Lawmakers ask Obama to put off Panama trade deal

The administration should not send a Panama free trade agreement to Congress until the Central American country takes steps to end its status as a haven for offshore tax evasion, two Democrats wrote President Barack Obama on Wednesday.

In a time of economic distress, wrote Sen. Carl Levin of Michigan and Lloyd Doggett of Texas, "we can no longer afford to ignore the billions of dollars of tax revenue lost to the U.S. Treasury due to the bank secrecy practices of Panama and other tax havens."

If the United States implements a free trade accord without addressing the tax haven issue, "we will never secure Panama's assistance in preventing tax evasion."

Doggett is a member of the House Ways and Means trade subcommittee that oversees trade policy. Levin, chairman of the Senate Armed Services Committee, is one of the Senate's most senior Democrats.

There are currently three bilateral trade agreements negotiated by the Bush administration but still awaiting congressional action - with Panama, Colombia and South Korea.

The Panama deal has been regarded as the one having the best chance of getting through Congress, where many Democrats see free trade agreements as harmful to labor rights and the environment.

U.S. Trade Representative Ron Kirk, in prepared remarks for a speech to the U.S. Chamber of Commerce on Monday, said his office has been working with the Panamanian government to resolve outstanding issues so the agreement can be sent to Congress. "We have had very productive discussions on both labor and international tax issues and our efforts are continuing," he said.

Doggett and Levin cited a lack of progress in negotiations, ongoing since 2002, to reach a tax information exchange agreement with Panama.