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Portman signals switch in American free trade strategy

Free trade with the USA closer than it seemed?

by Eric Jackson

If you have been following the prolonged free trade negotiations between the United States and Panama, you will know that the talks have been on hold since this past February, after eight rounds that always reached an impasse over agricultural issues. Essentially Panama wants a sugar quota that American cane and beet farmers strongly opposed, and US farmers want duty-free access of their subsidized products to the Panamanian market, which agricultural interests here are resisting. The negotiations were put off while the US Congress debated the Central American Free Trade Agreement --- which ended up passing with 55 votes in the Senate but by only a two-vote margin in the House of Representatives. After that the Bush administration put its emphasis on talks with the Andean countries, which have been bogged down over intellectual property issues and over the South Americans’ reluctance to work the US phobia about Venezuela into the proposed relationship.

To some observers like Jessie Gaskel of the Council on Hemispheric Affairs, it’s  a matter of a hardening line on trade policy by US farm interests that tend to support the Republicans and very jealously defend their subsidies being reflected in Washington’s bargaining position, and whether Panama will back down. In a press memorandum written this past August Gaskel saw no sign of a potential compromise in the talks between the Torrijos and Bush administrations.

However, the process has taken on some signs of life.

While in New York for the United Nations conference, President Torrijos told reporters there that the negotiating process is not stalled and that a free trade agreement is a priority for both Panama and the United States. The same week Commerce and Industry Minister Alejandro Ferrer was in Washington to meet with US Trade Representative Robert Portman to talk about renewing the talks.

Although the congressional battle over the Central American treaty was bruising, Potman said in a Washington press briefing that "CAFTA was not a landslide, but we did win. It gives us a bit of wind at our backs."

No date has been set for a ninth round, but Ferrer told El Panama America that it’s likely to be in a few weeks.

For his part, Portman has indicated that the Americans have switched burners with the Panama and Andean talks. Now he’s saying that he expects a deal with Panama this year, while the Bush administration’s target to finalize the process with the Andean countries is in 2006.

In addition to the agricultural impasse, there is the issue of investment guarantees that the Americans want to be ironed out before there can be a Panama-USA free trade agreement. Moreover, as the talks have been held behind closed doors and information about their results has been selectively released, it is likely that if and when a free trade deal is reached there will be groups in both Panama and the United States that will discover their interests affected and seek to intervene in the ratification processes.

In the event of a free trade agreement Panamanian farmers’ groups, labor unions and leftist organizations are likely to oppose it. Panama’s American Chamber of Commerce is strongly in favor of a free trade deal, and most of this country’s other business groups like the idea in principle but are withholding their judgment until they see the contents of any agreement.