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Agriculture in the U.S.-Panama Trade Promotion Agreement

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FarmThe U.S.-Panama Trade Promotion Agreement (“the Agreement”) creates new opportunities for U.S. farmers, ranchers, workers, and food processors seeking to export to Panama, one of the fastest growing economies in Latin America. This comprehensive Agreement will eliminate tariffs and other barriers to U.S. exports, promote economic growth, and expand trade between our two countries.

Panama is already an important market for America’s farmers and ranchers. In 2011, the United States exported nearly $505 million of agricultural products to Panama. Top U.S. exports were corn, wheat, soybean cake and meal, dairy products, poultry meat, and rice. Upon implementation of the Agreement, U.S. exporters will receive duty-free treatment on products accounting for nearly half of current trade, with tariffs on most remaining agricultural products phased out within 15 years.

KEY ELEMENTS:

Market Access: The Agreement is comprehensive, covering all agricultural products. Liberalization of Panama’s market will occur through tariff reductions and the expansion of duty-free tariff-rate quotas (TRQs).

Tariff Elimination: Under the Agreement, tariff phase-out periods range from immediate duty-free access to a maximum phase-out period of 20 years. Tariffs on 68 percent of Panama’s agricultural tariff lines, accounting for more than half of current U.S. trade by value, will be eliminated on entry into force of the Agreement. For agricultural products from Panama, U.S. tariffs will be eliminated immediately for the 89 percent of agricultural tariff lines already duty-free under the Caribbean Basin Initiative, covering over 99 percent of the value of Panama’s agricultural exports to the United States. Most other tariffs for both countries will be eliminated within 15 years. As a general rule, tariffs will be reduced in equal annual installments over the phase-out period, with the first tariff cut made on the date the agreement enters into force. For certain sensitive products, tariff cuts will be made annually after an initial period when tariffs are not reduced.

Tariff-Rate Quotas (TRQs): For some products with longer tariff phase outs, specific volumes of immediate duty-free market access will be provided through the creation and expansion of TRQs (providing duty-free access for a specified quantity of imports). Most of these TRQs will be operated on a first-come, first-served basis. The Agreement includes special disciplines for Panamanian TRQs that will be administered through auctions or historical licenses, as well as a prohibition on the use of domestic purchase requirements.

Agricultural Safeguards: Agricultural safeguard measures will be available for certain sensitive products, allowing for temporary tariff increases if import quantities exceed agreed trigger levels. Safeguards will no longer be allowed once tariff protection has been phased out.

Export Subsidies

The United States and Panama agreed not to use export subsidies on products shipped into each other’s market except to compete with third-party export subsidies.

Sanitary and Phytosanitary Measures (SPS) and Technical Standards

In December 2006, the United States and Panama signed an extensive agreement on SPS measures and technical standards to address many long-standing SPS and other regulatory concerns relating to trade in products ranging from meat and poultry to dairy and other processed products. Under this agreement, which has been fully implemented, Panama recognized the equivalence of the U.S. food safety inspection system for meat and poultry, and the U.S. regulatory system for processed foods, including dairy products, ending its requirements for plant-by-plant and/or shipment-by-shipment inspections. Panama also brought its sanitary requirements on imports of beef and beef products and poultry and poultry products into conformance with international standards, including those on bovine spongiform encephalopathy (BSE) and avian influenza, thereby re-opening its market to U.S. exports of these products. Panama has streamlined import documentation requirements, including its product registration system for processed foods and for U.S. agricultural products and formalized its continued recognition of the U.S. beef grading system and cuts nomenclature.