foreign exchange. It is payable as a condition for the importation of goods and the amount to be paid is based on the CIF value of the imported goods (rather than the amount of foreign exchange sold to an importer for the payment of goods). As such, it does not constitute a multiple currency practice or an exchange restriction notwithstanding its label or the fact that the commission is charged on the basis of the legal authority vested in the BCRD to charge an exchange commission on sales of foreign exchange. For the same reasons, it is not an exchange control measure.

In light of the above, the Fund has determined that the exchange commission is not an exchange measure. Therefore, the issue of its consistency with the Fund's Articles for purposes of Paragraph 8 of the Cooperation Agreement does not arise.

Very truly yours,

Frac�ois Gianviti
General Counsel