Panama has no formal restrictions on capital flows, does not discriminate between foreign and domestic investments, and maintains bilateral investment agreements with the United States and many European countries. However, critics have pointed out that the legal environment can be cumbersome and that relatively high labour costs (for the hemisphere) and rigid labour laws can be frustrated if not as an obstacle to U.S. direct investment.31 Nevertheless, U.S. companies are well represented in Panama, including the largest container port in the region. , several transport companies and production sites from different sectors. Like other countries that wish to enter into a free trade agreement with the United States, Panama is seeking to strengthen its ties with continuous direct iDi, which can result from a long-term, rules-based trade relationship with a major trading partner. Panama tends to have a large surplus in services trade, from $890 million in 2001 to $3.4 billion in 2011. Such a component of balance-of-payments services is unusual for a Latin American country, but reflects the unique aspects of the Panamanian economy. For many years, the surplus in services made up for most of the goods deficit. However, since 2010, Panama has experienced significantly larger trade deficits, which can persist as long as energy and food prices remain high and canal development accelerates. House Ways and Means Committee holds a hearing on free trade agreements with Colombia, Panama and South Korea. A particular feature of Panama`s trade regime is the Free Zone (CFZ), which, with the exception of Hong Kong, is the largest free zone in the world. The huge volume of trade that crosses the Panama Canal, the multimodal transportation infrastructure, the modern financial sector and Panama`s central position in North and South America make Colin a logical, if not ideal, place for a duty-free zone.
It serves as a «one-stop shop» for Latin American buyers and sellers from the rest of the world, including Asia and the United States. Sellers operate showrooms for small and medium-sized buyers who were in the wholesale buying for retail in their respective countries. As a general rule, goods are repackaged in smaller batches, integrated into the local market currency and transferred to the country of purchase, without income, VAT or transfer taxes. Most of CFZ`s business is in electronics, apparel, jewelry and other luxury goods. Trade is an increasingly important part of this largely service-based economy, but as can be seen in Table 1, Panama has a historically large trade deficit and exports relatively little relative to the amount of goods it imports. From 2001 to 2011, Panama`s annual trade deficits ranged from $696 million to $6.8 billion. The decline in the terms of trade in Panama is a factor influencing the trade balance (see Appendix B), but the strong increase from 2007 reflects two developments. First, a sharp increase in oil imports, driven by prices and quantity, and an increase in imports of construction equipment (Derricks, Dozer, cranes, etc.) linked to Panama`s strong economic growth, canal development and other infrastructure investments. The United States has a small but positive agricultural trade record with Panama.
Agriculture accounts for a small portion of all U.S. merchandise exports to Panama, but the United States captures about 51% of panama`s agricultural import market. While the average tariff on U.S. agricultural products is 15%, tariffs on chicken-leg quarters can reach 260%.39 Given that both countries had products they wanted to protect, access to the agricultural market was one of the most difficult problems to solve. Below is a more in-depth discussion of key areas of negotiation and an analysis of topics that have been of particular interest to Panama and the United States, including the U.S. Congress. If so, the changes