October 22, 2012
US-Panama trade deal will take effect Oct. 31
A free trade agreement between the United States and Panama will go into effect at the end of the month, the last of three deals passed a year ago.
U.S. Trade Representative Ron Kirk and Ricardo Quijano, Panama's minister of Commerce and Industry, exchanged letters on Monday locking in Oct. 31 for implementation of the FTA.
"Under this comprehensive agreement, Panama will eliminate tariffs and other barriers to U.S. exports, which will promote economic growth, and expand trade between our two countries," Kirk said Monday.
"This agreement also provides U.S. firms and workers improved access to customers in Panama’s $22 billion services market, including in areas such as financial, telecommunications, computer, express delivery, energy, environmental and professional services,” he said.
Panama's economy, one of the fastest growing in Latin America, expanded 10.6 percent last year and expectations are that the economy will expand between 5 to 8 percent each year through 2017.
U.S. goods exports to Panama in 2011 were $8.2 billion.
The deal with Panama is the final of three signed a year ago to be implemented — South Korea and Colombia went into effect earlier this year.
"This critical agreement will ignite economic growth and job creation in the U.S. and Panama,” said Myron Brilliant, U.S. Chamber senior vice president for International Affairs.
"With this step, we can take the century-old U.S.-Panama alliance to the next level."
Panama will immediately reduce or eliminate tariffs on U.S. industrial goods, which average about 7 percent and are as high as 81 percent.
About 86 percent of U.S. exports of consumer and industrial products to Panama will become duty-free immediately, including information technology equipment, agricultural and construction equipment, aircraft and parts, medical and scientific equipment, environmental products, pharmaceuticals and fertilizers, USTR reported.
Nearly half of all U.S. agricultural commodities will immediately become duty-free, including wheat, barley, soybeans, high-quality beef, bacon, and almost all fruit and vegetable products, with most of the remaining tariffs to be eliminated within 15 years.
These goods face an average tariff of 15 percent, with some duties as high as 260 percent.
The deal will provides greater access to Panama’s $22 billion services market.
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.
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