Colombia and Panama signed a free trade agreement with Panama Friday, putting an end to three years of negotiations between the neighboring countries.
MORE: Colombia secures FTA with Panama
The agreement, which still needs to be ratified by the Colombian and Panamanian Congresses, was heralded as an important achievement by both countries, formalizing $2.8 billion in annual commerce and establishing measures to limit the traffic of contraband into Colombia across the shared border.
Colombia already enjoyes the overwhelming majority of profits from international trade between the two countries, and the agreement would see the instant elimination of tariffs on as much as 72% of all Panamanian imports from Colombia.
Free trade has been a controversial topic in Colombia, with protesters from the striking agricultural sector calling for an immediate freeze on all ongoing negotiations, and repeals or revisions on existing agreements, which they say are undercutting internal market prices.
In the deal’s official announcement, however, Colombia’s Minister of Commerce pointed out that agricultural imports from Panama represent only 2.4% of Colombia’s total agricultural exports to its Central American neighbor, and that the deal would exclude internally produced goods, such as milk products, coffee and sugar, while opening Panama to various large-scale Colombian exports, such as flowers and fruits.
The deal, moreover, includes a “complex strategy” aimed at reducing the flow of contraband, which some economists claim has been more economically destructive than free trade up until this point.
The administration of President Juan Manuel Santos has been a strong proponent of free trade, continuing an aggressive global trade expansion started during the presidency of Alvaro Uribe.
The deal is the first to be signed since the start of nationwide agricultural strikes on August 19th. Though international economic policy has been one of the key focuses of the protest movement, the national negotiation framework agreed to last week excluded free trade from ongoing discussions.
Colombia, which has active free trade agreements with the Pacific trade block, the United States and the European Union, is involved in negotiations with South Korea, even as a potential deal with China stalled earlier this month.
MORE: Colombia suspends trade talks with China, government denies FTA
Sources
- Ministry of Commerce Press Release
- Ministry of Commerce Press Release (previous)
- Colombia y Panama firman acuerdo de libre comercio (Terra)
- Panama, Colombia sign free trade pact (Xinhuan Net)
