On October 22nd, U.S. Trade Representative Ron Kirk met with Panamanian Minister of Commerce and Industry Ricardo Quijano in order to conclude and put into effect a six-year-long process – the enforcement of the U.S.-Panama Trade Promotion Agreement (TPA).
Now that the agreement has been fully enforced, the decades-long trading partnership between the United States and Panama is expected to strengthen even further throughout the coming months.
In accordance with the TPA, Panama has agreed to abolish tariffs on at least 86 percent of the United States’ consumer and industrial goods. In addition, nearly 50 percent of the United States’ agricultural goods are now duty-free. The TPA also guarantees that any tariffs that still remain on industrial or agricultural goods will be completely removed within the next 10 and 15 years, respectively.
Not only will U.S.-based distributors have more access to the nation’s services market, which is currently valued at $22 billion, but they will also have more financial freedom to expand their operations and hire new employees.
“Panama is one of the fastest growing economies in Latin America, expanding 10.6 percent in 2011, with forecasts of between five to eight percent annual growth through 2017,” said Ron Kirk. “That adds up to support for more well-paying jobs across the United States.”
“Fair-trade agreements like the Panama FTA give the U.S. economy a much-needed boost and create new jobs for American workers here at home,” said Senator Max Baucus. “Enhancing and expanding access to rapidly growing foreign markets like Panama is an opportunity for American workers and businesses.”
According to the Senate Committee on Finance, the U.S.-Panama TPA, combined with other agreements enforced this year, will lead to a significant rise in U.S. exportation – by up to $13 billion on an annual basis. In 2011, every $1 billion of exports supported 5,080 jobs, according to the International Trade Administration; many economists believe this trend will continue in 2013.
Furthermore, these agreements will increase gross domestic product (GDP) by at least $15 billion. This considerable rise in exportation and GDP is projected to create tens of thousands of jobs throughout the coming years, according to the Senate Committee on Finance.
Such job creation directly corresponds with the National Export Initiative, which President Obama first announced on January 27, 2010 during his State of the Union Address. According to Obama, the initiative will help fulfill two objectives – to double the nation’s exports by 2014 and, ultimately, add two million new jobs to the national economy.
Despite the promise of the U.S.-Panama TPA and the National Export Initiative, two questions remain unanswered. Will job creation be noticed immediately – or will hiring begin to uptick in early 2013? And, how many Americans will actually be impacted by the agreement?