Panama: Central American Countries Aim for Free Trade Agreement

The Presidents of the Central American countries of Panama, Costa Rica, Nicaragua, Guatemala, and El Salvador, along with the Vice-President of Honduras, signed the Normative Text for a future Free Trade Agreement to cover all 6 countries. The Text was signed on March 6 in Panama City, having as witness the President of Brazil. With the signing of the Text, the Central American countries intend to form a trade bloc of 30 million consumers.

The Text provides guidelines for negotiations between member countries of bilateral Free Trade Agreements - a previously-negotiated FTA between Panama and El Salvador (the only two dollarized economies of the region) being signed that same day. The FTAs will deal with progressive access to markets of goods, services and investments from member countries as well their granting of Most Favored Nation treatment. Their scope is wider than previous bilateral trade agreements from the 1970s dealing with lists of specific goods.

Tax provisions allow for a reduction of customs duties on goods from member countries, elimination of most export taxes and rules of origin. Other provisions call for measures such as the elimination of non-tariff trade barriers, regulation of antidumping and anti-competitive measures, and the implementation of World Trade Organization Sanitary and Phytosanitary (SPS) Measures and Trade-Related Intellectual Property (TRIPS) agreements.

Panama is seeking negotiations for an FTA with the US, while the other Central American countries have been invited this year by the US to negotiate a US-Central American FTA. Panama also serves as temporary seat until 2003 of another initiative called the Free Trade Agreement for the Americas and its bidding to be its permanent seat after 2005.

Fabrega, Barsallo, Molino & Mulino are a Panama law firm with experience in intellectual property, licensing, business, administrative and commercial law.