Panama - United States Trade Promotion Agreement
Encyclopedia
The Panama
Panama
Panama , officially the Republic of Panama , is the southernmost country of Central America. Situated on the isthmus connecting North and South America, it is bordered by Costa Rica to the northwest, Colombia to the southeast, the Caribbean Sea to the north and the Pacific Ocean to the south. The...

 - United States
United States
The United States of America is a federal constitutional republic comprising fifty states and a federal district...

 Trade Promotion Agreement
(in Panama called Tratado de Libre Comercio (TLC) entre Panama y Estados Unidos) is a bilateral free trade agreement, whose stated objectives include eliminating obstacles to trade, consolidating access to goods and services and favoring private investment in and between both nations. Apart from commercial issues, it incorporates economic, institutional, intellectual-property, labor and environmental policies, among others.

The negotiations were officially completed on December 19, 2006, though elements were still to be renegotiated. The agreement was signed on 28 June 2007, and Panama's National Assembly ratified it on the following 11 July, before the twelve hundred page document had been translated into Spanish.

Concerns

There are various criticisms and controversies that have surrounded the pact. Most of the criticisms come from those movements typically critical of free trade
Free trade
Under a free trade policy, prices emerge from supply and demand, and are the sole determinant of resource allocation. 'Free' trade differs from other forms of trade policy where the allocation of goods and services among trading countries are determined by price strategies that may differ from...

 and neoliberalism
Neoliberalism
Neoliberalism is a market-driven approach to economic and social policy based on neoclassical theories of economics that emphasizes the efficiency of private enterprise, liberalized trade and relatively open markets, and therefore seeks to maximize the role of the private sector in determining the...

, including environmental, workers', and rural movements who oppose the intrusion upon each groups' gains. As pointed out throughout consideration of this trade agreement, however, Panama already possessed preferential, duty-free access to the U.S. market by virtue of its eligibility for preferences under the Caribbean Basin Economic Recovery Act
Caribbean Basin Economic Recovery Act of 1983
Caribbean Basin Economic Recovery Act of 1983 — P.L. 98-67 , Title II, authorized unilateral preferential trade and tax benefits for eligible Caribbean...

 (CBERA) and the Generalized System of Preferences
Generalized System of Preferences
The Generalized System of Preferences, or GSP, is a formal system of exemption from the more general rules of the World Trade Organization ,...

 (GSP).

Several controversies have prevented a speedy conclusion as well. In January 2006, Panama's Minister of Agriculture resigned in anger after a note that was slipped from Panama's trade representatives to the US representatives purportedly promising to reduce Panama's livestock import standards.

Many members of the US Congress had refused to vote for the treaty while Panama's National Assembly is led by Pedro Miguel González Pinzón
Pedro Miguel González Pinzón
Pedro Miguel González Pinzón is a leading political figure in Panama who was indicted by a U.S. federal court in October 1992 for the June 10, 1992 killing of an American serviceman, Sgt. Zak Hernández, and the serious wounding of another, Sgt. Ronald T...

, a man they allege to be a terrorist. This obstacle has been removed, however, after a December 2007 election that replaced González Pinzón.

After the problem with González was solved in late 2007, new concerns were raised by virtue of the fact that both the 110th
110th United States Congress
The One Hundred Tenth United States Congress was the meeting of the legislative branch of the United States federal government, between January 3, 2007, and January 3, 2009, during the last two years of the second term of President George W. Bush. It was composed of the Senate and the House of...

 and 111th
111th United States Congress
The One Hundred Eleventh United States Congress was the meeting of the legislative branch of the United States federal government from January 3, 2009 until January 3, 2011. It began during the last two weeks of the George W. Bush administration, with the remainder spanning the first two years of...

 U.S. Congresses (2007 – 2011) were dominated by the Democratic Party, the leadership of which was philosophically opposed to free trade agreements. New concerns related to Panama's status as a so-called "tax haven
Tax haven
A tax haven is a state or a country or territory where certain taxes are levied at a low rate or not at all while offering due process, good governance and a low corruption rate....

" then needed to be addressed. In 2010, President Barack Obama
Barack Obama
Barack Hussein Obama II is the 44th and current President of the United States. He is the first African American to hold the office. Obama previously served as a United States Senator from Illinois, from January 2005 until he resigned following his victory in the 2008 presidential election.Born in...

's trade representative, Ron Kirk
Ron Kirk
Ronald "Ron" Kirk is the 16th United States Trade Representative, serving in the Obama administration. He served as mayor of Dallas, Texas from 1995 to 2002; he also ran for the United States Senate in 2002.-Early life and career:...

, negotiated a tax information exchange agreement with Panama that overcame these concerns. This tax agreement entered into force in April 2011, paving the way for congressional consideration of the TPA.

Approval

In the 112th U.S. Congress
112th United States Congress
The One Hundred Twelfth United States Congress is the current meeting of the legislative branch of the United States federal government, composed of the United States Senate and the United States House of Representatives. It convened in Washington, D.C. on January 3, 2011, and will end on January...

, the ascendancy of the Republican Party in the House of Representative led to new pressures to approve all three pending free trade agreements (Colombia, Panama, and South Korea). Finally, in October 2011, President Obama submitted the three trade pacts to the Congress, and they were quickly passed. On October 12, 2011, the U.S.-Panama TPA was passed in the House by a vote of 300-129 and in the Senate by a vote of 77-22 . President Obama was expected to quickly sign the pact, but further regulatory formalities will need to be completed before the agreement enters into force.

External links

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