WORLD TRADE
ORGANIZATIONG/SCM/N/74/PAN/1
4 January 2002
(02-0037)
Committee on Subsidies and
Countervailing MeasuresOriginal:  Spanish
SUBSIDIES
Requests Pursuant to Article 27.4 of the Agreement on Subsidies and
Countervailing Measures Requests Pursuant to the Procedure
Established in Document G/SCM/39
PANAMA
The following communication, dated 20 December 2001, has been received from the
Permanent Mission of Panama.
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I am contacting you on behalf of the Government of Panama in connection with the
instructions to the Committee on Subsidies and Count ervailing Measures issued by the Ministers at
the Fourth Ministerial Conference to grant an extension for certain export subsidy programmes
provided by a number of developing country Members in accordance with the procedures set forth in
Article 27 of the Agreement on Subsidies and Countervailing Measures (SCM Agreement).
In view of the rights granted under that Article, and taking account of paragraph 1(a) of
document G/SCM/39, I have the pleasure to inform y ou that Panama wishes to initiate consultations
with the Committee to extend certain programmes that meet the requirements set forth in paragraph 2
of the same document.
The programmes for which Panama requests extensions under Article 27.4 of the SCM
Agreement in accordance with the procedure laid down in document G/SCM/39 are:
1. Official Industry Register
2. Export Processing Zones
These programmes were notified to the Committee in document G/SCM/N/71/PAN.  They
are essential to the country's economic growth and development objectives in the light of its
economic, financial and development needs.  They contribute to integrated development by
generating employment and foreign exchange, and to the country's integration in the global economy
by promoting exports of goods and services.  Furthermore, the amounts involved are small in relationto what is available to our main trading partners, and do not affect trade.
Panama meets the eligibility and other requirements for the granting of extensions for
programmes involving export subsidies as described above.G/SCM/N/74/PAN/1
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In conformity with the procedure established in paragraph 1(b) of document G/SCM/39,
Panama will provide, within the stipulated time-lim it, detailed information about the programmes for
which the extension is being sought.
This request is made without prejudice to such other rights as Panama may have under the
SCM Agreement or other Agreements.
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*     *
Pursuant to the Ministerial Decision on Implementation-Related Issues and Concerns and
with reference to document G/SCM/39, both adopte d by the Fourth WTO Ministerial Conference held
from 9 to 14 November 2001 in Doha, Qatar, the Government of Panama would like to make an
extension request under Article 27.4 of the Agreement on Subsidies and Countervailing Measures.
This request is made in the light of Panama's economic, financial and development needs.
The programmes for which the Government of Panama is seeking extension under
Article 27.4 of the SCM Agreement in conformity  with the procedure laid down in document
G/SCM/39 are the Official Industry Register and the Export Processing Zones.  These programmes
were notified to the Committee in document G/SCM/N/71/PAN.  In the hope that this request will be
given favourable consideration by the Committee on Subsidies and Countervailing Measures and
approved under Article 1(e) of document G/SC M/39, we provide herebelow a description of the
programmes concerned.
I. OFFICIAL INDUSTRY REGISTER
This programme establishes different categories of registration on the basis of which
enterprises may avail themselves of different incentives and benefits once they have entered theOfficial Industry Register.
The benefits granted under the programme are as follows:1. For enterprises wholly engaged in export production:
(a) Full exemption from taxes on introduction, contributions, levies and customs
duties and fees, along with the tax on the transfer of tangible property applied
to imports of machinery, equipment and spare parts used in the production
process, excluding construction materials, vehicles, furniture, office supplies
and any other inputs not used in the production process;
(b) full exemption from income tax on profits, with the exception of mining
industries or those using the country's natural resources;
(c) full exemption from export taxes;
(d) full exemption from sales tax;
(e) full exemption from production taxes;(f) full exemption from taxes on the enterprises' capital or assets, except licence
and immovable property taxes;G/SCM/N/74/PAN/1
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(g) creation of special funding programmes on a preferential basis compared to
what is normally available on the market.
2. For enterprises partially engaged in export production:
(a) Full exemption from income tax on profits obtained from production for
export, with the exception of mining industries or those using the country's
natural resources;
(b) full exemption from export taxes;(c) full exemption from export sales tax;(d) full exemption from export production tax;(e) creation of special funding programmes on a preferential basis compared to
what is normally available on the market;
(f) deduction from the taxable income of fixed costs such as interests,
depreciation and maintenance, provided total export sales do not exceed 20
per cent of the total value of sales.
The programme is covered by the following legislation:
- Law No. 28 of 20 June 1995 adopting measures for the universalization of tax
incentives to production and introducing other provisions;
- Law No. 3 of 20 March 1986 adopting a regime of incentives for the promotion and
development of the national industry and exports;
- Executive Decree No. 274 of 29 December 1995 regulating Law No. 28 of
20 June 1995 on the universalization of tax incentives to production and introducing
other provisions.
II. EXPORT PROCESSING ZONES
The Export Processing Zones are tax free, free-enterprise zones located within a specifically
defined area, intended for enterprises engaged in the production of goods and services for export.
These zones are free of national direct and indirect taxes, fees, contributions, duties and levies.
The programme is covered by the following legislation:
(a) Law No. 25 of 30 November 1992 establishing a special, integrated and simplified
regime for the establishment and operation of export processing zones;
(b) Executive Decree No. 28 of 19 May 1993 regulating Law No. 25 of
30 November 1992;
(c) Executive Decree No. 1-D of 28 January 1994 regulating Law No. 25 of
30 November 1992 with respect to the turnover of companies under the exportprocessing zones regime;G/SCM/N/74/PAN/1
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(d) Law No. 28 of 1 February 1996 cancelling special passports issued on the basis of
Law No. 25 of 1992 and introducing other provisions;
(e) Decree Law No. 3 of 7 January 1997 adding an Article to Law No. 25 of
30 November 1992 establishing a special, integrated and simplified regime for theestablishment and operation of export processing zones;
(f) Law No. 53 of 21 July 1998 amending Cabine t Decree No. 225 of 1969, creating the
Interior Vice-Ministry of Trade and Industry and the Vice-Ministry of Foreign Trade,
and introducing other provisions (Articles 5 and 6 of Law No. 25 of
30 November 1992 are repealed).
These programmes are essential to the country's economic growth and development
objectives in the light of its economic, financial and development needs. They contribute to integrated
development by generating employment and foreign exchange, and to the country's integration in the
global economy by promoting exports of goods and services.  Furthermore, the amounts involved are
small in relation to what is available to our main trading partners, and do not affect trade.
Panama meets the eligibility and other requirements for the granting of extensions to the
export subsidy programmes described above.
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