SINGAPORE, Feb. 17 (UPI) -- Although a small country with a GDP of $12.3 billion, Panama is planning a very strong and aggressive trade agenda over the coming year. The country will soon start negotiations with the United States on a Free Trade Agreement and on Tuesday, it also announced it had agreed with Singapore to initiate FTA negotiations.
"We're a very small country with one of the most open economy in Latin America, trying to insert Panama in the globalization," Minister of Commerce and Industry Joaquin Jacome Diez told UPI in an interview.
Panama signed an FTA last August with Taiwan, its first in Asia, which came into effect in January. The Central American country also has an FTA with El Salavador. Though the country will be facing a presidential election on May 2, Jacome believes the current trade agenda will remain unchanged regardless of who ever becomes president. Martin Torrijos Espino, the son of the late President General Omar Torrijos Herrera, is currently the favorite candidate to win the elections.
Jacome also sees no contradiction between pursuing FTA and the World Trade Organization's Doha negotiations. "We remains pro-Cancun and would like to push forward the Doha Development Agenda," he said. Panama was part of an alliance of 33 countries which was pushing for the inclusion of Strategic Products (SPs) and a Special Safeguard Mechanism (SSM) in the agriculture talks.
Agriculture will be a "sensitive" issue in the negotiations with the United States, Jacome admits. Agriculture only represents 6.9 percent of the economy structure, compared with 77 percent for services. But the agricultural sector accounts for about 17 percent of employment and is therefore a "fundamental sector" of the Panamanian economy, he said.
"Luckily, this sensitive issue of agriculture is not an issue for Singapore," Singapore Trade Minister George Yeo told reporters at a separate press conference Tuesday.
While Jacome expects trade talks with the U.S. to start in earnest in the second quarter this year, he would not venture as giving a timeframe for the length of the negotiations.
By comparison, the FTA with Singapore should start after Easter and be concluded within a year, Yeo said. "An FTA will strengthen the hub to hub connectivity between the two sides," Yeo noted.
Bilateral trade between the two countries represented $1.2 billion in 2003, up 6.9 percent, while imports from Panama represented $5.4 billion and exports to Panama represents $1.2 billion. Most of the goods are transiting.
The Lion-State has already concluded an FTA with the United States, which came into effect in January and this FTA will serve as a model for the Panama-Singapore FTA. This will also help simplify the US-Panama negotiations.
Although Panama has always had a "special" bilateral relationship with the United States because of the Panama Canal, the U.S. decided to initiate negotiations for an FTA with the Latin country on Nov 18 last year choosing to negotiate separately CAFTA with Panama's four Central American neighbours.
"The structure of our economy is very different from those countries as we don't have as much agriculture. That's why they negotiated separately," Jacome explains.
Beyond agriculture, two very important subjects for the United States are the security of their investments and intellectual property rights. Patents on software, books, discs, films and pharmaceutical products were very important in the negotiations with Singapore. Another key issue will be fight against corruption, observers said.
Jacome told UPI he hopes the Singapore FTA will facilitate and increase Singaporean investment into Panama. The country is facing massive investment needs as it aims to position itself as a logistic hub for Latin America.
The country is currently in the first stage of its airport expansion at the cost of $40 million and is also in the final stage of deciding the expansion of the Panama Canal, a project which could be worth $6-8 billion.
"There is a lot of opportunity for investment in logistic, which is where Singapore has experience," he said.
