Panama held hostage by commercial treaties

Panama is allegedly being held hostage by a number of free trade agreements that the country has signed globally, according to local experts.

Panama has signed more than 20 trade agreements with other countries, some partial and some total. Nevertheless, the massive wave of imports this has generated has placed the country's local producers and manufacturers at a disadvantage.

National agricultural and industrial production has been hit as many foreign products can now be imported into the country at zero tariffs.

One glaring example is the free trade agreements the country has negotiated with United States. The agreement stipulates that most of the products it covers will be imported free of duties within eight years of the agreement being signed.

The downside of these agreements for the country is indeed reflected in the increasingly large trade deficit that Panama has with the rest of the world.

According to data or from the Central American Integration Secretariat (Sieca), Panama’s trade deficit has increased by 8.4% in the last five years. The data show that Panamanian exports reached a mere $695.7m in 2015, while imports topped $12.13 billion, leaving the country with a trade deficit of $11.44 billion.

According to Pedro Acosta, President of the National Union of Consumers and Users of the Republic of Panama (Uncurepa), the country is currently being held hostage by the free trade agreements it has signed. The agreements have been negotiated according to World Trade Organization (WTO) rules by the local oligarchy, and have negatively impacted the country's working class.

Mr. Acosta denounced the desire of large producing countries that all kind of import duties be removed as nonsensical. This is because while economic powers such as the U.S. and the European Union lobby for zero import duties, they simultaneously support their local productive sectors. The latter does not happen in Panama. 'If we keep signing agreements stipulating low import duties, as a country we will ultimately subsidize producers in large countries and we will end up depending 100% on imported products', argued Mr. Acosta.

For his part, tuber farmer Maximino Diaz advocated support for local farmers who will soon have to confront a zero duties regime on a number of imported products, specifically from the United States.

“Panama needs proper planning and infrastructure to face the situation, so that our national produce can be more competitive once the zero duty regime comes into force”, Mr. Diaz explained. He highlighted the very real risk that the national farming industry disappear completely, thereby forcing the country to survive on imported products 100%.

According to Farmer Julio Ramírez, when Panama joined the WTO in 1997, some products were designated as sensitive and given a degree of protection: amongst them were onions, tomato and rice. Nevertheless, Mr. Ramirez pointed out that the country has since failed actually to put in place the very protective measures stipulated when the free trade agreements were signed.