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Testimony of Ambassador Miriam Sapiro
Deputy United States Trade Representative
Senate Finance Committee
Wednesday, May 25, 2011
*As Prepared for Delivery*
“Good morning Chairman Baucus, Ranking Member Hatch, Members of the Committee. I am honored to have the opportunity to appear before you today to discuss the United States-Panama Trade Promotion Agreement.
“As I testified before this Committee earlier, the Administration is firmly committed to ensuring that our trade agreements advance both our economic interests and our core values. At President Obama’s direction, we have engaged Congress and other stakeholders to advance these goals and to build bipartisan support for each of the pending trade agreements by successfully addressing concerns.
“Soon after the Administration took office in 2009, we began working intensively with both members of Congress and the Government of Panama to address our concerns regarding workers’ rights. Since then, Panama has taken several key steps. These include addressing the misuse of subcontracting and temporary work contracts, strengthening collective bargaining and the right to strike, preventing employer interference in union activities, and increasing the protection of labor rights in the maritime sector.
“Recently, Panama passed legislation to improve worker protections in export processing zones, at companies less than two years old, and in the economic development zone of Barú.
“Panama has now also taken important steps to improve tax transparency. Last November, Panama signed a Tax Information Exchange Agreement, known as a TIEA, with the United States, which entered into force in April. Moreover, Panama has already changed its domestic laws to comply fully with its transparency obligations under the TIEA.
“Panama’s actions have enabled us to begin the technical discussions necessary to move the Agreement forward. Once approved, the Agreement will benefit American workers, manufacturers, farmers and ranchers by providing greater access to one of the fastest growing economies in Latin America. Last year, Panama’s economy grew by more than 7 percent while it purchased over 6 billion dollars in U.S. goods, an increase of 40 percent over 2009.
“Panama’s strategic location also enhances the importance of this Agreement. Nearly two-thirds of Canal traffic is bound to or from U.S. ports, and about 10 percent of U.S. international trade passes through it each year. Panama is in the midst of a 5 billion dollar expansion of the Canal, and has identified almost 10 billion dollars in additional infrastructure projects in coming years.
“Currently the U. S. market is already open to imports from Panama, with 98 percent entering duty-free under either our normal tariff rates or the Caribbean Basin Initiative. By contrast, our exports of consumer and industrial goods and agricultural products to Panama face an average tariff of 7 and 15 percent respectively.
“The Agreement will eliminate immediately over 87 percent of tariffs on U.S. industrial goods, including consumer goods produced in states like New York and New Jersey, construction equipment produced in states like Florida and Washington, and machinery produced in states like Michigan and Iowa. The Agreement will likewise immediately eliminate more than half of tariffs on agricultural products grown in states like Texas and Kansas.
“Finally, the Agreement will provide greater access to Panama’s growing 20 billion dollar services market. It will improve standards for the protection and enforcement of a broad range of intellectual property rights and increase Panama’s accountability in areas ranging from customs administration to government procurement.
“Before I close, I want to emphasize the Obama Administration’s continuing commitment to moving forward with a comprehensive trade agenda that not only reduces trade barriers, but also keeps faith with America’s workers. Moving forward on our trade agreements must include a deal on the renewal of a robust Trade Adjustment Assistance program that will help Americans who need training and other services when their jobs are affected by trade. We also look forward to working with you to reauthorize the expired trade preference programs and to grant Russia Permanent Normal Trade Relations as that country joins the WTO.
“The Panama Agreement is an important element of this Administration’s comprehensive trade agenda. We stand ready to work with you in a manner that builds public and bipartisan support for trade, that helps U.S. companies compete and prosper, and that sustains greater job growth in America. Thank you.”