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WT/TPR/M/301
15 October 2014
(14-5878)
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Trade Policy Review Body
23 and 25 July 2014
TRADE POLICY REVIEW
PANAMA
MINUTES OF MEETING
Chairperson: H.E. Mrs Mariam MD Salleh
CONTENTS
1 INTRODUCTORY REMARKS BY THE CHAIRPERSON ....................................................... 2
2 OPENING STATEMENT BY THE REPRESENTATIVE OF PANAMA
(H.E. MR MELITON ARROCHA) .......................................................................................... 4
3 STATEMENT BY THE DISCUSSANT ................................................................................ 7
4 STATEMENTS BY MEMBERS ........................................................................................ 11
5 REPLIES BY THE REPRESENTATIVE OF PANAMA AND OTHER COMMENTS................... 35
6 CONCLUDING REMARKS BY THE CHAIRPERSON ......................................................... 39
Note: Advance written questions by WTO Members and the replies provided by Panama are
reproduced
in
document
WT/TPR/M/301/Add.1
and
will
be
available
online
at:
http://www.wto.org/english/tratop_ e/tpr_e/tp_rep_e.htm.
WT/TPR/M/301 • Panama
-21 INTRODUCTORY REMARKS BY THE CHAIRPERSON
1.1. The second Trade Policy Review of Panama was held on 23 and 25 July 2014.
The Chairperson H.E. Mrs Mariam MD Salleh (Malaysia) welcomed the delegation of Panama
headed by H.E. Mr Melitón Arrocha, Minister of Trade and Industries; H.E. Mr Alfredo Suescum,
Permanent Representative of Panama to the WTO; the rest of the delegation from Panama; other
colleagues from the mission in Geneva; and the discussant, H.E. Mr Dacio Castillo (Honduras).
1.2. The Chairperson recalled the purpose of the Trade Policy Reviews and the main elements of
the procedures for the meeting. The report by Panama was contained in document WT/TPR/G/301
and that of the WTO Secretariat in WT/TPR/S/301.
1.3. Questions by the following delegations had been submitted in writing at least two weeks in
advance and had been transmitted to the delegation of Panama: Hong Kong, China; Canada;
Iceland; Singapore; Australia; Chile; Argentina; the United States; the European Union; China;
Paraguay; Peru; Brazil; Mexico; and Indonesia. The following delegations submitted written
questions after the two-week deadline: Dominican Republic, Colombia, Chinese Taipei, Costa Rica,
Pakistan, Trinidad and Tobago, Thailand, and Ecuador.
1.4. Since its last review, despite a difficult global economic environment, Panama had achieved
impressive economic growth rates, which were among the highest in Latin America. At the same
time, Panama had maintained a fairly open trade and investment regime and had stepped up
efforts to deepen its integration into the global economy, mainly as a competitive exporter of
international services. In fact, both the Secretariat and the Government reports pointed out that
Panama had continued to open up its foreign trade and investment regime, mainly by taking part
in international trade agreements, and by implementing policies to attract foreign direct
investment and improve the business climate. In addition, large-scale investments in
infrastructure, including the expansion of the Panama Canal, had helped improve the country's
connectivity and consolidate its position as a regional logistics hub. Other reforms undertaken by
Panama to foster trade included modernizing its customs procedures; simplifying the tariff
structure; strengthening the legal frameworks for competition, government procurement, and
intellectual property; amending the Free Zone Regime to remove export subsidies; and opening up
the mobile telephony market. The need for reforms in some of these areas had been raised in the
last review, so the Chairperson was sure that Members would want to learn more about these
reforms and assess their implication on trade.
1.5. At the same time, judging from Members' advance questions, it was clear that challenges
remained for Panama. The Chairperson drew attention to some areas where Members were
interested in having more clarity as to the way forward. These included, inter alia, Panama's plans
to rectify the fact that applied tariffs on a number of products appeared to exceed the bound rates.
Members would also like to know the rationale for tax discrepancies between national and
imported goods regarding fuels mixed with ethanol and motor vehicles, and any plans to remedy
this situation.
1.6. In the TBT and SPS areas, a number of questions had been raised regarding Panama's plans
to submit updated notifications and improve its notification mechanisms. Also, there was interest
in learning more about Panama's plans to enhance its SPS system and facilitate access to
information on current and proposed sanitary and phytosanitary requirements and regulations.
1.7. In the services sector, while generally speaking the trade and investment regime was fairly
open, Members were keen to know about Panama's intentions to remove limits on foreign
investment in maritime auxiliary services, and to further open retail trade. Also, it had been
recalled that, because Panama had liberalized its services sector through both domestic reforms
and trade agreements, a large gap existed between its WTO commitments and its applied regime.
1.8. Finally, in the macroeconomic area, the consolidation of public finances remained a key
challenge, particularly in the face of costly public works projects and the absence of monetary
policy instruments. It was also interesting to know what steps were being considered to distribute
more broadly the benefits of economic growth and reduce social inequalities.
WT/TPR/M/301 • Panama
-31.9. Members would wish to raise many other issues as well. Overall, considering Panama's strong
economic performance and its by-and-large successful strategy to consolidate its role in
international trade, this review could offer useful insights on how other developing countries could
seek to better integrate into global trade flows of goods and services.
1.10. The Chairperson closed her introductory remarks by wishing Panama a very successful
second Trade Policy Review. She looked forward to its active engagement in this TPR.
WT/TPR/M/301 • Panama
-42 OPENING STATEMENT BY THE REPRESENTATIVE OF Panama
(H.E. MR MELITON ARROCHA)
2.1. On the occasion of the second Trade Policy Review of Panama, we warmly greet the
Ambassador of Malaysia, Mariam MD Salleh, Chairperson of this Trade Policy Review Body, the
Ambassador of Honduras, Dacio Castillo, whom we thank for agreeing to act as discussant for this
review, all Members participating in this session and the team of the Trade Policy Review Division
for the hard work they have effected together with our authorities over the course of a year.
2.2. We should note that since its first Trade Policy Review, the Republic of Panama has pressed
ahead with its process of trade liberalization, strengthening its strategy for participation in the
international economy, on the one hand by deepening its market-oriented economic policies to
favour trade expansion and attract foreign direct investment, and on the other, through its
continued active participation in multilateral, regional and bilateral trade negotiations.
2.3. The Panamanian economy continues to be solid, dynamic and in expansion, led by key
sectors linked mainly to international trade and promoted by sound economic and social reforms.
This economic success is based on the development of coherent, market-oriented economic
policies that have been instrumental in attracting foreign investment.
2.4. As a small nation that is highly integrated into the world economy, Panama has implemented
a set of stable and transparent rules that ensure and provide stability for trade with Members.
2.5. Between 2007 and 2013, the Panamanian economy recorded annual gross domestic product
(GDP) growth averaging 8.1%, one of the highest growth rates in Latin America, thanks to the
strong boost provided by public and private investment as well as the rise in services exports.
Also driving growth has been the buoyancy of construction, transport, storage and
communications, financial intermediation, wholesale and retail trade as well as activities closely
linked to tourism.
2.6. Let me state as regards transport that storage and communications accounted for an average
18% of GDP and that their dynamism derives from the operations of the Panama Canal and related
activities, port movement and telecommunications, which have been favoured by the opening up
to competition and by technological progress in mobile telephony and the accessibility and scope of
the Internet.
2.7. Investment in infrastructure has increased significantly. Public investments went mainly to
the expansion of the Panama Canal, line 1 of the Metro, the building and expansion of airports as
well as the highway network and hospitals. The increased private investment went mainly to
residential and non-residential construction, the latter category mainly by shopping centres and
hotels. This has enhanced business competitiveness and improved the quality of life of the
population.
2.8. As indicated in the report by the Secretariat, the services sector plays a dominant role in the
Panamanian economy and the country has therefore made significant endeavours to consolidate its
international position as a services exporting country. This has been possible thanks to extensive
opening up to the participation of foreign providers. The openness and competition offered by the
country has fuelled dynamic development in sectors such as telecommunications, air transport,
maritime and logistical services, as well as tourism.
2.9. As pertains to trade facilitation, Panama has adopted a strategy to optimize and reduce the
transaction costs associated with trade-related customs and administrative procedures, it has
modernized its customs system and introduced trade facilitation measures such as authorized
economic operator schemes, a single export window, advance rulings, post-clearance audits and
flexible procedures for goods in transit, and has made significant changes to its customs tariffs.
In this connection, Panama values the aims of the Trade Facilitation Agreement and is committed
to its observance and implementation.
2.10. Panama has bound all its tariff lines and maintains a predictable system of imports.
It applies a low level of tariffs, the simple average of which is 7.6% and as such it grants
most-favoured-nation (MFN) and non-discriminatory treatment to all its trading partners.
WT/TPR/M/301 • Panama
-52.11. Some 40% of Panama's import tariff headings currently reflect an MFN duty below 4% and
only 1.3% maintain import duties above 20%. A 0% tariff is applied to a number of products
covered by the information technology agreement (ITA), to automobiles, pharmaceuticals,
fertilizers, cotton and cotton fabrics, knitted fabrics and to most products considered as inputs for
national industry, all of which demonstrates a very significant level of trade opening.
2.12. Panama has also carried out reforms that underpin a policy of free competition, thereby
creating a level playing field for market access by all trading partners. It has made major changes
to its laws on competition and consumer protection by introducing an economic efficiency criterion,
classifying the cornering of the market as a relative monopolistic practice and has toughened the
penalties for engaging in anti-competitive practices.
2.13. Priority has also been given to developing processes to upgrade governance, by promoting
the optimal use of information and communication technologies in the government sector and
introducing efficient e-government tools.
2.14. Regulatory adjustment designed to protect and modernize intellectual property rights and
ensure our country's fulfilment of its international commitments has been an ongoing task, thanks
to which we now have an extensive system of protection for all the rights envisaged under the
TRIPS Agreement, including flexible and transparent formalities and rules on observance and
penalties for non-compliance. In addition to these regulatory improvements, the institutions
responsible for ensuring the observance of these rights have also been strengthened.
Panama updated its commitments in 2012 vis-a-vis the International Union for the Protection of
New Plant Varieties (UPOV) and acceded to the Patent Cooperation Treaty, the Trademark Law
Treaty and the Budapest Treaty.
2.15. In parallel, since its last Trade Policy Review Panama has carried out an intensive
programme of bilateral and regional trade negotiations, which represents a vitally important
complement to its strategy of integration in international trade by consolidating, broadening and
deepening the benefits derived from the multilateral trade negotiations taking place in this
Organization.
2.16. Between 2007 and 2013, Panama entered 13 trade agreements into force, the most recent
of which include the Trade Promotion Agreement with the United States, the Association
Agreement with the European Union, free trade agreements with Peru and Canada, and its
incorporation into the Central American Economic Integration Subsystem and the Latin American
Integration Association (LAIA). All these instruments have improved interaction with these trading
partners by expanding the foreign trade platform and boosting their participation in trade with
various regions of the world.
2.17. Our Government has given priority to the Second Trade Policy Review of Panama taking
place today by participating at the highest level, and we are also grateful for its presence, which is
proof of its interest in this exercise. The questions are a reflection of the growing interest in our
country, its economic sectors and the trade policies it applies, in particular those relating to
financial and logistical services and to the regulatory framework governing investments.
2.18. I wish to confirm in this connection that we have delivered written answers, within the
specified time frame, to the advance questions we received from Members, this being in line with
our intention to clarify the various concerns expressed, based on the opinion of our competent
authorities, and which will make up a significant part of our discussions at this meeting.
2.19. We wish to underscore that the Republic of Panama reaffirms its commitment to the
principles and values espoused by this Organization regarding an open, predictable, fair and
rules-based trading system, and attributes special importance to this review mechanism, which
makes for transparency in the trade policies of all Members. We are pleased to undergo this
second review.
2.20. Panama values the institutional framework provided by the multilateral trading system,
which is an efficient platform for promoting its economic relations and safeguarding its trading
rights. We are committed to strengthening the multilateral system and we support the early
WT/TPR/M/301 • Panama
-6conclusion of the Doha Round, such that it is adapted to the new needs of trade and promotes full
participation by all WTO Members in the multilateral system.
2.21. We shall continue to step up our relations with the rest of the world by strengthening our
economic, social and trade policies to enhance the growth of our economy and we trust that this
will increase opportunities and the prosperity of our population.
2.22. The vision of the President of the Republic of Panama, Juan Carlos Varela, which I share
with you today, is that trade policies must reflect the interest in promoting fair and free trade
amongst all our countries. They should also clearly constitute a public policy tool that enables the
population to meet their basic needs and in particular entertain the hope that it is possible to
realize their expectations of living in a more just society where the guiding principle is the quality
of life of people. This means – and this is how we understand it in Panama – that trade policy
should not be viewed or developed separately from social policy. We call for new linkages between
these policies, which, whilst promoting the greatest possible trade integration of our countries and
the fulfilment of our international commitments, create conditions for economic and social
advancement for our peoples that make for long-term sustainability in the pursuit of greater
openness.
WT/TPR/M/301 • Panama
-73 STATEMENT BY THE DISCUSSANT
3.1. I am honoured to be the discussant for this second Trade Policy Review of Panama, and all
the more so as this is a sister country in the Central American region.
3.2. I wish to begin my statement by welcoming Minister Melitón Arrocha, who is leading the
delegation of Panama on this occasion, as well as the delegation accompanying him from his
capital; I should also like to welcome Ambassador Alfredo Suescum, who has done his country
proud through his work and his tireless efforts to promote the multilateral trading system as Chair
of various key Council meetings in this Organization. I also welcome his team at the Mission and
commend them on their work to safeguard Panama's rights and fulfil its obligations vis-a-vis the
WTO in order to further their country's integration into the multilateral trading system.
3.3. I should also like to thank the Secretariat, in particular, Sylvia Ávila and Martha Lara, as
co-authors of the document before us. In this regard I must underscore that there are virtually no
discrepancies between the content of the Government report and that prepared by the Secretariat.
3.4. Today, Panama is submitting its second Trade Policy Review for the 2007-2013 period.
Given the time available and the interest shown, I shall try to focus on some elements based on
the sections established for this review. I shall begin with the economic environment.
The economic environment
3.5. It is worth noting that Panama has achieved impressive economic growth at an annual
average rate of 8%, which is attributable mainly to the dynamism of public and private
investment, and more specifically expansion work on the Panama Canal and other large-scale
infrastructure projects, as well as buoyant private consumption.
3.6. Panama weathered the world financial crisis without major consequences thanks to the
solidity of its banking system. As we all know, the services sector is the driver of its economy and
accounts for 70% of GDP. This strong economic growth led to the near doubling of nominal per
capita GDP over the period of this review to US$11,075, making it possible to introduce a range of
social support programmes and reduce unemployment and poverty.
3.7. The use of the United States dollar as legal tender has spared Panama the risks of fluctuation
and speculative attacks on its currency since it has no monetary policy instruments. It has also
promoted its positioning as an international financial centre.
3.8. Fiscal policy in contrast plays a very important role as a macroeconomic tool, and bearing in
mind Panama's privileged geographical position, has made Panama into a major exporter of
services such as financial services, tourism, port services, transport, storage and transit services
through the Panama Canal and the Colón Free Zone, which is the world's second-largest free zone.
3.9. Panama's traditionally balanced public finances nevertheless generated a deficit as of 2009
owing to rising expenditure, mainly capital expenditure. There is a cap on public finances
established by law, but several legislative changes were made during the period of this review in
order to respect that limit. The main fiscal policy challenge today is still to increase revenues and
achieve a more comfortable fiscal position.
3.10. The public debt to GDP ratio declined markedly over the period of this review, owing to the
creation of the Panama Savings Fund, which will be financed from the additional income generated
by the expansion of the Panama Canal.
3.11. Panama continued to show a current account deficit in the balance of payments over the
period 2007-2013, mainly as a result of the disequilibrium in the balance of trade in goods.
The deficit was financed from the surplus on the capital and financial accounts generated by the
increasing flows of foreign direct investment, which accounted for 7.6% of GDP in 2012.
3.12. The international goods and services trade is of paramount importance to Panama's
economy and was equivalent to 166% of GDP in 2012. Agricultural and food products are still
Panama's main exports (56% of the total, not including re-exports), and this reflects the relatively
WT/TPR/M/301 • Panama
-8modest size of the manufacturing sector. On the import side, manufactures and fuels make up
88% of the total.
3.13. The United States continues to be the main destination for Panama's exports and the
principal source of its imports. During the period under review, however, exports to the
United States and the European Union declined, which also meant a continued decline in their
importance as export markets for Panama. Panama has grown its exports to other markets in the
Americas such as Canada, which absorbed 14.6% of total exports, and the countries of the Central
American Common Market, where the increase was 12%. In Asia as a whole, Panamanian exports
increased by 18.3%, the main market being Chinese Taipei, followed by Korea and India.
3.14. As regards imports, the share of Brazil, Japan, Korea and the United States declined, while
those of the Central American Common Market held steady and those of China, Colombia, the
European Union and Mexico increased.
The trade policy and investment framework
3.15. Panama expects the preferential trade agreements the country has concluded in recent
years to help diversify foreign trade even further and attract greater foreign direct investment
flows.
3.16. It is interesting to observe Panama's national trade strategy goals and their outcomes over
time. The period from 2004 to 2009, for example, saw the conclusion of international trade
agreements, export promotion, the promotion of internal changes to improve domestic production,
an active role for the private sector in strategies to improve the business climate, and the
formation of conglomerates in priority sectors. From 2009 to 2014, investors received assistance
through the easing of investment-related procedures and projects were promoted to boost
Panamanian investments in new markets through the Investment and Export Promotion Agency
PROINVEX, involving work programmes to attract investment such as Panama INVIERTE and
Panama EXPORTA.
3.17. Panama seeks to attract high value-added investment that promotes training of its human
resources and the transfer of technology to important sectors such as financial services, logistics,
tourism and agriculture. Panama's goal is to position itself as one of Latin America's leading
destinations for foreign direct investment and the best place to do business, by simplifying the
business start-up procedure through electronically handled company start-up notifications.
3.18. Panama grants national treatment to companies and investors, there is no exchange
control, and they are free to repatriate their capital, dividends, interest and profits on their
investment.
3.19. The Constitution provides for the possibility of expropriation for reasons of public utility or
social interest. Panama has signed six new bilateral investment protection and promotion
agreements, bringing the total to 24. Panama has also signed double taxation agreements and
agreements on the exchange of tax information in line with the OECD principles on transparency
and the effective exchange of information in tax matters. By 2014 it had signed 16 agreements on
the avoidance of double taxation and nine tax information exchange agreements.
Panama and the WTO
3.20. Panama has been a Member of the Organization since 1997. Its late entry meant that it had
not taken part in the negotiations on topics of great interest to the country, such as the financial
services and telecommunications sectors under the General Agreement on Trade in Services.
Its representation in Geneva has nonetheless demonstrated leadership in the negotiations on
TISA, the Trade in Services Agreement.
3.21. Panama regards the WTO as the main forum for discussion with its trading partners and one
that provides an institutional legal framework through which to combat protectionism and promote
further market opening. The country has been involved as a complainant in four dispute
settlement cases and has been a third party in five cases. Panama has never been a defendant in
the WTO framework.
WT/TPR/M/301 • Panama
-93.22. Panama further considers that strengthening the rules of the multilateral system is
important for improving interaction among Members as regional or bilateral trading relations are
forged that help promote exports and investments.
3.23. In the negotiations on agriculture under the Doha Round Development Agenda, Panama
favours the elimination of export subsidies and the reduction of tariff protection as well as
domestic support. As the services sector is one of its most dynamic, Panama supports greater
opening in the trade in services.
3.24. Panama made regular notifications to the WTO during the period under review, in line with
its obligations. There are notifications outstanding, however, in the realms of intellectual property,
agriculture, trade protection and countervailing measures.
3.25. Panama has signed trade agreements with 13 partners, namely: Canada, Central America,
Chile, Chinese Taipei, Costa Rica, El Salvador, the European Union, Guatemala, Honduras,
Nicaragua, Peru, Singapore and the United States. Nine of these have taken effect since 2007.
Other agreements with Panamanian participation involved the Central American Economic
Integration Subsystem and the free trade agreement between Panama and Central America;
accession to the LAIA, the Cuba-LAIA, Colombia-LAIA, Mexico-LAIA partial-scope agreements and
an agreement with the Dominican Republic. Most of these new free trade agreements signed by
Panama have voided free trade and preferential trade agreements. Panama has not notified six of
the aforementioned trade agreements.
3.26. Between January and November 2013, the trade covered by these agreements accounted
for almost 9.7% of the value of Panama's exports and 10.4% of its imports. Panama has no
non-preferential rules of origin.
3.27. Panama is currently negotiating free trade agreements with CARICOM, and is seeking
rapprochement with Aruba, Barbados, Curaçao and the Republic of Korea in this regard.
Furthermore, together with 20 other countries, it is involved in the negotiations on the plurilateral
agreement on trade in services and has continued to benefit under the Generalized System of
Preferences of Austria, the Russian Federation, Japan and Turkey.
3.28. As regards trade policy by measure and sector, I wish to point out that Panama has
upgraded its customs regime by enacting a new law, adopting a new computer system and by
setting up the National Customs Authority (ANA). Trade facilitation measures included the
introduction of advance rulings, the single window based on the SIGA though covering exports
only, and the Inter-Institutional Commission which is working on introducing a Single Window for
Foreign Trade (VUCE) which will also handle imports and transit traffic and will be operated by the
Ministry of Trade and Industry (MICI).
3.29. On becoming a member of the Central American Economic Integration Subsystem, Panama
adopted the Central American import tariff, with the following exceptions: the Central American
Uniform Customs Code (CAUCA), and its implementing regulations (RECAUCA).
3.30. Tariffs are the main trade policy instrument. The report by the Secretariat states that they
are almost all ad valorem. According to the report by the Government, they are all ad valorem.
Furthermore, Panama accords MFN treatment to all its partners and applies neither seasonal,
temporary nor variable duties.
3.31. Panama does not require pre-shipment inspection or any similar procedure.
3.32. There is an administrative charge for customs services on imports as well as a fee for using
the computer system, both based on a specific amount. In addition, imports are subject to the Tax
on the Transfer of Movable Property and the Provision of Services (ITBMS) and, where applicable,
to the Selective Consumption Tax (ISC) and the Consumption Tax on Petroleum-Derived
Fuels (ICCDP). In the case of certain products (electronics, motor vehicles), the elimination
of tariffs has been offset by an increase in the ISC. Panama accords imports national treatment
when applying domestic taxes, except in the case of fuel mixed with ethanol from abroad, to which
a higher rate of ICCDP applies than for fuels mixed with domestic ethanol, and imported motor
WT/TPR/M/301 • Panama
- 10 vehicles (new and used), which are subject to a minimum ISC rate that varies according to the age
of the vehicle.
3.33. During the period under review, Panama endeavoured to bolster its institutional and
technical capacity in respect of sanitary and phytosanitary measures. It does, however, need to
make further improvements in areas such as risk analysis, human resource training, the
establishment of the national SPS committee, accreditation and notification procedures.
3.34. Panama notified eight sanitary and phytosanitary measures to the WTO, of which five were
emergency measures. Of 88 technical regulations covering food products, it has notified only six.
3.35. Panama notified three export subsidy programmes to the WTO and obtained an extension
until 31 December 2015. Preparations have clearly been under way to meet the deadline to which
Panama has committed itself.
3.36. During the review period, Panama adopted the law on competition and consumer protection,
reformed several laws such as that on government procurement, overhauled its legislation on
intellectual property to modernize it on a horizontal basis by bringing it into line with the country's
commitments under international agreements.
3.37. The sectoral structure of the Panamanian economy continues to be distinctly dualistic, with
the existence side by side, of a dynamic and competitive services sector that has chiefly developed
around the activities of the Panama Canal and the ZLC, and the less productive agricultural
manufacturing sectors, whose share in the economy is much more modest and has been declining
in spite of State support.
3.38. The Tocumen airport is the busiest in Central America and activity increased over the
period.
3.39. The national maritime strategy is designed to make the country into an integrated centre of
excellence for competitive maritime and logistical services.
3.40. The Panama Canal is a nerve centre of global maritime transport. During the review period
the Authority altered its toll policy to bring tolls into line with the value offered by the route. It is
hoped that the new structures relating to its expansion will be completed by December 2015.
3.41. Tourism is one of the main foreign exchange earners and accounted for a 12% share of
GDP; restrictions were lifted on foreign participation in tour operator and travel agency businesses.
3.42. The Panamanian Constitution reserves the right to engage in retail trade for Panamanians
by birth and naturalized foreigners, three years after having received their final papers.
3.43. I shall now conclude my statement. My intention has been to underline some positive
elements and some of Panama's efforts over the years, as well as some areas in which more work
is needed.
WT/TPR/M/301 • Panama
- 11 4 STATEMENTS BY MEMBERS
HONG KONG, CHINA
4.1. First of all, we would like to congratulate Panama on its impressive economic performance
during the review period. Panama has one of the best port and airport networks in the world, and
has been ranked as the most competitive economy in Central America since 2010 in the Global
Competitiveness Index published by the World Economic Forum. Panama's booming transportation
and logistics services sectors, along with its ambitious infrastructural development projects, have
enabled it to become the second-largest and fastest-growing economy in Central America.
4.2. Panama is no doubt a valued trading partner of Hong Kong, China. In 2012, it was our top
partner for trade in services in Latin America. For trade in goods, it was our ninth largest partner
in the region last year. Much of this is a result of the remarkable efforts made by the Panamanian
authorities to attract foreign direct investment (FDI) and promote trade.
4.3. As the name of its Investment and Export Promotion Agency (PROINVEX PANAMA) suggests,
Panama's economic policies are truly pro-investment. Investors now have a single window to
provide them with all the information they need, and an electronically processed start-up
notification system for setting up new companies. Panama maintains several incentive schemes to
attract FDI, a good example of which is the Colón Free Zone. Home to 3,000 companies, the Zone
is now the second largest duty-free area in the world, and Hong Kong is proud to be one of its
largest suppliers. We hope Panama will continue with its good work in liberalizing its investment
regime.
4.4. Services continue to grow at a remarkable rate of 7.4% a year and stay robust as the
dominant sector of Panama's economy. The Government has undertaken various measures,
such as amending legislations, establishing new regulatory authorities, and providing tax
incentives, to further liberalize trade in services. This is certainly a move in the right direction
given that services are making a very significant contribution to the country's economy in both
GDP (some 70%) and employment (about two thirds of total employment) terms.
4.5. We are pleased to note that Panama has modernized its customs regime and implemented
various trade facilitation measures including the introduction of advance rulings and the creation of
an authorized economic operator programme. The single window, however, is currently for exports
only. We hope it will cover imports soon.
4.6. We also appreciate the importance Panama attaches to the Agreement on Trade Facilitation.
We look forward to seeing the timely notification of its Category A commitments.
4.7. Regarding tariff, Panama has continued to pursue linear reductions in the bound rates
between 2007 and 2011, and has reduced its applied MFN tariff from 8.5% in 2007 to 7.6%
in 2013. There were also improvements in the percentage of duty-free tariff lines and tariff lines
subject to international tariff peaks. However, there are still 59 tariff lines for which the applied
rate exceeds the bound rate. The average tariff on agricultural products was also more than
double that on other products. We encourage Panama to further improve its tariff regime.
4.8. In the use of contingency measures, Panama has exercised considerable restraint, which we
fully appreciate. Nonetheless, we would urge its authorities to submit up-to-date notifications to
the Committee on Anti-Dumping Practices and the Committee on Subsidies and Countervailing
Measures to enhance the transparency of its trade remedy measures.
4.9. Finally, I would like to commend the contributions made by Ambassador Alfredo Suescum to
the work of the WTO, especially in his recent role as a Friend of the Chair of the Preparatory
Committee on Trade Facilitation to help finalize the Spanish translation of the Agreement. We also
thank Panama for the prompt replies it provided to our questions, and I wish Panama a very
successful trade policy review.
WT/TPR/M/301 • Panama
- 12 CANADA
4.10. Canada congratulates the Government of Panama on the strong performance of its economy
since the last Trade Policy Review in 2007. Continued political and economic stability will ensure
that Panama continues to post above-average growth rates, while helping to decrease economic
inequality. Much of Panama's recent economic performance can be attributed to the favourable
policy environment put in place by the Government, particularly by recent Governments in the face
of a difficult international context. I will focus my remarks on three interrelated dimensions of this
policy environment: the macroeconomic framework, strengthening public institutions, and the
business climate.
4.11. Canada hopes that Panama's new Government will continue to focus on sound
macroeconomic policies and responsible stewardship of the country's finances. Canada notes that
Panama, although it needs to address serious structural problems, chiefly in rural areas where
extreme poverty remains a challenge, is an upper-income country with a relatively high Human
Development Index ranking. Its high economic growth rates are predicated on its highly
specialized economy founded on services, which account for three quarters of the country's GDP,
and in which the Panama Canal and the shipping register figure prominently. Canada welcomes the
continued progress on the expansion of the Panama Canal, which in addition to existing revenues
from the Canal, the logistics, container ports, tourism and financial services industries, will be
critical to Panama's positive balance of payments position, and will further reinforce the country's
importance as a regional logistics hub. Against this positive backdrop, Canada encourages Panama
to guard against fiscal indebtedness that has been rising in recent years, and is pleased to note
that President Varela intends to monitor this closely.
4.12. With respect to strengthening public institutions, Canada recognizes that the new
Government has already announced several policy initiatives including a commitment to provide
safe water to all Panamanians, as well as improvements in the education and public health
systems. We also welcome President Varela's pledge to ensue zero tolerance for corruption in
government contracting processes.
4.13. Canada is pleased by reports that the construction and other sectors are likely to receive a
boost from several large public infrastructure projects including increases in social housing,
expansion of the Metro system, and the construction of new hospitals and health centres. In this
regard, we encourage Panama to consider the public-private partnerships model to support
infrastructure development by engaging the expertise and innovation of the private sector and the
discipline and incentives of capital markets to deliver public infrastructure projects.
4.14. Turning to the business climate, on a yearly basis, Panama is the largest recipient of foreign
direct investment (FDI) in Central America. According to UNCTAD, Panama accounted for 35.1% of
the total stock of FDI in that region by the end of 2012. This performance was a contributing factor
to the ranking by the World Economic Forum of Panama's economy as Central America's most
competitive in 2014. Also, the World Bank's Ease of Doing Business report ranked Panama as the
top performer in Central America. Part of this success can be attributed to improvements made by
the Panamanian authorities in expediting and facilitating new business start-ups, registering
property, protecting investors and paying taxes.
4.15. On the other hand, Canada notes a legacy of corruption, which is reflected in the country's
comparatively low ranking in Transparency International's Corruption Perceptions Index, which
places Panama at 102nd out of 177 countries. A key factor in this regard is the inability of the
country's legal system to enforce contracts between companies, an area in which the country has
lost ground since 2013. Canada, nevertheless, welcomes efforts on the part of the
Panamanian Government to promote a more favourable business climate through measures aimed
at increasing transparency and accountability. Canada notes that justice sector reform and
modernization are a priority for Panama, and we encourage continuation of the 2005 "Pact for
Justice" proposals to reform the administration of justice in five years, including: access to justice;
reform of the criminal courts, structural reform of the judiciary; judicial reforms; and transparent
accounting.
WT/TPR/M/301 • Panama
- 13 4.16. Canada also looks forward to working with Panama in its efforts to develop a sustainable
and responsible mining industry that is in line with international standards, noting that a stable
and predictable regulatory framework will allow mining and mining industry-related activities to
bring significant benefits to the most impoverished of Panamanians, in terms of jobs, skills training
and ancillary economic activity.
4.17. Trade between our two countries is modest by global standards, but Canada is nevertheless
Panama's second-largest export market after the United States. Our trade and investment
relationship will continue to be strengthened thanks to the improved market access through the
recently implemented Canada-Panama FTA and its parallel agreements on the environment and
labour.
4.18. In conclusion, Canada would like to reiterate its thanks for being afforded the opportunity to
put forth its suggestions regarding the current state of Panama's economic, trade and business
environment. We encourage the Government of Panama to continue implementing measures
aimed at ensuring respect for and the use of international institutions and international standards
of business ethics, good governance and transparency, so that all those in Panama who contribute
to the development of the country's economy can help improve the lives and the well-being of
Panamanian citizens.
ICELAND
4.19. We should congratulate Panama for tangible progress since its last review: impressive
economic growth, and maintaining a stable economic environment despite the aftermath of the
global financial crisis. More importantly, economic growth has led to an overall reduction in
poverty and unemployment levels. It appears that the overall strategy to consolidate the country's
role in the international economy through pragmatic reforms and playing a more active role on the
global and regional trading stage is bearing fruit.
4.20. The FDI numbers are also laudable, no doubt fuelled by a combination of numerous
large-scale infrastructure projects and legislative reforms undertaken in the past few years. We
encourage the Government of Panama to maintain a balanced and sustainable course, and to
ensure that all segments of society have an opportunity to participate in and take advantage of the
benefits that stem from a more open and liberal trade regime.
4.21. Iceland appreciates the role played by Panama at the multilateral trading level. Panama is a
reliable and constructive partner that plays by the agreed rules of the multilateral trading system.
For our part, we enjoy a very good working relationship with the Mission here in Geneva and
appreciate the active role they play both in the WTO and other processes, including TISA.
4.22. Last year, Iceland along with the other EFTA States signed a comprehensive Free Trade
Agreement with Panama and Costa Rica. We are happy to announce that Iceland completed its
ratification process earlier this Spring and deposited the instrument of ratification with the
Depository earlier this month. We look forward to the agreement entering into force this
September. We are convinced that this Agreement will help to create and foster the incentives and
legal conditions for our trade relations to strengthen in the future. Some key sectors where we see
potential for strengthening the trade between Iceland and Panama include fisheries and
geothermal energy. My delegation has already submitted advance questions related to these areas
and we look forward to studying the response from Panama.
SINGAPORE
4.23. Singapore and Panama enjoy strong economic relations, underpinned by the
Panama-Singapore FTA, which entered into force in July 2006. These relations were further
strengthened by the conclusion of an Avoidance of Double Taxation Agreement in August 2010.
Our two nations face similar economic challenges and circumstances, both being small economies
highly integrated into the world economy and dependent on international trade which accounts for
more than 100% of our GDP. In 2013, our bilateral trade with Panama stood at US$11.4 billion,
making Panama Singapore's top trading partner in Latin America, and 20th largest trading partner
worldwide. In recent years, Singapore companies have been active in various sectors in Panama
such as maritime and port operations, aviation and aerospace, consultancy services, information
WT/TPR/M/301 • Panama
- 14 technology, as well as bioscience. We are confident that these bilateral linkages will continue to
grow from strength to strength despite our geographical distance.
4.24. Panama has been successful in weathering the 2008 global financial crisis, achieving an
impressive average annual GDP growth of 8.1% over the period of review – the highest in Latin
America. This has largely been due to sound macroeconomic policies by the Panamanian
Government in maintaining an open economy. The Government's decision to invest in large-scale
infrastructure projects will also continue to reap economic dividends for the country in the long
term. Panama's rapid increase has helped to make significant progress in reducing poverty and
unemployment, and Singapore hopes that it would continue this growth trajectory in a sustainable
manner by addressing socio-economic inequality and improving the quality of education.
4.25. Singapore commends Panama for the further liberalization of its already open economy and
its significant efforts in the area of trade facilitation, such as the digitization of customs
procedures, introduction of a single window for exports, advanced rulings and an authorized
economic operator programme. We welcome the reduction of Panama's average MFN tariff rate
from 8.5% to 7.6% since 2007. However, we note with concern in the Secretariat's report that on
59 products, the applied rates exceed bound rates. We hope Panama will take steps to bring their
applied rates into compliance with their WTO commitments.
4.26. Singapore also commends Panama's efforts to update its intellectual property legislation,
competition and consumer protection law and its initiative to establish Special Economic Zones,
such as the Colón Free Zone. In addition, the City of Knowledge in Panama creates a conducive
environment for cross-country collaboration in innovation and sustainable development. We hope
that Panama can resolve the issue of the removal of tax benefits from the tenants at the City of
Knowledge as soon as possible, in line with Panama's goals of creating a knowledge-based
economy.
4.27. Panama has been a committed Member of the rules-based Multilateral Trading System
within the WTO. We are confident that Panama will continue to work closely with other Member
States to preserve the Multilateral Trading System. We welcome Panama's accession to the
Information Technology Agreement in 2012 and hope that they consider participating in the
negotiations to expand the ITA's coverage.
AUSTRALIA
4.28. Australia welcomes the opportunity to participate in this second Trade Policy Review of
Panama. Australia and Panama enjoy friendly bilateral relations. Panama is a valued like-minded
partner for Australia on a range of global issues and our economic relationship is growing. Beyond
trade we share common approaches to international whaling and the effective implementation of
the Arms Trade Treaty. Australia's trade with Panama has historically been modest, but we are
pleased that bilateral trade more than doubled in the two years to 2013 to around AUD 60 million
and we have many interests in Panama.
4.29. Australia welcomes Panama's continued commitment to the global trade liberalization
agenda under its new administration. We note that since its previous trade policy review, Panama
has undertaken trade-promoting legislative reforms in areas such as customs and intellectual
property. Panama's incentives to attract foreign direct investment, including its special economic
zones, have been largely successful. Since its last review, Panama has brought into force nine free
trade agreements and one partial scope agreement, and has joined various regional economic and
trade integration processes including working towards membership of the Pacific Alliance, to which
Australia is an observer. Australia congratulates Panama on its impressive economic growth since
its last review, as well as the decrease in poverty and unemployment rates.
4.30. We commend Panama's efforts to further open its economy and liberalize trade flows. There
are some areas where Panama may wish to take further steps. As the current review report notes,
addressing the skills shortage through educational reform would contribute to sustainable growth.
We also note the existence of barriers to foreign investment in maritime and port services as well
as retail services. Australia will watch with interest the impact of the recent introduction of price
caps on 22 basic goods, particularly any implications for Panama's international trade obligations.
WT/TPR/M/301 • Panama
- 15 We understand these price caps will be reviewed periodically and will be removed should they no
longer be deemed necessary.
4.31. Australia welcomes Panama's active engagement in the WTO services negotiations, as well
as in the Trade in Services Agreement. Australia is hopeful these negotiations will provide a
mechanism for Panama to extend improved trade commitments to more WTO Members and
encourage further liberalization.
CHILE
4.32. Chile and Panama established diplomatic relations 110 years ago, on 1 March 1904.
4.33. Throughout this period of over a century, our links have grown stronger in the political,
cultural, educational, economic and commercial fields under the 24 agreements and a policy
consultation mechanism existing between both countries.
4.34. Chile is the world's third-largest user of the Panama Canal, through which a large part of
our foreign trade passes.
4.35. The expansion of the Canal, which we hope will be concluded on time, will increase our
trade opportunities and supplies crucial to our development.
4.36. Technical cooperation is also a fundamental aspect of our relations.
4.37. We are highly satisfied with our relations with Panama and we have therefore welcomed its
candidacy for membership of the Pacific Alliance.
4.38. Trade between Panama and Chile expanded with the signing of the free trade agreement
(FTA) that became effective in 2008. With this agreement, Chile consolidated the network of trade
agreements in the Latin American region, and it is worth noting that this agreement was the first
signed by Panama with a South American country.
4.39. Although the volume of bilateral trade between our countries is still relatively modest, the
vibrancy of Panama's goods exports to Chile over recent years and of Chile's services exports to
Panama would indicate that there is considerable room for growth in the immediate future.
4.40. Panama is the main recipient of Chilean direct investment in the Central American region,
and 98.3% of it goes to the services sector, which itself accounts for 70% of GDP and two thirds of
the country's employment, as stated in the report by the Secretariat.
4.41. We are highly gratified by Panama's growth and development over recent years. The recent
holding of the World Economic Forum on Latin America in Panama City is a sign that the eyes of
economic and commercial world are on Panama. Furthermore, the Global Innovation Index 2014,
published by the World Intellectual Property Organization together with other academic
organizations, now ranks Panama third in Latin America when it comes to innovation. We are
players in Panama's strong economic performance, its efforts to diversify production and in the
development of its university system, as partners with a strategic vision in the new global realities.
4.42. The detailed report by the Secretariat further shows that Panama has continued in recent
years to comply with its WTO commitments, and focuses on the progress made, inter alia, in
customs matters, foreign trade regulations and foreign investment.
4.43. Bearing in mind the still outstanding matters mentioned by the Secretariat, we urge our
partner to continue with this process and we hope to be able to confirm continued progress at the
next trade policy review.
THE UNITED STATES
4.44. Panama occupies a unique place in international trade. The Panama Canal connects two
great oceans and plays a pivotal role in the flow of goods around the world. As Panama
approaches the 100th anniversary of the opening of the Panama Canal next month (15 August) we
WT/TPR/M/301 • Panama
- 16 are reminded that a large part of Panama's economy is predicated on the importance of moving
goods more efficiently and providing related services to support that activity. With the expansion
of the Panama Canal, Panama's role in international trade can be expected to become even more
important.
4.45. In the seven years since Panama's last TPR, Panama has experienced sustained economic
growth, with an average 8.6% rate of growth over that period; one of the highest levels of GDP
growth in Latin America and an annual growth forecast between 5.8% and 8% through 2019.
This economic growth reflects a number of the steps that the Government of Panama has taken to
further integrate its economy into the global trading system. The Secretariat, in its report, points
to accomplishments and advances in the areas of customs, intellectual property, and government
procurement, among others.
4.46. We note that at the time of Panama's last TPR in 2007, the United States-Panama Trade
Promotion Agreement (US-Panama TPA) had not yet entered into force. This comprehensive
free trade agreement, which entered into force on 31 October 2012, covers trade in goods and
services, intellectual property rights, investment, telecommunications, labour, and environment.
As detailed in the Secretariat's and the Government's reports, Panama undertook a number of
reforms to implement the TPA. These are measures that we believe contribute widely to the
multilateral trading system and the expansion of global trade, and also benefit Panama's other
trading partners.
4.47. As Panama's number one trading partner, the United States
growing commercial relationship with Panama. According to US trade
goods trade during 2013 was US$11.2 billion. US goods exports
US$10.8 billion and US goods imports totalled US$449 million.
United States' 45th largest goods trading partner.
has a strong, positive, and
statistics, our total two-way
to Panama in 2013 were
Panama is currently the
4.48. As it did in its 2007 TPR, Panama has identified attracting foreign direct investment as a key
element of its overall economic growth and trade strategy. We applaud Panama for implementing
policies that have resulted in sustained inflows of FDI since its last TPR, particularly in the face of
the global economic downturn in 2008 and 2009, and encourage Panama to take steps to further
diversify areas for FDI so as not to see a decrease once the Canal expansion is completed.
This inflow is a sign of the confidence that foreign investors have in the economic potential and
stability of the Panamanian market, and we note that the IMF expects that the US-Panama TPA (as
well as the other FTAs Panama has signed) will help maintain high levels of FDI. The United States
has long been Panama's largest source of foreign direct investment.
4.49. As I have noted, Panama changed a number of laws and regulations in order to implement
the US-Panama TPA. While these changes were significant and transformative actions, Panama will
gain the most benefit from them if Panama also provides a high level of regulatory transparency to
facilitate investment and market access. The Secretariat's report noted in several places that
Panama has made a number of notifications to the WTO. We encourage Panama to increase its
efforts towards regulatory transparency and to make more extensive and effective use of WTO
notification procedures, for example in the areas of sanitary and phytosanitary measures and
technical barriers to trade. We note that the Secretariat's report identified a number of
notifications that were lacking in the areas of IP, agriculture, trade protection, and countervailing
measures. We urge Panama to update its notifications in these areas. Panama should take credit
for all the positive steps it has made in many of these areas.
4.50. We do have some areas of specific concern that I will briefly highlight. The Secretariat's
report noted that in June of 2013 through Law No. 41 of that year, Panama limited foreign capital
participation in companies offering auxiliary maritime services. This law restricts foreign
investment in companies or vessels engaged in auxiliary maritime services because it requires that
Panamanians or Panamanian beneficiaries hold a 75% stake in these entities. In our view, this law
reflects a policy that runs counter to Panama's desire to attract foreign investment and become a
logistics hub. The Secretariat's report also stated that Panama does not extend national treatment
when applying domestic taxes in the case of fuel mixed with ethanol from abroad. A higher rate of
the Consumption Tax on Petroleum-Derived Fuels (ICCDP) applies for fuels mixed with foreign
ethanol than applies to fuel mixed with domestic ethanol, and the stated purpose of the measure is
"to protect domestic production of sugar cane used to produce bioethanol". We urge Panama to
reconsider its policies in these areas in the context of its WTO obligations as well as its related FTA
WT/TPR/M/301 • Panama
- 17 obligations, and we hope to hear more in this review about Panama's plans to address
these issues.
4.51. We have submitted a short list of questions about specific issues in Panama's trade regime.
We look forward to reviewing and discussing Panama's responses.
4.52. The United States is committed to building on our current strong trade and economic
partnership with Panama and supports Panama's progress along the path of global economic
integration that it has so strongly pursued. We commend Panama on its active participation in the
WTO, for its commitment to the multilateral trading system, and for showing ambition in the
pursuit of trade liberalization through the Information Technology Agreement and the Trade in
Services Agreement negotiations. We particularly appreciate the active and constructive leadership
of Ambassador Alfredo Suescum here in Geneva. We look forward to continued work with Panama,
both bilaterally and within the WTO. We especially hope to work closely with Panama in
implementing the WTO Trade Facilitation Agreement, recognizing the positive role Panama has
taken in those negotiations, and knowing the considerable benefits that will accrue to countries
like Panama.
4.53. We remain committed to continued close cooperation with Panama, to deepen our
relationship bilaterally as well as in the WTO.
EUROPEAN UNION
4.54. This is the second Review for Panama. During the years under review, Panama's economic
growth has been impressive, thanks mainly to its dynamic investment and a stable macroeconomic
environment.
4.55. A word on the EU's bilateral relationship with Panama. The EU is a major trading partner for
Panama. It is the second partner for Panamanian exports and the third partner for the Panamanian
imports.
4.56. The bilateral trade relations with Panama will certainly be further strengthened by the
effective implementation of the Association Agreement between Central America and the
European Union that entered into force on 1 August 2013 and that allows Panama to fully access a
market of more than 500 million people, which is unprecedented. The Agreement covers trade in
goods and services, investment, and also issues such as public procurement, intellectual property
rights and technical barriers to trade. It consolidates and broadens the preferences granted by the
EU under the GSP/GSP Plus. Furthermore, the Agreement also includes two more pillars providing
for political dialogue and cooperation.
4.57. Regarding Panama's economy, as acknowledged by the Secretariat report, it is based on a
fairly open trade and investment regime that continued to open up during the period under review,
chiefly through Panama's participation in preferential trade agreements.
4.58. This allowed Panama to grow, between 2007 and 2013, at an average annual rate of 8%,
one of the highest in Latin America. The Panama Canal remains the backbone of the country's
economy and represents the linchpin for its foreign relations and its socio-political development.
Therefore, it is not surprising that, as noted by the Secretariat report, the services sector accounts
for some 70% of GDP, allowing Panama to consolidate its position as a major exporter of financial,
port, logistical and tourism services.
4.59. While the EU will continue supporting Panama in strengthening its pivotal role within the
region as a hub for trade, the EU also encourages Panama to remain committed to open trade
policies, in particular on services, and to continue focusing on FDIs and exports as an engine for its
economic growth. This would certainly allow Panama to continue being the main recipient of
European investments at regional level and also the EU as a key source of investment for Panama
- the EU FDI accounts for 35% of the total FDI in the country.
4.60. The EU takes note of Panama's steps in advancing bilateral and regional integration through
the negotiation and the implementation of several trade and investment agreements which served
WT/TPR/M/301 • Panama
- 18 as a catalyst for legislative reforms in areas such as customs, intellectual property, government
procurement and other trade-related areas.
4.61. As stated in several fora, the EU can only agree with Panama that strengthening the rules of
the multilateral system is important in improving interaction among Members, as well as in
establishing stable regional or bilateral trading relations that contribute to the expansion of trade
and investment flows.
4.62. Turning to the hot topic of the moment, the EU commends the trade facilitation efforts done
by Panama during the period under review aiming at simplifying and modernizing its customs
regime. The EU understands that Panama has already created the National Customs Authority,
introduced advance rulings, the single window for exports, and is launching an authorized
economic operator programme.
4.63. Considering these achievements as well as Panama's declaration to attach special
importance to implementing the trade facilitation commitments arising from the Bali Conference,
the EU expects Panama to proceed speedily with its notification to the WTO of its commitments
under Category A.
4.64. The EU thus acknowledges that during the years under review, Panama has overall
continued to promote greater openness and reduced obstacles to foreign trade. Having said this, a
few concerns still remain.
4.65. Firstly, the main priority for the EU is to clarify the trade barriers imposed by the
Law No. 41 adopted in 2013 that requires that Panamanian nationals must own at least 75%
of companies or vessels engaged in auxiliary maritime services. This law represents a serious
concern for the EU industry and it seems to contradict Panama's international commitments.
We call on Panama to address these concerns.
4.66. Secondly, the EU would also like to receive some clarifications on SPS-related issues.
In particular, on the authorization process for the importation of food for human or animal
consumption classified as medium or high risk and on the permits required for the import of live
animals and products of animal origin.
4.67. In conclusion, let me reiterate that the EU acknowledges Panama for the progress it has
made since the last review.
PARAGUAY
4.68. We highly appreciate Panama's participation in this exercise as the country witnesses an
economic and trade boom and overcomes the obstacles created by the international crisis.
4.69. Despite the financial crisis of 2008 and 2009, Panama's economy has continued to grow at
levels close to 10%. As always, the buoyant services sector has played a key role in this
performance, as have economic policies designed to attract greater and better quality foreign
direct investment, which has done much to improve even further the good infrastructure existing
in this friendly country.
4.70. In this positive setting, Panama's most salient achievement has been to maintain a high
level of growth in the construction sector, which closed 2013 at 30%, as such becoming one of the
highest in the region and the world. All this has made Panama a leading player in the regional and
international trade arena.
4.71. The World Bank's Doing Business Index ranks Panama 11th worldwide and 1st in Latin
America as regards the trading across borders indicator. This places Panama in the vanguard as
concerns the time and cost entailed in completing each official goods import or export procedure
from the time of the contractual agreement between the two parties until delivery. This fact was
borne out by Panama's proactive role in the negotiations on the Trade Facilitation Agreement.
4.72. I should also like to underscore my country's good relations with Panama, not only
politically but also at the trade level. During the period under review, two-way trade flows
WT/TPR/M/301 • Panama
- 19 increased, even though trade still covers only a limited range of products, including cigarettes,
clothing and spirits.
4.73. This situation nevertheless encourages us to continue working together to strengthen our
relations by expanding and deepening bilateral trade and to continue to seek complementarities
between our economies.
4.74. We have held ad hoc consultations with the delegation of Panama on matters that we deem
important to highlight, and why not, in order to learn from that country's experiences. We are
therefore grateful for the replies we have received, amongst which we wish to highlight the steps
taken by the Government of Panama to speed up international goods transit, especially by
introducing the automated standard procedure for the Mesoamerican International Transit (TIM)
of Goods over land in the region and the adoption of the Single Transit Declaration (DUT).
4.75. Lastly, it is worth highlighting the like-mindedness of Paraguay and Panama when it comes
to their vision of the future of the multilateral system; we support the early implementation of the
Bali Package and a future, development-centred work programme.
PERU
4.76. Our delegation endorses the statements made by other Members this morning in
appreciation of Panama's impressive economic growth over the period under study. Its average
annual growth rate of 8.1% is one of the highest in the region and the world, and can be
explained, inter alia, by the growth of private consumption and public and private investment,
and by the major input from the services component which is predominant in the structure of the
Panamanian economy and accounts for 70% of GDP and two thirds of employment. The country
also has a diverse and competitive financial sector as well as a solid banking system.
4.77. It is also worth pointing out that the backbone of Panama's trade policy is increased Foreign
Direct Investment (FDI) and exports, and the process of opening currently under way in Panama is
therefore designed for this purpose. The aim is to attract high value-added investment so as to
foster the training of human resources and the transfer of technology to key economic sectors
such as tourism, agriculture, financial services and logistics. In that connection and as a
complement to that scheme, Peru shares with Panama the aim of strengthening the multilateral
trading system and the successful conclusion of the Doha Round.
4.78. Undoubtedly, there is scope for further improvement, for example in streamlining incentive
schemes to reduce the differences between the more vibrant areas and sectors of the economy
and the rest of the economy, and in allocating more resources to social programmes, these being
challenges common to the region of Latin America and the Caribbean. It is also important for
Panama to continue to improve in areas such as risk analysis, human resource training and the
establishment of a national SPS committee, as this would make for better use of trade
opportunities.
4.79. Bilateral relations between Peru and Panama received a boost in 2011 with the signing of
the free trade agreement between both countries. It took effect on 1 May 2012 and was duly
examined in the framework of the WTO Committee on Regional Trade Agreements in
September 2013. This agreement falls under the trade strategy to improve market access
conditions while establishing clear rules and disciplines to promote the goods and services trade as
well as investments. On the benefits side, by May 2017 at the latest, some 95% of Peru's exports
to Panama will be entering at a zero tariff rate. This means that Peru's agricultural exports such as
asparagus, artichokes, tangerines, grapes, mangoes, avocados, paprika, Cusco giant white corn,
blue corn and lemons, amongst others, will gain immediate access once the relevant provisions
takes effect. Similarly, Panama's main exports such as medicines, jewellery, books, and laminated
steel products, amongst others, will enter Peru under the agreement's tariff reduction programme.
This will favour domestic industry and end consumers.
4.80. This agreement thus becomes a useful tool for encouraging bilateral trade, which it is hoped
will benefit mainly small and medium-size enterprises (SMEs), which are constantly on the lookout
for nearby destinations for their value-added products.
WT/TPR/M/301 • Panama
- 20 4.81. Finally, trade between Peru and Panama surpassed US$740 million in 2013. Peru's exports
rose from US$270 million in 2008 to US$621 million in 2013. Peruvian exports were led by oil and
gas and their byproducts, while imports involved mainly raw materials and intermediate goods.
Panama is also the origin of 4.2% of the stock of foreign direct investment in Peru. Panamanian
FDI in Peru for the 1980-2013 period shows investment in excess of US$970 million, going mainly
to the two crucially important areas of industry with US$340 million, and energy with
US$240 million approximately.
4.82. On this occasion our delegation submitted some questions on trade policies and practices,
and we are grateful for the replies, which will be transmitted to our headquarters for review and
possible comments.
PHILIPPINES
4.83. Panama's economy is among the strongest in Latin America. Its dollar-based economy rests
primarily on a well-developed services sector that accounts for three quarters of GDP. Services
include operating the Panama Canal, banking, the Colón Free Zone, insurance, container ports,
flagship registry, and tourism. Panama's economy is less dependent on commodities and
manufacturing.
4.84. During the review period between 2007 and 2013, the Panamanian economy grew at an
average annual rate of 8%. Economic growth is bolstered by the Panama Canal expansion projects
that began in 2007 and is scheduled to be completed this year. The expansion project will more
than double the Canal's capacity, enabling it to accommodate ships that are now too large to
transverse the transoceanic crossway, and should help to reduce the high unemployment rate. The
expansion of the Canal will also enable products made in Asia, including the Philippines, to be sent
directly to the East Coast instead of being unloaded on the West Coast for transfer via train or
truck. Panama is also the transportation and logistics hub of the Americas with its regional
connectivity, strategic location, strong economy and Canal that joins more than 144 trade routes
across the globe.
4.85. It is important to note that for Panama, strengthening the multilateral trading system is
important in order to improve interaction among Members. Thirteen regional trade agreements
were nonetheless entered into force between 2007 and 2014. Panama has eliminated most of its
non-tariff barriers and the tariff is the main trade policy instrument. And today, the country's
average MFN tariffs are the lowest in the Latin American region, at 7.6%, except for those on a
few agricultural products, and to an overall average of 13.7%.
4.86. The Philippines lauds the steps taken by Panama to continue to modernize its customs
regime, adopting a new law, updating its computer system, and creating the National Customs
Authority. Other trade facilitation measures include the introduction of advance rulings, the single
window for exports, and the launching of an authorized economic operator programme.
4.87. I would like to personally commend Panama's efforts and commitment particularly at the
time when we were burning the midnight oil while working on the Trade Facilitation Agreement.
The Philippines and Panama worked closely on our common interests and concerns, together we
have coordinated in unifying positions on specific provisions of the TF Agreement that resulted to a
language that has generated consensus and at the same time addressed inherent sensitivities and
red lines.
4.88. Let me also personally thank Ambassador Alfredo Suescum for agreeing to be the chair of
the Friends of the Chair that facilitated the review and finalization of the Spanish version of
the TFA.
4.89. The sectoral structure of the Panamanian economy continues to be distinctly dualistic,
marked by the coexistence of a dynamic and competitive services sector, alongside the less
productive agricultural manufacturing sectors.
4.90. The Philippines and Panama share longstanding bilateral economic relations although
volume of trade in goods is somehow modest. As the fourth largest shipbuilder in the world, the
Philippines' exports to Panama are mostly tankers and ships.
WT/TPR/M/301 • Panama
- 21 4.91. On the other hand, the Philippines and Panama's relations in trade in services is substantial
and significant. Panama has the world's largest merchant fleet, with over 8,000 ships registered as
of June 2013, while the Philippines is the world's main supplier of seafarers. Over 70,000 Filipino
seafarers or almost 20% of the total number of Filipino seafarers are working on
Panama-registered vessels.
4.92. The Philippines and Panama are both signatories of the Maritime Labour Convention 2006,
the international treaty which seeks to protect the rights of seafarers worldwide. It is the
Philippines hope that soon Panama will also become a signatory of the UN International
Convention on the Protection of the Rights of Migrant Workers and Members of Their Families. It is
with great interest, nevertheless, that the Philippines notes Panama's National Maritime Strategy
that is designed to turn the country into an integrated centre of excellence for competitive
maritime and logistical services. This development presents various possibilities for cooperation
between our two countries.
BRAZIL
4.93. Panama has registered an impressive performance in the last few years, with GDP growth
rates of 8% on average and increased participation in the world trade. Since its last TPR, in 2007,
Panama has overcome the current world crisis and kept a steady pace of development.
4.94. Besides progress on the economic front, Panama has also enhanced its efforts towards the
expansion of the Panama Canal. This project, which will be completed by 2016, will improve the
capacity of the Canal, allowing it to continue to play a central role in the international
maritime trade.
4.95. As Brazil, Panama is a democratic and multicultural developing country faced with the
imperative of fighting poverty. In this regard, we commend the efforts of the
Panamanian Government to reinforce macroeconomic conditions for continuous growth.
4.96. Our bilateral trade stood at US$4.4 billion in 2013 from US$221 million in 2009. Last year,
Panama was the 24th Brazilian trading partner, accounting for around 1% of the Brazilian foreign
trade. Between 2009 and 2013, bilateral trade with the country grew by 1910.3%. In this context
of increased bilateral exchange, Brazilian Direct Investment in Panama reached US$4.5 billion in
five years, from 2006 to 2011.
4.97. Our good relations are not confined only to trade on goods and services. Brazil and Panama
have a good partnership in capacity building and science and technology in areas such as
livestock, agriculture, aquiculture, health, social development and culture.
4.98. Panama aims at becoming an important financial centre with a growing regional presence in
credit operations and investment. In this environment, one can never overstate the importance of
applying relevant international regulations to strengthen bank supervision that ensures proper risk
management and transparency.
4.99. The relations between Panama and Brazil continue to prosper in a constructive and open
way, as demonstrated by the growing flows of bilateral trade in goods, services and productive
investments.
MEXICO
4.100. The excellent trading relations between Panama and Mexico will be strengthened with the
entry into force of the free trade agreement that was signed this past April and which will be
submitted to the respective the legislative bodies for approval prior to enactment. This agreement
will strengthen our trading ties and open up even greater opportunities for the exports of both
countries.
4.101. Panama has registered high economic growth rates in recent years. It has recorded the
highest growth rate in Latin America for the past decade (8.5% between 2004 and 2014).
This economic growth, combined with sound macroeconomic policy management has lifted a
substantial part of its people out of poverty. According to a World Bank report, the poverty rate fell
WT/TPR/M/301 • Panama
- 22 from 48.5% in 2002 to 27.6% in 2011. Despite the unquestionable progress in terms of poverty
indicators, inequality in income distribution and uneven development between different regions are
still the main challenges facing the Panamanian Government in the years ahead. Furthermore,
one of the tasks awaiting action is the development of a system of social protection that benefits
the most vulnerable groups.
4.102. Recent public investments in infrastructure have consolidated Panama's export position in
the financial services, storage, transport and distribution sectors. Panama has improved its
position in terms of logistics and international competitiveness. According to the World Bank report
entitled Connecting to Compete 2014: Trade Logistics in the Global Economy, Panama has one of
the highest, steadily improving logistics performance indices in Latin America.
4.103. Despite the headway made, Panama still faces a series of major challenges which it must
tackle in order to ensure continued growth and enhanced international competitiveness. One
example is the electricity shortages facing the business sector. Although steps have already been
taken to save energy and provide fiscal incentives for electricity generation, the Panamanian
Government needs to implement a comprehensive policy that will prevent shortages such as those
experienced in 2013.
4.104. As pertains to tariff policy, we recognize that Panama has lowered the average applied
MFN tariff.1 Nevertheless, the MFN tariff applied to agricultural products (13.7%) is twice that
applied to non-agricultural goods (6.4%) Moreover, there is a high degree of tariff dispersion,
ranging from zero to 260%. Besides, the difference vis-a-vis the average bound tariff is evidence
of the urgency of completing the Doha Round, a prerequisite of which is the success of the
Bali programme.
4.105. In respect of trade facilitation, the report by the Secretariat states that Panama has a
single window based on the Integrated Customs Management System (SIGA) but that it handles
only exports. Work is nevertheless in progress to implement a single window for foreign trade that
will also cover imports. We would be grateful if Panama could provide more information on its
implementation and eventual operation. We urge the authorities to notify their Category A
commitments as promptly as possible.
4.106. As pertains to non-tariff barriers, greater efforts are needed to boost its institutional and
technical capacity in respect of sanitary and phytosanitary measures. The report points out that
efforts should be aimed at bringing about improvements in risk analysis, human resource training,
the establishment of a national SPS committee and in notification procedures. We would like
Panama to provide information regarding its efforts to implement these recommendations.
INDONESIA
4.107. We are pleased to be here today to participate in the Trade Policy Review of Panama. Since
its last review in 2007, Panama has stepped up its strategy to consolidate its role further in the
global economy. Indeed, the country now enjoys a robust, dynamic, and growing economy.
Panama's continuing efforts has helped to consolidate its position as a major exporter of financial,
port, transport, storage, distribution services, and transit services through the Panama Canal.
4.108. Indonesia further commends the strong role of Panama in promoting trade and investment
liberalization through regional, subregional, and bilateral cooperation. We also appreciate
Panama's positive contribution in the WTO forum. We believe that Panama has shown its strong
commitment to a successful Bali Package and Post-Bali Work Programme, both here in Geneva and
in the capital.
4.109. On the bilateral side, please allow me to share how both Governments have been engaging
a mutually beneficial trade relationship. Panama is an important trading partner for Indonesia as it
is our largest trading partner in Central America. In fact, between the period of 2009 to 2013, the
annual increase of Indonesia's export to Panama on average is 21.20%, which is higher than our
overall average of 11.45% annually.
1
The average MFN tariff moved from 8.5% in 2007 to 7.6% in 2013.
WT/TPR/M/301 • Panama
- 23 4.110. Nevertheless, despite the positive and strong economic ties between Indonesia and
Panama, we still have some trade and trade-related concerns that, hopefully, could be addressed
at this Trade Policy Review. These concerns relate to, among others, fuel taxes, and technical
regulations for food products. Indonesia has submitted specific questions with regard to these
issues, and we hope that Panama could provide a response to alleviate our concerns.
DOMINICAN REPUBLIC
4.111. Together with Panama, we are members of the Central American Economic Integration
System and we have had a partial scope trade agreement for many years now. From 2007
to 2013, despite the global economic and financial crisis, the Panamanian economy grew at an
average annual rate of 8%, one of the highest in Latin America. This week the Ministry of the
Economy announced that growth for this year is expected to fall between 6.5% and 7.5%, which is
more than twice the 2.5% average for Latin America and the Caribbean according to the latest
International Monetary Fund forecasts.
4.112. This rapid growth was due mainly to increased private consumption and public and private
investment, the latter being fuelled by robust foreign direct investment inflows representing 8% of
GDP on average for the period referenced. The bulk of domestic investment went towards
large-scale infrastructure projects.
4.113. As presented in the Secretariat's report, the Panamanian economy continues to display a
high degree of inequality. On the one hand there is a dynamic and competitive services sector that
has developed mainly around the activities of the Panama Canal and the Colón Free Zone, where
services are at the heart of Panama's economic structure and account for 70% of GDP, two thirds
of employment and 36% of exports. On the other, the agricultural and manufacturing sectors are
less productive and have a much smaller share in the economy and one that has continued to
contract in spite of the government assistance it has received.
4.114. Public finances have been running a deficit since 2009 owing to rising expenditure, mostly
capital expenditure. The deficit has been modest and has been held within the annual limits set by
law. The main fiscal policy challenge is maintaining discipline in order to consolidate public finances
and boost confidence, particularly bearing in mind that Panama cannot use monetary policy to deal
with economic cycles and any external shocks.
4.115. At all events, the public debt-to-GDP ratio, a critical indicator in this case, declined during
the period of the review to stand at a reasonable 36.8% in 2013 owing to vigorous GDP growth at
a rate higher than debt. Close attention should however be paid to inflation which, at 4% in 2013,
was above that of the United States. Wages would have to be deflated or productivity increased so
as not to erode competitiveness. This occurs in dollarized economies and in those dependent on
the euro.
4.116. Besides, attention should be paid to the large deficit in the current account of the balance
of payments, which has been funded by the appreciable influx of foreign investment. Despite the
impressive economic growth rate, Panama should focus on economic and social measures to
address the persisting and significant social and regional inequalities as well as the marked
shortage of skilled labour.
4.117. In this regard, the Secretariat's report rightly recommends that greater resources be
channelled towards social programmes, including improvements to the quality of education,
in order to meet the demand for qualified labour being generated by sustained economic recovery.
4.118. Besides, the recurring problems of electricity shortages should be solved through regional
cooperation, as this would help boost the efficiency and competitiveness of the economy.
4.119. During the period of this review, Panama continued to apply trade facilitation measures
and to upgrade its customs regime by adopting a new law, introducing a new computer system
and setting up the National Customs Authority.
4.120. Other trade facilitation measures included in the use of advance rulings, the introduction of
a single window for exports and the launch of an authorized economic operator scheme. Moreover,
WT/TPR/M/301 • Panama
- 24 the average tariff was reduced from 8.5% to 7.6%. Still, there are 59 products for which the rates
applied exceed the WTO bound rates and this should be corrected.
4.121. Panama has also made headway on the legislative front, and in 2007 adopted a new law
on competition and consumer protection, as well as a series of laws overhauling and refining its
legislation on government procurement. In 2012 it also reformed its legislation on intellectual
property so as to modernize and bring it into line with the country's commitments under
international agreements.
4.122. We conclude by urging Panama to continue its process of reforms designed to maximize
the benefits deriving from its excellent geographical location through its transport structure,
thereby sustaining dynamic growth and gradually raising the standard of living of its population.
COLOMBIA
Economic performance
4.123. As a country with which we share strong historical, economic and social ties, we are
gratified to see from the report prepared by the Secretariat that the period under review was
especially positive for the Panamanian economy. This is particularly evident from the high rate of
growth of real annual GDP, which averaged 8% between 2007 and 2013 (despite the world
financial crisis during which Panama's banking system demonstrated its solidity).
4.124. This also went hand-in-hand with massive increases in the volume of foreign investment
and global trade flows. It was possible at the same time to reduce unemployment, which in 2013
stood at 4.1%, and improve poverty indices, although much remains to be done in this area.
These results were made possible amongst other things by sound policies to attract investment,
increased private consumption and the implementation of large-scale infrastructure projects,
combined with prudent macroeconomic management.
4.125. For Panama, like few countries, the international goods and services trade is central to its
economic development, representing 166% of GDP, as stated in the report by the Secretariat. It is
therefore no surprise that during the period covered by this review, major efforts went into
upgrading its trade procedures, and in parallel, an active programme of negotiations to expand its
market opportunities and attract more investments.
Modernization
4.126. As pertains to modernization, the report appropriately underscores the recent legislative
and institutional changes, including the establishment of the National Customs Authority (ANA),
which will play a very important role in the proper conduct of Panama's foreign trade. We have
submitted a series of questions about the Authority in order to better understand how it discharges
its functions in the different areas of the goods clearance and valuation process. We trust that we
will receive adequate replies that will help clear up our concerns.
4.127. We also point to the implementation of several trade facilitation measures, a matter
currently of central concern at the WTO. Amongst others, we highlight the launch in early 2013 of
the pilot plan for an electronic Single Window for Foreign Trade and the introduction of measures
such as advance rulings, post-clearance audits, authorized economic operators and the adoption of
a regional transit system, all of which are measures envisaged under the Trade Facilitation
Agreement and which will undoubtedly benefit operators.
4.128. In this context, we cannot overlook the substantial role played by the Colón Free Zone
(ZLC), the world's second largest free zone, which, according to the Secretariat's report,
represented 66% of Panama's overall trade in 2013, or over US$27 billion. Companies established
in the Colón Free Zone receive extensive benefits, including tax exemptions on their imports,
re-exports and the manufacture of goods, and they also benefit from a special customs regime.
4.129. In the case of the ZLC, we also see movement on the upgrading of procedures. We draw
special attention to the introduction in 2009 of the electronic system for the declaration of
WT/TPR/M/301 • Panama
- 25 commercial activities with a view to speeding up trade formalities for companies in the Free Zone
through the sharing of information amongst the different bodies involved in those formalities.
4.130. The activities of the Colón Free Zone are of great interest to Colombia as an appreciable
percentage of its trade is destined to our country. We therefore submitted a series of questions in
order to get to know and understand the mechanisms for follow-up and control for the entry,
in-transit stay and exit of goods, these being topics that are not addressed in detail in the report
prepared by the Secretariat. We will therefore appreciate the replies received.
4.131. We are particularly interested in knowing the mechanisms used to forestall and control
criminal behaviour such as contraband and money laundering, as well as acts of unfair
competition, amongst others. Colombia is pleased to see that new computer tools are being used
to facilitate trade operations but deems it necessary to ensure all times that those tools also
represent suitable mechanisms of control, monitoring and transparency.
4.132. On the matter of tariffs, Panama endeavoured throughout the review period to reduce and
simplify the applied rates. The average applied rate in 2013 was 7.6%, or almost one percentage
point less than in 2007, in particular owing to tariff reductions on the goods covered by the 2007
Information Technology Agreement, as well as some vehicles, foodstuffs and items of clothing.
4.133. In this connection, we are struck by the fact that the Secretariat's report identifies
59 products on which the applied rate apparently exceeds the bound rate. We would be grateful
for the relevant comments in this regard.
Programme of international negotiations
4.134. The report provides ample information regarding Panama's programme of negotiations
during the review period. Not only did Panama join regional integration processes such as SIECA
and LAIA, but it also finished negotiating and putting into effect nine new trade agreements.
A further four are pending entry into force, one of which is the free trade agreement with
Colombia.
4.135. Panama has also stated its interest in joining the Pacific Alliance, which comprises Peru,
Chile, Mexico and Colombia.
4.136. These are all positive steps that will doubtless enable the country to further expand
opportunities for growing its foreign trade and attracting new investments.
4.137. Finally, I wish to note that on this occasion, we find two paragraphs in the report by the
Secretariat which we consider to be inaccurate. Paragraph 2.36 of the report states (and I quote)
that … "Panama and Colombia signed an FTA in 2013, following a period of over two years when
talks were suspended owing to differences over protection for sensitive products and the regime
applicable to the Colón Free Zone (ZLC). Pursuant to the agreement, Colombia will withdraw the
mixed tariffs on imports of textiles, clothing and footwear originating in the Colón Free Zone that
led Panama to request the WTO Dispute Settlement Body to hold consultations." Paragraph 3.174
in turn states: "In 2013, the ZLC encountered problems that led to a slowdown in trade activity,
owing in part to Colombia's imposition of a compound tariff on Panama's exports of textiles,
clothing and footwear …".
4.138. It should be clarified first and foremost that Colombia has imposed mixed tariffs on
imports of clothing and footwear, not on textiles as the report states in both paragraphs.
Furthermore, the aforementioned paragraphs convey the impression that this measure applies
only to Panama and specifically to goods from the ZLC. This is incorrect, as the measure applies to
goods of any origin, except for those coming from countries with which there are trade
agreements in force. We would be grateful if the appropriate correction could be made.
4.139. I conclude by stating that Colombia wishes Panama a successful trade policy review, from
which we hope it will be possible to obtain practicable recommendations and suggestions.
SEPARATE CUSTOMS TERRITORY OF TAIWAN, PENGHU, KINMEN AND MATSU
WT/TPR/M/301 • Panama
- 26 4.140. Panama's economic growth since its last review has been very impressive, at an average
annual rate of 8%. It has also become recognized as one of the world's leading nerve centres for
logistics and transport, and a dynamic destination for investment. These achievements are mainly
due to Panama's pragmatic approach to economic integration, by signing trade agreements aimed
at cutting intra-regional tariffs and taking care not to erect new barriers to trade with other
countries. To its great credit, Panama has adopted a policy of opening-up its markets in order to
make deeper-than-ever domestic reforms. As a result, in addition to generally expanding domestic
demand, substantial progress has been made in many key areas, such as the overhauling of
out-of-date regulations, boosting the development of the services sector, the upgrading of key
industries and increasing urban employment.
4.141. We appreciate Panama for its strong commitment and active participation in the
multilateral trading system.
4.142. We have submitted our written questions to seek further clarification and we thank
Panama for its prompt responses.
4.143. I will just add a few points of interests. First, Panama is a Party to the WTO Information
Technology Agreement (ITA). A greater engagement in other related areas from Panama is very
much welcomed. We would encourage Panama to reconsider to join the GPA.
4.144. Second, we welcome Panama's introduction of the new competition law to construct a
unified and open market system with orderly competition. We ask if Panama could please
elaborate further on its strategy and implementation in this respect.
4.145. Third, on the subject of the Colón Free Zone, we would like to know whether and if so, how
Panama plans to strengthen the link of its special economic zone with the economy as a whole.
4.146. Fourth, on the subject of notification obligations, we notice that Panama may not be
up-to-date with notifying the WTO as required, for example, in the areas of TBT and SPS.
We would encourage greater transparency with such measures and their conformity with
WTO rules.
4.147. Finally, I would like to touch briefly on our bilateral trade and investment relationship.
We enjoy very close and long-standing economic ties with Panama. Currently, it is one of our
largest trading partners in Latin America. Indeed, two-way trade between us is growing steadily
over recent years largely due to the bilateral FTA. We would definitely like to see this positive
trend to continue in the future.
COSTA RICA
4.148. Costa Rica has a special relationship with Panama and we wish to strengthen it even
further. Besides a close relationship of friendship and cooperation between our two neighbouring
countries and the common aims we share in many fields, we have a free trade agreement that
became effective in November 2013. This agreement has broad coverage and, unlike the 1973
preferential agreement that preceded it, and which was only partial in scope and regulated the
trade in goods, this is a modern instrument that also encompasses investments, services,
government procurement, sanitary and phytosanitary measures, and dispute settlement, amongst
other topics. Even before this agreement took effect, trade between the two countries had been
growing steadily over recent decades. At the world level, Panama ranks third amongst the
countries of destination of our exports and first in the Central American region. At the regional
level it ranks second as a country of origin of our imports.
4.149. As pointed out in the report by the Secretariat, Panama's economy recorded impressive
growth of 8% between 2007 and 2013, which was much higher than the average for
Latin America. The World Bank forecasts that the Panamanian economy will continue to grow
between 2014 and 2016 at a rate higher than that of Latin America and the Caribbean. Growth
rates are expected to surpass 6%, fuelled amongst other things by the expansion of the Panama
WT/TPR/M/301 • Panama
- 27 Canal and other large-scale projects.2 The World Bank also states that this vibrant economic
growth has led to improved social indicators, as poverty declined from 48.5% in 2002 to 27% in
2011, and extreme poverty diminished from 21% to 11% over the same period.3 We commend
Panama on these major accomplishments.
4.150. The steps taken by Panama to attract more high value-added investment, such as the
creation of PROINVEX, the single window for investors or the simplification of the business start-up
procedure, are all the more important to consolidating these advances when combined with a
system already in place which, inter alia, ensures legal certainty for investments and national
treatment, as well as the free repatriation of capital and dividends.
4.151. The services sector continues to play a key role in the Panamanian economy. It is
therefore no surprise that the country has played an active part in this regard in the Doha Round
and in the TISA negotiations, in which Costa Rica is also involved.
4.152. My delegation would like to underscore the trade facilitation initiatives that Panama has
been taking, such as upgrading its customs regime, introducing a single window for exports and
launching an authorized economic operator scheme. We welcome Panama's commitment to the
Trade Facilitation Agreement, which is consistent with these measures. We urge them to notify
their Category A commitments.
4.153. Before concluding, my delegation would like to acknowledge Panama's sterling contribution
to the Central American Economic Integration Subsystem since its accession, as well as the
country's commitment to the WTO multilateral trading system and the conclusion of the
Doha Round. We also highlight the invaluable role played by Panama's delegation to the WTO,
under the leadership of Ambassador Suescum.
4.154. We are aware of the tremendous effort deployed by Panama in preparing for this exercise.
We are therefore grateful for the replies they have provided to our questions, which we will be
studying most carefully.
PAKISTAN
4.155. During the review period, Panama's economy grew at a remarkable annual rate of 8%,
which is one of the highest both in Latin America and globally. Panama is in its seventh year of
economic success and recently became the second-richest country in Latin America after Chile.
It has the world's second-largest free-trade zone, Latin America's fourth-busiest airport,
and numerous free trade agreements.
4.156. This rapid growth is based on expansion of private consumption and by public and private
investment, chiefly in large-scale infrastructure projects, comparative advantage in the tertiary
sector, its geographical location, and ability to consolidate its position as a major exporter of
financial, port, transport, storage, distribution services and transit services through the Panama
Canal, besides logistics, banking, the Colón Free Zone, insurance, container ports, flagship
registry, and tourism. It is said to be on its way to becoming the Singapore of Americas.
4.157. Panama has a highly open trade and investment regime. FDI and exports are the pivots of
Panama's trade policy alongside services that account for 70% of GDP and two thirds of
employment. Panama has the world's largest merchant fleet. The Panama Canal and ZLC play a
vital role in this respect. ZLC accounts for about 70% of the value of the country's total
merchandise trade and ZLC firms continue to capture significant FDI flows. The importance of
trade in Panama's economy is reflected in the fact that it was equivalent to 166% of GDP in 2012.
2
6.8% (2014), 6.2% (2015) and 6.4% (2016). May be viewed at:
http://www.worldbank.org/en/publication/global-economicprospects/data?variable=NYGDPMKTPKDZ&region=LAC.
3
May be viewed at: http://www.bancomundial.org/es/country/panama/overviewk; and
http://www.worldbank.org/content/dam/Worldbank/document/EAP/Panamá/Panamá_Economic_Update_June2
014.pdf
(http://www.worldbank.org/content/dam/Worldbank/document/EAP/China/China_Economic_Update_June2014
.pdf).
WT/TPR/M/301 • Panama
- 28 4.158. Panama's trade in services has traditionally been in surplus, and so it remained during the
2007-2013 period.
4.159. Panama is not a prolific user of trade remedies. During the period under review,
it conducted only one anti-dumping investigation, and a safeguard investigation which led to the
adoption of safeguard measures for a period of one year. In 2009, Panama adopted regulations
containing procedural rules for conducting anti-dumping, subsidy and safeguards investigations.
4.160. Panama is an active player in the WTO. It supports the elimination of export subsidies, the
reduction of tariff protection and domestic support in agriculture, and supports greater openness in
trade in services because this is the most dynamic sector of its economy. Its participation in PTAs
has been conducive in legislative reforms in the areas of customs, intellectual property,
government procurement and other trade-related areas.
4.161. Amidst a story of star-studded performance, Panama faces several issues that it needs to
address. For instance, in SPS, improvements are needed in areas such as risk analysis, training of
personnel and the establishment of a national SPS committee.
4.162. Regarding competition policy, there is a high level of concentration in certain markets,
particularly in the case of goods. In some markets, only a few businesses are active while in others
tariff protection is high (especially agricultural products).
4.163. In the context of trade facilitation, more experience is considered necessary in developing
and detecting risk profiles, as well as technology and equipment to improve their management.
Compliance with risk management procedures by the regional customs needs to be reinforced.
4.164. Panama has the second-worst income distribution in Latin America and one fourth of the
population lives in poverty. It has to address one of the hemisphere's worst cases of economic
inequality.
4.165. Overall, as noted by the Secretariat, and I quote, "the links between the special economic
zones and the economy as a whole need to be strengthened, and the contribution of the former to
employment and local value-added needs to be improved. It would also be wise to reassess and,
where appropriate, rationalize the incentive schemes in order to narrow the gap between the most
vigorous economic zones and sectors and the rest of the economy, and to allocate more resources
to social programmes, including improvements in the quality of education in order to meet the
demand for skilled labour on which sustainable economic growth depends. The efficiency and
competitiveness of the economy would also be improved by solving the recurrent problem of
electricity shortages".
4.166. We earnestly hope that given Panama's recent success track, it would be able to overcome
these problems successfully.
TRINIDAD AND TOBAGO
4.167. Earlier this year, the World Economic Forum wrote the following of Panama: "Panama, the
host of this year's World Economic Forum on Latin America, embodies the region's progress and
potential. The country is a thriving international hub of trade and investment in the Americas and
has demonstrated impressive economic performance and stable growth rates in recent years".
4.168. With this and other positive reviews in mind, Trinidad and Tobago wishes to congratulate
Panama for its impressive macroeconomic performance, which is underpinned by sustained policy
reforms, strong private demand and the implementation of an ambitious public investment
programme, which includes the expansion of the Panama Canal. For the period under review
(2007-2013), Panama recorded an average annual growth rate of 8%, one of the highest in
Latin America.
4.169. The soundness of the Panamanian financial system is worthy of special mention; owing to
the resilience of the system, Panama was in a position to cope with the global financial crisis of
2008-2009 without major consequences. In this regard, my delegation noted with interest the
WT/TPR/M/301 • Panama
- 29 creation of its sovereign wealth fund, the Panama Savings Fund, in June 2012. Such a facility will
no doubt further strengthen the economy's resilience to external shocks.
4.170. Panama must be commended for the implementation of its National Trade Strategy that
focuses on increasing foreign direct investment (FDI) and exports. In keeping with this strategy,
Panama has signed a number of bilateral and regional trade agreements to complement the
benefits deriving from the WTO multilateral trade negotiations. For example, since its last Trade
Policy Review, Panama has implemented nine free trade agreements and a partial scope
agreement and has acceded to the Central American Integration System and the Latin American
Integration Association. We have duly noted that Panama's trade strategy also includes
programmes to attract and facilitate investment; programmes to support businesses going abroad,
as well as programmes to improve business competitiveness particularly the competitiveness of
micro, small and medium-sized businesses.
4.171. The dynamism and competitiveness of its services sector, which accounts for 70% of GDP
and two thirds of total employment, cannot go unmentioned. As highlighted in the Secretariat's
report, over the years, Panama has consolidated its position as a leader in financial, port, logistical
and tourism services.
4.172. My delegation also commends Panama for the reforms of its intellectual property,
government procurement and customs regimes.
4.173. Focusing on its customs regime, Trinidad and Tobago takes special note of Panama's
efforts in the area of trade facilitation, which included the establishment of a National Customs
Authority, as well as the introduction of the Integrated Customs Management System.
4.174. However, we do have a few concerns in relation to administrative charges for customs
services on imports, several tariff quotas and higher applied rates of tariff for a large number of
products. My delegation posed questions which addressed these concerns, among others, and we
thank the delegation of Panama for its responses to our questions.
4.175. We also note and commend the Government of Panama's efforts aimed at using its
economic growth to contribute to achieving sustainable and inclusive growth, poverty reduction
and improved living standards and well-being of its people. However, in spite of significant
progress, poverty and social inequality remain fairly high and we encourage continued efforts in
this regard.
4.176. I turn now to our bilateral relationship. Trinidad and Tobago's diplomatic relationship with
Panama spans 20 years and over the years our two countries have made efforts to strengthen and
deepen ties through an active bilateral agenda. Key initiatives in this regard include the signing of
a Partial Scope Agreement in October 2013; a Memorandum of Understanding (MOU) on
Cooperation in Energy; and a bilateral Air Services Agreement. Panama and Trinidad and Tobago
also enjoy a healthy commercial relationship. Trinidad and Tobago's main exports to Panama
include petroleum oils, liquefied propane and iron and steel bars.
4.177. In conclusion, my delegation wishes to commend Panama for its commitment to the
multilateral trading system, which is reflected in the delegation's active and positive engagement
in the WTO negotiations led by Ambassador Suescum.
GUATEMALA
4.178. Panama is an important trading partner to Guatemala and we congratulate the country on
its progress in the realm of trade, and more specifically on its accession to the protocol
incorporating Panama into the Central American Economic Integration Subsystem (SIECA). We are
gratified that it is now part of the Central American system.
4.179. Panama has achieved a high economic growth rate (8%), thanks mainly to buoyant levels
of investment and a sound and stable macroeconomic environment, combined with a development
strategy encompassing the management of transport, storage, distribution and transit through the
Panama Canal, in addition to creating infrastructure that is making this country into a regional
logistics hub.
WT/TPR/M/301 • Panama
- 30 4.180. We commend Panama on its incentives programme designed to attract foreign direct
investment (FDI) and boost exports, including financial services exports, which account for 70% of
Panama's GDP. In the world trade in services, Panama ranks 39th as an exporter and 57th as an
importer.
4.181. In trade facilitation, Panama has moved ahead in modernizing its customs system by
adopting a new law, setting up the National Customs Authority (ANA), upgrading its computer
system, introducing advance rulings and post-clearance audits, a single window for exports,
developing the framework for an authorized economic operator scheme and adopting a regional
transit system.
4.182. Lastly, we are aware that the basis of Panama's foreign trade policy over the years has
been trade openness and that the country has signed trade agreements with 13 partners, of which
nine have become effective since 2007. One of the most recent has been its accession to the
Central American system in 2012.
BARBADOS
4.183. The Panamanian economy has recorded strong economic growth over the period 2007
to 2013. Panama was largely unscathed by the global financial and economic crisis of 2008-2009.
In this regard, the country's sound economic performance and resilience has been attributed to the
expansion of public-private investments in large scale infrastructure projects, private consumption
and buttressed by a stable macroeconomic environment. Panama is one of the fastest growing
economies in Latin America, growing by 8% per annum on average over the period being
reviewed. Barbados commends the Government of Panama on these impressive achievements.
4.184. Despite its robust macroeconomic performance and reduced unemployment rates, Panama
remains challenged by social inequalities and a high rate of poverty, particularly in rural
communities. We therefore urge Panama to actively seek to diversify their economy to include the
economic participation of those in the rural communities and those below the poverty line.
4.185. Panama's trade policy is underpinned by the aggressive implementation of its National
Foreign Trade Strategy, 2009-2014. The focus of this strategy includes, among other things,
concluding trade agreements, providing assistance to investors in facilitating investment
procedures, and nurturing projects to support Panamanian exports to new markets. In its effort to
implement this strategy, Panama has become more open through its participation in regional and
bilateral agreements with countries where its exports of goods, services and high-value-added
non-traditional products could be afforded preferential access. Panama has increased the number
of bilateral investment treaties signed over the review period. The Government has also
implemented reforms which seek to improve efficiency in the areas of customs and administrative
procedures; and investment through the establishment of the Investment and Export Promotion
Agency (PROINVEX) and the introduction of an electronically processed start-up notification for
companies.
4.186. Panama's has utilized its comparative advantage in the tertiary sector and its geographical
location well, to establish its position as a major exporter of port, logistics, financial and tourism
services. Its ability to craft national strategies which support the areas with which the country has
a competitive advantage could also be said to play a contributory role in its successes.
Barbados therefore wishes Panama well in the implementation of its trade and development
policies.
4.187. The Governments of Barbados and the Republic of Panama established formal diplomatic
relations in August 1975. However, Barbados' economic, cultural relationship with Panama began
during the late 19th to the early 20th century, when approximately 60,000 Barbadians migrated to
Panama to construct the Panama Canal. The flows of remittances from these migrants back to
Barbados contributed to the social and economic development of the country. Many of the
migrants did not return to Barbados, and their resettlement gave birth to a new generation of
Panamanians of Barbadian descent. This was a significant milestone in the history of Barbados and
so during the course of this year Barbados will join with Panama in commemorating the centennial
anniversary of the Panama Canal.
WT/TPR/M/301 • Panama
- 31 4.188. To date, Barbados and Panama have signed cooperation agreements in the areas of
culture and tourism and a Double Taxation Agreement (DTA). The Government of Barbados
considers that there is significant potential for the further strengthening of relations with Panama,
and continues to cooperate bilaterally to develop a closer and more enhanced relationship.
4.189. With regard to future prospects, in 2011 the two Governments initialled an air services
agreement aimed at providing a direct or one-stop air services link between the two countries. It is
hoped that the agreement can be signed formally in the coming months. Barbados and Panama
also have initiated talks on expanding our trading relationship possibly leading to include a partial
scope trade agreement.
4.190. Panama has contributed positively to the work of the multilateral trading system. This is
evident in its participation in the various bodies of the WTO and we look forward to their continued
constructive engagement.
4.191. Barbados looks to further fruitful and mutually beneficial engagement with Panama at the
multilateral, regional and bilateral level.
EL SALVADOR
4.192. Our Central American nations established diplomatic relations 104 years ago, coming after
long-standing historical and cultural ties developed on the basis of respect and cooperation
between our Governments and peoples and on shared foreign policy objectives such as respect for
democracy, the consolidation of peace and regional security.
4.193. Our diplomatic and trading relations have been strengthened with the establishment
of a binational commission comprising our respective Ministries of Foreign Affairs. Through
a 2011 Memorandum of Understanding they brought about improvements in land and maritime
transport, strengthened the services and tourism sectors, and introduced a temporary migrant
workers programme between our countries, amongst other crucially important initiatives.
4.194. We maintain very close ties both bilaterally and regionally through the Central American
integration system. An outstanding historic event was last year's accession to the Central
American Integration Subsystem (SIECA), undoubtedly much facilitated by the free trade
agreement signed between our countries in 2013 and which we had the honour of negotiating,
together with Minister Arrocha and his team.
4.195. It is worth noting last year's entry into force of the Association Agreement between
Central America and the European Union, the first region-to-region agreement, which we are sure
will boost our intra-regional and extra-regional relations.
4.196. Our bilateral relations are dynamic and are reflected in a rapidly growing trade between
both countries, including in the investments. Proof of this is that our business people have found in
Panama the conditions necessary for placing their investments, and Salvadoran capital is now
present in Panama in areas such as motor vehicle distribution, shopping centres, hotels and
banking to name some of the main ones. We are thus able to take advantage of business
opportunities, which are further enhanced by factors such as geographical proximity, ease of land
and air transport, a common language and a single currency. All these factors have enabled us to
bolster our industries and to continue exploring new areas of trade and investment.
4.197. In trade, Panama ranks sixth amongst El Salvador's export destinations, surpassed only by
the United States and other large Members. This demonstrates the commercial importance of the
Panamanian economy to El Salvador.
4.198. Panama is the second-largest source of foreign direct investment (FDI) in El Salvador,
surpassed only by investments from the United States. Since the entry into force of the free trade
agreement, exports have expanded from US$46.2 million in 2003 US$121.7 million in 2013.
From January to May 2013, El Salvador's exports were up 1.6% on the same period in 2012.
WT/TPR/M/301 • Panama
- 32 4.199. Panama is a highly important trading partner to El Salvador both bilaterally and in the
WTO. We are therefore gratified to see evidence of the important steps Panama has been taking to
modernize its economic and social structure, including the liberalization of trade and agriculture.
4.200. We see, for example, that Panama's trade policy objectives are focused on increasing FDI
and exports, to which end, work has been in progress to enhance competitiveness and improve the
business climate and infrastructure. This entailed establishing the Investment and Export
Promotion Agency (PROINVEX), which, from the reports, operates as a single window for
investors. It therefore complements the "National Foreign Trade Strategy 2009-2014", which,
amongst other things, provides assistance to investors to facilitate investment procedures and
foster projects to boost Panamanian exports to new markets.
4.201. In the realm of intellectual property, we commend Panama on the policies it has been
implementing at the highest level, including, for example the development of distinctive signs for
collective use based on the geographical origin of products. This is a strategy for promoting and
protecting traditional knowledge and products originating from indigenous communities through
the intellectual property system. We also welcome the work of the Directorate-General of
Industrial Property, one of the first entities in the region to become fully automated and to offer
online services to its users. On the basis of compared experience, our national intellectual property
office has received information on the system used and this has proven useful for the purposes of
implementing registration processes and sub-processes as part of quality certification.
4.202. Finally, and no less important, we laud the active part being played by Panama
multilaterally in the current round of negotiations as well as its active engagement in the ordinary
work of this Organization under the leadership of our friend and colleague Ambassador Suescum.
URUGUAY
4.203. Uruguay welcomes the delegation of Panama to this important forum of the multilateral
system. The presence here today of a Minister and a Vice-Minister, together with other delegates
from the capital, is proof of the importance that Panama attaches to this body.
4.204. We congratulate Panama on its high rates of growth over the period of this review and its
rapid recovery from the global economic crisis thanks to the boost received from public and private
investment as well as the growth of services exports sustained by a stable macroeconomic
environment.
4.205. Over the period of this review, Panama opened its economy even further, mainly through
participation in preferential trade agreements, thereby consolidating reforms in areas such as
customs, intellectual property, government procurement and other trade-related areas.
4.206. In bilateral trade, Uruguay's exports to Panama doubled by comparison with 2011.
The leading exports are rice, followed by tobacco, plastic products and maritime or river
navigation.
4.207. A sanitary inspection mission led by Panamanian experts visited Uruguay from
12 to 30 May this year to look at the meat industry and dairy production facilities. A report is now
pending, and will clear the way for the entry of the relevant Uruguayan products into the
Panamanian market.
4.208. Uruguay assesses the Panamanian technical mission positively and the aforementioned
report is being awaited. Based on the work of the inspectors, the findings are expected to be
positive, and should soon open the way for exports of meat and dairy products. Uruguay is also
interested in exporting citrus fruit, for which arrangements are now being made.
4.209. Uruguay is an exporter par excellence of agricultural products. Any significant rollback
of certain protectionist policies in this sector will therefore lead to increased trade amongst
all Members.
4.210. Therefore, as stated by the Government of Panama in its report, Uruguay too is committed
to the successful conclusion of the Doha Round negotiations, in which progress in the agricultural
WT/TPR/M/301 • Panama
- 33 negotiations is of pivotal importance for integrating the least developed countries into the
multilateral trading system and eliminating trade-distorting factors.
4.211. On a personal note, I wish to express my gratitude for the invaluable work being done at
the WTO by the entire delegation of Panama under the distinguished leadership of
Ambassador Alfredo Suescum.
ECUADOR
4.212. Ecuador is participating with interest in this Panama's second Trade Policy Review, given
the common challenges facing the two countries. Our two countries recently became Members of
this Organization and we both use the dollar as legal tender, which means that we have no
monetary policy tool for dealing with economic cycles and external shocks.
4.213. In economic terms, Panama has grown at one of the fastest rates in the Latin American
region, posting an annual average of 8% fuelled by increasing private consumption and public and
private investment. Against this backdrop, Panama faces the challenge of ensuring that this
growth reduces the persisting social and regional inequalities, this being a challenge common to
many developing countries.
4.214. With specific reference to the composition of the Panamanian economy, the services sector
plays a key role. It is vibrant and competitive and is driven by activities related to the Canal and
the Colón Free Zone. The services sector accounts for 70% of GDP, two thirds of employment and
almost 36% of exports.
4.215. The good performance of services brings out the "duality" of the Panamanian economy.
The GDP shares of the agricultural and manufacturing sectors have declined, in spite of the high
tariffs applied to agricultural products by comparison with other products, government assistance
received, and the range of taxes levied on imports. Moreover, the Secretariat's report states that
in the case of 59 products, the applied rates exceed WTO bound rates.
4.216. As regards trade policies by measure, Ecuador welcomes Panama's efforts to effectively
dismantle export subsidy programmes, the extended deadline for which runs until
31 December 2015. Ecuador notes with some concern, however, that there are incentive
programmes existing in the Colón Free Zone whose consistency with the disciplines on export
subsidies warrant closer study.
4.217. Ecuador also welcomes the changes made by Panama to its banking legislation in order to
undergird the aims of combating tax evasion. In that connection, it believes that the establishment
of formal channels for the exchange of information between countries would contribute
significantly to attaining that objective.
4.218. Bilateral trade between Ecuador and Panama is appreciable, amounting in 2013 to just
below US$2 billion in goods alone and with a favourable balance for Panama. Despite the
encouraging outlook for the continued increase in trade between the two countries, more work is
needed on mechanisms to authenticate the origin of goods. Moreover, because Ecuador is one of
the main users of the Panama Canal, any increase in tolls has a direct impact on the
competitiveness of its exports.
HONDURAS
4.219. Panama's impressive economic growth is beyond dispute. With average GDP growth above
8% between 2006 and 2012, it has been one of Latin America's highest growth rates in recent
years. This performance is attributable mainly to the opening up of its economy, the vibrancy of
investments and a stable macroeconomic environment.
4.220. According to the report by the Secretariat, Panama continued to open up its economy
during the period 2007-2013, chiefly through participation in preferential trade agreements which
served as a catalyst for legislative reforms in key areas such as customs, intellectual property,
government procurement and others. Furthermore, as part of its development strategy,
Panama maintains incentive programmes to attract foreign direct investment (FDI), including the
WT/TPR/M/301 • Panama
- 34 operation of special economic zones such as the Colón Free Zone (ZLC), the world's second-largest
free zone. We are also pleased to observe that Panama is taking advantage of its tertiary sector
and its geographical location to consolidate its position in the region as a major exporter of
financial, port, transport, storage and distribution services, as well as transit services through the
Panama Canal.
4.221. According to World Bank figures, this rapid economic growth has brought with it a surge in
the nominal GDP per capita (US$11,075 in 2013) and a decrease in the poverty and
unemployment rates. In combination with the efforts of the Government of Panama, this strong
economic growth has generated an improvement in social indicators. The poverty rate fell from
48.5% in 2002 to 27% in 2011, while extreme poverty diminished by 50% during this period.
4.222. Panama's main trade policy objective is to boost FDI as well as exports. We welcome the
fact that for Panama, the opening up process goes hand-in-hand with these objectives, and it has
concentrated both on concluding trade agreements and improving competitiveness, the business
climate and infrastructure. Hence, by setting up the Investment and Export Promotion Agency
(PROINVEX), the Panamanian Government has been seeking to attract high value-added
investment that promotes training of human resources and the transfer of technology to key
economic sectors such as financial services, logistics, tourism and agriculture.
4.223. As the report by the Government shows, trade agreements are a vitally important
complement to its strategy of integration into international trade. This is borne out by the fact that
between 2007 and 2014, 13 regional trade agreements entered into force. These include Panama's
accession to the Latin American Integration Association and to the Central American Economic
Integration Subsystem, which has helped to facilitate trade in the region and, above all,
to buttress the capacity of the Central American Isthmus to improve its competitiveness versus the
rest of the world.
4.224. Our bilateral trade relations with Panama have been based on traditional links of fraternity
and friendship between our two countries, inspired by the need to expand both our markets.
The performance of our trading company has fuelled growth in Panama's transport, export and
import sectors, and increased production resources for Honduras. Panama ranks 20th as an export
market for Honduras and seventh as a place of origin of imports.
4.225. Trade between Panama and Honduras increased from US$174.3 million in 2009 to
US$353.4 million in 2011 under the bilateral free trade agreement that became effective in 2009.
There is no doubt as to the potential of our relations with Panama, and the Honduran Government
is keen to strengthen and promote those relations even further.
4.226. We conclude by wishing for the success of this second Trade Policy Review and welcome
the extraordinary achievements of our Panamanian brethren.
WT/TPR/M/301 • Panama
- 35 5 REPLIES BY THE REPRESENTATIVE OF PANAMA AND OTHER COMMENTS
H.E. MRS. DIANA SALAZAR (VICE-MINISTER OF INTERNATIONAL TRADE NEGOTIATIONS)
5.1. A very good morning to H.E. Mariam MD Salleh, Ambassador of Malaysia and Chairperson of
the Trade Policy Review Body. I take this opportunity to thank you, on behalf of my country, for
chairing this meeting so skilfully. I also thank the Ambassador of Honduras, Dacio Castillo,
who acted as discussant for this review, all Members participating in this meeting, the team of the
Trade Policy Review Division for the hard work they have done together with our authorities over
the period of a year. I am also grateful for the support of the interpreters, whose flexibility in the
first session made it possible to work beyond the agreed hour and who are serving as a channel of
communication at this session.
5.2. Our Government wishes to express its appreciation of the positive comments from Members
of the World Trade Organization during its second Trade Policy Review emphasizing the economic
strategy we have applied, enabling us to achieve high levels of growth at a time of worldwide
economic crisis.
5.3. We are also grateful for the interest shown in gaining more in-depth knowledge of the
economic, social and commercial policies applied by my country, where the Government's vision is
that interlinking those policies is the key to achieving growth aimed at equity for
Panamanian citizens.
5.4. Between 2007 and 2013, the Panamanian economy did in fact record very high levels of
economic growth based on public and private investment, services exports and private
consumption. In addition, we have made solid progress in areas that support trade facilitation,
such as the authorized economic operator scheme, the single window for foreign trade, upgrading
our customs regimes, and advance rulings.
5.5. Some significant results were also achieved over the same period. Poverty, for instance,
decreased from 36.5% to 25.8%, and inequality as measured by the GINI index moved from 0.54
to 0.50. These outcomes were possible thanks to the high levels of economic growth, which
generated a large number of jobs and brought unemployment to its lowest ever in the country's
history, in conjunction with social programmes that transfer resources to the most vulnerable and
impoverished households and people.
5.6. When it comes to social development, there are still challenges to be met in order to raise
the population's standards of well-being and reduce inequalities. The current Administration will
therefore be stepping up programmes to support the population so as to provide the most
vulnerable groups with the resources and tools they need to escape poverty.
5.7. The planned measures include increasing transfers to students in public education and
increasing financial assistance to impoverished adults above 65 years of age who are not receiving
retirement or pension payments. We will also take steps to deal with structural problems bound up
with poverty. Among them are low levels and quality of education, which will be tackled, inter alia,
by means of a bilingual (Spanish/English) education plan for students attending public schools, by
expanding the coverage of secondary education to rural areas, as well as implementing new forms
of technical education. We will also be striving to help satisfy basic health, sanitation and housing
needs, and we will make food available at more affordable prices without neglecting our
multilateral undertakings.
5.8. To deal with rural poverty, the Ministry of Agricultural Development of Panama, through its
Directorate for Agroindustry, has taken concrete action to raise the country's socio-economic level
by promoting 2,600 small agribusinesses across the country. Furthermore, the Rural Development
Directorate of the Ministry of Agricultural Development is promoting equity and poverty alleviation
in rural areas by means of rural organization programmes for producers, young people
and women.
WT/TPR/M/301 • Panama
- 36 5.9. Regarding the sustainability of public finances, the Government is determined to respect the
non-financial public sector deficit ceiling in accordance with the Social and Fiscal Responsibility
Law. To this end, the current Administration will make public spending more efficient and prioritize
public investment.
5.10. We are pleased to confirm that the decision to expand the Panama Canal as well as our
policy of integration in world trade will enable us, on the one hand, to maintain the
competitiveness of a sector that contributes hugely the gross domestic product. On the other
hand, the challenge arises of taking advantage of the series of agreements already negotiated and
which will form the basis for generating employment and will positively impact our trade balance.
5.11. When it comes to attracting investments, we are committed to maintaining a solid legal
basis that helps boost interest on the part of our trading partners, both in services and in seizing
the opportunities offered by the FTAs in force with over 50 countries throughout the world. In this
way, we will be able to attract investments to both the services and goods sectors.
5.12. We also look forward to the forthcoming entry into force of the FTA between the EFTA
Member Countries on the one hand, namely Iceland, Lichtenstein, Norway and Switzerland, and
Costa Rica and Panama on the other, set for August and September of this year.
5.13. Although the supply of energy currently exceeds demand, Panama has faced problems of
electricity generation over the past two years, stemming from the increased demand that comes
with economic growth. Besides, the effects of climate change and the tardiness in investing in the
large-scale diversification of electricity generation had widened the gap between supply and
demand. To tackle these problems, the present Government will be promoting investment in
efficient energy sources, electrical interconnection with neighbouring countries and the building of
transmission lines.
5.14. In respect of sanitary and phytosanitary measures, our country has stepped up the training
of veterinary and agricultural technical personnel over recent years in risk analysis with respect to
animals and food products. This has been possible thanks to the support of the World Organization
for Animal Health (OIE), the Regional International Organization for Plant Protection and Animal
Health (RIOPPAH), the Regional Quality Infrastructure and SPS Systems in Central America
Programme (PRACAMS), with funding from the European Union amongst other organizations.
We have therefore been able to train personnel in relation to my country's export products as well
as the ISO 17025 standard. Another area being addressed is the diagnostic assessment of food
and epidemiological surveillance of transboundary diseases.
5.15. This exercise in transparency has brought to our attention topics such as the concern of
Members over applied tariffs that exceed bound rates. Our senior authorities will be dealing with
this situation is a matter of priority and we trust that we will be able to find solutions even before
the deadlines indicated in our written replies.
5.16. In this current year we will be addressing other concerns raised by Members at this session.
We are assessing recent legislative amendments that some Members deem to be potentially
inconsistent with the basic principles of this Organization.
5.17. As a Member of this Organization, Panama is pleased to state that in June 2014,
we concluded our notifications of safeguard measures and domestic support for 2013.
We concluded our intellectual property notifications this month, in full awareness of the importance
of fulfilling this commitment. In the same vein, we are aware that when it comes to technical
regulations, we must take stock of our situation and, if appropriate, notify any outstanding
regulations. I am determined to make this effort so that our country can improve on its record
of notifications.
5.18. As part of this Organization and a signatory to the Bali Trade Facilitation Agreement,
we reaffirm our commitment to supporting the outcome achieved on that occasion.
5.19. Our commitment to this Organization is clear from our endeavour to respond to almost all
the concerns you were kind enough to raise, knowing that the few questions that could not be
WT/TPR/M/301 • Panama
- 37 settled at this time will be dealt with in accordance with the timeframes envisaged for this exercise
in transparency.
5.20. I conclude this statement by mentioning the vision of our authorities who are launching this
delicate task, acting in support of the vision of the President of the Republic of Panama,
His Excellency Juan Carlos Varela, whose intent is to take our country along a path of prosperity,
with better education and better health, creating a more just society that develops mechanisms for
linking trade policies with the well-being of the Panamanian people.
DISCUSSANT
5.21. I wish to begin by thanking Members for the dynamism and enthusiasm they have shown at
this second Trade Policy Review of Panama.
5.22. By way of conclusions, I have observed that the Panamanian economy is quite sound, and
that the authorities have shown wisdom in their search for practical solutions to the challenges
they face.
5.23. They are seeking to attract high-level investment and are striving each day to improve the
different structures that can inspire the confidence of foreign investors.
5.24. They have enacted and amended various laws in order to comply with their international
obligations.
5.25. There have been infrastructure works that have changed Panamanian society and which
form part of the plans of other nations that are awaiting the conclusion of work on the
Panama Canal.
5.26. I should like to thank you, Madam Chair, for the confidence you have reposed in me as
discussant at this second Review of Panama; I thank the delegations for their warm words
addressed to me, I thank Minister Melitón Arrocha and Vice-Minister Diana Salazar for their
opening and closing statements, I thank the Secretariat for its hard work and, of course,
Ambassador Suescum and his team for the magnificent task they have accomplished.
RUSSIAN FEDERATION
5.27. The considerable recent growth of Panama at an average annual rate of 8%, which is one of
the highest in Latin America, enables us to give a positive overall assessment of the economic
policies of Panama, including its trade and investment components.
5.28. We highly appreciate the current economic reforms in areas such as customs, intellectual
property, government procurement and other trade-related areas. Panama also maintains
incentive schemes for FDIs and Russia would appreciate some additional clarification on Panama's
trade practices in enhancing transparency with foreign direct investors, in particular, concerning
special governmental programmes aimed at giving a special and preferential investment regime on
Panama's market.
5.29. We would like some general information about how to set up a business in Panama. We
would also like to bring the attention to burdensome requirements applied to non-residents while
opening offices in Panama, which, in our view, create an obstacle to trade. In this regard, we
would like to get some possible clarification from Panama on the reasons behind this not quite
favourable treatment to non-residents.
EUROPEAN UNION
5.30. Let me express our sincere appreciation to the delegation of Panama for the timely replies
they have provided to our questions and for the comprehensive presentation given last Wednesday
as well as this morning.
WT/TPR/M/301 • Panama
- 38 5.31. The EU is pleased to note that this second Review of Panama has been really helpful for
better understanding the trade policies undertaken by Panama, as well as the areas in which
additional efforts are still needed.
5.32. As noted on Wednesday, the services sector is the heart of the country's economic
structure. Therefore, the EU would like to encourage Panama to take advantage of the comments
raised by several WTO Members in order to facilitate the inflows of FDIs, in particular revising the
current limitations on foreign capital participation in companies offering auxiliary maritime services
and the requirement that 90% of the vessels engaged in such services must be of Panama's
nationality.
5.33. The EU has a few follow-up questions that have been submitted to the WTO Secretariat and
we look forward to receiving replies in due course.
5.34. Finally, let me again express our appreciation to the delegation of Panama for their very
constructive participation in this important exercise and for the information and replies presented
during their second Trade Policy Review.
CANADA
5.35. Canada would like to congratulate Panama on their Trade Policy Review and also thank the
delegation for their prompt replies to our initial set of questions. I just wanted to flag that we have
a very limited number of follow-up questions that have already been sent or will be sent shortly
electronically to the delegation.
UNITED STATES
5.36. I would like to join others in congratulating Panama and its Trade Policy Review and thank
as well for the prompt responses and active engagement in the process. In our view, it has been a
very useful Trade Policy Review of Panama. We do have a small amount of follow-up questions in
the intellectual property area and we look forward to the written responses. I thank Panama for
the commitment expressed today in regards to making advancements in some of the issues that
have been raised.
H.E. DIANA SALAZAR
5.37. It is my pleasure to receive the questions posed to me this morning. I should like to clarify,
for the benefit of the delegate from Russia, from whom I do not recall having received written
questions, that paragraph 2.50 of subsection 2.4.2 "Establishing a business" on page 38 of the
Secretariat's report states: "Pursuant to Law No. 5 of 11 January 2007 and Executive Decree
No. 26 of 12 July 2007 regulating it, Panama streamlined the procedure for opening a business".
The overarching aim is for businesses to be able to set up in our country without grappling with
red tape. Please be informed that the indicators on the ease of starting a business in our country
are amongst the highest in the Central American region.
5.38. Turning to your question on non-residents, I would be grateful if you could develop it
further so that it can be answered definitively and in detail.
5.39. We are happy to take note of the concerns raised in other statements by Canada,
the European Union and the United States, and we will forward the replies to them in keeping with
the rules of this Trade Policy Review.
5.40. I thank you all for your participation, as it indicates that our country has a place in this
Organization. We are a developing country that is small in area, but one with a big heart.
WT/TPR/M/301 • Panama
- 39 6 CONCLUDING REMARKS BY THE CHAIRPERSON
6.1. This second Trade Policy Review of Panama has provided an excellent opportunity to consider
the evolution of Panama's trade and investment regime since its last review in 2007, and the
challenges it now faces. I would like to thank His Excellency Mr Melitón Arrocha, Minister of Trade
and Industries; Vice-Minister of International Trade Negotiations, Ms Diana Salazar;
Ambassador Alfredo Suescum; and the rest of the delegation of Panama, for their active and
constructive engagement in this review. I would also like to thank Ambassador Dacio Castillo for
his valuable insights as discussant. Members highly appreciated Panama's written responses to
most of the 280 questions received, and look forward to any additional replies no later than one
month after this meeting.
6.2. First of all, I would like to note that this has been a positive review. Members have praised
Panama for its success in achieving outstanding economic growth, greater integration in world
trade, and high levels of foreign direct investment. These achievements have been underpinned by
open trade and investment policies, which have enabled Panama to capitalize on its comparative
advantages and become a major exporter of international services, mostly associated with the
Panama Canal and the Colón Free Zone's operations. At the same time, Panama has been
encouraged to strengthen the linkages between these buoyant sectors and the rest of the
economy, reduce social disparities and allocate more resources to social programmes,
including education.
6.3. Members welcomed Panama's overall sound and stable macroeconomic policies, but they also
pointed to the challenges of a rising fiscal deficit and encouraged Panama to consolidate its
public finances.
6.4. Members commended Panama's strong commitment to the multilateral trading system,
the conclusion of the Doha Round, and ongoing plurilateral initiatives such as the Information
Technology Agreement. At the same time, Members took note of Panama's active use of regional
and bilateral trade agreements to deepen its integration into the global economy.
6.5. Panama was commended for moving ahead with significant legislative and regulatory
reforms. These reforms have included strengthening the legal frameworks for competition and
government procurement; overhauling the intellectual property regime to meet international
obligations; amending the Free Zones Regime; and liberalizing mobile telephony. Members also
welcomed Panama's measures to facilitate trade, including the modernization of customs
procedures, the introduction of a Single Window for exports and an authorized economic operator
scheme, among others. In this respect, they encouraged Panama to also establish a Single
Window for imports, and notify its Category A commitments under the Trade Facilitation
Agreement in a timely manner.
6.6. Notwithstanding these reforms and achievements, Panama still faces challenges in a number
of areas. Panama has addressed most of these issues in its final remarks or written replies.
I would now like to highlight some areas in which Members consider further improvements could
be made:

Tariffs: While acknowledging Panama's efforts to simplify its tariff structure,
Members have expressed concern about the fact that applied tariffs on a number of
products exceed the bound rates. Panama has indicated that it is taking steps in this
regard, with the view to rectifying this situation by 1 January 2015, at the latest,
and that it will notify the WTO in due course.

Taxes affecting imports: Members have enquired about Panama's rationale for
applying different taxes on national and imported fuels mixed with ethanol, and urged
Panama to remove discriminatory taxes. Panama informed that it is currently reviewing
its fuel consumption taxes in light of the objectives of its national policy on biofuels.

TBT and SPS measures: Members raised a number of questions regarding the
elaboration and implementation of technical regulations and sanitary and phytosanitary
measures, in particular with respect to the importation of food products and live animals,
and requested Panama to make further efforts to enhance transparency and notifications
WT/TPR/M/301 • Panama
- 40 in these areas. Panama has replied that it is working on measures to improve its
SPS system, including the establishment of a national SPS Committee, and to enhance
its SPS and TBT notification mechanisms.

Free trade zones: Members welcomed Panama's amendments to its free trade zones
legislation and the removal of export subsidies, in order to meet its obligations under the
Agreement on Subsidies and Countervailing Measures. Members also took note of the
key role played by the Colón Free Zone in regional and international trade. However,
more information was sought regarding customs controls to monitor the entry, transit
and exit of goods through the Zone, and about incentives granted in this area.

Services: Members acknowledged the fundamental importance of the services sector for
the Panamanian economy and its generally open trade and investment regime in the
sector, and exhorted Panama to continue liberalization of services. In the banking
sector, Members took note of recent financial reforms and called on Panama to continue
applying relevant international regulations to strengthen banking supervision.

Some questions were raised regarding the rationale and effects of foreign investment
restrictions in some areas:
o
With respect to maritime auxiliary services, Members expressed concerns about
caps on FDI and crew nationality requirements under the recent Law No. 41,
and exhorted Panama to remove such restrictions. Panama replied that it is currently
evaluating this situation bearing in mind its international commitments.
o
Members also sought clarification on Panama's restrictions with regard to retail
trade and encouraged it to further liberalize this sector.
6.7. To sum up, Panama was highly commended for its robust economic performance and rapid
transformation into a regional trade and logistics hub, which is a good example on how an open
trade and investment regime can support the integration of a small, services-oriented economy
into the global economy. Members encouraged Panama to pursue further reforms along this path
to consolidate these achievements.
6.8. Before I close this meeting, I would like to come back to the opening statement by Panama's
Head of Delegation about the social dimension of trade. He emphasized that Panama's trade
policies should promote freer and fairer trade, but at the same time be an instrument to improve
the expectations and quality of life of its population, in other words, trade policy should not be
divorced from social policy.
6.9. Finally, let me thank again the Panamanian delegation for their hard work and dedication
to this exercise, and to the other delegations, the discussant and the Secretariat for this
successful review.
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