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Will Congress Pass Panama FTA?

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Will the US Congress approve the U.S. free trade agreement with Panama despite stumbling blocs? Three experts share their views.

BY LATIN AMERICA ADVISOR
Inter-American Dialogue

Pedro Miguel Gonzalez, the head of Panama's National Assembly, said  [recently] he would not seek re-election, removing a key obstacle to U.S. congressional approval of a free trade agreement with Panama because of an arrest warrant for Gonzalez in the United States on charges he murdered a U.S. soldier in 1992. What are the prospects for a U.S.-Panama FTA in the wake of this news? What is a timeline for possible approval?

David Christy, Member of the Trade Policy Group at Miller & Chevalier, an Adjunct Professor of Law at Georgetown University, and a founding member of the Academy of WTO Law and Policy at Georgetown University's Institute for International Economic Law: Unfortunately, this does not significantly increase the chances of passage this year. Due to U.S. politics, the Panama FTA, which is a good agreement, has no clear path forward. First, the White House insists that the FTAs be addressed in chronological order—Colombia first, then Panama and South Korea—and has tried without success to goose the Colombia FTA by emphasizing national security. Absent a vote on Colombia soon (unlikely) or a switch in White House policy (very unlikely, given the national security gambit), Panama is stuck in the queue. Even if the Bush administration were able to force a vote on Colombia, Speaker of the House Nancy Pelosi and other Democrats seemingly regard FTA votes as inconsistent with strengthening the Democratic majority. They would resist another FTA vote this year. Second, Senate Finance Chairman Max Baucus insists there will be no FTA vote until the Trade Adjustment Assistance Act is strengthened (which could provide Democrats cover for passing FTAs during the elections). The administration has rejected some of the specific proposals and insists that expansion be linked to votes on all three pending FTAs. This issue must be resolved before any FTAs will have a plausible path forward. Third, the elections and current economic conditions are casting a pall over FTAs. The recent anti-NAFTA campaign rhetoric of Senators Clinton and Obama has made FTA votes even more problematic.

Domingo Latorraca, President of the Chamber of Commerce, Industry, and Agriculture of Panama: Determining if the U.S.-Panama TPA gets a place on the agenda would become the key issue once we reach September 1—if indeed Mr. Gonzalez does not seek re-election. The chairman of the House Ways & Means Committee stated recently that the U.S.-Panama Trade Promotion Agreement (TPA) would not be voted on this year—this statement would have to be revised. I find it very unlikely that the trade agreement could be voted on before the November elections in the United States. Provided the election results are favorable for the trade agenda, the TPA could be voted on during the lame-duck period, which is a very small window of opportunity. If not, the new administration's view on trade (remember that both Democratic candidates have stated they would renegotiate NAFTA) would determine if the TPA remains in the freezer.

Ambler Moss, Professor of International Studies at the University of Miami and a former US Ambassador to Panama: Although the TPA was completed in December 2006, it has been languishing before the U.S. Congress. Given the strong relationship between the two countries, and without serious opposition, it was an aberration not to pass it. But there was one significant political obstacle. Pedro Miguel Gonzalez, the head of Panama's National Assembly, was under an arrest warrant in the United States on charges that he murdered a U.S. soldier in 1992, a charge for which he was exonerated in Panama. Now, Gonzalez said [recently] he would not seek re-election. Congress may now move ahead and approve the TPA. It has bipartisan support, as the United States gains reciprocity. Around 95 percent of Panama's goods exported to the United States come in duty free under unilateral benefits programs like the Caribbean Basin Initiative. But Panama still maintains important barriers to U.S. agricultural products. Senator Chuck Grassley (R-IA), ranking member of the Senate Finance Committee, welcomed the TPA last year. He said: 'Panama imposes a tariff of up to 74 percent on our pork exports, a major Iowa product. The agreement will result in duty-free access for US pork, as well as for beef, corn, soybeans, and other Iowa agricultural products. By giving duty-free access to US goods and services in the Panamanian market, this agreement will bring much-needed reciprocity to our bilateral trading relationship.'

Republished with permission from the Inter-American Dialogue's daily Latin America Advisor newsletter. 

 

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