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Volume 15, Number 9
May 10, 2009

economy

Also in this section:
The state of the Panamanian labor movement
New twists for US-Panama Trade Promotion Agreement ratification process
ACP selling the Hercules
A documentary tale from the "expat community"


GOP hails Martinelli's election and urges ratification of the free trade pact, but Dems probably have the votes to block it
New twists on
US-RP free trade

by Eric Jackson

In the waning days of the presidential campaign, PRD candidate Balbina Herrera was being pressed hard by farmers who didn't like the prospect of competing with subsidized food imports from the USA and said "forget about the Free Trade Agreement." That was interpreted by the Martinelli campaign as a matter of this stooge of Venezuelan President Hugo Chávez letting her communistic anti-American attitudes show and taken as an opportunity for the eventual winner to pledge his support for the deal, dubbed the "Trade Promotion Agreement" for image reasons, that's pending before the US Congress for possible ratification.

Herrera is not a Chavista, and her statement was cryptic. It may have been an honest opinion about the agreement's chances  rather than her judgment on its merits.

In 2006 and 2008 opponents of NAFTA-style free trade agreements picked up dozens of seats in the US House of Representatives. Before the November 2008 voting, House Democratic leaders were predicting an easy ratification of the Panama deal that had been left over from the Bush administration. However, a counting of heads indicated that this was not the case, either in the lame duck post-election session or once the new Congress assembled. The scandals dogging the PRD and Torrijos administration didn't help the ratification cause, and the Obama administration's recommendation that the deal be accepted didn't appear to be enough.

The problem is by and large not the Republicans, nor the Senate. It's the House Ways and Means Committee's Subcommittee on Trade, which is led by Michigan Democrat Sander Levin. That panel has to approve the deal or it can't be ratified.

Levin calls himself a free trader, even if the vast majority of his constituents would not. In mid-2008, it appeared that the Torrijos administration's assurances on labor and environmental issues would meet enough of the Democratic objections to get the deal passed. But then the Petaquilla gold mine in particular and its promoter Richard Fifer in general became the poster children for an argument that there is no rule of law when it comes to things environmental in Panama. The Torrijos administration's encouragement of company unions in the construction industry, refusal to recognize unions affiliated with the leftist CONUSI federation, its handing of embarrassing old and recent cases of police murders of labor activists and discrepancies between Panamanian labor laws and international standards when it comes to the rights of workers in small establishments and in indigenous communities to organize were similarly used to discredit assurances about labor standards.

Still, it seems that the agreement could have survived those objections. But then the US economy collapsed in financial scandals, and part of the text of that was a perception that ill-gotten gains were being parked in offshore havens. In the US Congress the hue and cry against Panamanian banking secrecy was raised, to the point that if this country's banking laws are not amended to at least allow tax information sharing with the United States, if not to abolish bank secrecy altogether, the free trade pact won't get through Levin's subcommittee.

So Martinelli gets elected, voices his commitment to the free trade pact --- and announces that he doesn't intend to change Panama's banking secrecy.

Florida Republican US Representative Connie Mack hailed Martinelli's election as a triumph for capitalism in a Latin America that's mostly going leftist, and urged prompt ratification of the free trade deal. A number of Panama's mainstream dailies --- which support the treaty --- took that as a sign that ratification is going to happen this year. But then Connie Mack is a guy who wants to abolish the Social Security system and even if he speaks for a majority in the 14th Congressional District in Florida, his ability to sway the votes of his Democratic colleagues in Washington is, to put it nicely, limited. While far-right Florida Republicans, particularly those of Cuban extraction, once held a veto over all US policy toward Latin America, this is not the case in Washington today.

So will the PRD make lame duck changes to rescue the treaty before Martinelli takes office? That's possible, but unlikely.

What's most likely is that Martinelli will take office with the free trade ratification process at an impasse and he will either back down on bank secrecy or that stalemate will persist. Look for various offers and counter-offers of "side agreements" to get ratification back on track. Some of the things that get brought up in such a process may have nothing to do with the trade issues now in disupte.

If the give and take over side agreements doesn't work, then expect the Obama and Martinelli administrations to restart the trade negotiation process. But in that case, don't look for that process to conclude before the 2010 US congressional elections. These agreements are unpopular up there, and members of Congress are not going to want to vote on one of them during or close to an election campaign.

Also in this section:
The state of the Panamanian labor movement
New twists for US-Panama Trade Promotion Agreement ratification process
ACP selling the Hercules
A documentary tale from the "expat community"


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