Reprinted from Campaign For America's Future
Moment of Madness: Panama Papers Reveal Hillary Clinton On The Wrong Side Of History
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The Bush administration negotiated the Panama free trade agreement without addressing Panama's bank and corporate secrecy. Panama has little to "trade" with the U.S., so maybe leaving secrecy out of the agreement wasn't an accident; it was the point. It provided a stamp of legitimacy and protections for "investors" moving their money to Panama.
Panama Trade Agreement
The Panama-United States Trade Promotion Agreement, negotiated by the Bush administration, was finalized by the Obama administration and went into effect in 2012. The U.S. Trade Representative (USTR) website promotes the agreement as removing "barriers to U.S. services, including financial services." It removed some duties and tariffs on U.S. exports and phased out others, like agricultural goods and technology products. It provided "protections" for U.S. "investors."
Panama gave up revenue collected on imports. So what did Panama get in exchange? And why did the U.S. really put all that effort into negotiating a special "trade" agreement with one small country?
During the debate over the agreement Sen. Bernie Sanders (I-Vt.) pointed out one problem. He began with this question: "No one can legitimately make the claim that approving this free trade agreement will significantly increase American jobs. Then, why would we be considering a stand-alone free trade agreement with Panama, tiny little country?"
Answering his own question, Sanders went on:
"Well, it turns out that Panama is a world leader when it comes to allowing wealthy Americans and large corporations to evade U.S. taxes by stashing their cash in offshore tax havens. And the Panama free trade agreement will make this bad situation much worse. Each and every year, the wealthiest people in our country and the largest corporations evade about $100 billion in U.S. taxes through abusive and illegal offshore tax havens in Panama and in other countries. So, according to Citizens for Tax Justice -- and I quote -- 'A tax haven' has one of three characteristics: It has no income tax or a very low-rate income tax; it has bank secrecy laws; and it has a history of non-cooperation with other countries on exchanging information about tax matters. Panama has all three of those. ... They're probably the worst."
Panama had "no income tax or a very low-rate income tax; it has bank secrecy laws; and it has a history of non-cooperation with other countries on exchanging information about tax matters."
Sanders was far from alone with these warnings. At the time Public Citizen wrote of the Panama agreement:
"A long list of labor, consumer, environmental, faith, family-farm and other organizations oppose the Panama FTA because of the agreement's actual NAFTA-replicating terms.
"However, the problems with the notion of a U.S. FTA with Panama extend beyond what is contained in the pact's text. Despite Panama's status as one of the world's top venues for tax evasion and money laundering, the FTA does not remedy Panama's problems with tax evasion and money laundering. In fact, if the Panama FTA were adopted, it would make these matters of bipartisan concern worse."
During the 2012 election, after the agreement went into effect, Public Citizen wrote this about the effects of the agreement:
"...the pact restricts U.S. policies now available to counter tax evasion by U.S. firms and wealthy individuals who move their money to Panama. The pact also empowers firms incorporated in Panama, including offshored U.S. corporations, to use international tribunals to demand U.S. taxpayer compensation over U.S. policies, such as anti-tax-evasion measures, that the firms claim undermine their "reasonable expectations."
With this treaty, people moving money to Panama would be given special protections. The U.S. government would provide its stamp of approval to a country that helps wealthy people and companies in the U.S. and around the world evade taxation and disguise corporate ownership.