Panama Investor Blog

Senator John Kerry joins the fight to turn up the heat on Panama

The U.S. Senate is considering the U.S.-Panama Free Trade Agreement (FTA) today during Finance Committee hearings and Senator John Kerry has penned an article on the Politico web site outlining his goal to close down the evil tax havens (like Panama). 

Although he concedes that both countries will benefit from the FTA, he makes it clear that "many of the factors that contribute to Panama’s economic growth also make it a sanctuary for tax cheats and money laundering – and that needs to be remedied".   So, a sitting United States senator feels it his duty to "remedy" a problem for the U.S. in a foreign country.  A problem that even he acknowledges has been partially responsible for Panama's recent economic growth. 

Senator Kerry likes to frame his argument around the need to "stop terrorist organizations, drug cartels and other criminal groups from exploiting bank secrecy havens".   But the real reason behind all this is made clear when he says "we need to protect against efforts by U.S. citizens to evade taxes".  But in his zeal to catch "tax evaders" he is also casting a wide net against those that legitimately use Panama's corporation laws to protect their assets.

Most ominously though is this quote from the honorable Senator Kerry when he describes Panama as a "place where it’s easy to set up an impenetrable offshore company and open a bank account shielded from the prying eyes of the Internal Revenue Service".  I think that just about sums it up.

Read more: "John Kerry: Let's close tax evader loopholes - Sen. John F. Kerry - POLITICO.com" - 

Senator Carl Levin attacks the U.S. - Panama Free Trade Agreement

The U.S. - Panama Free Trade Agreement (FTA) has been an on again, off again process for nearly two years.  After much lobbying by commercial interests here in Panama, the Panamanian assembly passed the FTA and it looked like passage in the U.S. Congress was a slam dunk since it was fairly non controversial and backed by the Bush administration at the time.  However, just before the FTA was to be voted on in the House of Representatives in 2007, the deal was sabotage by the appointment of Pedro Miguel Gonzales to head the Panamanian assembly.  It has languished there ever since.

There's been a recent revival of the FTA by the Obama administration who wants to get this agreement through the Congress before tackling more complicated trade agreements with South Korea and Colombia.  This time, the road block is coming from President Obama's own party in the form of U.S. Senator Carl Levin.

Senator Levin has been leading the charge against so called "tax havens" and he's got Panama right in his cross hairs.  Senator Levin wants countries like Panama to eliminate their laws on banking secrecy and the use of corporations with anonymous shareholders.  Both of these policies are keys to the thriving legal and banking industries operating in Panama.  That Senator Levin is using the Panama FTA to advance his crusade is instructive in understanding the importance of this issue in Washington D.C.

It will be interesting to see how this plays out over the next few months and whether Panama backs down to U.S. demands.  But it looks like this is just the beginning of an orchestrated attack on the freedom on U.S. citizens.  If Senator Levin is unsuccessful in convincing foreign countries like Panama to change their laws to accommodate his agenda, the next step will be to limit citizens from taking their money abroad.  Keep an eye on Senator Levin.

From the Associated Press

Lawmakers ask Obama to put off Panama trade deal

54 U.S. house members sign petition to stop Panama FTA

This petition signed and delivered to President Obama is rather disturbing and will certainly cause consternation for Panama government officials. I find it a bit disingenuous for the U.S. to make such claims about Panama banks acting as a tax haven when the U.S. banks do the exact same thing on a much grander scale. In addition, recent events have shown many U.S. top banks have poor oversight and regulation that would not even pass muster here in Panama. Within the letter is this paragraph about Panama.

"Panama FTA. We also believe that Panama is not an appropriate U.S. FTA partner. A Government Accountability Office study identified Panama as one of only eight countries and the only current or prospective FTA partner that was listed on all of the major tax-haven watchdog lists. Panama has long been a key target of both the Organisation for Economic Co-operation and Development and other tax transparency entities for its resistance to international norms in combating tax evasion and money laundering. Indeed, Panama is one of few countries that has refused to sign any tax information exchange treaties. We applaud your cosponsorship last year of S. 681 (The Stop Tax Haven Abuse Act), which designates Panama as an Offshore Secrecy Jurisdiction targeted for that legislations restrictions on the use of offshore tax havens and abusive tax shelters to avoid U.S. federal taxation. Panama is one of the top locations for multinational firms subsidiaries many created for the sole purpose of avoiding taxes. (my emphasis).

The day is coming soon when legislation will be passed that will severely restrict the way Americans can do business here in Panama.  I suspect that main restriction will be limitations on money flowing into Panama from the US.  If you are considering moving some of your assets out of the U.S. you need to act now.

Bush won't press Panama trade vote before Colombia

With this latest decision by President Bush, it is unlikely that the FTA will be completed during his administration. This from Reuters.

Excerpts: WASHINGTON (Reuters) - President George W. Bush does not want Congress to vote on a free trade agreement with Panama before it votes on a similar deal with Colombia, Bush administration officials said on Tuesday after a major obstacle to approval of the Panama agreement was  removed.

"We believe the FTAs (free trade agreements) should be acted upon in the order they were signed," said Sean Spicer, a spokesman for the U.S. Trade Representative's office. "Once Colombia is acted upon, we hope to see action on Panama and South Korea."

Read the rest of the story here...

Opps! Panama violates Proposed FTA

In their rush to make changes that give the keys to the candy store to government officials  which allow them to approve contracts without competitive bids, they have violated one of the articles of the proposed FTA agreement with the U.S.. Transparency is paramount to the FTA and when officials can dole out contracts at their discretion it certainly conflicts with that transparency. Apparently the assembly did not realize their error. Lets hope they reverse their position before it goes for vote in the U.S..

From La Prensa

Excerpts;

LA PRENSA

trade issue:While the FTA with the U.S. has not even been approved, Panama has already violated it by increasing the threshhold the government can award in “no bid” contracts.1069290

Even as Panamanian officials are pushing the U.S. to approve a free trade agreement (FTA) between the two countries, the Torrijos administration has pushed through a law that violates the pact's parameters.

On June 30, the Asamblea Nacional approved a measure proposed by the Ministerio de Economía y Finanzas to change the country's procurement regulations. One of these changes allows the government to award consulting contracts of up to $300,000 without putting them up for public bid.

But according to the proposed FTA, Panama is obligated to establish “clear rules” in government procurement procedures that should focus on “respect for the principles of non-discrimination, transparency and due process.”

The agreement specifically sets a $193,000 limit on contracts awarded without putting them out for public bid. This would allow U.S. companies to bid on government contracts on an equal footing with local entities.

“The changes to the Ley de Contrataciones violates the proposed treaty with the United States,” said Manuel Ferreira, president of the Cámara de Comercio de Panamá. “This administration's term is coming to an end, and now they want to do everything quickly. But they are not doing things right.”

Ferreira said the Asamblea should take steps to eliminate the changes and return to the original procurement regulations.

Read the whole story here....

Bush vows to help Panama clinch free trade agreement

Great picture of the two leaders in Washington. They spoke about;

FTA-Gotta have it!
Canal Expansion-Gotta build it!
Price of food-Gotta lower it!
Drugs-Gotta stop it!

That's it. So if you want to read it with fluff you can go here.

Panama FTA: Uncertain Fate

Excerpt from Latin Business Chronicles

Peter Hakim, president of the Inter-American Dialogue, believes the Panama FTA's main obstacle is the issue of Pedro Miguel Gonzalez, who was elected president of

Panama

's national assembly last year despite being wanted in the

United States

for killing a

U.S.

soldier based in

Panama

in 1992. (He has been acquitted by a Panamanian court, but

U.S.

authorities maintain he is guilty). Gonzalez belongs to the ruling PRD party and was allegedly elected congress president despite concern by President Martin Torrijos, who has been widely praised by local and foreign investors for his pro-business policies.

"Consideration of the Panama FTA has been delayed because the country’s parliament elected a leader who is accused in the

United States

of murdering an American soldier - although he was found not guilty by a

Panama

court," he says. "He is scheduled to leave office in September, which will open the way for approval of the Panama FTA, although this could be delayed if the White House and the U.S. Congress have not made any progress toward an agreed-upon [Trade Adjustment Assistance]."

Will Congress Pass Panama FTA?

It all depends on who you ask.

From the Latin Business Chronicles

Will the US Congress approve the U.S. free trade agreement with Panama despite stumbling blocs? Three experts share their views.

BY LATIN AMERICA ADVISOR
Inter-American Dialogue

Pedro Miguel Gonzalez, the head of Panama's National Assembly, said [recently] he would not seek re-election, removing a key obstacle to U.S. congressional approval of a free trade agreement with Panama because of an arrest warrant for Gonzalez in the United States on charges he murdered a U.S. soldier in 1992. What are the prospects for a U.S.-Panama FTA in the wake of this news? What is a timeline for possible approval?

Read the rest of the story here.....

FTA dead for this year-As expected

The US congressman said the election of Pedro Miguel González derailed the agreement, which would have passed easily. 

LA PRENSA

Pedro Miguel González992068

U.S. Congressman Charles Rangel, chairman of the powerful Ways and Means Committee, has sent a letter to the Panamanian government stating that the free trade agreement will not be addressed this year.

He said specifically that last year's election of Pedro Miguel González to the post of president of the Asamblea Nacional is the reason the agreement has not been addressed by the U.S. Congress. González is wanted in the U.S. for the murder of an American soldier in Panama in 1992.

The news is a blow for Panama, which had spent a large amount of money lobbying to have the agreement passed. The U.S. is Panama's largest trading partner, and the agreement was seen as a key way for the local economy to keep growing.

Rangel was quoted in the U.S. media as saying that he spoke to President George Bush about the issue, and also sent correspondence to Panama's government.

"Although Democrats initially felt enthusiasm for the agreement, the election of a man who is wanted in the United States for the murder of an American soldier to the leadership post of the National Assembly has made a vote virtually impossible."

Rangel was also quoted as saying that he told a Panamanian delegation last week that the trade issue will not be considered until González is out of office. He added that the FTA probably would have been approved had González not been elected.

Either resign or no FTA says U.S. congress

In todays local paper we get this report regarding the U.S. law makers and their position on PMG and a second article about the matter from the Puerto Rican perspective. I don't think it can get a clearer than this. If he does not resign then he will carry the blame for losing this important trade deal. Of course there are many here who would rather the deal not go through. We should know pretty soon as the pot continues to boil.

Senator Rangel pronounces

The chairman of the Committee of Finances of the Senate, the democrat Charles Rangel, told the Miami Herald that the election of Pedro Miguel González as president of the Assembly in Panama can cause objections for the ratification of the FTA in the Congress. He added that the Department of State and the Department of Commerce have not yet said anything official on that issue, and that the  processes for the ratification continues the same. Meanwhile, the news agency AP reported that the U.S. secretary of Commerce, Carlos Gutiérrez, said that González must resign, and indicated that the case is handled by the State Department. (La Prensa)

Panama, Tuesday, September 11, 2007

Mayor Santini from Puerto Rico: Relations with USA are in danger

Jose Quintero De Leon jquintero@prensa.com

The mayor of the city of San Juan, Puerto Rico, Jorge A. Santini, estimated that is somewhat uncomfortable for the republic of Panama, that in the route to establish better relations and to obtain the ratification of the treaty of commercial promotion with the United States, the presidency of the National Assembly occupies a person sought by criminal facts by the American Government, thus already the embassy of his country has expressed his disagreement.

Santini talked about the crisis between powers that the presidential election of Pedro Miguel González has generated. These statements happened at his arrival to Panama, where he will participate in the sessions of the Latin American Council of Education, which they begin today.

The Puerto Rican mayor said he is solidarity with his people by the death of Sergeant Zak Hernandez, happened in 1992, in Chilibre, Panama, since he is part of the Government, and also part of the National Guard, the reserve of the Army of the United States.

Facing the declarations of González of which he does not discard to resign of his position if with he protects the country of future economic damages, he considers that if this deputy weigh the pros and the cons to resign to the presidency of the Assembly, he would do well in making it to allow that another person occupies and to be put under an investigation so that everything is clarified.

"That he cooperates and becomes involved in the investigation. If the truth is of its side, it will not have problems ", indicated.

For Santini, that requested not to take his words as an interference in the internal affairs of Panama, only it is necessary to imagine what would happen if González deputy had to travel to US. He remembered that the Senate of Puerto Rico issued a resolution of offense and malaise, to be in discord with the election of González for a so sensitive position of a Government brother.