Panama and Colombia undertake effort to resolve tariff dispute

Panama Colombia

The Minister of Commerce and Industry of Panama, Augusto Arosemena, met with the Minister of Commerce of Colombia, María Lorena Gutiérrez, in an effort to "move forward with a consensual solution" to resolve the tariff dispute that began in 2012, as a result of the restrictions imposed by the Colombian government on the import of textiles and footwear from the Colon Free Zone, affecting relations between both countries.

This was announced by the Ministry of Commerce and Industry of Panama on Twitter. They reported that the meeting between the ministers was held "in a very cordial and positive atmosphere, which reaffirms the willingness of both governments to seek a solution to the commercial conflict".

This meeting is convened after the government of Panama’s inclusion of Colombia within the list of the 20 countries that apply discriminatory or restrictive measures against the country, which could lead to the application of tax, customs and migration reciprocity measures through the Retorsion Law, in force in Panama since the end of 2016.

The Minister of Commerce and Industry, Augusto Arosemena, recently informed that with the publication of this list "they seek to defend the interests of Panama"; however, he highlighted that they will analyze the case of each country to take the pertinent measures in the case they render necessary to adopt them. He told local media that the government of President Juan Carlos Varela is committed to resolving these differences through dialogue.

"We as the Government must defend the interests of Panama internationally. When we passed the retorsion law (reciprocity) in 2016, a year and a half ago, we had planned to take this step, although obviously we had to exhaust previous efforts," said the official, according to local media reports.

The commercial conflict between the two countries began in 2012, when Colombia applied tariffs to the re-exports of footwear and textiles from the Colon Free Zone (CFZ). Given this measure, the Panamanian government went to the World Trade Organization, which ruled in its favor and declared this action illegal, forcing Colombia to suspend the mixed tariff in November 2016.

However, the South American country replaced the tariff by two decrees increasing the rate of some products re-exported from the Colon Free Zone, specifically clothing and footwear, to which the Panamanian government responded by also increasing the number of goods arriving from Colombia, as in the case of flowers and toiletries, according to local press release.

Varela’s government, imposed a measure on Colombia to face the trade dispute, by also canceling the purchase of two patrol boats to the Colombian army, for approximately 30 million dollars, "a transaction that had been agreed in October 2016 during a meeting of the presidents of Panama, Juan Carlos Varela, and of Colombia, Juan Manuel Santos," according to the press release published by EFE.

Because of the tariff dispute, Panama has suspended the approval process of the free trade agreement (FTA) signed by the two governments in 2013, after four years of negotiations that began in 2009. (EFE)

Colombia, Brazil, Chile, Ecuador, El Salvador, Peru, Uruguay, Venezuela, Croatia, Slovenia, Estonia, France, Greece, Lithuania, Poland, Portugal, Cameroon, Georgia, Russia and Serbia are the countries that apply discriminatory or restrictive measures against Panama, according to the list published by the country.


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