Panama Canal Next Stop on Canadian Trade Agreement Agenda

(Embassy – Michelle Collins)

Officials from the Central American country were in Ottawa last week as the two countries prepare for trade talks

As negotiations for a trade agreement with Colombia face critical opposition in both the U.S. and Canada, exploratory discussions about initiating free trade negotiations with Panama are being taken up in Ottawa.

In the Capital last week for a first meeting with Canadian trade officials, Panama’s chief trade negotiator Leroy Sheffer described the talks as “absolutely positive.” “We’re working to make Panama one of the top sectors in the world,” Mr. Sheffer said. “Panama is a main platform Canada can use to distribute to the Latin American market.”

With its strategic location in Central America and the Panama Canal free trade zone, Mr. Sheffer said the opportunities for Canadian businesses to expand services and exports in the region are immense.

He said a deal between Panama and Canada would serve to complement the two countries’ economies since both are largely service-based with important agricultural sectors. In addition, he said, Panama and Canada share similar views at the World Trade Organization in the service, financial and tourism areas.

Mr. Sheffer said Panama is especially keen to expand relations in some of the areas where Canada excels, such as bio-technology and mining, the industry in which Canada is a world leader. “Panama wants to connect with countries at a certain level of success, Canada has done well and Panama would like to be partners with the right trade partners that Canada has.”

A Foreign Investment Protection and Promotion Agreement was signed with Panama in 1998, and last year bilateral trade between the countries totalled $115.1 million. In its assessment of the country, Export Development Canada described Panama as very attractive to investors. However, the report also stated that there is rampant corruption and cronyism among businesspeople, though the government has set up a dispute mechanism to address the delays and lack of independence in the judicial system.

Since 2005, Canadian exports to Panama, such as pharmaceuticals, machinery, electronics, meat and vegetables, have grown by nearly 44 per cent. Imports from Panama to Canada are mainly mineral fuels, fruits and nuts, seafood, spices and coffee, teas and wood products.

In Export Development Canada’s analysis of Panama’s political situation, the report states that “There is little chance that a party with leftist tendencies will form a majority government or take [the] Presidency in 2009,” because the opposition received little public support in the 2004 elections.

“There’s tremendous opportunity in Panama to expand trade, especially as a portal to go into Latin America as a logistical hub,” Mr. Bains said. “Portal investment is increasing, trade is improving, there are a lot of synergies, a lot of commonalities.”

Leading the charge for an agreement since arriving in Ottawa in 2005 has been Panamanian Ambassador Romy Vásquez. Ms. Vásquez said she has been a non-stop promoter of a trade agreement between the countries because there are enormous market opportunities for both Panama and Canada.

“I’m a business person, and I do believe there are opportunities,” Ms. Vásquez said. “We are a hub for products and services because we are geographically positioned in the centre of the Americas. If Canadian companies would like to have more access, we are in a perfect position.” She said relations between the two countries have been rapidly expanding over the last few years, particularly in tourism. In 2004, Panama saw about 7,500 Canadian tourists a year. Today that number has grown to 55,000 a year, with five chartered flights leaving for Panama each week, she said.

The United Nations’ Economist Intelligence Unit has recently ranked Panama as the second-fastest growing economy in the world.

According to the Department of Foreign Affairs and International Trade, depending on the outcome of the initial talks, the government will embark on comprehensive consultations with stakeholders across Canada before making a decision on whether to launch negotiations.

Mr. Sheffer said he understands Canada has an extensive internal process to follow before moving forward with any agreements, but said he is very encouraged by Canada’s “amazing” commitment to corporate social responsibility. “There’s a need to create necessary synergies to provide benefits for Canada and Panama,” Mr. Sheffer said. “The opportunities Panama offers to Canadian firms are immense.” Read the entire article.