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Colombia wants to "steal" business from free zones, says Panamanian entrepreneurs

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  • Thu, 02/21/2019 - 15:26
Colombia wants to "steal" business from free zones, says Panamanian entrepreneurs
  • EFE

By María M. Mur

Colombia has no "interest" in resolving the tariff dispute it has with Panama because it wants to strengthen its free zones and "steal" the business, said to Acan-Efe the president of the entrepreneurs of the largest tax-free zone in America, located in the Panamanian Caribbean.

"They want to steal our business and strengthen their free zones in Cartagena, Santa Marta and Buenaventura", said Daniel Rojas on Thursday, for whom Panama should have shown more "audacity" to implement measures of reciprocity.

The conflict dates back to 2012, when Colombia began to apply 10% tariffs on footwear and textiles from the Colón Free Zone (CFZ) under the pretext of combating illicit trade.

The dispute has gone through several stages, including a ruling by the World Trade Organization (WTO) in favor of Panama that forced Colombia to suspend that tariff in 2016.

Colombia eliminated that rate but approved several measures that toughen customs controls and, according to the Panamanian authorities, similarly hinder trade with the free zone, where 3,000 companies engaged in re-export operate and employ about 18,000 people.

"Colombia has been very well received here, we love their citizens very much, but their governments are not doing well and we have to tell them that it is enough, that Panama is as important as them and that we must respect each other", Rojas urged.

The businessman described as "unfair" to say that all merchants promote smuggling, counterfeiting or money laundering, and said they have been striving for years to promote transparency, especially after the approval in 2015 of Law 23, known as "Antiblanking Law".

"We want to send a very clear message: we are here and we are doing things right", he added.

The authorities of both countries have established negotiations in recent years to try to solve the dispute, but so far have not been successful.

The presidents of Panama, Juan Carlos Varela, and Colombia, Iván Duque, agreed last September in the Panamanian capital to continue working to reach an agreement "as soon as possible". It is expected that both leaders will meet again on March 19 in Bogotá.

Colombia is one of the main customers of the FTA, which is located next to the Atlantic entrance of the Panama Canal and represents 8.5% of local GDP.

The enclave went through a severe crisis between 2013 and 2016, when its revenues fell more than 12%, mainly due to Colombian tariffs and the situation in Venezuela, another of its large buyers.

The numbers of the free zone, the second largest in the world after Hong Kong (China), have been recovering since then. In 2018, the commercial movement reached 20,931 million dollars, 6.5% more than in 2017.

For Rojas, the growth is "insufficient" and affects exclusively certain sectors, such as pharmaceutical multinationals or technological giants, while traditional businesses (textiles, footwear, perfumes) are still in crisis.

Beyond the "conjunctural" problems with Colombia and Venezuela, the merchant said that the recovery of the free zone requires modernization and greater state investment in infrastructure.

"If we do not give them the tools so that the entrepreneur can move their cargo in an agile, transparent and traceable way, we will be left behind, Colombia is already doing it, we continue working as in the last century", he warned.

In addition to the bilateral tension, the tariff dispute has caused Panama to suspend the ratification of a free trade agreement (FTA) with Colombia, signed in 2013. 

Source-EFE

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