Trade Agreement Strengthens U.S.-Panama Relations

Posted by Phyllis Powers
October 31, 2011
Two Cargo Ships Sail Through Pedro Miguel Locks at Panama Canal

One of the greatest pleasures I have had in my year as Ambassador to Panama was in picking up the phone to congratulate President Martinelli on the U.S. congressional approval of our Free Trade Agreement (FTA). Both the people of Panama, as well as American exporters, had been waiting four years for this significant step forward in our bilateral relationship.

A month ago, I had the chance to participate in a trade promotion tour with other U.S. Ambassadors. We traveled to Detroit, Houston, and Chicago, talking to different business leaders. I was able to see firsthand how the FTA would benefit U.S. companies as I got direct feedback from the U.S. business community on the importance of trade and investment in Panama. I was thrilled this month when Congress approved the FTA and President Obama signed it into law. The FTA will serve to strengthen the strategic partnership between our two countries that started way back with the construction of the Panama Canal more than 100 years ago.

This new phase of U.S.-Panamanian relations began at noon on December 31, 1999, when Panama took over full control of the Canal and all of the lands formerly associated with it. The Canal is a major global commercial artery. Roughly 5 percent of the world's trade transits the Canal. That trade directly supports the U.S. economy, as about two-thirds of ships transiting the Canal are headed to, or coming from, a U.S. port.

A few years after the transfer of the Canal, the United States and Panama began negotiations for a free trade agreement. The result of those negotiations was the agreement the U.S. House of Representatives passed 300-129, and the U.S. Senate passed 77-22 on October 12. With this agreement, Panama will virtually eliminate its average tariff of 7 percent on U.S. consumer and industrial products and average tariff of 15 percent on U.S. agricultural products. Reducing the price of American-made and American-grown products will benefit Americans and Panamanians alike. There are many additional benefits to the agreement, including state of the art provisions to protect and enforce intellectual property rights and to reduce regulatory red tape, and important disciplines relating to customs administration and trade facilitation. The agreement contains high standards for protecting labor rights, carrying out covered environmental agreements, and ensuring enforcement of key domestic labor and environmental laws.

This free trade agreement will start the next phase of the relationship between our two countries. It will strengthen our economic and political ties with Panama; support transparency, democracy, and freedom; and contribute to greater competitiveness and economic growth in both countries. This is a mutually beneficial agreement between two close partners, and I am honored to be serving in Panama during this historic moment.


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