The investment champion wants to join the commercial block
Leer en Español: Panamá se acerca a la Alianza del Pacífico
Over the last 10 years, Panama has shown sustained growth. Today, the Latin American country has the largest private investment account and has earned a privileged position in the region due to its infrastructure megaprojects. Nevertheless, the country faces the risk of slowing its growth under the circumstance of a new block taking investors to a new destination; therefore, joining the Pacific Alliance is a priority.
Panama’s entry to the Pacific Alliance
In order to gain access to the Pacific Alliance, any candidate nation must have a signed trade deals with all the official members. In Panama’s case, the country has trade deals with Peru, Mexico, and Chile. Unfortunately, there are disputes over textile commerce with Colombia.
The DS461 dispute on the World Trade Organization responds to Panama’s complaint against Colombia as a result of a 10% tax on textile production under the Colombia’s presidential order 074 – 2013. The sued nation argued that the tax was created to protect local goods, which was rejected by the World Trade Organization making Panama’s claim valid.
On September 22nd, the WTO reported that the final statement that will settle the issue will be disclosed by September 2018.
Panama has a service sector that accounts for 75% of its national GDP. Regarding its enterprises, the South American country is a regional hub for the banking sector and most of its recent development has been brought by an increased government spending which has reduced poverty by 10% in the last decade.
The two main government projects are the “Proyecto Cobre Panamá” which will extract 320,000 tons worth of copper per year at a cost of 6 billion dollars and the expansion of the Panama Canal which came at a cost of 5.2 billion dollars; it increased the canal’s transport capacities from 4,500 to 12,500 containers per ship.
The Pacific Alliance
The Pacific Alliance is the economic and commercial block that is currently composed by Chile, Peru, Colombia, and Mexico. Said alliance represents the eight largest economies in the world, as well as the eight largest export force worldwide. The group of nations possesses 38% of the Latin America and the Caribbean’s GDP.
The true power behind the conglomerate rests on its internal commerce and potential for foreign investment. 50% of the total market traffic in South America is handled by those 4 nations, which attracts 45% of the region’s international investment.
Unless an extraordinary diplomatic approach takes place, Panama will have finished paving its way to the Pacific Alliance by 2019.
Latin American Post | David Eduardo Rodríguez Acevedo
Copy edited by Susana Cicchetto