U.S. and Panama Complete Trade Promotion Agreement Negotiations
WASHINGTON - The United States and Panama today announced they have completed negotiations on a free trade agreement with the understanding that it is subject to further discussions regarding labor. This comprehensive trade agreement will eliminate tariffs and other barriers to trade of goods and services, expand trade between the United States and Panama, and promote economic growth and opportunity. The conclusion of the negotiations with Panama was announced by U.S. Trade Representative Susan C. Schwab and Alejandro Ferrer, Panama’s Minister of Trade and Industry. “This historic agreement between two good friends and close partners will promote economic growth and development in both of our countries,” said U.S. Trade Representative Susan C. Schwab. “Panama is an important ally in the region. We are pleased to be able to advance our long-standing friendship and deepen our trading relations with Panama,” said Ambassador Schwab. “This comprehensive agreement significantly cuts trade barriers and expands opportunities for American workers, consumers, farmers and ranchers, manufacturers, and service providers. We have reached this agreement with the understanding that it is subject to additional discussions on labor. Before submitting the agreement to Congress, we will work with both sides of the aisle to ensure strong bipartisan support for the agreement,” said Ambassador Schwab. The United States and Panama have a long history of close ties and a strong economic partnership. “The free trade agreement announced today expands an already vibrant trade and investment relationship, and is another important milestone in President Bush’s strategy of building strategic ties in the Western Hemisphere. The agreement will provide new economic opportunities for U.S. exporters, including significant opportunities to participate in the $5.25 billion expansion plan for the Panama Canal,” said Ambassador Schwab. The Panama Canal expansion is due to begin in 2008 and finish in 2014.Panama is predominantly a services-based economy, with services accounting for about 80 percent of economic activity. The Panama Canal is the focal point of Panama’s economy, with much of the country’s economic activity tied to the canal’s infrastructure and to the logistics and financing of international shipping. The United States also achieved new openings for financial services suppliers in the insurance sector, including the establishment of brokerage firms and cross-border supply of insurance for maritime, aviation, and transportation. Ground-breaking provisions on customs administration will enhance the transparency and efficiency of trade between the United States and Panama. For example, the agreement establishes a monitoring program for Panama’s free trade zones that will help guard against circumvention of customs rules. Important provisions on trade security will facilitate secure and reliable trade in goods from all over the world that pass through Panama. The agreement will eliminate nearly 90 percent of Panama’s tariffs on industrial goods immediately, with remaining tariffs phased out over 10 years.BackgroundIn April 2004, the United States and Panama launched negotiations on a free trade agreement. The United States had a goods trade surplus with Panama $1.8 billion in 2005, and is Panama’s largest trading partner. Total goods trade between the United States and Panama was $2.5 billion in 2005. Panama is a growing market for U.S. products. U.S. goods exports to Panama increased 17 percent from 2004 to 2005.Like many other developing countries, Panama already enjoys broad duty-free access to the U.S. market through various trade preference programs designed to promote economic development, such as the Caribbean Basin Initiative (CBI) and the Generalized System of Preferences (GSP). In 2005, more than 95 percent of Panama’s goods exports to the United States entered duty-free and the agreement will expand and secure those benefits for the long term. For the United States, today’s agreement will make free trade a two-way street, eliminating tariffs on U.S. exports to Panama. The agreement will also spur reforms of Panama’s domestic legal and business environment that are important to encourage investment, protect intellectual property rights, enhance regulatory transparency, and strengthen protections for workers and the environment.