The United States and Panama have signed numerous agreements over the past 150 years, the most important of which define their relative shares in the canal that crosses the Central American Isthmus and halves Panamanian territory. The Canal has been a critical factor that has influenced Panama`s domestic and foreign affairs, and like previous agreements between the United States and Panama, the importance of the Free Trade Agreement is linked to a Panamanian economy that has largely formed around the Canal. At the beginning of the 112th Congress, the review of FTA implementing laws for Colombia, Panama and South Korea became part of a broader trade law program that included the readmission of Trade Adjustment Assistance Programs (TAAs). Two issues needed to be resolved if the legislation was to move forward. First, Congress needed to draft a TAA bill that would have enough bipartisan support in both chambers. Second, due to strong disagreements and growing mistrust between the legislative and executive branches, a legislative pathway was needed to ensure the passage of the three implementing laws and taa legislation together.13 Agreement was reached on a TAA compromise bill that the parties and houses of Congress eventually passed.14 More than 86% of U.S. exports of consumer and industrial products to Panama are immediately duty-free. the remaining tariffs were abolished over a ten-year period. U.S. products that benefit from immediate duty-free access include computer equipment, agricultural and construction equipment, aircraft and parts, medical and scientific equipment, environmental products, pharmaceuticals, fertilizers, and agrochemicals.
As part of the resolution, Panamanian officials visited the United States to review the food safety control system for meat and poultry, noting that U.S. acceptance. The system would not pose a health threat to Panama. This agreement has been formalized in a separate bilateral agreement between the two countries as well as in a simplified import documentation system. The agreement, signed and entered into force on December 20, 2006, stipulates that for meat, poultry, dairy and other processed products, Panama agrees to accept the U.S. health, plant protection and regulatory systems as equivalent to Panama`s and to no longer require individual factory inspections. Panama has since amended its laws accordingly.45 The United States and Panama signed a trade promotion agreement on June 28, 2007, which was implemented on October 31, 2012. The TPA lowered tariffs to zero on about 87 percent of U.S. exports (including nearly all industrial and consumer goods), with the remaining nonfarm tariffs expiring over a decade.
Certain agricultural tariff products will expire on 1 January 2031. The APT also contains provisions on customs administration and trade facilitation, technical barriers to trade, government procurement, investment services, financial services, telecommunications services, electronic commerce, intellectual property rights, occupational health and safety, and environmental protection. Under the TPA, U.S. companies have better access to the Panamanian services sector than other Panamanian WTO members under the General Agreement on Trade in Services. All services sectors are covered by the TPA, unless Panama has made specific exceptions. Panama is also a full participant in the WTO Information Technology Agreement. Panama concluded a bilateral agreement with the United States in 2006 that removed some of the regulatory barriers to trade in agricultural products, from meat and poultry to processed products, including dairy products and rice. The United States has a weak but positive agricultural trade record with Panama. Agriculture accounts for a small portion of total U.S.
merchandise exports to Panama, but the U.S. captures about 51 percent of Panama`s agricultural import market. While average tariffs on U.S. agricultural products are 15%, tariffs on chicken thigh wedges can reach 260%.39 Since both countries had products they wanted to protect, access to the agricultural market was one of the most difficult problems to solve. The House Ways and Means Committee holds a hearing on the U.S. free trade agreements with Colombia, Panama and South Korea. As with the working chapter of the FTA, the revisions made in line with the ideas set out in the agreement of 10 May 2007 reflect a bipartisan sentiment that, while the text recognizes sovereign rights and obligations in the management of natural resources, trade and environmental policies should be mutually supportive and dedicated to the goal of sustainable development. The new wording therefore reinforces commitments on environmental commitments and their enforcement, and requires each country to have broader evidence to suggest that free trade agreements have not “forced a race to the bottom in regulatory standards, but rather that policy convergence is more affected by countries that agree on `governance standards` through cooperation through international agreements. Daniel W. Drezner, “Globalization and Policy Convergence,” International Studies Review, Vol. 3, No. 1 (Spring 2001), pp.
75-78. Panama is closely linked to the United States as a dominant trading partner and is one of the few Latin American countries with which the United States has a goods trade surplus. Although it is low relative to total U.S. trade, it is by far the largest in the region. Panama also has a large trade deficit with Latin America. Latin America`s main trading partners are Costa Rica, Mexico and Colombia. Panama also imports significant quantities of oil from Trinidad and Tobago. Trade with Asia follows the rapid trend in commodity exports seen in many Latin American countries, with relatively modest growth in Panamanian imports from the region.
.