Panama Canal Archives - Shopfloor

The U.S.-Panama Free Trade Agreement: Opportunity Awaits

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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. Read More

Gov. Rick Scott: In Focus on Private-Sector Jobs, Trade and Infrastructure

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In a far-ranging interview with radio host and blogger Hugh Hewitt, Gov. Rick Scott of Florida, a Republican, discusses his strategy for encouraging private-sector job creation during a time of budgetary cutbacks.

HH: Now I know that your critics, I’m not one of them, but I know that your critics would immediately say well, we want to cut 8,700 jobs from the state employment workforce, Governor Scott. How can you talk about jobs on the Hugh Hewitt Show, and say you know, I’ve got to cut 9,000 people’s livelihoods from the state budget?

RS: Well, what I’m focusing on is private sectors jobs. So those are the jobs that are going to be there, and there year in, year out. Just like right now, we’re dredging our port in Miami to get ready for the Panama Canal. That’s going to be over 33,000 permanent, private sector jobs that will be there year in and year out. It won’t cost taxpayers anything. As a matter of fact, we’ll get sales tax and property tax revenues out of that. That’s the type of jobs that I want. I don’t want more government. And you know what? The public agrees with me. They’re tired of the size of government. They know that government is way too big, and they can say that at the federal level, at the state level, and at the local level. Government is way too big, and they expect it to be cut.

With Airliner and Tax Deals, U.S. Business with Panama Flies Higher

By | Taxation, Trade | One Comment

This morning, in a signing witnessed by Secretary of Commerce Gary Locke and Panamanian Vice President Juan Carlos Varela, Copa, the Panamanian airline, signed a contract to purchase more than 20 Boeing 737-800 airliners equipped with General Electric engines. This deal, worth more than $2 billion, will support thousands of American jobs – not just Boeing and GE workers – but also jobs in their hundreds of Boeing’s and GE’s suppliers, many of whom are small or medium-size firms.

What this huge sale indicates is that the Panamanian market is important to U.S. manufacturing, and we want to see trade with Panama expand.  Among other things, Panama is planning upwards of $20 billion of infrastructure projects, including the world’s largest construction project – expanding the Panama Canal.  We certainly want to see American manufactured goods and American-supplied services employed in those projects.

But there’s a problem.  Our competitors, including Canada and the European Union, have signed Free Trade Agreements (FTAs) with Panama that will soon go into effect.  Those will allow their manufactured goods duty-free access to Panama, while American manufacturers will have to face import duties that can be as high as 15 percent.

The United States concluded a trade agreement with Panama three years ago, an agreement that would eliminate import duties on U.S.-made goods.  Most unfortunately, that agreement has languished, as opponents have said they are concerned about money-laundering and won’t agree to a Congressional vote until Panama signs a tax-exchange agreement with the United States.

Well, today’s second piece of goods news is that this afternoon, Treasury Secretary Geithner and Vice President Varela signed the Tax Information Exchange Information agreement. That agreement now removes the hurdle to sending the U.S.-Panama Trade Agreement to Congress for a vote that is unambiguously in the interest of manufacturing in America.

Let’s get on with it and beat the competition for a change!  We want more deals like today’s Boeing-GE deal with Panama.  And we want them with Colombia and Korea too.  Congress must get out of the business of blocking U.S. jobs and should get into the business of supporting U.S. manufacturers’ efforts to create jobs.

Frank Vargo is the National Association of Manufacturers’ vice president for international economic affairs.

U.S. Exports, Jobs Depend on All Three Pending Trade Agreements

By | Taxation, Trade | 3 Comments

President Obama met with members of the House Trade Working Group at the White House yesterday to hear their concerns  the U.S.-Korea Free Trade Agreement (FTA). Meanwhile,  promising developments have occurred with the other two nations with which the United States has pending free trade agreements – Panama and Colombia.

Panama and the United States came to agreement on a Tax Information Exchange Agreement (TIEA), which is one of the outstanding issues that the Administration has indicated needed to be concluded before it would consider moving the U.S.-Panama FTA. Anything that can remove an impediment to a part of the stalled trade agenda is a very good thing.

Of course, over the last few months the business community’s focus has been squarely on the Administration’s discussions aimed at getting a final deal on the U.S.-Korea FTA. If those discussions over resolving the disputes over beef and autos are successful — and it is a shame they weren’t finalized in Seoul last week – that trade agreement could be sent to Congress early in 2011.  U.S. manufacturing exports to Korea are in the neighborhood of $25-30 billion annually over the last few years, and Korea has a manufacturing import sector worth $250 billion annually – so it’s a big deal.

During this same period, the Administration has been working closely with Panama, and with a successful TIEA, we could conceivably see (and we HOPE to see) movement on that trade agreement as well in 2011. Panama is engaged in the largest civil works project on earth right now (expanding the Panama Canal), and it would be fantastic for U.S. companies to be exporting duty-free the equipment, materials, engineering services and everything else this $5 billion project needs as soon as possible.

This leaves us with our last pending trade agreement – Colombia — and as the country’s new Ambassador Gabriel Silva recently told reporters, Colombia has been removed from the International Labor Organization’s watch list because of widespread improvements his government has made in controlling violence against labor activists. This goes to the heart of what the Administration and some Congressional Democrats have been asking for; Colombia is to be commended for its long commitment, under both previous President Uribe and current President Santos, in pushing for improvements. Read More

Report from Panama, I

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Greetings from Panama, the other country that has a trade agreement pending with the United States. I will leave hand-wringing over trade to those in Geneva this week – because here it’s awfully hard to find anyone who doesn’t support the idea of free trade and, more specifically, the U.S.-Panama Free Trade Agreement.

Landing yesterday, the plane made a sweep over the Pacific, where I counted 17 container ships lined up on approach to the Canal. Lots of commerce, on its way from Asia to the East Coast and points further east. There was a similar queue on the Atlantic end of the Canal too. This is trade at its most fundemental, and few nations are better positioned to benefit than Panama. The United States and China are the two largest users of the canal.

Having lunch al fresco along the Canal approach, it was hard not to notice the constant procession of PanaMax ships in both directions. You can propose a time-out on trade in Washington, but it’s not going to make a whit of difference here. They’re expanding the Canal in one of the largest public works projects in the world. U.S. Companies stand to benefit greatly from this project – so passing the trade agreement and getting those tariffs removed will be a great thing for lots of manufacturers. More on the Canal tomorrow after our tour.

From nearly any vantage point, Panama City reminds you of Hong Kong, with scores of 50 and 60 story residential towers crowded together. It is a bit surprising to find such a concentration of tall buildings in a small country, but Panama continues to be a big draw for U.S. and European retirees, and is a critical logistics and services center for Latin America. It is predominently on on services economy, including call centers, banking, insurance, and lots and lots of shipping-related business.

Three million people live in this country, about half in Panama City. This is still a developing country, with poverty levels still above 30%. But unemployment is low – below 5%, and GDP is growing. Inflation, particularly food prices, is running about 8-10% this year, I was told this morning. A trade agreement will certainly lower food prices, as agriculture and food tariffs tend to be high.