WORLD TRADE  
ORGANIZATION  WT/TPR/M/186 
30 October 2007 
 (07-4707) 
Trade Policy Review Body 
17 and 19 September 2007  
 
 
TRADE POLICY REVIEW 
 
PANAMA 
 
Minutes of Meeting  
 
Chairperson:  H.E. Mr. Vesa Himanem (Finland)  
 
 
  Page 
 
I. INTRODUCTORY REMARKS BY THE CHAIRPERSON 3 
II. OPENING STATEMENT BY THE REPRESENTATIVE OF PANAMA 4 
III. STATEMENT BY THE DISCUSSANT 7 
IV. STATEMENTS BY MEMBERS 9 V. REPLIES BY THE REPRESENTATIVE OF PANAMA AND 
ADDITIONAL COMMENTS 20 
VI. CONCLUDING REMARKS BY THE CHAIRPERSON 23
 
 
 
 
Note:   Advance written questions by WTO Me mbers and the replies provided by Panama are 
reproduced in document WT/TPR/M/186/Ad d.1 and will be available online at 
http://www.wto.org/english/tr atop_e/tpr_e/tp_rep_e.htm. WT/TPR/M/186 
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I. INTRODUCTORY REMARKS BY THE CHAIRPERSON 
1. The first Trade Policy Review of Panama was held on 17 and 19 September 2007.  The 
Chairperson, H.E. Mr. Vesa Himanem (Finland), we lcomed the delegation of Panama, headed by 
H.E. Mr. Alejandro Ferrer, Minister of Trade and Industry and the discussant Mr. Martin Glass (Hong Kong, China).  As usual, the discu ssant would speak in his personal capacity. 
2. The Chairperson recalled the purpose of Trade Po licy Reviews and the main elements of the 
procedures of the meeting.  The Report by Pana ma was contained in document WT/TPR/G/186 and 
that of the Secretariat in document WT/TPR/S/186.  Replies by the delegation of Panama would be 
delivered on Wednesday morning, and they would  be based on the main themes identified in 
consultations with the delegation of Panama.  Af ter the responses by Panama, time would be given for 
discussion by Members, led by the discussant.  The delegation of Panama ha d provided, before the 
beginning of the meeting, written answers to ques tions submitted at least two weeks before this 
meeting.  Questions posed subsequently should be answ ered, to the extent possible, before the start of 
the second session of the meeting.  Questions left  unanswered at the end of the second session should 
be answered in writing no later than one month af ter the meeting.  The following delegations had 
submitted written questions at least two weeks in advance of the meeting:  Brazil;  Singapore;  
Canada;  Mexico;  Republic of Korea;  Hong Kong, Ch ina;  Japan;  the United States;  and Colombia.  
These questions had been transmitted to the delega tion of Panama.  Copies of the questions and 
answers given by Panama were available in th e meeting room.  The following delegations had 
submitted written questions after the two-weeks deadlin e:  the European Comm unities;  Costa Rica;  
India;  Argentina;  and Chile.  These questions ha d been also transmitted to the delegation of Panama, 
and copies were available in the meeting room.  Related answers should be available on Friday 
morning.   
3. The Chairperson noted that the Reports prepar ed for this review showed that Panama's 
economy had been expanding at a vigorous pace over the last five years, and that this was in large part 
the result of a healthy expansion in service exports.  The reports also showed that Panama maintained 
an open trade and investment regime, although ap plied tariffs on certain agro-industrial products 
received protection well above the overall average of 8. 5%.  Panama had also established a number of 
special incentive schemes, including the Colon Free Z one.  This Zone had become a global logistical 
hub, taking good advantage of transit trade across the Canal.  In this respect, he believed Panama had 
issued the first public contracts to expand the Ca nal in August 2007, a project which could have a 
significant impact, not only on Panama's economy, but also on world trade.  He would thus appreciate 
it if the delegation of Panama would say more about  the financing of this project, and the possible 
impact that the expansion of the Canal might ha ve on the cost of trans-oceanic transport. WT/TPR/M/186 
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II. OPENING STATEMENT BY THE REPRESENTATIVE OF PANAMA 
4. The representative of Panama
 pointed out that 13 years ago he had acted as the first 
Permanent Representative to the GATT and accession ne gotiator to the WTO.  This accession had had 
a clear impact on Panama's trade and economic struct ure.  Panama's current trade policy differed from 
that of 10 years ago when the accession processed had been concluded.  The current policy promoted 
a closer integration with Panama's trading partners in an effective manner, as well as the reorientation 
of Panama's productive sectors and the strengthening of Panama's export capacity;  it also contributed 
towards attracting investment and boosting productivity. 
5. For many years, prior to its accession to the WTO, Panama's production had been directed to 
the domestic;  and had presented a low degree of export diversification:  over 50% of exports 
consisted of seven main products, with  a limited number of destinations. 
6. Panama's total exports has reached only US$577.2 million in 1995, or US$370 million 
excluding the two main export products, sugar and bananas.  Export were hence dependent on a few 
products and markets. 
7. Until 1993, when Panama had started negotia tions for accession to the GATT, Panama had 
been isolated from international trade fora and its tr ade regime had lacked clear rules.  Its exports had 
faced many market-access barriers due to its not being a WTO Member nor participating in any bilateral or regional free-trade agreements.  Therefore, it became of great importance for Panama to introduce changes in its foreign trade policy to obtai n better access to foreign markets and to be able 
to export a wider variety of products, thus becoming less vulnerable. 
8. Since the conclusion of its accession negotiati ons to the WTO in 1997, in order to reduce 
poverty and improve income distribution, Panama's foreign trade policy was geared at promoting 
competitiveness, stimulating productivity, and inser ting the economy in a gl obalized world, while 
promoting human capital developmen t, economic growth, social deve lopment, and the modernization 
and reform of the State.   
9. The accession process had triggered a series of refo rms which had included the elimination of 
all specific, mixed and compound tariff rates, replacing them with ad valorem rates.  Tariffs had been 
lowered and bound, the tariff classification structure simplified, and all existing non-tariff barriers, 
such as quotas, discretionary licenses, a nd import permits had been eliminated. 
10. Reforms had also been introduced in other ar eas, such as intellectual property, where 
currently a number of institutions worked together within an efficient system of industrial property 
and copyright protection and respect.  Within this framework, education programs had been put in 
place for both the public and private sectors;  programs for promotion, diffusion and constant 
adaptation of the existing domestic le gislation had also been set up.  More recently, a modernization 
program to help enforcement had been launched, through the creation on an Automatized System of 
Industrial Property.  
11. With respect to SPS measures, and autonomous entity, the Panamanian Authority for Food 
Safety (Autoridad Panameña de Seguridad de Alim entos), had been established.  This authority was 
responsible for the application of SPS measures to imports, as well as for the surveillance of the 
transit and transshipment of food products;  its nor ms were strictly based on scientific criteria and 
international standards. 
12. Since its accession to the WTO, Panama had poste d higher growth rates than ever before.  In 
the last three years, GDP had expanded at an averag e annual rate close to 8.4%, one of the highest in 
Latin America.  In the first quarter of 2007, GDP  growth had surpassed expectations, reaching 9.3%;  
analysts were now forecasting two-digit growth rates for the near future.  It was also worth noting that  WT/TPR/M/186 
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the World Economic Forum had classified Panama as  the third most competitive economy in Latin 
America.  Unemployment had decreased from 16.3% in 1990-02 to 7.3% in 2007, with open unemployment at 5.3%.  Services and export-orie nted agro-business activit ies showed the best 
employment performance.  Investment had quadrupl ed over 2000-06, breaking historical records and 
exceeding the most optimistic projections.  Exports  of goods had expanded in a sustained manner, 
growing at an average annual rate of 8.6% over 2003- 06, compared to an annual average rate of 3.8% 
observed in the period prior to accession (1993-96).  During the past two years, exports had risen by 
9.7%, with an increase of 55% in the case on non-tr aditional agricultural exports.  Export growth had 
been accompanied by diversification:  Panama 's export supply had incorporated over 200 new 
products in 2005-06, and exports  had reached record levels. 
13. Services had expanded by over 10% in 2006 with r espect to 2005, especially in areas such as:  
financial intermediation, which had expanded by 16%;  constructi on, 17.4%;  re-exports from the 
Colon Free Zone, 12%:  retail trade, 15%;  and transport, warehousing and telecommunications, 
19.1%.  Services exports represented almost 75% of Panama's net exports .  Panama offered a 
complete logistics and services platform with a high degree of connectivity, a modern port 
infrastructure and important merchandise distributi on centres.  The Canal serviced almost 15,000 
vessel every year;  its expansion, which entailed ai n investment of over US$5 billion, would allow it 
to continue to be an essential route for world trade.  Around the Canal, an industry had been 
developed for the provision of auxiliary maritime services, ranging from cargo handling to ship repair 
services. 
14. Until a few years ago, Panama had been one of the least integrated countries in Latin 
America;  it did not have an FTA with any country, with the expection of some partial scope 
agreements, which applied only to trade in goods, a nd which had been signed in the 1960s and 1970s.  
As recently as 2004, Panama had only concluded two FTAs, with part ners accounting for some 3% of 
Panama's exports.  By 2007, Pa nama had concluded FTA negotiati ons with partners representing 
almost 50% of Panama's exports;  this figure would rise to 88.2% once pending negotiations were 
concluded. 
15. A responsible and gradual market liberalizati on to create balanced opportunities was one of 
Panama's goals to achieve economic and social development.  Panama acknowledged that trade 
liberalization ought to take into account the needs of the most sensitive economic sectors, provided 
these offered possibilities of sustained development.   In this respect, Panama maintained, in 
conformity with the Agreement on Subsidies a nd Countervailing Measures, some support programs 
for the productive sector.  Panama was convinced th at these programs had been successful in fostering 
productivity growth and in enhanci ng access to international markets. 
16. Panama considered a successful conclusion of the Doha Round to be of vital importance, 
since it was an opportunity to improve conditions which would allow to foster economic growth for 
countries such as Panama, while, at the same time, reinforcing the multilateral trading system.  This 
was why the Doha Round was the development ro und and hence its results ought to help reduce 
poverty and improve living standards in developing countries.  Panama encouraged Members to adopt 
more flexible positions and to take duly into accoun t those issues of vital importance for developing 
countries, so as to reach a prompt conclusion of the Round. 
17. Trade-related capacity-building programs were  part of Panama's trade and development 
strategy.  Panama had displayed efforts to build institutional and entrepreneurial capacity to take 
advantage of the new opportunities generated by trade a nd, in this way, reduce poverty.  To this end, 
Panama, had implemented the program called Comp lementary Agenda (Agenda Complementaria) to 
enhance and strengthen the different sectors' particip ation in the benefits derived from trade.  Panama 
was aware that we live a in time of great transfor mations and globalization and hence would continue 
working with its producers to raise their productivity  and competitiveness levels.  Panama would also 
deepen investment promotion and protection, especia lly investment resulting in technology transfers, WT/TPR/M/186 
Page 6  
 
human resource training.  Panama would continue pa rticipating actively in multilateral, regional and 
bilateral integration processes. 
18. Panama place great importance in the Trade Policy Review mechanism, and considered that it 
strengthened the transparency of a Member's trade policies and practices vis-à-vis  other Members.  
The TPR had allowed Panama to review the impact of its accession to the WTO in Panama's 
economic and social fibre, making it possible to conc lude than an adequate trade policy could become 
an economic and social development tool.  WT/TPR/M/186 
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III. STATEMENT BY THE DISCUSSANT 
19. The discussant  noted that the Trade Policy Review ex ercise served the important purposes of 
increasing the transparency and understanding of memb ers' trade policies and practices, improving the 
quality of public and intergovernme ntal debate on the issues, and enabling a multilateral assessment 
of the effects of members’ policies on the world tr ading system.  He noted that this was the first 
review of Panama and warmly welcomed the dele gation;  he believed that Panama, as well as other 
members, would benefit significantly from the excha nges.  He proposed to divide his observations 
largely along the lines of macroeconomic environment,  trade policy regime and sectoral policies.   
20. Following a somewhat chequered experience in the latter part of the 20th century, the 
economy of Panama had regained stability and, fo llowing reforms and accession to the WTO in 1997, 
had been growing steadily and surely ever since.   For example, Panama's GDP had grown at an 
average annual rate of nearly 5% during the earlier years of this millennium and growth was forecast 
to exceed 9% in 2007.  Within the economy, servi ces provided by far the largest part, accounting for 
some 80% of GDP and 70% of employment, and the Panama Canal was a dominant influence in this, 
together with the associated free zone of Colon.  Th e main services provided, in  addition to transport, 
include financial services, tourism, logistics, technology, telecommunications and other business 
services.   
21. Panama's economy was relatively small and qu ite open.  A recent report by the Fraser 
Institute on the Economic Freedom of the World ra nked Panama as the 25th freest economy out of the 
130 surveyed, on the basis of five major indicator s i.e. size of Government, legal structure and 
security of property rights, access to saved money, fr eedom to trade internatio nally and regulation of 
credit, labour and business.  In fact, as a growing fi nancial services centre, its ranking in terms of the 
access to sound money was as good as that for the overall top-ranked economy, and it also scored 
quite well on limiting the size of government, includi ng reducing the tax burden, and most aspects of 
freedom to trade.  Over the past 15 years, Pa nama had in fact been undertaking a significant 
programme of privatization of its utilities and in frastructure, which had introduced a commendable 
degree of competition and had clearly enhanced its ec onomic performance;  he encouraged Panama to 
continue further along this path.  
22. Panama’s fiscal position had improved consider ably as a result of public financial reforms 
carried out during this period, aimed at implementing prudent fiscal policies, such as public expenditure control, tax reform a nd debt reduction.  The increased revenue arising from the operation 
of the Panama Canal had also contri buted to this satisfactory state of affairs, and plans were afoot to 
expand the Canal.  Although this would incur significant upfront capital expenditure of over 
US$5 billion, and despite the current turbulence in  the world’s capital markets, financing was not 
expected to be a problem and, in the longer te rm, additional revenues should arise from the Canal’s 
greater capacity of 20% and from higher tolls. 
23. On monetary policy, it was to be noted that Pana ma in effect did not u se its own currency, but 
instead relied on that of the United States of America,  its main trading partner.  While this practice 
had imposed fiscal discipline and had led to low infla tion and interest rates, which had helped growth, 
it did on the other hand mean that as a small and ope n economy, Panama could be exposed to external 
economic factors, particularly those affecting th e U.S. economy.  Taking the longer view, however, 
there seemed to be no case for change, and the economy continued in pretty good shape.   
24. Panama had acceded to the WTO in 1997, and as a relative “late-comer” claimed that it had 
been subjected to more stringent conditions than other Members for its accession, notwithstanding the 
beneficial long-term macroeconomic impacts of these, and, along with other Recently Acceded 
Members, was arguing that it should be afforded more flexibility in implementing the eventual 
outcomes of the Doha Development Agenda.  In this respect, while Panama considered trade 
liberalization an important policy tool to achieve  development, it nevertheless believed that the WT/TPR/M/186 
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concerns of each WTO Member should be taken in to consideration and thus favoured a flexible 
approach to liberalization.  As a small, open and service-based economy, Panama had, however, a 
great deal to gain from a successful, balanced and ambitious conclusion of the current round. 
25. He noted that while Panama ha d taken measures in the area of trade facilitation to simplify 
and modernize its customs procedures and to im prove customs control, it still charged a customs 
service fee.  Furthermore, although the average a pplied MFN tariff was currently 8.5%, there was a 
gap between this and the average bound rate of so me 15 percentage points.  This gap became 
considerably wider considering that the average applied tariff for non-agricultural products was just 
over 7%, and such excess “water” could lead to considerable uncertainty for traders.   
26. He also noted that there was quite wide use of export subsidies and tax breaks via the Export 
Processing Zones, the Tax Credit Certificate and the Official National Industry Registry programmes 
as well as the Colon Free Zone, which accounted for a la rge part of Panama’s total merchandise trade.  
While in the short term, such benefits could undoubt edly attract investment and stimulate growth, he 
did, however, sound a note of caution that over the longer term they could be economically distortive 
and should not therefore be overly relied upon, as an y subsequent tightening of trade or fiscal policy 
might see a decamping of business to other places.  Ho wever, Panama's strategic location astride the 
Canal should shield it from such ri sks in the foreseeable future.   
27. He considered whether impr ovements could be made on th e issues of relative weakness 
pointed out in the WTO report, and in those comp etitive areas where Panama fared less well in the 
eyes of the Fraser report, such as legal structure, and the regulation of labour and business.  He noted that the entry into force of Panama’s Trade Promo tion Agreement with the United States of America, 
which was pending ratification, would have a pa rticularly important in stitutional and economic 
impact. 
28. The services sector was by and large fairly open, in keeping with Panama’s role as an 
international hub for activities such as maritime tr ansport, distribution services, logistics, banking and 
other financial services.  The main ports, although under the ownership of the State, were privately 
operated under concession contracts, the Canal itself was administered by the Panama Canal 
Authority, an independent public body, and Panama maintained the world’s largest shipping registry 
due, inter alia , to its liberal taxation and registration regi mes.  Panama had also expressed a strong 
interest in growing its tourism sector.   
29. On the other hand, foreign professionals enjoyed only limited access to the Panamanian 
market, and the provision of most regulated professional services was restricted to citizens of Panama.  
There was clearly scope, therefore, unless there were  overriding policies or regulatory considerations 
to the contrary, for further liberalization of the ser vices economy, and he looked forward to seeing an 
improved set of revised offers on services from Panama  in the current round, in order to capitalize on 
its existing promising outlook for further investment  and development, and enhanced competitiveness.  WT/TPR/M/186 
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IV. STATEMENTS BY MEMBERS 
30. Members welcomed the delegation of Panama led by H.E. Minister Alejandro Ferrer.     
31. The representative of Brazil  noted that, since the 1990s, Panama had been engaged in an 
extensive programme of economic and social reform s characterized by the progressive liberalization 
of key sectors of its economy, including privatization and increasing efficiency in areas under the 
control of the State, along with the consolidatio n of democratic institutions and civil society 
representation.  He noted that, in recent years, Pa nama had passed a large number of new laws with a 
view to strengthening its institu tional framework, resulting in a much more favourable environment 
for traders and investors.  
32. Brazil congratulated Panama for the signifi cant improvement of its economic and trade 
performance in the ten years that had passed since its accession to the WTO.  In that regard, Brazil 
welcomed the forecasts mentioned in the Secretar iat’s Report that Panama’s GDP could increase by 
8% in 2007, relying mainly on the expansion of the services sector, and was delighted to know that 
the actual figures would be higher, as mentioned by Minister Ferrer.  In view of the major challenges that the implementation of economic and social re forms represented, in terms of both human and 
material resources, Brazil expressed its appreciation of Panama’s efforts to translate the rapid 
economic growth into concre te benefits to the population.  It c onsidered that a strong and prosperous 
Panama would represent an engine of growth to its  region, as well as benefit the multilateral trading 
system.  
33. Brazil expressed its expectations that the ex cellent relations betw een Panama and Brazil 
would be further improved, including the strengtheni ng and diversification of their bilateral trade.  
Brazil appreciated Panama’s effort to reduce im port tariffs and non tariff measures as well as its 
willingness to engage constructively in negotiations at the multilateral and regional level with a view 
to achieving its objectives of trade liberalization.  In that regard, Brazil commended Panama for its 
active role in the Doha Development Agenda (DDA)  and in negotiating initiatives related to products 
of specific interest to highly competitive agri cultural exporters such as Panama and Brazil. 
34. The representative of Singapore
 stated that Panama and Singapore shared many similarities.  
Both countries had a long maritime tradition and an  equally long history as trading hubs for their 
region.  Like Singapore, due to its key geographi c location, Panama was a major trading and trans-
shipment hub for the Americas, just as Singapore was for Asia.  Home to the Panama Canal, Panama 
had the world’s second-largest free trade zone.  Pa nama's economy was service-oriented, with the 
services sector accounting for about 80% of GDP a nd heavily weighted toward banking, maritime 
transport and tourism.   
35. Panama was Singapore's top trading partner in  Latin America.  The Panama-Singapore FTA 
was Singapore’s first bilateral FTA with a Latin American country.  This was a comprehensive agreement that sought to liberalize trade in areas beyond goods and services, and included chapters on 
investment, customs procedures, competition policy,  government procurement, financial services, 
telecommunications, e-commerce and dispute settlement .  Total bilateral trade between Singapore and 
Panama had stood at over US$2.5 billion in 2006, a re markable 30% increase from the previous year.  
With an economy expected to grow at over 8%, Pa nama was an attractive destination for foreign 
direct investment.  Panama had reportedly receive d US$2.4 billion in foreign direct investment in 
2006, a clear signal of the confidence many intern ational companies had in Panama as their hub in 
Latin America.  A number of major Singaporean companies, particularly in the areas of maritime 
logistics, infrastructural development and info rmation technology had established their presence in 
Panama in recent years.  Singapore expected the tr end of its business exchanges with Panama to be 
further strengthened as its viewed Panama as an important friend and partner in Latin America. WT/TPR/M/186 
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36. From a regional perspective, Singapore and Pana ma, together with their neighbours, could do 
their part in bringing the two regions closer toge ther.  The Latin American  and Asian regions were 
witnessing strong economic growth and presente d good business opportunities.  For instance, 
Singapore's trade with Latin America had been growing in recent years, hitting a record high of over US$7 billion in 2006.  Sing apore's Foreign Minister had stated at the recent East Asia-Latin America 
Cooperation Foreign Ministers' m eeting held in Brasilia, that there was a great complementarity 
between the regions and that sooner or  later, with globalization, that complementarity had to translate 
into abundant opportunities for countries, compani es, and individuals.  Among the initiatives endorsed 
to build closer ties between the two regions were  the annually held Latin-Asia Business Forum in 
Singapore and the Asian Centre that Singapore unders tood that Panama was planning to have.   
37. Panama had taken a number of positive steps to improve its trade regime.  Singapore noted 
that Panama had set up a relatively well-develope d competition policy and was currently negotiating 
its accession to the WTO Government Procurement Agreement.  Panama had also modified its 
legislation to protect intellectual property rights, seeki ng to bring it in line with the TRIPS Agreement.  
There were, he noted, a few areas in Panama’s trade policy where there was scope for improvement.  
In this regard, Singapore shared some of the Secretariat’s assessments regarding Panama's tariff 
structure, more particularly on the need to simplif y its tariff structure by reducing the number of tiers 
and also to reduce the gap between the average appl ied and bound tariffs.  Singapore wished also to 
echo the comments on how an expansion of the level of service commitments would add to the predictability of Panama’s investment regime.   
38. There were many areas, particularly in the field of maritime logistics and infrastructural 
development, in which Singapore and Panama coul d learn from each other and cooperate.  He noted 
that Panama had always been deeply committed to  the multilateral trading system and, through its 
active and constructive participati on, had supported the conclusion of the Doha Round.  He wished 
Panama all the best for its Canal expansion project  which had officially begun two weeks ago, and 
which was a very important 10-year project for Panama and world commerce. 
39. The representative of Mexico
 noted that despite the fact that international trade was at the 
base of the Panamanian economy, competitiveness and gr owth could be aided by a reform of the tariff 
structure and a rationalization of incentives programs.  Mexico considered that in the absence of those 
reforms, in the middle run there could be a reduction in  the scope of fiscal policy.  This would have an 
impact on Panama's country risk assessment, since Panama could not make use of monetary policy 
instruments as it had adopted the U.S. dollar as its currency.  
40. Services represented some 80% of GDP and 70% of employment.  Panama had much to gain 
from a successful conclusion of the DDA.  Consequent ly, it was vital that Panama considered granting 
commitments in areas in which there was still strong state participation, such as telecommunications, 
electricity, and transport, apart from liberalizi ng trade in sectors in which there were foreign 
participation limitations, such as retail trade, pr ofessional services, broadcasting and air transport.  A 
competitive service sector would not only contribute dir ectly to growth, but also indirectly through its 
effect on the competitiveness of the manufacturing sector.  
41. Trade between Mexico and Panama benefited fro m the preferences granted under the Partial 
Scope Agreement signed by both countries under the umbrella of the Latin American Integration 
Association in 1985 and amended in 1989.  Despite  the absence of a more comprehensive trade 
integration arrangement, Mexican exports to Panama had increased  by almost 40% since Panama 
joined the WTO.  The trade balan ce had been historically favourable to Mexico, consistent with the 
fact that Panama's overall merchandise trade ba lance was in deficit, as result of its small 
manufacturing sector and its relativ e dependence on imported inputs.  WT/TPR/M/186 
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42. As Panama, Mexico believed in the compleme ntarity between unilate ral, bilateral and 
multilateral trade liberalization initiatives.  Mexico en couraged Panama to con tinue participating in 
the DDA, improving its market access offers for goods and services. 
43. The representative of Hong Kong, China  noted that Panama and Hong Kong, China had 
maintained good trade relations and that, in the first half of 2007, their bilateral trade had amounted to 
US$254 million, a 7% increase with respect to th e same period in 2006.  Hong Kong, China hoped 
this trend would continue.  Pa nama had all along supported the multilateral trading system by 
participating actively and constructively in the DDA negotiations.  Panama had been taking measures 
to liberalize its trade and investment regime, like simplifying and modernizing its customs procedures.  Hong Kong, China hoped that such liberalization would continue. 
44. Services had been the largest contributor to Panama's economy both in terms of GDP and 
employment.  Given this, a continuous effort to liberalize trade in services would be beneficial for 
Panama's further economic growth  and sustainable development.  Hong Kong, China appreciated 
Panama's substantial commitments undertaken  in the GATS context upon accession, However, 
Panama's commitments, albeit extensive, still fell shor t of the degree of access afforded in practice to 
foreign service suppliers.  Hong Kong, China wo uld encourage Panama to expand the level of 
commitments in line with its more liberal de facto regime in the current round of negotiations so as to 
increase the certainty and predictability of its trad ing regime.  Hong Kong, China looked forward to 
seeing Panama's revised offer in the near future. 
45. Panama's Canal was a main pillar of its econo my.  Hong Kong, China was of the view that 
trade liberalization in maritime transport services, toge ther with other forms of  transport and logistics 
services, could help establish an extensive trans port infrastructure which was essential for Panama's 
economic and social development.  Given Panama's geographical charact eristics, an effi cient maritime 
transport sector, together with good logistics services,  would play a major role in advancing its growth 
in both the agricultural and the industrial sector as well as enhancing its trade.  Hong Kong, China 
thus encouraged Panama to further improve its o ffer in maritime transport services and to undertake 
substantive commitments in transport and logi stics-related services in the current round of 
negotiations. 
46. Panama had bound all its tariff lines and had maintained ad valorem  rates for them.  Panama 
had been applying a bound-rate reduction program  that provided for linear annual reductions on 
179 tariff lines between 1997 and 2011.  However, there was still a 15% gap between applied and 
bound rates, which could undermine the predictability of the tariff regime.  Hong Kong, China looked 
forward to seeing improvements in these aspects. 
47. The representative of Canada
 noted that Canada was already a significant trader and investor 
in the Americas and that, as result of a recent decisi on to make the Western Hemisphere a priority in 
its foreign policy, Canada planned to invest great er political energy and practical resources in the 
Americas.  Canada's trading rela tionship with Panama was long-sta nding and growing.  While Canada 
had no formal trade agreement with Panama, an MF N relationship existed be tween the two countries, 
based on a 1935 exchange of notes.  This excha nge, along with the 1994 WTO agreements resulting 
from the Uruguay Round negotiations, served as the cornerstone of their trade and investment 
relationship.  In addition, Cana da, had a Foreign Investment pr otection and Promotion Agreement 
with Panama, which had been signe d in September 1996 and had entered into force in February 1998. 
48. Canada's bilateral merchandise trade with Pana ma had increased by nearly 236% since 2002, 
growing from US$31 million, to US$105 million in 2006.  The expansion of the Panama Canal had 
the potential to create significant opportunities to Ca nadian companies in environmental and heavy 
engineering, consulting services, capital projects, construction materials and services, as well as education and training in the construction industry. WT/TPR/M/186 
Page 12  
 
49. Canada applauded Panama for its strong co mmitment to transparency and openness, which 
was illustrated by the process under way for the expans ion of the Panama Canal, an important step 
towards further converting Panama into a logisti cal and services platform of global importance.  
Canada also applauded the measures Panama had taken to simplify and modernize customs 
procedures, as well as to improve customs controls.  This past July, a delegation of officials from the 
Canadian Border Services agency had held consulta tions with their Panamanian counterparts in order 
to identify areas for future bilateral cooperation.  The Canadian delegation had formulated a number 
of recommendations which would serve as the basis for future joint initiatives. 
50. Canada was also pleased to note the open inv estment regime offered by Panama, and its 
policy thrust towards further trade liberaliza tion and regional economic integration through the 
conclusion of a number of bilateral trade agreem ents with Central American and other countries, 
including Panama's major trading partner, the Un ited States.  The start of discussions on an EU-
Central American Association Agreement repres ented another important opportunity for further 
regional integration, a process that Canada had long supported. 
51. The representative of Japan
 noted that Japan appreciated Panama's recent favourable 
statistics, resulting from sound macroeconomic polic ies.  Since its accession to the WTO in 1997, 
Panama had taken measures such as the moderni zation of its socio-economic structure and trade 
liberalization.  Japan encouraged Panama  to continue pursuing these policies.   
52. Japan and Panama enjoyed an amicable and strong economic relationship.  Japan was a 
frequent user of the Panama Canal, the Colon Free Z one and the ship registry.  In this sense Panama's 
stability was of significant importance for the Jap anese economy as well as for the development of 
world trade.  Considering that Panama had already achieved a high level of income, Japan encouraged 
it to focus on poverty reduction, sustainable growth and protection of the environment. 
53. Panama had a competitive services sector, wh ich included the Panama Canal, maritime 
transport, the Colon Free Zone, and the internationa l financial sector;  its share of GDP had been of 
74% in 2006.  Services had contributed to the high growth posted in 2005 and 2006, which was 
expected to continue mainly due to the expansion of  the Canal.  Japan was, however, worried that the 
internationally competitive service sector was concentr ated in the cities, and that this widened the 
economic differential with the rural areas.  Unemployme nt was also a big issue due to the fact that the 
service sector had a small absorption effect on employ ment.  In consequence, Japan considered that, 
to some degree, economic diversification was required. 
54. The representative of the United States  noted that Panama occupied a unique place in 
international trade.  The Panama Canal connected tw o great oceans and played a pivotal role in the 
flow of goods around the world.  As Panama noted in  its report, since it joined the WTO in 1997, it 
had taken steps to strengthen its fi nancial and social institutions to  facilitate economic growth.  The 
United States welcomed these measures and shared  Panama’s hopes for a successful Doha outcome. 
55. The outcome of these measure was clear in Pa nama's GDP growth, which for 2006 had been 
8.1%.  Panama's economy had seen its fastest growth in  14 years, topping solid levels of 6.9% in 2005 
and 7.5% in 2004.  From 2000-06, the Panamani an economy had experienced sustained economic 
growth, with an average 5% rate of growth in GDP.   
56. The United States commended Panama for its co mmitment to take upon itself the difficult 
steps necessary to achieve economic reform, in cluding trade liberalization.  The United States 
looked forward to implementing the United St ates-Panama Free Trade Agreement (FTA) upon 
U.S. Congressional approval, and appreciated the Pa namanian Government’s swift action to approve 
the FTA and its impending task to implement the co mmitments it made under that agreement.  This 
comprehensive free trade agreement covered trade in  goods and services, intellectual property rights, 
investment, telecommunications, labour and environmen t, and government procurement.  Several of  WT/TPR/M/186 
 Page 13 
 
 
the reforms Panama would undertake to implemen t the FTA would also benefit Panama’s other 
trading partners.   
57. The U.S. commercial relationship with Panama was strong, positive and growing.  The United 
States was Panama’s largest trading partner, with  two-way goods trade during 2006 of approximately 
$3.1 billion.  U.S. goods exported to Panama in 2006 had been US$2.7 billion and U.S. goods 
imported from Panama had totalled US$379 million.  The United States exp ected the FTA to open 
many new opportunities for Panama to increase and diversify its exports to the United States. 
58. Panama had identified attracting foreign direct  investment as a key element of its overall 
economic growth and trade policy strategy.  The United States applauded Panama for its record 
US$2.56 billion inflow of foreign direct investment in 2006, more than twice the amount of 
investment received in 2005.  This inflow was a sign  of the confidence that foreign investors had in 
the economic potential and stability of the Panamanian market.  The United States had long been Panama’s largest source of foreign direct investment.  
59. In order to stay on the path toward improving its economic competitiveness, Panama would 
need to continue to simplify its tariff structur e.  As a primarily services-based economy, Panama 
should adopt additional measures to broaden access fo r foreign services providers.  The United States 
was also concerned that Panama’s numerous a nd complex incentive programs were too costly and 
might not be consistent with WTO rules.  The Unite d States hoped to hear more in this review about 
Panama’s plans to address these types of issues. 
60. The United States anticipated deepening furthe r its trade and economic partnership with 
Panama and supported Panama’s progress along the path  of global economic integration that it had so 
strongly pursued.  The United States noted, therefore,  that Panama had a major stake in achieving an 
ambitious result in the Doha negotiations.  A resu lt that included new market access in services, 
industrial goods and agriculture c ould further enhance opportunities fo r Panama to broaden its exports 
and its export markets, particularly with respect to new emerging markets.  The United States looked 
forward to working with Panama toward br inging the round to a successful conclusion.  
61. The representative of Colombia
 noted that Panama was a partner of especial importance for 
her country.  Colombia congratulated Panama for the fast GDP growth achieved in recent years, 
especially the swift 9.3% increase obtained in the First half of 2007 , which had gone beyond 
expectations.  
62. The great dynamism achieved in services exports  had been fundamental for economic growth 
and undoubtedly placed Panama in the path toward s development.  Notwithstanding the important 
role played by services in the good performance of  the Panamanian economy, it was desirable that 
economic policy supported the strengthening of agri culture and the manufacturing industry, so as to 
prevent a strong dependence of the economy on servi ces becoming an obstacle to the growth so far 
achieved.  Panama had two valuable elements for its economy and trade:  the inter-oceanic canal and 
the Colon Free Zone, the most important one in the Western hemisphere.  
63. Colombia was concerned with respect to expor ts into Colombia from the Colon Free Zone, 
originating mostly in third countries.  For Colo mbia it was vital that Panama adopted urgently 
effective control measures to allow an exact and ti mely verification of the accompanying documents.  
Colombia had raised questions to Panama on this and other issues;  some answers had been provided 
but others were pending.  Colombia hoped that the information provided might help bring some 
appeasement to those sectors of the Colombian economy which were seeing their normal competition 
conditions affected.  
64. Colombia congratulated Panama for the recent restructure of its SPS system, particularly with 
respect to the assignment of specific competencies regarding inspection, vigilance, animal health WT/TPR/M/186 
Page 14  
 
control, and phytosanitary measures to different state bodies.  To develop this new arrangement, it 
would be useful if the Panamanian Government c ould prepare an official inventory of all the SPS 
measures in place.  
65. Finally, Colombia considered that as a compleme nt to the important steps undertaken to foster 
growth, Panama should double its efforts to atta in an adequate level of productivity and 
competitiveness for its companies.  Th is was of vital importance to be able to take advantage of the 
opportunities offered by the opening of market s, and to face international competitors. 
66. The representative of Costa Rica
 congratulated Panama for the fast economic growth 
achieved over 2000-06, and for the swift expansion expected for 2007, when GDP was expected to grow by some 8% or more.  Costa Rica had tight  historical and cultural links with Panama.  The 
Panamanian market was very important for many  Costa Rican products.  Given that both economies 
were of a comparable size, they could complement each other through trade and investment.  Costa Rican exports to Panama, had totalled US$267.5 m illion in 2006, some 3% of Costa Rica's total 
exports.  Costa Rica's main export products to Panama were medicines (19%), insecticides and 
fungicides (8%), electrical cables (8%) and food preparations (5%).  Costa Rica's imports from 
Panama had reached US$163 million in 2006;  they were mainly medicines (20%), textiles (8%), 
aluminium products (4%), petroleum oils (4%) and fish (3%).  Costa Rica hoped that this trade 
relation would continue growing, and was pleased to note that, as a step in this direction, the 
Presidents of Costa Rica and Panama had signed an FTA on 7 August.      
67. Costa Rica wished to acknowledge Panama's  commitment with the multilateral trading 
system, as well as the value attached by Panama to trade liberalization, clear rules and transparency.  
Both countries shared the goal of attaining a comple te liberalization of trade in tropical products and 
similar products as a result of the DDA.  
68. Costa Rica had raised some questions with respect to the Colon Free Zone, technical 
regulations, customs procedures, foreign investme nt regime, telecommunicat ions, financial services 
and retail trade and awaited Panama's answers with interest. 
69. The representative of India
 noted that Panama's economy was service-based, heavily 
weighted toward banking, tourism, trading and industry, due to its key geographical position.  
Panama's macroeconomic stability had been strengthene d by the implementation of a set of structural 
reforms that had enabled Panama to visibl y improve its level of economic growth.   
70. Earlier this month, Panama had commenced work on the US$5.25 billion ambitious 
expansion of the Panama Canal, which, upon co mpletion, would accommodate a new class of ship 
capable of carrying more than twice the number of c ontainers than the vessels that currently transited 
the waterway.  The Government report noted that the Canal Expansion Project had strengthened the 
country's medium- and long-term economic and trad e expectations.  The Secretariat report had 
underlined the importance of careful project manage ment to prevent cost overruns or construction 
delays.  
71. Relations between India and Panama were cordia l and friendly.  Panama was India's largest 
market for merchandise exports in Central America.  Among Latin American countries, 
Panama's exports to India had ra nked fourth in 2006.  India-Panama trade was currently around 
US$230 million.  India's exports to Panama in  2006 were US$66 million, up 12% from 2005, and 
imports were US$162 million, up 65% from the prev ious year.  India exported textiles, rubber and 
rubber products, pharmaceuticals, engineering goods, and chemicals, among othe rs.  Panama exported 
ships, wood and wood products, iron and steel items, etc. to India.  
72. India believed there was untapped potential in  enhancing existing trade between the two 
countries.  In April 2007, India's Embassy in Panama had issued a report on the opportunities for  WT/TPR/M/186 
 Page 15 
 
 
Indian exporters to make use of the Colon Free Zo ne.  India hoped that, in the years ahead, the 
presence in, and utilization of, the Colon Free Zone by the Indian exporting community would increase significantly, to service the Panamanian and the regional markets. 
73. India had submitted some questions to Panama, mainly related to the difficulties faced by 
Indian exporters in travelling, a nd exporting goods, to Panama.  Inordi nate delays in issuing business 
visas to Indian businesspersons had been reported.   Although the establishment of the Autoridad 
Panameña de Seguridad de Alimentos had expedite d and facilitated the intern ational trade in goods 
via Panama by ensuring transparency, certainty, flexib ility, and reduction in import costs and in transit 
and transhipment formalities, the direct export of  food items from India to Panama faced problems 
due to delays in issuing phytosanitary permits in Panama.  Indian pharmaceutical exporters had also 
encountered delays in the registration of their products. 
74. The representative of Argentina
 noted that Panama's solid growth in the past few years, was 
supported mainly by services, namely financial services, tourism, port services, and transit across the Panama Canal.  The recently undertaken expansi on of the Canal would allow the maintaining the 
current pace of growth, by increasing trade and traffic.   This would result in additional income which 
could be devoted to the development of th e Panamanian economy as a whole.  Improving 
competitiveness in the supply of goods and services and integrating those sectors less exposed to 
international markets, were two areas in which Pa nama was working to achieve integrated social 
development. 
75. Panama had played an active role in the DDA ne gotiations, particularly in services.  Panama 
had also played an important role in the banana  disputes.  Although Panama had bound 100% of its 
tariff lines, tariff protection was much higher than average for a few agricultural products, such as 
bovine meat, cereals, and milk products.  With respect  to the latter, Argentina regretted that repeated 
difficulties excessively delayed access of powdered m ilk from Argentina into Panama.  Argentina 
wished to highlight the work unde rtaken by the Panamanian Authorit y of Food Safety to solve this 
matter, and trusted that a definitive solution woul d be found shortly avoiding unnecessary barriers to 
trade. 
76. Argentina wished to note also that bilateral trad e had tripled in the last five years, and there 
was a strong interest in deepening trade relations  even further, particularly in areas such as 
automobiles, pharmaceutical products, plastics, m achinery and electrical a ppliances, paper, and 
rubber. 
77. The representative of Chile
 noted that Panama and Chile had signed a free-trade agreement in 
2006, which was in the process of ratification.  For Chile, this agreement was of particular importance 
since it completed the network of agreements Ch ile had subscribed with other Latin American 
countries.  For Panama, this was the first agreemen t with a South American country.  The FTA was an 
example of political will;  it had been completed afte r several years of negotiation, and contained high 
disciplinary standards, but was also flexib le, taking on board bilateral sensitivities.  
78. He commended Panama for the high growth rates achieved over 2000-06, noting that 
prospects were favourable. 
79. Panama was an active participant in the Doha Round negotiations as well as a relatively 
active user of the dispute settlement mechanism, wi th three cases as a plaintiff and one as defendant.  
As a complement to its WTO participation, Panama  had been increasingly engaging in bilateral trade 
and investment agreements. 
80. He noted that some aspects could be improved, such as the complex tariff structure; the 
difference between average applied and bound tariff rates made the system less predictable.  Chile had 
also noted that certain domestic liquors had lowe r selective consumption tax rates than imported WT/TPR/M/186 
Page 16  
 
products and that Panama grante d export subsidies under three programs, although measures had been 
taken to eliminate some of them.  Finally, he noted the existence of foreign property limits in domestic air transport and the restricted market access for foreign professionals.  
81. The Panama Canal was of fundamental importanc e for Chile, who was the main user in Latin 
America and the fourth worldwide, after the Unite d States, China and Japan.  Some 50% of Chilean 
exports transited through the Cana l and Chile wished to congratula te the Panamanian authorities for 
their vision with respect to the expansion of the Ca nal.  However, the decision to apply higher tolls, 
starting in 2008, to finance the Canal had gene rated concern amongst the Chilean authorities and 
private sector.   
82. The representative of Chinese Taipei
 commended Panama on having achieved and sustained 
an annual GDP growth rate of almost 5% betw een 2000-06.  Even more noteworthy had been the 
growth posted since 2004;  growth of some 9-10% had been forecasted for 2007, placing Panama as 
one of the fastest growing economies in the world.  It was evident that the Panama Canal played a 
vital role in the country's economy. However, w ithout Panama's ability to manage and operate the 
Canal in an efficient manner, its mere ownership could not in itself produce this remarkable economic 
performance.  Chinese Taipei was convinced that Panama's highly competitive services sector and its 
very open investment regime had helped  foster these impressive growth rates. 
83. Panama had long been one of Chinese Taipei's mo st important trading partners in Central and 
South America.  These long-standing trade and ec onomic ties had recently been strengthened further 
by the entry in force of Chinese Taipei's Free Trade Agreement with Panama, at the beginning 
of 2004.  In fact, under the more general multilate ral trading system framework, Chinese Taipei and 
Panama shared common interests in a number of fields, mainly because they were both trade-oriented 
and internationally-integrated ec onomies, in addition to being newly-acceded Members to the WTO.  
Given that close relationship, Chinese Taipei wad pleased that Panama had successfully built up a 
sound macroeconomic environment and transforme d its geographic advantages into numerous 
commercial opportunities.  Chinese Taipei was optimis tic that the newly launched expansion of the 
Canal would give a further boost to Panama's ec onomy, so long as the potential impact of this 
accelerated growth on the ecological system and on income distribution was properly addressed and 
managed. 
84. The representative of Honduras  noted Panama's solid economic growth;  GDP per capita had 
reached US$5,200 in 2006, with exports of goods a nd services being the engine of this growth, with 
an average annual growth rate of 15% during 2004- 06.  Panama had positioned itself as an important 
supplier of services such as telecommunications, to urism, financial services, port services and the 
transit through the Canal. 
85. Honduras and Panama had signed a preferential trade agreement in 1973, which had entered 
into force in 1976.  To deepen trade relations, they had negotiated a Free Trade Agreement between 
Central America and Panama.  Panama and Honduras had concluded their bila teral negotiations and 
on 15 June 2007 had signed the bilateral protocols between the two countries.  Ratification of this 
agreement was still pending in Honduras. 
86. Honduras considered Panama an important tradin g partner;  the bilateral trade balance was 
favourable to Panama.  Some 0.7% of Honduras tota l exports had been directed to Panama in the 
January-July 2007 period.  Honduras's main exports to Panama were thread, cables, textiles, and shoe 
polishes creams and other preparations;  its main imports were pharm aceutical products, and 
footwear. 
87. The representative of Guatemala  stated that, for Guatemala, Panama was an important trade 
partner, both bilaterally and within the WTO.  Fo r this reason, it was noted that important steps 
towards its economic and social modernization, includ ing trade liberalization, had been implemented.   WT/TPR/M/186 
 Page 17 
 
 
Panama's trade policy was implemented at the unila teral, regional and multilateral levels.  Guatemala 
also formulated is trade policy giving consider able importance to regional liberalization through 
FTAs.  Both countries were currently fi nalizing the details of a bilateral FTA. 
88. Guatemala also noted, on the other hand, Panama 's engagement with the multilateral trading 
system, especially by backing the DDA negotiations, as a means of achieving and increasing the 
effective participation of developing countries, esp ecially small and least developed economies in the 
multilateral trading system.  In the negotiations on agriculture, Panama, as Guatemala, actively 
participated in the G33, in which they sought  special and differential treatment for developing 
countries.  Both countries also support the libera lization of tropical products in the markets of 
developed countries. 
89. The representative of the European Communities  noted that the EC and Panama maintained 
close trade relations.  Trade between Panama and the EC had represented almost 30% of global trade between Central America and the EC in 2006.  This pe rcentage had increased in the first half of 2007.  
Trade took place under the framework of the WTO and the GSP;  Panama was one of the 15 beneficiaries of the Special Regime to suppor t sustainable development and good governance.  In 
parallel, the EC and Panama were building a stro ng alliance, through development programs.  For 
example, a strategic plan, valued at some €38 m illion, had been programmed for the 2007-15 period, 
destined mainly to foster social cohesi on and social and regional integration.  
90. The EC encouraged Panama to move forward in the process of regional economic integration 
in Central America.  The EC hoped that this pro cess would be conducive to Panama's ratification of 
the Protocol of Guatemala, and then to becoming a member of the SIECA.  This would undoubtedly 
be the best way to deepen trade rela tions with the EC and to be able to fully participate in the future 
negotiations towards an EC-Central America Associ ation Agreement.  A deeper regional integration 
would allow Panama to increase the number of its tr ading partners and its export base, and permit it to 
take advantage of other nume rous opportunities offered by trade economic integration.  
91. The EC congratulated Panama for its strong economic dynamism, which had translated into 
high growth rates and an increased control of infl ation and unemployment.  Advantage ought to be 
taken of the current positive situation to face the challenges of consolida ting growth, reducing both 
the still high levels of poverty and vulnerability to a dverse shocks.  Since monetary policy instruments 
could not be used, it was necessary to maintain fi scal discipline, and hence, the EC encouraged 
Panama to continue strengthening its public finances.   This would be of utmost importance for the 
Panama Canal expansion project, wh ich was foreseen to give considerable economic impulse to the 
country, foster employment and contribute to the development of domestic industries.  The positive 
economic situation should allow a wider economic di versification, and an expansion of the productive 
and export base.    
92. The EC encouraged Panama to strengthen its  participation in the WTO Working Group on 
Government Procurement Transparency, and to work actively towards its accession to the GPA.  On 
services, the EC noted that there were difficulties a pplying competition policy on certain sectors, such 
as telecommunications and electricity generation and distribution.  A gradual liberalization of these 
sectors would be beneficial for all economic agents. 
93. Panama had maintained confidence in the mu ltilateral trading system and had supported 
initiatives to strengthen it.  A strong multilateral system  with clear and transparent rules was of great 
importance for a small economy dependent on interna tional trade.  Panama was a clear example of 
fast socio-economic development under the WTO fr amework and had a great responsibility in the 
progress of the DDA in all its areas.  
94. The representative of El Salvador
 noted Panama's solid economic growth in the past few 
years.  Panama's exchange-rate stability had prom oted economic stability and kept inflation low.  WT/TPR/M/186 
Page 18  
 
Panama was highly competitive in services.  As a resu lt, international services, such as those linked to 
the Canal, the Colon Free Zone, international banks , maritime transport and tourism, were strong 
competitors in world markets.  In  accordance with this, Panama main tained a basically liberal trade 
and investment regime, with an average applied MFN tariff rate of 8.5% and very few non-tariff 
barriers.  Its service orientation made Panama an international centre for maritime transport, 
distribution services and banking.   
95. Panama and El Salvador had increased significan tly its trade relations in services.  Recently, 
one of the main Panamanian financial conglomerat es had entered the Salvadorian market through the 
acquisition of one of the most prestigious banks in  El Salvador.  Also, Panamanian investors had 
developed several housing projects in El Sa lvador and investment had taken place in 
telecommunications, specifically cellular telephony.  Sa lvadoran entrepreneurs had invested in vehicle 
distribution, shopping malls, hotels, and banks in Panama. 
96. El Salvador wished to note the work done by the Dirección General de Propiedad Industrial , 
in the protection of intellectual property rights.  This bureau had been one of the first in the to be completely automated and offer online services. 
97. Last July, the process for the creation of a Salvadorian-Panamanian Chamber of Commerce 
had been initiated.  Its goals were to strengthen tr ade and industrial relations between both countries, 
solve any dispute that might arise with respect to th e interpretation of trade laws, and foster tourism.  
Trade relations had gone hand-in-ha nd with the expansion of investment  relations and in other areas.   
98. With respect to Panama's export promotion policy,  El Salvador took note that in the last few 
years the Government had implemented refo rms geared at diversifying export supply. 
99. Noting the importance of the Bilateral FTA betw een El Salvador and Panama, El Salvador 
stated that the agreement had promoted bilateral tr ade flows, and that Salvadoran exports to Panama 
had increased from US$47.6 million in 2000  to US$72. 4 million in 2006.  The b ilateral trade balance 
posted a surplus for El Salvador;  this surplus had averaged some US$46 million per year in the  
2000-06 period.  Trade had taken place in products such as medicines, be verages, detergents, 
cardboard boxes, aluminium products, bovine meat etc.  
100. El Salvador highlighted Panama's active role in  the DDA, especially its participation in the 
group of Members of recent accession. 
101. The representative of Nigeria
 welcomed the opportunity to participate in the First Trade 
Policy Review meeting of Panama.  Nigeria c ongratulated Panama for its impressive economic 
performance, since its membership of the World Tr ade Organization (WTO), ten years ago, largely 
due to unilateral trade and structural reforms.  Nigeria acknowledged Panama’s  contributions to the 
multilateral trading system, following its accession in 1997, especially, its strong commitments and 
support towards a successful conclusion of the Doha Development Age nda (DDA) negotiations, 
through constructive and analytical  contributions under the able leadership of Ambassador Norman 
Harris and his dedicated team.  
102. Nigeria encouraged the Government of Panama to  continue to accord priority to the services 
sector, which had the potential for contributing to gr owth and development, and to creating incentives 
for exporting and developing Panama ’s national opportunities for growth .  Nigeria noted the relative 
openness of Panamanian markets, which was an important source of its economic vitality as a 
regional hub.  However, trade barriers in the form of quotas, licensing and restrictive laws, constituted 
impediments to Panama’s growth and prosperity.  
103. Nigeria also noted that Panama’s economy w as service-oriented and open.  Although the 
services sector was fairly open, Nigeria urged Pa nama to endeavour to dismantle services and  WT/TPR/M/186 
 Page 19 
 
 
investment barriers, such as lifting restrictions on investment in retail trade, ensuring access to contracts, and providing new access in professional services that had been reserved exclusively to Panamanian nationals.  Panama should be encouraged by supporting its reforms in order to sustain the 
robust economic growth achieved in recent years,  being a relatively small but open economy. 
104. The representative of Nicaragua
 noted that her country maintained special friendship relations 
with Panama.  Beyond this, she recognized the ex traordinary improvements that had taken place in 
Panama in recent years, which extended to all sect ors.  Panama's accession to the WTO had allowed it 
to make important reforms that went beyond trade i ssues.  These reforms had provided Panama with a 
modern legal framework, and had allowed the impl ementation of an economic  development strategy 
with a strong orientation towards se rvices exports, taking advantage of the logistical characteristics of 
the country.  The expansion of the Canal would have  a tangible effect on global trade and would allow 
two-digit growth, contributing to  poverty reduction.  In this sense, Nicaragua was impressed by 
Panama's capacity to attract investment, which was the engine of development.  
105. Nicaragua maintained privileged trade relati ons with Panama.  A Third Generation FTA 
between the two countries was currently being finalized;  this would allow Panama to join the rest of 
Central America in its negotiations with the EU.  
106. Nicaragua encouraged Panama to continue along the path to modernization and to eliminate 
the last remaining obstacles in some sectors. 
107. The representative of Ecuador  noted Panama's strong growth which had resulted in an 
increase in GDP per capita of some 30% over the past  six years, to around US$5,200.  This growth 
rate could be maintained throug h the consolidation of Panama's  multilateral commitments, favouring 
other WTO Members. 
108. Panama was an active WTO Member with a contin uous and positive participation, both in the 
organization's regular tasks, and in the DDA.  Ecua dor and Panama shared, in general, a global view 
with respect to the multilateral trading system and the expectations for developing countries from the 
conclusion of the Doha Round.  They considered th at the Round should produce equitable result in all 
areas of interest for developing countries.  
109. For this reason, for both countries, achieving progress in the domestic aid reduction, the 
elimination of subsidies and binding real market ac cess in agriculture were sine qua non elements for 
a successful result of the negotiations.  Panama, t ogether with Ecuador and other Members advocated 
for the liberalization of tropical products, as well as  a special and differential treatment for Members 
of recent accession to the WTO in the agricultural and NAMA negotiations.   
110. Ecuador ran a trade deficit with Panama.  Imports from Panama had totalled US$462 million 
in 2006, while Ecuadorian exports had reached US$328 million.  Ecuador  had exported products 
classified under 328 tariff items in 2006, while Panama had exported prod ucts classified under 
1,858 tariff items in the same year.  90% of Ec uador's exports to Pana ma consisted of crude 
petroleum, while Panama had exported electronic pr oducts, footwear, pharmaceuticals, textiles, etc. 
111. Services was the engine of Panama's economy.   The Panama Canal was a key element of 
Panama's economy, but also a factor of consider able importance for Ecuador's economy.  Over 70% 
of Ecuador's exports transited th rough the Canal, which meant that  an increase in tolls affected 
considerably Ecuador's export competitiveness.  In  this regard, Ecuador, encouraged Panama to 
consider incorporating the main users of the Canal in  the directory of the Canal's Authority, so that 
they could actively participate in the decisions this Authority might take. WT/TPR/M/186 
Page 20  
 
V. REPLIES BY THE REPRESENTATIVE OF PANAMA AND ADDITIONAL 
COMMENTS 
112. The representative of Panama
 thanked the declarations made  by several delegations during 
the first day, in which they had acknowledged th e great progress made by Panama with respect to 
trade policy in the past ten years, and the results  this had had in promoting economic and social 
development.  He wished to reiterate Panama's  commitment to continue deepening the process of 
economic integration and trade relations with Me mbers and to continue playing a proactive and 
constructive role in the multilateral trading system. 
113. The Government of Panama had taken important steps to mode rnize its economic and social 
structure, and had, at the same time, supported the process of trade integration.  Panama had 
progressively created and strengthened institutions to ensure that growth and social development took 
place within the context of a market economy seeki ng to achieve higher levels of efficiency and 
competitiveness, and allowing an important particip ation of the private sector, both domestic and 
foreign.  Foreign direct investment played a major part in any economy, but even more so in a small 
open economy such as Panama's.  Panama had received  a total of US$2.56 billion in foreign direct 
investment in 2006, three times as much as in 2005.  Panama had become one of the major investment 
destinations in the region.  The Economic Freedom Index placed Panama 47th in terms of economic 
openness, and in the fourth place among Latin Amer ican countries, which was due to the absence of 
investment restrictions.  Foreign investment did not  require prior authorization in Panama.  The legal 
framework was equally applied to foreigners and nationals, and this was guaranteed by the 
Constitution.  Panama also has an Investment Stab ility law.  Projects such as the expansion of the 
canal, the establishment of new port facilities, en ergy, the Colon Free Zone, the Special Economic 
Panama-Pacific Area (Howard), and the financial se ctor represented clear opportunities to increase 
foreign direct investment flows into Panama. 
114. Maritime transport was of considerable importa nce for Panama:  its share of GDP had been 
some 1.8% in 2006, including related activities.  Th e Canal's contribution to GDP had been 5% in the 
same year.  Panama had 29 main ports, 12 of which were administered by the State and 17 by private 
operators.  Panama's ship registry, the largest in the world, comprised 7,183 vessels of over 100,000 
tonnes as at December 2006.  There were no nationality  restrictions for registry.  Cabotage services 
were open to both forei gn and domestic suppliers. 
115. The Panama Canal was one of the most dynamic sectors of Panama's economy.  In 2006, 
some 43.8% of total transit through the Canal had corresponded to trade between the east coast of the 
United States and Asia;  some 10.3% had corresponde d to trade between the United States and west 
coast of South America, and 6.7% to trade between the west coast of South America and Europe.  In 
the same year, 14,194 vessels had transited through the Canal.  At the same time, a popular referendum had approved the expansion of the Canal a nd the construction of a third set of locks.  The 
estimated cost of the project was US$5.25 billion and the construction was expected to last until 2014, 
100 years after the inauguration of the Canal. 
116. Noting that some questions with respect to cust oms practices in the Colon Free Zone had been 
raised, he stated that this was a matter that had Panama brought before the DSB and it was this body 
who would settle this controversy.  The Colon Free Zone was a very dynamic trade platform, 
generating business for some US$15 billion a year.  Th e Zone was created to promote, and facilitate, 
world trade and continued to play this role.  The main external factors that had contributed to the 
Zone's competitiveness were the frequents transits th rough the Canal;  the port infrastructure and its 
transhipment activities;  the availability of credit facilities through and international banking centre;  
the tax-free nature of operations;  administrative facilities;  and good international communications.  
Similarly, the inter-modal transport system were an important complement to logistical services.  The combination of maritime ports, airports, railroad and land transport facilities were indispensable 
elements for the competitiveness of trade through the Colon Free Zone.  WT/TPR/M/186 
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117. Financial services were another area of importance for Panama, representing some 7.5% of 
GDP in 2006.  The Panamanian Financial Centre  comprised activities in banking, insurance and 
securities markets. The Centre was seeking to expand and diversify its activities in the region and, to 
this end, the Government was seeking to open the sect or further, in order to achieve greater access to 
other markets.  In April 2007 there were 80 banks in Panama, both of domestic and foreign capital:  
40 with a general licence, 37 with an internati onal licence, eight representation offices, and two 
official banks. 
118. Panama had engaged in a process of pr ivatization in the 1991-94 period.  In 
telecommunications, Panama had opted, since 1997, to authorize the establishment of investment 
allowing a broader coverage and improved services and currently there was no monopoly in 
telecommunications.  The process of opening deepened in 2003, with the granting of concessions for 
local, national, and international basic telephony, p ublic and semi-public telephone.  That strategy had 
increased 20-fold the number of ce llular phone subscribers in just eight years, and increased five-fold 
the number of Internet connections.  On the other hand, the provision of inte rnational phone calls had 
gone from a state monopoly to an open market in which 10 companies participated, which had 
ensured lower calling tariffs. 
119. With respect to electricity, the state comp any had been divided into four generation 
companies, three distribution companies and one transmission company.  The Government still controlled the transmission company, but new privat e generation companies had been created.  This 
had allowed an improvement in quality and in ener gy supply, and had permitted the sector to operate 
with high levels of efficiency.  Reforms in tel ecommunications and energy had contributed towards 
increasing the general competitiveness of the Panamani an economy.  This had taken place within an 
effective and transparent regulatory framework, which had defended consum er interests and had 
stimulated domestic and foreign investment. 
120. Panama had engaged in tariff re duction and had simplified its tariff structure.  The average 
tariff rate had fallen from 15.86%  in 1996 to 8.6% in 2006, with a dispersion not exceeding 
6 percentage points.  Although in some cases tari ffs had been adjusted, this had always occurred 
taking Panama's multilateral commitments into account.  Therefore, the observation made by the Secretariat and some Members with respect to a pplied tariffs exceeding bindings in some cases was 
not correct:  the three tariff subheadings mentione d in the Secretariat report as exceeding bindings had 
always been kept at, or below, bound rates.   
121. The recently created Autoridad Panameña de Se guridad de Alimentos was in charge of the 
surveillance of the application of SPS measures.  Th e creation of this body had been a step towards 
enhancing transparency, and towards the use of sci entific criteria and international standards when 
applying SPS measures.  Since its accession to the WTO in 1997, Panama had presented 
49 notifications to the SPS Committee;  of these, only a small fraction were  measures banning the 
importation of agricultural products. 
122. For a developing country like Panama, th e current DDA negotiations represented an 
opportunity to correct some of the imbalances whic h existed in WTO rules, as well as an opportunity 
to foster economic and social development.  Th e Doha Declaration established the need that all 
Members benefited from the opportunities and progress of the multilateral trading system.  It was in 
that context that Panama aimed at obtaining balanced results for all WTO Members and to eliminate policies that attempted to perpetuate world trade distortions.  WTO Members' collective responsibility 
was  to generate new trade opportunities, particularly for developing countries. 
123. Finally, he wished to highlight the importance that Panama attached to the TPR mechanism, 
which reinforced the transparency of the tr ade policies and practices of WTO Members. WT/TPR/M/186 
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124. The discussant
 stated that, on Monday, many dele gations had noted the economic progress 
that Panama had made over the past 10 years, following a process of reform, and that they looked 
forward to continued growth as further liberalizat ion measures took root.  The expansion of the 
Canal’s capacity, which was now under way, would do mu ch to stimulate such growth, particularly in 
respect of canal-related services, which made su ch an important contribution to the Panamanian 
economy. 
125. Panama had a number of free trade or preferential agreements in place, or in the process of 
being put into place, with other Members, and it was no surprise that emphasis that had been placed, 
during such interventions, on the importance of th eir bilateral trade with Panama, and of the 
importance of the Canal to their own economies.  Members, however, had also noted the active role 
that Panama had played to date in the Doha De velopment Round, and had commented that, as a small, 
relatively open, largely service-based economy, Panama  had much to gain from the stimulus to global 
trade in goods and services that a successful outcome to the Doha Development Round would undoubtedly bring by strengthening the global multilateral trading system. 
126. Members had also asked a number of questions, and made suggestions, in order to increase 
their understanding of Panama’s trade policies and pr actices.  He was pleased to hear many of these 
being addressed in the Honourable Minister’s comp rehensive reply and also in the written replies 
tabled this morning. 
127. The representative of the European Communities
 thanked Panama for the answers provided 
and wished Panama success in its reform proces s and noted its rapid economic growth.  The EC 
wished to see progress in the implementation of, and accession process to, the Agreement of 
Government Procurement. 
128. The representative of the United States  commended Panama for the progress made, but urged 
it to take further steps to enha nce its commitments in services. 
129. The representative of Japan  thanked Panama for the replies provided and stated that he would 
look forward to comparing the next TPR report with the current one. 
130. The representative of Panama  noted that he was pleased to have gone through the Trade 
Policy Review exercise.  Panama was ready to work with other Members to provide an answer to the 
questions that had remained pending.  
  WT/TPR/M/186 
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VI. CONCLUDING REMARKS BY THE CHAIRPERSON 
131. Panama's first Trade Policy Review has allowed this Body to appraise in detail the evolution 
of its trade policies in recent years.  I thank Mi nister Ferrer, Chief Negotiator Sheffer, Ambassador 
Harris and the rest of the Panamanian delegation, as well as the discussant, Mr. Glass, and Members who engaged in the discussion as part of this exercise. 
132. Panama was warmly praised for its commitment to the multilateral trading system, including 
its constructive role in the Doha Development Age nda.  Panama's full engagement in this review 
demonstrated beyond doubt not only that commitment but also its support of the TPRM and transparency in general.  Members took note of Panama’s involvement in preferential agreements, 
including the recently completed agreement with the United States, Panama's main trading partner.  
Members also encouraged Panama to continue along  the path of global econom ic integration which it 
has followed so successfully. 
133. Members welcomed Panama's strong economic grow th in recent years, which they linked to 
sound macroeconomic policies and the liberalization of the trade regime.  Members highlighted the 
importance of a disciplined fiscal policy to sustain ec onomic growth, particularly in view of the costly 
Canal expansion and the absence of monetary policy instruments.  Panama was also encouraged to 
capitalize on the present auspicious economic environmen t to take steps to distribute more widely the 
benefits of growth. 
134. Members noted that the Canal is of critical  importance to the domest ic economy, and gives 
Panama a unique place in international trade representing as it does a vital transit point for global commerce.  Although Members welcomed the Canal e xpansion, they noted the need for its careful 
management while expressing some concerns about rising tolls.  The Colon Free Zone is also 
important for Panama's economy, having become a continental distribution hub.  The granting of tax 
breaks and export subsidies through export processi ng zones and other schemes was questioned in 
view of their cost and possible distorting effects. 
135. Members appreciated Panama's modernization a nd liberalization of its trade regime, which 
had been undertaken in part on an autonomous manner.  However, Members considered that 
transparency and predictability would be enhanced  by simplifying the tariff structure and narrowing 
the gap between bound and applied tariffs.  Panama provided responses to the various questions and 
concerns raised by Members over SPS measures and technical regulations.  Panama was invited to 
speed up its negotiations to accede to the GPA. 
136. Considering the great importance of services  for its economy, Members congratulated 
Panama for undertaking reforms to modernize its ser vices sector.  They pointed out to the numerous 
benefits from past liberalization, and thus enco uraged Panama to continue opening the sector.  
Panama was also invited to expand its GATS commitm ents as to reflect more closely the degree of 
access afforded in practice to fore ign service suppliers.  Panama indicated that it is working on its 
revised services offer, aiming to include additiona l commitments in many sectors that are already 
liberalized.  It also provided responses to servi ce-related questions concerning activities such as 
telecommunications, transport and retail trade. 
137. In conclusion, this first Trade Policy Review of  Panama has been invaluable in shedding light 
on developments since Panama acceded to WTO ten years ago.  Members stressed that during this short period Panama had become an active and resp ected Member of this Organization.  Members 
considered that the liberalization carried out in  recent years had underpinned rapid economic growth, 
but encouraged Panama to undertake further reforms to ensure the sustainability of growth.  I would 
also invite Panama to bind recent and future reform s in the WTO to give greater predictability to its 
trade and investment regime, as well as to strengthen the multilateral trading system from which, as a small, open economy, it greatly benefits. WT/TPR/M/186 
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138. I would like to close this meeting by thanki ng once again the Panamanian delegation, the 
Discussant, and the Members that took part in this meeting for contributing to an informative and 
engaging review.  I would also like to express my appreciation to the Panamanian delegation for the 
comprehensive responses provided during the meeti ng.  We look forward to receiving outstanding 
responses within the next month. 
 
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