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U.S. Panama Free Trade Agreement

The Government of Panama and the Government of the United States of America implemented on October 31, 2012 the U.S. – Panama Trade Promotion Agreement or Free Trade Agreement between both countries.

If you are interested in or are already exporting U.S.–made goods to Panama, the FTA is big news! And here is why:

Tariffs will drop to 0% for U.S. Exports to Panama. Panama’s tariffs are already relatively low – an average of 7% for industrial goods, around 15% for agricultural products. And U.S. products and services are already very competitive, with some 30% market share of Panama’s imports. But once the FTA is implemented, 87% of tariffs drop to 0%. That gives U.S. exporters several advantages:

  • Better chance of winning the business. You can drop your price relative to your non-U.S. competitors. That gives you a competitive advantage.
  • Better margins. You can alternatively offer the same price and obtain better margins if you win the business. That 7 – 12% that went to paying the tariff now goes to you. In that sense it is just like a tax cut, where you get to keep more of your money.
  • Simplified paperwork. For some of Panama’s biggest projects, e.g. the Panama Canal Expansion and the Metro, you can in theory export duty free if eventually your goods will be re-exported or consumed. In health care reform who pays for cialis reality, these projects are time-sensitive. Your supplies are on critical path. And the contractors don’t have time to file paperwork. So you’ll end up having to quote with duties paid or you’ll have paperwork delays that will cost you the business. With the FTA in place, you don’t have to worry about those issues. You just have to document content of origin.
  • Greater Transparency in Public Procurement. Selling to the Government of Panama can be a challenge. Certain clauses in the FTA will make the process more transparent and will give the U.S. Government increased leverage to ensure that you are competing on a level playing field.
  • No threat from Panamanian access to U.S. Market. Because Panama is a service-driven economy with almost no industrial sector, U.S. exporters will not face increased competition from Panamanian companies due to the FTA. In fact, Panamanian exports to the U.S. (primarily agricultural products) already come in duty-free, due to the Caribbean Basin Initiative.

Now is the time to look at exporting to Panama! The U.S. already enjoys a 30% market share of all Panama’s imports – it may already be a good market for you now. And Panamanian buyers now know that they can get most U.S.-made goods duty-free starting on October 31, 2012 – so they are very interested in talking with you.


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