The long anticipated US-Panama Free Trade Agreement (FTA) is expected to take effect in early November after years of delay. The agreement will immediately remove duties on 50% of US exports of agriculture and 86% of US exports of automobiles, electrical equipment, and pharmaceutical goods. This FTA will be a huge step for both countries as the US is Panama’s largest trading partner and roughly 10% of US imports and exports pass through the Panama Canal.
Panama’s infrastructure and economy make the country a very attractive trading partner to the US. Panama is a growing ocean shipping and air cargo hub with a railroad and major highway that connects the Atlantic and Pacific Oceans. A $5.25 billion expansion of the Panama Canal is currently underway, which will double the canal in size. Panama also has an extremely strong financial sector, which the US will gain access to as a result of the FTA along with other areas of the service dominated economy including telecommunications, energy, and professional services.
The US-Panama FTA has seen many delays as it was originally negotiated under the administration of George W. Bush but was not approved by Congress before he left office in 2009. The agreement was finally approved in October 2011 after President Obama made several changes to the agreement. Panama's National Assembly passed the final piece of legislation last week and is now waiting for Panama’s President Ricardo Martinelli to sign the legislation. The US is hoping that both countries will begin taking advantage of the agreement early next month.
For more information on the US-Panama FTA, please read:
Journal of Commerce, “US-Panama FTA Expected to Take Effect in November”
Reuters, “U.S., Panama to implement trade pact by early November”
