WT/REG374/2  
2 November  2017 
(17-4519) Page: 1/10 
Committee on Regional Trade Agreements  Original:  English/Spanish  
 
 
FREE TRADE AGREEMENT BETWEEN MEXICO AND PANAMA  
(GOODS AND SERVICES)  
QUESTIONS AND REPLIES  
 The following communication, dated 1 November  2017, is being circulated at the request of 
the delegations of Mexico and Panama . 
 
_______________  
 
 
Question from the  delegation of Canada  
 
1.1.  Paragraph 5.11.2 : This section indicates that nothing in the Chapter on investment 
shall be construed to prevent a Party from applying or adopting any measure (consistent 
with the Agreement) to ensure that investments in its territor y take into account 
environmental concerns (Article 10.9).  
 During the negotiations, did the Parties considered including more comprehensive 
provisions on environment in the Agreement, aligned with other agreements concluded 
by the Parties?  
 
 The disciplines that were the subject of negotiation s in this Free Trade Agreement were 
originally agreed upon between the Parties and were reflected in the terms of reference for the 
negotiation s on this international instrument . This Free Trade Agreement doe s not include 
disciplines in a specific chapter on the environment.  
 
 Panama as a State, recognizes that each party has the right and responsibilit y to protect 
and preserve the environment . It has made a commitment  to do so not only in this Free Trade 
Agreement  but also in others to which it is party.  
 
 The Ministry of the Environment has provided the following list of international agreements 
and conventions, to which Panama is party . Panama , as a State, applies its legislation in the 
interest of preventing the reduction or relaxation of environmental protection  and maintains  its 
commitment to applying such protection properly . 
 
 Convention on International Trade in Endangered Species of Wild Fauna and Flora  
(CITES ): The Panamanian Ministry of the E nvironment has been following up on the 
outcome s of the Sixteenth S ession of the Conference of the Parties (COP 16) to 
the CITES . 
 
 Convention on Biological Diversity (CBD): After the Tenth Session of the Conference of 
the Parties ( COP 10) to the CBD (Nagoya, Jap an, October  2010) at which the "Nagoya 
Protocol on Access to Genetic Resources and the Fair and Equitable Sharing of Benefits  
Arising from their Utilization " was adopted , Panama became  the eleventh  country to sign 
the Protocol ( March  2011), the  thirteenth  country to ratify it (October -December  2012), 
and the second country in Latin America to ratify it . Over the past few years, our country 
has been focusing on prepar ations  for the implementation of the Protocol.  
 
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   Cartagena Protocol : Panam a created a legal framework  establishing the National 
Biosafety Commission  (CNB) as a coordinating and advisory body to address the issue of 
living genetically modified organisms in the country (Law  No. 48 of 2002) . Under this 
legal framework , three sectoral  committees (agricultural, health and environmental ) 
were established, which  serve as technical committees to assist with the management of 
the National Biosafety Commission.  
 
 United Nations Framework Convention on Climate Change (UNFCCC ): Panam a chaired 
the Coalition  for Rainforest Nations (CRFN) during the final stage of the negotiations on 
the Paris Agreement, which it  signed in April 2016. 
 
 Basel, Stockholm and Rotterdam Conventions : Panam a supported Decision 8 on 
chemicals  of the Forum of Ministers of Environment for Latin America and the Caribbean 
held in Cartagena , Colombia,  on 28 -31 March  2016. The Ministry of the Environment has 
already established  its focal point for the Intergovernmental Network on Chemicals and 
Waste for Latin America and the Caribbean, which was created under  the 
aforementioned Decision.  
 
 Kyoto Protocol : Panam a has registered 22 projects under the Clean Development 
Mechanism . 
 
 Montreal Protocol : Since January  1989, the Republic of Panama has been party to the 
Montreal Protocol, under which it has worked actively through the National Ozone Unit of 
the Ministry of Health (focal point) to eliminate and control substances that deplete the 
ozone layer.  
Questions from the delegation of El Salvador  
 
Provi sions on T rade in Goods  
Cumulation  
 
1.2.  Footnote 1 1: This implies that a Party can use originating inputs of the other Party 
in the production of a good as if they were their own . The final good will qualified as 
originating as long as it satisfies the require ments of Article 4.2 (Article 4.8).  
 Although the Factural Presentation mentions only  bilateral cumulation , please 
indicate whether there are  clauses that allow for extended  cumulation , given Panama's  
accession to the CACM  and the Single Free Trade Agremen t between Central America 
and Mexico.  
 
 The Agreement does not contain any clause on extended cumulation in accordance with the 
provisions set out in Article 4.8. 
 
 It should be mentioned that the Republic of Panama joined the Secretary of Economic 
Integration of Central America (SIECA) on 6 May 2013 after the relevant provisions were agreed 
upon by the Central American region  in the framework of the bilateral Free Trade Agreement 
between Central America and Mexico.  
 
Bilateral Safeguards  
 
1.3.  Paragraph 3.34 : The Parties may apply bilateral safeguards if as a result of the 
trade liberalization under the Agreement the imports of a good cause injury or a threat 
thereof to sectors in the importing Party producing a like or dir ectly competitive good . 
The measure can be applied only during a given transition period, which varies between 
2 and 17 years depending on the product1, and only one year after the Agreement has 
entered in force . The measure will consist of a suspension of  further tariff reductions 
under the Agreement or the increase of tariffs to a level that will not exceed the MFN 
applied tariff in effect at the time the action is taken or the day prior to the Agreement's 
entry into force . The maximum period of applicati on of a bilateral safeguard is 
                                                
1 The "transition period" corresponds to the tariff elimination period associated with a given 
product plus two years (Article 6.1).  WT/REG374/2  
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  three  years, including an extension of one year and the period of application of any 
provisional measure, which is shorter than the eight years under the Safeguards 
Agreement (Article  7). Moreover, the measure can be applied to the same good only 
once, which is also more stringent than under the Safeguards Agreement, which allows 
that a safeguard measure be applied twice to the same good after a non -application 
period of at least two years . Upon termination of the bilateral sa feguard, the applied 
rate shall be that established in the Parties' tariff schedules (Article 6.2).  
 Please  explain why bilateral safeguard measures – which can be applied to the 
same good only once, unlike what is established  in the Agreement on Safeguard s – are 
restricted.  
 
 It wa s considered that the bilateral safeguard  application period  (three years) plus the 
extension  period (one year) gave enough time to allow for the adjustment of  the industry  that 
might be damaged by imports of a similar or directly co mpeting product from the other P arty. 
Furthermore, for many products, the transition period is very short and , therefore,  in such cases , 
it would be difficult to apply the measure more than once.  
 
Questions  from the delegation of the European Union  
 
Provisions on T rade in Goods  
General provisions  
Customs -related procedures  
 
1.4.  Paragraph 3.39 : Reference is made to A rt. 5.5 on the administration of  risk 
management . Could the Parties give further details on the strategy/techniques/criteria 
used for identifying the high -risk shipments of goods ? Could also the Parties present 
what cooperation's plans have been adopted or are planned to be adopted for 
strengthen the risk management?  
 In the case of Panama, there is /are: 
1- A National Customs Authority risk model:  
A. A deterministic system  that allows for the establishment of legal and operati onal rules. The legal 
rules require the application of control measures specific to a particular good  through a  tariff 
heading ; the operational  rules are the result of studies and analyses of customs findings, which 
enable  certain risk factors for a good, operator or customs -related determination etc. to be 
identified . Other factors are also considered, such as origin, weigh t, the conduct of operator s, and 
origin and destination routes.  
B. Prior controls are carried out on goods through the analysis of the cargo  manifested , and the 
inspection of the cargo using non -intrusive  and physical systems, where necessary . 
C. Immediate  control s are carried out  on the basis of an analysis of customs declarations data, in 
order to establish , via the  computer system, the criteria that determine the use of the red channel  
(physical inspection ) and the orange channel (documentary inspection ). 
D. A posteriori  controls are carried out through an analysis of the transactional conduct of trade 
operators over a certain  period of time, in order to determine the need to carry out an audit in the 
enterprises concerned.  
2- Cooperation plans adopted wi th international bodies to strengthen the prior control of maritime  
and air cargo, through agreements with the United Nations Office on Drugs and Crime (UNODC) 
the World Customs Organization (WCO).  
3- Active participation in the development and implementat ion of the risk s trategy for 
Central  American countries . 
Mexico examines various elements  to comprehensively assess the conduct  of enterprises;  
this enables it to identify  atypical conduct in accordance with existing  legal and regulatory WT/REG374/2  
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  provisions on foreign trade  and, in turn, assess the risk of  unlawful acts being committed in this 
regard . These elements  include:  
(a) an analysis of accounting records ; 
(b) customs and tax consistency;  
(c) compliance with obligations;  
(d) foreign trade operation  processes and logistics ; 
(e) compliance with non -tariff rules and regulations;  
(f) installed  capacity of the enterprise ; 
(g) international certification demonstrating the validity of information on operations with 
related foreign parties ; and 
(h) relationships between sharehold ers, and legal and trade representative s. 
Furthermore , appropriate  selection methods have been implemented and non-intrusive 
inspection instruments  are being used. I nspection procedures are constantly being improved to 
speed up the process  and reduce the physical inspection of all good s entering national territory.  
The latest agreements signed  have established the commitment  to adopt or maintain risk 
management systems that simplify  the inspection of high -risk shipments.  
1.5.  Refer ence is made to Art. 5.7 on the AEO . Could the Parties give further details on 
the state of the play of the negotiations of an AEO Mutual Recognition Agreement ? When 
it is planned to be adopted?  
 Mexico and Panama have not yet discussed  the possibility of negotiating an Authorized 
Economic Operator (AEO)  Mutual Recognition Agreement (MRA) between both nations . 
Consequently, we cannot give any further detail s of progress on an MRA , or the date of its 
adoption,  until we have signed the ac tion plan that will lead to  the signing of the Agreement . 
 
Intellectual property rights  
 
1.6.  Paragraph 5.26 : Annex 15.5 contains the list of the GIs agreed by the Parties . Could 
the Parties clarify whether there is a review clause on the addition of future GIs  in the 
FTA?  
 There is no review clause in the FTA . However, the channels between the parties remain 
open for future discussions on this and other matters.  
 
Environment  
 
1.7.  Paragraph 5.33 : According to the factual presentation, the Parties recognize that it 
is inappropriate to relax or reduce the environmental protection afforded by their 
legislation to promote investment in their territories, and thus commit to ensure that its 
legislation is properly applied.  
 Could the Parties submit further information on t he actions carried out for the 
implementation of the Agreement with an environmental protection dimension ? Could 
the Parties clarify if and what type of information would they have to exchange on other 
concluded agreements?  
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  It is important to know the context of the two questions asked by the European Union as 
they do not seem to be related to paragraph 5.33 of the factual presentation, which refers to an 
obligation not to relax or reduce environmental protection , with the aim of promoting investment 
in the territories of the Parties.  
 
 Panama, as a State,  recognizes that each party has the right and responsibility to protect 
and preserve the environment . It has made a commitment to do so not only in this Free Trade 
Agreement but also in others to which it is party.  
 
 The Ministry of the Environment has provided the following list of international agreements 
and conventions, to which Panama is party . Panama, as a State, applies its legislation in the 
interest of preventing the reduction or relaxation of e nvironmental protection  and maintains  its 
commitment to applying such protection properly . 
 
 Convention on International Trade in Endangered Species of Wild Fauna and Flora 
(CITES ): The Panamanian Ministry of the Environment has been following up on the 
outcome s of the Sixteenth Session of the Conference  of the Parties (COP 16) to 
the CITES.  
 
 Convention on Biological Diversity (CBD ): After the Tenth Session of the Conference of 
the Parties (COP 10) to the CBD (Nagoya, Japan, October  2010) at which the "Nagoya 
Protocol on Access to Genetic Resources and the Fair and Equitable Sharing of Benefits 
Arising from their Utilization" was adopted, Panama became the eleventh country to sign 
the Protocol ( March  2011), the thirteenth country to ratify it (October -December  2012), 
and the second country in Latin America to ratify it . Over the past few years, our country 
has been focusing on preparations for the implementation of the Protocol.  
 
 Cartagena Protocol : Panama created a legal framework establishing the Natio nal 
Biosafety Commission (CNB) as a coordinating and advisory body to address the issue of 
living genetically modified organisms in the country (Law No. 48 of 2002) . Under this 
legal framework, three sectoral committees (agricultural, health and environmen tal) 
were established, which serve as technical committees to assist in the management of 
the National Biosafety Commission.  
 
 United Nations Framework Convention on Climate Change (UNFCCC ): Panama chaired 
the Coalition  for Rainforest Nations (CRFN) during the final stage of the negotiations on 
the Paris Agreement, which it  signed in April 2016. 
 
 Basel, Stockholm and Rotterdam Conventions : Panama supported Decision 8 on 
chemicals of the Forum of Ministers of Environment for Latin America and the Caribbean 
held in Cartagena , Colombia, on 28 -31 March  2016. The Ministry of the Environment has 
already created  its focal point for the Intergovernmental Network on Chemicals and 
Waste for Latin America and the Caribbean, which was created under  the 
aforementioned Dec ision.  
 
 Kyoto Protocol : Panama has registered 22 projects under the Clean Development 
Mechanism.  
 
 Montreal Protocol : Since January  1989, the Republic of Panama has been party to the 
Montreal Protocol, under which it has worked actively through the National  Ozone Unit of 
the Ministry of Health (focal point) to eliminate and control substances that deplete the 
ozone layer.  
Questions from the delegation of Thailand  
General provisions  
 
1.8.  Paragraph 3.2: The Parties agree to grant national treatment to each other's  goods 
in accordance with Article III of GATT 1994, except for goods listed in Annex 3.3 . For 
Mexico, the list includes fuels and second hand vehicles, while Panama lists measures 
affecting imports of lottery tickets, used motor vehicles, videos and games,  as well as 
exports of woods from its national forests . Both Parties list actions authorized by the WT/REG374/2  
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  WTO Dispute Settlement Body . They also agree to eliminate any non -tariff measure that 
prohibits or restricts their bilateral imports, except for the measure s listed in Annex 3.3, 
or as provided in Article XI of the GATT 1994 . 
Does this agreement provide for the liberalization of non -tariff measures (NTMs) at 
a higher level than what has been achieved by the WTO's agreements ? If so, please 
explain.  
 
 The Parties agree not to apply restrictions on imports and exports of goods  between the 
Parties, or any  exceptions  thereto , in accordance with Articles III and XI of the  GATT 1994, and to 
incorporate  these Articles mutatis mutandis  into the Agreement . 
 
Global safeguards  
 
1.9.  Paragraph 3.32 : The Parties retain their rights and obligations under Article XIX of 
the GATT 1994  and the Agreement on Safeguards (hereafter the Safeguards 
Agreement), which shall govern the application of global safeguards , including any 
related disputed . They do not take any additional commitments under the Agreement in 
this area, except that imports from the other Party can be excluded from the imposition 
of global safeguards  if they do not account for a substantial share of total imports nor 
contribute in a significant manner to the serious injury or threat thereof (Article 6.7).  
Are the global safeguards in this agreement more or less restrictive than the WTO 
safeguard measu res? Please explain.  
 The global safeguard measures are applied in accordance with WTO provisions (Article XIX 
of the GATT 1994 and the Agreement on Safeguards ), as indicated in Article 6.7.1. Therefore , the 
global safeguard measures in this agreement are no more and no less restrictive  than those 
established in the WTO Agreement on Safeguards.  
Bilateral safeguards  
 
1.10.   Paragraph 3.35 : The Agreement also includes provisions on investigation 
procedures (Article 6.3), provisional safeguards (Article 6.4), transparency 
(i.e. notifications and consultations) (Article 6.5) and compensation (Article 6.6), all of 
which are in general more detail ed than under the Safeguard Agreement , except for 
those on the application of provisional safeguards which closely mirror the Safeguard 
Agreement . To determine the need for a safeguard, the corresponding authority in the 
Party must carry out an investigati on, on its own initiative or following a request from 
representatives of the domestic industry, who must account for at least 25 % of the 
production of the like or directly competitive good  (Article 6.1) . Compared to the 
Safeguards Agreement, this definitio n of "domestic industry" seems less restrictive  
since under the latter, the "domestic industry" is defined as producers accounting for a 
major proportion of the total domestic production of a similar or directly competitive 
good  (Article 4) . The Agreement further describes in detail the various stages of the 
investigation, including data requests.  
a. Please elaborate on how bilateral safeguards are in general more detailed than  
safeguard measures under the WTO Safeguards Agreement.  
 Some of the Agreement's procedures for adopting bilateral safeguards are more specific 
than the safeguard measures established in the WTO Agreement on Safeguards . For example, 
specific mention is made of  the information that should be included  in applications  for the initiation 
of an investigation,  initiating resolutions , and reports containing  technical arguments on which the 
corresponding resolution  is based . 
 
 Furthermore , with regard to notifications and consultations, the Agreement establishes 
specific time -frames and the information that must be provided to the other Party when an 
investigation is initiated  or when a measure is adopted or extended . Compensation consists of 
temporarily additional tariff concessions , while the Agreement on Safeguards establishes that any 
means of  trade compensation may be granted.  
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  b. How is the definition of "domestic industry" in the bilateral safeguards less 
restrictive than that in the WTO Safeguards Agreement ? Please provide an 
example to illustrate this point.  
 The definition of "domestic indus try" in the case of bilateral safeguards is no t less restrictive 
than that in the WTO Agreement on Safeguards , as it is in fact  the same : "the domestic producers 
as a whole of the like or directly competitive products, or those whose collective output cons titutes 
a major proportion of the total domestic production of those products".  
 
Denial of benefits  
 
1.11.   Paragraph 4.8 : Prior to notification, a Party can deny the benefits of Chapter 9 to a 
service supplier of the other Party if the supplier is a company owne d or controlled by 
nationals of a non -party, which has no substantial business activities in the territory of 
the other Party . It can also deny these benefits if the supplier is a company, owned or 
controlled by nationals of the denying Party that has no s ubstantial business operations 
in the territory of the other Party (Article  9.10).24 
Footnote No. 24: the Agreement does not contain a definition for "substantial business 
activities".  
 
 Pursuant to footnote 24 which provides that this agreement does not contain a 
definition for "substantial business activities", what are the criteria for determining the 
"substantial business activities" before a Party can deny the benefits of Chapter 9 to a 
service supplier of the other Party?  
 
 This is correct . The Agree ment does not contain a definition for "substantial business 
activities" and therefore there are no  criteria for determining such activities.  
 
Movement of natural persons  
Table 4 .1 Authorized business persons by the Parties  
Traders and Investors  
 
1.12.   Traders and investors who seek to (a) carry on substantial trade in goods and 
services pri ncipally between the Parties or ( b) establish, develop, administer or advise 
on the administration of an investment to which the business person or its company has 
committed, or will commit, a significant amount of capital . 
 
 What is the  threshold for investment that would be considered as "a significant 
amount of capital"?  
 In Mexico's case,  the competent authority has not established a threshold for inve stment 
that would be considered  a significant amount of capital . However, in the case of Panama, various 
amounts of capital have been established  for the authorization of investors (person s), the 
minimum  being US $160,000.00.  
Performance requirements  
1.13.   Paragraph 4.16 : The Agreement prohibits the application of performance 
requirements in connection with investment activities of an investor of a Party or a 
non-party in its territory.29 It also prohibits the Parties from granting an advantage 
related to an investment in the ir territories of an investor of the other Party or a 
non-party conditional on certain performance requirements, unless the requirement is to 
locate production, provide a service, train or employ workers, construct or expand 
particular facilities, or carry  out research and development in their territories.  
Paragraph 4.17 : Some performance requirements are allowed in the case of 
government procurement, export promotion and external support programmes . 
Performance requirements to achieve national content and benefit domestic goods can 
also be used to determine the origin status of products.  WT/REG374/2  
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  Footnote No. 29: The performance requirements prohibited under Article 10.7 are : (a) to 
export a given level or percentage of goods or services ; (b) to achieve a given leve l or 
percentage of domestic content ; (c) to purchase, use or accord a preference to goods 
produced in its territory, or to purchase goods from persons in its territory ; (d) to relate 
in any way the volume or value of imports to the volume or value of expor ts or to the 
amount of foreign exchange inflows associated with such investment ; (e) to restrict 
sales of goods or services in its territory that such investment produces or supplies by 
relating such sales to the volume or value of its exports or foreign e xchange earnings ; 
(f) to transfer technology, a production process or other proprietary knowledge to a 
person in its territory, except in certain cases ; and (g) to supply exclusively from the 
territory of the Party the goods that such investment produces o r the services it exports.  
 
a. Please provide examples of certain cases  which would fall under the exception 
stipulated in item (f) of footnote 29 . Do they need to be listed in the 
reservations on existing and futures measures with respect to performance 
requirements?  
 To date, neither  of the Parties have had cases in which this exception was applied . However, 
if there were such a case, it would not necessarily need to be listed in the reservations on existing 
and future measures.  
 
b. According to paragraph 4.17,  some performance requirements are allowed in 
the case of government procurement, export promotion and external support 
programmes . Please clarify whether these exceptions need to be listed in the 
reservations on existing and futures measures with respect to performance 
requirements.  
 As this concerns authorized performance requirements, if there were such a case, it would 
not need to be listed in the reservations on existing and future measures.  
 
Liberalization commitments  
1.14.   Paragraph 4.20 : The liberalization of trade in services and investments follows a 
"negative list" approach, which means that provisions in Chapters 9 (Cross -border Trade 
in Services) and 10  (Investments) apply to all sectors, unless otherwise specified in the 
Parties' lists o f reservations . Commitments in financial services (Chapter 11) are also 
defined according to a negative list, except for mode 1 which is also subject to a positive 
list (Annex 11.7).  
 Paragraph 4.21 : Annexes I and II to the Agreement contain the reservations on 
existing and futures measures with respect to national and MFN treatment, market 
access, local presence, performance requirements, and senior management and board of 
directors in cross -border trade in services and investments . Annex III lis ts reservations 
for financial services on existing and future measures with respect to national and MFN 
treatment, right of establishment, cross -border trade and senior management and board 
of directors . Reservations with respect to national and MFN treatm ent in Annexes I and 
II also apply to financial services, to the extent that the measure or activity in the 
reservation is covered by Chapter 11 (Article 11.11) . 
 Please elaborate more about the reservations with respect to national and MFN 
treatment in An nexes I and II which also apply to financial services , to the extent that 
the measure or activity in the reservation is covered by Chapter 11 (Article 11.11), given 
that Annex III already covers existing and future measures with respect to national and 
MFN treatment on the reservation lists for financial services.  
 
 The Chapter on financial services applies to the measures adopted or maintained by a Party 
in relation to a financial institution of the other Party, an investor of the other Party or  an 
investment by this investor in a financial institution in the territory of the Party, and cross -border 
trade in financial services.  
 WT/REG374/2  
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   The Chapter on cross -border trade in  services applies to the provision of services, including 
financial services . In this regard, there may be some financial services that are not regulated by a 
financial authority , and which are therefore  not covered by the scope of the Chapter on financial 
services . They are, however, covered by the Chapter on cross -border trade in  services.  
 
 Consequently , a non -conforming measure (reserva tion) established by a P arty in its list in 
Annexes I or II with regard to Articles 9.3 (most -favoured -nation treatment), 9.5 ( national 
treatment), 10.3 (national treatment) or 10.4 (most -favoured -nation treatment), must be treated 
as a non -conforming measure not subject to Article 11.3 or Article 11.4, as appropriate, to the 
extent that the measure, sector, subsector or activity established in the non -conforming measure 
is covered by the Chapter o n financial services.  
 
Financial services  
1.15.   Paragraph 4.36 : Mexico's commitments in financial services are broader than in 
the GATS but remain very limited as a number of reservations, largely reflecting those 
under the GATS, apply . For instance, in insurance and insurance related services, Mexico 
took some commitments for non -life insurance services but like in the GATS none were 
made for modes 1 -2 for life insurance services and related auxiliary services . In non -life 
insurance services, in particul ar transportation insurances, Mexico took commitments in 
modes 1 and 2, which mirror those under the WTO Understanding on Commitments on 
financial services, but maintains a broad reservation that prohibits foreign companies 
from selling insurances to perso ns or companies located in Mexico or subject to Mexican 
legislation, unless they cannot be purchased locally . This includes private insurance for 
Mexican nationals and companies, insurance for Mexican vessels or aircraft, credit 
insurance, as well as any i nsurance intended to cover a risk in Mexico . Subject to 
authorization, Mexico may allow foreign companies to sell international or travel 
insurance in its territory . The provision of auxiliary services for the activities covered by 
the reservation is also prohibited . Mexico also prohibits equity participation by foreign 
financial entities in insurance or bonding agencies, and mutual insurance companies . 
Foreign individuals may participate in mutual insurance companies as long as they do so 
individually and not as part of a legal entity . 
 Regarding the underlined sentences, what are the reasons behind the differential 
treatment in terms of equity participation in insurance companies between foreign 
financial entities and foreign individuals?  
 
Concerning the u nderlined sentences : 
a. The last paragraph under subsection 2 of Mexico's  non-conforming measures  contained 
in Section A of Annex III allows for financial institutions of the other Party to hold at 
least 51 % of the shares representing the capital of insurance institutions, provided that 
they are " subsidiaries ". 
b. Section 8 of Mexico's  non-conforming measures  contained in Section A of Annex III does 
indeed establish that groups of foreign natural or legal  person s, regardless  of their form, 
may not par ticipate in mutual insurance companies, whether directly or through an 
intermediary . 
The reason for this is that such companies are organized and function in such a way that 
their insurance operations do not make any  profit  for the company or its  associate s, as they only 
have to charge  the amount necessary to cover the ir general management costs and  create  the 
technical reserves needed to meet their commitments to insured parties.  
 
It should, however, be noted  that foreign legal persons are allowed to parti cipate in the 
capital of insurance institutions . 
 
Health related and social services  
1.16.   Paragraph 4.39: Mexico did not take any further commitment in health related and 
social services, which are subject under the Agreement to a broad reservation allowing 
the application of any measure affecting investment and cross -border trade in social WT/REG374/2  
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  services such as correctional services, income security and insurance, social security, 
social welfare, health (public and private) childcare services, as well as measures fo r 
providing law enforcement . Under the GATS, commitments in health related and social 
services are limited to certain activities and modes.  
Health related and social services  
1.17.   Paragraph 4.60 : Panama made no commitments in health related and social 
services,  as they are subject to a broad reservation on social services . The reservation 
allows Panama to adopt any measure affecting investment and cross -border trade in 
social services such as correctional services, income security and insurance, social 
security,  social welfare, health (public and private) childcare services, as well as 
measures for providing law enforcement.  
 With regard to health related and social services, does the Agreement provide for 
GATS -minus commitments ? Please advise.  
 
 No; since  the commitments  undertaken in the Mexico -Panama FTA only cover health 
services, they are reflected in reservation 8 of Annex II of the Agreement , which specifies  that this 
reservation applies to health services only insofar as  they are social services established in the 
public  interest . Any health service that is not established or maintained for reasons of public 
interest, such as private health services, will be  included in and covered by the commitments  
in Annex I.  
 
_________ _