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FACT
SHEET:
U.S.-Panama Trade Promotion
Agreement
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Michigan Farmers Will Benefit
November 2007
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The U.S.-Panama Trade Promotion Agreement eliminates tariffs and other
barriers on most U.S. goods, increasing export opportunities for agricultural
products important to Michigan. With immediate elimination of duties on over 60
percent of current U.S. trade, this agreement changes the one-way street of
duty-free access currently enjoyed by most Panamanian exports into a two-way
street benefiting both countries. The American Farm Bureau strongly supports the
agreement, predicting widespread gains for U.S. agriculture exceeding $190
million per year.
Michigan’s exports to all countries, estimated at $1.1 billion in 2006,
supported about 13,800 jobs, on and off the farm. These export sales make an
important contribution to the Michigan farm economy which had total cash
receipts of $4.5 billion in 2006.
Dairy Products. With sales of $936 million in 2006, the dairy industry is
the state’s largest source of farm cash receipts. The Panama agreement will
benefit this industry.
U.S. exporters will have immediate duty-free access to nine preferential
dairy tariff-rate quotas (TRQs) with a combined total of 3,986 tons. These
include 2,625 tons of skim milk powder, 728 tons of cheese, 263 tons of ice
cream, and 370 tons of other dairy products. These quantities will grow by 4
or 5 percent each year and the over-quota tariffs for these TRQs, which
range from 15 percent for ice cream to 50 percent for milk powders, will be
phased out in 15 to 17 years.
U.S. dairy exporters will continue to have access to the global TRQs for
3,830 tons of milk powder and 3,782 tons of cheese that are part of Panama’s
World Trade Organization commitments.
Panama will eliminate its 30-percent tariff on dried whey products
immediately. The tariffs on most other dairy products, which currently face
duties as high as 140 percent, will be phased out over 15 years.
In addition, Panama has already implemented our December 2006 bilateral
agreement on sanitary and phytosanitary (SPS) measures and technical
standards by recognizing the equivalence of the U.S. food safety systems for
processed foods, including dairy products, and by streamlining its product
registration system for packaged foods. This will allow U.S. food processors
to export dairy products to Panama without burdensome paper work and without
having each facility and shipment inspected by Panamanian authorities.
The National Milk Producers Association supports the Agreement, noting
that "Panama imports nearly half its dairy products, and the U.S. stands to
become a larger supplier once the FTA is finalized."
Soybeans and Products. Panama is the twelfth largest export market for
U.S. soybean meal with exports for the most recent three years averaging 109,000
tons valued at $24.7 million. As the state’s largest agricultural export, with
sales of $233 million in 2006, Michigan’s soybean producers will benefit from
this agreement.
Panama’s current zero-tariff treatment for soybeans and soybean meal
will be locked in place immediately upon implementation of the Agreement.
The current zero-tariff treatment for crude soybean oil will also be
locked in place immediately, while the 20-percent tariff on refined soybean
oil will be phased out in 15 years.
Feed Grains. Feed grains are the state’s second largest export, and corn
is the fourth largest source of cash receipts in the state at $563 million in
2006. This agreement will benefit feed grain producers.
Panama will provide immediate duty-free access within a TRQ for 298,700
tons of U.S. corn that will grow at a rate of 3 percent each year. The
40-percent over-quota tariff will be eliminated in 15 years.
The current zero-tariff treatment for crude corn oil will be locked in
place immediately and Panama will provide immediate duty-free access for
refined corn oil within a 368-ton TRQ that grows each year by 5 percent. The
30-percent over-quota tariff will be phased out within 10 years.
Beef. The cattle and calf industry is the state’s fifth largest source of
farm cash receipts with sales reaching $295 million in 2006. Ranchers will gain
from this agreement with Panama.
Panama will immediately eliminate its 30-percent duty on beef products
of most importance to the U.S. beef industry--prime and choice cuts.
Panama’s tariffs on other cuts of beef will be phased out over 15 years.
The 10-percent tariff on beef tongues and livers will be eliminated in 5
years, and the 15-percent tariffs on other edible offal will be eliminated
immediately.
Panama has already implemented our December 2006 bilateral agreement on
SPS measures, reopening its market to U.S. beef by bringing its import
requirements related to BSE into compliance with international standards.
Panama also accepted the equivalence of the U.S. meat inspection system,
which allows U.S. inspectors to certify beef for export to Panama without
having each facility and shipment inspected by Panamanian authorities.
Vegetables. Michigan is the nation’s eighth largest agricultural exporter
of fresh and processed vegetables with estimated sales of $114 million in 2006.
Potato, dried bean and other farmers can benefit from this agreement.
Panama will eliminate its tariffs on nearly all frozen and processed
vegetables immediately. The tariff faced by U.S. exporters for these
products currently is 15 percent.
The tariffs for most fresh vegetables will be eliminated in 10-15 years.
Panama will provide immediate duty-free access within a preferential TRQ
for frozen precooked French fries that starts at 3,640 tons and grows each
year by 4 percent. The 20-percent over-quota tariff will be eliminated in 5
years.
Panama will eliminate its 15-percent tariff on potato chips immediately
and the tariffs on potato flakes (15 percent) and other potato preparations
(as high as 54 percent) will be phased out in 5 to 10 years. Panama will
also establish a 765-ton duty-free preferential TRQ for fresh potatoes that
will grow each year by 2 percent.
Panama will eliminate its 15 percent tariffs on lentils and most dried
beans immediately. For Kidney beans, Panama will provide immediate duty-free
access within a preferential TRQ that starts at 795 tons and grows each year
by 6 percent. The 15 percent over-quota tariff will be phased out in 12
years.
Fruits. As the nation’s fifth largest exporter of fresh and processed
fruit, Michigan growers of blueberries, cherries and other fruit can benefit
from this agreement.
Panama will eliminate its tariffs on nearly all fresh and processed
fruits immediately.
Following are examples of fruit products of importance for Michigan that
will be duty-free immediately (the currently applied tariff is indicated in
parentheses): blueberries (15 percent), fresh cherries (1 percent),
processed cherries (Free), apples (2 percent).
Back to the
U.S.–Panama Trade
Promotion Agreement
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