Friday, November 06, 2009
Tweet[IWS] CRS: PROPOSED U.S.-PANAMA FREE TRADE AGREEMENT [15 October 2009]
IWS Documented News Service
_______________________________
Institute for Workplace Studies----------------- Professor Samuel B. Bacharach
School of Industrial & Labor Relations-------- Director, Institute for Workplace Studies
Cornell University
16 East 34th Street, 4th floor---------------------- Stuart Basefsky
New York, NY 10016 -------------------------------Director, IWS News Bureau
________________________________________________________________________
Congressional Research Service (CRS)
The Proposed U.S.-Panama Free Trade Agreement
J. F. Hornbeck, Specialist in International Trade and Finance
October 15, 2009
http://opencrs.com/document/RL32540/2009-10-15/download/1013/
[full-text, 33 pages]
Summary
On June 28, 2007, after two and a half years of negotiation, the United States and Panama signed
a reciprocal free trade agreement (FTA). Negotiations were formally concluded on December 16,
2006, with an understanding that further changes to labor, environment, and intellectual property
rights (IPR) chapters would be made pursuant to future detailed congressional input. These
changes were agreed to in late June 2007, in time for the FTA to be considered under Trade
Promotion Authority (TPA) legislation before it expired on July 1, 2007. TPA allows Congress to
consider trade implementing bills under expedited procedures. Panama's legislature approved the
FTA 58 to 4 on July 11, 2007. The 110th Congress did not take up the agreement, but
implementing legislation may be introduced in the 111th Congress.
The proposed U.S.-Panama FTA is a comprehensive agreement. Some 88% of U.S. commercial
and industrial exports would become duty-free upon implementation, with remaining tariffs
phased out over a ten-year period. Approximately 50% of U.S. farms exports to Panama also
would achieve immediate duty-free status, with tariffs and tariff rate quotas (TRQs) on select
farm products to be phased out by year 17 of the agreement. Panama and the United States signed
a separate bilateral agreement on sanitary and phytosanitary (SPS) issues that would recognize
U.S. food safety inspection as equivalent to Panamanian standards, which will expedite entry of
U.S. meat and poultry exports. The FTA also consummates understandings on services trade,
telecommunications, government procurement, investment, and intellectual property rights.
The circumstances framing the proposed U.S.-Panama FTA differ considerably from those of two
others that have yet to be considered by Congress. The deep concerns that Congress has
expressed over Colombia's violence have not been an issue in the Panama FTA debate, which is
framed more by the positive image of a longstanding strategic bilateral relationship based on
Panama's canal. Nor does Panama compare well with the continuing debate over the proposed
FTA with South Korea, which as a major U.S. trading partner, can affect key industries such as
automobile and beef production. To the contrary, Panama trades little with the United States, even
by Latin American standards, and so the FTA cannot have a major effect on the U.S. economy.
The final text of the proposed U.S.-Panama FTA incorporates specific amendments on key issues
at the behest of congressional leadership. The most significant were adoption of enforceable labor
standards, compulsory adherence to select multilateral environmental agreements (MEAs), and an
easing of restrictions on developing country access to generic drugs. In these cases, the proposed
U.S.-Panama FTA goes beyond provisions in existing bilateral FTAs and multilateral trade rules,
including those contemplated in the Doha Round.
Two other concerns still linger. The first pertains to a Panamanian labor statute, which some
Members of Congress would like to see amended so that the minimum number of workers
required to start a union would be reduced from 40 to 20, per ILO guidelines. The second relates
to questions raised over Panama's status as a "tax haven" and its refusal to enter into any tax
information exchange treaty. The new government of President Ricardo Martinelli has reportedly
agreed to set up a double taxation treaty commission to rectify the tax legislation problem, and to
change the labor law, raising expectations that Congress may be in a position to consider taking
up implementing legislation for the FTA at some point soon. For more, see CRS Report RL30981,
Panama: Political and Economic Conditions and U.S. Relations, by Mark P. Sullivan.
Contents
Panama's Canal and Economic Relations with the United States..................................................2
Early U.S.-Panama Economic Relations ................................................................................2
The Canal and U.S. Trade Policy...........................................................................................4
Panamanian Trade Relations .......................................................................................................6
Structure and Direction of Panamanian Trade........................................................................6
The Colón Free Zone ......................................................................................................8
U.S.-Panama Merchandise Trade...........................................................................................9
U.S. Foreign Direct Investment ...........................................................................................10
Summary of Trade Negotiations and the Proposed U.S.-Panama FTA........................................ 11
Market Access.....................................................................................................................12
Agricultural Trade.........................................................................................................13
Sanitary and Phytosanitary Standards (SPS) ..................................................................15
Textiles and Apparel......................................................................................................15
Government Procurement....................................................................................................16
Investment ..........................................................................................................................17
Services ..............................................................................................................................18
Intellectual Property Rights .................................................................................................18
Pharmaceutical Issues ...................................................................................................19
Labor and Environment.......................................................................................................21
Labor Issues..................................................................................................................21
Panama's Labor Conditions...........................................................................................23
Environmental Issues ....................................................................................................23
Trade Capacity Building......................................................................................................25
Outlook....................................................................................................................................26
Figures
Figure 1. Map of Panama ............................................................................................................3
Figure 2. Panama Direction of Trade, 2008..................................................................................8
Tables
Table 1. Panama's Current Account Balance................................................................................7
Table 2. U.S.-Panama Merchandise Trade, 2008........................................................................10
Table 3. U.S. Foreign Direct Investment in Panama, Mexico, and Central America.................... 11
Appendixes
Appendix A. Chronology of U.S.-Panama FTA.........................................................................28
Appendix B. Panama: Selected Economic Indicators .................................................................29
______________________________
This information is provided to subscribers, friends, faculty, students and alumni of the School of Industrial & Labor Relations (ILR). It is a service of the Institute for Workplace Studies (IWS) in New York City. Stuart Basefsky is responsible for the selection of the contents which is intended to keep researchers, companies, workers, and governments aware of the latest information related to ILR disciplines as it becomes available for the purposes of research, understanding and debate. The content does not reflect the opinions or positions of Cornell University, the School of Industrial & Labor Relations, or that of Mr. Basefsky and should not be construed as such. The service is unique in that it provides the original source documentation, via links, behind the news and research of the day. Use of the information provided is unrestricted. However, it is requested that users acknowledge that the information was found via the IWS Documented News Service.
Stuart Basefsky
Director, IWS News Bureau
Institute for Workplace Studies
Cornell/ILR School
16 E. 34th Street, 4th Floor
New York, NY 10016
Telephone: (607) 255-2703
Fax: (607) 255-9641
E-mail: smb6@cornell.edu
****************************************
_______________________________
Institute for Workplace Studies----------------- Professor Samuel B. Bacharach
School of Industrial & Labor Relations-------- Director, Institute for Workplace Studies
Cornell University
16 East 34th Street, 4th floor---------------------- Stuart Basefsky
New York, NY 10016 -------------------------------Director, IWS News Bureau
________________________________________________________________________
Congressional Research Service (CRS)
The Proposed U.S.-Panama Free Trade Agreement
J. F. Hornbeck, Specialist in International Trade and Finance
October 15, 2009
http://opencrs.com/document/RL32540/2009-10-15/download/1013/
[full-text, 33 pages]
Summary
On June 28, 2007, after two and a half years of negotiation, the United States and Panama signed
a reciprocal free trade agreement (FTA). Negotiations were formally concluded on December 16,
2006, with an understanding that further changes to labor, environment, and intellectual property
rights (IPR) chapters would be made pursuant to future detailed congressional input. These
changes were agreed to in late June 2007, in time for the FTA to be considered under Trade
Promotion Authority (TPA) legislation before it expired on July 1, 2007. TPA allows Congress to
consider trade implementing bills under expedited procedures. Panama's legislature approved the
FTA 58 to 4 on July 11, 2007. The 110th Congress did not take up the agreement, but
implementing legislation may be introduced in the 111th Congress.
The proposed U.S.-Panama FTA is a comprehensive agreement. Some 88% of U.S. commercial
and industrial exports would become duty-free upon implementation, with remaining tariffs
phased out over a ten-year period. Approximately 50% of U.S. farms exports to Panama also
would achieve immediate duty-free status, with tariffs and tariff rate quotas (TRQs) on select
farm products to be phased out by year 17 of the agreement. Panama and the United States signed
a separate bilateral agreement on sanitary and phytosanitary (SPS) issues that would recognize
U.S. food safety inspection as equivalent to Panamanian standards, which will expedite entry of
U.S. meat and poultry exports. The FTA also consummates understandings on services trade,
telecommunications, government procurement, investment, and intellectual property rights.
The circumstances framing the proposed U.S.-Panama FTA differ considerably from those of two
others that have yet to be considered by Congress. The deep concerns that Congress has
expressed over Colombia's violence have not been an issue in the Panama FTA debate, which is
framed more by the positive image of a longstanding strategic bilateral relationship based on
Panama's canal. Nor does Panama compare well with the continuing debate over the proposed
FTA with South Korea, which as a major U.S. trading partner, can affect key industries such as
automobile and beef production. To the contrary, Panama trades little with the United States, even
by Latin American standards, and so the FTA cannot have a major effect on the U.S. economy.
The final text of the proposed U.S.-Panama FTA incorporates specific amendments on key issues
at the behest of congressional leadership. The most significant were adoption of enforceable labor
standards, compulsory adherence to select multilateral environmental agreements (MEAs), and an
easing of restrictions on developing country access to generic drugs. In these cases, the proposed
U.S.-Panama FTA goes beyond provisions in existing bilateral FTAs and multilateral trade rules,
including those contemplated in the Doha Round.
Two other concerns still linger. The first pertains to a Panamanian labor statute, which some
Members of Congress would like to see amended so that the minimum number of workers
required to start a union would be reduced from 40 to 20, per ILO guidelines. The second relates
to questions raised over Panama's status as a "tax haven" and its refusal to enter into any tax
information exchange treaty. The new government of President Ricardo Martinelli has reportedly
agreed to set up a double taxation treaty commission to rectify the tax legislation problem, and to
change the labor law, raising expectations that Congress may be in a position to consider taking
up implementing legislation for the FTA at some point soon. For more, see CRS Report RL30981,
Panama: Political and Economic Conditions and U.S. Relations, by Mark P. Sullivan.
Contents
Panama's Canal and Economic Relations with the United States..................................................2
Early U.S.-Panama Economic Relations ................................................................................2
The Canal and U.S. Trade Policy...........................................................................................4
Panamanian Trade Relations .......................................................................................................6
Structure and Direction of Panamanian Trade........................................................................6
The Colón Free Zone ......................................................................................................8
U.S.-Panama Merchandise Trade...........................................................................................9
U.S. Foreign Direct Investment ...........................................................................................10
Summary of Trade Negotiations and the Proposed U.S.-Panama FTA........................................ 11
Market Access.....................................................................................................................12
Agricultural Trade.........................................................................................................13
Sanitary and Phytosanitary Standards (SPS) ..................................................................15
Textiles and Apparel......................................................................................................15
Government Procurement....................................................................................................16
Investment ..........................................................................................................................17
Services ..............................................................................................................................18
Intellectual Property Rights .................................................................................................18
Pharmaceutical Issues ...................................................................................................19
Labor and Environment.......................................................................................................21
Labor Issues..................................................................................................................21
Panama's Labor Conditions...........................................................................................23
Environmental Issues ....................................................................................................23
Trade Capacity Building......................................................................................................25
Outlook....................................................................................................................................26
Figures
Figure 1. Map of Panama ............................................................................................................3
Figure 2. Panama Direction of Trade, 2008..................................................................................8
Tables
Table 1. Panama's Current Account Balance................................................................................7
Table 2. U.S.-Panama Merchandise Trade, 2008........................................................................10
Table 3. U.S. Foreign Direct Investment in Panama, Mexico, and Central America.................... 11
Appendixes
Appendix A. Chronology of U.S.-Panama FTA.........................................................................28
Appendix B. Panama: Selected Economic Indicators .................................................................29
______________________________
This information is provided to subscribers, friends, faculty, students and alumni of the School of Industrial & Labor Relations (ILR). It is a service of the Institute for Workplace Studies (IWS) in New York City. Stuart Basefsky is responsible for the selection of the contents which is intended to keep researchers, companies, workers, and governments aware of the latest information related to ILR disciplines as it becomes available for the purposes of research, understanding and debate. The content does not reflect the opinions or positions of Cornell University, the School of Industrial & Labor Relations, or that of Mr. Basefsky and should not be construed as such. The service is unique in that it provides the original source documentation, via links, behind the news and research of the day. Use of the information provided is unrestricted. However, it is requested that users acknowledge that the information was found via the IWS Documented News Service.
Stuart Basefsky
Director, IWS News Bureau
Institute for Workplace Studies
Cornell/ILR School
16 E. 34th Street, 4th Floor
New York, NY 10016
Telephone: (607) 255-2703
Fax: (607) 255-9641
E-mail: smb6@cornell.edu
****************************************
# posted by SBasefsky : 9:22 AM
