A long-awaited free trade agreement with Panama that will reduce or eliminate tariffs on U.S. exports and provide access to the Central American country's lucrative services industry is scheduled to go into effect Oct. 31.
U.S. Trade Representative Ron Kirk and Panamanian Minister of Commerce and Industry Ricardo Quijano exchanged letters Monday that set the implementation date.
Last year, Panama's trade with the Miami Customs District, which stretches from Palm Beach County to Key West, set a record for the second year in a row. With total trade of $2.1 billion in 2011, Panama was the Miami district's 16th most important trading partner.
President Barack Obama signed legislation to implement free trade agreements with Colombia, South Korea and Panama at the same time last fall, but Panama needed to amend its tariff schedule and overhaul intellectual property regulations before the pact could take effect.
Since Panama is already one of the United States' preferential trading partners, the big impact of the agreement will be on U.S. exporters.
More than 86 percent of U.S. consumer and industrial exports will enter Panama duty-free beginning Oct. 31 and nearly half of U.S. agricultural products, including high-quality beef, bacon, soybeans, wheat, barley and nearly all fruit and vegetables, will become duty-free. Most remaining tariffs will be phased out over 15 years.
Tariffs on U.S. industrial exports currently average 7 percent and duties on agricultural products average 15 percent with some tariffs climbing as high as 260 percent.
Information technology products are among those eligible for immediate duty-free status. That should be a big boost for South Florida because computers and cell phones and other telephone equipment were its top exports to Panama last year.
Nationally, Panama is the United States' 52nd largest trading partner with $8.6 billion in total trade in products during 2011. U.S. exports totaled $8.3 billion and imports, $389 million. The Miami district exported $1.88 billion worth of products to Panama in 2011 and imported $212.7 million.
"Implementation of the U.S.-Panama FTA is welcome news as we work to get our economy moving again," said Doug Oberhelman, chairman and chief executive of Caterpillar and chairman of the Business Roundtable's International Engagement Committee. "Panama is an important strategic and commercial partner for the United States, and this overdue free trade agreement will increase U.S. exports to the fast-growing region, supporting U.S. economic growth and American jobs in the process,'' he said.
"This agreement also provides U.S. firms and workers improved access to customers in Panama's $22 billion services market, including in areas such as financial, telecommunications, computer, express delivery, energy, environmental and professional services,'' said Kirk.
He pointed out that Panama's economy is one of the fastest-growing in Latin America with growth of 10.6 percent last year. Growth also is expected to be brisk over the next five years.
"That adds up to support for more well-paying jobs across the United States," Kirk said. Each extra $1 billion in exports is estimated to create 5,000 to 7,000 jobs.
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