WT/REG 324/2 
 
16 September 2016 
(16-4919) Page: 1/5 
Committee on Regional Trade Agreements  Original: English/Spanish  
 
FREE TRADE AGREEMENT  BETWEEN PANAMA AND THE UNITED STATES  
(GOODS AND SERVICES ) 
QUESTIONS AND REPLIE S 
 The following communication, dated 12 September  2016, is being circulated at the request 
of the delegations of Panama  and the United States . 
 
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 This document reproduces the questions addressed to the Parties and the responses 
submitted.  
 
 
Questions from the delegation of the European Union  
 
Merchandise trade  
 
1.1.  Paragraph 1.3: Could the Parties explain what the possible reasons for the gener al 
trend described in merchandise trade (i.e. decline in Panama' s export – specifically in 
2015 – as pointed out) are?  
 Nominal global trade and U.S. trade were down in 2015 due to slowing real trade growth, 
commodity price declines and exchange rate fluct uations. U.S. imports of goods and services from 
the world were down by 3.1 % in 2015, with goods alone down by 4. 3%. The decline in imports of 
goods from Panama (5.4 %) is in line with the U.S. decline in  goods imports from the world. The 
largest decline wa s seen in U.S. goods returned, which more than accounted for the entire decline 
in imports and likely resulted from the canal completion.  
 
Adicionalmente, esto coincidió con las afectaciones climáticas a la producción agropecuaria y 
pesquera panameña, así como con la apreciación del dólar de los Estados Unidos, que le resta 
competitividad en el mercado a dichas exportaciones.   
 
Provisions on trade in goods  
Import duties and charges, and quantitative restrictions  
Tariff elimination  
 
1.2.  According to the Factual Presentation "a tariff can be raised to the level in the 
schedule following a unilateral reduction or as authorised by the WTO Dispute 
Settlement Body". This sentence reflects the following provisions of Article 3.3 of the 
Agreement:  
 "For greater certaint y, a Party may:  
 (a) raise a customs duty back to the level established in its Schedule to Annex 3.3 
 following a unilateral reduction; or  
(b) maintain or increase a customs duty as authorized by the Dispute Settlement 
Body of the WTO."  
 
a. Could the Parties  explain under which circumstances a Party can decide to 
unilaterally reduce its tariffs?  WT/REG324/2  
 
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  b. Could the Parties clarify how such unilateral reduction in tariff schedules would 
work?  
c. Could the Parties confirm that any possible custom duty increase by a Party will 
be done within the level of its bound tariffs?  
 There could be a number of circumstances in which a Party decides that it is in its interest to 
set an MFN applied rate at a rate below the level established in its Schedule to Annex 3.3 of the 
Agreemen t for a limited period of time. Article 3.3.4 clarifies that, following such a unilateral 
reduction, a Party may increase the rate of customs duty on an originating good back to the level 
set forth in its Schedule (and also makes clear that a Party may inc rease the rate of customs duty 
as authorized by the  WTO Dispute Settlement Body). As such, Article 3.3.4 does not assume or 
result in a change to t he tariff schedule of a Party. Provisions contemplating such circumstances 
are not unique; similar provisions  exist in other FTAs, including the EU -Canada Comprehensive  
Economic and Trade Agreement.  
 
Regulatory provisions on trade in goods  
Standard s 
Technical barriers to trade  
 
1.3.  Paragraph 3.25: According to the Factual Presentation, the TBT provisions 
contained in the Agreement go further than the ones of the TBT Agreement.  
 Could the Parties explain what are the WTO+ TBT provisions contained in the 
Agreement?  
 
 The TBT Chapter of the U.S. Panama Trade Promotion Agreement (TPA) builds on and 
clarifies WTO TBT di sciplines in the following areas:  
 
1. International Standards : TPA Article 7.3 reinforces the 2000 WTO TBT Committee Decision 
on the Principles for the Development of International Standards, Guides and 
Recommendations (2000 Committee Decision) and require s that the Parties apply the 
principles of the 2000 Committee Decision in determining whether an international standard, 
guide, or recommendation exists.  
 
2. National Treatment of Conformity Assessment Bodies (CABs ): Article 7.5.3 of the TPA 
obliges the P arties to provide national treatment of CABs, going beyond WTO TBT 
Article  6.4. Further, Article 7.5.1 of the TPA expands on the obligation under WTO TBT 
Article 6.1 that "Members shall ensure, whenever possible, that results of conformity 
assessment proce dures in other Members are accepted " by articulating a variety of 
alternative methods for facilitating the acceptance of conformity assessment procedures 
conducted in the other Party 's territory.  
 
3. Participation in Standards Development : TPA Article 7.7 .1 obliges the Parties to allow 
persons of the other Party to participate in the development of its standards, technical 
regulations and conformity assessment procedures.  
 
4. Transparency : TPA provisions under Article 7.7 enhance the WTO TBT 's transparenc y 
obligations under Articles 2.9 and 5.6. TPA Article 7.7 requires notification of proposed 
technical regulations and conformity assessment procedures directly to the other Party 
through the inquiry points (at the same time they are notified to WTO Members ), states that 
Parties should allow at least 60 days for comments on proposed measures, and requires 
Parties to publish responses to significant comments received no later than the date they 
publish the final regulations or conformity assessment procedure.  TPA Article 7.7.7 also 
requires the Parties to immediately notify importers if goods are detained at a port due to a 
perceived failure to comply with a technical regulation.   
 
 
 
 
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  Anti-dumping and countervailing measures  
Paragraph 3.34 linked with Paragra ph 1.1  
 
1.4.  In Paragraph 1.1 it is clarified that this Agreement supersedes the longstanding 
unilateral U .S. preferential regimes offered to Panamanian products entering the United 
States pursuant to the Generalized System of Preferences (GSP), Caribbean Basin  
Economic Recovery Act (CBERA), and the Caribbean Basin Trade Partnership Act 
(CBTPA).  
 Under Art icle 8.8 of the Agreement, as also presented in the Factual Presentation, 
Panama retains certain rights under U .S. law with respect to being designated as a 
"beneficiary country" under the Caribbean Basin Economic Recovery Act  for the 
purposes of the exception to cumulation for determining material injury.  
 
 Could the Parties clarify which are the rights retained by Panama under U .S. law 
for being designated as  a beneficiary country under the CBERA? In particular, could the 
Parties clarify the meaning of "cumulation for determining material injury"?   
 
 U.S. law provides that, as part of its material injury or threat of material injury 
determinations, the U.S. In ternational Trade Commission shall not cumulatively assess the volume 
and effect of imports "from any country designated as a beneficiary country under {CBERA} for 
purposes of making a determination with respect to that country, except that the volume and 
effects of imports of the subject merchandise from such country may be cumulatively assessed 
with imports of the subject merchandise from any other country designated as such a beneficiary 
country  
 
Provisions on trade in services  
 
1.5.  Given that Art. V of the GATS requires that the agreement should not provide for 
the a priori exclusion of any mode of supply could the Parties please clarify how 
temporary entry for business purposes (mode 4) works under the agreement (given 
there is no chapter on temporary movem ent present)?  
 The supply of services through Mode 4 is covered by Chapter 11 of the Agreement 
(Cross -Border Trade in Services). The obligations of Chapter 11 —including, inter alia , obligations 
on Market Access and National Treatment —apply with respect to Mode 4. The National Treatment 
obligation of Chapter 11 (Article 11.2, which provides for the absence of discriminatory measures 
in the sense of GATS Article XVII) is subject to the scheduling of limitations on a negative list 
basis. Reservations for exist ing measures inconsistent with the National Treatment obligation, 
inscribed in Parties ' schedules to Annex I of the Agreement, are subject to a standstill and ratchet 
mechanism that both prohibits new or more discriminatory measures and automatically captu res 
any future liberalization of existing discriminatory measures not eliminated under the Agreement.  
 
Other provisions on investment  
 
1.6.  Could the Parties clarify whether the investment protection provisions in the 
agreement contain any guarantee on the rig ht of states to regulate for legitimate public 
policy objectives?  
The Agreement provides a high standard of investment protection, while safeguarding the 
right of governments to regulate in the public interest. This objective is achieved through a variety 
of complementary provisions: substantive obligations that are carefully crafted to prevent 
overbroad or otherwise unintended interpretations that could impinge on legitimate regulatory 
objectives; exceptions, where appropriate, for regulatory measures, suc h as those taken for 
prudential reasons; investor -State dispute settlement procedures that, among other things, ensure 
Parties can maintain close and ongoing oversight over interpretation of the Agreement; and a 
preamble that establishes that the Parties, in making the Agreement, resolved to preserve their 
flexibility to safeguard the public welfare.  
 
 
 
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  1.7.  Could the Parties clarify whether investors have recourse to investor to state 
dispute settlement prior to establishing commercial presence in the host cou ntry?  
The investor -State dispute settlement provisions of the Agreement permit an investor of a 
Party to submit to arbitration a claim that another Party has breached an obligation under Section 
A of the Agreement 's Investment Chapter. The obligations in t hat Section include obligations that 
apply only with respect to covered investments (i.e., investments already established in the 
territory of the other Party), as well as obligations that apply with respect to the establishment or 
acquisition of investmen ts in the territory of the other Party (e.g., National Treatment, 
Performance Requirements). In all cases, in order to submit a claim, an investor must have 
suffered loss or damage by reason of, or arising out of, the measure alleged to constitute a breach  
of Investment Chapter obligations.  
 
1.8.  Could th e Parties clarify how does the A greement promote sustainable investment 
and responsible business conduct?  
 The Agreement contains a variety of provisions that are in line with the goals of sustainable 
investment  and responsible business conduct goals. These include provisions in Chapter 18 that 
obligate Parties to adopt or maintain legislation relating to anti -corruption; provisions in 
Chapter  16 that obligate Parties to adopt and maintain statutes, regulations, and practices relating 
to internationally recognized labor rights; and provisions in Chapter 17 relating to the effective 
enforcement of environmental laws and to strengthening capacity through environmental 
cooperation to protect the environment and to pr omote sustainable development.  
 
Government procurement  
 
1.9.  Paragraph 5.10: Could the Parties submit further information on the s pecific 
provisions on publications (i.e. deadlines for publication in general terms)?  
Article 9.5.1 of Panama FTA requires that a "procuring entity shall provide suppliers 
sufficient time to prepare and submit responsive tenders, taking into account the nature and 
complexity of the procurement. In no case shall a procuring entity provide less than 40 days from 
the date of publication  of a notice of intended procurement to the final date for submission of 
tenders ". 
 
Questions from the delegation of Mexico  
 
Propiedad Intelectual  
 
1.10.   Párrafo 5.13: De acuerdo a lo mencionado en este párrafo ¿En qué consiste las 
disposiciones relativas a las  indicaciones geográficas?  
 The provisions on geographical indications are in Article 15.3 of the Agreement. They 
contain commitments on the procedures regarding protection of geographical indications and 
disciplines on the relationship between geographic al indications and trademarks. The provisions of 
Chapter 15 can be found on the USTR website as follows:  
 
https://ustr.gov/sites/default/files/ uploads/agreements/fta/panama/asset_upload_file131_10350.
pdf  
 
or on the MICI website in Spanish : 
 
http://www.mici.gob.pa/detalle.php?cid=15&sid=57&clid=173&id=3853  
 
Medio A mbiente  
 
1.11.   Párrafo 5.19: ¿En qué consisten las disposiciones relativas a la promoción de la 
participación pública y la conciencia pública de las leyes ambientales?  
 The provisions on the promotion of public participation and public awareness of 
environmenta l laws are in Article 17.7 of the Agreement. Additionally, Paragraph 17.8 establishes 
a process whereby any person of a Party may file a submission asserting that a Party is failing to WT/REG324/2  
 
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  effectively enforce its environmental laws. The factual records develop ed in these processes are to 
be made publically available.  
 
 The provisions of Chapter 17 can be found on the USTR website as follows:  
 
https: //ustr.gov/sites/default/files/uploads/agreements/fta/panama/asset_upload_file314_10400.
pdf  
 
or on the MICI website in Spanish  
 
http://www.mici.gob.pa/detalle.php?cid=15&sid =57&clid=173&id=3853  
 
Laboral  
1.12.   Párrafo 5.17 : De acuerdo a lo mencionado en este párrafo y el capítulo 16 del 
tratado ¿Ya se creó el Consejo de Asuntos Laborales? En caso de que sea así ¿Qué 
actividades se han llevado a cabo dentro del mismo?  
 With regard to question 1.12., the Labor Affairs Council consists of cabinet level or 
equivalent officials from the U.S. and Panamanian governments, typically from labor, trade and 
foreign affairs agencies or ministries (Article 16.5, para 1). The Council met within o ne year of 
entry into force of the Agreement, will meet further as it deems necessary, and oversees the 
implementation of the labor chapter by discussing efforts to improve respect for labor rights, 
including technical cooperation activities (Article 16.5,  para 2). For example, the Council met in 
January 2014 in Panama City. During that meeting, high level officials from the Office of the U.S. 
Trade Representative, the Department of Labor, the U.S. Ambassador to Panama and the Vice 
Minister for Trade Negoti ations and Vice Minister of Labor of Panama, as well as other senior level 
trade and labor officials of both Parties, discussed labor enforcement initiatives in their respective 
countries, and held a public session with over fifty members of the public fro m Panama and the 
United States. For more information see: https://ustr.gov/about -us/policy -offices/press -
office/press -releases/2014/January/US -Panama -Hold-Inaugural -Meeting -of-Labor -Affairs -Council -
under -US-Panama -TPA  
 
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