Panama and Colombia are expected to sign a bilateral free trade agreement in Panama City today, finalizing a commitment that was reached by the two countries last June. Panamanian Minister of Commerce and Industry Ricardo Quijano and Colombian Minister of Commerce, Industry and Tourism Sergio Díaz-Granados will participate in the official treaty-signing ceremony.
During a television interview yesterday, Panamanian President Ricardo Martinelli expressed optimism about the agreement, saying that it is pivotal for Panama’s integration into the Pacific Alliance. Panama currently has free trade agreements with Chile and Peru and seeks to establish bilateral trade agreements with other Pacific Alliance member states—including Mexico, Chile and Colombia.
Martinelli also confirmed that the agreement will end what he has deemed an "unfair and detrimental” aspect of Panama’s trade relationship with Colombia. Currently, Colombia imposes a 10 percent “re-exportation” tariff on Panamanian-produced textiles and footwear before they are shipped internationally from Colombia’s free trade zone, Zona Libre de Colón. Last year, Colombian exports to Panama amounted to $2.857 billion, 80 percent of which was accounted for by crude oil. In contrast, Panama only exported $72 million of goods to Colombia, represented mainly by apparel shipments.
Panamanian President Ricardo Martinelli signed a pledge on Tuesday stating that he will not seek reelection in the country’s 2014 presidential elections. According to media observers in Panama, Martinelli made the pledge in response to controversial rumors of his desire to run again in a country with strict constitutional prohibitions against consecutive presidential terms. Until recently, President Martinelli's approval ratings hovered around 80 percent, but recent actions to quell protests by the Indigenous Ngabes Buglés people regarding mining and hydroelectric activities has brought his job approval and likability figures to around 33 percent—their lowest levels ever.
Martinelli challenged members of the opposition to sign a similar document and accused opposition parties of spreading false rumors about his seeking reelection. However, opposition party leader Francisco Sanchez of the Partido Revolucionario Democratico says the president’s move “shows that no one believes him,” and only serves to underline the Martinelli administration’s desperation to improve its job approval figures.
The latest poll, released Tuesday by research firm Dichter & Neira, questioned 1,200 people and found that 80.3 percent of respondents disapproved of how Martinelli handled the Indigenous strike. In addition, 71.8 percent believed the administration authorized excessive force against the protesters.
Panamanian President Ricardo Martinelli announced yesterday that he will hold a referendum in 2012 on a constitutional modification to reform the country’s electoral system. The initiative was already introduced by the executive branch in March as a law and is currently being discussed in Congress. A controversial point is that the proposed changes would include presidential re-election and the possibility of runoff starting 2014 if no candidate obtains an absolute majority of the vote.
Last week a dispute over the referendum during a debate in Congress led to the demise of the Alianza por el Cambio, a national political coalition initiated in 2009 between Martinelli’s Cambio Democrático (Democratic Change) party and the opposition (Partido Panameñista, the Unión Patriótica and the Movimiento Liberal Republicano Nacionalista). By the end of last week, Martinelli dismissed Juan Carlos Varela from his post as foreign minister (Varela remains Vice President) due to their differing positions on the proposals.
Martinelli, who according to a recent poll by Dichter & Neira (D&N) has lost 20.5 percentage points of popular support since last month and is blamed for the political rupture, said “there’s nothing more democratic than re-election.” He added, “The ones who oppose a second round are against democracy or have personal or party interests.” Before Martinelli’s announcement, Vice President Juan Carlos Varela—and leader of the Partido Panameñista—had already said that re-election must be approved by Panamanians: “Let the people decide,” he told a local newspaper last week.
Varela’s stance throughout the crisis has increased his appeal among voters. The D&N survey showed that the percentage of Panamanians who would vote for him in 2014 increased by 7.6 percentage points up to 24.8 percent during the last month; the percentage of Panamanians who would vote for Martinelli decreased by 6.6 points.
The Office of the United States Trade Representative announced yesterday afternoon that the Obama administration has resolved outstanding issues with Panama and will submit the U.S.-Panama Trade Promotion Agreement to the U.S. Congress shortly. In a letter sent to chairmen and ranking members of pertinent House and Senate committees, U.S. Trade Representative Ron Kirk announced that a Tax Information Exchange Agreement had been signed recently between the Panamanian and U.S. governments.
The exchange of tax information agreement paves the way for the Obama administration to introduce the free-trade agreement (FTA) in Congress. The bilateral pact was originally signed in June 2007 under the Bush administration, but upon taking office in 2009 Obama had pledged to renegotiate the FTA under concerns that Panama is a tax haven for income tax evaders.
The U.S.-Panama FTA is joined by agreements with with Colombia and South Korea as having been agreed upon but not yet ratified by Congress. Amid Republican pressure on the Obama administration to pass the FTAs as soon as possible, Ambassador Kirk said that the three pacts are likely to be submitted separately to Congress, rather than as one comprehensive piece of legislation. Kirk is nonetheless optimistic that all three agreements will win approval in 2011.
The White House also announced on Monday that Panamanian President Ricardo Martintelli will travel to Washington on Thursday, April 28 to meet U.S. President Barack Obama for the first time.
Panamanian President Ricardo Martinelli, Italian Prime Minister Silvio Berlusconi and Spanish Deputy Premier Manuel Chaves held a ceremony yesterday in Panama City celebrating the expansion of the Panama Canal—a massive infrastructure project to be completed in 2014. Also joined by the presidents of Guatemala, Colombia and Honduras, the ceremony marked the beginning of the construction for the canal’s expansion. "Today, a new future begins for the country,” said Martinelli.
The canal, first finished in 1904, is designed for ships with a 267-meter (875-feet) length and 28-meter (92-feet) beam, and is too small to handle modern ships, which commonly run three times as big. After a 2006 referendum approved its expansion, Grupo Unidos was awarded a 3.1 billion contract for the work.
The canal currently facilitates close to 5 percent of world trade and approximately 23 percent of commercial shipping traffic between Asia and the United States.
The streets of Panama are empty today as millions await the inauguration of Ricardo Martinelli, winner of the May 3 elections with approximately 60 percent of the popular vote. Martinelli, a millionaire who owns the largest supermarket chain in Panama, has vowed to reform the education system and to give $100 pensions to seniors over age 70. He also has promised to combat crime and improve infrastructure, including a pledge to construct a modern subway system in the capital.
Honduran President Manuel Zelaya—currently in exile after last Sunday’s military coup—will be among the world leaders at the inauguration. Other attendees include: Mexican President Felipe Calderón, Dominican Republic President Leonel Fernández, Colombian President Álvaro Uribe, and Felipe de Borbon, the heir to the Spanish throne.
Martinelli takes office amid high expectations. But some economists are skeptical whether he will be able to fulfill his promises due to the current economic crisis. One item that will certainly be on the agenda is moving forward the U.S.-Panama free-trade agreement.
June 1: This AQ-Efecto Naím segment looks at sustainable cities in the hemisphere.