The U.S.-Panama Trade Promotion Agreement (Panama TPA) entered into force Oct. 31, expanding market access for U.S. agricultural exporters in one of the fastest growing economies in Latin America. The Panama TPA is the last in a trio of trade agreements (South Korea and Colombia are the others) that altogether are expected to boost U.S. agricultural exports by $2.2 billion when fully implemented.
The Panama TPA implementation is especially exciting news for U.S. agriculture since Panama is already an important market for American farmers, ranchers and producers. The country imports 65 percent of its food products from the United States, and major U.S. agricultural exports to Panama include corn, soybean meal, wheat, poultry and rice. The agreement ensures U.S. exporters will receive duty-free treatment on products accounting for more than half of the current trade, with tariffs on remaining agricultural products phased out within 15 years.
The Foreign Agricultural Service (FAS) office in Panama has been working hard with U.S. agricultural trade organizations (called cooperators) to promote the high quality of U.S. agricultural products and maintain and expand U.S. exporters’ presence in Panama. “The Panamanian private sector has a strong preference for the American brand of food products,” said Arlene Villalaz, an FAS agricultural specialist in Panama. “With the Panama TPA underway, the U.S. will maintain and improve that market share.”
Among the FAS cooperators who have been positioning themselves to take advantage of expanded opportunities in Panama is the U.S. Grains Council, which represents the barley, corn and sorghum industries. In 2010, the council opened its regional office for Latin America and the Caribbean in Panama City. Grain exports represent 17 percent of the total cargo that transits the Panama Canal and 90 percent of those grains are from the United States.
Before the agreement, Panama’s tariffs on grains ranged from zero to 90 percent. Under the Panama TPA, barley and wheat will receive duty-free treatment immediately while sorghum will receive duty-free treatment in five years. Panama also established a 298,700 ton duty-free tariff rate quota (TRQ) for corn that will grow at a rate of three percent before it’s completely eliminated in 15 years.
The latest export forecast sees U.S. farm exports at their second highest level ever in 2012, while the forecast for 2013 is a record $143.5 billion. The Obama Administration, with Agriculture Secretary Tom Vilsack's leadership, has aggressively worked to expand export opportunities and reduce barriers to trade, helping to push agricultural exports to record levels. Overall, American agriculture supports 1 in 12 jobs in the United States and provides American consumers with 83 percent of the food we consume, while maintaining affordability and choice. Strong agricultural exports contribute to a positive U.S. trade balance, create jobs, boost economic growth and support President Obama's National Export Initiative goal of doubling all U.S. exports by the end of 2014.
For more information about the U.S. Panama Trade Promotion Agreement and its impact on U.S. agriculture, visit our website.
