Negotiations toward a Canada-Panama Free Trade Agreement

On August 11, 2009, Canada and Panama announced the conclusion of negotiations toward a Free Trade Agreement (FTA), as well as a Labour Cooperation Agreement (LCA) and an Environment Agreement (see News Release, Backgrounder and Statement).

An FTA will help enhance the bilateral commercial relationship and could generate increased export and investment opportunities for Canada by creating a preferential and more predictable trade and investment environment. Once implemented, an agreement would result in clear rules and lower barriers to trade, helping to expand opportunities for Canadian investors, service providers and exporters of industrial and agricultural products.

Canada and Panama will now carry out a detailed legal review of the texts in English, French and Spanish, after which the FTA, Labour and Environment Agreements can be signed and made public. Following the signing of the agreements, the Parties can proceed with ratification and implementation of the agreements in accordance with their respective legislative processes.

Canada held four successful rounds of free trade negotiations with Panama since October 2008, along with significant interessional work. Elements that are covered by this agreement include: market access for goods, cross-border trade in services, telecommunications, investment, financial services and government procurement.

Negotiations follow a successful exploratory process, including two meetings with Panama (May 6-7, 2008 in Ottawa and July 7-8, 2008 in Panama City) and detailed information exchange. The exploratory process provided an opportunity for both sides to discuss the scope of a possible bilateral FTA.

On May 31, 2008, the Government launched public consultations with Canadian provinces and territories, along with businesses, industry associations and the general public. A related notice of these consultations was posted on the Canada Gazette website.

Panama is an established market for Canada and the bilateral trade and investment relationship has strong potential for long-term growth. In 2008, bilateral merchandise trade between Canada and Panama totalled $149.1 million, with Canadian exports accounting for $127.9 million and imports totalling $21.2 million. In 2008, Canadian merchandise exports to Panama grew by 48% since 2007.

In 2008, Canada's top goods exports to Panama consisted of machinery, vehicles (including diesel trucks), electrical and electronic equipment, aerospace (primarily flight simulators), pharmaceuticals, pulses (primarily lentils) and frozen potato products. Imports from Panama included mineral fuels and oils, fruits and nuts, fish and seafood products, spices, coffee, and mineral ores (primarily silver ores and concentrates). The stock of Canadian direct investment in Panama reached $111 million at the end of 2006 (latest data available). Several Canadian investors and service providers are currently present in the Panamanian market (e.g. banking and financial services, construction, mining). Canada currently has a Foreign Investment Promotion and Protection Agreement (FIPA) with Panama, signed in 1998, and a new air transport agreement which was announced on June 19, 2008.

In 2008, The strenghth of Panama’s economy was evidenced by Panam’s real GDP growth rate of 9.2 per cent, one of the highest rates among Latin American and Caribbean countries. The Panamanian economy is based primarily on a well-developed services sector, which accounts for approximately 77 per cent of its GDP. Panama occupies a unique place in the international trading system. As home to the Panama Canal, Panama plays a pivotal role in the flow of goods around the world. The Panama Canal is an important stimulus for this service-oriented economy. Canada is currently the 11^th most important user of the Canal. The expansion of the Panama Canal is currently underway and is slated to be completed by 2014. The projected cost of the expansion is US $5.3 billion.

Panama has FTAs in force with Taiwan (2004), El Salvador (2002),Singapore (2006) and Chile (2008). Panama has also negotiated an FTA with the United States (US-Panama Trade Promotion Agreement) which is pending U.S. Congressional approval.

An FTA with Panama has the potential to improve the bilateral trade and investment relationship and further advance Canada's foreign policy objectives in the region. It could also better position Canadian business vis-à-vis competitors in this market, particularly with those who benefit from a preferential trading arrangement with Panama. An expanded Canal will strengthen Panama’s role in the international trading system, and could create new opportunities for Canadian business.

• Fast Facts
• Market Access
• Investment
• Services
• Government Procurement
• Canada-Panama Agreement on the Environment
• Canada Panama Labour Cooperation Agreement

• Economic Analysis: Prospective Free Trade Agreement Between Canada and Panama (html | pdf 262 kb)

• Panama Trade and Investment Profile
• Panama Country Profile
• Export Development Canada – Country overview

• The Canadian Embassy in Panama
• Government of Panama Ministry of Commerce
• Inter-American Development Bank

If you have questions or comments about this initiative we would like to hear from you. Please contact Foreign Affairs & International Trade Canada at:

Regional Trade Policy – Americas (TBL)
Canada-Panama Exploratory Discussions Towards Possible FTA Negotiations
Consultations and Liaison Division - CSL
Foreign Affairs and International Trade Canada
125 Sussex Drive, Ottawa, ON K1A 0G2
Fax: 613-944-7981
Email: consultations@international.gc.ca