WORLD TRADE  
ORGANIZATION  WT/REG239/1  
6 July 2009 
 (09-3329) 
Committee on Regional Trade Agreements  
  
 
 
 
FACTUAL PRESENTATION 
 
Free Trade Treaty between 
Chile and Panama 
(Goods and Services) 
 
Report by the Secretariat 
 
 
 
 
This report, prepared for the considerati on of the Free Trade Treaty Agreement between 
Chile and Panama has been drawn up by th e WTO Secretariat on its own responsibility 
and in full consultation with the Parties.  The report has been drawn up in accordance 
with the rules and procedures contained in the Decision for a Transparency Mechanism 
for Regional Trade Agreements (WT/L/671).  
Any technical questions arising from this report may be addressed to Maria Pillinini 
(Tel.:  +41 22 739 52 44).  WT/REG239/1 
 Page iii 
 
 
  TABLE OF CONTENTS 
 
 
  Page 
I. TRADE ENVIRONMENT 1  
A. OVERVIEW  1 
B. MERCHANDISE TRADE  1  
C. SERVICES TRADE  4  
II. CHARACTERISTIC ELEMENTS OF THE TREATY 8  
A. BACKGROUND INFORMATION  8  
III. TRADE IN GOODS 9 
A. NATIONAL TREATMENT AND MARKET ACCESS PROVISIONS ON TRADE IN GOODS  9  
1. Import duties and charges, and quantitative restrictions 10  
(a) General provisions 10  
(b) Liberalization of tariff lines and trade 10  
(c) Chile's liberalization schedule 12  
(d) Panama's liberalization schedule 16  
2. Rules of origin 19  
3. Export duties and charges, and quantitative restrictions 21  
4. Regulatory provisions on trade in goods 21  
(a) Standards 21  
(b) Safeguard mechanisms 23  
(c) Anti-dumping and countervailing measures 24  
(d) Subsidies and State aid 24  
(e) Customs-related procedures 24  
(f) Other regulations 26  
5. Sector-specific provisions  on trade in goods 26  
(a) Agriculture 26  
IV. TRADE IN SERVICES 26  
A. SCOPE AND DEFINITIONS  26  
B. DENIAL OF BENEFITS  27  
C. GENERAL PROVISIONS ON TRADE IN SERVICES  27  
1. Market access 27  
2. National treatment, MFN and local presence 27  
3. Movement of natural persons 28  
D. LIBERALIZATION COMMITMENTS  28  
1. Chile 28  
2. Panama 30  
E. REGULATORY PROVISIONS ON TRADE IN SERVICES  33  
1. Domestic regulation 33  
2. Recognition 33 WT/REG239/1 
Page iv  
 
  V. GENERAL PROVISIONS OF THE AGREEMENT 34  
1. Transparency 34  
2. Current payments and capital movements 35  
3. Exceptions 35  
4. Accession 35  
5. Institutional framework 35  
6. Dispute settlement 36  
7. Relationship with other agreements concluded by the Parties 38  
8. Government procurement 39  
9. Intellectual property rights 39  
10. Investment 40  
VI. OTHER 40 
A. AGREEMENT ON ENVIRONMENTAL COOPERATION  40  
B. AGREEMENT ON LABOUR COOPERATION  41  
ANNEX 1 42 
  WT/REG239/1 
 Page 1 
 
 
  I. TRADE ENVIRONMENT 
A. OVERVIEW  
1. The Panama-Chile Free Trade Treaty is the fi rst agreement notified and in force between 
Panama and a South American country.  With a p opulation of more than 16 million people in 2007, 
Chile represents an important market for Pana ma's exports;  in 2007, its GDP amounted to 
US$163.915 million.  In comparison, Panama is a smaller economy, with a population of 3.3 million 
inhabitants and a GDP of US$19.740 million.1 
2. As regards trade in goods, Chile's share in wo rld total exports and im ports was 0.49 per cent 
and 0.33 per cent, respectively.  It ranked 40th among global exporters and 46th among importers.  
Panama's participation in world trade was limited to  0.01 per cent for exports, and to 0.05 per cent for 
imports.  It ranked 139th among global exporters and 95th among importers.  The major trading 
partners for both countries were the Un ited States and the European Union. 
3. As for the participation of the two countries in  global trade in services, Chile accounted for 
0.26 per cent and 0.31 per cent of world exports a nd imports of services, respectively, whereas the 
respective figures for Panama were 0.15 per cent and 0.07 per cent.  In the same year, Chile's world 
ranking was 49th for services exports and 51st for imports, while Panama's world ranking was 62nd and 
90th for exports and imports respectively. 
B. MERCHANDISE TRADE  
4. Charts I.1 and I.2 below show development in  trade between the Parties and between them 
and the rest of the world.  Panama recorded a pe rsistent and growing trade deficit in both cases, with 
overall exports to Chile declini ng between 2001 and 2005 before  beginning to increase again.  
Exports to the world also grew relatively slowly  during this period in comparison to imports.  
Conversely, Chile showed a persistent trade surplus with Panama and a growing trade surplus with the 
rest of world, especially since 2000.2 
                                                      
1 The figures used in this section are taken from WTO Trade Profiles 2008. 
2 In the charts below, there is a major discrepancy in bilateral trade figures;  this is because the figures 
from Panama do not include the Colón Free Zone, but the opposite occurs as regards the figures from Chile. WT/REG239/1 
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  0.02.04.06.08.010.0
1998 1999 2000 2001 2002 2003 2004 2005 2006 200705101520253035404550US$ billionUS$ millionChart I.1 - Panama:  merchandise impo rts from and exports to world and 
Chile, 1998-2007
Note:          Figures regarding Chile do not include the "Zona Libre de Colón".
Sources :  UNSD, Comtrade database;  WTO-IDB (2004 Panama imports from Chile).Imports from Chile
Exports to ChileTotal imports
Total exportsLeft-hand scale: Right-hand scale:
 
 
0510152025303540455055606570
1998 1999 2000 2001 2002 2003 2004 2005 2006 20070255075100125150175200225250275300US$ billion US$ millionChart I.2 - Chile:  merchandise imports from and exports to world and 
Panama, 1998-2007
Note:        Figures regarding Panama include the "Zona Libre de Colón".
Source :  UNSD, Comtrade database.Imports from Panama
Exports to PanamaTotal imports
Total exportsLeft-hand scale: Right-hand scale:
 
 
5. Chart I.3 shows the composition of trade between the Parties and their exports and imports to 
and from the rest of the world, on the basis of Harmonized System (HS) product categories, using the 
annual average of trade flows during the period 2005-2007.  WT/REG239/1 
 Page 3 
 
 
  Chart I.3
Panama and Chile:  prod uct composition of merchandise trade, annual 
average 2005-2007
Panama's imports from Chile Chile's imports from Panama
 Source :  UNSD, Comtrade database.Per cent
Total:  US$34.2 million Total:  US$12.4 million
Total:  US$5.3 billion Total: US$35.8 billion
Total:  US$1 billion Total:  US$53.4 billionPanama's global exports Chile's global exportsPanama's global imports Chile's global imports 
Pulp of wood 4.0Prepared foods 2.7
Animals
43.8Other 
6.9Metals 5.6
Chemicals 4.0
Prepared foods 5.0 Textiles 3.5
Vegetables  33.9Other 5.8
Other 14.0
Animals 6.2Other 
8.4
Textiles 4.3
Pulp of wood 3.6
Prepared foods 6.2Vehicles 11.2Plastics 5.2Textiles 23.5
Machinery 5.2
Chemicals  8.4Footwear 4.0
Plastics 4.4
Minerals 27.3Prepared foods 26.2
Pulp of wood 2.4Metals 17.5
Vehicles 11.3Plastics 4.2
Metals 4.6Vegetables 3.0
Vegetables 5.3Miscelanneous 3.0
Machinery 22.3
Metals 37.7Chemicals 6.5
Machinery
19.4
Prepared foods 
6.7
Minerals 27.3Plastics 2.4
Prepared foods  5.8Articles of stone 2.8
Animals 4.4
Pulp of wood 7.6
Base metals 7.6
Chemicals 9.5
Wood 11.1Vegetables 17.4Wood  10.7
Machinery 9.8
Vehicles 9.1Works of art 8.0Optical 4.1
Minerals 
19.2
Chemicals  10.3Vegetables 2.2Pulp of wood  2.0Other 
8.8
Chemicals 2.2Wood 3.6Other 
6.9
 
 WT/REG239/1 
Page 4  
 
  6. Chile's exports are concentrated in two main  product categories, metals (37.7 per cent of 
exports) and minerals (27.3 per cen t), while Panama's main global exports are animals (43.8 per cent), 
vegetables (33.9 per cent) and prepared foods (6.2  per cent).  With respect to global imports, both 
Parties privileged the same four products categories, even if with different percentages:  machinery 
and mechanics (19.4 per cent for Panama and 22.3 per cent for Chile);  mineral products (19.2 per 
cent for Panama, 27.3 per cent for Chile);  vehi cles, aircrafts and vessels (11 per cent for both 
countries) and base metals and deri ved products (7.5 per cent for Panama, 5.6 per cent for Chile).  
Chile's imports also coincide with  its global exports, since the first two product categories sold abroad 
were base metals and related pr oducts and mineral produc ts, which together accounted for 65 per cent 
of the country's total exports to the world. 
7. As regards bilateral trade, Panama imports from Chile are mainly concentrated in three 
categories:  prepared foodstuff and beverages, vegetable products and w oods and related products, 
which together account for more than 50 per cent of total imports value.  Chile's principal imports 
from Panama are textiles and related articles (23.5 per cent), followed by pulp of wood (10.7 per 
cent), machinery (9.8 per cent) and vehicles, aircraft and vessels (9.1 per cent). 
C. S
ERVICES TRADE  
8. In 2007, Panama's commercial services exports  amounted to US$4.857 million, representing 
0.15 per cent of world exports, while imports am ounted to US$2.032 million and represented 0.07 per 
cent of world imports.  Panama's dynamism in servi ces exports is reflected in its extremely high 
proportion of Panama's external trade, accounting for 80.7 per cent of total exports;  the proportion of 
services in total imports is however significantly lower - i.e. 29.6 per cent. 
9. The evolution of Panama's total commercial  services trade during the period 2000-2007 is 
shown in Chart I.4.  Between 2000 and 2007, Pana ma's exports to the world increased by 147 per 
cent, while imports increased by 85.6 per cent, re sulting in a constant trade surplus in commercial 
services over this period. 
10. As regards the composition of exports, transpor t services remained the leading sector over the 
entire period, accounting for more than half (54 per cent) of Panama's total services exports, with the 
single sub-sector of maritime transport accounting for around 40 per cent.  Travel and financial services immediately follow, accounting for a growing share of total exports.  A sector that emerged during this period was communication, exports of which increased from US$34 million to US$182 million.  Transportation also represents the largest share in Panama's imports, doubling in 
value between 2000 and 2007, especially in the last th ree years.  Imports of financial and travel 
services also showed an upturn. 
11. Chart I.5 presents the total inflow of Foreign Direct Investment (FDI) into Panama from the 
world during the period 2003-2008 and FDI stock in  the period 2003-2006.  The inflow of FDI 
increased significantly as from 2006;  from then on, it followed an erratic trend though at significantly 
higher levels compared to the 2003-2005 period.  During the period 2003-2006, the stock of FDI 
amounted to US$12.665 million, with  a substantial increase of 53.9 per cent with respect to 2003.  WT/REG239/1 
 Page 5 
 
 
  0.00.51.01.52.02.53.03.54.04.55.0
2000
2001
2002
2003
2004
2005
2006
20070.00.51.01.52.02.53.03.54.04.55.0
2000
2001
2002
20032004
2005
2006
2007Chart I.4
Panama:  total commercial services trade, 2000-2007
Exports Imports
Transport services
Travel-related services
Source :  IMF Balance of Payments Statistics.Communication servicesUS$ billion
Financial services
Computer and information servicesOther business servicesUS$ billion
 Insurance services Royalties and licence fees
 WT/REG239/1 
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  05001,0001,5002,0002,5003,000
2003 2004 2005 2006 2007 200803,0006,0009,00012,00015,000
2003 2004 2005 2006Chart I.5
Panama:  foreign direct investment flow (2003-2008) and stock with world
(2003-2006)
Flow Stock US$ million US$ million
Source :  Office of the Comptroller General of the Republic of Panama.  
 
12. In 2007, Chile 's imports of commercial ser vices amounted to US$9.718 million, or 0.31 per 
cent of world imports, while its exports amounted to  US$8.677 million, or 0.26 per cent of the world 
total.  Imports of services in that year accounted  for 17.1 per cent of Chile's total imports, while 
exports of services constituted 10.1 per cent of the total. 
13. Chart I.6 shows the evolution of Chile's co mmercial services exports and imports for the 
period 2000-2007.  Both exports and imports grew by more than 100 per cent over this period, with 
imports increasing slightly more rapidly than for imports (117 per cent versus  108 per cent).  
Consequently, Chile maintained a constant trade deficit in commercial services over this period. 
14. The composition of exports and imports has rema ined fairly stable over the period surveyed.  
The three most important categories are transport, travel-related and other commercial services, which, in 2007, accounted for 90 per cent of Chile's total exports and 100 per cent of total imports.  
Transport services represent the largest share, with  54 per cent of total exports and 59.8 per cent of 
total imports.  It is worth noting the positive trend registered by the insurance sector, which grew by 
184 per cent during recent years.  Other emerging sect ors were:  computer and information services, 
royalties and licensing, and personal, cultural and recreation-related services.  WT/REG239/1 
 Page 7 
 
 
  0.01.02.03.04.05.06.07.08.09.010.0
2000
2001
2002
200320042005
2006
2007012345678910
2000
2001
2002
2003
2004
2005
2006
2007Chart I.6
Chile:  total commercial services trade, 2000-2007
Exports Imports
Transport services
Travel-related services
Source :   IMF Balance of Payment Statistics.Communication servicesUS$ billion
Financial services
Computer and information services
Royalties and licence feesOther business services
Personal and cultural servicesUS$ billion
 Insurance services
 
 
15. Total FDI flows into Chile from Panama and the world for the period 2004-2006 are depicted 
in Chart I.7.  FDI to Chile from Panama increased over the three y ear period, especially from 2004 to 
2005, from US$1.775 million to US$6.619 million.  In 2006, the increase was nearly 6 per cent.  FDI 
inflows to Chile from the world were erratic for th ese three years. In 2004, total inflows reached a 
maximum of US$4.6 billion, dropping to US$1.9 billion the following year.  In 2006, FDI increased by 60 per cent from the previous year. WT/REG239/1 
Page 8  
 
  0.02.04.06.08.010.0
2004 2005 20060.00.51.01.52.02.53.03.54.04.55.0
2004 2005 2006Chart I.7
Chile:  foreign direct investment inflow from Panama and world, 2004-2006
PanamaWorldUS$ millionUS$ billion
Source :  Chilean authorities.  
 
II. CHARACTERISTIC ELEMENTS OF THE TREATY 
A. BACKGROUND INFORMATION  
16. The Free Trade Treaty between Chile and Pana ma was signed on 27 June 2006;  it entered 
into force on 7 March 2008, following ratification by Chile on 26 December 2007 by means of Supreme Decree No. 25, and by Panama on 12 January 2007 by means of Law No. 7. 
17. The Parties jointly notified the goods and services aspects of the Treaty to the WTO on 
17 April 2008, in document WT/REG239/N/1 - S/C/N/ 443.  The notification was made pursuant to 
Article XXIV of the GATT 1994 and the Understanding on the Interpretation of Article XXIV of the 
GATT 1994, and Article V of the GATS, respective ly.  The notification presents the Treaty as 
establishing "... comprehensive trade liberalization betw een the parties.  This includes the elimination 
of tariffs on a significant share of trade in goods, in  addition to disciplines in areas related to trade in 
goods and services.  Finally, it provides for the ins titutional framework to implement the Agreement". 
18. The Treaty comprises 15 Chapters and various a nnexes - either within the respective chapter 
or at the end of the Treaty.  Two parallel agre ements - on environmenta l and labour cooperation - 
have also been signed by the Parties, at the same ti me as the Treaty;  they entered into force jointly 
with the Treaty.  Box II.1 provides an outline of the Treaty.  WT/REG239/1 
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Box II.1 
Outline of the Chile-Panama Free Trade Treaty 
Chapter 1 Initial Clauses 
Chapter 2 General Definitions 
Chapter 3 National Treatment and Market Access for Goods 
Chapter 4 Rules of Origin and Procedures of Origin 
Chapter 5 Customs Administration 
Chapter 6 Sanitary and Phytosanitary Measures 
Chapter 7 Technical Barriers to Trade 
Chapter 8 Trade Defence 
Chapter 9 Treatment of Investments 
Chapter 10 Cross-border Trade in Services 
Chapter 11 Transparency 
Chapter 12 Administration of the Treaty 
Chapter 13 Dispute Settlement 
Chapter 14 Exceptions 
Chapter 15 Final Clauses 
Annexes 
 Annex 3.3:  Tariff Elimination - Annex of Chile and of Panama 
 Annex 4.1:  Specific Rules of Origin 
 Services Annexes:  Annexes I, II and III of Chile and of Panama 
 
19. The Treaty is of indefinite duration.  Trade in  goods is regulated by Chapters 3-8, trade in 
services by Chapter 10 and investment by Chapter 9;  other chapters are of general application.  In 
Article 1.03, the Parties reaffirm their rights and obligations under the WTO Agreement.  The 
regulatory framework of the Treaty is complemented  by country-specific Annexes providing for tariff 
elimination (Annex 3.3), and reservations  and exceptions for services (Annexes I-III). 
20. General definitions, included in  Article 2.1, are complemented by a country-specific 
definition of a "natural person having the na tionality of a Party", defined in Annex 2.1. 
III. TRADE IN GOODS 
A. NATIONAL TREATMENT AND MARKET ACCESS PROVISIONS ON TRADE IN GOODS  
21. The Parties grant national treatment to each othe r's goods in conformity with Article III of the 
GATT 1994, which is incorporated into the Treaty (A rticle 3.2).  Measures listed in Annex 3.2 do not 
benefit from national treatment3;  they include, for Panama (a) measures regulating imports of lottery 
tickets, games and videos under HS 9504, and used vehicles, (b) measu res regulating exports of wood, 
and (c) actions authorized by the WTO Dispute Se ttlement Body (DSB);  and for Chile (a) actions 
authorized by the WTO DSB, and (b) measures regulating imports of used vehicles. 
                                                      
3 The general prohibition on quantitative restrictions also does not apply for these measures 
(paragraph 11). WT/REG239/1 
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  1. Import duties and charges, and quantitative restrictions 
(a) General provisions 
22. As stated in Article 3.3, the Parties are to progressively eliminate duties on originating 
products in accordance with Annex 3.3.  Unless otherw ise specified, they are not allowed to increase 
existing, nor adopt new, tari ff rates on originating products.
4  Upon request by a Party, consultations 
are to be organized aiming at accelerating the elimination of tariff rates;  if these succeed, the new 
tariff elimination programme is to replace the old one once approved by the Free Trade Commission (in line with Article 12.1(3)(b)).  If MFN rates are re duced, the calendar for tariff elimination is to be 
adjusted so as to maintain the preferences initially negotiated. 
23. Article 3.4-3.7 deals with special import regimes providing for duty-free entry of goods, 
namely temporary admission of goods, re-import of repaired or altered goods , and import of samples 
and printed advertising materials.  Article 3.4 ma kes clear that exemption from customs duties cannot 
be conditional - either explicitly or implicitly  - upon compliance with performance requirements, 
unless these are in accordance with Article 27. 4 of the WTO Agreement on Subsidies. 
24. Article 3.8 proscribes import prohibitions and r estrictions on goods from the other Party, with 
the exception of measures authorized under Article XI of the GATT 1994 (which is incorporated into 
the Treaty) and measures established in acco rdance with Annex 3.2 (see paragraph 8 above).
5,6  
Paragraph 2 clarifies that such prohibition includes (a) import price requirements, except as permitted 
in enforcement of countervailing and anti-dumping or ders and undertakings, and (b) the granting of 
import licences conditional on performance requirements.   
25. The amount of any fees and formalities connect ed with importation are limited to the 
approximate cost of the services rendered, in acco rdance with Article VIII:1 of the GATT 1994;  these 
are to be made available in electronic format (Ar ticle 3.9 of the Treaty).  The imposition of consular 
fees in relation to the import of goods from the other Part y is prohibited.  
(b) Liberalization of tariff lines and trade7 
26. Different transition periods for the eliminati on of tariffs apply to  Chile and Panama - 
respectively ten and 15 years.  Elimination of tariffs takes place according to different categories,  
presented in Box III.1;  Table III.1 shows their distribution in each Party. 
                                                      
4 A Party may increase a tariff rate up to the leve l foreseen in Annex 3.3 if it has been reduced 
unilaterally;  it may also increase or maintain it if so authorized by the DSB (Article 3.3.4). 
5 In Panama, restrictions on imports at the Treaty's entry into force are as follows:  measures regulating 
the import of official lottery tickets in circulation, pursuant to Decree No. 19 of 30 June 2004;  controls on 
imports of videos and other games of heading 9504 with cash prizes, according to Law No. 2 of 10 February 1998;  and measures relating to the import of used vehicles, used tyres, worn clothing, worn 
footwear, and used re-treaded tyres. 
6 In Chile, restrictions on imports at the Treaty's en try into force are as follows:  measures relating to 
the import of used vehicles and motorcycles, used or re-treaded tyres, asbestos in any form, pornography, toxic 
industrial waste, goods that pose a threat to animals, agriculture or human health, and goods prohibited by 
decree of the Ministries of Health or  Agriculture or other State bodies ( www.aduana.cl/OIRS ). 
7 Unless otherwise specified, all statistics contained in the tables and charts have been prepared on the 
basis of data provided by the Parties.  WT/REG239/1 
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Box III.1:  Categories of Tariff E limination in the Panama-Chile FTT 
Category  Schedule for Tariff Elimination  
A Elimination of tariffs as of entry into force 
B Elimination of tariffs in 5 equal instalments, duty free on 1.1.2012 
C Elimination of tariffs in 10 equal instalments, duty free on 1.1.2017 
C12 Elimination of tariffs in 12 equal instalments, duty free on 1.1.2019 
D15 Elimination of tariffs in 15 equal instalments, duty free on 1.1.2022 
D15-NL Elimination of tariffs in 13 equal instalments, starting on 1.1.2010, duty free on 1.1.2022 
EXCL Products excluded from the Treaty 
Source : Panama-Chile FTT, Annex 3.3. 
 
Table III.1 
Distribution of the categories of tariff elimination in the Panama-Chile FTT 
Panama Chile Categories 
No. of tariff lines  % No. of tariff lines  % 
A 5,747 64.5 7,312 92.5 
B 841 9.4 456 5.8 
C 1,718 19.3 105 1.3 
C12 174 2.0 - - 
D15 175 2.0 - - 
D15 -NL 2 0.0 - - 
EXCL 254 2.9 29 0.4 
Total 8,911 100.0 7,902 100.0 
Source : Panama-Chile FTT, Annex 3.3. 
27. The base rate upon which reductions are made are sp ecified in the country's tariff elimination 
annex;  for Chile, it is the MFN rate for 2008 except for 19 lines;  for Panama the base rate is the 
MFN rate applied in 2006.8  After entry into force, each liber alization instalment takes place on 
1 January of each year. 
28. Tariff elimination under the Treaty is depict ed in Tables III.2A and III.2B.  For Chile, 
MFN tariff lines that were duty-free imports prior to th e entry into force of the Treaty were negligible 
(0.4 per cent of its tariff lines).  Chile's liberalizati on is highly front-loaded, both in terms of tariff 
lines and trade, given that as from entry into for ce 92.1 per cent of Chile's tariff lines will become 
duty free for imports from Panama, corresponding to 93.7 per cent of intra-RTA trade.  Elimination of 
tariffs will be completed in two other instalments;  the number of tariff lines still subject to duties at 
the end of the transition period will be negligible  - i.e. 29 lines, accounting for 0.4 per cent and 
0.3 per cent of the tariff lines and trade, respectively. 
                                                      
8 Negotiation of the Treaty was completed in 2006, the base rate being the MFN tariff applied that year.  
Should a tariff subsequently be eliminated or reduced to a rate below that provided for in the Treaty, the lesser 
rate will apply to products of the other Party.  WT/REG239/1 
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Table III.2 
Tariff elimination commitments under the Treaty and corresponding average trade 
A. Chile 
Duty phase-out 
period Number of lines % of total lines in 
Chile's tariff schedule Value of Chile's imports 
from Panama (2005-2007) in 
US$ million % of Chile's total 
imports from Panama 
2005-2007 
MFN duty free (2008) 35 0.4 - - 
2008 7,277 92.1 10.7 93.7 
2012 456 5.8 0.5 4.5 
2017 105 1.3 0.2 1.5 
Remain dutiable 29 0.4 0.0 0.3 
Total 7,902 100.0 11.4a 100.0 
- No imports. 
a Only trade falling under HS Chapters 1-97 is included. 
Note: Based on the HS 2002 nomenclature. 
Source : WTO estimates based on data provided by Chile. 
29. A significantly different situation applies in the case of Panama, both with respect to its 
starting point and to the dismantling of tariff protec tion.  Table III.2B shows that 31.1 per cent of 
Panama's tariff lines were duty free on an MFN basis pr ior to the Treaty's entry into force, benefiting 
43.4 per cent of Chile's imports into Panama during 2005-2007.  As of the entry into force of the 
Treaty, an additional one-third of Panama's ta riff lines would become duty free for Chile, amounting 
to an extra liberalization of 22.7 per cent of trade.  By year ten (2017), 93.4 per cent of tariff lines, accounting for 87.3 per cent of trade would be duty free.  Two more instalments would result in a final elimination of tariffs on 97.3 per cent of  tariff lines covering 91.4 per cent of trade. 
Table III.2 
Tariff elimination commitments under the Treaty and corresponding average trade 
B. Panama 
Duty phase-out 
period Number of lines % of total lines in 
Panama's tariff 
schedule Value of Panama's imports 
from Chile (2005-2007) 
in US$ million % of Panama's total 
imports from Chile 
2005-2007 
MFN duty free (2008) 2,775 31.1 14.8 43.4 
2008 3,019 33.9 7.8 22.7 
2012 825 9.3 3.7 10.7 
2017 1,702 19.1 3.6 10.5 
2019 174 2.0 0.2 0.6 
2022 175 2.0 1.2 3.5 
Remain dutiable 241 2.7 3.0 8.6 
Total 8,911 100.0 34.2a 100.0 
a Only trade falling under HS Chapters 1-97 is included. 
Note: Based on the HS 2002 nomenclature. 
Source : WTO estimates based on data provi ded by Panama and the WTO-IDB. 
(c) Chile's liberalization schedule 
30. Chile's tariff contains a total of 7,902 tariff lin es;  as regards the MFN rate for 2008, 35 lines 
were already duty free at the Treaty's entry into fo rce (applying to certain products of the printing 
industry, banknotes, nuclear reactors and parts ther eof, certain vehicles, and aircrafts and vessels), 
eight lines had specific rates of duties (wheat and flour, and sugar, all of which are excluded from the Treaty's coverage), 11 lines had a tariff of 15.6  per cent (certain poultry meat) while the other  WT/REG239/1 
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  7,848 lines had a flat rate of 6 per cent.  As illustra ted by Chart III.1, the bulk of Chile's liberalization 
is up-front.  A total of 7,226 tariff lines with an MFN rate of 6 per cent as well as all the lines with 
MFN rates of 15.6 per cent, were liberalized immediately. 
0 1,000 2,000 3,000 4,000 5,000 6,000 7,000 8,000200820122017Chart III.1
Chile's duty elimination under the Treaty
Year of duty-free treatment   
Source :  WTO Secretariat estimates, based on data provided by Chile.Number of duty-free lines (cumulative)
Duty-free <10% <20% MFN is:
 
 
31. Table IIII.3 shows Chile's trade liberalization commitments under the Treaty on the basis of 
the HS 8-digit level organized by HS section pro duct categories.  Of the 7,902 tariff lines forming 
Chile's tariff schedule, 35 tariff lines were alread y MFN duty free in 2008;  an additional 7,277 lines 
covering products in all HS sections were liberalized upon entry into force of the Treaty.  Liberalization has applied evenly to agricultural a nd industrial products (to around 92 per cent of their 
tariff lines).  The second liberalizing step in 2012 is to increase this percentage to around 98 per cent, 
while in 2017 an additional 105 lines will be liberali zed (0.7 per cent and 1.5 per cent of agricultural 
and industrial lines, respectively).  A very smal l number of lines will remain dutiable - i.e. 29, 
covering wheat and flour, sugar, food preparations, u sed tyres and worn clothing and worn articles.  
The average final applied tariff in for those ex cluded products will be 6 per cent for industrial 
products, while a much higher tariff will apply to ve getable products - 31.5 per cent (on the basis of 
an ad valorem  equivalent (AVE)) - and  reaching a peak rate of 75 per cent for prepared foods (on the 
basis of a combination of ad valorem  and AVE). WT/REG239/1 
Page 14  
 
   
Table III.3 
Chile:  tariff elimination unde r the Treaty, by HS section 
Number of duty-free lines  
HS section and description  MFN 
average
% Total 
no. of 
lines  MFN 
2008  2008 2012 2017 Remain 
dutiable  Average final 
tariff rate 
(dutiable lines)  
I Live animals and 
animal products 6.2 567  557 10    
II Vegetable products 6.1 397  349 37 9 2 31.5a 
III Animal or vegetable 
fats and oils 6.0 65  65     
IV Prepared foods etc. 7.4 398  346 43 1 8 75.0b 
V Minerals 6.0 191  184  7   
VI Chemicals and 
chemical products 6.0 1,190  1,017 150 23   
VII Plastics and rubber 6.0 307  241 44 16 6 6.0 
VIII Hides and skins 6.0 86  86     
IX Wood and articles of 
wood 6.0 142  142     
X Pulp, paper , etc. 5.9 235 4 230  1   
XI Textiles and textile 
articles 6.0 1,171  1,158   13 6.0 
XII Footwear, headgear 6.0 115  83 30 2   
XIII Articles of stone 6.0 180  67 106 7   
XIV Precious stones, etc. 6.0 59  59     
XV Base metals and base 
metals products 6.0 657  650 1 6   
XVI Machinery 6.0 1,266 2 1,224 25 15   
XVII Transport equipment 5.5 343 29 305  9   
XVIII Precision equipment 6.0 290  281  9   
XIX Arms and ammunition 6.0 23  23     
XX Misc. manufactured 
articles 6.0 213  203 10    
XXI Works of art, etc. 6.0 7  7     
Total 6.1 7,902 35 7,277 456 105 29 26.8 
a AVEs provided by the Chilean authorities. 
b Combination of ad valorem  and AVEs. 
Note: Based on the HS 2002 nomenclature. 
Source : WTO estimates based on data provided by Chile. 
32. Chart III.2 shows a comparison of average du tiable rates in those HS Sections where 
preferential duties are to remain at the end of the implementation period.  The comparison is made between the average preferential and MFN rates for lines subject to preferential duties only.  As can 
be seen from Chart III.2, tariff peaks at the same le vel for both preferential and MFN duties remain in 
place for HS Sections II, IV, VII and XI.  The sa me applies regarding average dutiable rates by 
HS Chapter, as shown in Chart III.3, which was pr epared on the same basis as Chart III.2.  The 
highest rate will apply in HS Chapter 17 - suga r - which is excluded from the Treaty's coverage.  WT/REG239/1 
 Page 15 
 
 
  0 1 02 03 04 05 06 07 08 0XXIXXXIXXVIIIXVIIXVIXVXIVXIIIXIIXIXIXVIIIVIIVIVIVIIIIIIChart III.2
Chile:  average of dutiable rates, by HS Section
HS Section  
Note:        Calculation of MFN and preferential averages under HS Sections II and IV includes AVEs provided by Chilean authorit ies.
Source :  WTO Secretariat estimates, based on data provided by Chile.Average rate of duty (%)
MFN Preferential
 
 
0 1 02 03 04 05 06 07 08 09 0 1 0 0634021171110Chart III.3
Chile:  average of dutiable rates, by HS ChapterHS Cha pter  
Note:       Calculation of MFN and preferential averages under HS Chapters 10-11 and 17 includes AVEs provided by Chilean author ities.
Source :  WTO Secretariat estimates, based on data provided by Chile.MFN PreferentialAverage rate of duty (%)
 WT/REG239/1 
Page 16  
 
  (d) Panama's liberalization schedule 
33. Panama's MFN tariff structure in 2008 provided for 2,775 duty-free tariff lines, a similar 
number of lines subject to rates between 20 per cent a nd 30 per cent, a higher number of lines (3,227) 
with rates between 10 per cent and 20 per cent, a nd finally 142 lines whose rates are above 30 per 
cent.  Panama's liberalization h as a certain front-loaded component but also provides for significant 
duty elimination throughout the transition period.  At the entry into force of th e Treaty, the number of 
duty-free lines more than doubled, with an additio nal 3,019 lines becoming duty free;  of these, 
two-thirds had a tariff rate lower than or equal to 10 per cent.  A similar distribution is to occur at the 
second instalment in 2012, although a significantly smaller number of lines will become duty free (825).  A major liberalization of tariffs with rates between 20 per cent and 30 per cent is foreseen for 
2017.  Higher tariffs will be eliminat ed in particular as from 2017, though one line (roasted chicory) at 
30 per cent became duty free at entry into force a nd another one (prepared potatoes) will become duty 
free in 2012.  For two lines (table and kitchen salt, and other salt), full liberalization will take place in 
2022 but the first reduction in tariff will only be applicable in 2010. 
0 1,000 2,000 3,000 4,000 5,000 6,000 7,000 8,000 9,00020082012201720192022Chart III.4
Panama's duty elimination under the TreatyYear o f duty-free treatment   
Source :  WTO Secretariat estimates, based on data provided by Panama and the WTO-IDB.Number of duty-free lines (cumulative)
Duty-free <10% <20% MFN <30% <40% <50% >50%
 
 
34. Table II.2 shows the composition of the 8-digit tariff line liberalization undertaken by 
Panama, classified by HS section and by year of liber alization.  Before entry into force, 18.8 per cent 
and 33.6 per cent of agricultural and industrial lines respectively were already duty free on an 
MFN basis.  No section was fully lib eralized at entry into force.  Also in 2008, liberalization was 
stronger for agricultural products than for industria l ones (44.3 per cent and 38.1 per cent of lines 
becoming duty free, respectively).  The most significa nt liberalization at entry into force took place in 
machinery, precision equipments, live animals, and hides and skins (between 72.8 per cent and 
52.1 per cent of these lines turned duty free in 2008).  Liberalization of industrial products is to speed 
up from 2012 (greater liberalization will occur in articles of stone);  by 2012, around 75 per cent of 
tariff lines will be duty free while for agricultural produc ts an equivalent level of liberalization will  WT/REG239/1 
 Page 17 
 
 
  only be reached in 2017.  In that year, liberaliza tion of industrial products will reach 97 per cent - in 
particular with the full liberalization of the textiles and footwear sections;  by the end of the transition 
period, all tariffs on industrial products will have been eliminated.  Agricultural products will face a 
different situation, with 16.4 per cent of tariff lin es, covering all HS sections, remaining dutiable at 
the end of the transition period.  The higher average final tariff rate - 82.5 per cent - will apply to 
vegetable products, although only a minor percentage of tariff lines under this section - 1.4 per cent - 
will remain dutiable. 
Table III.4 
Panama:  tariff elimination unde r the Treaty, by HS section 
Number of duty-free lines  
HS section and 
description  MFN 
average
% Total 
no. of 
lines  MFN 
2008  
2008 2012 2017 2019 2022 Remain 
dutiable  Average 
final 
tariff 
rate 
(dutiable 
lines)  
I Live animals 
and animal 
products 22.4 399 21 221 16 4  38 99 51.7 
II Vegetable 
products 10.1 429 148 207 25 29  14 6 82.5 
III Animal or 
vegetable fats 
and oils 10.9 70 20 9  3  19 19 20.3 
IV Prepared foods, 
etc. 14.0 572 87 214 36 60  58 117 25.6 
V Minerals 7.0 199 84 90 10 9 1 5   
VI Chemicals and 
chemical 
products 2.6 1,268 842 265 81 60 9 11   
VII Plastics and 
rubber 4.4 445 248 78 28 86 3 2   
VIII Hides and skins 12.2 121 3 63 6 49     
IX Wood and 
articles of wood 7.3 176 69 33 22 52     
X Pulp, paper, etc. 7.4 485 205 150 60 42 8 20   
XI Textiles and 
textile articles 7.8 1,285 478 235 4 568     
XII Footwear, 
headgear 11.8 164 6 29 24 105     
XIII Articles of 
stone 9.7 293 39 10 113 111 12 8   
XIV Precious stones, 
etc. 7.2 66 24 10 21 11     
XV Base metals 
and base metals 
products 7.4 927 341 177 194 214 1    
XVI Machinery 6.0 1,028 117 748 96 67     
XVII Transport 
equipment 11.5 358 20 110 20 68 140    
XVIII Precision 
equipment 9.5 305 18 214 21 52     
XIX Arms and 
ammunition 14.6 27  13  14     WT/REG239/1 
Page 18  
 
  Number of duty-free lines  
HS section and 
description  MFN 
average
% Total 
no. of 
lines  MFN 
2008  
2008 2012 2017 2019 2022 Remain 
dutiable  Average 
final 
tariff 
rate 
(dutiable 
lines)  
XX Misc. 
manufactured 
articles 11.8 285 1 141 48 95     
XXI Works of art, 
etc. 7.8 9 4 2  3     
Total 8.3 8,911 2,775 3,019 825 1,702 174 175 241 37.3 
Note: Based on the HS 2002 nomenclature. 
Source : WTO estimates based on data provi ded by Panama and the WTO-IDB. 
35. Chart III.4 shows a comparison of average du tiable rates in those HS sections where 
preferential duties are to remain at the end of the implementation period.  The comparison is made 
between the average preferential and MFN rates for lines subject to preferential duties only.  As can 
be seen from Chart III.4 - and mirroring the situation of Chile - the Treaty had no effect on tariff peaks for HS Sections I-IV, as these remain in place at the same level for both preferential and 
MFN duties.  The same applies regarding averag e dutiable rates by HS Chapter, as shown in 
Chart III.6, which was prepared on the same basis as Chart III.5.  The highest rate will apply in 
HS Chapter 10 - rice - which is excluded from the Treaty's coverage. 
0 1 02 03 04 05 06 07 08 09 0XXIXXXIXXVIIIXVIIXVIXVXIVXIIIXIIXIXIXVIIIVIIVIVIVIIIIIIChart III.5
Panama:  average of dutiable rates, by HS Section
HS Section  
Source :  WTO Secretariat estimates, based on data provided by Panama and the WTO-IDB.Average rate of duty (%)
MF Preferential
  WT/REG239/1 
 Page 19 
 
 
  0 1 02 03 04 05 06 07 08 09 0 1 0 02221201917161510742Chart III.6
Panama:  average of dutiable rates, by HS ChapterHS Cha pter  
Source :  WTO Secretariat estimates, based on data provided by Panama and the WTO-IDB.Average rate of duty (%)
MF Preferential
 
 
2. Rules of origin 
36. Chapter 4 deals with rules and procedures of  origin, and Chapter 5 deals with customs 
procedures.  Definitions of relevance to th is Chapter are contained in Article 4.21. 
37. Originating goods are defined in Article 4.1, as follows: 
(a) Goods totally obtained or produced in one or both Parties; 
(b) any non-originating material used in the production of the good fulfils the change in 
tariff classification (CTC) or the regional value-content (RVC) requirement, specified 
in Annex 4.1.  These requirements are suppl emented by the other general provisions 
of the Chapter;  or 
(c) goods produced in one or both Parties ex clusively from originating materials. 
38. The CTC rule, applied for around 90 per cent of tariff lines, requires a change of heading.  It 
applies across the board, alone, or combined with the RVC, especially for industrial goods9 (on 
agricultural goods, RVC is only used in nine head ings of Chapters 9, 17-18, 20, 22 and 24 of the 
Harmonized System).  For goods in Chapters 39 (pl astics) and 40 (rubber), origin is also granted on 
the basis of a technical test according to which or iginating status is granted to a good resulting from a 
                                                      
9 CTC and RVC are jointly used in certain headings of HS Chapters 63-64, 72-73, 82, 84, 87, 90, 94 
and 96.  RVC requirements apply alone for certain goods of HS chapters 39, 44, 71, 76, 81, 83, 85 and 95. WT/REG239/1 
Page 20  
 
  chemical reaction in the territory of one or more of the Parties
10;  that is an alternative method to the 
specific rules of origin provided for both of these Ch apters.  Technical tests al so apply in the textiles 
sector. 
39. Other provisions include those relating to indi rect materials (Article 4.8);  packaging 
materials and containers for retail sale and shipment  (Articles 4.9 and 4.10);  sets (Article 4.12);  and 
exhibitions (Article 4.13). 
40. As regards goods originating in the territory of either of the Parties, Article 4.11 (Transit and 
Transhipment) stipulates that only those operations are authorized which are required for unloading, 
transhipment or any other process necessary to pr eserve the goods in good condition or for their 
transport to the territory of either of the Parti es.  While the Treaty does not specify that the goods 
must be kept under the control and surveillance of  the customs authorities, it points out that the 
importing Party may request proof that any operations carried out outside the territory of the Parties 
comply with the above-mentioned requirements. 
41. Duty-drawback is dealt with in Article 4.16;  it provides that the importer may, within one 
year at most from the date of importation, clai m a refund of duties paid in excess because the goods 
were not afforded preferential treatment, notwith standing the fact that the goods qualified as 
originating but preferential treatment had not been claimed at the time of import.  The claim must be accompanied by:  (a) a written statement that the goods qualified as originating at the time of import;  (b) a certificate of origin;  and (c) any further doc uments relating to the import of goods as may be 
required by the customs authorities. 
42. Article 4.2 provides that the RVC for determin ing the originating status of goods may be 
calculated in terms of either the build-down or the build-up method.  In the former, the value of 
non-originating materials is deducted from the adju sted value of the goods, while in the latter the 
value is arrived at through adding the value of orig inating materials.  The ceilings that apply are of 
40 per cent of RVC when the build-down method is used and 30 per cent when the build-up method is 
used.  Imported materials are valued on the basis of an "adjusted value"
11 while those acquired 
domestically are valued on the basis of the price actually paid, except in cases foreseen in 
Article 4.3(1)(c) and (d).  Paragra ph 2 of Article 4.3 provides a detailed list of adjustment that can be 
made to the value of originating and non-originating materials.  
43. Bilateral cumulation applies between the Parties,  that is to say, each Party stipulates that 
goods or materials originating in one Party, incorporated in goods in the territory of the other Party, are deemed to originate in the territory of that ot her Party.  The absorption principle also applies, 
i.e. non-originating material, once incorporated in  final goods, is considered to be 100 per cent 
originating provided that it undergoes a change of tariff classification. 
44. A de minimis  rule (Article 4.7) applies as follows: 
(a) If the value of all non-originating materials that do not comply with the required CTC 
is less than 10 per cent of the adjusted va lue, the good will be considered originating 
and the CTC requirement waived;  and 
                                                     
 
10 A list of minimal operations that do not confer origin to goods of Chapters 39 and 40 is included in 
Rule 1 of the Notes to Section VII of the "Specific Rules of Origin". 
11 "Adjusted value" means the value determined in accordance with Articles 1-8 and 15 of the 
WTO Agreement on Implementation of Article VII of th e GATT 1994, adjusted, wher e necessary, to exclude 
transport and insurance costs, charges or expenses.  WT/REG239/1 
 Page 21 
 
 
  (b) for textiles and clothing if the good is c onsidered to be non-originating because the 
fibre and the yarns used do not comply with the CTC requirements, it will nonetheless be considered originating if th eir total weight does not represent more 
than 10 per cent of the material's total weight. 
Box III.1:  Rules of Origin at a Glance 
Basic characteristics of the rules of origin 
• Product-specific criteria: 
- Wholly obtained goods. 
- CTC, generally a change of heading. 
- RVC:  40% or 30% depending on the method used. - Technical test applies to plastics, rubber and some textile products. 
• Bilateral cumulation applies 
• Absorption principle applies 
• Tolerance rule applies ( de minimis  rule) 
• Duty-drawback applies 
• No outward-processing authorized 
 
3. Export duties and charges, and quantitative restrictions 
45. Article 3.8 proscribes export prohibitions and rest rictions on goods from the other Party, with 
the exception of measures authorized under Article XI of the GATT 1994 (which is incorporated into 
the Treaty) and measures established in accordance w ith Annex 3.2 (i.e. actions authorized by the 
WTO DSB, and, in addition for Panama, measures on export of wood12).  Under its paragraph 2, the 
Parties agree on an interpretation of Article XI according to which export price requirements and 
voluntary export restraints are forbidden, except as permitted in enforcement of countervailing and 
antidumping orders and undertaki ngs or congruent with Article  18 of the WTO Agreement on 
subsidies or Article 8.1 of the WTO Agreement on Implementation of Article VI of the GATT 1994. 
46. The amount of any fees and formalities connected with exports are limited to the approximate 
cost of the services rendered, in accordance with Article VIII:1 of the GATT 1994;  these are to be 
made available in electronic format (Article 3.9 of the Treaty).  Article 3.10 prohibits the imposition 
of duties, taxes and charges on exports of a good des tined for consumption in a Party, unless they also 
apply to domestic consumption. 
4. Regulatory provisions on trade in goods 
(a) Standards 
(i) Sanitary and phytosanitary measures 
47. Chapter 6 of the Treaty deals with sanitary and phytosanitary (SPS) measures that may affect, 
directly or indirectly, trade in animals and products thereof, plants, and products of vegetal origin.  In 
Article 6.3, the Parties state that their right s and obligation on these issues are those of the 
WTO Agreement on SPS Measures. 
48. A Committee on SPS Measures is established under Artic le 6.4.  The Parties agree to use the 
Committee to deal with divergent views regarding the application of SPS measures (Article 6.3).  A 
Party may initiate consultations with the other Part y with respect to the application of a SPS measure 
                                                      
12 Executive Decree No. 57 of 5 June 2002 establishes measures relating to exports of wood from 
national forests, prohibiting the export of logs, stumps, roundwood or blocks, sawn or roughly dressed, of any 
species, from natural forests, or wood submerged in any artificial body of water. WT/REG239/1 
Page 22  
 
  or regarding the interpretation of Chapter 6 clauses.   Article 6.3 also makes clear that the dispute 
settlement procedures of Chapter 13 may be  used in relation to SPS measures. 
49. Transparency disciplines are spelled out in Article  6.5.  Upon entry into force of the Treaty, 
the Parties are to exchange their SPS measures;  from then onwards, new or modified SPS measures 
are to be notified in accordance with the WTO SPS Agre ement.  Notification is also due in respect of 
changes in animal health or in the phytosanitary  field, respectively within 24 or 72 hours following 
the detection and verification of the problem.  Pa rties commit themselves to provide substantiated 
replies to comments made on notified measures.  Un less in the case of urgent measures, a transition 
period should be provided for those goods in tran sit at the time of application of a new measure. 
50. Article 6.6 provides the rules regarding the rec ognition of a Party's SPS status,  in particular 
as pest/disease-free areas.  An expor ting Party wishing to be granted any such status shall make the 
request to the importing Party and provide scientific evidence in proof of such a request.  The Parties 
are to agree on a period for replying to such a requ est;  negative replies mu st be substantiated in 
writing. 
51. Equivalence (Article 6.7) may be granted to a specific measure, product-specific or category-
specific measure, or at the level of systems.  An exporting Party wishing to be granted recognition 
shall make a formal request to the importing Party and provide evidence that its measures adequately 
reaches the importing Party's level of protection.  The procedures and the substance of the equivalence 
process will be based on the standards of the releva nt international organizations and in accordance 
with the WTO SPS Agreement. 
52. Certification procedures for SPS measures are to be harmonized with the international 
standards of the International Office of Epizooti cs, the International Plant Protection Convention and 
the Codex Alimentarius  Commission.  The importing Party may proceed with a prior evaluation and 
auditing of the certification process and the qualification of the production and transformation sites 
(Article 6.8).  Finally, Article 6.9 provides for th e definition of specific projects of cooperation of 
mutual interest, to be defined as of the first meeting of the SPS Committee. 
(ii) Technical barriers to trade 
53. Chapter 7 deals with technical barriers to trade (T BT);  its scope is defined in Article 7.2 to 
cover all standards, technical regul ations and conformity assessment pr ocedures affecting, directly or 
indirectly, trade in goods between the Parties, with  the exception of technical specifications developed 
by governmental organisations in relation to their production and consumption of SPS measures. 
54. Through Articles 7.1 and 7.3, the Parties re affirm the rights and obligations of the 
WTO Agreement on TBT, and set the improvement of  the implementation of the latter as one of the 
objectives of the Chapter.  In line with this objectiv e, the Parties agree to intensify joint work on TBT 
in particular by identifying subject- or sector-speci fic bilateral initiatives aimed at trade facilitation.  
They commit themselves to inter alia  provide, upon request, reasons for the non-acceptance of the 
other Party's technical regulation as equivalent and of the results of conformity assessment procedures;  intensify exchange of informati on on mechanisms that facilitate acceptance of 
conformity assessment procedures;  and provide nati onal treatment for the recognition of conformity 
assessment bodies of the other Party (Articles 7.5-7.7). 
55. Transparency provisions are included in Article 7. 8;  its obligations are to be implemented as 
soon as possible but within a maximum of five years fro m the Treaty's entry into force.  They require 
the Parties to allow each others' persons to partic ipate in the elaboration of TBT on the basis of 
national treatment;  they also include additional commitments regarding publication of TBT, 
timeframes for providing comments, and bilateral ex change of information via electronic means.  WT/REG239/1 
 Page 23 
 
 
  56. A Committee on TBT is established under Article 7. 9.  In particular, paragraph 3 states that 
consultations on any matter aris ing under this Chapter, organized within the Committee and upon the 
request of a Party, will, upon mutual agreement, constitute "consultations" in the context of dispute 
settlement procedures. 
(b) Safeguard mechanisms 
57. Safeguard measures are dealt with in S ection A of Chapter 8 on Trade Defence. 
(i) Bilateral safeguards. 
58. Safeguard measures are only allo wed during the transition period.13  The application of a 
safeguard measure is allowed if the reduction or elim ination of a tariff rate, made in accordance with 
the Treaty, results in an increase in imports of orig inating products, in absolute terms or relative to 
domestic production, so that it causes, or threatens to cause, serious injury to the domestic production 
of the like product.  Measures allowed14 include suspending any for eseen future reduction of the 
relevant tariff rate or increasing the tariff rate up to  the lower rate between the MFN rate in force at 
the date of imposition of the safeguard measure and the MFN rate applied prior to the Treaty's entry 
into force (Article 8.1). 
59. The maximum duration of a safeguard, including  possible extensions, is three years.  
Independently of its duration, any safeguard measure shall terminate at the expiration of the transition 
period.  Measures imposed for more than one year are to be progressively liberalized at regular intervals.  Safeguards can only be applied once on a good.  Simultaneous application of safeguard 
measures under the Treaty and the WTO Agre ement is forbidden (Article 8.2). 
60. A safeguard may only be applied following an i nvestigation, carried out in accordance with  
Articles 3, 4:2(a) and (c) of the WTO Agreement on Safeguards;  these Articles are incorporated into 
the Treaty (Article 8.3).  Transparency require ments additional to those under the WTO Agreement 
are contained in Article 8.4 of the Treaty;  they pr ovide for the Party to (a) notify, without delay, the 
other Party of the initiation of an investigation, the determination of serious injury or threat thereof, 
and the adoption of a decision for application, exte nsion, or modification, of an existing safeguard 
measure
15, and (b) transmit to the other Party a copy of the public version of the investigation report. 
61. Article 8.5 provides that compensation, of equivalent trade effect, be provided upon the 
imposition of a safeguard measure;  this is to be mutually agreed and shall start 30 days after the 
imposition of the measure.  In the absence of an agreement, the affected Party may retaliate by 
suspending equivalent concessions;  prior 30 day notification is requi red.  Compensation obligations, 
and retaliatory rights, shall terminate at the later of:  (a) date of termination of the safeguard measure, 
or (b) the date when the customs duty returns to  the rate originally foreseen in Annex 3.3.  
62. At the termination of the safeguard measure, the tariff rate shall not be higher than the rate 
that would have, in accordance with Annex 3.3, b een applied one year after the imposition of the 
measure.  On 1 January of the year following its term ination, the Party shall either revert to the rate 
originally foreseen in Annex 3.3 or provide for the elimination of the tariff rate in equal instalments 
by the same final date. 
                                                      
13 In this context, goods liberalized as of entry into  force are considered as having a transition period of 
two years. 
14 The Treaty makes clear that neith er tariff-rate quotas nor quantita tive restrictions are acceptable. 
15 The WTO Agreement provides that these notifications be made to the Committee on Safeguards. WT/REG239/1 
Page 24  
 
  63. As at May 2009, no safeguard measure had b een imposed nor had any investigation been 
initiated in Panama with a view to determ ining the application of such a measure. 
(ii) Global safeguards 
64. Article 8.6 clarifies that the Treaty has no effect on the Parties' rights and obligations vis-à-vis 
the WTO disciplines on safeguards.  As mentione d above, simultaneous app lication of safeguard 
measures under the Treaty and the WTO is prohibited. 
(iii) Safeguards for balance-of-payments reasons 
65. Article 14.4 ("Exception for Balance-of-Payments") allows a Party to apply restrictive 
measures in cases where its balance-of-payments (B OP) is seriously threatened or faces serious 
difficulties.  These measures may affect trade in goods or services, and payments and capital transfers.  
Parties have, however, committed themselves to re frain from applying such restrictive measures. 
66. In the area of goods, a Party may adopt or maintain  a measure that suspends all or part of the 
benefits granted in the Treaty.  Such measure mu st be non-discriminatory, limited in time, necessary 
to remedy the situation, and c onsistent with the WTO and Intern ational Monetary Fund.  Measures 
adopted, or any modifications therein, are to be no tified to the affected Party as early as possible, and 
a calendar for elimination is to be notified as soon as possible.  The applying Party has the obligation 
to enter into consultations within the Free Trade Co mmission;  the aim of such consultations is to  
evaluate the conformity of the measures adopted with the conditions listed above.  
(c) Anti-dumping and countervailing measures 
67. Article 8.8 states that the Parties retain thei r rights and obligations in accordance with the 
relevant WTO agreements on anti-du mping and countervailing measures;  it also clarifies that the 
Treaty has no effect on these rights and obligations , including with respect to dispute settlement. 
(d) Subsidies and State aid 
68. Article 3.4(3) provides that subsidies maintain ed in conformity with Article 27.4 of the 
WTO Subsidies Agreement - i.e. a derogation from the general obligation of elimination of export 
subsidies, available to certain developing country  Members - remain authorized.  From May 2009 to 
31 December 2009, this exemption applies to tw o programmes in Panama, the "Official Industry 
Register" and "Export Processing Zones", which contra dict the general obligation of elimination of 
export subsidies and take the form of full or partia l exemptions from import duties and internal taxes 
(Decisions taken by the WTO Committee on Subsid ies and Countervailing Measures to extend this 
derogation are contained in documents G/SC M/84/Add.6 and G/SCM/85/Add.6 respectively).
16 
(e) Customs-related procedures 
69. These questions are dealt with in both Chapter 4 and Chapter 5 of the Treaty;  procedures of 
origin are dealt with in Article 4.14-4.20 while  Chapter 5 deals with customs administration. 
70. In accordance with Article 4.14, the Parties have  agreed (through an exchange of notes) on 
"Uniform Regulations for the Interpretation, Appli cation and Administration of Chapter 3, Chapter 4 
                                                      
16 In accordance with the Decision of 27 July 2007 (document WT/L/691 of 31 July 2007), the 
WTO General Council decided to extend the validity of pr ogrammes that had already been granted an extension 
in 2002, on the basis of the commitment of the respective Members to eliminate the export subsidies in question no later than 31 December 2015 , with no requests fo r extension beyond those foreseen  pursuant to the Decision.  
The extension thus granted benefits the programmes mentioned.  WT/REG239/1 
 Page 25 
 
 
  and Chapter 5 of the FTT between Chile and Panama" and on a correction to it;  the form and content 
of both the Certificate of Origin and the Declarati on of Origin are contained in its Annexes 1 and 2 
respectively.17 
71. The Certificate of Origin certifies that the goods being exported are originating;  it is to be 
filled and signed by the exporter and has a validity of  two years.  The Certificate of Origin remains 
valid for one or several imports of identical goods during the timeframe establis hed in the certificate.  
The Declaration of Origin is to be filled and signed by the producer of the good;  its validity is also 
two years.   
72. Article 4.15 lists the obligations of importers , including on occasions where doubts exist on 
the accuracy of the Certificate of Origin;  for expor ters or producers, the equivalent obligations are 
contained in Article 4.17. 
73. Provided that imports do not take place at differe nt times in order to circumvent certification 
requirements, the requirement for a Certificate of Or igin is waived in three cases, namely commercial 
imports below US$1,000 (an invoice indicating that  the good is originating may be required);  
non-commercial imports below US$1,000 (in both cases  a Party may establish a higher threshold);  
and imports of a good for which the importing Party h as waived the need for presenting the Certificate 
of Origin (Article 4.18). 
74. Verification (Article 4.19) is conducted by the authorities of th e importing Party;  findings are 
to be communicated within 60 days following its  conclusion.  Verification may involve written 
questionnaires to be completed by exporters or pro ducers, verification visits and other procedures.  
Verification visits require prior written notification and the agreement of the exporter or producer;  in 
the absence of a reply within 30 days, preferential trea tment may be denied.  Such visits may also be 
postponed once upon request of the exporter/producer.   
75. Chapter 5 on "Customs Administration" establishes a series of obligations of the customs 
administration aiming at trade facilitation.  These obl igations, generally of a "best endeavour" nature, 
are as follows: 
(a) Transparency obligations, through publica tion of customs-related laws, regulations 
and procedures;  establishment of focal points;  and best endeavours in prior publication of customs regulations proposed for adoption; 
(b) customs authorities of each Party are to  establish/maintain simplified customs 
procedures for the dispatch of goods (best endeavours to allow the dispatch of goods 
within 48 hours from arrival, without  temporary deposit and without prior 
presentation to customs); 
(c) best endeavours to expedite procedures th rough recourse to information technology; 
(d) best endeavours to put in practice risk mana gement systems so as to focus inspection 
activities of high-risk goods; 
(e) increase cooperation of Parties' customs authorities, including best endeavours in 
providing for prior communication of customs legislation changes to be introduced;  
the provision of technical assistance and conclusion of agreements for mutual administrative assistance;  as at April 2009, no such agreement had been concluded; 
                                                     
 
17 http://www.mici.gob.pa/TLC_nueva.php  and http://www.direcon.cl . WT/REG239/1 
Page 26  
 
  (f) maintenance of the confidentiality of information exchanged; 
(g) adoption/maintenance of specific and expedite customs procedures for express 
consignments; 
(h) ensure that importers have access to administrative and judicial reviews; 
(i) adoption/maintenance of measures allowing the imposition of civil, administrative 
and penal sanctions for violation of customs laws and regulations; 
(j) provision of advanced rulings prior to import upon written request by the importer, 
exporter or producer;  detailed procedures on th ese are contained in Article 5.10;  and  
(k) acceptance by Chile's customs authorities, in the context of the pr ohibition of outward 
processing in various other trade agreements concluded by Chile, of the certificate of 
re-export issued by Panama's customs authorities stating that the goods concerned 
have remained under control in a duty-free zone. 
(f) Other regulations 
76. Chile recognizes "Molas" as a distinctive produc t of Panama (Article 3.12) and will not 
therefore allow the import, production or sale in its territory of any product under this marking unless 
produced in Panama in conformity with its laws and regulations relating to the production of Molas.
18 
77. The marking of country of origin on goods fro m the Parties will be done in accordance with 
the provisions of Article IX of the GATT 1994, whic h is incorporated in the Treaty (Article 3.13). 
5. Sector-specific provisions on trade in goods 
(a) Agriculture 
78. Article 3.14 prohibits the introduction or appli cation of export subsidies on any agricultural 
products traded between the Parties.  
IV. TRADE IN SERVICES 
A. SCOPE AND DEFINITIONS  
79. The trade in services provisions are contained in  Chapter 10, while investment provisions are 
contained in Chapter 9.  Chapter 10 covers  cross-border supply (Mode 1), consumption 
abroad (Mode 2) and presence of natural persons (Mode 4) for all services sectors, except those 
specified in Article 10.1(3).  The following are ex cluded from the Treaty's coverage, as specified in 
Article 10.1(3): 
(a) Financial services; 
(b) air services, including domestic and intern ational, scheduled and non-scheduled air 
transport services, as well as related services in support of air services.  However, 
aircraft repair and maintenance services dur ing the period in which an aircraft is 
withdrawn from service, specialty air services and computerized reservation systems are included in the Treaty's scope (Art. 10.1.3(b)(i) and (ii)); 
                                                     
 
18 This is without prejudice of Chile's recognition of "Molas" as a distinctive product from another 
country.  WT/REG239/1 
 Page 27 
 
 
  (c) government procurement of services; 
(d) subsidies and other State aids;  and 
(e) as in the GATS, services provided by a Party "in the exercise of governmental 
authority, such as services related to retire ment, social security and public education, 
among others. 
80. The Chapter on Investment does not contain disciplines, but rather confirms the rights and 
obligations contained in the bilateral investment treaty (BIT) concluded between the two Parties in 
November 1996.  Accordingly, the Treaty does not co ntain liberalization commitments with respect to 
the supply of services through commercial presence (mode  3).  It may be noted that the BIT covers 
investments in all sectors, including services, although its focus is on treatment post-establishment. 
B. DENIAL OF BENEFITS  
81. Under Article 10.10, a Party may deny the benefits of the services Chapter to a services 
supplier of the other Party if:  (a) the service is supplied by an enterprise owned or controlled by a 
supplier of a non-Party and the enterprise does not  undertake "substantial business operations" in the 
other Party territory;  or (b) the service is supplied by an enterprise owned or controlled by a person of 
the denying Party and such enterprise does not en gage in "substantial business  operations" in the 
other Party's territory.  Denial of benefits may be  subject to consultations and (subsequently) dispute 
settlement. 
82. The relevant definitions are set out in Article 10.11. Accordingly, "enterprise" is defined as 
any entity constituted or organized under the applicab le law of a Party, including its branch, while 
"service supplier" is defined as a person that prov ides or seeks to provide a cross-border service;  
"substantial business operations " are however not defined. 
C. GENERAL PROVISIONS ON TRADE IN SERVICES  
83. The Panama-Chile Treaty adopts a "negative-list"  approach, by which the key provisions of 
the services Chapter apply to all covered sectors a nd modes of supply, unless otherwise provided.  As 
per Article 10.5, the Parties specify, in annexes, thei r reservations - i.e.  non conforming measures - to  
the principles of national treatment, MFN treatment  and local presence (respectively Article 10.2, 10.3 
and 10.4). 
1. Market access 
84. The Chapter does not contain an obligation along the lines of GATS Article XVI.  
Article 10.6 provides that each Party will establis h a list of all existing measures representing a 
non-discriminatory quantitative restriction to the pr ovision of a service;  this list is presented in 
Annex III to the Treaty. 
2. National treatment, MFN and local presence 
85. Under Article 10.2, each Party accords to service s uppliers of the other Party treatment no less 
favourable than that accorded, in similar circum stances, to their own service suppliers A footnote 
indicates that "service suppliers" is to be read  here as having the same meaning as "services and 
service suppliers" in GATS Article XVII:1.  Under Ar ticle 10.4, the Treaty prohibits the Parties to 
require a service supplier of the other Party to establis h or maintain a representative office or any form 
of enterprise, or be resident, in  its territory as a condition for the cross-border supply of a service.  WT/REG239/1 
Page 28  
 
  Parties may however apply reservations with respect to this rule under terms and conditions specified 
in Article 10.5, as referred to in paragraph 87 below. 
86. Under Article 10.3, each Party accords to service s uppliers of the other Party treatment no less 
favourable than that accorded, in similar circumstanc es, to service suppliers of a non-Party.  However, 
as indicated in the section relating to the Parti es' liberalization commitm ents, both countries have 
taken some reservations from this MFN obligation, including as regards preferential treatment granted 
in the context of a pre-existing international agreem ent, as well as for any international agreements in 
the fields of air transport, fishing, and maritime matters.  Like for national treatment, a footnote to 
Article 10.3 makes clear that "service suppliers " has the same meaning as "services and service 
suppliers" in GATS Article XVI. 
87. As indicated above, the Chapter follows a negativ e-list approach as regards the obligations of 
national treatment, MFN, and local presence.  In accordance with Article 10.5, the Parties have listed in Annex I their reservations for all existing non-conforming measures at the central level of 
government in relation to the obligations.  Existi ng non-conforming measures at the local government 
level are not listed in the annexes.  Annex II contai ns reservations allowing the Parties to maintain or 
adopt new non-conforming measures in relation to specified sectors or areas. 
3. Movement of natural persons 
88. While the Services Chapter does not contain di sciplines on movement of natural persons, it 
clarifies (Article 10.1(4)) that the chapter does not impose on a 
Party any obligation  with regard to 
nationals of the other Party seeking access to its employment market or being permanently employed 
therein, nor to confer any right wi th respect to any of these issues.  
D. LIBERALIZATION COMMITMENTS  
1. Chile 
89. Under this Agreement, Chile considerably extends its GATS commitments;  while in the 
GATS, commitments are undertaken on five out of the 11 sector groups iden tified in the Services 
Sectoral Classification List (SSC, W/120)19, all sectors are bound in the Treaty at the existing level of 
openness (i.e. non-discrimination), except for  financial20 and key air transport services, which are not 
covered, and for specific areas listed in Annex II  (future measures).  Additional liberalization 
commitments are also taken in various sectors alre ady covered under the GATS.  A major carve-out to 
this is that the Treaty does not contain liberaliza tion commitments on mode 3, or an obligation on 
market access along the lines of GATS Article  XVI (except for the obligation to list 
non-discriminatory QRs). 
90. Table IV.1 below lists existing (Annex I) a nd future (Annex II) non-conforming measures 
maintained by Chile, the sectors affected, and their location in the Treaty.  Quantitative restrictions 
(QRs) listed in Annex III by Chile are as follows:  (a) State monopolies for postal services, maritime 
and aeronautic telecommunications, and specialty air services regarding the establishment of maps 
and charts;  and (b) other types of QRs apply to radio services, transmission of electrical energy, 
services related to nuclear energy, legal services, air transport and environmental services. 
91. With regard to mode 4, Chile listed a reserva tion (Annex I) requiring that at least 85 per cent 
of the employees of any enterprise must be Chilean.  Th is rule only applies to enterprises of more than 
                                                      
19 Document MTN.GNS/W/120, of 10 July 1991, available on the WTO website at:  
www.wto.org/english/tratop_e/serv_e/mtn_gns_w_120_e.doc. 
20 Chile has undertaken commitments in financial services under the GATS.  WT/REG239/1 
 Page 29 
 
 
  25 employees.  For expert technical personnel th at cannot be replaced by local personnel, the 
85 per cent quota does not apply.  In the GATS,  Chile's mode 4 commitments are limited to 
intra-corporate transferees. 
92. Distribution, not committed to under the GATS, has been fully liberalized - i.e. it is not 
subject to any of the sector-specific exceptions listed in Annexes I-III.21  Construction, educational, 
environmental, and health and social services, are not committed to either under the GATS and 
remain subject in the FTT to future non-confor ming measures in accordance with Annex II and, for 
environmental services, to some QRs as well in a ccordance with Annex III.  Recreational, cultural and 
sporting services are liberalized but the possession of arms and explosives, as well as activities related 
to fireworks, are subject to registration requirement listed in Annex I;  Chile also listed a reservation 
under Annex I with respect to residency and na tionality requirements for news agency services. 
93. The liberalization of business services is exte nsive as compared to the GATS commitments, 
which cover only eight out of the 46 subsectors of the W/120.  In the Treaty, none of the subsectors is 
excluded from its coverage;  services incidental to fi shing are subject to numerous existing and future 
limitations;  some other subsectors, especially legal professional services, are subject to limitations - 
in particular nationality, registration an d professional accreditation requirements.   
94. In the communication sector, postal services are the monopoly of State enterprise.  Courier 
services, not covered under the GATS, are not subj ect to any specific reservation.  Chile takes 
commitments on telecommunications, though local  presence and nationality requirements may be 
applied under the Treaty.  It also reserved the right  to take any non-conforming measure with respect 
to local basic telecommunication services, as well as  for supplementary telecom services and limited 
telecom services.  Audiovisual services, which ar e uncommitted to in Chile's GATS schedule, are 
subject to a number of existing limitations (i ncluding e.g. reciprocity on the granting of 
radio-transmission concessions, nationality and local  presence requirements), as well as reservations 
for future measures in relation to satellite televi sion and audio broadcasting.  Further, Chile has 
reserved the right to apply to "cultural industries" future measures as regards MFN treatment.22 
95. Tourism and travel related services are liberalized without limitations;  that contrasts with the 
GATS, where in particular no commitments have been  taken on the subsectors covered with respect to 
mode 1. 
96. Chile's GATS commitments in transport are limited to certain air transport services.  In 
addition to these, all other transport services are covered by the Treaty and liberalization 
commitments apply on cross-border trade, although subject to a series of requirements in the various 
subsectors, e.g. nationality, professional accred itation and registration requirements on maritime 
transport, and nationality and registration requirements in road transport. 
97. Other future non-conforming measures listed in  Chile's Annex II include an MFN reservation 
applying to all sectors, whereby it reserves the right  to give preferential treatment to countries under 
any international agreement preceding the Panama-C hile Treaty;  for agreements signed after the 
Treaty's entry into force, this exemption is lim ited only to aviation, fishery services and maritime 
affairs, including rescue.  Other future sectoral r eservations not referred to above apply to minorities 
and indigenous peoples, social services - law en forcement and social readaptation - and public 
                                                      
21 However, horizontal reservations apply. 
22 "Cultural industries", defined by Chile in its Annex II, cover:  (a) publication, distribution, and sale 
of books, magazines, periodical and newspapers;  (b) produc tion, distribution, sale or exhibition of films, videos, 
music;  and (c) radio-communications received directly by the public, as well as all activities related to radio, 
TV and cable transmission, satellite programming services and transmission networks.   WT/REG239/1 
Page 30  
 
  services related to income security or insurance, social security, so cial welfare, public education and 
training, and childcare. 
Table IV.1 
Chile:  summary of non-conforming me asures contained in Annexes I and II 
Sector/subsector Obligations  Annex/page 
Annex I 
All sectors NT/LP Annex I-1/2 
Communications NT/MFN/LP Annex I-3/4 
Printing, publishing and associated industries NT/MFN/LP Annex I-5 
Services incidental to fishing NT/MFN/LP Annex I-6/7 
Sporting and other recreationa l services LP Annex I-8 
Specialty services/Custom agents  and officers NT/LP Annex I-9 
Specialty services/Armed security agents NT Annex I-10 
Business services/Research NT Annex I-11/12 
Business services/Research on so cial sciences NT Annex I-13 
Professional, technical and specialty serv ices/Professional services NT/LP Annex I-14 
Professional services/Engineers and technicians NT Annex I-15 
Professional services/Legal services NT/MFN Annex I-16 
Professional, technical and specialty  services/Services auxiliary to 
Justice Administration NT/LP Annex I-17/18 
Transport/Air transport NT/MFN/LP Annex I-19/21 
Transport/Maritime transport NT/MFN/LP Annex I-22/24 
Transport/Maritime transport NT/LP Annex I-25/26 
Transport/Road transport NT/MFN/LP Annex I-27/28 
Transport/Road transport NT/MFN Annex I-29 
Annex II 
All sectors MFN Annex II-1 
Questions relating to minorities NT/MFN/LP Annex II-2 
Questions relating to indigenous peoples NT/MFN/LP Annex II-3 
Communications/Local networks and basic telecommunication 
services, digital satellite transmission, telecommunications 
complementary services and telecommunications limited services NT/MFN/LP Annex II-4 
Educational services NT/MFN/LP Annex II-5 
Services incidental to fishing NT/MFN Annex II-6 
Cultural industries - business services (publication);  distribution 
services;  audiovisual services MFN Annex II-7 
Social services NT/MFN/LP Annex II- 8 
Environmental services NT/MFN/LP Annex II-9 
Construction services NT/LP Annex II-10 
Note: Existing measures not in conformity with obligations in re spect of:  NT:  National Treatment;  MFN:  Most-Favoured-Nation  
Treatment;  LP:  Local Presence. 
Source : Free Trade Treaty between Panama  and Chile, Annexes I and II. 
2. Panama 
98. Under this Agreement, Panama considerably extends its GATS commitments, particularly 
with regard to the number of sectors subject to liberalization commitments;  while it has commitments under the GATS in all 11 sector groups in the SSC , these cover less than half of the 160-odd 
subsectors comprising the List.  Under the Treaty, all sectors are bound at the existing level of  WT/REG239/1 
 Page 31 
 
 
  openness (i.e. non-discrimination), except for  financial23 and key air transport services, which are not 
covered, and for specific areas listed in Annex II (future measures).  However, as previously noted, 
this wide coverage is also to be seen vis-à-vis  the fact that the Treaty does not contain liberalization 
commitments on mode 3, or an obligation on market access along the lines of GATS Article XVI. 
99. Table IV.2 below lists existing (Annex I) a nd future (Annex II) non-conforming measures 
maintained by Panama, the sectors a ffected, and their location in the Treaty.  Quantitative restrictions 
listed in Annex III by Panama are as follows:  (a) State monopolies for the transmission of electrical energy, postal and telegraph services, and gambling;  and (b) other non-discriminatory QRs applying to distribution of electrical energy, agriculture, ag ricultural settlements in the form of a ratio of 
Panamanians to foreign families,  mobile telecommunication services, new bars in certain Districts of 
the country, and ports and airports. 
100. The Treaty does not contain reservations of ge neral application in relation to mode 4, 
although a number of sector-specific reservations rela te to the temporary movement of persons.  In 
contrast, in the GATS, Panama listed a horizontal limitation providing, among other things, that at 
least 90 per cent of the employees of any foreign investor must be Panamanian or must have resided 
in the country for ten years.  A horizontal MFN reservation applies vis-à-vis  other international 
agreements;  it mirrors that applied by  Chile described in paragraph 97 above. 
101. With regard to the Panama Canal, Panama maintains the right to give preference to 
Panamanians over foreigners in recruitment for posts w ithin the Canal Authority.  It also reserves the  
right, in Annex II, to adopt any measures regarding the use, operation, administration, development or 
property of the Canal that may affect foreign services suppliers. 
102. In business services, Panama liberalizes resear ch and development services, real estate 
services and a large number of other business service s subsectors.  Nationality requirements apply for 
a wide spectrum of professional services.  For exam ple, engineering and architecture enterprises have 
to be established in Panama to operate, unless otherwi se agreed in another international agreement.  In 
order to be able to practise, lawyers are to be Panamanians and have a licence granted by the 
Supreme Court of Justice. 
103. In communication services, Annex III provides th at Panama's postal a nd telegraph activities 
are restricted to the government, but no reservations  are listed as regards courier services, which is 
uncommitted under the GATS.  With respect to te lecommunications, Annex III states that the number 
of mobile phone operators and personal communication services is limited.  Annex I specifies that 
telecommunication services provided directly to us ers in Panama can only be supplied by persons 
established in Panama. 
104. In audiovisual services, Panama lists no reser vations as regards motion pictures and sound 
recordings, and reserved the right to maintain a number of existing non-conforming measures with 
respect to radio and television broadcasting, e.g. residency and nationality requirements. 
105. With regard to distribution services, whic h is uncommitted under the GATS, Panama has 
listed no reservations under the Treaty.
24  Furthermore, the State reserves the operation of the 
electricity transmission services.  In education services, Panama lists a reservation maintaining the requirement that the history of Panama and civic education must be taught by Panamanians.  It also reserves the right to adopt any future measures regarding services related to public education and 
training.  In tourism services, the coverage is ex tended to cover all subsectors, while in the GATS 
                                                     
 
23 In the GATS, Panama has undertaken certain  commitments in respect of insurance and 
insurance-related services, and banking and other financial services. 
24 Mode 3, which is the most relevant mode for this sector, is not covered by the Treaty. WT/REG239/1 
Page 32  
 
  commitments are limited to hotels and certain trav el agencies and tour operator services.  Nationality 
requirements apply to travel agents. 
106. In recreational services, the entire sector is liber alized under the Treaty - with the exception of 
games of luck and chance, which may only be opera ted by the State (Annex III), and artistic activities, 
for which there is a requirement that every time a Chilean music artist is hired, Panamanian music 
artists must be hired on the same conditions - whereas the GATS coverage is limited to partly 
liberalizing mode two commitments on certain entertainment services.  
107. Panama has undertaken commitments in all tr ansport services;  in air transport services - 
generally excluded from the coverage of the Treaty - commitments relate only to specialty services, and repair and maintenance;  in the GATS, the only commitment regarding transport services relates 
to "aircraft repair and maintenance".  However, Panama reserved the right to impose a series of 
requirements in the various subsectors.  For maritime transport, for example, only a Panamanian may be a pilot's apprentice and priority is given to Panamanians in recruitment by ship-owners.  In 
addition, at least one of the representatives of staff recruitment and placement agencies must be a Panamanian national.  With regard to air transpor t auxiliary services, staff of Panamanian enterprises 
must be Panamanian.  On road transport, Panama  reserves the right to implement future measures on 
freight transport and imposes nationality requireme nts for operating domestic routes for passengers 
and freight transport. 
108. Panama also includes a number of reservations in respect of services incidental to mining, 
fishing, oil and natural gas.  Other reservations allow Panama to adopt any future measures including 
on matters relating to minorities, and to deny Ch ilean service providers any rights or preferences 
granted to indigenous populations.  Furthermore, Pa nama reserves the right to impose limitations on 
the privatization of State enterprises and on construc tion services.  In social services, Panama reserves 
its rights to adopt any future measures regard ing services of law enforcement and correctional 
services, and public services related to retirement a nd unemployment insurance, social insurance, 
social welfare, water supply, health care and childcare. 
Table IV.2 
Panama:  summary of non-conforming measures contained in Annexes I and II 
Sector/subsector Obligations  Annex/page 
Annex I    
All sectors NT Annex I-PA-1 
Musicians and artists NT Annex I-PA-2 
Travel agencies NT Annex I-PA-3 
Radio and television transmission services NT/MFN Annex I-PA-4/5 
Educational services NT Annex I-PA-6 
Crude oil and natural gas NT/LP Annex I-PA-7 
Mining extraction of non-metallic and metallic  minerals (other than precious metal 
ores), alluvial and non-alluvial precious me tal ores, energy minerals (other than 
hydrocarbons) and reserve minerals NT Annex I-PA-8/9 
Fishery/fish and other fisheries products NT/LP Annex I-PA-9/11 
Fishery-related activities LP Annex I-PA-12 
Security services/private security agencies NT Annex I-PA-13 
Advertising services NT Annex I-PA-14 
Transport services/road transportation of  passengers and freight NT Annex I-PA-15 
Maritime transport/pilots NT Annex I-PA-16 
Maritime transport NT/LP Annex I-PA-17 
Air transport auxiliary services NT Annex I-PA-18 
Professional services/lawyers NT Annex I-PA-19 
Professional services NT/MFN/LP Annex I-PA-20/26  WT/REG239/1 
 Page 33 
 
 
  Sector/subsector Obligations  Annex/page 
Telecommunications LP Annex I-PA-27 
Ports and airports LP Annex I-PA-28 
Annex II    
Social services NT/MFN/LP Annex II-PA-1 
Questions relating to indigenous peoples NT/MFN/LP Annex II-PA-2 
Questions relating to minorities NT/MFN/LP Annex II-PA-3 
Matters relating to the Panama Canal NT/MFN/LP Annex II-PA-4 
Matters relating to State enterprises or public entities NT/LP Annex II-PA-5 
Construction services NT/LP Annex II-PA- 6 
Road transport services NT/MFN/LP Annex II-PA-7 
Fishery and fishery-related activities NT/MFN Annex II-PA-8 
All sectors MFN Annex II-PA-9 
Note: Existing measures not in conformity with obligations in re spect of:  NT:  National Treatment;  MFN:  Most-Favoured-Nation  
Treatment;  PR:  Performance Requirements;  LP:  Local Presence. 
Source : Free Trade Treaty between Panama and Chile, Annexes I and II. 
E. REGULATORY PROVISIONS ON TRADE IN SERVICES  
1. Domestic regulation 
109. According to Article 10.8 on domestic regulation,  where authorization is required for the 
supply of a service, the competent authorities of the Party must, within a reasonable period of time 
after the submission of an application considered  complete under domestic  laws and regulations, 
inform the applicant of its decision.  At the request  of the applicant, the competent authorities of the 
Party must provide, without undue delay, information concerning the status of the application;  this 
obligation does not however apply to requests of authorization in relation to measures in Article 10.5(2) (non-conforming measures listed in A nnex II).  Moreover, Article 10.8.2 provides that 
the Parties will strive to ensure that measures re lating to qualification requirements and procedures, 
technical standards and licensing requirements do not constitute unnecessary barriers to trade in 
services.  To this end, the Parties will seek to en sure that such requirements be based on objective 
criteria, not be more burdensome than necessary, and, in case of licensing procedures, not in of 
themselves restrict the supply of the service. 
110. Finally, the Parties agree to incorporate into the Treaty, upon consultation, the results of 
negotiations carried out on this subject in other multilateral forums, including the WTO. 
2. Recognition 
111. As regards mutual recognition of professiona l services qualification, dealt with under 
Article 10.9, the Treaty provides for the Parties to en courage relevant authorities to elaborate mutually 
acceptable mechanisms, rules and criteria for th e accreditation and certification of educational 
institutions or academic programmes of post-secondary  education;  and licences and authorizations 
for professional services suppliers of the other Party.   Neither Panama nor Chile has any qualification 
recognition agreements. 
112. In cases where recognition is granted to service suppliers of a non-Party by means of an 
agreement or a convention, there is no obligati on for this to be extended to the other Party.
25  The 
                                                      
25 There are agreements on mutual recognition of university diplomas between Panama's two leading 
State universities (University of Panama and Technology Institute) and some universities in Brazil, Colombia, 
Cuba, Ecuador, El Salvador, Mexico, Nicaragua, Peru, Spain and Venezuela. WT/REG239/1 
Page 34  
 
  Article also makes clear that recognition of professi onal titles, authorisation or certification shall not 
be granted in a manner that would constitute a discr imination of service suppliers of the other Party or 
a disguised restriction to trade in services. 
V. GENERAL PROVISIONS OF THE AGREEMENT 
1. Transparency 
113. The transparency mechanism is describ ed in Chapter 11.  According to it: 
(a) Each Party will designate an enquiry poin t to facilitate communication on any matter 
dealt with in the Treaty (Article 11.1); 
(b) laws, regulations, procedures and administ rative rulings of general application
26 on 
any matter covered by the Treaty will be published as early as possible, or will be 
made available for the Parties and any other interested person (Article 11.2); 
(c) each Party will notify, to the extent possible,  the other Party of any applied or draft 
measure that it considers as possibly, or substantially, affecting the interests of the other Party, and will provide, upon requ est, information on any applied or draft 
measure (Article 11.3);  and 
(d) in their administrative procedures covered by  the measures specified in Article 11.2, 
both Parties will ensure that persons of the other Party that are directly concerned by 
such procedures are given notice of initiation thereof and are given the opportunity to present facts and arguments in support of th eir positions, and that the procedures are 
in accordance with the respective Party's domestic legislation (Article 11.4). 
114. Moreover, each Party will establish or maintain a tribunal or a judicial, quasi-judicial or 
administrative procedure aimed at reviewing or ch allenging administrative rules affecting any matter 
covered under this Treaty.  Such tribunals will be  impartial and independe nt and will preserve the 
right of any Party to defend its own position (Article 11.5). 
115. The Chapter on transparency appli es to all Chapters of the Treaty,  so that there is no need for 
a provision in each chapter to specify the disciplin es it contains.  Chapter 11 has been extended with 
the addition of Article 10.7, stipulating that each  Party is to establish or maintain appropriate 
mechanisms for responding to request s from interested persons concerning its regulations in respect of 
matters covered by Chapter 10 and,  in order to implement this co mmitment, to establish mechanisms 
suitable for small administrative bodies, taking into account any budgetary and other potential 
resources limitations.
27,28 
                                                      
26 As specified in Article 11.6, "administrative ruling of general application" means any administrative 
resolution or interpretation applying to all persons or actions falling within its scope, excluding:  (a) administrative determination or resolution applying to persons, goods or services of the other Party in a 
specific case;  or (b) administ rative resolution referring to a specific action or practice. 
27 Panama's National Directorate of International Tr ade Treaty Administration and Trade Defence is the 
office responsible for responding to requests from interested persons concerning the regulations in respect of 
matters covered by the Chapter on Cross-Border Trade in Services.  This office is in charge of establishing and 
maintaining the appropriate mechanisms for implementing this commitment. 
28 Chile has not adopted any specific measures, but th ere are mechanisms for resolving questions from 
interested persons in this field.  WT/REG239/1 
 Page 35 
 
 
  2. Current payments and capital movements 
116. The Treaty does not contain any discipline on current payments and capital movements.  It 
only provides for the possibility, under Article 14.4, to introduce restrictive measures on capital 
movements in case of BOP difficulties faced by any of the Parties. 
3. Exceptions 
117. Exceptions to the bilateral trade regime are addressed in Chapter 14.  General exception 
vis-à-vis  goods provisions (Chapters 3-7) are dealt with through the incorporation of Article XX of the 
GATT 1994, including those environmental measures which are considered necessary to protect 
human, animal or plant life and those related to the conservation of exhaustible natural resources.  As 
for the services sector (Chapter 10), GATS Article XIV applies, including also the provision on 
environmental measures (Article 14.1(b)).  Excepti ons for BOP reasons have been described earlier 
(paragraph 65 above). 
118. Security exceptions are set out in Article 14. 2, in conformity with Articles XXI of the 
GATT 1994 and XIV bis of the GATS.  Taxations measures29 are generally excluded from the scope 
of the Treaty, except for those cases explicitly  provided in Article III of the GATT 1994 and 
GATS Articles I and XIV(d). 
4. Accession 
119. The Treaty does not contain any specific pr ovision on accession by third countries. 
5. Institutional framework 
120. Under Chapter 12, the Parties establish a Free Trade Commission ( Comisión de Libre 
Comercio ), made up of ministerial-level representatives of  the Parties or persons designated by them, 
which will meet at least once a year.  The fu nctions of the Commission are to supervise 
implementation of the Treaty, monitor its subsequent  development, resolve disputes and deal with any 
other matter as may affect the ope ration of the Treaty (Article 12.1). 
121. Additionally, the Free Trade Commission may further the implementation of the objectives of 
the Treaty, by approving any modification of:  (a ) the Parties' timetable for tariff elimination 
(Annex 3.3) in order to accelerate the liberalizati on process;  (b) the specific Rules of Origin 
contained in Annex 4.1;  (c) the rules governing th e arbitration procedure contained in Annex 13.9;  
(d) the Uniform Regulations (see paragraph 70 abov e);  and (e) the lists of services reservations and 
exceptions (Annexes I, II and III to Chapter 10). 
122. Modifications of the Treaty approved by the Fr ee Trade Commission will be implemented, in 
Chile's case, through implementing agreements and in  the case of Panama, pursuant to its legislation. 
123. Other bodies established under the Treaty are the Committee on Trade in Goods 
(Article 3.15), responsible for all matters unde r Chapters 3-5, and the Committees on SPS Measures 
and on TBT, which have been referred  to elsewhere in this document. 
                                                      
29 Article 14.6 clarifies the meaning of "taxatio n measure". Accordingly, this does not include: 
(a) custom tariff, as defined in Article 2.1;  or (b) any measure listed in Paragraphs b (antidumping and countervailing measures) and c (any other charge related to importation proportional to the cost of the services 
supplied) of Article 2.1. WT/REG239/1 
Page 36  
 
  6. Dispute settlement 
124. The dispute settlement mechanism is described in Chapter 13.  Article 13.2 provides that the 
provisions of Chapter 13 apply to any dispute ar ising between the Parties in relation to the 
interpretation or implementation of the Treaty;  to any existing or draft
30 measure which is considered 
to be incompatible with the obliga tions under this Treaty;  or to any existing or draft measure which is 
considered to cause nullification or impairment ac cording to Annex 13.2.  Annex 13.2 specifies that 
the dispute settlement mechanism will apply when a Pa rty considers that, as a result of a measure that 
does not contravene the Treaty, benefits that could reasonably have been expected to derive from the 
application of the following provisions are nullified or impaired:  (a) Chapters 3 to 5 (National 
Treatment and Market Access for Goods, Rules of  Origin and Procedures of Origin, Customs 
Administration);  (b) Chapter 7 (TBT);  and (c ) Chapter 10 (Cross-border Trade in Services). 
125. The complaining Party is free to choose the fo rum for the settlement of a dispute under the 
WTO Agreement or under any other international agre ement to which both are parties (Article 13.3);  
once a dispute settlement procedure has begun, the Pa rties may not request the use of the mechanism 
established in the other fora.  As a first stage, an y matter is to be dealt with through consultations 
(Article 13.4), following which a Party may request  the intervention of the Free Trade Commission 
(Article 13.5) and, should the matter not be resolved , the establishment of an Arbitral Tribunal (AT, 
Article 13.6).  No appeal mechanism is provided fo r.  Time-frames are associated with each stage of 
the procedure;  in cases of perishable goods, time-frames are reduced.  Table V.1 summarizes the 
dispute settlement mechanism. 
126. Under Article 13.4, any Party may request, in writing, to enter into consultations. 
Consultation shall start 30 days after the receipt of the request (15 days in urgent cases including those 
involving perishable goods).  If the Parties fail to re ach a satisfactory solution at this stage, they may 
request a meeting of the Commission to deal wi th the issue.  According to Article 13.5, the 
Commission will meet within ten days from the receipt  of the request and will endeavour to resolve 
the dispute;  in so doing, it may request technical advice or set up working groups;  provide for good 
offices, conciliation or mediation;  or put forward recommendations. 
127. If no mutually agreed solution is found:  (a) within 25 days from the meeting of the 
Commission;  (b) within 70 days from the receipt of the request for consultations, or 30 days in urgent cases including those involving perishable goods;  or (c ) any other period agreed to by the Parties;  
any Party may request the establishment of an AT  (Article 13.6), composed of three members.
31  Each 
Party is to appoint one member, while the third me mber, to be jointly appointed, will act as its 
President;  if agreement cannot be reached on the AT's composition within 30 days from the date of 
receipt of the request for its establishment, at the request of either Party, its composition will be decided by the WTO Director-General within the ne xt 30 days (Article 13.7).  The Parties may agree 
to suspend the AT procedure for a pe riod of no longer than 12 months or to terminate the procedure at 
any time if they succeed in reaching a mu tual acceptable solution (Article 13.10). 
                                                     
 
30 Draft measures will only be the subject of consultations. 
31 As specified in Article 13.6(4), an AT may not examine a draft measure.  WT/REG239/1 
 Page 37 
 
 
   
(Art. 1802)  
-
-4)Consultations , within 30  
days from receipt of request  
(Art. 13.4) 
Request for establishment of AT (Art. 13.6) 
Provisional AT report  (Art. 13.11) AT Composition (Art. 13.7) 
90 days**  
Final AT report (Art. 13.12) Referral to Commission (Art. 13.5)  
Meeting of the Commission (within 10 days) 
AT examination  (Art. 13.8-13.9 ) 
Implementation  (Art. 13.13) 
Notice of implementation, within 5 days 
from expiry of timeframe (Art. 13.14) 
Possibility of retaliation upon 
previous notice (Art. 13.15) Determination of equivalence  
by AT (Art. 13.15(5)) 
AT determination (Art. 13.15(6)) Comments by Parties  (Art. 13.11(7)) 
Timeframe: immediately or fixed by the 
AT (max. 90 days)*** (Art. 13.13(3))  
Note :  Timeframes are reduced for urgent cases including perishable goods. 
*   25 days after the Commission has met;  if meeting has not been held, 70 days after the receipt of the request for consultatio ns. 
**   Additional 30 days may apply upon written information of the AT to the Parties. 
***   The fixing of the timeframe may involve a formal request for the AT to do so;  this timeframe shall not go beyond 90 days.  15 days 
45 days  Technical consultations  
(Art. 6.4 or 7.9) 
Good offices, conciliation, mediation  (Art. 13.5(4)(b)) Technical advice requested (Art. 13.5(4)(a)) 
Issue of recommendations (Art. 13.5(4)(c)) 
15 days 
Publication 
 (Art. 13.12) Max 30 days Max 25 days* Max 60 days 
Composition by WTO DG  (Art. 13.7(5)) 
Max 30 days 
15 days 
Dispute settlement 
 (Art. 13.14(2)-(3) or 
13.16(1)) In case of disagreement over implementation 
AT determination  
(Art. 13.14(3)) Request for compensation 
negotiations  (Art. 13.15(2))
15 days 
Suspension of retaliation  
(Art. 13.16(2)) 15 days Table V.1 S ynopsis of the Dis pute Settlement Provisions under the Treat yWT/REG239/1 
Page 38  
 
   
128. A preliminary report, including both the descriptive sections and the AT's findings and 
conclusions, is to be submitted by the AT to the Parties for comment within 90 days from the request 
for its composition, or 60 days in cases of perishable goods (Article 13.11).
32  The Parties have 
15 days to submit their written observations to the AT;  within 30 days from the presentation of the 
preliminary report, a final report is to be issu ed.  The final report is binding and definitive 
(Article 13.12).  In cases of non-compliance with  the AT's conclusions, retaliation through the 
suspension of equivalent benefits granted unde r the Treaty is authorized (Article 13.15). 
7. Relationship with other agreements concluded by the Parties  
129. In conformity with Article 1.3, the Parti es reaffirm their rights and obligations under 
WTO Agreement and any other internationa l agreement to which both are parties. 
130. Table V.2 lists those agreements (notified and not notified to the WTO) concluded by Chile 
and Panama. 
Table V.2 
Chile and Panama:  participation in other RTAs (not ified and non-notified in force), as of March 2009  
GATT/WTO Notification Partner/Agreement Date of entry 
into force Type of agreement 
Year WTO Provision 
CHILEa 
Australia 06.03.09 Goods & Services 2009 GATT Art. XXIV & GATS Art. V 
Japan 03.09.07 Goods & Services 2007 GATT Art. XXIV & GATS Art. V 
India 17.08.07b Goods 2009 Enabling Clause 
China 01.10.06 Goods 2007 GATT Art. XXIV 
Brunei, New Zealand, Singapore 
(Trans-Pacific SEP) 28.05.06c Goods & Services 2007 GATT Art. XXIV & GATS Art. V 
European Communities 01.03.05 Services 2005 GATS Art. V 
EFTA 01.12.04 Goods & Services 2004 GATT Art. XXIV & GATS Art. V 
Republic of Korea 01.04.04 Goods & Services 2004 GATT Art. XXIV & GATS Art. V 
United States 01.01.04 Goods & Services 2003 GATT Art. XXIV & GATS Art. V 
European Communities 01.02.03 Goods 2004 GATT Art. XXIV 
El Salvador (Central America)d 01.06.02 Goods & Services 2004 GATT Art. XXIV & GATS Art. V 
Costa Rica (Central America) 15.02.02 Goods & Services 2002 GATT Art. XXIV & GATS Art. V 
Mexico 01.08.99 Goods & Services 2001 GATT Art. XXIV & GATS Art. V 
Canada 05.07.97 Goods & Services 1997 GATT Art. XXIV & GATS Art. V 
GSTP 19.04.89 Goods  1989 GATT Art. XXIV  
LAIA 18.03.81 Goods  1982 GATT Art. XXIV  
PTN 11.02.73 Goods  1971 GATT Art. XXIV  
Colombia 08.05.09 Goods & Services Not notified  
Peru 01.03.09 Goods & Services Not notified 
Honduras (Central America) 28.08.08 Goods & Services Not notified 
Cuba 28.08.08 Goods Not notified 
MERCOSUR 01.10.96 Goods Not notified 
Ecuador 01.01.95 Goods Not notified 
Bolivia 07.07.93 Goods Not notified 
Venezuela 01.07.93 Goods Not notified 
                                                      
32 This time-frame may be extended in exceptional cas es provided the AT so informs the Parties in 
written form;  such extension cannot be longer than 30 days unless otherwise agreed by the Parties.  WT/REG239/1 
 Page 39 
 
 
  GATT/WTO Notification Partner/Agreement Date of entry 
into force Type of agreement 
Year WTO Provision 
PANAMAe 
Singapore 24.07.06 Goods & Services 2007 GATT Art. XXIV & GATS Art. V 
El Salvador (Central America)f 11.04.03 Goods & Services 2005 GATT Art. XXIV & GATS Art. V 
Costa Rica (Central America) 23.11.08 Goods & Services 2009 GATT Art. XXIV & GATS Art. V 
Chinese Taipei 01.01.04 Goods Not notified 
Colombia 18.01.95 Goods Not notified 
Dominican Republic 08.06.87 Goods Not notified 
Mexico 24.04.86 Goods Not notified 
Guatemala 25.04.75 Goods Not notified 
Honduras (Central America) 09.01.09 Goods & Services Not notified 
Nicaragua 18.01.74 Goods Not notified 
a All but one (Chile-Honduras) non-notified RTAs have been concl uded under the auspices of the LAIA.  While Members of the 
WTO were informed of the conclusions of these RTAs in biennials reports presented by the LAIA Secretariat to the Committee 
on Trade and Development, formal notifications to the WTO ha ve not been made (see WT/COM TD/11, of 8 October 1997, and 
WT/COMTD/59, of 25 January 2007). 
b Due to internal considerations of an  administrative nature, the Agreement eff ectively entered into force for India on 
11 September 2007. 
c The Agreement entered into force on 28 May 2006 for New Zeal and and Singapore;  12 July 2006 for Brunei Darussalam;  and 
8 November 2006 for Chile. 
d "Central America" refers to the fact that the preferences are granted under the Free Trade Treaty between Central America and  
Chile, in accordance w ith the relevant bilateral Protocol. 
e Information on RTAs prior to the date of Panama's accessi on was provided during the WTO acce ssion process and is contained 
in document WT/ACC/PAN/19 and in the Report by the Secret ariat relating to the Trade Policy Review of Panama 
(WT/TPR/S/186). 
f "Central America" refers to the fact that the preferences are granted under the Free Trade Treaty between Central America and  
Panama, in accordance with the relevant bilateral Protocol. 
EFTA: European Free Trade Association 
LAIA: Latin American Integration Association 
GSTP: Global System of Trade Preferences 
PTN: Protocol Relating to Trade Ne gotiations Among Developing Countries 
Source : WTO Secretariat. 
8. Government procurement 
131. Government procurement of go ods is excluded from the coverage of the Treaty through the 
incorporation, within the Treaty, of Article III of the GATT 1994, which explicitly excludes 
government procurement from na tional treatment obligations. 
132. Government procurement of services is excluded from the coverage of the Treaty, in 
accordance with Article 10.1(3) (see paragraph 79 above). 
9. Intellectual property rights 
133. Through Article 3.11, the Parties recognize the rights and obligations derived from the 
WTO Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS), and agree to 
recognize and protect the geographical indications (G I) and denominations of origin (DO) from the 
other Party.  Accordingly, a Party will not allo w the importation, production or sale of a good using a 
GI or a DO protected in the other Party unless it has been elaborated and certified therein in 
accordance with its relevant legislation.  These ru les will only apply in accordance with Article 22 of WT/REG239/1 
Page 40  
 
  the TRIPS Agreement provided the other Party  has notified the Party of the GIs and DOs to be 
protected.
33 
10. Investment 
134. Chapter 9 on Trade and Investments is composed of two articles.  In Article 9.1, the Parties 
commit themselves to cooperate in promoting and facilitating new investment opportunities in their 
respective territories.  In Article 9.10, they rea ffirm their rights and obligations under a bilateral 
convention for the promotion and mutual protection of investments ( Convenio entre la República de 
Chile y la República de Panamá para la Promoc ión y Protección Recíproca de las Inversiones ) 
signed by the Parties on 8 November 1996.  A best endeavours clause is incorporated into the Treaty 
aiming at improving the rules and disciplines containe d therein.  The Parties also agree to further 
deepen the promotion and the establishment of bilate ral investment via discussions carried out in the 
framework of the Treaty's Free Trade Commission. 
135. According to the bilateral Convention, an "inv estor" is defined as a "natural" or "juridical" 
person of each contracting Party, and the term "investment" covers, inter alia , tangible or intangible 
rights in movable or immovable property, including rights in rem ;  share in an enterprise;  credit 
rights;  intellectual property rights;  and con cessions granted by law.  The Convention covers 
investments made in one Party by investors from the other Party;  it does not however cover the right of establishment.   The Convention provides for non-discriminatory treatment of investments by 
investors of the other Party, including fair and equitable treatment, national treatment and 
MFN treatment, and also includes disciplines on investors' protection from expropriation and 
subrogation rights.  Finally, it establishes a mechan ism for the settlement of commercial disputes 
between the investor and the State through arbitration. 
VI. OTHER 
A. A
GREEMENT ON ENVIRONMENTAL COOPERATION  
136. The bilateral cooperation agreement on environment34 is composed of a preamble and seven 
articles.  Its objectives are to promote the developm ent of environmental policies and management;  to 
facilitate compliance with commitments under the agreement through environmental cooperation;  
and to enhance dialogue and exchange  of experience in this area.  Article 2 recognizes the sovereign 
right of each of the Parties to establish, admini ster and supervise its own laws, regulations and 
environmental policies.  It also specifies the ina ppropriateness of using environmental policies, laws, 
regulations and management as a disguised obstacle to trade, as well as of loosening or refraining 
from supervision of environmental laws and regulat ions as a way to promote trade and investment.  
Cooperation on environmental issues is an essential pa rt of the agreement and shall be developed in 
mutually agreed areas.  A Joint Committee for Environmental Cooperation is established;  it is 
composed of high level government officials and is to  meet at least once every two years.  In the event 
of differences of interpretation or in the applicati on of Article 2 of the agreement, the Parties shall 
endeavour to reach an amicable settlement through  dialogue and consultatio ns.  If the differences 
cannot be settled within a period of six months, a sp ecial meeting of the Committee shall take place.  
The Committee shall draw up a report containing gui delines for future acti on by the Parties, in 
accordance with its conclusions and recommendations. 
                                                      
33 This is without prejudice of a Party recognition of  homonymous GIs or DOs that can legitimately be 
granted to another country. 
34 The text can be found at:  http://www.asamblea.gob.pa/legispan/PDF_NORMAS/2000/2007/ 
2007_551_0714.pdf.  WT/REG239/1 
 Page 41 
 
 
  B. AGREEMENT ON LABOUR COOPERATION  
137. The bilateral cooperation agreement on labour35 is composed of a preamble and nine articles.  
Its objectives include the promotion of labour po licies and practices that will improve working 
conditions and living standards in th e Parties' territories, the promo tion of labour principles included 
in Article 8 of the agreement (including the right of association, right of collective organization and 
negotiation), and the promotion of transparency in ad ministering labour legislation.  Article 3 states, 
inter alia,  that it is inappropriate to promote trade a nd investment through the weakening or reduction 
of protection foreseen in the domestic labour legi slation, or through refraining from supervising 
labour legislation.  A Joint Committee for Labour Coopera tion is established;  it is composed of high 
level officials and is to meet at least once ever y two years.  The agreement provides for cooperation 
on labour issues mutually agreed between Parties.   In the event of a conflict regarding the 
interpretation or application of the agreement, the Pa rties shall try to resolve it through consultations;  
the subject under consultation may also be addressed by the Committee, in the context of a meeting 
attended by Ministers. 
 
 
                                                      
35 The text can be found at: http://www.asa mblea.gob.pa/legispan/PDF_NORMAS/2000/2007/ 
2007_551_0709.pdf WT/REG239/1 
Page 42  
 
  ANNEX I 
 
 1. A comparison between the scheduled elimination of tariffs for each country's imports from 
the other and the MFN applied duties, by agricultu ral (WTO definition) and non-agricultural products, 
is shown in Tables AI.1 (Chile) and AI.2 (Pan ama).  Applied MFN duty rates in 2008 serve as a 
comparison. 
2. Chile has a mostly flat MFN tariff structure.  Its (unweighted) average MFN rate (2008) is 
6.1 per cent on all goods, with a somewhat higher average tariff for agricultural goods than for 
non-agricultural products.  Only 0.4 per cent of Chile's tariff lines are duty free at an MFN level.  On 
entry into force of the Treaty, Panama's exporte rs enjoyed a relative margin of preference of 
95 per cent on non-agricultural products vis-à-vis  the prevailing average MFN tariff in 2008, and a 
relative margin of preference of  82.1 per cent in  agricultural goods.  The share of duty-free lines 
increased to 92.5  per cent of all products.  By the end of the transition period in 2017, the average 
tariff faced by Panama's exporters on all products is set to be 0.1 per cent, with the share of duty-free 
tariff lines increasing to 99.6 per cent. 
Table AI.1 
Chile:  indicators of MFN ta riff rates and preferential ra tes for imports from Panama 
ALL PRODUCTS Agricultural productsa Non-agricultural products 
Average applied 
tariff Average applied 
tariff Average applied 
tariff Origin of 
goods Year 
Overall
(%) On 
dutiable 
(%) Share of 
duty-free 
tariff lines
(%) Overall 
(%) On 
dutiable 
(%) Share of 
duty-free 
tariff lines 
(%) Overall 
(%) On 
dutiable 
(%) Share of 
duty-free 
tariff lines 
(%) 
MFN 2008 6.1 6.1 0.4 6.7 6.7 0.0 6.0 6.0 0.5 
Panama 2008 0.4 6.0 92.5 1.2 9.8 88.1 0.3 5.0 93.2 
 2009 0.4 5.0 92.5 1.0 8.7 88.1 0.3 3.9 93.2 
 2010 0.3 3.9 92.5 0.9 7.7 88.1 0.2 2.9 93.2 
 2011 0.2 2.9 92.5 0.8 6.6 88.1 0.1 1.9 93.2 
 2012 0.1 8.1 98.3 0.7 31.8 97.9 0.1 3.5 98.4 
 2013 0.1 7.7 98.3 0.7 31.4 97.9 0.0 3.0 98.4 
 2014 0.1 7.2 98.3 0.6 31.1 97.9 0.0 2.5 98.4 
 2015 0.1 6.7 98.3 0.6 30.8 97.9 0.0 2.0 98.4 
 2016 0.1 6.3 98.3 0.6 30.5 97.9 0.0 1.5 98.4 
 2017 0.1 26.8 99.6 0.6 66.3 99.1 0.0 6.0 99.7 
a WTO Definition. 
Source : WTO Secretariat estimates based on data provided by Chile. 
3. In 2008, Panama had a variable MFN tariff structure.  Its (unweighted) average MFN tariff 
(2008) was 8.3 per cent, with the average for agri cultural products being twice that of industrial 
products (14.6 per cent and 7.2 per cent respectively) .  Around one-third (31.1 per cent) of Panama's 
tariff lines are duty free at an MFN level.  On entry into force of the Treaty, Chile's exporters enjoyed 
a relative margin of preference of 47.2 per cent on non-agricultural products vis-à-vis  the prevailing 
average MFN tariff in 2008, and a relative margin of preference of 36.3 per cen t in agricultural goods.  
The share of duty-free lines increased to 65  per cent of all products.  By the end of the transition 
period in 2022, the average tariff faced by Chile's expor ters on all products is set to be 1 per cent, with 
the share of duty-free tariff lines increasing to 97.3 per cent.  WT/REG239/1 
 Page 43 
 
 
  Table AI.2 
Panama:  indicators of MFN tariff rates a nd preferential rates for imports from Chile 
ALL PRODUCTS Agricultural productsa Non-agricultural products 
Average applied 
tariff Average applied 
tariff Average applied 
tariff Origin of 
goods Year 
Overall 
(%) On 
dutiable 
(%) Share of 
duty-free 
tariff lines
(%) Overall 
(%) On 
dutiable 
(%) Share of 
duty-free 
tariff lines 
(%) Overall 
(%) On 
dutiable 
(%) Share of 
duty-free 
tariff lines 
(%) 
MFN 2008 8.3 12.1 31.1 14.6 18.8 22.3 7.2 10.6 32.7 
Chile 2008 4.7 13.3 65.0 9.3 23.9 61.0 3.8 11.1 65.7 
 2009 4.2 11.9 65.0 9.0 23.0 61.0 3.3 9.5 65.7 
 2010 3.7 10.5 65.0 8.6 22.1 61.0 2.7 8.0 65.7 
 2011 3.2 9.0 65.0 8.2 21.1 61.0 2.2 6.5 65.7 
 2012 2.7 10.3 74.3 7.9 23.7 66.8 1.7 6.9 75.6 
 2013 2.4 9.2 74.3 7.7 23.1 66.8 1.4 5.6 75.6 
 2014 2.1 8.0 74.3 7.5 22.5 66.8 1.0 4.3 75.6 
 2015 1.8 6.8 74.3 7.3 21.9 66.8 0.7 3.0 75.6 
 2016 1.5 5.6 74.3 7.1 21.2 66.8 0.4 1.7 75.6 
 2017 1.2 17.4 93.4 6.8 26.1 73.8 0.1 2.9 97.0 
 2018 1.1 16.8 93.4 6.8 25.8 73.8 0.1 1.8 97.0 
 2019 1.1 22.9 95.3 6.7 25.4 73.8 0.0 3.5 99.4 
 2020 1.0 22.5 95.3 6.6 25.1 73.8 0.0 2.3 99.4 
 2021 1.0 22.1 95.3 6.5 24.8 73.8 0.0 1.2 99.4 
 2022 1.0 37.3 97.3 6.4 37.3 82.8 0.0 0.0 100.0 
a WTO Definition. 
Source : WTO Secretariat estimates based on data provided by Panama and the WTO-IDB. 
4. Mutual market access conditions for each country's top 25 exports in the 2005-2007 period 
are presented in Tables AI.3 and AI.4, together w ith an indication of the year in which duty-free 
treatment will be granted.  The code and product d escription are given at the six-digit level.  The 
tables also show the number of tariff lin es covered by the products concerned. 
5. Table AI.3 shows the market access conditions in  Chile for Panama's top 25 exports, covering 
97 tariff lines, and which in 2005-2007 accounted for 77.6 per cent of its global exports.  All of these 
tariff lines are subject to duties on an MFN basis.   Twenty-three products, accounting for 93 tariff 
lines and 74.4 per cent of Panama's global exports, became duty free upon the entry into force of the 
Treaty;  one further product - three lines and 1.2 pe r cent of global exports - will become duty free in 
2012, and one product - cane sugar, acc ounting for 2 per cent of Panama's global exports - will remain 
dutiable at an MFN rate of 6 per cent.  The margin  of preference granted to Panama by Chile under 
the Treaty is 6 percentage points with the excep tion of other vegetables (HS 0709.90), for which a 
specific duty applies in addition to the 6 per cent rate. WT/REG239/1 
Page 44  
 
   
Table AI.3 - Chile:  market access opportunities  under the agreement for Panama's top 25 exports 
Access conditions to Chile's import markets  
MFN (2008)  Panama's top export products in 2005-2007  
Duty-free in  
HS number and description of the product  Share in 
global 
exports 
(%) Average 
MFN 
applied rate
(%) Number of 
dutiable 
tariff lines
 2008 2012 Remain 
dutiable 
080300 Bananas, including plantains, 
fresh or dried 10.1 6.0 1 1   
030410 Fish fillets, fresh or  chilled 9.3 6.0 23 23   
080719 Other melons, papayas, etc. 9.2 6.0 1 1   
030342 Yellowfin tunas (Thunnus 
albacares) 7.3 6.0 1 1   
080711 Watermelons 6.2 6.0 1 1   
030219 Other salmonidae 5.9 6.0 1 1   
030613 Shrimps and prawns 5.2 6.0 9 9   
080430 Pineapples 3.2 6.0 1 1   
010210 Pure-bred breeding animals 2.2 6.0 1 1   
170111 Cane sugar 2.0 6.0 1   1 
070990 Other vegetables 1.8 6+specific 1 1   
030749 Other cuttle fish, squi d, etc. 1.5 6.0 2 2   
030269 Other fish 1.4 6.0 33 33   
720410 Waste and scrap of cast iron 1.4 6.0 1 1   
090111 Coffee, non-decaffeinated 1.4 6.0 1 1   
030559 Dried fish, other 1.2 6.0 2 2   
020130 Boneless beef 1.2 6.0 3  3  
030232 Yellowfin tunas (Thunnus 
albacares) 1.0 6.0 1 1   
760200 Aluminium waste and scrap 1.0 6.0 1 1   
071490 Other roots 1.0 6.0 1 1   
030611 Rock lobster (Palinurus spp., 
Panulirus spp., Jasus spp.) 1.0 6.0 4 4   
220840 Rum and tafia 0.9 6.0 2 2   
300390 Other medicaments 0.9 6.0 2 2   
410419 Other hides and skins 0.8 6.0 1 1   
481910 Cartons, boxes and cases, of 
corrugated paper or paperboard 0.8 6.0 2 2   
 Total 77.6  97 93 3 1 
Source :  WTO estimates based on data provided by the Chile and UNSD, Comtrade database. 
6. Table AI.4 shows the market access conditions in  Panama for Chile's top 25 exports, covering 
62 tariff lines, which in 2005-2007 accounted for 75.3 per cent of its global exports.  Nine products, 
corresponding to 18 tariff lines and accounting for 16.6  per cent of Chile's average global exports in 
2005-2007, already benefited from duty free in Panama's market prior to the Treat y's entry into force.  
Ten  products, accounting for 14 tariff lines and 27 pe r cent of Panama's global exports, became duty 
free upon the entry into force of the Treaty.  In 20 12, additional four produc ts - including Chile's 
major export that accounts for around one-fourth of its exports, namely cathodes and section of 
cathodes - will become duty free in 2012;  the se four products represent ten tariff lines1 and 
30.3 per cent of global exports  which.  Liberali zation will terminate with a final product, accounting 
                                                      
1 With respect to one product, an additiona l line became duty free at  entry into force.  WT/REG239/1 
 Page 45 
 
 
  for three tariff lines2 and 0.7 per cent of global exports, becoming duty free in 2017.  One product 
(three lines and 0.6 per cent of global exports) - other swine meat - will remain dutiable at an average 
MFN rate of 70 per cent.  The margin of prefer ence granted to Panama by Chile under the Treaty 
varies from 3.8 per cent to 15 per cent. 
Table AI.4 - Panama:  market a ccess opportunities under the agree ment for Chile's top 25 exports 
Access conditions to Panama's import markets  
MFN (2008)  Chile's top export products in 2005-2007  
No. of tariff lines  Duty-free in  
HS number and description of the 
product  Share in global 
exports MFN 
average  Duty 
free Dutiable 2008 2012 2017 Remain 
Dutiable  
740311 Cathodes and sections of 
cathodes 26.9 10.0  1  1   
260300 Copper ores and 
concentrates 17.9 10.0  1 1    
740200 Unrefined copper;  
copper anodes for 
electrolytic refining 3.9 0.0 1      
261310 Molybdenum ores and 
concentrates, roasted 3.1 0.0 1      
261390 Molybdenum ores and 
concentrates, other 1.9 0.0 1      
220421 Wine, in containers 
holding 2 litres or less 1.8 15.0  6 1 5   
470321 Chemical wood pulp, 
coniferous 1.8 0.0 1      
440710 Coniferous wood sawn or 
chipped lengthwise 1.6 3.8 2 2 2    
080610 Fresh grapes 1.6 0.0 1      
290511 Methanol (methyl 
alcohol) 1.5 0.0 1      
740319 Refined copper and 
copper alloys, 
unwrought, other 1.5 15.0  1 1    
030420 Frozen fish fillets 1.2 15.0  2 2    
271011 Light oils and 
preparations 1.1 0.0 10      
030410 Fish fillets, fresh or 
chilled 1.1 15.0  2 2    
230120 Flours, meals and pellets, 
of fish or of crustaceans, 
molluscs or other aquatic 
invertebrates 1.1 15.0  2 2    
710812 Gold, other unwrought 
forms 0.9 0.0 1      
720270 Ferro-molybdenum 0.9 15.0  1  1   
080810 Apples 0.8 0.0 1      
470329 Chemical wood pulp, 
non-coniferous 0.8 10.0  1 1    
440910 Wood, coniferous 0.7 8.8 1 3  3   
271019 Other petroleum oils and 
oils obtained from 
bituminous minerals 0.7 9.6 4 8 3 2 3  
                                                      
2 Five tariff lines would have become duty free at an earlier date. WT/REG239/1 
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  Access conditions to Panama's import markets  
MFN (2008)  Chile's top export products in 2005-2007  
No. of tariff lines  Duty-free in  
HS number and description of the 
product  Share in global 
exports MFN 
average  Duty 
free Dutiable 2008 2012 2017 Remain 
Dutiable  
030490 Other fish fillets 0.6 15.0  1 1    
020329 Other  hams, shoulders, 
etc., of swine 0.6 70.0  3    3 
740811 Copper wire, of which 
the maximum cross-
sectional dimension 
exceeds 6 mm. 0.6 5.0 1 1 1    
030319 Other Pacific salmon 0.6 5.0  1 1    
 Total  75.3  26 36 18 12 3 3 
Source : WTO estimates based on data provided by the Panama and UNSD, Comtrade database. 
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