Panama's strategic position has made it a transit point for agricultural products since long before French and U.S. efforts sliced a canal through the country. Corn, first developed in Mexico, spread to South America through Panama, while a variety of tubers, such as potatoes and yucca, spread north from the Amazon and Andes into Mesoamerica.
Panama continues to be an important trade hub for food commodities. However, the nation itself must import much of its food supply to feed its burgeoning population and booming economy. Sixty-five percent of Panama's food comes from the United States and with the signing of the U.S.-Panama Trade Promotion Agreement (Panama TPA), that food may become cheaper and more plentiful.
“The Panamanian private sector has a strong preference for the American brand of food products,” said Arlene Villalaz, an agricultural specialist with Panama's Foreign Agricultural Service, on the U.S. Department of Agriculture's website. “With the Panama TPA underway, the U.S. will maintain and improve that market share.”
Under the new agreement, tariffs will immediately be dropped on more than half of the current agricultural products entering Panama. Within 15 years the rest of the food tariffs will wither like an untended field. When it is fully implemented the Panama TPA may boost U.S. agricultural exports by $2.2 billion per year.
More specifically, barley and wheat will receive duty-free treatment immediately. Sorghum will be duty-free in five years. Currently the first 300,000 tons of corn can now enter Panama duty-free and that amount will grow three percent each year until the tariff disappears in 15 years.
How this will affect Panamanian farmers remains to be seen. A flood of cheap American farm products could make it difficult for local farmers to sell their corn and other crops that the U.S. produces. On the other hand, tropical fruits and coffee can't be grown in the U.S. and will offer a perpetually profitable produce possibility for Panamanian farmers. Additionally, crop imports from the already ecologically devastated grasslands of the U.S. will reduce pressure to clear the forests of Panama.
IMAGE: The Panama Canal's Gatun Locks. (CREDIT: Stan Shebs, Wikimedia Commons)