On August 21,
at a Taipei summit that gathered the heads of state of the
Republic of China (Taiwan), the Republic of Panama, the Central
American republics and Belize, Presidents Mireya Moscoso and
Chen Shui-bian signed a free trade treaty, the first of its
kind for Taiwan and the biggest of its kind for Panama.
Taiwan’s
24 million inhabitants represent a large potential export
market for Panama, a country of just under three million, but
last year Panamanian exports to the island nation only amounted
to a little more than $4.8 million. The Taiwanese, on the other
hand, exported some $127 million worth of goods and services to
Panama, much of which actually passed through Panama to third
countries via the Colon Free Zone. If the legislatures of both
countries approve the treaty as expected, beginning in January
6,200 categories of Taiwanese products, representing about 71
percent of its current exports to this country, will enter
Panama duty-free, while Taiwanese duties on 4,160 categories of
Panamanian products, representing about 48.5 percent of our
exports to Taiwan, will be eliminated. By 2014 97 percent of
Taiwanese exports to Panama and 95 percent of Panamanian
exports to Taiwan will be duty-free.
Generally the
industrially advanced Republic of China sells us manufactured
goods and we sell them agricultural products. The free trade
pact’s boosters in Panama are predicting an immediate
sharp increase in this country’s exports of meat and
poultry to Taiwan.
The most
important Panamanian commodity that was left off of the duty-
free list was rice. Taiwan will also retain duties on passenger
vehicles and tobacco products that it might import by way of
the Colon Free Zone.
There are
skeptics on the Panamanian political scene, and Partido Popular
president Rubén Arosemena has criticized the Moscoso
administration for failing to publish the treaty or provide
copies to the legislators who are expected to approve it. The
treaty text is, however, available in PDF format in Spanish, Chinese and
English on the Taiwanese government’s trade website.
For Taiwan,
which is facing potential economic isolation in the face of
mainland China’s overtures to all of Taiwan’s
important trading partners, the treaty with Panama has an
important symbolic value. Taiwan’s Vice-Minister of
Economic Affairs Steve Chen told reporters in his country that
his government hopes that the pact will encourage other
countries to follow suit. Negotiations for free trade between
Taiwan and Japan and Singapore are underway, but have been
hampered by Chinese diplomatic pressures. During a recent trip
to the United States, Taiwanese Vice-President Annette
Lu’s request to visit Boeing was turned down by the
company after China warned that it could negatively affect the
company’s business prospects with the world’s most
populous nation.
The Moscoso
administration rather maladroitly tried to straddle the China-
Taiwan divide by planning to send Vice-President Arturo
Vallarino to China at the end of August. China has important
economic relations with Panama, as many of its exports to Latin
America and the Caribbean are wholesaled out of the Colon Free
Zone and much of its commerce with Atlantic side of the
Americas and Western Europe passes through the canal. However,
Beijing demands that Panama break diplomatic relations with
Taiwan as the price of normal relations with China, something
that Panama has resisted for many years. The Vallarino mission,
however, didn’t go over well in Taiwan, where legislator
Parris Chang ridiculed Moscoso’s claim that she
“couldn’t control” Vallarino’s plans for a
“personal visit” to the People’s Republic of
China and blasted “the duplicitous strategy that Panama
has practiced in recent years, shuttling between Taipei and
Beijing to extort financial aid from both sides.”
Ultimately Vallarino’s trip was canceled.
President
Moscoso has said that Panama’s China policy won’t
change in her administration, but it’s highly unlikely
that the Arnulfista Party and its allies will win next
May’s elections. Front-runner Martín
Torrijos’s PRD is split on the issue of whether to
maintain diplomatic relations with Taiwan or dump them in favor
of ties with China, while the PRD’s junior coalition
partner, the Partido Popular, favors China over Taiwan. The
candidate currently occupying second place, Guillermo Endara,
maintained ties with Taiwan during his 1989-1994 administration
but says that if he’s elected again Panama’s China
policy will be reviewed.
Panama’s
Chinese community is split over the issue, with the longer-
established elements tending to favor Taiwan and the more
recent immigrants, most of whom come from the mainland,
generally in favor of closer ties with the People’s
Republic. The Panamanian labor movement, part of which is
motivated by leftist ideology and consequent preferences that
date back to the Chinese Civil War that left Mao Tse-tung in
control of the mainland and Chiang Kai-shek holding out on
Taiwan at the end of 1949, doesn’t think much of the
Panama-Taiwan free trade pact. This country’s business
leaders, some of whom are motivated by neo-liberal ideology and
consequent preferences for anything with the “free
trade” label affixed, are more divided than organized
labor but generally favorable to the deal.
China, seeking
to drive wedges into the political fissures, has in recent days
matched Taiwan’s long-standing offer to finance the
construction of a third set of Panama Canal locks and promised
that if visa restrictions are eased visitors from the
People’s Republic of China would provide a big boost for
Panama’s tourism industry. “We believe that if Panama
handles the [Taiwan] question adequately, normalization will
take place,” the Chinese Foreign Ministry said in a press
statement. But Taiwan’s Vice-President Lu, passing through
Panama on a trip around Latin America, dismissed Beijing’s
moves. “This attempt by Beijing is nothing
surprising,” she said. “This has been their attitude
for the past 50 years.”
Also in this
section:
Business & Economy
Briefs
Alemán's economic
platform
The problem with investing
the Social Security Fund
Panama-Taiwan Free trade
pact signed
Arguments over shopping
center permits
