WORLD TRADE  
ORGANIZATION  WT/REG268/M/1 
14 December 2010 
 (10-6699) 
Committee on Regional Trade Agreements 
Fifty-ninth Session  
 
 
 
CONSIDERATION OF THE FREE TRADE AGREEMENT BETWEEN  
PANAMA AND THE SEPARATE CUSTOMS TERRITORY OF TAIWAN,  
PENGHU, KINMEN AND MATSU, GOODS AND SERVICES 
 
Note on the Meeting of 29 and 30 November 2010  
 
Chairman:  Mr A. Suescum (Panama) 
 
 
1. The meeting was convened in document WT O/AIR/3643/Rev.1, dated 19 November 2010. 
2. Under Agenda Item D.V of its 59th Session, the Committee on Regional Trade Agreements 
(hereinafter CRTA or the Committee) considered the Free Trade Agreement between Panama and the 
Separate Customs Territory of Taiwan, Penghu, Ki nmen and Matsu (hereinafter the 'Agreement'), 
goods and services.  
3. The Chairman  said that the Agreement had entered in to force on 1 January 2004 and had been 
notified by the Parties to the WTO on 28 July 2009 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 (document  WT/REG268/N/1) and under GATS Article V:7(a) as an Agreement 
providing for the liberalization of trade in services within the meaning of Article V of the GATS (document S/C/N/501).  The text of the Agreement w as available, together with its Annexes, on the 
Parties' official websites. The Factual Presentation on the goods and services aspects 
(document WT/REG268/1, dated 21 September 2010) had been prepared by the Secretariat on its own 
responsibility in full consultation with the Parti es, in accordance with paragraph 7(b) of the 
Transparency Mechanism (TM) fo r Regional Trade Agreements (doc ument WT/L/671).  In addition, 
written questions and replies on the Agreement had been recently distributed in document
 
WT/REG268/2, dated 24 November 2010.  He pr oposed to organize the consideration of the 
Agreement by first asking the Parties and then ot her Members for general comments.  The Committee 
would then turn to the specifics of the Agreement using the Factual Presentation to guide the debate.  
He proposed to go through the Factual Presentation sec tion by section, and then look at the questions 
and replies document.  
4. The representative of Chinese Taipei  thanked the Secretariat for the Factual Presentation and 
Panama for the joint work in the preparation for consideration by the Committee.  He also thanked 
Japan, the United States and the Euro pean Union for their written questions, to which the Parties had 
duly responded.  The Parties had already enjoyed a close and growing bilateral trade relationship for 
several years before they had started to consider  a free trade agreement.  Beginning in October 2002, 
there had been four rounds of negotiations, with th e two Parties finally putting their signatures to the 
Agreement on 21 August 2003.  The Agreement had offici ally come into effect on 1 January 2004.  In 
April 2007, the first meeting of the Administrativ e Commission had been held, and the Parties had 
signed three decisions and achieved many positive resu lts.  As a reciprocal and mutually beneficial 
Agreement, it proposed to eliminate or reduce tariffs and other restrictive trade barriers with respect to 
substantially all the trade between the Parties.  It  also aimed to make full and complementary use of WT/REG268/M/1 
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  both economies and to strengthen trade, investment  and technological cooperation so as to enhance 
business opportunities for both sides, thereby creating more employment opportunities and improving the welfare of their respective peoples.  At the same time, the Agreement helped strengthen the 
competitiveness of both Parties, so that they could each more effectively respond to the challenges of 
globalization and liberalization.  The Agreement cons isted of 21 chapters covering:  trade in goods;  
technical barriers to trade;  investment;  trade in services;  competition policy;  intellectual property 
rights;  dispute settlement;  transparency;  and other institutional issues.  As indicated in its preamble, 
the Agreement was built on the rights and obligations  of the Marrakesh Agreement establishing the 
WTO.  Its purposes were to:  create greater business opportunities for goods and services;  provide the foundation for promoting investment;  enhance comp etitiveness;  promote intellectual property rights 
on trade in goods and services;  strengthen trade rela tions between both parties;  promote sustainable 
development;  etc. 
5. In terms of liberalization of tr ade in goods, immediately after th e Agreement's entry into force 
on 1 January 2004, Chinese Taipei had offered Panama zero tariffs on a total of 6,187 items 
(accounting for 71% of total tariff lines).  Pana ma had offered Chinese Taipei zero tariffs on 
4,181 items (accounting for 48% of total tariff lines) .  By the end of implementation in 2013, Chinese 
Taipei would offer Panama duty-free access for 97 % of products.  Panama  would offer 95% of 
Chinese Taipei's products duty-free access to its market .  In his delegation's view, this demonstrated 
the extremely high commitment of the Parties to th e liberalization of trade in goods.  In terms of 
liberalization of trade in services, the Agreement adopt ed a "negative list" appr oach.  In other words, 
it was only the few service sectors that were listed by the Parties on the "negative list" that had no 
access or conditional access, while thei r markets were open to all other services.  He said that this was 
a further demonstration of the high commitment of th e Parties to trade liberalization.  As far as the 
effectiveness of the Agreement was concerned, indications of its positive effect on trade and 
investment were as follows:  with respect to the va lue of bilateral trade, a comparison could be made 
between the seven years before (1997-2003) and the seven years after (2004-2010) the Agreement's 
entry into force.  According to Chinese Taipei 's customs statistics, from 1997 to 2003, the annual 
average value of exports to Panama was US$187.5 million, and the annual average value of imports 
from Panama was US$3.6 million.  From 2004 to 2010,  the annual average valu e of Chinese Taipei's 
exports to Panama was US$212 million, and the a nnual average value of imports from Panama was 
US$38 million.  In other words, Chinese Taipei's e xports to Panama had shown some steady growth, 
while imports from Panama had shown a remarkable in crease, about tenfold.  With regard to bilateral 
investment, according to Chinese Taipei Investment  Commission statistics, since the Agreement had 
come into effect, investment in Panama had increased by US$236.2 million, focusing on wholesale 
and retail sales, transportation and storage, support services, and trade and insurance.  With this 
increase, Chinese Taipei's investment in Panama cumu latively had reached a total of US$1.28 billion.  
On the other hand, since the Agreement had come into effect, Panama had increased investment in 
Chinese Taipei by US$140.3 million, focusing on fi nance and insurance, wholesale and retail sales, 
transportation and storage, and medical goods ma nufacturing.  With this increase, Panama’s 
cumulative total of investment in Chinese Taipei had reached US$832.6 million.  Therefore, he said it 
was true that the implementation of the Agreemen t had mutually enhanced the value of bilateral 
investment.  Given time, and a rela tively more stable global financial and trading environment than in 
recent years, Chinese Taipei was fully confident th at the Agreement would develop its full potential 
and make a substantial contribution to bila teral trade, as well as to global trade. 
6. The representative of Panama
 thanked the Secretariat for the Factual Presentation and 
Members for their interest and questions and for their participation in the Meeting.  He recognized the 
work done in capital by the Parties' national auth orities responsible for the administration of the 
Agreement and of the WTO Agreements, as well as de legations in Geneva for the efforts made in 
coordinating the joint work for the presentation of the Agreement.  The Agreement had been signed 
on 21 August 2003 and had entered into force on 1 Ja nuary 2004.  It widene d and improved bilateral 
trade relations, establishing the basis for the openi ng up trade between the Parties through extensive  WT/REG268/M/1 
 Page 3 
 
 
  coverage including goods and ser vices.  For Panama, the Agreemen t represented the possibility to 
trade with a partner that had a market of more than  23 million people;  Chinese Taipei represented an 
attractive market for the promotion of Panama's exports.  Exports of non-tr aditional products, derived 
from the application of innovative technology, info rmation and capital, had benefited the most.  For 
Chinese Taipei, this was also an excellent opport unity to access Panama's market, under preferential 
conditions compared to other trading partners, si nce it was its most important market in Central 
America.  The supply of high technology products (c omputers, electrical machinery and equipment, 
among others) at very accessible prices for Panamani an consumers had raised the level of technology 
of Panama's economy and be nefited both the public and private sectors.   
7. With the signature of the Agreement, Panama had obtained immediate duty-free access for 
40.4% of its agricultural products, which would reach , within ten years, around 85%.  In comparison, 
Chinese Taipei had obtained immediate duty-free access for almost 44.2% of its agricultural products.  
Both Parties had agreed to protect certain agri cultural products, taking into account their respective 
sensitivities.  Tariff rate quotas (TRQs) had been est ablished by Chinese Taipei on products such as:  
bananas (1,000 metric tonnes (MT));  pineapples (2,000 MT);  pork belly (1,050 MT);  liquid milk 
(3,000 MT);  poultry offal (nuggets and similar) (1 ,200 MT);  sugar in cubes and other refined sugar 
(21,000 MT);  and other types of fish (sardine, herring, mackerel) (800 MT).  In 2004, trade flows 
amounted to US$33 million, of which 65% corres ponded to Chinese Taipei's exports and 34% to 
Panama's exports.  In 2009, this was valued at  US$62 million, of which 61% corresponded to Chinese 
Taipei's exports and 39% to Panama's exports.  Th ese figures revealed an increase in bilateral trade of 
17.7% per year, encouraged particularly by an in crease of 22%, on average, of Panama's exports and 
of 15%, on average, by Chinese Taipei's exports.  In th e year of entry into force of the Agreement, in 
2004, the main exports from Chinese Taipei to Panama were concentrated in non-agricultural 
products, including:  PET (polyethylene terephtalate) , except in liquid and paste;  LCD and LED sign 
boards;  braid loom textiles, of synthetic fibres;  laminated steel or iron products, greater than, or 
equal to, 600 mm, plated or coated with chromatic oxide or chrome;  other c onstructions and cast iron 
and steel parts, except for prefabricated buildings of subheading 94.06;  sheets, bars, profiles, tubes 
and others, of cast iron and steel, prepared for constr uction;  illuminated signs;  new rubber tyres, used 
both in passenger cars (including "family break" or "station wagon") and racing cars;  landline and 
digital telecommunication appliances;  among others .  The main products exported from Panama to 
Chinese Taipei included:  bovine meat;  fish and crustaceans;  tropical fruit juices;  and cast iron waste.  On non-agricultural products, Panama ha d immediately eliminated duties on 50.3% of 
products, and Chinese Taipei on approximately 76 .6% of products, which had resulted in an 
asymmetry in favour of Panama.  He remarked that  such an asymmetry was maintained across all 
products subject to the tariff liberalization progra mme, since Panama had re duced its tariffs more 
slowly.  Also, for fiscal reasons, Panama ha d excluded cars from liberalization.  In the 
non-agricultural sector, in addition to the asymmetr ic approach, Panama had excluded 107 lines as a 
result of consultations with the industrial sector, granting protection for its most sensitive products.  
The Agreement incorporated basi c disciplines on services, such as national treatment, MFN treatment 
and local presence.  Nevertheless, the Parties coul d maintain reservations to these principles, which 
were listed in the annexes on non-conforming measur es attached to the Agreement.  On investment, 
the Agreement's objective was to ensu re transparency and legal certainty for investors of the Parties.  
In the event that any of the Agreement's provisions  was violated, national investors had access to an 
investor-State dispute settlement mechanism under an  arbitral procedure.  The Agreement further 
included horizontal provisions, such as a dispute se ttlement mechanism for all disputes relating to the 
application of measures incompatible with the prop er functioning of the Agreement and the Parties' 
obligations, and transparency rules, which ensure d the publication and immediate application of all 
rules, regulations and administrative procedures of general application relati ng to any matter covered 
under the Agreement.  
 WT/REG268/M/1 
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  8. The representative of the United States
 appreciated the work of the Secretariat and the Parties 
and thanked the Parties for their detailed present ations that had helpfully added to Members' 
understanding of the specifics of the Agreement.   She said that in pages 13-14 of the Factual 
Presentation, paragraphs 21 and 22, at the end of  the implementation period, 95.09% of Panama's 
tariffs would be duty-free to imports from Chines e Taipei, corresponding to 98.07% of imports by 
value.  Chinese Taipei had eliminated duties on 97 .4% of tariffs, corresponding to 99.6% of Panama's 
imports by value.  Such high percentages were co mmendable;  however, as noted in Tables AI.1 and 
AI.2 in Annex I of the Factual Presentation, both Pa nama and Chinese Taipei had eliminated tariffs on 
very high percentages of non-agricultural goods – 98.39% and 99.3%, respectively.  Panama, in 
particular, had undertaken significantly less tariff e limination in agricultural goods (only 77.36%).  
Furthermore, as noted in Annex Table AI.4, sever al of Panama's top 25 exports had not gained 
improved access into Chinese Taipei.  She said that in  Table V.2 of the Factual Presentation, Chinese 
Taipei's agreement with China, which had come into  force, was not listed and asked Chinese Taipei to 
indicate when it intended to notify it to the WTO.  With respect to non-notified RTAs, she said that, while she appreciated the Parties' intention to noti fy them in "the near future", according to the 
response provided in the Questions and Replies doc ument, she underscored Members' obligations to 
notify such RTAs upon entry into force.  She also  expressed her delegation's concern that non-notified 
RTAs represented a blind spot in the understanding of  RTAs and their implications for the multilateral 
trading system. 
9. The representative of European Union
 thanked the Parties for their written replies.  As regards 
the notification issue, she urged the Parties to speed  up their efforts to notify those agreements they 
were working on, so as to have them notified as soon as possible.  She asked Chinese Taipei to 
indicate how the notification of the Economic Cooperation Framework Agreement (ECFA) with China was proceeding and, if possible, to share so me details on when they excepted to notify it.  
10. The representative of Chinese Taipei
 thanked the delegations of the United States and the 
European Union for their questions.  With respect to the ECFA, he needed further instructions from 
capital.  However, as a preliminary response, he said that there were internal procedures to follow and 
as soon as these had been completed the agreement would be notified to the WTO.  Regarding the 
agreement with Guatemala, the Parties were consulti ng on the preparation of a joint notification, and 
this agreement would be notified to the WT O as soon as all the preparation work was done. 
11. The representative of Panama  said that, with respect to non-notified RTAs, his delegation had 
started to work on this issue, in particular in  relation to the agreements with Nicaragua and 
Guatemala.  The agreement between Panama and Central America was a framework agreement, under 
which there were five bilateral protocols.  The firs t bilateral protocol with El Salvador had entered 
into force some time ago and its consideration had been carried out in the CRTA.  In 2009, the other 
bilateral protocols had come into force and there ha d been informal consultations with the Secretariat 
on the possibility of considering all these protocols t ogether;  however, it had been decided to carry 
out a single consideration process for each bilatera l protocol.  This explained why these agreements 
had not been notified so far, and the parties were ready to notify them soon.  With respect to the 
agreement with Colombia, the parties would di scuss the possible notification and he reminded 
Members that Panama was currently renegotiating its bilateral trade relationship with Colombia.  The 
agreement with Mexico was a very limited one, which did not contain provisions on trade 
liberalization but on other areas.  The agreement with the Dominican Republic was a partial scope 
agreement covering a list of products subject to tari ff preferences and would be notified to the WTO.  
12. The representative of the United States  thanked the delegation of Panama for the updates on  
each of the non-notified RTAs.  She reminded the Pa rties that, a few years ago, the Secretariat had 
developed a very easy to fill out notification form and that the obligation of notification fell on each 
individual member of the agreement, without the need to negotiate with the other member.  She 
encouraged the Parties to notify all non-notif ied RTAs as soon as possible, including those  WT/REG268/M/1 
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  agreements that did not contain much informati on since for them the notification process would be 
even easier. 
13. The Chairman  said that the consideration of the goods and services aspects of the Free Trade 
Agreement between Panama and the Separate Cu stoms Territory of Taiw an, Penghu, Kinmen and 
Matsu had allowed the Committee to clarify a number of questions and oral discussion of the 
Agreement could be concluded in accordance with pa ragraph 11 of the Transparency Mechanism.  If 
any delegations wished to ask follow-up questions they were invited to forward submissions in 
writing to the Secretariat by 7 December 2010  and the Parties were asked to submit replies  in writing 
by no later than 21 December 2010.  In accord ance 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. 
14. The Committee took note  of the comments made. 
__________