U.S.-Panama Trade Promotion Agreement
Speaking at a November 7, 2005 press conference in Panama City with Panamanian President Torrijos, President Bush said that the United States and Panama had begun working towards a bilateral free-trade pact. President Bush has hailed Panama for the strong growth in its economy and its commitment to fighting corruption, combating narco-trafficking and promoting democracy. In 2007, the United States had a trade surplus with Panama, with exports totaling $3.7 billion and imports slightly under $400 million. California exports to Panama totaled $259 million making it the state's 43rd largest export market.
The United States and Panama concluded negotiations for a Trade Promotion Agreement (TPA) in December 2006. U.S. Trade Representative Susan Schwab commented, "The historic agreement between two good friends and close partners will promote economic growth and development in both of our countries."
Per the U.S. Department of Commerce, International Trade Administration, the U.S.-Panama Trade Promotion Agreement offers tremendous opportunities for California's exporters. Panama's strategic location as a major shipping route and the massive project underway to expand the capacity of the Panama Canal enhance the importance of the U.S.-Panama TPA for California's exporters.
When the Agreement enters into force, 88 percent of U.S. consumer and industrial exports to Panama, including nearly all information technology products; aircraft and related equipment; agriculture and construction equipment; medical and scientific equipment; environmental products; pharmaceuticals; fertilizers; and agro-chemicals will become duty-free immediately. The remaining tariffs phase out over 10 years. U.S. farmers and ranchers will also become much more competitive, benefiting from immediate duty-free treatment of more than 60 percent of current U.S. agriculture exports. Key U.S. agriculture exports such as high-quality beef, other meat and poultry products, soybeans, most fresh fruit and tree nuts, distilled spirits and wines, and many processed food products, will be duty-free upon entry into force of the Agreement. Tariffs on most remaining U.S. farm products will be phased out within 15 years.
The U.S.-Panama TPA will ensure that California's firms can participate on a competitive basis in the $5.25 billion Panama Canal expansion project that will offer many opportunities for U.S. providers of goods and services. Ultimately, the Canal expansion will benefit California's exporters by increasing the Canal's capacity, which will reduce the costs of transporting goods while keeping up with the demands of a growing global economy.
Anticipated Action
The U.S.-Panama TPA must go before Congress in both countries for their approval.
CalChamber Position
The California Chamber of Commerce, in keeping with long-standing policy, enthusiastically supports free trade worldwide, expansion of international trade and investment, fair and equitable market access for California products abroad and elimination of disincentives that impede the international competitiveness of California business. New multilateral, sectoral and regional trade agreements ensure that the United States may continue to gain access to world markets, resulting in an improved economy and additional employment of Americans.
Reasons for Position
- The Trade Promotion Agreement is a critical element of the U.S. strategy to liberalize trade through multilateral, regional and bilateral initiatives.
- Bilateral and regional agreements complement the possible goal of creating a Free Trade Area of the Americas.
- The TPA will increase momentum toward lowering trade barriers and set a positive example for other small economies in the Western Hemisphere.
Additional Information