Panama: trouble for FTA in US Congress?

On May 21 Assistant US Trade Representative Everett Eissenstat told a Senate Finance Committee hearing that the administration of US president Barack Obama won’t seek the approval of Congress for a free trade agreement (FTA) with Panama until the president has established a new “framework” for trade. “It’s clear that trade agreements in the last few years have been much too divisive,” Eissenstat said. “We want to make sure that Panama doesn’t contribute to that divisiveness.” This was a reversal from the administration’s plan in March to push for early approval of the pact; the change followed a statement by John Sweeney, president of the main US labor federation, the AFL-CIO, opposing the Panama FTA.

The Panama agreement was considered the least controversial and easiest to pass of three FTAs negotiated by the administration of former president George W. Bush (2001-2009) but still awaiting approval from Congress; the other two pacts are with Colombia and South Korea. The Panama accord is backed by the National Association of Manufacturers and the Illinois-based Caterpillar Inc., which is seeking to supply machinery for a planned expansion of the Panama Canal. Trade between Panama and the US was $5.5 billion in 2008. (Bloomberg, May 21)

The FTA is a foreign policy priority both for outgoing Panamanian president Martin Torrijos of the center-left Democratic Revolutionary Party (PRD) and for the conservative president-elect, Ricardo Martinelli. Analysts in Panama think that to win US approval the Panamanian government will have to meet US demands on unionization, child labor, environmental issues and banking secrecy laws. (Prensa Latina, May 22)

From Weekly News Update on the Americas, May 24

See our last post on Panama.