Panama: US business supports FTA

Tuesday, January 02, 2007

Panama: U.S. Business Supports FTA

US companies widely support the free trade agreement with Panama and some hope it will reduce piracy.

BY CHRONICLE STAFF

The U.S.-Panama free trade agreement, signed just before Christmas, is set to be debated by U.S. lawmakers before July. But U.S. business organizations widely support the agreement.

“This agreement is a ‘win-win’ for the United States and a key regional ally," Anne Alonzo, senior vice president of the National Foreign Trade Council (NFTC) , said in a statement. "The United States is Panama’s largest trading partner and the agreement, once it enters into force, will help to further cultivate a robust and mutually beneficial economic partnership.”

Panama already benefits from duty-free access to the United States through the Caribbean Basin Initiative (CBI) and the Generalized System of Preferences (GSP). In 2005, more than 95 percent of Panama’s exports of goods to the United States entered duty-free, according to the U.S. Trade Representative’s Office. However, the FTA will expand and secure those benefits for the long term, it points out.

Panama’s trade with the United States grew by 16.0 percent in 2005 to $2.5 billion. During the first half of last year, it grew by 18.8 percent to $1.5 billion, according to the U.S. Census Bureau.

SPUR REFORMS

"For the United States, [the] agreement will make free trade a two-way street, eliminating tariffs on U.S. exports to Panama," the USTR’s Office said in a statement. "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. "

Thanks to the FTA, more than 88 percent of U.S. exports of consumer and industrial goods to Panama will become duty-free immediately, with remaining tariffs phased out over 10 years, according to the USTR. The FTA also provides immediate duty-free access for key U.S. sectors including agricultural and construction equipment, information technology products, and medical and scientific equipment. Other key export sectors such as motor vehicles and parts, paper and wood products, and chemicals will also obtain significant access to Panama’s market, the USTR points out.

The FTA coincides with the start of a $5.2 billion, multi-year expansion of the Panama Canal.“The expansion of the Panama Canal will also be vital to expanding our trade relationship well into the future," Alonzo says.

Evan Gaddis, president of the National Electrical Manufacturers Association (NEMA), agrees. "This agreement is an excellent one for the electroindustry, especially given the recent vote by the Panamanian people to approve the Panama Canal widening project," he said in a statement. "Since Panamanian goods already enjoy very low or no duty access to our market, the agreement serves to level the playing field. The U.S. already enjoys a large bilateral electrical equipment trade surplus with Panama, and this stands to improve even further as the top quality products made by our members are afforded full market access to participate in the historic project to widen the canal."

AGRICULTURAL EXPORTS

Also agricultural exporters support the Panama FTA. More than half of current U.S. farm exports to Panama will become duty-free immediately, including high quality beef, other meat and poultry products, soybeans and products, most fresh fruits and tree nuts, distilled spirits and wine, and a wide assortment of processed products, according to the USTR.

The National Pork Producers Council expects its members to gain significant new market access in Panama as a result of the new agreement. “This agreement will contribute greatly to the bottom line of U.S. pork producers by opening up new market access to more than 3 million additional consumers in the Western Hemisphere,” NPPC President Joy Philippi, a pork producer from Bruning, Nebraska, said in a statement. “Our future is heavily dependent on expanding access for U.S. pork in international markets.”

The National Milk Producers Federation (NMPF) and the U.S. Dairy Export Council (USDEC) also expressed support today for the recently-negotiated Free Trade Agreement between the United States and Panama.

"This is a great opportunity to expand U.S. dairy exports and improve the U.S. trade balance for dairy products," Jaime Castaneda, NMPF senior vice president, said in a statement.

Panama imports nearly half of its dairy products, and the U.S. stands to become a larger supplier once the FTA is finalized, he points out. The FTA is expected to boost exports for all categories of U.S. dairy products, including cheese, milk proteins and ice cream, the federation says. "Equally important to the preferential market access provisions contained in the agreement are portions of the FTA dealing with sanitary and phytosanitary (SPS) issues and the administration of new quotas," it says.

And other business groups like the US Chamber of Commerce, the National Association of Manufacturers and the American Apparel & Footwear Association have previously announced their support for a US-Panama FTA.

PIRACY

Meanwhile, the International Intellectual Property Alliance (IIPA) hopes the new FTA will help reduce piracy and other intellectual property right abuses. In 2003, U.S. companies lost an estimated $6.7 million as a result of piracy of movies and software, according to the IIPA. Also music piracy is a problem.

"The piracy of sound recordings and music in Panama remains high, the IIPA says in a report on Panama. "Although no official figures exist for the level of music piracy, the industry safely estimates that it exceeds 50 percent of the total market. "