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business & economy

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Panama to restart free trade talks with Central America
by Eric Jackson, mainly from other media

The main problem with free trade between Panama and our Central American neighbors is that we all produce mostly the same things. They're mostly known as banana republics, and we produce bananas too. We export beef, and are negotiating quotas for imports of beef from Nicaragua. Costa Rica does a bit of high tech manufacturing and Honduras has its maquiladoras while we are a major import/export center for the manufactured goods of the industrialized world, so there are some exceptions to our common identity as producers of producers of tropical fruits, vegetables, seafood and meat. Those, however, are exceptions rather than the rule.

Another problem has to do with Panamanian identity. Within the political class, the idea of being a powerful aristocrat amidst a starving peasant majority, a life of cheap services and all the impunity that status can buy, has been an attractive one --- "banana republic" is a pejorative term in most minds, but there actually are people who wish that Panama more closely fit the stereotype. But the weak and destitute Central American countries have historically been apart from Panama. We were never part of the Captaincy General of Guatemala or the United Provinces of Central America like they were. Our indigenous cultures and languages are not related to those of the Aztecs or Mayas of Mexico, but rather come from the Chibchan culture of the Colombian highlands or the South American lowland jungle Chocoan peoples. In Colonial times we were part of the Viceroyalty of New Granada and we attained independence from Spain as part of the Bolivarian region. We have historically been more economically diverse, wealthier and better educated than our Central American neighbors.

Thus prior attempts to unify Panama's economy with those of the Central American countries have foundered over arguments about agricultural products that we both produce, fears of this country being overrun by destitute peasants of another culture (one particularly scary variant being the tattooed "mara" gangsters) and Panama just not having anything in particular that we might offer to our neighbors. Thus free trade talks between Panama and the Central American countries were talked about in the 90s and started by Mireya Moscoso --- a wannabe banana republic aristocrat if there ever was such a thing --- but have been stalled since 2002. When the Moscoso administration tried to get Panama included in the CAFTA talks among the Central American countries, the Dominican Republic and the United States, the Americans balked, arguing that Panama is a different economy that presents distinct issues.

This year's EXPOCOMER trade fair, however, was taken as an opportunity by the Central American heads of state to snip the ribbons on their respective pavillions and then sit down for a summit about regional integration. In addition to President Torrijos and the heads of the states that were once part of the United Provinces of Central America, Dominican President Leonel Fernández and a representative of Belize (an English-speaking former British colony) attended.

It was agreed that a schedule of talks aimed at establishing a regional customs union by the end of the year would be drawn up. Along with this process a general reduction or elimination of most import duties is contemplated.

The respective countries are also looking to end the long-standing problems about motor vehicles licensed in one country being able to freely travel in the others, particularly in the case of truckers bearing containers of merchandise. A lowering of immigration barriers is not on the agenda at this time.

At the summit the Central American nations and the DR, but not Panama, agreed to look into free trade deals with the European Union and with the CARICOM nations. Panama has special trade issues with Europe that its neighbors do not, and a history of discrimination against those Caribbean countries whose principal language is not Spanish.

One aspect of regional integration that has been slowly progressing while other matters have been stalled is the construction of a regional power grid. That's probably because the impetus for this development comes most of all from the north. Energy guzzling places like California would like to draw power from Mexico, but if that happens on any significant scale the Mexicans would need to find supplies to replace the energy they sold to the Americans and would look southward toward Guatemala and beyond. Because energy is lost when electricity is transmitted over long distances, Panama wouldn't be able to supply California, but Mexico might, making up the difference with power from Guatemala, which in turn would import electricity from Honduras, which would get power from Nicaragua, which would tap into Costa Rica's supply, which would be replenished from Panama. It could also work in the other direction and proposals to link Panama's power grid with that of Colombia add another twist.

Also in this section:
Central American free trade talks to start again
Panama on edge over renewed threat of electric rate hike
Third US mad cow case hasn't prompted the RP reactions that prior ones did
Business & Economy Briefs