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The US-Panama free trade negotiations, stalled when a secret letter by which the Torrijos administration promised to take the determinations of US inspectors and American policymakers  at face value when deciding Panamanian agricultural health policies, seem to have gotten around that crisis and it appears that a new round of talks will be announced shortly. However, the way around the roadblock, even when played up as the Torrijos administration would like by mainstream media which unanimously support a free trade deal, will probably not convince many of the doubters.

The letter that prompted former Agricultural Development Minister Laurentino Cortizo's resignation was categorical in its subordination of Panama's health inspection policies to those of the United States, but President Torrijos claimed it was just a draft. The American negotiators insisted that it was a done deal, but soon moved off of that position when informed that it would be a deal breaker. Thus both governments went into damage control mode.

Step one in damage control was both the US ambassador and President Torrijos hitting the campaign trail. By and large the former went to business groups and the latter went stumping around the countryside. But the messages, destined for different audiences, were sometimes at odds.

"It's a lie that you will be affected by the free trade treaty, don't let yourself be deceived, it's false," Torrijos declared at event in Pese where he handed out land titles to farmers who held their property by squatters' rights. But meanwhile, before the Panamanian Business Executives Association (APEDE), Eaton declared that "when we debate about 'winners and losers' in commercial accords, regrettably the focus is generally upon a few producers, rather than the great majority of producers."

Eaton blasted agricultural trade barriers "to subsidize uncompetitive producers" --- which the campesinos of Pese would surely be in comparison to their mechanized and subsidized American counterparts. Even if US agricultural price supports were ended, any farmers in the USA with incomes comparable to most small farmers here would qualify for food stamps and other anti-poverty benefits, subsidies that don't exist here.

Meanwhile, while condemning his critics for sowing fear, Torrijos was playing a fear card of his own. In his rural speeches he reminded farmers that US trade barriers that were lowered by the old Caribbean Basin Initiative are being restored, and that if Panama doesn't sign a free trade deal with the Americans the agricultural exports that we now make to the United States will be ended.

On another track, Torrijos moved to quell protests about the elimination of Panamanian sanitary controls by sending a delegation to the United States for an "inspection" of US agricultural sanitation controls. It was a political show, hardly long enough to do anything approaching a real inspection and pointedly omitting any consultations with American consumer groups who have been complaining for some time about the decline of US food inspection standards due to the budget cuts and ideological proclivities of the Bush administration.

In the backtracking from the celebrated letter two concessions were made: first, Panama will not automatically renounce its right to decide about the admissibility of US food products; and second, Panama will have the right to have its inspectors present at US food production facilities where products bound for the Panamanian market are raised or processed.

These concessions calmed some of the farmers' protests here, but the former would be more important than the latter. If Panama retains its power to restrict beef imports in the event of a mad cow outbreak, the ranchers' sincere objections will have been met. (Abuse of sanitary controls as a protectionist measure, which has happened, would be another question.) However, the Panamanian government lacks the budget to station any significant number of agricultural inspectors in the United States, so guarantees of a right to do so notwithstanding, this country would still depend on American inspectors.

The PRD-aligned daily newspaper La Prensa is claiming that polls show most Panamanians support a free trade deal with the United States, but actually all credible opinion surveys show more opposition than support, with a large segment of the population suspicious but willing to wait and see what's in a free trade agreement. As the negotiations have mostly been secret, people here don't know many of the terms that have been agreed.

Both Ambassador Eaton and President Torrijos are expressing optimism that an agreement will soon be reached, although neither are setting any dates. On the Panamanian end a canal expansion referendum campaign could be a complicating factor, because polls have suggested that public support for such a project rises and falls with the president's personal popularity and it's likely that a free trade agreement will be unpopular with the voters.

Even if farmers' objections are met, and except for some of the larger ones they are unlikely to be, a free trade deal based on the NAFTA and CAFTA model will touch many other topics that are sensitive to other sectors of the population, from restrictions against cheap generic drugs to giving US companies access to contracts now reserved for Panamanian firms to intellectual property rules that creative people and traditional healers are likely to find offensive. FRENADESO, an alliance of leftist groups and militant labor unions, vows to mobilize public opposition to a free trade agreement.

Torrijos's party does have a comfortable majority in the National Assembly, so there is no question that he'd have the votes to ratify any agreement. His main concern would be a treaty's effect on the way that his fellow citizens perceive him.

CAFTA passed the US Congress by just a few votes, and provoked rioting and election upsets across Central America. The conventional wisdom has been that with the CAFTA hurdle passed, other free trade agreements in the Americas will have an easier time being ratified in the United States.

Panama, however, has an unsavory reputation in the minds of many Americans, dating back to Noriega times and fed by repeated scandals of American citizens using this country as a base of operations for fraudulent schemes on an international scale. We do not yet know whether congressional Democrats would play the anti-corruption card in an election year debate about free trade with Panama, but with the Republicans already hurting from the ongoing Abramoff bribery scandal it would be reasonable to expect this tactic to be used. The argument could be couched in terms of questions about the wisdom of economic integration with a country that has banking and corporate secrecy, a court system that runs on bribery and undue influence and entrenched political corruption, to the extent that no US politician facing a close race for his or her re-election would want to be in the position of defending Panama.

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