Panama Trade Deal Approved By Congress

House Approves Controversial Trade Deal

WASHINGTON -- Congress voted to approve a free trade agreement with Panama, a country of less than 4 million that still carries economic weight because of the Panama Canal.

The vote on Panama came after Congress approved a similar free trade agreement with Colombia and before a vote on a South Korea trade pact.

The United States last year exported $6 billion worth of goods to Panama and has minimal imports from that country. But the trade deal will make it easier for U.S. companies to compete for contracts in Panama's $5.25 billion expansion of the canal.

The agreement also strengthens banking transparency in Panama, which has been known as a tax haven.

As HuffPost's Zach Carter reported, Panama has "some of the most stringent bank secrecy laws in the world, making it extremely easy and inexpensive for U.S. citizens to set up offshore corporations and bank accounts. Establishing the corporation and bank account costs less than $2,000, and any money that Americans stash in these entities is not taxed.

Bank secrecy laws and extremely lax corporate registration standards make it very difficult for the Internal Revenue Service to track transactions transferring funds to these Panamanian destinations from the United States. Small surprise, then, that Panama is home to nearly 400,000 offshore corporations, more than any other nation except Hong Kong."

Watch Carter discuss the deal on MSNBC's The Dylan Ratigan Show:

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