Chances for the US-Panama free trade agreement as we know it grow thinner

US Senator Max Baucus. Photo by Senator Baucus's office

Win some, lose some

Max Baucus, the maverick Democratic senator from the mainly Republican western state of Montana, is an important man in Washington, with whom the nation and the world are about to become much better acquainted. He's the chairman of the Senate Finance Committee.

He was in the news lately about Panama, but that's not so likely to be his claim to fame. He held a committee meeting on May 21 to discuss the long-stalled US-Panama Trade Promotion Agreement, which was negotiated between the Torrijos and Bush administrations under the now-expired "fast track" procedure and was ratified without any significant debate in Panama's National Assembly but has been lingering on the US side since the middle of 2007.

Recall that the AFL-CIO dropped its opposition to the "free trade" pact in exchange for Panamanian assurances that labor and environmental standards would be upheld. (Never mind that they never really were during the Torrijos years.) That formula worked to get the US-Peru pact ratified, but then the PRD decided to make its Norieguista statement by electing Pedro Miguel González, who has a US warrant out for his arrest on terrorism charges, president of the National Assembly. While he headed the legislature (through August of 2008) US ratification was out of the question. By the end of his term there was an American general election pending and Congress was not about to take up one of these unpopular trade deals before the vote. Then the US economy all but collapsed and dozens of new members who don't like the NAFTA template for trade relations were elected to Congress.

The conventional wisdom was that ratification of the US-Panama treaty was still a slam-dunk, but when the Democratic leadership in the House of Representatives counted votes, they found this was not the case. Most crucial of all, it was and is not the case in the Trade Subcommittee of the House Ways and Means Committee. If the deal doesn't pass in that subcommittee, it never gets to the floor.

Before the November 2008 elections the opposition was aimed at environmental and labor standards, but because of all the financial scandals --- and especially because it is suspected that billions of dollars looted in Ponzi schemes got salted away in Panama and other places with banking and corporate secrecy --- Panama's status as a haven for tax cheats and money launderers has come front and center in the US debate. The target is moving. At first, Trade Subcommittee chair Sander Levin warned that there would be no deal if Panama didn't do anything about banking secrecy. But his brother, Senator Carl Levin, is now insisting that both banking and corporate laws must be reformed. The opponents' case as it now stands is stated in an essay by Senator John Kerry.

Only six senators showed up to Baucus's hearing, and the Obama administration sent in a second string trade official, Assistant US Trade Representative Everett Eissenstat. The latter, to Baucus's frustration, announced that the White House would not present the treaty to Congress until the president had formulated a new framework for trade agreements. Baucus complained that "the Panamanians may back out."

Eissenstat said that US negotiators were working with the lame duck Torrijos administration to see about an agreement on the tax haven issue, but what we have been getting in the news here is that Torrijos might agree to an unpublished register of the beneficial owners of Panamanian corporations to show to US investigators under certain circumstances. The possibilities of the PRD ending banking secrecy or reaching a tax information sharing agreement with the United States before they leave office are a bit more remote. Martinelli and his people, for their part, flatly rule out any changes in bank secrecy.

Other inducements might be proffered on either side, so we really can't predict with much certainty what the PRD might do in its final weeks in this power cycle. Martinelli says he wants the United States to ratify, but would he give more concessions without exacting something in return from the other side?

I would expect this treaty to die, but I also expect talks about a new proposal to eventually take place between the Obama and Martinelli administrations. Those would not be easy negotiations.

Every year Panama exports some $375 million worth of things to the United States, but imports about $5 billion worth of US products. The proposed trade pact would expand US agricultural exports and ruin many of our farmers, who would not be able to compete with subsidized US imports. Panama would see very little increase in its exports.

On the other hand, "free trade" is a popular cause in Panama because our economy largely depends on international commerce. That's what the Panama Canal and the Colon Free Zone are all about. Martinelli may support some of the same trade positions that Torrijos has taken, but on economic matters the incoming administration will be substantially to the right of the outgoing one. So look for an ideological urge to negotiate a deal with the USA from a Martinelli administration, but on the other hand less willingness to make the concessions that Washington Democrats want.

So maybe Senator Baucus has reason to worry that "the Panamanians may back out." If so, he'll lose this one, for now anyway. And if those Americans who oppose economic integration on the NAFTA model spend too much time celebrating, that could also lead to defeat. The Panama deal isn't dead yet, and meanwhile the trade battle will be shifting to the new level of influencing Obama's template for deals yet to come. Panama may well become the first of the post-NAFTA generation of trade agreements.

Those of you who watch news from the United States on cable TV will be seeing a lot more of Baucus in the months to come, about something else. You see, his Senate Finance Committee will be a principal battleground in the Democrats' drive to pass comprehensive health care reform. That's not a sure thing either, as the insurance companies, HMOs and pharmaceutical companies are at their battle stations and well funded for a major confrontation. But on that issue, although he will face criticism from both the right and the left, Baucus is much more likely to have the votes on his side.

* * *

Mango bowl. Photo by Eric Jackson

It's mango season, a bit early. Also, it's bug season, a bit late.

Of course, we have had insect activity all along. Otherwise, these mangoes would not have been pollinated.

So it's rude to compare the human predators in our community to insects. Bees provide a valuable service to humanity, and generally only sting in self-defense. For a contrary point of view, see this issue's letters section.

* * *

Photo courtesy of Jorge Ameer

They're going to put us in the movies.

Of course, they already have, in much larger productions than this one.

But independent Panamanian film producer/director Jorge Ameer's next movie, Sabor Tropical, was shot during this year's Carnival in Las Tablas and is now in the editing phase. It should open in Panama sometime next January.

Maybe by that time, Panamanians will need an entertaining escape. On paper many things about Panama look very good, but there are some tremendous difficulties confronting Ricardo Martinelli's new team. There will be plenty of time to argue, but those who supported him and those who did not ought to hope for his success. Very few of us would escape the consequences of another failed administration. Here in Panama and elsewhere in the world, it's time to acknowledge certain realities.

Do leave yourself some wiggle room, however. Maybe, for example, you might want to take the time to appreciate some different but great music videos from yesteryear, as highlighted on this issue's Cool Internet sites.

Enjoy.

Eric Jackson
editor & publisher

PS: People who are on The Panama News email list are notified as new articles are uploaded onto this website, as the production cycle bears an ever more tenuous relationship to the stated dates of any particular issue. People on this list started getting links to articles in this issue more than a week before this front page was uploaded. Send me an email asking to subscribe if you want to get on the email list.

Listen to Internet radio as you read The Panama News by clicking onto one of the buttons below. Several of these buttons will get you to places that offer multiple channels.

Panama Hotel: Luxury apartment rentals in Casco Viejo, Panama City
Panama Real Estate: Original travel and investment articles on The Panama Report
Make the Executive Hotel your headquarters in Panama City
Find the boat of your dreams through Evermarine

-
The Panama News Editors

Editor & Publisher - Eric Jackson
Contributing Editor - Silvio Sirias
Contributing Editor - José F. Ponce
Copy Editor - Sue Hindman