WT/REG 324/M/1  
 
21 October 2016 
(16-5743) Page: 1/4 
Committee on Regional Trade Agreements  
Eighty -second  Session   
 
 FREE TRADE AGREEMENT  BETWEEN THE UNITED STATES AND PA NAMA  
(GOODS AND SERVICES)  
NOTE ON THE MEETING OF 27 SEPTEMBER  2016 
Chairman: Ambassador Daniel BLOCKERT (Sweden)  
1.1.  The 82nd Session of the Committee on Regional Trade Agreements (hereinafter 'CRTA' or the 
'Committee') was convened in Airgram  WTO/AIR/RTA/ 7/Rev.1 dated 16 September  2016. 
1.2.  Under Agenda Item B.IV of the session, the CRTA considered the  Free Trade Agreement 
between the United States and Panama , goods and services , (hereinafter "the Agreement").  
1.3.  The Chairman  said that the Agreement had entered into force on 31 October 2012. It had 
been notified to the WTO by the Parties on 29 October 2012 under Article XXIV:7(a) of the GATT 
1994 and the Understanding on the Interpretation of Article XXIV of GATT 19 94 as an Agreement 
establishing a free trade area (document WT/REG324/N/1) and under GATS Article V:7(a) as an 
Agreement providing for the liberalization of trade in services within the meaning of Article V of the 
GATS (document S/C/N/658). The text of the  Agreement was available, together with its Annexes, 
on the Parties' official websites.  
1.4.  The Factual Presentation on the goods and services aspects (document WT/REG324/1 dated 
18 July 2016) had been prepared by the Secretariat on its own responsibility in f ull consultation 
with the Parties, in accordance with paragraph 7(b) of the Transparency Mechanism for Regional 
Trade Agreements (document WT/L/671). In addition, written questions and replies on th e 
Agreement had been distributed in document WT/REG324/2 d ated 16 September 2016. He 
propose d to organize the consideration of the Agreement by first asking the Parties and then other 
Members to give any general comments , following which the Committee would turn to the specifics 
of the Agreement .  
1.5.  The representat ive of Panama  attache d great importance to th e 82nd Session of the CRTA , 
which was considering the Trade Promotion Agreement between the United  States and Panama. 
He began by pointing out that historically, the United States ha d been Panama's main trading 
partner in the goods and services market  with which it maintained excellent trade relations . This 
had led Panama  to negotiate a Trade Promotion Agreement which had been  ratified by Panama 
through Law No.  53 of 13  December  1997, published in Official Gazett e No.  25.944 of 
20 December  2007.  
1.6.  Prior to the entry into force of the Agreement, Panama's exports had been  covered by the 
Caribbean Basin Initiative (CBI) which granted  a limited group of tariff lines preferences for 
Panamanian exports to the United State s on a unilateral basis.  
1.7.  With the entry into force of the Agreement on 31  October  2012, the United  States had 
immediately liberalized approximately 97% of its tariff s. Panama, for its part, had granted the 
United States duty -free treatment with immediate e ffect for approximately 67% of its tariff  lines, 
while 8.5% was to be liberalized within five years, 9.8% within ten years, and 14.6% over periods 
of more than ten years. Potatoes and onions, representing 0.1%, would  not be liberalized.  
1.8.  In 2015, Panama's t rade with the United States had amounted to some 3,267.7  million 
Balboas. The main products exported by the  United States to Panama included diesel fuel; WT/REG324 /M/1 
 
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  unleaded gasoline with an octane rating of 87 and above ; unprepared and unmilled maize; 
gasoline with an octane rating of 91 and above ; solid residue oil -cake flours; heavy  fuel oils; and 
vehicles with reciprocating internal combustion engines.  
1.9.  Panama's main exports to the United States include d salmonids, fresh or chilled; cold water 
shrimps and prawns; r aw cane sugar; aluminium waste; frozen fish; roasted coffee, not 
decaffeinated; fresh bananas; and pineapples.  
1.10.   Panamanian exports to the United States had declined  in 2015 owing to the impact of 
adverse weather conditions on Panamanian agriculture and fish eries and the appreciation of 
the US dollar.  
1.11.   With respect to trade in services, the Agreement set out a legislative framework in line with 
WTO rules and disciplines, based on reciprocal rights and obligations. The scope of the Agreement 
include d the countr y's most important sectors, for instance the maritime, tourism, professional 
services, and logistics sectors, to name but a few.  Chapter 12 of the Agreement regulate d financial 
services, and Chapter 13 cover ed telecommunications, and specifically access to  and use of public 
telecommunications services.  
1.12.   For 2014, U .S. FDI in Panama exceeded  B/ 5.6  million, representing approximately 15.9% 
of the total , placing it in second place behind the European Union . 
1.13.   The Agreement provided for  the possibility of enablin g enterprises in the Colon Free Zone to 
re-export to the United States goods that were covered by other trade agreements concluded by 
the United States with third countries (Australia, Bahrain, Chile, the Dominican Republic and 
Central America, Morocco, Si ngapore, Canada and Mexico). In  October  2013, Panama had 
expanded the list of countries to include four new U .S. trading partners, namely Peru, the Republic 
of Korea, Oman and Co lombia. With this expansion,  U.S. trade authorities had recognized the 
origin of, and maintained the tariff preferences with respect to , products produced by its trading 
partners and re -exported from the Colon Free Zone to its territory, provided they underwent no 
processing. This ha d important implications for regional trade in mer chandise originating in the 
United States when it came  to transhipment, transit or preparation of goods for re -export in 
connection with a whole range of operations undertaken by major multilateral enterprises from 
Panama's free zones and port terminals bo th on the Pacific and Atlantic coasts  promoted by the 
expansion of the Panama Canal . 
1.14.   The representative  of the United States  welcome d the consideration of the U.S.-Panama 
Trade Promotion Agreement.  The Agreement ha d strengthened the long -standing alliance and 
growing commercial ties between the United States and Panama, and had expanded economic 
opportunities for citizens in both countries.  More broadly, the Agreement was a key component of 
the United States ' commitment to deepening commercial and economic engagement in the 
Western Hemisphere.  The Agreement had  entered into force on 31 October 2012.  As of 2015, 
Panama had become the 33rd largest export destination for U.S. goods (including exports to 
Panama 's free zones, including the Colon Free Zone), and its 91st largest supplier of goods.  
Two-way trade in goods total led US$8.2 billion in 2015.  
1.15.   The Agreement was comprehensive , reflecting the Parties'  commitment to fostering a 
favourable environment for free trade, investment, openness, and transparency.  The Parties 
believed  that the Agreement was fully consistent with their WTO obligations and built  upon their 
WTO commitments in many areas.  Already, the Agreement ha d generated new opportunities for 
stakeholders , workers and consumers in both countries, furt her reaffirming U.S. commitment to 
open markets and trade liberalization.   
1.16.   Upon entry  into force of the Agreement, duties on U.S. consumer and industrial goods under 
more than 75 % of Panamanian tariff lines had been  eliminated, accounting for 80 % of U.S. 
exports.  At the beginning of th e year, on 1 January 2016, over 83 % of tariff lines on U.S. 
consumer and industrial products had become  duty-free, and all remaining tariffs w ould be lifted 
by 2021 , in the tenth year of the Agreement .  More than half of U.S. agricultural products had 
become  duty-free in Panama upon entry into force , with the majority becoming duty -free by 2026.  WT/REG324 /M/1 
 
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  1.17.   Upon entry into force of the Agreement, nearly 98 % percent of U.S. tariff lines were duty -
free for Panamanian products.  The Agreement not only maintained the preferential tariff treatment 
previously accorded to Panama under unilateral U.S. preference program mes, but also provided 
preferential treatment for additional tariff lines.    
1.18.   The Agreement guarantee d access on a non -discriminatory  basis to Panama 's dynamic 
services market, which account ed for roughly 70 % of Panama 's economy.  Panama ha d undertaken 
strong commitments across all the major sectors, including financial, telecommunications, 
computer, distribution, express delivery, energ y, and environmental services.  Panama had also 
agreed to maintain a pro -competitive regulatory framework f or telecommunications that built  upon 
the WTO 's Basic Telecommunications Reference Paper and guarantee d competitive access to 
Panamanian telecom netwo rks on reasonable and non -discriminatory terms.  
1.19.   The Agreement provide d benefits for businesses wishing to supply services cross -border and 
guarantee d non-discriminatory treatment of digital products.  The Agreement also ensure d a secure 
and predictable lega l and regulatory environment in both countries, a priority of foreign investors.  
1.20.   The stock of U.S. FDI in Panama was US$4.1 billion in 2015, a 12.2 % decrease from 2014, 
led by nonbank holding companies, finance  and insurance, and wholesale trade.  The s tock of 
Panama 's FDI in the United States was $2.7 billion in 2015, up 12.9 % from 2014.  Panama 's direct 
investment in the United States was led by real estate, finance  and insurance, and retail trade.  
1.21.   Under  the Agreement, the United States and Panama ha d both demonstrated their 
commitment to high standards for the protection of intellectual property.  These standards 
recognize d the importance of strong and effective intellectual property protection to the Parties' 
economies.  
1.22.   The Agreement call ed on Panama to imp lement improved standards for the protection and 
enforcement of a broad range of intellectual property rights, consistent with emerging international 
standards. When fully implemented, such improvements would  include requirements for IPR 
protections that were critical to protecting copyrighted works like music, movies, and software 
from piracy in the digital environment; deterrent criminal penalties against copyright piracy and 
trademark counterfeiting; robust patent and test data protection that recognize d the Doha 
Declaration on the TRIPS Agreement and Public Health; and state -of-the-art protection for 
trademarks.  
1.23.   The Agreement 's multiple, cross -cutting transparency obligations  had substantially improved 
upon previous policies and practices, and were facilitating the flow of trade and investment 
between the United States and Panama.   
1.24.   He highlight ed that the Agreement provide d for non -discriminatory treatment of goods and 
services of each Party across a broad range of  each other 's government procurement mark et, both 
at the federal and sub-regional level s. The Agreement require d the use of fair and transparent 
procurement procedures, such as advance notice of purchases and timely and effective bid review 
procedures.   
1.25.   The United States believe d that the strong growth in foreign investment seen in the 
Panamanian market ha d been enhanced by Panama's  commitment to open its market, as well as 
the transparent, predictable business climate resulting from stronger regulatory and trade 
facilitation provisions, enhanced intellectual property rights protections, improved business 
services, and the pro -liberalization position signal led by the Agreement.  The reforms undertaken 
to enter into and to implement the Agreement ha d made Panama an attractive and sound place to 
invest, and were creating new opportunities for the Panamanian people.   
1.26.    The representative of the European Union  thanked the Parties for the informative 
presentations on the Agreement. The EU appreciated the modern aspects of the Agreement which 
included provi sions on labour, environment, and anti -corruption. The EU recognized the high level 
of market access concessions for goods and services. The EU had noted that the regulatory 
provisions on trade in goods built on the TBT Agreement, but went further , establi shing rules on 
conformity assessment, technical regulations, trade facilitation, transparency and information 
exchange. The EU considered the transparency requirements a good example for enhancing WT/REG324 /M/1 
 
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  transparency at the bilateral level while also impacting po sitively at the multilateral level. That 
being said, the EU regretted the more limited coverage in some chapters, such as government 
procurement and she wondered whether the Parties were considering any revision of the rules in 
this area. The EU had submit ted detailed advance questions on TBT, standards, mode 4, 
investment protection, sustainable investment and responsible business conduct , and government 
procurement. She thanked the Parties for their replies. The EU had no further questions.  
1.27.   The representa tive of Mexico  thanked the Parties for the replies to its questions on 
geographical indications, labour affairs and the promotion of public participation in environmental 
affairs.  
1.28.   In response to the question by the EU, the representative of the United Stat es said that the 
provisions in question struck an appropriate balance at this stage in the relationship and there 
were no immediate plans to take a fresh look at those provisions.  
1.29.   The Chairman  said that the consideration of the Goods and Services Aspects o f the FTA 
between the United States and Panama ha d allowed the Committee  to clarify a number of 
questions and it had  now conclude d oral discussion of th e RTA in accordance with paragraph 11 of 
the Transparency Mechanism. If any delegations wish ed to ask fo llow-up questions they we re 
invited to forward submissions in writing to the Secretariat by 4 October 2016 and Parties  were 
asked to submit replies in writing by no later than 18 October 2016. In accordance with 
paragraph  13 of the Transparency Mechanism a ll written submissions, as well as minutes of this 
meeting would  be circulated promptly, in all WTO  official languages, and would  be made available 
on the WTO website.  
1.30.   The Committee took note  of the comments made.  
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