The retaliatory measure applied in the form of an increase of tariffs in products from, mostly Colombia, in 15% and 30%, has been deemed as a mistake before the negative of the neighboring country of abolishing the tariffs in textile and footwear from of the Colon Free Zone, what is affecting some sectors of the national economy and, by extension, end the consumer, just as experts say.
However, after approval in third debate of project of law 370 that establishes retaliatory measures, doubts have emerged around whether the sanctions that this project contemplates will be effective or will be disadvantageous for Panama, just as the tariffs are at this moment, according to experts.
Some claim that if Panama uses goods as a means of retaliation, it could be in disadvantage since the country has a current negative trade balance.
Panama imports from Colombia nearly 400 million dollars in products, while Panama exports 12 million dollars to that country, without consideration of the fact that the Colon Free Zone exports to Colombia about one million 800 dollars and Colombia exports to the Colon Free Zone around 16 million, according to some CFZ businessmen.
For the Economist Juan Jované, the Government made a mistake since, no retaliatory action should be imposed on inputs.
He said that, for example, in the case of flowers, what should have been done is to promote the local production so as not to affect the domestic florists and foster the national production.
"This Government keeps failing to do things as they should as it acts based on improvisation and the flowers are going to be more expensive, since the flower businessperson will not absorb the cost," he said.
Jované pointed out that Panama is a small market that could be affecting Colombia, but "we are not as large as to exert so much weight and, at the end of the day, it is the Panamanian consumers who end up paying… ".
Regarding the Law that passed in third debate, Jované asserted that "laws depend on how they are implemented, but based on the style of administration of the Ministry of Economy and Finance, these laws will actually not bring about anything positive to the country; however, if used effectively, they could be an instrument at the service of the country.
For the President of the Colombo-Panamanian Chamber of Commerce, Eduardo Cristo, Colombia is indeed being affected, not to the greatest possible extent, especially in products such as clinker and coal, but in his view this is not the main issue, trying to find solutions is.
"The issue is not whether they are affected or not, but it is whether Panama is applying a benevolent retaliatory measure, because they have not chosen products that do more damage, such as leather, clothing, among others", said Cristo.
He noted that the exports from Colombia fell last year in 45% at the international level and these tariffs do one way or another have an impact on them.
Panamanian authorities decided to apply the Cabinet Decree 28 of 2 August 2016, which modified some tariff fractions on the import tariff in products such as roses, carnations, chrysanthemums, coves, astromerias, gladiolus in 30%, as well as cement clinker in 30% plus 7% ITBMS; garments for women in 30% plus 7% ITBMS and bituminous coal in 15%.
This decision was made, once the businessmen affected of Free Zone requested the Government to defend the interests of Panama, since this trade emporium represents one of the main pillars of the economy.
The businessmen that market these products have expressed that they have been affected, not only by the measure itself, but by the failures in the system of the Customs Office, at the time of collecting the tax.
Ana Carolina Restrepo, administrative director of Studio F., said that the tariff in four products has increased and has made the margin to become affected in 5 to 7 points approximately, because they once were paying 15% and now 30% plus 7% ITBMS, having to take on the end cost of the consumer.
"At the operational level this has been complicated because they made a decree without making sure the Customs Office were prepared", she said.
The businesswoman indicated that "every Monday we receive products from Colombia and to date these products have not been released, because the customs agent is making a mistake with the system and is failing to apply the tax as corresponds".
"it was we who realized that some lines were not being liquidated at 30% and thus decided to notify them because at the end we may be affected when checked", she said.
Impact on flowers
In the case of flowers, for example, traders have had a 30% increase in tax, which forces them to transfer this cost to their customers, especially in flower shops, however, they have made the decision of taking on this cost so as not to affect their end customers, according to members of the sector.
"The sales of products from Colombia have decreased and flower products from Costa Rica, Panama, Ecuador, among others have increased ", said Mario Valencia, Manager of Operations of importer La Marqueta de las Flores.
He indicated that they expect that both governments (Colombia and Panama) arrive at an agreement and take the taxes back to normal aimed at making their products to be competitive once again.