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FACT
SHEET:
U.S.-Panama Trade
Promotion Agreement -
California Farmers Will Benefit
September 2008
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The U.S.-Panama Trade Promotion Agreement eliminates tariffs and other
barriers on most U.S. goods, increasing export opportunities for agricultural
products important to California. With immediate elimination of duties on over
60 percent of current U.S. trade, this agreement changes the one-way street of
duty-free access currently enjoyed by most Panamanian exports into a two-way
street benefiting both countries. The American Farm Bureau strongly supports the
agreement, predicting widespread gains for U.S. agriculture exceeding $190
million per year.
California’s exports to all countries, estimated at $11.3 billion in 2007,
supported about 124,100 jobs, on and off the farm.
These export sales make an important contribution to the California farm economy
which had total cash receipts of $31.4 billion in 2006.
Fruits. California is the nation’s leading grower and exporter of fruit.
As the nation’s leading exporter of fresh and processed fruits at nearly $2.4
billion in 2007, California’s orange, grape, peach, and plum growers and
processors will benefit from this agreement.
Panama will eliminate its tariffs on nearly all fresh and processed
fruits immediately.
Following are examples of fruit products of importance for California
that will be duty-free immediately (the currently applied tariff is
indicated in parentheses): oranges (15 percent), peaches (2 percent), pears
(5 percent), plums (free), prunes (5 percent) , grapes (Free), raisins (2
percent), canned peaches and pears (Free), concentrated grape juice (15
percent)
The 15-percent tariff on strawberries will be phased out in 10 years.
The 10-percent tariffs on most dried fruits will be eliminated in 5 years,
and the 15-percent tariffs on many single strength fruit juices and juice
mixtures will be phased out over 5 to 15 years.
Tree Nuts. California is the nation’s largest producer of tree nuts
thanks to the world’s largest almond industry which continues to rapidly expand.
California is also the largest exporter of tree nuts with overseas sales
estimated at $2.7 billion in 2007. The state’s almond, pistachio and walnut
growers will benefit from this agreement.
Panama will eliminate its tariffs on all shelled and roasted nuts
immediately. The current tariffs on nuts are free, for shelled walnuts, 2
percent for shelled almonds and pistachios, and 15 percent for all roasted
nuts.
Panama will also eliminate its tariffs on most in-shell nuts
immediately, but the tariff on in-shell nut mixtures will be phased out in 5
years. These tariffs currently range from 5 to 10 percent.
Vegetables. As the nation’s leading grower and exporter of vegetables,
California’s many vegetable growers and processors will benefit from this
agreement.
Panama will eliminate its tariffs on nearly all frozen and processed
vegetables immediately. The tariff faced by U.S. exporters for these
products currently is 15 percent.
The tariffs for most fresh vegetables will be eliminated in 10-15 years.
Panama will eliminate its 15-percent tariffs on fresh lettuce, tomatoes
and broccoli in 12 years. The 30-percent tariff on fresh carrots will be
phased out in 10 years. Panama will eliminate its 15-percent tariffs on
frozen broccoli, carrots and vegetable mixtures immediately.
Panama will provide immediate duty-free access within a preferential
tariff-rate quota (TRQ) for tomato paste that starts at 798 tons and grows
each year by 3 percent. The 81-percent over-quota tariff will be eliminated
in 15 years.
U.S. exporters will continue to have access to the global 1650 ton TRQ
for tomato paste that is part of Panama’s World Trade Organization (WTO)
commitments. Panama has agreed to eliminate the tariff for imports under
that TRQ for the period from September through February each year.
Dairy Products. California has the nation’s largest dairy industry with
cash receipts totaling $4.4 billion in 2006, and California is the nation’s
second leading dairy exporter with overseas sales estimated at $566 million in 2007. This agreement will benefit California dairy producers.
U.S. exporters will have immediate duty-free access to nine preferential
dairy TRQs with a combined total of 3,986 tons. These include 2,625 tons of
skim milk powder, 728 tons of cheese, 263 tons of ice cream, and 370 tons of
other dairy products. These quantities will grow by 4 or 5 percent each year
and the over-quota tariffs for these TRQs, which range from 15 percent for
ice cream to 50 percent for milk powders, will be phased out in 15 to 17
years.
U.S. dairy exporters will continue to have access to the global TRQs for
3,830 tons of milk powder and 3,782 tons of cheese that are part of Panama’s
WTO commitments.
Panama will eliminate its 30-percent tariff on dried whey products
immediately. The tariffs on most other dairy products, which currently face
duties as high as 140 percent, will be phased out over 15 years.
In addition, Panama has already implemented our December 2006 bilateral
agreement on sanitary and phytosanitary (SPS) measures and technical
standards by recognizing the equivalence of the U.S. food safety systems for
processed foods, including dairy products, and by streamlining its product
registration system for packaged foods. This will allow U.S. food processors
to export dairy products to Panama without burdensome paper work and without
having each facility and shipment inspected by Panamanian authorities.
The National Milk Producers Association supports the Agreement, noting
that "Panama imports nearly half its dairy products, and the U.S. stands to
become a larger supplier once the FTA is finalized."
Beef. With cash receipts of nearly $1.7 billion in 2006, California’s cattle and
calf industry will benefit from this agreement.
Panama will immediately eliminate its 30-percent duty on beef products
of most importance to the U.S. beef industry--prime and choice cuts.
Panama’s tariffs on other cuts of beef will be phased out over 15 years.
The 10-percent tariff on beef tongues and livers will be eliminated in 5
years, and the 15-percent tariffs on other edible offal will be eliminated
immediately.
Panama has already implemented our December 2006 bilateral agreement on
SPS measures, reopening its market to U.S. beef by bringing its import
requirements related to BSE into compliance with international standards.
Panama also accepted the equivalence of the U.S. meat inspection system,
which allows U.S. inspectors to certify beef for export to Panama without
having each facility and shipment inspected by Panamanian authorities.
Rice. The nation’s second largest rice exporter, California rice growers
will benefit from this agreement.
Panama will provide immediate duty-free access within TRQs for 12,190
tons of U.S. rice, including 7,950 tons of rough rice and 4,240 tons of
milled rice. The 90-percent over-quota tariffs will be eliminated in 20
years and the TRQ quantities will grow by 6 percent each year.
U.S. rice exporters will continue to have access to the global 9,711-ton
TRQ for rice that is part of Panama’s WTO commitments.
Panama has also committed to increase the size of the preferential TRQs
when it has a short supply situation, as has occurred in recent years.
Wine. California is home to the nation’s largest wine industry, and
exports far more wine than any other state. California’s wine industry will
benefit from this agreement.
Panama’s tariff on still wine is 15 percent. Under the agreement, the
tariff on bottled table wine will be eliminated immediately while tariffs on
all other wine categories will be phased out within 5 years.
Back to the
U.S.–Panama Trade
Promotion Agreement
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