The free trade agreement (FTA) pending between the United States and Panama will enter into force on October 31.
Letters exchanged this week between U.S. Trade Representative Ron Kirk and Panamanian Minister of Commerce and Industry Ricardo Quijano established the date on which the FTA would go into effect, after officials in each country completed a review of laws and regulations related to the agreement's implementation.
When the FTA enters into force next week, Panama will immediately reduce or eliminate tariffs on U.S. industrial goods, which currently average 7% but can stretch as high as 81%. Furthermore, over 86% of U.S. exports of consumer and industrial products to Panama will become duty-free immediately, including information technology equipment, construction equipment, aircraft and parts, medical and scientific equipment, environmental products, pharmaceuticals and fertilizers.
"This agreement also provides U.S. firms and workers improved access to customers in Panama’s $22 billion services market, including in areas such as financial, telecommunications, computer, express delivery, energy, environmental and professional services," said Kirk. "Panama is one of the fastest growing economies in Latin America, expanding 10.6% in 2011, with forecasts of between 5-8% annual growth through 2017. That adds up to support for more well-paying jobs across the United States."
The FTA is also expected to benefit the U.S. agricultural industry, as U.S. agricultural exports to Panama currently face an average tariff of 15%, with some reaching as high as 260%. Upon entrance into force, the agreement will immediately make nearly half of U.S. exports of agricultural commodities to Panama duty-free, with most remaining tariffs being eliminated over the next 15 years.
- Jacob Barron, CICP, NACM staff writer