Oscar O.

Diaz Reyes
AWSC 4670
Prof. Moreno

United States and Panama Bilateral Trade and

Agreement

Trade is an ancient human activity involving the exchange of goods between one and

another. These activities have been done since humans saw their necessities and how they could

benefit from them. As time went by, and humanity with it, trade moved from being between

individuals, to agreements between countries. Interconnected transfers began with maritime

transport, and it stayed until the 20th century were men jump into the next step, this time aiming

to the skies. Nowadays, there are different types of trading within the global economy, some are

bilateral, multilateral, regional and some are just global supply of chains. These agreements

directly influence the way the economy is going to move and grow inside the countries, and they

are made because a country needs a specific good or just because of having a benefit in their

economy. An example of this is the United States with its bilateral trade with Panama. Why do

they have bilateral agreements? In the case of the U.S, bilateral agreements are made to protect

the domestic market and to support international law standards, being Panama one of the first

under the Bilateral Investment Treaty (BIT) program. On the other hand, Panama made it to

grow its economy and to strengthen the relationship between them and the United States that was

already strong since the help from the United States in the independence of Panama.

Bilateral agreements are one of the many agreements existing in the world. These kinds

of agreements are made to get a particular product that benefits both parties. Facilitating sectors

like agricultural, technological and even generating jobs are some of the benefits from these

agreements. An example of a bilateral agreement, we have the U.S and Panama. These two

nations were friends even before 1914, where the Panama Canal was constructed and controlled
 Oscar O. Diaz Reyes
AWSC 4670
Prof. Moreno
by the United States until 1977 when President Carter gave it to the Panama’s government. The

United States and Panama bilateral treaty was signed in October 1982 under the presidency of

Ronald Regan, but it did not take effect until 1991. The treaty was mainly focused on four key

aspects: no favorable treaty to any other investor, appliance of international law standards, free

capital transfers and clear dispute resolution procedures. This agreement was created to protect

investment in both nations and foster economic stability between U.S and Panama. Some of the

important articles of these agreements explain in more detail how the agreement benefit both

nations investors. Article like article II where it says that “each Party shall maintain favorable

conditions for investments in its territory by nationals and companies of the other Party”, and

article V which establish “in the event that a company of one of the Parties suffers a loss because

of war or other type of armed conflict, it shall not be treated less favorably, with regard to

restitution…” show us how well protected investors form those countries are in comparison with

third party ones having a guaranteed income in those nations. Another way to see the benefits is

through the exports and imports. The United States, by 2024, exported a total of $10.7 billion in

good to Panama, in comparison with the imports from the nation mentioned ($555 million),

leaving a trade balance of $10 billion. Showing that as United States benefits Panama, Panama

does it as well to the United States, since one of their biggest exporters at that year was to the

mentioned country with a 5.6% of total exports of Panama. However, since presidents change

and ideas change, Panama during the years increases tariffs to U.S making it a little hard to enter.

Despite this, since both nations relationship have been so strong throughout the year, this led to a

new agreement called “the Trade Promotion Agreement”.

The “Trade Promotion Agreement” came into effect in 2007 in which Panama reduced

the tariffs and other barriers to U.S exports, in exchange the U.S enter the worth nearly $22
 Oscar O. Diaz Reyes
AWSC 4670
Prof. Moreno
billion market in Panama. This led to the United States to export, more easily, goods like oil,

aircraft, machinery and agricultural products in exchange of seafood, tropical fruits, cane sugar,

coffee and precious metals exports from Panama. Several United States companies inside

Panama taking advantage of this treatment are, “Western Union”, “Halliburton”, “Panamerican

Life”, “Fastenal”, “Johnson & Johnson”, “Dell”, “Boeing” among others. On the other hand,

Panamanian companies include “Camaronera de Cocle S.A”, “Salva-Mar S.A”, “Bajamar

Seafood”, among others inside the United States. Despite the benefits of all the goods the nations

have some exempts to protect their own products. In the bilateral agreement there are some

exceptions which include certain sectors. These exceptions, as for the United States, are designed

to protect states interests. Some areas include air transport, shipping and banking.

The industry of aviation is considered as a backbone and a pillar of modern trade. Air

transportation facilitates not just tourism but companies as well, to access new markets and new

opportunities to continue their expansion and with that their capacity to bring a better service. In

the case of the United State and Panama trade, aviation plays a key role, as a significant portion

of goods and millions of passengers arrive from both sides, boosting the government economy.

For cargo, aviation plays a crucial role because most of the air freight is fragile cargo, but

valuable. Food transported to United State, or high-tech transported to Panama are some

examples of the importance of aviation. However, as demonstrated, air transport is one of those

exceptions inside the agreement, still, this doesn’t mean it has a direct impact inside both

countries. Since aviation is so important in this connected world and Panama being considered as

one of the logistic hubs in the region. Panama has developed modern airport infrastructure in

which they receive, on the passenger side as for 2019, a total of 745 thousand passengers from

North America. Additionally, aviation has contributed on the nation’s GDP being this one a
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AWSC 4670
Prof. Moreno
12.6% of Panama total economy. His infrastructure, as mentioned before, is one who presents a

direct service to passengers and allowing more than 100,000 tons of cargo handle inside the

airport so companies can move it freely and quickly to satisfy customers around every corner

inside Panama. On the economy and job side, thanks to the sector, the nation has received more

than 2,000 million in contributions and more than 100,000 jobs. For the United States,

companies like “Boeing” have benefited from agreements as showed in their income since they

reached a deal with “Copa Airlines” (as Panama’s flagship airline). The deal was to sell “Copa

Airlines” aircraft for them to upgrade their fleet and was made for a total of $6 billion dollars.

Not only Boeing but also companies like “American Airlines”, in which they have stablished a

strategic management with “Copa Airlines” to expand not only inside Panama, but also inside

other parts in the market were “American Airlines” might have a limited access or incapability to

reach. In total for United States, the incomes as for transportation equipment was $808 million

dollars as for 2024.

In ancient times trade was a more localized phenomenon, with few daring to accept

expanding their markets and taking it to the rest of the world. Nonetheless it was an innovative

thing to bring products from other parts of the world, but since aviation enters the market, it

becomes more accessible to the population and it demonstrated another challenge in companies

demonstrating that to survive in this economy companies and, consequently nations need to rely

more on each other to ensure economic growth and stability. United States and Panama treat is

one example on how globalization can benefit both countries. Bilateral agreements are

demonstrated that they exist not just to protect a good or company, but also to benefit other parts

of this one like tourism, local jobs, infrastructure and economic flow in general. Airlines have

been key facilitators in this process reducing time and money so customers like us cannot just
 Oscar O. Diaz Reyes
AWSC 4670
Prof. Moreno
visit but also enjoy the products and services from other parts around the world. Since

democracy is so unstable, on that part and technologies are emerging, governments need to make

sure there are not break outs when an agreement is made cause relationships can change in a

blink of an eye like we are seeing nowadays with President Trump, but that’s a topic for another

day. Governments should realize, aside of business, that goods are finite, is important that

countries maintain this kind of treaties in other to secure the humans and the nations behavior

since we are a specie that can’t just “walk alone” especially with the air world at our side, we

must do it together especially in this difficult time of changes.

February 24, 2025, from https://www.trade.gov/bilateral-investment-treaties

 US Census Bureau. (2019, April 15). International trade. https://www.census.gov/foreign-

trade/balance/c2250.html#questions

 Workman, D. (n.d.). Panama’s top 10 exports.

https://www.worldstopexports.com/panamas-top-10-exports/

 US relation with Panama. (n.d.). https://www.state.gov/u-s-relations-with-panama/

 Lista Vigente de Grupos Empresariales. (2023). Ministerio De Comercio E Industria.

Retrieved February 24, 2025, from https://mici.gob.pa/wp-content/uploads/2023/05/9-

LS-RG-013-Grupos_Empresariales-SEM-2007-may23.pdf

 Empresas que exportan de Panamá a Estados Unidos. (n.d.). Apex Panama.

https://www.apexpanama.com/region-exportacion/estados-unidos/

 Americas Focus. (2019). IATA. Retrieved February 24, 2025, from

https://www.iata.org/contentassets/cb691a38573642d0bbfd2ba380eaf04e/americas-focus-

no-5-2019.pdf

 TradeStats Express - Year-to-Date (YTD) U.S. Trade by Partner (countries and regions).

(n.d.). International Trade Administration | Trade.gov. https://www.trade.gov/data-

visualization/tradestats-express-year-date-ytd-us-trade-partner-countries-and-regions

 Beneficos Economicos del Transporte Aereo de Panama. (2013). IATA. Retrieved

February 24, 2025, from

https://www.iata.org/contentassets/9ecfb8aacd7c4d2586bb411eb905e42e/beneficios-

economicos-del-transporte-aereo-en-panama.pdf