The United States established diplomatic relations with Panama in 1903 following its declaration of independence from Colombia. Panama's location and role in global trade make its success vital to U.S. prosperity and national security. Panama’s key location along major land and sea transit routes makes it a critical partner in the interdiction of illegal drugs destined for the United States. While Panama's economic growth rate is among the highest in the hemisphere, the country faces the challenge of making this growth more inclusive. It also faces added pressure for more fiscal transparency as it enforces recent anti-money laundering legislation. Increasing pressure from drug trafficking and organized criminal activity – including migrant smugglers – contributes to security problems that threaten to undermine Panamanian security, democratic institutions, and economic prosperity. Because of our shared history, cultural ties between both countries are strong.
U.S. Assistance to Panama
U.S. assistance to Panama aims to ensure that it remains a secure, prosperous, and democratic country that continues to work with the United States as its principal partner in the region. The United States and Panama work together to advance common interests in improving citizen safety and strengthening the rule of law. They cooperate in many ways, including combating illegal drug trafficking and other criminal activity and promoting economic, democratic, and social development through U.S. and international agencies.
Bilateral Economic Relations
The United States and Panama have signed a bilateral investment treaty and a Trade Promotion Agreement. The trade agreement eliminated tariffs and other barriers to U.S. exports, promotes economic growth, sets high standards for the treatment of investments, provides a framework for resolution of investment or trade disputes, and expands trade between the two countries. In 2016, Panama inaugurated the expansion of the Panama Canal which has provided substantial benefits to Panama and many U.S. East-coast ports. U.S. exports to Panama include oil, machinery, aircraft, agricultural products, and low-value shipments. U.S. imports from Panama include fish and seafood, gold, cane sugar, and bananas and pineapples. The finance/insurance and wholesale trade sectors lead U.S. direct investment in Panama while the manufacturing and real estate sectors lead Panamanian direct investment in the United States.