U.S. Commercial Service Panama Doing Business in Panama

U.S. Commercial Service Panama Doing Business in Panama

Daniel Crocker Regional Director, Western Hemisphere International Trade Administration

Panama The Crossroads of the World “Location, Location, Location” • Population: 3.5 million. • GDP: est. $39 bn (PPP). • Services 80%. • Industry 14%. • Agriculture 6%.

Panama’s Principal Trading Partners - 2012 •Panama’s Imports from U.S.: $9.9 billion (30% of total imports). •20% jump in U.S. exports.

Other major trading partners: Europe, Japan, Mexico and South America. • U.S. Imports from Panama: $306 million. •We export $32 to Panama for every $1 Panama exports to the US.

Panama’s Advantages       

FTA with the U.S. Logistics hub for Americas. Canal operations, direct air routes. Dollarized economy. simplifies business planning, no currency risk. Sophisticated banking sector. finance & credit availability. Stable economic and political environment. Affinity for U.S. goods and services. Safe. High level of personal security.

Panama’s Challenges

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Security. Could deteriorate. Workforce. Inflexible labor laws, small population. Education. Key limiting factor. Government. Limited capability, susceptible to influence. Legal Complications. Building trust is key.

The Panama Canal

Eighth Wonder of the World 

Panama’s Unique Advantage.

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$250 mn./yr procurement.

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$5 bn. Canal Expansion – why it matters.

Opportunities for U.S. Companies        

Panama Canal and Expansion. Ports. Port Transshipment, rail activity. Colon FTZ:, 3PL Logistics, Consumer Retail. Regional Hub: Air activity, support for multinationals. Infrastructure: $13 billion in announced projects – mass transit, airports, hospitals, water treatment, roads. Energy: generation, efficiency upgrades, regional market. Mining: $7 billion investment in copper mining. Consumer Retail: not only for Panama, but for Latin America through the Colon Free Trade Zone.

Bottom Line: not just a market of 3.5 million…

Next Steps

1. Read our Doing Business Guide: export.gov/panama/doingbusinessinpanama

2. Talk with Your Local Trade Specialist: export.gov/usoffices

3. Contact Us: export.gov/panama/contactus

Thanks! U.S. Commercial Service Panama Embassy of the United States of America E-mail: [email protected] Phone: 011-507-317-5388 www.export.gov/panama

Appendix

The Panama Canal Why it Still Matters

Source: econedlink.org

Why Expand Canal?

Panama Canal Authority Wants to Maximize Profits • Almost 2/3 of container capacity can’t fit through today’s Canal. • 44% of ocean cargo to U.S. goes through Long Beach/LA. • Then 60% of that goes east of the Rockies. • That multimodal method is fast. But it is: – Expensive. – Fuel inefficient. – Too dependent on the Long Beach/LA bottleneck. • An expanded Canal could also serve super tanker trade.

But the Impact on U.S. ports is less clear…

Lots of Complicating Factors On U.S. Port Impact • • • • • • •

Panama Canal will want to raise tariffs to capture fuel savings. An increase in bulk traffic and tankers = fewer container ships. Port of Long Beach/LA motivated to address challenges. West Coast railroads may adjust tariffs to remain competitive. Most East Coast/Gulf Ports can’t handle largest new Panamax. Significant bets being made on transshipment in Caribbean. Wage gap between China and Mexico closing – near shoring trend? • Attractiveness of all-water route highly sensitive to fuel costs and how lean the supply chain is.

Looking at it from CSX’s Point of View…

Versus Long Beach’s Point of View

BNSF Traffic Density

UP Traffic Density

The Colon Free Trade Zone Second Largest Worldwide $29 Billion in Trade (2011)

Scenarios where it could help you make money: 1. SME Consumer Retail Manufacturer. 2. Large Consumer Retail Multinational with demand throughout the region. 3. Capital Equipment Supplier with maintenance contract obligations in the region.

FREE TRADE AGREEMENT U.S. – Panama • Ratified by Panama in 2007. • Ratified by U.S. Congress in October 2011. • Implemented October 2012.

Free Trade Agreement will Benefit U.S. Companies 

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Tariffs: drop from 10-15% to 0%.  Makes your goods and services more competitive.  Gives you better margins.  Bypass burdensome exemption processes to secure subcontracting business with Canal, Metro projects. Greater Transparency in Public Procurement. Statutes give U.S. Government greater leverage to encourage an open and transparent process. Political Statement. Re-affirmation of U.S. – Panama historic relationship, which fosters even more trade. Strengthens Panama’s goal of becoming another Singapore. More selling opportunities for you.

What We Do The U.S. Commercial Service is part of the U.S. Department of Commerce, with offices in 75 countries world wide and over 100 offices throughout the U.S.

Our Mission: – Help U.S. companies export goods and services to Panama. – Defend U.S. business interests in Panama.