WORLD TRADE  
ORGANIZATION  WT/REG268/2 
24 November 2010 
 
 (10-6315) 
Committee on Regional Trade Agreements Original:   English 
 
 
 
FREE TRADE AGREEMENT BETWEEN PANAMA AND THE SEPARATE CUSTOMS 
TERRITORY OF TAIWAN, PENGHU, KINMEN AND MATSU  
 
Questions and Replies  
  
 The following communication, dated 18 November 2010, is being circulated at the request of 
the delegations of Panama and the Separate Cust oms Territory of Taiwan, Penghu, Kinmen and Matsu 
(hereinafter Chinese Taipei). 
 
 This document reproduces the questions addressed to the Parties and the responses submitted.  
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 Questions from the Delegation of the European Union
 
 
Sanitary and phytosanitary measures  
 1. According to paragraph 49 of the Factua l Presentation, the assessment of risk and 
determination of the appropriate level of SPS prot ection is to be based on guidelines established 
by relevant international organizations.  
(a) Could the Parties elaborate how they use the guidelines established by relevant 
international organizations, and whether they would be applying these 
guidelines in a manner that does not discriminate against other trading partners?   
 It is assumed that those measures based on international standers, guidelines or 
recommendations stipulated by the three sister-organ izations are compatible with the SPS Agreement. 
The Party that takes measures based  on these international regulations may be confident that they are 
compliant with the SPS Agreement.  However, Me mbers clearly have the right to raise question 
regarding any sanitary or phytosanitary measure, in pa rticularly when the measure is considered to be 
declared on an international norm which is badl y founded.  These measures are applied in a manner 
that does not discriminate against other trading partners . 
 
(b) Could the Parties confirm whether these guidelines are only applied in the 
context of this FTA, or whether they a re generally applied with respect to all 
trade? If the former, please explain the rationale.  
 These guidelines are applied in general to all co mmerce.  The Parties have the right to adopt 
sanitary and phytosanitary measures in order to reach the level of health protection, which they have 
established.  On the condition that  their application is subject to the necessary protection of life and 
health, they are based on scientific principles and can not be maintained without sufficient scientific WT/REG268/2 
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  evidence (except for urgent or provisional measur es).  These measures do not unjustly discriminate 
against national or foreign origins. 
 
2. In paragraph 50, the Factual Presentation not es that the Parties shall recognize pest- or 
disease-free areas of low pest of disease prevalence.  
(a) Would this "area" refer to the whole territo ry of the Party or only specific parts 
of it? If the latter, could the Parties explain how such areas are defined?  
 The concept of "area" could refer to the entire terr itory of one Party or a part of it.  In this case, 
it will be determined by international guidelines and recommendations, in accordance with the 
scientific evidence, taking into consideration the geographic situation, the ecosystem, the 
epidemiological monitor and the efficiency of the sanitary or phytosaniary control in this zone. 
 
(b) Could the Parties confirm whether they would automatically accept disease-free 
status as defined by relevant international organisations?  If not, why?  
 According to the document G/SPS/48, there is no obligation for WTO Members to accept 
automatically the disease-free areas and areas of low pest or disease prevalence status as defined by 
the relevant international organi zation.  Under the FTA one Part y will consider and review the 
application for recognition submitted by the other Party.  
 
 The Party interested in obtaining disease-fre e recognition of a certain disease should present 
its application and provide corresponding scientific and technical information according to the other 
Party. 
  The Party receiving the application may conduct verification of inspection, evidence and 
other procedures. If the case is not accepted, th e Party should provide a written explanation of 
technical basis for its decision. 
 
 The Parties shall initiate consultations in or der to achieve agreement on specific requirements 
regarding disease-free recognition.  Given the lack of  international standards for the recognition of 
areas of low pest or disease preval ence, the Parties agree that the recognition of such areas shall be 
pending until the establishment of the international standards. 
 
3. As stated in paragraph 51, the Agreement sets out maximum inspection periods of 
100 days.   
 Could the Parties explain the reasons fo r not having set timelines for reviewing 
documents and conducting risk assessments?  
 
 According to the SPS Agreement as well as the re levant international standards, guideline and 
recommendation of OIE and IPPC, no timelines are set for reviewing documents or for the process of 
risk assessment. The Parties are committed to that those procedures begin and finish without illegal 
delays, and that imported products are no less fa vorable than those similar national products. 
 Relationship with other agreements concluded by the Parties
   
 
4. In Table V.2, we can see that there are several agreements concluded by the Parties 
which have not been yet notified to WTO.  
(a) Could Panama confirm when it plans to notify its Agreement with Nicaragua, 
Guatemala, Colombia, Dominican Republic and Mexico?  WT/REG268/2 
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   The Republic of Panama plans to notify these pending agreements in the near future.   
 
(b) Could Chinese Taipei indicate when it  plans to notify its agreement with 
Guatemala?  
 The Separate Customs Territory of Taiwan, Penghu, Kinmen and Matsu and the Republic of 
Guatemala are preparing to notify th eir FTAs in the near future.  
 
Government procurement  
 
5. As confirmed in paragraph 145, there are no  government procurement provisions in the 
Agreement.  Could the Parties explain the reasons  for not having included such provisions in 
this Agreement?  
 It is not the Parties' interest to include gove rnment procurement provisions in the Agreement.  
 
Intellectual property rights    
 
6. In paragraph 147, it is noted that the "holder of copyright and related rights shall not 
hinder free trade of legitimate products in a Party, once the relevant products are legally 
introduced into that Party, by the right or license holder or by any other authorized third 
person." 
 Could the Parties clarify whether this relates to a sort of international exhaustion of 
rights but only limited to copyrights and related rights?  
 Both Parties confirm that Paragraph 147 is ai med at products that have acquired the copyright 
owner's permission to be legally introduced into a Pa rty, and are allowed to be sold within that Party 
only.  Therefore, this paragraph differs from the principle of international exhaustion and is only 
applicable to copyright issues.  
 
 Furthermore, the distribution exhaustion of the Copyright Act of the Separate Customs Territory of Taiwan, Penghu, Kinmen and Matsu a dopts the principle of national exhaustion, which 
means that a person who has obtained ownership of th e original of a work or a lawful copy thereof 
within the territory under the jurisdiction of th e Separate Customs Territory of Taiwan, Penghu, 
Kinmen and Matsu may distribute representations of that  work by means of the transfer of ownership. 
Therefore, the Separate Customs Territory of Ta iwan, Penghu, Kinmen and Matsu does not enact any 
articles relating to international exhaustion . 
 
7. In paragraph 148, it is noted that the Agreement provides for the protection of 
geographical indications (GIs); however there is only one GI listed for Panama and none for 
Chinese Taipei.  
(a) Could the Parties describe in detail how the process of recognition and 
protection of GIs works in practice? 
 Notification details are provided in Paragr aph 3 of Article 16.04. Practical processes of 
recognition and protection are provided in related regulations of the Parties on GI protection. 
 
  
 
 WT/REG268/2 
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   For Panama, the process is described in detail as follows : 
 
 Details concerning notification are provided in paragraph 3 of Article 16.04.  Other 
recognition and protection procedures are covered by  the regulations on protection of geographical 
indications between the Parties. 
 
 In the case of the Republic of Panama, the process of recognition and protection of 
indications of source and appellations of orig in is governed by Executive Decree No. 7 of 
17 February 1998, which regulates Law No. 35 of 10 May 1996 containing provisions on industrial 
property. 
  Article 104 of the above-mentioned Executive Decree provides that, for purposes of 
registration and recognition of appellations of or igin, the Directorate-General of the Industrial 
Property Register (DIGERPI) shall maintain a special register of appellations of origin. 
 
 A national appellation of origin may be registered with the DIGERPI at the request of any 
legally constituted entity representing producers, manuf acturers or craft workers whose production or 
manufacturing facilities are situated in the region or locality to which the appellation of origin 
corresponds.  An appellation of origin may also be registered at the request of a competent public 
authority.  Foreign appellations of origin shall be  protected in accordance with the treaties to which 
the Republic of Panama is a party. 
 
 It is important to emphasize that an applica tion for registration of an appellation of origin 
must contain the following informati on, in accordance with Article 108: 
 
(i) The name, nationality and address of the a pplicant or applicants and the place 
in which their production or manufacturing facilities are located; 
(ii) the appellation of origin for which registration is sought; 
(iii) the specific geographical area of producti on to which the appellation of origin 
refers; 
(iv) the products for which the appella tion of origin is used;  and 
(v) a brief description of the essential charact eristics of the products for which 
the appellation of origin is used. 
 Pursuant to Article 110, the decision granting registration of an appellation of origin shall 
contain the following information: 
 
(i) The particular geographical area of production; 
(ii) the products to which the appellation of  origin is to be applied;  and 
(iii) the essential characteristics of the products  to which the appellation of origin 
is to be applied. 
 The term of registration of an appellation of orig in in Panama is indefinite, as is provided in 
Article 111 of the above-mentioned regulation. 
 
 Lastly, the DIGERPI shall grant protection to appellations of origin on the basis of 
Article 114, by means of a reasoned decision, which sh all be notified by means of an edict posted in a  WT/REG268/2 
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  visible location in the Directorate for a period of five (5) working days, following which the 
notification shall be deemed  to have been verified. 
  An appeal or application for review shall lie  against this declaration under the terms provided 
for in Article 163 of Law No. 35.  An extract from th e declaration of protection shall be published in 
the Bulletin of the Industrial Property Register  (BORPI), which must contain the following 
information: 
 
(i) Date of issue; 
(ii) indication of the appellation of origin protected, as well as the products or 
services to which it refers. 
 As for the Separate Customs Territory of Ta iwan, Penghu, Kinmen and Matsu, the process in 
detail is as follows: 
 The Separate Customs Territory of Taiwan , Penghu, Kinmen and Matsu protects its GIs 
through several mechanisms, including the Fair Tr ade Act, the Tobacco and Alcohol Administration 
Act, the Regulations Governing the Labelling of th e Alcohol Products, as well as the Trademark Act. 
Take the trademark system as an example. After th e notification of a term from the other Party, our 
Trademark Registrar Office checks if the term fulfils  one of the exceptions provided in Article 24 of 
TRIPS Agreement. If not, the term shall be placed in our Trademark Examination Database to prevent 
others from registration.  
(b) Could the Parties explain why the list of protected GIs is so limited for Panama 
and why Chinese Taipei chose not to pr otect its GIs in the Agreement?   
 The Republic of Panama lists only "SECO", because at that time it was the product with more 
interest for exportation. 
 
 The Separate Customs Territory of Taiwan, Penghu, Kinmen and Matsu was establishing its 
candidates list of GIs at that time, and will provide notification after the list has been established in the future. 
 
(c) Could the Parties confirm whether the list of protected GIs will be expanded in 
the future? 
 Both Parties confirm that the Agreement do es not exclude the possibilities of expansion. 
 
8. Paragraph 149 refers to "collective intellectual property rights".  
 Could the Parties specify what these rights refer to? 
 
 
 Collective intellectual property rights of Indigenous Peoples  is defined as Indigenous  
cultural and intellectual property rights, which refers  to art, music, literature, biological, medical and 
ecological knowledge, and other respects and expressi ons which have neither a known author nor a 
known owner, nor a date of origin, and it is the patrimony of all Indigenous Peoples.   
 
 As for Panama, collective intellectual prope rty rights and Indigenous Peoples’ traditional 
knowledge are stipulated in Panama Law 20 of 26 June 2000, and regulated by Executive Decree 12 
of 20 March 2001. 
 
 WT/REG268/2 
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   As for the Separate Customs Territory of Taiwan, Penghu, Kinmen and Matsu, the relative 
regulation is the Protection Act for the Traditional Intellectual Creations of Indigenous Peoples, which 
protects the intellectual creations referred to as traditional religious  ceremonies, music, dance, songs, 
sculptures, weaving, patterns, clothing, folk crafts or any other expression of the cultural 
achievements of indigenous peoples. 
 9. It is reported in paragraph 151, that with respect to the protection of rights originating 
from the use of plant varieties, "breeders ri ghts" are recognized by the Parties through a 
special system of registration in accordance with their relevant laws and regulations.  In this 
regard, it is indicated that the Parties plan to develop a mutual recognition mechanism. 
 Could the Parties shed some light about this mechanism? 
 
 
 There is no development of mutual recognition mechanism of the "breeders rights" between 
the Parties.  
 
10. The Committee on Intellectual Property was established to discuss and review all 
intellectual property issues under the Agreement.  
 Could the Parties confirm whether this Comm ittee has already held any meetings, and if 
so, explain the issues under discussion? 
  
 The Committee on Intellectual Property has not held any meetings since its establishment. 
 
Questions from the Delegation of Japan  
 
11. According to Annex 13.01(B), it is unable to connect private telecommunications 
network with the public telecommunication networ k.  Please clarify , if any, which law(s) 
support(s) the provision in each party.  
 Regarding paragraph 2, it is stipulated that  paragraph 1 will no longer be effective if the 
internal law has been amended.  Please confirm whether paragraph 1 is still being effective in 
present, and if there is any possibility of amendm ent in related law(s).  Furthermore, would the 
Parties explain the relationship between Annex 13.01(B) and GATS Annex on Telecommunications Article 5? 
  In the Republic of Panama, a limitation is established by Executive Decree No. 73 on 9 April 
1997, which is based on Law No. 31 of 8 Febuary 1996, which sets out the norms for 
telecommunication regulations in the Republic of Pana ma.  As for the Separate Customs Territory of 
Taiwan, Penghu, Kinmen and Matsu, some limitati ons are stipulated in Articles 21 and 22 of the 
Administrative Regulations on Type II
1 Telecommunications Business. 
 
 Both parties confirm that these laws are still e ffective, and neither party has considered the 
possibility of amending the laws relating to telecommunications. 
 
 Annex 13.01(B) of the Agreement is in accordance with Paragraph 5(e)(i) of the 
GATS Annex on Telecommunications.  Therefore, the pa rties have adopted the restrictions stipulated 
in Paragraph 5(f)(v) of the GA TS Annex on Telecommunications. 
 
                                                      
1 A Type I telecommunications enterprise means an enterprise that installs telecommunications line 
facilities and equipment in order to provide telecommunications services.  A Type II telecommunications 
enterprise means a telecommunications enterprise other than Type I telecommunications enterprises.  WT/REG268/2 
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  12. With regard to the Article 13.01, would the Parties explain the reason for having a 
provision "enhanced or value-added services" whose definition is not the same as "value-added 
services" in W/120? 
 Document W/120 serves as an indicative document for sector classification. The definition of 
the term "enhanced or value-added services" in Article 13.01 was created by both parties especially 
for the Agreement in question, but its meaning app lies equally to the term "value-added services" in 
W/120.  
 
13. Article 13.01 uses the term "main provider or dominant operator" but not the term 
"major supplier" which is used in WTO reference paper.  Furthermore, the term "monopoly" 
is deliberately used.  Would the Parties explain the reasons to use these terms?  Please confirm 
whether a "main provider or dominant operator"  and "monopoly" exist in the market for 
"enhanced or value-added services" in each Party. 
 The use of terms such as "main provider", "dominant operator" and "monopoly" in 
Article13.01 was determined by both parties because these terms are generally used in both parties.  
 
 In the Republic of Panama, since 2001 there ha s not been a monopoly enterprise in either the 
public or private sectors, and as for the Separate  Customs Territory of Taiwan, Penghu, Kinmen and 
Matsu no "monopoly" exists in the market for "enhanced or value-added services".  
 
14. Regarding Article 13.04, please explain th e objective for putting a provision for 
"enhanced or value-added services" and its relating law(s).  Especially with regard to 
Paragraph 1, could the Parties explain if it is n ecessary to obtain any special license in order to 
provide the value-added telecommunication ser vice in Panama and Chinese Taipei?  Is any 
other license required to provide any other sort  of telecommunication services?  Please provide 
examples, if any. 
 Article 13.04 and related laws have been enacted  in order to ensure the sound development of 
telecommunications, promote public welfare, safegua rd the security of communications and protect 
the rights and interests of users. 
 
 In Panama, all telecommunication services,  including valued-added ones, require a 
concession granted by the National Authorit y of Public Services. The concession for 
telecommunication services does not contain any limitations on foreign investment capital. 
  In the Separate Customs Territory of Taiwan , Penghu, Kinmen and Matsu, it is necessary to 
obtain a licence to provide value-added telecomm unication services. No other license is required 
before applying for the telecommunications license,  but a telecommunications enterprise shall be a 
company limited by shares incorporated pursuant to the Company Law and shall apply for the 
telecommunications license to the Na tional Communications Commission (NCC). 
 
15. Please explain the reason why the provision re garding Article 13.05 (Standards-Related 
Measure) was stipulated in telecommunication chapter.  How would the Parties explain its 
relationship with Chapter 9 (Measures on Standards, Metrology and Authorization 
Procedures)? 
 The provision for a standards-related measure in Article 13.05 corresponds to the need to 
establish a more specific principle in the tel ecommunications chapter without prejudicing the 
existence of Chapter 9. 
 WT/REG268/2 
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   Furthermore, Chapter 9 provides regulati ons for general industrial products, while 
Article 13.05 of Chapter 13 stipulates specifically for telecommunications. 
 
Questions from the Delegation of the United States  
 
Services and Investment  
 
16. Paragraph 86 of the Secretariat’s Report di scusses the market access provisions of the 
Agreement, noting that, while the Agreement does not contain an obligation similar to 
Article XVI of the GATS, it does direct the Parties (in Article 11.9) to set out any quantitative 
restrictions that they maintain.  The Report then  notes that Chinese Taipei did not identify any 
such restrictions (i.e., it made no "Annex 5" entries), and concludes that, "therefore, Chinese 
Taipei cannot apply quantitative restrictions on Panamanian service providers and investors." 
(a) With regard to the Secretariat Report’s conclusion about the effect of 
Chinese Taipei not having scheduled any Annex 5 restrictions, can the Parties 
confirm that this conclusion is correct?  Specifically, Article 11.9 of the 
Agreement creates an obligation on the Parties to: (1) set out any quantitative restrictions that it maintains;  (2) noti fy the other Party of any quantitative 
restrictions that it adopts; and (3) endeavour to negotiate liberalization or 
elimination of such restrictions.  The Agree ment does not, however, appear in its 
current form to contain any obligation on the Parties to eliminate or reduce 
existing restrictions, or any prohibition against the adoption of new restrictions. 
 Both parties confirm that the Separate Cu stoms Territory of Taiwan, Penghu, Kinmen and 
Matsu has not scheduled any Annex V restrictions and the situation currently remains the same as 
when this provision was adopted.  With respect to  Article 11.9.3, the Parties shall endeavour to 
negotiate with the aim of liberalizing or elimin ating existing or new quantitative restrictions.  
 
 As the Parties have established an Ad ministrative Commission to supervise the 
implementation of the Agreement, in practic e, in the event of amendments concerning 
non-conforming measures and quantitative restrict ions, the Commission shall be responsible for 
establishing the relevant procedures.  
(b) With regard to the general operation of Ar ticle 11.9.3 (negotiation or elimination 
of liberalization of restrictions), could th e Parties explain how they envision the 
process of future negotiation working?  Would they amend the Agreement to 
create a new obligation to bind the elimination or liberalization of existing 
measures, and/or to create a prohibition against new measures?  Have the Parties already begun this process, pursuant to the requirements of 
Article 11.11? 
 The Separate Customs Territory of Taiwan, Pe nghu, Kinmen and Matsu considers that it is 
not possible at this stage to antic ipate the exact form that future negotiations might take. However, 
both sides shall endeavour to negotiate with th e aim of liberalizing or  eliminating quantitative 
restrictions.  
 
 As for the Republic of Panama, all means to improve the bilateral co mmercial relationship are 
highly acceptable, and Panama has never denied that  it will complete more negotiations in the near 
future with the aim to extend th e coverage of the Agreement. 
  Both parties confirm that they have  not begun this process of negotiation. 
  WT/REG268/2 
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  (c) Could the Parties describe any procedures that have been established for 
consultations on services reservations and quantitative restrictions, pursuant to 
Article 11.12(b)? 
 No procedures have been established for consultations in this respect. 
 
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