trade

EU warned of deadline

Officials were told twice that they needed to turn in documents to participate in a tax program.

Those documents were not delivered, and now exporters are faced with millions of dollars in losses.

Gabriel Rodríguez/la prensa

under pressure: Panama’s exporters could have a harder time selling goods in Europe because the country no longer qualifies for a lucrative tax abatement.1134515

Panamanian officials were warned at least twice that the deadline for submitting documents to gain tax breaks for imports to the European Union was approaching, but they apparently fell on deaf ears.

According to Cristina Martins, an official with the European Commission who deals with Panama, a warning was sent to the country's ambassador to the commission in Brussels, Pablo Garrido, on Aug. 8. When the documents still were not turned in, a message was sent to then-Minister of Trade and Industry Carmen Gisela Vergara at the end of August.

Martins said that each notice outlined, “step by step,” all the required documents that had to be submitted to the commission by the Oct. 31 deadline for the country's exporters to continue to receive an exemption from tariffs.

That paperwork was never submitted, and Panama will likely not be able to participate in the program until 2010, which could cost importers millions of dollars in lost business.

Foreign Minister Samuel Lewis Navarro and the new Trade Minister, Gisela Porras, have said they will lead an investigation to identify those responsible for the act of negligence, which could end up costing taxpayers as much as $30 million in subsidies to exporters.

It was learned that several officials of the Foreign Ministry and the Trade Ministry will be suspended in the coming days until the investigation is finished.

Exporters and others, including Martins, have focused the blame squarely on Garrido, the brother of presidential candidate Balbina Herrera, and Vergara. When reached by La Prensa, Vergara said his poor health prevented him from discussing the situation.

Herrera, meanwhile, has distributed a letter dated Aug. 28 in which Garrido is quoted as asking the Foreign Ministry for instructions about how to request an extension for submitting the paperwork to the program.

But other government sources have said that the memo arrived at the Foreign Ministry on Nov. 6 via fax, six days after the deadline given by commission had expired.

Officials also said that no evidence has been found that the memo arrived in the diplomatic pouch, the normal means of transport for such communications.

The government has announced that it will undertake a diplomatic mission “of the highest level” in an attempt to regain Panama's tax exempt status, but the success of that effort seems unlikely as a previous such mission failed to get any results.