The U.S.‐Panama Trade Promotion Agreement, an initiative through which President Barack Obama seeks to increase opportunities for U.S. businesses, farmers, and workers through improved access for their products and services in foreign markets, takes effect Oct. 31.
The historic agreement is also expected to benefit Puerto Rico, which already has a steady commercial relationship with the Central American nation.
The U.S.‐Panama TPA is expected to increase U.S. exports to Panama by removing or reducing trade barriers in the Panamanian market and by leveling the tariff playing field. Ninety‐eight percent of Panama’s exports to the U.S. entered duty‐free in 2010, while fewer than 40 percent of U.S. goods entered Panama without tariffs, according to the Office of the U.S. Trade Representative.
For the island, the new trade agreement will build upon existing commercial ties. Through August 2012, Puerto Rico had exported more than $111.5 million in goods to Panama and imported some $6.8 million, according to data gathered by the Puerto Rico Statistics Institute.
In 2011, the island’s exports to Panama exceeded $195 million, while imports were a little more than $10.2 million, the agency’s data shows.
U.S. goods exports to Panama in 2011 were $8.2 billion.
In anticipation of the new scenario, Puerto Rico entrepreneurs — often backed by the government — have been preparing themselves for the better part of the last year to delve into Panama’s business circuit, through training and commercial missions.
Last year, a delegation of 14 local companies organized by Puerto Rico Trade participated in Panama’s Expocomer 2011 fair, generating nearly $5 million in immediate and future sales in the areas of technology, food, construction and renewable energy. Most recently, in March 2012, a group of engineers participated in a workshop to learn how to go about exporting their services to Panama, specifically to compete in the $5.25 billion Panama Canal expansion project.
Panama’s strategic location as a major shipping route and the massive project underway to expand the capacity of the Canal enhances the importance of the U.S.‐Panama TPA.
Another area that is expected to gain strength from the agreement is farming, as nearly half of current U.S. farm exports to Panama will become duty free immediately and most of the remaining tariffs will be eliminated within 15 years.
“The U.S.-Panama Trade Promotion Agreement enters into force next week, eliminating tariffs and other barriers to U.S. goods and services, promoting economic growth, and enhancing trade between the United States and Panama,” U.S. Agriculture Secretary Tom Vilsack said Monday.
“Last year, President Obama insisted that we get this agreement with Panama right-alongside pacts with South Korea and Colombia-forging a better deal for America’s workers and businesses that led to strong bipartisan support in both houses of Congress. Altogether, these agreements will bring an additional $2.2 billion in agricultural exports,” he said.
In 2011, the United States exported more than $504 million of agricultural products to Panama.