Friday, 25 February 2011 00:00
Free trade with Panama has languished in the Congress for over three years. President Obama has said he supports the deal cut with Panama, but has failed to put his words into action. And even with the signing of Tax Information Exchange Agreement last November by Treasury Secretary Timothy Gerthner and Panama’s vice president, Juan Carlos, there has still been no movement.
The recent approval of the Tax Information Exchange Agreement between the United States and Panama should, in my opinion, assure passage of a Free Trade Agreement between the countries. One of the main reasons the Treaty can now be approved, beyond the exchange of bank information, is the fact that Republicans control the House of Representatives and have narrowed significantly the Democrat Party control of the Senate. Republicans have pushed for approval of Free Trade with Panama since the agreement was first approved by the George W. Bush Administration in 2007.
When you take a look at current trade between Panama and the United States, it makes no sense to delay a Free Trade Agreement. In 2009, the United States has almost a $4 billion trade balance with Panama, and even with today’s dour economy, the balance will be over $4 billion this year in favor of the United States.
In today’s global economy, Panama is both a commercial and financial crossroad. For example, around 69 percent of the cargo transiting the Panama Canal is destined to or from the United States. From the construction of the canal in the early 1900s, our relationships with Panama are deep and should not be ignored by the Congress at this time, particularly as work continues on doubling the capacity of the Canal.
Once the tax agreement takes effect, according to the Treasury Department, “the new agreement will provide the United States with access to the information it needs to enforce U.S. tax laws, including information related to bank accounts in Panama.”
Beyond the trade issue itself there are other reasons to have a close bond with Panama. First, the U.S. dollar is the currency of the country—not behind the scenes—but the actually currency of Panama. When you go into a store and see a sign that says $2.59, you do not need to take out a calculator and compute the cost. The cost is what the sign states.
Another positive in Panama is the culture. Because of a long U.S. presence in construction of the Panama Canal and operating it through 1999, the people of Panama are generally bicultural. Many Panamanians have attended U.S. colleges and universities. For example, both the immediate past president of Panama and the administrator of the Panama Canal are graduates of Texas A&M. In addition, while Spanish is the official language of the country, most people in the business world are bilingual with English as their second language.
It is no wonder, based on the above, that the fourth place for Americans to buy a second home is in Panama. Only Florida, Arizona and North Carolina have more than Panama. And, by the way, from a tourist view, there are more different kinds of birds in Panama than in Costa Rica.
Looking forward, Panama is currently expanding the canal to accommodate the world’s largest vessels. At a cost of some $5.25 billion, the project should be completed in 2014 – the 100th anniversary of the canal’s opening in 1914. It is a massive undertaking, and up to this point has been carried out in the most transparent way.