From USA-ITA OFF THE CUFF for October 12, 2012
On Thursday, October 4th, USA-ITA attended a special event at the U.S. Chamber of Commerce titled, “Panama: Business Gateway to the Americas.” Co-sponsored by the American Chamber of Commerce and Industry of Panama (AMCHAM), the event featured U.S. and Panamanian government officials, as well as businesses and organizations in Panama, discussing the outlook for trade after the implementation of the U.S.-Panama Free Trade Agreement (FTA). The U.S. government expects the FTA will go into effect this fall, so it’s important to know what to expect—but it’s clear we can expect good things.
After introductions by both Chambers, Deputy U.S. Trade Representative Ambassador Miriam Sapiro kicked off the discussion by talking about the United States’ special relationship with Panama and the pending FTA. The U.S. was the first country to recognize Panama, and the two have grown closer as time has passed. In fact, the U.S. is Panama’s largest trading partner—and 10 percent of all U.S. trade passes through the Panama Canal. When the FTA goes into effect—which USTR is hopeful will be in October or early November—86 percent of products will be duty-free immediately, further strengthening that relationship. Upon entry into force, 86 percent of products will be duty-free immediately, including access to financial, telecom, and other professional services. This FTA contains important investment provisions such as intellectual property protections and due process, which benefit both nations. Ambassador Sapiro concluded by noting that Panama has the potential to become the logistical hub for the Western Hemisphere.
The first panel, titled “Panama: Logistics Hub of the Western Hemisphere,” explored this idea and the many “connection points” in Panama. Pedro Heilbron, CEO of COPA Airlines, introduced the panel by noting that Panama is a “connection point” for the Americas. Panama boasts the largest container ports in Latin America, and COPA Airlines in particular boasts the highest connectivity in the Americas based on number of daily flights and destinations. Juan Carlos Croston, Vice President of Marketing for the Manzanillo International Terminal-Panama, added that his terminal is one of the largest container terminals in the region, and 14 of the top global shipping lines have a presence in Panama—including many USA-ITA Associate Members like APL and Maersk. Dean Rodin, Managing Director of Maersk Line Caribbean Cluster, explained that the shipping line has been in Panama for 95 years, and in 2012, the company’s Panama office became the regional headquarters. While there remain some challenges—such as education and development of business clusters—the panelists agreed that Panama has many benefits, especially the interconnected airport and canal ports along with infrastructure quality and a stable, pro-business government.
The second panel, “Opportunities in Leading Growth Sectors,” panelists discussed the economic potential of Panama and benefits for foreign investors. Of particular note to all industries, Dr. Nicolas Ardito Barletta, Director General of the National Center for Competitiveness in Panama, noted the country’s dollarized monetary system, integrated banking, a low territorial tax system, equal treatment of local and foreign investors, and Law 41, which allows foreign companies to open regional hubs easily in Panama. Jose Pacheco Tejeira, the Vice Minister of Foreign Trade, added that Panama’s government has prioritized the stabilization of public finances, with a public debt 30 percent below the GDP. He noted that Caterpillar is just one of many foreign companies expanding operations there—Caterpillar is in fact doubling its employees in Panama. Finally, Alberto Diamond, Superintendent of Banks at the Panama Banking Commission, said that Panama has 91 banks from all over the world, making it very easy for foreign companies to do business there.
The event closed with lunch and remarks from U.S. Department of Commerce’s Under Secretary for International Trade Francisco Sánchez and Alberto Aleman, former administrator of the Panama Canal Authority. Sánchez made note of the U.S. and Panama’s “shared futures” and “linked economies,” and also added that Commerce’s International Trade Administration has talented staff there that know the market and players and are able to help U.S. companies. Aleman, once the second-highest U.S. government official in Panama, explained the benefits of the canal expansion—specifically that vessels will be able to carry three times more cargo through the canal than before.
After hearing so many benefits to doing business and trade in Panama, Aleman noted perhaps the most compelling reason: the Panama Canal connects the Atlantic and Pacific, and is the only port in the world with terminals in two oceans. The canal can thus cut shipping times drastically—13 fewer days from the U.S. East Coast to China, and 16 fewer days from the Gulf of Mexico to China—which can significantly help U.S. companies and their bottom lines.