After creating alliances with Colombia, Chile and Peru, Mexico signed a free trade agreement (FTA) with Panama. Signed in Panama City by both Mexican President Enrique Pena Nieto his Panamanian counterpart Ricardo Martinelli, the FTA will allow their countries to exchange goods and services as well as open the doors for reciprocal investments.
Martinelli commented, “Signing this trade agreement brings us closer to our wish to be part of the Pacific Alliance.” Panama has been trying to enter the Pacific Alliance, which covers over 210 million people and cuts down more than nine-tenth of tariffs on products or services its members trade. As Mexico was the only member Panama hadn’t signed with, the country may become part of the alliance before 2014 ends.
Now this was the third time Panama and Mexico had tried signing an FTA, the previous two being in 1999 and 2003 before the tax issue thwarted negotiations. However, not only was the FTA necessary for Panama to become a member of the Pacific Alliance, but also because of the trade relations between both countries.
According to the Foreign Ministry of Mexico, trade between both countries has grown by 214% over the last 10 years. With an increase from $339,000 to $64 million, Panama became Mexico’s fourth largest trading partner and the 11th in Latin America and the Caribbean. On the other hand, Panama is the second Latin American investor in Mexico, with investments amounting to $876 million between 1999 and 2013. Meanwhile, Mexico has invested over $2 billion in Panama, making it the fourth investor in Latin America.
Panamanian president Martinelli, who applauded the record time (seven months) in which the negotiations took place, highlighted his high expectations from the FTA. “We welcome all Mexican companies that want to establish in Panama, that could and should be the gateway for Mexican companies to the South American and Central American market… I’m sure this is a win- win situation and will be an advantage for all the businessmen in both countries,” he said.
Currently, there are no official documents stating the tariff reductions the FTA has to offer. However, there have been talks about it including 21 chapters, which include market access, customs rules, trade defense, e-commerce, and intellectual property among others.
Meanwhile, the president of the Association of Bilateral Champers of Commerce in Latin America has ascertained that the FTA won’t only commercially integrate the nations involved, but also allow the Pacific Alliance to become a commercial bloc for the area to import and export goods with Asian economies in a more competitive manner.