Above: Panama President Ricardo Martinelli in Honduras (Photo: OP)
By the Caribbean Journal staff
Panama has fully joined the Central American Integration System, in a move the country hopes will improve its trade with the region.
SICA is Central America’s regional economic, cultural and political organization. While Panama had been a member of SICA, it had not previously participated in SICA’s integration subsystem.
“We are financially part of Central America, and this will make the exchange of goods and services in the region optimized to benefit the population,” Panama President Ricardo Martinelli said following the 39th Summit of SICA in Honduras.
As part of its incorporation, Panama joined the Comprehensive Association Agreement signed by Central America and the European Union last week.
The agreement, which was signed by Costa Rica, El Salvador, Guatemala, Honduras, Nicaragua and Panama, has three pillars: political dialogue, cooperation and trade.
“The association agreement constitutes a new milestone in our longstanding relationship,” said Christian Leffler, European External Action Service Managing Director for the Americas. “It is the strongest institutional bond that can tie the EU to its partners.”
The EU called it a “comprehensive tool that provides with all the means needed for an integrated relation, going from political dialogue to cooperation and trade.”
On the trade front, the agreement eliminates tariffs on manufactured goods, fisheries and agriculture.
“In the current economic situation, it is vital for European businesses to count on a stable and predictable business and investment environment,” said European Commissioner for Trade Karel De Gucht in a statement. “The region-to-region trade deal will help to establish major business opportunities for both sides.”
The EU will liberalize 91 percent of tariff lines for Central American exports after the agreement enters into force. Central America will do the same for 48 percent of lines, completing the liberalization schedule within a 10-year period under the agreement, among other tenets.
“European exporters will save around [$114 million] on customs per year, and European service providers, such as for telecoms and transport, will get greater market access,” De Gucht said.
Last year, the European Union was Central America’s second-largest trade partner after the United States.
Panama was the third-largest importer in the Central American region of European exports.
Panamanian Trade Minister Ricardo Quijano signed the agreement to officially incorporate Panama into SICA, which took place at the 39th Meeting of SICA in Honduras.