Panama’s attempt to cap pork imports key test for FTA enforcement

Per capita pork consumption is the highest in Central America.

4 Min Read
Customers enjoy samples of U.S. pork at a tasting demonstration outside a Riba Smith supermarket in Panama City.USMEF

Earlier this year, the government of Panama published a decree seeking to limit the country’s total annual pork imports, despite free trade agreement obligations that conflict with this policy. The decree would cap Panama’s pork imports at just under 8,800 metric tons, with a 6% annual growth rate. The decree covers chilled and frozen pork cuts, but variety meats are excluded. Many processed pork products are included, but not bacon and sausages. An unofficial translation of the decree is available here.

The United States is Panama’s largest supplier of imported pork, but Panama also currently accepts pork from the European Union, Canada and Brazil. Among these trading partners, Brazil is the only supplier that does not have an FTA with Panama. Last year Panama’s pork imports from all suppliers (excluding variety meats and bacon) were about 13,500 mt, well above the cap proposed in the decree. As recently as 2019, imports reached nearly 19,000 mt.

In 2023, Panama’s import data showed U.S. pork accounted for 64% of import volume, followed by Canada at 17% and Denmark at 12%. For chilled/frozen pork muscle cuts, the U.S. accounted for 93% of imports. Panama’s import data for the first quarter of 2024 show U.S. pork accounted for a dominant 87% of import volume (a new high), followed by Denmark with 6% share, Canada with 5% and small volumes from Brazil, Spain and the Netherlands. For chilled/frozen pork muscle cuts, U.S. pork accounted for 95% of imports, with Canada making up the balance.

The U.S.-Panama Trade Promotion Agreement, which entered into force in 2012, provides duty-free access for U.S. pork, but subject to the following provisions:

  • In 2024, the duty-free tariff rate quota for U.S. pork cuts and many processed products is 3,825 mt.

  • Once imports exceed 3,825 mt, a 15.6% tariff is applied until imports reach the safeguard trigger volume of 4,972.5 mt.

  • For imports in excess of 4,972.5 mt, the safeguard tariff of 42.7% is applied.

  • There are two separate duty-free TRQs for bacon, totaling 1,920 mt, with low duties (2% to 4%) applied to out-of-quota imports.

  • Sausages and some other processed pork items are at zero duty, without quotas. 

U.S. pork exports to Panama typically increase in December for clearance in January, when the new quota year begins. Because of the TRQ, U.S. shipments to Panama are front loaded for clearance at the beginning of the year. Once the TRQ is filled and the import safeguard volume is reached, high tariffs severely limit trade. Following this trend, U.S. exports to Panama in December totaled 6,466 mt, valued at a record $17 million (excluding variety meats). Although sharply higher than a year ago, first quarter 2024 shipments totaled just 2,144 mt, valued at $2.4 million.

Under the U.S.-Panama Trade Promotion Agreement, Panama is committed to eliminating all TRQs and safeguards on U.S. pork by Jan. 1, 2026. But a decree capping total imports would sabotage the U.S. industry’s ability to capitalize on this provision.

“If this decree is implemented, the race will be on among all of Panama’s pork suppliers to move as much product into the market as possible early in the year,” explained Erin Borror, U.S. Meat Export Federation vice president of economic analysis. “We have been looking forward to Panama’s removal of the TRQs and safeguard on U.S. pork in 2026, so that Panama can join the rest of the Central American region as a rapidly growing, year-round destination for U.S. pork cuts. But the decree threatens to greatly disrupt U.S. exporters’ ability to serve their customers in this market.”

Panama’s annual per capita pork consumption is the highest in Central America, reaching 16 kilograms (carcass weight) last year, up 32% from 2012. This compares to 21 kilograms for Mexico and 29 kilograms for the United States. Panama’s pork self-sufficiency has been in the 60% to 70% range in recent years, but reached 74% last year. USDA estimates that Panama’s domestic pork production reached a record 53,000 mt (also carcass weight) in 2023, up 6% year-over-year and up 56% since 2012.   

“U.S. pork’s presence in the Panamanian market isn’t hurting domestic production,” Borror said. “On the contrary, rising consumption has bolstered pork demand, to the benefit of all suppliers and, most importantly, Panama’s consumers.”

Panama’s decree was one of the trade concerns discussed at a late March meeting of the World Trade Organization’s Market Access Committee. The committee does not have another formal meeting scheduled until November, but an informal meeting is set for June 11. The issue could also be impacted by Panama’s just-completed presidential election. Former national security minister José Raúl Mulino won the May 5 election and is set to take office July 1.

For the U.S. pork industry, the fate of the decree could have implications that extend well beyond the Panamanian market.

“It’s absolutely critical that trading partners live up to their FTA commitments and that these agreements are fully enforced,” Borror said. “The U.S. pork industry has made significant investments to develop this market, even while navigating the various quotas and safeguards agreed to in our FTA. Now we are finally on the doorstep of full and open access, and Panama is backpedaling. That’s just not acceptable.”   

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