President Notifies Congress of His Intent to Sign a Free Trade Agreement With Panama

Under the provisions of the Bipartisan Trade Promotion Authority Act of 2002, the President is required to notify Congress at least 90 days in advance of signing an FTA with Panama.

(On December 19, 2006, the USTR announced that the U.S. and Panama had completed negotiations on a FTA with the understanding that it was subject to further discussions regarding labor. See ITT's Online Archives or 12/21/06 news, 06122105, for BP summary.)

After FTA is Signed, Next Step Expected to be Submission of Implementing Legislation, Etc.

Once the FTA with Panama is signed, the next step is expected to be that the President will formally submit the U.S.-Panama FTA implementing legislation package (U.S.-Panama FTA, implementing legislation, and statement of administrative action) to Congress. Under the Trade Act of 2002's TPA, Congress would then have 90 legislative days to consider the U.S.-Panama FTA implementing legislation, which cannot be amended.

If the U.S.-Panama FTA implementing legislation is passed by Congress (both House and Senate), the President would be expected to sign it into law and then subsequently issue an implementing proclamation.

Highlights of U.S.-Panama FTA

According to a previously issued summary by the Office of the U.S. Trade Representative (USTR), the following are highlights of the U.S.-Panama FTA (partial list):

Over 88% of exports of consumer and industrial goods to Panama would become duty-free immediately. The USTR states that over 88% of U.S. exports of consumer and industrial goods to Panama would become duty-free immediately upon entry into force of the agreement, with remaining tariffs phased out over 10 years. The agreement includes "zero-for-zero" immediate duty-free access for key U.S. sectors including agricultural and construction equipment, information technology products, and medical and scientific equipment. Other key export sectors such as motor vehicles and parts, paper and wood products, and chemicals would also obtain significant access to Panama's market.

More than half of current U.S. farm exports to Panama would become duty-free immediately. According to the USTR, more than half of current U.S. farm exports to Panama would become duty-free immediately, including high qualify beef, other meat and poultry products, soybeans and products, most fresh fruits and tree nuts, distilled spirits and wine, and a wide assortment of processed products. U.S. farm products benefiting from expanded market access opportunities through tariff-rate quotas (TRQs) include pork, chicken leg quarters, dairy products, corn, rice, refined corn oil, dried beans, frozen french fries, and tomato products. Tariffs on most remaining U.S. farm products would be phased out within 15 years.

Panama and the U.S. signed a far reaching bilateral agreement on sanitary and phytosanitary measures and technical standards whereby Panama will recognize the equivalence of the U.S. food safety inspection system for meat and poultry and the U.S. regulatory system for processed food products. Panama will provide access for all U.S. beef, poultry, and related products consistent with international standards. The agreement also streamlines import documentation requirements for U.S. processed foods.

Yarn-forward standard, special textile safeguard, etc. The USTR states that apparel products made in Panama would be duty-free under the FTA if they use U.S. or Panamanian fabric and yarn. Special state-of-the-art customs cooperation commitments between the U.S. and Panama would allow for verification of claims of origin or preferential treatment, and denial of preferential treatment or entry if claims cannot be verified. A special textile safeguard would provide for temporary tariff relief, if imports under the FTA prove to be damaging to domestic producers.

No TPLs for textiles or apparel. The USTR notes that the U.S.-Panama FTA is one of the few FTAs without tariff preference levels (TPLs).

Immediate reciprocal duty-free access for all textile and apparel goods. The Parties would provide reciprocal duty-free access immediately for all textile and apparel goods.

Other textile and apparel provisions. According to the USTR, other textile and apparel provisions include:

a single transformation rule of origin for "Guayabera-style" shirts and dresses;

duty-free treatment of socks meeting U.S.-Caribbean Basin Trade Partnership Act (CBTPA) rule of origin with a 10-year phase-out of duties on all other socks;

pockets in garments receiving duty-free treatment will be made of fabric from one of the Parties; and

thread and narrow elastic fabrics would be required to originate in the U.S. or Panama. There is also a provision to ensure visible linings originate in the U.S. or Panama.

Greater protection for intellectual property rights. The FTA provides for improved standards for the protection and enforcement of a broad range of intellectual property rights (IPR), which are consistent with both U.S. standards of protection and enforcement, and with emerging international standards. Such improvements include state-of-the-art protections for digital products such as U.S. software, music, text, and videos; stronger protection for U.S. patents, trademarks and test data, including an electronic system for the registration and maintenance of trademarks; and further deterrence of piracy and counterfeiting by criminalizing end-use policy.

Strengthened protection against technical barriers to trade. The USTR states that the FTA builds on each government's obligations under the World Trade Organization (WTO) Agreement on Technical Barriers to Trade to enhance transparency in the development and application of technical regulations and conformity assessment procedures (e.g., product testing and certification). The agreement obliges the Parties to provide national treatment when recognizing conformity assessment bodies.

Customs Administration. According to the USTR, the FTA would help facilitate the movement of trade through far-reaching obligations on customs administration. The agreement addresses transshipment concerns by requiring Panama to maintain a monitoring program in its free trade zones (FTZs) and to provide U.S. Customs and Border Protection (CBP) with access to information collected in connection with the program. The FTA also requires Internet publication of customs procedures, speedy release of goods, the use of advance binding rulings, and specific commitments related to express delivery shipment, as well as provisions on the use of information technology and risk assessment techniques.

Presidential Notification (FR Pub 04/02/07) available at http://a257.g.akamaitech.net/7/257/2422/01jan20071800/edocket.access.gpo.gov/2007/pdf/07-1647.pdf.

Presidential Letter to Congressional Leaders (dated 03/30/07) available at http://www.whitehouse.gov/news/releases/2007/03/20070330-1.html.