WASHINGTON (Reuters) - A long-delayed free trade agreement between the United States and Panama will go into force in the coming weeks, once the Central American country takes a few remaining steps, officials from both countries said on Thursday.
“The United States and Panama are on the eve of bringing an historic trade agreement into force,” Deputy U.S. Trade Representative Miriam Sapiro said in a speech at the U.S. Chamber of Commerce.
The United States is already Panama’s largest trading partner and the two countries share a long and sometimes rocky history, linked to the Panama Canal.
About 10 percent of U.S. imports and exports of goods pass through the Panama Canal, and that percentage could rise as Panama completes its $5.3 billion canal expansion project.
The free trade pact, approved by the U.S. Congress nearly a year ago, will support U.S. jobs by immediately eliminating Panama’s tariffs on 86 percent of U.S. consumer and industrial goods, including autos, chemicals, electrical equipment, information technology and medical technology, Sapiro said.
It also will immediately eliminate Panama’s tariffs on roughly 50 percent of U.S. agriculture exports and guarantees U.S. companies access to Panama’s highly services-dominated economy in areas like financial services, telecommunications, energy and professional services.
Panama’s remaining agricultural, industrial and consumer product tariffs are phased out over longer periods of time.
Panama’s National Assembly last week passed the final piece of legislation to implement the agreement.
The next step, expected by Oct 21, is for Panama’s President Ricardo Martinelli to sign the legislation and for the government to publish the changes to Panamanian law.
That would be followed by an official exchange of letters between Panama and the United States, allowing the pact to go into force by “early November,” Panama’s ambassador to the United States Mario Jaramillo told Reuters.
U.S. business groups had hoped the agreement would be enacted by the start of October, and the U.S. Chamber of Commerce event on Thursday with U.S. and Panamanian officials was originally expected to celebrate that.
Sapiro said she hoped the time for champagne was near.
“I am optimistic that Panama will do everything it can to take the final actions necessary so both countries’ companies, workers, farmers, ranchers and service providers can begin taking advantage of the agreement,” she said.
The Republican administration of former President George W. Bush negotiated the trade deal with Panama and two other pacts with Colombia and South Korea that it could not get Congress to approve before Bush left office in 2009.
Lawmakers finally approved all three agreements in October 2011 after President Barack Obama made changes to the agreements to address his fellow Democrats’ concerns.
Reporting by Doug Palmer; Editing by Vicki Allen