Panama Star | 9 March 2009
IN THE UNITED STATES
350 civil groups oppose FTA
MARIJULIA PUJOL LLOYD
The national, state and local organizations said that Panama’s economy thrives on banking secrecy and money laundering
Panama Star PANAMA. — Around 350 US national, state and local groups from religious to environmental sectors sent a letter to the House of Representatives as far back as February 5, asking lawmakers not to ratify the Free Trade Agreement FTA between Panama and the United States.
The groups that combined have a total membership of 18 million members and called themselves, Citizens Trade Campaign, insisted that Panama’s economy thrives on banking secrecy and money laundering.
Last week a group of 54 Democrat Congressman sent a letter to President Barack Obama, explaining the reasons why they were opposed to the ratification of the FTA between the countries, using as a justification the Panamanian banking secrecy laws and its reluctance to sign agreements regarding tax information exchanges.
In March the Public Citizen’s Global Trade Watch division sent another letter to the House of Representative also opposing to FTA for the same reasons cited by the congressmen.
The Citizens Trade Campaign said in its letter that “Panama has been a key target of both the Organization for Economic Co-operation and Development OECD and G7 created Financial Action Task Force for its resistance to international norms in combating tax evasion and money laundering.”
In the last 10 years Panama has been called a tax heaven and put on the black list of countries like Spain.
Panama has tried to clean its bad image by creating and implementing new laws to control money laundering, but it has not been enough to satisfy critics and it is still considered a place where US companies can create local subsidiaries for the purpose of dodging taxes.
Creating corporations in Panama is a relatively easy procedure and with approximately 400,000 registered corporations in the country is second only to Hong Kong as a home for multinational firms’ subsidiaries.
According to Citizens Trade Campaign many have been created for the sole purpose of avoiding tax.
Traditionally Democrat governments in the United States have taken a more protectionist attitude to international trade.
Many observers believe that the FTA with Latin American and Asian countries will not be ratified as an effort to protect the fragile American industry from nations that can produce and sell products at a lower price, especially in the current financial climate.
FREE TRADE AGREEMENT AND ITS BENEFITS
Free Trade Agreements FTA, according to the US Commerce Department have proved to be one of the best ways to open up foreign markets to US exporters. Today, the United States has FTAs with 14 countries and 42 percent of the US exports come from them.
In 2006, Panama exported approximately $337 million worth of goods to US and practically all of it went to that country duty free. However the products imported from the US paid taxes.
Taking this fact into account the FTA will be more beneficial to the US than to Panama, because the national market is going to be flooded with cheap American products, which could help the consumer and reduce the price of the basic food basket, but on the other hand can be a detriment to the Panamanian producer who will not be able to compete against low price exports.
The FTA between Panama and the United States was signed over a year ago and since then a group of democrat senators and congressmen have being against it.
Civil groups believe that FTAs in general will in the long run damage even more the fragile economy of the United States and as a consequence more people will lose their jobs.