RESTRICTED
WORLD TRADE WT/SPEC/33/Rev.3
6August 1996
ORGANIZATION(96-3134)
WORKING PARTY ONTHE ACCESSION OFTHE REPUBLIC OFPANAMA
TOTHE WORLD TRADE ORGANIZATION
DRAFT REPORT
1. Atitsmeeting on8October 1991, theCouncil ofRepresentatives established aWorking Party
toexamine theapplication oftheGovernment ofPanama toaccede totheGeneral Agreement pursuant
toArticle XXXIII, andtosubmit totheCouncil recommendations which might include adraftProtocol
ofAccession. On19December 1995, theGovernment ofPanama advised thatithaddecided tonegotiate
theterms ofaccession ofPanama totheAgreement Establishing theWorld Trade Organization
(hereinafter referred toasthe"WTO Agreement") under Article XIIoftheAgreement. Pursuant to
thedecision oftheGeneral Council of31January 1995, theWorking Party ontheAccession ofPanama
totheGATT 1947 continued asaWTO Accession Working Party.
2. TheWorking Party meton20April 1994, 7February and10July1995, 5March and
[19September] 1996. TheChairman oftheWorking Party isH.E.Mr.E.Tironi (Chile). Theterms
ofreference oftheWorking Party were setoutindocument WT/L/37.
3. TheWorking Party hadbefore it,toserve asabasis foritsdiscussions, aMemorandum on
theForeign Trade Régime ofPanama (document L/7228, andAdd.1), andthequestions submitted
byMembers ontheForeign Trade Régime ofPanama together withthereplies ofthePanamanian
Government thereto (documents L/7426 andAdd.1-2, L/7624, WT/ACC/PAN/5) Inaddition, the
representative ofPanama made available thefollowing documents:
TheConstitution oftheRepublic ofPanama;
TheImport Tariff; atableofPanama 'stariff structure correlating theHarmonized System withthe
CCCN (Customs Cooperation Council Nomenclature); atableofthenewtariff asat31May1994;
Cabinet Decree No.20of26July1995 Amending theImport Tariff; Official Journal No.22706 of
19January 1995 containing Cabinet Decree No.2of10January 1995 Amending theImport Tariff;
Cabinet Decree No.23(2October 1995) Amending theImport Tariff; andCabinet Decree No.24
(12October 1995) Amending theImport Tariff andEnacting Other Measures;WT/SPEC/33/Rev.3
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TheFiscal Code ofPanama, andasummary oftheDraft Lawamending certain articles oftheFiscal
Code andeliminating theConsular Invoice;
Decree No.33of3May1985containing regulations under Chapter IVofBook I,TitleIoftheFiscal
Code, onpublic tendering, competitions, price requests andcontracts withtheGovernment;
Preliminary draftlawsetting outmeasures covering theregulation ofandprocedures forimport licences,
andasummary oftheDraft LawonRegulation ofImport Licensing Procedures;
LawNo.36of1July1995amending provisions oftheTaxCode relating tothedocuments thatmust
accompany goods imported intoPanama, customs services feesandtheelimination oftheconsular
invoice;
Draft Cabinet Decree establishing thesystem ofvaluation ofgoods forcustoms purposes;
Summary oftheDraft Cabinet Decree onValuation Procedures forCustoms Purposes;
TheDraft LawonValuation;
Preliminary draftlawonprotection ofanimal health; acopy ofthepreliminary draftlawonplant
health; asummary oftheDraft LawonPhytosanitary Measures, acopyoftheDraft LawEstablishing
Sanitary Measures forthePurpose ofImproving theHealth Conditions ofAnimals, Humans andthe
Environment andBestowing Special Powers ontheMinistry ofAgricultural Development; asummary
oftheDraftLawonZoosanitaryMeasures;andaDraftLawEnactingPhytosanitaryProtectionMeasures
andAdopting Other Provisions;
AlistofSanitary Requirements forAgricultural Products, indocument WT/ACC/PAN/17;
Decree No.3of5April 1978creating theNational SeedCommittee, regulating production, processing
andmarketing ofseeds;
Information concerning therégime ontechnical barriers totrade;
LawNo.28of20June1995ontheUniversalization ofTaxIncentives toProduction, andasummary
ofthatlaw;
Informal communication ondomestic support andexport subsidies inconformity withtheAgreement
onAgriculture; anddetails ofthesupports andincentives available totheAgricultural Sector inPanama
indocument WT/ACC/PAN/7/Add.1, together withanAgriculture country schedule;
LawonDefenceofCompetition,containingprovisionsgoverninganti-dumping,countervailingmeasures
andsafeguards, andabolishing price controls, andasummary ofthatDraft Law. Information on
IndustrialSubsidies(documentWT/ACC/PAN/7),InformationonFiscalExemptionsGrantedtoIndustry
totheWorking Party (document WT/ACC/PAN/7/Add.1);
Draft LawNo.92,abrogating thewhole ofTitleVIandTitleXXIofBook IVoftheTaxCode and
Cabinet Decrees No.35of12February 1970 andNo.22of1February 1972 andother provisions,
andestablishing theSelective Consumption TaxonAerated andAlcoholic Beverages andCigarettes;
LawNo.41of13July1995Approving theParisConvention fortheProtection ofIndustrial Property,
of20March 1883, asrevised atBrussels on14December 1900, atWashington on2June1911, atWT/SPEC/33/Rev.3
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TheHague on6November 1925, atLondon on2June1934, atLisbon on31October 1958 andat
Stockholm on14July1967;
LawNo.35of10May1996 onIndustrial Property andanindex ofitsprovisions indocument
WT/ACC/PAN/9;
Information ontheremedies available toenforce intellectual property rights inPanama (documents
WT/ACC/PAN/5 and8);
LawNo.15of1994 approving theLawonCopyright andNeighbouring Rights;
Cabinet Decree No.238of2July1970reforming theBanking Regulations andcreating theNational
Banking Commission; and
Laws 55and56of20December 1984 regulating theconduct ofinsurance andreinsurance business.
Therepresentative ofPanama alsosubmitted thetextofthefollowing Agreements:
Agreement between Panama andtheUnited States ofAmerica;
Agreement onFreeandPreferential Trade withCosta Rica;
Agreement onFreeandPreferential Trade withGuatemala;
Agreement onFreeandPreferential Trade withElSalvador;
Agreement onFreeandPreferential Trade withNicaragua ;
Agreement onFreeandPreferential Trade withHonduras;
Agreement onFreeandPreferential Trade withtheDominican Republic;
Partial-Scope Agreement withtheUnited Mexican States within theFramework oftheLatin American
Integration Association (LAIA);
Caribbean Basin Initiative;
Enterprise fortheAmericas Initiative;
Trade Agreement between theGovernment oftheRepublic ofPanama andtheGovernment oftheUnion
oftheSoviet Socialist Republics (now theCommonwealth ofIndependent States, CIS);
Trade Agreement between thePeople 'sRepublic ofBulgaria andtheRepublic ofPanama;
Trade Agreement between theRepublic ofPanama andthePeople 'sRepublic ofHungary;
Trade Agreement between theGovernment oftheRepublic ofPanama andtheGovernment ofthe
People 'sRepublic ofPoland; and
Trade Agreement between theGovernment oftheRepublic ofPanama andtheGovernment ofRomania.WT/SPEC/33/Rev.3
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General Statements
4. Inhisstatements therepresentative ofPanama stated thatPanama wascommitted tobeing an
active participant andcontributor inthefamily ofnations involved ininternational trade. The
Government hadspared noeffort inpromoting thedevelopment ofthecountry through aprocess of
socio-economic transformations. These transformations required anumber ofeconomic adjustments
aimed atmaking theeconomy more openandefficient, aswellasthealleviation ofpoverty andthe
modernization ofthePanamanian State institutions. HisGovernment hadrealized thattheopening
upofmarkets andtheglobalization ofthePanamanian economy represented theonlyviable wayof
modernizing thecountry. Fortunately, thetransformation oftheeconomy wasbecoming aconcrete
reality. Panama hadtaken anumber ofdifficult decisions, andwasready tocarry outdifficult reforms
inspiteoftheireconomic andpolitical impact which would obviously affect theproductive branches
oftheeconomy aswellasthesocial sector. Draft lawsaimed atdeveloping afreemarket economy
infullconformity withWTO obligations hadbeenprepared inresponse totheviews expressed by
members, andhadbeensubmitted totheWorking Party. Thedrafts included legislation withrespect
totheapplicationofimportsurcharges,theeliminationofconsularinvoices,licensing,customsvaluation,
unfairinternationalcompetition,suchasanti-dumpingandcountervailingmeasures,safeguards,legislation
eliminating thesystem ofprice regulation andexport subsidies. Inaddition, draft lawsregulating
phytosanitary andzoosanitary measures andbringing theentire body ofdomestic legislation intoline
withtheAgreement ontheApplication ofSanitary andPhytosanitary Measures hadalsobeensubmitted.
HisGovernment wasready todoitsutmost toensure thesmooth andrapid accession ofPanama to
theWorld Trade Organization.
5. Intheirgeneral remarks, members oftheWorking Party welcomed Panama 'sinitial application
foraccession totheGeneral Agreement, andlateronPanama 'srequest foraccession totheWTO.
Members noted thatPanama hadundertaken asubstantial process ofeconomic andtradeliberalisation
aimed atimproving thestandard ofliving ofthepopulation, increasing employment opportunities and
achieving diversification oftheproductive sectors. Although Panama hadmade significant progress
inreforming theeconomy andtheforeign traderégime, further work wasnecessary tobring Panama 's
traderégime intoconformity withWTO obligations. Recalling thenegative costsofprotection, some
members stressed thatpursuing liberalization would beofeconomic benefit toPanama 'sfuture economic
growth anddevelopment andtothewellbeing ofitsconsumers. These members alsoexpressed support
foranearlyconclusion oftheproceedings oftheWorking Party. Some members recalled theirstrong
regional tieswithPanama andwelcomed Panama 'slonglasting andearnest decision tobefullyintegrated
intothemultilateral trading system. Recalling therecent comprehensive economic reforms introducedWT/SPEC/33/Rev.3
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byPanama, some members stressed thatthiswould facilitate theassumption ofWTO obligations.
Some members oftheWorking Party notified theintention toenter intobilateral market access
negotiations withPanama. Withreference tothepossible membership ofPanama intheWorld Trade
Organization, some members stressed theneedforcomprehensive information concerning theWTO
related issues andfortheearly commencement ofnegotiations concerning market access ongoods
including agriculture aswellasservices andTRIPS, etc.Theinformation submitted byPanama in
thisrespect isdescribed hereunder inthecorresponding sections ofthisreport.
Foreign Trade Régime
6. TheWorking Party reviewed theforeign trade régime ofPanama andthepossible terms of
adraftdecision andProtocol ofAccession totheWTO. Theviews expressed bythemembers ofthe
Working Party aresummarized below inparagraphs 7to115.
Economic Policies
7. Therepresentative ofPanama informed theWorking Party thathiscountry hasnoCentral Bank
andnorestrictions onthemovements ofcapitals. TheUnited States dollar together withthenational
currency, theBalboa, areoflegal tender intheRepublic ofPanama byvirtue ofa1904 monetary
agreement between thetwocountries. Healsostated thatPanama isamember oftheInternational
Monetary Fund since 1946. Regarding fiscal policies hestated thattheywere based onthree main
objectives: reduction ofgovernment expenses, through modernization ofpublic institutions and
privatization ofpublic enterprises; restructuring andamortization ofpublic debt; andmore equitative
andefficient taxcollection.
Price controls
8. Inresponse tomembers 'questions concerning theGovernment 'sauthority toimpose price
controls withregard tosome 361products which, interalia,included vitamins, medicines andfood
products, including poultry, apples andgrape juice, certain cereals, certain vegetable oilsetc.,the
representative ofPanama explained thattheprices ofasubstantial number ofproducts classified as
essential hadpreviously beensubject togovernment control. Panama supplied alist,byHStariffline,
ofallimports currently subject topricecontrols. Steps toeliminate thesecontrols hadbeenundertaken.
In1989 174products and2types ofservices hadbeensubject tocontrol; bytheendof1995 price
controls hadbeenreduced to36products and2types ofservices. These arelisted inAnnex 1.PanamaWT/SPEC/33/Rev.3
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providedinformationconcerningtheoperationsoftheOfficeofPriceRegulationwhichwassubsequently
replaced bytheOffice ofConsumer Protection. Theprices ofthecovered products hadbeenfixed
onthebasis ofanapplication fromtheproducer ordistributor ofthegoodorservice. Price controls,
when applied toimported products areequally applied todomestic products. However, insome cases,
price controls applied todomestic products arenotalways applied toimported products.
9. Therepresentative ofPanama supplied thetextoftheLawonDefence ofCompetition tothe
Working Party. Hestated thattheLawonDefence ofCompetition, enacted asLawNo.29of
1February 1996, provided fortheabolition ofmostoftheremaining pricecontrols. Therepresentative
ofPanama stated thatthelawdidnotcompletely eliminate allprice controls. During atransitional
period offiveyears, from1996toFebruary 2001, theGovernment could regulate, onthesame basis,
theprices ofdomestic andimported products which were subject toanimport tariff ofgreater than
40percent,oriftheGovernment otherwise hadcause tobelieve thatadistributor ormarketer ofthe
product wasengaging inanti-competitive behaviour constituting athreat toconsumers andtofreetrade.
Attheendofthatfiveyeartransitional period, theprovision permitting theGovernment toimpose
price controls would expire. Therepresentative ofPanama saidthattheGovernment ofPanama is
trying toconvert itseconomy intoamarket economy. Inorder todothat,reforms willtakeplace
during atransitional period inwhich theeconomy willnotbecentrally planned noramarket economy,
requiring theGovernment tointervene onbehalf oftheconsumer, every timeanti-competitive behaviour
arises fromthepossible distortions tothemarket economy. Thismight bethecasefordomestic goods
when theyareshielded from foreign competition through import tariffs equal orabove 40percent.
Some members noted thattheeffect ofArticle IIIoftheGATT 1994 wastooblige WTO Members
toapply price controls strictly inconformity withnational treatment obligations andtobemindful of
theneedtotakeintoaccount theinterests ofexporting Members. Some members oftheWorking Party
saidthatprice controls could prejudice theinterests ofmembers supplying imported products. The
representative ofPanama stated thatnolegislation inforce norplanned legislation contravened the
obligations contained inArticle IIIoftheGATT 1994.
10. Therepresentative ofPanama confirmed thatpricecontrols onproducts andservices inPanama
havebeeneliminated withtheexception ofthose listed inAnnex 1andcommits thatthese controls,
andanythatareintroduced orreintroduced inthefuture, would beapplied inamanner consistent
withtherequirements oftheWTO Agreement, inparticular Article III.9oftheGATT 1994. The
Working Party tooknoteofthiscommitment.WT/SPEC/33/Rev.3
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Framework ofForeign Trade Policies
11. Therepresentative ofPanama explained thatregarding foreign trade, thepolitical Constitution
oftheRepublic ofPanama empowered theExecutive Branch oftheGovernment toconduct allforeign
relations oftheRepublic including trade matters. Asforimport tariff policies, theConstitution
establishes thatboththeExecutive andtheLegislative Branches areresponsible. TheJudicial Branch
isempowered toreview under theConstitution andtheLawalladministrative actsoftheExecutive
Branch, andanyperson affected bytheadministrative actisentitled tothisrecourse. TheJudicial
Branch isalsoempowered toreview theconstitutionality ofanylawadopted bytheLegislative Branch
andanycitizen orresident oftheRepublic isentitled tothisrecourse.
Tariff nomenclature
12. Members oftheWorking Party enquired whether Panama applied theHarmonised System of
import classification. Therepresentative ofPanama stated thaton15July1994theHarmonized System
hadbeen fully implemented inPanama, andprovided theWorking Party withacopy ofthenew
Harmonized Tariff.
Tariff régime
13. Members oftheWorking Party sought information fromPanama onthetariffrégime asabasis
forsubsequent tariff negotiations. Some members oftheWorking Party noted thatsince 1986 in
pursuance ofLawNo.3,Panama hadputintoeffect atariffreduction programme which hadreduced
ceiling dutyratesto60percentforindustrial products and90percentforagro-industrial products.
Nonetheless, forsome 48tariff headings suchaslentils, rice,pork, tomato juice, etc.import duties
were equal toorhigher than90percent. These members asked Panama toupdate theinformation
onthereduction ofratesofduty. Noting thattheauthority oftheExecutive toalterduties, customs
feesandother trade measures havebeenchallenged inthecourts, theyrequested information onthe
status ofthischallenge. These members stressed moreover thatthePanamanian Executive would be
expected toundertake toexercise thisauthority inconformity withWTO conditions. Inaddition,
some members noted thatsome 20percentofPanama 'simports wereexempted fromduties asinputs
todomestic production andenquired whether Panama would maintain suchprogrammes ineffect after
accession totheWTO. Inresponse, therepresentative ofPanama stated that,regarding theExecutive 's
authority toalterduties, thePanamanian Supreme Court ofJustice upheld theauthority oftheExecutive
toaltertariffs, andasfortheexceptions ofduties forinputs, Panama notonlywould maintain thisWT/SPEC/33/Rev.3
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programme, buthasrecently approved LawNo.28of1995, thatwould allow allproducers toimport
theirinputs withaspecial tariff rateof3percentadvalorem, ifthose inputs arenotproduced inthe
country. Theprogramme isapplied toimports ofallcountries. Panama made itscustoms tariff, as
wellasallsubsequent revisions, available tomembers oftheWorking Party. Inresponse tostatements
thatthetariffsystem lacked transparency, therepresentative ofPanama responded thatthesystem was
similar tothatapplied bycertain WTO Members, butthatPanama waswilling todiscuss anysuggestions
forfuture reform ofthetariff.
14. Inreply toquestions frommembers oftheWorking Party, therepresentative ofPanama stated
thatPanama applied amixed (both specific andadvalorem) tariff system. Themixed tariffs were
composed oftwodifferent types oftariff, onespecific andoneadvalorem. Thespecific tariffincluded
anamount which represented anadditional surcharge calculated asapercentage ofthevalue ofthe
merchandise. Once theamount oftheadvalorem andthespecific tariff(including itssurcharge) were
calculated, therateapplied wasthetariffthatproduced thehigher amount oftax.Some members stated
thattheyconsidered thattheamount ofthesurcharge onthespecific rateofduty(which was2.5,3.5
or7.5percent,depending ontheproduct), washighanddidnotseemcompatible withtheGATT 1994.
Therepresentative ofPanama stated thattheamount ofthesurcharge formed partoftheimport tariff.
HisGovernment hadnointention ofremoving thesurcharge, which hadbeendeveloped tofundasocial
housing programme.
15. Inaccordance withusual procedures, Panama entered intobilateral market access negotiations
ongoods withinterested WTO members. Inresponse toquestions about howPanama intended to
bindmixed duties which required choosing fromtwodutycalculations andapplying whichever amount
washigher, therepresentative ofPanama initially stated thatPanama reserved theright tobind, in
themarket access schedule ongoods, anyofthetypes ofduties ineffect which hadbeennegotiated
withWTO members consistently withtheGATT 1994. Later onhesaidthatPanama would incorporate
surcharges andbindimport duties atsingle advalorem rates. TheSchedule ofmarket access concessions
ongoods which reflects theresult ofthose negotiations isreproduced inPartIoftheAnnex toPanama 's
Protocol ofAccession totheWTO.
16. Therepresentative ofPanama stated thatPanama would bindallduties andcharges, other than
theordinary customs duties, listed initsgoods schedule annexed toitsProtocol ofAccession under
Article II.1(b) oftheGATT 1994, atzeroonallproducts. TheWorking Party tooknoteofthis
commitment.WT/SPEC/33/Rev.3
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Other FeesandCharges forServices Rendered
17. TherepresentativeofPanamainformedmembersoftheWorkingPartythatinadditiontocustoms
duty, several other charges wereimposed. Stamp duties andfeesrelated totheprocessing ofimport
documents consisted of:(i)astamp dutyoneachpackage, twocents (0.02 cts.)perpackage; (ii)a
peace andsocial security stamp, twenty cents (0.20 cts.)oneachcustoms declaration-assessment
document; and,(iii)arevenue stamp, onedollar percopy ofthecustoms declaration-assessment
document. Inaddition, aConsular Administrative Costs Fee(TCAC) wasapplied. Therepresentative
ofPanama stated thatthetwocentsstamp dutyoneachpackage andthe20centspeace andsocial security
stamp were eliminated byLawNo.36of1995.
18. Therepresentative ofPanama noted thatinaddition tothecharges specified inthepreceding
paragraph, imports ofspirits andtobacco were subject tothefollowing taxes:
(a) Stamp dutyfortheanti-tuberculosis campaign; 0.06cts. to0.21cts.perlitre
(b) Domestic consumption stamps: these stamp duties were levied according totheamount of
contents ofthebottle orcontainer (beer andsome wines areexempted).
- containers withacapacity ofnotmore than
100c.c.; stamp dutyof20cents (0.20 cts.)
- containers withacapacity ofmore than
100c.c.butnotmore than900c.c.; stamp dutyof2.50dollars ($2.50)
- containers withacapacity ofmore than
900c.c.butnotmore than1,800 c.c.; stamp dutyof3.50dollars ($3.50)
- containers withacapacity ofmore than
1,800 c.c.; stamp dutyof4.50dollars ($4.50)
19. Inconnection withthestamp duty,somemembers considered thatcertain provisions concerning
itsapplication toliquors andcigarettes were discriminatory andcontrary tothenational treatment
provision oftheWTO, interalia,Article IIIofGATT 1994. Inresponse, therepresentative ofPanama
stated thatthestamp dutyfortheanti-tuberculosis campaign andthedomestic consumption stamps
applied tospirits andtobacco hadbeeneliminated byLawNo.45of1995.
20. InresponsetoquestionsfromsomemembersoftheWorkingParty,therepresentativeofPanama
stated thatallimporters ofgoods toPanama wererequired tosubmit a"consular invoice" when clearingWT/SPEC/33/Rev.3
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thegoods. Theconsular invoice wasadocument prepared bythePanamanian Consulate inthecountry
ofexport. Thepurpose oftherequirement foraconsular invoice wastocertify theveracity ofthe
commercial invoices andthedescription ofthegoods tobeimported. Inaddition, theconsular officials
converted thevalue ofthegoods inthecurrency ofexport intoPanamanian currency. Iftheconsular
officers determined thatthevalue recorded ontheinvoice wasnotconsistent withthecurrently prevailing
price forthegoods intheexporting country, thecurrently prevailing price inthecountry ofexport
would besubstituted.
21. Therepresentative ofPanama stated thata"consular administrative fee"wasalsopayable,
which varied depending onthef.o.b. value ofthegoods. Heprovided theWorking Party withdetails
oftheamount ofthatfee. Inresponse toquestions concerning thecompatibility oftheconsular
administrative feewiththerequirements ofArticle VIII, therepresentative ofPanama stated thatit
considered thatthefeerepresented thecostoftheservice provided bytheGovernment ofPanama.
Following further questions andcomments from members oftheWorking Party concerning the
compatibility oftheconsular administrative feewiththerequirements ofArticle VIII,therepresentative
ofPanama stated thattherequirement ofconsular approval intheexporting country offorms and
documentation required forimportation ofgoods andthecorresponding feehadbeeneliminated by
LawNo.36of6July1995.
22. Therepresentative ofPanama confirmed thatPanama hadabolished consular feesandinvoices
anddocument certification requirements, asprovided forinLawno.36of6July1995, andwould
notreintroduce them. TheWorking Party tooknoteofthiscommitment.
23. Therepresentative ofPanama alsostated thatpriortoaccession thecustoms service feeof$70
fortransactions over$2000 would replace other customs feesandcharges forservices rendered and
would betheonlycustoms charges other thanthecustoms dutyapplied toimports andwould notbe
included inthebaseforcalculation ofthecustoms duty. Headded thatfrom thedateofaccession
anyapplication offeesandcharges byPanama forservices rendered forimports orexports would
beinaccordance withtherelevant provisions oftheWTO Agreements, inparticular, Articles VIII
andXofGATT 1994. TheWorking Party tooknoteofthese commitments.
Application ofInternal Taxes
24. Attherequest ofsome members oftheWorking Party, therepresentative ofPanama also
provided details ofthe"ITBM" tax.Thattaxapplied tothetransfer oftangible property inPanamaWT/SPEC/33/Rev.3
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bysale,exchange, payment, contribution, assignment oranyother act,contract oragreement which
involved thetransferring oftitleinthegoods, regardless oftheirorigin, i.e.,italsoapplied todomestic
goods. Inthecaseofsales, thetaxwaspayable atthemoment when theseller issued theinvoice,
evenifdelivery occurred later. Hestated thatinthecaseofimports, Article 1057(v) oftheFiscal
Code provided thatthetaxable baseofthetaxwasthec.i.f. value plusallthetaxes, charges, levies,
andcustoms duties thatapply totheimported goods. Ifthec.i.f. value wasnotknown, thevalue was
determined byadding 15percenttothef.o.b. value. TheITBM taxonthetransfer ofpersonal property
wasalsocollected ondomestic products. Thetransfer ofproperty taxwasapplied toallimports when
theyentered thePanamanian customs territory. Since itwasataxonvalue added, oncetheimporter
soldtheproduct, theimporter collected 5percent(5%) oftheselling price from thepurchaser and
remitted thedifference between theprice obtained from thepurchaser andwhatwaspaidatthetime
ofimportation totheTreasury. Inthecaseofspirits andtobacco, theITBM is10percentandisapplied
inthesame manner todomestic andimported goods. Only inthecaseofsoftdrinks wastheITBM
applied exclusively toimports, tobalance theproduction taxcollected ondomestic softdrinks, which
wasalso5percent(5%). Incases other thanimports andleases, theITBM wasapplied when the
deedorcontract wassigned, orwhen thegoods were delivered byanyofthemeans authorized by
law. Hefurther informed theWorking Party thatparagraphs 7and8ofArticle 1057(v) oftheFiscal
Code ofPanama provided forcertain exceptions fromtheITBM tax. Paragraph 7provided thatthe
following were notsubject totheITBM tax:
(a) Transfers ofgoods mortis causa ,freeofcharge, orbydeedbetween living persons
already subject toinheritance andgifttax;
(b) transfers inconnection withmarriage settlements, andcontribution orseparation of
conjugal property;
(c) expropriation andsales bytheState, except those made byState industrial and
commercial companies;
(d) saleofproperty under anyordinary orspecial proceedings, including proceedings for
theseparation ofproperty;
(e) transfers ofnegotiable instruments andsecurities ingeneral.
Paragraph 8ofArticle 1057 (v)oftheFiscal Code provided thatthefollowing wereexempt
from theITBM tax:
(a) Sales ofagricultural, poultry, cattle andother similar products, intheirnatural state
orsubjected onlytoafattening, butchering orchilling process bytheproducers;WT/SPEC/33/Rev.3
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(b) salesoffishermen 'sandhunters 'products, intheirnatural stateorsubjected onlyto
achilling orfreezing process bytheproducers;
(c) exports andre-exports;
(d) transfers made tothePanama Canal Commission ortotheUnited States Armed Forces;
asdefined bythePanama Canal Treaty of7September 1977anditsrelated agreements;
(e) transfers oftangible personal property inthefreezones legally authorized inthe
Republic ofPanama;
(f) operationsinvolvingtangiblepersonalpropertylocatedincustomsareasandwarehouses
where ownership wastransferred through theendorsement ofdocuments;
(g) transfers ofsoftdrinks already subject totheSoftDrinks Tax;
(h) imports andtransfers ofoils,lubricants andrelated products specified inthefollowing
subdivisions oftheTariff: 313-01-01, 313-01-01A, 313-01-01B, 313-01-01C,
313-01-02, 313-01-03, 313-01-04, 313-01-05, 313-02-00, 313-03-01, 313-03-02,
313-03-99, 313-04-01, 313-04-02, 313-09-00, 314-01-00, 314-02-00;
(i) imports andtransfers offoodproducts;
(j) imports andtransfers ofmedicinal andpharmaceutical products specified inGroup 541
oftheTariff; and
(k) imports andtransfers ofthefollowing products:
1. Manufactured fertilizers oftariff subdivisions: 271-01-00; 271-02-00;
271-03-00; 271-04-00; 561-01-00; 561-02-00; 561-03-00 and561-09-00.
2. Insecticides,fungicides,herbicides,disinfectantsandthelike,usedinagriculture
andanimal husbandry, oftariff subdivisions: 599-02-01 and599-02-02.
3. Allseeds usedinagriculture.
4. Barbed wirespecified intariff subdivision 699-05-01.
5. Hand toolsusedinagriculture, suchasmachetes, grubhoes, hoes, shovel-hoes,
andgoads.
Inthecaseofexemptions provided forinparagraphs (c)and(d),ataxcredit wasallowed ontheamount
oftaxcharged ondomestic purchases andimports incorporated inthecostoftheexports, re-exports
orgoods transferred toauthorized agencies oftheGovernment oftheUnited States located inthePanama
Canal Zone.
25. Therepresentative ofPanama stated thattheITBM would beretained afteraccession. Inhis
Government 'sviewtheITBM wasavalue added taxlikethose applied inmostcountries oftheworld,WT/SPEC/33/Rev.3
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andwasconsistent withWTO rules. Some members oftheWorking Party stated thattheyconsidered
thatsome oftheexemptions hadtheeffect ofapplying theITBM toimported goods andnotto
domestically produced goods, inparticular theexemption forproducers ofagricultural products in
araworslightly processed state. Therepresentative ofPanama stated thattheexemption foragricultural
products inaraworslightly processed statewasapplied tobothdomestically produced andimported
products. Inresponse toafurther question, therepresentative ofPanama provided theWorking Party
withtheHSCodes oftheagricultural products which weresubject totheITBM, aswellasalist,also
byHSCode, ofthose products exempted from theITBM.
26. Therepresentative ofPanama stated that,asofthedateofaccession, theonlydomestic tax
orinternal charge applied toimports would betheTaxontheTransfer ofTangible Personal Property
(ITBM). Hefurther stated that,from thedateofaccession, anyapplication toimports ofdomestic
taxes orother internal charges ofanykindwould beinaccordance withtheprovisions oftheWTO
Agreements. TheWorking Party tooknoteofthiscommitment.
Import Formalities Including Customs Valuation
27. Inresponse toquestions from members oftheWorking Party, Panama explained thatithad
taken steps tosimplify some oftheprocedures forimportation. Inthatrespect, anewandsimpler
customs declaration formhasbeenadopted andthenecessary stepstoobtain acommercial licence have
beenreduced. Commercial licences arenecessary toengage inanyeconomic activity, other than
agriculture, andanyperson orcorporation canobtain oneprovided thatitcomplies withthefollowing
requirements: tofilltheformwithgeneral information and,when requesting alicence forretail trade,
tobePanamanian or,inthecaseofcorporations, beowned byPanamanians.
28. Therepresentative ofPanama stated that,onaverage, customs formalities tookthreebusiness
days. Import formalities could becommenced prior totheactual arrival ofthegoods, provided that
theoriginal shipping documents wereavailable. Iftheoriginal documents could notbeproduced, the
importer could clearthegoods following lodgement ofadeclaration withadeposit ofabond inthe
amount ofthetaxpayable, plusasurcharge of5percentofthec.i.f. value ofthemerchandise.
29. Asof1January 1995, andaspartofitsefforts tocomply withWTO requirements, Panama
adoptedtheHarmonizedSystemofCustomsClassificationanditbecameamemberoftheWorldCustoms
Organization since thebeginning of1996. Currently Panama isstudying thepossibility ofbecomingWT/SPEC/33/Rev.3
Page14
amember oftheKyoto Convention, theRules ofOrigin Agreement, andtheHarmonized System
Convention.
30. Some members oftheWorking Party noted thatinthecaseofsome products, e.g.rice,maize,
sorghum, poultry meatandsteel, Panama applied fixed levels ofvaluation forimports. Inaddition,
Panama hadcreated adatabaseofreference prices forcustoms valuation appraisal ofimports; ifthe
import value declared bytheimporter wasoverthemargins established inthedatabase, theimporter
wasforced tosupport thisprice ortopaythedutyovertheadjusted value calculated according tothe
database. Intheirview, thispractice operated defactoifnotdejureasaminimum valuation scheme.
Inaccordance withtheWTO Agreement onCustoms Valuation, theuseofalistofaverage import
prices asasurrogate valuation method wasnotpermissable. Panama wasinvited tosubmit forreview
bytheWorking Party adraftresponse tothequestionnaire oncustoms valuation.
31. Therepresentative ofPanama explained thatthetaxable basis ofimported merchandise was
costs paidorpayable prior toentry intothefirstPanamanian portofcall. Following arrival atthat
firstPanamanian port, allexpenses forservices performed within thenational territory ofPanama,
suchasinsurance, wereexcluded fromthebasevalue inorder toavoid double taxation ofthegoods.
32. InresponsetoquestionsfromsomemembersoftheWorkingParty,therepresentativeofPanama
saidthatPanama hadprepared adraftlawonCustoms Valuation which wasinconformity withthe
Agreement onCustoms Valuation. Thedraftofthatlawwassupplied toWTO Members indocument
WT/ACC/PAN/5. Inresponse toconcerns raised bysome Working Party members inrelation to
Panama 'ssystem ofreference prices, therepresentative ofPanama explained thatalthough Panama
hadpreviously usedasystem ofreference prices, theDraft LawonCustoms Valuation would eliminate
thatsystem ofvaluation.
33. Concerning theimportation ofmotor vehicles, therepresentative ofPanama noted thatatthe
timeofentry, thedeclared priceforthemotor vehicle waschecked against thefactory pricelistcovering
theprecise specification ofmotor vehicle imported. Thatprice listwassupplied toCustoms bythe
vehicle importer. Intheevent thatthedeclared price wassignificantly different from thedeclared
value, thevalue appearing onthefactory price listwasused. Imports ofusedmotor vehicles were
valued andtaxed asiftheywerenew,although vehicles more thanthreeyears oldcould bedepreciated
byspecified amounts. Thebaseprice usedasthebasis forthevaluation oftheusedmotor vehicle
wasderived from industry publications.WT/SPEC/33/Rev.3
Page15
34. With reference tocustoms practices andprocedures, therepresentative ofPanama saidthat
hisGovernment would apply customs practices andprocedures inaccordance withtherelevant WTO
provisions including those ofArticles VII,VIIIandXoftheGATT 1994fromthedateofitsaccession.
Bythatdate, Panama would amend anyprovision oflaworadministrative regulation thatprovided
forpractices inconsistent withtheabove-mentioned provisions. Hefurther stated thatfrom thedate
ofaccession theuseofminimum import prices would beeliminated and,thatinaccordance withthe
WTO Agreements onAgriculture andImplementation ofArticle VIIoftheGATT 1994, suchmeasures
would notbereintroduced. TheWorking Party tooknoteofthese commitments.
35. Therepresentative ofPanama stated thatbyJuly1996, hisGovernment would enact adecree
lawoncustoms valuation thatwould beinfullconformity with theWTO Agreement onthe
Implementation ofArticle VIIoftheGATT 1994, andthatthatlawwould come intoeffect by
1January 1997. Panama would notrequire recourse toanyadditional transitional period for
implementation oftheAgreement. TheWorking Party tooknoteofthiscommitment.
36. Therepresentative ofPanama saidthatshould theservices ofapreshipment inspection firm
beusedtoassist Panama intheimplementation ofitscustoms procedures, theGovernment ofPanama
would ensure thattheoperations ofsuchfirms wereconsistent withtherelevant WTO Agreements,
inparticular, onPreshipment Inspection andCustoms Valuation. TheWorking Party tooknoteof
thiscommitment.
Non-tariff measures
37. Some members oftheWorking Party welcomed theremoval ofproducts fromthelistofthose
subject toquantitative protection aprocess which Panama hadinitiated unilaterally. They requested
thatPanama submit achart describing theuniverse ofremaining quotas, import licensing orpermit
requirements andauthorizations applied toimports withtheirspecific justification interms ofWTO,
indicating alsoifpermits weregranted onanautomatic ordiscretionary basis. These members noted
thatquotalevelswerenotgenerallyannouncedandthatforsomeproductstheamountoflocalproduction
thatanimporter hadpurchased conferred eligibility onarequest foraquota. Intheirview, these
practices appeared tobeinconsistent withArticles III,XandXIofGATT 1994. Ingeneral, theWTO
favoured theapplication ofprice based measures instead ofquantitative restrictions forprotection.
Anyremaining restrictions, orthoseapplied byPanama during ascheduled period ofelimination, should
bepublished atacentral point established forinformation asprovided intheAgreement onImportWT/SPEC/33/Rev.3
Page16
LicensingProcedures.TheprovisionsofotherWTOAgreements,suchastheAgreementonSafeguards,
should alsobeobserved.
38. Inresponse toquestions from members oftheWorking Party, therepresentative ofPanama
stated thatPanama hadpreviously applied import quotas toimports of,interalia,potatoes, onions,
beans (Vigna), kidney beans, lentils, vetches, peas, dwarf beans, maize, sorghum, porkandpoultry
meat. Those import quotas hadbeenabolished through thefollowing decrees: Decree No.51of
22September 1993 (amended byDecree No.61of27October 1993); Decree No.55of
13October 1993; andDecree No.56of13October 1993 (amended byDecree No.61of
27October 1993, inturnamended byDecree No.69of24December 1993). TheRepresentative of
Panama stated thattheremaining import quotas onagricultural products werecurrently administered
bytheMinistry ofAgricultural Development, theController General andtheMinistry ofFinance and
theTreasury. Therepresentative ofPanama supplied theWorking Party withInformation onImport
Licensing Procedures, including alistofitems bytariff linethatweresubject tonon-tariff measures
indocuments WT/ACC/PAN/5 and6.
39. Inresponsetofurtherquestions,therepresentativeofPanamaprovidedmoredetailedinformation
onthesystem ofimport quotas andbans. Indocument WT/ACC/PAN/8, therepresentative ofPanama
supplied theWorking Party withacurrent list,bycurrent andHSclassification, ofallimports nolonger
subject toQuotas andPrior Licensing. Therepresentative ofPanama reported thatimport quotas and
bans, priorauthorizations orpermits andother quantitative restrictions wereabolished for,interalia,
kidney beans, maize, sorghum, andporkandpoultry meatbyaseries ofdecrees inlate1993. The
representative ofPanama alsostated thattheremaining products under quantitative restriction were:
quotas ondairy products, fatsandoils,sugar, yeast, fishmeal, andsalt;licensing restrictions onanimal
fats,certain vegetables, andpreparations forfoodprocessing; andreference prices onpoultry, maize,
rice,sorghum, cornmeal, andsteelreinforcing bars. Headded thathisGovernment didnot,ingeneral,
publish thequota levels forimports restricted bysuchmeasures. Heacknowledged thatthiswasnot
consistent withArticles X.1andXI.2oftheGATT 1994 andwerenotjustified byArticle XIXand
theAgreement onSafeguards, norwiththeWTO Agreement onImport Licensing Procedures, which
require thatquotas bepublished indicating thetotalquantity andvalue permitted forimportation during
aspecified period. Import authorizations weregranted onadiscretionary basis onlyifthere areno
domestic substitutes available. Therepresentative ofPanama alsostated thattariff ratequotas would
beadministered onacase-by-case basis, giving preference toapublic bidding process when possible.
Therepresentative ofPanama noted thathisGovernment hadsupplied comprehensive information to
theWorking Party concerning itsimport licensing régime indocument WT/ACC/PAN/6.WT/SPEC/33/Rev.3
Page17
40. Inlightofmembers 'questions andcomments, therepresentative ofPanama made available
tomembers oftheWorking Party adraftlawrevising theimport licensing régime inPanama. Following
members 'further comments onthatdraftlaw,therepresentative ofPanama informed members ofthe
Working Party thatthedraftlawhadbeenrevised totakeaccount ofmembers 'comments, andthe
requirements oftheAgreement onImport Licensing. Thedraftlawwould simplify theprocedure for
obtaining licences andwould eliminate anydiscrimination arising from theirapplication.
41. Therepresentative ofPanama stated thatfromthedateofaccession totheWTO, tradeingoods
including agricultural products would beadministered inaccordance withWTO obligations, including
theAgreement onImport Licensing Procedures. Asofitsdateofaccession totheWTO, Panama would
eliminateallquotas,restrictiveimportpermitrequirements,bansandreferenceprices,exceptasexpressly
permitted under theWTO Agreement. Allunnecessary permit requirements would beeliminated.
Panama would notseekadelay intheapplication ofArticle 2oftheAgreement onImport Licensing.
TheWorking Party tooknoteofthese commitments.
42. Therepresentative ofPanama confirmed that,fromthedateofaccession, theauthority ofhis
Government tosuspend imports andexports ortoapply licensing requirements thatcould beusedto
suspend, ban,orotherwise restrict thequantity oftrade would beapplied inconformity withthe
requirementsoftheWTO,inparticularArticlesXI,XIII,XVIII,XIX,XX,andXXIoftheGATT1994,
andtheMultilateral Trade Agreements onAgriculture, Sanitary andPhytosanitary Measures, Import
Licensing Procedures, Safeguards andTechnical Barriers toTrade, andthathisGovernment would
eliminate fromthedateofitsaccession, non-tariff import measures, including bans, quotas, permits,
prior authorization requirements andlicences thatcould notbejustified specifically under WTO
provisions. Inparticular, Panama would apply nolessfavourable controls, criteria andrulesregarding
technical regulations, standards certification andlabelling requirements toimported anddomestic goods,
andwould notusesuchregulations torestrict imports unnecessarily. Panama would ensure thatits
technical regulations, standards,certification andlabelling requirements werenotapplied toimports
inanarbitrary manner, inawaythatdiscriminated between supplier countries where thesameconditions
apply orasadisguised restriction oninternational trade, inaccordance withWTO provisions. Panama
would alsoensure thatfromthedateofitsaccession itscriteria forgranting prior authorization orfor
securing required certification or"sanitary registration" forimported products would bepublished and
madeavailabletotraders,andwouldbeadministeredinatransparent,expeditiousandnondiscriminatory
manner. Panama would bewilling toconsult withWTO Members concerning theeffect ofthese
requirements onWTO Members tradewithaviewtoresolving specific problems. TheWorking Party
tooknoteofthese commitments.WT/SPEC/33/Rev.3
Page18
Agreement onTechnical Barriers toTrade
43. InresponsetorequestsforinformationfrommembersoftheWorkingPartyconcerningtechnical
barriers totradeinPanama, therepresentative ofPanama stated thatthefollowing legislation regulated
technical andindustrial standards: Decree 282of13August 1970; Law2ofthe11February 1982,
Creating andassigning functions totheDirección General deNormas yTecnología Industrial (the
Directorate-General forIndustrial Standards andTechnology); andDecree 63of4May1971, To
approve theregulations implementing Cabinet Decree 283of13August 1970, which established the
Comisión Panameña deNormas Industriales yTécnicas (COPANIT) (Panamanian Commission for
Industrial andTechnical Standards). Decree 63determined thepowers andfunctions ofthePanamanian
Commission forIndustrial andTechnical Standards (COPANIT) which wasresponsible forstudying
andrecommending technical standards andestablishing thegeneral system fortechnical standardization
practices.
44. Heexplained thattheprocedure foramending existing regulations consisted ofthree phases:
thePreparation ofthedraft; study ofthedraft; andthepublic discussion ofthedraft. Once thedraft
hadbeenapproved itwentthrough apreliminary draftstage which consisted ofthepublication ofan
announcement inalocal newspaper, setting atime-limit of60daysforcomments onthedocument
(Article 6ofExecutive Decree No.63of4May1971). Ifasaresult ofcomments itproved necessary
todraftasecond proposal, thatmustbepublished forpublic inspection foraperiod of30days. Once
comments were received thepreliminary draft wassubmitted totheplenary ofthePanamanian
Commission forIndustrial andTechnical Standards (COPANIT) forapproval andratification bythe
Ministry ofTrade andIndustry. Thereafter thedocument waspublished intheBoletín delaPropiedad
Industrial (Industrial Property Bulletin) oftheMinistry ofTrade andIndustry. Once thestandard had
beenapproved andpublished intheIndustrial Property Bulletin, theDirectorate-General forIndustrial
Standards andTechnology sentacopytoallnational entities andinternational standardization bodies
(Article7ofExecutiveDecreeNo.63of4May1971).Panamasupplieddetailedinformationconcerning
itsrégime onTechnical Barriers toTrade indocument WT/SPEC/2.
45. Inresponse tocomments from members oftheWorking Party, therepresentative ofPanama
stated thathisGovernment hadjoined theInternational Organization forStandardization (ISO). He
added thathisGovernment wasdrafting newprovisions inorder toadapt therelevant legislation and
make itconsistent withtherequirements oftheAgreement onTechnical Barriers toTrade, when Panama
becomes aMember oftheWTO.WT/SPEC/33/Rev.3
Page19
46. Specific functions under theAgreement onTechnical Barriers toTrade werecarried outthrough
theDirectorate-General forIndustrial andTechnical Standards (COPANIT). COPANIT wasamember
ofthePan-American Standards Commission, aninternational standardization andcertification body
andamember oftheInternational Organization forStandardization (ISO). Thesystem wasthereby
harmonized withinternational systems. COPANIT worked inclosecommunication withtheMinistry
ofTrade andIndustry, aninstitution oftheCentral Government. TheCommission hadtheauthority
toundertake itsactivities, including inspections ofinstitutions, atnational andlocallevels.
47. Therepresentative ofPanama stated thatuponaccession totheWTO, Panama would comply
withalltheprovisions oftheAgreement onTechnical Barriers toTrade without recourse toany
transitional arrangements. TheWorking Party tooknoteofthiscommitment.
Agreement onSanitary andPhytosanitary Measures
48. AmemberoftheWorkingPartynotedthatSectionIofDecreeNo.57(2July1956)established
thebasis ofPanama 'sprotection intheareaofsanitary andphytosanitary measures. LawNo.7of
30March 1993 hadexpanded theGovernment 'sprotective authority. Theinformation available to
thismember demonstrated thatthesanitary regulations established inLawNo.7applied onlytopoultry
partsandnottootherpoultry products andthattheserequirements appeared tobeapplicable exclusively
toimports andnottocompeting domestic poultry production. Moreover, thesanitary requirements
withregardtopoultryappearedtoexceedtherequirementsoftheInternationalOrganisationofEpizootics
(OIE) and,insome cases, imposed standards impossible tomeet. Asevery agricultural product which
entered Panama wassubject toeither asanitary orphytosanitary certificate, theadditional precautions
seemed redundant. Intheviewofthismember, these requirements wereinconsistent withArticles XI
andXXoftheGATT 1994andtheprovisions oftheAgreement onSPS. Panama should repeal these
provisions andestablish WTO-consistent sanitary requirements forpoultry products. Some members
oftheWorking Party alsonoted thatPanama should provide assurances thatcurrent protective practices
would bereformed tocomply withWTO norms. Inparticular, these members noted thatsome of
thedraftlawsprovided totheWorking Party didnotappear toreflect therequirements oftheAgreement
onSanitary andPhytosanitary Measures andtheprinciple ofequivalency. Under theSPSAgreement,
animporting country isobliged toaccept theSPSmeasures ofanother country asequivalent ifthe
exporting country objectively demonstrates thatitsmeasures achieve theimporting country 'slevelof
protection. Thedraftlawsalsoincluded public health issues intheareaofadditives, maximum residue
levels, etc.which were notplant and/or animal health issues.WT/SPEC/33/Rev.3
Page20
49. Therepresentative ofPanama replied thatPanama wasfreeofdisease inthepoultry sector.
Inorder tomaintain high health standards, theMinistries ofAgricultural Development andHealth
hadqualified veterinary doctors carry outregular fieldinspections andinspections ofprocessing plants.
Thesanitary regulations ineffect withregard toimports were aimed atpreventing theintroduction
intoPanama ofexotic diseases orpests harmful tohuman oranimal health andhadnoprotectionist
aimordesign. Notallimports ofagricultural products weresubject tophytosanitary certificates. The
representative ofPanama provided theWorking Party withalistofthesanitary requirement forimports
ofagricultural products indocument WT/ACC/PAN/17. Imports ofagricultural products inanatural
staterequired thiscertificate but,except inafewcases, processed agricultural products didnotrequire
such acertificate. With regard tothesanitary certificate, hesaidthatallproducts forhuman
consumption, bothdomestically produced andimported, musthaveasanitary register issued bythe
Ministry ofHealth. Thiswasnothing more thanacustoms health control measure andthecertificate
could beobtained rapidly. Recently prepared draft lawshad,interalia,reflected theprinciple of
equivalency inArticle 19oftheDraft LawonAnimal Health, TitleII,General Provisions; and
Article 11oftheDraft LawonPlant Health, Title II,Chapter II,Principles andDefinitions. The
representative ofPanama explained thatthose lawssetthecriteria forandempowered theMinistries
toissueregulationsonsanitaryandphytosanitarymatters.Followingpreparationofthedraftregulations,
aNational Consultative Regulatory Committee would examine thedraftregulations, theregulations
would bepublished intheOfficial Gazette, andtheregulations would become lawthereafter. Some
members stated thattheWTO Agreement onSanitary andPhytosanitary Measures required thatat
leastsixtydaysprior toanymodification ofsuchalaw,anotification beprovided totheWTO. The
representative ofPanama stated thatPanama wasaware oftherequirement tonotify anysuchlegislative
change atleastsixtydaysprior toitsentry intoforce. Thelawswould apply toallimports following
Panama 'sentry intotheWTO.
50. Inreply tofurther questions, therepresentative ofPanama stated thatinthecaseofadecision
thataproduct wasnotacceptable, allnatural orlegalpersons could lodge anadministrative appeal
tothedecision maker andfollowing thattotheMinister forAgricultural Development. Concerning
diseases subject tocompulsory notification, Article 4oftheLawonAnimal Health provided thatall
Organisation Internationale desEpizooties (OIE) Classes AandBdiseases wererequired tobenotified.
Inaddition, theMinistry ofAgricultural Development retained thepower torequire other diseases
tobenotified. Inresponse tofurther questions andcomments from members oftheWorking Party
indicating thattheyconsidered certain aspects ofPanama 'srégime onSanitary andPhytosanitary
Measures tobecontrary toprovisions oftheAgreement onSanitary andPhytosanitary Measures, the
representative ofPanama made available tomembers oftheWorking Party twodraftlawsmodifyingWT/SPEC/33/Rev.3
Page21
Panama 'srégime onSanitary andPhytosanitary Measures. Following further comments frommembers
oftheWorking Party, therepresentative ofPanama indicated thatthedraftlawshadbeenmodified
totakeaccount ofmembers 'concerns. Hefurther indicated thatthose draft lawswere before the
National Assembly forapproval.
51. Therepresentative ofPanama stated thatfromthedateofaccession totheWTO, Panama would
applyallitssanitaryrequirementsconsistentlywiththerequirementsoftheWTOAgreementsonSanitary
andPhytosanitary Measures andImport Licensing Procedures without recourse toanytransitional
arrangements. Inparticular, hestated thatifadecision wastaken torequire notification ofdiseases
other thanthose listed inOrganisation Internationale desEpizooties (OIE) Classes AandB,anysuch
decision would betaken inconformity withtherequirements oftheAgreement onSanitary and
Phytosanitary Measures. Healsostated thatPanama willallow areasonable interval between the
publication ofthesanitary orphytosanitary regulation anditsentry intoforce inorder toallow time
forproducers inexporting Members, toadapt tothenewrequirements. TheWorking Party tooknote
ofthese commitments.
Agreements onAgriculture andonSubsidies andCountervailing Measures
52. Regarding incentives fortheagricultural sector, therepresentative ofPanama stated thattotal
domestic supports totheagriculture sector wereverylowinabsolute terms -lessthan$9million per
annum. Theaidprovided consisted ofthefollowing elements: (i)preferential tariffs forinstallation
andconsumption ofelectricity usedinfarming activities (areduction of30percentonthemarket rate);
(ii)anincome taxdeduction of30percentoninvestments inlivestock, fisheries andagro-industrial
activities, withamaximum deduction of40percentoftaxable income inthetaxperiod prior tothe
investment; (iii)exemption from taxonprofits derived from timber plantations planted within the
lastseven years; (iv)exemption from taxonincome oflessthan$100,000 perannum derived from
agricultural orlivestock production; (v)adeduction ofapercentage ofthecapital invested infarming
activity when farmincomes exceed $100,000 perannum (thededuction being limited totheaverage
rateofinterest forfixed termdeposits plusthree percentofthataverage); and(vi)anexemption
from payment ofproperty taxonfarming estates withalandregistry value oflessthan$100,000.
TherepresentativeofPanamaalsoindicatedthatagriculturalproducershadaccesstocreditatpreferential
interest ratesandtoanexport subsidy intheformofataxallowance certificate (CAT) thatcould be
usedtopaytaxestoanamount equivalent to20percentofthenational value-added ofexported goods.
Therepresentative ofPanama supplied theWorking Party withaninformal communication ondomestic
support andexport subsidies based onthemodel ofjustification oftheAgreement onAgricultureWT/SPEC/33/Rev.3
Page22
including details ofthesupports andincentives available totheagricultural sector inPanama indocument
WT/ACC/PAN/7/Add.1.
53. Regarding export subsidies, therepresentative ofPanama stated thatbecause ofthenature of
theCATprogramme, itisnotpossible toprovide fordetailed commitments onthereduction ofamounts
ofthesubsidies andvolume ofagricultural products benefitting from such subsidies during the
implementation period ascompared tothebaseperiod. However, Panama would reduce thebasein
which theCAT subsidy iscalculated from 20percentto15percentofthenational value added by
1January 2001, andwould terminate theCAT programme on31December 2002. Thiscommitment
isreflected intherelevant column ofthesupporting tables anddocument reference ofPartIVofthe
agricultural country schedule. Theagricultural country schedule ofPanama isreproduced in
PartI-Goods oftheAnnex totheProtocol ofAccession ofPanama.
54. Withreferencetoincentivesforindustry,therepresentativeofPanamastatedthathisGovernment
hadgrantedspecificprivilegesbymeansofspecialcontractstocertaininvestorswhoseactivitiesrequired
theuseoflarge areas ofland. Those areas oflandhadordinarily beengranted under aconcession
system. Existing arrangements included themineral resources exploration andexploitation contracts
regulated byDecree LawNo.23of22August 1963, theContract between theStateandtheRefinery
ofPanama under LawNo.31of31December 1992concerning theregulation oftherefining ofcrude
petroleum andtheContract between theState andVidrios Panameños S.A. under LawNo.43of
17November 1977 forthemanufacture ofglass containers.
55. Therepresentative ofPanama added thatthose contracts granted exemptions fromdirect and
indirect taxes andsetouttherights andduties oftheenterprises inconnection withtheiractivities.
Thecontracts fortheexploitation ofmineral resources werevalid forvarying periods, depending on
thesizeoftheproject. Bywayofexample therepresentative ofPanama indicated thatthecontract
fortheproduction ofglasscontainers would expire in1998, whereas therefinery contract wasoperative
for20years asfrom 30September 1992.
56. Following further questions frommembers oftheWorking Party, therepresentative ofPanama
stated thatinresponse tothequestions raised thelawsonindustrial incentives hadbeensubstantially
reformed. LawNo.3ofMarch 1986(dealing withincentives forsmall andmedium-sized enterprises)
hadbeensuperseded byLawNo.28of20June1995, copies ofwhich weremade available tomembers
oftheWorking Party. LawNo.28of20June1995provided thatthebenefits accruing toenterprisesWT/SPEC/33/Rev.3
Page23
registered under theearlier lawwould expire 15years afterregistration. LawNo.28of20June1995
alsoprovided thatnofurther registrations forparticipation inthescheme would beaccepted.
57. Therepresentative ofPanama alsoexplained thatLawNo.3of1986 hadprovided thatall
manufacturers registered intheOfficial Industry Registry could takeadvantage ofatariff reduction
forimports usedinmanufacturing. Ifthesametypeofgoods werenotmanufactured inPanama, eligible
manufacturers could, upon request, import those goods atthetariff rateof3percentoftheirc.i.f.
value. Thelawalsoestablished income taxandlandtaxexemptions forthose manufacturers that
dedicated theirproduction toexports. Inaddition, exporters ofnon-traditional products wereeligible
toreceive discounts onpurchases ofelectricity andaTaxCredit Certificate. Inresponse toquestions
frommembers oftheWorking Party, therepresentative ofPanama stated thatPanama considered that
these incentives were compatible with theGATT 1994, andtheAgreement onSubsidies and
Countervailing Measures, since those incentives were granted inorder toimprove Panama 's
competitiveness, growth andeconomic development. Inaddition, those measures didnotcause serious
prejudice tothetrade orproduction ofanyWTO Member. InPanama 'scase, aminimal number of
exports benefitted from theincentives andthemeasures hadnoimpact onworld trade, andthus
Article XVIwasnotviolated. Therepresentative ofPanama provided theWorking Party withan
Informal Communication onIndustrial Subsidies including anotification ofFiscal Exemptions Granted
toIndustry totheWorking Party indocument WT/ACC/PAN/7/Add.1.
58. Onthesubject ofexport incentives, inresponse toquestions from members oftheWorking
Party, therepresentative ofPanama stated thatagricultural exports were exempted from income tax
onincome derived fromtheexported goods, andinthecaseofanon-traditional agricultural product,
aTaxCredit Certificate wasgranted. Healsoprovided copies ofthelawsthatprovided export
incentives. Some members oftheWorking Party expressed concern thattherebate ofdirect taxation
wasinconsistentwithArticleXVIoftheGATT1994andtheAgreementonSubsidiesandCountervailing
Measures. Therepresentative ofPanama replied thattheincentive lawswere notinconsistent with
theGATT 1994 northeAgreement onSubsidies andCountervailing Measures because ofPanama 's
status asadeveloping country. Therepresentative ofPanama provided further information inrelation
toPanama 'spolicy ofincentives inrelation toagricultural andindustrial products indocument
WT/ACC/PAN/7/Add.1, inorder tofacilitate theconsideration oftherequirements provided forin
theWTO Agreement onSubsidies andCountervailing Measures.
59. TherepresentativeofPanamafurtherstatedthatPanama'sindustrialpolicyencouragedindustrial
development bygranting taxexemptions which were generally applicable. Direct assistance intheWT/SPEC/33/Rev.3
Page24
formofpayments toproducers, financial assistance tospecific sectors andother similar measures were
notapplied. Hesaidthatincentives forindustrial activities including small andmedium-sized enterprises
wereprovided bymeans ofLawNo.3of1986. Thatlawwasdesigned toencourage small andmedium-
sized enterprises intheirindustrial andassembly activities. Arégime oftaxexemptions existed for
enterprisesproducinggoodsforthedomesticmarketorforexport.Enterpriseswishingtotakeadvantage
oftheexemption wererequired tobeentered intheOfficial Industry Register oftheMinistry ofTrade
andIndustry before theycould utilise theexemptions. Enterprises thatgeared industrial production
tothedomestic market received:
- preferential treatment inthepayment ofimport duties onrawmaterials, semi-finished
orintermediate products, partsformachines andequipment, containers, packing and
other imported inputs. They wererequired topayonly3percentofthec.i.f. value
oftheimported inputs, inaddition totheTaxontheTransfer ofTangible Personal
Property (ITBM);
- anexemption fromincome taxonnetprofits reinvested toexpand production capacity
ortoproduce newarticles. Those enterprises alsocame under aspecial régime
permitting thecarry overoflosses forincome taxpurposes, andaspecial depreciation
calculation;
- anexemption from property taxfor10years onland, structures andinstallations
intended formanufacturing, fullexemption frompayment ofincome onprofits from
salesonthedomestic market fortheenterprise 'sfirstfiveyears ofproduction, and
a50percentexemption forthesubsequent threeyears. Those exemptions wereapplied
toenterprises intheregions specified inthelaw.
60. TherepresentativeofPanamaalsostatedthatunderLawNo.3of1986enterpriseswhollyengaged
intheproduction ofexports received:
- fullexemption fromtaxesonintroduction, contributions, andcustoms duties, feesand
charges, along withtheITBM onimports ofmachinery, equipment andpartsforuse
intheproduction process;
- credit forduties orcharges usedinproducing aproduct;
- fullexemption from income taxonprofits, withtheexception ofmining industries
orthose using thecountry 'snatural resources;WT/SPEC/33/Rev.3
Page25
- fullexemption from export taxes;
- fullexemption from salestax;
- fullexemption from production taxes; and
- fullexemption from taxes ontheenterprises 'capital orshares, except licence and
immovable property taxes.
Inaddition, enterprises thatproduced partially forexport received taxexemptions inproportion to
theamount intended forexport. Thisrégime would haveatotallifeof10-15 years. Itwasestimated
thatapproximately 75percentofenterprises 'registrations would expire intheyear2002. Allother
registrations would expire in2010.
61. Inrelation tosmall andmicro-enterprises, therepresentative ofPanama saidthatincentives
wereprovided pursuant toLawNo.9of19January 1989. Thatlawprovided fortaxincentives for
micro-enterprises andsmall enterprises within theterritory oftheRepublic thatwere engaged in
manufacturing activities using mechanized equipment, cottage industry methods oracombination of
thetwo. Thetaxexemptions available tosuchbusinesses were asfollows:
- fullexemption fromincome taxforthefirstfiveyears, 75percentforthefollowing
fiveyears and25percentduring theremaining lifeofthecompany;
- fullexemption from stamp duty;
- fullexemption fromimport taxonproduction andmaintenance equipment, partsand
rawmaterials;
- exemption from immovable property taxforthefirst10years; and
- exemption from taxoncapitalized dividends.
Anenterprise could loseitseligibility totheexemptions inthefollowing circumstances (i)iffollowing
aninitial period offiveyears, theenterprises 'assets andcapital increased bytwenty-five percentor
more, or,(ii)iftheyhadincreased thevalue ofannual salesofonehundred thousand dollars ($100,000)
forthreeconsecutive years or(iii)ifforfivealternating years, theannual salesincreased bymore than
twenty percent(20%). Therégime would operate foratotalperiod of15years.
62. InresponsetoquestionsandcommentsfrommembersoftheWorkingParty,indicatingconcerns
inrelation tothecompatibility ofthevarious export incentive schemes withtheprovisions ofthe
GATT1994andtheAgreementonSubsidiesandCountervailingMeasures,therepresentativeofPanama
stated that, inhisGovernment 'sview, theCAT scheme wascompatible withtheprovisions ofWT/SPEC/33/Rev.3
Page26
ArticleXVIoftheGATT1994andwiththeprovisionsoftheAgreementonSubsidiesandCountervailing
Measures insofarastransitional arrangements areforeseen topermit theelimination ofthisprogramme
overanextended period oftime, astheyapplied todeveloping countries. Therepresentative ofPanama
alsoprovided details ofPanama 'sexport promotion scheme. Thelegislative basisforthescheme was
LawNo.108of30December 1974. Thatlawestablished anexport incentive mechanism fornon-
traditional goods wholly orpartly produced orprocessed inPanama, bygranting acertificate which
could beusedasacredit towards direct taxes payable totheState. TheTaxAllowance Certificate
(CAT) could beusedtopaytaxesuptoanamount equivalent to20percentofthenational value added
oftheexported goods. Such certificates were transferable byendorsement, were exempt from any
kindoftaxanddidnotbearinterest. Headded thatfollowing theprovisions setoutintheAgreement
onSubsidies andCountervailing Measures, Panama haddecided toeliminate these taxbenefits
progressively. LawNo.28of20June1995Adopting Measures forGeneral Production TaxIncentives
andEstablishing Other Provisions, provided thatupto31December 2000, thevalue oftheCAT will
remain 20percentofthenational value added. From 2001 through December 2002, CATs would
fallto15percentofthenational added value. Theincentive wasscheduled tobefullyeliminated
by31December 2002. Enterprises inreceipt ofother taxexemptions could notusetheCAT scheme.
63. Therepresentative ofPanama stated thathisGovernment would progressively eliminate all
measures which meet thedefinition ofaprohibited subsidy, within themeaning ofArticle 3ofthe
Agreement onSubsidies andCountervailing Measures, including those prohibited subsidies covered
byLawNo.3of1986, including allregistrations granted toenterprises prior toenactment ofthelaw
Adopting General Production TaxIncentives andEstablishing Other Provisions, (Law No.28of
20June1995) andIncentives forExport Promotion under LawNo.108of30December 1974 (as
amended byLawNo.28of20June1995). Consistent withthisobligation, Panama would provide
explanatory information initsannual notification ofsubsidies under Article 25oftheAgreement on
Subsidies andCountervailing Measures andArticle XVI:1 oftheGATT 1994toenable other Members
toconfirm thatsuchprogrammes arebeing progressively eliminated. Theabove-mentioned subsidy
measures would benotified asprovided forintheWTO Agreement onSubsidies andCountervailing
Measures uponaccession. TheGovernment ofPanama would eliminate allsubsidies inconsistent with
theprovisions ofArticle 3oftheAgreement onSubsidies andCountervailing Measures bynolater
than31December 2002asprovided byArticle 27oftheAgreement onSubsidies andCountervailing
Measures. TheWorking Party tooknoteofthese commitments.WT/SPEC/33/Rev.3
Page27
Legislation onAnti-Dumping andSubsidies andCountervailing Measures
64. Following theexamination ofPanama 'srégime inrelation toanti-dumping andcountervailing
duties, some members stated thattheyconsidered thatnotalltherequirements oftheAgreements on
Anti-Dumping andSubsidies andCountervailing Measures appeared tobereflected inPanama 's
legislation. Members expressed particular concerns inrelation totheprovisions containing thedefinition
ofspecificity andnon-actionable subsidies, aswellasinrespect oftheprovisions governing the
assessment ofthelevelofdomestic support forapetition, retroactive dutyprice undertakings, public
notifications ofnegative decisions, andtheelements required tobecontained inapetition. The
representative ofPanama stated thatPanama hadaltered itsdraftlawstotakeaccount ofMembers '
concerns. Inreplytoquestions concerning thedraftlaws'definition ofmaterial injury, therepresentative
ofPanama replied thatinhisGovernment 'sview, thedefinition provided wascompatible withArticle 3
oftheAnti-DumpingAgreementandArticle15oftheSubsidiesandCountervailingMeasuresAgreement.
Some members oftheWorking Party alsoconsidered thatcertain other provisions ofthedraftlaw,
suchasthedefinitions ofasubsidy, andtheprovisions dealing withanti-circumvention required
improvement.TherepresentativeofPanamarequestedfurtherclarificationofthosemembers'concerns.
Following further discussions, therepresentative ofPanama informed theWorking Party thatthedraft
lawhadbeenaltered totakeaccount ofmembers 'concerns andthattherevised draftlawwasbefore
theNational Assembly forapproval. Thedraft lawwasapproved bytheNational Assembly as
LawNo.29,on1February 1996. Thelawisnowinfullconformity withtherequirements ofthe
Agreements regarding definitions ofspecificity andnon-actionable subsidies (Articles 72and73);
assessment oflegitimacy tosupport apetition (Article 149); retroactive dutyprice undertakings
(Article 163); publicity (Articles 152,164,166and171); elements required inapetition (Article 150)
andmaterial injury (Articles 92to95). Thedefinition ofsubsidy (Article 71)andthedispositions
dealing withanti-circumvention (Article 90)wereimproved. Thelawisalsoinconformity withthe
Safeguards Agreement. Regarding procedures, italsocomplies withWTO requisites. LawNo.29
of1February 1996 willbenotified totherelevant Committees oftheWTO.
Government Procurement
65. Inresponse toquestions from members oftheWorking Party, therepresentative ofPanama
provided details oftheCentral Government procurement system. Article 29oftheFiscal Code required
thatforallStatepurchases thatexceeded onehundred andfiftythousand balboas (B150,000), public
tenders mustbecalled for.Invitations totender wererequired tobepublicly announced intheOfficial
Gazette andnational newspapers atleast15calendar daysinadvance. Theannouncement wasrequiredWT/SPEC/33/Rev.3
Page28
toindicate thedateofthemeeting forinterested bidders. Thatmeeting wasforthepurpose ofanswering
anyinquiries inrelation tothetender specifications andotherdocuments. TheMinistry orcorresponding
public entity wasresponsible forformulation ofthespecifications, inwhich theconditions ofthecontract
andbaseprice forthebidwould beclearly indicated. Thespecifications would indicate: thedate,
timeandplace ofbidding, andthebaseprice; theobligation onthebidders tolodge atemporary bond
toparticipate inthebidding, andafinalbond tobelodged bythecontractor towhom thecontract
isawarded; theobligations required tobeassumed andtherights acquired bythecontractor; the
obligations assumed andtherights acquired bytheState; thefines thatcould beimposed onthe
contractor, andtheliabilities incurred byfailure toperform; andtheobligation topresent abidder 's
certificate. TheFiscal Code required thatthetender specifications, aswellasdocuments, blueprints,
objects orsamples relating tothesubject-matter ofthecontract, bedisplayed attheoffice where the
bidding wastotakeplace, sothattheycould beexamined bytheinterested parties.
66. Therepresentative ofPanama explained thatprospective bidders must submit thefollowing
documents insupport ofthetender: aBidder 'sCertificate forPublic Bidsissued bytheTreasury,
aswellasdocuments proving thatthetenderer wasnotadelinquent debtor vis-à-vis theState, that
thetenderer hadnotcheated thepublic treasury, thatthetenderer hadacommercial orindustrial licence
toengage intheactivity, thatthetenderer wasregistered withtheTechnical Board ofEngineering
andArchitecture, ifthetenderer wished toparticipate incontracts forpublic works orinothers for
which thisrequirement must befulfilled, andanyother document required bylaw. Tenders were
submitted toadesignated official. Following theopening ofthetenders, acertificate attesting tothe
validity ofthebidisissued. Certified tenders werecirculated tothedifferent Stateagencies. Based
upon theproposals received thepresiding official willprovisionally award thecontract tothebidder
whohasoffered themostadvantageous proposal among those received. Because theprovisional award
didnotconstitute adefinitive orfirmadministrative act,noappeal could bemade against it.Once
thepublic bidding procedure hadbeenconcluded, bidding filescontaining alltheproposals received
wereassembled. Thetemporary bonds werealsofiledunless theunsuccessful bidders requested their
return, ontheunderstanding thatbysodoing theywaived anyrights topresent aclaim ontheawarding
ofthecontract. Allinterested parties hadrightofaccess tothefile,aswellastherighttoobtain copies
ofallthedocuments therein. Onthedayafterthepublic bidding, thefilewenttotheProposal Evaluation
Committee forconsideration. TheCommittee concluded examination ofallbidswithin thenexteight
calendardays.Withineightdaysfollowingtheexpirationofthetime-limitinterestedpartiescouldpresent
submissions forinclusion inthefile. Theopinion oftheEvaluation Committee wasnotbinding on
thedeciding authority provided thatthelatter would show thattheopinion wasnotinthebestinterests
oftheState. Thecontract wasawarded onthebasisoftheeconomic advantages oftheproposals andWT/SPEC/33/Rev.3
Page29
thetechnical economic, administrative, andfinancial capacity ofthebidders, andthebidconsidered
tobeofthehighest quality atthelowest price. Dissatisfied parties could usegovernment channels to
appeal tothebodythatawarded thecontract, without prejudicing anyaction forannulment before the
Third Chamber oftheSupreme Court ofJustice. Once thedefinitive award ismade, thecorresponding
Minister required thesuccessful bidder tolodge thefinalbond within three days. Ifthesuccessful
bidder didnotpostthefinalbondordoesnotpaythebidprice incashwithin thecorresponding term,
thetemporary bond wasforfeit totheNational Treasury.
67. Inresponse toinquiries whether Panama would consider accession totheAgreement on
GovernmentProcurement,therepresentativeofPanamastatedthatPanamawasconsideringthepossibility
ofaccedingtotheWTOGovernmentProcurementAgreementandwasstudyingthepossibleimplications
ofsuchadecision, interms ofbothlegislative reform andrestrictions ondevelopment policies.
68. Therepresentative ofPanama confirmed thathisGovernment wascurrently anobserver in
theCommittee fortheAgreement onGovernment Procurement. Hestated thathisGovernment would
notify theCommittee atthetimeofPanama 'saccession totheWTO ofitsintention toaccede tothe
Agreement onGovernment Procurement, andthatPanama would initiate negotiations formembership
intheAgreement bytabling anentity offerpriorto30June1997. Healsoconfirmed that,iftheresults
ofthenegotiations aresatisfactory totheinterests ofPanama andother members oftheAgreement,
Panama would complete negotiations formembership intheAgreement by31December 1997. The
Working Party tooknoteofthiscommitment.
Freedom oftransit
69. Regarding thefreedom oftransit, therepresentative ofPanama stated thathiscountry applies
theprovisions oftraffic andtransit asprovided forinArticle VoftheGATT 1994.
Export duties
70. Inresponse toquestions from members oftheWorking Party, therepresentative ofPanama
stated thatexport duties werecharged onbananas, scrap iron,copper, bronze, silver, goldandplatinum
inorder togenerate revenue totheTreasury. Certain other products were subject toexport quotas
during periods ofshort supply. Therepresentative ofPanama alsostated thatcurrently export duties
areapplied withtheintent ofcollecting revenue fortheCentral Government andtheyarenotused
topromote localinvestment; inthatsense, headded thatthere isnomanufacturing industry foranyWT/SPEC/33/Rev.3
Page30
ofthese commodities currently inPanama; thatthetaxrateislowandtherefore doesnotgenerate
incentive fortheestablishment ofmanufacturing industry.
71. Therepresentative ofPanama stated thatfollowing accession totheWTO, hisGovernment
would onlyapply export controls inconformity withrelevant WTO provisions including Article XI
paragraph 2(a)oftheGATT 1994. TheWorking Party tooknoteofthiscommitment.
Freezones
72. Therepresentative ofPanama alsoprovided details ofPanama 'sexport promotion zones. The
purpose ofthose schemes wastopromote investment andPanama 'sscientific, technological, cultural,
educational, economic andsocial development. Hestated thatthelegislative basis fortheschemes
wasLawNo.25of30November 1992. Thatlawestablished arégime forthecreation andoperation
ofexportprocessingzones.ExportProcessingZonesweretax-freezones.Boththeenterprisesoperating
within those zones andtheactivities undertaken therein were100percentfreeofdirect andindirect
taxes. Boththecapital invested within theprocessing zones andthecapital oftheenterprises operating
inthezones werefreeofdirect orindirect national taxes, including patent orlicence taxes. Earnings
intheformofdividends andinterest creating shares, bonds andother securities issued bytheenterprises
andplaced ontheinternational market were alsofreeofnational direct orindirect taxes andduties.
There wasnotimelimitforexpiry ofthescheme. Therepresentative ofPanama stated thattheexport
Promotion FreeZones didnotdiffer fromtheExport Processing Zones: thefreezones wereclassified
intwocategories: commercial freezones, which included theColon FreeZone, andindustrial free
zones, which included theexport processing zones andpetroleum freezones.
Colón FreeZone
73. Therepresentative ofPanama saidthatmostimportant ofthefreezones wastheColón Free
Zone. Imports fromtheColón FreeZonerepresented Panama 'ssecond largest import market. Exports
totheColón FreeZone werenotsosignificant. Panama 'sImports andExports toandfromtheColón
FreeZone amounted tothefollowing in1995:WT/SPEC/33/Rev.3
Page31
(Millions ofdollars)
Detail Years Jan.toApril
1993 1994 1995
(a) Fiscal Territory
Imports 2,187.4 2,404.1 732.2
Exports 507.6 532.5 184.9
(b) Colon FreeZone
Imports 4,492.8 5,009.9 1,651.6
Exports 5,115.2 5,721.0 1,825.4
(c) Panama withColon FreeZone
Imports from C.FreeZone 241.9 370.1 n.a.
Exports toC.FreeZone 5.8 6.9 n.a.
n.a. Notavailable.
74. TheColon FreeZone wascreated byDecree No.18of17June1948. Itcomprised several
adjoining zones close totheCristobal Port. Theoperations carried outintheColon FreeZone were
theimport andre-export ofmerchandise andtheconsolidation ofconsignments. TheZonewasmanaged
andadministered byaBoard ofDirectors chaired bytheMinister ofTrade andIndustry, anExecutive
Committee oftheBoard ofDirectors andamanager.
75. AllnaturalorlegalpersonscouldoperateintheCFZprovidedtheyhadobtainedanauthorization
toengage inbusiness fromtheAdministration oftheCFZ. Nocommercial licence orminimum capital
investment wasrequired. Allactivities carried outintheZone wereexempt fromalltaxesasstipulated
inthelawsofPanama, excepting income tax. Goods imported intotheZone were notsubject to
Panamanian import duties. Imports fromtheColón FreeZone wereliable topayalltariffs andduties
payable under Panamanian legislation. Anytypeofgoodfromanycountry maybeimported intoand
re-exported fromtheZone, withtheexception ofprohibited imports suchasexplosive orinflammable
substances, weapons andnarcotics. There werenoquantitative restrictions onimports totheZone.
There were notaxes, duties orrestrictions onforeign investment inthezone.
76. Allgoods andother commercial articles oreffects imported intotheZone which hadbeen
manufactured, altered, assembled, packed orprocessed there, could beexported without payment of
import duties andtaxesto:official departments oftheUnited States located intheCanal area,intended
foruseorconsumption bypersons entitled toduty-free purchases under inter-governmental agreements;
toships transitting thePanama Canal destined forforeign ports andsailing between anyauthorized
portintheRepublic andforeign ports; andforexport outside theterritory ofPanama. The
representative ofPanama stated thathisGovernment didnotconsider thattheincentives provided toWT/SPEC/33/Rev.3
Page32
theFreeZones werebased onexport activity, dejureordefacto,asestablished inArticle 3ofthe
Subsidies Agreement. Furthermore, therepresentative ofPanama explained thatnoneofthelicensing
requirements necessary fortheestablishment ofanenterprise within anExport Processing Zone and
theColón FreeZone, adopted byLawNo.25of30November 1992andLawNo.18of17June1948,
respectively, arebased onexport performance considerations. Therepresentative ofPanama alsostated
thatthese requirements were based onnational treatment andarefullycompatible withtheTRIMs
Agreement.
77. Therepresentative ofPanama stated thatfreezones including theColon FreeZone andExport
Processing Zones aresovereign Panamanian Territory. Assuch, theyarefullysubject tothecoverage
ofPanama 'scommitments initsProtocol ofAccession totheWTO Agreement. Inthisregard Panama
would ensure enforcement ofitsWTO obligations inthose zones, including those commitments derived
fromtheAgreement onTrade Related Aspects ofIntellectual Property Rights. Inaddition, when goods
produced orimported intothezones under thespecial taxandtariffrégime existing intheseareas enter
intotherestofPanama, normal customs formalities, tariffs andtaxes would beapplied. TheWorking
Party tooknoteofthese commitments.
Trade Agreements
78. Withthelongtermobjective ofintegration intotheCentral American Common Market, Panama
launched aprocess ofnegotiation andsignature ofbilateral agreements onfreetrade andpreferential
treatment witheachofthecountries inCentral America inthe1970's.These treaties areofindefinite
duration andenvision thenegotiated incorporation ofproducts originating ineither contracting State.
Thegoods traded under thepreferential régime aresubject toeither lowtariffs orzerotariff, andare
exempted fromallsurcharges andfeesthatareincidental totheimportation andexportation ofgoods.
Inthecontext ofamodality agreed under the1980Treaty ofMontevideo establishing theLatin American
Integration Association (LAIA), Panama hassigned tradeagreements (Partial Scope Agreements) with
theUnited Mexican States andtheRepublic ofColombia.
79. Panama hassigned other agreements, withaviewtoexpanding itstrade relations, withthe
following countries: theformer Union ofSoviet Socialist Republics (now theCommonwealth of
Independent States, CIS), People 'sRepublic ofBulgaria, People 'sRepublic ofHungary, People 's
Republic ofPoland andtheGovernment ofRomania. These agreements onlyprovided forabilateral
most-favoured-nation treatment anddonotprovide foranyexemptions fromnormal tariffs, surcharges
orfees.WT/SPEC/33/Rev.3
Page33
80. Therepresentative ofPanama alsostated thatPanama would observe theprovisions oftheWTO
including Article XXIV oftheGATT 1994, paragraph 3oftheEnabling Clause, andArticle Vofthe
GATS initstrade agreements, andwould ensure thattheprovisions ofthese WTO Agreements
concerning preferential trading systems, freetrade areas, andcustoms unions ofwhich Panama isa
member aremetfromthedateofitsaccession. TheWorking Party tooknoteofthese commitments.
Privatization/State Trading Organizations
81. Inresponse toquestions concerning theprivatization process inPanama, therepresentative
ofPanama stated thatprogress hadbeenmade intheprivatization ofthefollowing enterprises:
Empresa Estatal deCemento Bayano: Privatized
Ferrocarril dePanamá: Preliminary studies forprivatization were being made.
Corporación deDesarrollo Integral de
Bayano:
ATLAPA:Realproperty wasbeing sold.
Theprecise means forprivatization modality hadyet
tobedetermined.
Corporación Azucarera LaVictoria: Astudy wasbeing conducted bytheMinistry of
Economics todetermine themost appropriate method
ofprivatization.
Generación deEnergía Eléctrica: Law9ofFebruary 1995 hadgranted authority tothe
Institute ofElectrical Resources togiveprivate
concessions forthegeneration ofelectricity.
Corredor Norte: Anadministrative concession hadbeengranted toa
private foreign enterprise.
Drinking Water Services: Themethod ofprivatization would bedetermined
shortly.
Cellular Channel: Thelawtoprivatize Band AofCellular Telephony
wasbeing revised toproceed withthepublic bidding.
82. Therepresentative ofPanama stated thatintheview ofhisgovernment, onlyCorporación
Azucarera LaVictoria (CALV) (Sugar Company ofLaVictoria), Instituto deSeguro Agropecuario
(ISA) (Agricultural Insurance Company), Instituto Nacional deTelecomunicaciones (INTEL) (National
Telecommunications Institute), Instituto deRecursos Hidráulicos yElectrificación (IRHE) (Water
Resources andHydro Electricity Company), Instituto deAcueductos yAlcantarillados Nacionales
(IDAAN) (National Sewers andCanals Company), Dirección Metropolitana deAseo (Metropolitan
Cleanliness Authority) were engaged inState trading pursuant toArticle XVII oftheGATT 1994.
With theexception ofthose firms specifically granted amonopoly bytheGovernment (National
Telecommunication Institute, Water Resources andHydroelectricity Company, National Sewers andWT/SPEC/33/Rev.3
Page34
Canals Company, National Bingo, National Casinos, National Lottery, President Remon Horse Racing
Track), those firms were alsosubject totheanti-monopoly provisions oftheLawonDefence of
Competition. TheMinistry ofAgriculture andtheAgriculture andMarketing Institute (AMI) retained
therighttoState-trading eventhough theywere notengaged insuchtrade atthepresent time.
83. TherepresentativeofPanamaconfirmedthathisGovernmentwouldapplyitslawsandregulations
governing thetrading activities oftheseenterprises listed inparagraph 83inconformity withtherelevant
provisions oftheWTO Agreement, inparticular Article XVII oftheGATT 1994, theUnderstanding
onthatArticle andArticle VIIIoftheGATS. HealsosaidthatPanama would abide bytheprovisions
fornotification, non-discrimination, andtheapplication ofcommercial considerations fortrade
transactions, andthatitwould submit itsnotification under Article XVII atthetimeofitsaccession.
Therepresentative ofPanama alsosaidthathisGovernment would apply itslawsandregulations
governingthetradingactivitiesofState-ownedenterprisesandotherenterpriseswithspecialandexclusive
privileges andwould otherwise actinfullconformity withtheprovisions oftheWTO Agreements.
TheWorking Party tooknoteofthese commitments.
84. Some members oftheWorking Party noted thattheAgriculture andMarketing Institute (AMI)
hadnotbeenlisted byPanama asaStatetrading enterprise eventhough atvarious points inPanama 's
documentation, theAMIhadbeendescribed asaStatepurchaser ofagricultural products andinvolved
inthedistribution ofimport authorization afterensuring thattherewerenodomestic substitutes. These
members asked Panama toclarify theroleoftheAMI.
85. Inresponse tofurther questions fromWorking Party members, therepresentative ofPanama
explained thattheAgricultural Marketing Institute (AMI) hadbeenestablished byLawNo.70of
15December 1975, to:regulate supplies ofagricultural products intheinternal market ofbothnational
andimported agricultural products; topromote theimprovement ofmarketing systems foragricultural
output;andtoimplementthemarketingpoliciesformulatedbytheMinistryofAgriculturalDevelopment.
TheAMIhadalsobeenresponsible foradministering import permits forsome agricultural products.
In1990 anoverhaul ofAMIhadbeencommenced, resulting initceasing tobuyandsellagricultural
products andconcentrating instead onthepromotion oftheprovision ofservices totheagricultural
community. Since 1990, AMIhadnotbought, sold,imported orexported anyagricultural products.
Ithadalsoprivatized orclosed theinfrastructure owned bytheorganization, including theNational
Slaughterhouse. Since 1994 AMI hasoperated solely asafacilitating enterprise foragricultural
producers, byproviding information onexport markets, training activities andotherspecialized support
services. Adraftlawrestructuring AMI, eliminating itsauthority toengage inState-trading isintheWT/SPEC/33/Rev.3
Page35
process ofapproval. Noagricultural products aremarketed through Stateenterprises. However, the
Executive power hastheconstitutional authority topromote andcreate Stateenterprises, which may
beengaged intrade inagricultural products. Theonlyother State institution withlegalauthority to
engage inState trading istheMinistry ofAgriculture.
86. Therepresentative ofPanama affirmed thatwhen Panama acceded totheWTO, trade in
agricultural products would beadministered inconformity withtherelevant provisions oftheWTO
Agreements. TheWorking Party tooknoteofthiscommitment.
General Agreement onTrade inServices (GATS)
87. Inresponse toinquiries concerning Panama 'sservices sector, therepresentative ofPanama
supplied aMemorandum ontheServices Régime indocument WT/ACC/PAN/4. Therepresentative
ofPanama stated thatthelargest services sectors weretourism, theColon FreeZone, thePanama Canal
andtheTransisthmian OilPipeline. Services suchasbanking, airtransport, insurance andretail sales
totourists represent more than25percentoftheGDP. TheServices Balance hadaveraged US$1,000
million overthelastthreeyears. Norestrictions onremittance ofcapital norforeign exchange controls
were inplace. TheConstitution andthecommon lawrégime provided thatinvestment lawapplied
equally tonational andforeign investors. Panama 'sschedule ofspecific commitments onservices was
reproduced inWT/SPEC/1. Theviews expressed bytherepresentative ofPanama concerning various
service sectors aresummarized hereunder.
88. With reference tothebanking sector, therepresentative ofPanama saidthatwithin Panama
therewere108banks inoperation, ofwhich 84wereforeign banks. Banking wasregulated byCabinet
Decree No.238of1970, asamended byLawNo.93ofNovember 1974, copies ofwhich wereprovided
tomembers oftheWorking Party. Those lawsestablished theNational Banking Commission. Every
bankthatcomplied withtheconditions setdown bytheBanking Commission wasfreetoobtain alicence
tooperate inPanama. There werethree (3)classes ofbanking licence: (i)aGeneral Licence, which
permitted theholder ofthelicence toofferawiderange ofbanking services, bothwithin oroutside
Panama. Holders ofsuchalicence wererequired tohaveaminimum ofUS$1,000,000 paid-in capital.
Holders ofGeneral Licences wererequired topayanannual taxofUS$25,000; (ii)anInternational
Licence which permitted theholder toconduct foreign transactions fromPanama. Theholder ofsuch
alicence wasrequired tohaveUS$500,000 inNational Bonds, freeofencumbrances. Holders ofan
InternationalLicencewererequiredtopayanannualtaxofUS$15,000and(iii)aRepresentationLicence
which permitted aforeign banktoestablish localrepresentative offices.WT/SPEC/33/Rev.3
Page36
89. Concerning insurance, therepresentative ofPanama saidthatanyinsurance orreinsurance
company could operate inPanama under thesameconditions asnational companies. Thelawregulating
theprovision ofinsurance wasLaw55of1984. Allinsurance companies were required tohavea
minimum paid-in capital, tomaintain aguarantee deposit, andtobeauthorized andoperate under
supervision oftheInsurance Commissioner oftheMinistry ofCommerce andIndustry. LawNo.56
of1985 regulated reinsurance. Reinsurance companies wererequired tohaveaminimum paid-in or
assigned capital, ineachcase, ofnotlessthanB250,000. Licences were issued bytheNational
Reinsurance Commission. TheInsurance Commissioner supervised theactivities ofreinsurance
companies. Insurance brokers were regulated byLawNo.55of1984. Thatlawprovided thatin
order toobtain alicence asaninsurance broker, applicants must beresident Panamanian citizens.
Inorder toobtain alicence legal persons were required to:(a)present aCertificate ofthePublic
Registry, verifying itsregistration intheMercantile Section oftheRegistry, andthename oftheagent
ofthecorporation; (b)provide aCopy oftheArticles ofIncorporation, including thename ofthe
Directors, domicile andauthorized capital; (c)provide adocument certifying thattheagent ofthe
corporation isalicensed insurance broker, whohasbeenpractising habitually andpermanently for
thelasttwoyears; (d)maintain therequired deposit; (e)holdacertificate fromtheshareholders of
thecorporation, signed bytheSecretary orTreasurer. Theshareholders mustbelicensed insurance
brokers.
90. Therepresentative ofPanama saidthatfinancial enterprises were regulated byLawNo.20
ofNovember 1986, andwere natural orlegal persons, other thanbanks, insurance companies,
cooperatives,mutualcompaniesandsavingsandloansassociations,engagedinmakingloansforpersonal
orfamily purposes. Legal ornatural persons must haveaminimum paid-in capital ofB150,000.
Interest allowed wasfixedbyResolution ofMinistry ofCommerce andIndustries between 1.5percent
and2.0percentpermonth depending onfluctuations inLondon Interbank Offering Rate. Financial
enterprises were required topayanannual taxequal to2.5percentoftheirpaid-in capital asof
31December ofeachyear, withamaximum taxofB12,500.
91. Concerningsecurities,therepresentativeofPanamasaidthattheNationalSecuritiesCommission
(NSC) wascreated byCabinet Decree No.247of16July1970. TheNSCregulated thepublic offering
ofsecurities andmutual funds, andtheactivities ofbrokers, dealers andexchanges. Twotypes of
securitiesareavailable:InitialPublicOfferingswiththeNationalSecuritiesCommissionandthePanama
Stock Exchange; andsecurities issued onaforeign market seeking listing onthePanama Stock
Exchange.WT/SPEC/33/Rev.3
Page37
92. Inrelation totourism services, therepresentative ofPanama stated thattherewerenorestrictions
forforeign investment inhotels inPanama. Activities oftravel agencies wereconsidered retail trade
andaccordingly suchservices could onlybeprovided byPanamanians.
93. Inrelation toconstruction, therepresentative ofPanama saidthatconstruction activities could
beundertaken byforeign persons provided thatthose persons hadalicensed professional (engineer
orarchitect) incharge oftheworks.
94. Inrelation tomaritime transport, therepresentative ofPanama stated thatin1993, the
Panamanian Merchant Marine hadatotalfleetof12,500 vessels, equivalent to77.1million ofGross
Registered Tons, thattransported freight amounting to157,980,301 longtons. Around 12,000 vessels
navigated thePanama canalannually. Panama had16ports, some ofthemoperating under concessions
given toprivate enterprises (Almirante, Puerto Armuelles). Commercial portswere: Balboa, Cristobal,
Coco SoloandLasMinas Bay. Thetwomostimportant ports wereCristobal andBalboa: in1991,
Cristobal moved atotalfreight of398,331 metric tonnes andBalboa, 945,103 metric tonnes (more
than75percentofthese, were containers freight). Inrelation tolandtransport, therepresentative
ofPanama stated thatanyforeign person could participate inlandfreight transportation. Land
transportation ofpassengers could onlybeprovided byPanamanian nationals.
95. Inrelation toairtransport, therepresentative ofPanama stated thatthere werenorestrictions
fortheestablishment ofenterprises engaged inmaintenance orrepair ofaircraft, andthatseveral foreign
airtransport companies were engaged intheprovision ofservices inPanama.
96. Therepresentative ofPanama stated thattheNational Political Constitution provided thatonly
Panamanians could engage inretailtrade. Retail tradewasdefined asselling toconsumers, representing
oracting asagent formanufacturing ortrading companies oranyother activity defined asretail trade.
Ingeneral, theprovision ofservices, wasconsidered wholesale trade.
97. Inrelation toprofessional services, therepresentative ofPanama explained thatinsome cases
professional services could onlybeprovided byPanamanian providers, orforeigners meeting residency
requirements. Theprovision oflegalservices wereregulated byLawNo.9of18April 1984. The
Supreme Court ofJustice could onlygrant licences topractise theprofession ofattorney toPanamanian
nationals withaprofessional qualification inlaw,issued bytheUniversity ofPanama orUniversidad
Santa Maria LaAntigua, oranyother recognised university.WT/SPEC/33/Rev.3
Page38
98. Inrelation toaccountancy services, therepresentative ofPanama saidthattheTechnical Board
ofAccountants could grant special permits topractice toforeign accountants onlyiftheapplicant was
acitizen ofacountry thataccords thesame rights toPanamanians, oriftheindividual wasaninternal
auditor inaresident foreign company orinstitution orinternational body thatrequired theapplicant
toexecute functions related totheirorganization. Inaddition, aspecial permit topractice could be
granted when there were nonational professionals available, oriftheapplicant wasmarried toa
Panamanian citizen, orhadresided inPanama formore thantenyears. Only natural persons with
aCertified Public Accountant 'sLicence werepermitted toestablish corporations toprovide services
totheprofession, andthelegalperson thusconstituted must satisfy certain additional conditions.
99. Therepresentative ofPanama stated thatengineers orarchitects wererequired toholdalicence.
Qualified Panamanian citizens andqualified foreign citizens ofgoodcharacter married toaPanamanian
orwithPanamanian children andentitled topermanent residence inPanama were eligible toobtain
alicence. Inaddition citizens ofcountries which permitted Panamanians toexercise suchprofessions
were entitled toobtain alicence. Such foreign professionals could onlybeemployed ifthere were
noPanamanian professionals available toprovide those services. Iftheforeigner wasemployed for
more than12months, theemploying entity wasrequired toemploy aPanamanian professional tobe
trained inorder totaketheplace oftheforeigner when thecontract isover. Permits toemploy foreign
experts forlessthan12months were notrenewable.
100. Theschedule ofPanama 'sconcessions andcommitments onservices isreproduced inPartII
oftheAnnex totheProtocol ofAccession ofPanama.
Agreement onTrade Related Aspects ofIntellectual Property Rights (TRIPS)
101. When reviewing Panama 'slegislation onintellectual andindustry property, some members
noted thatthislegislation wasdispersed inseveral legalinstruments. Thissituation wascontrary to
international standards concerning transparency andpublication oflegal texts. They invited the
representative ofPanama toclarify anumber ofquestions relevant totheconsistency ofPanama 's
legislation withtheTRIPS Agreement. Therepresentative ofPanama saidthatthelegislation hadbeen
updated, harmonized andadapted tointernational provisions inorder tosimplify procedures andgive
inventors, owners oftrade marks andauthors security. Headded thatPanama hadalonghistory of
legislative protection ofintellectual property rights, dating from1916. Therepresentative ofPanama
provided members oftheWorking Party withacomprehensive description ofintellectual property laws,
including theagencies responsible forimplementation andafulllistofallrelevant treaties towhichWT/SPEC/33/Rev.3
Page39
itwasasignatory indocument WT/ACC/PAN/5. Therepresentative ofPanama stated thatCopyright
isincluded inLawNo.1of16August 1916, Administrative Code oftheRepublic ofPanama inBook V,
TitleIV,Literary andArtistic Property. Thiswasthefirstcopyright lawoftheRepublic. LawNo.
15of8August 1994 wasthenewCopyright Law. LawNo.15included specific regulation of
audiovisual work, computer programs, architectural work, press articles, moral rights, patrimonial
rights, several kindofcontracts, mandatory licensing (which would notaffect orcondition theprotection
ofworks inanyway, asprovided forinArticle 5(2)oftheBernConvention), regulation ofrelated
rights, etc.Therepresentative ofPanama stated thatintherecently enacted legislation ontheprotection
ofindustrial property, Panama hadcomprehensively adapted itsdomestic legislation totheAgreement
onTRIPS.TheviewsexpressedbytherepresentativeofPanamaconcerningvariousintellectualproperty
rights aresummarized hereunder.
102. Therepresentative ofPanama stated thatindustrial property wasregulated bytheAdministrative
Code andExecutive Decree No.1of3March 1939 (Articles 2005-2035), Executive Decree No.1
of3March1939andtheGeneralInter-AmericanConventiononTrademarksandCommercialProtection.
HisGovernment hadrecognized theobsolescence ofthatlegislation, andadraftlawhasbeenapproved
bytheCabinet andhadbeensubmitted toLegislative Assembly forapproval. Acopyofthatdraft
lawwasmade available tomembers oftheWorking Party. Headded thatbyLawNo.41of
13July1995, Panama hadacceded totheParis Convention fortheProtection ofIndustrial Property.
103. Concerning trademarks andtrade names, therepresentative ofPanama stated thattheycould
beregistered regardless ofwhether theowners werePanamanian nationals orforeigners. Registration
wasvalid fortenyears butcould berenewed intenyearintervals indefinitely. Applications for
registration could befiledbytheowner oranattorney. Allrequired documents wererequired tobe
inSpanish ortranslated byapublic translator. Goods orservices pertaining todifferent classes could
notbeincluded insameapplication. Separate applications foreachseparate classofmark wererequired.
Marks covering services areregistered asservice marks. Inthecaseofinfringement administrative,
civilandpenal remedies applied. There wereprocedures fortheannulment ofregistered marks and
concession procedures. Registration requests were published fortheinformation ofthirdparties.
104. WithreferencetopatentstherepresentativeofPanamasaidthatpatentsweregrantedtoinventors,
whether nationals orforeigners, byletters ofpatent (patente deinvención) issued pursuant tothe
Administrative Code, Articles 1987-2004. They were valid foratermof20years. Inthecaseof
registration ofanexisting foreign patent, noPanamanian patent could begranted foratermexceeding
15years, andinnoevent could thetermofregistration extend beyond theduration oftheoriginalWT/SPEC/33/Rev.3
Page40
patent. Extension orrenewal could onlybegranted when theoriginal patent wasnotforafullterm,
andprovided itwasconsidered tobejustified. Applications forregistration could befiledbytheowner
oranattorney. Allrequired documents were required tobeinSpanish ortranslated byapublic
translator. Inthecaseofinfringement thecriminal sanctions were applicable pursuant tothePenal
Code.
105. Inresponse toquestions andcomments fromsome members oftheWorking Party indicating
whattheyconsidered tobeinadequacies inPanama 'sintellectual property régime, therepresentative
ofPanama stated thatanewdraftlawmaking Panama 'sintellectual property régime fully consistent
withtheAgreement onTrade Related Aspects ofIntellectual Property Rights wasready tobepresented
totheNational Assembly foritsapproval. Itwasacomprehensive coderegulating patents, utility
models, trademarks, industrial designs, registration andcancellation procedures, notifications, and
allocating administrative resources tocarry those provisions intoeffect. Thelawhadbeendrafted
withthehelpofinternational specialists including staffoftheWorld Intellectual Property Organization.
106. Following examination ofthetextofthedraftlaw,some members asked thatalterations be
made toremedy certain deficiencies inthefields ofcopyright; inparticular, rental rights, andprotection
forelectronic databases, patents; integrated circuits; trademarks; trade secrets andenforcement of
intellectual property lawsintheColón FreeZone. Members alsorequested clarification oftheremedies
available under thenewlawinthecaseofinfringement. Therepresentative ofPanama replied that
changes hadbeenmade tothedraftlawtotakeaccount oftheconcerns ofmembers. Heprovided
adetailed summary ofthenewdraft law, including anindex ofitsprovisions indocument
WT/ACC/PAN/9.Healsoprovideddetailedinformationontheremediesavailabletoenforceintellectual
property rights inPanama, indocuments WT/ACC/PAN/5 and8.
107. Inrelation toenforcement ofcopyrights, therepresentative ofPanama stated thatsummary
civilactions based onTitleXII,Chapter IofLawNo.15would beavailable totheowners ofcopyrights.
Following aCourt order tosuspend theillegal activity provisional measures could beobtained without
prejudice toanyrights tocompensation formaterial damage. Therightholder could alsorequest an
interlocutory order ofseizure oftheincome derived from theillegal activity; seizure ofthegoods
illegally produced andtheequipment usedtoproduce them; andanorder compelling thedefendant
tosuspend theinfringing activity. Administrative procedures andremedies weretheprovince ofthe
Directorate General ofCopyright, andwereavailable fornon-criminal violations ofLawNo.15.In
suchacasetheDirectorateGeneralofCopyrightwouldsuspendanyfurtherdisseminationorreproduction
oftheinfringing works. Criminal sanctions were established byLawNo.15of1994 (Title XII,WT/SPEC/33/Rev.3
Page41
Chapter II,Infringement andSanctions). Imprisonment could range from30daysto4years. Additional
pecuniary sanctions could beawarded bytheCourt.
108. Inrelation toenforcement ofindustrial property rights, therepresentative ofPanama stated
thatcivilandadministrative remedies similar tothose described above inrelation tocopyrights were
available. Administrative remedies wereobtained fromtheGeneral Directorate forIndustrial Property.
Following anadministrative order, registered marks could beexpunged. Criminal remedies similar
tothose described above inrelation tocopyright were alsoavailable.
109. Therepresentative ofPanama stated thatthedraftlawonindustrial property, aforementioned,
became lawoftheRepublic (Law No.35of10May1996), making itsinternal legislation fully
compatible withTRIPS provisions andeliminating allexisting discriminatory provisions.
110. Following theexamination oftheinformation described above concerning Panama 'sintellectual
property régime, some members stated thatPanama should implement theAgreement onTrade Related
Aspects ofIntellectual Property Rights asofitsaccession totheWTO.
111. Therepresentative ofPanama stated thatPanama would fullyapply alltheprovisions ofthe
Agreement onTrade Related Aspects ofIntellectual Property Rights bythedateofitsaccession to
theWTO, without recourse toanytransitional period. TheWorking Party tooknoteofthiscommitment.
Agreement onTrade Related Investment Measures (TRIMs)
112. Inresponse toquestions raised bymembers oftheWorking Party, therepresentative ofPanama
saidthatPanama doesnotmaintain andinthefuture would notintroduce anymeasure inconsistent
withtheTRIMs Agreement. TheWorking Party tooknoteofthiscommitment.
Transparency
Notifications
113. Therepresentative ofPanama saidthatupon entry intoforce oftheProtocol ofAccession,
Panama would submit notifications oflegislation pursuant totheimplementation ofthefollowing
provisions ofMultilateral Trade Agreements forwhich thedatespecified inthose provisions isearlier
thanthedateofentry intoforce oftheProtocol ofAccession, andanyother notifications required for
thefollowing Agreements: Agreement onSanitary andPhytosanitary Measures; Agreement onImportWT/SPEC/33/Rev.3
Page42
Licensing Procedures; Agreement onTechnical Barriers toTrade; andtheUnderstanding onthe
InterpretationofArticleXVIIoftheGATT1994.ThenotificationsfortheAgreementonImplementation
ofArticle VIIoftheGATT 1994would besubmitted by1January 1997. Anyregulations subsequently
enacted byPanama which gaveeffect tothelawsenacted toimplement theabove mentioned Agreements
would alsoconform totherequirements ofthose Agreements. Draft notifications fortheAgreements
onAgriculture andSubsidies andCountervailing Measures hadbeenexamined bytheWorking Party
andthose notifications would besubmitted totheWTO Secretariat atthetimeofPanama 'saccession.
TheWorking Party tooknoteofthese commitments.
114. Therepresentative ofPanama alsostated thathisGovernment would notify theWTO Secretariat
annually oftheimplementation ofthephased commitments withdefinitive datesforcompliance referred
toinparagraphs 35,53,63and68ofthisReport andwould identify anydelays inimplementation
together withthereasons therefore. TheWorking Party tooknoteofthiscommitment.
Publication
115. Therepresentative ofPanama saidthatlawsarepublished intheofficial publication organ,
which iscurrently theOfficial Gazette. Nolawenters intoforce without previous publication inthe
Official Gazette. Healsostated thatPanama would secure transparency onallpublication requirements
andcomply withtheprovisions ofArticle XofGATT 1994. TheWorking Party tooknoteofthese
commitments.
Conclusions
116. TheWorkingPartytooknoteoftheexplanationsandstatementsofPanamaconcerningitsforeign
trade régime, asreflected inthisreport. TheWorking Party tooknoteofthecommitments given by
Panama inrelation tocertain specific matters, which arereproduced inparagraphs 10,16,22,23,
26,34,35,36,41,42,47,51,63,68,71,77,80,83,86,111,112,113,114and115ofthisreport.
TheWorking Party tooknotethatthese commitments hadbeenincorporated inparagraph 2ofthe
Protocol ofAccession ofPanama totheWTO.
117. Having carried outtheexamination oftheforeign trade régime ofPanama andinthelightof
theexplanations, commitments andconcessions made bytherepresentative ofPanama, theWorking
Party reached theconclusion thatPanama should beinvited toaccede totheAgreement Establishing
theWTO under theprovisions ofArticle XII.Forthispurpose, theWorking Party hasprepared theWT/SPEC/33/Rev.3
Page43
draftDecision andProtocol ofAccession reproduced intheAppendix tothisreport, andtakes note
ofPanama 'sSchedule ofSpecific Commitments onServices (document WT/SPEC/24) anditsSchedule
ofConcessions andCommitments onGoods (document WT/SPEC/33/Rev.2/Add.1) thatareannexed
totheProtocol. Itisproposed thatthese textsbeadopted bytheGeneral Council when itadopts the
report. When theDecision isadopted, theProtocol ofAccession would beopenforacceptance by
Panama which would become aMember thirty daysafteritaccepts thesaidProtocol. TheWorking
Party agreed, therefore, thatithadcompleted itswork concerning thenegotiations fortheaccession
ofPanama totheAgreement Establishing theWTO.WT/SPEC/33/Rev.3
Page44
APPENDIX
ACCESSION OFTHE REPUBLIC OFPANAMA
Draft Decision
TheGeneral Council,
Having regard totheresults ofthenegotiations directed towards theestablishment oftheterms
ofaccession oftheRepublic ofPanama totheMarrakesh Agreement Establishing the
World Trade Organization andhaving prepared aProtocol fortheAccession oftheRepublic ofPanama,
Decides ,inaccordance withArticle XIIoftheMarrakesh Agreement Establishing theWorld
Trade Organization, thattheRepublic ofPanama mayaccede totheMarrakesh Agreement Establishing
theWorld Trade Organization ontheterms setoutinthesaidProtocol.WT/SPEC/33/Rev.3
Page45
PROTOCOL OFACCESSION OFTHE REPUBLIC OFPANAMA
TOTHE MARRAKESH AGREEMENT ESTABLISHING
THE WORLD TRADE ORGANIZATION
DRAFT
TheWorld Trade Organization (hereinafter referred toasthe"WTO"), pursuant totheapproval
oftheGeneral Council oftheWTO accorded under Article XIIoftheMarrakesh Agreement Establishing
theWorld Trade Organization (hereinafter referred toas"WTO Agreement"), andtheRepublic of
Panama (hereinafter referred toas"Panama"),
Taking noteoftheReport oftheWorking Party ontheAccession ofPanama totheWTO in
document WT/ACC/PAN/... (hereinafter referred toasthe"Working Party Report"),
Having regard totheresults ofthenegotiations ontheaccession ofPanama totheWTO,
Agree asfollows:
PartI-General
1. Upon entry intoforce ofthisProtocol, Panama accedes totheWTO Agreement pursuant to
Article XIIofthatAgreement andthereby becomes aMember oftheWTO.
2. TheWTO Agreement towhich Panama accedes shallbetheWTO Agreement asrectified,
amended orotherwise modified bysuchlegalinstruments asmayhaveentered intoforce before the
dateofentry intoforce ofthisProtocol. ThisProtocol, including thecommitments referred toin
paragraph 116oftheWorking Party Report which arehereby incorporated intothisProtocol, shall
beanintegral partoftheWTO Agreement.
3. Except asotherwise provided forintheparagraphs referred toinparagraph 116oftheWorking
Party Report, those obligations intheMultilateral Trade Agreements annexed totheWTO Agreement
thataretobeimplemented overaperiod oftimestarting withtheentry intoforce ofthatAgreement
shallbeimplemented byPanama asifithadaccepted thatAgreement onthedateofitsentry intoforce.WT/SPEC/33/Rev.3
Page46
4. Panamamaymaintainameasureinconsistentwithparagraph1ofArticleIIoftheGATSprovided
thatsuchameasure isrecorded intheListofArticle IIExemptions annexed tothisProtocol andmeets
theconditions oftheannex totheGATS onArticle IIExemptions.
PartII-Schedules
5. TheSchedules annexed tothisProtocol shall become theSchedule ofConcessions and
Commitments annexed totheGeneral Agreement onTariffs andTrade 1994 (hereinafter referred to
asthe"GATT 1994") andtheSchedule ofSpecific Commitments annexed totheGeneral Agreement
onTrade inServices (hereinafter referred toas"GATS") relating toPanama. Thestaging ofthe
concessions andcommitments listed intheSchedules shallbeimplemented asspecified intherelevant
parts oftherespective Schedules.
6. Forthepurpose ofthereference inparagraph 6(a)ofArticle IIoftheGATT 1994 tothedate
ofthatAgreement, theapplicable dateinrespect oftheSchedules ofConcessions andCommitments
annexed tothisProtocol shallbethedateofentry intoforce ofthisProtocol.
PartIII-Final Provisions
7. ThisProtocol shall beopen foracceptance, bysignature orotherwise, byPanama until
30June1997.
8. ThisProtocol shallenter intoforce onthethirtieth dayfollowing thedayofitsacceptance.
9. ThisProtocol shallbedeposited withtheDirector-General oftheWTO. TheDirector-General
oftheWTO shallpromptly furnish acertified copyofthisProtocol andanotification ofacceptance
thereto pursuant toparagraph 7toeachMember oftheWTO andtoPanama.
10. ThisProtocol shallberegistered inaccordance withtheprovisions ofArticle 102oftheCharter
oftheUnited Nations.WT/SPEC/33/Rev.3
Page47
Done atGeneva this...dayof...onethousand ninehundred andninety-six, inasingle copy
intheEnglish, French andSpanish languages eachtextbeing authentic, except thataSchedule annexed
hereto mayspecify thatitisauthentic inonlyoneormore ofthese languages.WT/SPEC/33/Rev.3
Page48
ANNEX
SCHEDULE CXLI -REPUBLIC OFPANAMA
PartI-Goods
[Circulated asWT/SPEC/33/Rev.2/Add.1]
PartII-Services
[Circulated asWT/SPEC/24]WT/SPEC/33/Rev.3
Page49
ANNEX 1
TOTHE REPORT OFTHE WORKING PARTY ONTHE ACCESSION OFPANAMA
Price Controls
Heading Description
1.Food
1006.20.00 Husked (brown) rice
1006.30.00 Semi-milled orwholly-milled rice, whether ornotpolished orglazed
1006.40.00 Broken rice
1701.99.90 Sugar, national (allvarieties)
0402.91.91 Evaporated, ofafatcontent, byweight, notexceeding 1.5% [Evaporated milk]
0402.91.92 Evaporated, ofafatcontent, byweight, exceeding 1.5% [Evaporated milk]
0402.99.91 Evaporated, ofafatcontent, byweight, notexceeding 1.5% [Evaporated milk]
0402.99.92 Evaporated, ofafatcontent, byweight, exceeding 1.5% [Evaporated milk]
0401 Milk andcream, notconcentrated norcontaining added sugar orother sweetening
matter [Pasteurized milk]
0402.10 Inpowder, granules orother solid forms, ofafatcontent, byweight, notexceeding
1.5% [Powdered milk]
0402.21 Notcontaining added sugar orother sweetening matter [inpowder]
0402.29 Other [inpowder]
1901.10.10 Modified milk [Infant formula]
1501.00.10 Lard andpigfat[Lard, national]
2501.00.30 Table orkitchen salt[Refined salt,national]
1604.20.10 Homogenized preparations forinfant use[Children 'sfood (allbrands)]
1901.10 Preparations forinfant use,putupforretail sale[Children 'sfood (allbrands)]
2104.20 Homogenized composite food preparations [Children 'sfood (allbrands)]
2106.10.10 Dietetic milk substitute preparations, forchild use[Children 'sfood (allbrands)]
2190.90.90 Other (Composite non-alcoholic preparations with abasis ofextracts ofsyrups for
thepreparation ofbeverages) [Children 'sfood (allbrands)]
1901.10 Preparations forinfant use,putupforretail sale[Cereals forbabies]
0407.00.20 Forhuman consumption, [Eggs, grade A]
1507 Soya-bean oilanditsfractions, whether ornotrefined, butnotchemically modified
[Edible vegetable oils]
1508 Ground-nut oilanditsfractions, whether ornotrefined, butnotchemically modified
[Edible vegetable oils]WT/SPEC/33/Rev.3
Page50
Heading Description
1509 Olive oilanditsfractions, whether ornotrefined, butnotchemically modified
[Edible vegetable oils]
1510 Other oilsandtheir fractions, obtained solely from olives, whether ornotrefined,
butnotchemically modified, including blends ofthese oilsorfractions with oilsor
fractions ofheading 15.09 [Edible vegetable oils]
1.Food (cont'd)
1511 Palm oilanditsfractions, whether ornotrefined, butnotchemically modified
[Edible vegetable oils]
1512 Sunflower-seed, safflower orcotton-seed oilandfractions thereof, whether ornot
refined, butnotchemically modified [Edible vegetable oils]
1513 Coconut (copra) palm kernel orbabassu oilandfractions thereof, whether ornot
refined, butnotchemically modified [Edible vegetable oils]
1514 Rape, colza ormustard oilandfractions thereof, whether ornotrefined, butnot
chemically modified [Edible vegetable oils]
1515 Fixed vegetable fatsandoils(including jojoba oil)andtheir fractions, whether ornot
refined, butnotchemically modified [Edible vegetable oils]
2301.20.00 Flours, meals andpellets, offishorofcrustaceans, molluscs orother aquatic
invertebrates [Fish meal (used inthepreparation offeedforpoultry, pigsandcattle)]
2.Articles forhousehold use
3402.20.20 Preparations putupforretail sale[Detergents, national (except special)]
3402.90 Other [Detergents, national (except special)]
3401.11 Fortoilet use(including medicated products) [Toilet soap]
3401.20.20 Forbathroom ortoilet use,including added bacteriostatic substances [Toilet soap]
3.Other
4820.20.10 Exercise books, broad line, double line, calligraphy, ruled insquares anddrawing
books [Stapled exercise books, national (except plastified)]
4820.20.90 Other, including notebooks [Stapled exercise books, national (except plastified)]
4901.99.00 Other [School texts, national andimported (except listed novels)]
3004 Medicaments (excluding goods ofheadings Nos. 30.02, 30.05 or30.06) consisting of
mixed orunmixed products fortherapeutic orprophylactic uses, putupinmeasured
doses orinforms orpackings forretail sale[Medicinal products]
2711 Petroleum gases andother gaseous hydrocarbons [Liquefied gas(25pound tax)]*
6203.42 Ofcotton [Official school uniforms]
6203.43 Ofsynthetic fibres [Official school uniforms]
6203.49 Ofother textile materials [Official school uniforms]
6204 Women 'sorgirls'suits, ensembles, jackets, blazers, dresses, skirts, divided skirts,
trousers, bibandbrace overalls, breeches andshorts (other thanswimwear) [Official
school uniforms]WT/SPEC/33/Rev.3
Page51
Heading Description
6205.30.21 Forchildren 'sschool uniforms [Official school uniforms]
6205.90.21 Forchildren 'sschool uniforms [Official school uniforms]
6206.30.20 Forschool uniforms (ofcotton/up tosize16). Women 'sorgirls'blouses, shirts
andshirt-blouses) [Official school uniforms]
3.Other (cont'd)
6206.40.20 Forschool uniforms (ofman-made fibres/(up tosize16),women 'sorgirls'blouses
shirts andshirt-blouses) [Official school uniforms]
6206.90.20 Forschool uniforms (oftextile materials/(up tosize16),women 'sorgirls'blouses,
shirts andshirt-blouses) [Official school uniform]
________________
*Afreight differential (transport cost)isapplied, depending ontheregion inwhich the25-pound liquefied gastankissold.