The Seattle Times notes:
PANAMA is a country primarily known for three things: a canal, cool hats and money laundering. In fact, you can float right through the middle of the country, sporting a stylish straw hat, and nobody ever has to know who paid for the trip, or the hat.
Panama's "comparative advantage" is tax evasion. The more money multinational companies shift to hokey Panamanian subsidiaries, the fewer taxes they owe in the U.S. And secrecy in the Panamanian banking sector secures foreign investment of another sort. The U.S. State Department and the Drug Enforcement Agency have identified Panama's financial sector as a primary repository and conduit for Colombian and Mexican narco-trafficking cartels.
And as they note:
There's nothing "free" about this type of trade except the license to cheat.
Which is why the US should not do a trade deal with Panama. As the authors say:
Any future deal with Panama must be conditioned on eliminating excessive banking secrecy, ceasing to accept illicit drug-cartel cash, re-regulating its financial sector, forcing banks and multinational subsidiaries to pay taxes, and signing international tax-transparency treaties. Panama should sign the U.S. Tax Information Exchange Agreement and the standard U.S. double taxation/fiscal evasion treaty before any consideration for an agreement.