WASHINGTON D.C.— The U.S.-Panama free trade agreement likely will take effect in November, with the signature of President Ricardo Martinelli being one of the last steps to implementing the long-delayed pact.
The U.S. also will decide soon on whether to seek “an ambitious and comprehensive” free trade agreement with the European Union, Deputy U.S. Trade Representative Miriam Sapiro told attendees of a U.S. Chamber of Commerce event Thursday. The potential pact, along with ongoing Trans-Pacific Partnership negotiations, is the next step toward liberalizing trade after President Obama signed FTAs with Panama, Colombia and South Korea in October 2011, she said.
The FTA with Panama will immediately remove duties on 86 percent of U.S exports of automotive, electrical equipment and pharmaceutical goods, and the rest of the tariffs for those shipments with be phased out within 10 years. Half the duties on U.S. agriculture exports will be immediately stricken, with the remaining duties to be removed over the next 15 years.
Although the majority of attention to Panama centers on the $5.25 billion expansion of the Panama Canal, the country is also a growing ocean shipping and air cargo hub, according to panelists at the Panama-Business Gateway to the Americas Forum. The doubling of the size of the canal and Panama’s pending FTA with the U.S., coupled with the country’s strong financial sector, are expected to further solidify its role as a transshipment center for the Americas.
Panama already has become the air “hub of the Americas,” with Copa Airlines connecting to 64 destinations in 28 countries in the hemisphere, said Pedro Heilbron, CEO of the national carrier. Tocumen International Airport recently opened 12 new gates, bringing its total to 32 gates, and Panama in September accepted bids for another expansion project at the airport.
In additional to the canal, which 14,000 vessels traverse through annually, Panama has a railroad and major highway that connect the Atlantic and Pacific oceans, giving shippers more options on how to move goods, said Juan Carlos Croston, vice president of marketing at Manzanillo International Terminal Panama.
Those geographical advantages are enhanced by Panama’s logistics services, particularly at the Colon Free Trade Zone. He said smaller shippers “that don’t have the economies of scale to buy full container loads” can gain financing in Panama City and save money by getting goods consolidated at the 600-acre warehouse park on Pacific Ocean side, the second-largest FTZ in the world.
“We are served by top 14 shipping lines in the world,” Croston said. They are complemented with a lot of feeder carriers.”
The Colon Free Trade Zone isn’t the only development benefiting from increased transshipment. Panama Pacifico, a mixed-use development near the Pacific entrance of the Panama Canal, has nearly 22 logistics companies that serve major shippers of electronics, electrical and construction equipment, and pharmaceuticals, said Henry Karondksi, managing director of the development. The 217-acre global commerce center has 120 tenants, including Caterpillar, BASF, Grainger and Dell.