The Globe and Mail (Canada)
By Steven Chase
August 11, 2009
www.theglobeandmail.com

Agreement part of effort to forge deeper ties in Central and South America

(Panama City) – Prime Minister Stephen Harper has detoured from his trip home following the Three Amigos summit in Mexico to sign a free-trade agreement Tuesday in Panama, the fastest growing economy in Central America.

Coinciding with the deal, Panama is lifting a six-year-old ban on Canadian beef, one imposed after mad cow disease hit Canada in 2003.

The Canada-Panama free-trade deal is the fifth such agreement to liberalize commerce with other countries that the Conservative government has inked since taking power more than three years ago.

Canada and many other nations are scrambling to sign preferential business arrangements with each other in the wake of the collapse of world trade talks that had failed to reach a global-scale deal.

Ottawa is also trying to diversify trade beyond its single biggest trading partner, the United States because the worldwide recession has hit Americans particularly hard. It’s not the first time Canada has tried to shift trade activity away from the U.S. but all previous efforts have failed to move significant amounts of commercial activity abroad.

Mr. Harper’s host in Panama City today is newly-minted Panamanian President Ricardo Martinelli, a supermarket chain tycoon-turned populist politician who won power only three months ago.

The Canadian leader is also visiting the Panama Canal, a marvel of engineering effort that’s undergoing a significant expansion. The canal, which the United States constructed in the early 20th century, is being widened so it can accept giant supertanker ships.

The canal connects the Caribbean Sea, and the Atlantic Ocean beyond it, to the Pacific Ocean, significantly shortening trips between some world ports.

The Canada-Panama free-trade deal, which must still be passed by Parliament, would eliminate tariffs on over 90 per cent of the Canadian goods currently imported by Panama immediately. This would include frozen potato products, beans, lentils, as well as some meat and pork cuts, fish, seafood and machinery such as flight simulators.

Remaining tariffs would be eliminated within five to 15 years, with some products being sheltered from free trade for longer periods.

Canada’s current trade with Panama is extremely small and the deal underlies the fact this is more than a commercial move for Ottawa. It’s also a symbolic effort to forge deeper ties in Central and South America.

Two-way merchandise trade between Canada and Panama was $149.1-million last year. That amounts to a mere 10 per cent of a single day’s two-way trade between Canada and the United States.

“Signing a free trade agreement with a key hemispheric partner like Panama is the logical next step in our policy of pursuing deeper integration and closer co-operation throughout the Americas,” Mr. Harper said in a release.

Canadian direct investment in Panama today, in areas such as banking and engineering, is only $111-million according to the most recent figures from Ottawa.

http://www.theglobeandmail.com/news/national/harper-in-panama-to-sign-free-trade-deal/article1247617/