U.S.-Panama Free Trade Agreement

Overview

The U.S.-Panama FTA was approved by the US Congress on Oct. 12, 2011. The Panamanian Congress passed the Agreement on July 11, 2007. 

On November 7, 2005 in Panama City, the United States and Panama had begun working towards a bilateral free trade-trade pact. The United States and Panama concluded negotiations for a Trade Promotion Agreement  (TPA) in December 2006.

Panama has been hailed for the strong growth in its economy and its commitment to fighting corruption. In 2010, the United States had a trade surplus with Panama, with exports totaling $6.1 billion and imports slightly under $379 million. California exports to Panama totaled $252 million making it the state's 42nd largest export market.

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 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.

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 Free Trade 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 FTA will increase momentum toward lowering trade barriers and set a positive example for other small economies in the Western Hemisphere.