On October 31, nearly five years after being signed by both nations, a free trade agreement between the United States and Panama will finally be entering into force.
Five years ago, there was no iPad, the unemployment rate was under 5 percent, and the Tea Party was still an 18th century historical event. Five years ago was also when the U.S. and Panama finalized the U.S.–Panama Trade Promotion Agreement, which removes most barriers to trade between the U.S. and Panama and will greatly benefit American consumers and manufacturers alike.
This agreement has many tangible economic, political, and security benefits for both the U.S. and Panama. So why did it take five years after negotiations were completed for it to take effect? The agreement was finalized in 2006, signed by both nations in June 2007, and ratified by Panama’s National Assembly the following month. Then the agreement sat on the shelf for four years, blocked first by the Democratic majority in Congress and then by the Obama Administration.
Finally, in October 2011, President Obama submitted the agreement to Congress, where it was quickly passed.
The U.S. is Panama’s largest trading partner, and many U.S. corporations have been anxious to boost their exports into the strategically located Central American nation. This agreement immediately removes hundreds of tariffs and will undoubtedly increase trade between the two countries.
As one example, Caterpillar will likely see an increase in sales for large projects, such as the Panama Canal expansion. Its exports increased fivefold to Mexico and threefold to Colombia after free trade agreements with each went into effect.
The U.S. government should be doing everything in its power to support the American economy and encourage growth. Free trade agreements have proven to do both, yet no new trade agreements have been originated or signed by President Obama, and our trade policy remains in limbo.
Mark Lamborn is currently a member of the Young Leaders Program at The Heritage Foundation. For more information on interning at Heritage, please visit http://www.heritage.org/about/departments/ylp.cfm.