Panamanian Minister Sets October 1 Goal for U.S.-Panama FTA

Officials at the U.S.-Panama Business Council state that the Panamanian Minister for Commerce and Industry, Ricardo Quijano, has set a goal of October 1, 2012 for the implementation of the U.S.-Panama Free Trade Agreement. Quijano attended the recent “Panama Week” conference held March 15-16 in Washington, DC.

(On June 28, 2007, the U.S. and Panama signed an FTA that will liberalize trade in goods and make many U.S. exports to Panama duty-free. The FTA also includes disciplines relating to trade in services (including financial services), customs administration and trade facilitation, technical barriers to trade, government procurement, investment, telecommunications, electronic commerce, intellectual property rights, and labor and environmental protection. Panama approved the FTA on July 11, 2007. The Panama FTA Implementation Act was signed into law in the U.S. on October 21, 2011. See ITT's Online Archives 11101417 for summary stating that Panama has already ratified the FTA, and 11102103 for summary on President Obama signing Panama FTA Implementation Act into law.)

FTA Will Remove Barriers to U.S. Goods Entering Panama’s Market

The International Trade Administration states that the U.S.-Panama FTA is expected to increase U.S. exports to Panama by removing or reducing trade barriers in the Panamanian market and by leveling the tariff playing field. Ninety-eight percent of Panama’s exports to the U.S. entered duty-free in 2010, while fewer than 40 percent of U.S. goods entered Panama without tariffs. Specific benefits to U.S. exporters include, among other things:

Consumer and Industrial Products. According to the U.S. Trade Representative, over 87 percent of U.S. exports of consumer and industrial products to Panama will become duty-free immediately, with remaining tariffs phased out over ten years. U.S. products that will gain immediate duty-free access include information technology equipment, agricultural and construction equipment, aircraft and parts, medical and scientific equipment, environmental products, pharmaceuticals, fertilizers, and agrochemicals.

Agricultural Exports. U.S. agricultural exports will also benefit. USTR states that nearly 56 percent of current trade will receive immediate duty-free treatment, with most of the remaining tariffs to be eliminated within 15 years. Panama will immediately eliminate duties on high-quality beef, frozen turkeys, sorghum, soybeans, soybean meal, crude soybean and corn oil, almost all fruit and fruit products, wheat, peanuts, whey, cotton, and many processed products. The FTA also provides duty-free access for specified volumes of standard grade beef cuts, chicken leg quarters, pork, corn, rice, and dairy products through tariff rate quotas (TRQs).

Government Procurement. Under the FTA, U.S. suppliers are granted rights to nondiscriminatory treatment in bidding on procurement by a broad range of Panamanian government ministries, agencies, regional governments, and public enterprises. For procurement covered by the FTA, it requires the use of fair and transparent procurement procedures, such as advance notice of purchases and timely and effective bid review procedures.

(See ITT’s Online Archives 12031509 for summary of USTR Kirk’s March 14 meeting with Minister Quijano, in which both officials pledged to bring the U.S.-Panama FTA into force as quickly as possible.

See ITT's Online Archives 11033123 for summary of the Administration's March 2011 view that Panama was close to completing its work on outstanding FTA issues, but still needed to address the protection of internationally recognized labor rights and implement a Tax Information Exchange Agreement.

See ITT's Online Archives 11040743 for April 2011 summary stating that Panama's President has signed several labor reform laws, and that the last outstanding U.S. concern was its implementation of a Tax Information Exchange Agreement (TIEA), which subsequently entered into force on April 18, 2011. See Treasury Dept announcement here.)

See Panama Ministry of Commerce and Industry press release (dated 03/14/12) detailing Quijano’s trip to Washington, DC to attend Panama Week and meet with officials of the U.S. Trade Representative here.

Final text of the U.S.-Panama FTA available here.