On October 22 a fifth round of US-Panamanian free trade negotiations ended without a deal. The talks are being held behind closed doors, but on the Panamanian side there are committees of people interested in the various subject matters under discussion, who sit in a nearby room and are frequently consulted by the negotiators and thus get to know snippets of what’s going on in the talks. Members of these advisory committees, and sometimes negotiators themselves, have been the source of leaks that find their ways into the daily newspapers. Of course, it will be hard to judge how accurate these indirect reports are until a proposal is published for people to examine.
It seems that on the agricultural front, the Torrijos administration is unwilling to abide by concessions that the Moscoso administration was offering. For example, it was reported in La Prensa that the previous government had offered to phase out duties on cooking oil over five years, but the new administration wants that process to be extended to 20 years. The United States, however, reportedly is sticking to the five-year period.
Even before the change of administrations here, however, agriculture was a major sticking point. The essential problem is that US agriculture is largely government subsidized and highly automated, while Panamanian farmers rarely get subsidies and tend to work with simpler technologies. These factors mean that Panamanian farm products generally can’t compete with US competitors if they are not protected by tariffs. Thus under this and the prior administration, it’s hard for the negotiators to find common ground in the field of farm products.
The disagreements continue over things that Panama doesn’t even produce. Our auto market is dominated by the Japanese, with European manufacturers holding a big chunk of the luxury car sector and Korea, China and now even India becoming players. The Americans want an immediate elimination of duties on US-built cars. That would be unfair competition, complain the dealerships that specialize in non-US autos. Probably of more consequence is the fact that duties on imported cars are one of the major sources of revenue for the Panamanian government.
Then there is the American insistence that professionals from the United States be permitted to work here “temporarily” when in the given profession Panama does not educate sufficient people in the field. The arguments against that, from the Panamanian point of view, are first that many of our professionals are educated abroad, and second that this type of arrangement could directly affect the development of this country’s university system. The political reality is that the organizations of most Panamanian professions, both the internationally competent advanced ones (like many fields of health care and architecture) and the parochially backward ones (like accounting and journalism), are dead set against foreign competition and would throw their weight behind the opposition to a free trade treaty if it allows American competitors in. It seems, however, that the US negotiators are not aiming at opening this country’s largest and most powerful professions, but are trying to create openings for American nurses, economists and lab technicians.
Left for a sixth round of talks are the telecommunications and maritime sectors, plus those industries in which Panama is a producer: salt, glass, paper, plastic and aluminum. Some likely sticking points in the telecom sector will be the effective though illegal monopoly that Cable & Wireless holds over fixed line telephony in Panama and the BellSouth (now Telefonica) and Cable & Wireless exclusive rights to provide cell phone services, which expire in 2007. In the maritime sector, Panama’s main aim is to be considered a “distant port” by the United States, a classification that would allow passengers bound for the US to board cruise ships here and thus boost our national tourism industry. Our small manufacturing sector appears to be split between those who think that they might compete in the US market and those who fear that their businesses would be wiped out by unrestricted American competition.
Before a US-Panamanian agreement is reached, a battle in the US Congress over the Central American Free Trade Agreement (CAFTA) will likely set the parameters for what will be acceptable on the American end. Although the Republicans gained seats in both houses, their victory on November 2 was not big enough to break a Democratic filibuster in the Senate, and the question then becomes whether the Democrats choose to be a combative opposition and whether they choose that treaty as one of the issues on which they’ll make a stand. IF CAFTA is not ratified, that would likely signal an impasse in many other hemispheric economic integration processes, including the US-Panamanian free trade talks.
Also in this section:
No deal yet in US-RP free trade talks
Criminal case reopened in Banco DISA collapse
The Panama News shatters its old readership records
Business & Economy Briefs
