By RICK A. RICHARDS
ST. LOUIS, Mo. — Panama is a blip on the trading radar of the United States – it’s our 52nd largest trading partner – but the elimination of agricultural tariffs for soybeans shipped to that country is a great deal.
The American Soybean Assoc. (ASA) heaped praise on the Office of the U.S. Trade Representative for the free trade agreement that took effect Oct. 31. “The enactment of the free trade agreement with Panama … is a big win for soybean farmers,” said President Steve Wellman, a Nebraska soybean grower.
“Panama is one of the most rapidly growing economies in Latin America and represents a valuable market for American soy, and the many products like poultry and pork for which soy is critical in the production process.”
Beginning Oct. 31, all tariffs on U.S. soybeans, soybean meal and crude vegetable oils were removed. In addition tariffs on most beef, poultry and pork products in which soybean meal is used as feed, will be removed.
In 2011, U.S. exports to Panama totaled $8.3 billion, while imports from there totaled $389 million. Total agriculture shipments to Panama were $505 million, while the ASA said U.S. farmers exported more than $53 million in soybean products last year, down from $65 million in 2010.
U.S. Trade Representative Ron Kirk’s office said, “This agreement also provides U.S. firms and workers improved access to customers in Panama’s $22 billion services market, including in areas such as financial, telecommunications, computer, express delivery, energy, environmental and professional services.”
Alan Kemper, chair of the ASA, said that is the real impact of the agreement.
“It’s a big win for the economy,” said Kemper, a soybean farmer from Lafayette, Ind. He described the agreement as an extension of the Caribbean Basin Initiative, which set up a free trade zone between the United States and dozens of small Caribbean island nations.
He said the agreement with Panama now extends that free trade zone into Central America and sends a signal to all of Latin America that the United States is serious about free trade.
“It creates a level playing field for us in Panama,” said Kemper, who explained 99 percent of U.S. products shipped to Panama were slapped with a tariff while Panamanian products shipped here weren’t.
Kemper said U.S. soybeans shipped to Panama were hit with a $2 a bushel tariff – about a 15 percent import tax – that kept U.S. imports low. “Panama is not a very big market for us, but that could change,” he said.
“This is just one point of a very big picture. This also is a signal to Congress that it needs to act on opening up trade in other countries, too.”
Kemper specifically mentioned Russia, where an annual import permit has to be issued by the State Department every year before U.S. agricultural products can be shipped there. He said it’s time a more permanent trade agreement with Russia was reached in order to provide stability for U.S. farmers.
“The ASA is interested in free trade and we think this agreement with Panama is a signal to our partners that we’re serious about it,” he said.
Under terms of the agreement with Panama, nearly half of U.S. agricultural products, including beef, bacon, soybeans, wheat, barley and nearly all fruit and vegetables, will enter the country tariff free. Although a few tariffs will remain, they will be phased out over the next 15 years.
Besides agriculture, the agreement with Panama opens up trade for other industries, particularly construction and service providers to bid on the $5.25 billion expansion project of the Panama Canal. The Panamanian government has also identified $10 billion in additional infrastructure improvements that U.S. companies could bid upon.
Even though the total amount of agriculture exports to Panama is small, it represents 42 percent of all of that country’s agricultural purchases. Without the agreement, that figure would decline, since Panama recently completed similar agreements with Canada, Costa Rica, Chile, El Salvador, Guatemala, Honduras, Nicaragua, Singapore and Taiwan.
“We commend the American and Panamanian governments for their work on seeing this agreement to completion and we look forward to continuing a successful partnership with our friends in Panama,” said Wellman.