trade

Bill upsets export sector

la prensa

restricted: A clause in a bill aimed at reimbursing duties on the country’s exports to the European Union limits the benefits to companies that initiate shipments before Dec. 1.1139513

The bill designed to compensate the country’s exporters for the inopportune loss of tariff preferences with markets in the European Union may leave many of the prospective recipients of the government aid out in the cold.

According to the bill’s verbiage, it would seem that only companies that have initiated shipments to the European Union by Dec. 31 will be eligible for the tariff refund offered by the Panamanian government.

That means that all new companies hoping to break into the European market will now be at a disadvantage to both domestic competitors and neighboring countries’ exporters that, unlike Panama, submitted applications for preferential treatment before the deadline.

Several unions have expressed opposition to the restriction, arguing that it is discriminatory. The Union of Non-Traditional Agroexporters of Panama, for instance, has requested that the National Assembly amend the bill so as to extend the compensation to all exporters, irrespective of when they enter the market. If not, union representative Francisco Antunez said the bill deters new companies from joining the country’s export sector.

Deputy Minister of Foreign Trade Severo Sousa said that the bill will submit a proposal of $7 million to cover the severed euro-bond, and would also adjust the value of Tax Credit Certificates from 5 percent to 10 percent. The latter benefit could mean that the government shells out $25 million in compensation annually.

“That sum will be paid with money from your taxes and mine,” seethed Adolfo Linares, vice president of the Chamber of Commerce, Industries and Agriculture of Panama.

Linares clarified that although the chamber agrees with the formula that seeks to help exporters to continue exporting to Europe and not cut back on jobs in the sector, he suggested that investigators dig deeper into who was responsible for losing the bond in the first place so that the government learns its lesson.

Additionally, Linares demanded that there be greater oversight of how the compensation monies are distributed to avoid fraud, and cited abuse of the Tax Credit Certificates in the past.

Max Gallardo, president of the Panamanian Association of Exporters, has asked that the those credits be increased to 10 percent for the protection of domestic exports, basing it on the grounds that other countries receive greater incentives from their governments.

The National Assembly is expected to approve the bill before Jan. 1 so as to offset the financial impact of the European tariff preferences that expire the same day.

Assembly members will discuss the measures during three sessions starting Monday, said Pedro Miguel González, the chairman of Public Finance in the Assembly.