Ricardo Martinelli, the President of Panama, has announced that the free trade agreement (FTA) with Colombia will be signed in the coming weeks, which will bring an end to the restrictions imposed by Colombia on apparel produced in the Colon Free Zone.
Speaking at a meeting of the Board of the Chamber of Commerce of Panama, the President said negotiations for the FTA between Panama and Colombia completed in June this year, and the agreement would be signed in the coming weeks.
Once the FTA is signed, the restrictions imposed by Colombia through tariffs on textiles and apparel from the Colon Free Zone will come to an end, the President said.
The imposition of five dollars per kilogram fee on imports of clothing by the Colombian Government also stood as a hurdle during the FTA negotiations, which concluded only after the Colombian Government clarified that the fee was only a temporary measure and not a permanent one.
As per the FTA, Panama will allow duty free access for most of Colombia’s current export supply, with immediate relief being agreed for 72 percent of the current industrial exports.
On the other hand, 49 percent of the tariff lines comprising Panamanian industrial goods will get duty-free entry in Colombia with the entry into force of the FTA, while 50 percent of other goods will receive tariff relief over a 3 to 12 year period.
At present, garments are among the major items that Colombia imports from Panama, and hence, Panama’s clothing exports are likely to get a boost once the FTA comes into force.
In 2012, Colombia’s exports to Panama were valued at US$ 2.857 billion, with crude oil accounting for about 80 percent of the same. Colombia’s imports from Panama were far less at US$ 72 million, with apparel accounting for a major share.