The U.S. International Trade Commission (ITC) has released the analysis of the agreement that it is required to prepare under the Trade Act of 2002: U.S.-Panama Trade Promotion Agreement: Potential Economy-wide and Selected Sectoral Effects.
Here's the abstract:
This report assesses the likely impact of the U.S.-Panama Trade Promotion Agreement(TPA) on the U.S. economy as a whole and on specific industry sectors, including the impact the agreement would have on U.S. gross domestic product (GDP); exports and imports; aggregate employment and employment opportunities; the production, employment, and competitive position of industries likely to be significantly affected by the TPA; and the interests of U.S. consumers.
Panamanian exporters generally face substantially lower tariffs in the U.S. market than do U.S. exporters in the Panamanian market because most U.S. imports from Panama enter free of duty either unconditionally or under trade preference programs. Because of this tariff asymmetry, the primary impacts of the TPA likely would be improved U.S. access to the Panamanian market and an increase in U.S. exports to Panama. Nevertheless, the overall impact of the U.S.-Panama TPA on the U.S. economy would likely be small because of the small size of the Panamanian market relative to total U.S. trade and production.
The partial equilibrium model used by the Commission indicates that full implementation of the market access provisions (elimination of tariffs and tariff-rate quotas (TRQs)) of the TPA would likely cause U.S. exports to Panama of the products selected for analysis in this report to increase by between 9 and 145 percent.
The Commission analyzed the impact of both the immediate and the phased elimination of tariffs and TRQs by the TPA using sector-specific analysis of selected U.S. product sectors. The sectors analyzed were meat (beef, pork, and poultry), grain (corn and rice), frozen potato products (e.g., frozen French fries), certain processed foods, sugar and sugar-containing products, passenger cars and light trucks, and certain machinery. For most of these sectors, the TPA would provide small but positive benefits for U.S. exports.
The TPA would likely generate a small increase in U.S. services exports to Panama. Finally, the TPA also could increase trade and investment through trade facilitation, such as the reduction of impediments in customs processing; an improved regulatory environment, such as enhanced investor protections; and increased regulatory transparency. The effects of such measures on bilateral trade and investment flows could become more significant in the medium and long term.
Here's a description of the statutory requirement for the report:
The United States and Panama concluded negotiations for a free trade agreement on December 19, 2006. On March 30, 2007, President Bush notified Congress of his intent to enter into the U.S.-Panama Trade Promotion Agreement (TPA). In a letter dated March 30, 2007, the United States Trade Representative requested this investigation under section 2104(f) of the Trade Act of 2002 (Trade Act) (19 U.S.C.§3804 (f)), which requires that the U.S. International Trade Commission (the Commission) submit a report to the President and the Congress not later than 90 calendar days after the President enters into a trade agreement. The United States and Panama signed the U.S. – Panama TPA on June 28, 2007.
Section 2104(f)(2) of the Trade Act requires that the Commission prepare a report assessing the likely impact of the agreement on the U.S. economy as a whole and on specific industry sectors, and section 2104(f)(3) requires the Commission, in preparing its assessment, to review available economic assessments regarding the agreement.
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