Last week, Panama's legislature ratified the free trade agreement with the United States which had been signed by the two governments late in June. The Panamanian congress voted 58 to 3 in favour of the agreement.
The United States and Panama launched negotiations on a free trade agreement in April 2004, and the final agreement incorporated amendments derived from a negotiation between the Bush Administration and Congressional leadership. Nonetheless, US Congressional approval is not a done deal.
Governmental signing of the agreement took place two days before the expiration of President Bush's authority for "fast track" trade promotion at the end of June, meaning that the Congress must approve or reject the agreement without making changes. No vote is currently scheduled.
The United States had a goods trade surplus with Panama of $2.3 billion in 2006, and is Panama’s largest trading partner. Total goods trade between the United States and Panama was $3.1 billion in 2006. Panama is a growing market for US products; US goods exports to Panama increased 25% from 2005 to 2006.
Samuel Lewis, Panama’s vice-president, urged the US Congress to push ahead with ratification of the agreement. ”The agreement does not threaten US jobs,” Mr Lewis told the Financial Times. “It will only mean growth for both Panama and the US.”
Panama has been experiencing rapid growth in recent years, which will probably continue due to the canal enlargement program. However, it is not a member of the Central American Free Trade Agreement (Cafta), which the US signed with Central American countries and the Dominican Republic in 2004, and which has been ratified by all member countries other than Costa Rica.
Mr Lewis said he was not confident that US legislators would ratify the agreement. “If the debate were just about Panama I’m sure it would be ratified very quickly but unfortunately trade discussions in the US run much deeper than Panama.”
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