Colombia, Panama FTAs To Boost Investment
The U.S. is upping
its investments
in Colombia
and Panama.
by Charles W. Thurston
Latin America Correspondent
thurstoncw@rodpub.com
Pending free trade agreements between the United States and both Colombia nd Panama bode well for increased U.S.
investments in those countries, as well as for
lower import tariffs on U.S. goods shipped
there, including paint and coatings. Although
these two FTAs have been percolating since
2007, some U.S. officials, like Secretary of
State Hillary Clinton, are full of praise for
rapid ratifications.
Both Colombia and Panama are particularly
well suited to capture regional trade, and have
long served as trade and transportation hubs.
Panama, with canal traffic in the realm of
15,000 vessels per year or about four percent of
global trade, already possesses the largest trade
zone in the Western Hemisphere, at Colon. Similarly, Colombia has long been a trade gauntlet
for the Andean countries along the U.S.-built
Highway of the Americas, leading south to
Ecuador and Chile, and east to Bolivia.
President Obama is still negotiating with
Colombia for progress in lifting trade union
repression and diminishing corruption.
Panama, which is a more open trading society
than Colombia, also has raised U.S. concerns
about corruption and banking secrecy. Still,
both FTA pacts are expected to be ratified
once Obama can pass legislation that will help
U.S. workers who may loose jobs as a result of
the agreements.
Paint and coatings consumption in these two
countries traditionally grows as the gross domestic product (GDP) expands. In Panama, economic growth over the first quarter of 2011 was
a red-hot 9. 7 percent. GDP growth in Colombia registered in the four percent range first
quarter; the International Monetary Fund (IMF)
has predicted that Colombia will present the
third-fastest growth rate in Latin America this
year, near five percent.
Retail spending also is a strong indicator for
future growth in paint and coatings sales, both
for the automotive and architectural segments.
In Colombia, retail sales rose over 23 percent in
April, according to the government statistics
agency DANE. And in Panama, where 80 percent of the GDP is based on services, retail
spending is expected to parallel near-double-digit GDP growth.
Panama's $26.8 billion economy has produced a per capita income level of nearly
$7,600, spread over the population of 4. 3 million. It is the smallest country in Latin America
in terms of population. Colombia's GDP of
about $283 billion results in a per capita income
level of about $8,000, according to the IMF.
“[T]he International Mon-
etary Fund (IMF) has pre-
dicted that Colombia will
present the third-fastest
growth rate in Latin
America this year, near
five percent.”
Investments in the two countries will rise
on FTAs. Panama already is involved in a
$5.25 billion expansion of the Panama Canal.
Recent raises in risk ratings for the two countries also will help U.S. investments rise. Fitch
Ratings agency recently raised the sovereign
rating of Panama to BBB, at the edge of in-vestment-grade rating. Moody's rating agency
also raised its rating for Colombia to an investment grade this year.
While the U.S. government debates the FTAs
with Colombia and Panama, the two Latin
countries are heatedly pursuing trade agreements with other countries, including Australia,
Canada and China. A Canada-Panama FTA is
expected to be ratified this fall. Panama, in the
mean time, has signed an FTA with Peru, and is
close to one with Costa Rica. CW
