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Saturday, April 19 2014 @ 12:46 AM EDT

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Tariffs end as Panama trade pact takes effect

Money MattersOver three-quarters of Panama's tariffs on Canadian agricultural products end effective immediately as Canada's free trade agreement with Panama takes effect Monday (April 1).

Canada's international trade minister Ed Fast said Monday the bilateral deal brings an immediate end to Panama's tariffs on 78 per cent of agricultural imports and 95 per cent of non-agricultural imports from Canada.

Those include mark-ups of up to 70 per cent on certain pork products, up to 30 per cent on certain beef products and up to 20 per cent on frozen French fries.

Panama in 2009 ended its BSE-related ban on imports of Canadian beef, followed in 2010 by the end of its bans on live Canadian cattle and genetics.

Under the new trade pact, Panama's tariffs also end immediately on imports of Canadian industrial and construction machinery, wood products and vehicles.

Most of Panama's remaining tariffs will be eliminated "over a period of five to 15 years," the Canadian government said Monday.

"Workers and businesses in a wide range of Canadian sectors, such as aerospace, pharmaceuticals, pulp and paper and agriculture and agri-food, will benefit from taking Canada's trading relationship with Panama to the next level," Fast said Monday.

"As a high-growth emerging market, Panama is a small but strategic trade partner for Canada," the government said, noting two-way merchandise trade in 2011 totalled $235 million, up 105 per cent over the previous five years.

The deal is also expected to give Canadian service providers a "secure, predictable, transparent and rules-based environment that will facilitate access to Panama's $20.6 billion services market."

Competition "unlikely"

Canada, in return, is expected to eliminate tariffs on over 99 per cent of current imports from Panama immediately. The Canadian government has previously said over-access imports of dairy, poultry and eggs would be exempt from any tariff reductions, as would Canada's tariffs on certain sugar products.

Canada's top imports from Panama have been mainly mineral fuels and oils, mostly aviation fuel. Other imports from Panama include bananas, melons and papayas among other fruits and nuts, as well as fish, seafood products, spices, coffee, tea, fats and oils.

Total imports from Panama to Canada were valued at $28.7 million in 2007, many benefiting from Canada's "relatively low" most-favoured-nation (MFN) tariff rate of 5.5 per cent as well as lower or no tariffs on many goods through Canada's general preferential tariff (GPT) for developing countries.

In 2007, Canada noted, 97 per cent of imports from Panama were MFN duty-free and most others were eligible for GPT treatment.

"Given that the vast majority of goods imported from Panama already enter Canada duty-free, there is unlikely to be any significant change in import competition for Canadian industries" through a free trade pact, the Canadian government said in a 2008 economic analysis of the proposed deal.

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Coacess Will See $95 Million Liquidated

Money MattersThe announcement of the liquidation of the Social Security Employees Savings and Credit Cooperative Fund (Coacecss) has taken depositors by surprise.

Dr. Carmen Carrasco, who like other depositors trusted entity to save her money, was informed on Thursday when she called the Coacess to inquire about the delay in the payment of interest, due to the freezing of funds of the cooperative.

Carrasco, whose savings are part of the $95 million that were on deposit with the Coacecss, said she has no idea of when she will be able to get her money.

"This is ridiculous. These were retirement funds. So far we have not received a penny of interest," said Carrasco.

The liquidation order was issued on 21 March 2013 by the Panama Autonomous Cooperative Institute (Ipacoop).

This occurred after the refusal of a proposed reorganization and financing presented to the board by various cooperative associations.

Coacecss had been under intervention since June 2012 when the IPACOOP detected a "financial deterioration" in its management, including the payment of high commissions for referring customers. (Prensa)

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Canada—Panama Free Trade Agreement To commerce April 1

Money MattersA free trade agreement between Panama and Canada is scheduled to come into force April 1 that would help generate jobs and prosperity in the two countries, the federal government has said.

"I am very pleased to mark this important step in Canada's deepening partnership with Panama-a country that boasts one of the fastest-growing markets in our hemisphere and that serves as a strategic gateway to Latin America," said Diane Ablonczy, Canadian minister of State of Foreign Affairs Sunday.

"This free trade agreement, a key part of our government's plan to strengthen our relationships in the Americas, will cement the ties between our nations and help us build greater prosperity for the peoples of our hemisphere," said the minister in a press release.

The announcement was made while the Inter-American development bank meeting was underway in Panama City.

By strengthening the existing trade relationships between the two countries, the free trade agreement is expected to increase Canadian exports to Panama, the southernmost country of Central America.

Canadian Trade Minister Ed Fast called the free trade a 'significant milestone' in the history of Canadian trade relationship with foreign countries.

"The entry into force of the agreement is a significant milestone, one that will have immediate benefits for Canadian exporters," said Minister Fast. "The agreement will immediately eliminate tariffs on more than 90 percent of Canadian goods exported to Panama, benefiting a wide range of sectors, including aerospace, pharmaceuticals, pulp and paper, and agriculture and agro-food."

According to the press release, Panama is Canada's third-largest merchandise-export market in Central America, with bilateral merchandise trade reaching $213.6 million last year.

The Panamanian government has a five-year plan to invest in major infrastructure projects worth $13.4 billion.

Within last six years, the Canadian federal government has signed free trade deals with nine countries: Colombia, Honduras, Jordan, Panama, Peru and the European Free Trade Association member states of Iceland, Liechtenstein, Norway and Switzerland.

In coming years, the federal government is targeting to sign free trade deals with the European Union, India, Japan, and the members of the Trans-Pacific Partnership, according to the release. (ca.ibtimes.com)

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Panama could consider bond for liability management

Money MattersBy Lucien Chauvin - Although its financing needs are currently met, Panama's government may decide to tap debt markets this year in a liability management plan for a $932 million bond coming due in 2015, a senior official in charge of public credit told Emerging Markets.

The country's Finance Minister Frank de Lima had told Emerging Markets earlier on the sidelines of the Inter-American Development Bank meeting that there was no need for a bond issue as financing was covered, and that he was confident that market conditions would remain the same.

But there is still a good chance, according to Dario Espinosa, the government’s director of public credit, that the government may decide to tap local markets this year in a liability management plan for the $932 million bond coming due in 2015. He said that if liquidity, appetite and conditions were right, a combination of local and global bonds could be in the cards. The government carried out a similar operation on the January 2015 issue to re-profile $500 million of that bond.

“We have been turning to capital markets, primarily the local market, for funding. We are looking to extend duration with the possibility of a $500 million benchmark that would be for 15 or 30 years,” he said.

Espinosa repeated the finance minister's comments that financing for this year was basically covered with disbursements from multilaterals, including the Venezuela-headquartered Development Bank of Latin America (CAF), the Inter-American Development Bank (IDB) and the World Bank, as well as $362 million from France’s Coface and Spain’s Cesce that is being used for the $2-billion subway system under construction in the capital.

“The need for global bonds is very low compared to last year. Last year we emitted locally for the first time in history [when] we placed a 10-year bond for $1.36 billion,” said Espinosa. Slightly less than half of that issuance was in the local market.

Espinosa added that the Panamanian government wanted to take advantage of its dollarized economy and strong financial sector to become a regional hub for capital markets.

Panama has the right conditions and offers lower costs for countries and firms in the region looking to launch global bonds, he said.

“Our dollarized economy, political stability and strong banking and regulatory systems provide us with the infrastructure to become a leader in capital markets. Fees and legal costs here are much lower than in the United States,” he said.

Becoming a hub for bond emissions is the final step in a process underway over the past few years that has included the creation of a successful market-makers program. In 2009, only $30 million worth of Panamanian paper was acquired locally. The number jumped to more than $600 million last year after the launch of the market-makers program the previous year. As a result, 25% of the country’s total debt is held locally, compared to 8% in 2009. (emergingmarkets.org)

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Live from Panama: Devex at the 2013 IDB annual meeting

Money MattersEyes are on Panama as throngs of development movers and shakers head to the country for the annual meeting of the Inter-American Development Bank, which opens March 14.

Devex will be in the thick of it all, bringing you the highlights from Panama City with breaking news, interviews and insights. (devex.com)

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Bankers Express Concerns Over Law To Freeze Bearer Shares in Panama

Money MattersThe country would lose competitiveness and simultaneously suffer the serious consequences of falling into discriminatory lists if it fails the review of the Global Forum, said yesterday members of the Banking Association of Panama.

Raul Guizado, vice president of the group, who was accompanied by Rolando De Leon De Alba and Otto Wolfschoon, treasurer and manager, respectively, said they are in favor of the immobilization of bearer shares, but they are against Article 27 of the draft Bill 568 which freezes the bearer shares, because it indicates the law would enter into force in two years, once it is once published in the Official Gazette.

"We would not pass the peer review (of the Global Forum) so that is why we are expressing our opinion," said Guizado.

They said they do not know why this Article 27 was introduced into the draft Bill, because it was not in the original draft that was circulated for consensus.

"We found out one day before it was approved by the Cabinet," they said.

Among the consequences that could result, they warned that the correspondent banks in other countries could resist working with Panamanians and almost all transactions, because Panama is a dollarized country, pass through the United States.

Funds also would be more expensive and this would make banking services more expensive.

They further recalled that there is a history in the banking, where banks like BNP Paribas and Societe Generali closed their operations because Panama was regarded as non-cooperative country or was included in the so-called blacklists.

The bankers are concerned that the International Finance Corporation (IFC) has refused loans to companies based in Panama for not having passed the review of the Global Forum.

Also, they are disturbed by the agency's claims - published by this media - in which they state that if the project is approved as is, the country would not pass the review.

De Leon De Alba said if Panama wants to have a strong international financial sector then it needs more transparency. He said they will be present at the first debate of this law to ask the Deputies in the National Assembly to change Article 27.

Today the Panamanian Association of Business Executives will present a debate between the lawyers Jaime Alemán, who defends the project and Adolfo Linares, who opposes it. (Estrella)

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Canadians Want To Export Papayas From Panama

Money MattersCoordinated by the Ministry of Commerce and Industry, a group of Canadian businessmen visited different growing areas for papaya, tubers and roots in the provinces of Cocle and Los Santos, interested in exporting these products to Canada. (more)

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Sanctions Will Continue Against Panama

Money MattersThe issue of bearer shares made it to the National Assembly, but the debate is taking place between the guilds that measure forces. (more)

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Sanctions Will Continue Against Panama

Money MattersThe issue of bearer shares made it to the National Assembly, but the debate is taking place between the guilds that measure forces.

The bankers have begun a campaign to publicize the project and include their opposition to Article 27 which states that the current regulation will take effect two years after it is published in the Official Gazette.

Jaime Moreno, president of the Panama Banking Association, said in conversations with Roberto Albisetti - the regional manager of Mexico and Central America of the IFC - he indicated that if the project is approved with the article in question it would not pass the peer review, and the sanctions would continue.

Remember that the International Finance Corporation, the financial arm of the World Bank, has stopped payment on at least $400 million, to companies based in Panama.

The policy adopted by the IFC goes back to November 2011.

The Bill has been in the National Assembly for a week, and although it was included in the agenda of the Commission of Economy and Finance, it will not be discussed until next week.

The IFC measure affects companies that are based in the country, but most of their business takes place in other jurisdictions.

Lawyers Refute The US Ambassador to Panama - The U.S. ambassador in Panama, Jonathan Farrar, explained to the La Estrella newspaper that bearer shares are not issued in any state in the United States.

Adolfo Linares, a Panamanian lawyer, said that while it is true that no bearer shares are issued, the system used to create corporations in the United States - especially in the states of Nevada, Delaware and Wyoming - Limited Liability Companies can be formed, which do not require the information about the identity of the beneficiaries to be divulged.

The issue of obtaining information on the owners of companies is the argument being used to immobilize bearer shares.

The lawyers argue that Panama is complying with this provision.

According to Linares, the U.S. Senator from Illinois has tried to pass a "know your customer" law in that country, but it has been rejected. (Estrella)

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Meat and Sausage Production Facility Closed in Volcan

Money MattersThis week the Colombian group Nutresa closed the meat and sausage processing plant known as Alimentos Cárnicos de Panamá (managed by the Berard brand) to move the production line to the facilities of its Panamanian subsidiary Blue Ribbon.

It was learned that the closure and relocation of the plant was due to their business expansion plan in Panama to directly serve more than 3,000 points of sale.

What's more, their facilities in Volcan were rented.

The company will still have logistical and commercial processing facilities in Chiriqui.

According to the company, they are negotiating labor issues with their workers.

Among the brands of hams, sausages, beef, and pork sausages produced by Berard, are the Valle Verde, Mi Jamón Berard, Hacienda Berard and Chorizo Istmeño, plus a gourmet line, with dressings of French and German spices, honey and apple.

In 2008 the company Grupo Nacional de Chocolates de Colombia purchased Ernesto Berard through Blue Ribbon, which they had acquired in 2006.

At the time, it was said the difference between the two processing plants were in production volume, since it took the Berard plant three days to produce 5,000 sausages while at the Blue Ribbon plant they can do that it two hours.

The market management of the Grupo Nutresa is concentrated on 32 plants, 10 of which are located outside of Colombia.

These are dedicated to the development of the segments of meat, biscuits, chocolates, coffee, ice cream and pasta, and they also have a presence in the Andean Region, Central America, the Caribbean, Mexico and the Hispanic community in the United States. (Estrella)

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