Custom duties expected to increase cost of imported goods

 The increase in import duties on selected Colombian goods is likely to affect the final price paid by Panamanian consumers.  Panama imports some $400m a year from Colombia, compare to the $12m it exports to the neighbouring country.  Colombia exports some $16m to the Colon free zone, importing $1.8 million in return. In a television interview on the Debate Abierto programme, Michael Morales, of the Panamanian Union of Industrialists (SIP), warned that Panama's negative trade balance put it at a disadvantage relative to Colombia. "As the import duties are increased, Colombia is likely to experience a reduction in exports to Panama, while consumer prices of affected products are expected to increase", he explained. Mr. Morales singled out cement and coal used in energy production as two imported goods likely to experience price increases. Panama has resorted to retaliatory action against Colombia, slapping import duties on roses (30%), coal (15%), cement (30%) as well as clothing (30%). However, many experts are advising caution. Usha Mayani, president of the Association of Users of the Colon free zone, warned of the possible negative impact on the economic area, which represents 7% of Panamas GDP. Former deputy minister for commerce, Nestor Gonzalez, pointed out how Panama has acted within the limits set out by the World Trade Organization (WTO).  This is in contrast to the illegal import duties that Colombia had earlier applied on imports of textiles and shoes from the Colon free zone. "The WTO ruling on the matter is quite clear: Colombian duties were discriminatory and ran against WTO rules", he explained. Mr. Gonzalez highlighted that Colombian direct investment in Panama represents 13% of total foreign direct investment (FDI) in the country. It is principally concentrated in the banking and industrial sectors. “Panama acted within its rights by denouncing Colombia with the WTO: let's hope the two countries can find an amicable solution and reverse these latest measures", declared Jorge Garcia Icaza, President of the Panamanian Chamber of Commerce. According to economist Olmedo Estrada, "Panama has every right to defend itself from discriminatory actions taken by Colombia".  Mr. Estrada highlighted how Panama is an open market economy, where laws of supply and demand apply. "Colombia is not the only producer of roses in the region” he explained: “if Colombian roses become too expensive, Panama will import them from Ecuador or from some other country".