Panama: Day Four

Panama is known as "The World's Most Famous Shortcut" and flying into Panama City made this very obvious. From the air we could see ships lined up in the ocean waiting to get through the lock system of the Panama Canal. At the time I didn’t think about how big these ships must be to be visible from our altitude, but later when we toured the canal from the ground it was amazing to see their size.

One of Panama's problems right now is the size of the ships. They need to widen the canal and are anticipating that their legislature will approve a referendum this fall to do just that. The largest ships that can get through the canal are appropriately named Panamax ships. They are fearful that if they do not widen the canal their economy may suffer as larger and larger ships are built that will not fit through the canal.

Our first stop in Panama City was at the Ambassador's residence were we had our usual briefings from individuals from the political, economic, and agricultural sectors of their country. We also met the Ambassador, Bill Eaton, who is relatively new to his position, but you would never realize if from talking with him. He has only been the ambassador for 4 months, but he is very knowledgeable about Panama and has a great understanding of the country and its people.

We learned that 70,000 Christmas trees were imported to Panama this past season from Canada and only Canada. Panama is very concerned about diseases and environmental issues and so is cautious about not only imports, but products that pass through its canal.

Unlike the other countries we visited, Panama is primarily a service economy. One of their main industries, outside of the canal and shipping of course, is banking. Consequently, Panama City is a very sophisticated looking city with beautiful tall buildings. Another reason for the taller buildings is that it is less likely to suffer from earthquakes than Guatemala or Costa Rica, so higher structures can be built.

Another difference is that the infrastructure in Panama is very strong. Panama has enjoyed a very stable government and strong economy. The US military exited in 1999, but there is still a very strong US feel to the country. Seventy percent of the products sold in their stores are US products and they use the US dollar as their currency. As with the other countries we visited, tourism is a big and growing industry for them.

After lunch with a former Panamanian president, Dr. Nicholas Ardito Barletto, we headed back to our hotel for an afternoon of focused discussions with our counterparts in Panama.

My group talked with a representative from BAISA, the agricultural stock exchange in Panama. The delegates from government organizations on our trip met with government officials from Panama and those from educational institutions met with Panamanian educators.

BAISA focuses specifically on agricultural products such as corn, rice, beans, beets, tomato products, chicken, etc. Unlike bidding in the US that starts low and goes up, bidding in Panama on the BAISA exchange starts with the lowest bid and goes lower. There is no minimum necessary to trade, so even small farmers and producers sell their products through BAISA.

We ended our day, and really our trip, with a Friends of Indiana reception and then headed to a beautiful restaurant for dinner that overlooked the canal and locks.

As we ended our day I continued to think about how much Central America has to offer and what a great opportunity it is for Indiana.

Costa Rica: Day Three

Our second day in Costa Rica started with a breakfast briefing on the topic of "Doing Business in Agricultural Products in Costa Rica." Representatives were present from the Agricultural Attaché, Banco de Jose, and Arce Compos Customs Agency.

The representative from Banco de Jose reported that General Electric (GE) just bought 49.9% of their bank. This was perceived as a strong signal that GE believes that being involved in Central America is critical.

We learned that the customs office in Costa Rica was created recently, 1995. They are working to implement electronic transmission of all document which will allow for minimal response times once all customs documents are filed.

They told us that 50% of the imports to Costa Rica come from the US and the other 50% from primarily Chile and Europe. Costa Rica does business with many multi-national corporations that are based in the US. Their advice to multi-nationals is to abide by the customs laws and know them. There are fines and penalties associated with non-compliance.

Our next experience was briefings on soy and meat products. We were told that Costa Rica exports $28 million in meat products and imports $5-$6 million. Cattle is raised in the northern region of the country, but this has diminished over the past few years. The slaughter of cattle is referred to as "sacrificing" in Costa Rica. They reported that last year 45,000 heads were sacrificed as compared to 300,000 heads in 1995. Forty two percent of the meat goes to the US and the remaining 48% is used in Central America.

Soy is a very big business for Costa Rica. Covac Company was the only company providing soy products in the 1980s. Now there are a variety of producers and soy is used to make sausage, bacon, and many other products. Costa Rica has undertaken a great crusade to educate their market about soy products. Soy milk and soy drinks are very popular. The US is embarking upon the same educational journey. Starbucks uses Silk soy milk in their drinks and more and more soy products are being seen in US grocery stores.

We then headed to CoopendIa, an ornamental plant facility. This is a coop between Purdue University and private enterprise. Their focus is on the eradication of pests and bacterial influence on plants. They have pursued this focus because Costa Rica is the largest importer to the US of ornamental plants and they are also unintentionally the largest importer of pests. Because there are so many pests in the soil, plants are only allowed to be imported in saw dust.

Finally, we ended our day at Pipaso, a poultry producer. In addition to exporting fresh chicken to McDonald's, Burger King and Kentucky Fried Chicken, they also provide cat and dog food and animal feed. To produce the pet food and animal feed they use large quantities of grain and corn. There was obvious interest between the delegates from Indiana involved in grain and corn production and the executives from Pipaso.

Costa Rica: Day Two

We concluded our time in Guatemala by visiting what they call Hypermarkets. These are very similar to our stores like Meijer and Wal-Mart. In fact the 6 Hypermarkets in the region are all owned by Wal-Mart. The brands we saw in the stores were known to us all. Our delegates from Red Gold and Clabber Girl saw their products on the shelves and we even saw some chocolate from Hammond, Indiana. There are some things that are different. For example, we learned that a large percent of their population is lactose intolerant, so their children drink soy or corn milk products instead of dairy. They mix the drinks from a powder. This is also much cheaper than cows' milk.

In contrast to the Hypermarkets we visited a Supermarket. In Guatemala these are very high-end food stores that stock gourmet items that are imported from Europe and elsewhere across the globe. This really highlighted the divide between the income levels in Guatemala. Only the most wealthy individuals in the country would be able to afford to shop in the Supermarket.

We set off from here to the airport and landed soon after in Costa Rica. It is beautiful, green and very mountainous.

Our first stop was for a briefing at the embassy. We heard from Mark Langdale who is from Texas. He gave us a good overview of the country and its economic situation. Also present were representatives from political, economic, public, and foreign affairs, as well as a representative from the foreign commercial services.

They told us about the many challenges faced by Costa Rica. Among them are a very high inflation rate (14%), a large national debt, very inefficient monopolies among key utilities like telecommunications and electricity, a troubling tax system, and a very uncertain investment climate. But, on the positive side, Costa Rica is flourishing as a vacation destination, their gross domestic product is growing, and they expect that CAFTA will contribute to future growth and development.

Costa Rica is also very proud of the fact that they have been a democracy since 1948 and have invested in education and health care. This investment has resulted in a 92% literacy rate and a national health care system that provides care for its citizens.

The country has a presidential election planned for February 5, 2006. They are expecting voter turnout to be in the neighborhood of 70%-80% which is much higher than what we see in the US.

Our day ended at the home of Brad Corbett, a business associate and friend of Congressman Dan Burton. Mr. Corbett was very appreciative of Congressman Burton's efforts to support trade between the US and Costa Rica. We spent the evening enjoying a relaxing dinner at the Corbett home and mingling with the other guests that Mr. Corbett had invited.

Guatemala: Day One

We arrived on Sunday and toured the city and took some time to get to know one another better. Our real mission would begin the next day as we began our meetings with the counselors and directors of the Guatemalan political, economic, and agricultural organizations.

Our first stop was the embassy briefing where we were introduced to the Deputy Chief of Mission, the director for the US Agency of International Development, the Political Counselor, and the Economic Counselor. We learned that Guatemala is very pro-American and views their biggest competitor as China. They stressed that the close proximity to the US should be viewed as an advantage as a trade partner over China.

They believe that CAFTA, the free trade agreement recently ratified by the US Congress, will greatly enhance the trade relationships between the US and Guatemala. Additionally, they look to the US as a model for democracy and appreciate our guidance as they work to better establish their own democratic society.

Our next stop was to meet with representatives from the American Chamber of Commerce. We talked to individuals from the agriculture department and the customs department about legal and tax issues. We learned about an organization called Agextront that was established in 1982 that promotes agri-trade for non-traditional products. They consider non-traditional products to be things like tropical fruits, flowers, handicrafts, and textiles. These non-traditional products account for 60% of the trade or exporting from Guatemala. The organization has 5 goals:

1. To improve their country's infrastructure by focusing on interest rates and labor laws.
2. To implement CAFTA.
3. To reduce poverty.
4. To participate in globalization (Wal-Mart now owns 60% of their grocery stores).
5. To increase food safety.

At lunch we met with the Guatemalan Association of Food Product Producers. We discussed the synergies between our two countries and industries we share. We then broke into small groups of 2 to 3 people and talked about very focused topics. I met with individuals who represented entrepreneurs who want to establish investments in Guatemala. We talked about the economic stability of the country and the opportunities available. I was surprised to learn that Guatemala provides 40% of the coffee used by Starbucks. Additionally, they provide the top selling drink in Japan, called Rainbow Mountain. Their tourism industry has grown significantly over the past several years mostly due to an increase of flights into the country. They now host 1.3 million tourists each year and this is continuing to grow.

Our final destination for the day was a Friends of Indiana reception at the Guatemalan Government Ambassador's residence. I ended the day thinking that Guatemala has a lot to accomplish, but they know exactly what they need to do to get there.