Panama and economic integration from the perspective of the FTAA

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1. Introduction

2. Content

3. The Free Trade Area of the Americas (FTAA)

4. Conclusion

1. Introduction

This work is a compilation of data concerning the economic integration process from the perspective of the negotiations of the Free Trade Area of the Americas in Panama to participate.

The aim of this study is to know roughly the desirability of economic integration for our country, and especially the FTAA. This will address the theory of economic integration, their types, their effects, and finally, the Free Trade Area of the Americas.

2. Content

Economic Integration

The doctrine of integration, the extension means in the multinational level of argument that economic development

is impossible without industrialization, ie that a region’s economic development is impossible without the industrialization of the region. Defined as economic integration process, not simply the phased program of eliminating artificial barriers to trade in goods and movement of factors of production. In turn, the integration as a state or situation is final image that is accessed once achieved the abolition of various forms of discrimination between national economies involved.

The economic cooperation and integration pose to underdeveloped areas and especially to Latin America, the opportunity to accelerate economic growth and thereby reduce the major social tensions that our continent is subjected. Economic integration implies that the elimination of discrimination facilitate economic exchanges and allow for the ideal of free trade, which is considered feasible and capable of maximizing the general welfare.

The integration process can take many forms, presenting, as the case advantages and disadvantages. The possible forms of economic integration could list them as follows:

* System of tariff preferences, is based on the fact that a set of customs territories are granted each other a number of customs advantages not extended to others, due to the internationally accepted suspension of most-favored-nation clause.

* Free Trade Zones: An area consisting of two or more countries immediately or gradually abolished customs and trade barriers among themselves, but keeping each others face their own customs tariff and trade regime peculiar. Experience has demonstrated fully that the formation of free trade areas is possible only between countries that are in a degree more or less high and homogeneous. In this sense we can state that in developing countries this is merely of an FTA transitorio.Las are obviously unstable formations, which are created on a temporary basis and that by force of events tend to become customs unions or disappear.

* Customs unions: They are the ultimate expression of two or more integration of previously separate national economies. A customs union, is first, immediate or gradual abolition of trade barriers and the movement of goods among the states that constitute the union (dismantling of tariffs and trade). But the customs union also means building a common customs tariff towards third countries. This last element, which is also called common external tariff or simply TEC-is that what clearly differentiates a customs union of free trade zones where foreign against domestic tariffs remain different member states.

* Common Market: Deletes the tariff and quantitative restrictions on mutual trade.

* Full integration: It goes beyond markets and concerns the whole economy.

Effects of Integration

Effects on Production

1. Positive: If you enable the replacement of domestic sources of supply of high costs for producing some of the other member countries with lower costs, the savings would allow more efficient use of productive resources and improved welfare standards.

2. Negative: If it is replaced with lower-cost imports, from third countries, for productions originating in the region and higher costs, had an increase in expenses.

Effects on Consumption

Arising from the replacement of certain property, whether domestic or foreign, goods from different species but the same kind and designed to meet the same need, originating in other countries in the union.

Effects in terms of trade

Changes in trade patterns resulting from economic integration will affect the terms of trade with third countries, expressed in price relationships between imports and exports, causing thus a redistribution of real income between the partners and third countries.

Effects on government services

Arising from the elimination of many customs and administrative services, is a saving.

Effects of traffic diversion or

These occur when economically integrated countries set their own tariffs for countries outside the block, then a competition going on in terms of tariffs. The country with the lowest tariff for a particular good will be most benefited as he is introduced products outside the bloc. These facts bring trade distortions that are reflected in the production and investment.

Benefits of Economic Integration

The region may receive the following benefits

* Changes in productivity resulting from increased specialization and the application of the comparative advantages of members.

* Improvements in production due to the large scale production.

* Changes in competition and production efficiency.

* Increased level of employment and production volume.

* Improvements in transportation and communication networks in general.

3. The Free Trade Area of the Americas (FTAA)

Our country now belongs to no single economic bloc, however, is in talks to integrate economically, the most important of these negotiations of the FTAA.

The FTAA emerged as a commitment by the presidents of the Hemisphere gathered at the First Summit of the Americas in 1994 in the city of Miami agreed to establish the Agreement of the Free Trade Area of the Americas by the year 2005, based on a Declaration of Principles and Action Plan

The bargaining structure since then has consisted of

* The Meeting of Ministers Responsible for Trade in the Hemisphere

* The CNC Trade Negotiations Committee, also called Meeting of Deputy Ministers of Trade of the Hemisphere

* Nine negotiating groups, and

* Three committees.

The objectives of the FTAA are to preserve and strengthen democracy in the Americas, to eradicate poverty and discrimination, promote sustainable economic development and open doors to new markets and preserve the environment.

Panama is currently the Head Pro Tempore of the Administrative Secretariat of the FTAA negotiations, from March 1, 2001 until February 28, 2003, and the Dominican Administrative Director Ivan Ogando Lora. Before it was Miami, then it will be Mexico. Among the reasons that Panama was one of those chosen for the Pro-Tempore Headquarters is the fact that Panama offered the lowest cost of living of all the nominated cities. Pro-Tempore headquarters in Panama has been established in the Hotel Caesar Park. The cost of the FTAA – Panama is $ 4.3 million, divided into $ 3,115 million provided by the tripartite committee, IDB, ECLAC and OAS, and $ 1,185 million for the Panamanian Government.

The Panamanian government has repeatedly expressed his hope that Panama is the permanent headquarters of the secretariat of the FTAA in 2005. In fact, that was a goal that the Panamanian authorities raised at the recent Summit of the Americas held in Quebec in April.

But to do it, Panama will have to cope with the aspirations, which, in the same direction, have other cities, including Miami and Mexico City

Among the advances that have occurred in the FTAA negotiations are:

* Business Facilitation Measures: In Toronto, he approved the first package of these measures and transparency in customs matters, corresponding to the Deputy Ministers to monitor the implementation of the measures already adopted

* Preparation of draft legal texts: In Toronto instruction turned the Negotiating Groups to draft bracketed text text drafts of each chapter based on the achievements of the first stage of negotiations so that the Ministerial Meeting Buenos Aires you can have a future draft FTAA agreement that reflects the convergence and divergence in views in the hemisphere.

* Civil society: the Committee of Government Representatives on the Participation of Civil Society, for this purpose and on instructions from the ministers, permanent receives the written contributions of hemispheric civil society in trade-related issues that are relevant to the negotiation process.

The FTAA would bring benefits to the region would, according to the 34 Heads of State and Government in 1994 signed the Declaration of Principles of Miami, are:

* Promote our economic growth.

* Increase our domestic prosperity.

* Raise the standard of living.

* Improve the working conditions of the peoples of the Americas.

* Protect the environment better.

Additionally, the FTAA:

* Develop the democracies of the Americas.

* Promote the protection of human rights.

* Promote sustainable development in the region.

But in order to give these results, the countries of the region should strive for development and liberalization of the weakest economies, for economic homogenization at least for the project did not come under, for a more equitable distribution of wealth and poverty elimination. Corruption and human rights are very important issues for the success of the FTAA, as well as education, private investment and health.

Integrated America is a dream, that even the Bolivar was, but not until the 1990 that our continent could build the courage to face the challenge of the FTAA. And this is what the FTAA is to Panama, a challenge. A challenge that, as we face it, our future depends. And a challenge for which Panama is not ready, but you may be through actions such as:

A redistribution of public spending in a manner that allows development of traditionally disadvantaged sectors which will make our country stronger and help you be more consistent with the stronger economies in the hemisphere.

* A real transformation of the national education on the premises of excellence, total quality, productivity and competitiveness, not to leave us at the mercy of the demands of work that a free trade area would bring.

* An aggressive fight against corruption, which constitutes a barrier to growth and development.

* Replace the protectionism that the State is preparing to certain sectors oriented towards productivity and excellence.

4. Conclusion

Economic integration conceived as the phased program and as a result of the removal of artificial barriers to trade in goods and movement of factors of production within a region, is a joint development tool, as applied.

Panama has been deprived of this tool throughout its history. But it is time to face the challenge of the FTAA along with a Puebla-Panama Plan (PPP) and other attempts at integration may mean the beginning of an era of prosperity and real development, not only for ourselves but also for all the hemisphere.

Meeting this challenge and get the most out goes beyond being the headquarters of the Secretariat Pro-Tempore or requesting the Permanent Secretary, is a national challenge that only excellence in our preparation will allow us to cope, if not, progress negotiations and the interests of our neighbors will become our worst enemy.

The following is excerpt from the Declaration of Principles of the Summit of the Americas held in Miami in 1994. Only included as regards the creation of the Free Trade Area of the Americas.

Summit Of The Americas

Statement of Principles

Partnership for Development and Prosperity: Democracy, Free Trade and Sustainable Development in the Americas

To promote prosperity through economic integration and free trade

Our continued economic progress depends on sound economic policies, sustainable development and a dynamic private sector. A key to prosperity is trade without barriers, without subsidies, without unfair practices, and with an increasing stream of productive investments. The elimination of barriers to market access for goods and services among our countries will foster our economic growth. A growing world economy will also enhance our domestic prosperity. Free trade and increased economic integration are key factors for raising standards of living, improving the working conditions of the peoples of the Americas and better protecting the environment.

Therefore, resolve to begin immediately to construct the “Free Trade Area of the Americas” which will be progressively eliminated barriers to trade and investment. We further resolve to conclude the negotiation of “Free Trade Area of the Americas later than in 2005, and agree that concrete progress toward achieving this objective by the end of this century. We recognize the progress that has already been obtained through the unilateral actions of each of our nations and regional trade agreements in our hemisphere. On the basis of existing subregional and bilateral agreements to broaden and deepen hemispheric economic integration, making them more similar.

Aware that investment is the main engine of growth in the Hemisphere, we will encourage collaboration in the establishment of more open markets, transparent and integrated. In this regard, we are committed to creating mechanisms that promote and protect the flow of productive investment in the Hemisphere and promote the development and progressive integration of capital markets.

To advance economic integration and free trade, create a hemispheric infrastructure and cooperation with private sector financing and international financial institutions. This process requires a cooperative effort in fields such as telecommunications, energy and transport will enable the efficient movement of goods, services, capital, information and technology that are the foundation of prosperity.

We recognize that despite considerable progress in solving the debt problem in the Hemisphere, the burden of high foreign debt still hinder the development of some of our countries. We also recognize that economic integration and the creation of a free trade area will be complex, particularly in light of the wide differences in levels of development and size of the economies of our hemisphere. Remain cognizant of these differences as we move towards economic integration in the Hemisphere. We look to our own resources, ingenuity and individual capacities as well as the international community to help us achieve our goals.