Economic, trade and investment relations between the EU and Panama are substantial. The two have strengthened trade and their commitment to promoting access for Panamanian and Central American goods to European markets.

Relations with the EU have contributed to Panama’s strong economic growth, among the fastest in Latin America over the last decade, with a positive impact on social indicators. For instance, multiple European companies have set up national or regional offices in Panama, thus opening up employment opportunities.

At the same time, Panama has proven that it is a key partner to the EU as a bridge connecting South America with Central America, as a gateway to the Caribbean, and as an ideal place for establishing regional centres in multiple areas (logistic hub, banking hub, pharmaceutical hub, etc.). Due to its strategic location and the Panama Canal, the country is a crux for international trade.

The European Union is a champion of free trade. 35 million European jobs are directly or indirectly supported by trade with non-EU countries. The EU is striving for open, rules-based markets, a level playing field, and high international standards worldwide. The EU is the largest trading power in the world and one of the most open economies.

Since 1 August 2013, trade relations between Panama and the EU are governed by the application of the trade pillar of the EU-Central America Association Agreement (explanatory document). The free trade has boosted trade flows and opened up markets for goods, government procurement, services and investment on both sides, thus increasing benefits for consumers and contributing to the creation of a stable business and investment environment.

Panama and the other countries in the region have mobilised the benefits and used the tools of the agreement to diversify their exports and attract more European investment. Panama remains the main trading partner country for the EU in Central America, followed by Costa Rica. In 2023, exports of goods from Panama to the EU amounted to 958 million EUR (which is a 197% increase since 2012 before the Association Agreement entered into force), while imports of goods from the EU reached 8.330 million EUR (+243% since 2012), based on data from Eurostat. In 2022, Panama exported 3,6 billion EUR in services to the EU, and imported 2,4 billion EUR.

The EU is the second main export destination of Panama (17% of Panama’s exports in 2023). Panama’s main exports to the EU are ores, slag and ash, as well as edible fruits and nuts (mainly bananas), and machinery and transport equipment. In terms of imports, the EU is Panama’s 3rd supplier (16% of Panama’s imports in 2023). The main categories of exports from the EU to Panama are organic chemicals, pharmaceutical products, machinery and mechanical appliances.

If you are interested in exporting and importing to and from the EU, the portal ACCESS2MARKETS contains everything you need to know: product-by-product information on tariffs and taxes, customs procedures, rules of origin, trade barriers, product requirements, statistics for all EU countries and over 120 export markets worldwide. EU companies interested in doing business in Panama can contact the respective Chambers of Commerce, as well as the Latin America IP SME Helpdesk.

Global Gateway is the EU’s quality investment offer to its partners around the world. It supports partner countries’ strategic autonomy, aligning their interests and EU interests, by scaling up high-quality geostrategic investments and promoting sustainable financing. The strategy, adopted in 2021, stands for sustainable and trusted connections that work for people and the planet, to tackle the most pressing global challenges, from climate change and protecting the environment, to improving health security and boosting competitiveness and global supply chains. Global Gateway is the EU contribution to narrowing the global investment gap, accompanying the social and just green and digital transitions beyond European borders and boosting competitiveness and security of global supply chains.  

Global Gateway boosts smart, clean and secure links in the digital, transport, energy and climate-relevant sectors, and strengthens education, research and health networks. EU investment in the five key areas linked to human and social development (digital, energy, transport, health, education and research) will contribute to achieve the Sustainable Development Goals (SDGs) and the Paris Agreement, both in partner countries and in Europe.

Global Gateway is implemented thought the Team Europe approach (coordination between the EU, its institutions, and Member States). Mobilisation of private sector is key to the Global Gateway Investment Agenda. Across the world, Global Gateway aims to mobilise up to 300 billion EUR in investments between 2021 and 2027 with a mix of grants, concessional loans and guarantees to de-risk private sector investments. Between 2021 and 2023, 179 billion EUR in investments have been mobilised across the world, advancing 225 flagship projects.

The flagship Global Gateway initiative in Panama is the Regional Data Centre CopernicusLAC, with a budget of 12 million EUR. The Centre is part of the EU-LAC Digital Alliance, launched in March 2023, which includes also the BELLA cable extension, the establishment of another Copernicus regional centre in Chile, as well as regional policy dialogues on data governance, cybersecurity, e-governance and connectivity. Another key Global Gateway project in Panama is Universal access to energy in Ngäbe-Buglé.

The EU Delegation in Panama actively gathers information on the principal investment projects which could have an interest for the EU-LAC Global Gateway investment package. Global Gateway projects are designed together with the partner country to ensure it benefits from the EU investment offer and the results improve the necessary infrastructure and connectivity.

The EU ranks third in Foreign Direct Investment in Panama with 15% of the total (8.256 million EUR in 2023). Over the years, the European Investment Bank has provided more than 800 million EUR to projects in the energy, transport, water and telecommunications sectors. It is worth noting 50 million USD for the expansion of the Juan Díaz Water Treatment Plant and another 50 million USD for the sanitation plan of the Districts of Arraiján and Chorrera. These projects sought to improve the coverage, quality and capacity of water treatment, generating a positive impact on the quality of services and of the urban environment for the citizens of the capital and surrounding cities.

Laying at the crossroads of the North and South American continents and the Atlantic and Pacific Oceans, the EU recognises that Panama is of key international strategic importance. The Panama Canal acts the backbone of the country’s economy and the linchpin for its foreign relations and socio-political development. The Canal is crucial for transit of goods to and from the EU, and this is why European ships make substantial use of its services. Several European companies are also involved in providing services to ships crossing the Canal. 

The completion of the enlarged Panama Canal in 2016 is a major achievement, not only for Panama, but for international trade in general. A consortium of companies from Spain, Italy and Belgium were in charge of this important project. In addition, the European Investment Bank provided 500 million USD, representing 10% of the project costs. It also marked the largest operation so far of the EIB in Latin America, and one of the three largest ones outside the EU. The creation of a third line of locks, Panama Canal doubled its navigating capacity, tripled the capacity of crossing ships, and improved the efficiency of water management.

During the eleven years since the EU-Central America AA was signed, trade between the EU and the region has seen significant growth: Central American exports to the EU almost doubled, while European Union exports to Central America increased by more than 40%. The economies of Central America and the European Union are highly complementary: the bulk of CA exports to the EU are agricultural goods, while the majority of EU exports to CA are machinery and manufactured goods. 

In the context of the 10th anniversary of the Association Agreement, the European Union organised a "Dialogue on Sustainable Transport and Logistics", which took place on 20 July 2022 in Panama City. The event focused on the benefits of the Association Agreement between the European Union and Central America; an assessment of business opportunities in the Central American region in the field of logistics and transport; existing financing instruments; and innovative solutions in sustainable logistics and transport.

The EU-Central America Association Agreement is a region-to-region agreement that the Central American countries negotiated as a bloc. In fact, this has been one of the EU's objectives in its policy towards Central America - promoting regional integration and reducing barriers to intraregional trade. This has also made it possible to strengthen the competitiveness of the region and its ability to attract investment.

The EU is contributing to regional integration also through the development of the Central American Digital Trade Platform (PDCC). It aims to strengthen and facilitate trade transactions between countries in the region, by streamlining customs processes, reducing logistics costs, and accessing markets. The platform, formally launched in November 2023, will benefit more than 9.000 importing companies and more than 4.000 exporting companies with the reduction of time. The EU invested 9 million EUR, administered by the Inter-American Development Bank (IDB), and the implementation of the project is done by the Secretariat for Central American Economic Integration (SIECA) and the Central American Integration System (SICA).

The fight against money laundering and terrorist financing (AML/CFT) is a priority for the European Union. Through the EU Global Facility on AML/CFT, the European Union supports partner countries such as Panama in their efforts to combat these phenomena. 

In March 2021, the EU Global Facility received a request for technical assistance from Panama, which focused on two topics: 1) registration of final beneficiaries (GAFI IO 5) to help integrate the IT system and build capacity ; 2) Enforcement Act (GAFI IO 7) to strengthen the capacity of competent authorities to conduct money laundering investigations. Following this, a work programme was agreed which also included national coordination (GAFI IO1) in order to improve the effectiveness of donor activities. In November 2022, Panama’s request was extended to carry out a national risk assessment of virtual assets (GAFI IO 3). 

Through the EU Global Facility technical assistance, more than 30 face-to-face and online activities have been carried out, both bilaterally with Panama and at regional level with the countries of the Financial Action Task Force for Latin America (GAFILAT). More than 1.000 Panamanian officials and other actors benefited from the activities. Based on the principle of sustainability, the EU Global Facility aims to equip partner countries with the capacities to be self-sufficient in maintaining the highest AML/CFT standards.  

Technical assistance has contributed to Panama making significant progress in the implementation of AML/CFT measures, including the adoption of new legislation and the strengthening of its regulatory framework, to fully comply with international standards, such as those established by the Financial Action Task Force (FATF).