Panama will seek arbitration in a dispute with Colombia over textile tariffs which Panama City says violate WTO trade regulations.
According to Panama, Colombia’s current trade tariffs regarding textiles remain “unbalanced” and “discriminatory.”
Panama filed a complaint with the World Trade Organization (WTO) in 2013 against Colombia’s compound tariffs on clothing and shoes imported from Panama.
The tariffs remain in place despite a Free Trade Agreement between the two countries signed in late 2013.
Panama’s Minister of Commerce and Industry, Meliton Arrocha, claimed that the tariff results in “undue protection of their [Colombia’s] national production to the detriment of free trade, and of the Colon Free Trade Zone in particular.”
The Colon Free Trade Zone (CFTZ) is a free port near the Atlantic entrance to Panama canal. It is the second largest free port in the world, behind Hong Kong, and serves as a point for re-exporting textiles from Panama.
Trade through the port represents up to 8% of Panama’s GDP and is greatly impacted by Colombia’s tariffs.
Despite the complaint lodged with the WTO, the tariffs (intended for one year) have been extended for two additional years.
According to Arrocha, this displays a lack of consistency with Colombia’s trade obligations under their Free Trade Agreement with Panama and under the regulations of the WTO. He claims that Colombia has been unable to display that the tariffs “are not applied in a discriminatory manner and restrict the access (of products from the CFTZ) to its market.
The government of Panama has sought an audience with an arbitration group. The case will go before a group in Geneva, Switzerland, later this week.
The arbitration group’s ruling could allow Panama to take economic action against Colombia to make up for revenue lost under the discriminatory tariffs.
Earlier this year, Colombia put Panama on a blacklist of countries that provide a tax haven by not reporting adequate information to Bogota regarding Colombian assets held in Panama.
MORE: Colombia puts Panama on tax haven blacklist
Sources
- Panamá dice que Colombia no pudo justificar arancel ante grupo de arbitraje (Caracol Radio)
- Panamá dijo que Colombia no pudo justificar arancel ante grupo de arbitraje (W Radio)
- Colombia – Measures Relating to the Importation of Textiles, Apparel and Footwear – Request for consultations by Panama (WTO)