Panama is already a great market for U.S. manufacturers and exports, and the expansion of the Panama Canal, the huge subway project in Panama City, and the development of the world’s fifth largest copper mine represent even more opportunity, the CEO of Caterpillar testified Wednesday.
Taking advantage will require President Obama to submit the U.S.-Panama Free Trade Agreement to Congress for its enactment.
Doug Oberhelman, Caterpillar’s CEO and vice chairman of the National Association of Manufacturers, testified Wednesday at a House Ways and Means Trade Subcommittee hearing on the benefits of the U.S.-Panama Free Trade Agreement. (Prepared statement)
Manufactured goods and agriculture consistently report trade surpluses, Oberhelman reminded the committee. (See graphic below.) The growth of U.S. exports has been especially strong in the Latin American countries with which the United States has free trade agreements. Lowering Panama’s tariffs against U.S. goods would help expand market share for American companies. Oberhelman:
U.S. export success in Panama comes despite a fundamental imbalance in the proverbial playing field. The United States unilaterally opened its market to Panama and its neighbors through the Caribbean Basin Initiative in 1983 and expanded that access through successive acts with the support of strong bipartisan majorities in Congress. Currently, under the Caribbean Basin Trade Partnership Act (CBTPA), fully 96% of all imports from Panama already enter the U.S. market duty-free. By contrast, Panama’s average applied duty on imports of manufactured goods is 7.1%, and agricultural products face even higher tariffs. In other words, Panama enjoys virtually free access to our marketplace, while U.S. products continue to be taxed at steep rates when entering Panama.
Critically, the FTA will cut Panama’s tariffs on U.S. products, and as a result it will transform an imbalanced trade relationship into a more mutually beneficial, reciprocal partnership. The day the agreement enters into force, 88% of Panama’s tariffs on U.S. consumer and industrial goods and a majority of the tariffs on U.S. farm exports will be eliminated. In turn, the agreement locks in Panama’s access to the U.S. market, creating a new level of certainty for investors and traders in that country.
The Peoria Journal-Star did a nice with its coverage of the hearing, “Cat CEO touts benefits of trade agreement with Panama,” quoting the local Congressman too, Rep. Aaron Schock, R-Peoria, who said: “Doug made an irrefutable case for passage of these pending free trade agreements. In Latin America alone, Caterpillar saw an increase in sales of 58 percent just last year, more than any other market in the world. The high-wage manufacturing jobs in Illinois depend on these new customers.”
Caterpillar also issued a news release, “Caterpillar Chairman Tells Congress Passage of Free Trade Agreements Would Increase Exports, Support Jobs in the United States.”
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