Down Panama way, a new, expanded canal is being built, a $5.5 billion venture that’s the world’s largest construction project since the Three Gorges Dam in China. (The canal’s official website is here.) Last month, the authority issued its first request for proposal to start on the dry excavation, so the project is definitely moving ahead. And it means big things for manufacturers in the United States.
Tom Gales, Caterpillar’s vice president for Latin America, testifed about the project before the U.S. ITC last month, providing a concise summary of the expansion’s impact and the need to enact the U.S.-Panama Free Trade Agreement to take full advantage of the opportunities. Gales explained the canal now moves about 5 precent of global traffic — much of it coming from Miami, New York City and Los Angeles — but it’s now too small to carry the largest cargo ships. An expansion would substantially shorten U.S. supply chains, improving competitiveness. He continued:
The potential economic benefits for Caterpillar, the world’s largest producer of earthmoving equipment, and other U.S. and Panamanian businesses and consumers are significant. If enacted, a Panamanian Trade Promotion Agreement would immediately eliminate tariffs ranging from three to 15 percent on Caterpillar products, benefiting both the company and its customers.
“In addition to manufacturing, American agriculture and service industries will also benefit from this agreement,” said Gales. “Services represent the fastest growing sector of the Panamanian economy and freer trade will further enhance investment opportunities in financial services, real estate, tourism and transportation. For agriculture, the agreement will allow U.S. exporters to maintain and expand their 50% market share in Panama.”
His comments are in this news release.
The opportunities really are legion. As the USTR’s fact sheet on the Panama FTA notes, more than 88 percent of U.S. exports of consumer and industrial goods will become duty-free immediately. Remaining tariffs phase out over the next decade. The “zero-for-zero” provisions also allow immediate duty-free access for sectors including agricultural and construction equipment, information technology products, and medical and scientific equipment.
A multi-billion-dollar project and a market — promising, indeed. And a powerful argument to move forward on the U.S.-Panama Free Trade Agreement. (Gales has also testified on behalf of FTAs with Colombia and Peru, which stand on similar arguments.)
P.S. What might be shipped through an expanded canal? Guy Steele knows, palindrome-wise.
A man, a plan, a canoe, pasta, heros, rajahs, a coloratura, maps, snipe, percale, macaroni, a gag, a banana bag, a tan, a tag, a banana bag again (or a camel), a crepe, pins, Spam, a rut, a Rolo, cash, a jar, sore hats, a peon, a canal – Panama!
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