Panama Update Archives
Number 18, Winter 1997 Panamá Update
Fellowship of Reconciliation Task Force on Latin America and the Caribbean
2017 Mission St. #305, San Francisco, CA 94110
Tel: (415) 495-6334, Fax: (415) 495-5628, E-mail: forlatam@igc.apc.org
Panama in the World Trade Organization and Tariff Agreements
by Dennis Montenegro
From Premisas, November 1996, published by the Center for Latin American
Studies (CELA)
The negotiations between Panama and the World Trade Organization (WTO) allowed a ceiling of 40% for tariffs on most imported goods. Nevertheless, as former Commerce Minister Nitzia de Villareal said, these tariffs may still be lowered as a result of the government's trade policy.
Panama's commitment to the WTO, according to Villareal, is to lower tariffs to 30% within five years. There are 81 products that, because they are considered sensitive for Panama's economy, have ten years to lower tariffs. These include chicken, pork, milk, corn, rice, sugar, coffee, and salt.
Manuel Miranda, Vice-minister for Livestock Development, confirms that import tariffs on agro-industrial products could be lowered by 54% in 1997, decreases which are set in Panama's agreements with the World Bank. An example of this, according to Miranda, is the tariff on rice, which will be cut by 60%. He adds that the objective of the trade reform policy is for the country's consumers to benefit through greater competition in the local market.
Carlos Sousa Lenox, Minister of Livestock Development, recognizes that producers will have "some degree of hardship" because of the cuts in tariffs, which go into effect at the beginning of 1997. To compensate for these difficulties the government has tried for two years to improve production by bringing new technology to producers.
Juan Jované, director of the National Studies Institute (IDEN) at the University of Panama, says that Panama's entrance into the WTO does not guarantee that prices will fall for basic food staples, known as the "basic basket." In his judgement, the concentration of economic resources [in Panama] is not in the area of production, but in marketing and trade.
The government seeks to lower the cost of the "basic basket," and so cuts tariffs, but the distribution of goods is concentrated within few hands in Panama. The problem then is that instead of reducing prices, what happens is that the multiplier factor is raised, which means an increase in the margins in traders' profits. Technically, the service of trade is not "transable," that is, the consumer has no choice but to acquire goods in commercial stores, Jované says.
He adds that the sectors most affected by the government's policy of opening trade are livestock and industry. Panama is destined to be among the losing countries in the WTO, because of the rapid way these policies are being carried out, the economist says.
The IDEN director explains that the most serious problem for producers is not Panama's incorporation into WTO, but the parallel agreement signed with the World Bank, which involves a more rapid transition for farmers. The agreement breaks with the graduated transition hoped for by producers, he says, so that they will have less time to find a place in the competitive world market.
A Planning Ministry document recognizes that the World Bank agreements negotiated different tariffs from those established with the WTO. Changes were made to tariffs on rice, onions, potatoes, pork, tomatoes, milk products, sugar and coffee. This could cause agricultural producers to seek other ways to survive, becoming import traders, thus reducing the number of jobs in the countryside, the IDEN director says.
Darío Selles, president of the Panamanian Exporters Association, notes that there is much concern about the World Bank's demands to reduce tariffs beyond those established with the WTO. Selles asserts that the problem lies in commitments made to multilateral banks before producers are able to develop new production techniques.
Fellowship of Reconciliation
Panama Campaign
Produced by the Fellowship of Reconciliation Task Force on Latin America and the Caribbean
2017 Mission St. #305, San Francisco, CA 94110
Tel: (415) 495-6334, Fax: (415) 495-5628, E-mail: forlatam@igc.apc.org
- Last updated February 21, 1997.
