Legislation was signed to implement free trade agreements with Panama, Colombia and South Korea this time last year, a bipartisan effort aimed at using foreign trade to drive America’s economic growth (as stated in an earlier PIERS blog). Panama needed to amend its tariff schedule and property regulations before the pact could take place; United States Trade Representative (USTR) Ron Kirk announced that the United States-Panama Trade Promotion Agreement will become effective October 31, 2012.
More than 86% of U.S. consumer and industrial exports (averaging tariffs of 7%) will enter Panama duty-free beginning Oct. 31 and nearly half of U.S. agricultural products, including high-quality beef, bacon, soybeans, wheat, barley and nearly all fruit and vegetables (averaging tariffs of 15%), will become duty-free. Most remaining tariffs will be phased out over 15 years.
The advantage for U.S. exporters:
- Businesses can drop their price relative to your non-U.S. competitors. That gives you a competitive advantage.
- Increased margins, the 7 – 12% that went to paying the tariff now goes to your business
- Simplified paperwork, business will now just have to document content of origin.
- Clauses in the FTA will make the public procurement process in Panama more transparent and will give the U.S. Government increased leverage to ensure that you are competing on a level playing field.
- Panama is a service-driven economy with almost no industrial sector; U.S. exporters will not face increased competition from Panamanian companies due to the FTA.
How do you plan to keep an eye on new trade developments in Panama? PIERS offers comprehensive coverage of U.S. waterborne exports to Panama. Register for a free demo and a solutions expert will show you how PIERS trade intelligence can assist your business.