By Mario Hubert Garrido
Chief Correspondent of Prensa Latina in Panama
Following the formal request for this procedure, the northern country’s authorities confirmed it would not be reviewed, while several Canal Nation ministers indicated it will affect national producers of sensitive products such as milk, rice, pork and chicken.
The Panamanian head of agricultural development, Augusto Valderrama, explained that the intention is to contribute to the well-being of local production and food security.
In addition to Valderrama, the President of the Republic Laurentino Cortixzo, Ministers of Foreign Affairs Janaina Tewaney and Minister of Commerce and Industry Federico Alfaro also held meetings with United States Undersecretary of Agriculture Alex Taylor, but without major results.
THE PACT
Panama and the United States signed the TPC on June 28, 2007 to reduce tariffs.
The pact affects key local produce such as rice, dairy and meat, and exempts more than 87 percent of the northern state’s exports of manufactured and consumer goods to the Channel country from tariffs.
Statistics from the poultry sector in Panama indicate that since the entry into force of this agreement, the United States has recorded a surplus of more than $2800 million in general trade and more than $400 million in agriculture.
Panama only exported about $90 million worth of products to the northern nation.
In March 2022, Valderrama warned that if the United States does not accept the revision of the agreement, alternatives would have to be sought, one of which would be to export these products to other countries, alluding to China.
Now the official points out that the review of the TPC must take place at a level that goes beyond simple trade and trade exchanges, it must act as a strategic partner and be linked to the food security situation on the continent, which is becoming more delicate every day.
The TPC between Panama and the United States also includes disciplines related to customs administration and trade facilitation, technical barriers, government acquisitions, investments, telecommunications, e-commerce, intellectual property rights, and labor and environmental protection.
The request to renegotiate this agreement was reiterated by Valderrama during a visit to Panama in early March 2022 by Julie Callahan, United States Representative for Agricultural Affairs and Commodity Policy.
OTHER APPROACHES
On the thorny issue, Trade and Industry chief Federico Alfaro acknowledged that the executive will continue to insist on a review of the TPC, although the United States has already said it will only focus on implementation, not renegotiation.
Various meetings and exchanges also took place with United States Trade Representative and Chief Negotiator of the Trade Promotion Bureau Katherine Chi Tai and Secretary of Commerce Gina Raimondo.
If this deal is left as it is, he said bringing it to zero tariffs means the national market will receive more exports of North American products, which will make Panama’s agricultural sector less competitive.
The tariff cut began in 2022, he recalled, with rice and chicken (slice of thigh), allowing US industry to pay a lower tariff and subsequently flooding the Panamanian market with imported products .
Among other options for Panama, Alfaro mentioned TPC instruments to defend producers’ interests in the four sensitive areas in the short term.
He also pointed out that if the review of the tariff cut doesn’t make progress with the United States, they as a government will look for alternative formulas, such as B. Setting up quotas to ensure that producers are not negatively affected by this problem. With this proposal, according to Alfaro, Panama has the Dominican Republic as a reference.
On the other hand, he said he understands the position of the United States — considered here as a strategic partner — and its complexities in renegotiating a treaty due to technical and political issues, considering they have a Congress of antagonistic strength between Republicans and Democrats .
Despite this, Alfaro said that “it is important for us to continue to warn about the negative impact this may have on producers” as the Panamanian market means nothing to the US agricultural sector but US imports would be a major consequence. .
According to official statistics, imports of agricultural products from the United States are about $480 million versus Panamanian exports, which are about $48 million, showing a large asymmetry.
Free trade agreement with China
Regarding a free trade agreement (FTA) with China, Alfaro stated that they continue to evaluate what was negotiated back then during the government of Juan Carlos Varela (2014-2019).
The focus right now isn’t to deal with a pending FTA, but to maximize the opportunities China offers to Panamanian exporters.
China represents an important jurisdiction in economic affairs and is one of the main users of the canal, Alfaro said.
“For us, China represents a market with significant potential and we have already seen this with Panamanian meat exports, for example,” he added.
More than three years have passed since the free trade agreement between Panama and China was put on the table.
Faced with these attempts, the President of the Republic, Laurentino Cortizo, indicated in 2022 on the IX. America Summit in Los Angeles, USA, that the negotiations will be more focused on the agricultural sector.
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