Sweet Deal! US-Panama Free Trade Agreement went into effect on Halloween

The US-Panama Free Trade Agreement (FTA) went into effect on 31 October 2012, making it the final of three US FTAs implemented this year and bringing with it the potential for major cost savings through tariff reductions for US businesses exporting to Panama.  Don’t miss out on the opportunity to take advantage of reduced tariffs for your business’ exports to Panama.
 
The long-awaited implementation date comes nine years after starting negotiations and five years after signing of the agreement.  Over 87% of US industrial goods and over half of US agricultural commodities immediately became duty-free, including many processed food products.  For goods that are not duty-free immediately upon implementation, 31 October 2012 marked the first round of tariff reductions. On 1 January 2013, tariffs will reduce again and quota amounts will also increase for goods subject to a tariff-rate quota. 

US Free Trade Agreements from Canada to Chile

Perhaps even more importantly, the US implemented its free trade agreement with Panama ahead of the EU and Canada. Tariffs on US exports will be reduced two times before the EU and Canada implement their respective agreements with Panama (expected to occur in January 2013), which will give US exports an important advantage over EU and Canadian exports in Panama. 
 
The FTA is bilateral and reciprocal which means US exports will benefit from lower tariffs into Panama just as many imports from Panama already benefit from lower tariffs into the United States under the Generalized System of Preferences (GSP) for developing countries.  The FTA levels the playing field and creates more opportunities for US exporters to increase sales to new customers in Panama at lower cost.
 
In addition to the reduced tariffs and increased trade flows, the trade agreement with Panama is especially advantageous for US companies for several reasons. 

• Panama is one of Latin America’s fastest growing economies, with a GDP that is expected to grow 7-10% per year through 2015. Panama’s economic growth has the potential to provide US companies with a growing consumer class and a new market for their goods. 
• The official currency of Panama is the US dollar. This gives US businesses an advantage since they avoid having to convert currencies. 
• Panama inhabits an especially strategic location as a transit country between South America and North America, and also as the home to the Panama Canal. Panama is currently enlarging the canal to accommodate bigger ships and plans to finish the project by 2014. 
• The US-Panama agreement creates a contiguous zone of US free trade agreements accessible to US exporters north from Canada all the way to the southern tip of Chile.   (See the globe below.)

 
To see Panama’s preferential tariff rates on your company’s products, check out export.gov’s free FTA Tariff Tool. 
 
If you are looking for more personalized advice on expanding your US exports, sourcing materials internationally, or exporting to the Panamanian market for the first time, a consultation with TradeMoves can help make sure you realize your company’s maximum benefit from the US-Panama FTA. 
 
Lori Hammer - [email protected] - International Trade Analyst
Shawn Marie Jarosz  -  [email protected]  -  202.415.4016

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