May 19, 2024

Trade Deal With Panama Clears Hurdle Over Taxes

WASHINGTON — The White House announced on Tuesday that Panama had satisfied a final condition for a free-trade pact with the United States, smoothing the way for President Obama to seek Congressional approval for three trade agreements inherited from the Bush administration and now central to his own job-creation agenda.

“We view this agreement as creating a more level playing field for U.S. exporters and also for U.S. investors,” Miriam Sapiro, the deputy United States trade representative, said in a conference call with reporters.

Michael Froman, Mr. Obama’s deputy national security adviser for international economics, said the White House had begun discussions with Congressional leaders to schedule action soon on the agreement with Panama and those with Colombia and South Korea. While Republicans were receptive and business groups applauded the development, Mr. Obama faces opposition from his Democratic Party and its union allies.

The last hurdle for the Panama deal was cleared on Monday when the two countries agreed to exchange tax information; the United States has complained in the past that Panama was a haven for income-tax evasion.

The end to the Panama negotiations followed the administration’s tentative agreement earlier this month with Colombia, after that country made concessions on labor rights and protections, and its deal late last year with South Korea after it made concessions on trade in beef and autos.

Republican leaders had said the Obama administration needed to propose legislation adopting all three trade agreements before they would consider any of them. Senate Republicans are also blocking confirmation of nominees for commerce secretary or trade-related posts until then.

Representative Dave Camp, a Republican of Michigan who is chairman of the House Ways and Means Committee, which handles trade legislation, said in a statement that the Obama administration should send Congress the paperwork for legislation on the trade agreements in time for action by July 1.

“U.S. job creators and workers are every day put at a disadvantage to foreign competitors from countries that have already concluded trade agreements without us,” Mr. Camp said. “The more we delay, the more we lose.”

As on most trade legislation, the Republicans enjoy maximum leverage because Mr. Obama will not be able to rely on Democrats’ support in Congress. This week the head of the A.F.L.-C.I.O., Richard Trumka, warned that the union would include the three trade votes on its influential “scorecard” of members of Congress, subtracting points for free-trade votes.

Mr. Obama, as a candidate for president, opposed all three Bush-era trade accords and Congress, then controlled by Democrats, refused to approve them. Since then, however, his administration has negotiated side agreements with all three countries to satisfy Mr. Obama’s criticisms, especially on labor rights. He also has made the trade pacts a priority as he seeks to improve relations with business and to reach his goal of doubling exports by 2014 to create jobs in export industries like agriculture, manufacturing and financial services.

But the Colombia deal holds a final wrinkle for pushing ahead on the three trade agreements, administration officials acknowledged. Colombia agreed to an “action plan” for protecting labor unionists from the violence and abuse many have suffered. The action plan sets a timetable for compliance, though Mr. Froman said the administration would not insist that Colombia reach every goal before it sends legislation to Congress.

According to the White House, the deal with Panama, whose economy is one of the fastest growing in Latin America, will eliminate many tariffs on American agricultural, consumer and industrial goods at a time when trade rivals like Canada and the European Union nations are making inroads in the region.

It also would open opportunities for heavy equipment manufacturers on $15 billion in Panamanian infrastructure projects, including an expansion of the Panama Canal. A representative of Caterpillar joined the White House call with reporters, taking the chance to thank the administration officials and tell them the news was “playing well in Peoria” — where Caterpillar is based.

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