WT/REG384/3  
 
26 March 2019  
(19-1794) Page: 1/6 
Committee on Regional Trade Agreements  English/Spanish  
 
ACCESSION OF PANAMA TO THE CENTRAL AMERI CAN COMMON MARKET (C ACM)  
(GOODS)  
QUESTIONS AND REPLIE S 
 The following communication, dated 15 March 2019, is being circulated at the request of the 
delegations of  Costa Rica, El Salvador, Guatemala, Honduras, Nicaragua and Panama . 
 
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Questions from the delegation of the Dominican Republic  
 
1.1.  What legislative amendments has Panama had to make with a view to this process ? 
Joint response from the Parties  
 
 As part of the process of incorporation into  the Central American Integration Subsystem, the 
Republic of Panama approved Law No. 25 of 10 April 2013, published in Official Gazette No. 27268 -A, 
which approved  the Protocol of Guatemala signed  on 29 October 1993 (in its entirety ) and the 
amendment thereto of 27 February 2002 . 
 
 Also approved was Law No.  26 of 17 April 2013, published in Official Gazette  No. 27268 -B, 
which approved  (in its entirety ) the Protocol Incorporating the Republic of Panama into the Economic 
Integration Subsystem of the Centr al American Integration System , signed in Ciudad de Tegucigalpa, 
Honduras, on 29  June 2012.   
 
 Lastly,  we should mention that as part of the integration process, acts, resolutions, decisions 
and instruments are prepared that are specific to integration . Once adopted, they are incorporated 
into the legislation of each of the States Parties . 
 
1.2.  Which products exported to Central American countries and traded freely since the 
implementation of the Central American Common Market were previously subject to the 
payment of tariffs?  
Joint response from the Parties  
 
 Prior to Panama's incorporation into the Central American Economic Integration Subsystem 
(Economic Subsystem), market access for goods traded between Panama and other 
Central  American countries was regulated by the Bilateral Protocols of the Free Trade Agreement 
between Central America and Panama .  
 
Since  the entry into force of the Protocol Incorporating Panama, originating goods traded 
between Panama and other Central American countries have been traded freely under Article III of 
the General Treaty on Economic Integration, with the exception of the goods listed in Annex 4.2. 
and 4. 3. of the Protocol . 
 
 Annex  4.2 contains a list of  goods that are in transition towards free trade between 
Central  America and Panama and vice versa (i.e. a tariff elimination programme), while Annex 4.3 
lists the goods that are not covered by free trade a rrangements. For all purposes, both annexes are 
considered as Annex A of the Republic of Panama to the General Treaty on Economic Integration . WT/REG384/3  
 
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   Furthermore, paragraph 4.5 of the Incorporation Protocol provides  that Panama and the rest 
of the States Parties  shall negotiate a timetable to liberalize  trade in the goods listed in Annex 4.2 
and 4.3. The States Parties have agreed  to gradually incorporate products that were excluded from 
free trade arrangements. Such agreements are reflected in Resolutions No. 08-2018, No. 09 -2018 
and No.  10-2018 of the Executive Committee for Economic Integration  (CEIE) . 
 
1.3.  Which import products of Central American origin traded freely since the 
implementation of the Central American Common Market were previously subject to the 
payment of tariffs ? 
Joint response from the Parties  
 
 See reply to question  1.2. 
 
Questions from the delegation of Ecuador  
 
Safeguard mechanisms  
Global safeguards  
 
1.4.  According to paragraph 3.57, the Parties shall develop a regional safeguard 
mechanism in order to impose trade defence measures with respect to imports from 
third  parties (Article 17 of the Framework Agreement). Intra -RTA trade shall be excluded 
from this mechanism.  
What mechanism would allow for this exclusion? Is the mechanism operational and, 
if so, how does it work ? 
Joint response from the Parties  
 
 The Framework Agreement referred to in paragraph 1.1 is the Framework Agreement  for the 
Creation of a Central American Customs Union, which seeks to consolidate economic integration , 
while providing  for the use of trade defence mechanism s that will be developed  as the process  moves 
forward. Regarding the safeguard mechanism, Article 17 of the Framework Agreement  provides that 
these measures shall not apply to goods that circulate in the customs territo ry once the Customs 
Union is established .  
 
 While  the Customs Union is being perfected, the provisions of the  Central American Regulation 
on Safeguard Measures  and the Central American Regulation on Unfair Trade Practices  are 
applicable . 
 
Bilateral safeguards  
1.5. According to paragraph 3.59 , the Parties retain their right to apply temporary 
unilateral safeguard measures in case of market disruption, unfair trade practices or any 
other situation that is liable to develop into a national emergency (Ar ticle 26 of the 
CRAAC). Such measures are authorized by the Council of Ministers of Economic 
Integration (Article 22 of the CRAAC). Similarly, Article  57 of the PG allows the Parties to 
suspend the application of one or more provisions of the PG with the a uthorization of the 
Council of Ministers of Economic Integration if the implementation of such provision or 
provisions is considered to be seriously affecting some sector of the economy.  
a. Please describe the scope of unfair trade practices, given that unfa ir trade would 
tend more towards dumping practices.  
Joint response from the Parties  
 
 In 1984, when the Convention on the Central American Tariff and Customs Regime  was 
negotiated, the term "unfair trade practices" covered dumping practices and subsidies; however, 
this term has evolved, and is currently  consistent with the provisions of the relevant WTO provisions. 
In Central America, these provisions have been updated through the Central American Regulation 
on Unfair Trade Practices (Resolution No. 193-2007 COMIECO - XLIV).  
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  b. What is meant by market disruption ? 
Joint response from the Parties  
 
 Market disruption is one of the situations listed in Article 26 of the Convention, but is not 
defined in any regional provision. In this case, the State adopting such  a measure must justify it in 
accordance with Article 26 of the Convention . 
 
Safeguards in agriculture  
 
1.6. According to paragraph 3.60 , the Parties can adopt, if necessary, measures to 
counteract unfair competition due to the agricultural or commercial p olicies of 
third  countries (Article 23 of the PG).  
 Has a list of agricultural products been established for the application of this 
safeguard ? 
 
Joint response from the Parties  
 
 Article  23 of the Protocol of Guatemala provides for the adoption of measures, but not for the 
establishment of a list of agricultural products . 
 
Other special safeguards  
 
1.7. According to paragraph 3.61 , Article  26 of the CRAAC allows Parties to adopt, 
unilaterally, safeguard measures in case of sudden shortages of primary materials and 
basic final goods or of market disruption.  
 What is the criteria for applying a measure on the grounds of market disruption ? 
 
Joint response from the Parties  
 
 The criteria generally used are the following: temporary shortages in the domestic and 
regional market  or situations that are likely to develop into a national emergency . 
 
Anti-dumping and countervailing measures  
 
1.8. According to paragraph 3.71, all anti -dumping and compensatory duties shall be 
applied to the extent that it is  necessary to counteract the unfair practice and are 
therefore exceptional and temporary (Article 37). In any case, all definitive measures 
must be eliminated within five years from the imposition of the provisional measures 
(Article 40). For the adoption of a measure, the existence of a causal link, as in the 
WTO  Agreement, is necessary (Article  38). The duration can be exceptionally extended if 
the conditions that triggered the measures are still in place. The investigating authority 
shall notify the proc edural acts as required under the Regulation and the WTO Agreements 
(Article 45). The Party that is affected by an anti -dumping or compensatory measure can 
appeal to the Central American Dispute Settlement Mechanism or to the WTO Dispute 
Settlement Body (A rticle  47). 
 Does the regional mechanism have to be exhausted first before turning to the 
multilateral mechanism, or is it optional ? 
 
Joint response from the Parties  
 
 The complaining Party may select the forum it prefers . 
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  Subsidies and State aid  
1.9. According to paragraph 3.73 , existing State monopolies remain subject to local 
legislations and the special treatments established in Annex A of the TGIEC whereas, in 
case of the creation of new State monopolies, the Parties will engage in consultations to  
establish special regimes (Article VIII of TGIEC).  
 What is the scope of the special regimes for new State monopolies referred to in 
paragraph 3.73 ? 
 
Joint response from the Parties  
 
 The regulations that will govern this matter are being established at regional level.  
 
Questions from the delegation of the European Union  
 
Provisions on trade in goods  
Regulatory provisions of the agreement  
Subsidies and s tate aid  
 
1.10.  Paragraph 3.72: "3.72. Direct and indirect export subsidies are prohibited under 
Article XI of the TGIEC. Price discrimination practices that translate into export prices that 
are lower than domestic prices are considered to be indirect export subsidies. On the other 
hand , tax exemptions for the promotion of production and exemptions on exported goods 
that are re exported to a third country are not considered as export subsidies. If a good 
produced with under priced inputs is imported, the affected Party can raise the issu e with 
the Executive Council in order to determine if it is facing an unfair trade practice. 
Currently, in accordance with Article 8 of the PG, this function falls to the Executive 
Committee of Economic Integration (CEIE). The Executive Council makes a dec ision in five 
days and, in case of unfair trade practices, authorizes the temporary suspension of free 
trade for 30 days ." 
 Please explain why tax exemptions on exported goods that are re -exported to a 
third  country are not considered as export subsidies.  
 
Joint response from the Parties  
 
 Pursuant to  Article 8 of the Protocol of Guatemala, the States Parties undertake to perfect and 
update the common trade rules that govern  the use of subsidies, dumping and other unfair trade 
practices . 
 
 The States Parti es of the Economic Subsystem, as WTO Members, apply  the provisions of the 
Agreement on Subsidies and Countervailing Measures for all subsidy -related matters .  
 
1.11.  Paragraph 3.73: " 3.73. Existing State monopolies remain subject to local legislations 
and the special treatments established in Annex A of the TGIEC whereas, in case of the 
creation of new State monopolies, the Parties will engage in consultations to establish 
special regimes (Article VIII of TGIEC). " 
 Please explain how it can be ensured that private and public companies 
(State  monopolies) are given equal treatment under the TGIEC.  
 
Joint response from the Parties  
 
 The legal instruments of economic integration contain a number of provisions that seek to 
ensure non-discriminatory treatment in o rder to promote free competition in the countries in the 
region . 
 
 Pursuant to Article VII of the General Treaty on Central American Economic Integration , none 
of the signatory States shall establish or maintain regulations on the distribution or sale of goods 
originating in another signatory State, whe re such regulations place or seek to  place such goods in WT/REG384/3  
 
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  a discriminatory situation with respect to identical goods  produced domestically or imported from 
any other country . 
 
 Furthermore, Article 7 of the Protocol of Guatemala provides that goods originating in States 
Parties shall enjoy national treatment in the territory of all these States Parties . 
 
 Where a State Party of the Economic Subsystem considers that its private or p ublic enterprises 
are not receiving equal treatment in another State Party, it may take recourse to the mechanism for 
the settlement of trade disputes between Central American coun tries, as approved by the Council of 
Ministers for Economic Integration (COM IECO)  through Resolu tion No. 170 -2006 (COMIECO -XLIX), 
which provides for consultation mechanisms, good offices and arbitration . 
 
General provisions of the agreement  
Other provisions  
Competition  
 
1.12.  Paragraph 4.27: " 4.27. The Parties shall develop regional regulations for 
competition (Article 25 of the PG and Article 21 of the Framework Agreement). The Parties 
have reported that they are working on a draft set of Central American Competition 
Regulations ." 
 For when is the adoption of the Competition  regulations scheduled?  
 
Joint response from the Parties  
 
 Central America is currently working on a draft  set of regional c ompetition regulations , which 
it hopes to finalize  by 2020 at the latest . 
 
Question from the delegation of Mexico  
 
Provisions on trade in goods  
Regulatory provisions of the Agreement  
Standards  
Technical barriers to trade  
 
1.13.  Paragraph 3.55: The Central American Regulation on Normalization Measures, 
Metrology and Authorization Procedures (adopted through Resolution No. 37 -99) 
develops the relevant disciplines included in the PG and the WTO TBT Agreement. Such 
measures shall not introduce or cause unnecessary obstacles to trade between the Parties 
(Articles 1 and 4).1 Two or more Parties can sign harmonization and mutual recogni tion 
agreements in order to strengthen Central American integration and facilitate 
intra -regional trade (Article 5). The Parties strive to harmonize their normalization and 
metrology measures and their authorization procedures without reducing the level of  
safety and protection of human, animal and plant life and health, the environment and 
consumers (Article 9). Article 9 also provides for mutual recognition of technical 
regulations when the importing Party determines that the regulations comply with its 
legitimate objectives. Each Party shall accept the results of conformity assessment 
procedures carried out in the other Parties as long as they provide a satisfactory 
guarantee that the good or service complies with the relevant technical regulation or norm  
(Article 10). In terms of transparency, the Parties shall ensure that there is at least 
one information centre in its territory capable of answering any question or request 
(Article  13) and they commit to notify, through the Central American Economic 
Integration Secretariat, the measures that they intend to adopt, derogate or modify 
before the entry into force of such measures (Article 14). The regulation also includes 
provisions on risk evaluation (Article 8) and technical cooperation (Article 15).  
                                                
1 Unless otherwise specified, all articles in the remaining [part] of this subsection refer to 
articles in the Central American Regulation on Normalization Measures, Metrology and Authorization 
Procedures.  WT/REG384/3  
 
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   Would  notification to the WTO therefore take place through the Central American 
Economic Integration Secretariat (SIECA), or is notification only between the Parties? In 
other words, would the Parties send only one notification to the WTO through SIECA or 
would  they make this notification only to SIECA and not to the WTO ? 
 
Joint response from the Parties  
 
 Central American Technical Regulations (RTCA) are  not notified through the Central American 
Economic Integration Secretariat (SIECA) . Each Central American State Party makes its notifications 
individually to the Committee on Technical Barriers to Trade of the World Trade Organization (WTO) 
through the enquiry centre contact point. These notifications are made following regional 
coordin ation between the States Parties, where it is agreed to notify on the same date agreed in 
advance . 
 
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