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Panama - US Relations

The United States cooperates with the Panamanian Government in promoting economic, democratic, security, and social development through US and international agencies. American long-term interest lies in developing democratic institutions - including political parties - to ensure a Panama that is secure, stable, prosperous and capable of effectively administering the Panama Canal.

The United States established diplomatic relations with Panama in 1903 following its declaration of independence from Colombia. That year, through the Hay/Bunau-Varilla Treaty, the United States was granted rights to a zone spanning the country to build, administer, fortify and defend an inter-oceanic canal. The Panama Canal opened in 1914. In 1977, the Torrijos-Carter Treaties were signed to set basic governing standards for the Canal through 1999 and guarantee its permanent neutrality. These treaties went into effect in 1979 and on December 31, 1999, Panama assumed full jurisdiction and operational control over the Canal.

Changes in Panamas government and tensions over the canal led to the interruption of diplomatic relations several times during the 20th century. From 1987-1989, relations deteriorated sharply under the rule of Manuel Noriega. During Operation Just Cause in 1989, U.S. troops entered Panama and captured Noriega, who would not cede power following elections. Since the restoration of democracy, Panamanians have elected five presidents from three political parties in free and fair elections.

Panamas location and role in global trade make its success vital to U.S. prosperity and national security. Panamas key location along major land and sea transit routes makes it a critical partner in interdiction illegal drugs destined for the United States. While Panamas economic growth rate is among the highest in the hemisphere the country faces the challenge of making this growth more inclusive. It also faces added pressure for more fiscal transparency as it enforces recent anti-money laundering legislation. Increasing pressure from drug trafficking and organized criminal activity contributes to security problems that threaten to undermine Panamanian security, democratic institutions, and economic prosperity. Because of our shared history, cultural ties between both countries are strong.

U.S. assistance to Panama aims to ensure that it remains a secure, prosperous, and democratic country that continues to work with the United States as a principal partner in the region. The United States and Panama work together to advance common interests in improving citizen safety and strengthening the rule of law. They cooperate in many ways, including combating illegal drug trafficking and other criminal activity and promoting economic, democratic, and social development through U.S. and international agencies.

U.S. diplomatic engagement and foreign assistance in Central America is guided by the U.S. Strategy for Engagement in Central America (Strategy). In 2015, the United States announced the Strategy, a comprehensive and robust partnership with Central American governments to promote an economically integrated Central America that is fully democratic; provides economic opportunities to its people; enjoys more accountable, transparent, and effective public institutions; and ensures a safe environment for its citizens. The Strategy focuses on three overarching lines of action: 1) enhancing citizen security; 2) promoting good governance; and 3) promoting prosperity and regional economic integration. The Strategy is a multi-year effort for all seven Central American countries that builds off of previous successful partnerships and programs in the region.

Cultural ties between the two countries are strong, and many Panamanians come to the United States for higher education and advanced training. In 2007, the U.S. and Panama partnered to launch a regional health worker training center. The center provides training to community healthcare workers in Panama and throughout Central America. About 27,000 American citizens reside in Panama, many retirees from the Panama Canal Commission and individuals who hold dual nationality. There is also a rapidly growing enclave of American retirees in the Chiriqui Province in western Panama.

In the economic investment arena, the Panamanian Government has been successful in the enforcement of intellectual property rights and has concluded a Bilateral Investment Treaty Amendment with the United States and an agreement with the Overseas Private Investment Corporation. Although money laundering remains a problem, Panama passed significant reforms in 2000 intended to strengthen its cooperation against international financial crimes.

The United States and Panama signed a Trade Promotion Agreement that entered into force in October of 2012. The U.S.-Panama TPA has significantly liberalized trade in goods and services, including financial services. The TPA also includes sections on customs administration and trade facilitation, sanitary and phyto-sanitary measures, technical barriers to trade, government procurement, investment, telecommunications, electronic commerce, intellectual property rights, and labor and environmental protection.

The TPA improved U.S. firms access to Panamas services sector and gives U.S. investors better access than other WTO Members under the General Agreement on Trade in Services. All services sectors are covered under the TPA, except where Panama has made specific exceptions. Under the agreement, Panama has provided improved access in sectors like express delivery, and granted new access in certain areas that had previously been reserved for Panamanian nationals. In addition, Panama agreed to become a full participant in the WTO Information Technology Agreement.

The 1977 Panama Canal Treaties entered into force on October 1, 1979. They replaced the 1903 Hay/Bunau-Varilla Treaty between the United States and Panama (modified in 1936 and 1955), and all other U.S.-Panama agreements concerning the Panama Canal, which were in force on that date. The treaties comprise a basic treaty governing the operation and defense of the Canal from October 1, 1979 to December 31, 1999 (Panama Canal Treaty) and a treaty guaranteeing the permanent neutrality of the Canal (Neutrality Treaty).

The details of the arrangements for U.S. operation and defense of the Canal under the Panama Canal Treaty are spelled out in separate implementing agreements. The Canal Zone and its government ceased to exist when the treaties entered into force and Panama assumed jurisdiction over Canal Zone territories and functions, a process that was finalized on December 31, 1999.





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Page last modified: 07-06-2017 18:54:40 ZULU