(May 12, 2009) As the U.S. Congress gets closer to voting on the pending U.S.-Panama Free Trade Agreement (FTA), Panama’s president-elect is expressing his devotion to seeing that the FTA is passed.
Ricardo Martinelli won Panama’s presidential election on May 3 in a landslide victory (61 percent). Martinelli has called the FTA with the United States his “No. 1 priority.”
In addition, President Barack Obama has placed the importance of the U.S.-Panama FTA ahead of the other agreements awaiting action by Congress, while current Panama President Martin Torrijos has said he plans to sign the FTA before he steps down on July 1.
The United States and Panama concluded negotiations for an FTA in December 2006. According to 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 FTA for California’s exporters.
Trade Agreement Impact
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 FTA 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.
Panama
Panama has been hailed for the strong growth in its economy and its commitment to fighting corruption, combating narco-trafficking and promoting democracy.
In 2008, the United States had a trade surplus with Panama, with exports totaling $4.9 billion and imports slightly under $400 million. California exports to Panama totaled $346 million, making it the state’s 39th largest export market.
Action Needed
The CalChamber has urged members of the California congressional delegation to support the U.S.-Panama FTA and is encouraging CalChamber members to do the same.
A sample letter is available at www.calchamber.com/international.
Staff Contact: Susanne Stirling