Panama’s Free Trade Agreement with the United States is expected to be signed this month following consensus on labor stipulations, say US government officials, with subsequent approval by Congress.
U.S. Trade Representative Susan Schwab said the Free Trade Agreement (FTA) with Panama would likely be signed in June, just six months after the US and Panama closed negotiations.
“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.
Panama’s FTA, along with those of Colombia and Peru, had stalled in Congress while House Democrats called for provisions to protect US labor, fearing the proposed treaties would undercut the American labor force. Under the new policy, participating nations would put in place laws to ensure basic international labor standards under the 1998 International Labor Organization declaration, effectively preventing those countries from lowering their labor standards.
Negotiations for a trade accord between the two nations were launched in April 2004, and concluded in December 2006. With tighter provisions in place on labor, the environment, and patent rights, officials expect the accord to have smooth passage through Congress.
“Hopefully it will be approved as soon as possible because we believe it is in the best interests of both countries and it would be good to take advantage of the agreement's benefits," said US Deputy State Secretary John Negroponte, after a meeting last month with Panama’s President Martin Torrijos.
Under the trade agreement, tariffs and other trade barriers would be phased out over the next ten years, with more than 88% of US consumer and industrial exports to Panama to become duty-free as the accord comes into effect.
According to the United States Trade Representative, the US is Panama’s largest trading partner, accounting for nearly half of Panama’s total imports. U.S. goods exports to Panama increased 17 percent from 2004 to 2005, and US foreign investment in Panama totals about $25 billion. Total goods trade between the United States and Panama was $2.5 billion in 2005.
For its part, Panama already has duty-free status for most of its exports to the U.S. market through other trade agreements, such as the Caribbean Basin Initiative (CBI), which is set to expire in 2008.
Earlier this month, Panama also hosted a meeting of representatives from the Caribbean Community (CARICOM) and five other Central American countries, to begin preliminary discussions on a regional free trade agreement.