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Dairy Facts 2016

United States, Panama Conclude Free Trade Agreement

Jan 02, 2007

United States, Panama Conclude Free Trade Agreement

The United States and Panama announced on December 19 that the two countries had completed negotiations on a free trade agreement, although it is subject to additional discussions regarding Panama's labor standards. According to the agreement, more than half of current U.S. agricultural exports, including whey, will receive immediate duty-free access to Panama's market. Tariffs on other dairy products, such as cheese, ice cream and yogurt, will be phased out over the next 15 years.

"This trade agreement will provide new opportunities to increase U.S. dairy exports to Panama, which were valued at $3.5 million in 2005," said Helen Medina, IDFA manager for international affairs.

In addition, Panama has agreed to increase the amount of U.S. agricultural imports allowed into the country, which previously had been limited because they compete with domestic industries. By granting these higher quotas, known as tariff-rate quotas or TRQ's, Panama will pave the way for more U.S. exports to enter the country duty-free. According to the agreement, the TRQ's will be expanded over time and eventually will permit unlimited access for all U.S. agricultural products, including dairy.

The deal also permits the United States to import duty-free an additional 7,000 metric tons of sugar products from Panama once the agreement has been implemented.

The agreement now moves to Congress for approval, but legislators have expressed concern that Panama's labor practices are not up to international standards. In an unusual step for free trade agreements, the negotiations were completed with a stipulation that the labor provisions would remain open for discussion. The Bush administration has indicated it will work with lawmakers to address their labor concerns and expects to gain congressional approval for the agreement this year.

Sugar producers, traditionally opposed to free trade agreements that give foreign entities additional access to the U.S. sugar market, reacted positively to the deal. Their response may help to ease the process for gaining congressional approval.

For more information, contact Medina at or 202-220-3507.

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Posted January 2, 2007

Dairy Delivers