Colombian businessmen have pointed out the damage caused to their business dealings with Panama by the respective governments inability to resolve continuing conflicts over the sharing of financial information and tariff policy.
Representatives from the Colombian Chamber of Commerce - Panama stressed the importance of Panama not only as a financial center but as a destination for its exports and investments, and urged government authorities to more quickly resolve the differences on issues of tariff policy and exchange of financial information. Currently the two countries are in the midst of a conflict over the charging of a tariff imposed by Colombia on footwear, textiles and clothing from the Colon Free Zone.
The government has announced that it will not ratify the trade agreement until the conflict caused by the tariff of 5% added to textiles and footwear coming from the Colon Free Zone is resolved.
Meliton Arrocha, Minister of Commerce and Industry of Panama, announced that the measure has already been communicated to the Colombian government, to whom there was was a call made for dialogue under international trade rules in order to resolve the existing trade disputes.
On September 20 the trade agreement will be signed in Panama City after it has been ratified by the respective legislatures.
"We have everything finalized for the signing of the treaty with Colombia on Friday September 20," said Ricardo Quijano, Panama's Minister of Commerce and Industry.
He added that Panama has negotiated a good FTA, which will increase its presence in the South American country "with Panamanian products and even with products that will go from the Colon Free Zone, which bear some elaboration and yes they will carry a Panamanian certificate of origin".
Once the trade agreement is signed between the two countries tariffs that the South American nation excises on textiles and leather from the CFZ will be removed.
The information was confirmed by President Ricardo Martinelli, after a meeting with his Colombian counterpart. The president said that the trade agreement will be signed next week.
According to Martinelli, the tariff is applied only to countries that do not have an FTA with Colombia.
Venezuela's debt for $1.1 billion and the loss of 80% of the footwear market in Colombia has led to the closure of businesses and the loss of thousand jobs.
Added to this is a 20% decrease in sales from the Free Zone, as two of its main markets have shrunk by 50% for some companies and up to 80% for items such as shoes.
Panamaamerica reports that "the complicated situation has led the guild to ask the Panamanian government for immediate action to halt the decline of their business, including retaliatory actions with Colombia, a more aggressive plan to collect the debt from Venezuela, reduced Entry fee for containers as well as updating the laws for this zone in order to make it more competitive. "
Businessmen from both countries are pay attention to the dialogue on tax information, tariffs on re-exportations from the CFZ, the Trade Agreement, and the electrical interconnection.
Larepublica.com reports: "Today sees the start of a new stage in the Colombian-Panamanian relationship with President Ricardo Martinelli's visit to Colombia, for a meeting with President Juan Manuel Santos".
The Minister of Commerce and Industry said that although Colombia is maintaining its excess tariffs on the CFZ, the FTA between the two countries is moving ahead.
"After starting negotiations for a free trade agreement (FTA) with Colombia, without having dealt with the request from businesses in the CFZ, the goal now is to raise a complaint with the World Trade Organization (WTO) in order to mitigate the effect of the Colombian excess tariffs", reported Prensa.com.
Colombia will continue to apply extra tariffs on re-exports coming from the CFZ for products which do not have certificates of origin and value-added processing.
After signing the agreement with Colombia, "We do not know how the [issue with] the CFZ ended up. There is a vacuum of information that we do not understand and I fear the worst. The silence, can be taken as a case of "no news is bad news", said Surse Pierpoint, president of the Association of Users of the Colon Free Zone.
Following the signing of the trade agreement, the government of Panama has not provided information about Colombia's treatment of the exports from the Colon Free Zone.
Meanwhile, the Ministry of Commerce, Industry and Tourism of Colombia said that "the Colombian industry is the net winner" of this FTA, something that the Association of Users of the Colon Free Zone (CFZ) expressed its discontent over due to lack of information from the Panamanian authorities.
The contentious issue of the Colon Free Zone has been settled by agreeing to "certain provisions to regulate traffic of goods from third countries between the two nations."
From a press release by the Ministry of Commerce and Industry of Panama (ICIM):
The round of negotiations for the signing of the Free Trade Agreement between Panama and Colombia held from 28 to 31 May 2013 culminated in the early morning hours of Saturday June 1 in the City of Panama, allowing the closure of all outstanding issues.
Both nations failed to resolve issues such as the treatment of products in the Colon Free Zone, which means there will probably have to be an eighth round of negotiations.
"... The round that lasted for four days, dealt with technical issues such as trade and rules of origin procedures, access to markets for agricultural lists and issues related to customs administration and trade facilitation", reports Prensa.com.
Negotiations for the signing of the trade agreement between the two countries may come to a conclusion in the seventh round to be held in Panama in late May.
This will happen regardless of the lawsuit that the Government of Panama intends to file against the World Trade Organization (WTO). "The FTA negotiations with Colombia have absolutely nothing to do with the WTO lawsuit challenging taxes imposed by the country on goods from the Colon Free Zone (CFZ), and it is not dependent on this issue being resolved," said the Minister of Trade and Industry, Ricardo Quijano.
Colombia's government is studying the possibility of applying a reduction to the fees charged for goods coming from the Colon Free Zone.
According to Ricardo Quijano, Minister of Commerce and Industry of Panama, this relief is an option being proposed by Colombia during the meeting held in recent days with his Colombian counterpart, Sergio Diaz-Granados, in the city of Bogota, in order to seek an early resolution to this situation which affects the Colon Free Zone (CFZ).
The lack of agreement in the sixth round of negotiations shows how difficult it will be, especially in terms of exports from the Colon Free Zone.
The sixth round of negotiations for a Free Trade Agreement between Panama and Colombia in Medellin, closed last Friday without any agreement being reached, therefore each country will now consider the proposals line by line and take its position to the next round be held in late May in Panama.
The Free Zone, meat, coffee and milk are the most controversial topics in the sixth round of negotiations for a Free Trade Agreement between Colombia and Panama.
According to Luis Germán Gómez, vice president of the Association of Members of the Colon Free Zone, Panama is maintaining its position that Colombia should lift restrictions on the entry of goods from the zone.