The Obama administration announced that Panama had cleared the way for Congress to now move forward on the U.S.-Panama Free Trade Agreement (FTA). A new Tax Information Exchange Agreement (TIEA) has been implemented by Panama that will allow U.S. tax investigators to have access to information on possible tax evasion using Panamanian banks as tax havens. This was the administration’s major issue in moving the FTA forward. Panama in 2010 imported over $450 million of U.S. agricultural products, which has doubled since 2005. The top U.S. exports were corn, soybean cake and meal, wheat, rice and horticultural products. Key agricultural provisions of the FTA include:

• Immediately eliminates duties on half of U.S. farm exports, including high-quality beef, frozen turkeys, sorghum, soybeans, soybean meal, crude soybean and corn oil, almost all fruit products and tree nuts, wheat, most peanuts, whey, cotton and many processed products.

• Eliminates nearly all of the remaining tariffs on U.S. farm exports within 15 years.

• Immediately provides duty-free access through tariff rate quotas (TRQ) for specific volumes of standard grade beef, chicken leg quarters, pork, corn, rice and dairy products.

The National Pork Producers Council (NPPC) said, “Implementing the pending trade agreement with Panama will level the playing field so that U.S. producers and exporters of food and farm products receive reciprocal market access. It also will open to U.S. pork producers, other agricultural sectors and U.S. businesses a market of almost 3.4 million consumers.” According to NPPC, U.S. pork exports to Panama currently are restricted by a small quota and out-of-quota duties as high as 80%. Under the Panama Trade Promotion Agreement, U.S. pork variety meats would receive immediate duty-free treatment, and the trade deal would expand market access for U.S. pork muscle meat through larger tariff rate quotas that will grow by 6% annually. The out-of-quota tariffs will be phased out in 15 years, and all other tariffs on U.S. pork will be phased out over 12 years. U.S Trade Representative Ron Kirk has indicated that the three pending FTAs (Korea, Colombia, Panama) are now ready for congressional consideration. The goal is to pass the three FTAs by July 1.

Interstate Shipment of Meat and Poultry Final Rule Ready — USDA announced the final rule for the implementation of interstate shipment of state-inspected meat and poultry products, which will broaden the market for smaller state-inspected plants. By participating in this voluntary cooperative interstate shipment program, select establishments will have the option to ship meat and poultry products, bearing an official USDA mark of inspection, across state lines. In participating states, state-inspected establishments selected to take part in this program will be required to comply with all federal standards under the Federal Meat Inspection Act (FMIA) and the Poultry Products Inspection Act (PPIA). The 2008 farm bill required USDA to establish an interstate shipment program.

Food Safety Penalties — The Senate passed legislation (S. 216) that would increase criminal penalties for companies and individuals that knowingly contaminate the food supply by distributing misbranded or tainted food products. The legislation would establish prison terms for up to 10 years for violations.

P. Scott Shearer
Vice President
Bockorny Group
Washington, D.C.