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FACT
SHEET:
U.S.-Panama Trade
Promotion Agreement -
Virginia Farmers Will Benefit
September 2008
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The U.S.-Panama Trade Promotion Agreement eliminates tariffs and other
barriers on most U.S. goods, increasing export opportunities for agricultural
products important to Virginia. With immediate elimination of duties on over 60
percent of current U.S. trade, this agreement changes the one-way street of
duty-free access currently enjoyed by most Panamanian exports into a two-way
street benefiting both countries. The American Farm Bureau strongly supports the
agreement, predicting widespread gains for U.S. agriculture exceeding $190
million per year.
Virginia’s exports to all countries, estimated at $622 million in 2007,
supported about 7,000 jobs, on and off the farm. These export sales make an
important contribution to the Virginia farm economy which had total cash
receipts of $2.7 billion in 2006.
Poultry Meat. With farm cash receipts of $506 million in 2006, broilers
are Virginia’s leading agricultural industry accounting for 19 percent of total
farm earnings. Turkey production accounted for another 10 percent with cash
receipts of $261 million. The state’s poultry and poultry product exports were
estimated at $102 million in 2007. From 2004 through 2006, U.S. suppliers shipped an
average 5,700 tons of poultry meat valued at $7 million to Panama each year.
However, exports are mostly limited to turkey cuts and whole turkeys due to a
260-percent tariff on broiler leg quarters. Virginia’s poultry industry will
benefit from this agreement.
Panama will eliminate its 15-percent duties on turkey meat immediately
for frozen whole turkeys and most frozen turkey cuts. The 15-percent tariffs
on processed turkey and chicken will be eliminated within 5 years.
The 260-percent tariff currently applied to chicken cuts will be
eliminated immediately for mechanically de-boned chicken, within 5 years for
wings and 10 years for other chicken cuts except leg quarters.
Panama will provide immediate duty-free access within a preferential
tariff-rate quota (TRQ) for chicken leg quarters that starts at 660 tons and
grows each year by 10 percent. The 260-percent over-quota tariff will be
eliminated in 18 years.
U.S. poultry exporters will continue to have access to the global
756-ton TRQ for chicken cuts that is part of Panama’s World Trade
Organization (WTO) commitments.
In addition, Panama has already implemented our December 2006 bilateral
agreement on sanitary and phytosanitary (SPS) measures by recognizing the
equivalence of the U.S. poultry inspection and disease monitoring systems,
allowing U.S. inspectors to certify poultry for export to Panama without
having each facility and shipment inspected by Panamanian authorities.
Beef. As the second largest source of farm cash receipts with earnings of
$426 million in 2006, Virginia’s cattle and calf industry will benefit from this
agreement.
Panama will immediately eliminate its 30-percent duty on beef products
of most importance to the U.S. beef industry--prime and choice cuts.
Panama’s tariffs on other cuts of beef will be phased out over 15 years.
The 10-percent tariff on beef tongues and livers will be eliminated in 5
years, and the 15-percent tariffs on other edible offal will be eliminated
immediately.
Panama has already implemented our December 2006 bilateral agreement on
SPS measures, reopening its market to U.S. beef by bringing its import
requirements related to BSE into compliance with international standards.
Panama also accepted the equivalence of the U.S. meat inspection system,
which allows U.S. inspectors to certify beef for export to Panama without
having each facility and shipment inspected by Panamanian authorities.
Dairy. The dairy industry is the state’s third largest source of farm
cash receipts earning $266 million in 2006. This industry stands to gain from
the Panama agreement.
U.S. exporters will have immediate duty-free access to nine preferential
dairy TRQs with a combined total of 3,986 tons. These include 2,625 tons of
skim milk powder, 728 tons of cheese, 263 tons of ice cream, and 370 tons of
other dairy products. These quantities will grow by 4 or 5 percent each year
and the over-quota tariffs for these TRQs, which range from 15 percent for
ice cream to 50 percent for milk powders, will be phased out in 15 to 17
years.
U.S. dairy exporters will continue to have access to the global TRQs for
3,830 tons of milk powder and 3,782 tons of cheese that are part of Panama’s
WTO commitments.
Panama will eliminate its 30-percent tariff on dried whey products
immediately. The tariffs on most other dairy products, which currently face
duties as high as 140 percent, will be phased out over 15 years.
In addition, Panama has already implemented our December 2006 bilateral
agreement on SPS measures and technical standards by recognizing the
equivalence of the U.S. food safety systems for processed foods, including
dairy products, and by streamlining its product registration system for
packaged foods. This will allow U.S. food processors to export dairy
products to Panama without burdensome paper work and without having each
facility and shipment inspected by Panamanian authorities.
The National Milk Producers Association supports the Agreement, noting
that "Panama imports nearly half its dairy products, and the U.S. stands to
become a larger supplier once the FTA is finalized."
Back to the
U.S.–Panama Trade
Promotion Agreement
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