economy

Exporters on edge as trade act lapses

la prensa

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While the country’s export sector totals the losses it will incur next year because of the government’s failure to renew preferential tariffs with the European Union, exporters are waiting for the other shoe to drop as an important trade program deadline looms, this time with the United States.

The tariff preferences offered to some 24 countries by the U.S.’ Caribbean Basin Trade Security Act since 1984 will expire on Jan. 31, 2009, putting into jeopardy the export of around $26 billion in agricultural products and manufactured goods, according to a report by the Office of U.S. Trade Representative.

For Panama, those trade incentives have come to represent nearly 40 percent of the country’s total exports, or about $400 million annually, according to U.S. government statistics.

Unlike other Central American countries and the Dominican Republic, which have joined the list of countries granted permanent tariff preferences through various free trade agreements with the U.S., Panama is still awaiting ratification of the Treaty of Trade Promotion filed more than a year ago on June 28, 2007.

What looked to a be a thumbs up from the U.S. early on in regard to the treaty devolved into a diplomatic spat when Pedro Miguel González was appointed as president of the National Assembly despite his alleged involvement in the murder of an American soldier in 1992.

Now, Panamanian exporters are crossing their fingers in hopes that Congress will have a change of heart under the Barack Obama administration and push through the treaty before the current tax breaks are eliminated.

Panamanian Foreign Trade Deputy Minister Severo Sousa said that he plans to resume the campaign to promote the treaty in January, about the time that the Caribbean Basin Trade Security Act is on the way out.

Among the country’s primary agricultural exports to the United States during the 2006-2007 period under the Caribbean Act included sugar, melons, pineapple, fruit juices, vegetables, yams, watermelon and non-chocolate candies.

Manufactured goods such as glass bottles, tableware and plastic items, clothing, jewelry and marine wares also benefited from reduced tariffs, according to information from the Ministry of Commerce and Industries.