USTR announces implementation of the U.S.-Panama FTA
The United States Trade Representative (USTR) announced last week that the United States-Panama Trade Promotion Agreement, also known as the Free Trade Agreement (FTA), will enter into force on Oct. 31, 2012.
The original agreement was signed on June 28, 2007. Panama approved it on July 11, 2007, and it was signed into law in the U.S. on Oct. 21, 2011.
According to the Office of the United States Trade Representative, the U.S.-Panama FTA is a comprehensive free trade agreement that can result in significant liberalization of trade in goods and services, including financial services. It also includes important disciplines relating to customs administration and trade facilitation, technical barriers to trade, government procurement, investment, telecommunications, electronic commerce, intellectual property rights, and labor and environmental protection.
U.S. firms will have better access to Panama’s services sector than it provides to other World Trade Organization (WTO) members under the General Agreement on Tarrifs in Services. All services sectors are covered under the agreement except where Panama has made specific exceptions. Moreover, Panama agreed to become a full participant in the WTO Information Technology Agreement.
Panama has also entered into a bilateral agreement with the U.S. resolving a number of regulatory barriers to trade in agricultural goods ranging from meat and poultry to processed products, including dairy and rice. USTR is currently working to address outstanding issues regarding the Panama FTA, including labor and tax policies.
“Texas ranchers have worked for nearly five years to see these agreements become reality,” said Joe Parker Jr., rancher and Texas and Southwestern Cattle Raisers Association (TSCRA) president. “Families, both at home and abroad, want Texas beef on their tables, and now we will be able to help meet that demand. This is a win for consumers overseas and producers here in the U.S.”
Among other things, implementation of the Panama FTA results in the immediate repeal of the 30 percent tariff on Prime and Choice cuts of U.S. beef and begins to phase out all remaining tariffs.
According to the U.S. International Trade Commission, the three trade agreements will increase U.S. exports by at least $13 billion and add $10 billion to the U.S. Gross Domestic Product. Additionally, exports of U.S. goods generate an estimated 8,000 jobs for every billion dollars shipped overseas.
Parker says that while implementation of the three FTAs is a good thing for Texas beef producers, there is still increasing potential for beef exports in other countries including China, Japan, Taiwan and the European Union.
“With the demand for beef rising, it is crucial that U.S. beef producers have a seat at the international table and that we aggressively pursue expanding market opportunities in other countries,” said Parker.
“Our global competitors are already negotiating agreements with other markets. If we don’t beat these countries to the punch, U.S. producers will be at a severe disadvantage,” Parker said. “With 95 percent of the world’s population living outside of the U.S., we simply cannot afford to not have increased market access.”
The National Cattlemen’s Beef Association (NCBA) is greatly encouraged by this news and the ultimate removal of tariffs and other barriers to U.S. exports, including U.S. agricultural exports.
“The cattle industry has been waiting on implementation of this agreement for a long time and we’re looking forward to increased trade opportunities with Panama,” said Bob McCan, NCBA vice president and a Texas cattleman. “The U.S.- Panama Free Trade Agreement immediately eliminates the 30 percent tariff on Prime and Choice beef cuts and all other duties will be phased out over the next 15 years. This is a positive step forward for American cattlemen and women.”
Panama is one of the fastest growing economies in Latin America with forecasts of between 5 to 8 percent annual growth through 2012. This agreement provides U.S. ranchers access to this valuable market. Similar to the FTA with Colombia, the agreement with Panama provides assurances for a stable export market through plant inspection equivalency. Additionally, Panama modified its import requirements related to BSE to be consistent with international standards. With these agreements in place, the U.S. will have free trade for U.S. beef with approximately twothirds of the population in the Western Hemisphere.
“NCBA has been an outspoken supporter of this agreement and others like it because they increase market access and provide stable export markets based on internationally recognized scientific standards,” Mc- Can said. “We are encouraged by [last week’s] news and we appreciate Ambassador Kirk and the USTR’s leadership in moving these agreements forward.”
This is the final agreement of a five-year push to finish three FTAs that are expected to boost beef exports by $3 billion. The U.S.- Korea FTA took effect March 15, 2012, followed by the Colombia FTA on May 15, 2012. — Traci Eatherton, WLJ Editor