WT/REG278/M/1  
WT/REG331/M/1  
WT/REG336/M/1  
 
5 May 2014  
(14-2723)  Page: 1/3  
Committee on Regional Trade Agreements 
Seventy-Second Session   
 
 CONSIDERATION OF THE FREE TRADE AGREEMENT BETWEEN  
CENTRAL AMERICA (HONDURAS, NICARAGUA, GUATEMALA)  
AND PANAMA, GOODS  
NOTE ON THE MEETING OF 8 APRIL 2014 
Chairman: Ambassador Francisco Lima Mena (El Salvador) 
1.1.  The 72nd Session of the Committee on Regional Trad e Agreements (hereinafter 'CRTA' or the 
'Committee') was convened in Airgram WTO/AIR/4252/Rev.1 dated 28 March 2014. 
1.2.  Under Agenda Item B.VI of this session, the CRTA considered the Free Trade Agreement 
(FTA) between Central America (Honduras, Nicaragu a, Guatemala) and Panama (hereinafter "the 
Agreement"). 
1.3.  The Chairman said the Agreement had entered into force on 9 January 2009 for Honduras 
and Panama; 21 November 2009 for Nicaragua and Panama; and 20 June 2009 for Guatemala and 
Panama. It had been notified to the WTO on 16 December 2009 for Honduras and Panama, 25 February 2013 for Nicaragua and Panama; and 22 April 2013 for Guatemala and Panama under Article XXIV:7(a) of the GATT 1994 and the Understanding on the Interpretation of Article XXIV of 
GATT 1994 as an Agreement establishing a free trade area (documents WT/REG278/N/1, 
WT/REG331/N/1, and WT/REG336/N/1/Rev.1 respectively) and under GATS Article V:7(a) as an Agreement providing for the liberalization of trade in  services within the meaning of Article V of the 
GATS (documents S/C/N/535, S/C/N/678, and S/C/N/692/Rev.1 respectively). The text of the 
Agreement was available, together with its Annexes, on the Parties' official websites.  The Factual Presentation on the goods and services aspects (joint documents WT/REG278/1 • WT/REG331/1 • 
WT/REG336/1 and Corrigendum 1, dated 27 January 2014 and 18 February 2014 respectively) 
had been prepared by the Secretariat on its own resp onsibility in full consultation with the Parties, 
in accordance with paragraph 7(b) of the Transparency Mechanism for Regional Trade Agreements (document WT/L/671). Written questions and replie s on this Agreement had been distributed in 
joint document WT/REG278/2 • WT/REG331/2 • WT/REG336/2 dated 2 April 2014. He proposed to 
organize the consideration of the Agreement by first asking the Parties and then other Members to give any general comments and then turn to the specifics of the Agreement, using the Factual 
Presentation, document WT/REG278/1 • WT/REG331/1 • WT/REG336/1 and Corrigendum 1 to 
guide the debate. They would then go th rough the questions and replies document. 
1.4.  The representative of Honduras, speaking on behalf of Guatemala, Nicaragua and Honduras, 
welcomed the opportunity to present the Bilatera l Protocol between Central America (Honduras, 
Guatemala and Nicaragua) and Panama to the Free Trade Agreement between Central America 
and Panama. The delegations gave special thanks to the Secretariat for preparing the factual presentation. Additionally, he thanked the delegati ons of Thailand and the European Union for their 
questions, and for the interest expressed in the consideration of the Agreement. The FTA between 
Central America and Panama and the Bilateral Protocols to the Agreement aligned with the trade policy framework of the Parties with a view to promoting trade liberalization. Efforts were centred 
on the development of the Central American integration process under competitive conditions, with 
the ultimate objective of furthering their economies and integrating into the multilateral trading system. WT/REG278/M/1 • WT/REG331/M/1 • WT/REG336/M/1 
 
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  1.5.  The Agreement's main objectives included the stimulation, expansion and diversification of 
trade in goods and services, and the promotion of conditions for fair competition within the free trade area. It also sought to establish clear and mutually advantageous rules governing the promotion and protection of investments, and trade in goods and services. It should be noted that 
the Parties, as Members of the WTO, respected the balance of rights and obligations assumed 
when joining the WTO. This meant complying with its rules and seeking to liberalize tariff and non-tariff trade barriers between the Parties and Panama by establishing mechanisms that allowed 
reasonable adjustment to free trade in goods sensitive to competition between all Parties. 
1.6.  The FTA signed on 6 March 2002 had 22 chapters containing legal provisions applicable to 
Panama and the Central American countries on trade in goods and services, investment and intellectual property. The Agreement contained provisions on national treatment and market 
access for goods, and covered disciplines that supplemented the tariff reduction programme, such 
as rules of origin, customs procedures, standardization measures, metrology and authorization procedures, sanitary and phytosanitary procedur es, and unfair trade practices. The Agreement 
also included commitments on investment, cross-border trade in services, the temporary entry of 
business persons, competition policy, monopolies and state-owned enterprises, government procurement, intellectual property, and dispute settlement, as well as administrative and 
institutional provisions concerning areas such as transparency, and general aspects. Furthermore, 
within the framework of the Protocol, multilateral measures relating to cooperation in WTO agricultural negotiations had been agreed upon, with a view to achieving the greatest possible 
reduction or elimination of domestic aid or support measures that distorted trade.  
1.7.  Regarding bilateral trade between Honduras and Panama, there had been an increase in both 
imports and exports during the period 2004-2008, before the Agreement's entry into force. Imports from Panama had increased by 292%, wh ile exports to Panama had increased by 192%. 
The trade balance for Honduras was in deficit, registering US$290,185 million in 2009. 
Nevertheless, the figures for 2013 (cumulative to October) showed a balance of US$220,428 million, i.e. a 24% reduction in the deficit in comparison to 2009. In the period 2009-2013, 
imports into Honduras from Panama  consisted mainly of other motor spirits, diesel oil (gas oil) and 
no. 6 fuel oil (Bunker C). Panamanian FDI in Honduras had  increased on  average by 
US$17.2 million in the period 2010-2012. 
1.8.  Regarding Guatemala and Panama, both count ries had always maintained strong trade links 
which would be further strengthened through the signing of the FTA. In 2011, exports from 
Guatemala and Panama, and imports to Guatemala from Panama, represented 2.4% and 2.9% of 
Guatemala's total exports, making Panama the eighth largest destination for exports from 
Guatemala and the seventh largest source of it s imports. The main products that Guatemala 
exported to Panama included chemical products, prepared foods and machinery. 
1.9.  Regarding Nicaragua and Panama, since the Agreement's entry into force, trade had 
increased from US$24.9 million in 2010 to US$39.8 million in 2013, an increase of 59.8%. Average 
growth during the period 2010-2013 was 16.9%. Th e value of Nicaraguan exports to Panama had 
risen from US$12.3 million in 2010 to US$30 million in 2013, an increase of 143.9%, demonstrating average growth of 34.7% over the same period, notably for goods such as bovine 
meat, biscuits, rum, bovine offal, oat flakes or ground oats, mineral solvents, and corrugated 
cardboard boxes. The value of imports from Panama, however, had fluctuated somewhat, increasing from US$12.6 million in 2010 to US$17.7 million in 2011, but falling to US$11.9 million 
and US$9.8 million in 2012 and 2013, respectively. Imports included medicines, birds' eggs, meat 
preparations, glass bottles and jars, cigarettes, and condensed milk. It should be mentioned that following the entry into force of the FTA, Nicaragua had experienced a growing trade surplus with 
Panama over the last few years. Nicaragua regi stered a trade deficit in 2010 (US$0.3 million) and 
2011 (US$1.2 million). However, this trend had been  reversed with the surpluses that had been 
observed in 2012 (US$8.5 million) and 2013 (U S$20.2 million). In the third quarter of 2013, 
Panamanian FDI in Nicaragua stood at US$155 million,  representing 89% of the total FDI reported 
from this country in 2012, when it stood at US$174.1 million, the highest amount recorded since 
2006 (not including the total figure from 2013). 
1.10.  He said that the Republics of Honduras, Guatemala and Nicaragua would continue their 
efforts to enhance trade relations with Panama, in the hope of strengthening trade flows through 
the preferences granted, and encouraging direct investment flows between the Parties. He hoped 
that the consideration of the Agreement would contribute to improving the administration of the WT/REG278/M/1 • WT/REG331/M/1 • WT/REG336/M/1 
 
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  FTA between Central America and Panama, thus strengthening economic ties between the Parties, 
and that the implementation of the Agreemen t would continue to strengthen the WTO's 
multilateral trading system. His partners were willing to answer any further questions that Members might have. 
1.11.  The representative of Panama reaffirmed the interest and importance that Panama 
attributed to the promotion of transparency of trade policies implemented by Members, particularly 
through RTAs, and which enabled the Membership to improve their understanding of the 
functioning of such agreements. The FTA between  Central America and Panama had entered into 
force with Honduras on 8 January 2009 through Law No. 23 of 25 April 2008, with Guatemala on 20 June 2009 through Law No. 48 of 15 July 2008, and with Nicaragua on 1 January 2010 through Law No. 29 of 23 June 2009, thus comple ting the five Bilateral Protocols under the 
Agreement. The Agreement consisted of 22 chapte rs which regulated matters such as market 
access for goods, rules of origin, customs procedures, sanitary and phytosanitary measures, standardization measures, metrology and author ization procedures, investment, cross-border 
trade in services, financial services, telecommunications, competition policy, and government 
procurement, and which improved market access co nditions while establishing clear disciplines 
that promoted a greater level of complementarity in trade in goods and services and investment 
between Panama and the Central American region. 
1.12.  According to data from the Panamanian Statistics Institute, trade between Panama 
and Honduras, Guatemala and Nicaragua had in creased by 35% in the last five years, 
from US$218.7 million in 2009 to US$294.3 million in  2013 and included a wide range of products. 
The Agreement also covered other areas of interest for the Parties, such as the Agreement 
on Maritime Transport, which was incorporated bilaterally into the Agreement between Central America and Panama under the Protocol with Guatemala, in order to ensure and promote 
the harmonious development of the provision of  maritime transport services and auxiliary 
maritime industries between the ports of both countries. For Panama, the consideration of the Agreement was important and gratifying, as Central America was a natural trading partner with 
which it had deepened its trade links since the Agreement's entry into force, and even more so at 
present, as the Parties were working together to develop an ambitious agenda of economic 
integration. Central America was an important ally in Panama's foreign trade strategy.  
1.13.  Panama had a promising economic and trade dynamic that displayed strong growth, 
stimulated principally by the establishment of fr ee market-oriented policies, the country's alliance 
with strategic partners, and compliance with multilateral trade rules. Furthermore, Panama was promoting a renewed bilateral and regional trade ag enda that would undoubtedly be of benefit. He 
thanked the WTO Secretariat for preparing the Fa ctual Presentation, Members whose delegations 
had shown interest by preparing questions, the delegations of Honduras, Guatemala and Nicaragua 
for their cooperation and coordination efforts throughout this process, and Members present in the 
Committee. 
1.14.  The representative of the United States thanked the Parties and the Secretariat for the 
materials provided which had enabled the consider ation of the Agreement. His delegation had no 
questions but had observed that the Parties had a number of non-notified RTAs which he hoped 
they would notify as  soon as possible. 
1.15.  The Chairman said that the consideratio n of the Goods and Services Aspects of the FTA 
between Central America (Honduras, Nicaragu a, Guatemala) and Panama had allowed the 
Committee to clarify a number of questions and the oral discussion of this RTA could be concluded 
in accordance with paragraph 11 of the Transpar ency Mechanism. If any delegations wished to as k 
follow up questions they were invited to forwar d submissions in writing to the Secretariat by 
14 April 2014 and Parties were asked to submit replies in writing by no later than 28 April 2014. In 
accordance with paragraph 13 of the Transparency Mechanism all written submissions, as well as minutes of this meeting would be circulated promptly, in all WTO official languages, and would be made available on the WTO website.  
1.16.  The Committee took note of the comments made. 
__________