Panama and the UK have shared diplomatic ties since 1908. The US brought the highest amount of foreign direct investment (FDI) into Panama in 2018, with the UK coming in eighth position in the FDI stakes. The 2015 FDI figures saw the UK in fourth spot after the US, Colombia and Switzerland (with a total of 6% of FDI into Panama).
The EU is Panama´s second-largest commercial partner and is in first position in terms of the export of agricultural products. In 2018, 80% of all Panamanian agricultural exports landed in the EU. Exports from Panama to the UK are not huge in terms of total exports to the EU (5% of total) but are highly concentrated (84%) in three products: pineapple, bananas and watermelon.
The trade framework with the EU is the association agreement between the EU and Central America (Association Agreement), ratified by Panama in 2013.
Mainly to protect agricultural exports and to continue to attract FDI from the UK, the Panamanian congress passed Law 103 of 2019. Law 103 ratified the agreement entered into in July 2019 between Costa Rica, El Salvador, Guatemala, Honduras, Nicaragua, Panama and the UK and Northern Ireland (CA-UK Agreement).
The CA-UK Agreement is enormous, comprising 28 pages in total (as opposed to the 4396-page Association Agreement). The relative brevity achieved is the result of the simplistic yet perfectly functional formulation of 'incorporation by reference mutatis mutandis' upon which the CA-UK Agreement is constructed. Under this structure, in essence, all the provisions of the Association Agreement are incorporated by reference to the CA-UK Agreement, and adjusted only as applicable and as minimally set forth in the CA-UK Agreement.
The pragmatic approach of all parties involved enabled the putting into place of a very complex trade package within a period of just a few months, ensuring the status quo after Brexit.