G/SCM/N/253/PAN  
G/SCM/N/260/PAN  
2 July 2013  
(13-3428)  Page: 1/6  
Committee on Subsidies and  
Countervailing Measures  Original: Spanish  
 
  SUBSIDIES 
NEW AND FULL NOTIFICATION PURSUANT TO ARTICLE XVI:1 
OF THE GATT 1994 AND ARTICLE 25 OF THE AGREEMENT 
ON SUBSIDIES AND COUNTERVAILING MEASURES 
TRANSPARENCY NOTIFICATION ON THE EXTENSIONS UNDER SCM ARTICLE 27.4 OF THE 
TRANSITION PERIOD FOR THE ELIMINATIO N OF EXPORT SUBSIDIES PURSUANT TO 
THE PROCEDURES  CONTAINED IN THE GENERAL COUNCIL 
DECISION IN DOCUMENT WT/L/691 
PANAMA  
 The following communication, dated 28 June 2013, is being circulated at the request of the 
delegation of Panama. 
 
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 The Republic of Panama hereby submits the following new and full notification 
pursuant to Article XVI:1 of the GATT 1994 and Article 25 of the Agreement on Subsidies and Countervailing Measures. 
 
 This notification is also being submitted in order to provide addition al transparency in the 
context of the extensions under Article 27.4 of  the Agreement on Subsidies and Countervailing 
Measures granted pursuant to the procedures contained in the General Council Decision 
in document WT/L/691, without prejudice to the fact that these procedures require that this notification be submitted in 2013. 
 
 Panama confirms that its programmes subjec t to extension comply with the standstill, 
favourability and transparency requirements under the procedures for extensions (G/SCM/39) and the General Council Decision (WT/L/691) in that neither programme has been modified 
so as to make it more favourable than it was at 1 September 2001. G/SCM/N/253/PAN • G/SCM/N/260/PAN 
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  - Programmes 
 
I. EXPORT PROCESSING ZONES 
1. Description of the programme 
See paragraph II.1 of document G/SCM/N/95/PAN. 
2. Period of notification 
2012. 
3. Objective of the programme 
See paragraph II.3 of document G/SCM/N/95/PAN. 4. Background and authority 
See paragraph B.4 of document G/SCM/N/71/PAN. 
5. Form of the subsidy 
See paragraph II.5 of document G/SCM/N/95/PAN. 6. Beneficiaries and mechanism 
See paragraph II.6 of document G/SCM/N/95/PAN and paragraph I.6 of document 
G/SCM/N/160/PAN. 
7. Estimated amount of the subsidy 
No estimate available. However, paragraph I.9 provides updated information, which represents 
an attempt to establish an order of  magnitude under the EPZ programme. 
8. Duration of the subsidy 
Not specified in Law No. 25 of 1992, which has, however, been repealed by Law No. 32 of 2011. 
9. Statistical data permitting an assessmen t of the trade effects of the subsidy 
Table No. 1. PANAMA: VALUE OF EXPORTS 
FROM FREE ZONES 
2010-2012 
YEAR No. of enterprises F.O.B. VALUE  
(US$ million) 
2010 89 93.3 
2011 94 69.9 
2012 99 298.2 
Source:  Vice-Ministry of Foreign Trade, Ministry of Trade and Industry. G/SCM/N/253/PAN • G/SCM/N/260/PAN 
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Table No. 2. PANAMA: EXISTING FREE ZONES AND  
NUMBER OF ENTERPRISES REGISTERED  
AS AT DECEMBER 2012 
No. FREE ZONES  No. of Enterprises  
Registered  
1 Panaexport, Ojo de Agua 25 
2 Proinexport 2 
3 Marpesca, S.A. 33 4 Rail Road Export Processing Zone 1 
5 Zona Procesadora de Davis 6 
6 Colón Maritime Investor 6 7 Eurofusión 1 
8 Isla Margarita Development 8 
9 Espanam Iberoamérica 0 
10 Zona Procesadora de Albrook 16 11 Zona Procesadora de Chilibre 0 
12 Proexport 0 
13 Export Pacific Panamá, S.A. 0 14 Hewlett Packard Global Services Panamá, S.A. 
 
Most of the enterprises located in Free Zones 
are engaged in international trade services 
activities. 1 
   
TOTAL  99 
Source : Vice-Ministry of Foreign Trade, Ministry of Trade and Industry. 
 
10. Adoption of internal measures 
(a) Panama has taken the following steps with a view to eliminating the export subsidies under 
the programme: 
- Following the consultations planned with the relevant sectors, in December 2010 
the Institutional Technical Commission of the Ministry of Trade and Industry completed 
the preparation of a preliminary draft law for the development of Free Zones, aimed at strengthening the domestic market and creating a secure and transparent environment in order to raise producer and investor confidence and reduce unemployment levels, while 
meeting Panama's obligations in respect of the time-limits established for bringing into 
conformity programmes comprising export subsidies that are inconsistent with multilateral trade rules. 
- In January 2011, the draft law was approved by the Vice-Ministers of Foreign Trade 
and International Trade Negotiations, with the endorsement of the Minister of Trade 
and Industry, and was referred to the Cabinet Council for subsequent submission 
to the National Assembly of Deputies. 
- In April 2011, the draft law was approved by  the Executive as Law No. 32 of 5 April 2011 
and published in Electronic Official Journal No. 26757-B. 
- The changes introduced in Law No. 32 of 2011, which repeals  Law No. 25 
of 30 November 1992, are consistent with the provisions of the World Trade Organization 
(WTO). 
II. OFFICIAL INDUSTRY REGISTER  
1. Description of the subsidy 
See paragraph III.1 of document G/SCM/N/95/PAN. G/SCM/N/253/PAN • G/SCM/N/260/PAN 
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  2. Period of notification 
2012. 3. Objective of the programme 
See paragraph III.3 of document G/SCM/N/95/PAN. 
4. Background and authority 
See paragraph C.4 of document G/SCM/N/71/PAN. See also Resolution No. 32 
of 31 December 2002 of the Ministry of Trade and Industry, notified in Annex 1 to 
document G/SCM/N/95/PAN and Law No. 11 of 4 January 2008. 
5. Form of the subsidy 
See paragraph III.5 of document G/SCM/N/95/PAN. 6. Beneficiaries and mechanism 
See paragraph III.6 of document G/SCM/N/95/PAN. In addition, the following table indicates the 
number of beneficiary enterprises in  the Official Industry Register, according to type of activity. 
Table No. 3. OFFICIAL INDUSTRY REGISTER: NUMBER OF ENTERPRISES 
ACCORDING TO TYPE OF ACTIVITY/PRODUCT AS AT JUNE 2013 
No. ACTIVITY/PRODUCT  No. OF ENTERPRISES 
 TOTAL 90 
1 Animal feed 2 
2 Sugar cane 4 
3 Manufacture of clothing 3 4 Poultry breeding 2 
5 Milk by-products 3 
6 Detergents and other chemical products 6 
7 Manufacture of footwear 0 8 Brewing of beer 1 
9 Manufacture of mattresses 0 
10 Manufacture of brooms and mops 0 11 Manufacture of furniture 2 
12 Wood and wood articles 0 
13 Articles of aluminium and other metals 5 14 Cement articles 1 
15 Paper and paperboard and articles thereof 11 
16 Coffee processing 4 
17 Processing of hides and skins 2 18 Food products 20 
19 Marine products 10 
20 Pharmaceuticals 1 
21 Plastic products 8 
22 Printing  2 
23 Other products 3 
Note: Only covers enterprises listed in the Official  Industry Register as ex porting all or part of 
their production. 
Source: Directorate-General of Industry of the Ministry of Trade and Industry. G/SCM/N/253/PAN • G/SCM/N/260/PAN 
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  7. Estimated amount of the subsidy 
Table No. 4. VALUE OF TAX INCENTIVES GRANTED UNDER  
THE OFFICIAL INDUSTRY REGISTER 2010-2012 
(US$ million) 
TYPE OF BENEFIT YEAR 
2010 2011 2012 
Import tax exemption or rebate 34.3  33.3 45.3 
Income tax exemption or re bate for rein vestment 11.4  16.5 3.0 
Other incentives* 5.3 5.5 6.0 
Total 51.0 55.3 54.3  
* Exemption from income tax only. 
Source: IT Coordination Unit, Directorate-General of Revenue, Ministry of the Economy and Finance. 
Commercial Consular Directorate of the Office of  the Auditor-General of the Republic of Panama. 
8. Duration of the subsidy 
See paragraph III.8 of document G/SCM/N/95/PAN. 9. Statistical data permitting an assessmen t of the trade effects of the subsidy 
No statistical information is available to assess the trade effects of the programme. 
 10. Adoption of internal measures 
The following steps have been taken with a view to eliminating the export subsidies under 
the programme: 
Adoption of Law No. 11 of 4 January 2008: (a) Law No. 3 of 1986, which regulated the programme and granted the tax benefits deemed 
to constitute export subsidies, was repealed pursuant to Law No. 28 of 1995. The benefits 
granted under the former Law will continue to exist only for the rest of the period during which the registration or contract, as applicable, is effective. Programme benefits have been 
extended and remain in effect under the extension granted by the WTO. 
(b) Enterprises which benefited under the programme may only continue to benefit upon 
request. The request must be submitted prior to  the expiry of the respective registration 
and the extension may only be granted up to, but not beyond, 31 December 2015. 
(c) The Republic of Panama enacted Law No. 76 of 2009 on the promotion and development 
of industry, regulated by Executive Decree of  15 January 2010, with a view to encouraging 
the growth and sustainable development of Panamanian industry through the granting 
of benefits aimed at promoting investment and improving the competitiveness 
of domestic production. 
The same Law promotes investment in activities such as human resource training, 
while encouraging research and development in respect of new products or processes 
and promoting the implementation of quality systems, the generation of employment, the 
improvement of management systems, quality assurance, and environmental conservation. 
 
It also provides for a system of incentives, through the issuing of an industrial promotion 
certificate (CFI) which is non-transferable and valid for eight years. 
 G/SCM/N/253/PAN • G/SCM/N/260/PAN 
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  When applying for a CFI, an enterprise must pr ovide copies of its payroll to prove that new 
jobs have been generated. Enterprises estab lished following the entry into force of the 
present Law may apply for a CFI two years after the start of their operations. Enterprises benefiting from the Official Industry Register programme may not avail themselves of the 
present Law until their registration or the respective extension expires. 
 
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