economy

Export industry takes a hit

The lapse of a tariff agreement with the European Union has been blamed on government negligence.

Economic authorities pledged to compensate exporters for the duties paid beginning in January.

la prensa

costly error: The country’s exporters will have to pay regular duties on shipments to the European Union until mid-2010 because of a government oversight.1132062

The loss of the country’s preferential trade tariffs granted by the European Union as a result of neglect on the part of Panamanian authorities will be covered by public funds, said Foreign Trade Deputy Minister Severo Sousa, who pledged yesterday to establish a compensation fund to reimburse the duties paid in Europe.

Government officials said they haven’t finished tallying the approximate amount needed to compensate the country’s exporters.

During a press conference, however, deputy foreign minister Sousa and Ricardo Durán dodged the issue of imposing sanctions on trade officials who failed to apply for an extension to the preferential tariff program before the Oct. 31 deadline.

Who exactly dropped the ball is still uncertain, but there is plenty of blame to go around. Some point to the Panamanian embassy in Brussels, headed by Ambassador Pablo Garrido, the brother of presidential candidate Balbina Herrera, and various officials from the Foreign Ministry and the Ministry of Trade and Industry.

The European Union said yesterday that it will not go back on its decision to exclude Panama from the group of export countries receiving reduced duties, but will consider renewing the agreement in mid-2010. There are currently 16 nations benefiting from the program.

As of the Jan. 1, 2009, exporters must pay the regular tariff required by the European Union. That means that fish products that once enjoyed duty-free entry to European Union nations will face fees between 15 percent and 20 percent. And melons, watermelons and other non-traditional produce will be hit with 8 percent duties. Those three products alone account for $160 million in profits a year.

Business groups linked to the export industry have expressed concern about the issue and have pursued a solution, among them the Panamanian Association of Producers, Processors and Exporters of Seafood Products, the Union of Non-Traditional Agro-Exporters and the Chamber of Commerce, Industries and Agriculture.

“Any alternative to this trade problem should be treated with the utmost urgency by the Executive Branch, but so far nothing is concrete,” said Max Gallardo, president of the Panamanian Association of Exporters, which stands to lose money on its juice exports.

Other exports expecting to be affected by higher duties include pineapple, shrimp and squash.