U.S., Panama complete free trade agreement negotiations
The Bush administration has concluded free trade agreement negotiations with Panama, under the condition that some labor concerns are still open for debate.
The agreement mainly eliminates tariffs and other barriers to U.S. goods and services.
“The agreement will provide new economic opportunities for U.S. exporters, including significant opportunities to participate in the $5.25 billion expansion plan for the Panama Canal,” said U.S. Trade Representative Susan Schwab in a statement on Tuesday.
Panama remains largely a services-based economy, with these businesses accounting for about 80 percent of its economic activity. The Office of the U.S. Trade Representative (USTR) noted that the Panama Canal is “the focal point of Panama’s economy, with much of the country’s economic activity tied to the canal’s infrastructure and to the logistics and financing of international shipping.”
The U.S.-Panama free trade agreement calls for improvements to Panama’s customs operations. For instance, the agreement creates a monitoring program for Panama’s free trade zones to help guard against circumvention of customs rules. There are also provisions in the agreement to increase trade security.
The agreement will eliminate about 90 percent of Panama’s tariffs on U.S. industrial goods immediately, with the remaining tariffs phased out in 10 years.
Panama has enjoyed broad duty-free access to the U.S. market through various trade preference programs such as the Caribbean Basin Initiative and the Generalized System of Preferences.
Total goods trade between the United States and Panama was $2.5 billion in 2005. U.S. goods exports to Panama increased 17 percent from 2004 to 2005, the USTR said.
According to the U.S. Department of Agriculture, U.S. agricultural producers sold about $200 million worth of products to Panama in 2005.
A number of U.S. agricultural goods will enter Panama duty-free under the free trade agreement, such as high quality beef, mechanically de-boned chicken, turkey, pork, whey, soybeans, crude vegetable oils, cotton, wheat, barley, most fresh fruits, almonds, walnuts and many processed foods such as soups, chocolate confectionery, distilled spirits, wines and pet food.
The USDA said farmers will benefit from expanded market access through tariff-rate quotas on pork, chicken leg quarters, dairy products, corn, rice, refined corn oil, dried beans, frozen French fries and tomato products. Tariffs on most remaining U.S. agricultural products will be phased out within 15 years under the free trade agreement.
“Most significant for U.S. beef and poultry producers, Panama is revising its sanitary and phytosanitary regulations recognizing the equivalence of the U.S. food safety inspection system for meat, poultry and processed food products,” said U.S. Agriculture Secretary Mike Johanns in a statement.
“Panama will also provide market access for U.S. beef and poultry products consistent with international standards and recognize the U.S. beef grading system. In addition, this agreement streamlines import documentation requirements for U.S. processed foods,” he said.
The United States and Panama started their free trade agreement negotiations in April 2004. Both governments must now ratify the free trade agreement language for it to take effect.
“Before submitting the agreement to Congress, we will work with both sides of the aisle (Republicans and Democrats) to ensure strong bipartisan support for the agreement,” Schwab said.