SANTO DOMINGO, Dominican Republic (AP)--President Leonel Fernandez will not veto a 25 percent import tax on corn syrup despite warnings from U.S. officials that it could bring an end to a free-trade agreement between the two countries, an official said Sept. 24.

"We don't want friction with the United States, but trying to redo this package would be difficult and time consuming," said Roberto Rodriguez, a presidential spokesman.

The Dominican Senate passed the tax, bucking warnings from U.S. trade officials that it violated a free-trade agreement reached in August. Lawmakers said without the tax, corn syrup competition would devastate the Caribbean nation's sugar cane industry, one of its largest and most lucrative.

The syrup import tax is part of a larger fiscal reform package that includes 10 percent to 20 percent tax hikes on domestic beer and tobacco sales, international travel and the general sales tax.

Free-trade zones are areas where companies can manufacture goods without having to pay import taxes on raw materials or export taxes on the final product.

Companies operating in free-trade zones are a leading employer in the Dominican Republic, with 530 of them employing 170,833 people in 2002.

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