US-Panama trade deal goes into effect Wednesday

A free trade agreement between the United States and Panama goes into effect on Wednesday, a deal supporters say will expand growing trade between the two nations. 

The White House issued a proclamation Tuesday afternoon outlining the agreement, which was passed by Congress in October 2011.  

Last week, U.S. Trade Representative Ron Kirk and Ricardo Quijano, Panama's minister of Commerce and Industry, locked in the date, the final of the three agreements passed a year ago to go into effect. Agreements between South Korea and Colombia were implemented earlier this year. 

Panama's economy, one of the fastest growing in Latin America, expanded 10.6 percent last year and expectations are that their economy will expand between 5 to 8 percent each year through 2017.  

U.S. goods exports to Panama in 2011 were $8.2 billion. 

Opponents argue that the trade deal weakens the U.S. government’s ability to stop corporations and wealthy individuals from dodging taxes in Panama while offering few export expansion opportunities. 

“The presidential candidates are sparring over who would best crack down on offshore tax evasion and reduce our budget deficit, so it’s a sorry statement about the power of corporate campaign money that both candidates support a pact with the hemisphere’s leading tax haven,” said Lori Wallach, director of Public Citizen’s Global Trade Watch.

Proponents said the agreement is further enhanced because of Panama’s strategic location as a major shipping route, of which approximately two-thirds of the Panama Canal’s annual transits are bound to or from U.S. ports.

The canal's expansion is set for a 2015 completion. 

But Wallach says many of the prospective U.S. business opportunities associated with the Panama Canal widening project were carved out of the agreement’s coverage. 

As part of the deal, Panama will immediately reduce or eliminate tariffs on U.S. industrial goods, while about 86 percent of U.S. exports of consumer and industrial products will become duty-free immediately.

Meanwhile, about half of all U.S. agricultural commodities will immediately become duty-free and the deal will provides greater access to Panama’s $22 billion services market.