Panama is again being noticed in the international arena. Mercosur announced that Panama is joining the Southern Common Market as an associate member. The agreement was formally signed in December 2024 after both countries had approved the Economic Complementation Agreement.
Mercosur has finally chosen to bring one of the most strategically important countries in the Americas, Panama, into its economic and political fold. With free trade, nearshoring, and digitization being major geopolitical and business drivers, it is critical for Latin American economies to modernize their institutions and regulatory frameworks, creating more integration with neighbors and win-win solutions that will bring opportunities for growth. Mercosur believes that Panama joining the bloc as an associate member will contribute to consolidating and deepening Latin American and Caribbean integration.
Panama Joins Mercosur and Its Opportunities
Panama, a country whose geographic position gives it great logistical, economic, and diplomatic advantages, is part of many international organizations such as ALADI, the WTO, APEC, and the OECD. This is no longer an emerging or growth economy, but rather an economy with a history that could be considered solid.
How, then, can Panama’s joining Mercosur as an associate member benefit both Panama and Mercosur itself? By recognizing its purpose, it opens a real scenario of opportunities. The question then arises: What does Panama gain from being a member of Mercosur?
Mercosur in Numbers
Mercosur was established by Argentina, Brazil, Paraguay, and Uruguay in 1991, with the goal of advancing towards the free movement of goods, services, and production factors, having a common external tariff, and coordinating trade and foreign investment policy in the international arena.
If we treat Mercosur as a single economy, it is the fifth-largest economy in the world, with 290 million inhabitants. If Mercosur were a country, it would be in fourth place on the list of the most populous countries in the world, between the United States and China. Panama’s joining Mercosur gives it access to this demographic dividend.
Membership Status in Mercosur
Mercosur grants two levels of membership. Full membership has a commitment to community integration, while associate membership is able to sign trade agreements with Mercosur without necessarily committing to the whole program that full membership requires. Panama, joining Mercosur as an associate member, could be a good alternative to allow itself to grow and build momentum to meet full membership conditions in the future.
What Does Panama Gain by Joining Mercosur?
Panama provides Mercosur with several unique advantages. These include strategic geographic location, state-of-the-art logistical and infrastructural assets, international economic credibility, and respect for international standards of governance and transparency. In addition to positioning itself as a logistical axis between the two oceans, Panama also takes pride in being a financial hub, sometimes referred to as the “Singapore of the Americas,” and a dollarized economy that is very stable in the eyes of the investor community.
Minister of Commerce and Industries Julio Moltó, declared that “joining Mercosur will give us the necessary institutional support to modernize our productive matrix and better position Panama as a safe and competitive destination for foreign direct investment.”
When Panama joins Mercosur, an integrated and more diverse market awaits. An integrated Mercosur, with Peru, Colombia, Ecuador, and now Panama, offers a multitude of opportunities for cross-border trade, investment, and cooperation. For Panama, Mercosur is not just a market but a gateway to the broader South American region.
Panama and ALADI
Panama is an active member of the Committee of Representatives of the Latin American Integration Association (ALADI), and its relations with Mercosur are complemented by the goals set within this multilateral framework. María Fábrega, Vice President of the Committee of Representatives of ALADI, stated, “We have the challenge and the responsibility to strengthen our links, but not only as a logistical bridge. I want to be a digital bridge. I also want to be a financial bridge to move forward with infrastructure projects, productive chains, innovation, and mining. We have to look at these elements.”
What Are the Benefits of Mercosur for Panama?
The logic of Mercosur to accept Panama as an associate member, beyond the fact that it is looking to reenergize itself and internationalize more, is that it needs more connectivity. When Mercosur integrates Panama into its structure, it must first be aware that it is obtaining one of the most advanced economies in the region, and the most internationally respected, with a very large logistical, infrastructural, and diplomatic dimension.
On the other hand, although at the moment Mercosur does not directly open the doors to its market for Panama, with Panama joining Mercosur, these ties of international commerce can be seen as the basis for further trade agreements. An improved logistical and financial landscape that Panama offers can provide benefits not only to Mercosur but to the other two continents that trade with it—Europe and Asia.
The Regional Scope and Public Support in Panama
A recent study by the University of Panama confirms that most of the public is in favor of the country’s Mercosur membership, not just on the specific case of Mercosur, but on the overall economic integration agenda, and generally supports development policies focused on dialogue and the exchange of national and international trade.
A 70% approval for international integration, seen as an inherent Panamanian interest, consolidates itself as a strategic foreign policy that could be extended to many more countries. A development agenda with these approvals will have the institutional and political support to project a vision of national growth in time.
Integration is not only trade but the future of diplomacy. The next step for Panama with Mercosur would be to develop a diplomatic agenda focused on multilateralism, coordination, or just being able to act as a facilitator between two or more economic, social, cultural, or digital worlds.
Panama Joins Mercosur for Latin America’s Nearshoring
One of the great and valuable lessons of the last decade has been the great global value of resilience. With the new orders in trade and geopolitics, including de-globalization and self-sufficiency, coordination and convergence in Latin America represent a valuable asset and should represent a strategic consensus in the coming years.
Panama joining Mercosur, as well as ALADI as a trading bloc creates opportunities and an international presence. However, it is necessary for the Central American nation to connect more extensively in many more sectors.
The World We Are Gearing Up For
We cannot deny the scale and velocity of the fourth industrial revolution. We cannot avoid the new globalizations, the new micro-globalizations that are beginning to form at the regional level and that are complemented by the development of e-commerce. Because digitization is a geopolitical and business issue, and integration is a driver in trade, production, logistics, transport, and commerce.
The different approaches taken to open economies, production chains, e-commerce, energy, and digital data transmission are all experiences of new geoeconomics that are consolidating and that will be at the center of Mercosur, or its main members, and Panama in the coming years.
Mercosur as a Regional Headquarters
Panama is already advancing as a crossroads and a trade hub, not only geographically but also as a point of economic interchange or coordination. If the central image of globalization, in the midst of de-globalization, is the platform or the headquarters in which the value is placed, then Mercosur and other regional initiatives, such as ALADI, represent an opportunity that we must manage and develop.
Mercosur with Panama as an associate member and its proposed set of principles and agreements can be used to promote greater trade facilitation and complementation in the nearshoring scheme that Mercosur economies are working on. A nearshoring scheme that is not only a geopolitical and business issue, but one that is also in demand among Latin Americans, where the concept of closer neighbors and different markets opens up new opportunities.
Mercosur is Ready for the New World and It’s Digital
Digital trade is one of the great beneficiaries of the Mercosur-Panama agreement. In Mercosur, or its prominent members, we must have a coordinated strategy to achieve new business arrangements in the exchange of commerce.
As physical, maritime, road, and air trade, logistics, and traffic are advancing, cross-border electronic-commerce platforms or infrastructure, regulations, logistics coordination, standards, taxation, electronic certification, digital identities, fast payments, and many other experiences and technologies, in which digitization is increasingly adding value in a changing international environment, a productive sector becomes a geopolitical driver in production and trade.
Panama Joins Mercosur, Mercosur, and the Region Benefit
Mercosur could play a much more strategic role in mediating Latin American integration. And what for? For that difference. As many geopolitical and business experts know, and as Panamanian entrepreneurs know, Panama joining Mercosur and Mercosur can and must play a strategic role in the present and the future as a virtual, geopolitical, and business framework and be a bridge in the business world, not only geographically between Asia, Europe, and Latin America.
In short, when Panama joins Mercosur as a full member, it will begin a process that is already underway. It is necessary to connect more closely, more extensively, and more electronically, across many more sectors.