WORLD TRADE  
ORGANIZATION  G/SCM/N/192/PAN 
9 July 2009 
 
 (09-3368) 
Committee on Subsidies and 
Countervailing Measures Original:   Spanish 
 
 
 
SUBSIDIES 
 
Continuation of Extension under SCM Article 27.4 of the Transition Period for the  
Elimination of Export Subsidies Pursuant to the Procedures Contained in the  
General Council Decision in Document WT/L/691  
 
PANAMA 
  
 The following communication, dated 30 June 2009,  is being circulated at the request of the 
delegation of Panama.  
_______________ 
 
 
 The Republic of Panama hereby submits the following notification pursuant to 
subparagraph 1(d) and paragraphs 3 and 4 of the Pr ocedures for extensions under Article 27.4 of the 
SCM Agreement for certain developing country Members (G/SCM/39), subparagraph 1(c) and 
paragraphs 2 and 3 of the Decision adopting proc edures for the continuation of such extensions 
(WT/L/691), and the Decisions of 22 November 2002 on Export Processing Zones (G/SCM/85) and 
on the Official Industry Register (G/SCM/84). 
  In accordance with its rights and obligati ons under the procedures for extending programmes 
that comprise subsidies classified as prohibited unde r Article 3.1 of the Agreement on Subsidies and 
Countervailing Measures (SCM) of the World Trade Or ganization (WTO), the Republic of Panama is 
submitting the following notification for the Comm ittee's consideration in order to meet its 
obligations in respect of the extension of the tr ansition period for programmes subject to renewal. 
  Panama confirms that its programmes subject  to extension comply with the standstill, 
favourability and transparency requirements under the procedures for extensions (G/SCM/39) and the 
General Council Decision (WT/L/691) in that neither pr ogramme has been modified  so as to make it 
more favourable than it was at 1 September 2001. G/SCM/N/192/PAN 
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  - Programmes 
 
I. EXPORT PROCESSING ZONES 
1. Description of the Programme 
  See paragraph II.1 of document G/SCM/N/95/PAN. 
 
2. Period of notification 
 
 2008 
 
3. Objective of the programme 
 
 See paragraph II.3 of document G/SCM/N/95/PAN. 
 4. Background and authority 
 
 See paragraph B.4 of document G/SCM/N/71/PAN. 
 
5. Form of the subsidy 
  See paragraph II.5 of document G/SCM/N/95/PAN. 
 
6. Beneficiaries and mechanism 
 
 See paragraph II.6 of document G/SCM/N/ 95/PAN and paragraph I.6 of document 
G/SCM/N/160/PAN. 
 
7. Estimated amount of the subsidy 
 
 No estimate available.  However, paragr aph I.9 provides updated information, which 
represents an attempt to establish an or der of magnitude under the EPZ programme. 
 
8. Duration of the subsidy 
 
 Not specified in Law No. 25 of 1992. 
 9. Statistical data permitting an assessment of the trade effects of the subsidy 
 
Table No. 1.  PANAMA:  VALUE OF  EXPORTS FROM PROCESSING ZONES 
2001-2008 
Year No. of enterprises f.o.b. value (US$ million) 
2001 57 51.9 
2002 68 52.4 
2003 74 67.2 
2004 45 69.2 2005 56 77.8 
2006 61 88.2 
2007 77 88.5 2008 88 99.9 
Source : Auditor-General of the Republic and Vice-Ministry of Foreign Trade of the Ministry of Trade and Industry.  G/SCM/N/192/PAN 
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Table No. 2.  PANAMA:  EXISTING PROCESSING ZONES AND  
NUMBER OF ENTERPR ISES REGISTERED 
AS AT JUNE 2009 
No. Processing zone No. of enterprises registered 
1 Panaexport, Ojo de Agua 25 
2 Proinexport 2 
3 Marpesca, S.A. 21 
4 Rail Road Export Processing Zone 1 
5 Zona Procesadora de Davis 10 6 Colón Maritime Investor 4 
7 Eurofusión 1 
8 Schlobohm 2 9 Telepuerto Panamá 3 
10 Isla Margarita Development 8 
11 Espanam Iberoamérica 0 12 Zona Procesadora de Albrook 11 
13 Zona Procesadora de Chilibre 0 
14 Tocumen Export Processing Zone 0 15 Proexport 0 
TOTAL  88 
Source : Vice-Ministry of Foreign Trade, Ministry of Trade and Industry. 
 
10. Adoption of internal measures 
 
 The following steps have been taken with a view to eliminating export subsidies under the 
programme: 
 
(a) Written notification to each of the developers and enterprises based in the Export 
Processing Zones and benefiting under the programme, stating that the benefits granted under the programme which are deemed  to constitute export subsidies will be 
eliminated by 31 December 2015 at the latest, and specifically clarifying that the extension granted to these programmes may not be continued beyond that date and 
that no further export subsidies may be granted after the calendar year 2015.  
Notifications will be sent by 31 December  2009 at the latest (as suggested in 
Annex I). 
  (b) Development of a draft text to introduce legislative amendments governing the 
procedures for cancelling developers' operating licences on the basis of a proposal 
submitted by the National Export Promotion Di rectorate, the office responsible for 
administration of the programme, with a view to fostering the development, and assisting with the dismantling, of the progra mme, without affecting the status quo of 
the benefits granted thereunder. 
 
 (c) Establishment of a Working Group comprising  the National Export Promotion 
Directorate (responsible for administra tion of the programme), the National 
Directorate for the Administration of International Trade Treaties and Trade 
Protection, DINATRADEC (responsible for ad ministration of the WTO Agreements), 
the Vice-Ministry of Foreign Trade (responsib le for Panama's foreign trade) and all 
Ministry of Trade and Industry offices.  Th is Working Group has been entrusted with 
drawing up the action plan for eliminatin g the export subsidies under the programme. 
 G/SCM/N/192/PAN 
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   (d) Participation of Working Group officials in the workshop on "Export subsidies – 
Compliance with the requirements of th e WTO General Council Decision of 
27 July 2007 (WT/L/691) for Central American countries benefiting from the continuation of extensions under this Deci sion", held in Guatemala City from 26 to 
28 May 2009.  The workshop provided a cl earer understanding of the scope of the 
export subsidies and will prove helpful as re gards the development of an effective 
action plan. 
  (e) Projected creation of a Commission  involving other public and private sector bodies 
and with a mandate to present new propo sals for programmes to replace the Export 
Processing Zone Programme, in particular with  regard to the benefits deemed to be 
export subsidies, and which allow for the promotion and strengthening of the export 
sector. 
 
II. OFFICIAL INDUSTRY REGISTER 
 
1. Description of the subsidy 
 
 See paragraph III.1 of document G/SCM/N/95/PAN. 
2. Period of notification 
  2008 
 
3. Objective of the programme 
 
 See paragraph III.3 of document G/SCM/N/95/PAN. 
 
4. Background and authority 
 
 See paragraph C.4 of document G/SCM/N/71/PAN.  See also Resolution No. 32 of 31 December 2002 of the Ministry of Trade a nd Industry, notified in Annex 1 to document 
G/SCM/N/95/PAN and Law No. 11 of 4 January 2008, attached hereto as an Annex. 
 
5. Form of the subsidy 
 
 See paragraph III.5 of document G/SCM/N/95/PAN.  6. Beneficiaries and mechanism 
 
See paragraph III.6 of document G/SCM/N/95/ PAN.  In addition, the following table 
indicates the number of beneficiary enterprises in the Official Industry Register, according to type of 
activity.  G/SCM/N/192/PAN 
 Page 5 
 
 
  Table No. 3.  OFFICIAL INDUSTRY REGISTER :  NUMBER OF ENTERPRISES ACCORDING TO 
TYPE OF ACTIVITY/PRODUCT 
AS AT JANUARY 2009 
No. Activity/Product No. of enterprises 
 TOTAL  153 
1 Animal feed 3 
2 Sugar cane 5 
3 Manufacture of clothing 6 
4 Poultry breeding 5 5 Milk by-products 5 
6 Detergents and other chemical products 9 
7 Manufacture of footwear 5 8 Brewing of beer 2 
9 Manufacture of mattresses 3 
10 Manufacture of brooms and mops 3 11 Manufacture of furniture 2 
12 Wood and wood articles 1 
13 Articles of aluminium and other metals 11 
14 Cement articles 1 
15 Paper and paperboard and articles thereof 16 16 Coffee processing 4 
17 Processing of hides and skins 4 
18 Food products 25 19 Marine products 17 
20 Pharmaceuticals 2 
21 Plastic products 11 22 Printing 2 
23 Other products 11 
Note : Only covers enterprises listed in the Official Industr y Register as exporting all or part of their production. 
Source : Directorate-General of Industry of the Ministry of Trade and Industry. 
 
7. Estimated amount of the subsidy 
 
Table No. 4.  VALUE OF TAX INCENTIVES GRANTED UNDER 
THE OFFICIAL INDUSTRY REGISTER 
2006-2008 
(US$ million) 
Year Type of benefit 
2006 2007 2008 
Import tax exemption or rebate 18.9 22.7 31.0 
Income tax exemption or rebate for reinvestment 3.4 4.8 7.3 
Other incentives* 10.4 2.7 4.8 
Total 32.7 30.2 43.1 
* Exemption from income tax only. 
Source : Fiscal Studies Department, Dire ctorate-General of Revenue, Mini stry of the Economy and Finance . 
 
8. Duration of the subsidy 
 
 See paragraph III.8 of document G/SCM/N/95/PAN. 
 
9. Statistical data permitting an assessment of the trade effects of the subsidy 
 
 No statistical information is available to assess the trade effects of the programme. G/SCM/N/192/PAN 
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10. Adoption of internal measures 
 
 The following steps have been taken with a view to eliminating export subsidies under the 
programme: 
 
 Adoption of Law No. 11 of 4 January 2008 (see Annex 2):   (a) Law No. 3 of 1986, which regulated th e programme and granted the tax benefits 
deemed to constitute export subsidies, was repealed pursuant to Law No. 28 of 1995.  
The benefits granted under the former Law w ill continue to exist only for the rest of 
the period during which the registration or c ontract, as applicable, is effective.  
Programme benefits have been extended a nd remain in effect under the extension 
granted by the WTO. 
 
 (b) Enterprises which benefited under the pr ogramme may only conti nue to benefit upon 
request.  The request must be submitted prior to the expiry of the respective registration and the extension may onl y be granted up to, but not beyond, 
31 December 2015. 
  G/SCM/N/192/PAN 
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  ANNEX I 
 
 ____ _____ 2009 
N- /09 
 
 Dear ,   As you are aware, Panama has been a member  of the World Trade Organization (WTO) since 
1997, pursuant to Law No. 23 of 15 July 1997. 
  One of the commitments undertaken by Panama upon accession to the World Trade Organization (WTO) was to phase out all measures  corresponding to the definition of a prohibited 
subsidy, as is the case of export subsidies, in a ccordance with Article 3.1(a) of the WTO Agreement 
on Subsidies and Countervailing Measures. 
  Panama is required to meet its  obligations under this Agreement and in particular those set out 
in paragraph 1(e) of the General Council Deci sion of 27 July 2007 (document WT/L/691), which 
establishes that " from 1 January 2008 and in no case later than 31 December 2009, the Member shall 
notify each beneficiary under the programme indica ting that no export subsidies within the meaning 
of SCM Article 3.1(a) will be granted or ma intained beyond the end of calendar year 2015 ", in order 
to maintain the waiver in respect of its commitme nt to eliminate export subsidies, in accordance with 
the annual notification process followed by the WTO Committee on Subsidies and Countervailing 
Measures.  
 For the above reasons, please be advised that no further export subsidies within the meaning 
of SCM Article 3.1(a) will be granted to Export Pr ocessing Zones or to the en terprises located in such 
zones, nor will existing subsidies be maintained  beyond the end of calendar year 2015, with no 
requests to the WTO for extension corresponding to this programme.   Nevertheless, in the light of the importance of the Export Processing Zone programme to the 
development of Panama's export sector, we wish to  point out that the required analyses, assessments 
and reviews are already under way, with a view to  securing viable alternatives for this sector which 
are in keeping with Panama's WTO commitments.   We thank you for your attention to this matter 
 
 Yours faithfully,    
Director for National Export Promotion G/SCM/N/192/PAN 
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  ANNEX II 
 
 
LAW NO. 11
1 
 
Of 4 January 2008 
 
Amending Article 23 of Law No. 28 of 1995, 
adopting measures extending the scope of production tax incentives 
 
THE NATIONAL ASSEMBLY 
 
HEREBY DECREES: 
 
 
Article 1.  Article 23 of Law No. 28 of 1995 shall read as follows: 
 
Article 23.   Enterprises which, upon the entry into force of this Law, are entered in the 
Official Industry Register or have a contract with the State on the basis of Cabinet Decree No. 413 of 1970 or an industry development cont ract shall retain the tax benefits granted by 
such registration, pursuant to Law No. 3 of 1986,  or under such a contract, as applicable, for 
the rest of the period during which the registrati on or contract is effective in each particular 
case, compliance with the provisions of Article 25 of this Law being required for products 
deemed to be sensitive for the domestic economy. 
 
Enterprises which are entered in the Official Indus try Register may request, prior to the expiry 
of the respective Register entry, that regist ration be extended for activities which were in 
force as at 27 July 2007.  Extensions of Official Industry Register entries may be granted up until 31 December 2015.  The Ministry of Trad e and Industry shall have legal powers to 
implement these development regimes for as l ong as the above-mentioned State contracts and 
Official Industry Register entries remain in for ce, except in relation to products deemed to be 
sensitive, which are subject to the special regime  provided for in Article 25 of this Law, for 
which the legal powers shall be exercised by th e ad hoc commission referred to in Article 147 
of Law No. 23 of 1997. 
 Paragraph.   Enterprises the entries of which in th e Official Industry Register expired on 
27 July 2007, the date of entry into force of this  Law, may request that the activities listed in their 
registration on that date be rene wed and extended up until 31 December 2015.  To this end, the 
enterprises shall have a period of sixty days as from the date of enactment of this Law to submit the 
relevant application.   The Ministry of Trade and Industry may grant Official Industry Register entry extensions to enterprises which so request, provided that they ar e in compliance with the established requirements. 
 
Article 2.   This Law amends Article 23 of Law No. 28 of 20 June 1995, as amended by Law No. 26 
of 4 June 2001.  Article 3.   This Law shall enter into effect on the date of its enactment. 
                                                     
 
1 Official Journal ( Gaceta Oficial ) No. 25955 of Thursday 10 January 2008.  G/SCM/N/192/PAN 
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  FOR COMMUNICATION AND IMPLEMENTATION. 
 
Draft No. 387 of 2007 adopted on third reading at the Justo Arosemena Palace in Panama City on the 
thirtieth day of December 2007.  
 
President, Pedro Miguel González P. 
 Secretary-General, 
Carlos José Smith S. 
  
NATIONAL EXECUTIVE BODY, PRESIDENCY OF THE REPUBLIC. 
 
PANAMA CITY, REPUBLIC OF PANAMA, 4 JANUARY 2008. 
   
MARTÍN TORRIJOS ESPINO President of the Republic 
 
ALEJANDRO FERRER Minister of Trade and Industry  
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