Negotiations on a Mexico – Panama Free Trade Agreement that began in May of 2013 were finalized on Monday, March 24, 2014.
Upon the announcement at the beginning of negotiations, the Mexican Ministry of Economics cited that such an agreement with Panama would serve the furtherance of its goal of making Mexico “a privileged platform to produce and distribute goods and services to the north and south of the American continent, as well as to global markets.” From the Panamanian perspective a Mexico – Panama Free Trade Agreement is a necessary precursor step in the direction of future full integration into the Pacific Alliance regional trading bloc. This group of commercial partners presently includes of Chile, Colombia, Mexico and Peru.
Most of the US $1.1 billion of bilateral trade that was transacted between the two nations in 2013 took the form of Mexican exports to Panama. A significant portion of what was sold and shipped to Panama by Mexico consisted of energy related commodities and products. In additon to the deepening of trade in terms of goods and services, Panamanian president, Ricardo Martinelli, views the Mexico – Panama Free Trade Agreement as one which will have an ancillary effect of increasing tourism between the two Latin American nations.
In addition to income resulting from products and services exported to Panama, Mexico is also a foreign direct investor in its Central American neighbor’s economy in industries that include food and beverages, electronics, telecommunications and construction. Panama participates in the Mexican economy with a modest aggregate investment of approxately US $900 million as of last year. According to the Mexican government, investments of its new trade partner in the country have been made mainly in the manufacturig and service sectors.
The Mexico – Panama Free Trade Agreement must now be submitted to both countries’ legislatures for ratification. It is not anticipated that there will be any difficulty in getting the lawmakers of both nations to approve and implement the pact.
Since the NAFTA was signed into law in 1994, Mexico has entered into a total of twelve free trade agreements that govern commercial relations between itself and forty-four countries. During that period it has also signed six Economic Complementation Agreements (ACAs), which provide legal protection for capital flows. Lastly, Mexico has negotiated Double Taxation Treaties with thirty-one countries. These accords prevent the taxation of two or more countries on the same income.
Read the primary source for this post at WSJ.