WT/TPR/S/301/Rev.1  
14 October 2014  
(14-5833)  Page: 1/148  
Trade Policy Review Body   
 
TRADE POLICY REVIEW 
REPORT BY THE SECRETARIAT 
PANAMA  
Revision 
This report, prepared for the second Trade Polic y Review of Panama, has been drawn up by the 
WTO Secretariat on its own responsibility. The Se cretariat has, as required by the Agreement 
establishing the Trade Policy Review Mech anism (Annex 3 of the Marrakesh Agreement 
Establishing the World Trade Organization), sought clarification from Panama on its trade policies and practices.  
Any technical questions arising from this report may be addressed to Ms Martha Lara 
(tel.: +41 22 739 60 33) or Ms Silvia Ávila (tel.: +41 22 739 50 64).  
Document WT/TPR/G/301/Rev.1 contains the policy statement submitted by Panama. 
 
 
Note: This report was drafted in Spanish. WT/TPR/S/301/Rev.1 • Panama 
 
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  CONTENTS 
SUMMARY ....................................................................................................................... . 7 
Economic envi ronment ...................................................................................................... 7  
Trade and investment policy framework ............................................................................... 8  
Trade policies by measure .................................................................................................. 8  
Sectoral policies ............................................................................................................. . 10 
1   ECONOMIC ENVIRONMENT ........................................................................................ 12  
1.1   Overview ................................................................................................................. 12 
1.2   Recent ec onomic trends ............................................................................................ 13 
1.2.1   Growth and stru cture of th e economy ....................................................................... 13 
1.2.2   Fiscal policy ......................................................................................................... . 15 
1.2.3   Moneta ry policy ..................................................................................................... 18 
1.2.4   Balance of payments .............................................................................................. 19 
1.3   Trade performance ................................................................................................... 20 
1.3.1   Trend of merchandise trade ..................................................................................... 20 
1.3.1.1   Composition of merchand ise trade ......................................................................... 21 
1.3.1.2   Direction of merchandise trade .............................................................................. 24 
1.3.2   Trade in services ................................................................................................... 24 
1.4   Foreign dire ct invest ment .......................................................................................... 25 
2   TRADE AND INVE STMENT RE GIME ............................................................................ 27  
2.1   Genera l Framework .................................................................................................. 27 
2.2   Trade poli cy objectives .............................................................................................. 27 
2.3   Trade agreements  and arrang ements .......................................................................... 28 
2.3.1   World Trade Organization ........................................................................................ 28 
2.3.2   Preferential trade agreements .................................................................................. 29 
2.3.2.1   Regional in tegration ag reements ........................................................................... 30 
2.3.2.1.1   Latin American In tegration Associ ation (LAIA) ...................................................... 30 
2.3.2.1.2   Central American Economic Integration Subsystem (SIECA) and  
Free Trade Agreement between Panama and Central America ................................................. 31 
2.3.2.2   Other tr ade agreements ....................................................................................... 32 
2.3.2.2.1   Association Agreement between the European Union and Central America ................ 33 
2.3.2.2.2   Pana ma - Canada ............................................................................................. 33 
2.3.2.2.3   Trade Promotion Agreement be tween Panama and th e United States ....................... 34 
2.3.2.2.4   Pa nama - Peru ................................................................................................. 34 
2.3.2.2.5   Panama - Chile ................................................................................................ 34 
2.3.2.3   Other tr ade agreements ....................................................................................... 35 
2.3.2.4   Trade agreements currently being negotiated .......................................................... 35 
2.3.3   Other agreements and arrangements ........................................................................ 35 
2.4   Investme nt regime ................................................................................................... 35 
2.4.1   Genera l framework ................................................................................................ 35 WT/TPR/S/301/Rev.1 • Panama 
 
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  2.4.2   Establishi ng a busi ness ........................................................................................... 38 
3   TRADE POLICIES AND PRACTICES, BY MEASURE ....................................................... 40  
3.1   Overview ................................................................................................................. 40 
3.2   Measures direct ly affectin g imports ............................................................................. 42 
3.2.1   Customs procedures ............................................................................................... 42 
3.2.2   Custom s valuation ................................................................................................. 45 
3.2.3   Rules of origin .......................................................................................................  46 
3.2.4   Tariffs ............................................................................................................... ... 48 
3.2.4.1   Structure and levels ............................................................................................ 48 
3.2.4.2   Tari ff bindings .................................................................................................... 51 
3.2.4.3   Tariff concessions ................................................................................................ 51 
3.2.4.4   Preferential tariffs ............................................................................................... 52 
3.2.5   Other import charges and taxes affecting imports ....................................................... 53 
3.2.6   Import prohibitions, restrictions an d licensing ............................................................ 54 
3.2.7   Continge ncy measures ........................................................................................... 56 
3.2.7.1   Anti-dumping and countervailing measures ............................................................. 57 
3.2.7.2   Safeguard measures ............................................................................................ 59 
3.2.8   Standards and technical regulations ......................................................................... 60 
3.2.9   Sanitary and ph ytosanitary measures ....................................................................... 62 
3.3   Measures direct ly affectin g exports ............................................................................. 66 
3.3.1   Export procedur es and requirements ........................................................................ 66 
3.3.2   Export taxes,  charges and levies .............................................................................. 67 
3.3.3   Export prohibitions, restrictions and licensing ............................................................. 67 
3.3.4   Export  incentives ................................................................................................... 68 
3.3.4.1   Drawback, duty-free replacement of goods and temporar y admission regimes ............. 69 
3.3.4.2   Free zones covere d by Law No. 32 of 2011 ............................................................. 69 
3.3.4.3   Coló n Free Zone ................................................................................................. 71 
3.3.4.4   Other free zones ................................................................................................. 72 
3.3.4.5   Other export  incentive progra mmes ....................................................................... 73 
3.3.4.5.1   CAT and CeFA .................................................................................................. 73 
3.3.4.5.2   Paymen t certificates ......................................................................................... 74 
3.3.5   Export financing, insurance and guarantees ............................................................... 74 
3.3.6   Export promotion ................................................................................................... 74 
3.4   Measures affectin g production and trade ...................................................................... 76 
3.4.1   In centives ............................................................................................................  76 
3.4.1.1   Official National Industry Register .......................................................................... 76 
3.4.1.2   Industrial promotion ce rtificate ............................................................................. 77 
3.4.1.3   Special regime for mult inational business headquarters ............................................ 78 
3.4.1.4   Credit and financial incentives ............................................................................... 79 
3.4.1.5   Sectoral incentives .............................................................................................. 79 WT/TPR/S/301/Rev.1 • Panama 
 
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  3.4.2   Competition and price contro l policy ......................................................................... 80 
3.4.2.1   Competition policy .............................................................................................. 80 
3.4.2.2   Pric e contro ls ..................................................................................................... 82 
3.4.3   State trading, government  enterprises and privatization .............................................. 83 
3.4.4   Governme nt procurement ....................................................................................... 84 
3.4.5   Intellectual property rights ...................................................................................... 87 
3.4.5.1   Enforcement of intellectual property rights .............................................................. 90 
4   TRADE POLICY  BY SECTOR ........................................................................................ 92  
4.1   Overview ................................................................................................................. 92 
4.2   Agriculture and fishing .............................................................................................. 94 
4.2.1   Genera l features .................................................................................................... 94 
4.2.2   Agriculture ............................................................................................................ 94 
4.2.2.1   Objectives .......................................................................................................... 94 
4.2.2.2   Agricultural  policy in strume nts .............................................................................. 95 
4.2.2.2.1   Border measures .............................................................................................. 95 
4.2.2.2.2   Inte rnal measures ............................................................................................ 97 
4.2.3   Fishing ............................................................................................................... .. 99 
4.3   Energy .................................................................................................................. .. 99 
4.3.1   El ectricity ...........................................................................................................  100 
4.3.2   Hydrocarbons ...................................................................................................... 102  
4.4   Manufac turing ........................................................................................................ 10 2 
4.5   Services ................................................................................................................  103 
4.5.1   General features and specif ic commitments un der the GATS ...................................... 103  
4.5.2   Telecommunications ............................................................................................. 104  
4.5.2.1   Features of the market ...................................................................................... 104  
4.5.2.2   Legal framework ............................................................................................... 105  
4.5.3   Financial services ................................................................................................. 108  
4.5.3.1   Genera l features ............................................................................................... 108  
4.5.3.2   Banks and other financial inst itutions ................................................................... 109  
4.5.3.2.1   Features of the market .................................................................................... 109  
4.5.3.2.2   Legal framework ............................................................................................ 110  
4.5.3.3   In suranc e ........................................................................................................ 11 3 
4.5.3.3.1   Features of the market .................................................................................... 113  
4.5.3.3.2   Legal framework ............................................................................................ 114  
4.5.3.4   Securities market .............................................................................................. 117  
4.5.4   Air transport and airports ...................................................................................... 118  
4.5.4.1   Features of the market ...................................................................................... 118  
4.5.4.2   Legal framework ............................................................................................... 119  
4.5.5   Maritime transport, including the Pa nama Ca nal ....................................................... 121  
4.5.5.1   Genera l features ............................................................................................... 121  WT/TPR/S/301/Rev.1 • Panama 
 
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  4.5.5.2   Maritime tr ansport serv ices ................................................................................ 122  
4.5.5.3   Port  services .................................................................................................... 12 3 
4.5.5.4   Pana ma Canal .................................................................................................. 125  
4.5.6   Tourism .............................................................................................................. 126  
4.5.7   Retail trade ......................................................................................................... 129  
REFERENC ES ................................................................................................................ 130  
5   APPENDIX TABLES .................................................................................................. 133  
 
CHARTS 
 Chart 1.1 Merchandise trade by  tariff section,  2007 and 2012 ................................................ 22
 
Chart 1.2 Merchandise trade by trading partner, 2007 and 2012 ............................................. 23 
Chart 3.1 Frequency distribution  of MFN tariff  rates,  2013...................................................... 49 
 
TABLES 
 Table 1.1 Basic economic indicators, 2007-2013 ................................................................... 14
 
Table 1.2 Structure of GDP measured by expenditure, 2007-2012 ........................................... 15 
Table 1.3 Fiscal accounts of the non-fi nancial public se ctor, 2007-2013 ................................... 16 
Table 1.4 Balance of payments, 2007-2013  ......................................................................... 19 
Table 1.5 Trade in services, 2007-2013 ............................................................................... 24 
Table 1.6 Net foreign direct invest ment flows by se ctor, 2007- 2012 ........................................ 25 
Table 1.7 Net FDI flows by category  of economic ac tivity, 2010- 2012 ...................................... 26 
Table 1.8 Net FDI flows by main countries of origin, 2009-2012 .............................................. 26 
Table 2.1 Dispute settlement procedures, 2007 to Apr il 2014 ................................................. 29 
Table 2.2 Participation of Panama in regional trade agreements  
(whether notified or not,  in force) April 2014 ....................................................................... 30 
Table 2.3 Panama: Liberalization programmes agreed as part of preferential 
trade agreements ............................................................................................................ 33 
Table 2.4 Prohibitions on investment .................................................................................. 37 
Table 2.5 Restrictions on  foreign in vestme nt ........................................................................ 37 
Table 3.1 Structure of MFN tariffs, 2007 and 2013 ................................................................ 48 
Table 3.2 Summary of the MFN tari ff, 2013  ......................................................................... 50 
Table 3.3 Summary of Panama’s preferential  tariffs under certai n agreemen ts, 2013 ................. 52 
Table 3.4 Consumption tax on fu els and petroleu m products .................................................. 54 
Table 3.5 Imports subject to import licences  or approval by th e competent bodies .................... 55 
Table 3.6 Exports subject to co ntrol or specia l procedures ..................................................... 68 
Table 3.7 Tax incentives gi ven in free zo nes, 2007- 2012 ....................................................... 70 
Table 3.8 Value of free zone exports and impo rts, 2007- 2013 ................................................ 71 
Table 3.9 Foreign trade in th e Colón Free Zo ne, 2007- 2013 ................................................... 71 
Table 3.10 Cost of the tax incentives given under the CAT, CeFA and  
CPC programmes , 2007-2 013 ............................................................................................ 74 WT/TPR/S/301/Rev.1 • Panama 
 
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  Table 3.11 Tax incentives give n under the ROIN  programme .................................................. 76 
Table 3.12 Amount of the tax incentives  under the ROIN pr ogramme, 2007-201 2 ..................... 77 
Table 3.13 Semi-pub lic companies ..................................................................................... 83 
Table 3.14 Summary of laws amendi ng Law No. 22 of  27 June  2006 ....................................... 84 
Table 4.1 Agricultural products su bject to tariff quotas, 2007- 2012 ......................................... 96 
Table 4.2. Domestic support, 2007-2012 ............................................................................. 97 
Table 4.3 Telecommunications sect or indicators, 2007-2013 ................................................ 105  
Table 4.4 Structure of the Panamanian financial system, December 2012 ............................... 109  
Table 4.5. Panama's banking system: liquidity, capital adequacy and  
profitability indica tors, 2007-2 013 .................................................................................... 110  
Table 4.6. Value of insurance premiums written, by branch, 2007-2012 ................................. 114  
Table 4.7. Annual rate of growth of  passenger and freight traffic at  
Tocumen International Airport, 2007- 2013 ........................................................................ 118  
Table 4.8 Number of passengers at Marc os A. Gelabert Ai rport, 2 007-2013 ............................ 119  
Table 4.9 Bilateral air serv ices agreements (ASA) ............................................................... 120  
Table 4.10 Tourism indi cators, 2007- 2013 ......................................................................... 127  
 
APPENDIX TABLES 
 Table A1.1 Merchandise exports by HS tariff sectio n, 2007-2 012 .......................................... 133
 
Table A1.2 Merchandise imports by  HS tariff sectio n, 2007-2 012 .......................................... 134  
Table A1.3 Merchandise exports by trading partner, 2007-2012 ............................................ 135  
Table A1.4 Merchandise imports by trading partner, 2007-2012 ............................................ 136  
 
 
Table A2.1 Notifications by requ irement, 2007–2014 [M arch 2 014] ....................................... 137  
 
 
Table A3.1 Applied MFN tariffs hi gher than bound tariff rates ................................................ 141  
Table A3.2 Summary of the preferenti al tariffs in some of Panama's  
trade agreemen ts, 2013  ................................................................................................. 143  
Table A3.3 Types of gove rnment proc urement ................................................................... 145  
Table A3.4 Overview of IPR pr otection in Pa nama, 2013  ...................................................... 147  
 WT/TPR/S/301/Rev.1 • Panama 
 
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  SUMMARY 
1. Since 2007, Panama's economic growth has been impressive, thanks mainly to its dynamic 
investment and a stable macroeconomic environment. Generally speaking, Panama's trade and investment regime is fairly open, and continued to open up during the period 2007-2013, 
chiefly through Panama's participation in preferential trade agreements which served as a catalyst 
for legislative reforms in areas such as customs, intellectual property, government procurement and other trade-related areas. As part of its development strategy, Panama also maintains 
incentive schemes to attract foreign direct investment (FDI), including a number of special 
economic zones, such as the Colon Free Zone (ZLC). Thanks to its comparative advantage in the tertiary sector and its geographical location, Panama has been able to consolidate its position as a major exporter of financial, port, transport, storage, distribution services and transit services 
through the Panama Canal. The large public investments in infrastructure in recent years were 
intended to convert the country into a regional logistical centre. On the other hand, in spite of the government support and protection they have  received, the shares of the agricultural 
and manufacturing sectors in GDP have declined. 
2. 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. However, there 
remain considerable social and regional inequalities and a significant shortage of skilled labour. 
Judging from the significant increase in FDI flow s over the past few years, the incentive schemes 
to attract investment appear to have borne fruit.  However, the links between the special economic 
zones and the economy as a whole need to be st rengthened, 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 schem es 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. 
Economic environment 3. Between 2007 and 2013, the Panamanian economy grew at an average annual rate of 8%, 
one of the highest in Latin America. This rapi d growth was fuelled mainly by the expansion 
of private consumption and by public and private investment, chiefly in large-scale infrastructure 
projects. Services are at the heart of the country 's economic structure, accounting for 70% of GDP 
and two thirds of employment. 
4. Since 2009, public finances have recorded a deficit owing to rising levels of expenditure, 
mainly capital. Although the deficit has been moderate and has remained within the annual limits approved by the law, those limits have had to be eased on several occasions. The main fiscal 
policy challenge is to maintain discipline in order to consolidate public finances and boost 
confidence, an objective made all the more pressing by the lack of a monetary policy for dealing with economic cycles and possible external shocks  (Panama uses the US dollar as legal tender). 
The public debt to GDP ratio decreased during the review period, reaching 36.8% in 2013. 
A credit boom, together with robust domestic demand and high international fuel and food prices, 
has put pressure on inflation, which stood at 4% in 2013, higher than that of the United States. 
5. International trade in goods and services continues to play a key role in the Panamanian 
economy, representing 166% of GDP. During the 2007-2013 period, the current account 
of Panama's balance of payments recorded deficits, mainly owing to a negative balance in merchandise trade. The services balance, on  the other hand, has been positive and growing 
thanks to the increased income from the Panama Canal, transport services, port services 
and tourism. Agricultural and food products have dominated Panama's merchandise exports (56% of the total, without counting re-exports  from the ZLC), reflecting the relatively 
small size of the manufacturing sector in Panama. Manufactured goods and fuels account for 88% 
of imports. The United States remains Panama's main trading partner, absorbing more than 20% 
of its exports and imports, although its relative importance has declined. Other major partners are the European Union, Canada, the Central American countries, Mexico, Colombia and China. 
FDI flows into Panama continued to grow during the review period, reaching 7.6% of GDP in 2012. WT/TPR/S/301/Rev.1 • Panama 
 
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  The preferential trade agreements concluded by Panama over the past few years are expected 
to help diversify its foreign trade and attract more FDI. 
Trade and investment policy framework 6. The main focus and the objective of Panama's trade policy is to increase FDI and exports. 
For Panama, the opening up process goes hand in hand with these objectives, and it has 
concentrated both on concluding trade agreemen ts and improving competitiveness, the business 
climate and infrastructure. It is seeking to attract high value-added investment that promotes 
training of human resources and the transfer of te chnology to key economic sectors, i.e. financial 
services, logistics, tourism and agriculture. To that end, it created the Investment and Export Promotion Agency (PROINVEX) which acts as  a single window for investors. In order to 
increase the volume, quality and diversity of its exportable supply, Panama is concentrating on 
exports to markets that afford preferential access to its goods and services, and exports 
of high-value-added non-traditional products, for example non-traditional agricultural and marine products. 
7. For Panama, strengthening the multilateral trading system is important in order to improve 
interaction among Members while they establish regional or bilateral trade relations that help foster growth in exports and investment. Thirteen regional trade agreements entered into force 
between 2007 and 2014. This includes Panama's accession to the Latin American Integration 
Association (LAIA) and the Central American Economic Integration Subsystem (SIECA), the Trade Promotion Agreement between Panama and the United States and the Association Agreement between the European Union and Cent ral America. After signing agreements with 
Colombia (2013) and Mexico (2014), Panama hopes to join the Pacific Alliance, comprising 
Colombia, Chile, Peru and Mexico. 
8. Panama has streamlined the procedure for setting up companies by introducing 
an electronically processed start-up notification. Panamanian law grants national treatment 
to foreign investors and the enterprises in which they participate. There are no foreign exchange controls. Foreign investors are guaranteed free repatriation of capital, dividends, interest 
and profits arising from their investment. Any investments worth B 2 million or more may benefit 
from the Law on Legal Stability of Investment. Investors do not require any prior authorization to invest unless they benefit from an incentive scheme or wish to conduct activities that require a concession, licence, permit or other type of authorization.  
Trade policies by measure 
9. Panama continued 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. The tariff is the main trade policy instrument; practically all of them are ad valorem , and the number of tariff rates decreased 
from 37 to 29 during the review period. The aver age MFN tariff was reduced from 8.5% to 7.6%, 
but at 13.7%, the average tariff on agricultural products (WTO definition) remains more than double that on other products (6.4%). In the case of 59 products, the applied rates exceed 
the WTO bound rates. In 2013, when it joined SIECA, Panama adopted the Central American 
Import Tariff, with a few exceptions. Under its trade agreements, Panama applies preferential 
tariffs to imports from more than twenty trading partners. 
10. 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 gives 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 vehicles (new and used), which are subject to a minimum ISC rate that varies 
according to the age of the vehicle. WT/TPR/S/301/Rev.1 • Panama 
 
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  11. During the review period, Panama pursued its efforts to build up its institutional 
and technical capacity for the application of sanitary and phytosanitary (SPS) measures. Nevertheless, improvements are still needed in areas such as risk analysis, training of personnel, creation of a national SPS committee, accreditation, and notification procedures. Between 2007 
and 2013, Panama notified eight SPS measures to the WTO, five of which were emergency 
measures. Panama has 88 technical regulations, mostly covering food products, of which only six have been notified to the WTO since 2007. By improving its SPS systems and technical 
regulations and increasing transparency, Panama would be in a better position to take advantage 
of the trade opportunities offered by the preferential agreements. 
12. While Panama made little use of contingency measures during the review period, 
in 2009 it did adopt regulations containing procedural rules for conducting anti-dumping, 
subsidy and safeguard investigations. 
13. Exports of some marine species, flammable products and weapons are subject to a permit 
or compliance with special formalities. For reasons of sustainability and to boost national value 
added, exports of wood in slabs and blocks or si mply planed is prohibited. Panama does not apply 
any export taxes except on products manufactured from native woods. Domestic taxes are not imposed on exports. 
14. Panama notified three export subsidy programmes to the WTO and was given an extension 
until 31 December 2015 for the elimination of those subsidies. In 2009, Panama eliminated the Tax Credit Certificate and in 2010 introduced the Industrial Promotion Certificate, which replaced the Official National Industry Register. In 2011, it also adopted Law No. 32 
on free zones, eliminating the tax benefits that constituted export subsidies. In 2012, the free 
zones under Law No. 32 accounted for less than 2% of total exports (including re-exports). On the other hand, the Colón Free Zone (ZLC), which is governed by another law, is the second largest 
free zone in the world, and handles 66% of the country's foreign trade. Companies established 
in the ZLC are exempted from taxes on impo rts, re-exports and manufacturing of goods 
and repatriation of dividends, as well as from ot her internal taxes. In addition, there are many 
incentive programmes, for example, for the head offices of multinational companies, for 
micro and small enterprises and for specific sectors (agriculture and tourism). It would be worth conducting a cost-benefit analysis of the in centive schemes and rationalizing them where 
appropriate in order to improve their efficiency and transparency and make the incentive structure 
more uniform, to avoid possible distortions in the allocation of resources. 
15. In 2007, a new competition and consumer protection law was adopted (Law No. 45) which, 
among other things, introduced an economic effici ency criterion, classified cornering the market 
as a relative monopolistic practice, introduced a payment for information scheme, and increased 
fines. Although Law No. 45 has led to a more forceful implementation of competition policy, there is still a high level of concentration in certain markets, particularly in the case of goods. 
As far as consumer protection policy is concerned, the authorities monitor the price of fuels, 
medicines and goods in the basic basket. Prices for land transport of passengers are regulated, as are rates for the distribution and sale of electricity. Panama has notified the WTO that it has no State trading enterprises. 
16. Panama has adopted the number of laws reforming and clarifying its government 
procurement legislation. These mostly concern proc edural matters, and tend to favour the bidders. 
However, recourse to special procedures continues to be common. In August 2013, after several 
years of negotiations, Panama announced its decision not to accede to the WTO Plurilateral 
Agreement on Government Procurement. Nevertheless, it has adopted government procurement commitments in its bilateral agreements, in some cases even with respect to procurement 
by the Panama Canal Authority. The authorities have announced their intention to continue 
negotiating access to government procurement markets on a bilateral basis. 
17. In 2012, Panama overhauled its intellectual property legislation to bring it up to date 
and harmonize it with its international commitments. The amendments cover all intellectual 
property rights, extend terms of protection and am plify administrative provisions, provide stronger 
rules on enforcement and increase the penalties.  The import or export of counterfeit, altered 
or imitated products is defined as a crime in the Penal Code, even if they are in transit 
through Panama. WT/TPR/S/301/Rev.1 • Panama 
 
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  Sectoral policies 
18. The sectoral structure of the Panamanian economy continues to be distinctly dualistic, 
marked by the coexistence of a dynamic and co mpetitive services sector, that has chiefly 
developed around the activities of the Panama Canal and the ZLC, alongside the less productive 
agricultural and manufacturing sectors, whose share in the economy is much more modest and 
has been declining in spite of State support. 
19. The relative share of agriculture in GDP continued to decline between 2007 and 2013, 
although it still employs 16.4% of the workin g population. In 2013, the average tariff in the 
agricultural sector (WTO definition) was 13.7%, ab ove the overall average, and the products with 
the highest tariffs were agricultural products. The average tariff quota fill rates for agricultural products in Panama's schedule of commitments va ried from 60% to 100%, in addition to which 
autonomous tariff quotas were opened because of a lack of supply. Panama granted domestic 
support in the green box category. Domestic support under the heading "development programmes" increased considerably between 2007 and 2012. 
20. In 2013, the manufacturing industry accounted for 5.1% of GDP and employed 7.7% of the 
labour force. The sector is concentrated in a handful of activities, such as the manufacturing of food and beverages, publishing and printi ng, and non-metallic mineral products. There are 
various fiscal and financial incentives for manufacturing activities. The main imports include fuel, 
mineral oils and machinery, and the main exports precious metals and cast iron and steel. 
21. The electricity market is decentralized and regulated. Generation is mainly private 
and operates under conditions of free competition, whereas transmission is in the hands of a State 
enterprise, with three semi-public companies responsible for distribution in exclusive concession 
areas. Panama is connected to the Central American power grid. The installed capacity margin relative to demand is narrow, and although it has improved, it is still insufficient to satisfy 
the demand in all seasons of the year. The State is allocating subsidies to mitigate the effect of the 
increase in end-user tariffs. Panama does not produce any hydrocarbons, but has substantial storage capacity and an extensive port infrastructure. In 2013, it took steps to promote 
exploration with a view to commercial exploitation of the confirmed deposits on its territory. 
22. The services sector plays a fundamental role in Panama's economy, accounting for some 
70% of GDP, two thirds of total employment and approximately 36% of total exports. Panama has 
consolidated its position as a major exporter of financial, port, logistical and tourism services. 
It has made specific market access and national treatment commitments in 11 sectors defined 
in the General Agreement on Trade in Services (GATS). While the commitments in the financial sector are broad, those in the telecommunication s and transport sectors are limited, or indeed 
non-existent in the case of maritime transport. In practice, the scope of Panama's commitments 
under the GATS has been largely surpassed by the current openness up to foreign services suppliers. 
23. In the telecommunications sector, competition was improved with the market entry 
of two mobile operators in 2009, a move which favo ured a reduction in prices and improvements  
in the quality of services. There are no restrictions on foreign investment in private telecommunications firms. In 2008, Panama adopted the Law on Universal Service and Access, 
and in 2009, the Number Portability Regulations. Under the GATS, Panama has made specific 
commitments only with respect to value-added services, and has not adopted the Basic Telecommunications Reference Paper. 
24. Panama has a diversified and competitive financial sector. The banking system is sound: 
capitalization and liquidity levels are reasonably high, and there has been a credit boom in recent years. Foreign banks can be set up through subsidiaries or branches. During the period under 
review, Panama amended its banking legislation to strengthen supervision and bring it into line 
with international standards, improve transparency, curb tax evasion, and protect consumers. Moreover, financial conglomerates were subjected to supervision, and the Financial Coordination Council was set up to improve cooperation among the various bodies responsible for overseeing 
the sector. WT/TPR/S/301/Rev.1 • Panama 
 
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  25. Foreign insurance companies can set up as public limited companies or as branches. 
Insurance policies on property and persons situated in Panama con only be taken out with insurers established in the country. In 2012, a new insurance law was adopted which, among other things, broadened the responsibilities of the sector's supervisory body, updated the rules on minimum 
capital, solvency and reserves, and authorized the sale of insurance through financial companies 
and trading companies. Foreign reinsurance companies can offer their services to companies domiciled in Panama provided they have enrolled  in a register created for the purpose in 2012. 
In 2011, the Securities Market Supervisory Au thority was created, with broad regulatory 
and supervisory responsibilities. 
26. Tocumen International Airport is the busiest airport in Central America and a regional air 
transport hub. Between 2007 and 2013, the tota l number of passengers grew at an average 
annual rate of 12.8%, the number of passengers in  transit by 21% and the volume of freight 
and mail by 5.2%. There are no restrictions on foreign investment in international traffic operators, but cabotage traffic is reserved, in principle, for companies with a minimum 
of 60% of the shares in Panamanian hands. By law, the Tocumen Airport management company is 
100% State-owned. International passenger and fr eight air traffic operating certificates are 
granted to foreign companies under bilateral agreements. 
27. Panama's National Maritime Strategy, approved in 2009, is designed to turn the country into 
an integrated centre of excellence for competitive maritime and logistical services. Panama has an extensive network of ports and offers a wide range of services for vessels. The State owns the 
ports but their management may be outsourced to private companies on concession and, in fact, 
the largest ports are under private management. There are limits on foreign capital participation 
in companies offering auxiliary maritime services, and 90% of the crew of vessels engaged in such 
services must be Panamanian nationals. In 2012,  the maritime transport sector's contribution 
to GDP amounted to 2.3%. Panama has the world's largest merchant fleet, with 8,221 ships 
registered as of 30 June 2013. There are no na tionality restrictions on registration. Panama 
is seeking to rejuvenate its fleet by granting various discounts on the registration of newly 
built vessels. 
28. The Panama Canal's contribution to GDP was 3.2% in 2012. The Canal is a nerve centre 
of global maritime transport which generates a variety of economic activities, in addition to the contribution from tolls. During the review period, the Panama Canal Authority (ACP) altered its toll 
policy to bring tolls into line with the valu e offered by the route. In 2007, work began 
on expanding the canal by building a third set of locks to accommodate vessels with a greater draught. In February 2014, having resolved a fe w problems relating to the financing of cost 
overruns, the ACP and the construction companies reached a conceptual agreement which targets 
December 2015 for the completion of the works. 
29. Tourism is one of the main generators of foreign exchange and accounted for 12% of GDP 
in 2012. Investment in tourism increased considerably during the 2007-2012 period, especially 
in Panama City. During the same period, Panama  extended the coverage of the tax incentives 
granted to investment in tourism, lifted the restrictions on foreign participation in tour operator and travel agency businesses, which ceased to be  regarded as retail trade, and strengthened the 
institutional support system for the sector. 
30. 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. 
Between 2007 and 2012, retail trade grew at a ra te of 8.5%, and accounted for 3.8% of GDP 
in 2012. Under the Trade Promotion Agreement with the United States, Panama has opened up this subsector by establishing that multiple service businesses were not regarded as retail trade. 
 WT/TPR/S/301/Rev.1 • Panama 
 
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  1  ECONOMIC ENVIRONMENT 
1.1  Overview 
1.1.  The Panamanian economy performed very strongly between 2007 and 2013, with real GDP 
increasing by an average of 8% per year (at 2007 prices)1, one of the fastest growth rates in 
Latin America. Growth was fuelled mainly by the expansion of private consumption and by public 
and private investment associated with large-scale infrastructure works, and it was underpinned by a stable macroeconomic environment. This, toge ther with the soundness of its banking system, 
enabled Panama to cope with the global financial crisis of 2008-2009 without major consequences. 
The Panamanian economy is dominated by servic es, which contribute 70% of GDP and generate 
two thirds of all employment.
2 As a result of its rapid growth, per capita nominal GDP almost 
doubled between 2007 and 2013, to reach a level of US$11,075. In addition, the unemployment 
rate dropped to 4.1%, and although poverty indice s fell thanks to the implementation of a number 
of social programmes, they remain high, particularly in rural areas. Reducing the country's social and regional inequalities, improving the quality of education and strengthening institutions remain 
key pending objectives to underpin the country's development. 
1.2.  As Panama uses the US dollar as its currency of legal tender, it has no monetary policy 
instruments of its own. Nonetheless, this a rrangement has enabled it to avoid the risks 
of exchange-rate fluctuations and speculative attacks against its currency, while also promoting 
its positioning as an international financial centre. Fiscal policy, in contrast, plays a key role as a macroeconomic instrument. 
1.3.  The country's public finances, which have trad itionally been in balance, have recorded deficits 
since 2009, owing to a rising level of (mainly capita l) expenditure. Although the deficits have been 
kept to moderate proportions and within the limi ts approved by the law (although the latter have 
been revised upwards on three occasions), the main fiscal policy challenge today continues to be 
to increase revenues and attain a more comfortable fiscal position. The public debt to GDP ratio fell 
sharply during the period under review, reaching a level of 36.8% in 2013. A credit boom, together with robust domestic demand and high international fuel and food prices, put upward 
pressure on prices from 2010 onwards, but inflat ion was kept under control, and the rate was 
brought down to 4% in 2013. With the recent creation of the Panama Savings Fund, which will be financed out of additional revenues obtained from the Panama Canal expansion, it is hoped to help strengthen the country's public finances and improve the economy's capacity to respond 
to potential external shocks. 
1.4.  The current account of Panama's balance of payments recorded deficits throughout 
the 2007-2013 period, mainly owing to a negative balance in merchandise trade. The deficit 
was financed by a surplus on the capital and financial accounts, resulting from burgeoning flows 
of foreign direct investment (FDI), largely destined for megaprojects in the infrastructure sector. International trade in goods and services is crucial to Panama's economy and represented 
166% of GDP in 2012. Agricultural and food products continue to dominate Panama's 
merchandise exports (56% of the total, without counting re-exports), which reflects the relatively small size of its manufacturing sector. On the import side, manufactured goods and fuels account for 88% of the total. The characteristics of the Panamanian economy (dollarization, lack of controls 
on capital movements and macroeconomic stability), combined with its privileged geographic 
position, have helped the country consolidate its position as a major exporter of services such as financial, tourism, port, transport and storage services, along with transit through the Panama 
Canal. The latter makes a crucial contribution to the country's economy, and is an essential 
international trade link. The Colón Free Zone (ZLC) is the world's second largest duty-free area, and handles about 66% of Panama's external trade. 
                                               
1 In March 2014, Panama introduced a new methodology for calculating real GDP, taking 2007 as the 
base year instead of 1996. This Trade Policy Review is based on the preliminary data series calculated with the new methodology, wherever available; otherwise, the 1996-based data are used. In some cases, the most 
recent data correspond to 2012. 
2 In the sectoral structure of Panama's GDP, the activities of construction and electricity, gas and water 
supply, are classified within the "primary an d industrial sector", and not as services. WT/TPR/S/301/Rev.1 • Panama 
 
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  1.5.   The United States remains Panama's leading trading partner (absorbing over 20% of its 
exports and imports) and its top FDI source, although its relative importance has continued to decline in recent years. Other major partners are the European Union, Canada, the countries of the Central American Common Market (CACM), Mexico, Colombia and China. FDI flows into 
Panama continued to grow during the review period, and represented 7.6% of GDP in 2012. 
The preferential trade agreements that Panama has entered into in the last few years are expected 
to help further diversify its external trade and attract larger FDI flows. 
1.2  Recent economic trends 
1.2.1  Growth and structure of the economy 1.6.  The Panamanian economy grew vigorously in the period under review, despite a slowdown 
in 2009 in the wake of the economic crisis (Table  1.1). Real GDP expanded at an annual average 
rate of 8% between 2007 and 2013, one of the highest in Latin America. In 2013, the economy 
grew by 8.4%.
3 The main drivers have been private and public investment, 
particularly works associated with the Panama Canal expansion and other large-scale 
infrastructure projects, supported by robust  growth of private consumption in 2010-2011. 
Net exports of goods and services in general co ntributed positively to GDP growth during the 
period under study, except in 2010-2011, when imports surged on the back of burgeoning private 
consumption (Table 1.2). 
1.7.   The sectoral structure of the Panamanian economy continues to be dominated by services, 
which contributed 71.9% of GDP on average during the years reviewed and 70.3% in 2013 (Table 1.1). Overall, services grew at an  average real rate of 7.4% per year between 
2007 and 2013. The most buoyant sectors were: tr ansport, storage and communications, with 
annual average growth of 9.7% between 2007 an d 2013; hotels and restaurants (8.8%); and 
wholesale and retail trade (8%). Within the "primary and industrial sector", construction and the 
mining and quarrying subsectors posted the hi ghest growth rates of 19% and 19.4% per year, 
respectively. In contrast, the GDP share of the agriculture, fisheries and manufacturing sectors 
declined during the period reviewed, posting levels of 2.6%; 0.4%; and 5.1%, respectively, 
in 2013. 
1.8.  In keeping with the dynamism of the economy, the unemployment rate, measured 
as a percentage of the economically active po pulation, trended down during the period under 
review, to reach a level of 4.1% in 2013 (3.1% in the case of open unemployment). In that year, 
services generated 63.5% of employment, le d by the business subsector which absorbed 
17.6% of all people in work, followed by transport, storage and communications (8.5%). Construction accounted for 11.2% of all jobs; ag riculture and fisheries employed 16.4% of the 
employed population, while manufacturing in dustry accounted for 7.7% (Table 1.1). 
1.9.  The country's vigorous economic growth enabled per capita nominal GDP to almost double 
in the review period, to reach a level of US$11,075 in 2013. Although levels of poverty and social 
inequality declined, they remain high, particularly in rural communities. In March 2012, 
25.8% of Panama's population were living in conditions of general poverty and 10.4% in extreme poverty.
4 The Gini coefficient stood at 0.51 in 2011, one of the highest in the region5, and 
major regional inequalities persist. 
                                               
3 Online information from the National Institute of St atistics and Censuses (INE C) in the Office of the 
Comptroller-General of the Republic of Panama, viewed at: http://www.contraloria.gob.pa . 
4 Ministry of the Economy and Finance (2012). 
5 Zambrano O., "Crecimiento, pobreza y desigu aldad en Panamá", press article viewed at: 
http://www.prensa.com/impreso/opinion/crecim iento-pobreza-y-desigu aldad-en-panama-omar-
zambrano/150331 , 13 January 2013. WT/TPR/S/301/Rev.1 • Panama 
 
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  Table 1.1 Basic economic indicators, 2007-2013 
 2007  2008  2009  2010  2011 2012 2013a 
Various  
Nominal GDP 
(US$ million) 21,122 24,884 25,925 28,814 33,271 37,956 42,648 
Real GDP at 2007 consumer 
prices (US$ million) 21,122 23,054 23,970 25,373 28,106 30,986 33,573 
Nominal GDP per capita (US$) 6,077 7,033 7,201 7,869 8,935 10,021 11,075 
Population (million) 3.5 3.5 3.6 3.7 3.7 3.8 3.9 
Open unemployment rateb 4.7 4.2 5.2 4.7 2.9 3.0 3.1 
Unemployment rateb 6.4 5.6 6.6 6.5 4.5 4.1 4.1 
Sectoral structure of GDP (% of GDP at 2007 prices, preliminary figures)  
Primary and industrial sector 23.4 24.3 24.3 22.6 22.8 23.3 25.2 
Agriculture, livestock, hunting 
and forestry 3.9 3.7 3.1 3.0 2.9 2.7 2.6 
Fisheries 1.2 1.2 1.1 0.6 0.4 0.4 0.4 
Mining and quarrying 0.7 0.8 0.8 0.8 0.9 1.1 1.3 
Manufacturing 7.2 6.8 6.5 6.3 5.9 5.3 5.1 
Electricity, gas and water supply 2.9 3.0 3.9 3.0 3.2 2.7 2.6 
Construction 7.5 8.8 8.8 8.9 9.5 11.1 13.3 
Services 72.6 71.6 71.5 73.0 72.5 71.8 70.3c 
Wholesale and retail trade; repair of 
motor vehicles, moto rcycles, personal 
effects and domestic appliances 17.8 18.1 17.7 18.4 18.8 18.5 17.7 
Hotels and restaurants 2.9 2.9 2.9 3.1 3.2 3.1 3.0 
Transport, storage and communications 17.0 16.6 17.4 18.6 18.8 19.0 18.6 
Financial intermediation 8.6 8.6 8.2 7.9 7.7 7.6 7.6 
Real estate, rental and 
business services 14.8 14.4 14.5 14.4 13.8 13.8 13.7 
Public administrati on and defence; 
compulsory social security schemes 3.9 3.6 3.9 3.8 3.5 3.5 n.a. 
Education 3.6 3.5 3.4 3.2 3.1 2.9 0.9d 
Social services and health activities 3.3 3.2 3.1 3.2 3.0 2.8 1.2d 
Other community, social and 
personal services 2.3 2.2 2.2 2.2 2.2 2.2 2.0d 
Private households with 
employed persons 0.9 0.8 0.8 0.7 0.7 0.7 0.6 
Less: Financial intermediation services 
indirectly measured (FISIM), allocated to domestic consumption 2.6 2.5 2.5 2.5 2.4 2.3 2.3 
Gross value added at basic prices 96.0 95.9 95.7 95.6 95.3 95.2 95.5 
Plus: Product taxes 4.6 4.8 4.7 5.0 5.2 5.3 5.0 
Less: Product subsidies 0.6 0.6 0.4 0.6 0.5 0.4 0.4 
Gross domestic product 
at consumer prices 100.0 100.0 100.0 100.0 100.0 100.0 100.0 
Employment (% of the to tal working population)  
Total 100.0 100.0 100.0 100.0 100.0 100.0 100.0 
Agriculture, livestock,  hunting, forestry, 
fisheries, and related service activities 18.9 17.9 18.0 17.4 17.0 16.7 16.4 
Mining and quarrying 0.3 0.2 0.2 0.2 0.2 0.2 0.3 
Manufacturing 8.9 8.6 8.7 8.3 6.9 6.9 7.7 
Electricity, gas and water supply 0.6 0.5 0.6 0.5 1.0 0.8 1.0 
Construction 9.2 9.7 9.7 9.7 10.4 10.4 11.2 
Services 62.2 63.0 62.8 63.9 64.4 65.0  63.5 
Wholesale and retail trade 17.9 18.4 17.3 17.4 17.9 18.2 17.6 
Hotels and restaurants 5.1 5.0 5.4 5.1 5.0 4.9 5.1 
Transport, storage and communications 6.8 7.1 7.5 7.8 8.1 8.3 8.5 
Financial and insurance activities 2.1 2.0 1.9 1.9 2.5 2.4 2.5 
Real estate activities 4.9 5.1 5.4 5.7 0.7 0.7 0.7 
Professional, scientific 
and technical activities 0.0 0.0 0.0 0.0 2.4 2.3 2.3 
Administrative activities 
and support services 0.0 0.0 0.0 0.0 3.5 3.7 3.7 
Public administrati on and defence; 
compulsory social service schemes 6.0 5.6 5.7 6.0 6.8 6.5 6.4 
Education 5.1 5.4 5.3 5.7 5.4 5.4 5.4 
Other 14.3 14.4 14.2 14.3 12.1 12.6 11.9 WT/TPR/S/301/Rev.1 • Panama 
 
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   2007  2008  2009  2010  2011 2012 2013a 
Nominal interest rates  
Interest rate on deposits 
(Panamanian banks)e  4.8 3.5 3.5 3.0 2.3 2.1 2.1 
Interest rate on deposits 
(foreign banks)e 4.3 2.7 2.5 2.2 1.6 1.6 1.5 
Interest rate on loans 
(Panamanian banks)f 8.3 8.2 8.3 7.9 7.3 7.0 7.4 
Interest rate on loans (foreign banks)f 7.6 6.3 6.9 7.2 6.5 7.4 7.0 
Inflation and exchange rate  
Consumer price index 4.2 8.7 2.4 3.5 5.9 5.7 4.0 
Wholesale price index 5.3 15.8 -6.7 3.9 11.9 4.7 0.1 
Nominal exchange rate 1.0 1.0 1.0 1.0 1.0 1.0 1.0 
n.a. Not available. 
a.  Preliminary figures for 2013. 
b. The figures represent a weekly average in August; they exclude permanent residents in collective 
housing. 
c. The percentages shown for the services subsectors in 2013 do not add up to the total percentage 
because disaggregated data are no t available for some subsectors. 
d. Only includes the private sector contribution. e. Six-month deposits. f. One-year loans for commercial activities. 
Source: National Institute of Statistics and Censuses (INEC), Office of the Comptroller-General of the 
Republic of Panama. Reportes Estadísticos 2013 , Banking Supervisory Authority, Panama. 
Table 1.2 Structure of GDP meas ured by expenditure, 2007-2012  
 2007  2008  2009  2010 2011 2012  
Real annual growth rate (%, base d on GDP at constant 1996 prices)a 
Total consumption 1.4 -1.4 -1.7 25.4 16.6 -2.3 
Public consumption 4.1 2.6 4.1 15.3 1.6 5.9 
Private consumption 0.9 -2.1 -2.8 27.4 19.3 -3.6 
Gross capital formation 38.9 24.2 -5.7 11.2 19.6 16.0 
Gross fixed capital formation 41.0 25.3 -6.2 11.6 19.9 16.1 
Variation in stocks 4.9 -0.4 6.6 1.6 13.5 14.0 
Exports of goods and services 22.0 17.8 -1.0 1.6 22.8 10.1 
Imports of goods and services 18.1 12.2 -9.9 18.0 32.5 0.6 
GDP 12.1 10.1 3.9 7.5 10.9 10.8 
As a percentage of current GDP       
Total consumption 68.6 63.2 61.2 72.9 76.1 69.9 
Public consumption 11.3 10.4 12.7 13.1 12.1 11.6 
Private consumption 57.3 52.8 48.4 59.8 64.0 58.3 
Gross capital formation 24.1 27.6 25.6 25.5 27.2 28.6 
Gross fixed capital formation 23.0 26.5 24.6 24.5 26.1 27.5 
Variation in stocks 1.1 1.1 1.0 1.0 1.1 1.1 
Exports of goods and services 81.2 85.2 81.0 75.2 86.9 83.7 
Imports of goods and services 73.9 76.0 67.8 73.6 90.2 82.3 
GDP 100.0 100.0 100.0 100.0 100.0 100.0 
a GDP figures measured by the expenditure method, at 2007 prices, are not available. 
Source: National Institute of Statistics and Censuses(INE C), Office of the Comptroller-General of the Republic 
of Panama. 
1.2.2  Fiscal policy 
1.10.  The Ministry of the Economy and Finance (M EF) is in charge of formulating and executing 
fiscal policy. Law No. 34 of 5 June 2008, the Fiscal Social Responsibility Law (LRSF) defines rules for consolidating fiscal discipline and imposes limits on the deficit of the non-financial public sector (NFPS) and for public borrowing.
6 In the case of the fiscal deficit, the limit set was 
1% of GDP, which could be raised in situat ions of national emergency declared by the 
Cabinet Office, or whenever real GDP was growing by  2% or less. In such cases the limit could be 
raised to a maximum of 3% per year, provided it was reduced to 2% in the following year and to 
1% in the third year. In addition, the LSRF set a target of reducing the net total public debt to 
                                               
6 Law No. 34 of 5 June 2008 replaced the Fiscal Responsibility Law of 2002. WT/TPR/S/301/Rev.1 • Panama 
 
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  40% of GDP over a seven-year period running from fiscal 2008.7 Although this target was achieved 
from 2011 onwards, the fiscal deficit limits set in the LSRF were raised four times during the review period. 
1.11.  Law No. 38 of 5 June 2012
8 created the Panama Savings Fund (see paragraph 1.16 below), 
and also changed the annual NFPS deficit ceilings to 2.9% for 2012; 2.8% for 2013; 
2.7% for 2014; 2.0% for 2015; 1.5% for 2016; 1.0% for 2017; and 0.5% from 2018 onwards. The ceiling can be raised in situations of national emergency, or when real GDP is growing by 
2% or less; in the first case, by up to a maximum of 1.5% of GDP in the year of the emergency 
(depending on the real cost of the emergency); or , in the case of an economic slowdown, by up 
to 2% on a graduated basis (by up to 1% if real GDP grows between 1.1% and 2%; up to 1.5% i f  r e a l  G D P  g r o w t h  i s  b e t w e e n  0 %  a n d  1 % ,  a n d  u p  t o  2 %  i f  i t  i s  n e g a t i v e ) .  I n  t h e  c a s e  o f  a n  
economic slowdown, the corresponding deficit increase must be cut by one third in the 
immediately following year, by another third in the second year, and again in the third year, thereby restoring the limit defined in the LSRF. In April 2013, the National Assembly approved 
a waiver to allow the fiscal deficit ceiling to be raised to 3.1% of GDP by the end of fiscal 2013. 
1.12.   Having recorded a surplus in 2007 and 2008, the NFPS fiscal accounts (excluding 
the Panama Canal Authority) posted a deficit in the ensuing years of the review period (Table 1.3). 
The flexibilities provided for in the LSRF and in  Law No. 38 were used to cushion the economic 
slowdown caused by the global crisis of 2009 an d the expenditures generated by natural disasters 
on several occasions, thereby keeping th e deficit under the approved ceiling. 
Table 1.3 Fiscal accounts of the no n-financial public sector, 2007-2013 
(% of GDP) 
 2007  2008  2009  2010  2011 2012 2013a 
Total revenues 26.1 24.2 24.2 23.9 23.3 23.7 23.2 
Current revenues, ge neral government 23.1 21.9 22.7 22.3 22.8 22.9 22.3 
Central Government 17.3 16.0 16.1 16.1 16.2 16.7 15.6 
Social Security Fund (CSS) 5.2 5.3 5.9 5.7 6.1 5.8 6.3 
Consolidated agencies 0.6 0.5 0.7 0.6 0.4 0.4 0.4 
Operating balance of public enterprises 0.8 1.1 0.9 0.7 0.4 0.4 0.3 
Non-consolidated agencies and others 0.9 -0.1 0.3 0.2 0.0 0.4 0.2 
Capital revenue 1.2 1.0 0.3 0.6 0.1 0.1 0.4 
Grants 0.1 0.3 0.1 0.1 0.1 0.0 0.0 
Total expenditure 22.8 23.8 25.2 25.6 25.4 25.2 26.1 
Current expenditure,  general governmentb 18.2 17.3 18.5 17.9 17.3 16.9 16.5 
Current expenditure,  general government  
(excl. interest payments) 15.0 14.4 15.7 15.4 15.1 15.0 14.6 
Central Government 7.7 7.7 8.6 8.5 8.7 8.9 8.4 
Social Security Fund (CSS) 6.5 6.0 6.5 6.3 5.9 5.5 5.7 
Consolidated agencies 0.8 0.6 0.7 0.6 0.6 0.5 0.5 
Interest 3.2 2.9 2.8 2.5 2.2 2.0 1.9 
Domestic interest 0.4 0.4 0.4 0.2 0.2 0.3 0.4 
External interest 2.8 2.5 2.4 2.3 2.0 1.7 1.6 
Capital expenditure 4.6 6.5 6.7 7.8 8.1 8.3 9.6 
Current saving, general government 4.9 4.6 4.2 4.5 5.5 6.0 5.8 
Current saving, NFPS 6.5 5.6 5.3 5.4 5.8 6.7 6.3 
Total saving (total revenues less 
current expenditure) 7.8 6.9 5.7 6.0 6.0 6.8 6.7 
Primary balance 6.5 3.3 1.8 0.7 0.1 0.5 -0.9 
Surplus or deficit 3.2 0.4 -1.0 -1.8 -2.1 -1.5 -2.9 
Total public debtc 
Total 49.6 41.9 42.3 40.4 38.5 37.6 36.8 
External  39.2 34.1 39.2 36.2 32.8 28.4 28.7 
Domestic 10.4 7.9 3.2 4.1 5.7 9.2 8.1 
a Preliminary figures. 
b Excludes the interest payments of public enterprises for the years 2011 to 2013. c The debt figures report the situation at 31 December each year. 
Source: Macrofiscal Department of the Ministry of the Economy and Finance; and Report of the Office of the 
Comptroller-General of the Republic for 2012 (March 2013) and 2013 (March 2014). Online information viewed at: http://www.contraloria.gob.pa . 
                                               
7 Articles 11 and 12 of Law No. 34 of 5 June 2008. 
8 Law No. 87 of 4 December 2012 amended Article 5 of Law No. 38 of 5 June 2012. WT/TPR/S/301/Rev.1 • Panama 
 
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  1.13.   The NFPS fiscal deficit recorded in the latter years of the review period has mainly been 
fuelled by a constant increase in capital expenditure, which has only partially been matched by larger fiscal revenues. The growth of capita l expenditure reflects the implementation of an 
ambitious public investment programme which includes infrastructure works such as the clean-up 
of Panama Bay, the expansion of the coastal be lt, the construction of freeways and the Panama 
City metro. There has also been increased social spending on programmes such as the preferential 
housing credit, the universal scholarship for students and the metrobus fare subsidy. 
On the revenue side, the increase is mainly explained by the growth of tax revenues collected 
by the Central Government, which expanded at an annual average rate of 14.7% between 2007 and 2013 and represented 11.4% of GDP in the latter year. This mainly reflects the country's robust economic growth, supported by other fact ors such as improvements in tax collection, 
the creation of a specialized large-taxpayer unit, and stricter inspection. 
1.14.   Preliminary official figures show that the NFPS fiscal balance posted a deficit 
of 1,219 million balboas (B 1,219 million) in 2013, which was more than twice the amount 
recorded in 2012 and equivalent to 2.9% of GDP. Total NFPS revenues amounted 
to B 9,909 million in 2013, up by 9.9% on the 2012 figure and representing 23.2% of GDP. This increase reflected revenue growth in the So cial Security Fund (CCS) and other government 
agencies, and, to a lesser extent, the increased tax revenues obtained by Central Government. 
Total expenditure amounted to B 11,128 million in 2013 (16.4% higher than in 2012) equivalent to 26.1% of GDP. This trend is largely explai ned by the performance of capital expenditure, 
which grew by 30.2% in relation to the 2012 figure, to represent 9.6% of GDP. 
1.15.  Although the total public debt rose in absolute terms between 2007 and 2013, reflecting 
the public sector's financing requirements, the de bt to GDP ratio fell from 49.6% in 2007 to 36.8% 
in 2013, thanks to the economy's vigorous growth (Table 1.3). According to the debt sustainability 
analysis performed by the International Monetary  Fund (IMF), the downward trend is expected 
to persist, and the amortization profile is under control.
9 In addition, since 2009, there has been 
no change in the composition of the total debt, with the domestic component increasing its GDP 
share from 3.2% to 8.1% by 2013. The auctions held as part of the market-makers programme 
implemented since mid-2011 have helped replace external financing sources with domestic ones; and in 2012, international risk rating agencies raised Panama's sovereign debt rating.
10 
1.16.  Law No. 38 of 5 June 2012 created the Panama Savings Fund (FAP) to provide a long-term 
state saving facility, and serve as a stabilization mechanism in situations of emergency 
and economic slowdown. The FAP was funded original ly from the Trust Fund for Development, but, 
as from 2015, contributions in excess of 3.5% of GDP made by the Panama Canal Authority 
to the National Treasury will be deposite d in the Fund, pursuant to Law No. 38 of 2012.11 
The creation of the FAP is expected to improv e the economy's future capacity to respond to 
potential external shocks. At the end of 201 3, the total value of the Fund stood at 
B 1,231.2 million.12 
1.17.  Other important fiscal reforms introduced  during the review period include a package 
of measures in 2009-2010 to improve revenue collection and tax compliance. These included compulsory installation of fiscal cash registers in businesses; an increase in the Tax on the 
Transfer of Movable Property and the Provision of Services (ITBMS); and lower personal income 
tax rates. These measures made it possible to increase fiscal revenues, improve ITBMS collection and increase its share in total revenue, while also expanding the tax base.
13 Law No. 52 
of 28 August 2012 made further amendments to the Tax Code, which abolished the monthly 
income tax advance payment system and reinstated the estimated income declaration system with four-monthly payment; amended certain provisions relating to the ITBMS
14; exempted persons 
                                               
9 IMF (2013). 
10 In October 2012, Moody's risk rating agency raised Panama's sovereign debt rating from Baa3 
to Baa2. Online information from Moody's, viewed at: https://www.moodys.com/research/Moodys-upgrades-
Panama-to-Baa2--PR_258683 . Panama's debt was also awarded in vestment grade by the risk raters 
Fitch Ratings and Standard & Poors. 
11 Article 3 of Law No. 38 of 5 June 2012. 
12 Office of the Comptroller-General of the Republic (2014). 
13 IMF (2013). 
14 Persons engaged in the importation and manufactu re of food or pharmaceutical and medicinal 
products for human consumption, as well as those involved in the agri cultural or agribusiness sector, 
with incomes above B 300,000, may deduct from their estimated income declaration the total amount WT/TPR/S/301/Rev.1 • Panama 
 
- 18 - 
 
  involved in agricultural activity and earning less than B 300,000 (previously B 250,000) from the 
need to file an income tax return; and exempted dividends on registered preferred shares and set 
new rules on transfer pricing. In 2013, a new institution, known as the National Public Revenue Authority (ANIP), was created to assume responsibility for the administration of income, 
which is expected to help improve tax collection. 
1.2.3  Monetary policy 1.18.  As Panama uses the United States dollar as its currency of legal tender, it does not have 
its own monetary policy instruments. Nor does it have a central bank that fulfils functions such 
as currency issuance, the management of bank reserv es, credit regulation or lender of last resort. 
The State-owned National Bank of Panama serves as  depository of the State's financial resources. 
The regulation and supervision of the banking sector is the responsibility of the Banking 
Supervisory Authority of Panama (section 4.5.3.2). 
1.19.  Since the adoption of United States dollar as the country's currency of legal tender 
in 1904
15, the nominal exchange rate between the dollar and the national currency, the balboa, 
has been held at 1:1. Market forces and the inte rnational interest rate determine local interest 
rates and the money supply. There are no mechanisms  for controlling interest rates, and no legal 
reserve requirements on bank deposits, or re strictions on the flow of funds out of or 
into the banking system. Nor are there any restrictions on the establishment of foreign 
banks (section 4.5.3.2). 
1.20.  During the review period, interest rates in the Panamanian banking system trended down, 
mainly as a result of the additional liquidity provided by international capital flows (Table 1.1). 
The fall was steeper in the case of the deposit rate, for which the average dropped from 
4.8% in 2007 to 2.1% in 2013. The interest rate on loans for commercial activities fell by less (from 8.3% to 7.4%) owing to the robust  demand for credit. Consequently, the spread 
between deposit and lending rates tended to wide n during the period. The interest rates offered 
by foreign banks established in Panama have traditionally been lower than those of Panamanian banks, reflecting the foreign entities' greater effi ciency and easy access to international markets. 
Nonetheless, the differential between the intere st rates practised by the two types of bank 
narrowed steadily in the period under review, and even became inverted in 2012. 
1.21.  The historically low level of interest rates fuelled a credit boom that has expanded 
at two-digit rates in recent years. From January to September 2013 alone, Panamanian banks 
disbursed a total of US$20,091.7 million in new loan s, representing a 15.7% increase compared 
to the same period in 2012.
16 Over half of those credits were extended to the business sector, 
while significant amounts were also lent for personal consumption, construction, industry, 
and mortgages. 
1.22.  The buoyancy of lending activity has he lped underpin economic growth, supported by the 
fact that Panama's banking system is sound and has high liquidity, solvency and profitability 
indices (section 4.5.3.2). Nonetheless, the authorities have been advised to keep a close watch 
on credit growth, particularly in the real estate and tourism sectors and in the ZLC, and closely monitor  the rising levels of corporate and household leverage.
17 This recommendation is all the 
more important in view of the tapering of monetary stimulus by the United States Federal Reserve, 
which began in January 2014 and could force up interest rates on the Panamanian market in the 
medium term. 
1.23.   Inflation, measured by the consumer pric e index (CPI), reached historically high levels 
by Panamanian standards in the review period (Table 1.1). The rise in the CPI peaked in 2008 
at 8.7%, reflecting the high international prices of food and fuel products, and led the Government 
                                                                                                                                               
of ITBMS that they have paid exclusively on the purcha se of packaging materials, services and inputs needed 
for the manufacture of food or pharmaceutical an d medicinal products for human consumption. Goods 
exporters and re-exporters can deduct from their estimated income tax the annual sum of monthly ITBMS credits calculated in their ITBMS returns for the immediately preceding fiscal year. 
15 Through the Monetary Convention of 1904. 
16 Online information from the Banking Supe rvisory Authority of Panama, viewed at: 
http://www.superbancos.gob.pa/documentos/noticias_y_eventos/2013/12_dic/Prest_nuevos.pdf . 
17 IMF (2013). WT/TPR/S/301/Rev.1 • Panama 
 
- 19 - 
 
  to implement a number of measures to shore up the population's purchasing power, 
including subsidies on electricity and liquefied gas, and reductions in income tax. After easing in 2009, CPI inflation resumed its upward trend in 2010-2011, once again owing to the sharp rise in international oil and food prices, but particularly in response to domestic demand pressures 
resulting from the credit boom and public expenditure growth.
18 In 2012, inflation stood at 5.7%, 
when further inflationary pressure came from the rise in minimum wages in the early part of the year. As food price pressures eased in 2013, inflation dropped back to 4%, but it remained above 
the rate in the United States. The combination of  the foregoing factors suggest a tendency towards 
overheating in the economy.
19 
1.2.4  Balance of payments 1.24.   The current account of the balance of payments recorded a widening deficit 
in the period 2007-2013, except in 2009 and 2012 (Table 1.4). The robust expansion of imports 
associated with Panama's high rates of economic growth put pressure on the current account deficit, which peaked at 15% of GDP in 2011. In 2012, the deficit narrowed somewhat, but 
remained relatively large (10.1% of GDP), before widening again in 2013 (11.3%). Over the 
period, the current account deficit was mostly financed by a surplus on the capital and financial accounts, and particularly by burgeoning FDI flows. 
Table 1.4 Balance of payments, 2007-2013  
(US$ million) 
 2007  2008  2009  2010  2011a 2012a 2013b 
A. Current accountc -1,560 -2,513 -163 -3,076 -4,993 -3,816 -4,806 
Balance of merchandise trade -3,189 -4,049 -2,183 -4,543 -7,217 -6,541 -6,751 
Goods (f.o.b.): exports 9,648 12,025 12,037 12,675 16,926 18,872 17,505 
Colón Free Zone 7,696 8,599 9,883 10,245 13,782 14,588 13,577 
Other sectors 1,952 3,426 2,154 2,430 3,145 4,284 3,928 
Goods (f.o.b.): imports -12,837 -16,074 -14,220 -17,218 -24,143 -25,413 -24,256 
Colón Free Zone -7,179 -8,538 -7,892 -9,710 -13,500 -14,029 -12,174 
Other sectors -5,658 -7,536 -6,328 -7,508 -10,643 -11,383 -12,082 
Balance of trade in services 2,247 2,511 3,341 3,641 3,933 5,164 5,052 
Services: credit 4,409 5,195 5,542 6,439 8,075 9,348 9,767 
Colón Free Zone 71 22 39 27 19 47 22 
Other sectors 4,338 5,174 5,503 6,412 8,056 9,302 9,744 
Services: debit -2,163 -2,684 -2,201 -2,798 -4,143 -4,184 -4,715 
Colón Free Zone -474 -460 -370 -497 -575 -569 -501 
Other sectors -1,689 -2,225 -1,831 -2,302 -3,568 -3,615 -4,214 
Income account balance -1,254 -1,507 -1,448 -2,311 -1,911 -2,534 -3,081 
Colón Free Zone -376 -239 -296 -531 -588 -527 -399 
Other sectors -878 -1,268 -1,152 -1,781 -1,324 -2,008 -2,682 
Balance of goods, services 
and income -2,196 -3,045 -289 -3,214 -5,196 -3,910 -4,781 
Current transfers 636 532 126 138 202 94 -25 
B. Capital accountc 44 57 30 43 9 0 23 
C. Financial accountc 2,078 2,386 313 3,111 4,564 3,723 5,726 
Direct investment 1,899 2,147 1,259 2,407 2,956 3,162 4,371 
Portfolio investment -556 -582 351 735 969 832 -52 
Other investment 735 821 -1,298 -31 640 -271 1,408 
D. Net errors and 
omissions 67 631 392 230 192 117 -321 
E. Financing -629 -562 -572 -307 228 -24 -622 
Reserve assets -619 -556 -572 -307 228 -24 -622 
Other financing -10 -5 0 0 0 0 0 
Memorandum item        
Current account/GDP (%) -7.4 -10.1 -0.6 -10.7 -15.0 -10.1 -11.3 
a Preliminary figures. 
b Estimated figures. c Excludes components that have been classified as Group E. 
Source: National Institute of Statistics and Censuses (INEC), Office of the Comptroller-General of the 
Republic of Panama. 
                                               
18 Executive Decree No. 240 of 28 December 2011 raised minimum wages by between 15% and 18%, 
to take effect as from January 2012. 
19 IMF (2013). WT/TPR/S/301/Rev.1 • Panama 
 
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  1.25.   The merchandise trade balance remained in deficit during the period 2007-2013, 
owing to rapid import growth (particularly capital goods), the impact of high international fuel and food prices on the import bill, and the depr eciation of the US dollar against the currencies 
of Panama's main trading partners. After peaking in 2011, the merchandise trade deficit retreated 
in 2012, thanks to the growth in exports, particular ly those originating in export processing zones, 
while imports grew more slowly. Nonetheless, the gap widened again in 2013, owing to a reduction in exports from the ZLC and other sectors. The balance of trade in services was increasingly 
positive during the review period, thanks mainly to the growth of services provided 
by the Panama Canal and the expansion of port services, transport (particularly by air) and 
tourism (section 1.3.2). 
1.26.   The balance on the income account also posted a deficit in 2007-2013, mainly owing to the 
repatriation of profits and dividends abroad, particularly by firms established in the ZLC, 
and interest payments on the external debt. Curre nt transfers were positive during the period. 
The capital and financial accounts maintained a surplus in 2007-2013, as a result 
of growing FDI flows chiefly representing the entry of foreign capital destined for the Panama 
Canal expansion and other major infrastructure works. 
1.27.  The contribution made by the ZLC to the merchandise trade balance was positive in the 
period 2007-2012, but the same cannot be said of trade in services. In 2013, re-exports from 
the ZLC shrank by 7.2%, partly owing to proble ms arising in two of Panama's most important 
markets in the Latin American region. 
1.3  Trade performance 
1.28.   The sum total of Panama's exports and imports of goods and services was equivalent 
to 166% of GDP (at 1996 prices) in 2012, which shows how important international trade is to the Panamanian economy, and the crucial role played by both the Panama Canal and the ZLC 
(Table 1.2). In 2012, Panama was the world's 54th largest exporter and its 50th largest importer; 
in global trade in services, it was ranked 39th as an exporter and 57th as an importer.
20 
1.3.1  Trend of merchandise trade 
1.29.  When analysing the structure of Panama's me rchandise trade, it is important to distinguish 
between Panamanian trade as such and trade that is channelled through the ZLC, given the preponderance of the free zone in the country's total trade figures. In fact, the ZLC accounts for about 70% of the value of the country's total merchandise trade, a proportion that 
has remained stable throughout the 2007-2012 period. Using the same approach as in the 
previous Secretariat Report (2007), the statistics (Tables A1.1 to A1.4) and the analysis presented in this section do not include imports from the rest of the world to the ZLC, or exports 
and re-exports from the ZLC to the rest of the world. Nonetheless, Table A1.3 includes sales 
(exports) from Panamanian customs territory to the ZLC and other Panamanian free zones, and Table A1.4 includes purchases (imports) from the ZLC and other Panamanian free zones 
entering Panamanian customs territory. 
1.30.  The value of merchandise imports grew steadily during the period under 
review (2009 excepted), attaining an average rate of 13% per year between 2007 and 2012. 
In contrast, the value of exports declined as fr om 2009, and proved unable to regain its earlier 
levels, resulting in a 6% average annual contraction between 2007 and 2012. According to the 
authorities, the contraction is partly explai ned by a reduction in the exportable supply 
of agricultural and fish products, compounded by changes in the methodology used to calculate 
exports.
21 In 2012, imports totalled US$12,633 million, while exports came in at US$822 million.22 
                                               
20 The figures exclude intra-European Union trade. Trade Profiles 2013 . Online information from 
the WTO, viewed at: http://www.wto.org/english/res_e/booksp_e/trade_profiles13_e.pdf . 
21 In the case of fisheries, supply was affected by  the rise in fuel prices and adjustment of the 
regulations governing activities to eradicate illegal fishing. 
22 In 2012, total imports and exports (including those pertaining to the ZLC) amounted 
to US$27,284 million and US$16,964 million, respectively. WT/TPR/S/301/Rev.1 • Panama 
 
- 21 - 
 
  1.3.1.1  Composition of merchandise trade 
1.31.  The composition of Panama's merchandise exports remains dominated by agricultural 
and food products, which jointly accounted for 56% of the total in 2012, despite having declined in absolute terms (Table A1.1, Merchandise exports by HS tariff section, 2007-2012 
and Chart 1.1). These categories are led by  fruit (bananas, pineapples, watermelon), 
which accounts for 18.1% of the total; fish and crustaceans, fresh or chilled (12.7%); sugar and confectionery products (4.3%); meat and edible offal (4%); and beverages, 
alcoholic liquids and vinegar (3%). The contribution of manufactured products (HS Chapters 25 
to 97) grew strongly in the period 2007-2012, from 16.6% of total exports to 43.8%. Nonetheless, this was largely due to an increase in the shares of precious stones and metals (15.7% of the total in 2012) and meta l waste and scrap (12.9%). The first of these 
categories includes exports of gold for non-monetary use
23, which increased from 0.3% to 14.1% 
of the total between 2007 and 2012. The base meta ls category includes the smelting of iron 
and steel, which accounted for 7.2% of total exports in 2012 (2.0% in 2007). 
1.32.  There have been no significant changes in the composition of Panama's imports, 
which essentially consist of manufactured products (88% of total imports in the period 2007-2012; 
see Table A1.2 and Chart 1.2). The leading imports are mineral fuels, which accounted for 22.5% 
of total imports in 2012, followed by machiner y and equipment (mechanical machinery) 11.2%, 
transport equipment (motor vehicles) 9.6%, and pr oducts of the chemical or allied industries 
(mainly pharmaceuticals) 8.5%. The share of agricultural products in total imports remained broadly stable during the 2007-2012 period, representing 11.2% of the total in 2012. 
                                               
23 Following the entry into operation of a mine in Colón province. WT/TPR/S/301/Rev.1 • Panama 
 
- 22 - 
 
  Chart 1.1 Merchandise trade by tariff section, 2007 and 2012 
2007 2012
(a)    Exports
Live animals 
and animal 
products (I)
19.2%
Vegetable 
products 
(II)
20.8%
Fats and 
oils (III)
3.7%Prepared 
foodstuffs  
(IV)
12.5%Precious 
stones and 
metals 
(XIV)
15.7%Base metals 
and articles of 
base metals  
(XV)
12.9%Other
15.2%
Total: US$1,127 million
(b)    Imports 2007
Prepared 
foodstuffs (IV)
6.1%
Miscellaneous 
manufactured 
articles
(XX)
2.9%Other
14.6%Prepared 
foodstuffs (IV)
6.6%
Mineral 
products (V)
23.0%
Products of 
the chemical 
or allied 
industry (VI)
8.5%
Plastics and 
rubber (VII)
4.0%Textiles and 
textile articles 
(XI)
4.8%Base metals and 
articles of base 
metal (XV)
7.6%Machinery and 
mechanical 
appliances (XVI)
18.6%Transport 
equipment 
(XVII)
9.6%Miscellaneous 
manufactured 
articles
(XX)
3.7%Other
13.5%
Total: US$6,870 million Total: US$12,633 millionTotal: US$822 millionPrecious 
stones and 
metals
(XIV)
1.3%
Vegetable 
products 
(II)
37.4%Other
10.6%
Textiles and 
textile articles 
(XI)
3.3%Mineral 
products (V)
19.4%
Plastics and 
rubber (VII)
4.1%Live animals 
and animal 
products (I)
39.7%
Fats and 
oils (III)
0.5%Base metals 
and articles of 
base metal 
(XV)
4.7%
Prepared 
foodstuffs (IV)
5.8%
Products of the 
chemical or 
allied industries
(VI)
9.4%
Base metals and 
articles of base 
metal (XV)
7.7%Transport 
equipment 
(XVII)
11.8%
Machinery and 
mechanical 
appliances (XVI)
20.6%
 
Source: National Institute of Statistics and Censuses (INEC), Office of the Comptroller-General of the 
Republic of Panama. WT/TPR/S/301/Rev.1 • Panama 
 
- 23 - 
 
  Chart 1.2 Merchandise trade by trading partner, 2007 and 2012 
2007 2012
(a)    Exports
Chinese 
Taipei
4.0%Korea, Rep. 
of
3.0%
Total: US$1,127 million
(b)    Im ports 2007
Colombia
2.8%Korea, Rep. 
of
3.9%a
Colombia
3.4%Korea, Rep. 
of
2.8%a
Total: US$6,870 million Total: US$12,633 millionTotal: US$822 millionCanada
0.2%Other
2.4%
United States
35.6%
EU (27)
21.8%
Other
America
6.0%EU (27)
33.7%
Mexico
3.1%China
6.0%Other Asia
1.8%
America
54.9%United 
States
20.2%
Other America
8.0%China
4.1%
Other Europe
0.7%Other Asia
7.1%Other
4.4%
Asia
18.3%
America
52.1%Asia
11.4%
United 
States
30.9%
Other 
America
8.4%EU (27)
7.0%Other Europe
7.4%Japan
4.8%
China 
5.2%Other Asia
2.1%Other
16.6%
United 
States
23.6%
Mexico
4.4%
Other 
America
5.5%EU (27)
8.4% Other Europe
1.4%China 6.4%Other 
Asia
2.7%Other
31.4%
America
52.9%America
44.6%
Europe
14.5%
Europe 
9.7%Asia
16.0%
Asia
14.2%CACM
10.3%
Japan 2.3%Europe
34.1%Europe
22.5%Other 
Europe
0.4%
CACM
12.0%
Canada
14.6%
CACM
7.8%CACM
7.7%Chinese 
Taipei
3.5%Korea, Rep. 
of
0.2%2007 2012
(a)    Exports
Chinese 
Taipei
4.0%Korea, Rep. 
of
3.0%
Total: US$1,127 million
(b)    Im ports 2007
Colombia
2.8%Korea, Rep. 
of
3.9%a
Colombia
3.4%Korea, Rep. 
of
2.8%a
Total: US$6,870 million Total: US$12,633 millionTotal: US$822 millionCanada
0.2%Other
2.4%
United States
35.6%
EU (27)
21.8%
Other
America
6.0%EU (27)
33.7%
Mexico
3.1%China
6.0%Other Asia
1.8%
America
54.9%United 
States
20.2%
Other America
8.0%China
4.1%
Other Europe
0.7%Other Asia
7.1%Other
4.4%
Asia
18.3%
America
52.1%Asia
11.4%
United 
States
30.9%
Other 
America
8.4%EU (27)
7.0%Other Europe
7.4%Japan
4.8%
China 
5.2%Other Asia
2.1%Other
16.6%
United 
States
23.6%
Mexico
4.4%
Other 
America
5.5%EU (27)
8.4% Other Europe
1.4%China 6.4%Other 
Asia
2.7%Other
31.4%
America
52.9%America
44.6%
Europe
14.5%
Europe 
9.7%Asia
16.0%
Asia
14.2%CACM
10.3%
Japan 2.3%Europe
34.1%Europe
22.5%Other 
Europe
0.4%
CACM
12.0%
Canada
14.6%
CACM
7.8%CACM
7.7%Chinese 
Taipei
3.5%Korea, Rep. 
of
0.2%
 
CACM: Costa Rica, El Salvador, Guat emala, Honduras and Nicaragua. 
a "Other" mainly consists of free zones (15.8% in 2007 and 30.4% in 2012). Source: National Institute of Statistics and Censuses (INEC), Office of the Comptroller-General of the 
Republic of Panama. WT/TPR/S/301/Rev.1 • Panama 
 
- 24 - 
 
  1.3.1.2  Direction of merchandise trade 
1.33.  Although the United States remains Pana ma's leading export market, its share dropped 
sharply during the review period, from 35.6% in 2007 to 20.2% in 2012 (Table A1.3 and Chart 1.2). In contrast, the share of other countries of the Americas grew considerably, 
particularly that of Canada, which absorbed 14.6% of Panama's total exports. 
Sales to CACM countries were also on the rise, representing 12% in 2012, while Colombia's share has declined in recent years. Although the sh are of exports absorbed by the European Union 
(EU 27) declined sharply, it remains substantial and stood at 21.8% in 2012. Within the EU, 
the main destination markets are the Netherla nds, Sweden, Italy, United Kingdom, Spain 
and Germany. The share of Asia as a whole gr ew to 18.3% in 2012, the leading markets being 
the People's Republic of China, Chinese Taipei, the Republic of Korea, and India, whose share 
increased during the review period. 
1.34.  On the import side, the United States remains the leading source (providing 23.6% 
of the total in 2012) although its relative share declined in the period under review. 
Imports from CACM countries remained stable, maintaining an 8% average share during the 
period, led by Costa Rica. Other countries that increased their share of Panamanian imports were Mexico and Colombia, while Brazil's share fell back slightly. Imports from the EU (27) grew 
moderately, to account 8.4% of the total in 2012. Wi thin this group, the main source countries are 
Spain, Germany and the Netherlands. The relative  share of Asia decreased slightly (to 14%), 
owing to a reduction in the shares of Japan and th e Republic of Korea, while the People's Republic 
of China managed to increase its share (6.4%). 
1.3.2  Trade in services 
1.35.  Panama's trade in services has traditionally been in surplus, and so it remained during 
the 2007-2013 period (Table 1.5). In 2013, services  generated 36% of the country's total exports 
and 22.9% of its GDP, with a value of US$9,767 million, representing a 122% increase 
on the 2007 level. Exports from practically all se rvices sectors grew during the review period. 
Transport and storage services (including those provided by the Panama Canal Authority and firms 
in the ZLC, as well as air services) remain the country's largest foreign exchange earners, 
having generated 49% of services exports in 2013. This category was followed by travel services 
(tourism) which accounted for 34% and financial services with 5.8%. On the import side, transport services generated 46.4% of total services imports in 2013, supported 
by travel (17.6%), other business services (13.5%) and financial services (12.9%). 
Table 1.5 Trade in services, 2007-2013  
 2007  2008  2009  2010  2011a 2012a 2013b 
Services (net) 2,247 2,511 3,341 3,641 3,933 5,164 5,052 
Services (credit) 4,409 5,195 5,542 6,439 8,075 9,348 9,767 
Transport 2,263 2,758 3,136 3,431 3,973 4,723 4,802 
Travel 1,185 1,408 1,484 1,745 2,605 3,067 3,316 
Communication services 216 223 251 306 319 326 327 
Construction services 1 3 2 2 2 4 4 
Insurance services 95 102 95 123 140 136 276 
Financial services 338 434 312 463 638 676 566 
Information technology and 
information services 22 30 26 25 25 34 39 
Royalties and licence duties 0 0 0 8 8 12 13 
Other business services 253 197 200 264 268 253 235 
Personal, cultural and 
recreational services 0 0 0 10 11 18 46 
Government services, n.e.s. 37 40 38 63 86 99 143 
Services (debit) 2,163 2,684 2,201 2,798 4,143 4,184 4,715 
Transport 1,211 1,543 1,208 1,541 2,235 2,275 2,188 
Travel 307 366 338 398 462 505 830 
Communication services 61 76 45 56 58 70 62 
Construction services 0 0 0 0 0 0 0 
Insurance services 105 131 146 161 209 212 192 
Financial services 227 321 170 369 556 637 608 
Information technology and 
information services 2 2 3 3 5 8 9 
Royalties and licence duties 57 59 63 46 69 42 81 WT/TPR/S/301/Rev.1 • Panama 
 
- 25 - 
 
   2007  2008  2009  2010  2011a 2012a 2013b 
Other business services 136 115 157 145 469 351 639 
Personal, cultural and 
recreational services 0 0 0 0 2 5 22 
Government services, n.e.s. 56 71 73 79 79 79 84 
Exports of services/GDP (%) 20.9 20.9 21.4 22.3 24.3 24.6 22.9 
a Preliminary figures. 
b Estimated figures. 
Source: National Institute of Statistics and Censuses (INEC), Office of the Comptroller-General of the 
Republic of Panama. 
1.4  Foreign direct investment 
1.36.  Net FDI flows into Panama grew between 2007 and 2012 to reach a level 
of US$2,887 million in the latter year, and represen ted 8.1% of GDP on average during the period, 
albeit with yearly fluctuations (Table 1.6) . In 2013, a sharp upturn took FDI flows past 
the US$4 billion level.24 The free trade agreements signed recently by Panama, along with others 
currently being negotiated, are expected to help maintain the high level of FDI inflows recorded to date, particularly when public-sector investments in infrastructure projects start to decline.
25 
Table 1.6 Net foreign direct invest ment flows by sector, 2007-2012  
(US$ million)  
 2007  2008  2009  2010 2011a 2012a 
Total 1,899 2,147 1,259 2,723 3,132 2,887 
Banks 389 777 2 373 635 -112 
Firms in the Colón Free Zone 373 288 222 390 390 535 
Other firms 1,136 1,082 1,036 1,960 2,108 2,464 
FDI flows/GDP (%) 9.0 8.6 4.9 9.5 9.4 7.6 
a Preliminary figures. 
Source: National Institute of Statistics and Censuses (INEC), Office of the Comptroller-General of the 
Republic of Panama. 
1.37.  The comparable-data series spanning 2007 to 2012 shows that ZLC firms continued 
to capture significant FDI flows throughout the period, particularly from 2010 to 2012, whereas 
flows into the banking sector (general licence and international banks) fluctuated sharply 
and declined significantly in 2012. In contrast , investments in "Other firms" grew rapidly 
as from 2010, apparently in line with the revival of economic growth. 
1.38.  Data on FDI by economic activity, which are available for 2010 onwards (Table 1.7), 
show that trade activities have absorbed the la rgest proportion of inflows in recent years, 
accounting for 45.6% in 2012. The Table also reports a significant increase in FDI channelled into 
manufacturing industries, which absorbed 24% of the total in 2012, and to a lesser extent 
information and communication services (9.1%). In contrast, transport, storage and postal services, another of the leading FDI target areas, saw their share in total FDI flows shrink by more 
than half between 2010 and 2012. The shares of financial and real estate services and agricultural 
activities also fell back. 
                                               
24 El Economista , "Panamá recibió más de $4.000 millones de inversión directa foránea", 
30 January 2014. Viewed at: http://www.eleconomista.net/2014/01/30/panamá-recibio-mas-de-4000-
millones-de-inversion-directa-foranea . 
25 IMF (2013). WT/TPR/S/301/Rev.1 • Panama 
 
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  Table 1.7 Net FDI flows by category of economic activity, 2010-2012  
Category of economic activity Foreign direct investment 
(US$ million) % of total 
2010  2011a 2012a 2010 2011a 2012a 
TOTAL 2,723 3,132 2,887 100 100 100 
Agriculture, livestock,  hunting and forestry 79 55 14 2.9 1.7 0.5 
Mining and quarrying -2 39 -1 -0.1 1.3 0.0 
Manufacturing -114 142 694 -4.2 4.5 24.0 
Electricity, gas and water supply -34 279 -220 -1.2 8.9 -7.6 
Construction -212 155 146 -7.8 5.0 5.0 
Wholesale and retail trade 1,572 1,103 1,317 57.7 35.2 45.6 
Transport, storage an d postal services 783 350 408 28.8 11.2 14.1 
Hotels and restaurants -12 157 50 -0.4 5.0 1.7 
Information and communication 38 37 263 1.4 1.2 9.1 
Financial and insurance services 360 592 61 13.2 18.9 2.1 
Real estate services 112 80 29 4.1 2.6 1.0 
Professional, scientific and technical 
services -13 83 43 -0.5 2.6 1.5 
Administrative and support services 165 34 34 6.1 1.1 1.2 
Education -2 5 3 -0.1 0.2 0.1 
Social and health-related services 13 7 26 0.5 0.2 0.9 
Arts, entertainment and creativity -18 14 15 -0.6 0.4 0.5 
Other services 6 0 5 0.2 0.0 0.2 
a Preliminary figures. 
Source: National Institute of Statistics and Censuses (INEC), Office of the Comptroller-General of the 
Republic of Panama. 
1.39.  In terms of the origin of net FDI flows,  Table 1.8 shows that the United States remains 
the leading source, although the value of investment flows from that country into Panama 
has varied sharply over the period 2009-2012. Other major FDI sources are Colombia, Switzerland, the Bolivarian Republic of Venezuela, Chinese Taipei and Mexico. Net FDI flows from 
the European Union as a whole have also fl uctuated widely and dropped sharply in 2012, 
with Spain and the Netherlands being the leading EU source countries. 
Table 1.8 Net FDI flows by main countries of origin, 2009-2012 
(US$ million) 
 2009  2010  2011a 2012a 
TOTAL 1,259 2,723 3,132 2,887 
United States -19 1,120 392 552 
Colombia 135 82 412 278 
Switzerland 301 444 210 204 
Venezuela, Bolivarian Republic of 68 76 10 145 
Chinese Taipei 15 130 54 140 
Mexico 154 -9 15 133 
Brazil 33 -2 20 123 
Japan 4 26 5 71 
Puerto Rico -2 -63 8 58 
Costa Rica 20 13 104 52 
Jamaica -33 -209 -11 51 
European Union 404 155 822 48 
of which: Germany 13 15 131 57 
Spain 327 -50 177 263 
Netherlands -0.1 126 36 170 
United Kingdom 68 79 378 -280 
Bahamas n.a. 5 1 36 
Chile 2 37 9 35 
Canada 16 9 39 32 
Dominican Republic n.a. 35 30 31 
Other -245 705 290 689 
n.a. Not available. 
a Preliminary figures. Source: Information provided by the Panamanian authorities. WT/TPR/S/301/Rev.1 • Panama 
 
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  2  TRADE AND INVESTMENT REGIME 
2.1  General Framework 
2.1.  The most recent constitutional reform in Panama took place in 2004. Panama is a republic 
and its political system is based on the separation  of executive, legislative and judicial powers. 
Article 4 of the Constitution states that Panama abides by the rules of international law. 
The National Assembly also performs the judicial function of hearing complaints and accusations against the President of the Republic and th e judges of the Supreme Court of Justice. 
While in recess, the National Assembly may vest closely defined extraordinary powers 
in the Executive at the latter's request where ci rcumstances so dictate. The powers in question 
exclude the approval of international treaties or the budget; the setting of national taxes 
and contributions; the development of fundamen tal guarantees, suffrage, or the party system; 
and the classification of offences and penaltie s. Any Decree Law issued by the Executive must 
be presented to the Legislature for a vote during the parliament following promulgation of the Decree Law. Treaties and international agreements concluded by the Executive must 
be presented to the Legislative Assembly for approval and ratification.
1 
2.2.  The National Assembly vested extraordinary powers in the Executive in 2008 that 
the Executive employed to establish the National  Customs Authority, issue provisions on the 
customs regime, amend the Banking Law, establish the Tourism Authority and issue provisions 
on the tourism regime. 
2.2  Trade policy objectives 
2.3.  The Ministry of Trade and Industry (MICI)  formulates, coordinates and implements Panama's 
trade and industrial policies. It has two Vice-Ministries – the Vice-Ministry of Domestic Trade 
and Industry and the Vice-Ministry of Foreign Trade, as well as a Trade Negotiations Office. The Vice-Ministry of Foreign Trade is responsible for the promotion of investment and exports. 
Through its two divisions, namely the Direct orate for International Trade Negotiations 
and the National Directorate for the Administration of International Trade Agreements and Trade Protection, the Trade Negotiations Office is responsible for all trade negotiations 
and the implementation of trade agreements.
2 The private sector participates in the trade 
integration process through the National Commission for International Trade Negotiations whose members are drawn from the most representative private-sector associations.
3 
2.4.  The Head of the Office of International Trade Negotiations takes part in all negotiation 
meetings that require ministerial or vice-ministerial participation and accordingly receives 
the same treatment as a vice-minister. The Office of the Permanent Mission of Panama to the WTO is at the Office of the Head of International Trade Negotiations. 
2.5.  During the period under review, the priority for Panamanian trade policy was to increase 
foreign direct investment (FDI) and exports. The objectives of the National Trade Strategy 2004-2009 were to conclude internatio nal trade agreements, promote exports, promote 
domestic trade to improve national output, incorporate active private-sector participation into 
strategies to improve the business climate, and form clusters in priority sectors.
4 The National 
Foreign Trade Strategy 2009-2014 has the additional purpose of providing assistance to investors 
to facilitate investment procedures and foster projects to boost Panamanian exports to new 
markets through the Investment and Export Promotion Agency (PROINVEX).5 
                                               
1 The hierarchy of laws in Panama, in descending order, is as follows: Political Constitution; international 
treaties; Laws of the Republic; Decr ee Laws; Cabinet Decrees; Legislat ive Decrees; Regulatory Decrees; 
Simple Decrees; Resolutions; Ministerial Decisions, and individual orders and legal acts; and Local Government Agreements. 
2 Decree Law No. 6 of 15 February 2006 and Executive Decree No. 46 of 14 June 2008. 
3 Law No. 33 of 1999 and online information from the MICI, viewed at: 
http://www.mici.gob.pa/detalle.php?cid=15&sid=60&id=1343 . 
4 Ministry of Trade and Industry (2007) and Ministry of the Economy and Finance (2005). 
5 Ministry of Trade and Industry (2009b) and National Government (2009). WT/TPR/S/301/Rev.1 • Panama 
 
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  2.6.  Both strategies propose work programmes to attract investment, for example "INVIERTE" 
and "PANAMA INVEST" on the one hand, and programmes to support businesses venturing abroad, such as "EXPORTA" and "PANAMA-EXPORT" on the other. Specifically, the National Foreign Trade Strategy 2009-2014 provides for the establishment of a single window for investors 
and automated export procedures. Other work programmes seek to improve businesses' 
competitiveness as exporters, for example "Prepárate para Competir", "Desarrollo Industrial Competitivo", "Compite Panamá" and "Impul so Panamá". Some programmes, such as 
"Mano a la Obra" were designed specifically to promote agricultural exports or to encourage 
exports and competitiveness among micro, small and medium-sized businesses (MSMEs), such as the MSME Competitiveness Support Programme.
6 
2.7.  Panama wants to attract high value-added FDI that promotes training of human resources 
and technology transfer. For example, the Government is promoting FDI in financial services, 
logistics, tourism and agriculture, sectors whose current or future competitive advantages have led to their inclusion in the Government's Strategic Plan for 2010-2014 as drivers of Panamanian 
economic growth.
7 Panama is seeking to become one of the chief destinations in Latin America 
for FDI and "the best place for doing business". 
2.8.  To increase not only the volume but the quality and diversity of its exportable supply, 
Panama is promoting exports to markets that affo rd preferential access to Panamanian goods and 
services, and exports of high-value-added non-trad itional products that ensure a more competitive 
presence in foreign markets. The objective purs ued by the National Trade Strategy 2004-2009 was 
to achieve considerable growth in exports (32%) an d in exports of non-traditional products (20%). 
It also sought to achieve a significant increase in the number of exporting businesses . 
The authorities indicated that although they did no t meet these targets, exports of non-traditional 
products and agricultural products improved considerably in 2007 and 2008 but fell in 2009. 
Since 2010 and 2011 the search has been on for ma rkets that are less affected by the recession, 
for example Canada, and efforts to increase exports of non-traditional agricultural and marine products have proved successful. 
2.9.  Panama is of the view that the process of op ening up is closely linked to the increase in FDI 
and exports. To that end it is pressing home th e need to open negotiations with countries where 
it considers there are markets for Panamanian exports and to ensure that domestic conditions help Panamanian economic operators to take fuller advantage of the opportunities made available 
under bilateral trade agreements. Indeed, in 2006 Panama embarked on the Complementary 
Agenda and Competitiveness Programme that seeks to improve governance, infrastructure, productivity and access to financing to engender a more favourable business climate. One of the 
programme's achievements is the option to perform procedures online.
8 
2.3  Trade agreements and arrangements 
2.3.1  World Trade Organization 
2.10.  Panama has been a Member of the WTO since 1997. As a minimum, it grants MFN 
treatment to all its trading partners. It is an observer on the Committee on Government Procurement but decided not to pursue its applicat ion to accede to the Agreement on Government 
Procurement by a communication circulated on 9 August 2013.
9 Panama had submitted two offers, 
the latest in 1999, and these were withdrawn. Panama is a participant in the Information 
Technology Agreement.10 Panama is not party to the Agreement on Trade in Civil Aircraft 
and because of its date of accession to the WTO did not participate in the sectoral negotiations on 
financial services and telecommunications for the General Agreement on Trade in Services (GATS). 
2.11.  Panama is of the view that strengthening the rules of the multilateral system is important 
in order to improve interaction between Members wh ile they establish regional or bilateral trade 
relations that help foster growth in exports and investment. Within the framework 
                                               
6 For further information, see Ministry of Trade and Industry (2007), Ministry of Trade and Industry 
(2009b) and OECD/WTO (2009). 
7 National Government (2009). 
8 For further information, see Minist ry of Trade and Industry (2007). 
9 WTO document GPA/ACC/PAN/1 of 9 August 2013. 
10 WTO document G/IT/1/Rev.49 of 4 October 2013. WT/TPR/S/301/Rev.1 • Panama 
 
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  of the negotiations on agriculture under the Doha Development Agenda, Panama supports 
the elimination of export subsidies, the reduction of tariff protection and domestic support. Panama supports greater openness in trade in services because this is the most dynamic sector of its economy (sections 1 and 4).
11 
2.12.  As part of its obligations, Panama has regularly submitted notifications to the WTO during 
the period under review (Table A2.1). However, there are notifications pending in the fields of intellectual property, agriculture, trade prot ection and countervailing measures, for example. 
2.13.  Since 2007, Panama has been involved as a complainant in four dispute settlement 
procedures and has participated as a third party in others (Table 2.1). It should be noted that Panama was party to the dispute on bananas, regarded as one of the most complex, difficult and long-standing disputes in the multilateral trading system. There have been no complaints 
against Panama within the framework of the WTO since 2007. 
Table 2.1 Dispute settlement pr ocedures, 2007 to April 2014  
Subject Complainant/respondent  Situation WTO 
document 
series 
Regime for the 
importation of bananas Panama/ EU Mutually agreed solution (DA/364/3, 
G/L/822/Add.1 of 12 November 2012)  DS364 
Indicative prices and 
restrictions on ports 
of entry Panama/ Colombia Implementation notified by the 
respondent (WT/DS366/15 of 
9 April 2010)  DS366 
Measures relating to trade in goods and services Panama/ Argentina Panel established and constituted 
(WT/DS453/5 of 12 November 2013) DS453 
Measures relating to the 
importation of textiles, 
apparel and footwear Panama/ Colombia Panel established and constituted 
(WT/DS461/4 of 16 January 2014) DS461 
Panama as a third party    
Safeguard measures on 
imports of polypropylene 
bags and tubular fabric Costa Rica/Dominican 
Republic 
Guatemala/Dominican 
Republic 
Honduras/Dominican 
Republic 
El Salvador/Dominican 
Republic Implementation notified by the 
respondent (WT/DS/415/13, 
WT/DS/416/13, WT/DS/417/13, 
WT/DS/418/13 of 9 May 2012) DS415 
DS416 
DS417 
DS418 
Certain measures 
concerning trademarks, geographical indications and other plain packaging requirements applicable to tobacco products and packaging Honduras/Australia On 25 September 2013 the Dispute 
Settlement Body decided to establish a panel but it has not yet been constituted. DS435 
Source: WTO Secretariat. 
2.3.2  Preferential trade agreements 
2.14.  Panama has signed trade agreements with 13 partners, nine of which have entered into 
force since 2007. Between January and November 2013, trade covered by the agreements accounted for almost 9.7% of the value of Panamanian exports and 10.4% of imports.
12 
Despite the provisions on notification13, several agreements have not been notified 
to the WTO (Table 2.2). The authorities indicated that they were working with the relevant institutions with a view to notification. 
                                               
11 WTO documents WT/MIN(09)/ST/114 of 2 December 2009, WT/MIN(11)/ST/20 of 16 December 2011 
and WT/MIN/(13)/ST/43 of 5 December 2013, and Ministry of Trade and Industry (2011a). 
12 INEC and Directorate-General for the Administration of In ternational Trade Agreements. 
13 Article XXIV:7 of the GATT 1994, Article 5 of the GATS, paragraph 4(a) of the Decision 
on differential and more favourable treatment, reciproc ity and fuller participation of developing countries 
of 28 November 1979 (L/4903) and paragrap h 3 of the Transparency Mechanism. WT/TPR/S/301/Rev.1 • Panama 
 
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  Table 2.2 Participation of Panama in regional trade agreements (whether notified or not, 
in force) April 2014  
Trading partner or Agreement Date of entry into force Type of 
Agreement  GATT/WTO Notification  
Year WTO provision  
EU – Cent ral America  1  August  2013 a Goods & 
Services 2013 GATT Art. XXIV 
& GATS Art. V 
Canada 1 April 2013 Goods & 
Services 2013 GATT Art. XXIV 
& GATS Art. V 
United States 31  Octobe r 2012 Goods & 
Services 2012 GATT Art. XXIV 
& GATS Art. V 
Peru 1 May 2012 Goods & 
Services 2012 GATT Art. XXIV 
& GATS Art. V 
Nicaragua (Central America) 21 Novembe r 2009 Goods & 
Services 2013 GATT Art. XXIV 
& GATS Art. V 
Guatemala (Central America)  20 June 2009 Goods & 
Services 2013 GATT Art. XXIV 
& GATS Art. V 
Honduras (Central America) 9  January  2009 Goods & 
Services 2009 GATT Art. XXIV 
& GATS Art. V 
Costa Rica (Central America) 23 Novembe r 2008 Goods & 
Services 2009 GATT Art. XXIV 
& GATS Art. V 
Chile 7  March  2008 Goods & 
Services 2008 GATT Art. XXIV 
& GATS Art. V 
Singapore 24 July 2006 Goods & 
Services 2007 GATT Art. XXIV 
& GATS Art. V 
Chinese Taipei 1  January  2004 Goods & 
Services 2009 GATT Art. XXIV 
& GATS Art. V 
El Salvador (Central America)  11 April 2003 Goods & 
Services 2005 GATT Art. XXIV 
& GATS Art. V 
SIECA - Accession of Panama  6 May 2013 Goods  Not notified 
LAIA – Accession of Panama 3 May 2012 Goods  Not notified 
Cuba LAIA, AAP.CE No. 71 20  August  2009 Goods  Not notified 
Colombia LAIA, AAP.A25TM No. 29 1 January  1995 Goods  Not notified 
Dominican Republic 8  June 1987 Goods  Not notified 
Mexico LAIA, AAP.A25 No. 14  1 May 1983 Goods  Not notified 
a EU – Central America: the notifications made in February 2013 (see WT/REG332/N/1 
and S/C/N/680) state that: "Provisional application of the Agreement by all signatory parties is expected in the course of the second quar ter 2013"; further notifications are anticipated, 
confirming the specific dates of entry into force between the EU and the Central American countries. 
Note: LAIA: Latin American Integration Association. 
 SIECA: Central American Economic Integration Subsystem. 
Source: WTO Secretariat. 
2.3.2.1  Regional integration agreements 
2.3.2.1.1  Latin American In tegration Association (LAIA) 
2.15.  Panama has been a member of LAIA since February 2012 and has acceded to seven regional 
agreements, including the Regional Agreement on  Regional Tariff Preference (AR.PAR No. 4) 
and the agreements on open markets with the Plurinational State of Bolivia, Ecuador and Paraguay.
14 
2.16.  AR.PAR No. 4 is an agreement providing for reciprocal tariff preferences that apply 
to imports of goods originating in the parties other than products in the lists of exceptions. 
The Regional Tariff Preference (RTP) is a percenta ge reduction in the national import tariff or 
MFN tariff that varies in line with the level of development of the granting country and the 
recipient country. LAIA classifies Panama as a country of intermediate development (CID). 
In February 2014, AR.PAR No. 4 had entered into force in respect of trade between Panama and Argentina, the Plurinational State of Bo livia, Cuba, Ecuador, Mexico and Paraguay, 
and in April 2014 in respect of trade between Pa nama and Uruguay. The RTPs granted by Panama 
are as follows: 34% to the Plurinational State of Bolivia and Paraguay (relatively less developed, 
landlocked countries); 28% to Ecuador (a relatively less developed country); 20% to Cuba, Colombia, Chile, Peru, Uruguay and the Bolivarian Republic of Venezuela (CIDs); and 
12% to Argentina, Brazil and Mexico. In the fr amework of the regional agreements on open 
                                               
14 The other three regional agreements are the Regional Agreement on scientific and technological 
cooperation (Framework Agreement)  between the LAIA member countries, the Regional Agreement on 
cooperation and trade in cultural, ed ucational and scientific goods and th e Framework Agreement on promoting 
trade by eliminating technical barriers to trade. WT/TPR/S/301/Rev.1 • Panama 
 
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  markets, Panama at once fully eliminated customs levies and other restrictions on imports of 
certain products originating in the Plurinational State of Bolivia, Ecuador and Paraguay, lists of which are annexed to those agreements.
15 
2.17.  Under Article 25 of the Montevideo Treaty16, Colombia, Cuba and Mexico signed partial 
scope agreements with Panama before it became a member of LAIA. The agreement with Cuba 
was signed and entered into force in 2009. The ag reements with Colombia and Mexico have been 
in force since 1995 and 1986 respectively. The agreements with Colombia and Cuba provide 
for reciprocal tariff preferences whereas the agreement with Mexico grants unilateral tariff 
preferences to around 100 Panamanian products. According to information from the Panamanian authorities, Panama's accession to LAIA does not affect these agreements: they remain in force because they have not been rescinded; however, in  the event of a conflict, the obligations entered 
into in the more recent agreement prevail. 
2.3.2.1.2  Central American Economic Integration Subsystem  (SIECA) and Free Trade 
Agreement between Panama and Central America
17 
2.18.  Together with Costa Rica, El Salvador, Gu atemala, Honduras and Nicaragua, Panama signed 
the Tegucigalpa Protocol of 1991 to the Charter of  the Organization of Central American States 
(ODECA), establishing the Central American Integration System (SICA). Panama approved 
the Protocol under Law No. 10 of 3 January 1996. On 29 October 1993, Panama signed 
the Protocol to the General Treaty on Central American Economic Integration (TGIEC) (Guatemala Protocol) establishing the Central American Economic Integration Subsystem (SIECA), which was ratified only on 17 April 2013. Panama approved the Protocol of Incorporation of the 
Republic of Panama into SIECA and the amendment to the Guatemala Protocol 
of 27 February 2002 under Law No. 26 of 17 April 2013. 
2.19.  The SICA is a multidisciplinary integration scheme comprising five subsystems: 
environmental, economic, educational and cultural, political and social.
18 SIECA established under 
the Guatemala Protocol provides for the estab lishment of a free-trade zone, the adoption of 
a common external tariff, the establishment of a customs union, the free movement of factors of 
production, and monetary and financial integration. The Secretariat for Central American Economic 
Integration, based in Guatemala, is the technical and administrative arm of the integration process.
19 
2.20.  The Free Trade Agreement (FTA) between  Panama and Central America (Costa Rica, 
El Salvador, Guatemala, Honduras and Nicaragua) was signed on 6 March 2002 and entered into 
force between Panama and the various countries between 2003 and 2009 upon the entry into force of the respective bilateral protocols that are an integral part of the Treaty. The aims of the 
FTA are to develop the free trade zone between the Parties; promote, expand and diversify trade 
in goods and services; promote conditions for fair competition; eliminate barriers to trade; facilitate the movement of goods and services; and promote, protect and substantially increase 
investments in each Party. Although the agreement does not provide for a precise date for full 
implementation, the various bilateral Protocols between Panama and its partners extend the Tariff Elimination Schedule  (PDA) until 2013 with El Salvador, 2026 with Costa Rica 
and Honduras, 2024 with Nicaragua, and 2029 with Guatemala. 
2.21.  The FTA contains provisions on trade in goods relating to national treatment and market 
access, rules of origin, customs procedures, safeguard measures, unfair trade practices, technical barriers to trade, sanitary and phytosanitary measures, standardization and metrology 
measures, and authorization procedures. It also contains provisions on investment, cross-border 
trade in services, financial services, telecommunica tions, temporary admission of business people, 
                                               
15 Second Protocol to AP.AR No. 4, Article 2. Online information viewed at: 
http://www.aladi.org/nsfaladi/textacdos.nsf/vpaises/panama?OpenDocument&Start=1&Count=310&Collapse=
5. 
16 This Article states that "member countries ma y draw up partial scope agreements with other 
Latin American countries and ar eas of economic integration". 
17 In 2012, 12% of exports of goods from Panama were to Central America and 7.7% of its imports 
were from that region. 
18 Secretariat for Central American Integration (2010). 
19 Online information from the Secretariat for Central American Integration, viewed at: 
http://www.sieca.int/Portal/Pagina.aspx?PaginaId=1015 . WT/TPR/S/301/Rev.1 • Panama 
 
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  competition policy, monopolies and State-owned enterprises, government procurement, 
intellectual property, transparency, and dispute settlement. Until the entry into force of the Protocol incorporating Panama into SIECA, trade relations between Panama and Central America were governed by the FTA between Panama and Central America and the bilateral 
protocols establishing tariff reduction programmes, rules of origin and annexes to the chapters 
on investment, services and government procurement.
20 
2.22.  The Protocol incorporating Panama into SIECA entered into force on 6 May 2013. It began 
to govern trade relations between Panama and Ce ntral America and partially superseded the FTA 
between Panama and Central America. Only the pr ovisions of the FTA that govern matters not 
covered by the Protocol of Incorporation into SIECA continue to apply. 
2.23.  With the entry into force of the Protocol  of Incorporation into SIECA, Panama adopted 
the following instruments: 
i. the General Treaty on Central American Economic Integration (TGIEC) 
of 13 December 1960; 
ii. the Agreement on the Central American Tariff and Customs Regime 
of 14 and 27 December 1984 and the three Protocols thereto. For the Central American Import Tariff, whose application is immediate but contains 
exceptions, Panama must negotiate the schedule for harmonization of the 
nomenclature within one year and the schedule to harmonize import duties within two years; 
iii. the Central American Uniform Customs Code (CAUCA), including its amendments
21 
and its implementing regulations (RECAUCA)22, under which certain Articles will enter 
into force after five years (customs brokers and special agents) or ten years (non-commercial consignments for household use and objections and appeals); and 
iv. the Framework Agreement Establishing the Central American Customs Union. 
2.24.  The following provisions entered into force at the same time: institutional provisions; 
the Central American Regulations on the Origin of Goods (other than the exceptions 
in Annex 6(a)); trade protection; settlement of disputes; sanitary and phytosanitary measures; 
technical barriers to trade (other than the exceptions in Annex 7.1); customs transit and non-tariff barriers. These provisions will gradually supersede their counterparts in the FTA but the tariff quotas provided for in the bilateral protocols to the FTA will remain in place until free trade 
is achieved in line with a schedule that  must be drawn up within two years. 
2.25.  It also provides that within a period of six months, Panama will take the steps necessary 
to negotiate its incorporation into the Agreement on Investment and Trade in Services (TICS) 
and the Protocols thereto, subject to the cond ition that the commitments assumed by Panama 
and members of the TICS on investment, cross-border trade in services and financial services do not entail a greater degree of non-conformity or a level of commitment lower than those 
stipulated in the FTA. 
2.3.2.2  Other trade agreements 2.26.  Panama has negotiated various tariff reduction programmes in its preferential trade 
agreements, as illustrated in Table 2.3. 
                                               
20 For further information see Ministry of Trade and Industry (2009a). 
21 COMIECO Resolution No. 223-2008. 
22 COMIECO Resolution No. 224-2008. WT/TPR/S/301/Rev.1 • Panama 
 
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  Table 2.3 Panama: Liberalization programm es agreed as part of preferential 
trade agreements  
Partner Reduction 
programme % of lines 
Duty free Dutiable 2013 Final 
Central America  
Costa Rica 2008-2026 88.70 97.50 2.50 
El Salvador 2003-2013 82.44 82.44 18.46 
Guatemala 2009-2028 84.89 97.39 2.5 
Honduras 2009-2026 8.10 87.20 12.80 
Nicaragua 2009-2024 86.50 90.50 9.40 
Canada  2013-2031 75.70 98.80 1.30 
Chile  2008-2022 74.30 97.30 2.70 
United States  2012-2031 75.32 99.97 0.03 
Peru 2012-2029 58.05 96.50 3.50 
European Union  2013-2027 50.89 94.62 5.38 
Source: WTO Secretariat, on the basis of inform ation provided by the countries in question. 
2.3.2.2.1  Association Agr eement between the European Union and Central America 
2.27.  Together with the other Central American countries, in September 2012 Panama signed 
the Association Agreement with the European Unio n and ratified it by Law No. 27 of 17 April 2013. 
The Agreement entered into force on 1 August 2013. Panama was an observer at the negotiations between 2006 and 2010 and began to participate as a full member in 2010.
23 The Agreement 
consolidates and broadens the preference s granted by the EU under the GSP/GSP 
Plus. It also establishes a tariff reduction programm e for Panama that differs from that of the other 
Central American countries, under which the base rate tariff adopted by Panama can be either the Central American tariff or a lower tariff. Note the special treatment for bananas that allows 
the EU to suspend preferential tariffs for a maximum annual period of three months when imports 
reach a given amount (431,000 tonnes in 2013 for Panama). There are two other pillars in the Association Agreement that encourage political  dialogue and cooperation. In 2012, 21.8% 
of exports of Panamanian goods were to the European Union and 8.4% of its imports came 
from the EU. 
2.3.2.2.2  Panama - Canada 
2.28.  The Agreement between Panama and Cana da, which entered into force on 1 April 2013, 
contains provisions on goods (rules of origin, customs procedures, sanitary and phytosanitary measures, technical barriers to trade, emergency measures) and on services (investment, cross-border trade in services, telecommunications, financial services, temporary 
entry of business people), and on competition policy, monopolies and State-owned enterprises, 
and government procurement. It also contains provisions on e-commerce, trade-related cooperation, dispute settlement and trade facilitation, and two parallel agreements on the 
environment and labour. The services commitments  are based on negative lists, and generally 
speaking, are broader than the commitments entered into under the GATS. 
2.29.  In 2012, goods exports from Panama to Canada and goods imported from Canada 
accounted for 14.6% and 0.5% of total goods exports and imports respectively. The entry into 
force of the Agreement meant that 75.7% of Panama's tariff was duty free for imports from Canada, corresponding to 89.4% of those imports.  At the end of the transition period (2031), 
98.7% of the tariff will be duty free, correspondi ng to 97.7% of imports from Canada. A total 
of 112 tariff lines (corresponding to 1.3% of Panama's tariff) will remain dutiable, representing 
2.3% of its imports from Canada.
24 Panama's chief exports to Canada are gold, salmonids, 
unwrought silver and coffee, and its imports include lentils, newsprint in rolls, and machines 
for working rubber or plastics and minting coins.25 
                                               
23 Ministry of Trade and Industry (2011a). 
24 WTO document WT/REG334/1 of 16 January 2014. 
25 Online information viewed at: 
http://www.mici.gob.pa/imagenes/ pdf/doc_explicativo_pma_canada.pdf . WT/TPR/S/301/Rev.1 • Panama 
 
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  2.3.2.2.3  Trade Promotion Agreement be tween Panama and the United States 
2.30.  Until 2012, Panama benefited from the unilateral tariff preferences granted 
by the United States (GSP and Caribbean Basin Initiative (CBI)), which were bound under the Trade Promotion Agreement (TPA) upon its entry into force on 31 October 2012. 
This is one of the most important agreements signed by Panama during the period under review, 
not only because of the importance of its trade and investment relations with the US but also because the TPA has driven forward major reforms to the Panamanian regulatory framework for 
trade to bring it into line with the commitments entered into the 22 chapters of the TPA, 
for example in intellectual property, retail trade, government procurement, banking, information technology, rules of origin and clearance of urgent correspondence. The United States is the chief source of FDI in Panama, the number one destination for Panama's exports of goods 
(20.2%) and Panama's largest source of imports (23.6%).
26 
2.31.  The TPA provides for a linear tariff reduction programme except for products regarded 
as sensitive, for example agriculture, for which longer grace or phasing-out periods were agreed, 
or the industrial sector, where minor reductions were agreed for the first few years with increases 
in later years. Panama grants increasing quotas for certain agricultural products (pork, chicken, dairy products, potatoes, onions, beans and rice), and imports of these will be unrestricted 
after a period of between five and 18 years, depending on the product. The TPA also includes 
disciplines on investment, intellectual property, trade protection, trade facilitation, government procurement and dispute settlement. Commitments relating to investment and services are based on negative lists.
27 
2.3.2.2.4  Panama - Peru 
2.32.  The agreement between Panama and Peru entered into force on 1 May 2012. The tariff 
reduction programme is to be implemented betw een 2013 and 2029. At the end of the transition 
period, 300 lines of Panama's schedule will remain dutiable. The majority of these lines (270) refer 
to agricultural products (HS sections I to IV), in particular live animals, animal products and prepared foods. For the corresponding HS sect ions, the average preferential tariffs will range 
between 12.2% and 44.4%. Other HS sections where tariffs will continue to apply are: 
chemicals (VI), plastics and rubber (VII), wood pulp and paper (X) and articles of stone (XIII). The average preferential tariff for these HS  sections will vary between 11.3% and 15%. 
Panama applies tariff quotas, most of which are fixed. The importation of three products (pasta, 
sweet biscuits and fish flour) may be unrestricte d by the end of the transition period (2029). 
The commitments relating to investment and services are based on negative lists and are generally more extensive than those set out in the GATS schedules.
28 In 2012, 0.8% of Panama's 
exports of goods went to Peru and 0.5% of  its imports originated in that country. 
2.3.2.2.5  Panama - Chile 2.33.  The agreement with Chile entered into force in March 2008. Prior to that date, 18.8% 
and 33.6% of agricultural and industrial lines, respectively, were already duty free under 
the MFN regime. The entry into force of the ag reement brought greater tariff liberalization 
for agricultural products than for industrial prod ucts (44.3% and 38.1% of lines respectively were 
duty free). In 2017, liberalization of industrial products will be 97%, including full liberalization 
of textiles and footwear, and by 2022 all tariffs on  industrial products will have been eliminated. 
The situation will be different for agricultural prod ucts: 16.4% of tariff lines will continue to be 
subject to duty until the end of the transition pe riod. The highest average final tariff (82.5%) will 
apply to vegetable products, although only 1.4% of tariff lines under that heading will continue 
to be dutiable. Commitments on investment and services are based on negative lists. Panama 
substantially extended its commitments in serv ices compared to those entered into under 
the GATS, especially in relation to the number of sectors subject to liberalization commitments. 
All sectors are bound at the current level of openness (i.e. non-discrimination), except for financial and key air transport services.
29 The Agreement also contains provisions on government 
                                               
26 Online information viewed at: http://webservices.wto.org/resources/profiles/TP/ZZ/2012/PA_s.pdf . 
27 Ministry of Trade and Industry (2011b). 
28 WTO document WT/REG313/1/Rev.1 of 26 September 2013. 
29 WTO document WT/REG239/1/Rev.1 of 27 January 2010. WT/TPR/S/301/Rev.1 • Panama 
 
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  procurement. In 2012, goods exports from Panama to Chile and goods imported from Chile 
accounted for 0.9% and 0.6% of Panama's total goods exports and imports respectively. 
2.3.2.3  Other trade agreements 2.34.  During the period under review, Panama also signed trade agreements with the countries 
of the European Free Trade Association (EFTA), Colombia, and Trinidad and Tobago. 
2.35.  In 2010, EFTA and Panama signed a Joint Declaration on Cooperation, and opened 
negotiating rounds in November 2011 that ended in December 2012. Costa Rica, Guatemala 
and Honduras joined the negotiations. Panama and Costa Rica signed the FTA in 2013. 
The agreement provides that other SIECA member countries may accede to it.
30 
2.36.  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).31 Pursuant to the agreement, Colombia established mixed 
tariffs on imports of textiles, clothing and footwear originating in the ZLC that led Panama to request the WTO Dispute Settlement Body to hold consultations (Table 2.1). By signing the FTA, 
Panama took another step towards joining the Pacific Alliance comprising Colombia, Chile, Peru 
and Mexico. To be eligible to join the Alliance, a country must have signed an FTA with each of its members and Panama's signature of the FTA with Mexico on 4 April 2014 means that 
the eligibility requirement has now been met.  
2.37.  The agreement with Trinidad and Tobago, signed in October 2013, is a partial scope 
agreement that includes modalities on goods, services and investment . For Panama it represents 
progress in closer trade relations with the countries of the Caribbean. Panama already has partial 
scope agreements with Cuba and the Dominican Republic.
32 
2.3.2.4  Trade agreements currently being negotiated 2.38.  Panama is negotiating free trade agreem ents with the Caribbean Community (CARICOM) 
and has held talks in this regard with Aruba, Barbados, Curacao and the Republic of Korea.
33 
Panama also participates with 20 other countries in the negotiation of a plurilateral agreement on trade in services in Geneva, outside the framework of the WTO. 
2.3.3  Other agreements and arrangements 
2.39.  During the period under review Panama has continued to benefit under the Generalized 
System of Preferences (GSP) of Austria, the Russian Federation, Japan and Turkey.
34 
2.4  Investment regime 
2.4.1  General framework 
2.40.  A number of legislative texts define the Panamanian investment regime, 
including the Constitution, Law No. 54 of 22 July 1998 on Legal Stability of Investment as 
amended, and Law No. 41 of 24 August 2007 on th e special regime for the establishment and 
operation of multinational business headquarters, as amended by Law No. 45 of 10 August 2012 (section 3.4.1.3). The amendments made to Law No. 54 since 2007 broaden its scope, extending 
it for example to the supply and transmission of electricity and multinational business 
headquarters. The amendments also introduce furthe r conditions to extend the scope of the Law, 
                                               
30 Online information from EFTA, viewed at: http://www.efta.int/free-trade/free-trade-news/2013-06-
24-central-america.aspx , and online information from the MICI, viewed at: 
http://mici.gob.pa/subca tegoria.php?cid=15&sid=58 . 
31 Ministry of Trade and Industry (2011a). 
32 Online information from the MICI, viewed at: 
http://www.mici.go b.pa/clase.php?cid =15&sid=58&clid=81 . 
33 Online information from the Office of th e President of the Republic, viewed at: 
http://www.presidencia.gob.pa/4095-Panama-se-reposiciona-en-el-Comercio-mundial , and online information 
from the MICI viewed at: http://www.mici.gob.pa/sub categoria.php?cid=15&sid=58 . 
34 UNCTAD (2011). WT/TPR/S/301/Rev.1 • Panama 
 
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  such as a requirement to incorporate technica l progress, generate productive employment, 
contribute to geographical decentralization, in crease and diversify exports, and employ local 
labour. 
2.41.  The Vice-Ministry of Foreign Trade at the MICI is responsible for formulating 
and implementing investment policy.35 The Vice-Ministry comprises the National Investment 
Promotion Directorate, which has responsibility for formulating the annual investment promotion strategy
36 and the Investment and Export Promotion Agency (PROINVEX PANAMÁ). 
2.42.  PROINVEX PANAMÁ was established in 2010 to promote investment in those sectors that 
the Government's Strategic Plan for 2010-2014 identi fied as drivers of economic growth, namely 
financial services, logistics, tourism and agriculture.37 The aim of PROINVEX PANAMÁ is to improve 
interaction with the international business community.38 PROINVEX PANAMÁ acts as a single 
window to identify government incentives for investment; it provides information to investors 
who are in the process of performing due diligence and holds the Master Register of Investments.
39 
2.43.  Panamanian law grants national treatment to foreign investors and the enterprises in which 
they participate.40 Foreign investors and the enterprises in which they participate have the same 
rights and obligations as national investors and enterprises, without any restrictions other than 
those established in the Constitution and the law. Those rights include freedom to trade, engage in 
industry, import and export. In order to be eligible under the Law on Legal Stability of Investment, an investor must make an investment in conformity with the provisions of an investment plan that includes the requirement to invest at least B 2 million within the period provided for in the law 
governing the activity in question or in other cases within a minimum period of two years. 
The plan must be registered with the National Industry and Business Development Directorate (DINADE), which certifies that the investment exists and forwards a copy to the MICI. 
The MICI then has 60 days to make a decision by reasoned opinion on entering the investment 
on the register. Law No. 54 ensures legal stability for the purposes of taxation
41, the customs 
regime and labour matters for ten years (five years at municipal level), as from the entry of the 
investment plan on DINADE's Register of Legal Stability of Investment. At July 2013 
around 360 enterprises had been entered on the Register.42 
2.44.  Foreign investors do not require prior authorization to invest in Panama unless they benefit 
from an incentive regime (section 3) or wish to conduct activities that require a concession, 
licence, permit or other type of authorization. There continue to be prohibitions on private 
investment in certain sectors (Table 2.4). Nonetheless, although the Constitution reserves gambling operations to the State, the private sector has been able to run gambling halls since 
1998 under concession contracts.
43 Similarly, although the Constitution provides that the purchase 
of mines and other deposits is prohibited, it allows the private sector to operate them through semi-public enterprises or under a concession. In relation to restrictions on foreign investment, 
the retail trade continues to be reserved to Panamanians, but foreigners who satisfy certain 
conditions may engage in retail (Table 2.5). Activities as a tour operator or travel agency ceased to be regarded as retail trade activities during the period under review, meaning that foreigners 
may engage in them. 
                                               
35 Decree Law No. 6 of 15 February 2006 and Article 7 of Executive Decree No. 46 of June 2008. 
36 Articles 79-86 of Executive Decree No. 46 of 14 June 2008. 
37 Executive Decree No. 134 of 14 July 2010. 
38 National Government (2009), p. 41. 
39 Executive Decree No. 134 of 14 July 2010, and online information from PROINVEX, viewed at: 
http://proinvex.mici.gob.pa/index.php?option=c om_content&view=article&id=93&Itemid=55&lang=es . 
40 Article 2 of Law No. 54 of 22 July 1998. 
41 Exempt from indirect taxes. 
42 Law No. 54 of 22 July 1998, and online information from the MICI, viewed at: 
http://www.mici.gob.pa/d etalle.php?cid=16&id=323 . 
43 Title III of Decree Law No. 2 of 10 February 1998. WT/TPR/S/301/Rev.1 • Panama 
 
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  Table 2.4 Prohibitions on investment  
Activity Foreign National Legal framework 
Purchase of salt pans, mines, underground 
and thermal waters, hydrocarbon deposits, quarries and other mineral deposits  x x Article 257 of the Constitution 
Purchase of land less than 10 km from 
the border x  Article 291 of the Constitution 
Gambling and betting  x x Article 297 of the Constitution  
Fishing in Panamanian territorial waters when 
the product of fishing is sold for immediate 
consumption on the Panamanian market x  Article 285 of the Tax Code 
Mail and telegraphy services on the 
national territory  x x Article 301 of the Tax Code  
Supply of electricity  x x Article 46 of Law No. 6 
of 3 February 1997 
Source: WTO Secretariat. 
Table 2.5 Restrictions on foreign investment  
Activity Description Legal framework 
Retail trade  Foreigners are allowed to hold equity 
in enterprises that se ll their own output Article 293 of the Constitution 
Public utilities Limited equity participation  Article 285 of the Constitution 
Public radio and television 
broadcasting service  Limited equity participation Article 14 of Law No. 24 
of 30 June 1999 
Source: WTO Secretariat. 
2.45.  There are no foreign exchange controls in Panama. Foreign investors are guaranteed free 
repatriation of capital, dividends, interest and the profits arising from their investment. 
In accordance with anti-money-laundering rules, Panamanian financial entities must inform the authorities of any transaction in excess of B 10,000. 
2.46.  Dividends paid abroad are subject to dividend tax
44, and payments of interest, commission 
and other charges to foreign creditors are subject to income tax.45 Remittances abroad are subject 
to income tax.46 Foreign nationals resident abroad who receive payments for a service performed 
in Panama, excluding dividends and shareholdings, pay taxes on 100% of the amount remitted47 
and natural or legal persons resident in Panama, whether Panamanian or foreign, who receive 
payments for a service performed abroad, pay taxes on 50% of the amount remitted. "Payments" includes the payment of royalties, goodwill, fees and income by way of intellectual property rights, 
etc.
48 Enterprises in the ZLC are not subject to income tax on these payments.49 
2.47.  The Constitution covers the possibility of expropriation by eminent domain or on the ground 
of social interest, subject to payment of compensation.50 The compensation is based on the market 
valuation of the property in question.51 There were no expropriations by eminent domain during 
the period 2007-2013. 
                                               
44 Article 733 of the Tax Code (Law No. 8 of 27 January 1956) as amended. 
45 Article 701(h) of the Tax Code (Law No. 8 of 27 January 1956) as amended. 
46 Articles 694 and 733 of the Tax Code (Law No. 8 of 27 January 1956) as amended. 
47 Article 733 of the Tax Code (Law No. 8 of 27 January 1956) as amended and Note No. 201-01-228 
of the Ministry of the Economy and Finance of  15 February 2006. Online information viewed at: 
http://www.momentofiscal.com/consultas/Consultas%20sobre%20Remesas/Remesas%20%20articulos%2069
4%20y%20733%20del%20CF.pdf . 
48 Article 694 of the Tax Code (Law No. 8 of 27 January 1956) as amended and Note No. 201-01-228 
of the Ministry of the Economy and Finance of  15 February 2006. Online information viewed at: 
http://www.momentofiscal.com/consultas/Consultas%20sobre%20Remesas/Remesas%20%20articulos%2069
4%20y%20733%20del%20CF.pdf . 
49 Article 708(n) of the Tax Code (Law No. 8 of 27 January 1956) as amended. 
50 Article 48 of the Constitution and Articles 21-22 of Law No. 54 of 22 July 1998. 
51 Articles 18 and 21-22 of Law No. 54 of 22 July 1998. WT/TPR/S/301/Rev.1 • Panama 
 
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  2.48.  Since 2007, Panama has signed six new bilateral investment protection and promotion 
agreements, bringing the total of such agreements to 24.52 Additionally, the preferential trade 
agreements that Panama signed with Canada, Central America, Chile, Chinese Taipei, Peru, Singapore and the United States include a chapter on investment. Panama participates 
in the Multilateral Investment Guarantee Agency (MIGA) and the International Centre 
for Settlement of Investment Disputes (ICSID). 
2.49.  Panama has signed agreements on double taxation and tax information exchange 
agreements in line with the principles of th e OECD on transparency and effective exchange 
of information in tax matters.
53 At April 2014, Panama had concluded 16 conventions 
on the avoidance of double taxation and nine  agreements on the exchange of information 
in tax matters.54 
2.4.2  Establishing a business 
2.50.  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. In conformity with this 
Law, natural or legal persons who wish to carry on a commercial or industrial activity need only 
inform the Panamanian authorities in a start-up notification of the activity they seek to pursue. The notification consists in registration of the following information in the computerized system 
"PanamáEmprende", administered by the MI CI: name or company name, nationality, 
the applicant's identity or passport number, legal domicile, activity to be carried on, the estimated amount of the investment, the date of comme ncement of business, email address and sworn 
declarations or any other requirement laid down by the MICI. Once the procedure has been 
completed, the declarant prints the start-up notification and the accompanying sworn declaration, 
signs them and keeps them at his place of business. 
2.51.  The sworn declaration is a compulsory stag e confirming the truthfulness of the information, 
the facts as declared and compliance with the prerequisites laid down in Law No. 5 or other special 
laws, such as permits, authorizations, licences or concessions for certain activities. Some activities do not require a start-up notification, for example agricultural activities or handicrafts 
and self-employed professions.
55 
2.52.  The procedure for obtaining a start-up notification generates a one-time fee, a number 
on the Single Register of Taxpayers (RUC) and a number on the Business Register at the Municipal 
Treasury. The holder of a start-up notification must keep the notification up to date. An additional 
start-up notification is required to open a branch, but not administrative offices at a location other 
than at the principal place of business. 
2.53.  Foreign businesses can open branches in Panama, hold equity in State or private-capital 
businesses, and set up new businesses. In conformity with Panamanian trade law, 
there are various types of company of which th e most common is the public limited company.56 
Foreign businesses can also be formed as civil-law partnerships, private foundations, trusts 
or franchises. During the period under review, Law No. 4 of 2009 repealed Law No. 24 
of 1 February 1966 and established a new regulato ry framework for the establishment of private 
limited companies in which limits were no longer imposed in respect of minimum and maximum capital or the maximum number of partners, fo r example. Additionally, there are no limits 
                                               
52 Online Information from the MICI, viewed at: 
http://mici.gob.pa/detalle.php?cid=15&sid=105&id=2598 . 
53 Online information from the OECD, viewed at: 
http://www.oecd.org/ctp/harmful/jurisdictionscommitte dtoimprovingtransparencyandestablishingeffectiveexch
angeofinformationintaxmatters.htm  and from the Directorate-Gene ral of Revenue, viewed at: 
https://www.anip.gob.pa/defaultsecure.asp . 
54 Double taxation: Barbados, Czech Republic, France, Ireland, Israel, Italy, Republic of Korea, 
Luxembourg, Mexico, Netherlands, Portugal, Qata r, Singapore, Spain, United Arab Emirates 
and United Kingdom. Exchange of information in tax matters: Canada, Denmark, Faroe Islands, Finland, 
Greenland, Iceland, Norway, Sweden, and United States. 
55 Law No. 5 of 11 January 2007 and Executive Decree No. 26 of 12 July 2007 contain the list 
of regulated activities subject to pres cribed formalities and of activities exempt from the requirement to submit 
a start-up notification. 
56 Other types of commercial company are: genera l partnerships, cooperatives, limited liability 
companies, limited part nerships and temporary partnerships  or joint venture partnerships. WT/TPR/S/301/Rev.1 • Panama 
 
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  on the interest that partners can earn on thei r contributions, and the requirement to register 
changes in directors and the establishment an d closure of branches has been withdrawn. 
A commercial company must be entered on the Public Register, a procedure that generates payment of an annual fee and other duties; the requ irement to pay an annual registration fee does 
not apply to cooperatives.
57 
2.54.  The Labour Code provides that employers must employ Panamanian nationals. The concept 
of "Panamanian nationals" includes the foreign spouses of Panamanian nationals who have been 
resident in Panama for ten years. The Code limits recruitment of foreigners to 10% of staff or 15% 
in the case of specialist staff. Recruitment of foreign staff requires authorization from the Ministry of Labour. When the authorization expires (maximum five years) the business must replace the foreign worker with a Panamanian worker.
58 Businesses with fewer than ten workers 
are authorized to employ a foreign worker on a temporary basis. Additionally, the Panama Canal 
Authority (PCA) only authorizes the recruitment of foreigners once all means of recruiting Panamanian nationals have been exhausted; if only foreign candidates are available, 
preference goes to those who are married to Panamanian nationals or can prove ten years' 
continuous residence in Panama. The director of the PCA must be a Panamanian national.
59 
2.55.  The restrictions on the recruitment of foreign staff are set out in Panama's WTO Schedule 
of Specific Commitments.60 
 
                                               
57 Law No. 17 of 1 May 1997 and Article 318-A of the Tax Code as amended by Article 1 of Law No. 28 
of 8 May 2012. 
58 Labour Code, Articles 17-18. 
59 Article 14 of Law No. 19 of 11 June 1997. 
60 WTO document S/DCS/W/PAN of 24 January 2003. WT/TPR/S/301/Rev.1 • Panama 
 
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  3  TRADE POLICIES AND PRACTICES, BY MEASURE 
3.1  Overview 3.1.  Panama continued to modernize its customs system throughout the period under review, 
adopting a new law, creating the National Customs Authority (ANA) and updating its computer 
system. Other trade facilitation measures taken by  Panama included the introduction of advance 
rulings and post-clearance controls, the entry into effect of the single window for exports, the creation of an authorized economic operator pr ogramme and the adoption of a regional transit 
scheme. Pursuant to the new customs law, the value of some imports, as determined by ANA, are 
subject to prior determination if there is a justif ied risk, and they must be  accompanied by a sworn 
declaration of value signed by the importer. 
3.2.  In 2013, Panama adopted the Central American Import Tariff, based on the Central American 
Tariff System (SAC), when it joined the Central American Economic Integration 
Subsystem (SIECA). In October 2013, the simple  average of Panama's MFN tariffs was 7.6%. 
The average tariff on agricultural products (WTO definition) remained over double (13.7%) that on 
other products (6.4%). Virtually all import duties are ad valorem. Panama bound all its tariffs at 
an average rate of 23.7% when it became a Memb er of the WTO, although for a large number of 
products the applied rates are higher than the bound rates. Panama has several tariff quotas for 
agricultural products. 
3.3.  Under the free trade and other trade or in tegration agreements signed by Panama and in 
force in late 2013, it applied preferential tariffs to imports from over 20 trading partners in America, Europe and Asia. 
3.4.  There is an Administrative Charge for Customs Services on imports, as well as a fee for using 
the Customs computer system. Imports are also su bject to the Tax on the Transfer of Movable 
Property and the Provision of Services (ITBMS), the Selective Consumption Tax (ISC), and the 
Consumption Tax on Petroleum-Derived Fuels (ICCDP). Panama gives imports national treatment 
when applying domestic taxes, except for fuel mixed with ethanol from abroad, to which a higher rate of ICCDP applies, and imported motor vehicl es, which are subject to a minimum rate of ISC 
that varies according to the age of the vehicle. 
3.5.  Some imports are banned or restricted for sanitary, phytosanitary, health or safety reasons. 
During the review period, Panama pursued its efforts to build up its institutional and technical capacity for the application of sanitary an d phytosanitary (SPS) measures. Nevertheless, 
improvements are still needed in areas such as  risk analysis, training of personnel and the 
establishment of a national SPS committee, inter alia. Panama notified eight SPS measures to the 
WTO between 2007 and 2013, five of them being emergency measures. There have been no 
fundamental changes as regards technical regulati ons. Panama has 88 of these, mostly covering 
food products, but only six have been notified  to the WTO since 2007. Panama has no mutual 
recognition agreements, but does recognize the conformity assessment certificates issued 
by foreign agencies duly accredited by bodies  recognized by international organizations. 
3.6.  Panama has not made frequent use of contingency measures. During the period under 
review, it only conducted one anti-dumping investigation, which concluded without any definitive duties being applied, and another investigation which led to the adoption of safeguard measures 
for a period of one year. In 2009, Panama adop ted regulations containing procedural rules for 
conducting anti-dumping, subsidy and safeguards investigations. 
3.7.  Exports of some marine species, flammable products and weapons are subject to a permit 
or compliance with special formalities. The export of wood in slabs or blocks or simply planed is 
prohibited for environmental reasons and in order to boost national value added. There are no export taxes, except on products manufactured from native woods. Domestic taxes are not 
imposed on exports. 
3.8.  Panama notified the WTO of three export subsidy programmes: the Export Processing 
Zones (ZPE), Official National Industry Regi ster (ROIN), and Tax Credit Certificate (CAT) 
programmes. In 2007, Panama was given an extension until 31 December 2015 to eliminate 
export subsidies granted under the ZPE and ROIN programmes (it did not request an extension for WT/TPR/S/301/Rev.1 • Panama 
 
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  the CAT programme). In order to comply with its WTO commitments, Panama eliminated the CAT 
at the end of 2009; in January 2010, it introduced the Industrial Promotion Certificate to replace 
the ROIN; and in April 2011 approved Law No. 32 on free zones, which repealed the ZPE law, broadened the categories of eligible enterprises and modified the tax regime applicable to them, 
withdrawing the exemption from income tax and the tax on dividends, inter alia. Free zones only 
contribute a limited share of exports, which amounted to 3% of total exports (including re-exports) in 2013. 
3.9.  Moreover, the Colón Free Zone (ZLC) is an important centre for logistics and distribution 
of goods, ranking as the world's second larges t free zone with a volume of trade (imports 
and re-exports) exceeding US$27 billion in 2013, i. e. 66% of Panama's total foreign trade. 
The ZLC's activities slowed down over the past year, however, owing to a number of factors. 
Companies established in the ZLC are given exemption from payment of taxes on: imports, 
re-exports and goods manufacturing, re-export earnings and repatriation of dividends, as well as exemption from other national and provincial taxes. 
3.10.  Panama has other tax and financial incentive programmes to promote the development 
of micro and small enterprises and the establishment of head offices of multinational companies, and to support specific sectors such as agriculture and tourism. 
3.11.  In 2007, a new competition and consumer protection law was adopted (Law No. 45), 
in which the major changes included the introduction of an economic efficiency criterion, the concept of cornering the market as a relative monopolistic practice, a limitation on the time given to collect evidence for judicial hearings, a payment for information scheme and higher fines. 
Although competition policy has been applied more  forcefully since the adoption of Law No. 45, 
a high level of concentration remains 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 (agricultural 
products). In addition, as far as consumer protection policy is concerned, the authorities monitor 
the price of fuels, medicines and goods in the basic basket. The price of public services and utilities 
such as land transport of passengers and rates for the distribution and sale of electricity are also 
regulated. 
3.12.  Panama has notified the WTO that it has no State trading enterprises within the meaning 
of Article XVII of the GATT. Government enterpri ses and semi-public companies operate in public 
service sectors such as airports, ports, generation and distribution of electricity, 
and telecommunications. There have been no major privatizations since 2007. 
3.13.  Panama adopted several laws reforming an d clarifying government procurement legislation 
during the review period. These mostly concern procedural matters, for example, the extension 
of time-limits for submitting bids and speeding up the work of the evaluation commission, all of 
which tend to favour bidders. There still appears to be frequent recourse to special procedures, however. In August 2013, Panama announced its decision not to accede to the WTO Plurilateral 
Agreement on Government Procurement. In some of  the bilateral agreements it has signed with 
trading partners, it has adopted government  procurement commitments, covering also 
procurement by the Panama Canal Authority (ACP). The authorities have announced their intention of continuing to negotiate access to government procurement markets on a bilateral basis. 
3.14.  In 2012, Panama amended its intellectual proper ty legislation in order to bring it up to date 
and harmonize it with its international commitments in that regard. The amendments cover all intellectual property rights (IPRs), extend te rms of protection and amplify administrative 
provisions, provide stronger rules on enforcement and increase the penalties. The import or export 
of counterfeit, altered or imitated products is defined as a crime in the Penal Code, even if they are 
in transit through Panama. WT/TPR/S/301/Rev.1 • Panama 
 
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  3.2  Measures directly affecting imports 
3.2.1  Customs procedures 3.15.  ANA, which is part of the Ministry of  the Economy and Finance (MEF), was set up by 
Decree Law No. 1 of 13 February 2008 as the high est authority in the national customs service.
1 
It is responsible for controlling, monitoring, and overseeing the entry, exit and movement of 
goods, persons and means of transport at Panama's  borders, ports and airports, for the purposes 
of collecting taxes and exercising appropriate cont rols, as well as for preventing, investigating and 
punishing customs violations, drawing up foreign trade statistics and intervening in international 
goods traffic. 
3.16.  Customs activities are governed by the Po litical Constitution, the international treaties 
ratified by Panama, the Tax Code, various laws , decree laws and Cabinet decrees. A new customs 
law was adopted during the period under review, Decree Law No. 1 of 2008, which, in addition to 
creating ANA, regulates customs activities, the various customs regimes applicable to goods and relations between ANA and natural or legal persons involved in the entry, stay and exit of goods in 
Panamanian territory.
2 The scope of this Decree Law covers the whole of Panama's territory, 
including free zones and other special economic zones. The procedures for the various customs regimes (import, export, tax exemptions and special regimes) are laid down in Cabinet Decree 
No. 41 of 11 December 2002. The authorities are planning to update these rules in order to bring 
them into line with Central American customs rules. Panama belongs to the World Customs Organization, but has not formally  adopted the revised Kyoto Convention (1999). 
3.17.  In 2012, Panama signed the Protocol of Incorporation into SIECA, which came into force 
on 6 May 2013.
3 Since then, Panama has adopted the Central American Import Tariff (based on 
the SAC) with a few exceptions; the Central American Uniform Customs Code (CAUCA) and its implementing Regulations (RECAUCA), subject to certain time-limits and conditions (concerning, 
inter alia, customs brokers and appeal of decisions by the Customs); as well as other 
Central American regulations. Panama will ad opt further SIECA instruments by January 2017 
at the latest (section 2.3.2.1.2). 
3.18.  The services of a customs broker must be  used when importing goods, except in those 
cases covered by the law or international treaties signed by Panama. This requirement does not apply to imports of goods whose c.i.f. value does not exceed B 500 (US$500); imports by the 
State; imports shipped to diplomats accredited to Panama; travellers' luggage not exceeding 
B 2,000 (twice a year); transactions covered by the transhipment or storage regimes; and goods 
entering free zones.
4 Customs brokers have to obtain a licence issued by ANA's Director; 
they must be Panamanian citizens and have a degree in customs public administration, in addition 
to other requirements. 
3.19.  Panama does not require preshipment inspection or any similar procedure. 3.20.  All goods entering Panamanian territory require a customs declaration, in which the 
consignee freely states the customs destination or  regime to which the goods will be subject. 
The declaration must be made electronically. A pre-declaration (preliminary declaration) must be drawn up for customs destinations which require prior authorization or licensing by an authority. This is also required when registering the final declaration in the Customs' computer system. 
3.21.  On 1 October 2011, the Integrated Customs Management System (SIGA)
5 came into effect 
to replace the Integrated Foreign Trade System (SICE), with the purpose of streamlining and 
speeding up procedures and the Customs' immediate response capacity. SIGA is an electronic 
platform for exchanging information among trade operators, governmental control bodies and ANA 
and must be used for all customs regimes. International cargo manifests and declarations are submitted through SIGA. It can also be used to obtain the authorizations required by various 
                                               
1 The National Customs Authority replaced  the Directorate-Ge neral of Customs. 
2 Decree Law No. 1 of 2008 repealed Law No. 16 of 29 August 1979, Law No. 41 of 1 July 1996, 
and Articles 58-64 of Law No. 30 of 8 November 1984 (Customs Penal Regime). 
3 The Protocol was incorporated into domestic legislation by Law No. 26 of 17 April 2013. 
4 Articles 42 and 43 of Decree Law No. 1 of 2008. 
5 Cabinet Decree No. 27 of 27 September 2011 and ANA Resolution No. 230 of 29 September 2011. WT/TPR/S/301/Rev.1 • Panama 
 
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  control bodies such as the Ministry of Health (MINSA), the Panamanian Food Safety Authority 
(AUPSA) and the Ministry of Agricultural Development (MIDA). Work is proceeding on linking other competent bodies to SIGA. Tariffs and taxes are paid  at two State banks or at the National Public 
Revenue Authority (ANIP) (formerly the Directorate-General of Revenue). Customs brokers have 
to be registered and in possession of a key for access to SIGA.
6 
3.22.  Panama has a single window based on SIGA, but for the time being it is only operative for 
exports. An Interinstitutional Commission7 is currently working on introducing a Single Window for 
Foreign Trade (VUCE) to be operated by the Minist ry of Trade and Industry (MICI), which will also 
be used for imports and transit traffic. 
3.23.  Before goods arrive at a Panamanian port or when they are being unloaded, the carrier 
must submit the international cargo manifest, through SIGA, giving details of the bills of lading 
covering the cargo being shipped. In order to complete the importation, the customs broker 
(or any customs intermediary) must prepare a pre-declaration (preliminary declaration) and furnish the following documents: the original commercial invoice, bill of lading (air or maritime 
waybill or transport document), the certificate of origin where applicable, and the permit in the 
case of restricted imports (section 3.2). SIGA processes this information automatically and only accepts registration of the definitive declaration when all these requirements have been met. 
Pursuant to the legislation, clearance can be completed (including payment of duty) before the 
goods arrive.
8 
3.24.  Goods imported by post must be accompan ied by the commercial invoice and, if their value 
is B 100 to B 500, clearance is simplified using a "Postal Package" form; if they are worth more 
than B 500, they are subject to general customs procedures. There is an accelerated customs 
clearance system for express consignments, which allows courier operators to use a simplified import procedure. By submitting the express consignment manifest pre-registered with SIGA, 
a person legally authorized as a "courier" may obtain the immediate release of certain goods of a 
value not exceeding B 100 without further processing, and for example, documents, correspondence and business papers.
9 
3.25.  There is also a system for clearance by posting a bond, which is available for temporary 
imports, urgent imports or perishable goods, disputed imports or imports lacking certain documents, as well as those covered by a spec ial partial or total exemption regime. The bond 
guarantees payment of the tariffs and taxes owing and may cover several import transactions or a 
single transaction/customs destination.
10 
3.26.  The legislation provides that the Customs is to use risk analysis to identify persons or goods 
that are to be made subject to control (inspe ction) and to determine the scope of the latter.11 
ANA has an Interinstitutional Risk Analysis Office responsible for preparing risk profiles and 
conducting pre-clearance, in-clearance and post-clearance controls. For in-clearance controls, a software tool is used to determine the level of inspection to be applied to the goods, taking into 
account safety criteria, the existence of non-economic prohibitions, trade treaties and tariff 
classification. When Panama assessed the country 's needs in the context of the multilateral 
negotiations on trade facilitation, the authorities recognized that more experience was necessary in developing and detecting risk profiles, as well as technology and equipment to improve their 
management. According to another evaluation, compliance with risk management procedures 
by the regional Customs needed to be reinforced.
12 
                                               
6 The forms for registering with SIGA are available on the SIGA website at: 
http://www.ana.gob.pa/index.php?option=com_content&view=article&id=456&Itemid=140 . 
7 The Commission was set up by Executive Decree No. 130 of 14 August 2012 and is composed of the 
Ministry of Trade and Industry, ANA, the ZL C and the Government Innovation Authority. 
8 Cabinet Decree No. 3 of 7 February 2001 and Decree Law No. 1 of 2008 (Article 91). 
9 Articles 224-248 of Cabinet Decree No. 41 of 2002 and Article 36 of Decree Law No. 1 of 2008. 
For further information on this method , view online information from ANA at: 
http://www.ana.gob.pa/index.php?option=com_k2&vi ew=item&id=121%3Adespacho-aduanero-inmediato-de-
envios-de-expresos&Itemid=197  [July 2013]. 
10 Articles 129-132 of Decree Law No. 1 of 2008 and Articles 266-284 of Cabinet Decree No. 41 of 2002. 
11 Article 27 of Cabinet Decree No. 27 of 27 September 2011. 
12 USAID (2009). WT/TPR/S/301/Rev.1 • Panama 
 
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  3.27.  The authorities have indicated that the average time needed to clear goods is two hours 
within SIGA and 48 hours up to the release of the goods from the Customs, provided that all the necessary formalities and authorizations have been complied with. Regarding the application of the various forms of control, the authorities have said that, in September 2013, 87.98% 
of declarations went through the green channel (with no inspection); 1.66% through the orange 
channel (inspection of documents) and 10. 36% through the red channel (physical and 
documentary inspection). Close to 60% of the latter  were determined on the basis of risk profiles 
and the remainder were chosen at random. 
3.28.  Goods in international transit through the Re public of Panama are not inspected, except in 
special cases in which the Customs exercises its powers or in order to comply with an order from a judicial authority other than the Customs.
13 Under the Panama Canal Neutrality Treaty, the transit 
of goods through the Panama Canal has become a sort of international right of way, involving 
national security controls but no controls for customs purposes. Transit does not generate any customs formalities. 
3.29.  ANA has the power to inspect and/or detain goods in transit (even through the 
Panama Canal) under any customs regime if there is any suspicion that the goods infringe intellectual property rights.
14 More specifically, Law No. 1 of 2008 (Article 100) provides that ANA 
may suspend or prevent customs clearance, and wi thhold goods presumed to infringe intellectual 
property rights granted in Panama or under international agreements signed by Panama. 
3.30.  Entry of goods into free zones, including the ZLC, is not regarded as being importation into 
Panamanian customs territory and is subject to a special customs regime (section 3.3.4). In order 
to enter goods into the ZLC that have not undergone customs clearance, a Commercial Activity 
Form authorized by the ZLC's Trade Department has to  be furnished, for which a copy of the bill of 
lading and a duly attested copy of the commercial invoice are required.15 
3.31.  The legislation provides for an administrative procedure for settling disputes relating 
to technical disagreements regarding valuation (examination of the goods), the content of shipments, the origin, the weight, the quantity, the tariff classification or the value of the goods.
16 
Complaints are made in the first instance to the Regional Administrator, who may confirm the 
valuation or modify it. The decisions of the Regional Administrator may be contested before the MEF's Tariff Commission
17, whose ruling is final and exhausts government channels. Decisions on 
tariff classification have general effect and must be made available to the public, whereas 
decisions on any other matters only have effect on the actual subject of the decisions. ANA may 
authorize the release of goods that are the subject of  a dispute, provided that a bond is posted to 
cover any duties, taxes or charges applicable. 
3.32.  Taking as a basis ANA's Strategic Plan for 2011-2015, Panama has adopted measures 
to update its customs legislation and system with a view to facilitating international trade and ensuring the security of the logistics chain. In addition to applying SIGA, these measures 
include implementation of advance decisions and post-clearance controls, partial application of the 
VUCE, an authorized economic operator programme that is currently being developed, the use of non-intrusive inspection equipment for cargo, improvements to the infrastructure and training 
of customs personnel, together with use of a traceability system for cargo in regional transit. 
3.33.  Decree Law No. 1 of 2008 (Article 89) provides  that any person with a direct or legitimate 
interest may pose a question in advance in writing or electronically to ANA with regard to the application of technical regulations, the tariffs in force and valuation issues. ANA's opinion 
is binding, although an interested party has a specific period in which to contest a decision on 
valuation. ANA's decisions and the outcome of the complaint concerning valuation must be made 
                                               
13 Article 152 of Cabinet Decree No. 41 of 11 December 2002. 
14 Article 4 of Executive Decree No. 123 of 26 November 1996. 
15 Cabinet Decree No. 6 of 15 March 2002 on control of goods that have not undergone customs 
clearance. 
16 Title XII of Decree Law No. 1 of 2008. 
17 This is composed of: a customs official, the Minist er of Trade and Industry, the Director of the Price 
Control Office, a member of the Office of the Comptroller-General of  the Republic, a representative of the 
business sector and one from the industrial sector, and a member of the second-instance court for valuation 
attached to the MEF. WT/TPR/S/301/Rev.1 • Panama 
 
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  available to the public. Work is currently procee ding on a plan to publish decisions and enable 
parties to interact on a website. 
3.34.  Legislation allows ANA to verify the accuracy of the declaration and compliance with 
customs and foreign trade formalities after clearance. It has five years after acceptance of the 
declaration in which to conduct the verification. The Authority may require payment of the duties 
and taxes not paid, including interest, and may also initiate relevant judicial proceedings.18 
The customs authorities have indicated that 466 post-clearance inspections were conducted 
between 2007 and 31 October 2013. 
3.35.  Panama has drawn up a regulatory framewor k for the application of an Authorized Economic 
Operator (AEO) system, based on the World Customs Organization's model. Operators who obtain their AEO certificate will be given advantages such as: less stringent physical and documentary 
inspections; priority for controls; opportunity to conduct inspections on their own premises; 
prior notification of inspections; a guarantee stamp accrediting them; reduction in time and cost; and recognition in other countries that have the same programme. Pursuant to 
Executive Decree No. 998 of 2 October 2013, the pilot phase of the AEO programme has been 
introduced and six operators have been accredited; the authorities have indicated that regulations on security status still have to be worked out. The concept and th e requirements of the 
AEO programme are set out in the CAUCA and the RECAUCA. 
3.36.  Pursuant to Cabinet Decree No. 12 of 1 May 2012, the digitalized Mesoamerican 
International Transit (TIM) system came into effect, enabling international transit cargo to be traced throughout Central America so as to lessen waiting time at border crossings. Consideration 
is being given to modifying the TIM so as to improve customs controls in the region. 
3.37.  During the review period, Panama's Customs pursued its efforts to combat piracy and 
counterfeit goods at the country's borders, for which it received recognition from the WCO 
in August 2012. According to data provided by ANA, between 2009 and 2013, the c.i.f. value 
of goods withheld because of alleged trademark counterfeiting amounted to B 198.1 million; and from November 2009 to December 2013, 1,803 containers were detained. 
3.2.2  Customs valuation 
3.38.  The WTO Customs Valuation Agreement is an integral part of Law No. 23 of 15 July 1997 by 
which Panama approved the Marrakesh Agreement Establishing the World Trade Organization. Panama started to implement the Customs Valuation Agreement (CVA) in full in January 1997 
pursuant to Cabinet Decree No. 26 of 1 Augu st 1996 and the resolutions implementing it.
19 
Moreover, Decree Law No. 1 of 2008 (Article 109) provides that the determination of customs 
value is to be governed by the CVA and its annexes. 
3.39.  Pursuant to the CVA, in Panama customs valuation of imported goods is first and foremost 
based on the transaction value. If it is necessary to use alternative methods of valuation, Panama also follows the provisions in the CVA. The authorities have indicated that the transaction value 
applies to 99% of declarations. 
3.40.  Decree Law No. 1 of 2008 empowers ANA to  determine that some imports are subject to 
mandatory consultation with the Valuation Department prior to clearance if there is a justified risk because of their source, origin, value, nature or condition. Such goods must be valued according 
to objective and quantifiable criteria following general accounting practices and in conformity with 
the CVA, Cabinet Decree No. 26 of 1 August 199 6 and the general regulations issued by the 
customs authority.
20 Under Resolution No. 230 of 29 September 2011, ANA introduced a "Sworn 
Declaration of Value" form for goods subject to mandatory prior consultation.21 This declaration is 
an instrument signed by the importer or his legal representative in which he declares, on oath, the existence and terms of a commercial transaction so that controls may be conducted prior to 
clearance, when there is a justified risk. The fo llowing are some of the goods determined by ANA 
to be subject to mandatory prior consultation regarding their value: new and used automobiles; 
                                               
18 Articles 117 and 133-136 of Decree Law No. 1 of 2008. 
19 Resolutions No. 704-04-017 of 10 January 1997 and No. 704-04-532 of 17 September 1997. 
20 Articles 90 and 110 of Decree Law No. 1 of 2008. 
21 The form appears in Annex 2 to Resolution No. 230 of 29 September 2011. WT/TPR/S/301/Rev.1 • Panama 
 
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  new and used boats and planes; new and used heavy-duty equipment; machinery for the mining 
industry and new and used self-propelled machinery; tiles and clay roof tiles; used tyres; used clothing; toilet paper, paper towels, serv iettes, exercise books, notebooks and folders; 
edible oil and onions.
22 
3.41.  Panama notified its customs legislation to the WTO and replied to the checklist of issues on 
enforcement and administration of the CVA in 1998.23 It also notified that, since October 1997, 
it had applied the CVA's decisions on the treatment of interest charges in the customs value 
of imported goods and the valuation of carrier media bearing software for data-processing 
equipment.24 
3.42.  The legislation includes provisions on disagreement regarding the customs value of goods.25 
Where ANA has reason to doubt the declared value before accepting the declaration, it may 
request further information from the declarant. If ANA continues to entertain reasonable doubts 
after it has received this information, it may decide that the customs value of the goods cannot be determined using the transaction value and informs the declarant in writing of the reasons for its 
decision, which is binding. The importer has the right to lodge an appeal, without any penalty, 
within a period of three working days of the notification of the decision and before the customs declaration is accepted. If a first-instance appeal has been made to the Regional Administrator, 
a second-instance appeal may be made to the Tariff Commission within eight working days 
following notification of the ruling given in the first instance. The decision by the Tariff Commission exhausts government channels and so the next recourse would be through administrative litigation channels. 
3.43.  If an import declaration has already been  submitted and during clearance of the goods the 
customs official has reasonable doubts concerning the declared value, the documents are forwarded to the Regional Administrator, who has to take a decision within a period not exceeding 
30 days, indicating whether or not there is a di screpancy. Once the decision has been notified, 
the interested party may appeal to the Tariff Commission within eight days. In any event, if the importer manages to dispel the reasonable doubt, ANA notifies the interested party of acceptance 
of the declared value. If, on the other hand, it is determined that the importer has falsified the 
information, ANA may order the initiation of an investigation into a customs offence. According to data from ANA, between January 2009 and October 2013 there were 33 complaints against decisions by the Customs with regard to the valu e of goods, of which three went forward to the 
Tariff Commission. Five of these cases concerned the value of used vehicles. 
3.44.  By Resolution No. 072 of 10 September 200 9, ANA provisionally suspended the application 
of Resolutions No. 704-04-528 of 1 October 1997 and No. 704-04-019 of 10 January 1997, which 
set out the provisions for determining the customs value of used goods in general and of used 
vehicles, respectively. Consequently, Cabinet Decr ee No. 26 of 1 August 1996 currently applies to 
both new and used goods. The authorities have indicated that, in 2012, 100% of new vehicles 
and 99.7% of used vehicles were valued according to the transaction value. They stated, however, 
that some cases of alleged under-invoicing of used vehicles were being investigated. 
3.2.3  Rules of origin 3.45.  Panama has no non-preferential rules of origin. 
3.46.  Panama applies preferential rules of origin  in the context of the trade agreements it has 
signed (section 2.3.2). Below are described some general aspects of the rules of origin in the agreements which came into force from 2007 onwards, namely: the agreement with Chile; 
the bilateral protocols with Costa Rica, Honduras, Guatemala and Nicaragua under the Central 
America-Panama Free Trade Agreement
26; the agreements with Peru, the United States of America 
and Canada, and the Association Agreement between the European Union and Central America, 
                                               
22 Resolution No. 230 of 2011, amending Resolution No. 704-04-017 of 10 January 1997. 
23 WTO documents G/VAL/N/1/ PAN/1 and G/VAL/N/2/PAN/1, both of 8 October 1998. 
24 WTO document G/VAL/N/3/PAN/1 of 8 October 1998. 
25 Articles 145-147 of Decree Law No. 1 of 2008. 
26 There are provisions on rules of origin in the Central America-Panama FTA, both in the Agreement 
itself, which applies to all Central American countries belonging to the CACM and Panama, and in the bilateral protocols, which only apply to the countries which have signed each protocol. WT/TPR/S/301/Rev.1 • Panama 
 
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  whose trade chapter came into effect for Honduras, Nicaragua and Panama on 1 August 2013.27 
Panama has notified the WTO of the bilateral rules of origin applying to Nicaragua and Guatemala under the Central America-Panama FTA
28 and the rules of origin in the Association Agreement with 
the EU.29 Furthermore, when its Protocol of Incorporation into SIECA came into force (May 2013), 
Panama adopted the Central American Regulations on the Origin of Goods and their Annex, 
with some exceptions30 and undertook to negotiate with the other countries belonging to SIECA, 
within a period not exceeding six months as of the entry into force of the Protocol, 
the harmonization of the specific rules of origin whose application had been temporarily 
suspended. 
3.47.  In general, the trade agreements that have entered into force for Panama since 2007 have 
similar rules of origin.31 Specific rules of origin vary, however, in each agreement or bilateral 
protocol, and for different products, in order to take into account the special features 
of the countries party to each agreement. Textiles and clothing are usually the subject of special rules of origin. 
3.48.  In the majority of agreements signed by Pa nama, a good is deemed to be originating if it 
meets one of the following criteria: (i) it has been wholly obtained or produced in the territory of one or more of the parties; (ii) it has been produced in one or more parties from non-originating 
materials, with a change in tariff classification or a regional content value, or a combination 
of the two; or (iii) it has been produced in one or more parties exclusively from originating materials. In the Agreement between Central America and the EU, the following are the general criteria conferring origin: the product must have  been wholly obtained in one of the parties; 
the product has been obtained in one of the parties incorporating materials not wholly obtained 
in one of the parties provided that these materials have been sufficiently worked or processed in one of the parties. 
3.49.  In almost all the agreements (except that with the EU), the change in tariff classification 
criterion, which usually requires a change in tariff heading, applies. In some cases, however, a change in tariff chapter is required (for agricultural, mineral and other products) or a change 
in tariff subheading (coffee, tea, base metals). 
3 . 5 0 .   S o m e  p r o d u c t s  h a v e  t o  c o m p l y  w i t h  a minimum value of regi onal content (RCV), 
usually 30% to 45%, although in the bilateral protocols between Panama and some Central American countries, the RCV is higher and may reach as much as 85%. It is either applied 
as a single criterion or combined with a change in tariff classification. Generally, two formulas are 
used to calculate the RCV: the build-down method (the value of non-originating materials is deducted from the adjusted value of the product)  or the build-up method (obtained by adding the 
value of originating materials). A third is the net cost method, used to calculate the RCV 
of automobile parts and components (for exam ple, in the agreement between Panama and the 
United States). 
3.51.  All the agreements mentioned contain a de minimis rule which allows a non-originating good 
to be deemed as originating if the value of all the non-originating materials of which it is composed do not exceed 10% of the value of the good. For textiles and clothing, the weight of non-originating yarns and fibres must not exceed 10% of the material's weight. 
3.52.  The agreements allow for cumulation of or igin between the parties and, in some cases, 
also in respect of third countries with which each party has a trade agreement. The agreement between Panama and Peru, for example, not only allows bilateral cumulation but also cumulation 
in respect of materials from Central American countries (Costa Rica, El Salvador, Guatemala and 
Honduras), provided that Peru has an agreement in force with those countries, and that the specific rules of origin in the Panama-Peru free trade agreement are observed. There are also 
                                               
27 For the agreements which came into force prior to 2007, see WTO (2007). 
28 WTO documents G/RO/N/92 of 9 April 2013 and G/RO/N/95 of 16 May 2013. 
29 WTO document G/RO/N/93 of 9 April 2013. 
30 The exceptions are set out in Annex 6(a) to the Prot ocol. For these, the bilateral rules of origin under 
the FTA between Central America an d Panama and its bilateral protoc ols will continue to apply. 
31 The chapters and annexes on rules of origin in these agreements and protocols can be viewed on the 
website of Panama's MICI at: http://www.mici.gob.pa/sub categoria.php?cid=15&sid=57 . WT/TPR/S/301/Rev.1 • Panama 
 
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  conditions for applying cumulation of origin in the textiles/clothing sector; cumulation does not 
apply to materials excluded  from tariff reduction. 
3.53.  The provisions on administering rules of origin (verification, certification, etc.) are usually 
included in the chapters on rules of origin and customs procedures. In Panama's agreements with 
Chile, Central America, Canada, the United States and Singapore, certificates of origin are 
completed and signed by the exporter and submitted at the time of the import declaration, without 
any need for endorsement by an official body. Th e agreement with the United States allows the 
importer to issue the certificate of origin for a product which he himself is going to import 
and provides for the adoption of electronic certif icates of origin. In the agreements with Peru 
and the EU (as well as in those with Colombia, the Dominican Republic and Chinese Taipei, in force before 2007), the certificate of origin must be issued by an office authorized by the 
respective government. In Panama, this task falls to the Vice-Ministry of Foreign Trade 
(VICOMEX), which bases itself on a determination of origin from the MICI's Directorate-General of Industry. 
3.54.  It is ANA's responsibility to conduct investigations into the control and verification of origin, 
in coordination with the MICI's National Directorate for the Administration of International Trade Agreements and Trade Protection. ANA's tasks in relation to verification of origin include 
monitoring free zones so as to ensure that goods in transit there do not undergo further 
processing or operations other than unloading, reloading or any other operation needed for their conservation or transport to other countries. 
3.2.4  Tariffs 
3.2.4.1  Structure and levels 
3.55.  Panama gives at least most-favoured-nati on (MFN) treatment to all its trading partners, 
and does not apply seasonal, temporary or variable tariffs.  
3.56.  Since its integration into SIECA in May 2013, Panama has adopted the Central American 
Import Tariff, with some exceptions. This follows the SAC for the classification of goods, which in turn is based on the Harmonized Commodity Description and Coding System (HS). 
The Fifth Amendment to the HS was incorporated into the SAC on 1 January 2012.
32 
3.57.  At the end of 2013, Panama's tariff was composed of 8,881 eight-digit tariff lines, of which 
99.7% were ad valorem33, and applied to the c.i.f. value of the goods (Table 3.1). The arithmetic 
average of the applied MFN tariffs was 7.6%, lowe r than the 8.5% applied in 2007. This situation 
can be explained by the lowering of tariffs on cert ain products such as food, clothing, vehicles and 
products covered by the WTO Information Techno logy Agreement. The percentage of duty-free 
lines rose to 34.5% in 2013 and the percentage  of tariff lines subject to rates exceeding 15% 
(international tariff peaks) fell to 1.5%.  
Table 3.1 Structure of MFN tariffs, 2007 and 2013 
(%) 
 2007 
(HS02) 2013 
(HS12) 
Total number of lines 8,918 8,881 
Non-ad valorem  tariffs (% of tariff lines) 0.0 0.3 
Non-ad valorem  tariffs with no AVEs (% of tariff lines) 0.0 0.3 
Tariff quotas (% of tariff lines) 0.8 0.7 
Duty-free tariff lines (% of tariff lines) 29.8 34.5 
Average tariff for dutiable lines (%) 12.1 11.6 
Arithmetic average 8.5 7.6 
Agricultural products 15.1 13.7 
Non-agricultural products (including petroleum) 7.3 6.4 
Domestic tariff "peaks" (% of tariff lines)a 1.5 1.4 
International tariff "peaks" (% of tariff lines)b 2,3 1,5 
                                               
32 Resolution No. 263-2011 of 27 July 2011 of SIECA's Council of Ministers for Economic 
Integration (COMIECO). 
33 Of the tariff lines, 0.3% corresponding to boats (heading 89.03) are subject to specific tariffs 
pursuant to Cabinet Decree No. 34 of 11 September 2012. WT/TPR/S/301/Rev.1 • Panama 
 
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   2007 
(HS02) 2013 
(HS12) 
Overall standard deviation of applied rates 10.2 10.9 
"Nuisance" applied rates (% of tariff lines)c 0.1 0.1 
Bound tariff lines (% of tariff lines) 100.0 100.0 
a Domestic tariff peaks are defined as those exceed ing three times the overall simple average applied 
rate. 
b International tariff peaks are defined as those exceeding 15%. 
c "Nuisance" rates are those greater than zero but less than or equal to 2%. 
Source: WTO Secretariat calculations, based on data provided by the authorities. 
3.58.  Since the previous review, Panama has brought the number of tariff rates down 
from 37 to 29, ranging from 0 to 260%. Most of the tariff headings are to be found in the 1% to 10% range, followed by duty-free lines and lines subject to tariffs that range from over 10% 
to 20% (Chart 3.1). 
3.59.  The products that receive the highest tariff protection are: fresh, chilled and frozen poultry 
cuts (260%), milk and cream products (155%), cane sugar (144%) and whey (120%). In all, 18 tariff lines exceed 100%. 
3.60.  Although the average tariff on agricultural pr oducts (WTO definition) has decreased, it is still 
two times higher (13.7%) than for other products (6.4%). The groups of agricultural products with the highest average tariffs are: dairy produce (36.4%), animals and animal products (24.4%), 
sugar and confectionery (23.5%), and coffee and tea (15.9%). The average tariff on cereals fell 
during the period under review from 23.7% to  10%. The non-agricultural products with the 
highest average tariff include fish and fish products (12.5%) and clothing (10.7%) (Table 3.2). 
Chart 3.1 Frequency distribution of MFN tariff rates, 2013 
(34.5%)(40.4%)
(23.5%)
(1.4%)(0.3%)
05001,0001,5002,0002,5003,0003,5004,000Number of lines
non ad valorem 
tariffsDuty Free >0-10 >10-20 >20 
Source: WTO Secretariat calculations, based on data provided by the authorities. WT/TPR/S/301/Rev.1 • Panama 
 
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  Table 3.2 Summary of the MFN tariff, 2013 
 MFN Average 
bound 
tariff Number 
of lines Average Range Duty-free 
tariff lines Coefficient 
of variation 
Product description  (%) (%) (% of tariff 
lines) (CV) (%) 
Total 8,881 7.6 0-260  34.5 1.4 22.9 
By WTO category       
Agricultural products 1,419 13.7 0-260  23.5 1.6 30.3 
Animals and animal 
products 205 24.4 0-260  12.2 1.8 42.8 
Dairy produce 74 36.4 0-155  2.7 1.0 47.7 
Fruit, vegetables and 
garden produce 399 10.6 0-81 22.6 0.8 27.3 
Coffee and tea 35 15.9  0-54 11.4 0.9 28.7  
Cereals and cereal 
preparations 200 10.0 0-90 30.0 1.4 24.8 
Oilseeds, fats and oils and 
their products 122 8.1  0-30 32.0 0.8 24.1  
Sugar and confectionery 39 23.5 0-144  17.9 1.5 38.1 
Beverages, alcoholic 
beverages and tobacco 131 11.1 0-30 14.5 0.5 29.7 
Cotton 5 0.0 0 100.0  0.0 10.0 
Other agricultural products 
n.e.s. 209 7.6  0-15 39.2 0.9 25.9  
Non-agricultural products 
(including petroleum) 7,462 6.4 0-81 36.6 0.9 21.5 
Non-agricultural products 
(excluding petroleum)  7,431 6.4  0-81 36.5 0.9 21.5  
Fish and fish products 311 12.5 0-15 6.1 0.3 18.7 
Mineral and metal 
products 1,422 7.6  0-81 33.5 0.9 26.3  
Chemicals and 
photographic products  2.5 0-15 65.0 1.5 6.8 
Wood, wood pulp, paper 
and furniture 606 8.1  0-15 33.2 0.8 26.7  
Textiles 814 5.0 0-15 57.1 1.2 28.3 
Clothing 441 10.7  0-15 0.9 0.2 29.6  
Leather, rubber, footwear 
and travel articles 329 8.7 0-15 20.1 0.7 25.6 
Non-electrical machinery 667 4.2  0-15 23.2 1.0 23.5  
Electrical machinery 376 5.9 0-15 29.5 0.9 18.6 
Transport equipment 323 5.6  0-15 49.2 1.2 21.1  
Non-agricultural products 
n.e.s. 640 9.5 0-15 12.0 0.6 24.9 
Petroleum 31 4.2  0-30 64.5 1.8 27.7  
By HS:       
HS 01-24 1,635 13.9  0-260  19.0 1.5 28.4  
HS 25-97 7,246 6.2 0-81 38.0 1.0 21.6 
By HS section       
01 Live animals and animal 
products 540 20.0 0-260  7.0 1.5 31.0 
02 Vegetable products 463 9.9  0-90 34.6 1.2 27.2  
03 Fats and oils 72 8.6 0-30 27.8 0.7 26.7 
04 Prepared foodstuffs, etc. 560 12.0  0-144  16.4 1.1 27.1  
05 Mineral products 200 6.8 0-81 43.5 1.4 28.5 
06 Products of the chemical 
or allied industries 1,333 2.4  0-15 66.3 1.6 7.0  
07 Plastics and rubber 413 4.2 0-15 52.8 1.3 15.3 
08 Hides and skins 113 11.8  0-15 3.5 0.3 30.0  
09 Wood and articles of 
wood 179 7.3 0-15 35.2 0.8 28.8 
10 Wood pulp, paper, etc. 378 7.9  0-15 36.8 0.8 25.8  
11 Textiles and textile 
articles 1,211 6.9 0-15 38.2 0.8 28.8 
12 Footwear, hats and other 
headgear 154 9.8  0-15 6.5 0.5 21.9  
13 Articles of stone 285 9.1 0-15 15.4 0.5 26.3 WT/TPR/S/301/Rev.1 • Panama 
 
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   MFN Average 
bound 
tariff Number 
of lines Average Range Duty-free 
tariff lines Coefficient 
of variation 
Product description  (%) (%) (% of tariff 
lines) (CV) (%) 
14 Precious stones, etc. 66 7.2  0-15 36.4 0.8 28.1  
15 Base metals and articles 
of base metal 898 7.4 0-15 35.7 0.8 26.7 
16 Machinery and 
mechanical appliances 1,086 4.8  0-15 27.0 1.0 21.1  
17 Transport equipment 338 5.9 0-15 47.0 1.1 21.3 
18 Precision instruments 287 9.0  0-15 12.5 0.6 24.2  
19 Arms and ammunition 24 14.6 10-15  0.0 0.1 30.0 
20 Miscellaneous 
manufactured articles 273 10.9  0-15 1.1 0.4 27.9  
21 Works of art, etc. 8 6.9 0-15 50.0 1.0 29.4 
By stage of processing       
First stage of processing 948 10.0 0-90 28.6 1.0 25.6 
Semi-processed products 2,536 3.9  0-144  65.0 1.9 18.7  
Fully processe d products 5,397 8.9 0-260  21.2 1.3 24.4 
Source: WTO Secretariat estimates, based on data provided by the authorities. 
3.61.  Panama's legislation prescribes that the Tariff Commission is responsible for technical 
analysis of proposed changes to import tari ffs and, where applicable, for recommending the 
necessary amendments to the tariff. The MEF's Di rectorate of Government Policy, for its part, 
undertakes a financial examination of any proposed tariff reform in order to determine what fiscal 
sacrifice it entails. The proposal is then submitted to the President's Cabinet Council, which takes a decision. Since Panama joined SIECA in May 2013 it  has been the responsibility of the Council 
of Ministers for Economic Integration (COMIECO ) to decide on amendments to the Central 
American Import Tariff. 
3.62.  Panama applies tariff quotas to several agricultural products in line with its WTO 
commitments. The duties applied within these quot as are 3% or 15%, while out-of-quota rates 
range from 15% to 260% (section 4.1). 
3.2.4.2  Tariff bindings 3.63.  Panama bound all its tariffs when it became a Member of the WTO. There are 46 levels 
ranging from 0% to 260% in the bound tariffs. The average final bound rates are: 23.7% for all 
products, 28.3% for agricultural products (WTO definition) and 22.9% for non-agricultural products. Between 2007 and 2011, Panama continued with its programme of linear reductions in 
the bound rates, covering 179 tariff lines for produc ts not produced in Panama and in general use. 
3.64.  For those headings that are strictly comparable, in other words, identical in the HS 2007 
version used in the Revised Tariff Schedule containing Panama's bound tariffs and the HS 2012 version of applied tariffs, the WTO Secretariat found 59 products where it would seem that the 
applied rate exceeds the bound rate (Table A3.1). The Panamanian authorities acknowledge this 
situation and have indicated that they will take the necessary steps to resolve this issue promptly. 
3.65.  In May 2012, Panama launched procedures under Article XVIII:5 of the GATT 1994 in order 
to make certain changes to its Schedule of Tariff Concessions CXLI in relation to maize 
and tomatoes. The renegotiation procedure co ncluded at the end of December 2012 and, 
as WTO Members did not put forward any objections, the amendments were approved with effect 
from 29 July 2013. These consisted of eliminating the tariff quota for maize and, for tomatoes, 
a reduction in the applicable in-quota rate from 15% to 0%.
34 
3.2.4.3  Tariff concessions 3.66.  Customs duty may be waived only if this is covered by a legal provision in force, 
an international agreement or a contract entered into by the State. Furthermore, 
                                               
34 WTO document WTO/Let/891 of 18 September 2013. WT/TPR/S/301/Rev.1 • Panama 
 
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  the Cabinet Council, in exercise of its constitutional powers, has the power to decide on general 
or specific, total or partial, reductions in such duty. 
3.67.  Pursuant to Decree Law No. 1 of 2008, th e following are exempt from payment of import 
duty: imports by the State, donations to the non- profit-making private sector intended to cover 
relief, welfare and education services; imports covered by international treaties or economic 
integration agreements; imports by diplomats accredited to Panama; educational material for teaching; medical equipment and instruments for hospitals; articles to be used to conduct 
religious activities; equipment for use by the police;  and imports of social interest as determined 
by the Cabinet Council. Imports intended for fair s or exhibitions are also  exempt from payment 
of import duty. 
3.68.  Customs duty is also waived on imports of  goods that have been exported or re-exported 
temporarily, provided that they have not undergone any transformation, processing or repair 
abroad.
35 Imports intended for special customs regimes such as free zones (section 3.3.4) 
or duty-free shops are also exempt  from payment of customs duty. 
3.2.4.4  Preferential tariffs 
3.69.  Under its free trade agreements and other trade agreements in force, at the end of 2013 
Panama applied preferential tariffs on imports from countries belonging to SIECA (Costa Rica, 
El Salvador, Guatemala, Honduras and Nicaragua), Canada, Chile, Chinese Taipei, the Dominican 
Republic (under a partial scope agreement), the European Union, Peru, Singapore, and the United States of America (Table 3.3 and Table A3.2). In  addition, within the Latin American Integration 
Association (LAIA), of which it has been a member since 2012, Panama granted preferential tariffs 
to Argentina, the Plurinational State of Bolivi a, Cuba, Ecuador, Mexico, Paraguay and Uruguay 
(section 2.3.2.1.1).
36 
Table 3.3 Summary of Panama’s preferenti al tariffs under certain agreements, 2013a 
(Arithmetic average, %) 
  WTO HS (Chapter) 
 
Total Agricultural 
products Non-agricultural 
products 
(including petroleum) 01-24 24-25 
MFN 7.6 13.7 6.4 13.9 6.2 
SIECA      
Costa Rica 1.1 4.2 0.6 3.7 0.6 
El Salvador 1.9 6.3 1.0 5.5 1.1 
Guatemala 1.5 5.6 0.7 4.9 0.7 
Honduras 2.2 6.2 1.4 5.2 1.5 
Nicaragua 1.4 4.7 0.8 4.1 0.8 
Canada 3.2 9.7 2.0 8.2 2.1 
United States 2.7 6.5 1.9 5.6 2.0 
Peru 3.9 9.2 2.8 8.1 2.9 
Chinese Taipei  1.1 6.3 0.1 5.6 0.1 
European Union 4.8 10.4 3.8 10.6 3.5 
Chileb 2.2 6.7 1.4 6.4 1.4 
Singaporeb 1.7 7.2 0.6 6.9 0.6 
a In order to compare the tariff rates, the applied MFN rate for 2013 was used as a basis, except for 
Chile and Singapore. 
b Given that the tariff schedules of Singapore an d Chile are based on the HS 2002 and MFN and the 
other agreements are based on HS 2012, the figures for Singapore and Chile are not strictly comparable. 
Note: The preferences granted by Panama under LAIA  and those granted to the Dominican Republic are 
not included. 
Source: WTO Secretariat estimates, based on data provided by the authorities. 
                                               
35 Article 246 of Cabinet Decree No. 41 of 11 December 2002. 
36 The preferential tariffs for a further five countrie s within the LAIA framework had not yet come into 
force at the time of writing (April 2014). WT/TPR/S/301/Rev.1 • Panama 
 
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  3.2.5  Other import charges and taxes affecting imports 
3.70.  Imports are subject to an Administrative  Charge for Customs Services (TASA) amounting 
to B 100 (increased from B 70 by Cabinet Decree No. 5 of 2014) for each customs declaration covering goods imports with a total c.i.f. value of B 2,000 or more. The TASA is collected by ANA. 
There is also a charge of B 3.00 per declaration for use of the customs computer system. 
3.71.  In the same way as domestic products, the following indirect taxes are imposed on imports: 
the ITBMS and the ISC. The ICCDP applies at a different rate to fuel mixed with ethanol imported 
from abroad (see paragraph 3.79 below). 
3.72.  The ITBMS is a value added sales tax and applies to imported goods, products sold and 
services provided in Panama. For products, the tax base is the price on the invoice, including all costs charged to the buyer, while for services it is the price agreed for providing the service. 
The tax base for imports is the c.i.f. price, pl us the tariff and other customs taxes and charges 
imposed on imports. The ITBMS on imports is paid at the time the declaration is submitted and the 
duty paid. The general rate for the ITBMS is 7% (it rose by 5% on 1 July 2010).
37 Higher rates 
apply to alcoholic beverages (10%), cigarettes and other tobacco products (15%) and hotel and 
accommodation services (10%). Moreover, since 1 September 2013, a 15% ITBMS % has applied to pure ethyl alcohol and absolute alcohol to be used to produce fuel.
38 The tax on fuel 
consumption for petrol and diesel fuel containing bioethanol has also been increased. 
3.73.  Some goods and services are exempt from the ITBMS, for example, agricultural and food 
products, crude oil and its byproducts, pharmaceuticals, the transfer of goods and services within free and customs zones, health and education services, the generation, transmission and 
distribution of electricity, freight, transport of freight, air, maritime and land transport 
of passengers, loading, unloading and transfer an d auxiliary loading services in ports, together 
with repair, maintenance and auxiliary services supplied to ships in transit through Panama's 
territorial waters. In October 2013, imports of aircraft and vessels of tariff headings 88.02 
and 89.03 also became exempt from payment of the ITBMS. 
3.74.  The ISC applies to the sale of certain Panamanian and imported products and services for 
consumption, including aerated beverages, syrups, alcoholic beverages (spirits, wines and beers), 
tobacco products, automobiles, motor cycles, boat s, aircraft, jewellery, cable, microwave and 
satellite television services and mobile telephony. The tax base is the price upon first sale from the manufacturer (including all costs charged to the buyer) or the cost of providing the service. 
For imports, the tax base is the c.i.f. value pl us the tariff and other taxes and charges levied 
by the Customs on imports. ANIP is responsibl e for collecting the ISC at a basic rate of 5%, 
although higher rates apply to products such as tobacco (32.5%) and alcoholic beverages, 
to which a fixed amount is applied dependin g on the price and alcohol content per litre. 
3.75.  Law No. 8 of 15 March 2010 (Article 143) increased the ISC to 10% for: motor cycles 
(over 125 cc), outboard engines (over 75 cc), yachts, sailboats or recreational craft, jet skis, ships, 
aircraft and helicopters for non-commercial use, syrups for manufacturing beverages, jewellery 
and firearms. The Law also modified the ISC rates for self-propelled land vehicles (which now range from 5% to 25%) and made imported vehicles subject to a minimum rate of B 500; for used vehicles, the law provides for a minimum tax ranging from B 750 to B 1,500 depending on the 
vehicle's age. The authorities have indicated that the purpose of imposing new ISC rates on motor 
vehicles is to compensate for the removal of the tariffs on them. Law No. 8 also imposed the tax on cable, microwave and satellite television serv ices and mobile telephony services at a rate 
of 5%. Law No. 52 of 28 August 2012 extended application of the ISC (at a rate of 5%) to a series 
of products of chapters HS 84, 85 and 90 such  as calculators, telephones, office machines, 
data-processing equipment and various electronic appliances. The authorities have indicated that, 
in this case as well, the aim is to use the ISC to offset the removal of the tariffs on these products 
as a result of the WTO Agreement on Information Technology. 
3.76.  Law No. 15 of 12 March 2013 imposed a sizeable increase in ISC rates on alcoholic 
beverages depending on their value and the degree of alcohol, applicable in particular to those 
with the highest prices, usually imported beverages. Pursuant to Law No. 76 of 21 October 2013, 
                                               
37 Law No. 8 of 15 March 2010. 
38 Tariff headings 2207.10.11 and 2207.10.91, pursuant to Law No. 76 of 21 October 2013. WT/TPR/S/301/Rev.1 • Panama 
 
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  the ISC was abolished for boats or craft for pleasure or sports (HS 89.03). During the period under 
review, the provision allowing a reduced ISC by ye ar of ageing for domestically produced spirits 
was eliminated. 
3.77.  Goods going abroad and sold directly to passengers and crew of ships and aircraft engaged 
in international transport and sales for export, as well as sales to companies established 
in Panama's free zones, are not subject to payment of the ISC. 
3.78.  The ICCDP applies to the sale of such products in Panama. As Panama is not an oil 
producer, the ICCDP applies to the import of fuels and other petroleum products from abroad 
or from a free zone. The tax base is the gallon an d the rate varies depending on the product and, 
for petroleum since September 2013, on the source of the bioethanol or biodiesel with which it is mixed (Table 3.4). 
Table 3.4 Consumption tax on fuels and petroleum products 
Product Rate (B per gallon) 
Petrol, 87 octane  0.60 
Petrol, 87 octane, unleaded 0.60 
Petrol, 91 octane 0.60 
Petrol, 91 octane, unleaded 0.60 
Petrol, 91 and 95 octane, unleaded 
- with 5% of anhydrous bioethanol of foreign origin - with 5% of anhydrous bioethanol of domestic origin - with 7% of anhydrous bioethanol of domestic origin - with 10% of anhydrous bioethanol of domestic origin  
3.78 0.57 0.56 0.54 
Petrol mixed with biodiesel of foreign origin 1.58 
Kerosene 0.13 
Low sulphur diesel 0.25 
Fuel oil 0.15 
Low viscosity 0.15 
Asphalt, penetration grade  0.08 
Asphalt, cutback 0.09 
White spirit 0.08 
Source: WTO Secretariat, on the basis of Law No. 6 of 20 January 1998, Law No. 46 of 10 May 2011 
and Law No. 76 of 21 October 2013. 
3.79.  In fact, Law No. 76 of 21 October 2013 set the ICCDP at a rate of B 3.78 per gallon for 
petrol (HS 2710.12.19) mixed with anhydrous bioe thanol of foreign origin and B 1.58 per gallon 
for petrol mixed with biodiesel of foreign origin. At the same time, a B 0.57 lower rate per gallon 
was set for petrol mixed with 5% of anhydrous bi oethanol produced using domestic raw materials, 
the rate being reduced in line with the increase in bioethanol content. Payment of this tax was 
made retroactive to 1 September 2013, the date on which it became mandatory to use 5% of bioethanol in 91 and 95 octane petrol in Panama.
39 According to statements by the authorities, 
this variable rate is intended to protect dome stic production of sugar cane used to produce 
bioethanol.40 Likewise, in October 2013, the structure of the National Import Tariff was modified in 
order to differentiate imports of pure ethyl alcohol and absolute alcohol to be used to produce 
biofuels from those used to prepare other produc ts, and the tariff was raised from 15% to 30%.41 
3.2.6  Import prohibitions, restrictions and licensing 3.80.  Panama imposes import prohibitions and restrictions for health, safety, environmental, 
sanitary and phytosanitary reasons. The Cabinet Council is responsible for determining which 
imports are to be prohibited or restricted.
42 Import of the following is prohibited: false coins and 
implements for minting coins; falsely labelled alcoholic beverages and medicines and any preparation harmful to health; arms or instruments of war; foreign lottery or raffle tickets; 
smoking opium and opium resin; indecent or morally offensive printed publications; plants, seeds 
                                               
39 This same Law No. 76 of 21 October 2013 increa sed the ITBMS to 15% on pure ethyl alcohol 
and absolute alcohol to be used to produce biofuels (see above). 
40 La Prensa , "Fijarán impuesto a gasolina con etanol" of 1 October 2013. Viewed at: 
http://www.prensa.com/impreso/panorama /fijaran-impuesto-gasolina-etanol/209486  [2 October 2013]. 
41 Cabinet Decree No. 28 of 8 October 2013. 
42 Cabinet Decree No. 41 of 16 December 2002 (Articles 99 and 126). WT/TPR/S/301/Rev.1 • Panama 
 
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  and animals designated by MIDA; and non-original products that imitate the workmanship 
of traditional products of the indigenous peoples. Restricted imports are medicinal opium, morphine, heroin, and all alkaloids of opium and cocaine and other so-called opiates for medicinal use; firearms that are not weapons of war and those used for self-defence, ammunition, dynamite 
and other explosive materials.
43 
3.81.  Pursuant to Executive Decree No. 41 of 11 December 2002, procedures for ensuring 
compliance with sanitary, phytosanitary, animal health and other control measures on the part 
of the institutions authorized to intervene in customs clearance must be limited to what is strictly 
reasonable and necessary in accordance with ea ch institution's regulations. Table 3.5 shows 
the products whose import requires a licence, permit or other type of approval from the competent body. 
Table 3.5 Imports subject to import licence s or approval by the competent bodies 
Competent body Product 
Ministry of Health  
Food Safety Department Fresh, processed, packaged, prepackaged and wrapped food 
products for human consumption. Meat, fish, dairy and farinaceous 
products. Oils, fruit, vegetables, sugar and related products. 
Alcoholic and non-alcoholic beverages, salts and their byproducts, 
spices and condiments. 
In some cases, approval from the Agricultural Quarantine 
Department is required in addition  to that given by the Ministry 
of Health. 
National Pharmacy and Drugs 
Directorate Medicinal opium, morphine, heroin, cocaine and all opium alkaloids 
and other so-called opiates when  imported for medicinal use, 
and acetic acid.  
Waste Department Precursors and essential chemical substances subject to 
international control. 
Self-propelled land vehicles driven  by internal combustion engines 
using petrol. 
Paints, inks, varnishes, lacquers, enamels and glues containing 
lead. Raw materials used to manufacture ceramics, 
glazed ceramics and pottery. 
Air-conditioning equipment in motor vehicles and trucks 
(whether or not incorporated into the vehicle). 
Refrigeration and air-condit ioning equipment/domestic 
and commercial heat pumps.  
Ministry of Agricultural Development  
Directorate-General of Agricultural 
Quarantine Animals, plants and their produc ts and byproducts, agricultural 
chemicals, biological or biotechnolo gical products for veterinary use 
or made from or manufactured using raw materials of animal 
origin, or for agricultural use, including packaging, containers 
and/or recipients, luggage and belo ngings of passengers and postal 
packages.  
National Seeds Commission Seeds 
Ministry of the Economy and Finance 
Gaming Control Board Slot machines and electronic games 
National Public Revenue Authority Spirits, aerated beve rages and cigarettes 
Ministry of Public Security 
Institutional Directorate of Public 
Security Affairs Arms in general, sidearms, rifles, ammunition, components, 
detonators, powder, bu llets or projectiles, pellets, equipment 
for loading ammunition and explosives.  
Ministry of the Interior  
Fire Brigade Safety Office  Explosive materials (dynamite, nitroglycerine), accessories using 
explosives (detonators), pyrotech nical articles, compressed gases 
whether or not inflammable, accessories and devices used in 
installations that use gases (valves for cylinders, etc.), petroleum 
and hydrocarbons byproducts (inf lammable), combustible materials 
(sodium, lithium, potassium and similar materials), and oxidizing 
and corrosive materials.  
Attorney General's Office  
Narcotics Division, 
Judicial Police, technical branch  Precursors and essential chemical substances subject 
to international control used illegally to produce drugs. 
                                               
43 Cabinet Decree No. 19 of 30 June 2004. WT/TPR/S/301/Rev.1 • Panama 
 
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  Competent body Product 
National Public Service Authority  Wireless telephones, telefax, te letypewriters, radio-telephony 
transmitters, broadcasting and television stations, television cameras, video cameras, radar an d radio-navigation equipment, 
antennas and antenna reflectors.  
Secretariat of Energy 
Directorate-General of Hydrocarbons   Petroleum byproducts imported during the period of suspension 
of the protection tariff. Machinery and equipment required for oil exploration and exploitation.  
National Environmental Authority  
Directorate of Forestry De velopment  Logs, coniferous  logs, non-coniferous logs, logs of tropical wood, 
sawn coniferous wood, sawn wood, non-coniferous tropical wood, plywood.  
National Transit and Land Transport 
Authority  All vehicles to be used to carry goods and persons. 
Source: Prepared by the WTO on the basis of on line information from the Customs, viewed at: 
http://aduanas.gob.pa/Manual . 
3.82.  The import licensing system is gove rned by Law No. 23 of 15 July 1997 (Title III) 
and Resolution No. 5 of 18 November 1998, which deals with the granting of licences to import 
products subject to tariff quotas.44 In 2004, Panama replied to the questionnaire on import 
licensing procedures45 and in September 2013 notified the WTO that the information on the 
general import licensing system contained in the 2004 notification remained valid.46 According to 
this notification, there are two types of import licence: automatic import licences, which are for 
statistical purposes, and non-automatic import li cences, which apply to goods whose import is 
restricted and used for the administration of tariff quotas (section 4.2.2.2.1). It should be noted that, in October 2012, Panama adopted regulations for the administration of tariff quotas in 
connection with the Trade Promotion Agreement with the United States, which include, inter alia, 
a licensing mechanism for awarding quotas.
47 
3.83.  Any interested person, company or institution may apply for an import licence and has a 
right of appeal through administrative litigation ch annels against decisions by the bodies in charge 
of granting licences (competent bodies). Import licences must be obtained before the import declaration is definitively registered. In some cases, they can be obtained using the Customs' computerized system (SIGA). 
3.2.7  Contingency measures 
3.84.  The Directorate-General of Trade Protection (DGDC) of the National Directorate for the 
Administration of International Trade Agreements (DINATREC)
48, attached to the MICI, is the 
authority responsible for conducting investigations into unfair trade practices and safeguards. 
The Minister of Trade and Industry has to recommend to the Cabinet Council the imposition or lifting of anti-dumping, countervailing or safeguard measures. 
3.85.  Panama's legal framework for trade protection is derived from the relevant WTO 
Agreements (incorporated into domestic legisl ation by Law No. 23 of 1997), Decree Law No. 7 
of 15 February 2006 and its implementing Regulations (Executive Decree No. 1 of 8 January 2009). Panama notified the WTO of the latter two instruments
49 and they were 
                                               
44 Notified in WTO documents G/LIC/N/1/PA N/1 of 18 August 1998 and G/LIC/N/1/PAN/2 
of 16 November 1998. 
45 WTO document G/LIC/N/3/PAN/2 of 4 March 2004, 
46 WTO document G/LIC/N/3/PAN/4 of 30 September 2013. 
47 Executive Decree No. 154 of 10 October 2012. 
48 Although the DGDC conducts the investigations, the decisions are taken by DINATREC. 
49 WTO documents G/ADP/N/1/PAN/2, G/SCM/N/1/ PAN/2 and G/SG/N/1/PAN/2 of 4 August 2006; 
and G/ADP/N/1/PAN/2/Suppl.1, G/SCM/N/1/PAN/2/ Suppl.1 and G/SG/N/1/PAN/2 of 28 January 2009. WT/TPR/S/301/Rev.1 • Panama 
 
- 57 - 
 
  examined by the relevant Committees.50 Some Members posed questions, to which Panama 
replied in writing.51 
3.86.  Decree Law No. 7 of 2006 establishes rules for trade protection against unfair trade 
practices and market situations which require the application of safeguard measures, while its 
implementing Regulations provide mechanisms  and detailed procedures for conducting 
investigations and applying anti-dumping, countervailing and safeguard measures. 
3.87.  The implementing Regulations contain procedural rules common to the three types 
of investigation. They specify the obligation to notify the WTO of the initiation of an investigation, 
the imposition of provisional or definitive measures, the acceptance of price undertakings and the suspension, modification or extension of measures. They also provide for appeals against administrative decisions to the first-instance authority (DINATRADEC) and if, within a period 
of 15 working days, the official responsible has not issued any decision, the appeal is considered 
as having been rejected and government channe ls are exhausted. The implementing Regulations 
also contain common substantive rules regarding unfair trade practices, including provisions on 
determining serious injury and threat of injury, the period of investigation, the domestic industry, 
the definition of like product and the causal link (causality). 
3.88.  Decree Law No. 7 of 2006 (Article 46) prohibits the simultaneous application 
of anti-dumping and countervailing measures to the same product. Executive Decree No. 1 of 2009 
(Article 101) provides that provisional countervailing or anti-dumping duties may not be adopted or imposed simultaneously in order to resolve the same situation resulting from subsidy or anti-dumping investigations. 
3.2.7.1  Anti-dumping and countervailing measures 
3.89.  Panama does not make frequent use of trade protection measures. During the period under 
review, it initiated only one dumping investigation concerning imports of paint from El Salvador, 
the United States, Guatemala and Mexico. The investigation commenced in October 2009; 
no provisional duties were imposed and it co ncluded without the application of definitive 
anti-dumping duties as it was not determined that dumping had occurred.
52 Panama notified the 
Committee on Anti-Dumping Practices that it did not adopt any anti-dumping measures during the 
period 1 July 2011 to 30 June 201253; it has not submitted any notifications since then. Panama 
did not apply any countervailing measures during the review period either. Nevertheless, except for the period January to June 2012
54, it did not submit any notifications to the Committee 
on Subsidies and Countervailing Measures during the years under review.55 
3.90.  In dumping investigations, the basis for determining the normal value is the price of a like 
product destined for consumption in the country of ex port in the ordinary course of trade. If this 
method cannot be applied, the normal value has to be determined by constructing the price 
(the cost of producing the product in the country of origin plus administrative and selling costs and profit) or by comparison with the price of  a like product exported to a third country. 
The investigating authority must take into account the differences between countries that affect 
price comparability, for example, different terms of sale, taxation, commercial levels and other factors.
56 
                                               
50 WTO documents G/ADP/M/32 of 23 October 2007, G/ADP/M/36 of 15 July 2009, G/SCM/M/69 
of 22 September 2009, G/SG/M/35 of 25 September 2009 and G/SG/M/36 of 2 February 2010. 
51 WTO documents G/ADP/Q1/PAN/5 of 11 April 2007, G/ADP/Q1/PAN/6 of 12 April 2007, 
G/ADP/Q1/PAN/7 of 20 October 2008, G/ADP/Q1/PAN/8 of 25 March 2009, G/ADP/Q1/PAN/9 of 24 April 2009 and G/ADP/Q1/PAN/10 of 28 April 2009. For the provisions on safeguards, WTO documents G/SG/Q1/PAN/3 of 27 October 2009, G/SG/Q1/PAN/4 of 12 Ma rch 2010 and G/SG/Q1/PAN/5 of 29 March 2010. 
52 Resolution No. 05 of 21 April 2011. See also Panama's notification in WTO documents 
G/ADP/N/216/PAN of 13 July 2011 and G/ADP/N/216/PAN/Corr.1 of 26 July 2011. 
53 WTO documents G/ADP/N/223/Add.1/Rev.1 of 12 October 2012 and G/ADP/N/237/Add.1 
of 10 April 2013. 
54 WTO document G/SCM/N/242/Add.1/Rev.1 of 12 October 2012. 
55 WTO document series G/ SCM/N/*/Add.1 (semi-annual reports under Article 25.11 
of the SCM Agreement). 
56 Articles 10-12 of Decree Law No. 7 of 2006 and Articles 19-25 of the implementing Regulations. WT/TPR/S/301/Rev.1 • Panama 
 
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  3.91.  Panama's legislation defines subsidies and specificity, incorporating the concepts to be 
found in the WTO Agreement on Subsidies and Countervailing Measures.57 Likewise, 
the implementing Regulations (Article 31) define the elements to be taken into account by the investigating authority in order to determine the amount of a subsidy. 
3.92.  Dumping or subsidy investigations may be initiated at the request of a party or ex officio. 
The domestic industry affected may request that an investigation be initiated when: (i) the request is supported by domestic producers representing ov er 50% of total production of the like product
58 
(taking as a basis companies expressing support and those opposing the request); 
and (ii) producers which expressly support the request represent at least 25% of total production of that product.
59 
3.93.  After it has received a request to initiate an investigation and has obtained all the necessary 
information, the investigating authority must issue a resolution, within 15 working days, declaring 
either the initiation or the rejection of an administrative investigation. Before publishing the resolution, the investigating authority must notify the government of the exporting country. 
Once they have received the notification, interested parties have 30 calendar days in which to 
defend their interests in writing.
60 The investigating authority collects information by means of 
questionnaires, to which interested parties must respond within 30 calendar days (which may be 
extended by a further 30 calendar days). 
3.94.  Following a minimum of 60 days after initiation of the investigation, the investigating 
authority may issue a preliminary determination, recommending to the Cabinet Council the imposition of provisional measures to prevent inju ry being caused to the domestic industry during 
the investigation. The provisional measures must be applied for the shortest possible time, 
and must not exceed six months for anti-dumping measures and four months for countervailing measures.
61 
3.95.  The investigating authority must terminate an investigation immediately when it has 
determined that the margin of dumping or the amount of the subsidy is de minimis or when the 
volume of dumped or subsidized imports is insignificant.62 
3.96.  During the investigation, the investigating authority may inspect domestic and foreign 
companies in situ in order to verify the accuracy of the information furnished by the parties. 
Before issuing a final resolution, the authority invites the interested parties to attend a hearing to inform them of the essential facts that will serve as the basis for its decision and to give them 
an opportunity to defend themselves in writing. After receiving the claims, the authority 
has ten working days in which to issue a final resolution and recommend to the Cabinet Council whether or not to impose definitive anti-dumping or countervailing duties.
63 The Cabinet Council 
issues its decision in the form of a decree. 
3.97.  Anti-dumping or countervailing duties may not exceed the margin of dumping or the 
amount of the subsidy whose existence has been proved.64 The investigating authority may decide 
to apply a lower rate provided that the circumstances so permit.65 Anti-dumping or countervailing 
duties may not be imposed for more than five years.66 The law contains provisions on review 
of the measures, at the instigation of a party or ex  officio, after at least one year has elapsed since 
t h e y  w e r e  i m p o s e d ,  a s  w e l l  a s  p r o v i s i o n s  o n  c o n s i d e r a t i o n  o f  a n  e x t e n s i o n ,  p r o v i d e d  t h a t  t h e  
                                               
57 Articles 5 and 6 of Decree Law No. 7 of 2006 and Articles 28 and 29 of the implementing Regulations. 
58 The concept of like product is defined in Article 11 of the implementing Regulations. 
59 Article 27 of Decree Law No. 7 of 2006 and Article 71 of the implementing Regulations. 
60 This time-limit may be extended for a maximum of a further 30 calendar days. 
61 Title VI, Sections IV (Preliminary determination)  and V (Provisional measures) of the implementing 
Regulations. 
62 Title V, Section VII (Early termination) of the implementing Regulations. 
63 Articles 41-44 of Decree Law No. 7 of 2006 and Articles 116 and 120 of the implementing 
Regulations. 
64 Article 19 of Decree Law No. 7 of 2006 and Article 117 of the implementing Regulations. 
65 Article 118 of the implementing Regulations. 
66 Article 19 of Decree Law No. 7 of 2006. WT/TPR/S/301/Rev.1 • Panama 
 
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  request is submitted no later than 120 days prio r to expiry of the measure. No extension may 
exceed five years.67 
3.2.7.2  Safeguard measures 3.98.  During the period under review, Panama conducted one safeguard investigation concerning 
the import of printed polypropylene (BOPP-type) f ilm in rolls and printed polyvinyl chloride (PVC) 
film in rolls and notified the Committee on Safeguards of the adoption of provisional measures applicable to these products in early 2007.
68 Colombia raised questions on the criteria and 
procedures that led to the application of these measures.69 Subsequently, Panama notified the 
Committee of a finding of serious injury caused to domestic producers and the adoption of definitive safeguard measures on the products under investigation, to last one year as of 13 April 2007.
70 In October 2008. Panama informed the Committee that its authorities had 
decided not to grant the requested extension of the safeguard imposed on one of the products 
(BOPP-type film).71 Panama did not conduct any other investigation or apply other safeguard 
measures during the review period. 
3.99.  The implementing Regulations in Decree No. 7 of 2006 lay down substantive rules on 
safeguards, including provisions on the determination of serious injury or threat of serious injury, causal link, the concepts of like product and public interest, and the period of investigation. 
A safeguard measure may only be imposed in response to a rapid and significant increase 
in imports of a product as a result of unforeseen circumstances if this increase causes or threatens to cause serious injury to the domestic industry producing like or directly competitive products.
72 
3.100.  Producers in the domestic industry affected may request the initiation of a safeguard 
investigation in writing provided that, when making the request, they represent at least 25% 
of total production of the like or directly competitive product. In special cases, the authority may initiate an investigation ex officio.
73 After it has received the request and has verified compliance 
with the substantive and formal requirements needed for the initiation of an investigation, 
the authority issues a resolution initiating the investigation. An extract from this resolution must be published in the Official Journal and notified to the country or countries whose 
products are under investigation and to the WTO Committee on Safeguards.
74 As a resolution 
initiating an investigation is deemed to be a "substantive resolution" (Article 58(d) of Executive Decree No. 1 of 2009), the procedures for its notification have to commence, at the latest, within five days following the date on which the resolution was issued.
75 Article 69 
of Decree Law No. 7 of 2006 determines that the MICI has ten working days following the issue 
of the initiating resolution in which to issue the public notice and the communication to the interested parties. 
3.101.  During the investigation, the authorit y may recommend the adoption of provisional 
measures if it has been determined that the increase in imports has caused or threatens to cause serious injury and if delay might cause damage to the domestic industry which it would be difficult 
to repair. Provisional measures adopted must be in the form of tariff increases and may not last for 
more than 200 days.
76 
3.102.  Interested parties are invited to attend a hearing in order to defend their interests; 
once the hearing has ended, the investigating authority has ten working days in which to issue 
a final resolution and, where applicable, to recommend to the Cabinet Council the imposition 
of definitive measures. These may be in the form of a tariff increase or a quantitative restriction 
                                               
67 Title VII, Section III (Review of measures) an d Section IV (Consideration of extension) 
of the implementing Regulations. 
68 WTO documents G/SG/N/7/PAN/1 and G/SG/N/11/PAN/1 of 20 February 2007 
and G/SG/N/7/PAN/1/Suppl.1 and G/SG /N/11/PAN/1/Suppl.1 of 24 April 2007. 
69 WTO document G/SG/Q2/PAN/2 of 7 May 2007. 
70 WTO documents G/SG/N/8/PAN/1 of 7 June 2007 and G/SG/N/8/PAN/1/Suppl.1 of 19 October 2007. 
71 WTO document G/SG/N/8/PAN/1/Suppl. 3 of 12 November 2008. 
72 Article 39 of the implementing Regulations. 
73 Articles 146 and 147 of the implementing Regulations. 
74 Article 156 of the implementing Regulations. 
75 Articles 60 and 61 of the implementing Regulations. 
76 Articles 170-173 of the implementing Regulations. WT/TPR/S/301/Rev.1 • Panama 
 
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  on imports.77 T h e i r  m a x i m u m  d u r a t i o n  i s  f o u r  y e a r s ,  w h i c h  m a y  b e  e x t e n d e d  o n c e  o n l y  f o r  u p  
to six years. Measures lasting over one year, however, must be gradually liberalized at regular intervals, as specified in the WTO Agreement on Safeguards.
78 The authority is empowered to take 
account of arguments relating to the public interest in its final determination.79 
3.103.  The implementing Regulations provide for th e application of bilateral safeguards under the 
international trade agreements signed by Panama. The criteria and requirements for applying such measures, including the assessment of injury, the increase in imports and the causal link, 
must comply with those set out in each of these agreements and with the provisions in the 
implementing Regulations, where necessary. Application of the special agricultural safeguard pursuant to Article 5 of the WTO Agreement on Agriculture is also foreseen. 
3.2.8  Standards and technical regulations 
3.104.  Law No. 23 of 15 July 1997 lays down, inter alia, provisions on technical standardization, 
conformity assessment, accreditation and quality certification.
80 Executive Decree No. 55 
of 6 July 2006 regulates the provisions on accreditation. Law No. 52 of 11 December 2007 
introduces new provisions on calibration and measurement.81 Panama has accepted 
the WTO's Code of Good Practice for the Prepar ation, Adoption and Application of Standards.82 
3.105.  Panama is a member of the International Organization for Standardization (ISO), 
the Pan American Standards Commission (COPANT) and the Codex Alimentarius, and is an 
observer on the International Electrotechnical Commission (IEC). 
3.106.  The MICI's Directorate-General of Standard s and Industrial Technology (DGNTI) is the only 
body authorized to develop standards and technical regulations in Panama and acts through its 
two departments: Technical Standardization and Quality Certification. The DGNTI has been 
designated as the national enquiry point for th e purposes of the WTO Agreement on Technical 
Barriers to Trade.83 The Panamanian Industrial and Technical Standards Commission (COPANIT) 
advises the DGNTI on its studies and analyses.84 The National Accreditation Council (CNA) is 
responsible for accreditation and the National Metrology Centre of Panama (CENAMEP) is in charge of metrology. 
3.107.  The preparation of a technical regulation goes through the following stages: an application 
is submitted to the DGNTI. If it considers that the application is valid, the DGNTI sets up a technical committee composed of interested parties from the public and private sectors, which then draws up a draft technical regulation. The draft's viability is based on criteria relating 
to safety, environmental protection, and human, an imal and plant health and life. The draft is 
published on the MICI's website and is subject to a public enquiry lasting 60 days, during which interested sectors send in comments. At the same time, the DGNTI notifies the WTO of the 
technical regulation, so that Members can submit comments. After the public enquiry, 
the technical committee considers the comments and makes any necessary amendments. The final document is signed by the Minister of Trade and Industry. Once the document has become official, 
the technical committee decides on the timeframe for application of the technical regulation, which 
takes effect as of its publication in the Official Journal. Usually, at least one month is allowed for its entry into force, except in emergencies when it becomes applicable immediately. The procedure for preparing voluntary standards is the same, except that the draft is not notified to the WTO. 
3.108.  The private sector may adopt voluntary technical standards without having to inform 
the DGNTI. These may be transformed into national standards provided that they go through the procedure for preparing technical regulations described above. 
                                               
77 Article 40 of the implementing Regulations. 
78 Title VIII, Section VIII, of the implementing Regulations. 
79 Article 182 of the implementing Regulations. 
80 Title II, Articles 90-131. WTO document G/TBT/2/Add. 53 of 7 May 1999. 
81 Law No. 52 of 2007 repealed Articles 105-109 of Law No. 23 of 15 July 1997. 
82 WTO document G/TBT/CS/N/98 of 22 April 1998. 
83 WTO document G/TBT/ENQ/38/Rev.1 of 8 July 2011. 
84 The responsibilities of COPANIT are described in Articles 97 and 98 of Law No. 23 of 15 July 1997. 
Law No. 52 of 11 December 2007 (Article 43) amends one of these descriptions. WT/TPR/S/301/Rev.1 • Panama 
 
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  3.109.  As at October 2013, Panama had 88 technical regulations, of which 40 had been notified to 
the WTO, six of them during the period under review (Table A2.1).85 Panama's technical 
regulations concern mostly food products, chemicals, petroleum and petroleum products, hygiene and industrial safety, metrology, water quality, drinking water, waste water, pesticides, pamphlets 
and labelling. They can be viewed on the MICI's website.
86 The authorities have indicated that 
most of the technical regulations adopted by Panama are based on international standards. Panama has modified some technical regulations since 2007, mainly to include the respective 
conformity assessment procedures. Technical regulations are applied in the same way to both 
domestic products and imports. 
3.110.  The DGNTI undertakes conformity assessment procedures, with the support of other public 
or private institutions. The public institutions involved include MINSA's Central Laboratory, MIDA, 
the Authority for Protection of the Consumer and Defence of Competition (APODECO), AUPSA, 
the National Environment Authority (ANAM), the Secretariat of Energy and the National Secretariat of Science and Technology. Once the conformity assessment procedures have been completed, 
the DGNTI issues a conformity certificate. 
3.111.  The CNA is responsible for accrediting Pana manian or foreign public and private conformity 
assessment bodies.
87 At October 2013, 37 Panamanian bodies had been accredited: 20 testing 
laboratories (of which four were public), one calibration laboratory and 14 inspection entities.88 
There were 24 accreditations during the period under review. Accreditation procedures comply with ISO's recommendations and the procedures of Inter American Accreditation Cooperation (IAAC).
89 In most cases, accreditation is mandatory. 
3.112.  The DGNTI is required by law to recognize the equivalence of the technical regulations 
of foreign institutions, provided that they comply with the objectives of its own regulations. Likewise, the DGNTI has to recognize the results of conformity assessment carried out by foreign 
institutions on the basis of mutual recognition agreements (MRA).
90 Panama had not signed 
any MRA at October 2013. It does, however, recogniz e the conformity certificates of foreign bodies 
that have been accredited by entities recognized by international accreditation organizations such 
as International Laboratory Accreditation Cooperation (ILAC), IAAC, the International Accreditation 
Forum (IAF), the Quality Assurance Program (PAC),  European Cooperation for Accreditation (EA) 
and the IEC. 
3.113.  Persons wishing to market products with certificates issued abroad may request the DGNTI 
to issue a certificate of foreign recognition. The form for applying for this certificate can be found 
on the MICI's website. After verifying the application's compliance with the administrative and technical requirements, as well as the status of accreditation of the certifying foreign body 
with respect to the technical regulation in question, the DGNTI issues a certificate of foreign 
recognition. 
3.114.  In the case of food, compliance with technical regulations is verified through the 
monitoring at retail level of Panamanian products  and products that have been customs cleared 
and entered the marketing chain; this is the responsibility of MINSA. For imported foodstuffs, verification of compliance with technical regulations takes place at the port of entry and is the responsibility of AUPSA (section 3.2.9). 
3.115.  The Protocol incorporating Panama into SIECA came into force on 6 May 2013. At that 
time, Panama undertook to adopt the Central American Regulations on Standardization Measures, Metrology and Authorization Procedures, the Guidelines for the Drafting and Presentation 
of Central American Technical Regulations an d the Procedures for Preparing, Adopting 
and Approving Central American Technical Regu lations and Conformity Assessment Procedures.
91 
                                               
85 WTO documents: G/TBT/N/PAN/36 of 17 April 2007, G/TBT/N/PAN/37 of 24 May 2007, 
G/TBT/N/PAN/38 of 12 March 2013, G/TBT/N/PAN/39 of 3 July 2013, G/TBT/N/PAN/40 of 3 July 2013 
and G/TBT/N/PAN/41 of 15 August 2013. 
86 Online information from the MICI, viewed at: 
http://www.mici.gob.pa/i magenes/pdf/reglamentostecnicosnacionales.pdf . 
87 Article 101 of Law No. 23 of 15 July 1997 and Executive Decree No. 55 of 6 July 2006. 
88 Information provided by the DGNTI. 
89 Online information from the CNA, viewed at: http://www.cna.gob.pa . 
90 Articles 121 and 122 of Law No. 23 of 15 July 1997. 
91 Annex 3.2 to the Protocol incorporating Panama into SIECA. WT/TPR/S/301/Rev.1 • Panama 
 
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  In addition, it undertook to adopt two Central American technical regulations when the Protocol 
came into force and the remainder within two years as of its integration into SIECA.92 
3.116.  The procedure for drafting Central American technical regulations commences with a 
request from one or more SIECA member countries to the Directors of Integration, who decide on 
its pertinence. After it has been accepted, the request is forwarded to the Coordinators of the 
Technical Registration Group and the competent working subgroup, which coordinates consultations with national technical committees. The resulting draft is put up for public 
consultation by means of notification to the WTO. The time-limit for submitting comments 
is 60 days. The internal public consultation process is conducted in accordance with each State's legislative provisions. The final text, approved by COMIECO, is published and incorporated into each member State's legislation.
93 
3.117.  The various preferential trade agreements  signed by Panama (section 2.3.2) contain 
chapters on technical regulations and standards. Among other provisions, these specify commitments on concluding mutual recognition and equivalence agreements. 
3.118.  The provisions on consumer protection provide that labelling must include clear and 
truthful information on the nature, composition, content, weight, origin, expiry date, toxicity, warnings, price and any other essential information on the product.
94 Imported products may be 
labelled in the language of origin and there is no requirement that labels be in Spanish95, except in 
the case of medicines, agricultural chemicals and toxic products, as well as food products that necessitate special warnings or precautions because they constitute a danger to human health. The DGNTI is at present preparing a technical regulation on the labelling of prepackaged 
foodstuffs, based on the Codex Alimentarius, which will make labelling in Spanish compulsory. 
Work is currently proceeding on other drafts on quality certification, including nutritional labelling, the labelling of fermented beverages, the labe lling of distilled beverages, pasteurized milk 
and cheese. 
3.2.9  Sanitary and phytosanitary measures 3.119.  The main legal instruments governing sanitary and phytosanitary matters include 
Law No. 47 of 9 July 1996 on phytosanitary protection measures, Law No. 23 of 15 July 1997 
on animal health and agricultural quarantine measures and authority and Decree Law No. 11 of 22 February 2006 setting up AUPSA and prescribing food safety regulations.
96 Law No. 1 
of 10 January 2001 and its implementing Regulations (Decree No. 178 of 12 July 2001) regulate, 
inter alia, sanitary registration of medicines and other human health-related products. 
3.120.  The preparation and application of sanita ry and phytosanitary (SPS) measures involves 
a number of government agencies. In order to coordinate their action, an intersectoral group was 
set up informally in 2006 to prepare a National Agenda for the period 2008-2012, with an action 
plan to improve the application of SPS measures in Panama.97 This includes measures to increase 
Panama's attendance at international fairs on SPS topics, to develop institutional and human 
capacity in this field, to support the process of harmonizing national regulations with international 
standards and to enhance sanitary and phytosanitary surveillance of pests and diseases. At April 2014, the creation of the Intersectoral SPS Committee had not yet been formalized. 
3.121.  MIDA is responsible for protecting animal  and plant health through the National Animal 
Health (DINASA) and Plant Health (DNSV) Directorates and the Executive Directorate 
of Agricultural Quarantine (DECA). 
                                               
92 Annexes 7.1 and 7.2 to the Protocol incorporating Panama into SIECA. 
93 COMIECO Resolution No. 162-2006. 
94 Article 18 of Decree Law No. 9 of 20 February 2006, amending Article 31 of Law No. 29 
of 1 February 1996. 
95 Standard No. 52 of 1978, which is voluntary, provides that packaged foodstuffs for human 
consumption must bear an additional label in  Spanish, but this is not always the case. 
96 The provisions in Decree Law No. 11 of 2006 can be found in procedural manuals and in the sanitary 
and phytosanitary requirements published on AUPSA's website. 
97 See Inter-American Institute for Cooperation on Agriculture (2009). WT/TPR/S/301/Rev.1 • Panama 
 
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  3.122.  DINASA has the task of laying down the animal health requirements for importing live 
animals, products of animal origin, veterinary pharmaceuticals and biological, biotechnological, chemical and food products for animal consumption and use. It is also responsible for issuing export certificates for animal products, whether or not foodstuffs.
98 The law on the National 
Traceability Programme was adopted in October 2013; it will commence with bovine livestock 
production and gradually be extended throughout Panama. 
3.123.  The DNSV lays down the phytosanitary requirements for the import and transit of products 
of plant origin not deemed to be food for human or  animal consumption. It is also responsible for 
aspects concerning their export.99 When preparing phytosanitary import requirements, 
the procedures followed are those determined in Decision (Resuelto)  No. 93 of 24 October 1997 
and Decision (Resuelto)  No. DAL-067-ADM-2006 of 20 November 2006, which contains the general 
and specific phytosanitary requirements to be  observed when introducing plants and plant 
products into Panama. ISPM guidelines Nos. 1, 5, 11 and 20 are also taken into account. 
3.124.  The DECA is the executive arm of DINASA and the DNSV; it carries out inspections and 
quarantines animals, plants and their byproducts not deemed to be food at entry points into 
Panama. It is also in charge of issuing animal and plant health licences for imports or transit of such products.
100 MIDA's Centre for Sanitary and Phytosanitary Surveillance and Emergency 
Operations (COP) collects and analyses national and international information on pests 
and diseases and warns DINASA, the DNSV and DECA of any likely sanitary or phytosanitary emergencies. 
3.125.  AUPSA is an autonomous State agency responsible for ensuring the protection of human 
health, Panama's agricultural assets and the interests of consumers in relation to imported foods. 
3.126.  MINSA, through the Food Protection Department (DEPA), is in charge of sanitary 
registration of foods and beverages produced in Panama, as well as soaps, detergents and related 
products for use in the food industry, whether Panamanian or imported. Some of DEPA's other 
tasks include monitoring and controlling the entire production and retail chain for food, certifying Panamanian and foreign food processing plants and issuing sanitary certificates for export 
to authorized plants.
101 I n  o r d e r  t o  b e  c e r t i f i e d ,  p r o c e s s i n g  p l a n t s  m u s t  f o l l o w  s t a n d a r d i z e d  
cleaning and disinfection procedures, good manufacturing practices and the Hazard Analysis and Critical Control Points (HACCP) system.
102 
3.127.  MINSA's Animal Disease Monitoring and Control Department prevents and controls 
diseases of animals and food of animal origin transmissible to humans. MINSA's National Pharmacy 
and Drugs Directorate is responsible for sanitary registration and control of the import, export and re-export of medicines, narcotics and other human health products. 
3.128.  The MICI's National Directorate for the Administration of International Trade Agreements 
and Trade Protection is responsible for WTO notifications.
103 MIDA (through DINASA and the 
DNSV) and AUPSA are the national enquiry points notified to the WTO. 
3.129.  Panama submitted eight sanitary and ph ytosanitary notifications to the WTO between 
2007 and 2013, of which five were emergency meas ures intended to suspend imports temporarily 
because they concerned shipments of products with quarantine diseases regulated in Panama (Table A2.1).
104 The following were the products notified: bananas, fresh and chilled fruit and 
vegetables, potato tubers for consumption, flower s, foliage and plants. No Member expressed any 
                                               
98 Articles 5-9 of Law No. 23 of 15 July 1997. 
99 Law No. 47 of 9 July 1996. 
100 Articles 49-56 of Law No. 23 of 15 July 1997. 
101 Decree No. 256 of 13 June 1962, amended by Executive Decree No. 331 of 22 July 2008. 
102 Executive Decree No. 352 of 10 October 2001 and Executive Decree No. 81 of 31 March 2003. 
103 WTO document G/SPS/NNA/16 of 11 March 2011. 
104 The emergency measures relating to food were adopted on the basis of the Procedural Manual for 
monitoring the introduction (import, transit and/or transhipment) of any food for human and/or animal 
consumption (MPDNV-001-08, text of 15 May 2009). WT/TPR/S/301/Rev.1 • Panama 
 
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  concern regarding the application of Panama's sanitary and phytosanitary measures during the 
period under review and the concerns raised prior to 2007 have been resolved.105 
3.130.  Panama is a member of the World Organisation for Animal Health (OIE), the Codex 
Alimentarius Commission, the International Plant Protection Convention (IPPC)106 and the Regional 
International Organization for Plant Protection and Animal Health (RIOPPAH). The Panamanian 
authorities have indicated that the sanitary and phytosanitary measures Panama has taken are based on recommendations by the international reference organizations. 
3.131.  MIDA determines the animal and plant health  requirements on the basis of a risk analysis 
assessment. The requirements are issued in the form of decisions (" resueltos "), which are 
published in the Official Journal. Except in an emergency, MIDA must allow a period of no less than 60 days between publication of a decision (resuelto)  and its entry into force to allow 
producers to adapt and to comply with the obligation of notifying international organizations.
107 
MIDA does not at present have a database to permit online consultation of the animal and plant health requirements prescribed by DINASA and the DNSV, but it is in the process of being created. 
3.132.  The import of live animals and products of  animal origin requires a prior animal health 
permit. A plant health permit is also required for the import of plants and products of plant origin. 
Applications for both these permits can be made on the website of MIDA'S DECA.
108 DECA keeps 
lists of specific animal and plant health requir ements by product and by country. The competent 
authority in the country of origin has to certify that the product to be exported meets these requirements. Once the permit has been issued, the importer must present it at DECA's offices at the entry point 48 hours prior to arrival of the good s. The sanitary permit for the import of live 
animals is issued subject to authorization by the veterinarian at the quarantine station. There are 
quarantine stations at the airports of Tucumán and Paso Canoa, where live animals may enter and remain (for 7 to 15 days). An appointment with the veterinarian has to be made before the 
animals arrive. Applications for permits for veterinary pharmaceuticals, biological and 
biotechnological products, agricultural chemicals, chemicals and food for animal use and consumption must be accompanied by a copy of the registration previously granted by DINASA 
or the DNSV.
109 Permits may be cancelled if there is an animal or plant health emergency. 
Animal and plant health permits are issued via the Internet and may require just a few minutes (if the information required is correct) up to a maximum of 24 hours. The authorities have indicated that 263,617 permits were issued over the period 2011-2013. 
3.133.  When live animals or products of animal or igin or plants or products of plant origin are 
imported for the first time, pre-inspection at origin in the processing facilities or plants or of the phytosanitary material is required. This is done by analysing the risk which, depending on the type 
of product, is undertaken by DINASA or the DNSV,  following the recommendations of the relevant 
international organizations (OIE or IPPC).
110 In the case of a product of plant origin for which there 
is no phytosanitary requirement, for example, an importer has to forward a request for a 
phytosanitary requirement to the DNSV's Section for Pest Risk Analysis and Phytosanitary 
Requirements, attaching all the necessary information. The Section has ten working days in which to decide whether to undertake a pest risk analysis (PRA) and to inform the importer. The cost of the PRA is paid by the importer. 
3.134.  The import, transit and transhipment  of foods are subject to the sanitary 
and phytosanitary requirements issued by AU PSA on the basis of Decree Law No. 11 of 2006, 
which provides that such requirements must be  made public and be based on clearly proven 
scientific criteria. Requirements that are issued for the first time come into effect at the time they 
are issued and are then published in the Official Journal, while any amendments to such requirements come into force 21 days after their publication.
111 Requirements are drafted 
in accordance with the Manual of Procedures for the Preparation and Revision of Sanitary and 
Phytosanitary Requirements (MPDNN-006-11, text of 15 March 2011). AUPSA has an online 
                                               
105 WTO SPS Information Management Syst em. Online information, viewed at: http://spsims.wto.org . 
106 WTO document G/SPS/GEN/49/Rev. 5 of 4 July 2013. 
107 Article 22 of Law No. 23 of 15 July 1997. 
108 The website is: http://168.77.213.144/LicImport/formularios/login.aspx . 
109 Executive Directorate of Agricultural Quarantine, MIDA (2009). 
110 In Decision (Resuelto)  No. DAL-043-ADM-2008 of 7 July 2008, Panama adopted IPSM No. 11 
of the IPPC for quarantine pest risk analysis. 
111 Article 51 of Decree Law No. 11 of 22 February 2006. WT/TPR/S/301/Rev.1 • Panama 
 
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  database for consulting the requirements it has established, including new and amended 
requirements, before they are published in the Official Journal so that interested parties may be kept up to date and adapt their products accordingly.
112 Up to now, AUPSA has not had any 
mechanism for notifying the WTO of sanitary or phytosanitary requirements, except for emergency 
measures. 
3.135.  With regard to the import of food for human or animal consumption classified as medium 
or high risk, the following are required dependin g on the sanitary or phytosanitary requirement 
applicable: an evaluation of the sanitary/phytosa nitary system in the country, province, region, 
zone or area where the product is produced and exported; inspection of the processing facilities or plants. These evaluations are carried out in accordance with the provisions in the various Manuals of Procedure
113 and their cost is usually borne by the importer, the exporter or both, 
except for evaluations carried out in European Un ion countries, where the cost is paid by AUPSA 
pursuant to the Association Agreemen t between Central America and the EU. 
3.136.  No prior authorization is required to import food into Panama, but a sanitary 
or phytosanitary certificate issued by the competent authority in the product's country of origin 
must be produced.114 AUPSA must be notified of the arrival of the food at the point of entry at 
least 48 hours beforehand, using the website of the Food Import Notification Scheme (SISNIA), 
on which the Import Notification Form is completed. SISNIA shows which foods are classified 
as high risk and warns of the need to take a sample at the border. 
3.137.  Packaged, bottled or wrapped foods bearing a particular name or trademark have to be 
registered with AUPSA before being imported.115 Registration is free-of-charge and may be done 
through SISNIA's website or at AUPSA offices, and usually takes 24 hours.116 No registration is 
required for unprocessed products such as fresh meat (not packed), fresh fruit or vegetables, grains, dairy produce in bulk, food ingredients an d additives. The authorities may also identify 
packaged foods for which sanitary standards are recognized internationally and therefore do not 
need to be registered.
117 No such foods have been identified so far. 
3.138.  When food imports arrive at the point of entry, they must be accompanied by the Import 
Notification Form, the certificate of origin, the commercial invoice and the customs pre-declaration. 
Imports of raw materials and fresh food of animal origin also need a sanitary certificate; unprocessed food of plant origin must have a phytosanitary certificate; and prepackaged foods need a free sale certificate.
118 In Decision (Resuelto)  No. AUPSA-DINAN-077-2009 of 27 July 2009, 
AUPSA determined that, when a free sale certificate has been furnished at the time of registration, 
it does not have to be submitted again for each shipment.119 
3.139.  Panama allows the import of genetically modified products. It does, however, prohibit the 
production, import, sale and use of products containing certain additives for animal consumption. 
Panama approved the Cartagena Protocol on Biosafety to the Convention on Biological Diversity and has set up a National Biosafety Commission, as well as biosafety committees in the areas 
                                               
112 The database is available online at: http://www.aupsa.gob.pa/RES . 
113 These are: Manual of Procedure for the sanitary elig ibility of countries, regions, zones and provinces; 
and phytosanitary recognition of: areas,  places, sites free of quarantine diseases and areas of low prevalence 
of regulated pests (MPDNN-001-09, text of 15 March 2011); Manual of Procedure for approval of facilities, production chains and/or processing plants for the ex port of food to the Republic of Panama (MPDNN-005-09, 
text of 15 March 2011); and Manual of Procedure for th e recognition of the equivalence of a sanitary 
or phytosanitary measure that is specific or related to a particular product or a particular category of products, 
or at the system level (MPDNN-004-09, text of 15 March 2011). The countries recognized as eligible to export certain products to Panama in 2007-2013 are listed in the Annex to Decision (Resuelto)  AUPSA-DINAN 
No. 092 – 2007 (of 2 March 2007), and the facilities approved can be viewed on AUPSA's website. 
114 Article 53 of Decree Law No. 11 of 22 February 2006. 
115 Article 54 of Decree Law No. 11 of 22 February 2006. 
116 AUPSA (2011). 
117 Article 55 of Decree Law No. 11 of 22 February 2006. 
118 AUPSA (2009). 
119 This applies to foods covered by AUPSA-DINAN Decisions (Resueltos) : 003-2006, 008-2006, 
049-2007, 054-2007, 262-2007, 055-2008, 057-2008, 152-2008 and others. WT/TPR/S/301/Rev.1 • Panama 
 
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  of health, the environment and agriculture.120 The authorities are planning to develop more rules 
in this regard. 
3.140.  The CNA is empowered to accredit or certify national sanitary and phytosanitary testing 
laboratories. It is also working, however, on obtaining their international certification. For those 
laboratories undertaking analyses for the purpose of importing food, the accreditation given by the 
CNA has to be approved by AUPSA. The CNA recognizes the tests carried out by foreign laboratories accredited by international organizations. 
3.141.  The Panamanian authorities retain the right to undertake laboratory testing when goods 
arrive at entry points in order to ensure that they comply with sanitary and phytosanitary requirements and the legislation applicable. The tests are carried out randomly by means of a 
sample based on the product's risk and origin an d the importer's background, taking into account 
international sanitary or phytosanitary warnings and any cases of non-conformity detected 
in previous imports. Imports of live animals an d plants, fresh fruit and vegetables and grains 
undergo testing in 100% of cases. 
3.142.  Since 2006, Panama has recognized the equivalence of the sanitary and phytosanitary 
systems of the United States for meat (including bovine and pigmeat), poultry and poultry products, as well as dairy produce and other processed products for human or animal 
consumption.
121 Panama is still working on achieving the equivalence of its sanitary system for 
meat products with those of the United States. Since 2009, Panama has also recognized as equivalent Canada's sanitary system for bovine and pigmeat products (chilled, frozen or fresh). It recognizes as well the equivalence of the sa nitary systems of Italy and Spain for cheese and 
pigmeat products having undergone inactivation treatment: and of Denmark and the Netherlands 
for dairy produce.
122 
3.143.  Chapters on SPS measures appear in the trade agreements signed by Panama. 
These determine that the application of such measures must be based on international regulations 
and advocate recognition of equivalence. Panama has undertaken to adopt the Central American Regulations on Sanitary and Phytosanitary Measures and Procedures when the Protocol 
incorporating Panama into SIECA comes into force. These regulations seek the gradual 
harmonization of SPS measures in intraregional trade.
123 
3.3  Measures directly affecting exports 3.3.1  Export procedures and requirements 
3.144.  VICOMEX, within the MICI, is responsible for regulating procedures relating to exports.
124 
The bodies involved in export are ANA; MIDA, thro ugh the National Animal Health and Plant Health 
Directorates and the Executive Directorate of Agricultural Quarantine; MINSA, through DEPA; 
and the Panamanian Aquatic Resources Authority (ARAP).  
3.145.  The following documents are required in order to export from Panama: the export 
declaration, the sworn commercial invoice and the certificate of origin. Companies exporting for 
the first time must submit their single taxpayer's registration so as to be registered in SIGA's 
electronic system. Furthermore, depending on the nature of the product to be exported and the 
requirements in the country of destination, it may be necessary to have a sanitary certificate (food and seafood), an animal health certificate (live animals), a phytosanitary certificate 
(fresh vegetables and fruit, grains and wood) or a catch certificate (seafood and fish), issued by 
                                               
120 The Cartagena Protocol was approved by Law No. 72 of 26 December 2001, and Law No. 48 
of 8 August 2002 created the National Biosaf ety Commission and the sectoral committees. 
121 WTO document G/SPS/N/EQV/PAN/1 of 9 Augu st 2007. See also the AUPSA press release, Medidas 
sanitarias y/o fitossanitarias para la importación de alimentos originarios de los Estados Unidos de América  
of 17 May 2013. Online information viewed at: http://www.aupsa.gob.pa . 
122 The relevant resolutions can be viewed on AUPSA's website. 
123 COMIECO Resolution No. 271-2011. Online information viewed at: 
http://www.sieca.int/Portal/EnlacesDeInteres.aspx?NodoNavegacionId=11&NodoId=724 . 
124 VICOMEX was created by Law No. 53 of 21 July 1998. WT/TPR/S/301/Rev.1 • Panama 
 
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  the competent authorities.125 Export documents are forwarded through SIGA. It is not compulsory 
to use the services of a customs broker in order to export Panamanian products.  
3.146.  Panama has a single window in VICOMEX to centralize and streamline export formalities.126 
There are also single windows in the regional customs administrations.127 These windows offer 
services such as endorsement of export and re-export customs declarations; issue and 
endorsement of certificates of origin; sale an d endorsement of documents covering commercial 
activities in free zones. Officials from each of the bodies dealing with export transactions are, 
however, not present at all these windows. In recent years, the authorities have been working 
on computerizing all the formalities and setting up a single electronic window. In January 2013, a Pilot Plan for a Single Electronic Foreign Trade Window was launched and it is hoped that the second phase will start operating in May 2015 wh en the remaining competent bodies are linked 
to the digital platform.  
3.147.  Through the single export window, VICOMEX issues certificates of origin for exports not 
eligible for preferential tariffs, for exports covered by trade agreements under which a certificate 
of origin issued by a government authority is required (the agreements with Colombia, 
the Dominican Republic, the EU and Chinese Taipei ), as well as for exports covered by the GSP 
and LAIA regimes. VICOMEX simply endorses the certificate of origin for exports covered by free 
trade agreements that permit self-certification (section 3.2.3). Panama's Chamber of Commerce, 
Industry and Agriculture, the Industry Associatio n of Panama (SIP) and the Panamanian Exporters' 
Association (APEX) are authorized to issue certif icates of origin, but these must be endorsed 
through the single export window and only serve as a reference to determine the origin of the 
goods and not for eligibility for tariff preferences.  
3.148.  Exports are not generally subject to physical inspection, except in some cases such as 
wood, which is inspected by ANAM, and polychaete worms (used in fishing), shark fins and lobster 
tails, which are inspected by ARAP. Through its respective directorates, MIDA performs inspections 
prior to issuing a phytosanitary certificate for the ex port of products of plant origin and the animal 
health certificate needed for the export of live animals. MINSA is responsible for inspecting plants 
processing food for export and issues the relevant sanitary certificates.  
3.3.2  Export taxes, charges and levies 3.149.  There are no domestic taxes on exports. Panama does not have any export taxes, 
except on processed wood from natural forests,  on which a levy of 1% of the export value 
is imposed by ANAM.
128 There are no minimum export prices. 
3.3.3  Export prohibitions, restrictions and licensing 3.150.  Cabinet Decree No. 41 of 11 December 2002 provides that all domestic products may be 
exported, with the exception of drugs (unless they are for medicinal or scientific purposes); 
products endangering the safety of fauna, flora or the nation's cultural, historical or archaeological heritage; staple goods of which there is a shortage in Panama and those determined by the 
Executive as being in Panama's economic interests. The authorities have indicated that the latter 
situation has not yet occurred. 
3.151.  Executive Decree No. 83 of 10 July 2008 (Artic le 6) prohibits the export of wood in the 
form of logs, stumps, roundwood or blocks, sawn or roughly dressed, of any species from natural 
forests.
129 The objective is to ensure the sustainable use of this natural resource and to boost 
national value added by processing the wood. Panama does not allow the export of certain plants 
                                               
125 See online information from Panama Export at: 
http://www.panamaexport.gob.pa /es/documentacion-y-tramite/documentos-y-tramites-para-la-
exportacion.html .  
126 Created by Executive Decree No. 53 of 15 July 1985. 
127 Located in Colón and Comarca Kuna Yala; Chir iquí; Bocas del Toro; Coclé, Veraguas, Herrera 
and Los Santos; Tocumen airport; Panama City and Darién. 
128 Forestry Law No. 1 of 3 February 1994. 
129 Executive Decree No. 83 of 10 July 2008 (which repealed Executive Decree No. 57 of 5 June 2002) 
allows the export of wood from natural forests provided that it involves finished products or wood processed 
to a higher degree than simply sawn or roughly dresse d; or wooden frames to be used for market research. WT/TPR/S/301/Rev.1 • Panama 
 
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  and animals in danger of extinction pursuant to the International Convention on International 
Trade in Endangered Species of Wild Fauna and Flora (CITES).130 Panama also regulates the export 
and re-export of substances controlled by the International Narcotics Control Board. 
3.152.  In addition to any requirements or certificates which the country of destination may 
determine, in Panama the export of some products is restricted or requires a special procedure, 
as shown in Table 3.6. 
Table 3.6 Exports subject to co ntrol or special procedures 
Product Procedure Competent body Legislation 
Polychaete worms 
(marine species) and lobster tails  Resolution and 
marketing permit  Panamanian Aquatic 
Resources Authority (ARAP) Executive Decree No. 4 
of February 1997 and Executive Decree No. 15 of 30 March 1981  
Shark fins Export certificate ARAP Law No. 9 of 16 March 2006 
and Resolution No. 022-2011 
of 10 February 2011  
Wood  Permit and export 
transport document  National Environment Authority (ANAM) Executive Decree No. 83 
of 10 July 2008 
Inflammable products Authorization Fire brigade Law No. 48 of 31 January 1963, 
Law No. 21 of 18 October 1982, 
Resolution No. CDZ03-99 
of 11 February 1999 and Resolution 
No. 132-05 of 31 August 2005  
Firearms, ammunition, explosives, non-lethal defensive and similar articles. Weapons of mass destruction, including dual application technologies for final use in weapons of mass destruction Authorization Ministry of the Interior 
and Justice  Decree No. 354 of 29 December 1948, 
Decree No. 2 of 2 January 1991 and Law No. 48 of 1980.   Law No. 27 of 17 April 2013  
Farmed frogs and lizard 
skin  CITES export 
certificate  ANAM Law No. 24 of 7 June 1995; 
Law No. 39 of 24 November 2005; 
Executive Decree No. 43 
of 7 July 2004; and CITES  
Source: WTO Secretariat, with online  information from ANA, viewed at: 
http://www.ana.gob.pa/images/stories/Articulos/r egimenes/exportacion/regimendeexportaciondefini
tiva.pdf ; and information from Exporta Fácil , viewed at: http://www.exportafacil.gob.pa/exporta-
facil/que-no-puedo-exportar.html  and WTO (2007). 
3.3.4  Export incentives 
3.153.  Panama has a number of export support programmes. These include drawback, temporary 
import, and various types of special economic zo nes (free zones, the ZLC and the Panama-Pacific 
Special Economic Area), as well as other tax concession schemes. During the period under review, 
Panama amended its legislation in order to comply with the rules in the WTO Agreement on Subsidies and Countervailing Measures. 
3.154.  Panama notified the WTO of three export subsidy programmes: the ZPE, ROIN
131 
and CAT programmes.132 In 2006, Panama sought an extension from the WTO for the elimination 
of export subsidies granted under the ZPE and ROIN programmes (it did not request an extension for the CAT).
133 
3.155.  The extension was approved in July 2007,  thus allowing Panama to maintain export 
subsidies under these two programmes until 31 December 2015, provided that it adopts a plan of action for their elimination.
134 In 2010, Panama notified the WTO of the action taken 
                                               
130 This applies, for example, to wood of the species Dalbergia retusa  and Dalbergia darienensis  
(cocobolo), whose export is subject to Decree No. 83 of 10 July 2008, pursuant to Resolution AG No. 0260-2011 of 28 April 2011 and Resolution AG No. 0696-2013 of 17 October 2013. 
131 The ROIN programme also gives tax incentives to companies producing for the domestic market. 
132 WTO document G/SCM/N/95/PAN of 3 July 2003. 
133 WTO document G/SCM/W/537 of 23 June 2006. 
134 WTO document WT/L/691 of 31 July 2007. WT/TPR/S/301/Rev.1 • Panama 
 
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  to dismantle the subsidies granted under the ROIN (sections 3.4.1.1 and 3.4.1.2) and ZPE 
programmes.135 In 2011, Panama notified the adoption of a new law on free zones repealing the 
law on the ZPE (section 3.3.4.2).136 
3.156.  Panama has not submitted any notification  on agricultural export subsidies since 2007. 
3.3.4.1  Drawback, duty-free replacement of goods and temporary admission regimes 
3.157.  Cabinet Decree No. 41 of 11 December  2002 governing the drawback, duty-free 
replacement of goods and temporary admission regimes remains in force.  
3.158.  The drawback regime allows all the taxes paid on the import of goods used to produce the 
goods for export to be refunded at the time of export.137 The sale of raw materials, containers, 
packaging and semi-finished products on the domestic market to companies whose production is at least 90% for export is also deemed to be an export. 
3.159.  The duty-free replacement of goods regime allows goods that are equivalent (of a similar 
type, quality and technical specifications) to be im ported free of import duty to replace imported 
goods used to obtain products previously exported definitively. Goods that are incidental to 
production (for example, fuel) or parts for machinery or equipment cannot be replaced.
138 
3.160.  The temporary admission regime allows du ty-free import of goods intended for re-export 
in the same state. Security has to be posted to cover all duties if the goods remain in Panama.139 
3.3.4.2  Free zones covered by Law No. 32 of 2011 
3.161.  In order to comply with its commitment to eliminate export subsidies, Panama repealed 
Law No. 25 of 30 November 1992, which governed the ZPE.140 Instead, it enacted Law No. 32 
of 5 April 2011 establishing a new free zones regime and its implementing Regulations, Executive 
Decree No. 26 of 9 February 2012. Promoters and companies that operated under the ZPE regime 
have continued their operations under the new free zones law, but the export subsidies they receive will terminate on 31 December 2015. 
3.162.  In order to dismantle these subsidies, Law No. 32 on free zones introduces radical changes 
to the tax regime.
141 As of 1 January 2016, companies established in free zones will have to pay 
the following taxes, inter alia : 
a. income tax (ISR) and the ITBMS on local leasing and subleasing operations; 
b. the 5% tax on dividends, irrespective of the source, and the 2% additional tax applicable 
if no profits are distributed; 
c. the 1% annual tax on the company's capital (a minimum of B 100 and a maximum 
of B 50,000); 
d. the ISC on goods and services (section 3.2.5); and 
e. the Special Interest Compensation Fund (FECI) on loans, unless they are guaranteed 
by bank deposits. 
3.163.  Based on information from ANIP, Table 3.7 shows the tax incentives given over the period 
2007-2012 to companies in the former export processing zones and, since 2012, to those in the 
free zone covered by Law No. 32. 
                                               
135 WTO documents G/SCM/N/211/PAN of 24 June 2010 and G/SCM/N/211/PAN/Corr.1 (Spanish only) 
of 29 September 2010. 
136 WTO document G/SCM/N/253/PAN-G/SCM/N/260/PAN of 2 July 2013. 
137 Articles 193 and 194 of Cabinet Decree No. 41 of 11 December 2002. 
138 Article 200 of Cabinet Decree No. 41 of 11 December 2002. 
139 Articles 195-200 of Cabinet Decree No. 41 of 11 December 2002 
140 For further details on the previous ZPE regime, see WTO (2007). 
141 WTO document G/SCM/Q3/PAN/19 of 12 October 2012. WT/TPR/S/301/Rev.1 • Panama 
 
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  Table 3.7 Tax incentives given in free zones, 2007-2012 
(Balboas) 
 Income tax (ISR)  Amount of the incentive  
2007 2,945,259,376 883,577,813 
2008 3,315,318,779 994,595,634 
2009 1,590,705,305 477,211,592 
2010 1,750,532,786 525,159,836 
2011 1,386,038,423 415,811,527 
2012 1,176,157,185 323,443,226 
Source: Information provided by ANIP. 
3.164.  Under the new regime, the tax concessions given to companies established in free zones 
consist of exemption from all domestic taxes, charges and levies (except for those mentioned in the preceding paragraph), as well as import duties, for all operations, transactions and transfer 
of movable and immovable property, the purc hase of equipment and building materials, 
raw materials, machinery, tools, accessories, inputs and any good or service needed for their operations. Services companies, hi-tech companies, research and higher education centres will still 
be exempt from the ISR as long as they engage in foreign operations and operations among 
themselves. Promoters of free zones, for their part, remain exempt from the ISR and ITBMS on local leasing and subleasing operations.
142 
3.165.  Goods produced in free zones and exported to markets abroad are not subject to any type 
of domestic taxes, charges and levies or export du ties. Goods produced in or introduced into free 
zones and then imported into national fiscal territory must pay the applicable customs tariffs or duties and the corresponding ISR. Goods manufactured in free zones using foreign inputs 
and then imported into national fiscal territory pa y customs tariffs and duties solely on the value 
of the foreign inputs, using as a basis the tariff on the end product, for which the importer has to forward the Input-Product Ratio Sheet, approved by ANA.
143 
3.166.  Another change introduced by Law No. 32 is extension of the categories of company 
eligible for the free zone regime to include all those engaged in manufacturing, assembly or processing of finished and semi-finished products; hi-tech and scientific research firms; higher 
education establishments; companies providing logistics, environmental and health services, etc. 
Companies in free zones are not, however, authoriz ed to import finished products for re-export 
without any form of processing to add local value.
144 
3.167.  A licence has to be obtained from the National Free Zones Commission (CNZF)145 in order 
to act as a promoter or operator of a free zone, and the applicant has to be registered in the 
Official Register of Free Zones. Likewise, companies wishing to set up business in a free zone have to obtain a licence from the CNZF and be registered in the Official Register of Companies 
Established in Free Zones. No minimum capital is required of free zone companies in order to start 
their business. Promoters of free zones, on the other hand, have to invest a minimum of B 250,000 and have at least two hectares available for the zone. 
3.168.  Companies established in free zones also benefit from streamlined customs procedures, for 
example, use of a single form for the Free Zone Commercial Activity Declaration, which can be used for imports, exports and transfer of goods. Th is form has to be submitted at the VUCE and is 
verified by the customs office operating in each free zone.
146 Companies operating in free zones 
are also given migration and labour facilities. 
                                               
142 Articles 31-37 of Law No. 32 of 5 April 2011 and Executive Decree No. 26 of 2012. 
143 Article 36 of Law No. 32 of 5 April 2011. 
144 Article 24 of Law No. 32 of 5 April 2011. 
145 The CNZF was created by Law No. 32 of 5 April 2011 as a body under the Ministry of Trade and 
Industry and is composed of the mini sters (or their representatives) of th e MICI, MEF, Employment and Labour 
Development, MINSA, the Director-General of ANA, the Di rector-General of the National Migration Service, the 
National Secretary for Science, Technology and Innovati on, a representative of SI P and one of the free zone 
promotion companies. 
146 Commercial activities in free zones are governed by Executive Decree No. 26 of 9 February 2012. WT/TPR/S/301/Rev.1 • Panama 
 
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  3.169.  At April 2014, 16 licences for free-zone companies had been issued under Law No. 32 
of 2011, of which: ten were operating, three were in the process of setting up and another three were preparing the infrastructure for their operations. In all, 96 firms were established in free zones, employing around 2,600 people. The main branches of activity for free-zone companies 
are: services (40%), processing of finished or semi-finished products (31%), assembly (16%) and 
manufacturing (13%).
147 In 2013, exports from free zones reached B 463.6 million, while imports 
amounted to B 414.5 million; both figures are fairly modest and account for 3.0% and 1.6% 
of total exports and imports, respectively (Table 3.8). 
Table 3.8 Value of free zone exports and imports, 2007-2013 
(B million) 
 Exports (f.o.b.) % of total exportsa Imports 
(c.i.f.) % of total importsb 
2007 122.7 1.3 97.7 0.7 
2008 171.9 1.6 169.9 0.9 
2009 129.8 1.1 132.2 0.8 
2010 93.3 0.8 162.4 0.8 
2011 163.5 1.0 187.4 0.7 
2012c 312.1 1.8 276.4 1.0 
2013c 463.6 3.0 414.5 1.6 
a Total exports include re -exports from the ZLC. 
b Total imports include imports into the ZLC. c Provisional figures. 
Source: Information on free zones prov ided by the Panamanian authoritie s on the basis of data from the 
Office of the Comptroller-General of th e Republic. Information on total trade
 based on data  from the 
National Institute of Statistics and Censuses (I NEC) in the Office of the Comptroller-General 
of the Republic. 
3.3.4.3  Colón Free Zone 
3.170.  The ZLC was set up in 1948 and is situated at the Atlantic entrance to the Panama 
Canal.148 The fiscal and corporate benefits afforded by the ZLC and its privileged geographical 
position make it a pole of attraction for investment and an important multimodal logistics centre, 
with four container ports, a motorway and an airport for cargo and passengers.149 The ZLC is the 
world's second largest free zone after Hong Kong , China, and is of the utmost importance for 
Panama's economy. In 2012, when an historic record was reached, the ZLC handled commercial 
operations (imports and re-exports) amounting to cl ose to US$31 billion, corresponding to 7.5% of 
national GDP. In 2013, there was a drop in commercial operations to US$27.421 million (Table 3.9). 
Table 3.9 Foreign trade in the Colón Free Zone, 2007-2013 
(US$ million) 
 Imports Re-exports Total trade 
2007 7,634 8,519 16,154 
2008 9,056 9,607 18,664 
2009 8,260 10,922 19,182 
2010 10,221 11,389 21,609 
2011 14,041 15,111 29,152 
2012a 14,651 16,142 30,793 
2013a 12,686 14,736 27,421 
a Provisional figures. 
Source: Information provided by the Panamanian authorities. 
                                               
147 Information provided by the Panamanian authorities. 
148 The ZLC was created by Law No. 18 of 17 June 1948, and implemented by Executive Decree No. 428 
of 7 September 1953. 
149 Online information on the ZLC viewed at: http://www.zolicol.gob.pa/index.php  and 
http://www.zolicol.gob.pa/detalle.php?cid=2&sid=21&id=54 . WT/TPR/S/301/Rev.1 • Panama 
 
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  3.171.  In order to set up in the ZLC, companies have to obtain an operating permit, undertake 
to re-export at least 60% of imported goods and employ a minimum of five Panamanian staff on a permanent basis.
150 No minimum investment capital is required. Companies established in the ZLC 
may engage in import, export, re-export, manuf acturing, selling, marketing or distribution, 
and may have their own physical facilities or be represented by a direct user. 
3.172.  The fiscal concessions available to ZLC companies include exemption from payment 
of taxes on: imports, re-exports and manufacture of goods, re-export earnings and the 
repatriation of dividends, as well as exemption fr om other national and provincial taxes. They also 
benefit from low-cost leasing of land and property, discounted leasing costs for public services (leaseback), migration concessions for foreign executives, and computerized commercial transactions. In 2009, a Declaration of Electr onic Commercial Activity (DMCE) scheme was 
introduced to speed up trade formalities for ZLC companies. This scheme enables information to 
be exchanged among those involved in processing  declarations of commercial activity. These are 
approved automatically and, if any controls are needed, the information is forwarded under the 
DMCE scheme to the government body responsible for approval.
151 
3.173.  The ZLC hosts around 3,000 companies and provides direct employment for 30,000 people 
and indirect employment for another 5,000. The ma in trade flows handled in the ZLC concern the 
import of goods from Asia (essentially China and Singapore) and their re-export to Latin America 
(Bolivarian Republic of Venezuela and Colombia) and Puerto Rico. In value terms, the main products traded are textiles and clothing, footwear, electrical and electronic appliances, and pharmaceuticals.
152 
3.174.  In 2013, the ZLC encountered problems that led to a slow-down in trade activity, 
owing in part to Colombia's imposition of a compound tariff which affected Panama's exports of clothing and footwear and because of delays in payment by Venezuelan traders to companies 
established in the ZLC. With regard to the me asure introduced by Colombia, Panama requested 
the establishment of a WTO dispute settlement panel in August 2013, and this was set up in January 2014.
153 
3.3.4.4  Other free zones 
3.175.  In addition to the free zones covered by  Law No. 32 of 2011 and the ZLC, there are other 
special economic areas in specific geographical areas: the Panama-Pacific Special Economic Area and the Barú Free Zone, which are governed by their own laws. 
3.176.  The Panama-Pacific Special Economic Area was created by Law No. 41 of 20 July 2004
154 
in order to boost investment and create jobs in the zone. The aim is to turn the Area into a regional centre for the distribution of goods because of its position at the Pacific entrance to the 
Panama Canal and connections to road and rail networks and the international airport.
155 In order 
to operate in the Area, companies must be registered with the Panama-Pacific Area Agency, a government body which manages the Area. Th ere is no minimum investment requirement. 
The activities of companies registered are exempt  from payment of indirect taxes and import and 
export/re-export duties, but the following direct taxes have to be paid: the ISR, the tax on dividends, the additional tax and the tax on remittances abroad.
156 Companies in the Area also 
benefit from special customs procedures, with customs offices situated in the Area 
available 24 hours on request and an integrated pr ocedures scheme (SIT), which acts as a single 
                                               
150 Resolution JD 06-06 of 19 June 2006. Online information viewed at: 
http://www.zolicol.gob.pa/detalle.php?cid=1&sid=19&id=56 . 
151 Online information on th e DMCE scheme, viewed at: http://dmce.zonalibredecolon.gob.pa . 
152 ICEX (2012). 
153 For further details, see WTO document series WT/DS461. 
154 Amended by Law No. 31 of 22 June 2009, Law No. 69 of 6 November 2009, Law No. 8 
of 15 March 2010 and Law No. 33 of 30 June 2010. 
155 Online information from the Panama -Pacific Area Agency, viewed at: 
http://www.app.gob.pa/index.php?p=noticias  and http://www.app.gob.pa/i ndex.php?p=ventajas . 
156 Companies registered as involved in "special bu siness activities" in accordance with Law No. 41 
of 2004 are exempt from the ISR, the tax on dividends, the additional tax and the tax on remittances abroad. WT/TPR/S/301/Rev.1 • Panama 
 
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  window.157 The Law on Legal Stability of Investment also applies to them, as does flexibility with 
regard to migration and labour laws applicable to their employees. 
3.177.  Companies established in the Panama-Pacific Area may engage in any form of production 
or trade activities, including the import and re-export of finished products at the wholesale level. 
The incentives are, however, intended to attract activities such as the head offices of 
multinationals, call centres, logistics and multimodal services, hi-tech manufacturing, aviation and related services, digital and data transmission, and the sale of services to ships, aircraft and 
passengers, inter alia . In January 2014, there were 174 companies in the Panama-Pacific Special 
Economic Area, but it was not possible to obtain statistics on their imports and exports. 
3.178.  The Barú Free Zone is situated in the prov ince of Chiriquí on the border with Costa Rica 
and was set up by Law No. 19 of 4 May 2001 with the aim of promoting investment in this 
geographical area by offering tax and other incentives. Among the benefits available to companies 
operating in the Barú Free Zone are exemption from payment of all national taxes and import 
duties.
158 Companies may carry out industrial, trade and tourism activities. Since it was set up, the 
Barú Free Zone has only attracted around 15 companies and its performance has not come up to 
expectations. 
3.3.4.5  Other export incentive programmes 
3.3.4.5.1  CAT and CeFA 
3.179.  During the period under review, Panama granted export incentives for agricultural 
products through the CAT and the Agricultural Exports Promotion Certificate (CeFA) programmes; the former was eliminated while the latter conti nues to apply, except in the case of exports 
to some countries with which Panama has signed trade agreements. 
3.180.  Until 31 December 2009, exports of non-traditional agricultural products were eligible for 
the CAT.
159 This was a tax credit used to pay domestic and import taxes. To be eligible for the 
CAT, exporting firms had to meet a minimum percentage of national value added amounting 
to 20% for those established in the metropolitan region and 10% in other regions. The credit granted corresponded to a percentage of the nati onal value added of the product exported, which 
increased if the company used technologies to  upgrade productivity, and varied from 5% 
to 12%.
160 As the CAT constituted an export subsidy within the meaning of the WTO 
SCM Agreement, the Panamanian authorities decided to eliminate it and replace it with the CeFA 
on 1 January 2010. Companies which exported agricultural products with CAT benefits up until the 
end of 2009 could request the certificate up to 31 March 2010 and it became invalid 
on 31 May 2013.161 
3.181.  The CeFA was introduced by Law No. 82 of 31 December 2009, and implemented 
by Executive Decree No. 65 of 25 March 2010, in or der to boost the competitiveness of exports 
and growth of the agricultural sector.162 The CeFA consists of a tax credit that can only be used to 
pay national taxes (except municipal taxes). Its value corresponds to a percentage (10% or 15%) 
of the reference value per unit exported. The refere nce value is the estimated average of the cost 
of marketing incurred for wrapping, packin g, transport and domestic freight costs.163 The exporter 
has six months from the date of exporting the goods in which to request the certificate and must register with the MICI the first time it makes such a request. The CeFA is granted without any 
                                               
157 Executive Decree No. 77 of 2006 and online information from the Panama-Pacific Area Agency, 
viewed at: http://www.app.gob.pa/index.php?p=sit . 
158 Law No. 19 of 4 May 2001 and online information from the Barú Free Zone, Beneficios , viewed at: 
http://www.zfb.gob.pa . 
159 The CAT was introduced by Law No. 108 of 30 December 1974, which was amended on a number 
of occasions. Law No. 11 of 23 January 2009 extended its applicability until 31 December 2009. 
Laws No. 3 of 8 January 2007, No. 37 of 1 August 2007, No. 11 of 23 January 2009, No. 82 
of 31 December 2009 and No. 28 of 8 March 2012. Executive Decree No. 62 of 30 November 2007. 
160 For further details, see WTO (2007). 
161 Article 14 of Law No. 28 of 8 March 2012. 
162 Law No. 82 of 31 December 2009 was amended by Law No. 28 of 8 March 2012. 
163 See Annex 1 to Law No. 82 of 31 December 2009. WT/TPR/S/301/Rev.1 • Panama 
 
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  national value added requirement. Companies established in free zones are not eligible for the 
CeFA. Some 250 agricultural products may be granted the CeFA.164 
3.182.  The amounts of the incentives granted under the CAT and CeFA programmes over the 
period 2007-2013 are shown in Table 3.10. According to figures from the MICI, the value of the 
CeFAs issued in 2011 corresponded to 13% of the f.o.b. value of total exports of the products 
concerned. Pineapples received the greatest support under the CeFA.165 
Table 3.10 Cost of the tax incentives give n under the CAT, CeFA and CPC programmes, 
2007-2013 
(B million) 
 2007  2008  2009  2010  2011 2012a 2013a 
Tax Credit Certificate (CAT) 33.4  22.4 22.7 18.5 11.6 0.2 4.3  
Agricultural Exports Promotion Certificate 
(CeFA) n.a. n.a. n.a. 0.7 6.8 10.7 10.6 
Payment certificate (CPC)b 1.5 2.6 2.0 0.8 2.9 3.9 1.4  
a  Provisional figures. 
b  Credit used (does not necessarily correspond to the credit granted). 
n.a  Not applicable. Source:  Figures provided by ANIP and th e MEF's Directorate-General of Revenue. 
3.183.  In some of the trade agreements it has signed, Panama has undertaken not to apply the 
CeFA. For example, on 31 October 2012, when  the Trade Promotion Agreement with the 
United States came into force, Panama notified exporters that, as of that date, the CeFA was 
eliminated for exports to the United States. Likewise, the CeFA ceased to apply to exports to Canada on 1 April 2013 and to those to the European Union on 15 August 2013, pursuant to the 
commitments undertaken by Panama in the respective agreements with these trading partners. 
The CeFA remains in force for exports to other countries with which Panama has trade relations. 
3.3.4.5.2  Payment certificates 3.184.  Payment certificates (CPC) are granted to taxpayers which export or re-export goods and 
which, because of the scale of their operations, continually maintain a balance in their favour in 
ITBMS declarations.
166 The CPC can only be used to pay the ITBMS. In 2013, the fiscal cost of this 
instrument for the State was B 1.4 million (Table 3.10). 
3.3.5  Export financing, insurance and guarantees 
3.185.  There are no official export financing or export insurance programmes in Panama. 3.186.  The private firm Panamericana de Seguros S.A. offers export credit insurance. The policy 
only covers the commercial risks and the amount insured is up to 85% of the credit, but the term 
may not exceed one year. The premium is determined according to the financial situation of the buyer, economic and political stability in the country of destination of the exports and the particular features of each export transaction. 
3.3.6  Export promotion 
3.187.  Promoting exports is a cornerstone of Panama's foreign trade policy. The Government 
particularly promotes exports of high value-adde d non-traditional products and the expansion of 
exports to new markets. 
3.188.  The MICI's VICOMEX is in charge of promoting exports through the National Export 
Promotion Directorate (DNE) and the Investment and Export Promotion Agency (PROINVEX). 
                                               
164 The list of products can be found in Annex 1 to Law No. 82 of 31 December 2009. 
165 Online information from the MICI, viewed at: http://www.mici.gob.pa/detalle.php?cid=18&id=489 . 
166 The legal basis for the CPC is Law No. 75 of 1976. WT/TPR/S/301/Rev.1 • Panama 
 
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  The DNE is responsible for managing the single export window (section 3.3.1). PROINVEX, created 
in 2010, is the agency in charge of promoting exports and attracting foreign direct investment.167 
3.189.  PROINVEX offers training services to micro, small and medium-sized entrepreneurs, 
promotes trade missions abroad and advises exporters on export formalities, among other 
tasks.168 During the review period, PROINVEX co ntinued to implement the PANAMÁ EXPORT 
2009-2014 programme (the successor to the EXPORTA 2004-2009 programme) and introduced other programmes such as the Agricultural Exports Platforms and the Exporta Fácil programme. 
3.190.  The objective of the PANAMÁ EXPORT programme is, inter alia , to assist companies with 
externalization and consists of promotion and ma rketing technique campaigns, organization of 
trade fairs and missions, training programmes and upgrading of the single export window.
169 
In 2012, this programme's total budget amounted to B 925,979. In December 2012, the MICI 
launched the Panamaexport.gob.pa website, through which exporters can register to announce 
their products and services.170 
3.191.  The purpose of the Agricultural Export Plat forms is to diversify and increase the number of 
exporters and the value of agrifood exports to spec ific markets. It is aimed at companies in the 
agrifood sector (some 25 firms) which have no export experience or do not regularly export to the chosen market. The programme consists of three stag es: training in export logistics; validation of 
the product (sending samples to the destination market, visits to potential buyers, suggestions for 
adapting the product, obtaining samples and prices for competing products); and in situ marketing 
(attendance at trade fairs and in trade missions, visits to supermarkets and distribution centres, and meeting with potential partners). The authorities have indicated that exports from the 
agroindustrial sector have performed positively, increasing from US$66 million in 2008 to around 
US$130 million in 2013. 
3.192.  The Exporta Fácil programme is designed to facilitate the artisanal exports of micro, small 
and medium-sized enterprises (MSMEs). It is a simplified export scheme using postal services and 
allows these companies to send goods up to a maximum weight of 30 kg per package and a value not exceeding US$5,000. The aim of this scheme is to improve efficiency and achieve low costs, 
as well as to offer competitive rates and the possibility of tracking dispatches. No customs broker 
is required for export formalities. The export declaration is completed on the Exporta Fácil website
171 and sent to the Posts and Telegraph Office (COTEL) electronically. The goods are 
deposited unwrapped at the offices of Exporta Fácil located in COTEL's branches, together with a 
copy of the export declaration and the necessary certificates (origin, sanitary and quality).172 
The time-limits for dispatch of the goods by COTE L are 7 to 30 days. The first dispatches through 
Exporta Fácil took place in December 2011. The sc heme is available in the provinces of Panama 
City, Los Santos, Herrera and Coclé and will gr adually be extended to the rest of Panama.173 
To date, some 10 to 20 companies regularly use the Exporta Fácil scheme. 
3.193.  The private sector is actively involved in  promoting exports. APEX groups and represents 
exporters from all economic sectors and small and medium-sized enterprises seeking to 
externalize.174 Other groups of exporters include the Group of Exporters of Non-Traditional 
Agricultural Products of Panama (GANTRAP), th e Seafood Producers' and Exporters' Association 
(APEXMAR) and SIP. Representatives of APEX an d SIP belong to the National Commission for 
International Trade Negotiations, where they repr esent the interests of the exporting sector in 
negotiations on trade agreements. 
                                               
167 Created by Executive Decree No. 134 of 14 July 2010. 
168 Online information from PROINVEX, viewed at: 
http://proinvex.mici.gob.pa/index.php?option=c om_content&view=article&id=95&Itemid=43&lang=es . 
169 Ministry of Trade and Industry (2009b). 
170 Online information from the MICI, viewed at: http://www.mici.gob.pa/detalle.php?cid=20&id=3939 . 
171 Available online at: http://www.exportafacil.gob.pa . 
172 For further details, see online informat ion from Exporta Fácil Panamá. Viewed at: 
http://www.exportafacil.gob.pa/exporta-facil/como-funciona.html . 
173 Online information from Exporta Fácil Panamá. Viewed at: http://www.exportafacil.gob.pa . 
174 APEX (2012). WT/TPR/S/301/Rev.1 • Panama 
 
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  3.4  Measures affecting production and trade 
3.4.1  Incentives 3.4.1.1  Official National Industry Register 3.194.  In 2006, Panama requested the WTO for an extension of the time-limit for eliminating the 
export subsidies granted under the ROIN programme.
175 This was granted in July 2007, thus 
allowing the companies registered to continue to  benefit from export subsidies under the ROIN 
programme up to 31 December 2015 (section 3.3.4).176 To meet its WTO commitment, Panama 
amended its legislation on the ROIN and informed beneficiary enterprises of the termination of the 
programme.177 It also introduced a new incentive scheme called the Industrial Promotion 
Certificate (CFI) (section 3.4.1.2). 
3.195.  Companies registered in the ROIN engage in industrial manufacturing or assembling and 
may produce either for the domestic market or wholly or partially for the export market. By the 
end of 2013, 152 companies had been regist ered, of which 90 were exporting firms.178 
3.196.  The tax incentives given to ROIN companies are determined in accordance with the 
company's type of registration (Table 3.11). For companies which produce entirely for export, 
for example, the benefits include, inter alia, exemption from import duty and the ITBMS on 
machinery, equipment and spare parts used in the production process, together with full 
exemption from the ISR on profits and from taxes on capital. All these benefits will remain in effect 
until 31 December 2015. 
Table 3.11 Tax incentives given under the ROIN programme 
1. Companies wholly engaged in export production  
Exemption from all levies, taxes or customs duties, and from the ITBMS on the import 
of machinery, equipment and spare parts used in the production process, excluding construction 
materials, vehicles, furniture, office supplies and any other inputs not used in the production 
process.  
Full exemption from income tax on profits, with the exception of mining industries or those using 
the country's natural resources. 
Full exemption from export tax (where applicable).  
Full exemption from sales taxes.  
Full exemption from production taxes. 
Full exemption from taxes on the company's capital or assets, except licence and immovable 
property taxes.  
2. Companies partially engage d in export production  
Full exemption from income tax on profits earned from production for export, with the exception 
of mining industries or those using the country's natural resources.  
Full exemption from export tax.  
Full exemption from export sales taxes (where applicable). 
Full exemption from export production tax.  
Deduction of fixed costs (interest, depreciation, maintenance) from taxable income, provided that 
total export sales do not exceed 20% of the total value of sales.  
                                               
175 WTO document G/SCM/W/537 of 23 June 2006. 
176 WTO document WT/L/691 of 31 July 2007. 
177 Law No. 11 of 4 January 2008 and MICI Resolution No. 2 of 4 June 2008. Online information viewed 
at: http://www.gacetaoficial.gob.pa/pdfTemp/26144/13142.pdf . 
178 Information provided by the auth orities. See also WTO document 
G/SCM/N/253/PAN-G/SCM/N/260/PAN of 2 July 2013. WT/TPR/S/301/Rev.1 • Panama 
 
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  1. Companies wholly engaged in export production  
3. Companies engaged in production for the domestic market 
Import duty equivalent to 3% of the c.i.f. value of the foreign inputsa entering into the composition 
or the production process, as well as machinery and equipment used in the production process, 
plus the ITBMS.  
Exemption from income tax on net profits reinvested in the expansion of their production capacity 
or in producing new articles, applicable to the portion of that reinvestment in excess of 20% 
of taxable income in the tax year concerned. 
Special carry-over regime for losses.  
Special depreciation formula.  
For companies setting up in the districts of Santiago, Chitré, Bugaba, Chorrera, Los Santos, 
Las Tablas, Aguadulce, Natá, Penonomé and in the province of Colón, the following benefits: 
(a) 100% exemption from real estate tax for a period of ten years; 
(b) 100% exemption from income tax on profits from their sales on the domestic market for the 
first five years of production and 50% for the following three years. 
a Import of raw materials, semi-f inished and intermediate goods, inputs, spare parts for machinery 
and equipment, together with  containers and packaging. 
Source: WTO document G/SCM/N/95/PAN of 3 July 2003 and information provided by the Panamanian 
authorities. 
3.197.  According to Panama's notifications to the WTO, during the period 2007-2012 the amount 
of the tax incentives given under the ROIN programme amounted to US$288.5 million, almost 66% of which were for exemption from, or a rebate on, import duty (Table 3.12). 
Table 3.12 Amount of the tax incentives under the ROIN programme, 2007-2012 
(US$ million) 
Type of incentive 2007  2008  2009  2010 2011 2012  
Import duty exemption or rebate  22.7  31.0 23.2 34.3 33.3 45.3  
Income tax exemption for reinvestment 4.8 11.2 16.2 11.4 16.5 3.0 
Exemption from income tax on profits  2.7  5.3 10.8 5.3 5.5 6.0  
Total 30.2 47.5 50.2 51.0 55.3 54.3 
Source: WTO document series G/SCM/N/*/PAN, several years. 
3.4.1.2  Industrial promotion certificate 
3.198.  In 2010, Panama notified the WTO that it had adopted the CFI as a measure for 
eliminating the export subsidies granted under the ROIN programme (section 3.4.1.1).179 
3.199.  The CFI was introduced by Law No. 76 of 2009, and implemented by Executive Decree 
No. 15 of 15 January 2010180, with the objective of promoting the development of Panama's 
industry by giving incentives designed to bo ost investment and competitiveness. It is a 
non-transferable tax credit valid for eight years, with which a company is able to pay all national taxes, charges and contributions. It is not valid for the payment of the tax on dividends, the additional tax, the ICCDP or withholding taxes.
181 
3.200.  Companies engaged in manufacturing, agro-industry, processing of marine resources, 
obtaining and processing agricultural and forestry  raw materials and which carry out the following 
activities are eligible for the CFI: R&D, quality management and assurance systems, 
environmental management, investment or reinve stment of profits, human resource training 
and coaching and creating production-related jobs.182 Companies which receive any other form 
of tax incentive and those engaged in communicati ons, supplying electric power, construction, 
packaging and distribution of products are not eligible for the CFI.183 Investments made as 
of 23 January 2010 may benefit from the CFI. 
                                               
179 WTO documents G/SCM/N/211/PAN of 24 June 2010 and G/SCM/N/211/PAN/Corr.1 (Spanish only) 
of 29 September 2010. 
180 This Decree was amended by Executive Decree No. 66 of 25 May 2010. 
181 Article 14 of Law No. 76 of 23 November 2009. 
182 WTO document G/SCM/Q3/PAN19 of 12 October 2012. 
183 Article 2 of Law No. 76 of 23 November 2009. WT/TPR/S/301/Rev.1 • Panama 
 
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  3.201.  The CIF consists of a percentage of the investment made corresponding to 35% for 
agro-industrial companies and 25% for other comp anies. The goods that have benefited may not 
be sold or transferred for a period of five years as of their purchase or import. Applications for the CFI are made to the MICI and the National Industrial Policy Council (CONAPI)
184, which approves 
or rejects the application. MEF issues the CF I following endorsement by the Office of the 
Comptroller-General of the Republic. Companies have to prove that they have created new jobs in order to apply for the CFI.
185 
3.202.  Beneficiaries of the CFI may also opt for the following benefits: 
a. preferential import duty of 3% of the c.i.f. value for imports of raw materials, 
semi-finished products, machinery, equipment and spare parts, containers, packaging and other inputs used in the composition or preparation of their products;
186 
Raw materials, semi-finished products and other inputs deemed to be sensitive for the 
national economy are excluded;187 
b. carry-over of losses for the five tax years foll owing the issue of the certificate, in the 
amount of 20% per annum not exceeding half of taxable income; 
c. possibility of entering the customs drawback regime. 
3.203.  According to the information provided by th e authorities, in 2011 three applications for the 
CFI were endorsed representing a total of B 1.1 million; in 2012, ten applications were endorsed 
for an amount of B 2.7 million; and in 2013 ten applications corresponding to B 3.8 million were approved. To date, the CFI has been little used, pa rtly owing to the multitude and length of the 
bureaucratic formalities needed for its endorsement and the fact that many companies are still 
operating under the ROIN programme. 
3.4.1.3  Special regime for mult inational business headquarters 
3.204.  Law No. 41 of 24 August 2007, amended by Law No. 45 of 10 August 2012
188, introduced 
a special regime for the head offices of multinationals (SEMs) in Panama. Under this regime, SEMs 
which are set up in Panama and operate from there are eligible for tax incentives, as well as labour and migration facilities. A SEM is a multinational company which provides the services defined in 
Law No. 41 to the business grouping to which it belongs, or which establishes its head office in 
Panama.
189 In order to be eligible for the SEM regime, a licence issued by the MICI has to be 
obtained.190 
3.205.  The tax incentives available to SEMs are exemption from the ISR and the ITBMS on 
services provided to their business grouping outside Panama which do not generate taxable 
income in Panama; exemption from the tax on dividends and the additional tax. The supply of services by SEMs within Panama is taxable. SEMs also pay the ITBMS on the purchase of goods or 
services within Panama and on their imports.
191 
3.206.  Medium- and high-level foreign personnel recruited by SEMs benefit from a special 
migration regime, and from exemption from the ISR if their salaries come from abroad, together 
with duty-free import of their household effects.  SEMs have the right to recruit the number of 
personnel "of confidence" and executives needed for their business. In addition, pursuant to 
                                               
184 CONAPI is composed of representatives of : MICI, MEF and MIDA, the National Science 
and Technology Secretariat, ANAM, the Office of the Comp troller-General of the Republic, SIP, APEX, 
Agricultural Producers of Panama and th e National Private Enterprise Council. 
185 WTO document G/SCM/N/253/PAN-G/SCM/N/260/PAN of 2 July 2013. 
186 Article 35 of Law No. 76 of 23 November 2009. 
187 Sensitive products are listed in Panama's WTO Schedule CXLI, Section IB, Tariff quotas, incorporated 
into Law No. 23 of 15 July 1997 (pork, chicken, milk and dairy produce, rice, potatoes, maize, tomatoes and beans) and the products listed in Cabinet Decree No. 25 of 16 July 2003 (onions, coffee, whether or not 
decaffeinated, raw cane sugar and refined sugar). 
188 Law No. 41 of 2007 was implemented by Executive Decree No. 28 of 2009, amended by 
Executive Decree No. 39 of 2009. 
189 Articles 3 and 4 of Law No. 41 of 24 August 2007. 
190 Online information on SEMs, viewed at: http://www.sem.gob.pa/requisitos.php . 
191 Articles 21-23 of Law No. 41 of 24 August 2007, amended by Law No. 45 of 2012. WT/TPR/S/301/Rev.1 • Panama 
 
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  Cabinet Decree No. 9 of 9 April 2013, they may al so opt for the legal stability of investment 
regime (section 2.4.1).  
3.207.  At December 2013, 101 companies had been accepted as SEMs, with activities in the 
following sectors: engineering and construction (13), logistics (7), automobiles (7), consumer 
goods (6), electronic goods, (6) finance (6), food  (5), industrial manufacturing (5), energy (5), 
pharmaceuticals (4), textiles (4), oil and gas (3), and other sectors (30).192 
3.4.1.4  Credit and financial incentives 
3.208.  There are two development banks active in  Panama: the National Bank of Panama (BNP) 
and the Agricultural Development Bank. The latter grants loans on preferential terms to businesses in the agricultural sector (section 4.2.2.2.2). 
3.209.  The BNP is the State's financial arm, and acts both as a development bank and a 
commercial bank. As a development bank, it grants loans at competitive rates in order to finance 
production activities, mainly in agriculture. In 2013, it granted loans amounting to B 3,264 million, 
of which B 2,765.6 million went to the private sector and the remainder to the public sector. 
In 2012, total loans provided by the BNP amounted to B 2,990.8 million, of which 
B 2,516.8 million were channelled to the private sector. Agricultural loans accounted for 15.5%, loans to business for 14.7% and those to industry for 2.3%. The remainder consisted 
of mortgages, personal loans, loans to financial institutions, overdrafts and financial leasing.
193 
3.210.  The Trust Fund for the Financing of Compet itiveness and Productivity (FINDEC), set up by 
the MICI in 2008, is a trust fund which operates as a second-tier bank, making two lines of credit available to financial institutions in order to finance the investment and working capital needs of 
companies providing goods and services. The maximum amount of the loans which financial 
institutions may grant is US$25,000 for micro and small enterprises, US$500,000 for other enterprises and US$2 million for cooperative and similar associations.
194 
3.211.  The Authority for Micro, Small and Medium-Sized Enterprises (AMPYME) provides training, 
technical assistance and financial intermediation services in support of MSMEs.195 Law No. 72 
of 9 November 2009 (implemented by Executive Decree No. 126 of 23 June 2010) created the 
Business Promotion Fund, with minimum annual resources of B 10 million. AMPYME offers the 
following financial products: (i) security for loans contracted by micro and small enterprises (MSEs) with financial entities in order to acquire fixed assets and working capital, which cover 60% to 80% of the loan depending on the type of activi ty; (ii) lines of credit of up to B 1 million for 
financial entities to allow them to grant loans of up to B 25,000 per enterprise to MSEs; 
(iii) seed capital, which is a non-refundable contribution of up to B 1,000 to finance new 
endeavours by MSEs and is granted by means of a competition.
196 In addition, MSEs listed in 
AMPYME's register of businesses do not pay income tax for a period of two years as of registration, 
nor do they pay the annual interest surtax under the FECI on their loans, and they have priority in 
public tendering procedures if a competition is held.197 
3.4.1.5  Sectoral incentives 
3.212.  Panama grants incentives to support the development of specific economic sectors. 
In 2012, a new incentives law was introduced to promote tourism, granting tax concessions for activities such as the building of tourist accommodation or the promotion of new tourism products 
(section 4.5.6).
198 Tax incentives are also given to companies engaged in reforestation, mining, 
renewable energy and the construction of coastal vessels (section 4.5.5). 
                                               
192 Information provided by PROINVEX. 
193 Online information from the National Bank of Panama, viewed at: 
https://www.banconal.com.pa/images /stories/pdf_nuevo/10_ESTRUCTUR A_Y_EJECUCION_PRESUPUESTARIA/
ESTADOS_FINANCIEROS_AUDITADOS_2012/es tados_financieros_auditados_2012.pdf . 
194 Online information from FINDEC, viewed at: http://www.findec.gob.pa/ productos/index.html . 
195 Law No. 33 of 25 July 2000. 
196 For further details, see the AMPYME website: http://www.ampyme.gob.pa/home/financiamientos . 
197 AMPYME (2011). 
198 Law No. 80 of 8 November 2012, which repealed Law No. 58 of 28 December 2006. WT/TPR/S/301/Rev.1 • Panama 
 
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  3.4.2  Competition and price control policy 
3.4.2.1  Competition policy 3.213.  During the period under review, Panama adopted Law No. 45 of 31 October 2007
199, 
which contains rules on consumer protection and the defence of competition, 
and Executive Decree No. 8-A of 22 January 2008, which implements Title I (Monopolies) and 
other provisions of this Law. Four guidelines regulate other aspects such as: (i) lawful collaboration among competitors; (ii) vertical practices; (iii) control of economic mergers; and (iv) monitoring 
competition. The body responsible for defending competition is the Authority for the Protection 
of the Consumer and Defence of Competition (ACODECO)
200, which is a decentralized government 
agency with its own legal status, internal autonomy, independence in the performance of its functions and legislative initiative through the MICI. It has an Administrator at its head, a National 
Free Competition Directorate and a National Cons umer Protection Directorate, and is subject 
to control by the Office of the Comptroller-General of the Republic. 
3.214.  Some of the main changes introduced by Law No. 45 include explicit consideration of the 
criterion of economic efficiency, the introduction  of the concept of cornering the market as a 
relative monopolistic practice, limitation of the period for collecting evidence in judicial hearings, the introduction of payment for information and higher fines. 
3.215.  The purpose of Law No. 45 is "to protect and ensure free economic competition 
by eradicating monopolistic practices and other restrictions on the efficient operation of the markets in goods and services, in the best interests of the consumer". The Law applies to almost all economic operators, whether natural or legal persons, private companies or State or municipal 
institutions, and to all those actively engaged in economic activities. It does not apply to those 
economic activities that the Constitution or other laws reserve exclusively for the State and which have not been put out to concession, for example, electricity transmission and airport 
management. ACODECO nevertheless has the power to investigate, consider and verify 
monopolistic, anti-competitive or discriminatory practices by companies or entities which provide public services, with the support and collaboration of the technical personnel of the National Public 
Service Authority (ASEP). As regards penalties, the Law created a programme of payment for 
information or leniency, but by April 2014 it had not been used. 
3.216.  Pursuant to Law No. 45, absolute monopolistic practices, defined as any act, contract or 
practice that restricts, lessens, injures, prevents or in any other way harms free competition in the 
production, processing, distribution, supply or marketing of goods or services, are prohibited. 
The Law does not, however, prohibit a monopoly  if it has not been achieved by means of 
prohibited practices. It does prohibit relative monopolistic practices
201, meaning unilateral acts, 
pacts, arrangements, agreements or contracts with the objective and effect of unreasonably 
causing other operators to withdraw from the ma rket, unfairly preventing their access or unfairly 
establishing exclusive advantages in favour of one or more economic operators, for which the cost 
and the benefits have to be weighed in order to determine whether the acts in question can be 
allowed. As already mentioned, the Law also introduces the concept of cornering the market as a relative monopolistic practice. 
3.217.  Exceptions to Law No. 45 are acts whose purpose is to increase, save on or improve 
the production and/or distribution of goods or services or which promote technical or economic 
progress, or generate benefits for consumers or the market, provided that they involve: (i) the exchange of technical information or technology; (ii) the joint establishment and/or 
development of infrastructure, equipment, resources or production facilities; (iii) the joint 
establishment and/or development of collection, storage, transport or distribution facilities; 
or (iv) the result of such acts is export. By in cluding the concept of economic efficiency and these 
exceptions to application of the Law, economic criteria have been incorporated into the legal 
assessment evaluating the interests of the consumer. 
                                               
199 Law No. 45 of 31 October 2007 repealed Law No. 29 of 1 September 1996, Executive Decree No. 31 
of September 1998 and Decree Law No. 9 of 20 February 2006. 
200 ACODECO replaced the Free Competition an d Consumer Affairs Commission (CLICAC). 
201 Articles 15 and 16 of Law No. 45 of 31 October 2007. WT/TPR/S/301/Rev.1 • Panama 
 
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  3.218.  Law No. 45 does not cover mandatory prior notification of mergers, but ACODECO is 
responsible for examining mergers, whether at the request of the interested party or ex officio, by carrying out preliminary checks or post facto investigation. Mergers that have been verified and endorsed by a favourable opinion may not subseq uently be challenged by ACODECO, unless the 
decision was based on false or incomplete information provided by the interested party. 
The favourable opinion is denied if the ensuing merger: (i) confers or potentially confers on the economic operator the power to fix prices or materially restrict supplies on the relevant market; 
(ii) is intended to remove other competitors from the relevant market or block their access; 
or (iii) materially facilitates the exercise of prohibited monopolistic practices. Mergers that have not been voluntarily submitted to verification may be challenged for up to three years after having occurred. If an investigation determines the existence of a prohibited practice, ACODECO may 
make completion of the transaction conditional upon compliance with the conditions necessary to 
bring it into conformity with the law or may challenge the merger in the appropriate courts with a view to ordering the partial or total demerger of what was improperly merged. These remedial 
measures are taken without prejudice to penalties which ACODECO or the courts may impose or 
any criminal liability that arises. 
3.219.  ACODECO may impose administrative sanctions for failure to comply with the law 
and bring the case before the courts for the purpose of other civil measures such as fines of up 
to three times the amount of the damages caused, together with legal costs. The legal framework in effect at ACODECO permits that, following initiation of an investigation, an agreement procedure can be set in motion at the request of a party and, once this has been agreed by the parties, it is 
forwarded for approval by the Cabinet. In this connection, ACODECO conducted agreement 
procedures for an amount of B 1.3 million betw een 2010 and 2013. From 2009 to 2013, it carried 
out eight to 13 investigations each year, mostly into absolute monopolistic practices, but in 2010 
there were 23, of which 12 were into absolute monopolistic practices. There are currently more 
negotiated agreements between parties than judicial solutions.
202 
3.220.  As regards legal proceedings, Law No. 45 created three civil circuit courts in the 
First Judicial District of Panama (Eighth, Ninth and Tenth Chambers) and a circuit court in Colón, 
Coclé (Second Chamber), Chiriquí (Fourth Chamber) and Los Santos (Second Chamber), to hear such cases and intellectual property disputes. A Third High Court was also set up in the First Judicial District. Lastly, the Law limits the period for evidence-based hearings to 45 days, 
with the possibility of a maximum 30-day extension, thus speeding up the process. According 
to information from the authorities, however, there have not been any notable improvements in the delays. 
3.221.  The principal economic mergers exam ined between 2007 and 2012 concerned a number 
of different economic sectors. Two cases were in the banking sector, one in insurance and two 
in the food sector. ACODECO gave a favourable opinion in all these cases. In one case relating to 
gaming and another to fuel, ACODECO gave a favourable opinion subject to conditions, and it was 
ratified following the submission of a modified non-competition agreement in the gaming case and 
the acceptance of certain conditions and the posting of a guarantee in the fuel case.
203 ACODECO 
also responded to two viability questions in 2008: in one it gave a favourable opinion and in the 
other the response was positive, leaving the way open to a case-by-case examination. 
3.222.  Investigations into monopolistic practices involved both Panamanian and foreign 
companies. The cases settled mainly concerned the following practices: agreement between 
competitors to manipulate and agree on the price for buying services to control advertising 
investment (2008), the practice of excluding ec onomic operators (2009), agreement on the cost 
of fire insurance premiums (2010), strategy to lower the percentage of the no-claims rebate 
in private motor insurance policies (2010), fixing th e buying price of rice (2010), fixing the selling 
price of bread (2010). The following are some of the cases pending before the courts: price fixing by five oil companies (2000), concerted action by five airlines to fix the basic commission paid to travel agencies (2001), code-sharing agreement am ong three airlines, agreement on buying prices 
among dairy produce processors (2008), agreemen t to impose transport prices and rates on 
certain routes (2009), fixing of the price of laundry services (2010) and laundrettes (2011). ACODECO or its predecessors found violations of the competition law in all these cases and they 
                                               
202 Information provided by ACODECO. 
203 For further details, see ACODEC O's website (Economic mergers): 
http://www.autoridaddelconsumidor. gob.pa/nuestra_labor.asp?area=11 . WT/TPR/S/301/Rev.1 • Panama 
 
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  were referred to the courts.204 In March 2014, the proceedings begun in 2003 against monopolistic 
practices by advertising agencies ended with a ruling to compensate for the damage caused amounting to around B 881,000. Pursuant to Law No. 29 of 1996 in force at the time of the facts, ACODECO is also responsible for imposing fines on  each of the companies accused (ranging from 
B 25,000 to B 100,00 each, depending on factors such as the seriousness of the offence, the size 
of the company, etc.). 
3.223.  Between 2007 and 2012, several bilateral tr ade agreements signed by Panama containing 
provisions on competition policy came into force. In the Free Trade Agreement between 
Central America and Panama, the parties undertake to endeavour to establish mechanisms to facilitate and promote competition policy and pr event the negative effects of anti-competitive 
practices. In the agreement with Peru, the parties undertake to adopt or maintain domestic 
legislation which fully and effectively covers anti-competitive practices and to establish or maintain 
a competent responsible authority. This agreement also covers notification and holding of consultations on any activity that might affect important interests of the parties. In the 
agreement with Canada, the parties agree to ban anti-competitive practices through measures 
consistent with the principles of transparency, non-discrimination and due process, but the parties 
may designate monopolies. In the agreement with  the European Union, the parties agree that 
arrangements, decisions on association, concerted practices with the aim of distorting competition, 
abuse of a dominant position and mergers among companies which hinder competition are inconsistent with the agreement. 
3.224.  ACODECO is viewed positively by the public, economic operators and members of the 
judiciary who deal with competition issues, but is better known for its activities in defence 
of consumers. Competition policy as such is not very visible in Panama.
205 Although it has been 
applied more forcefully since the approval of Law No. 45, Panama's markets show a high level 
of concentration, particularly in relation to goods. In some cases, only a few businesses operate 
in certain sectors (cement, plastics, oil, bakeries) and, in others, tariff protection is high (dairy produce, pigmeat, sugar, confectionery) . A proactive policy is therefore particularly 
important to guarantee competition. According to information provided by the authorities, 
however, the number of ACODECO employees did not increase between 2007 and 2013, although 
its operating budget rose from B 613,000 in 2007 to B 797,683 in 2013. 
3.4.2.2  Price controls 
3.225.  In accordance with Law No. 45, exceptionally and only when the market's operations are 
restricted, the Executive may decide on and implement policies to control prices; this is done by ACODECO, which temporarily fixes maximum selling prices for specific goods and services for 
periods not exceeding six months, although this may be extended for an equal period. Controls 
only apply to products whose applied import tariff exceeds 40% ad valorem , except for 
hydrocarbons, petroleum products and staple good s, which only require due substantiation in 
order to be adopted. The Executive determines the goods and services subject to controls in 
a decree, after non-binding consultation with ACODECO. 
3.226.  In addition, Law No. 1 of 10 January 2001 on Medicines and Other Products for Human 
Health provides that, exceptionally and at any time, the Executive may impose ceiling reference 
prices for medicines for six-month periods, which may be extended, if price trends on the domestic 
market bear no relation to the price of the said or like products on international markets. Pharmaceutical establishments are obliged to forw ard the price lists for their products to ACODECO 
together with any changes. After examining these, ACODECO makes any recommendations and 
proposals to the Executive. 
3.227.  The price of some services is controlled, for example, land transport of passengers, whose 
rates are fixed by the Land Transit Authority, the distribution and sale of electric power 
and telecommunications services when there is only one concessionaire (Chapter 4). 
                                               
204 For further details, see ACODECO' s website (Monopolistic practices): 
http://www.autoridaddelconsumidor. gob.pa/nuestra_labor.asp?area=11 . 
205 OECD-IDB (2010). WT/TPR/S/301/Rev.1 • Panama 
 
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  3.228.  ACODECO's National Free Competition Directorate reviews the prices of some products and 
draws up reports which can be viewed on ACODECO's website.206 The purpose of these reviews is 
to promote competition and inform consumers so that they have more information on which to base their decisions. Products whose prices  are monitored include: fuels, medicines, 
the 50 products making up the basic basket (food and beverages), and some goods and services 
such as teaching and garage workshops. 
3.229.  Executive Decree No. 20 of 25 January 2013 introduced price controls for petrol and diesel 
fuel for extendable six-month periods, by setting ceiling prices every fortnight. 
Executive Decree No. 495 of 23 July 2013 determined the maximum retail and wholesale selling price for liquefied petroleum gas in 25-litre containers (section 4). 
3.4.3  State trading, government  enterprises and privatization 
3.230.  Panama has notified that it does not have any State trading enterprises within the 
meaning of Article XVII of the GATT.
207 
3.231.  By Executive Decree No. 110 of 4 August 2009, Panama created the Directorate 
of Investment, Concessions and State Risks (DICRE) within the MEF's organizational structure 
and under the competence of the Vice-Ministry of Finance. The main tasks of this new Directorate are: to evaluate the operation and performance of semi-public companies so as to guarantee the 
State the maximum benefit, to draw  up proposals on concessions granted or to be granted in the 
Republic of Panama, to take part with the right to speak in administrative and decision-making bodies, to recommend to the MEF policies to improve operations, profitability and risk management in companies, and to collaborate with other government institutions involved in these 
companies' decision making. The Coordinating Unit for the Privatization Process, better known as 
PROPRIVAT, has been dissolved and some of its responsibilities have been transferred to DICRE and other MEF Directorates. 
3.232.  Panama has the following government enterprises wholly owned by the State: 
the Panama-Pacific Special Economic Area Agency  (AAEEPP); Tocumen International Airport S.A. 
(AITSA); Panama Maritime Authority (AMP); National Bingos; the Civil Aviation Authority (AAC), 
Household Garbage Collection Authority (AAUD) ; Power Generation Company S.A. (EGESA); 
Power Transmission Company S.A. (ETESA); Nati onal Highway Company S.A. (ENA); National 
Water Supply and Sewerage Company (IDAN); Agricultural Marketing Institute (IMA); National Welfare Lottery; Colón Free Zone (ZLC); National Bank of Panama; and the Savings Bank.
208 
3.233.  Table 3.13 shows the semi-public companies and the level of State participation. 
Table 3.13 Semi-public companies 
Company State share  
AES Panamá, S.A. 
(Hidroeléctricas La Estrella, Los Valles and Bayano) 50.39% 
Empresa de Distribu ción Eléctrica Metro-Oeste (EDEMET) 48.24% 
Empresa de Distribu ción Eléctrica Chiriquí (EDECHI) 49% 
Elektra Noreste S.A. (ENSA) formerly Empresa de Distribución Eléctrica Noreste 48.25% 
Empresa de Generación  Bahía las Minas  49% 
Cable & Wireless  Panamá, S.A. 49% 
Enel Fortuna  49.9% 
Energía y Servicios de Panamá, S.A. 47.96% 
Panama Ports Company 10% 
Petroterminal de Panamá, S.A. 50% 
Source: Information provided by the Panamanian authorities. 
                                               
206 Online information, viewed at: http://www.autorida ddelconsumidor.gob.pa . 
207 WTO documents G/STR/N/11/PAN, G/STR/N/ 12/PAN, G/STR/N/13/PAN, G/STR/N/14/PAN 
of 23 April 2012. 
208 Online information, viewed at: http://www.mef.gob.pa/es/informes/Documents/INSTITUCIONES DEL 
SECTOR PUBLICO 2013.pdf . WT/TPR/S/301/Rev.1 • Panama 
 
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  3.234.  Lastly, the authorities have indicated that the Atlapa Convention Centre, which was being 
privatized in 2007, is being sold through a special procedure after three calls for bids at public auctions in 2013 did not result in any bids. 
3.4.4  Government procurement 
3.235.  Panama is an observer on the Committee on Government Procurement. It is not party to 
the WTO Plurilateral Agreement on Government Procurement. It sought accession in 1997 and submitted two offers, the more recent in 1999. In a communication circulated on 9 August 2013, 
Panama declared its decision not to accede to the GPA and withdrew its offers.
209 In connection 
with the review of Panama's trade policy, the auth orities have indicated that their conclusion was 
that it was more in Panama's interest to negotiate access to government procurement on a bilateral basis and that, having agreed on further trade liberalization with important trading 
partners, Panama intended to continue along those lines. 
3.236.  Among the bilateral agreements which came into force between 2007 and 2013, Panama's 
agreements with Central America, Peru, Canada, Singapore
210, the European Union and the 
United States all contain provisions on government procurement. The last three include 
procurement by the Panama Canal Authority above certain thresholds and subject to the terms negotiated in each agreement. 
3.237.  The main instruments covering government procurement are Law No. 22 of 27 June 2006 
and Executive Decree No. 366 of 28 December of the same year, implementing it. Law No. 22 replaced Law No. 56 of 27 December 1995 and amended and repealed other contrary provisions. Between 2007 and 2013, Panama adopted several laws reforming and clarifying Law No. 22, 
specifying its provisions more precisely (Table 3.14). A number of other instruments were also 
adopted, for example, executive decrees, resolution s and circulars. In general, the amendments to 
Law No. 22 extend the time-limits between publication and submission of tenders and reduce 
some of the time-limits for submission of the evaluation commission's report, thereby improving 
the procedure for bidders. 
Table 3.14 Summary of laws amen ding Law No. 22 of 27 June 2006 
Law Summary of principal amendments 
Law No. 41 
of 10 July 2008, amending Law No. 22 of 2006 Specifies the functions of the Government  Procurement Administrative Tribunal. 
Expands the provision on contractual balanc e for articles used in construction in 
unforeseeable cases. Publication of invitation to tender: Makes changes to the time-limits conditional upon publication in PanamaCompra. Exceptions to the selection of contractors:  energy and hydrology resources and others 
of importance for national development; pr ocurement by the National Assembly for up 
to B 50,000; works and supplies relating to the security of citizens, the President and the State for up to B 3 million, with author ization from the Minister of the President's 
Office and from the Ca binet Council if this sum is exceeded. 
Consultancy contracts: the criterion of in compatibility with in dustries engaged in 
exploration, development and exploitation of mineral and hydrocarbons resources is 
waived. Consultancy amounting to up to B 300,000 is exempt from the contractor's 
selection procedure and direct contracting authorization. Provides that public assets can only be dispos ed of in the form of a donation by the MEF 
to non-profit-making entities for activities  of proven national or social interest. 
Determines a period of five days in which to  lodge an appeal agai nst a decision by the 
contracting agency administratively terminating a contract. The appeal suspends the procedure.  
Law No. 69 of 
6 November 2009 
prohibiting the 
comparison of 
contracts  Prohibits changes, adjustments or alte rations for the purpose of comparison. 
Defines and adds abbreviated tend ering as a selection procedure. 
Complements the provisions on the obligation s of contracting entities and contractors, 
on contractual balance, the re quirements for participation by  legal persons in contracts 
exceeding B 3 million, publication of the invitation to tender, minor contracting, 
procurement procedures, appeal bonds, administrative rescue. 
                                               
209 WTO document GPA/ACC/PAN/1 of 9 August 2013. 
210 The Agreement with Singapore came into  force in 2006, but was notified in 2007. WT/TPR/S/301/Rev.1 • Panama 
 
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  Law Summary of principal amendments 
Law No. 80 of 
31 December 2009, coastal zones and islands and other provisions  Amends, supplements and adds provisions on abbreviated tendering, the new invitation 
to tender and direct sale of goods, decision s on selection, exceptions to the selection 
procedure, notification, and appeals.  
Law No. 12 
of 19 March 2010 Adds the best value procedure with separate and complementary evaluation of the 
requirements for participation by legal persons.  
Law No. 18 of 23 April 2010 Establishes a special regime for the procurem ent of works, goods and services by the 
Ministry of Education. 
Law No. 66 
of 26 October 2010, 
amending Law No. 22 
of 2006 Increases the amount of appeal bonds to 15% of the value of the claimant's proposal.  
Law No. 48 of 10 May 2011, 
amending Law No. 22 
of 2006 Designates the competent authorities for evaluation and approval of contracting 
through special procedures. 
Lays down time-limits according to the amount and complexity of the invitation 
to tender. Introduces amendments to the various procurement procedures. Determines the composition of the eval uation or verification commission. 
Establishes the special procurement procedure.  
Source: WTO Secretariat. 
3.238.  Despite the aforementioned amendments, in its report for 2012 the Office of the 
Comptroller-General of the Republic insisted on the need to bring down to the minimum and the 
strictly necessary requests for exemption for the purchase of goods and services, and that State 
institutions should comply with the prior procedures set out in Law No. 22 and make provision for procurement in their budgets.
211 The authorities stressed that a Special Procedure212 had been 
established for this purpose and required an official substantiated technical report signed by the 
technical officer responsible and endorsed by the le gal representative of the institution concerned. 
Moreover, all special procedures have to be registered in the PanamaCompra electronic 
procurement system and, in certain cases, a notification has to be published in PanamaCompra. 
3.239.  Law No. 22 and amendments thereto apply to public contracts from the Central 
Government, autonomous and semi-autonomous agencies, municipal authorities, the Social Insurance Fund
213, financial intermediaries and public limited companies in which the State owns 
51% or more of the shares or assets for: (i) the purchase or leasing of goods; (ii) the execution 
of public works; (ii) the disposal of State goods, including leasing; (iv) the provision of services; (v) the operation and management of goods; and (vi) concessions or any other contract not 
governed by a special law. The Law applies residually to communal and local authorities but this 
does not exempt them from the mandatory use of the PanamaCompra electronic government procurement system. The Law also applies to companies, associations, non-governmental 
organizations, foundations and other bodies that receive donations from the State or from foreign 
States or international organizations for public purposes. The rules and procedures set out in the loan contracts may be incorporated into contracts financed by international credit organizations. 
3.240.  Law No. 22 established the Directorate-General of Government Procurement (DGCP) as an 
autonomous entity with its own assets, legal stat us, and independence in the performance of its 
functions, for the purpose of regulating, interpre ting, monitoring and advising on procedures for 
the selection of contractors by State institutions. The DGCP is also responsible for keeping the 
register of electronic procurement bidders, contracts and ineligible contractors; its other tasks 
include the development, organization, operation and control of procedures and appeals, ongoing 
monitoring and everything to do with the PanamaCompra system. The purchasing departments or 
directorates in contracting agencies become lin ks between the DGPC and its offices, and are 
responsible for ensuring compliance with the DGCP's policies, guidelines and directives, but the DGCP itself does not conduct the contractor selection procedures. Panama has a centralized 
                                               
211 Online information, viewed at: http://www.contraloria.gob.pa/archivos_informesdelc/INFORMES 
2013/INFORME ANUAL/INFORME DE LA CONTRALORA -completo2013.pdf . 
212 Law No. 48 of 10 May 2011. 
213 The purchase of medicines, medical inputs and eq uipment by the Social Insurance Fund is governed 
by Law No. 1 of 10 January 2001 on medicines and other human health products, Law No. 51 
of 27 December 2005, amending the Law on the Organizati on of the Social Insurance Fund and other relevant 
legal provisions in force. WT/TPR/S/301/Rev.1 • Panama 
 
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  procurement system (PanamaCompra), in which each agency is responsible for its own public acts 
or tenders and has the competence, autonomy and responsibility for the purchases it makes and the contracts it concludes according to its own budget. The agencies nevertheless remain subject to the DGPC's oversight as regards compliance wi th Law No. 22 of 2006 and endorsement by the 
Office of the Comptroller- General of the Republic. 
3.241.  Law No. 22 also set up the Government Procurement Administrative Tribunal as an 
independent and impartial body, with jurisdiction throughout Panama and, depending on the case, 
it has exclusive competence as the sole instance for hearing appeals challenging any award of a 
contract. In this connection, Law No. 41 of 10 July 2008 gives more precise details on such appeals and adds to the list complaints not resolved by the DGCP. The Tribunal consists of three lawyers appointed by the President of the Republic  for an initial term of five years, with the 
possibility of being re-appointed. The President of the Republic is the highest authority responsible 
for suspension, removal or dismissal of members of the Tribunal and for applying disciplinary measures, for the reasons specifically determined in the Law. For its internal administrative 
functions, the Tribunal is subject to the regulations governing public officials, but administrative 
acts by the Tribunal can only be reviewed by the courts. 
3.242.  Panamanian or foreign natural or legal persons, legally established, may enter into 
contracts with State agencies provided that they have not been declared ineligible for the reasons 
specified in the Law.
214 For procurement exceeding B 3 million, the shares in legal persons 
participating must be registered shares. 
3.243.  Procurement procedures are based on transp arency, efficiency, effectiveness, due process, 
publicity, economy and responsibility. There are no  preferences for domestic suppliers, but there is 
provision for promoting competitive participation by MSMEs. This is set out in Executive Decree No. 366, which stipulates that, when bids are equal, if one of the bidders is an MSME it should be 
awarded the contract. The programme for the distribu tion of milk and nutritional biscuits also gives 
preference to domestic products. Furthermore, Law No. 22 does not apply to the National Support Programme (PAN), created for the implementation of social development programmes aimed at 
poor and marginal sectors.
215 In 2013, funds earmarked for this programme amounted 
to B 268 million.216 
3.244.  Streamlined formalities apply to minor procurement amounting to B 3,000 to B 30,000. 
Procurement above this amount must, in princi ple, be through a public act selecting the 
contractor, following the procedures determined in the law: open tendering, best value tendering, 
best value tendering with separate evaluation, tendering under a framework agreement, reverse auction, abbreviated tendering and special proced ure. These forms of procurement are described 
in Table A3.3 (Types of government procurement). 
3.245.  The time-limits imposed for publication of the invitation to tender depend on the amount 
and complexity of the contract and may not be less than four working days for amounts ranging 
from B 30,000 to B 175,000 and 40 calendar days if the contract exceeds B 175,000. For works, 
the time-limits may not be less than eight working days for amounts ranging from B 175,000 to B 5 million and 40 calendar days if the contract exceeds B 5 million. In the higher ranges and in the situations determined in the Law, the contra cting agency may set shorter time-limits, but in 
general these may not be less than five calendar days and ten calendar days for works. 
The notices must mandatorily be published in PanamaCompra. The purchase of information technology products for amounts of over B 175,000 necessitates a favourable opinion from the 
Secretariat for Innovation in the Office of the President. 
3.246.  Between 28 December 2006 and 27 December 2012, overall procurement under 
Law No. 22 amounted to B 15,349 million. The figure for 2012 was B 3,801 million, corresponding 
to 11% of current GDP and was broken down as follows: procurement covered by Law No. 51 
on the Social Insurance Fund (25%); best value tendering with separate evaluation (21%); abbreviated best value tendering (12%); best value tendering (11%); open tendering (9%); 
                                               
214 Article 117 of Law No. 22 of 27 June 2006. 
215 The PAN was introduced by Executive Decree No. 690 of 22 July 2010. 
216 Budget of the Office of the President of the Republic at 31 October 2013. WT/TPR/S/301/Rev.1 • Panama 
 
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  abbreviated tendering by price (8%); minor procurement (6%); special procedure (4%); 
purchases from a catalogue (3%); and auction (1%).217 
3.247.  The ACP has its own procurement system whose legal basis is paragraph 6 of Article 319 
of the Political Constitution and Section Four  of Law No. 19 of 11 June 1997. Procurement is 
governed by the implementing Regulations ad opted by Agreement No. 24 of 4 October 1999, 
with the amendments contained in agreements issu ed by the Board of Directors. The Regulations 
lay down uniform rules and procedures applicable to: (i) contracting or purchase of works, goods 
and services necessary for the operation, maintenance, preservation, modernization and expansion 
of the Panama Canal; (ii) disposal and sale of ACP property; and (iii) the granting of concessions 
and contracting for special services. Contracts sign ed by the Authority are subject to and fulfilled 
in conformity with the ACP regulations and, residually, the provisions in Panama's legislation.218 
Panamanian or foreign natural or legal persons that have not become ineligible to bid may take 
part in the selection of contractors and enter into contracts with the Authority, subject to approval in accordance with the Regulations. 
3.248.  The following are the procedures followed by the ACP when selecting contractors in order 
to promote competition: streamlined procurement, open price-based tendering, negotiated tendering, two-stage open tendering and the sale of  movables belonging to the Authority. There is 
also restricted procurement, for example, when a particular make or manufacturer is requested, 
although certain formalities have to be fulfilled depending on the amount. 
3.249.  The Authority uses the Internet tendering system (LSI). The centralized procurement office 
and the units expressly authorized by the Administ rator engage in minor procurement, streamlined 
procurement and tendering. The ACP's other administrative units may engage in minor 
procurement and streamlined procurement for up to B 10,000.
219 Contracts for amounts exceeding 
B 100,000 are subject to a legal opinion. Streamlined procurement applies to amounts ranging 
from B 1,000 to B 100,000. Administrative units may purchase goods and services by issuing 
purchase orders for not more than B 10,000 per order, on the basis of agreements containing lists of official unit prices, with a period of validity of not more than one year. Procurement that 
exceeds B 100,000 and sale of property no longer used by the ACP is through tendering. 
In the 2013 financial year, the ACP notified 8,773 purchases, received 23,979 bids and awarded 19,671 contracts. Investment projects (not including investment in works/expansion) amounting to B 554 million and centralized and decentralized purchases amounting to B 1,033 million were 
handled.
220 
3.250.  The ACP's implementing Regulations have been amended several times since the previous 
review in 2007. The principal amendments concer n, for example, the time-limits, negotiated 
tendering, the amendment and term of contracts,  the procurement of special services, specific 
risks and objections. 
3.4.5  Intellectual property rights 
3.251.  The WTO Agreement on Trade-Related Aspe cts of Intellectual Property Rights (TRIPS) 
entered into force for Panama when it joined the WTO on 6 September 1997, without any transition period. As part of the preparations for accession, Panama amended its intellectual property legislation to bring it into line with the TRIPS Agreement. Panama has notified the WTO 
that the Directorate for International Trade Negotiations (DINECI), the Directorate-General for 
Industrial Property Registration (DIGERPI), the Intellectual Property Department of the DGA, the Intellectual Property Department of the ZLC and the Tenth Circuit Prosecution Service 
(specializing in intellectual property offences) of the Office of the Public Prosecutor are the contact 
points specified in Article 69 of the TRIPS Agreement.
221 In addition, Panama deposited its 
instrument of acceptance of the Protocol amending the TRIPS Agreement on 24 November 2011. 
                                               
217 Memorandum of the Directorate-General of Government Procurement 2011-2012. 
218 Provision incorporated by Article Eight of Agreement No. 142 of 30 July 2007. 
219 Provision amended by Article Four of Agreement No. 142 of 30 July 2007. 
220 Panama Canal (2013). 
221 WTO document IP/N/3/Rev. 9 of 8 November 2005. WT/TPR/S/301/Rev.1 • Panama 
 
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  3.252.  During the review period, Panama adopted Law No. 61 of 5 October 2012222 (amending 
Law No. 35 of 10 May 1996 on industrial property), Law No. 63 of 5 October 2012 (amending Law No. 23 of 1977 on rules for the protection of new plant varieties) and Law No. 64 of 10 October 2012 on copyright and related rights (repealing Law No. 15 of 8 August 1994, 
Law No. 10 of 22 February 2011, and other contrary legal provisions). With the approval of these 
three laws, Panama amended its intellectual property  rights (IPR) legislation to bring it into line 
with the bilateral treaties it has signed, notably the Trade Promotion Agreement with the United 
States and the WIPO international treaties to which it acceded in 2012 and 2013. It has also added 
certain articles to the single text of the Penal Co de. Panama has considerably extended the term of 
protection and has introduced changes which upgrad e and strengthen its system for the protection 
of intellectual property. The legislative amendments concern virtually all IPRs and improve and 
amplify the provisions on processing and enfo rcing such rights. It should be noted that, 
by mid-May 2014, Panama had still not notified th e WTO of the legislative amendments adopted. 
3.253.  Panama's legislation covers all aspects of the TRIPS Agreement. Table A3.4 provides an 
overview of the protection of IPRs. 
3.254.  Panama is a member of the World Intellectual Property Organization (WIPO) and the 
International Union for the Protection of New Varieties of Plants (UPOV), with which it deposited its 
instrument of ratification of the 1991 Act on 22 October 2012, which entered into force one month 
later. Panama has signed many of the WIPO-administered international treaties
223, some of which 
contain broader provisions than those in the TR IPS Agreement, for example, the WIPO Copyright 
Treaty (WCT) and the Trademark Law Treaty (TLT).  In 2012, it acceded to the Budapest Treaty 
on the International Deposit of Microorganisms for the Purposes of Patent Procedure, the Patent 
Cooperation Treaty (PCT) and the TLT. In 2014 , Panama ratified the European Convention 
on Cybercrime, which also deal s with copyright infringement. 
3.255.  Panama is not party to any treaty on  classification, but Law No. 35 of 10 May 1996, 
amended by Law No. 61 of 5 October 2012, provides that industrial designs are to be registered 
according to the International Classification system established under the Locarno Agreement and 
trademarks according to the International Classification of Goods and Services for the Purposes of 
the Registration of Marks (Nice Classification), revised in 1967 and 1977. 
3.256.  Panama has also undertaken commitments on intellectual property in the free trade 
agreements it has signed with LAIA, Canada, Ce ntral America, Chile, Chinese Taipei, Cuba, the 
European Union (European Union-Central America), Peru, the Central American Economic 
Integration Subsystem (SIECA), and the United States. SIECA members have agreed to harmonize their intellectual and industrial property legislation and registration so that registration in any 
of the members is valid in all other member countries.
224 
3.257.  The MICI is responsible for developing and implementing Panama's intellectual property 
policies and is in charge of the Interinstitutional Commission225 responsible for ensuring the 
harmonization, coordination and monitoring of relevant policies. The Commission determines 
policies and guidelines for protection and enforcem ent in order to prevent infringement. The MICI's 
DIGERPI is responsible for the industrial property register and its activities are governed by Law No. 35 of 10 May 1996, amended by Law No. 61 of 5 October 2012, and Executive Decree 
No. 7 of 17 February 1998. The changes introduc ed by Law No. 61 include the creation of the 
Register of Authorizations in DIGERPI, the use of electronic media and digital signatures for 
administrative formalities and the creation of an el ectronic database to facilitate the safekeeping, 
consultation and issue of authenticated copies and certifications throughout the term of industrial 
property rights. The Register of Authorizations is  not a pre-condition for the formalities but makes 
them easier inasmuch as, with a registered auth orization, attorneys may act on behalf of right 
holders simply by indicating the registration number, which also serves in proceedings before 
Competition Tribunals. Chapter V of Law No. 61 incorporates the PCT into Panama's legislation. 
                                               
222 The implementing Regulations for the Indu strial Property Law are being drafted. 
223 See the list of the treaties signed by Panama online at: 
http://www.wipo.int/treaties/es/ShowResults.jsp?country_id=136C . 
224 Information provided by the Panamanian authorities. 
225 The Interinstitutional Commission is composed of  the DIGERPI, the National Copyright Directorate 
(DNDA), the Administration of the ZL C, ANA, the Office of the Public Prosecutor, DINECI and the Judicial 
Investigations Directorate. WT/TPR/S/301/Rev.1 • Panama 
 
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  3.258.  The functions of the National Copyright Directorate (DNDA), attached to the MICI since 
February 2011226, are registration, filing, monitoring and inspection of copyright pursuant to 
Law No. 64 of 10 October 2012. It is empowered to act as arbitrator, authorize the operation of collective management entities and oversee them , take preventive measures ex officio or at the 
request of a party and file a criminal complaint. Through its Register of Copyright and Related 
Rights, the DNDA handles applications for the registration of works, productions and contracts. Between 2007 and 2012, 3,355 works were registered.
227 
3.259.  Law No. 64 of 10 October 2012 on Copyri ght and Related Rights and the implementing 
Regulations (Decree No. 261 of 1995) protect all li terary, artistic or scientific works. The Law 
includes special provisions on audiovisual works, computer programs, databases and data compilations, architectural works, three-dimensional works, and journalistic works. The author's 
moral and economic rights are both protected, together with the related rights for original 
and derived works. Foreigners receive national treatment for their works published in Panama. The Law extends the term of economic rights from  50 to 70 years after the death of the author 
or performer; after disclosure or first publication in the case of anonymous or pseudonymous 
works; and from the first publication or their termination for collective or audiovisual works or computer programs. Phonogram producers have the right to receive remuneration for 
communication of their phonograms to the public, which is shared equally with the performer 
and is collected by the collective management entity. The Panamanian Society of Authors and Composers (SPAC) is responsible for the collect ive management of copyright in musical works. 
In January 2007, the DNDA approved the operatio n of the Panamanian Society of Phonographic 
Producers (PRODUCE) as a collective management entity. 
3.260.  Law No. 35 of 1996 on Industrial Proper ty, amended by Law No. 61 of 2012, contains 
provisions on patents, utility models and industrial designs. Some of the main changes introduced 
by Law No. 61 include the elimination of second use patents, extension of the term of patents 
because of unreasonable administrative delays, requests for unofficial management with posting of a bond until the documentation has been submitted, the introduction of specific time-limits 
and fees for making good omissions, and acceptan ce of the results of substantive examinations 
or the equivalent conducted by foreign offices. It is deemed that a delay is unreasonable if the time taken for the decision exceeds five years as of  the date of filing the application or three years 
from the request for a substantive examination. Additional protection is at the rate of one day per 
day of delay for the first five years and one day fo r every two days of delay for the following years, 
up to a maximum of seven and a half years. International applications must be filed in Spanish. Patents are published in the Official Bulletin of the Industrial Property Register (BORPI). Between 
2008 and 2013, 1,860 patents were registered, of which 40 were by Panamanian residents.
228 
3.261.  Law No. 61 extends the term of protection for utility models and industrial designs without 
registration from two to three years. It also provides that an industrial design is considered new 
if it has been created independently and shows a significant difference in comparison with known 
industrial designs. Utility models or industrial designs and trademarks are deemed to be property 
and the rights conferred may serve as surety, be su bject to usufruct or be taxed, be confiscated, 
banned or subject to other judicial measures resulting from an executory procedure. Such legal 
acts may only be used against third parties if they have been registered. Revocation 
or cancellation of a patent is confined to those cases in which the person who has obtained the patent is not the inventor or his assignee or th e patent has been granted contrary to the rules 
of patentability. 
3.262.  Panama has no special legislation regulating the protection of layout-designs, which are 
protected through copyright legislation, provided  that they meet the requirements for being 
considered a protected work. Another innovation introduced by Law No. 61 is that of non-voluntary 
licences, which must be non-exclusive and intended mainly to supply Panama's domestic market. Voluntary or non-voluntary licences must be regi stered with DIGERPI in order to have effect 
against third parties. 
                                               
226 Law No. 10 of 22 February 2011. 
227 Information provided by the Panamanian authorities. 
228 Information provided by DIGERPI. WT/TPR/S/301/Rev.1 • Panama 
 
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  3.263.  Title V of Law No. 23 of 15 July 1997, amended by Law No. 63 of 5 October 2012 and its 
implementing Regulations (Executive Decree No. 13 of 19 March 1999), govern the protection of 
new plant varieties. Law No. 63 of 2012 extends the scope to all plant genera and species but not to the product of the harvest. The Council for the Protection of New Plant Varieties (COPOV), 
chaired by the Minister of Agricultural Development and composed of the Agricultural Research 
Institute of Panama, DIGERPI, the Agricultural Sciences Faculty, the Executive Secretariat of the National Seeds Council, and other members, is th e advisory body for matters relating to the 
protection of new plant varieties. DIGERPI is re sponsible for keeping the register of protected 
varieties and for granting breeders' rights. 
3.264.  In principle, parallel imports are not prohibited inasmuch as Panama recognizes the 
international exhaustion of industrial property rights; nevertheless, the right holder may bring an 
action. They are not prohibited in relation to copyright either, but the importer of intellectual 
property protected by copyright may not exploit it by any means that has not been authorized.
229 
3.4.5.1  Enforcement of intellectual property rights 
3.265.  Panama responded to the Checklist of Issues on Enforcement in 1998.230 The legislation on 
enforcement of IPRs includes: Resolution No . 9 of 27 December 2002; Resolution No. 013 
of 9 March 2006; Law No. 45 of 4 June 2003; and Law No. 1 of 5 January 2004. In addition, 
the Copyright Law makes provision for administrative, civil and criminal proceedings for 
infringement of copyright. 
3.266.  ANA's Intellectual Property and Copyright Directorate is in charge of monitoring at the 
border in order to protect intellectual property. The Intellectual Property Department of the ZLC is 
responsible for the protection of IPRs pertaining to goods and services marketed through the Zone. 
The Office of the Public Prosecutor is responsibl e for prosecuting intellectual property offences. 
Border measures include administrative or judicial measures to suspend the release of goods 
through the enforcement of provisional measures, which must subsequently be reviewed 
by a court. 
3.267.  Law No. 61 of 5 October 2012 amplified the acts deemed to constitute improper use, for 
example, manufacturing products which give th e same general impression as the registered 
product, or use of containers bearing a geographical indication for commercial purposes. The Law also gives the Interinstitutional Intellectual Property Commission the task of determining policies and guidelines for protection and enforcement that are sufficiently effective to discourage 
infringement and broadens the Commission's co mposition, adding a member of the Judicial 
Investigations Directorate. The Law also increases the term of imprisonment and the severity of sanctions in general. Moreover, the import or ex port of counterfeit, altered or imitated products, 
even if they are in transit through Panama, is defined as an offence in the Penal Code, punishable 
by a term of imprisonment of four to six years, and two to four years for products with indications 
of source or appellations of origin that infringe IPRs. 
3.268.  Resolution No. 19 of 10 July 2008, amen ding Resolution No. 9 of 27 December 2002, 
extends and strengthens the enforcement system by appointing a Higher Prosecution Service Specializing in Intellectual Property Offences an d Informatics Security and the Third Prosecution 
Service in the Chiriquí circuit as the prosecution office specializing in intellectual property offences. 
The former is responsible for handling investigations into intellectual property offences and 
bringing criminal proceedings before the competent courts throughout Panama. The Judicial Investigations Directorate of the National Police Force, which also has a department specializing in 
intellectual property and informatics security, assists the Office of the Public Prosecutor in the 
investigation, the judgment and the punishment of authors of intellectual property offences and accomplices. There are specialized IPR tribunals, pursuant to the provisions in Law No. 45 
of 31 October 2007, which created the circuit courts and a Third Higher Commercial Court with 
competence for intellectual property matters. 
3.269.  Between 2007 and 2012, the Higher Prosecutio n Service for intellectual property dealt with 
an average of 801 cases, carried out an averag e of 140 searches, and seized products that 
infringed copyright amounting to an average of  US$1,820,938, and an average of US$23,026,162 
                                               
229 Paragraph 2 of Article 9 of Law No. 61. 
230 WTO document IP/N/6/PAN/1 of 23 June 1998. WT/TPR/S/301/Rev.1 • Panama 
 
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  for those violating industrial property rights. It should be noted that, in 2013, following the entry 
into force of the new legislation, the Prosecution Service dealt with 743 cases, carried out 216 searches and seized products infringing copyright amounting to US$853,876 
and violating industrial rights for an amount of US$131,238,635.
231 These figures show that, 
although the value of the goods seized for infringe ment of copyright is lower than the average over 
the period 2007-2011, seizures for violation of industrial property rights multiplied almost sixfold. 
 
 
                                               
231 Information provided by the Panamanian authorities. WT/TPR/S/301/Rev.1 • Panama 
 
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  4  TRADE POLICY BY SECTOR 
4.1  Overview 4.1.  Services continue to be the dominant sect or of the Panamanian economy, thanks to both 
their greater productivity and their dyna mism. Between 2007 and 2013, services grew 
at an average real annual rate of 7.4% (at 20 07 prices), while the manufacturing sector grew 
by 1.8% and the agricultural sector by only 0.7%.
1 The services sector developed within a largely 
open and competitive regulatory framework, enabling Panama to consolidate its position 
as an important international provider of financial, port, logistical, tourism and Panama Canal 
transit services. For its part, agricultural and manufacturing production, despite receiving protection and various types of government support, nevertheless failed to increase its share of GDP. 
4.2.  In fact, between 2007 and 2013 the relati ve importance of the agricultural sector 
in the Panamanian economy continued to decline. There was also a decline in the percentage of the labour force employed in agriculture, particularly in the case of fishing since this activity 
contracted considerably between 2007 and 2013. In 2013, the average tariff in the agricultural 
sector (WTO definition) was 13.7%, above the gene ral average, and the products with the highest 
tariffs were agricultural products. The average fill  rate of tariff quotas for agricultural products 
featuring in Panama's schedule of commitments varied between 60% and 100%. Panama granted 
domestic support in the green box category. Domestic support under the heading "development programmes" increased considerably between 2007 and 2012. 
4.3.  In 2013, manufacturing industry acco unted for 5.1% of GDP and employed 7.7% 
of the labour force. The sector is concentrated in a few activities, such as food and beverage 
manufacturing, publishing and printing, and non-metallic mineral products. The average level of tariff protection for non-agricultural prod ucts was 6.4% in 2013. There are various fiscal 
and financial incentives for manufacturing activities. The main imports include fuel, mineral oils 
and machinery, and the main exports precious metals and cast iron and steel. 
4.4.  The electricity market is decentralized and regulated. Generation is mainly private 
and operates under conditions of free competition, whereas transmission is in the hands of a single 
State enterprise and there are three semi-public co mpanies responsible for distribution in exclusive 
concession areas. Panama is connected to the Central American power grid. In Panama, the installed capacity margin relative to demand is narrow but has improved, 
though still insufficient to meet the demand in all seasons of the year. The State is allocating 
subsidies to mitigate the effect of the increase in end-user tariffs. Panama does not produce hydrocarbons but has substantial storage capacity and an extensive port infrastructure. In 2013, 
it took measures to promote exploration wi th a view to the commercial exploitation 
of the confirmed deposits on its territory. 
4.5.  The services sector plays a fundamental role in Panama's economy and in 2013 
contributed 70% of GDP (at 2007 prices), two thir ds of total employment and one third of total 
exports. Panama has made specific market access and national treatment commitments in 11 of the 12 sectors defined in the General Ag reement on Trade in Services (GATS). Although 
the commitments in the financial sector are relatively broad, those in the telecommunications 
and transport sectors are limited, and in the case of maritime transport non-existent. In practice, 
the scope of Panama's commitments under the GATS has been largely surpassed by the current openness of its services regime. 
4.6.  The telecommunications sector has maintained its dynamism and competition has increased, 
mainly as a result of the market entry of two mo bile telephone operators at the beginning of 2009. 
This has encouraged a steady reduction in prices, improvements in quality and diversification 
of the supply of services. The market is open without restriction to foreign investment in private 
businesses. To operate in Panama foreign companies must establish a subsidiary with a local presence. The changes in legislation during the revi ew period include, in particular, the adoption 
of the Law on Universal Service and Access (2008) and the Number Portability Regulations (2009). 
                                               
1 Does not include fishing, which recorded negative average annual real growth of 9.6% between 2007 
and 2013. WT/TPR/S/301/Rev.1 • Panama 
 
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  Within the framework of the GATS, Panama has made specific commitments only with respect 
to added value services and has not adopted the Basic Telecommunications Reference Paper. 
4.7.  The financial sector grew at an av erage annual rate of 6.0% between 2007 and 2013 
(at 2007 prices). The banking system is sound and di versified, with high levels of capitalization 
and liquidity, and has recently experienced a cred it boom. In Panama, there are no restrictions 
on the establishment of foreign banks, which can be set up through subsidiaries or branches under three types of licences: to operate in Panama; to carry out exclusively external transactions; 
or to establish a representative office. During the review period, Panama amended its banking 
legislation to strengthen supervision and bring it into line with international standards, improve transparency, prevent tax evasion and protect cons umers. Moreover, financial conglomerates were 
subjected to supervision and the Financial Coordination Council was established to improve 
cooperation between the bodies responsible fo r regulating the various segments of the 
financial market. 
4.8.  Foreign insurance companies can be set up as public limited companies constituted 
in Panama or as branches. Authorization to operate a branch in Panama is limited to the categories 
of insurance in which a company is engaged in its country of origin. Insurance policies on property and persons situated in Panama can only be taken out with insurers established in the country. 
In 2012 a new insurance law was adopted. Among other things, this law broadened 
the responsibilities of the sector's supervisory body; clarified the requirements for establishing 
insurance companies; updated the rules on minimu m capital, solvency, reserves and investment; 
and allowed insurance to be sold through finance companies and trading companies. 
Foreign reinsurance companies can offer reinsurance services to companies domiciled in Panama, 
but must be enrolled in a register created for the purpose at the end of 2012. In relation to the securities market, it is worth noting the approval, in 2011, of the law establishing 
the Securities Market Supervisory Authority, with broad regulatory and supervisory powers. 
4.9.  Tocumen International Airport has become the busiest airport in Central America 
and a regional air transport hub. Between 2007 and 2013, the total number of passengers grew 
at an average annual rate of 12.8%, while the to tal number of passengers in transit grew by 21% 
and the volume of freight and mail by 5.2%. There are no restrictions on foreign investment in international traffic operators, but there are restrictions on cabotage traffic which is reserved, in principle, for companies with a minimum of 60% of the shares in Panamanian 
hands. By law, the Tocumen Airport mana gement company is 100% State-owned. 
International passenger and freight air traffic operating certificates are granted to foreign 
companies under bilateral agreements. The agr eements signed by Panama since 2005 are much 
more liberal than earlier agreements and include the Fifth Freedom. 
4.10.  Panama's National Maritime Strategy, approved in 2009, is designed to turn the country 
into an integrated centre of excellence for competitive maritime and logistical services. 
Panama has an extensive network of ports and offers a wide range of services for vessels. 
The State owns the ports but their management can be outsourced to private companies on concession and, in fact, the largest ports are under private management. In 2012, the maritime transport sector's contribution to GDP amounted to 2.3%. Panama has the world's largest 
merchant fleet, with 8,124 vessels registered at the end of 2012. There are no nationality 
restrictions on registration. Panama is seeking to rejuvenate its fleet by granting various discounts on the registration of newly built vessels. 
4.11.  The Panama Canal's contribution to GDP was 3.2% in 2012. The Canal is a nerve centre 
of global maritime transport which generates a variety of economic activities, in addition to the contribution from tolls. During the review period, the Panama Canal Authority changed 
its pricing policy to bring the tolls more closely into line with the value offered by the route. 
In 2007, work began on expanding the Canal by  building a third set of locks for vessels 
with a greater draught, but owing to problems with  the financing of cost overruns the completion 
of the works may be delayed until the end of 2015. 
4.12.  Tourism is one of the main generators of foreign exchange and accounted for 12% of GDP 
in 2012. Between 2007 and 2012, investment in the sector increased considerably, especially in Panama City. During the same pe riod, Panama extended the coverage of the tax 
incentives granted to investment in tourism, lifted the restrictions on foreign participation in tour WT/TPR/S/301/Rev.1 • Panama 
 
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  operator and travel agency businesses, which ceased to be regarded as retail trade, 
and strengthened the sector's system of institutional support. 
4.2  Agriculture and fishing 4.2.1  General features
2 
4.13.  In 2013, Panama's agricultural sector only accounted for 2.6% of GDP and fishing for 0.4%. 
The importance of the agricultural sector and fishing must be measured by considering the percentage of the labour force engaged in these activities. According to household 
surveys carried out during the period 2007-2013, the percentage of the labour force employed 
in the agricultural sector, which includes livestock farming, hunting, forestry, fishing and related service activities fell from 18.9% in 2007 to 16.7% in 2012. Between 2007 and 2011, imports of agricultural products, based on Chapters 1 to 24 of the Harmonized System, rose from 
10.7% to 11.2% of total imports while export s fell from 83.5% to 56.2% of total exports.
3 
Panama's main agricultural exports are sugar cane, bananas, coffee, shrimps and prawns, and meat of bovine animals. 
4.14.  In 2012, the agricultural sector grew by 4.9% relative to the previous year, sugar cane 
production increased by 5.2% and there wa s also an increase in bean production. 
Exports of pineapples and watermelons increased by 21.7% and 7.4%, respectively. 
Banana production grew by 3.5%, thanks to dome stic consumption since exports of this product 
declined by 6.3%. Rice production also decreased (by 5.8%), as did that of vegetables, melons and coffee. In 2012, livestock production grew by 7.0%, while milk and poultry production recorded increases of 10.7% and 6.7%, respective ly. Forestry grew by 9.5% but agricultural 
services decreased due to a reduction in the areas planted and harvested. The Panamanian 
authorities have noted that the El Niño  phenomenon was a factor in the reduced production of rice, 
vegetables and melons and that coffee rust affe cted coffee production. The effect of the shift 
in crops to African palm production was also felt. Moreover, there was a decrease in cultivated 
areas due to the use of the land for other, more profitable economic activities such as tourism. 
4.15.  The fishing sector recorded an increase of 2.5% in 2012, thanks to a 20.2% increase 
in shrimp exports and increased non-industrial fishing. 
4.2.2  Agriculture 4.2.2.1  Objectives 4.16.  In accordance with Chapter 8 of the Constitution, which establishes Panama's Agricultural 
Regime, the State regulates "labour relations in the agricultural sector by promoting maximum 
productivity and a fair distribution of profits". Article 26 stipulates that the State is responsible for organizing assistance with credit to meet the financing needs of agriculture, for measures 
for stabilizing markets and achieving fair prices, and for establishing means of communication 
and providing technical assistance. 
4.17.  The Ministry of Agricultural Development (MIDA) is the entity responsible for formulating 
and implementing policy in the sector. MIDA is also entrusted with sanitary and phytosanitary 
protection through the National Animal Health (DINASA) and Plant Health (DNSV) Directorates 
and the Executive Directorate of Agricultural Quar antine (DECA) (section 3.2.9). MIDA's principal 
partner organizations in the implementation of agri cultural policy are the Agricultural Development 
Bank (BDA), the Agricultural Insurance Institute (ISA), the Agricultural Research Institute (IDIAP) 
and the Agricultural Marketing Institute (IMA). 
4.18.  The Strategic Action Plan (PAE) for the Agricultural Sector 2010-2014 defines the strategic 
approach to agricultural development. Its general objective is "an agricultural sector at the service 
of producers and the population, which ensures competitiveness and the fair and sustainable 
improvement of the rural environment by bringing together all the sectors involved, thus enabling 
                                               
2 National Institute of Statistics and Censuses (2013). 
3 If the Colón Free Zone is included, imports accounted for 6.8% of total imports in 2007 and in 2011, 
and exports for 12.6% and 5.5% of tota l exports in 2007 and 2011, respectively. WT/TPR/S/301/Rev.1 • Panama 
 
- 95 - 
 
  the producers and the rest of the population to ri se above the poverty line". The objective has five 
components: (i) food security and the basic basket4; (ii) the restructuring of production; 
(iii) marketing; (iv) rural development; and (v) institutional modernization of the agricultural public sector. The Plan envisages the establishment of an Inter-Institutional Committee, 
chaired by the MIDA and composed of the direct ors and managers of the national institutions 
involved in the programmes, and of a Joint Counc il for coordination with the various public 
and private sector bodies in which representatives of producers, agribusiness enterprises 
and consumers participate. The PAE seeks to make good the deficiencies observed in the sector, 
such as inadequate infrastructure and high co sts of production and commercial intermediation, 
which affect the competitiveness of producers. Panama intends to boost domestic food production through the timely use of the agricultural se ctor support mechanisms permitted by the WTO.
5 
4.2.2.2  Agricultural policy instruments6 
4.2.2.2.1  Border measures 4.19.  In 2013, the average level of tariff prot ection in the agricultural sector was 13.7% 
(Table 3.2), with the highest tariffs being recorded for the following products: 
poultry meat (260%), dairy products (110%, 120% and 155%) and cane sugar (144%). 
4.20.  As indicated in section 3.2.9, to import products of animal or plant origin a zoo- 
or phytosanitary licence is required. 
4.21.  Agricultural products in the natural state are exempt from the payment of sales tax (ITBMS) 
(section 3.2.5). In the natural state means not having undergone changes that alter their form 
or natural state as a consequence of processing or treatment, except where 
necessary for preservation purposes. Imports of  capital goods and inputs for the exclusive 
use of the agricultural sector are exempt from import duty.
7 
4.22.  Panama has notified the WTO that in 2007 and 2009 no special safeguard measures were 
applied8, but has not submitted any notifications regarding special safeguard measures 
for the years 2008, 2010, 2012 and 2013. 
4.23.  In accordance with its market access commitments under the WTO Agreement 
on Agriculture, between 2007 and 2013 Panama su bmitted six notifications on imports subject 
to tariff quotas.9 Panama applies tariff quotas to some headings for pig meat, poultry meat, dairy 
products, potatoes, beans, maize, rice and tomatoes. As can be seen from Table 4.1, the out-of-quota tariff for these products varies  between 0% and 260%. The in-quota tariff may 
be 3% or 15%. The 3% tariff is applied to inputs, raw materials, intermediate goods and capital 
goods destined for buyers with an industrial licence granted by the MICI.
10 
4.24.  The average quota fill rate varies from one product to another. In the case of rice 
and tomatoes utilization reached 99.2% and 98.8%, while in the case of pig meat and potatoes 
the average fill rate was around 88.5% and 73.5%, respectively. In the case of beans, the quota 
was not used but there were out-of-quota imports of more than 2,000 tonnes in 2011; it should 
be mentioned that the out-of-quota applied tariff is 0%. For dairy products there are 11 quotas 
whose fill rate varies considerably depending on the tariff lines concerned, being almost total 
                                               
4 The 50 products in the basic basket include: me at (beef, pork, chicken, fish, ham, sausages), 
vegetables and salads, pulses, fruit (bananas, apples  and oranges), fats (vegetable oil and margarine), 
dairy products (powdered, evaporat ed and fresh milk, yellow cheese), eggs, white sugar, and other items 
such as tomato sauce, dried soup, coffee, tea, salt, etc. 
5 MIDA (2010). 
6 Shortly before the publication of this Report, the Panamanian authorities indicated that they had 
submitted notifications on domestic support and market  access for 2013, and the notification concerning use 
of special safeguard provisions for 2008, 2010, 2011, 2012 and 2013. 
7 By virtue of Law No. 28 of 20 June 1995, Decree Law No. 1 of 13 February 2008 and paragraph 8 
of Article 1057-V of the Tax Code. 
8 WTO documents G/AG/N/PAN/16 of 3 October 2008 and G/AG/N/PAN/21 of 16 July 2010. 
9 WTO documents G/AG/N/PAN/17 of 5 Novemb er 2008, G/AG/N/PAN/20 of 12 February 2010, 
G/AG/N/PAN/22 of 6 September 2010, G/AG/N/PAN/23 of 11 May 2012, G/AG/N/PAN/25 
of 3 September 2012, and G/AG/N/PAN/29 of 3 October 2013. 
10 Resolution No. 2 of 10 June 2005. WT/TPR/S/301/Rev.1 • Panama 
 
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  in some cases and non-existent in others. In the case of poultry meat the quotas were not used 
and neither were there any imports during the period in question. Finally, in-quota maize imports exceeded the amount of the quota, particularly  in 2010. The authorities have pointed out that 
the demand for maize, particularly for animal feed, is much greater than domestic production. 
Nevertheless, in 2012, Panama negotiated the with drawal of the maize quota within the framework 
of the WTO. The tariff for the tomatoes quota was also reduced to zero.
11 
Table 4.1 Agricultural products subject to tariff quotas, 2007-2012 
Product group Number of 
tariff lines Average quota 
announced 
(tonnes) Average fill rate  
(%) Tariff applied 2012 
In-quota 
% Out-of-quota 
% 
Pig meat 25 880.0 88.5 3 - 15 60 – 70a 
Poultry meat 2 756.0 0 15 260 
Dairy produce 27 
30c 12,075 62.6 3 - 15 30 - 155a 
Potatoes 1 618.0 73.5 15 81 
Tomato 
concentrateb 3 
6c 1,656 98.8 3 - 15 81 
Beans  1 500.0 0 15 0 
Maizeb 3 150,000.0 110 3 - 15 40 
Riceb 4 9,711.6 99.2 3 - 15 90 
a The tariff varies with the specific tariff line. 
b For these products quotas additional to those agreed at the WTO were approved because of lack 
of supply. 
c As from 2012. 
Source: WTO Secretariat and Panama's notifications. 
4.25.  Panama is also opening autonomous tariff quotas for lack of supply for products deemed 
"sensitive"12 by the Cabinet Council.13 Between 2007 and 2013, lack of supply quotas 
were announced for maize, rice, unprocessed tomato paste or pulp, and coffee. In the case of rice as a finished product, in accordance with Cabinet Decree No. 9 of 27 March 2012, only enterprises 
that "sell to end consumers in accordance with that which they have purchased from the mills 
or to distributors in accordance with that which they have purchased from the mills" may participate in the invitation to tender. In the case of maize, in accordance with Cabinet 
Decree No. 10 of 19 June 2013, quota importers must take precautions to fulfil the commitment 
to purchase domestic maize, in particular as regards the storage silos that must be available for domestic production at harvest time. Moreover, Panama has granted tariff quotas within 
the framework of its regional trade agreem ents, for example, with Central America
14, Canada, Peru 
and the United States. The amount of these quotas and the tariffs applicable vary with the country 
concerned and are additional to the WTO commitments. 
4.26.  Law No. 23 of 15 July 1997 and its implementing regulations contained in Resolution No. 5 
of 18 November 1998 govern the award of tariff quotas. The Tariff Quota Licensing Commission 
prepares the invitation to tender for the quota an d sends it to the National Commodities Exchange 
(BAISA), which is the only private commodities exchange and has a licence from the National 
Commodities Exchange Commission to negotiate agricultural product quotas in Panama. 
The invitation to tender for quotas must be published in two newspapers with a national circulation at least 21 calendar days before the negotiating rounds begin and must include, at least, 
a description of the product, the total amount of the quota, the raw material part of the quota, 
the part that is finished product, and the starting and closing dates of the procedure. Interested economic operators must register, using a special form, five working days before the date of the negotiating round; once registered, they participate in the negotiating rounds 
through a broker's office. The final contract must be signed within three days of the closure 
of the negotiating round. The Exchange informs the Technical Secretariat of the Tariff Quota 
                                               
11 WTO documents G/MA/265; G/SECRET/33 and Add.1. 
12 Under Law No. 26 of 4 June 2001, the following are sensitive products: pig meat, poultry meat, 
dairy products, potatoes, tomato concentrate, beans, ma ize and rice. In addition, for quota purposes coffee, 
onions and sugar have been declared to be sensit ive products (Cabinet Decree No. 25 of 16 July 2003). 
13 The Regulation for the Awarding of Tariff Quotas for Lack of Supply was approved 
by Resolution No. 02-05 of 10 June 2005. 
14 El Salvador, Costa Rica, Guatem ala, Honduras and Nicaragua. WT/TPR/S/301/Rev.1 • Panama 
 
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  Licensing Commission15 within a period of two working days and the latter issues the buyer with 
a certificate, also within two working days. 
4.2.2.2.2  Internal measures 4.27.  Panama does not impose price controls on agricultural or food products. However, the MEF 
monitors the costs of the products that make up the basic basket (foods and beverages) 
on the basis of INEC data. The Agricultural Mark eting Institute monitors the prices of various 
agricultural products on the Central Agricultural Market and the San Felipe Market and of products 
on sale in the subsidized food markets ( Jumbo Ferias del Ahorro ). 
4.28.  Panama has notified the WTO of the domestic support granted between 2007 and 2012 
for research purposes (Agricultural Research Programmes), pest and disease control, information and training services, extension and advisory serv ices, inspection, health, safety, standardization 
and integrated pest management services, marketing, promotion and market intelligence services, 
infrastructure services (irrigation, reservoirs, environmental programmes, roads, etc.), natural disaster relief, and structural adjustment through support for investment 
(Livestock Improvement Programme, Agricultur al Conversion Programme and Agricultural 
Competitiveness Programme). Between 2007 and 2012,  the cumulative total of this support, 
considered to be "green box", exceeded B 638 mi llion. Panama has also notified measures under 
the heading "Development Programmes" consisting of generally available subsidies for investment 
in agriculture, which increased considerably in amount between 2007 and 2012. In addition, it notified de minimis  specific product payments for tomatoes for processing (Table 4.2). 
Table 4.2 Domestic support, 2007-2012 
(Balboas) 
Category 2007 2008  2009  2010  2011 2012  
General services 90,164,804 89,945,084  73,240,687  91,880,158  102,826,893 128,325,920  
Natural disaster 
relief 1,806,412 1,139,850  1,567,079  322,445  3,060,795 1,959,634  
Assistance for 
structural adjustment  5,136,636 10,364,259
 7,625,196  10,673,633  11,484,235 7,042,104  
Development 
programmes  13,272,426 14,928,518  17,461,198  20,578,136  25,218,673 31,263,186  
Direct payments 
Tomatoes for processing 365,570 
de minimis
 358,545  
de minimis  733,998  
de minimis  0 164,000 
de minimis  111,767  
de minimis  
Source: WTO Secretariat, on the basis of notifications submitted by Panama. 
4.29.  The Agricultural Development Bank (BDA) provides financing for the development 
of agricultural and agro-industrial activities. It finances non-traditional products with export 
potential such as: melons, watermelons, pumpkins, yucca, yams, pineapples, fresh and processed 
vegetables, flowers, okra, coffee, oranges, cocoa and bananas, inter alia . The Executive 
Committee of the BDA sets interest rates, within the guidelines laid down by the Banking 
Supervisory Authority. 
4.30.  Under the Consumer Support Programme (P AC), the preferential interest rate charged 
by the BDA is 2% per annum for items such as  rice, maize and beans and for the purchase 
of agricultural machinery or equipment that can be used for producing two or more products 
interchangeably, whereas between 5% and 6% is ch arged for ordinary loans. The security required 
by the Bank may take the form of: mortgages and antichresis, liens, crops, livestock, equipment 
or machinery, personal or fiduciary bonds (collateral), possessory rights, chattel mortgages, 
combinations thereof or other collateral security. The terms and amortization schedule are drawn 
up taking into account various aspects of the project to be financed, for example, the investment 
                                               
15 Technical Secretariat of the Tariff Quota Licensing Commission, Article 5 of Resolution No. 5 
of 18 November 1998. The Tariff Quota Licensing Commission  is composed of the Ministries of Agricultural 
Development, Trade and Industry , and the Economy and Finance. WT/TPR/S/301/Rev.1 • Panama 
 
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  plan and the marketing calendar. The repayment period for each loan depends on the type 
of operation.16 
4.31.  Between 2007 and 2013, the cumulative total of the loans granted to the agricultural sector 
by the BDA amounted to B 335.6 million with a ba lance in the loan portfolio of B 153.8 million 
in December 2013. The total annual amounts vary considerably from year to year. 
Most of the loans are granted for livestock farming, in particular, cattle raising, the cumulative total for the period between 2007 and 2013 being more than B 173 million with a balance 
of B 94 million in the loan portfolio at the end of 2013. Lending to the traditional agricultural 
sector
17 amounted to B 94 million with a balance in the loan portfolio of B 25.3 million 
in December 2013. The cumulative total of the lo ans for export products (melons, watermelons, 
pumpkins, pineapples) between 2010, the starting year, and 2013 amounted to B 1.2 million 
with a loan portfolio of B 830,000 in December 2013. The amount of lending for export products 
is small compared with that for traditional agriculture. In fact, as the authorities have pointed out, the official agricultural credit programmes ad ministered by the BDA and the National Bank 
of Panama do not favour exports. The BDA loans destined for other agricultural activities 
(agro-industry, land purchase and titling, pu rchase of farms, etc.) totalled B 67.4 million 
with a cumulative portfolio of B 32.9 million.
18 
4.32.  Under Law No. 2 of 20 March 1986, as amended by Law No. 28 of 1995, Panama provides 
incentives for agriculture (for the production  of food, wood, crop and livestock farming, 
aquacultural and forestry raw materials, and other agricultural products) for the purpose of making food available for domestic consumption and ex port. The Law establishes a preferential rate, 
up to 30% lower than the ordinary rate, for the installation and consumption of electricity 
for agricultural purposes and tax exemption o f  u p  t o  3 0 %  f o r  s u m s  i n v e s t e d  i n  c r o p  
and livestock farming, fishery, aquacultural and agro-industrial activities, although the deduction 
may not exceed 40% of the taxable income. To qualify, taxpayers must invest in the production 
of goods, the cancellation of obligations or the introduction of more productive technology and maintain the investment for at least three years. 
4.33.  Law No. 52 of 28 August 2012 introduced changes in the Tax Code that favour 
the agricultural sector. For example, it raises  from B 250,000 to 300,000 the gross annual income 
threshold below which natural and legal persons engaged in agriculture or agro-industry are exempt from income tax. Moreover, pers ons engaged in agriculture or agro-industry 
with incomes in excess of B 300,000, together with persons engaged in importing 
and manufacturing food or pharmaceutical and medicinal products for human consumption, may deduct on their estimated tax return the total amount of the ITBMS they have paid solely 
on the purchase of packaging materials, servic es and inputs necessary for manufacturing food 
or pharmaceutical and medicinal products for human consumption. 
4.34.  During the period from 2007 to 2013, Panama did not notify any export subsidies. 
At the end of 2009, Panama adopted Law No. 82 of 31 December 2009 establishing 
the Programme for the Promotion of Agricultur al Export Competitiveness through export 
incentives, consisting of tax credits exclusively for paying domestic taxes and, in 2010, issued the corresponding implementing regulati ons (Executive Decree No. 65 of 25 March 2010). 
The authorities have noted that a law for establishing a trade promotion fund for financing 
the export of agricultural products is being drawn up. 
4.35.  The ISA is the agricultural insurance intermediary and offers the following categories 
of insurance: (i) agricultural and forestry insurance which covers, for example, drought, floods, 
disease and pests; (ii) bonds, for example, for lo an payments and product delivery; (iii) livestock 
insurance; and (iv) supplementary insurance, for example, machinery insurance, agricultural 
and transport insurance, storage and infrastructure insurance and rural life insurance. 
The premiums set by the ISA are percentages of the insured value and the term varies 
                                               
16 Online information, viewed at: http://www.bda.gob.pa/terminos_legales.html . BDA Executive 
Committee Resolution No. 10-2010. 
17 Traditional agricultural sector products, for ex ample: rice, maize, tomatoes, vegetables, beans, 
potatoes, onions, sugar cane; an d coffee, pineapple, yams, yucc a, bananas, and watermelons, 
for domestic consumption. 
18 Round numbers. BDA figures provided  by the Panamanian authorities. WT/TPR/S/301/Rev.1 • Panama 
 
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  with the risk covered.19 For example, in the case of livestock the premium varies with the nature 
of the animal (3.5% for female breeding stock for meat and fattening, 2.7% for female breeding stock for milk, 3.0% for dual-purpose female breeding stock, 4% for male breeding stock, whether for milk or meat). In crop farming, the premiu m varies between 4% and 7% of the insured value 
depending on the agronomic conditions and the province. The excess varies between 10% 
and 30%. The term of the coverage is variable, for exam ple, in the case of feeder cattle, it is up to 
two years and in the case of male and female breeding stock up to 72 months. Crop coverage 
depends on the agricultural cycle. There is also  a Guarantee Fund Programme, a B 10 million trust 
fund deposited in the National Bank of Panama fo r guaranteeing agricultural loans granted by that 
institution for crops approved by the MIDA in its crop manuals, livestock breeding and agricultural product processing. The guarantee covers up to 80% of the loan. 
4.2.3  Fishing 
4.36.  The fishing sector consists of industri al and non-industrial fishing and aquaculture. 
Non-industrial fishing is small-scale and mainly for domestic consumption. Although the fishing 
sector's contribution to GDP continued to decline between 2008 and 2012, from 2.2% 
to an estimated 0.4%, the gross aggregate value of the sector recorded annual growth of 2.5% in 2012, mainly due to an increase in shrimp exports (20.2%) and non-industrial fishing. 
4.37.  The Panamanian Aquatic Resources Author ity (ARAP) is responsible for the observance 
and application of the laws and regulations concerning the management, conservation and exploitation of aquatic resources and the national fishing and aquaculture policies adopted by the Executive. The ARAP is represented in its relations with the Executive by the 
Ministry of Agricultural Development.
20 The ARAP is authorized to grant international fishing 
licences to Panamanian-registered vessels.21 Industrial fishing also requires an industrial licence, 
granted by the MICI to Panamanian nationals and foreigners without distinction. 
Commercial shrimp fishing is restricted to vessels built in Panama and only Panamanian nationals 
may engage in coastal or non-industrial fishing.22 Moreover, there is a series of technical 
requirements for limiting the exploitation of fisheries resources which apply without distinction 
to nationals and foreigners alike. 
4.3  Energy 4.38.  The National Energy Secretariat (SNE ), established in 2008 and attached to the 
Ministry of the President's Office, is responsible for overseeing the energy sector.
23 The SNE 
designs and implements the energy policy cont ained in the National Energy Plan 2009-2023, 
whose main objectives are to ensure, within  competitive parameters, the availability 
and sustainable supply of energy, promote the deve lopment of renewable sources and the rational 
use of energy, and strengthen regional integration through interconnections with Central 
and South America.24 
4.39.  The demand for electricity grew by 8.4%25 in 2012 with 64.4% of electricity output being 
generated in hydraulic power stations and 35.5% in thermal power plants.26 Between 2007 
and 2013, Panama was a net exporter of electricity in some years and a net importer in others. 
4.40.  Panama participates in the Regional Electricity Market (MER), together with Costa Rica, 
Guatemala, El Salvador, Honduras and Nica ragua. The MER has a 1,800 km electricity 
                                               
19 Online information from ISA, viewed at: http://www.isa.gob.pa/programas.php# . 
20 Law No. 44 of 23 November 2006. 
21 Executive Decree No. 49 of 13 November 2009 and Executive Decrees Nos. 160, 161, and 162 
of 6 June 2013. 
22 Executive Decree No. 124 of 8 November 1990. 
23 In 2008, the SNE replaced the MICI's Directorate- General of Hydrocarbons and Alternative Energies. 
24 SNE (2009). 
25 Online information, viewed at: http://capamec.org/wp-content/uploads/2013/08/Sector-
El%C3%A9ctrico-julio-2013.pdf . 
26 Online information from ASEP, viewed at: 
http://200.46.47.233/images/electricidad/estadisticas/II%20Semestre_2012/OFERTA.pdf . WT/TPR/S/301/Rev.1 • Panama 
 
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  infrastructure known as the Central America Electrical Interconnection System (SIEPAC). 
There are also plans for an electrical interconnection between Panama and Colombia.27 
4.41.  Panama does not produce hydrocarbons bu t has a storage capacity of 21.5 million barrels28 
and an extensive port infrastructure. There is an oil pipeline in operation but only 12% 
of its capacity is being used. Fuel free zones have been established to supply the existing 
infrastructure. Under this procedure, crude petroleum and petroleum products can enter fuel free zones without payment of taxes, levies and othe r fiscal charges at importation, and exemption 
from export taxes is granted on sales of these products to ships and aircraft in international traffic 
that use Panamanian ports and airports and on sales to vessels that transit through the Panama Canal. Bunkering is an important commercial activity in the hydrocarbons subsector. 
4.3.1  Electricity 
4.42.  Panama's electricity market is decentralized and regulated, generation is mainly private 
and operates under conditions of free competit ion. The Power Transmission Company (ETESA), 
which is 100% State-owned, is responsible for tran smission; the National Dispatch Centre (CND), 
which is controlled by ETESA, operates and supervises the National Interconnected System (SIN) 
maintaining a balance between supply and demand. There are three semi-public electricity distributors operating in different areas under exclusive concessions, namely, 
Empresa de Distribución Eléctrica Metro Oeste,  S.A (EDEMET), Elektra Noreste, S.A. (ENSA) 
and Empresa de Distribución Eléctrica Chiriquí, S.A (EDECHI), which in December 2012 held 44.5%, 42.2% and 13.3% of the market, respectively. The Central American regional transmission system is the responsibility of Empresa Propietaria de la Red (EPR), 
which is composed of the transmission companies of each of the countries of Central America 
and three shareholders from outside the region.
29 
4.43.  In September 2013  total installed capacity was 2,441.7 MW, with firm capacity standing 
at 1,825 MW as compared with a maximum demand of around 1,440 MW, recorded 
on 13 April 2013. Since 2007 the firm power margin relative to maximum demand has improved but is still narrow. In May 2013, Panama experienced a crisis which led to the adoption of energy 
saving measures and the importation of electricity from the Central American regional market
30; 
moreover, in April 2014 measures were taken to reduce energy consumption and prevent a crisis. Exports are authorized only if the energy and po wer to be exported are not needed to supply 
the domestic market.
31 Assessments of the quality of the distribution service show that 
the indicators reflecting the frequency and duration  of interruptions exceed the permissible level, 
the difference being more pronounced in the rural sectors. According to ETESA, to improve the efficiency of the system it is proposed to build a fourth transmission line which would be ready 
in 2021. A Panama-Colón transmission line is also  being planned, and the Chan II hydroelectric 
power station is expected to come on stream in 2018. 
4.44.  Law No. 6 of 3 February 1997 and its amen dments, which govern the provision of public 
electricity services, guarantee market operators non-discriminatory access to transmission 
networks. The transmission company acts as an intermediary and does not receive any net profit or assume any costs or risks under block energy  supply contracts, all the costs associated 
with such contracts being transferred on average to the distributors. The National Public Service 
Authority (ASEP) is the market regulator. It gran ts licences and concessions, regulates distribution 
prices, establishes calculation methods and approves companies' tariff proposals. Only the prices at which electricity is sold to end customers, other than large customers, are regulated. 
The end consumer pays a price calculated as a f unction of consumption and voltage. The average 
consumer price rose from B 0.15 per kWh in 2006, then one of the highest tariffs in Latin America, to over B 0.16 in 2012, after hitting a peak of B 0.185 in 2008 due to the surge in oil prices. 
                                               
27 SNE (2013). 
28 Online information, viewed at: 
http://www.energia.gob.pa/admin/gal/12/f iles//Zonas%20Libres%20de%20Combustible%20-
%20Contratos%20Vigentes.pdf . 
29 Online information from the EPR, viewed at: 
http://www.eprsiepac.com/quienes_siepac_transmision_costa_rica.htm . 
30 La Prensa  of 8 May 2013, online information, viewed at: 
http://www.prensa.com/impreso/panorama/crisis-energeti ca-racionamiento-sector-publico-y-privado-falta-de-
lluvias/175942 . 
31 Executive Decree No. 22 of 19 June 1998, Article 30. WT/TPR/S/301/Rev.1 • Panama 
 
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  4.45.  Law No. 57 of 13 October 2009, which amended Law No. 6, introduced important changes. 
For example, it authorizes ETESA to prepare specif ications and call for bids, obliges the generators 
to offer their firm capacity and available energy in the bids, which in its turn authorizes them to participate in the contingency market. The dist ributors' energy purchases from the transmission 
company are paid for through tariffs that reflect the economic costs of supply, which cover 
all the costs of energy, capacity, special servic es and other costs of purchasing energy from 
the generators. Customers who are up to date in paying for the service and submit claims 
in connection with invoicing problems can suspend payment of the portion claimed until the ASEP 
settles the claim. Law No. 57 also raises the level of the fines, which can amount to B 20,000,000. 
4.46.  ASEP has granted 20 generating companies 19 concessions, of which nine are operational, 
and 22 licences, of which 21 are operational. The State owns two generating companies. 
The transmission company cannot participate in generation, distribution or sales to large 
customers.
32 Generating companies and distributors may not apply for new concessions that 
increase their market share to more than 25% and 50%, respectively. The ASEP can modify these 
levels and, in fact, permitted a temporary increase in the participation of the hydroelectric 
companies to 40% between 2005 and 2012. The participation of distributors in generating companies is restricted, while the participation of generators in distribution is prohibited.
33 
4.47.  To fulfil its plans for saving energy and diversifying its energy sources, Panama grants 
tax incentives for the construction of new hydroelectric power plants or solar, wind and geothermal energy projects and those that use natural gas or biomass.
34 In the tender processes 
for the purchase of energy and capacity, a prefer ence of 5% of the evaluated price is granted 
to projects that use renewable sources.35 The Strategic Plan for the Rational and Efficient Use 
of Energy, supported by the Fund for th e Rational and Efficient Use of Energy36, is intended 
to finance programmes and projects in the private commercial and residential sector and to grant 
incentives and subsidies for equipment, machinery, materials and spare parts that use less energy 
and/or recover energy for their own operation. It prohibits, from 2014, the manufacture and importation of equipment with energy effi ciency ratings below the minima determined 
by the Energy Efficiency Ratings Management Committee.
37 Equipment, machinery, structures 
or appliances that reduce energy consumption, marketed in Panama, must bear a label indicating at least their energy consumption under normal conditions, the normal conditions for calculating energy consumption and their energy efficiency rating.
38 
4.48.  The State subsidizes electricity consum ption through discounts on the end customer's 
invoice. Discounts are given to the agricultural sector (5% of the tariff), to subsistence consumption customers (up to 20%), to pensioners and third-age customers 
and to political parties (50%). The subsidy for subsistence consumption customers is funded 
from the contributions of customers whose monthly consumption exceeds 500 kWh, at a rate of up to 0.6% of their invoice.
39 
4.49.  Cross subsidies are allocated through the Tariff Stabilization Fund (FET) to mitigate 
the effect of end-customer tariff increases and to constitute the Energy Compensation Fund (FACE). The FET is intended for all tariffs but, in recent years, has been restricted to customers on the simple low-voltage tariff  who consume up to 500 kWh per month. The State is progressively 
reducing the number of FET beneficiaries, with a view to limiting the subsidies to customers with 
                                               
32 Article 83 of Law No. 6 of 3 February 1997. 
33 Articles 69 and 94 of Law No. 6 of 3 February 1997. 
34 Law No. 45 of 4 August 2004 and Executive Decree No. 45 of 10 June 2009 (hydropower 
and geothermal energy); Law No. 37 of 10 June 2013 (solar energy); Law No. 44 of 25 April 2011 as amended by Law No. 18 of 26 May 2012 (wind energy); Law No. 41 of 2 August 2012 (natural gas); and Law No. 42 of 20 April 2011 (biomass). 
35 Law No. 41 of 2 August 2012 and Law No. 42 of 20 April 2011. 
36 The Fund can receive reimbursable  and non-reimbursable contributions from bilateral and multilateral 
financing organizations, technical cooperation funds, governments and energy market operators. The State 
allocates annual budget appropri ations to bolster the capital. 
37 The Ratings Management Committee consists of representatives of the MICI, the MEF, the National 
Secretariat of Science, Technology and Innovation, th e Technical Council for Engineering and Architecture, 
the National Metrology Centre AIP, the University of Panama, the Technological University of Panama, the INEC, the Office of the Comptroller-General of the Republic with the right to speak, and the National 
Energy Secretariat. 
38 Law No. 69 of 12 October 2012 and Executive Decree No. 398 of 19 June 2013. 
39 ASEP (2012a). WT/TPR/S/301/Rev.1 • Panama 
 
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  a consumption of up to 300 kWh in 2016. The FACE is made up of State funds for compensating 
the electricity distributors for the amounts foregone, through tariff updating, due to Government commitments or as a result of the total transfer of the extra costs to the electricity generators with mixed share capital not having been permitted.
40 
4.3.2  Hydrocarbons 
4.50.  Panama imports 100% of its hydrocarbon cons umption in the form of finished derivatives. 
4.51.  Hydrocarbon-related activities are governed by Law No. 8 of 16 June 1987, as amended 
by the following three laws: (1) Law No. 27 of 12 July 2006 enabling the State to establish 
companies to provide hydrocarbon exploration, development, transport, storage, marketing, 
industrialization, import, export and refining services; (2) Law No. 39 of 14 August 2007, which promotes and regulates the exploratio n and development of petroleum deposits, 
declares these activities to be of public ut ility and social interest and exempts companies 
that conclude contracts from the payment of import taxes on machinery, grants a special depreciation regime and creates free zones for fuel; and (3) Law No. 53 of 9 September 2013, 
which amends the conditions of oil and gas exploration and development permits 
and contracts. In approving these laws Pana ma seeks to promote exploration and prepare 
the way for the commercial development of confirmed deposits in its territory. 
However, in December 2013, no de velopment activity had yet begun.
41 
4.52.  The importation and sale of fuels and petroleum products are subject to a consumption 
tax (ICCDP). Moreover, Law No. 76 of 21 October 2013 imposes an import tax on fuels blended with bio-ethanol of foreign provenance (section 3.2.5). The State regulates the maximum retail 
price of petrol (91 and 95 octane) and low-sulphur diesel, in accordance with the trends 
in international prices, and adjusts it every fortnight.
42 
4.4  Manufacturing 
4.53.  Manufacturing in Panama focuses on just a few activities, namely, food and beverages, 
publishing and printing, non-metallic mineral products, textiles, leather tanning and dressing and footwear, wood and wood products, paper and paper products, chemical and plastics products, 
metals and metal products, machinery and vehicles. Over 70% of production consists 
of consumer goods.
43 
4.54.  Between 2007 and 2013 the manufacturin g industry's share of GDP fell from 7.2% 
to an estimated 5.1%. Nevertheless, in 2012 the sector's gross aggregate value grew by 3.6%, 
mainly due to increases in the production of meat and meat products (5.3%), the manufacture 
of cement, lime and gypsum (25.2%), the prep aration of non-alcoholic beverages (5.9%), 
and the production of dairy products (10.6%). On the other hand, there were declines 
in the processing and preservation of fish and fi sh products, the manufacture of milling industry 
products, the production of fertilizers an d nitrogen compounds, and the manufacture 
of pharmaceutical products, chemicals for medicinal purposes and botanical products, inter alia.44 
In terms of employment, in 2013 the manufacturing  sector employed 7.7% of the total labour 
force. According to the Chamber of Commer ce, Industry and Agriculture of Panama, 
the manufacturing industry lost workers betw een 2011 and 2012, recording a fall of 1.3%.45 
4.55.  In 2012, the principal manufactured products in terms of output value were the preparation 
and preservation of fish, fruit, vegetables, oils and fats (19.7%), the preparation of beverages 
(17.2%), the manufacture of non-metallic mineral pr oducts (10.4%), the preparation of other food 
products (7.5%), publishing, printing and the reproduction of recordings (7.4%), 
                                               
40 Cabinet Resolutions No. 174 of 8 November 2011 and No. 64 of 26 June 2012. 
41 SNE (2013). 
42 Online information from the SNE, viewed at: http://www.energia.gob. pa/Precios-Paridad-
Importacion.html . 
43 National Competitiveness Centre (2013). 
44 Comptroller-General of the Republic (2014) and INEC. 
45 National Competitiveness Centre (2011) and Chamber of Commerce, Industry and Agriculture 
of Panama (2013). WT/TPR/S/301/Rev.1 • Panama 
 
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  and the manufacture of metal products for use in building (7.5%).46 In September 2013, 
the indicators reflecting the volume and value of manufacturing output were higher by 3.6% 
and 12.1%, respectively, relative to the same period in the previous year. The activities with the strongest growth were publishing, pr inting and the reproduction of recordings, 
non-metallic mineral products (due to the good performance of the construction sector) 
and vehicle manufacturing. The biggest falls were recorded in leather tanning and dressing and footwear and the manufacture of textile and paper products.
47 
4.56.  Panama offers manufacturers the opportuni ty to take advantage of several incentives 
programmes (section 3.4.1). Some were introduc ed during the review period for the purpose 
of improving productivity and competitiveness, for example, the Industrial Promotion Certificate (CFI), a tax credit granted to companies which make investments in certain activities
48 
and the Trust Fund for the Financing of Competitiveness and Productivity. The authorities have 
noted that the impact of these measures on the performance of the manufacturing industry 
has not been measured. 
4.57.  In 2013, Panama applied an average MFN ta riff of 6.4% to non-agricultural products 
(WTO definition). When Chapters 25 to 97 of the Harmonized System (HS) are taken as the basis, the average is 6.2% (Table 3.2). Between 2007 and 2012, imports of manufactured goods, based 
on HS Chapters 25 to 97, fell from 89.3% to 88.8% of total imports and exports rose from 16.6% 
to 43.8% of total exports. In 2012, the main imports were mineral fuels, mineral oils and their distillation products; bituminous substances; mineral waxes (22.5%), nuclear reactors, boilers, machinery and mechanical appliances; parts thereof (11.2%); and motor vehicles, tractors, 
bicycles and other land vehicles; their parts and accessories (9.1%). Panama's exportable range 
of manufactured products included pearls (natural or cultured), precious and semi-precious stones, precious metals, metals clad with precious metal, and articles thereof; imitation jewellery; 
coins (15.7%), cast iron and steel (7.2%); wood and wood products (3.0%), paper and paper pulp 
(3.0%); and aluminium and articles thereof (2.8%) (Tables A1.1 and A1.2). It is estimated that 
Panama exports 22% of its manufacturing output.
49 
4.5  Services 
4.5.1  General features and spec ific commitments under the GATS 
4.58.  Panama is essentially a services economy. In 2013, services contributed 70% of GDP 
(at 2007 prices), together with two thirds of em ployment (Table 1.1) and about 36% of total 
exports (goods and services). Between 2007 and 2 013, the services sector grew at a real annual 
rate of 7.4%. Exports of services (including th ose from the Colón Free Zone) were particularly 
dynamic, increasing in value by 121% during the same period to reach US$9,767 million in 2013, 
while imports amounted to US$4,715 million (Table 1.5).50 
4.59.  Panama's Schedule of Specific Commitments under the General Agreement on Trade 
in Services (GATS) was negotiated within the context of its accession to the WTO in 1997. 
The horizontal commitments concerning market access include the presence of natural persons 
working temporarily in Panama in the following categories: sellers of services, managers, administrators and specialists. Panama did not bind any horizontal commitments relating to national treatment. 
4.60.  Panama adopted specific commitments relating to market access and national treatment 
in 11 of the 12 sectors defined in the GATS, the exception being the "other services" sector. The commitments in the telecommunications and transport sectors are limited; in the latter sector, 
they cover only the repair of aircraft. In telecommunications, Panama adopted commitments only 
                                               
46 Online information from INEC (Table 12), viewed at: 
http://www.contraloria.gob.pa/inec/archivos/P5531Cuadro%2012.pdf . 
47 Online information from INEC, " Según división industrial: Índice s resumen de volumen, precios y 
valor de la industria manufacturera ", viewed at: 
http://www.contraloria.gob.pa/in ec/Avance/Avance.aspx?ID_CATEG ORIA=1&ID_CIFRAS=5&ID_IDIOMA=1 . 
48 These activities are: R&D, management and quality assurance and environmental management 
systems, investment or reinvestment of profits, human resource training and coaching, and increase 
in production-related employment. 
49 National Competitiveness Centre (2013). 
50 Estimates for 2013. WT/TPR/S/301/Rev.1 • Panama 
 
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  with respect to value-added services, undertaking to liberalize them in two stages: (i) one year 
after its accession to the WTO, foreign companie s would be allowed to provide such services 
in association with the dominant local company; and (ii) five years after accession, foreign companies would be allowed to provide the services directly. 
4.61.  In financial services, the commitments are broader. Panama bound cross-border supply 
(mode 1), consumption abroad (mode 2) and commercial presence (mode 3) in respect of: lending and deposit taking; financial leasing with the opti on to purchase (movables only); bank guarantees 
and commitments; payment and money transmission services (excluding local transmission 
services); trading for own or customers' account; money market instruments and foreign exchange; derivatives; transferable securities; participation in issues of securities; money broking; asset management and advisory services, inter alia.
51 
4.62.  In the insurance sector, Panama bound commercial presence without limitations, but did not 
bind cross-border supply, consumption abroad or the physical presence of persons for life, accident and health insurance activities or for non-life insurance. In the specific case 
of transportation insurance, Panama did not impose any limitation on the cross-border supply 
of insurance with respect to goods exported from Panama, from the moment they are outside Panamanian territory. For reinsurance and retrocession services, Panama bound modes of supply 
1, 2 and 3 without limitations on national treatmen t, as well as modes 2 and 3 for market access, 
imposing a limitation on fire insurance for which insurance companies may not cede premiums for reinsurance abroad in an amount exceedin g 50% of the total premiums for risks covered 
in Panama. 
4.63.  As it acceded to the WTO in 1997, Panama did not take part in the extended negotiations 
on financial services and telecommunications under the GATS and has not accepted the Fourth and Fifth Protocols annexed to the GATS. In the context of the services negotiations under 
the Doha Round, Panama submitted an initial offer in 2003. 
4.5.2  Telecommunications 4.5.2.1  Features of the market 
4.64.  The telecommunications sector is one of the most dynamic in the Panamanian economy. 
During the review period, its contribution to GDP (at 1996 prices) increased, rising from 6.06% in 2007 to 9.15% in 2012
52, and generated gross income of US$2,359.9 million (1,035.4 million 
in 2007).53 Mobile telephone and broadband services ar e those which experienced the most growth 
in recent years. In 2012, the telecommunications sector employed 5,162 people.54 
4.65.  Panama's telecommunications market was privatized in 1997 and opened up to competition 
in January 2003, when the exclusive concession to provide basic telephony services enjoyed 
by the company Cable & Wireless Panama, S.A. was terminated. 
4.66.  In Panama, fixed telephony teledensity is low by regional standards, although it increased 
during the review period thanks to the presence  of alternative operators that use fixed mobile 
or coaxial cable networks to offer the service (T able 4.3). At the end of 2013, eight basic local 
telephony companies were operating (two of which were foreign), together with seven domestic long-distance (LD) operators (including two foreign) and nine international LD operators (including five foreign). Cable & Wireless Panama, S.A. is maintaining its dominant position in the 
basic telephony market with around 70% of fixed lines. 
                                               
51 WTO document GATS/SC/124 of 1 October 1997. 
52 Information provided by the National Public Service Authority (ASEP) based on INEC data. 
53 Information provided by ASE P. The income figures relate  to regulated gross income. 
54 Information provided by ASEP. WT/TPR/S/301/Rev.1 • Panama 
 
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  Table 4.3 Telecommunications sector indicators, 2007-2013 
 2007 2008  2009  2010  2011 2012 2013a 
Fixed teleph one lines 
in operation 495,250 523,999  537,356  540,317  560,184 569,880 586,298  
Fixed lines per 
100 inhabitants 14.25 14.81  14.93  14.76  15.04 15.05 15.23  
Cellular mobile lines 3,010,635 3,915,246  6,066,683  6,715,098  6,735,429 6,213,564 6,297,604  
Cellular mobiles per 
100 inhabitants 86.6 110.7  168.5  183.4  180.9 164.1 163.5  
Internet users 913,711 1,148,159  1,351,105  1,397,173  1,522,353 1,583,644 1,598,183  
Internet users per 
100 inhabitants 26.3 32.5 37.5 38.2 40.9 41.8 41.5 
a Estimated. 
Source: National Public Service Authority (ASEP). Online information viewed at: 
http://www.asep.gob.pa/default.asp . 
4.67.  Cellular telephony55 has boomed in recent years, achieving a penetration of 163.5% 
in 2013, far above the figure recorded in 2007 and the regional average. The expansion 
is partly due to the market entry, at the beginning of 2009, of two new operators (Claro Panamá, 
S.A. and Digicel Panama, S.A.) after having obtained concessions to operate two cellular telephony bands through competitive bidding. This  broke the duopoly of the companies 
Cable & Wireless Panama, S.A. and Telefónica Móviles Panamá, S.A., which now together hold 
about two thirds of the market. Over 90% of  active mobile phone lines are prepaid. 
4.68.  The Internet sector has also enjoyed rapid growth, achieving a penetration of 41.5% 
in 2013 (26.3% in 2007). In the broadband segment, Cable & Wireless Panama, S.A. has a virtual 
monopoly on the provision of ADSL access. However, several companies are competing to provide 
Internet service using other technologies such as cable modem and WiMAX. At the end of 2013, there were 21 public-use Internet service concession holders in operation. Internet penetration 
is expected to keep growing thanks to increasing demand and the implementation 
of the government project known as National Inte rnet Network, which is intended to eradicate 
the digital divide and offer basic Internet access for the entire population. 
4.69.  In general terms, greater competition in the telecommunications market has contributed 
to a reduction in prices, improvements in quality and diversification of the services offered. Domestic and international long-distance tariffs had already fallen substantially in the first years of liberalization.
56 The domestic LD service is being maintained at a basic price of B 0.05 
per minute; the international LD service has an average price of B 0.05 per minute for calls 
to the United States and B 0.25 per minute for calls to the rest of the world. Thanks to the entry of new operators, mobile phone tariffs have been reduced substantially since 2009 and are among 
the most competitive in the region, at an averag e of B 0.09 per minute. For their part, the prices 
of Internet access services are less competitive, being on average B 18.00 per mbps per month.
57 
4.5.2.2  Legal framework 
4.70.  Responsibility for formulating telecommunications sector policy lies with the Executive, 
through the Cabinet Council. The National Public Service Authority (ASEP)58, through the National 
Telecommunications Directorate, is responsible for regulating, inspecting and monitoring the sector's activities. Its functions include granting concessions for the provision 
of telecommunications services, allocating radio frequencies, establishing and overseeing 
the observance of service quality standard s, promoting competition in the market, 
imposing sanctions on infringers and arbitrating in disputes. 
4.71.  The telecommunications sector is governed  by Law No. 31 of 8 February 1996, as amended 
by Law No. 24 of 30 June 1999, and by its impl ementing regulations introduced by Executive 
Decree No. 73 of 9 April 1997. Other important pieces of legislation include Executive Decree 
No. 21 of 12 January 1996, which regulates the mobile telephony service, and Resolution 
                                               
55 Cellular telephony includes the mobile telephone service and personal communication services. 
56 66% and 94%, respectively between 2002 and 2006. WTO (2007). 
57 Information provided by the ASEP. 
58 ASEP was established by Decree Law No. 10 of 22 February 2006. WT/TPR/S/301/Rev.1 • Panama 
 
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  No. JD-2802 of 11 June 2001 on the adoption of rules for the supply of basic telecommunications 
services59 as from 2 January 2003. There are also numerous ASEP regulations and resolutions60, 
as well as a National Technical Telecommunications Plan.61 
4.72.  The main pieces of legislation adopted during the review period include Law No. 44 
of 31 October 2007 creating the Single Emergency Management System and establishing a tax 
of 1% on the invoicing of some telecommunications services to finance that service; Executive Decree No. 58 of 12 May 2008, which extends to new personal communications service 
concessionaires the same rules as apply to mobile telephony service providers; 
the Law on Universal Service and Access (Law No. 59 of 11 August 2008); Law No. 51 of 18 September 2009 on the retention, protection and supply of telecommunications services user data; and Law No. 15 of 26 April 2012, which estab lished a tax to cover the costs of the project 
to bury telecommunications services cabling and infrastructure. Another change was the adoption 
of the Number Portability Regulations (Res olution AN-3064 Telco of 11 November 2009) 
and Law No. 70 of 9 November 2009, which authorized the ASEP to establish a tax to cover the 
operating costs of the body responsible for administering portability. 
4.73.  The telecommunications legislation does not provide for the regulation of VoIP services. 
However, duly authorized concessionaires may us e VoIP within their networks to communicate 
with their users through the SIP protocol, while always maintaining the means to translate SIP 
into SS7 signalling protocol
62, in the event that the destination of a call is a network that does 
not handle SIP or VoIP protocol. ASEP is working on establishing rules to regulate convergent networks and the use of SIP protocol as a means of interconnection in addition to SS7. 
4.74.  The Telecommunications Law authorizes majority foreign participation in the capital 
of companies providing public telecommunications services, with the exception of foreign companies which another State controls or in which it has a majority holding. To operate 
in Panama, foreign companies must set up a subsidiary with a local presence. 
4.75.  To provide any telecommunications service it is necessary to obtain a concession. 
There are two types of concessions: Type A and Type B
63; both are for a term of 20 years, 
renewable for a further period of the same length. The provision of mobile telephony services 
requires a Type A concession granted by the St ate, subject to assessment by the ASEP. Type A 
concessions are granted under an open tendering procedure with prequalification and are subject 
to a regime that restricts the number of operators in the market. The concession is awarded 
to the prequalified company which submits the hi ghest bid for the right. In 2008, two concessions 
to operate cellular mobile telephony bands were awarded in this way, to the companies Claro Panamá, S.A. and Digicel Panama, S.A. 
4.76.  Type B concessions are needed to provide the remaining telecommunications services, 
that is: basic telephony (local, domestic and international), Internet for public use, data transmission, satellite transmission, private networks and resale services, inter alia . Type B 
concessions are granted by the ASEP without a public invitation to tender. If the service 
does not require the use of the radio-frequency spectrum, the ASEP must grant the concession within 30 working days. Otherwise the interested pa rty must follow the procedures for requesting 
the allocation of frequencies set out in the Telecommunications Regulations.
64 Type B 
concessionaires who use frequencies must pay the corresponding annual fee.65 
4.77.  According to ASEP data, in November 2012 a total of 352 companies had valid concessions 
to provide telecommunications services, but only 166 (one third of the total) were operating 
                                               
59 These include local telephony, domestic and international long distance, and public 
and semi-public terminals. 
60 The legislation can be viewed on the ASEP website at: http ://www.asep.gob.pa. 
61 Resolution No. JD-106 of 30 September 1997. 
62 The Interconnection Agreements treat the SS7 Signalling Protocol as an essential element 
for interconnection between operators. 
63 Under Law No. 31 of 1996, Type A concessions ar e required for mobile te lephony services that 
operate in the numerical restriction regime; Type  B concessions are for the remaining services 
and are classified in Resolution No. JD-025 of 1996 and amendments thereto. 
64 Title IV, Chapter 2 of Executive Decree No. 73 of 9 April 1997. 
65 This fee is established in accordance with the technical parameters of the wireless systems 
and the National Frequency Allocation Plan. WT/TPR/S/301/Rev.1 • Panama 
 
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  the concession.66 Many of these concessionaires are foreign-owned companies that provide 
telecommunications services in more than one segment. Call-centre services, telecommunications transmission services and Internet for publ ic use are the segments in which the number 
of concessionaires recorded in recent years has been greatest. 
4.78.  The rules on interconnection
67 oblige concessionaires to interconnect their networks 
with those of other concessionaires that so request and install network elements, functions and capacities on the basis of the principles of neutrality, non-discrimination and equality 
of access. Concessionaires are free to negotiate interconnection agreements with each other
68, 
but must register them with ASEP. If no agreemen t is reached within 120 calendar days of receipt 
of the request, either of the parties may ask ASEP to mediate. If after a brief period of mediation, 
there is still disagreement, ASEP must, within 90 calendar days, issue a mandatory interconnection 
order with retroactive effect, which may incl ude interconnection charges and other terms. 
The authorities have noted that during the period 2007-2013, ASEP intervened in less than 10% of interconnection agreements. The regulations stipulate that interconnection and access charges 
must reflect at least the long-run incremental costs.
69 
4.79.  Together with its amendments, Re solution No. JD-107 of 30 September 1997, 
which contains the National Frequency Allocation Plan, regulates the design of the wireless 
subscriber loop. In Resolution No. JD-5880 of 23 February 2006, ASEP issued instructions 
for the unbundling of the loop in wireless networks. At the time, it was reported that the company with a dominant position had obstructed the unbundling of its local network, maintaining a virtual monopoly in the provision of the ADSL Internet  access service. According to an ECLAC study, 
the refusal of the company with a dominant position to unbundle its network constituted 
a bottleneck at the start of the liberalization of the Panamanian telecommunications market.
70 
4.80.  In Resolution AN No. 566-Telco of 16 Ja nuary 2007, ASEP classified the concessionaires 
with a dominant position for 16 public telecommunications services; Cable & Wireless Panamá, 
S.A. was identified as the operator in a dominant position for nine of these services. At the end of 2013, ASEP was in process of updating this information. 
4.81.  In 2008, ASEP deci ded that number po rtability would be mandatory for fixed and mobile 
networks within a period of two years.
71 In 2009, the number portability regulations 
(Resolution AN-3064 of 11 November 2009) were adopted and Law No. 70 of 9 November 2009 establishing a tax to cover the costs of implem enting them was approved. Number portability 
for mobile telephony was implemented as from December 2011. Between December 2011 
and February 2014 around 240,000 mobile network numbers and another 28,000 fixed network numbers were transferred.
72 Portability has brought increased competition among operators 
to maintain their customer portfolios through attractive plans and products. 
4.82.  The Law on Telecommunications stipulates that the charges for telecommunications services 
offered under competitive conditions are to be de termined by the concessionaires. However, ASEP 
can impose a tariff regime if: (i) there is only one concessionaire to provide a specific service; 
(ii) a service is subsidized from the profits of another service; or (iii) there are practices that restrict competition, in which case it can also take corrective measures. The authorities have pointed out that during the review period, ASEP did not impose any tariff regime as none 
of these conditions was satisfied. If concessionaires decide to increase their prices, they must 
publish the new prices 30 days before they come into effect. The legislation does not allow cross-subsidies between different services and requires concessionaires to publish separate 
accounts for each service provided.
73 Despite the fact that mobile telephony is subject to a regime 
of legally restricted competition, the tariffs for this service are freely established by the concessionaires. 
                                               
66 ASEP (2012b). 
67 Title V of Executive Decree No. 73 of 9 April 1997. 
68 Resolution No. JD-3264 of 27 March 2002 establishes a model interconnection contract. 
69 Article 216 of Executive Decree No. 73 of 9 April 1997. 
70 ECLAC (2007). 
71 Resolution AN No. 1668-Telco of 30 April 2008. 
72 Online information from ASEP, viewed at: http://www.portabilidad.gob.pa . 
73 Article 86 et seq. of Executive Decree No. 73 of 9 April 1997. WT/TPR/S/301/Rev.1 • Panama 
 
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  4.83.  ASEP promotes and supervises comp etition in the telecommunications market, 
with the participation of ACODECO, which investigates monopolistic practices and mergers (section 3.4.2). ASEP's functions in this area include: assisting ACODECO with the requirements relating to the investigation of monopolistic, anti-competitive and discriminatory practices 
on the part of telecommunications companies;  forwarding to ACODECO a detailed report 
on any act or behaviour of the regulated companie s that could affect free and fair competition 
so that an investigation may be promptly initiated; recommending to ACODECO that it request 
the competent courts to adopt precautionary measures in connection with the investigations. 
In addition, ASEP seeks ACODECO's favourable opinion on resolutions and regulations it intends to issue in order to maintain competition in the telecommunications market. During the review period, ACODECO investigated several cases of an ti-competitive practices in telecommunications 
(relating to interconnection), but without finding any breach of the law. 
4.84.  Universal service and access to telecommunications is governed by Law No. 58 
of 11 August 2008, as amended by Law No. 70 of 9 November 2009 and Law No. 62 
of 5 October 2012. Law No. 58 established the Fund for the Development of Universal Service 
and Access Projects, to finance projects approved by an Advisory Council which promote the universal service and universal access to telecommunications services throughout the country. 
The Presidential Secretariat for Government Innovation is responsible for the implementation 
of Law No. 59 of 2008. 
4.85.  The Fund is financed from up to 1% of  the taxable income of the operating companies 
engaged in the commercial exploitation of the paid information and telecommunications services 
defined in Law No. 59.
74 The taxable income includes the income from the termination of inbound 
international calls terminated in local networ ks under any procedure. The amendment made 
by Law No. 62 of October 2012 eliminated the provision which made the termination of inbound 
international calls more expensive for foreign correspondents. From 1 January 2013, 
all telecommunications companies operating in Panama must contribute to the Fund at the same rate. In April 2014, the Fund amounted to about US$50 million. 
4.86.  The authorities have launched the National  Network for Universal Internet Access project, 
which seeks to promote equality of opportunity for all citizens. Under this project hundreds of free wireless Internet access sites have been established in 22 Panamanian towns and cities, covering 80% of the population. This is turning Panama into one of the world's leading countries 
in the provision of free wireless Internet access at national level. It should be pointed 
out, however, that the speed of the Internet is limited and there is therefore a need to expand 
the capacity of the broadband network. Another of the objectives of Law No. 59 of 2008 
is to provide a public telephone service and othe r services to meet the needs of the population 
in disadvantaged areas. 
4.87.  Telecommunications services are subject to ITBMS at a rate of 7%, except for fixed 
telephony and residential Internet access servic es, which are exempt. In addition, post-paid 
mobile telephony and cable television services are subject to payment of the ISC (5%). 
4.88.  Panama has made commitments in the area of telecommunications services in the free 
trade agreements it has concluded. In the Pa nama-United States Trade Promotion Agreement, 
the parties adopted a regulatory framework for promoting competition in the telecommunications 
sector which builds on the disciplines of the WTO's Basic Telecommunications Reference Paper. 
4.5.3  Financial services 
4.5.3.1  General features 
4.89.  Financial intermediation continues to be a dynamic sector, having grown at an average 
annual rate of 6.0% between 20 07 and 2013 (at 2007 prices). It is considered to be one 
of the fundamental sectors for economic growth  in the Government's Strategic Plan 2010-2014. 
The sector contributed an average of 8% to real GDP over the period 2007-2013 and accounted for 2.5% of total employment in 2013 (Table 1.1). 
                                               
74 Local, national and international basic telephony services; personal communications services; cellular 
mobile telephony; telecommunications transport and public-use Internet service. WT/TPR/S/301/Rev.1 • Panama 
 
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  4.90.  Panama's financial services sector comprises the banks (including development banks), 
cooperatives and savings and loan associations, finance companies, insurers, pension funds, leasing companies, securities companies and remittance companies. The banks account for more than three quarters of financial sector assets (Table 4.4). 
Table 4.4 Structure of the Panamanian  financial system, December 2012 
Financial entity Number Assets 
(US$ million) % Supervisory body 
Banks 92 89,772 76.6 Panamanian Banking Supervisory 
Authority (SBP) 
General licence 49 72,937  SBP 
International licence 29 16,835  SBP 
Agency licence 14 N/A  SBP 
Cooperatives 595 1,823 1.6 Panamanian Autonomous 
Cooperative Institute 
Savings and loan 
associationsa 4 n.a.  National Mortgage Bank 
Insurers 31 1,881 1.6 Insurance Supervisory Authority 
Pension funds  644 0.6 Securities Market Supervisory 
Authority 
Development banks 2 593 0.5  
National Mortgage Bank 1 234  National Mortgage Bank 
Agricultural Development 
Banks 1 359  Agricultural Development Bank 
Finance companiesa 161 830 0.7 Ministry of Trade and Industry 
(MICI) 
Leasing companiesa 118 322 0.3 MICI 
Securities companies 81 21,329 18.2 Securities Market Supervisory 
Authority 
Remittersb 15 n.a. n.a. MICI 
Pawnbrokersb 280 n.a. n.a. MICI 
n.a. Not available. 
N/A Not applicable. 
a Information for June 2012. 
b Information for March 2012. 
Source: Information provided by the SBP. 
4.5.3.2  Banks and other financial institutions 
4.5.3.2.1  Features of the market 
4.91.  Panama has a sound and diversified bankin g sector with high levels of capitalization 
and liquidity. During the review period the sect or continued to expand and at the end of 2013 
had assets totaling US$97,928 million, an increase of 9.1% as compared with 201275 and more 
than twice the value at the end of 2007 (47,600 million).76 Banking accounts for about 7% 
of national GDP and employs about 30,000 people. 
4.92.  On 31 December 2013, the Panamanian bank ing sector (known as the International Banking 
Centre or CBI) comprised 92 banks: 51 with a ge neral licence, 27 with an international licence, 
and 14 with an agency licence. Of the banks with a general licence, two were official banks 
(the National Bank of Panama and the Savings Bank), 18 were banks with Panamanian private capital and 31 had foreign capital. All the banks with an international licence were foreign banks.
77 
4.93.  The Panamanian banking system weathere d the global financial and economic crisis 
(2007-2009) without serious consequences and today has high solvency, liquidity and profitability indicators (Table 4.5). In December 2013, the equity/risk-weighted assets ratio (capital adequacy) was 14.8%, higher than the 8% required by law. Likewise, monthly average liquidity was 60.4%, 
above the 30% required by law. Asset quality is good, since the ratio of non-performing 
                                               
75 Panamanian Banking Supervisory Authority (2013). 
76 WTO (2007). 
77 Online information from the SBP. Viewed at: 
http://www.superbancos.gob.pa/es/reportes_estadisticos . WT/TPR/S/301/Rev.1 • Panama 
 
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  and past-due loans to the total loan portfolio is low and has fallen substantially since 2009. 
Profitability indicators are reasonable: at the end of 2012 the return on average assets (ROAA) was 1.5% and the return on equity (ROE) 13.8%. 
Table 4.5 Panama's banking system: liquidi ty, capital adequacy and profitability 
indicators, 2007-2013 
(%) 
Indicator Dec. 2007 Dec. 2008  Dec. 2009  Dec. 2010  Dec. 2011 Dec. 2012 Dec. 2013 
Liquidity ratio 
(monthly average) n.a. 62.9  69.5 65.7 66.0 65.5 60.4  
Capital adequacy ratio 13.8 14.5 16.4 16.3 15.6 16.2 14.8 
Return on average 
assets (ROAA) 1.9 2.0  1.41 1.7 1.7 1.8 1.5  
Return on equity 
(ROE) 15.2 15.9 11.8 13.6 14.1 15.5 13.8 
Non-performing + 
past-due portfolio/Total domestic portfolio 3.5 3.9
 4.2 3.4 2.7 2.6 2.4  
n.a. Not available. 
Source: Panamanian Banking Supervisory Authority, Statistical Reports, various years; online information 
viewed at: http://www.superbancos.gob.pa/es/reportes_estadisticos_hist . 
4.94.  In recent years, there has been a significant expansion of the banks' loan portfolio, 
reflecting the dynamism of the Panamanian economy. Total domestic credit granted to the private 
sector by the banks with a general licence (which make up the National Banking System or SBN) amounted to US$35,240 million in December 2013, an increase of 10.4% as compared with the 
close of 2012. The sectors with the largest share of  the total credit granted were the commercial, 
mortgage and personal consumption sectors, which accounted for 78% of total SBN domestic credit. Lending to the construction sector was particularly dynamic, rising by 24% as compared with 2012. The loan portfolio for the whole of the CBI (banks with general and banks 
with international licences) reached US$60,614 million at the end of 2013, which represented 
an increase of 8.2% relative to the close of 2012. For their part, at the end of 2013, total CBI 
deposits amounted to US$70,149 million, of which 59,525 million corresponded to the SBN.
78 
4.5.3.2.2  Legal framework 
4.95.  During the review period, Panama made changes in the banking sector's legal framework 
to align it on international regulatory standards, increase transparency, prevent tax evasion, build 
the capacity of the supervisory authority and pr otect bank customers. Panama does not have 
a Central Bank and uses the United States dollar as legal currency. The Panamanian Banking Supervisory Authority (SBP), established in 1998, is  the banking sector's regulator and supervisor; 
its powers include issuing licences, ensuring that the banks maintain appropriate solvency 
and liquidity ratios, developing banking regulati ons, imposing sanctions and supervising bank 
liquidation proceedings. 
4.96.  Panama aspires to become a regional banking and financial centre. To this end, the SBP 
has launched the Strategic Plan 2012-2014, whose main pillars are: strengthening bank 
supervision by means of a regulatory framew ork that ensures proper risk management; 
developing and applying a corporate governance sy stem based on best banking practices; meeting 
international standards on money laundering and the financing of terrorism; strengthening 
the international reach of the Panamanian financial market; and negotiating agreements with foreign regulators that enable consolidated supervision. 
4.97.  The banking regime is fairly open. The main legal instrument is Decree Law No. 2 
of 22 February 2008, as amended and consolidated into a single text by Executive Decree No. 52 
of 30 April 2008 (Banking Law). The latter wa s, in its turn, amended by Law No. 67 
of 1 September 2011. Moreover, the SBP periodical ly issues decisions, regulations and circulars 
which develop and implement the Banking Law. Duri ng the review period, the SBP issued decisions 
on various aspects of banking, including rules for corporate governance, for measuring 
                                               
78 Panamanian Banking Supervisory Authority (2013). WT/TPR/S/301/Rev.1 • Panama 
 
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  the financial impact of various kinds of operating risks, and for improving the security of online 
banking transactions, and updated the regulations on  credit risk. At present, the SBP is working 
on the regulation of consolidated supervision for financial conglomerates. 
4.98.  The changes introduced by Executiv e Decree No. 52 of 2008 include the following: 
the powers of the SBP were reinforced by consolidating its supervision of all bank operations, 
including those of subsidiaries and branches and foreign operations, and financial conglomerates were placed under its supervision. Among other things, the mechanisms for the voluntary 
liquidation of failed banks were improved, the powers of the SBP to apply corrective measures 
in the case of banks in difficulty were extended, and it was granted new powers to reorganize or liquidate banking institutions not in compliance with the law. In addition, it was established that the minimum capital requirements had to  be calculated on a risk-weighted basis 
and the capital adequacy and liquidity re quirements were extended to the banks 
with an international licence under the home su pervision of the SBP. Other important changes 
were the creation of the professional career of ba nking supervisor, the introduction of institutional 
protection ( amparo ) to cover the expenses and costs of the members of the Board of Directors 
of the SBP if they become the subject of judgments or complaints deriving from acts adopted in conformity with the Banking Law in the exercise of their powers, and provisions enabling 
the SBP to oversee and protect the rights of the bank customer. 
4.99.  One of the main reforms introduced by Law No. 67 of 1 September 2011 was the creation 
of the Securities Market Supervisory Authorit y (SMV) in place of the National Securities 
Commission, with broad powers to regulate the activities of the capital market, together 
with the establishment of the Financial Coordination Council (CCF) with a mandate to improve 
coordination and cooperation between the country's financial regulators in order to harmonize the regulations and ensure the effective supervision of the financial market.
79 In addition, 
the concept of "cross directors" was introduced, according to which out of the seven directors 
on the Board of Directors of the SBP, one must be nominated by the SMV and another 
by the Insurance and Reinsurance Supervisory Authority. 
4.100.  Under the legislation, to engage in banking activities within or from Panama it is necessary 
to obtain a licence from the SBP. There are three types of licence: 
a. general licence: allows banking in Panama and transactions that are completed, 
conducted or have effect abroad; may be granted to Panamanian banks and to foreign 
banks established in Panama through subsid iaries or branches; the minimum capital 
requirement is B 10 million; 
b. international licence: allows transactions co mpleted, conducted or having effect abroad 
to be managed from an office in Panama; granted to banks with a parent company 
in another country that have a physical presence in Panama but does not allow them to carry out transactions in the Panamanian market, although they may purchase 
Panamanian domestic public debt through the Panamanian securities market; 
the minimum capital requirement is B 3 m illion, of which B 250,000 must be held 
as security in one of the two official banks; and 
c. agency licence: allows foreign banks to set up a representative office but does 
not authorize them to carry out any banking operations in Panama; there is no minimum 
capital requirement. 
4.101.  To engage in banking activities within or  from Panama or open a representative office, 
foreign banks must first have obtained authorization from their supervisory body abroad. 
Banks with a general or international licence can set up as subsidiaries or branches. Branches in Panama and establishments abroad may be opened without a licence, but only after the SBP has 
been notified and has given its approval. There are no restrictions on the number of branches that 
can operate. 
                                               
79 The CCF is composed of the SBP's supervisors, the Insurance and Reinsurance Supervisory Authority, 
the SMV, the Executive Director of the Panamanian Au tonomous Cooperative Institute (IPACOOP), the MICI's 
National Director for Financial Compan ies and the Executive Director of the Civil Servants Savings and Pensions 
Capitalization System (CICAP). Online information, viewed at: http://www.ccf.gob.pa . WT/TPR/S/301/Rev.1 • Panama 
 
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  4.102.  In addition to meeting the requirements concerning minimum capital, whose origin must 
be clearly determinable, in applying for a licence it is necessary to submit the bank's corporate governance policies and a business plan that demonstrates its viability.
80 SPB Decision No. 3-2001 
(5 September 2001), as amended by Decision 2-2006,  establishes the criteria and requirements 
for applying for a banking licence. These requirements vary depending on whether the legal 
p e r s o n  i n  q u e s t i o n  i s  t o  b e  o r g a n i z e d  i n  a c c o r d a n c e  w i t h  t h e  P a n a m a n i a n  o r  f o r e i g n  legislation. The authorities have noted that the application approval process lasts between six 
months and a year, depending on the type of licence requested; a general licence involves 
more requirements. 
4.103.  As regards capital adequacy, the law stipulates that any bank with a general 
or international licence under the home supervision of the SBP must maintain capital funds 
equivalent to at least 8% of the risk-weighted total of all its assets and off-balance sheet 
operations.
81 Moreover, both general-licence and international-licence banks must maintain 
a minimum liquid assets balance equivalent to a percentage of their total gross deposits in Panama 
or abroad; the SBP is authorized to fix this percentage periodically, on condition that it never 
exceeds 35%.82 General-licence banks must maintain assets in Panama equivalent to a percentage 
of their local deposits determined by the SBP. Th is percentage must be the same for all the banks 
and may not exceed 100%.83 In April 2014, the percentage was 85%. A bank's capital reserves 
cannot be reduced without the prior authorization of the SBP. 
4.104.  By law, banks are prohibited from using th eir shares as security for the loans they grant. 
They are also prohibited from giving a loan to a single natural or legal person if the value 
of the loan exceeds 25% of their capital, or 30% where loans to another bank are concerned. 
Moreover, a bank may not own shares or holdings in non-banking or finance-related companies whose value exceeds 25% of the bank's capital f unds. Restrictions are also applied to prevent 
the concentration of loans in related parties.
84 Banks with an international licence for which the 
SBP is the home supervisor are subject to the same restrictions. 
4.105.  Foreign banks are accorded national treatment with regard to the activities in which 
they can engage in Panama, in accordance with the type of licence they have been granted. 
There are no restrictions on the participation of foreign capital in banks established in Panama, neither are there any nationality requirements or  restrictions applicable to the board members 
or directors of a bank. However, the Banking Law stipulates that branches of foreign banks must 
appoint at least two general agents resident in Panama, at least one of whom must 
be a Panamanian national. 
4.106.  The great majority of the rules laid down in the Banking Law and in the decisions 
of the SBP are based on the principles and re commendations of the Basel Committee on Banking 
Supervision. Within the framework of the Strategic Plan 2012-2014, the SBP is working 
on the gradual implementation of the Basel II recommendations (including the drafting 
of regulations for financial conglomerates, market risk and derivatives, among other aspects). 
The SBP is authorized to request information on th e operations of the banks, their assets and their 
compliance with the technical, operating and institutional regulations. The SBP can also investigate the transactions of a depositor, without his cons ent, within the context of a judicial inquiry. 
Moreover, under the law, foreign supervisory bodies may investigate operations carried 
out in Panama by a foreign bank if the parent comp any of that bank is subject to the jurisdiction 
of the foreign supervisory body. 
4.107.  There is no bank deposit insurance in Panama. However, the Banking Law stipulates 
that preference will be given to the payment of deposits of up to B 10,000 per person in cases of compulsory liquidation.
85 In June 2013, 92% of the deposits in SBN banks were recording 
balances of less than B 10,000. 
                                               
80 Article 48 of Executive Decree No. 52 of 30 April 2008. 
81 Article 70 of Executive Decree No. 52 of 30 April 2008. 
82 Article 73 of Executive Decree No. 52 of 30 April 2008 and SPB Decision No. 9 of 2006. 
83 Article 78 of Executive Decree No. 52 of 30 April 2008. 
84 Articles 95, 99 and 96, respectively, of Executive Decree No. 52 of 30 April 2008. 
85 Articles 161 and 167 of Executive Decree No. 52 of 30 April 2008. WT/TPR/S/301/Rev.1 • Panama 
 
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  4.108.  Panama has a broad range of non-bank financial intermediaries which, taken together, 
account for about 23% of the total assets of the financial system. In its 2013 report on Panama relating to the Article IV consultation, th e International Monetary Fund recommended 
the strengthening of the supervision and the pr udential requirements with respect to these 
financial entities, in particular the cooperatives.
86 
4.109.  In recent years, Panama has concluded a number of double taxation treaties that conform 
with international standards as regards transparency and the exchange of financial information 
(section 2.1). 
4.110.  Since 2006, Panama has been applying a tax on personal and business loans with a value 
of more than B 5,000 granted by local banks and fi nancial entities. The tax is equivalent to 1% 
per annum on the amount of the loan used as the basis for calculating the interest.87 Of the sum 
collected, 50% goes to the National Treasury  for payment of the preferential tranches 
of the mortgage financing referred to in Law No. 29 of 2008, 12.5% to the Agricultural Development Bank, 12.5% to the Ministry of Ag ricultural Development, and the remaining 25% 
to the Special Interest Compensation Fund (FEC I), for financing loans on preferential terms 
for the agricultural sector, in the form of a discount on the interest rates agreed with the banks or other financial intermediaries.
88 The SBP is responsible for administering the FECI 
and, from January to December 2013, reimbursed a total of B 41 million to banks that had applied 
the discount to agricultural sector loans qualifying during that period. 
4.111.  Since there is no government entity in Panama that acts as a lender of last resort, 
and given the need to minimize the vulnerability of  the financial system to a shortage of liquidity 
that could put the system at risk, the authorities are studying the possibility of establishing 
a liquidity fund initially financed with resources from the National Bank of Panama.89 
4.5.3.3  Insurance 
4.5.3.3.1  Features of the market 
4.112.  Panama's insurance sector accounts for 0.35% of Panamanian GDP and employs some 
3,100 people (2012).90 The market is made up of 32 insurance companies91, of which 12 were 
set up with Panamanian capital, 18 with foreign capital, and two as branches of foreign companies. 
There are also eight reinsurance companies; eight reinsurance brokerages, 11 captive insurers; seven managers of captive insurers; 29 insurance adjusters; and two insurance brokers' portfolio managers. In April 2014, 2,521 insurance brokers' licences had been granted to natural persons 
and 357 to legal persons. The market is led by two Panamanian-owned companies which together 
hold 33.7% of the market; these are followed by two foreign-owned companies and a branch 
of a foreign company; together these five companies control 63.4% of the market.
92 
4.113.  The total value of the insurance premiums written in 2012 was B 1,138 million. By branch 
of insurance, the largest portfolios are those for motor vehicles and health, which together account for one third of total premiums (Table 4.6). 
                                               
86 IMF (2013). 
87 Law No. 22 of 27 June 2006. 
88 The FECI was established by Law No. 4 of 14 May 1994, as implemented by Executive Decree 
No. 29 of 8 August 1996. 
89 IMF (2013). 
90 Information provided by the Panamanian Insura nce and Reinsurance Supervisory Authority (SSRP). 
91 Of the 32 insurance companies, 15 also have a reinsurance licence. 
92 Information provided by the SSRP. WT/TPR/S/301/Rev.1 • Panama 
 
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  Table 4.6 Value of insurance premiums written, by branch, 2007-2012 
(B million) 
Branch Premiums written 
2007 2008 2009 2010 2011 2012 
Total  % Total  % Total  % Total  % Total % Total  % 
Individual insurance 86.0  14.19 108.1  13.98  119.9  14.15  107.6  11.74  106.1 10.07 119.7  10.52  
Personal accident 11.1 1.84 12.6 1.62 13.0 1.55 13.6 1.49 18.6 1.77 16.2 1.43 
Health 96.0  15.83 118.8  15.35  136.0  16.00  143.28  15.64  159.0 15.07 181.3  15.93  
Group life 96.2 15.86 114.00  14.70  119.1  14.06  125.00  13.64  128.00 12.13 136.00  11.92  
Fire and 
related lines 45.3 7.48 57.2  7.41 67.4 7.97 70.3 7.68 81.2 7.72 97.00  8.51 
Multi-risk 3.3 0.56 4.4 0.57 6.4 0.76 7.3 0.81 8.3 0.79 9.8 0.86 
Freight transport 23.6  3.88 24.5  3.17 20.2 2.38 20.7 2.27 24.5 2.33 27.3  2.40 
Hull 11.6 1.93 13.9 1.80 17.4 2.05 13.6 1.48 20.7 1.98 23.6 2.07 
Motor vehicle 110.8  18.27 152.1  19.66  157.3  18.57  161.2  17.60  180.9 17.19 199.3  17.50  
Technical branches 21.0 3.47 20.2 2.61 17.5 2.07 22.1 2.41 27.1 2.58 33.1 2.91 
Public liability 21.3  3.52 31.4  4.07 35.7 4.22 38.4 4.19 52.3 4.97 66.7  5.86 
Theft 7.5 1.21 16.8 2.18 15.0 1.78 16.3 1.81 12.8 1.21 14.3 1.26 
Bonds 40.5  6.67 51.8  6.71 59.0 6.97 87.9 9.60 114.8 10.90 102.2  8.98 
Other 32.1 5.30 47.7 6.17 63.1 7.46 88.3 9.65 118.5 11.26 112.0  9.84 
Source: Compiled by the WTO Secretariat from information provided by the SSRP. 
4.114.  In 2012, insurance company assets totalled B 1,899.2 million, while liabilities amounted 
to B 1,142.8 million, which gave a general solvency ratio of 1.66 (higher than the ratios of 1.51 
and 1.58 achieved in 2010 and 2011). Insurance ge nerated a net profit of B 91.7 million in 2012.93 
4.5.3.3.2  Legal framework 4.115.  The Panamanian Insurance and Reinsurance Supervisory Authority (SSRP) is an 
autonomous public body responsible for the regu lation, supervision, monitoring and oversight 
of companies, entities and individuals engaged in insurance and reinsurance in Panama. Its objectives include promoting an inclusive insurance market, protecting the consumer and strengthening oversight. 
4.116.  During the review period, Panama upda ted the regulatory framework of the insurance 
sector for the purpose of encouraging its development, incorporating new technological tools and tightening the control and supervision of the industry. This involved the enactment 
of Law No. 12 of 3 April 2012, which repealed the old Insurance Law No. 59 of 29 July 1996 
and other provisions. The main legal framework for the insurance business is supplemented by the Reinsurance Law (Law No. 63 of 19 September 1996
94) and the Captive Insurers Law 
(Law No. 60 of 29 July 1996). Insurance is also gove rned by the decisions issued by the recently 
created Board of Directors of the SSRP on aspects such as the pricing, auditing rules for insurance companies, procedures for dealing with complaints, registration of foreign reinsurers not established in Panama, administrative sanctions, and regulation of the profession of insurance 
broker and of brokerage companies. 
4.117.  The main changes introduced by Law No. 12 include the following: the SSRP is endowed 
with autonomy and the structure, legal powers and resources necessary to perform its regulatory 
and supervisory functions; the Board of Directors is established as the SSRP's senior and advisory 
body
95; the career of insurance supervisor is created within the SSRP; the requirements 
and guarantees for setting up insurance companies are clarified; and the rules relating 
to the minimum capital, solvency, reserves and investments of insurers and reinsurers 
are updated. In addition, insurance sales agents  and agencies and insurance account executives 
are brought within the orbit of supervision; th e requirements for exercising the profession 
                                               
93 Panamanian Insurance and Rein surance Supervisory Authority, Boletín Estadístico al año 2012 . 
Online information, viewed at: http://www.superseguros.gob.pa/imagenes/seguros/DOCS/122459.pdf . 
94 Article 11 of Law No. 63 of 19 September 1996 was repealed by Law No. 12 of 3 April 2012. 
95 The Board of Directors is composed of five independent directors, one director from the SBP 
and one from the SNV, who must not have links wi th the insurance business. Under the Law of 2012, 
the representatives of the industry, who previously part icipated in the decision-making through the Insurance 
Technical Council and the former National Reinsuranc e Commission, no longer form part of the Board 
of Directors. WT/TPR/S/301/Rev.1 • Panama 
 
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  of insurance broker are strengthened; new distribution channels through Panamanian financial 
institutions and commercial companies are permitted; and liquidation and regularization mechanisms are introduced. 
4.118.  To operate as an insurer in Panama it is necessary to obtain a licence from the Board 
of Directors of the SSRP. The law recognizes th ree branches of insurance, for each of which 
a licence is required, namely: personal insurance (life, accident, health, etc.), general insurance 
(motor vehicle, fire, transport, etc.) and bo nd insurance (contract performance, payment 
and other bonds). Moreover, authorization is required for opening and closing branches in Panama 
and branches or agencies abroad. 
4.119.  Insurers may set up as limited companies formed in Panama, or as branches of foreign 
companies. There are no restrictions on the participation of foreign capital in insurance companies 
established in Panama, or on the number of foreign insurers or branches of foreign companies that 
can operate in the country. Article 40 of Law No. 12 of 3 April 2012 lays down the requirements 
for an insurer wishing to become established in Panama. Once all the necessary documents have 
been submitted, the approval of a licence takes between six and eight months. 
4.120.  In the case of branches of foreign companies, in addition to the documents that must 
accompany any licence application, it is necessary to submit: 
a. the document authorizing the constitution of the branch in the Republic of Panama, 
authenticated by the Panamanian diplomatic or consular official in the country of origin (translated by an authorized public translator, if not in Spanish); 
b. a certificate from the supervisory authority in the country of origin showing that 
the parent company has been duly established in that country and has operated there 
in a state of total solvency for a minimum of five years. Authorization to operate a branch in Panama is restricted to those areas of activity in which the company 
is engaged in its country of origin. 
4.121.  Companies applying for a licence to operate as insurers must put up a minimum amount 
of capital, in cash, the amount of which was raised by Law No. 12 (Article 41) from B 2 million 
to B 5 million as from April 2012.
96 Moreover, insurance companies must set aside in their 
liabilities technical reserves which must at all times be backed by eligible assets that vary with the type of risk. They must also keep contingency reserves for statistical deviations and for disaster risks. In addition, they must establish and maintain in Panama a legal reserve with the equivalent 
of 20% of their net profits until that reserve re aches B 2 million and thereafter with 10% until 
it reaches 50% of the paid-up capital.
97 
4.122.  Law No. 12 made changes in the rules that govern insurers' investments with a view 
to safeguarding their solvency and liquidity against future claims and making their financial 
operations more transparent. At least 50% of te chnical reserves and capital must be invested 
in Panama in eligible assets: inter alia , in bonds issued or guaranteed by the State, in credit 
instruments issued by banks authorized by the SB P, or in credit and capital instruments issued 
by companies registered with the SMV, and within the limits laid down for each type of asset. 
The remaining 50% of the reserves can be invested in international capital markets in instruments with at least a BBB- international investment ra ting granted by a rating agency recognized 
by the SSRP.
98 
4.123.  Individuals and companies domiciled in Panama may only take out insurance on persons 
and goods situated in Panama with insurers auth orized to operate in Panama. This requirement 
does not apply if: (i) it is contrary to international agreements or treaties to which Panama 
is party; (ii) the insurance is not available in Panama or, (iii) the insurance has been refused by the insurers authorized to operate in Panama. If it is not possible to obtain the insurance 
in Panama, the SSRP may give permission for it to be taken out abroad.
99 Insurance and 
                                               
96 Insurers which were operating in Panama before th is law entered into force have a maximum of three 
years to comply with this requirement. 
97 Articles 206, 207, 208 and 2013 of Law No. 12 of 3 April 2012. 
98 For more details, see Article 217 of Law No. 12 of 3 April 2012. 
99 Article 153 of Law No. 12 of 3 April 2012. WT/TPR/S/301/Rev.1 • Panama 
 
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  reinsurance companies established in Panama may place or accept reinsurance with other insurers 
or reinsurers domiciled in Panama or abroad. 
4.124.  Model policies and bonds must be auth orized by the SSRP before being marketed 
to the public. Premium tariffs are set out in a Technical Note, which must accompany any policy 
submitted to the SSRP for authorization, and ar e approved after validation by the actuarial 
department of the SSRP. The Supervisory Authority is empowered to check, at any time, that the principles of equity, efficiency and non-discrimination are not being violated 
and, if necessary, may order the tariffs to be changed. 
4.125.  Insurance companies must pay a tax of 2% on the gross premiums received under policies 
issued in Panama covering risks situated in Panama and a tax of 5% on gross premiums under fire insurance policies issued in Panama to cover risks situated in Panama. In addition, 
insurance premiums are subject to a consumption tax of 5%, except those for fire insurance, 
life insurance with surrender values and agricultural insurance.
100 
4.126.  The Supervisor of the SSRP issues licences for exercising other supervised activities such 
as those of insurance brokers, insurance managers, and insurance sales agents and agencies. 
To qualify for an insurance broker's licence it is necessary to be a Panamanian citizen domiciled in Panama or a foreigner who meets the requiremen ts of Article 293 of the Political Constitution.
101 
At least 49% of the shares of a legal person with an insurance brokerage licence must 
be in the hands of Panamanian insurance brokers.102 The profession of insurance sales agent 
is reserved for Panamanian citizens.103 The shares of legal persons must initially belong to qualified 
insurance brokers. There can be a shift in contro l of the shares to persons who are not insurance 
brokers, provided that a trade agreement signed by Panama so permits. 
4.127.  With a view to stimulating and divers ifying the insurance market, Law No. 12 of 2012 
allowed insurers to use alternative marketing channels to offer their products, through banks, 
finance companies and trading companies. To this end, minimum parameters were established 
for marketing contracts, together with the risk categories that can be marketed through these alternative channels.
104 
4.128.   Reinsurance is regulated by the Reinsurance Law (No. 63 of 19 September 1996). 
At the time this report was being written, the authorities were commencing a consultation process with a view to preparing a draft law aimed at turning Panama into an international reinsurance hub. To attract reinsurers, the draft law provides for incentives similar to those offered by the Law 
on multinational business headquarters (Law No. 41), which include tax, migration and labour 
facilities (section 3.4.1.3). 
4.129.  The SSRP is responsible for the regulati on and supervision of reinsurance. The Board 
of Directors of the SSRP issues licences for reinsurance companies to operate in Panama 
(a function previously performed by the old National Reinsurance Commission). Reinsurers can set up as limited companies or as branches of foreign companies. Where foreign companies 
are concerned, they must produce the document  authorizing the establishment of the branch 
in Panama and a certificate from the supervisory authority of the country of origin, stating that the foreign company is duly established in that country and has operated there in a state of total solvency for a minimum of five years.
105 
4.130.  Law No. 63 establishes that companies authorized to engage in reinsurance activities 
must appoint at least two general agents, both resident in Panama and of whom one must be a Panamanian national. Companies that apply for authorization to operate must 
put up a minimum capital of B 1 mi llion, in cash, in Panama and, once authorized, must maintain 
                                               
100 Article 63 of Law No. 12 of 3 April 2012. 
101 Article 166 of Law No. 12 of 3 April 2012. Article 293 of the Constitution allows naturalized 
Panamanians to be insurance brokers provided that they are married to a Panamanian national, or have a child 
with a Panamanian national, and three years after obta ining their naturalization papers apply for a licence 
to work as an insurance broker. 
102 Article 181 of Law No. 12 of 3 April 2012. 
103 Article 56 of Law No. 12 of 3 April 2012. 
104 Articles 52 and 53 of Law No. 12 of 3 April 2012. 
105 Article 18 (paragraphs 2 and 10) of Law No. 63 of 19 September 1996. WT/TPR/S/301/Rev.1 • Panama 
 
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  technical reserves equivalent to at least 35% of the net premiums written. Of these reserves 65% 
must be invested in Panama. 
4.131.  The taxes on reinsurance premiums covering risks situated in Panama are the same 
as those applied to insurance premiums. Reinsurance premiums covering risks situated abroad 
are not taxed and neither are the profits derived from the reinsurance of foreign risks. 
Foreign reinsurance companies can offer reinsurance services to companies domiciled in Panama provided they are enrolled in the Register of Foreign Reinsurers not established in Panama, 
created by Decision No. 4 of 13 December 2012. The same applies to foreign reinsurance 
brokerage companies. At the end of 2013, about 100 foreign reinsurers had applied for registration. 
4.132.   Captive insurers are companies which from an office established in Panama engage 
exclusively in insuring or reinsuring individual or specific foreign risks previously authorized 
by the SSRP. Law No. 60 of 29 July 1996 governs th e activities of captive insurers and requires 
them to maintain a physical office in Panama. These insurers can apply for licences to offer their 
services to Panamanian and foreign companies in general insurance and to cover long-term risks. 
In the first case, the minimum capital required is B 150,000 and in the second B 250,000. Premiums and profits derived from captive in surers' activities are not subject to tax. 
4.5.3.4  Securities market 
4.133.  At the end of September 2013, the Panamanian securities market was composed 
of the Panamanian Stock Exchange (BVP), 85 securities companies, 45 investment advisers, 15 investment managers, two privat e pension and retirement fund managers, 
one securities exchange and nine credit-rating agencies.
106 The main issuers on the securities 
market are banks, insurance companies, inve stment funds and private capital companies. 
The main securities issued are debt instruments, wi th shares being issued only to a limited extent. 
From November 2011 to October 2012, the total value of the securities registered 
with the Panamanian Securities Market Supervisory Authority (SMV) was US$2,314.3 million, of which bonds accounted for 88%.
107 
4.134.  The Panamanian securities market is governed by Decree Law No. 1 of 8 July 1999 
and its amending legislation, including Law No. 67 of 1 September 2011 which created the Securities Market Supervisory Authority (SMV) to replace the National Securities Commission (CNV), gave it stronger regulatory powers and ex tended the range of securities market activities 
subject to supervision. Other laws that govern the securities market include Law No. 12 
of 3 April 2012, which supplemented and amended se veral provisions of Decree Law No. 1 of 1999 
and Law No. 67 relating to investment funds;  Law No. 56 of 2 October 2012, which amended 
Decree Law No. 1 of 1999 to make possible th e transition from the CNV to the SMV; 
together with various laws intended to prevent money laundering and the financing of terrorism, among other things. 
4.135.  All securities market participants must obtain a licence from the SMV and are subject 
to its supervision and control. Ratings agenci es are subject to prior registration. The SMV 
also grants licences and keeps a register of securi ties brokers, principal directors and investment 
analysts, who must pass an examination to obtain the corresponding licence. In addition, the SMV 
is responsible for regulating the activities of the securities market, establishing the capital 
requirements for investment funds, supervising private pension and retirement schemes and imposing administrative penalties for breaches of the law. 
4.136.  The public offering of securities issued by private and semi-public companies requires 
the prior authorization of the SMV. Moreover, all securities listed on the Panamanian Stock Exchange, public offerings of securities by issuers and shares of issuers domiciled in Panama 
with 50 or more shareholders that are effective owners of at least 10% of the issuer's paid-up 
capital must be registered with the SMV. Capital gains derived from the disposal of securities as a result of the acceptance of a pu blic offering gene rate a tax of 10%. 
                                               
106 Online information from the Panamanian Securiti es Market Supervisory Authority, viewed at: 
http://www.supervalores.gob.pa/files/informacion_al_inversionista/InfoMer_Ases_Inver.pdf . [October 2013]. 
107 Panamanian Securities Market Supervisory Authority (2012). WT/TPR/S/301/Rev.1 • Panama 
 
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  4.137.  As part of its efforts to improve fiscal transparency, Panama adopted Law No. 47 
of 6 August 2013, which establishes a safe-keeping regime for bearer shares. Under this regime, bearer share certificates must be delivered to a custodian (banks, trust companies, securities company or securities exchange established in Panama) together with documents and information 
which have to be delivered by the issuing company within a period of 20 days; bearer share 
certificates issued before this law entered into force have to be delivered to an authorized custodian within a period of three years. 
4.138.  The SMV maintains memoranda of understanding on consultations and technical assistance 
with various foreign regulatory bodies
108 and a multilateral memorandum between Central 
America, Panama and the Dominican Republic. 
4.5.4  Air transport and airports 
4.5.4.1  Features of the market 
4.139.  Panama has five international airports, of which four are for commercial public 
use and one (Howard) for private use, and ten domestic airports. The five international airports 
have immigration control and customs services. Moreover, Panama has some 40 minor airfields 
and landing strips with runways for smaller aircra ft. These runways provide the main air transport 
infrastructure for rapid communication with remote areas. 
4.140.  The main airport is Tocumen Internationa l Airport, which thanks to its geographical 
location has become the busiest in Central America. It is the regional hub for several commercial and cargo carriers and connects passengers and moves freight to more than 31 countries and 70 destinations throughout the world. Between 2007 and 2013, the annual average rates 
of growth in the total number of passengers, passe ngers in transit and volume of freight and mail 
amounted to 12.8%, 21.0% and 5.2%, respective ly (Table 4.7). In 2013, almost 8 million 
passengers used Tocumen, of whom about 3.9 millio n (50.9%) were in direct transit; the freight 
terminal handled 110,000 tonnes of freight and mail, mostly for transhipment. According 
to information from the International Air Transport Association (IATA), between 2012 and 2013, global international passenger air traffic grew by  5.4%, whereas in Panama it increased by 11.8%. 
Moreover, between 2010 and 2013 new international routes were opened and services to 29 cities 
were authorized to begin. 
Table 4.7 Annual rate of growth of pa ssenger and freight traffic at Tocumen 
International Airport, 2007-2013 
(%) 
Operation 2007-2008 2008-2009  2009-2010  2010-2011  2011-2012 2012-2013  
Passengers in transit 25.6 22.0 7.7 24.3 28.3 18.0 
Total passengers 19.5 4.4 6.2 15.9 19.1 11.8 
Total freight and mail 4.8 -3.1 17.9 12.2 4.85 -5.3 
Source: WTO Secretariat, on the basis of Airport Statistical Reports of Tocumen S.A. 
4.141.  There are 30 scheduled airlines operating from Tocumen International Airport, which is also the site of the headquarters of  the airline COPA and the DHL freight terminal. 
The company COPA Airlines accounts for 70% of the flights offered. 
4.142.  Faced with increasing numbers of domestic and international passengers, the Government 
has an expansion plan for several terminals and airports. In 2012 the project to expand the existing terminal at Tocumen International Airport, known as Muelle Norte, was completed, 
increasing operating capacity by more than 50%. A South Terminal, which will enable the airport 
to handle between 12 and 14 million passengers a year, is also being built. 
4.143.  Marcos A. Gelabert Airport is the main domestic service airport and the home of the local 
company Air Panamá, the only one to operate sched uled commercial domestic transport flights. 
                                               
108 In Argentina, Chile, Colombia, Costa Rica, Do minican Republic, El Salvador, Honduras, Mexico, 
Puerto Rico, Spain, and Ukraine. WT/TPR/S/301/Rev.1 • Panama 
 
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  In addition, there are air taxi companies that offer unscheduled domestic passenger flights. 
Table 4.8 illustrates the trend in domestic passenger traffic at this airport between 2007 and 2013. 
Table 4.8 Number of passengers at Marcos A. Gelabert Airport, 2007-2013 
2007 2008 2009  2010  2011  2012 2013  
319,048 320,820 302,768  369,443  389,197  273,244 274,769  
Source: Information provided by the Panamanian authorities. 
4.5.4.2  Legal framework 
4.144.  Within the GATS framework, Panama has bound full commitments for aircraft maintenance 
and repair services for all modes of supply, except for the presence of natural persons, 
to which the horizontal commitments apply.109 
4.145.  In 2003, Panama adopted several instruments by which this sector is governed. 
Law No. 21 of 29 January 2003, which regulates civil aviation and replaced Decree Law No. 19 
of 1963, stipulates that: traffic rights are State pr operty; the exercise of technical crew functions 
is reserved for Panamanian citizens, but the temp orary hiring of foreign personnel is permitted 
if it can be shown to be necessary; airports have a public purpose; cabotage traffic is reserved, 
in principle, for domestic carriers. Law No. 21 also stipulates that operating certificates for the provision of air transport services in Panama are reserved for: nationals with a base of operations in Panama; legal persons with 51% of the subscribed capital in registered shares 
in the name of Panamanians or 60% where domestic transport is concerned. The concession 
of commercial aviation rights to foreign airlines is based on reciprocity. In addition, Law No. 89 of 1 December 2010 for promoting the development of commercial aviation sets out the conditions 
in which domestic airlines can hire foreign pilots as technical crew provided they do not exceed 
15% of the total number of their employees in Panama. 
4.146.  Law No. 22 of 29 January 2003 crea ted the Civil Aviation Authority (AAC) 
as an autonomous State body responsible for directing and regulating air transport services, 
regulating and providing air navigation services, and certifying and administering airfields, including their regulation, planning, operation, surveillance and control. The Board of Directors of the AAC, composed of the Minister of the Interi or and Justice who acts as chairman, the Minister 
of the Economy and Finance and the Minister of  Trade and Industry, is the body responsible 
for establishing and administering Panama's major air transport policies. The Director General of the AAC acts as the Board's Ex ecutive Secretary with the right to speak 
and the Comptroller-General of the Republic attend s the meetings, also with the right to speak. 
4.147.  Under Law No. 23 of 29 January 2003, which defines the regulatory framework 
for the management of Panama's airports and airfields, the State can create companies 
for providing public airport and airfield management services, which must act in accordance 
with the principles of efficiency, transparency  and equal treatment. These are public limited 
companies governed by the Law on Public Limi ted Companies and the Commercial Code. All 100% 
of the shares are registered, State-owned and in  the custody of the Ministry of the Economy 
and Finance. No debt instrument may be issued in which the control of these public limited 
companies is or could be compromised. The general manager must be Panamanian. Materials are purchased and works or services procured in accordance with the regulations issued 
by the Cabinet Council guided by the principles of transparency, efficiency and equal treatment. 
The Law on Government Procurement has supplementary effect. Law No. 23 also created the Special Fund for the Development of Nati onal Aviation Infrastructure, which relies 
on a minimum annual contribution provided by the company that manages Tocumen International 
Airport. The Cabinet Council approves this sum. 
4.148.  The ACC grants foreign companies certificates to operate international passenger 
and freight traffic in accordance with bilateral ag reements. There are no restrictions on the sale 
and marketing of air transport services or on computer reservation systems. Panama has signed 
34 bilateral and two plurilateral agreements (Table 4.9). As this report was being finalized, news was received of the signing of an agreement with Turkey. Panama's relations 
with El Salvador and Haiti are based on real and effective reciprocity without a written document. 
                                               
109 WTO document S/DCS/W/PAN of 24 January 2003. WT/TPR/S/301/Rev.1 • Panama 
 
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  Table 4.9 Bilateral air services agreements (ASA) 
Partner Date 
5thaa 
7thab 
Cabotagec 
Coop.d 
Designatione 
Withholdingf 
Tariffsg 
Capacityh 
Stat.i 
ALI 2011 
ALI 2005 
Germany 13.12.99 No No No Yes M CI CO PD Yes 14  14 
Argentina 21.11.06 Yes No No Yes M SOEC CO PreD Yes 16 16 
Aruba 24.09.87 Yes No No No M SOEC DA PreD No 11  11 
Barbados 06.07.11 Yes No No Yes M PPB DA Free Yes 29  
Belgium 12.01.66 Yes No No No M SOEC DA BI Yes 14  14 
Bolivia, Plurilateral 
State of 27.07.77 No No No No M SOEC DA PreD Yes 4 4 
Brazil 25.05.07 Yes No No No M SOEC CO PreD Yes 13  4 
Canada 28.11.13 Yes No No Yes M SOEC DD PreD Yes 19  
Korea, Rep. of 28.12.79 Yes No No No S SOEC DA BI Yes 10  10 
Chile 21.10.97 Yes No No Yes M SOEC DD Free No 28  
China 30.08.94 No No No No M SOEC CO PreD No 8   
Colombia 18.02.10 Yes  No No Yes M n.a. CO Free Yes 24  
Costa Rica 16.10.81 No No No No S n.d. n.d. PreD No 1  1 
Cuba 05.11.07 Yes No No Yes M PPB DD BI Yes 31 0 
Ecuador 12.01.95 Yes No No No M n.a. CO PreD No 14  14 
United Arab Emirates 23.09.11 Yes No No No M SOEC DD Free Yes 24  
Spain 07.08.01 Yes No No Yes M PPB DD PreD Yes 27  27 
United States 08.05.97 Yes No No Yes M SOEC DD Free No 28 28 
Russian Federation 03.02.93 No No No No M SOEC CO PreD No 8   
Guatemala 26.11.98 Yes No No No M n.a. DA PreD No 11 21 
Honduras 15.10.87 No No No No M SOEC DA PreD No 5  5 
Jamaica 25.08.99 Yes No No Yes M SOEC DD BI Yes 23 23 
Mexico 04.08.11 Yes No No Yes M SOEC DA PreD No 14   
Nicaragua 08.01.98 Yes No No No S SOEC DA PreD No 7  
Netherlands 05.07.96 Yes No No No S SOEC DA PreD No 7  15 
Netherlands Curacao 20.03.12 Yes No No Yes M PO DD Free Yes 35  
Paraguay 20.06.05 Yes No No Yes M PPB DD Free Yes 35   
Peru 08.09.03 No No No Yes M n.a. PO O Yes 10  
United Kingdom 29.10.97 No No No No M SOEC DD BI Yes 14  14 
Venezuela, Bolivarian 
Rep. of 08.07.13 Yes No No Yes M SOEC DA PreD Yes 13  
Dominican Republic 22.08.08 Yes No No Yes M PPB DD O Yes 27   
Switzerland 21.04.64 Yes No No No M SOEC DA BI Yes 14 14 
Trinidad and Tobago 25.11.05 Yes No No Yes M SOEC DA Free Yes 21   
Uruguay 18.02.98 Yes No No Yes M n.a. DA PreD No 14  
n.a. Not available. 
a "Yes" indicates that fifth freedom rights are granted, even though they may be limited. 
b "Yes" indicates that seventh freedom rights ar e granted, even though  they may be limited. 
c "Yes" indicates that cabotage rights are granted, even though they may be limited. d "Yes" indicates that there are clauses permitting cooperation between airlines, such as code-sharing. e "S" indicates that the designation is single, "M" that it is multiple. f Type of withholding clause: subs tantive ownership and effective control "SOEC", principal place of 
business "PPB" or community of interest "CI". 
g Type of tariffs clause: double approval "DA", doub le disapproval "DD", country of origin (CO), zone 
pricing "ZP", free pricing "FP". 
h Type of capacity clause: predetermination "Pre D", Bermuda I "BI", free determination "Free", other 
"O". 
i "Yes" indicates that the agreement provides for an exchange of statistics. 
Source: WTO Secretariat. 
4.149.  In 2005, Panama's air liberalization index (ALI) recorded in QUASAR (Quantitative Air 
Services Agreements Review) was 19.2 units on a range from 0 to 28. Since 2005, the agreements 
signed, amended or entered into force have meant that Panama's ILA has risen by more 
than 12 units. Two thirds of these new agreements are with countries of Central and South America. Panama's most recent bilateral agreements are much more liberal than those 
in its QUASAR-2005 profile.
110 As can be seen from Table 4.9, the ALIs of the agreements lie 
                                               
110 WTO document S/C/W/270/Add.1 of 30 November 2006. WT/TPR/S/301/Rev.1 • Panama 
 
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  within a range of from 1 to 35 units. The ALIs of most of the agreements signed since 2005 are 
equal to or greater than 16 and four of them are equal to 24 or higher. In short, since 2005 the levels of openness have increased thanks to the fact that agreements concluded by Panama contain clauses on cooperation and code-sharing, a multiple designation clause and country 
of origin and double disapproval provisions in relation to tariffs, typical of the latest agreements. 
Moreover, all the agreements signed since 2005 contain the fifth freedom. 
4.5.5  Maritime transport, including the Panama Canal 
4.5.5.1  General features 
4.150.  Panama has made no commitments on maritime transport under the GATS. 4.151.  In 2012, the maritime transport sector's contribution to Panama's GDP was 2.3%. 4.152.  Panama has an extensive network of ports and a wide range of services for ships, 
for cargo, whether containerized, bulk, liquid or general, and for passengers in the various cruise 
ship terminals. The ports in the National Port System are divided into State ports and private ports. The Panamanian Maritime Authority (AMP ) manages 23 of the 42 ports, the other 19 being 
managed by private operators under concessions.
111 The ports on the Atlantic mainly serve 
the east coasts of North and South America and the Caribbean. On the Pacific coast, until recently, the port of Balboa was the only terminal providing container handling services. 
Now, a Government of Singapore public enterprise  has completed the first phase of construction 
of a new port terminal, PSA Panama International Terminal (PSA Panama). The terminal began operating at the end of 2010 when it received steel and other supplies for Canal expansion, while its container operations officially commenced in 2012. This infrastructure is intended 
to attract new cargo from Asia to the west coast of America, with Panama serving 
as a transhipment centre. 
4.153.  The Port of Colón on the Atlantic is the biggest port in Panama and the second largest 
in Latin America, after Santos in Brazil. In 2012, the Port of Colón moved approximately 51.8% 
of containers, followed by Balboa on the Pacific with 48.3%. In 2012, cargo movements 
in the national port system amounted to 76.5 million tonnes, of which 143,000 tonnes passed 
through the State-managed ports. Container traffic amounted to 6.8 million TEU. Of this traffic 
86.6% involved transhipment and 12.4% corresponded to containers bound for Panama and the free zone.
112 In 2013, imports and exports accounted for 97.2% of the cargo handled 
in Panamanian ports and cabotage for 2.8%. Panama's foreign trade relies mainly on maritime 
transport.113 
4.154.  Since many of the vessels that arrive at Panamanian ports take on fuel this business 
continues to be an important part of the maritime conglomerate. The cruise sector is also 
important, although the data for 2012 show that 223 cruise ships with a total of 413,796 
passengers were recorded, which represents a decrease of 18% and 36%, respectively, as compared with 2011. The preliminary figures for 2013 indicate that 239 cruise ships carrying 
529,042 passengers were recorded, which corresponds to an increase of 6.7% and 21.8%, 
respectively, as compared with 2012.
114 
4.155.  According to Lloyd's Register , on 30 June 2013, Panama occupied first place among 
the countries of registration of vessels of the world merchant fleet, with 8,221 ships and a tonnage 
of 223,293,304 GRT.115 
4.156.  Cabinet Resolution No. 79 of 24 June 2009 a pproved the updating of the National Maritime 
Strategy, while rescinding Cabinet Resolution No. 3 of 28 January 2004. The Strategy seeks 
to turn Panama into an integrated centre of excellence for competitive maritime and logistical 
services by developing activities that generate value added within a legal framework that promotes 
                                               
111 Information provided by the AMP. 
112 Panamanian Maritime Authority (2012). 
113 INEC. Statistics Department, Dire ctorate-General of Ports and Aux iliary Maritime Industries, AMP. 
114 Online information from the AMP. Statistics viewed at: 
http://www.amp.gob.pa/newsite/spanish/home_mirror.html . 
115 Port Maritime Statistical Bulletin. January-December-2013. Viewed at: http://www.amp.gob.pa . WT/TPR/S/301/Rev.1 • Panama 
 
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  and guarantees free enterprise, legal certainty, a competitive market structure and sustainable 
development. The strategy has six objectives: (i) to strengthen the logistical maritime conglomerate and its constituent economic activities; (ii) to consolidate Panama's position as the main maritime and logistical platform in the Americas for global trade; (iii) to guarantee 
processes based on excellence and effective co mmunication between the private and public 
components of the maritime and logistical conglomerate; (iv) to develop human resources; (v) to promote secure trade through intelligence systems and compliance with international rules 
and inter-institutional protection and security agreements; and (vi) to guarantee environmental 
sustainability in the development of maritime, logistical and supply chain activities. To this end, Resolution JD No. 055-2008 of 18 September 2008 created the Inter-Institutional Advisory Commission of the National Maritime Strategy (CICEMN) with the AMP as coordinator 
and an Executive Secretariat that includes the AMP, the ACP, the MICI, the SENACYT 
and representatives of the Standing Executiv e Committee, the Expanded Executive Committee 
and the Maritime Chamber of Panama. The Commission is not meeting at present.
116 
4.5.5.2  Maritime transport services 
4.157.  Law No. 57 of 6 August 2008 as amended by Law No. 41 of 14 June 2013 (General Law 
on the Merchant Marine) governs Panama's maritime transport.117 The AMP, headed by a Board 
of Directors118 and an Administrator appointed by the Executive, is an autonomous State body 
with its own legal personality, its own assets and the capacity to manage them. It is empowered to grant concessions and/or operating licences, as well as to receive, keep safe, allocate and invest its financial resources. The AMP is entrusted with administering, promoting and implementing 
the strategies and rules relating to the operation and development of the maritime transport 
sector and for administering the ship register. It is also responsible for the organization of the port system and its administration, planning and supervision. It is subject only to the policies, 
guidance and inspection of the relevant agenci es of the Executive branch and the supervision 
of the Office of the Comptroller. It also has a reimbursable Emergency Fund to handle, through single tendering, the costs of maritime investigations, detentions, spillages, etc. Law No. 57 
also grants the AMP the authority to hire the services of independent auditors and companies 
in order to outsource invoicing services. 
4.158.  Law No. 57 creates the Panamanian Shipowners Association as a non-profit legal person 
to represent and coordinate with the State institutions the interests of the domestic 
and international ship-owners that use the Panamanian register. The Merchant Marine is composed 
of international service and domestic service vessels. International service vessels can apply to switch to domestic service and vice versa. The Directorate-General for the Merchant Marine 
can authorize vessels for both services, subject to fulfilment of the additional requirements of the 
service to which they desire to obtain access. Any person, natural or legal, irrespective of nationality or domicile, may register one or more vessels owned by that person in the Merchant 
Marine. The registration application for an international service vessel must be accompanied 
by the instrument of appointment of a resident agent.
119 The income from the international 
maritime trade of domestic merchant vessels lega lly registered in Panama does not give rise 
to income tax, even if the transport contracts are concluded in Panama, nor is tax levied 
on the rent from the leasing of foreign service merchant vessels engaged in trade in international 
waters. Activities carried out in Panamanian territorial waters do incur income tax. 
4.159.  Panama is seeking to rejuvenate the fleet and, in this connection, Law No. 57 establishes 
discounts on the registration fee, annual tax and annual consular fee, for new-built ships and ships 
enrolled in the Merchant Marine, within five years of the date on which the keel was laid. 
                                               
116 For the composition of the CICEMN, see Table No. 1 of Resolution JD No. 055ª-2008, Official Journal 
No. 26319. 
117 Law No. 57 of 6 August 2008 amends Articles 1, 10, 15, 16, 17, 19, 20, 21, 22, 23, 24, 27 and 30 
of Law No. 7 creating the Panamanian Maritime Au thority and consolidating the maritime functions 
of government; it also repeals Law No. 8 of 12 January 1925 and Law No. 25 of 3 June 2002. 
118 The Board of Directors of the AMP is composed of : the Presidential Minister, the Minister for Canal 
Affairs, the Minister of the Econom y and Finance, four Members appointe d by the President of the Republic, 
with more than seven years of involvement in the maritime sector. The Manager of the AMP serves as 
secretary with the right to speak and the Comptrolle r-General of the Republic and the Directors-General 
of the AMP participate, also with the right to speak. Th e members of the Board have a five-year term of office. 
119 Resident agent: a qualified attorney or law firm  appointed in writing by the shipowner to deal 
with the Directorat e-General of the Merchant Marine. WT/TPR/S/301/Rev.1 • Panama 
 
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  The percentages of these discounts vary with the to nnage and are applied on a tapering basis over 
a period of three years. The AMP's Administrator, at the request of the Directorate-General for the Merchant Marine, can vary the percentages with an eye to the competitiveness of the Register. Moreover, with the prior approval  of the Administrator, the Board of Directors 
can establish special tariffs for vessels enrolled in the National Merchant Marine which take 
on board officers undergoing training or other categories of personnel of Panamanian nationality. The Law also provides for discounts of 20% on registration fees, annual tax and annual consular 
fees for new vessels registered by economic groups that keep five to 15 vessels registered, 
discounts of 35% for 16 to 50 vessels, and discounts of 60% for 51 vessels or more. In addition, there are discounts for the enrolment of groups of three or more vessels which vary with the tonnage and are applied if the vessels are not entitled to any other discount. 
Resolution No. 106-136-DGMM of 10 September 2013 grants exemptions additional 
to the discounts envisaged in Law No. 57 for main taining and improving Panama's competitiveness 
when its competitors reduce the costs of registration under their flags. Furthermore, a discount 
of 15% of the annual tax and the annual consular fee, applicable to the following year, is granted 
to vessels already enrolled in the Merchant Marine if they can show that they have not been detained for a port State inspection for 24 months and are not receiving any other discount under 
Law No. 57. 
4.160.  The owner of domestic service vessels must register them with the Directorate-General 
for the Merchant Marine (DGMM) or other AMP department authorized for that purpose, without the need for an attorney. The DGMM must esta blish the requirements for operating vessels 
that provide services in Panamanian territorial waters. 
4.161.  Law No. 41 restricts investment in domestic service vessels which are going to be used 
to supply the auxiliary ma ritime services of lighterage, provisioning and transport of fuel 
for bunkering. If the owner or bare-boat charterer of such vessels is a legal person, he must show 
that 75% of the holders or beneficiaries of the shares are Panamanian and, if a natural person, must be a Panamanian national; however, companies building vessels in Panama in accordance 
with the AMP's specifications for the auxiliar y maritime services envisaged in this Law 
are exempt.
120 
4.162.  Panama grants tax incentives to cabotage vessels built in Panama consisting of exemption 
from tax: (i) on the transfer of movable tang ible property and the provision of services 
in the shipbuilding services subsector; (ii) on the introduction of materials and equipment 
for shipbuilding; and (iii) on income for vessels built wholly in Panama. For this purpose, a vessel built in Panama is deemed to be one built in a shipyard inside Panamanian territory. 
4.163.  Panama is a member of the International Maritime Organization and is party 
to 23 international maritime transport conventions, including the Maritime Labour Convention (2006) and the Athens Convention relating to the Carriage of Passengers and their Luggage 
by Sea (2002). There are also agreements on recognizing the measurement of ships' tonnage with 
the United States, the Russian Federation and Ukraine and on trade and navigation with Spain, France and Italy. 
4.164.  Law No. 4 of 24 February 1983, as amended by Law No. 19 of 3 August 1992 
and Decree Law No. 17 of 26 October l989, establishes the tax regime applicable to foreign service 
vessels. 
4.5.5.3  Port services 
4.165.  Law No. 56 of 6 August 2008, as amended by Law No. 41 of 14 June 2013 
and Resolution ADM-016-09 of 9 Fe bruary 2009, and its regulations
121, known as the General 
Panamanian Ports Law, establishes the rules govern ing port activities and maritime installations, 
                                               
120 In accordance with Law No. 41, auxiliary mariti me services are supplemen tary maritime transport 
services provided in connection wi th the cargo, the vessel, the crew, the passengers or maritime or port 
installations. 
121 Resolution J.D. No. 027-2008 of 21 January 2008, approving the regulations for granting operating 
licences for auxiliary maritime services and Resolution J.D. No. 026 of 21 January 2008, amending Articles 8, 
27 and 43 of the concession regu lations approved by Executive Committee Decision No. 9-76 
of 24 March 1996. WT/TPR/S/301/Rev.1 • Panama 
 
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  the use of property granted on concession and th e provision of maritime services, whether public 
or private. Port services are public and must be supplied free of discriminatory practices with 
regard to the ships, cargo or passengers to whic h they must be provided. The Law also stipulates 
that the port development plan must be directed towards the promotion of private investment 
in port activities. 
4.166.  The AMP authorizes the granting of conc essions for the development, use and operation 
of State goods and services, namely, the construction and operation of maritime and port 
installations, as well as the issuing of operating licences to parties interested in carrying 
out commercial activities in port precincts or areas within the jurisdiction of the AMP. Concessions are granted under contract and operating licences by administrative resolution, subject to payment 
of the inspection fee. The State retains th e ownership of the property on concession 
and the concessionaire is unable to claim or obtain title to build improvements. 
4.167.  Concession contracts can be amended, assigned, extended and renewed at the request 
of the interested party, subject to the expr ess authorization of the AMP and the approval 
of the Comptroller-General of the Republic. Concession contracts for the construction of maritime 
or port terminals can also be raised to the status of a "contract law" ( contrato ley ) if justified 
by the amount of the investment guaranteed an d the impact it could have on the economy. 
Concessions are granted for a maximum period of  up to 20 years, which can be extended 
at the request of the concessionaire for a period equal to that specified in the original contract, although the conditions may be amended. The requ est for an extension must be submitted during 
the last fifth of the original period and, at the la test, one year before the expiration of the contract. 
The concessionaire must give permission for cargo to enter or leave the country to anyone 
who needs to use the port installations, with out commercial discrimination. The port access 
channels and the turning basins are for public use. Concessionaires are required to carry 
out capital and maintenance dredging works in th e port access channels at their own expense, 
unless the State has accepted responsibility for carrying out capital dredging works in those channels in the concession contract. In this case, the AMP selects among the companies 
specialized in the field the one with the most advantageous proposal for carrying out the work. 
Law No. 56 created the Special Dredging Commission which is responsible for assessing the technical and financial aspects of each bid. Concession contracts are governed exclusively by Panamanian law. Only if expressly agreed will disputes concerning the interpretation 
or application of the contract be subjected to arbitration in law, in accordance with 
the Panamanian legislation. 
4.168.  Operating licences are issued for a period of up to ten years and can be renewed 
for the same period of time with the same rights, on condition that the provider has fulfilled 
all his obligations and has paid the State the corresponding fees. Operating licences are non-transferable. Law No. 41 establishes limits on the participation of foreign capital 
in companies which offer auxiliary maritime services in the areas of lighterage, provisioning, 
fuel transport and the supplying of ships with th ose items that are required to operate a vessel. 
If the owner or bare-boat charterer of such ships is a legal person, he must show that 75% of the holders or beneficiaries of the shares are Panamanians and, if he is a natural person, 
mus t b e  of P anamanian n ational ity . L i ke wis e , 9 0 %  of the  c re w  of ve s s e ls  t hat p rovid e  auxi l iary  
maritime services must be Panamanian nationals. An applicant for an operating licence for providing these services who is not the owne r or bare-boat charterer must also show that 
he belongs to the same business group as the proprietor or owner of the vessel in question. 
Natural or legal persons who hold a valid operating licence at the time of entry into force of Law No. 41 must meet the requirements establis hed in accordance with that law whenever they 
wish to incorporate new vessels into their licence. 
4.169.  The AMP establishes the tariffs for granting concessions and operating licences and fixed 
or variable tariffs for the right to use the concession and the right to use port installation facilities and operating licences. The Law establishes the method of invoicing tariffs, whose amounts 
may be reviewed and adjusted at five-yearly intervals, with account for the tariffs charged 
for providing the same services at other ports in the region. Any increase is applied equally to all concessionaires and auxiliary service providers according to the type of activity. 
Concessionaires and service providers are required to pay the municipal taxes applicable to them 
for the activities they carry out. Port operators pay the National Treasury a uniform tariff by way of income tax on each local cargo movement. Port operators may not adopt discriminatory 
measures or tariffs. In the event of discrimination,  the AMP will regulate any increase in tariffs. WT/TPR/S/301/Rev.1 • Panama 
 
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  A percentage of the tariffs charged per movement is earmarked for the development 
and maintenance of State wharves and ports. Finally, companies engaged in the construction, development, management and operation of port terminals for handling containers and bulk cargo 
must comply with the requirements of Law No. 45 of 2007 on consumer protection 
and the defence of competition and any relevant provisions adopted in the future. The authorities 
have noted that shipping company tariffs are not subject to government approval and that the prices of port services and related services are also unregulated. 
4.5.5.4  Panama Canal 
4.170.  The Constitution states that the Panama Canal is the inalienable heritage 
of the Panamanian nation. Law No. 19 of 11 June 1997 stipulates that the Canal may not be sold, assigned or mortgaged. The Panama Canal Authority (ACP) is a Panamanian Government entity 
created under Title XIV of the National Constitution. It has exclusive responsibility 
for the operation, administration, functionin g, preservation, maintenance, improvement 
and modernization of the Canal and for its related activities and services, in accordance 
with existing constitutional law, in order to ensure that the Canal functions safely, continuously, 
efficiently and profitably. Law No. 19 authorizes the ACP to delegate the performance of certain 
works or services, in full or in part. The ACP has its own system of public procurement. 
4.171.  An 11-member Board of Directors
122 determines the policies for the functioning, 
improvement and modernization of the Canal and supervises its administration. Its decisions and resolutions are adopted by absolute majority voting. The Board is responsible for appointing 
the administrator (senior executive official and legal representative of the Authority)
123, the deputy 
administrator and the inspector general and for establishing the ships' tonnage system. 
Subject to the approval of the Cabinet Council, th e Board sets the tolls, taxes and duties charged 
for using the Canal and its related services. The Administrator is tasked with implementing 
the policies adopted by the Board of Directors an d has responsibility for the daily functioning 
of the Canal and the authority to discharge that responsibility. Although the ACP draws 
up its budget independently, it is then submitted to the Cabinet Council and subsequently 
to the National Assembly for approval. The ACP may engage the services of third parties, 
offer them to the State and, subject to authorization by the Cabinet Council, contract loans or any other type of credit commitment. The law establishes a maximum term of 20 years or, exceptionally, 40 years for concession contracts and leases. 
4.172.  Each year, the ACP must pay to the National Treasury fees per net tonne, or equivalent, 
collected from ships subject to tolls for passing through the Canal and, moreover, hand over the surplus once the operating, investment, mo dernization and enlargement costs have been 
met and the reserves for which the Law provides have been constituted. 
4.173.  In 2012, the Canal contributed 3.2% of Panama's GDP. The ACP's contribution 
to the current account of the balance of payments in the same year was B 2,280.2 million or 7% 
of GDP.
124 From 2007 to 2013, the Canal's total contributions to the National Treasury amounted 
to B 6,200.2 million. The corresponding direct contribution for 2013 amounted to B 981.8 million.
125 In accordance with Law No. 38 of 5 June 2012, the Canal Authority's 
contributions to the National Treasury which exceed 3.5% of nominal GDP for the current year will 
become contributions to the Panama Savings Fund, as from budget year 2015. 
4.174.  In fiscal year 2013, the ACP's total income amounted to B 2,411.3 million, of which 
B 1,849.7 million was in tolls. The recorded num ber of transits through the Canal was 13,548, 
representing 209,878,270 tonnes of cargo. Approximately 2.3% to 3% of world maritime trade 
transits through the Panama Canal. In continuati on of the pricing policy begun in 2002, in 2007 
the ACP adjusted its tolls and its tonnage rules to  align them on the value offered by the route, 
                                               
122 The President of the Republic appoints a director, who chairs the Board and has the rank of Minister 
of State. The Legislature nominates a director whom it is free to appoint and remove. The other nine directors 
are appointed by the President of the Republic with the agreement of  the Cabinet Council and subject 
to ratification by an absolute ma jority of the members of the Legisl ative Assembly. The directors remain 
in office for a period of nine years. 
123 The administrator is appointed for seven years with  the possibility of re-election for an additional 
period. 
124 Information obtained from INEC, Office of the Comptroller-General of the Republic of Panama. 
125 ACP (2013). WT/TPR/S/301/Rev.1 • Panama 
 
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  to maintain the value of the tolls over time, to maintain the competitiveness of the route 
and to maintain a profitability consonant with the levels of risk and the investment, in such a way that the contributions to the National Treasury increase. For example, in the case of passenger 
ships, the toll is calculated on the basis of the maximum passenger capacity. In mid-2007, 
the average increase in tolls was 10% per tonne of cargo, in May 2008 it was 11.3% 
and in May 2009 7.4%. The recorded increases per container were 10% in 2007, 16.7% in 2008 
and 14.3% in 2011. In 2011, the method of calculating the toll for container ships was changed, 
as were the tolls for certain segments, such as dry and liquid bulk carriers, vehicle carriers, 
and refrigerator ships, among others. In 2012 an d 2013, the ACP introduced changes in the toll 
structure for tankers carrying petroleum and petroleum products, chemical tankers and gas carriers, redefined the vehicle carrier segment by incorporating Ro-ro vessels, 
and adjusted the tolls for smaller vessels, which had not changed since 1998. As a result 
of the changes begun in 2002, the ACP's pricin g policy has gone from being a system based 
on cost recovery to a structure that reflects the requirements and mode of operation of the various 
segments of the market.
126 
4.175.  The comprehensive programme for expanding the capacity of the Canal was adopted 
as a result of the passage of Law No. 28 of 17 July 2006. The project, which has an estimated 
cost of B 5,250 million, consists of the following components: (i) the construction of two lock 
complexes, one on the Atlantic and one on the Pacific with re-use water reservoirs; (ii) the excavation of access channels and the widening of the existing navigation channels; and (iii) the deepening of the navigation ch annels and the raising of the maximum level 
of operation of Lake Gatún. On 22 October 2006, the expansion of the Canal was approved 
by national referendum and the ACP was given responsibility for carrying out the works. 
Under Law No. 28, the funds generated by the operation of the Canal and by increased tolls must 
cover the costs of expansion. During the construc tion of the project, the Canal's contributions 
to the National Treasury in the form of surpluse s may not be less than those for fiscal year 2005 
and the transfers in the form of fees per net to nne may not be less than those for fiscal year 2006. 
The project's financing will be neither backed nor guaranteed by the State. 
4.176.  Fieldwork under the Expansion Programme began in September 2007. The programme 
provides for the participation of the National Environment Authority, the preservation of archaeological finds and wildlife rescue work. Several companies of different nationalities 
are participating in the project. The first contract for construction works was awarded 
to a Panamanian company in a tendering procedure based on the lowest bid. In 2009, the main contract for B 3,221.6 million was awarded to th e Grupo Unidos por el Canal S.A. (GUPCSA) 
for the design and construction of the new lock complexes. 
4.177.  At the end of 2012, GUPCSA had drawn up a schedule which envisaged the completion 
of the works in April 2015, that is, six months after the contractual completion date, but problems 
arose in connection with the financing of the additional costs incurred. In February 2014, 
the negotiations conducted in order to resolve these problems within the contractual framework resulted in a framework agreement aimed at comple ting the construction of the third set of locks 
in December 2015.
127 
4.5.6  Tourism 
4.178.  Tourism is one of the four sectors considered fundamental for economic growth 
in the Government's Strategic Plan for 2010-2014, together with agriculture, financial services 
and logistics. In 2013, tourism's contribution to  GDP was around 11.9% (Table 4.10). The tourism 
indicators for the ten years preceding 2012 revealed steady growth (average annual rate of 11%)
128, which generated substantial income, new jobs and investment. Tourism is the leading 
source of foreign currency earnings, with US $5,077.9 million in 2013 (including international 
transport). According to information provided by the Panamanian authorities, between 2007 and 2012, the contribution of income from tourism to exports of goods and services was maintained at around 13.5%, with a slowdown to 12.6% in 2011. 
                                               
126 Information provided by the ACP. Th e maritime tariffs can be found at: http://www.pancanal.com . 
127 There is detailed information on the progress of  the Panama Canal Expansion project in the ACP's 
Quarterly and Annual Reports. Viewed at: http://www.pancanal.com . 
128 ATP, Estadísticas 2011. WT/TPR/S/301/Rev.1 • Panama 
 
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  Table 4.10 Tourism indicators, 2007-2013 
 2007 2008  2009  2010  2011 2012 2013  
Contribution of tourist 
spending to GDP (%) 9.1 9.6  9.4 9.5 9.5 12.6 11.9  
Income from tourism 
(US$ million) 1,799.2 2,216.6  2,269.0  2,552.5  2,916.7 4,575.7 5,077.9  
Total employment in tourism 118,993 127,631  128,384  129,771  130,710 131,983 133,033  
Private investment 
(US$ million) 62.2 25.5 64.3 141.2  452.8 382.8 200.5  
Number of visitors 1,428,395 1,575,051  1,562,884  1,725,956  2,004,015 2,086,007 2,201,854  
Average spending per stay 
(US$) 1,260 1,407  1,452  1,479  1,455 2,194 2,306  
Hotel rooms 16,560 16,843  17,975  19,412  21,067 23,367 24,171  
Hotel occupancy (%) 
Panama City 65.7 67.2 57.3 66.9 64.7 58.8 56.8 
Source: Online information from the ATP, viewed at: http://www.atp.gob.pa/estad%C3%ADsticas-de-
turismo-en-panam%C3%A1-2012  ; and information provided by the Panamanian authorities. 
4.179.  During the review period, private investment in the tourism sector shot up, rising from 
US$62.2 million in 2007 to 452.8 million in 2011, 382.8 million in 2012 and 200.5 million in 2013, of which Panama City accounted for 95.7%.
129 The sharpest increase was in 2011. 
4.180.  Since 2007 Panama has classified tourism activities in accordance with the Standard 
International Classification of Tourism Activities  (SICTA) and, in 2008, published its first Tourism 
Satellite Account (TSA).130 Both tools make it possible to improve the analysis of tourism statistics 
and to determine their impact on the economy with greater precision. 
4.181.  Tourism policy is based on the Master Plan for Tourism 2007-2020, which highlights 
26 tourist destinations with the greatest potent ial for strengthening and diversifying the range 
of tourism products on offer. Panama would like to establish itself as a destination for business 
and conventions (40% of the people who visit Panama already do so for this reason) 
and to develop its potential as a cruise ship destination. It is also investing in other tourism products for which it has resources but for which demand is still weak, for example, adventure, 
cultural and eco-tourism. Thus, between 2007 an d the beginning of 2013 the Panamanian Tourism 
Authority invested US$2.6 million in projects to improve, for example, the signposting of tourist 
areas and basic infrastructure.
131 The 2013 tourism competitiveness index classification 
of the World Economic Forum ranks Panama fourth in America. 
4.182.  Since 2007 there have been some important legal and institutional changes. The approval 
of Decree Law No. 4 of 27 February 2008, as  implemented by Executive Decree No. 82 
of 23 December 2008, led to the creation of the Panamanian Tourism Authority (ATP)132, 
subject to the policies and guidance of the Execut ive through the MICI, together with the National 
Tourism Council (CONATUR), the Tourism Advisory Councils and the National Tourism Fund (FONATUR). 
4.183.  The task of the ATP is to formulate an d develop tourism policy, draw up and implement 
master plans and regulate tourism activities. CONATUR, which has nine members
133, 
approves the general guidelines, goals and objectives for the efficient functioning of the Authority, in accordance with the directives and principles laid down by the Executive for tourism master 
plans. The Tourism Advisory Councils coordinate tourism development at provincial level 
                                               
129 Online information from the Oxford Business Group, viewed at: 
http://www.oxfordbusinessgroup.com/economic_u pdates/panam%C3%A1-inve rsi%C3%B3n-en-turismo . 
130 The CST can be viewed at: 
http://www.contraloria.gob.pa/inec/Publicaciones/P ublicaciones.aspx?ID_SUBCATEGORIA=26&ID_PUBLICACIO
N=12&ID_IDIOMA=1&ID_CATEGORIA=4 . 
131 La Prensa  of 21 March 2013. Online information, viewed at: 
http://www.prensa.com/impreso/economia/26-millones-en-71-proyectos-turisticos/164751 . 
132 The ATP replaces the Panamanian Tourism Institute (IPAT). 
133 The Ministers of Industry and Trade, the Economy and Finance, Interior and Justice, Public Works, 
and Foreign Affairs or their delegates, and four repr esentatives of the Panamanian Chamber of Tourism, 
chosen from lists submitted by the Chamber to the Executive. The Comptroller-General of the Republic participates in the meetings  with the right to speak. WT/TPR/S/301/Rev.1 • Panama 
 
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  and operate under the supervision of the ATP.  CONATUR and the Tourism Advisory Councils 
are composed of representatives of the public and private sectors. 
4.184.  The FONATUR is a trust fund made up of public and private funds, domestic 
and international, for the promotion and development of tourism activities, the financing 
of promotional campaigns and the implementation of master plan projects. However, according 
to the authorities, this trust fund is not yet operational. Promotional campaigns must comply with the rules governing government procurement. 
4.185.  During the review period, Panama opened the tourism sector up further to foreign 
participation. It lifted the restriction on tour op erator activities in 2008 and that on travel agency 
activities in 2010, no longer classifying them as retail trade activities.
134 Foreigners 
can also provide tourist guide services if they have been resident in Panama for five years.135 
Moreover, in conformity with Decree Law No. 4 approved in 2008, foreign companies that 
are wholesale promoters of international tourism can establish offices, provided that they operate in countries whose markets offer some real benefit or potential for Panama, such 
as the United States, Canadian and European markets.
136 All tourism operators that meet the 
requirements laid down in the law can carry on activities in Panama regardless of their country of provenance. Tourism service providers must be re gistered with the ATP's Department of Tourism 
Enterprises and Activities in order to obtain a licence enabling them to complete the start-up 
notification formalities for establishing their business on the Internet portal Panamá Emprende
137 
(section 2.4.2).138 Likewise, to establish a travel agency it is necessary to obtain a licence from 
the ATP which subsequently makes it possible to complete the start-up notification formalities 
(section 2.4.2). 
4.186.  Law No. 80 of 8 November 2012 repeals Laws No. 8 of 14 June 1994 and No. 58 
of 28 December 2006 and introduces a new incentives regime. This regime covers a greater 
number of eligible activities and a greater number of tax incentives. The Law encourages 
investment throughout the country with aim of developing the coastal areas and the interior. The incentives for tourist accommodation establishments in Panama City have not been in effect 
since 9 February 2013. In general, the law reduce s the period of validity of the tax benefit 
and includes tourism products and services in  the interests of creativity and quality. 
Investors who have availed themselves of the incentives regime under Laws No. 8 and No. 58 continue to benefit from it until their registration expires. The advantages for tour operator travel 
agencies include exemption from import tax and the selective consumption tax on certain goods 
and services, for example, land transport motor vehicles with a minimum capacity of nine passengers. The ATP can also offer support for the organizers of events that attract 
at least 400 people. 
4.187.  Incentives are granted in the form of tota l exemptions from import taxes, property tax, 
taxes on the use of wharves, on the interest income accruing to creditors, on income derived 
from the tourist trade and on capital, as well as tax credits or tax-deductible expenditure, 
for specified periods and in accordance with specific investment thresholds. The thresholds are lowest and the periods longest for investments made outside the district of Panama. The ATP grants the incentives subject to enrolment of th e enterprise and the activity in the National 
Tourism Register. To be eligible for the tax benefits, a natural or legal person must lodge 
with the Registry details of the project and a performance bond of 1% of the investment. 
The Authority must reply within a period of 30 days. If the ATP decides in favour of the project, 
it issues a certificate renewable on an annual basis. Domestic and foreign investors can avail 
themselves of the incentives regime, as well as of  the investment stability regime (section 2.4.1). 
According to information provided by the au thorities, in 2013, following the approval 
of Law No. 80, investment totalled B 55,681 million while the global cost of the incentives 
amounted to B 203,866, thus demonstrating the efficiency of the tax incentives, which are much less than the investment declared. 
                                               
134 Law No. 5 of 11 January 2007, Article 32. 
135 Executive Decree No. 82 of 23 December 2008, Article 89. 
136 Decree Law No. 4 of 27 February 2008, Article 23. 
137 Online information, viewed at: https://www.panamaemprende.gob.pa . 
138 Executive Decree No. 82 of 23 December 2008. WT/TPR/S/301/Rev.1 • Panama 
 
- 129 - 
 
  4.188.  Moreover, since 2011 Panama has offered free medical insurance for a period of 30 days 
to tourists and Panamanians resident abroad who enter the country through Tocumen International Airport. In 2012, about 1,700 tourists made use of this service, to which the ATP allocates some US$4 million a year. 
4.189.  The Ministry of the Economy and Finance grants concessions for investment in tourism 
in the island and coastal zones and on State-owned land; these concessions are for 40 years and can be extended for another 30. Concessions in tourist areas located in indigenous regions 
must be approved by the traditional authorities.
139 
4.5.7  Retail trade 4.190.  Panama has not adopted any commitments on retail trade under the GATS.
140 
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. The Constitution 
defines this activity as selling to consumers or acting as the representative or agent of production or trading enterprises or any other activity which the law classifies as retail trade. 
There is an exception for those cases in which a farmer or a craftsman sells his own products. 
Law No. 5 of 11 January 2007 and Executive Decree No. 26 of 12 July 2007 which implements it stipulate that, in the sworn statement that accompanies the start-up notification, 
natural persons wishing to engage in commercial activities must indicate that they are aware 
of the limitations and restrictions mentioned in the Constitution and, in the case of legal persons, 
require an additional sworn statement in which the company gives an assurance that it meets the constitutional requirements. This Law also stipulates that the activities of tour operators 
and travel agencies are deemed to be wholesale trade as from 1 January 2008 and 2010, 
respectively, and thus no longer to be regarded as retail trade. 
4.191.  In 2012, retail trade, as defined by INEC
141, accounted for 3.8% of GDP.142 The subsector 
grew at an average rate of 8.5% between 2007 and 2012, and in 2012 growth was 13.1% 
due to increased sales of food, fuel, pharmaceutical products, textile products, hardware and paint, new motor vehicles and other consumer goods. On 31 August 2011, the latest date for which data 
are available, the sector employed 103,291 peop le, which represented 22.9% of the workforce 
of the enterprises engaged in non-financial activities.
143 
4.192.  Foreign companies have been able to penetrate the retail trade through franchises 
(section 2.4.2). In Panama, foreign franchises account for 95% of the total number of franchises, 
the majority of which are of United States origin.144 
4.193.  Within the framework of the Trade Promotion Agreement between Panama 
and the United States, Panama grants greater openness in the retail trade subsector by 
establishing that the reservations contained in Panama's schedule do not include multiple service 
businesses. These are defined as businesses that invest more than US$3 million in Panama and engage in the sale of goods and the supply of services in a single establishment, including through 
membership programmes. Panama has not negotiated greater liberalization of the retail trade 
within the framework of othe r preferential agreements. 
 
                                               
139 Law No. 2 of 7 January 2006. 
140 WTO document S/DCS/W/PAN of 24 January 2003. 
141 INEC definition: Economic acti vity dealing with new products and the production of services, 
based on margins generated by trade, for the sale of pr oducts on the retail market. Includes the resale of new 
or used products by shops, large stores, sales outl ets, mail order houses, and consumer cooperatives 
to the general public for consumption or personal or domestic use. Includes the repair and installation 
of personal and household goods, whether or not combined with their retail sale. 
142 INEC, table 242-24, online information, viewed at: 
http://www.contraloria.gob.pa/inec/Publicaciones/P ublicaciones.aspx?ID_SUBCATEGORIA=26&ID_PUBLICACIO
N=553&ID_IDIOMA=1&ID_CATEGORIA=4 . Figures corresponding to the 1996 base series. 
143 INEC (2012). 
144 US Commercial Service (2010), US Commercial Opportunities in Panama's Franchise Sector . 
Viewed at: http://www.franchise.org/uploadedFiles/Franchi se_Industry/International_Development/PanamaFra
nchising.pdf . WT/TPR/S/301/Rev.1 • Panama 
 
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 WT/TPR/S/301/Rev.1 • Panama 
 
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  5  APPENDIX TABLES 
Table A1.1 Merchandise exports by HS tariff section, 2007-2012 
(US$ million and %) 
Tariff section 2007  2008  2009  2010 2011 2012a 
Total (US$ million) 1,126.8 1,144.0 821.9 727.6 785.0 821.9 
 (% of total) 
I. Live animals; animal products 39.7 40.5 48.4 30.7 20.0 19.2 
Fish and crustaceans (HS 03) 35.3 36.7 43.8 25.6 14.9 12.7 
II. Vegetable products 37.4 36.5 24.1 23.5 20.8 20.8 
Edible fruit and nuts (HS 08) 31.8 30.7 21.7 20.5 18.2 18.1 
III. Fats and oils 0. 5 0.4 0.6 0. 6 2.3 3.7 
IV. Prepared foodstuffs 5.8 5.9 7.9 10.8 13.4 12.5 
Sugars and sugar confectionery (HS 17) 1.6 1.4 1.7 2.7 4.8 4.3 
Beverages, spirits and vinegar (HS 22) 1.6 1.2 2.0 3.3 3.8 3.0 
V. Mineral products 0.7 0.6 0.9 0.3 0.1 0.1 
VI. Products of the chemical or allied industries 2.4 2.5 3.0 4.2 3.0 3.6 
VII. Plastics and rubber 0.6 0.5 0.5 0.7 0.6 0.5 
VIII. Raw hides and skins, and leather 1.8 0.5 0.5 1.2 1.8 2.2 
IX. Wood and articles of wood 0.9 0.6 0.5 1.7 3.2 3.0 
X. Pulp of wood, paper 2.7 2.8 2.4 3.2 2.7 3.4 
XI. Textiles and textile articles 1.1 0.9 1.0 1.3 1.6 1.2 
XII. Footwear and headgear 0.0 0.0 0.0 0.0 0.0 0.0 
XIII. Articles of stone 0.1 0.1 0.2 0.2 0.4 0.7 
XIV. Precious stones and metals 1.3 2.0 4.4 10.2 15.9 15.7 
Gold (including gold plated with platinum) 
unwrought or in semi-manufactured forms, or in powder form (HS 7108) 0.3 0.5 1.9 9.7 14.9 14.1 
XV. Base metals and ar ticles of base metal 4.7 5.9 5.5 11.2 13.7 12.9 
Iron and steel (SA 72) 2.0 3.1 2.5 5.3 7.1 7.2 
XVI. Machinery and me chanical appliances 0.1 0.0 0.1 0.0 0.0 0.0 
XVII. Vehicles, aircraft, vessels and associated 
transport equipment 0.0 0.1 0.0 0.0 0.0 0.0 
XVIII. Precision instruments 0.0 0.0 0.0 0.0 0.0 0.0 
XIX. Arms and ammunition 0.0 0.0 0.0 0.0 0.0 0.0 
XX. Miscellaneous manufactured articles 0.2 0.2 0.2 0.2 0.3 0.4 
XXI. Works of art, etc. 0.0 0.0 0.0 0.0 0.0 0.0 
a Preliminary figures for 2012. 
Note: The data does not include exports from the Coló n Free Zone or other free zones in Panama to the 
rest of the world. 
Source: National Institute of Statistics and Censuses (INEC), Office of the Comptroller-General of the 
Republic of Panama. 
 WT/TPR/S/301/Rev.1 • Panama 
 
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  Table A1.2 Merchandise imports by HS tariff section, 2007-2012 
(US$ million and %) 
Tariff section 2007  2008  2009  2010 2011 2012a 
Total (US$ million) 6,869.9 9,009.9 7,788.8 9,136.5 11,339.7 12,633.2 
 (% of total) 
I. Live animals; animal products 1.1 1.2 1.2 1.3 1.2 1.2 
II. Vegetable products 3.0 3.3 2.9 3.2 2.8 2.8 
III. Fats and oils 0. 5 0.6 0.6 0. 5 0.6 0.6 
IV. Prepared foodstuffs, etc. 6.1 5.9 7.2 6.8 6.8 6.6 
V. Mineral products 19.4 22.2 18.1 19.3 22.3 23.0 
Mineral fuels (HS 27) 18.3 21.1 16.9 19.0 22.0 22.5 
VI. Products of the chemical or allied 
industries 9.4 8.7 10.2 9.4 8.5 8.5 
VII. Plastics and rubber 4.1 3.8 4.1 4.4 4.2 4.0 
VIII. Raw hides and skins, and leather 0.4 0.4 0.5 0.5 0.6 0.6 
IX. Wood and articles of wood 0.6 0.6 0.6 0.6 0.5 0.6 
X. Pulp of wood, paper 3.4 3.1 3.2 3.0 2.7 2.2 
XI. Textiles and textile articles 3.3 3.1 4.4 4.6 4.4 4.8 
XII. Footwear and headgear 1.6 1.5 2.0 1.9 1.8 1.9 
XIII. Articles of stone 1.8 1.6 1.8 1.8 1.7 1.6 
XIV. Precious stones and metals 0.4 0.3 0.4 0.4 0.4 0.3 
XV. Base metals and ar ticles of base metal 7.7 9.2 7.7 7.8 7.3 7.6 
XVI. Machinery and mechanical appliances 20.6 19.6 19.7 19.8 18.8 18.6 
Machinery and mechanical appliances 
(HS 84) 12.1 11.0 10.7 10.9 11.0 11.2 
XVII. Vehicles, airc raft, vessels and 
associated transport equipment 11.8 10.4 10.2 9.9 10.3 9.6 
XVIII. Precision instruments 1.9 1.6 1.8 1.7 1.7 1.7 
XIX. Arms and ammunition 0.0 0.0 0.0 0.0 0.0 0.0 
XX. Miscellaneous manufactured articles 2.9 3.1 3.5 3.3 3.3 3.7 
XXI. Works of art, etc. 0.0 0.0 0.0 0.0 0.0 0.1 
a Preliminary figures for 2012. 
Note: The data does not include imports from the rest  of the world destined primarily for the Colón Free 
Zone or other free zones established in Panama. 
Source: National Institute of Statistics and Censuses (INEC), Office of the Comptroller-General of the 
Republic of Panama. 
 WT/TPR/S/301/Rev.1 • Panama 
 
- 135 - 
 
  Table A1.3 Merchandise exports by trading partner, 2007-2012 
(US$ million and %) 
Description 2007  2008  2009  2010 2011 2012a 
Total (US$ million) 1,126.8  1,144.0  821.9  727.6 785.0 821.9  
 (% of total) 
America 52.1 55.6 64.3 60.7 56.4 54.9 
USA 35.6 39.2 43.5 29.7 21.4 20.2 
Central American Common Market (CACM) 10.3 9.8 11.4 13.2 12.9 12.0 
Costa Rica 5.1 5.8 7.4 6.8 6.7 6.6 
Nicaragua 1.1 1.2 1.3 2.0 2.4 1.7 
Honduras 1.9 1.5 1.4 2.3 2.1 1.6 
El Salvador 0.7 0.7 0.7 1.2 1.0 1.3 
Guatemala 1.5 0.7 0.7 0.9 0.8 0.8 
Other America 6.2 6.5 9.4 17.8 22.1 22.6 
Canada 0.2 0.3 1.1 10.4 15.4 14.6 
Suriname 0.2 0.4 0.1 0.7 0.6 1.2 
Colombia 1.7 1.0 1.9 1.3 1.2 1.0 
Chile 0.1 0.2 0.4 0.8 1.2 0.9 
Europe 34.1 31.7 24.8 22.3 21.5 22.5 
EU(27) 33.7 31.5 24.5 21.7 20.9 21.8 
Netherlands 10.2 10.7 6.6 6.9 4.4 5.9 
Sweden 5.5 5.4 6.1 6.9 7.0 4.8 
Italy 1.6 2.6 2.1 2.0 2.6 4.0 
United Kingdom 5.4 5.4 1.5 1.2 1.3 2.1 
Spain 5.0 5.0 6.2 2.7 2.1 2.0 
Germany 0.3 0.4 0.4 0.6 1.6 1.1 
EFTA 0.1 0.1 0.0 0.2 0.2 0.0 
Other Europe 0.3 0.1 0.3 0.3 0.4 0.7 
Commonwealth of Independent States (CIS) 0.0 0.0 0.0 0.0 0.5 0.1 
Africa 0.3 0.2 0.1 0.1 0.2 0.5 
Middle East 0.1 0.0 0.0 0.0 0.0 0.1 
Asia 11.4 10.7 8.4 14.1 17.5 18.3 
China 6.0 4.1 2.5 5.0 4.9 4.1 
Japan 0.3 0.4 0.6 0.5 0.5 0.8 
Six East Asian traders 4.2 5.3 4.0 6.7 8.2 9.3 
Chinese Taipei 3.5 4.3 2.9 5.0 4.4 4.0 
Korea, Rep. of 0.2 0.4 0.5 0.7 2.4 3.0 
Thailand 0.0 0.3 0.1 0.4 0.7 1.5 
Other Asia 0.9 0.9 1.4 2.0 3.9 4.0 
India 0.7 0.6 0.6 1.0 2.4 2.7 
Viet Nam 0.1 0.2 0.5 0.8 1.1 0.9 
Other 2.1 1.8 2.3 2.8 3.9 3.7 
Free zonesb 1.8 1.7 2.2 2.7 3.7 3.6 
a Preliminary figures for 2012. 
b Merchandise from the rest of Pa nama which was exported to fr ee zones established in Panama. 
Note: The data does not include exports from the Colón Free Zone or other free zones in Panama 
to the rest of the world. 
Source: National Institute of Statistics and Censuses (INEC), Office of the Comptroller-General of the 
Republic of Panama. 
 WT/TPR/S/301/Rev.1 • Panama 
 
- 136 - 
 
  Table A1.4 Merchandise imports by trading partner, 2007-2012 
(US$ million and %) 
Description 2007  2008  2009  2010 2011 2012a 
Total (US$ million) 6,869.9  9,009.9  7,788.8  9,136.5 11,339.7 12,633.2  
 (% of total) 
America 52.9 51.8 52.7 49.7 46.6 44.6 
USA 30.9 29.9 29.1 27.6 24.9 23.6 
Central American Common Market 
(CACM) 7.8 8.1 8.8 7.9 7.5 7.7 
Costa Rica 4.7 5.1 5.2 4.9 4.5 4.6 
Guatemala 1.6 1.6 2.1 1.9 1.7 1.7 
El Salvador 1.1 1.0 1.1 0.9 0.9 0.9 
Honduras 0.3 0.3 0.2 0.2 0.2 0.3 
Nicaragua 0.1 0.1 0.1 0.1 0.1 0.2 
Other America 14.3 13.8 14.9 14.1 14.2 13.4 
Mexico 3.1 3.5 4.6 4.3 3.9 4.4 
Colombia 2.8 2.7 3.3 3.3 4.2 3.4 
Brazil 2.0 1.6 1.9 2.7 1.9 1.4 
Argentina 1.1 0.4 0.6 0.5 1.1 1.1 
Peru 1.0 1.2 0.6 0.5 0.6 0.8 
Chile 0.6 0.6 0.6 0.6 0.6 0.6 
Canada 0.7 0.8 0.6 0.7 0.8 0.5 
Europe 14.5 7.9 7.4 7.5 8.4 9.7 
EU(27) 7.0 6.6 6.7 6.6 7.4 8.4 
Spain 1.6 1.6 1.5 1.8 2.6 2.5 
Germany 1.3 1.4 1.3 1.5 1.5 1.4 
Netherlands 0.6 0.4 0.5 0.5 0.5 1.2 
Italy 0.6 0.7 0.7 0.6 0.8 0.8 
France 0.8 0.4 0.5 0.5 0.5 0.6 
EFTA 0.3 0.3 0.4 0.4 0.3 0.3 
Other Europe 7.2 1.1 0.4 0.5 0.6 1.1 
Turkey 0.0 0.5 0.4 0.5 0.6 1.1 
Commonwealth of Independent 
States (CIS) 0.0 0.0 0.1 0.0 0.2 0.0 
Africa 0.0 0.0 0.1 0.0 0.0 0.1 
Middle East 0.1 0.1 0.1 0.1 0.1 0.1 
Asia 16.0 15.1 13.3 14.7 13.9 14.2 
China 5.2 5.0 4.2 5.4 6.1 6.4 
Japan 4.8 4.3 3.6 3.2 2.6 2.3 
Six East Asian traders 5.3 5.0 4.7 5.5 4.6 4.8 
Korea, Rep. of 3.9 2.9 2.6 3.2 2.7 2.8 
Thailand 0.4 0.9 1.0 1.0 0.9 1.0 
Chinese Taipei 0.5 0.6 0.5 0.5 0.4 0.4 
Other Asia 0.7 0.7 0.8 0.7 0.7 0.7 
Other 16.4 25.1 26.3 27.9 30.7 31.2 
Free zonesb 15.6 24.5 25.8 27.6 30.3 30.4 
a Preliminary figures for 2012. 
b Merchandise from free zones established in Panama  which was imported into the rest of Panama. 
Note: The data does not include imports from the rest  of the world destined primarily for the Colón Free 
Zone or other free zones established in Panama. 
Source: National Institute of Statistics and Censuses (INEC), Office of the Comptroller-General of the 
Republic of Panama. 
   
  WT/TPR/S/301 /Rev.1  • Panama  
- 137 - Table A2.1 Notifications by requirement, 2007–2014 [March 2014] 
Agreement  Requirement Frequency WTO document (most recent) 
Agreement on Agriculture 
Article 18.2 DS:1  Domestic support On an annual basis G/AG/N/PAN/28 of 02.10.2013 
Article 18.2 MA:2 Market access. Volume 
of imports under tariff and other quotas On an annual basis G/AG /N/PAN/29 of 03.10.2013 
Articles 5.7 and 18.2 MA:5 Market access. Special 
safeguard provisions On an annual basis G/AG/N/PAN/21 of 16.07.2010 
General Agreement on Trade in Services  
Article III:4 and/or 
Article IV:2 Enquiry points and contact 
points Once only  S/ENQ/78/Rev.12 of 22.12.2010 
Article V:7(a) Economic integration 
(regional trade agreement) Ad hoc  S/C/N/692/Rev.1 of 26.04.2013 
S/C/N/692 of 23.04.2013 S/C/N/691 of 12.04.2013 S/C/N/680 of 27.02.2013 S/C/N/678 of 26.02.2013 S/C/N/658 of 30.10.2012 S/C/N/642/Rev.1 of 01.05.2012 S/C/N/642 of 24.04.2012 S/C/N/535 of 17.12.2009 
S/C/N/501 of 03.08.2009 
S/C/N/490 of 17.04.2009 S/C/N/443 of 15.05.2008 S/C/N/392 of 13.04.2007 
GATT concessions 
Annex to L/6905 Revision of schedule of 
commitments HS96 Ad hoc  G/SECRET/HS96/48/Rev.2 of 23.03.2009 
General Agreement on Tariffs and Trade 1994 (GATT 1994) 
Article XVII:4(a) State trading (new and full 
notification) On a triennial basis (full notification) 
On an annual basis (changes) G/STR/N/11/PAN; G/STR/N/12/PAN; G/STR/N/13/PAN; 
G/STR/N/14/PAN of 23.04.2012 
Article XXIV:7(a) Free trade areas Ad hoc  WT/REG336/N/1/Rev.1 of 26.04.2013 
WT/REG336/N/1 of 23.04.2013 
WT/REG334/N/1 of 12.04.2013 
WT/REG332/N/1 of 27.02.2013 
WT/REG331/N/1 of 26.02.2013 
WT/REG324/N/1 of 30.10.2012 
WT/REG313/N/1/Rev.1 of 01.05.2012 
WT/REG313/N/1 of 24.04.2012 
WT/REG278/N/1 of 17.12.2009 
WT/REG268/N/1 of 03.08.2009 
WT/REG264/N/1 of 17.04.2009 
WT/REG239/N/1 of 15.05.2008 
WT/REG227/N/1 of 13.04.2007 
Article XXVIII:5 Modification of schedule  On a triennial basis G/MA/TAR/RS/304 of 29.04.2013   
  WT/TPR/S/301 /Rev.1  • Panama  
- 138 - Agreement  Requirement Frequency WTO document (most recent) 
Agreement on Implementation of Article VI of the GATT 1994 (Anti-Dumping Agreement) 
Article 16.4 Anti-dumping actions 
(preliminary and final) Ad hoc  G/ADP/N/218 of 01.09.2011 
G/ADP/N/194 of 06.01.2010 
Article 16.4 Anti-dumping actions 
(taken within the preceding 
six months)  On a semi-annual basis  G/ADP/N/216/PAN of 13.07.2011 
G/ADP/N/209/PAN of 20.06.2011 
G/ADP/N/202/PAN of 07.10.2010 
G/ADP/N/195/PAN of 27.04.2010 
G/ADP/N/65/PAN/Rev.1 of 20.02.2008 
Article 16.5 Authority competent to initiate 
and conduct investigation As appropriate (upon entry into force of the 
WTO Agreement for the Member concerned)  G/ADP/N/14/Add.30; G/SCM/N/18/Add.30 of 22.10.2010 
Article 18.5 Changes to laws /regulations Full integrated text once upon entry into force 
of the WTO Agreement for existing laws and 
regulations; ad hoc as and when a Member 
establishes such laws and regulations, 
or makes changes in existing laws and 
regulations or in the administration thereof G/ADP/N/1/PAN/2/Suppl.1; G/SCM/N/1/PAN/2/Suppl.1; 
G/SG/N/1/PAN/2/Suppl.1 of 28.01.2009 
Agreement on Import Licensing Procedures 
Article 7.3 Replies to questionnaire On an annual basis G/LIC/N/3/PAN/4 of 30.09.2013 
Agreement on the Application of Sanitary and Phytosanitary measures 
Article 7, Annex B Sanitary/phytosanitary 
regulations, including 
emergency measures Ad hoc  G/SPS/N/PAN/58 of 11.03.2014 
G/SPS/N/PAN/57 of 11.03.2014 
G/SPS/N/PAN/56 of 29.01.2014 
G/SPS/N/PAN/55 of 21.06.2012 
G/SPS/N/PAN/54 of 13.06.2012 
G/SPS/N/PAN/53 of 24.02.2010 
G/SPS/N/PAN/52 of 18.01.2010 
G/SPS/N/PAN/51 of 19.09.2008 
G/SPS/N/PAN/50 of 03.09.2008 
G/SPS/N/EQV/PA of 03.09.2007 
G/SPS/N/PAN/49 of 19.03.2007 
Agreement on Rules of Origin 
Article 5 and Annex II, 
paragraph 4 Preferential rules of origin in 
effect  Ad hoc  G/RO/N/102 of 19.09.2013 
G/RO/N/95 of 16.05.2013 
G/RO/N/93 of 09.04.2013 
G/RO/N/92 of 09.04.2013 
Agreement on Technical Barriers to Trade 
Article 2.9 Technical regulations  Ad hoc  G/TBT/N/PAN/43 of 12.03.2014 
G/TBT/N/PAN/42 of 12.03.2014 
G/TBT/N/PAN/41 of 15.08.2013 
G/TBT/N/PAN/40 of 03.07.2013 
G/TBT/N/PAN/39 of 03.07.2013 
G/TBT/N/PAN/37 of 24.05.2007 
G/TBT/N/PAN/36 of 17.04.2007 
Article 2.10 Urgent technical regulations Ad hoc  G/TBT/N/PAN/38 of 12.03.2013    
  WT/TPR/S/301 /Rev.1  • Panama  
- 139 - Agreement  Requirement Frequency WTO document (most recent) 
Agreement on Safeguards 
Article 9.1, footnote 2 Non-application of safeguard 
measures against a product 
originating in a developing 
country Member  Ad hoc G/SG/N/11/PAN/1; G/SG/N/7/PAN/1 of 20.02.2007 
Article 12.1(b) Finding of serious injury 
or threat thereof  Ad hoc  G/SG/N/10/PAN/1; G/SG/N/8/PAN/1 of 07.06.2007 
Article 12.1(c)  Decision to apply/extend 
a safeguard measure  Ad hoc  G/SG/N/10/PAN/1; G/SG/N/8/PAN/1 of 07.06.2007 
Article 12.4 Provisional safeguard measures Ad hoc  G/SG/N/11/PAN/1; G/SG/N/7/PAN/1 of 20.02.2007 
Article 12.6  Laws/regulations and 
modifications thereto Full integrated text once upon entry into force 
of the WTO Agreement for existing laws and regulations; ad hoc as and when a Member establishes such laws and regulations, or makes changes in existing laws and regulations or in the administration thereof G/ADP/N/1/PAN/2/Suppl.1; G/SCM/N/1/PAN/2/Suppl.1; 
G/SG/N/1/PAN/2/Suppl.1 of 28.01.2009 
Agreement on Subsidies and Countervailing Measures (SCM) 
Article 25.1 Any subsidy as defined 
in Article 1.1 of the Agreement, which is specific within the meaning of Article 2 of the Agreement, as well as any other subsidy which causes increased exports or decreased imports within the meaning of Article XVI:1 of the GATT 1994  On a triennial basis (full notification) 
On an annual basis (changes)  G/SCM/N/253/PAN; G/SCM/N/260/PAN of 02.07.2013 
Article 25.12 Authorities competent to initiate 
and conduct investigations  Once upon entry into force of the WTO 
Agreement for existing authorities and 
procedures; ad hoc as and when a Member 
establishes such authorities and procedures G/ADP/N/14/Add.30; G/SCM/N/18/Add.30 of 22.10.2010 
Part VIII, Article 27.4: 
developing country Members (DCMs)  Special and differential 
treatment for DCMs: extension of transition period for phasing out export subsidies  No later than 31/12/2001. DCMs seeking 
to extend the transition period must enter into consultation with the SCM Committee one year before the expiry of this period G/SCM/N/253/PAN; G/SCM/N/260/PAN of 02.07.2013 
G/SCM/N/243/PAN of 22.06.2012 G/SCM/N/226/PAN of 10.10.2011 G/SCM/N/211/PAN of 24.06.2010 G/SCM/N/192/PAN of 09.07.2009 G/SCM/N/177/PAN/Rev.1 of 20.07.2009 G/SCM/N/177/PAN of 03.07.2008 G/SCM/N/163/PAN of 14.09.2007 G/SCM/N/160/PAN of 11.07.2007   
  WT/TPR/S/301 /Rev.1  • Panama  
- 140 - Agreement  Requirement Frequency WTO document (most recent) 
Article 32.6 Laws/regulations and changes 
thereto Full integrated text once upon entry into force 
of the WTO Agreement for existing laws 
and regulations; ad hoc as and when a 
Member establishes such laws and 
regulations, or makes changes in existing 
laws and regulations or in the administration 
thereof G/ADP/N/1/PAN/2/Suppl.1; G/SCM/N/1/PAN/2/Suppl.1; 
G/SG/N/1/PAN/2/Suppl.1 of 28.01.2009 
Source: WTO Secretariat. 
 WT/TPR/S/301/Rev.1 • Panama 
- 141 - 
  Table A3.1 Applied MFN tariffs higher than bound tariff rates 
HS Description Applied 
tariff rate 
2013 (%) Bound tariff 
rate (%)a 
01031000 - Pure-bred breeding animals 6 5 
03036600 - - Hake ( Merluccius spp ., Urophycis spp .) 15 8 
04014020 - - Cream 60 30 
12074090 - - Other 10 5 
16024119 - - - - Other 40 30 
16041290 - - - Other 15 10 
18069090 - - Other 15 5 
20019070 - - Mixed vegetable preserves 15 10 
25010099 - - Other 81 30 
29021990 - - - Other 2 0 
29037610 - - - Bromochlorodifluoromethane 15 5.5 
29037620 - - - Bromotrifluoromethane 15 5.5 
29037630 - - - Dibromotetrafluoroethanes 15 5.5 
29333300 Alfentanil (INN), anileridine (INN), bezitramide (INN), 
bromazepam (INN), difenoxin (INN), diphenoxylate (INN), 
dipipanone (INN), fentanyl (INN), ketobemidone (INN), 
methylphenidate (INN), pentazocine (INN), pethidine (INN), 
pethidine (INN) intermediate A, phencyclidine (INN) (PCP), 
phenoperidine (INN), pipradrol (INN), piritramide (INN), 
propiram (INN) and trimeperidine (INN); salts thereof 8 0 or 6.5 
30051000 - Adhesive dressings and other articles having an adhesive 
layer 5 0 
30059090 - - Other 10 0 
32081011 - - - Aerosols 10 6.5 
32141011 - - - Of a kind used in building 10 6.5 
32141012 - - - Coachbuilders' 10 6.5 
32149000 - Other 10 6.5 
33030011 - - Of a CIF value of less than B/22.38 per litre 10 6.5 
33030021 - - Of a CIF value of less than B/4.43 per litre 10 6.5 
33043000 - Manicure or pedicure preparations 10 6.5 
33049190 - - - Other 10 6.5 
33049919 - - - - Other 10 6.5 
33049930 - - - Sunscreen or suntan preparations 10 8 
33049990 - - - Other 10 6.5 
33051020 - - Liquid, whether or not medicated 10 6.5 
33052000 - Preparations for permanent waving or straightening 10 6.5 
33053000 - Hair lacquers 10 6.5 
33059019 - - - Other 10 6.5 
33059020 - - Dyes and bleaches used on the hair 10 6.5 
33069010 - - Mouthwashes and dental rinses 10 6.5 
33071010 - - Shaving creams and foams 10 6.5 
33071021 - - - Based on denatured alcohol (for example, Bay Rum, 
Menticol and the like) 10 5 
33071022 - - - Other lotions and eau de cologne of a CIF value 
of B/4.43 or more per litre 10 5 
33074100 - - "Agarbatti" and other odoriferous preparations which 
operate by burning 10 6.5 
33074990 - - - Other 10 6.5 
33079030 - - Depilatories 10 6.5 
33079090 - - Other 10 6.5 
34053000 - Polishes and similar preparations for coachwork, other than 
metal polishes 10 6.5 
37079091 - - Toner 10 6.5 
38089192 - - - - Fly-papers 10 6.5 
38089912 - - - - Glue-coated traps, whether or not containing toxic 
substances 10 6.5 WT/TPR/S/301/Rev.1 • Panama 
- 142 - 
  HS Description Applied 
tariff rate 
2013 (%) Bound tariff 
rate (%)a 
38089919 - - - - Other 10 6.5 
38089999 - - - - Other 10 6.5 
38249099 - - - Other 10 6.5 
39199090 - - Other 10 6.5 
39205990 - - - Other 10 6.5 
39249021 - - - Soap dishes, towel rails, toilet paper holders and similar 
articles, other than articles for building in 
or permanent fixture 10 6.5 
70134900b - - Other 15 10 or 15 
84796000 - Evaporative air coolers 10 5 
85086090 - - Other 10 5 
85256020 - - For television broadcasting stations 15 0 
85284100 - - Of a kind solely or principally used in an automatic data 
processing system of heading 8471 5 0 
85439030 - - Electronic microassemblies 10 0 
85489010 - - Electronic microassemblies 10 0 
90278010 - - For blood testing 15 0 
90278020 - - For determining capillary blood glucose levels 5 0 
a Bound tariff rates are based on the HS 2007 of the WTO Consolidated Tariff Schedules (CTS) 
database. 
b The bound tariff rate could be 10%, wh ich is lower than the applied rate. 
Source: WTO Secretariat estimates based on data provided by the authorities and in the file transposing 
Panama's bound tariff schedule from HS2002 to HS2007. 
   
  WT/TPR/S/301 /Rev.1  • Panama  
- 143 - Table A3.2 Summary of the preferential tari ffs in some of Panama's trade agreements, 2013a 
Simple average, % 
Product description MFN Central American Economic Integration Subsystem   Costa Rica 
El Salvador 
Guatemala 
Honduras 
Nicaragua 
Canada 
USA 
Peru 
Chinese 
Taipei 
European 
Union 
Chileb 
Singaporeb 
Total 7.6 1.1 1.9 1.5 2.2 1.4 3. 2 2.7 3.9 1.1 4.8 2.2 1.7 
By WTO category              
Agricultural products 13.7 4.2 6.3 5.6 6.2 4.7 9.7 6.5 9.2 6.3 10.4 6.7 7.2 
Animals and animal products 24.4 15.1 20.4 19.5 18.8 15.3 19.1 17.1 20.2 14.1 20.5 16.4 15.1 
Dairy products 36.4 4.4 27.7 14.3 20.6 4.5 34.9 28.7 36.4 32.1 31.5 33.9 36.4 
Fruit, vegetables and garden produce 10.6 1.0 0.4 1.4 0.7 1.3 5.8 3.0 4.9 1.7 7.9 2.4 3.5 
Coffee and tea 15.9 10.1 9.7 9.7 12.5 9.7 11.7 7.5 10.5 12.4 5.5 5.3 8.0 
Cereals and cereal preparations 10.0 3.9 3.2 4.2 5.8 4.6 7.0 5.8 7.4 6.1 8.8 5.2 7.1 
Oilseeds, fats and oils and their products 8.1 2.6 2.5 2.7 2.7 3.5 4.6 2.9 4.3 3.5 5.4 3.2 3.6 
Sugar and confectionery 23.5 14.5 21.6 13.5 20.8 19.4 19.2 6.7 20.3 15.3 22.6 18.9 13.3 
Beverages, alcohol and tobacco 11.1 1.2 3.3 2.3 1.4 1.5 8.0 2.4 7.3 2.9 6.5 3.4 2.5 
Cotton 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 
Other agricultural products n.e.s. 7.6 0.0 0.0 0.1 1.0 0.0 3.9 0.0 0.8 0.1 3.2 0.1 0.2 
Non-agricultural products (including petroleum) 6.4 0.6 1.0 0.7 1.4 0.8 2.0 1.9 2.8 0.1 3.8 1.4 0.6 
Non-agricultural products (excluding petroleum) 6.4 0.6 1.0 0.7 1.4 0.8 2.0 1.9 2.9 0.1 3.8 1.4 0.6 
Fish and fish products 12.5 0.0 0.0 0.0 0.0 0.5 0.0 0.0 1.1 0.6 8.7 0.0 0.3 
Mineral products and metals 7.6 0.1 0.0 0.3 0.9 0.1 4.6 4.1 4.2 0.1 3.2 1.5 0.6 
Chemicals and photog raphic products 2.5 0.1 0.0 0.1 0.2 0.1 0.7 0.7 1.1 0.0 1.3 0.5 0.2 
Wood, wood pulp, paper and furniture 8.1 0.1 0.0 0.2 0.8 0.3 3.4 3.6 5.2 0.0 4.7 1.3 1.0 
Textiles 5.0 0.9 3.4 1.0 4.0 1.6 0.4 0.4 1.3 0.0 4.0 1.1 0.4 
Clothing 10.7 6.0 10.6 6.2 10.1 9.1 0.1 0.1 4.1 0.4 10.3 4.7 2.5 
Leather, rubber, footwear  and travel articles 8.7 0.0 0.0 1.6 1.0 0.0 3.6 3.9 5.5 0.0 7.1 2.7 0.8 
Non-electrical machinery 4.2 0.1 0.0 0.0 0.1 0.0 0.9 0.8 1.6 0.0 0.8 0.3 0.1 
Electrical machinery 5.9 0.0 0.0 0.0 0.0 0.0 1.1 1.1 3.3 0.0 1.8 0.4 0.3 
Transport equipment 5.6 1.0 0.2 1.0 0.4 0.6 2.5 2.3 3.0 0.4 3.1 4.4 1.8 
Non-agricultural products n.e.s. 9.5 0.1 0.2 0.1 0.5 0.1 2.8 3.0 3.3 0.0 5.6 1.4 0.3 
Petroleum 4.2 0.0 0.0 0.2 0.0 0.0 0.5 1.9 2.1 0.0 1.9 1.1 0.0   
  WT/TPR/S/301 /Rev.1  • Panama  
- 144 - Product description MFN Central American Economic Integration Subsystem   Costa Rica 
El Salvador 
Guatemala 
Honduras 
Nicaragua 
Canada 
USA 
Peru 
Chinese 
Taipei 
European 
Union 
Chileb 
Singaporeb 
By HS:              
HS 01-24 13.9 3.7 5.5 4.9 5.2 4.1 8.2 5.6 8.1 5.6 10.6 6.4 6.9 
HS 25-97 6.2 0.6 1.1 0.7 1.5 0.8 2.1 2.0 2.9 0.1 3.5 1.4 0.6 
By HS section              
01 Live animals; animal products 20.0 5.5 10.2 8.0 9.0 6.9 10.7 9.3 11.6 10.1 15.5 12.4 14.0 
02 Vegetable products 9.9 2.1 2.0 2.5 2.3 2.3 5.8 3.1 4.1 2.5 6.5 1.9 3.4 
03 Fats and oils 8.6 4.4 4.2 4.5 4.6 5.9 6.0 4.9 7.1 5.7 6.2 5.5 6.5 
04 Prepared foodstuffs, etc. 12.0 3.0 3.9 3.8 4.2 2.8 8.0 4.2 8.1 3.8 9.8 5.6 4.6 
05 Mineral products 6.8 0.5 0.0 0.6 0.9 0.4 1.8 1.9 3.2 0.1 2.4 1.0 1.1 
06 Products of the chemical or allied industries 2.4 0.1 0.0 0.1 0.2 0.1 0.7 0.6 1.1 0.0 1.1 0.4 0.2 
07 Plastics and rubber 4.2 0.1 0.0 0.1 0.1 0.0 1.8 2.2 2.4 0.0 2.9 1.1 0.1 
08 Raw hides and skins, and leather 11.8 0.0 0.0 0.0 0.0 0.0 5.8 4.3 7.5 0.0 9.0 2.4 0.9 
09 Wood and articles of wood 7.3 0.0 0.0 0.0 0.5 0.0 2.3 3.4 5.3 0.0 4.7 1.5 0.6 
10 Pulp of wood, paper, etc. 7.9 0.2 0.0 0.2 1.1 0.3 3.4 3.0 4.7 0.0 4.1 1.0 1.1 
11 Textiles and textile articles 6.9 2.8 6.1 2.9 6.5 4.4 0.2 0.1 2.2 0.1 6.0 2.3 1.2 
12 Footwear and headgear 9.8 0.0 0.0 3.5 2.2 0.0 3.5 3.6 4.4 0.0 9.1 3.8 1.0 
13 Articles of stone 9.1 0.0 0.0 0.3 1.4 0.0 7.1 6.4 5.5 0.3 6.4 2.5 1.1 
14 Precious stones, etc. 7.2 0.0 0.0 0.0 0.0 0.0 4.7 3.9 3.3 0.0 5.6 1.0 0.1 
15 Base metals and arti cles of base metal 7.4 0.0 0.0 0.2 0.8 0.0 4.5 4.0 4.2 0.0 2.3 1.3 0.4 
16 Machinery and mechanical appliances 4.8 0.0 0.0 0.0 0.0 0.0 0.9 0.9 2.2 0.0 1.3 0.3 0.1 
17 Vehicles, aircraft, vessels and associated 
transport equipment 5.9 1.1 0.2 1.0 0.4 0.6 2.5 2.3 3.1 0.5 3.3 4.3 1.7 
18 Precision instruments 9.0 0.0 0.0 0.0 0.0 0.0 2.1 2.1 1.1 0.0 2.9 1.0 0.0 
19 Arms and ammunition 14.6 0.0 0.9 0.0 7.3 0.0 5.6 5.8 3.5 0.0 14.6 3.1 0.1 
20 Miscellaneous manufactured articles 10.9 0.1 0.4 0.2 0.3 0.5 3.9 4.9 6.2 0.0 8.5 2.0 1.2 
21 Works of art, etc. 6.9 0.0 0.0 0.0 0.0 0.0 3.4 3.0 1.1 0.0 4.8 2.0 0.3 
Note: Does not include the preferences grante d by Panama within the LAIA framework, or  those granted to the Dominican Republic under a partial scope agreement. 
a To compare tariff rates, the 2013 applied MFN tariff was used as a basis, except for Chile and Singapore. 
b Given that Singapore and Chile's tariff schedules are based on  the HS 2002 and the MFN tariff and other agreements are based on the HS 2012, the figures for 
Singapore and Chile are not strict ly comparable with the others. 
Source: WTO Secretariat estimates based on data provided by the Panamanian authorities.WT/TPR/S/301/Rev.1 • Panama 
- 145 - 
  Table A3.3 Types of government procurement 
Procedure Value of 
contract Comments 
Minor contracting From B 3,000 
up to B 30,000 Allows procurement to be cond ucted expeditiously subject to 
compliance with minimum formalities. The invitation to tender may be issued a minimum of two working days beforehand or two hours beforehand for urgent purchases in the event of force majeure , human health emergencies or disasters. 
For purchases amounting to less than B 3,000, the petty cash fund procedure is followed.  
Open tendering From B 30,000 Open tendering is the contractor selection procedure in which the 
determining factor is the price. 
The deadline for the verification committee's report is five days, 
although it may be extended by up to three days. 
Best value 
tendering From B 30,000 Used when the goods, works or services to be contracted for have 
a high degree of complexity. The technical, economic, 
administrative and financial aspe cts of the bids are considered 
and the contract is awarded to the bidder who obtains the most points as a result of applying the weighting method specified in the tender specifications. The price must have a weighting of not less than 30% and not more th an 50% of the total points 
considered in awarding the co ntract. The evaluation committee 
has ten days to submit its report , although this period may be 
extended by up to five days ( previously twice as long ). 
Best value 
tendering with 
separate 
evaluation From  
B 20,000,000 One contractor meets all work or  project requirements. Initially 
only the technical aspects of th e proposals are assessed and a 
rating is given. The price must receive a rating no lower than 
30% and not exceeding 49% of the total rating and must not 
exceed the estimated price by more than 20%. Financial 
proposals lower than the percentage of the estimated price may 
be rejected or submitte d to risk assessment. At a later stage, the 
financial proposals are opened an d the contract is awarded to 
the bidder with the highest rating in accordance with the 
methodology established in the tender specifications. 
The evaluation committee has 30 working days to submit its 
report, although this period may be extended by up to 20 days. 
Tendering under 
a framework 
agreement Not specified One or more bidders are selected and invited to sign a contract 
for products or services for mass and daily use, called a 
framework agreement, which esta blishes specific prices and 
conditions for a specified period  of not more than two years, 
extendable for one additional year ( previously  half of this ). 
This tendering procedure can only be carried out by the DGCP. Once the framework agreement has been awarded (to several 
bidders if necessary), the products  and services contained in the 
agreement are included in the Electronic Catalogue of Products and Services. Products and serv ices are purchased directly 
during the term of the contra ct, through purchase orders 
or equivalent documents. 
Reverse auction Not specified A process of bidding and re-biddi ng for the purpose of obtaining 
the best price for goods, services  or works, within a specified 
period. The details must be publis hed at least five working days 
before the process begins. Bidde rs compete in real time and 
online through "PanamaCompra". The contracting authority 
establishes a maximum reference price, and the lowest price is 
published in "PanamaCompra" to  permit re-bidding at lower 
prices. Once the auction process has ended, the tendering 
authority awards the contract to the lowest bidder. WT/TPR/S/301/Rev.1 • Panama 
- 146 - 
  Procedure Value of 
contract Comments 
Abbreviated 
tendering More than 
B 30,000 Applies to selection and awarding on the basis of the lowest price 
or, in the case of best value, on the best weighting, when in 
response to needs relating to social interest or a state of emergency. Must be announ ced in "PanamaCompra" and on 
the entity's bulletin board for a period of three working days for 
amounts up to B 3,000,000 and five working days for amounts exceeding this. The evaluation committee has a period of five days, extendable by up to three days, to issue its report, which must be published in "P anamaCompra". A printed copy 
of the report must be submitted to participants on the same day. The evaluation committee has five working days to issue its report, although this period may be extended by up to three days.  
Auction of public 
property Any amount Applies to the sale or lease of movable and immovable state 
property and can be effected by public auction, which can only 
be arranged by the MEF. Where the actual value is lower than 
B 300,000, no authorization is required. The authorization of the 
National Economic Council is required if the actual value is 
between B 300,000 and B 3,000,000 and that of the Cabinet 
Council if the actual value exceeds B 3,000,000. The auction 
must last no longer than three hours. Auctions can be conducted 
electronically through "PanamaC ompra". Bidders must register 
at least two days before the auction and deposit 10% of the 
estimated value of the property. 
Special 
procedure  Any amount Procedure without competition between bidders, which applies if 
other procedures put at risk the satisfaction of State requirements and interests. This procedure may be used in the following cases: for procuring or leasing goods or services in the 
event of emergency, in special circumstances subject to a declaration by the Executive, and in the case of contracts awarded on merit for science, te chnology, innovation and culture 
through the Ministry of the President's Office, contracts 
exceeding B 300,000 if they are extensions, contracts for works of art, and contracts concluded by the National Assembly exceeding B 50,000. Contracts of less than B 3,000,000 relating to public, presidential and State security require the 
authorization of the Minister of the President's Office, while those exceeding this amount require the authorization of the Cabinet Council.  
Source: Law No. 22 of 27 June 2006, as amended. Single Text, Official Journal No. 26829. 
 WT/TPR/S/301/Rev.1 • Panama 
- 147 - 
  Table A3.4 Overview of IPR protection in Panama, 2013 
Law/Scope Term Comments, limitations and exclusions 
Copyright and related rights 
Law No. 64 of 10 October 2012 on copyright 
and related rights; Decree No. 261 of 1995 
regulating Law No. 15 of 1994. 
Scope : The rights of authors and 
successors in title over all literary, artistic or 
scientific works, regardless of their type, 
form of expression, merit or purpose. 
Related rights are also protected. Protection 
is recognized independently of the physical 
medium containing the work. Related rights 
include the rights of performers, phonogram 
producers and broadcasti ng organizations.  Lifetime of author 
(or last co-author) plus 
70 years. 
Anonymous 
or pseudonymous 
works, 70 years from 
disclosure. 
Audiovisual works, 
collective works 
and computer 
programs, 70 years 
from first publication 
or termination. Where 
the term of protection 
is not counted from the 
death of the author, 
it will be counted from 
1 January of the year 
following that in which 
the work was created. No registration is required for protection; 
registration is declaratory and does not 
constitute a right. 
By the mere fact of creation, the author of a 
work has the original ownership of the 
moral and economic rights over the work, 
as recognized by the Law. 
Laws, decrees, official regulations, public 
treaties, judicial decisions and other official 
acts are not subject to protection, nor are 
generic expressions of folklore, news, or 
mere facts and data. 
Patents  
Law No. 35 of 10 May 1996, as amended by 
Law No. 61 of 5 October 2012; Executive 
Decree No. 7 of 17 February 1998 
(Regulations). 
Scope : Inventions, of products or 
processes, that are new, involve an 
inventive step and are capable of industrial 
application. The law provides for the 
granting of compulsory licences. It does not 
provide for second-use patents. 20 years from filing of 
application. DIGERPI 
can extend 
non-pharmaceutical 
patent protection if 
there are delays in 
granting the patent. The following, inter alia , are not considered 
inventions: theoretical principles, computer 
programs per se , aesthetic works, methods 
of surgical, therapeutic or diagnostic 
treatment applicable to the human body and 
those relating to animals, the juxtaposition 
of inventions or the mixing of known 
products, unless it can be proved that they 
satisfy the requirements of novelty, 
inventive step, and industrial application.  
The following cannot be patented: plants, 
animals and essentially biological processes 
for the production of plants or animals other 
than non-biological or microbiological 
processes; plant species and animal species 
and breeds; biological material existing in 
nature; living tissue that makes up the 
human body; and plant varieties. Panama 
recognizes retroactivity in patents only 
when a priority right is invoked. 
Industrial drawings and models (designs) 
Law No. 35 of 10 May 1996, as amended by 
law No. 61 of 5 October 2012; Executive 
Decree No. 7 of 17 February 1998. 
Scope : 
Model: three-dimensional shape that serves 
as a model or pattern for the manufacture 
of an industrial product; 
Drawing: combination of shapes, lines or 
colours incorporated in an industrial product 
for ornamentation purposes and which give 
it a specific appearance of its own. Three years from the 
date of its first 
disclosure in Panama. 
Ten years from filing of 
application for 
registration in Panama, 
extendable for one 
additional period of 
five years. Unregistered industrial designs. 
 
 
 
Protection through registration. 
The protection conferred does not include 
those elements or characteristics of the 
design which serve only to obtain a 
technical effect. Possibility of protection 
cumulated with copyright. 
Utility models 
Law No. 35 of 10 May 1996, as amended by 
Law No. 61 of 5 October 2012; Executive 
Decree No. 7 of 17 February 1998. 
Scope : Any shape, configuration or 
arrangement of the elements of a device, 
tool, instrument, mechanism or other object 
that makes possible an improvement or 
change in the functioning, use or 
manufacture of the object in which it is 
incorporated, or provides it with some 
utility, advantage or technical effect which it 
did not have before. Ten years from date 
of filing of application, 
non-extendable. Protection through registration and a utility 
model patent. To be eligible for registration, 
models must be new and have an industrial 
application. Models that differ only in minor 
ways from previous models cannot be 
registered. WT/TPR/S/301/Rev.1 • Panama 
- 148 - 
  Law/Scope Term Comments, limitations and exclusions 
Layout-designs of integrated circuits  
Law No. 64 of 10 October 2012 on copyright 
and related rights; Decree No. 261 of 1995 
regulating Law No. 15 of 1994. 
Scope : Original layout-designs. Life + 70 years Protection through copyright if the 
requirements necessary to be treated as a 
protected work are met. 
Product or service marks  
Law No. 35 of 10 May 1996, as amended by 
Law No. 61 of 5 October 2012; Executive 
Decree No. 7 of 17 February 1998. 
Scope : Subject to registration, any mark, 
sign, letter, figure, word (or combination 
thereof), noise, smell or taste, capable of 
distinguishing a product or service in trade. 
Geographical indications may be registered 
as marks. The right to register a mark is 
acquired by use. 
The owner of a mark may grant a licence for 
use by contract. Ten years from being 
granted, indefinitely 
renewable for ten-year 
periods. The following, inter alia , may not be 
registered: (a) descriptive or generic 
indications; (b) titles of literary or scientific 
works; (c) the shape given to products 
lacking in originality; (d) those which are 
identical, similar or alike to used marks; (e) 
national or foreign designations of origin 
which may give rise to confusion or error in 
this respect; (f) misleading names. Use of 
the mark is not compulsory. 
Geographical indications   
Law No. 35 of 10 May 1996, as amended by 
Law No. 61 of 5 October 2012; Executive 
Decree No. 7 of 17 February 1998. 
Scope : Designations of origin, understood 
as the geographical designation of a 
country, region or locality that serves to 
identify a product originating therein and 
whose quality or characteristics are 
exclusively or essentially attributable to the 
geographical environment; indications of 
provenance, defined as an expression 
or sign used to indicate that a product 
or service comes from a particular country, 
region or place.  The registration is valid 
indefinitely.  Protection through registration 
and certificate issued by DIGERPI. 
Designations of origin and indications 
of provenance that do not correspond to the 
country, locality or region of manufacture 
may not be used. 
The following are not subject to the 
protection provided for in the Law: foreign 
geographical indications identifying wines or 
spirits in connection to goods and services, 
which have been used by nationals or 
residents in the territory to identify these 
same goods and services in Panama in the 
ten years prior to 15 April 1994. 
New plant varieties  
Law No. 23 of 15 July 1997, Title V; 
Law No. 12 of 3 May 1999 (accession 
of Panama to UPOV) and Law No. 63 
amending articles of Law No. 23 of 1997 on 
standards for the protection of new plant 
varieties. 
Scope : All plant genera and species.  Right granted to the 
breeder for 20 years, 
from the date of 
granting of the 
protection title. 
For trees and vines, 
including rootstock, the 
period of protection 
is 25 years. Protection through breeder certificates. 
A variety is considered new if on the date of 
filing of the application or priority date the 
reproductive or multip lication material or 
harvested material of the variety has not 
been offered for sale or marketed, by the 
breeder or his successor in title: in Panama, 
more than one year prior to the filing or 
priority date; in the territory of any other 
country, more than four years or, in the 
case of trees and vines, more than six years 
prior to that date. 
Protection of undisclosed information 
Law No. 35 of 10 May 1996; Executive 
Decree No. 7 of 17 February 1998 
Scope : Article 39.2 of the TRIPS Agreement Not specified. Industrial and commercial secrets are 
protected: information with industrial 
or commercial applications which means 
obtaining or maintaining an economic 
competitive advantage over third parties 
and with respect to which adequate 
measures have been taken to maintain its 
confidentiality and restricted access.  
Source: WTO Secretariat. 
 
__________