Although gradual, tariff reductions on chicken from the U.S. pose a threat to the poultry industry in Panama.
Monday, January 23, 2012
Currently tariffs on imports of chicken meat is 260% for chicken thighs and drumsticks. This protection for the local industry will gradually disappear, according to provisions by the Trade Promotion Agreement signed with the northern country.
An article in Prensa.com, reports that "When the agreement comes into force, which could be in 2013, depending on the adaptability of Panamanian law to the TPA- specific quantities of chicken meat may come into the country without incurring tariffs. In the first year that the TPA is in force, the quota is 660 metric tons of chicken quarters - thighs and boned pieces, from the U.S. ".
Then, the duty free quota will increase year by year, until eventually, after 5 years of the TPA, there will be no limit. The same applies to chicken wings, now also protected with a tariff of 260% - they will enter Panama with zero tariffs.
"What has been negotiated is a challenge for local industry, because Panamanians eat the whole chicken. The country is in fact one of the biggest consumers of chicken in Latin America. The per capita consumption of Panama (75.9 pounds) is second only to Venezuela (76.34 pounds) and Brazil (83.02 pounds), reports the Latin American Poultry Association. "
The USA has agreed to reduce to 0% the tariff on chicken leg quarters imported from the US market for the Central American countries under DR-CAFTA.
The request to remove the tariff was made by Guatemala weeks ago. Chicken legs, both frozen and refrigerated, will enter the Central American market with 0% tariff when all the signatory countries of CAFTA-DR have completed the application process with the Department of Commerce.
From January 2016 import tariffs will start to be phased out on chicken, rice and milk from the USA, reaching 0% in 2022 and 2025, under the DR-CAFTA agreement.
In Costa Rica local producers say they have been preparing for this for several years, but the country's loss of competitiveness due to high production costs and lack of action by the government to improve on this might prevent them from competing on equal terms.
With the coming into force of the Trade Promotion Agreement, the Panamanian market becomes more attractive to American cattle farms.
Such is the view of the U.S. Meat Export Federation (USMEF), whose spokesmen explained that the tariffs went to 0% for certain cuts, while others still maintain a 30% rate that will be gradually reduced to 0%.