Panama WT/TPR/S/186 
 Page 23 
 
 
III. TRADE POLICIES, BY MEASURE 
(1) OVERVIEW  
1. In recent years Panama has been modernizing its customs system through measures such as 
computerization and improvements in risk manageme nt and smuggling controls.  Since January 1997, 
Panama has applied the WTO Cu stoms Valuation Agreement. 
2. Tariffs are the main instrument of border protection and all the duties applied are ad valorem .  
In 2007, the simple average of the MFN tariff rates applied was 8.5 per cent;  the equivalent averages 
for agricultural (WTO product definition) and non- agricultural products were 15.1 and 7.3 per cent, 
respectively.  The tariff structure is complicated, wi th 37 different tariff rates, and characterized by 
marked negative escalation between the first ph ase of processing and the semi-processed product.  
Panama has bound its entire tariff universe, thereby giving its trade regime greater predictability, 
although the effect is somewhat reduced by the difference of approximately 15.2 percentage points 
between the bound and applied average tariffs. 
3. At the beginning of 2007, Panama was appl ying preferential tariffs to imports from 
nine trading partners, provided that they complied w ith the origin criteria.  Panama has notified the 
WTO that it has no non-preferential rules of origin. 
4. Apart from customs duties, imports are subject  to an Administrative Charge for Customs 
Services, the Tax on the Transfer of Movabl e Property and Services (ITBMS), the Selective 
Consumption Tax (ISC), and the Consumption Ta x on Fuels Derived from Petroleum.  Imports 
receive national treatment in the application of inte rnal taxes, with the exception of certain spirits 
which pay a lower ISC if domestically produced. 
5. Since joining the WTO, Panama has notified only one dumping investigation, which did not 
result in the imposition of duties.  Moreover,  in October 2006 Panama notified a safeguards 
investigation which resulted in the imposition of a provisional measure.  In mid-2007 the final 
determination was still pending. 
6. Panama imposes import prohibitions and restric tions for sanitary and phytosanitary, health 
and safety reasons.  Panama has maintained an act ive programme of implementation of sanitary and 
phytosanitary measures.  Since joining the WTO in  1997, Panama has made 48 notifications under the 
WTO Agreement on the Application of Sanitary a nd Phytosanitary Measures, of which a little over 
half affected imports of live animals, meat a nd by-products.  Moreover, Panama has notified 
34 technical regulations, most of which relate to food technology. 
7. There is a ban on the exportation, but not on the production for domestic consumption, of 
wood in the form of logs and sawn blocks from na tural forests.  The exportation of some marine 
products and nonferrous scrap is subject to special procedures.  Panama levies a tax on exports of 
certain processed woods.  Exports are exempt from internal taxes. 
8. Panama has notified the WTO that it granted subsidies to agricultural exports between 1997 
and 2003 (last year notified).  In mid-2007, Panama  was maintaining several general export incentive 
programmes including:  the Tax Credit Certificate (CAT), the Export Processing Zone (EPZ) Programme, the Official National Industry Regist er (ROIN), and the Colon Free Zone (ZLC).  
Panama has notified the WTO that the first three of these programmes grant export subsidies.  The 
CAT grants a tax credit to companies exporting non-traditional products produced or processed 
wholly or partially in Panama.  The EPZs grant labour and migration incentives and exemption from 
taxes provided that a minimum value added is achieve d.  The ZLC regime provides similar benefits.  WT/TPR/S/186 Trade Policy Review 
Page 24 
 
 
Under the ROIN, companies that export their entire output are exempted from tariffs, income tax, and 
various internal taxes and, moreover, may be nefit from preferential financing programmes. 
9. In 2005, the tax benefits granted amounted to US$40 million for ROIN and US$31 million in 
the case of CAT.  There is no information concerning  the tax benefits granted to the EPZs or the ZLC.  
The exports originating in the EPZs were relatively modest, equivalent to 1 per cent of total exports  
in 2005.  The exports supported by the CAT progra mme appear to be more substantial.  Re-exports 
from the ZLC represent a little over three quarters of  total Panamanian merchandise exports.  This 
Zone operates mainly as a logistical and global goods distribution centre. 
10. ROIN also offers incentives to companies that  produce only for the domestic market, such as 
reduced import tariffs and some degree of inco me tax exemption.  Moreover, Panama operates 
incentive schemes for micro and small businesses and for R&D, as well as for specific sectors such as 
agriculture, forestry, mining and tourism (see chapter IV).  The number and complexity of the incentive programmes in force raise questions as to their effectiveness as a development tool, 
especially in the context of the persistent public sect or deficit (see chapter I).  It would therefore be 
advisable to assess the costs and benefits of th ese programmes and the advantages of rationalizing 
them. 
11. Recent reforms appear to have provided Pana ma with a relatively well-developed legal 
framework in the area of competition.  However, in specific sectors, including some agricultural 
markets protected by high tariffs, the level of comp etition appears to be limited.  In practice, price 
controls are not applied in the case of goods, altho ugh the legislation permits their use in certain 
circumstances. 
12. Panama has notified the WTO that it has no stat e trading enterprises within the meaning of 
Article XVII of the GATT.  In the 1990s, Panama had a very ambitious privatization process, but in 
recent years, with the decline in state involvement in production, this has almost come to a halt.  The cost and number of the formalities involved in  establishing new enterprises in Panama have 
traditionally been low. 
13. Panama is not a party to the WTO's Plurilate ral Agreement on Government Procurement, but 
it is in process of acceding to that Agreement a nd is participating in the WTO Working Group on 
Transparency in Government Procurement.  Unde r the new regulatory framework introduced in 2006 
foreign bids receive national treatment.  Panama  Canal purchases are subject to a separate regime. 
14. As part of its preparations for joining the WTO, Panama amended its  industrial property and 
copyright legislation to adapt it to the TRIPS Agreement, but it has not adopted any specific 
legislation concerning layout-designs. 
(2) M
EASURES DIRECTLY AFFECTING IMPORTS  
(i) Procedures, documentation and registration 
15. The Directorate-General of Customs (DGA), under the Ministry of the Economy and Finance 
(MEF), is the institution responsible for supervis ing and controlling the passage of goods across the 
national borders, collecting the taxes levied ex clusively on those goods, preventing and repressing 
customs offences, and administering customs procedur es.  Panama is a member of the World Customs 
Organization. Panama WT/TPR/S/186 
 Page 25 
 
 
16. Panama's customs regime is based on La w No. 16 of 29 August 1979 and Law No. 41 of 
1 July 1996, which in their turn are based on th e Revised Kyoto Convention.  The customs import 
procedures are laid down in Cabinet Decree No. 41 of 11 December 2002.  The Customs Penal 
Regime was established by Law No. 30 of 8 Novemb er 1984.  In mid-2006, the Government prepared 
draft Law No. 042-06 for the purpose, among other things, of creating a new customs authority with 
institutional and financial autonomy, modernizin g the customs legislation, introducing advance 
rulings and fighting corruption.1 
17. Panama has participated as an observer in the meetings to prepare the new Central American 
customs code.  However, even though Panama has an interest in the process of coordination of the 
customs legislations of the Central American count ries, its legislation has not been harmonized with 
the Central American provisions.2 
18. As a general rule, the importati on of goods requires the intervention of a customs broker.  If 
the c.i.f. value does not exceed B 500.003,  the use of a broker is optional.  Moreover, the intervention 
of a customs broker is not required in the case of en try declarations for free zones established in the 
country.  Customs brokers must be accredited by the MEF.  This involves obtaining a licence, for 
which the applicant must possess Panamanian nationality and hold a diploma in Customs 
Administration or the equivalent.4 
19. By Cabinet Decree No. 3 of 7 February 2001, Panama adopted the Integrated Foreign Trade 
System (SICE) as the Internet-based computer sy stem compulsorily applicable to all customs 
procedures and purposes requiring a declaration.  The authorities have noted that 100 per cent of 
customs import formalities are completed through the SICE.  The declarations are registered in the 
SICE and can be consulted and corrected by the u sers who prepare them.  Customs brokers, and other 
customs intermediaries, must complete a user ac tivation application to obtain access to the SICE. 
20. For goods to enter Panama, or be unloaded at a Panamanian port, the carrier must transmit 
electronically through the SICE, before they arrive at the port or at the time of unloading, an international cargo manifest with details of the b ills of lading covering the cargo being shipped to 
Panama.  If the cargo is consolidated, the bulk-breaker  must sort out the different bills of lading so 
that the customs broker can complete a separate pr e-declaration for each.  The broker prepares a pre-
declaration (preliminary customs declaration) b ased on the presentation of the following documents:  
the original commercial invoice
5;  the bill of lading (for example, the waybill for the various modes of 
transport)6;  the certificate of origin, where necessar y (see section 2(iii) below);  and, where 
importation is restricted, the appropria te permit (see section 2(vi) below).7  The SICE automatically 
analyses the pre-declaration and informs the broker if  any other prior authorization or import licence 
is required, indicating the permitting body to whic h application should be made.  The broker must 
                                                      
1 Draft Law No. 042-06 can be consulted on the web site of the Directorate-General of Customs 
(www.aduanas.gob.pa). 
2 Panama forms part of the Central American Inte gration System, but not of the Central American 
Economic Integration Secretariat. 
3 1.00 balboa is the equivalent of 1.00 US dollar. 
4 Chapter II of Cabinet Decree  No. 41 of 11 December 2002. 
5 The commercial invoice must contai n at least the following information:  address of the individual or 
firm selling the goods;  date of sale;  name of the buyer in Panama and of the consignee;  description, quantity, 
weight and/or volume;  and the price of the goods, total and subtotal. 
6 The bill of lading must contain at least the following information:  the names of the shipper, the 
consignee, the vessel, the port or place of departure, and the port of unloading;  the dest ination of the goods;  the 
mark, number, quantity, weight and description of th e packages; and the agreed  value of the freight. 
7 See:  http://www.mef.gob.pa/ Direccion%20de%20Aduanas/Conten ido/Documentos%20para%20la% 
20Importacion-3.asp. WT/TPR/S/186 Trade Policy Review 
Page 26 
 
 
apply for the permit through the SICE itself, which bl ocks the registration of the final declaration until 
all the necessary authorizations have been obtained. 
21. If the customs broker or the importer is unable to produce the commercial invoice and/or any 
other of the documents required, security correspon ding to the import duties and taxes payable must 
be lodged.  The security will be forfeited if the mi ssing documents are not produced within the period 
laid down in Cabinet Decree No. 41 of 11 December 2002. 
22. In addition to implementing the SICE, the Government has developed other customs 
modernization projects, such as, for example, a t echnical assistance project for the implementation of 
a risk management and goods inspection programme.8  Although the Office of Risk Analysis has 
already been formally established, its regulations are still in the process of internal discussion within 
the DGA.  The traffic light system has not been im plemented either, but the draft law provides for the 
installation of a system for analysing the data declar ed for inconsistency, using statistical or customs 
warning indicators.  The authorities have stated th at, in mid-2007, Panama was continuing to carry out 
documentary checks on all imports. 
23. Goods imported by post require the duly certified commercial invoice as the shipping 
document;  in post offices where there is an Inte rnet connection declarati ons can be made in a 
simplified electronic format.  Imports with a valu e of less than B 100.00 are exempt from duty.  
Imports whose c.i.f. value does not exceed B 500.00 do not require the intervention of a customs broker and benefit from a simplified procedure requi ring the use of a Letter Parcel Form, which can 
be issued ex officio by the custom s officials attached to the Postal Service.  Parcels that exceed the 
limit are subject to the general customs procedures and formalities. 
24. There is an accelerated customs clearance syst em for express consignments used for the 
simplified importation of goods via courier operato rs.  On the basis of the express consignment 
manifest pre-registered in the SICE, a legally authorized person (courier) can obtain the immediate 
release of certain goods without further processing.
9 
25. The authorities have indicated that, provided the prior authorizations required by the different 
competent authorities have been duly obtained, the average time needed for imports to clear customs 
is less than six hours, irrespective of the import procedure used. 
26. Under the Canal Neutrality Treaty, the transit of goods via the Panama Canal has become a 
sort of international easement, with national security  controls but no controls by customs for customs 
purposes.  This transit operation does no t generate any customs formalities. 
                                                      
8 The project has the support of th e Government of Canada, the Inter-American Development Bank and 
the International Tax Administration Centre.  Availabl e for consultation at:  h ttp://www.mef.gob.pa/Direccion 
%20de%20Aduanas/Contenido/Proyect o%20de%20modernizacion-1.asp. 
9 Materials and objects not considered to be goods (human corpses, postal items, business papers), 
documents in general (excluding computer software), sma ll items of a domestic nature (occasional imports, of a 
non-commercial nature, consisting of small consignments of goods with a value of not more than B 50.00, samples of no commercial value, and non-commercial periodicals). Panama WT/TPR/S/186 
 Page 27 
 
 
27. The Panamanian customs authority has powers to  inspect and/or detain goods in transit, 
including through the Canal, if it suspects (generally  as a result of a complaint) that the goods infringe 
intellectual property rights or  constitute illicit substances.10 
28. The free zone territories, including the Colon Free Zone (ZLC), are not regarded as being part 
of Panama's customs territory and have a separate customs regime.  Therefore, goods entering these 
territories are not treated as imports for customs purposes.  For all goods entering the ZLC (see section 4(iii)) it is necessary to produce a so-called Commercial Movement Form, duly signed or authorized by the Trade Department of the ZLC.  To  obtain authorization a duly attested copy of the 
commercial invoice and a copy of the bill of ladi ng (for example, the waybill for the corresponding 
mode of transport) are required. 
29. The customs administrative process provides fo r recourse, in the first instance, to the 
Regional Administrator and, in the second instance,  to the MEF's Tariff Commission in the event of 
disagreement as to the classification or customs value of goods, or to the DGA's own Appeals 
Commission in cases relating to other infringements, including those with criminal implications.
11  
However, judicial remedies are not being used in Appeals Commission cases since they are no longer 
authorized by the Supreme Court of Justice.  During the administrative process, the goods are 
detained by the DGA, unless security equivalent to the difference in tax that might be payable is 
provided. 
30. Temporary or outright imports of acknowledge d urgency or covered by a special import 
regime (for example, a partial or total relief regime) can make use of a system for providing security.  
The security ensures the payment of the duties and taxes resulting from multiple imports (general) or 
a single customs operation (specific).  As secur ity the DGA will accept in surance policies, bank 
guarantees, bonds, cash, etc.12 
31. Panama has been combating smuggling thro ugh the Customs Investigation Department 
established by Executive Decree No. 155 of 3 August 1995.  The regulations for suppressing smuggling are laid down in Law No. 30 of 8 November 1984, as amended by Law No. 28 of 
27 June 2001.  The products most likely to be smuggled are cigarettes and spirits. 
32. According to the World Customs Organizati on, although Panama is imposing exemplary 
sanctions on officials found to have been involved in corrupt activities, the problems of corruption in 
the customs administration remain severe.
13  The authorities have pointed out that the Customs 
Investigation Department is carrying out regular training and goods traffic monitoring and inspection 
programmes for the purpose of reducing the numbe r of customs offences and corruption levels. 
(ii) Customs valuation 
33. The Directorate-General of Customs is responsib le for issuing and applying the regulations on 
customs valuation. 
                                                      
10 The customs authorities with jurisdiction to order these inspections are the Regional Customs 
Administrator of the transit zone and the Director-General of Customs.  Available for consultation at:  http://www.mef.gob.pa/Direccion%20de%20Aduanas /Contenido/ regimen_transito_aduanero-6.asp. 
11 WCO (2006). 
12 Chapter IV of Cabinet Decree  No. 41 of 11 December 2002. 
13 WCO (2006). WT/TPR/S/186 Trade Policy Review 
Page 28 
 
 
34. Since January 1997, Panama has applied the WTO Customs Valuation Agreement (CAVA) in 
full, under Cabinet Decree No. 26 of 1 August 1 996, as regulated by Resolution No. 704-04-017 of 
10 January 1997, Resolution No. 704-04-019 of 10 January 1997, Resolution No. 704-04-532 of 
17 September 1997 and Resolution No. 7804-04 -528 of 10 October 1997.  Moreover, the 
WTO Customs Valuation Code, together  with its Annexes I, II and III, forms an integral part of Law 
No. 23 of 15 July 1997 to adopt the Marrakesh Agreement establishing the WTO. 
35. In Panama, in accordance with the provisions  of the ACV, the customs value of imported 
goods is a priori  the transaction value.  The authorities have  indicated that in practice the transaction 
value is applied in appr oximately 90 per cent of cases.  In dete rmining alternative values Panama is 
also guided by the provisions of the CAVA. 
36. In 1998 Panama replied14 to the check-list of issues concerning the implementation and 
administration of the CAVA.  Among other things, Pa nama noted that Article 5 of Cabinet Decree 
No. 26 of 1996 provides for the reversal of the order of application of the valuation methods described 
in Articles 5 and 6 of the CAVA, provided that the Customs Administration accepts the request of the interested party for that order to be reversed.  With reference to Ar ticle 11 of the CAVA, Panama also 
noted that the importer has the right to challenge th e decision, without penalty, within three working 
days of the customs duties being calculated.  He may also appeal to the DGA within five working 
days following notification of the first-instance decision.
15 
37. In 1998, Panama notified16 that the Decision of the Comm ittee on Customs Valuation on the 
Valuation of Carrier Media Bearing Software fo r Data-Processing Equipment had been applied by 
Panama since 20 October 1997, in accordance with Article No. 15 of Resolution No. 704-04-532 of 
17 September 1997.  Panama notified17 that Decision No. 3.1 (Treatment of Interest Charges in the 
Customs Value of Imported Goods) of the WTO Co mmittee on Customs Valuation had been applied 
since 20 October 1997. 
38. The customs value of used goods is determined on the basis of the transaction value if the 
invoices come from a supplier or seller of used go ods recognized by the customs authority on the 
basis of checks carried out by its Valuation Section.18  Moreover, acceptance of the transaction value 
requires:  (i) in the case of a recognized used goods seller, proof that the value approximates the 
values in the Customs Administration's records;  or  (ii) in other cases, that the invoice data correspond 
to the condition in which the used goods are presente d.  The authorities note that underinvoicing is not 
a major problem in Panama. 
39. Machinery used in construction, mining or agriculture, like vessels, aircraft and motor 
vehicles, is treated as a specific cas e of used goods and is therefore s ubject to special valuation rules, 
mainly in those cases in which valuation b ased on the transaction value is not possible.19 
40. In the specific case of used motor vehicles th e valuation rules are laid down in Resolution 
No. 704-04-019 of 10 January 1997.  The transact ion value is accepted if the imports come from 
auctioneers or used goods sellers recognized by the cu stoms authority.  In other transactions, such as, 
                                                      
14 WTO document G/VAL/N/2/PAN/1 of 8 October 1998. 
15 Provisions contained in Article No. 12 of Cabinet Decree No. 26 of 1996. 
16 WTO document G/VAL/N/3/PAN/1 of 8 October 1998. 
17 WTO document G/VAL/N/3/PAN/1 of 8 October 1998. 
18 Used goods are goods which have been produced or manufactured and which, having been the 
subject of a first sale, have already been utilized for their intended purpose. 
19 Resolution No. 704-04-528 of 1 October 1997 governs the importation of all used goods, with the 
exception of used motor vehicles. Panama WT/TPR/S/186 
 Page 29 
 
 
for example, those between private individuals, the value is determined using one of the alternative 
methods described in Cabinet Decree No. 26 of 19 96, in accordance with the framework established 
by the CAVA.  If it is not possible to apply any of  the above-mentioned methods, the customs value is 
determined on the basis of a price list supplied by the distributors of new vehicles in Panama, by 
applying the depreciation percentages and/or av erages specified in Resolution No. 704-04-019 of 
1997.  Between 2000 and 2006, on average, the tr ansaction value was accepted for motor vehicle 
imports (new and used) in 76 per cent of cases in terms of the number of vehicles and in 96 per cent of cases in terms of c.i.f. value. 
(iii) Rules of origin 
41. Panama has notified the WTO that it h as no non-preferential rules of origin.
20 
42. Panama applies preferential rules of origin under trade agreements which, at the beginning of 
2007, were in force with Chinese Taipei, Colombia , Costa Rica, Dominican Republic, El Salvador, 
Guatemala, Honduras, Mexico, Nicaragua and Singapore.  In 1998, Panama notified the WTO of the application of the rules of origin under these agre ements, with the exception of the more recent ones 
with Chinese Taipei, El Salvador and Singapore.
21 
43. The general principle governing the determinati on of the origin of goods that incorporate 
inputs from outside the territories covered by the va rious preferential agreements is the change of 
tariff classification.  Nonetheless, the rules of or igin applied by Panama vary from one preferential 
treaty to another and between different goods. 
44. The Preferential Agreements with Costa Rica,  Guatemala, Honduras and Nicaragua only have 
rules for determining the origin of natural products  according to the methods of cultivation, breeding 
or extraction employed.  No specific rules or regional content percentages are defined.22 
45. Under the Partial Scope Agreement with the Do minican Republic, if the change of tariff 
classification method contained in the specific rules cannot be applied, then it becomes necessary to 
comply with the level of regional content value speci fied for the product in its specific rule of origin23;  
the horizontal criterion of 35 per cent was not appr oved by the Treaty's Pe rmanent Joint Commission. 
46. Under the Partial Scope Agreement with Colombia , the general criterion for the determination 
of origin is a change of tariff classification through a change of tariff heading.  In the case of products 
for which there are no specific origin requirements resulting from an assembly or erection process, or 
products whose tariff subheading is  the same for both the goods and their parts, origin may be 
conferred without change of tariff heading if the c. i.f. value of the materi als originating in third 
countries does not exceed 60 per cent of the f.o.b.  value of the end product.  Specific origin 
requirements take precedence over general criteria.24 
                                                      
20 WTO document G/RO/N/23 of 5 October 1998. 
21 WTO document G/RO/N/23 of 5 October 1998. 
22 Regulations of the Panama–Costa Rica FTA Decree No. 47 of 18 August 1986;  Regulations of the 
Panama–Guatemala FTA Decree No. 10 of 11 October 1987;  Article No. 2 of the Panama–Honduras FTA of 
8 November 1973;  Article No. 2 of the Panama–Nicaragua FTA of 26 July 1973. 
23 Regulations of the Panama–Dominican Republic Trade Treaty of  6 February 2003. 
24 Text of the Panama-Colombia Partial Scope Agreement signed on 9 July 1993. WT/TPR/S/186 Trade Policy Review 
Page 30 
 
 
47. Under the Partial Scope Agreement with Mexico, the determination of the origin of products 
is subject to the specific origin requireme nts laid down in Annex II to the Agreement.25  Those 
products for which there are no specific requirements ar e subject to the LAIA general rules of origin.  
Under these rules, origin is conferred on products:  (i) if they were manufactured in the territory of 
one of the signatories using exclusively materials fr om other signatories;  (ii) if materials from non-
participating countries were used and there has been a ch ange of tariff heading;  or (iii) in the case of 
assembly or erection operations, the c.i.f. value of th e inputs of materials originating in third countries 
does not exceed 50 per cent of the f.o.b. value of the end product. 
48. The Free Trade Agreements (FTAs) with Chin ese Taipei, El Salvador, and Singapore have 
similar rules of origin.  These rules confer origin on goods produced in the territory of one or more of 
the signatory parties:  (i) exclusively from material s originating in any of the signatory parties;  
(ii) that incorporate non-originating materials which satisfy a change of tariff classification 
requirement or other specific requirements laid dow n in the respective Treaty;  or (iii) incorporate 
non-originating materials which do not satisfy a ch ange of tariff classification requirement provided 
that the c.i.f. value of the said non-originating ma terials does not exceed 65 per cent of the f.o.b. value 
of the end product, under the FTAs with Chinese Taipei and Singapore, or 70 per cent of the 
f.o.b. value of the end product, under the FTA with El Salvador.26 
49. The competent authority responsible for investiga ting the control and verification of origin is 
the DGA, in coordination with the National Director ate for the Administration of International Trade 
Treaties and Trade Protection of the Ministry of Trade and Industry (MTI). 
50. Certificates of origin under the Preferential Agreements with Costa Rica, El Salvador, 
Guatemala, Honduras and Nicaragua and the FTA w ith Singapore are made out, signed and presented 
at the time of the import declaration by the exporte r or producer and do not need to be endorsed by 
any government body.  In the case of certificates of origin under the agreements and treaties with Chinese Taipei, Colombia and the Dominican Republic, it is necessary to obtain the endorsement of a 
certifying body authorized by the government of each  country;  in Panama that authority is the 
Directorate-General for Industries. 
(iv) Tariffs 
(a) Structure and levels 
51. In 2006, the import duties collected totalled B 276 million and accounted for 8.7 per cent of 
total central government revenue.  Half the total receipts from the Tax on the Transfer of Movable 
Tangible Property and the Provision of Services (ITBMS) corresponded to imports (see also 
section (v) below).  Import duties and ITBMS on imports together accounted for 23.9 per cent of tax receipts, which in their turn were equivalent  to 13.7 per cent of total government revenue.
27 
52. Panama grants at least MFN treatment to all its trading partners.  It does not impose seasonal, 
temporary or variable import duties. 
                                                      
25 Available for consultation at:  http://www.ala di.org/nsfaladi/textacdos.nsf/b324a3677a1b802603256 
7ee006b7d26/39f1f952d12cdbf8032568240078c555?OpenDocument. 
26 Article No. 4.03 of the Panama–El Salvador FTA of  6 March 2002;  Article No. 4.03 of the Panama–
Chinese Taipei FTA of 21 August 2003;  and Articles Nos. 3.2 and 3.3 of the Panama–Singapore FTA of 
26 June 2006. 
27 Consulted on the site of the Directorate-General for Revenue:  http://www.dgi.gob.pa/ 
defaultsecure.asp. Panama WT/TPR/S/186 
 Page 31 
 
 
53. The Import Tariff applied by Panama is  based on the 2002 Harmonized Commodity 
Description and Coding System (HS).  The tariff has 8,918 lines (at 8-digit level), of which 100 per 
cent are ad valorem  and levied on the c.i.f. value of th e imported product (see Table III.1).  In 
March 2007, the simple average of the MFN tariffs applied was 8.5 per cent, as compared with the 
average of 9.4 per cent applied in 1999.  This d ecrease is largely due to tariff reductions on certain 
non-agricultural products (WTO definition). 
Table III.1 
Structure of the MFN import tariff, 2007  
(Per cent) 
  2007 
1. Total number of tariff lines 8,918 
2. Non- ad valorem  tariffs (% of tariff lines) 0.0 
3. Non- ad valorem  tariffs with no AVEs (% of tariff lines) 0.0 
4. Tariff quotas (% of tariff lines) 0.8 
5. Duty-free tariff lines (% of tariff lines) 29.8 
6. Average tariff for dutiable lines (%) 12.1 
7. Domestic tariff peaks (% of tariff lines)a 1.5 
8. International tariff peaks (% of tariff lines)b 2.3 
9. Bound tariff lines (% of tariff lines) 100.0 
a Domestic tariff peaks are defined as rates that exceed  three times the overall average of the applied rates. 
b International tariff peaks are define d as rates that exceed 15 per cent. 
Source : WTO Secretariat calculations , based on data provided by the Panamanian authorities. 
54. According to the authorities, between 1998 and 20 00, five different investigations (initially 
classified by the government as safeguard investig ations) were initiated to  determine whether the 
government's decision to lower applied tariffs to half the percentages bound in the WTO was actually 
causing injury to the domestic industry.28  In most cases, as a result of the investigation, the applied 
tariffs were re-established at the bound percentages. 
55. Law No. 28 of 20 June 1995 on the universalization of tax incentives, as regulated by 
Executive Decree No. 274 of 29 December 1996, allo ws the importer to request the MTI or the 
Ministry of Agricultural Development (MAD) to reduce the tariffs on certain products not produced 
in Panama or which, if produced, do not satisfy the criteria of sufficient production, acceptable quality 
or competitive price.  Moreover, the Law also re quires that for all importers the import duty be 
reduced (to a single rate of 3 per cent) on any produ ct that may have been exempted for enterprises 
with industrial registration, under Articles 9 and 10 of Law No. 3 of 20 March 1986;  the authorities 
have pointed out that these tariff changes have not yet been implemented. 
56. Any reduction or increase in duties must be exam ined by the Public Policies Directorate of 
the Economics Department of the MEF, and is subj ect to approval by the Cabinet Council of the 
Office of the President. 
57. The average MFN tariff applied to lines with a ta riff greater than zero is 12.1 per cent.  About 
2.3 per cent of lines are subject to rates of more than 15 per cent (international tariff peaks) (see Table III.1).  The highest tariff (260 per cent) is a pplied to two products:  fresh pieces of chicken and 
frozen chicken offal.  The second highest tariff (155 per cent) is applied to condensed milk and 
                                                     
 
28 These investigations are conducted within the legal framework of Law No. 29 of 1 February 1996, in 
connection with the following products:  poultry, pig me at, biscuits and sardines, unrefined salt, and deformed 
steel bars. WT/TPR/S/186 Trade Policy Review 
Page 32 
 
 
evaporated milk and cream products.  Other products , such as cane sugar, buttermilk and whey, are 
also subject to high tariffs;  in all, 14 products are subject to tariffs of more than 100 per cent. 
58. Panama applies tariff quotas to several agricultu ral products;  the in-quota rates applicable are 
3 or 15 per cent, while those outside the quotas vary from 15 to 260 per cent (see chapter IV (2)). 
59. The tariff protection for agricultural products is higher than that for non-agricultural products:  
15.1 and 7.3 per cent respectively (WTO product defi nition).  In 2007, the groups of agricultural 
products with the highest average applied tariffs were dairy products (41.8 per cent), animals and 
animal products (24.3 per cent), and cereals (23.7 pe r cent).  The non-agricultural products with high 
average tariffs include fish and fish products (12. 7 per cent) and transport equipment (11.4 per cent) 
(see Table III.2). 
60. The tariff is broken down into 37 tariff rates which vary between 0 and 260 per cent, with a 
coefficient of variation of 1.2 per cent.  The most common tariff rate is 15 per cent (applied to 
approximately 31 per cent of lines), followed by th e zero (duty-free) rate and the 10 per cent rate, 
which are applied to 29.8 per cent and 20.5 per cent of  the total number of lines, respectively.  A little 
over 66 per cent of lines are subject to rates of less than 10 per cent.  Tariffs of more than 25 per cent 
are applied to 1.5 per cent of lines. 
Table III.2 
Summary of MFN tariff, 2007 
 MFN 
Description Number of 
lines Average 
(%) Range 
(%) Coefficient of 
variation (CV) Average 
bound tariffa 
(%) 
Total 8,918 8.5 0 – 260 1.2 23.7 
HS 01-24 1,472 15.4 0 – 260 1.3 27.3 
HS 25-97 7,446 7.1 0 – 81 0.9 23.0 
By WTO category      
Agricultural products 1,405 15.1 0 – 260 1.3 28.3 
 - Animals and animal products 189 24.3 0 – 260 1.3 36.5 
 - Dairy products 74 41.8 0 – 155 1.1 44.7 
 - Coffee and tea, cocoa, sugar, etc. 278 13.1 0 – 144 1.2 26.0 
 - Cut flowers and plants 56 7.0 0 – 15 1.0 29.6 
 - Fruit, vegetables and garden produce 321 13.1 0 – 81 0.8 25.8 
 - Cereals 19 23.7 0 – 90 1.5 32.6 
 - Oilseeds, fats and oils and their products 116 9.7 0 – 30 0.9 23.8 
 - Alcoholic beverages and liquids 140 13.6 0 – 30 0.3 28.6 
 - Tobacco 15 13.0 0 – 15 0.4 26.0 
 - Other agricultural products n.e.s. 197 8.0 0 – 15 0.8 25.5 
Non-agricultural products (including petroleum) 7,513 7.3 0 – 81 0.9 22.9 
 - Non-agricultural products (excluding 
petroleum) 7,486 7.3 0 – 81 0.9 22.9 
    - Fish and fish products 168 12.7 0 – 15 0.3 18.8 
    - Minerals, precious stones and metals 526 8.1 0 - 81 0.9 26.0 
    - Metals 945 7.6 0 - 15 0.8 27.2 
    - Chemicals and photographic products 1,459 3.0 0 - 15 1.5 6.8 
    - Leather, rubber, footwear, and travel articles 341 9.6 0 - 15 0.6 25.8 
    - Wood, wood pulp, paper and furniture 722 7.9 0 - 15 0.8 27.3 
    - Textiles and clothing 1,333 8.1 0 - 15 0.8 28.8 
    - Transport equipment 343 11.4 0 - 20 0.5 21.8 
Table III.2 (cont'd)  Panama WT/TPR/S/186 
 Page 33 
 
 
 MFN 
Description Number of 
lines Average 
(%) Range 
(%) Coefficient of 
variation (CV) Average 
bound tariffa 
(%) 
    - Non-electrical machinery 644 5.0 0 - 15 0.9 25.7 
    - Electrical machinery 329 8.0 0 - 15 0.6 24.6 
    - Non-agricultural products n.e.s. 676 10.5 0 - 15 0.5 27.0 
 - Petroleum 27 5.0 0 - 30 1.7 26.2 
By ISIC sectorb      
Agriculture and fishing 461 10.8 0 - 90 0.9 25.0 
Mining 118 7.9 0 - 81 1.4 29.6 
Manufacturing 8,338 8.4 0 - 260 1.2 23.5 
By HS chapter      
  01  Live animals and animal products 400 22.4 0 - 260 1.3 30.7 
  02  Plant products 429 10.9 0 - 90 1.1 25.9 
  03  Fats and oils 71 11.4 0 - 30 0.8 27.3 
  04  Food preparations, etc. 572 14.5 0 - 144 0.9 26.2 
  05  Mineral products 199 7.2 0 - 81 1.3 29.3 
  06  Products of the chemical and related 
industries 1,268 2.8 0 - 15 1.6 6.8 
  07  Plastics and rubber 449 4.6 0 - 15 1.3 14.9 
  08  Hides and skins 121 12.3 0 - 15 0.3 30.0 
  09  Wood and articles of wood 176 7.3 0 - 15 0.9 28.7 
  10  Wood pulp, paper, etc. 485 7.4 0 - 15 0.9 26.9 
  11  Textiles and textiles articles 1,285 7.9 0 - 15 0.8 28.9 
  12  Footwear, hats and other headgear 164 11.8 0 - 15 0.4 22.1 
  13  Articles of stone 294 9.7 0 - 15 0.5 27.2 
  14  Precious stones, etc. 66 7.2 0 - 15 0.8 28.3 
  15  Base metals and articles of base metal 927 7.6 0 - 15 0.8 27.2 
  16  Machinery and mechanical appliances 1,028 6.1 0 - 15 0.8 25.2 
  17  Transport equipment 358 11.5 0 - 20 0.5 22.1 
  18  Precision instruments 305 9.8 0 - 15 0.5 26.8 
  19  Arms and ammunition 27 14.6 10 - 15 0.1 30.0 
  20  Miscellaneous manufactured articles 285 11.8 0 - 15 0.3 27.6 
  21  Works of art, etc. 9 7.8 0 - 15 1.0 29.4 
By stage of processing      
First stage of processing 877 10.1 0 - 90 1.0 26.1 
Semi-processed products 2,611 3.9 0 - 144 1.8 20.1 
Fully processed products 5,430 10.5 0 - 260 1.0 25.2 
a As the bound rates correspond to the HS96 classification and the a pplied rates to HS02, there may be a difference in the numb er 
of lines included in the analysis. 
b ISIC (Rev.2), excluding electricity (1 line). 
Source : WTO Secretariat estimates based on data provided by the Panamanian authorities. 
61. Panama's Import Tariff does not reveal any obvious  escalation of tariff rates.  Imports of raw 
materials and fully processed products are subject to  almost the same average tariff (about 10 per 
cent), but the latter is much higher than the aver age tariff for semi-processed products (3.9 per cent) 
(see Table III.2).  According to the authorities, this ta riff structure is not intentional, but a result of the 
tariffication process and various tariff reductions over the last twenty years. WT/TPR/S/186 Trade Policy Review 
Page 34 
 
 
(b) Tariff bindings 
62. The bound tariff used in this review corresponds to the HS 1992 classification.  When it 
joined the WTO, Panama bound its entire tariff univer se, chapters 1 to 97 of the HS, at 46 different 
levels varying from duty-free to 260 per cent.  The average bound tariff is 23.7 per cent;  for 
agricultural products (WTO definition), the average is 28.3 per cent, and for non-agricultural products 
22.9 per cent. 
63. Panama has been applying a bound rate reducti on programme that provides for linear annual 
reductions on 179 tariff lines between 1997 and 2011.29  For strictly comparable headings, i.e. for 
those identical in the HS versions used in th e bound (HS 1992) and applied (HS 2002) tariffs, the 
WTO Secretariat has found three products for whic h the rate applied exceeds the bound level (applied 
tariff/bound tariff in parentheses, per cent):  ot her salt and pure sodium  chloride HS 25010099 
(81/30);  soap dishes, towel-rails, toilet roll holders  and the like, of plastic HS 39249021 (10/6.5);  and 
other impregnated paper, printed HS 48119030 (10/5). 
(c) Tariff concessions 
64. The following imports are exempt from the payment of duties:  those effected by the State;  
donations to the private sector intended to cover aid,  relief and education services;  those effected by 
members of the diplomatic corps accredited in Panama ;  those relating to teaching materials for use in 
private schools;  medical equipment for hospitals;  articles intended for the development of religious 
activities;  equipment for police use;  and, temporar ily, goods intended for display at trade fairs and 
exhibitions.30 
65. Goods which have been temporarily exported or re-exported may be imported for home use 
free of customs duties, provided that they have not  undergone any manufacturing, processing or repair 
whilst abroad.  In order to benefit from this regime , the importer must show that the goods were in 
circulation in the national territory at the time of e xportation and that they are in the same state, except 
for normal wear and tear.31 
66. Panama also grants tariff concessions to imports  intended for exportation, under the free zone 
and drawback procedures (see section (3)(iv) below). 
(d) Preferences 
67. At the beginning of 2007, under the relevant  preferential agreements (see chapter II(4)), 
Panama was applying preferential tariffs to imports from Chinese Taipei, Colombia, Costa Rica, Dominican Republic, El Salvador, Guatemala, Hondur as, Mexico, Nicaragua and Singapore.  In the 
FTAs with Chinese Taipei, El Salvador and Singa pore, Panama undertook to  implement total and 
definitive tariff reduction programmes.  As exceptions  to these programmes, MFN tariffs have to be 
maintained for some groups of products, such as meat and dairy products under all three FTAs, 
vehicles under the FTA with Chinese Taipei, and tex tile materials under the FTA with El Salvador. 
68. Panama does not participate in the Global System of Trade Preferences (GSTP) established in 
1988. 
                                                     
 
29 Panama also applied a bound rate reduction programme between 1997 and 2006. 
30 Articles Nos. 18 and 246 of Cabine t Decree No. 41 of  11 December 2002. 
31 Article No. 136 of Cabinet Decr ee No. 41 of 11 December 2002. Panama WT/TPR/S/186 
 Page 35 
 
 
(v) Other charges affecting imports 
(a) Charges applied exclusively to imports 
69. In addition to tariffs, imports are subject to an Administrative Charge for Customs Services 
(TASA) equivalent to B 70.00 for each customs declaration covering imports for which the total 
c.i.f. value of the goods amounts to B 2,000.00 or  more.  The DGA is responsible for administering 
and collecting the TASA.32 
(b) Indirect taxes 
70. Imports are subject to the payment of ITBMS,  Selective Consumption Tax (ISC), and the 
Consumption Tax on Fuels Derived from Petroleu m.  In 2006, B 323 million was collected as 
ITBMS, of which 49 per cent came from imports and represented the equivalent of  18 per cent of total 
tax revenue.  In 2006, the ISC collected amounted  to B 173 million, of which 21 per cent came from 
the sale of alcoholic beverages and represented the equi valent of 10 per cent of total tax revenue.  The 
same year, sales of fuels and other petroleum derivatives reached 581 million gallons.  The tax 
collected amounted to B 86 million, or 4.7 per cent of total tax revenue.33 
Tax on the Transfer of Movable Tangible Property and the Provision of Services 
71. The ITBMS applies to the transfer of movable property and services, both domestic and 
imported, and operates as a value-added sales tax in the sense that each taxpayer determines the tax 
payable on the basis of the difference between the fisc al debit and the fiscal cred it.  The tax base is the 
price agreed for the provision of services or, in the ca se of the transfer of property, the invoice price, 
including all costs charged to the buyer (for exam ple, transport and packing costs and interest on 
financing).  For imports, the tax base is the c.i.f.  value plus duties, charges and any other customs 
levies that affect the imported goods.34  Where the c.i.f. value of the goods is not known, the 
f.o.b. value plus 15 per cent is used.35 
72. The ITBMS on imported goods is declared and paid at the same time as the duty.  The 
Directorate-General for Revenue (DGI), under th e Ministry of the Economy and Finance, is 
responsible for administering and collecting the ITBMS. 
73. Since the ITBMS was introduced in 1976, the b asic rate of 5 per cent has been applied to 
most goods and services.36  The only exceptions are alcoholic beverages, which are taxed at 10 per 
cent, and cigarettes and other tobacco product, taxed at 15 per cent.  Some goods and services, 
including imports, are exempt from ITBMS (Table III.3).  The inclusion of professional services within the scope of the ITBMS has been challenge d in the courts, but these cases have not yet been 
decided by the Supreme Court. 
 
                                                     
 
32 Law No. 36 of 6 July 1995. 
33 Available for consultation at:  http s://www.dgi.gob.pa/defaultsecure.asp. 
34 Article No. 1.057-v of the Tax Code, as amended by Law No. 6 of 2 February 2005. 
35 Of the reference value, 13.5 per cent is for freight and 1.5 per cent for insurance. 
36 Law No. 75 of 22 December 1976. WT/TPR/S/186 Trade Policy Review 
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Table III.3 
Goods and services exempt from ITBMS 
Exempt goods: 
Agricultural products (crops, livestock, poultry, products of fishing and hunting, etc.) in the natural state 
Aerated beverages Crude oil, fuels, lubricants and related products Food products Manufactured fertilizers specified in the headings or groups of the Import Tariff
a 
Insecticides, fungicides, herbicides, disinfectants and the like,  used in agriculture and lives tock breeding, of the following subheadings:  
38.08.10.10, 38.08.10.20, 38.08.20.10, 38.08.20.20, 38.08.40.10, 38.08.40.20, 38.08.90.11, 38.08.90.91 and 38.08.90.92 
All seeds used in agriculture Barbed wire of subheading 73.13.00.20 Hand tools used in agriculture, such as machetes, hoes, spades, shovels, and picks Newspapers, magazines, reviews, magnetic me dia of an educational nature, exercise books, pencils, ballpoint pens and other arti cles 
exclusively for school use, as well as textbooks, books  and publications in general, excluding pornography 
Drinking water supplied by public utility companies 
Medicinal and pharmaceutical products specifi ed in Chapter 30 of the Import Tariff 
Foreign currency, shares, and gove rnment and private securities 
Transfers of goods and services within free zones and areas under customs control 
Exportation and re-exportation of goods (i ncluding accommodation services provide d by persons in the hotel trade) 
Exempt  services: 
Services related to human health 
Leasing and subleasing of real estate intended ex clusively as the house or dwelling of the lessee 
Services related to education, if provided by persons authorized by the Ministry of Education 
Lending to the state, and loans, deposits and payments generate d by financial services provide d by entities legally authorized to provide this 
kind of service 
Freight transport services (excluding the tr ansport of securities and private mail), a nd passenger  transport by air, sea and l and 
Generation, transmission and distribution of electrical energy Fixed telephone services Social communication services, such as radio, press and televi sion, provided by public  or private entities, with the exception of the sale of 
advertising space 
Postal services provided by the state Games of chance at state and private casinos and racecour ses, including those operated on concession from the state 
Insurance and reinsurance International freight services for transporting goods abroad;  re pair of cargo and passenger ship s and aircraft engaged in inte rnational trade 
activities, whatever their nationality;  cleaning and maintenance services for such ships and ai rcraft;  loading, unloading and  transfer 
services provided wholly within customs areas and warehouses, and private services provided for the passage of vessels through the Panama 
Canal 
Legal services provided for vessels e ngaged in international trade register ed in the national merchant marine 
Professional services provided to persons resident abroad 
Services provided within free zones and processi ng zones, directly related to export operations; 
Internet access services, residential and for entities that provide educational serv ices, recognized as such by the state 
Sewage and garbage collection services provi ded by public entities or  concession-holders 
Public cultural events, as classified by the National Institute of Culture 
Activities of securities and agricultu ral commodity exchanges and the financial activities of cooperatives 
Food retailing on business premises on which al coholic beverages are not sold or consum ed (for example, fast-food restaurants) 
a A complete list of tariff headings can be found  in  Article 39.8(7) of Law No. 6 of 2 February 2005. 
Source : WTO Secretariat, based on the text  of Article 1.057-v of the Fiscal Code, as amended by Law No. 6 of 
2 February 2005, and Executive Decree No. 84 of 26 August 2005. Panama WT/TPR/S/186 
 Page 37 
 
 
Selective Consumption Tax 
74. The Selective Consumption Tax (ISC) applies to the sale of certain domestically produced 
and imported goods and services.  The goo ds and services subject to ISC include, inter alia , aerated 
and alcoholic beverages, tobacco products, cars a nd motorcycles, vessels, aircraft, jewellery, prizes 
won on slot machines, television services, and mobile phone services.37 
75. The tax base is the price agreed for the provisi on of services or the invoice price in the case of 
the sale of goods, including all costs charged to the buyer (for example, transport and packing costs and interest on financing) and excluding the value of the ITBMS.
38  For imports, the tax base is the 
c.i.f. value plus duty, charges and any other cust oms levies that affect the imported goods, with the 
exception of the ITBMS.  Where the c.i.f. value of the goods is not known, the f.o.b. value plus 15 per 
cent is used.39 
76. Where domestically produced goods and the provision of services are concerned, the ISC 
must be paid by the taxpayer monthly, by the fifteenth day of the month following the date of the tax-generating activity.
40  In the case of imported goods, the ISC must be paid together with the other 
taxes levied on the importation of the product, within three working days reckoned from the day 
following the date of shipment of the imports.  The DGI is responsible for administering and 
collecting the ISC. 
77. The basic rate of ISC is 5.0 per cent on most goods and services, with the exception, inter 
alia, of tobacco products, which are taxed at the rate of 32.5 per cent, and alcoholic beverages, which 
pay a fixed amount in balboas for each degree of alc oholic strength per litre.  National treatment is not 
accorded to spirits distilled from cane, honey, cane syr up or maize, which receive a rebate for years of 
aging in the case of domestic products, but not in the case of imports (Table III.4). 
78. Exemption from payment of the tax is grante d to sales of goods destined for abroad made 
directly to the crews and passengers of vessels and ai rcraft engaged in intern ational transport, as well 
as to sales for export, including sales made to enterprises installed in free zones established in Panama.
41 
Table III.4 
Selective Consumption Tax (ISC) 
Product Rate Exemptions 
Aerated beverages 5%  
Syrups or concentrates used in the production of aerated 
beverages 6% 
  
Rectified alcohol, rum, whisky or gin B 0.035a 
 Domestically produced spirits distilled from sugar 
cane, honey, cane syrup, molasses and maize aged for four years receive a rebate of 10% of the value of the 
tax;  a further rebate of 5% for each additional year of aging;  the total rebate may not exceed 40%.  Alcohol 
used in pharmaceutical preparations;  chemical 
products;  fuels;  dyes and perfumes 
Wine and other alcoholic be verages with a low alcohol 
content (not less than 7% or more than 20%) B 0.05b  
 Non-alcoholic beers and liquid extracts of malt that do 
not contain more than 0.5% of alcohol by volume 
Table III.4 (cont'd) 
                                                      
37 Law No. 45 of 14 November 1995 and amendments introduced by Law No. 6 of 2 February 2005. 
38 For products derived from tobacco the ta x base is the final consumer price. 
39 Articles Nos.  60 and 63 of Law No. 6 of 2 February 2005. 
40 Article No. 61 of Law No. 6 of 2 February 2005. 
41 Law No. 45 of 14 November 1995. WT/TPR/S/186 Trade Policy Review 
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Product Rate Exemptions 
Beer B 0.325b  
Tobacco products (incl.  cigarettes) 32.%  
Self-propelled land vehicles for the transport of persons, if 
the c.i.f. value exceeds B 15,000 or B 18,000 for four-
wheel drive vehicles 5% 
 Vehicles designed for the transport of freight and 
goods, ambulances and hearses, public transport 
vehicles, tow-trucks, fire engines, etc. 
Motorcycles with two or more wheels and an engine of 
more than 125 cc 5%  
Yachts, sailboats, jet skis, r ecreational craft, boats, and 
outboard engines of more than 75 cc 5% 
  
Aircraft for non-commercial use and helicopters 5%  
Jewellery 5%  
Firearms 5% Arms purchased by the state 
Cable, microwave and satellite television services 5%  
Mobile telephone services 5% M obile telephone services, prepaid 
Prizes of more than B 300 won on slot machines related to 
games of chance 7% 
  
a For each degree of alcoholic strength pe r litre of domestic or imported beverage. 
b Per litre of domestically produ ced or imported wine or beer. 
Source : WTO Secretariat, based on the text of Law No. 45 of  14 November 1995 and Law No. 6 of 2 February 2005. 
Consumption Tax on Fuels Derived from Petroleum 
79. The Consumption Tax on Fuels Derived from Petrol eum is applied to the sale of the products 
in question within Panamanian territory.  As Panama  is not an oil producer, the activity that generates 
the tax is the importation of fuel s and other petroleum derivatives from abroad or a free zone.  The 
taxpayers are the importing enterprises authorized by the Ministry of Trade and Industry's National 
Hydrocarbons Directorate.  The tax must be paid by means of a bank order accompanied by the customs declaration, subject to complia nce with the other customs formalities.
42  The tax base is the 
gallon and the tax rate varies from product to product (Table III.5). 
Table III.5 
Consumption Tax on Fuels and Petroleum Derivatives 
Product Rate (B per gallon) 
Petrol, 87 octane 
Petrol, 87 octane, unleaded 
Petrol, 95 octane 
Petrol, 95 octane, unleaded Kerosene 
Diesel, light 
Fuel oil Low viscosity  
Asphalt, penetration grade 
Asphalt, cutback White spirit  0.60 
0.60 
0.60 
0.60 0.13 
0.25 
0.15 0.15 
0.08 
0.09 0.08 
Source : WTO Secretariat, based on the text  of Law No. 6 of 20 January 1998. 
80. All natural or legal persons that sell, distri bute or transfer, at wholesale level, petroleum-
derived products that have been re leased into free circulation must submit, within the first 15 working 
days following the end of each month, a detailed re port on the sales made.  The DGI is responsible for 
administering and collecting the tax. 
                                                      
42 Resolution No. 201-2378 of 6 August 2003. Panama WT/TPR/S/186 
 Page 39 
 
 
81. The consumption tax on light diesel and unleaded petrol for general use was temporarily 
reduced at the end of 2005.43  Moreover, collection of the consumption tax on light diesel for public 
transport use was temporarily suspended for four months at the end of 2005 to reduce the cost 
overruns experienced by the transport sector in recent years.  The DGI is responsible for 
administering and collecting the tax. 
(vi) Import prohibitions, restrictions and licences 
82. Panama has notified the WTO of Law No. 23 of 15 June 1997 whic h established general 
import licensing provisions and incorporated the WTO Agreement on Import Licensing Procedures.44  
Panama has also notified Resolution No. 5 of 18 November 1998 under which the granting of licences 
for the importation of products subject to tariff rate quotas is administered45 (see chapter IV(2)), as 
well as various specific regulations on the li censing of medicaments and narcotic drugs.46 
83. In its replies to the questionnaire on import licensing procedures, Panama noted that its 
system provides for two types of import licence:  automatic licences for statistical purposes and non-
automatic licences for imports subject to restrictions  and for the administration of tariff rate quotas 
(see chapter IV(2)).47  Although the law provides for automatic licences for the importation of non-
food products, the authorities have indicated that in practice they are not applied.  In general, all 
persons, enterprises and institutions are entitled to a pply for an import licence and to institute the 
relevant legal proceedings.  It is possible to a ppeal decisions of the authorities on the granting of 
import licences both through administrative channels and, in the second instance, through the courts. 
84. Panama maintains import prohibitions and rest rictions on a limited number of products for 
sanitary and phytosanitary (see section (ix) below) , health and safety reasons.  The goods may be the 
subject of an absolute prohibition or of specific import rules (Table III.6). 
Table III.6 
Goods whose importation is prohibited or restricted 
Importation prohibited 
False coins and implements for minting coins 
Arms and instruments of war, offensive weapons in general 
Smoking opium and opium resin 
Falsely labeled spirits, wines, beers and medicines (see section (2) (viii)) 
Indecent or morally offens ive printed publications 
Plants, seeds and animals designated by the Ministry  of Agricultural Development (see section (2) (ix)) 
Foreign lottery and raffle tickets 
Non-original products that imitate, in w hole or in part, the workmanship of trad itional products of the indigenous peoples 
Importation restricted 
Machinery for minting coins can only be imported by the state 
Firearms that are not weapons of war, that is, those intended  for hunting, those used for the development of sporting skills an d those 
permitted for self-defence;  the corresponding amm unition;  non-lethal arti cles for self-defencea 
Dynamite, gunpowder, nitroglyc erine and other explosivesb 
Medicinal opium, morphine, heroin, cocaine and all alkalo ids of opium and cocaine if imported for medicinal usec 
a These articles require a permit issued by the Ministry of the Interior and Justice. 
b These articles require a permit issued by  the Safety Office of the Fire Service. 
c These articles require a permit i ssued by the Ministry of Health. 
Source : WTO Secretariat, based on the text of Cabinet Decree No. 19 of 30 June 2004. 
                                                      
43 Law No. 30 of 17 August 2005. 
44 WTO document G/LIC/N/1/PAN/1 of 18 August 1998. 
45 WTO document G/LIC/N/1/PAN/1 of 18 August 1998. 
46 WTO document G/LIC/N/1/PAN/2 of 16 November 1998. 
47 WTO document G/LIC/N/3/PAN/2 of 4 March 2004. WT/TPR/S/186 Trade Policy Review 
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(vii) Special trade measures 
85. In 2006, the Directorate-General for Trad e Protection (DGDC) was set up under the MTI by 
Decree Law No. 6 of 15 February 2006, the purpose of which is to reorganize and restructure the 
operations of the MTI.  The DGDC replaces the Comisión de Libre Competencia y Asuntos del 
Consumidor  (Commission on Free Competition and Cons umer Affairs - CLICA) as the authority 
responsible for investigating, analysing and eval uating unfair trade practices and recommending to the 
Cabinet Council of the Office of the President the imposition of anti-dumping, countervailing or 
safeguard measures.  Moreover, the DGDC is respons ible for publicizing the rules on unfair trade 
practices. 
86. Decree Law No. 7 of 15 February 2006, whic h repealed the relevant provisions of Law 
No. 29 of 1 February 1996, together with the Marra kesh Agreement and its Annexes incorporated in 
the legislation by Law No.23 of 1997, constitute the legal framework for Panama's anti-dumping, 
countervailing and safeguard meas ures.  Panama has notified the WTO of Law No. 29 of 1996 and 
Decree Law No. 7 of 15 February 2006 under th e Agreements on Anti-Dumping, Subsidies and 
Countervailing Duties, and Safeguards.48  The Committees on Anti-Dumping Practices and on 
Subsidies and Countervailing Measures have examin ed Law No. 29 of 1996;  four Members posed 
questions, to which Panama did not provide written replies.49  At the beginning of 2007, these 
Committees had not yet examined Decree Law No. 7 of 15 February 2006. 
87. Within the context of this review, the aut horities have indicated that expert technical 
assistance to develop specific anti-dumping, counterv ailing and safeguard regul ations is awaited. 
88. As provisions common to anti-dumping, counterva iling duty and safeguard investigations, 
Decree Law No. 7 of 15 February 2006 establishes:  the possibility of an appeal to the Cabinet 
Council against decisions on whether to recommend the imposition of the respective measures, which 
is deemed to have been denied if 15 working days  have passed without the competent official having 
ruled;  and the penalties to which public officials are subject for infringement of the principle of the 
confidentiality of information. 
89. Decree Law No. 7 of 15 February 2006 prohib its the simultaneous application of an anti-
dumping measure and a countervailing measure to the same product.  However, there are no 
provisions against a safeguard and an anti-dumpi ng or countervailing measur e being simultaneously 
applied to the same product. 
(a) Anti-dumping and countervailing measures 
90. Panama has notified the WTO of a single dumpi ng investigation initiated since it joined the 
Organization.50  That investigation was initiated in July  1998 and related to imports of sugar for 
human consumption from Colombia and Mexico.  The authorities have noted that the application for 
the imposition of anti-dumping duties was rejected in Fe bruary 2000 and the investigation was closed.  
                                                      
48 WTO documents G/ADP/N/1/PAN/1 and G/ SCM/N1/PAN/1, of 17 April 1998, and 
G/ADP/N/1/PAN/2, G/SCM/N1/PAN/2 and G/SG/N/1/PAN/2 of 4 August 2006. 
49 WTO documents G/ADP/Q1/PAN/1 of 7 October 1998, G/ADP/Q1/PAN/2 of 8 October 1998, 
G/ADP/Q1/PAN/3 of 20 October 1998, and G/ADP/Q1/PAN/4 of 22 October 1998. 
50 WTO document G/ADP/N/47/PAN of 6 April 1999;  and Semi-Annual Reports of the Committee on 
Anti-Dumping Practices 1997-2006. Panama WT/TPR/S/186 
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Panama has notified the Committee on Subsidies a nd Countervailing Measures that it has not adopted 
any countervailing duty measure since joining the WTO.51 
91. According to Decree Law No. 7 of 15 February 2 006 the determination of the normal value in 
dumping investigations must be based on the price of the like product when destined for consumption 
in the exporting country.52  If this method cannot be used, the normal value must be determined by 
comparison with the price of the like product when expor ted to a third country, or in terms of the cost 
of production of the product in the country of orig in plus an additional amount for administrative and 
selling costs and for profits.  These comparisons must  take into consideration the differences between 
countries with respect to conditions of sale, taxati on, etc.  However, at the beginning of 2007 no 
detailed regulations on the method of comparing nor mal value and export price had been adopted. 
92. The domestic industry affected may request the initiation of an administrative subsidy or 
dumping investigation only if it has the support of domestic producers accounting for at least 25 per 
cent of total production of the product under investigation.  The MTI itself may initiate an investigation ex officio. 
93. After having received the application for the in itiation of an investigation, the MTI may, 
within five working days, request the applicant to send it corrections to the application within a period 
of ten working days.
53  Once it has all the information requ ested, the MTI must, within 15 working 
days, assess the merits of the application and decl are, by resolution, whether an administrative 
investigation is to be initiated or refused.  Befo re publishing the resolution the MTI must notify the 
government of the exporters' country.  From receipt of the notification, the interested parties have 
30 calendar days in which to reply;  this pe riod may be extended by a maximum of a further 
30 calendar days.  After that, the MTI has 30 calendar days (subject to extension) to examine the evidence and conclude the investigation by summoning the interested parties to a hearing to inform 
them of its decision.  There are as yet no regula tions concerning the limit on the extension for taking 
evidence.  Once the hearing has been  concluded, the parties have three working days to present their 
arguments in writing, and then within ten work ing days the MTI must issue a final resolution 
recommending the Cabinet Council to impose, or not  to impose, definitive countervailing or anti-
dumping duties.
54  There is no maximum period within which the entire investigation procedure must 
be completed following its initiation. 
94. No sooner than 60 calendar days from the in itiation of an investigation, the MTI may 
recommend to the Cabinet Council the application of provisional measures to prevent the unfair trade 
practice from causing imminent injury to the domestic  industry.  The provisional measures are applied 
by requiring the importer to lodge security in an amount not greater than the provisionally calculated 
margin of dumping.  The duration of the provisional measures may not exceed four months in the case of subsidies or six months in the case of dumping. 
95. The countervailing or anti-dumping duties may not exceed the subsidy or margin of dumping 
whose existence has been demonstrated and ma y not be applied for more than five years.
55  T h e  
authorities are authorized to set an anti-dumping duty below the margin of dumping but this provision has not yet been regulated.  Definitive count ervailing and anti-dumping duties may be applied 
retroactively from the date on which it would have  been possible to apply a provisional measure. 
                                                     
 
51 Semi-Annual Reports of the Committee on Subsidies and Countervailing Measures 1997-2006. 
52 The term "like product" is defined in Article 4 of Decree Law No. 7 of 2006. 
53 Within the MTI the formalities are mainly the responsibility of the DGDC. 
54 Decree Law No. 7 of 15 February 2006. 
55 Articles 9, 12 and 19 of Decree Law No. 7 of 15 February 2006. WT/TPR/S/186 Trade Policy Review 
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(b) Safeguard measures 
96. Panama has taken safeguard action on only one  occasion, in connection with which, in 
October 2006, it notified the WTO of a safeguard inves tigation into the importation of printed film in 
rolls for the manufacture of flexible packaging.56  According to the authorities, the investigation was 
initiated after the MTI had examined an application fr om the domestic plastic sack and bag industry.  
Peru raised questions concerning the initial pro cedures adopted by Panama in that investigation.57  On 
6 March 2007, the competent authority recommende d to the Cabinet Council the application of 
provisional safeguard measures to all the products subject to investigation, with the exception of 
printed sheet in rolls for the manufactur e of flexible polypropylene packaging.58  At the beginning of 
June 2007 the proceedings were still co ntinuing pending a final resolution. 
97. Decree Law No. 7 of 15 February 2006 states th at in considering the application of a 
safeguard measure the MTI must verify whether th e serious injury is related with the increased 
imports of like or directly competitive products.59  The safeguard measures may involve the 
imposition of:  (i) tariff increases;  (ii) tariff quotas;  (iii) quantitative restrictions;  or (iv) any other 
measure to prevent or remedy serious injury or th reat of serious injury to the domestic industry. 
98. Safeguard measures may have a maximum duration of four years, which may be extended for 
a further period of six years.  However, measures with a duration of more than one year must be 
progressively liberalized as provided for in the legislation.60 
99. The producers' association or the domestic industry affected, provided they account for 
domestic producers that constitute a "substantial proportion" of total production of the product under 
investigation, and the MTI are entitled to request th e initiation of an administrative investigation. 
100. After the initiating resolution has been issued, th e MTI has ten working days within which to 
give public notice and inform the interested par ties.  In general, the safeguards investigation 
procedure is similar to that followed in the case of dumping or subsidy investigations (see above). 
101. The MTI may be requested to consider the imposition of provisional safeguard measures 
which must consist of temporary tariff increases w ith a maximum duration of 200 calendar days.  If 
the MTI initiated the investigation ex officio, it may also decide to apply provisional measures. 
102. Within the framework of the FTAs with Chinese Ta ipei, El Salvador and Singapore, bilateral 
safeguard measures may be applied in response to th e adverse effects of a preference granted;  these 
measures may not exceed the MFN tariff.  The durat ion of these measures, like the provision for the 
application of provisional measures, is different fo r each agreement.  The FTAs with Chinese Taipei 
and El Salvador prevent the signatories from applyi ng global safeguard measures to imports from the 
other party, unless those imports account for a substantial share61 of total imports or are making a 
major contribution to the serious injury.62  In the case of the FTA with Singapore, imports from the 
                                                      
56 WTO document G/SG/N/6/PAN/1 of 2 October 2006. 
57 WTO document G/SG/Q2/PAN/1 of 13 October 2006. 
58 WTO document G/SG/N/7/PAN/1 and G/SG/N/11/PAN/1 of 20 February 2007. 
59 Article 52 of Decree Law No. 7 of 15 February 2006 defines like or directly competitive products. 
60 Decree Law No. 7 of 15 February 2006. 
61 The two treaties stipulate that a country has a substan tial share, if it is one of the five main suppliers 
of the goods, on the basis of averag e imports for the last three years. 
62 Normative texts of the Panama–El Salvador (6 March 2002) and Panama-Chinese Taipei 
(21 August 2003) FTAs. Panama WT/TPR/S/186 
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other party may be excluded from global safeguards if those imports do not constitute a substantial 
cause of the serious injury.63 
103. In 1998, Panama notified its inte ntion to reserve the right to avail itself of the transitional 
safeguard mechanism under Article 6.1 of th e WTO Agreement on Textiles and Clothing.64  However, 
Panama has not applied any measure under this mechanism. 
(viii) Standards and technical regulations  
104. Panama has notified the WTO that Title II of Law No. 23 of 15 July 1997 adapts the 
Panamanian legislation to the WTO's Agreement on Technical Barriers to Trade (TBT).65  Panam a 
has also notified that the Dirección General de Normas y Tecnología Industrial  (Directorate-General 
of Standards and Industrial Technology – DGNTI), part of the MTI, is the only national entity 
responsible for notifying Panamanian technical re gulations to the WTO and supervising all other 
provisions of the TBT Agreement.  Moreover, the DGNTI is responsible for coordinating the 
technical committees and administering the National Information Service.66  In March 1998, Panama 
also notified that the DGNTI had accepted the Code  of Good Practice for the Preparation, Adoption 
and Application of Standards.67  However, the DGNTI has not notified the ISO/IEC68 of its work 
programme for recent years. 
105. Law No. 23 of 15 July 1997 changed the role of the Comisión Panameña de Normas 
Industriales  (Panamanian Industrial Standards Commi ssion – COPANIT), which became a DGNTI 
advisory body on studies and analyses of standard s and technical regulations;  and created the Consejo 
Nacional de Acreditación  (National Accreditation Council – CNA), as an auxiliary organization of the 
MTI (see below).  The authorities have also noted the importance of the documentation and advisory 
service provided by the DGNTI through the Centro de Información Normativa  (Regulatory 
Information Centre – CIN). 
106. Panama has signed a memorandum of understanding with ASTM International  and is a full 
member of the Pan-American Standards Commission (COPANT) and the International Standardization Organization (ISO). 
107. Table III.7 shows the classification, by sector, of the 84 technical regulations in force in 
Panama;  of these, 34 have been notified to the WTO, 32 having been notified after publication.  
Nevertheless, to improve transparency, the aut horities decided that, as from 2006, all new technical 
regulations would be notified, whether based on inte rnational standards or not.  The complete list and 
contents of the technical regulations  are available on the MTI web site.
69 
                                                      
63 Text of Law No. 19 of 20 June 2006 approving the Panama–Singapore FTA. 
64 WTO document G/TMB/N/337 of 16 September 1998. 
65 WTO document G/TBT/2/Add.53 of 7 May 1999. 
66 WTO document G/TBT/ENQ/28 of 27 October 2006. 
67 WTO document G/TBT/CS/N/98 of 22 April 1998. 
68 Information Centre administered by the International Standardization Organization (ISO) in 
association with the Internationa l Electrotechnical Commission (IEC). 
69 Available for consultation at:  http://www.mici.gob.pa/nortec.php. WT/TPR/S/186 Trade Policy Review 
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Table III.7 
Technical regulations, by sector, February 2007 
Classification by sector or subject-matt er  Number of regulations Notified to WTO 
Food technology 59 24 
(sugar and its derivatives) (18) (12) 
Quality, discharge and use of water and other liquids 7 2 
Metrology (calibration, weights, etc.) 7 2 
Hygiene and industrial safety 3 3 
Building materials 3 2 
Agriculture (pesticides) 2 0 
Fuels derived from petroleum 1 0 
System components (gas cylinders) 1 0 
Chemical products for industrial use 1 1 
Source : WTO Secretariat, based on informa tion provided by the authorities. 
108. In general, the technical regulations are established in accordance with international 
guidelines and are applied in the same wa y to both domestic products and imports. 
109. About 70 per cent of the technical regulations in force relate to food technology that must be 
applied by the food industry or agricultural producer s;  these include technical regulations applied to 
sugar and its derivatives, edible oils, milk, bovine cattle and bovi ne meat products, and tomatoes. 
110. The labelling on imported products may be in the la nguage of origin;  however, in accordance 
with National Technical Standard No. 52 of 1978 anot her additional label, with a description of the 
contents and instructions for use in Span ish, must be stuck to the packaging. 
111. In conformity with Decree Law No. 11 of 2006,  Panama has eliminated the requirement of 
sanitary registration with the Ministry of H ealth for imported and domestic food products. 
112. The process of preparation of standards and tec hnical regulations begins with the receipt of 
the application by DGNTI, which must determine whet her it is viable or not.  If the application is 
considered viable, it is assigned to a DGNTI standardi zation expert, who is requi red to prepare a draft 
standard or regulation and set up a Technical Comm ittee composed of the interested parties (public 
and private sectors).  The Technical Committee, coordinated by the standardization expert, must 
develop a normative document (standa rd or regulation) and once consensus has been achieved, that 
document must be made available for public discussi on for a period of 60 days by publishing it in a 
local newspaper.  At the same time, the WTO notif ication process must be initiated in order to allow 
WTO Members 60 days in which to examine the document.  Comments arising out of the public 
discussion are considered by the Committee in prepar ing the final document, which is published in the 
Gaceta Oficial de Panamá  (Official Gazette).  In general, technical regulations enter into force 
immediately after publication.70 
113. The private sector can adopt (voluntary) standards without having to inform the DGNTI, but 
for these to be considered national standards th e preparation process described above must be 
followed. 
114. Imported products must also comply with the mandatory technical regulations of the country 
of origin.71 
                                                      
70 Law No. 23 of 15 July 1997. 
71 Article 120 of Law No. 23 of 15 July 1997. Panama WT/TPR/S/186 
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115. The DGNTI must accept the technical regulations of other countries as equivalent, if they 
differ from the Panamanian ones, provided that the regulations in question fulfil the objectives of the Panamanian regulations.
72  Panama also recognizes the procedures and results of technical conformity 
assessments carried out in the exporting country if it has a mutual recognition agreement with that 
country.  In mid-2007, Panama had not recognized th e technical regulations of any other country or 
signed any mutual recognition agreement relating to technical regulations or conformity assessment.  
Nevertheless, the authorities have indicat ed that work is being done on this. 
116. The CNA is the organization responsible for granting and issuing accreditation to private 
conformity assessment bodies, such as, for example, certification and inspection bodies, and 
sampling, testing and/or calib ration laboratories.  The accr editation of these entities follows 
ISO recommendations and is valid for three years with the possibility of extension.73  As of mid-2007, 
the CNA had accredited six laboratories for hydrocarbon and environmental testing, as well as five inspection bodies, but had not accredited any certification body.
74  According to the authorities,  
almost all certification is done independently by the private sector.  The DGNTI must carry out batch 
certification, but as of mid-2007 had not carried out any certification of this kind as the procedure had 
not yet been established. 
117. The Autoridad de Protection al Consumidor y Defensa de la Competencia  (Authority for the 
Protection of the Consumer and Defence of Comp etition) and the Food Safe ty Department of the 
Ministry of Health are the government entities resp onsible for monitoring compliance with technical 
regulations.  Monitoring is carried out by sampli ng products, and those products which do not comply 
with the technical regulation are penalized.  In  mid-2007, these entities were discussing the possibility 
of implementing border inspections with the DGA. 
(ix) Sanitary and phytosanitary measures 
118. In March 2007, Panama restructured and no tified to the WTO the following bodies as the 
enquiry point for sanitary and phytosanitary measures (SPM):  the Centro de Operaciones de 
Emergencias y Vigilancia Sanitaria  (Centre for Emergency Operations and Health Surveillance – 
COP) of the Ministry of Agricultural Development (MAD) and the Autoridad Panameña de 
Seguridad de Alimentos  (Panamanian Food Safety Authority – AUPSA).75  The authority responsible 
for WTO notifications is the Dirección Nacional de Administración de Tratados Comerciales 
Internacionales y de Defensa Comercial  (National Directorate for the Administration of International 
Trade Treaties and Trade Protection) of the MTI. 
119. The COP performs surveillance and support functions for the MAD's National Directorates of 
Animal Health, Plant Health and Agricultural Qu arantine, maintaining a permanent system for 
monitoring outbreaks of disease and pest infest ation at national and international levels.76 
120. The MAD's National Animal Health Director ate is responsible, among other things, for 
establishing the zoosanitary requirements for the in troduction of live animals, semen and embryos, 
medicaments for exclusively veterinary use, and bi ological and chemical products for animal use.  
This Directorate is also responsib le for everything to do with the e xportation of products of animal 
                                                      
72 Article 121 of Law No. 23 of 15 July 1997. 
73 Executive Decree No. 55 of 6 July 2006. 
74 Available for consultation at:  http://www.cna.gob.pa. 
75 WTO document G/SPS/N/PAN/49 of 19 March 2007. 
76 Available for consultation at:  http://webserv -mida.mida.gob.pa/MAD/pdfsdocs/compras/Inform 
edelCOP.pdf. WT/TPR/S/186 Trade Policy Review 
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origin, whether food products or not, as well as for proposing animal health standards for the transit 
and domestic movement of such products.77 
121. The MAD's National Directorate of Plant Health is responsible for establishing inspection 
measures and phytosanitary import and transit requirements for any product of plant origin not 
deemed to be food for human or animal consumpt ion.  These requirements may be changed at any 
time for quarantine reasons in order to protect the Pa namanian agricultural heritage, by publication in 
the Official Gazette.  This Directorate is also respons ible for everything to do  with the exportation of 
products of plant origin, whether food products or not.  Another responsibility of this Directorate is to 
propose to the Minister accession to internationa l plant health conventions and agreements.78 
122. The MAD's Executive Directorate of Agricultu ral Quarantine (DECA) is required to 
coordinate with the DGA inspection and surveillance activities at all points of entry into the country 
in connection with the quarantining of animals, plants  and their products not deemed to be food.  This 
Directorate is also required to issue phytosanitary and zoosanitary import and transit licences for these 
goods.79 
123. The Dirección Nacional de Farmacia y Drogas  (National Pharmacy and Drugs Directorate of 
the Ministry of Health – MINSA) is responsib le for authorizing and signing import permits for 
medicaments and other human health products.80 
124. In October 2006, Panama notified the WTO of the creation, by Decree Law No. 11 of 
22 February 2006, of the AUPSA as an autonomous entity.81  This Authority establishes sanitary and 
phytosanitary measures applicable to food imports, and applies public policies for the prevention of 
diseases and pests transmissible through food.  AUPSA's Executive Board, composed of its 
Administrator General and the Ministers of Ag ricultural Development, Health, and Trade and 
Industry, is required to coordinate the establishmen t of human, animal and plant health measures with 
these ministries. 
125. Panama is a member of the Codex Alimentari us Commission, the International Office of 
Epizootics and the International Plant Protection Convention.82  Panama is also a signatory to the 
Biological Diversity Convention. 
126. The Panamanian legal framework relating to san itary and phytosanitary measures is mainly 
composed of Law No. 23 of 15 July 1997 which a pproved the Marrakesh Agre ement and its Annexes, 
as well as establishing zoosanitary and agricultural quarantine measures;  Law No. 47 of 9 July 1996 
establishing phytosanitary protection measures;  and Decree Law No. 11 of 22 February 2006 
establishing food safety measures.83  The Executive Decree enabling Decree Law No. 11 of 2006 is in 
the stage of consultation with civil so ciety and has not yet been approved. 
127. As of mid-2007, Panama had notified 49 measures under the WTO Agreement on the 
Application of Sanitary and Phytosanitary Measu res (SPM), approximately half of which were 
                                                      
77 Article 6 of Law No. 23 of 15 July 1997, as amended by Decree Law No. 11 of 22 February 2006. 
78 Articles 10 and 20 of Law No. 47 of 9 July 1996. 
79 Articles 51 and 56 of Law No. 23 of 15 July 1997, as amended by Decree Law No. 11 of 
22 February 2006. 
80 Available for consultation at:  http://www.minsa.gob.pa/. 
81 WTO document G/SPS/N/PAN/47 of 3 October 2006. 
82 WTO document G/SPS/GEN/49/Rev.7 of 26 July 2006. 
83 Law No. 23 of 1997 and Decree Law No. 11 of 2006 were notified in WTO documents 
G/SPS/N/PAN/1 of 24 September 1998 and G/SPS/ N/PAN/47 of 3 October 2006, respectively. Panama WT/TPR/S/186 
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adopted before Panama joined the WTO (Table III. 8).  Of the measures notified, 52 per cent concern 
the importation of live animals, meat and by-product s, and of these more than half relate to bovine 
meat or cattle.  Altogether, six notifications rela te to the prohibition or suspension of imports of 
agricultural products, of which two were applied as emergency measures.  Moreover, seven of the 
notifications related to a regulator y change without the application of a specific measure.  Panama 
does not have a public inventory of all the sanitary and phytosanitary measures in force in the country, 
but these measures are published in the Official Gazette and on the web sites of the competent 
agencies. 
Table III.8 
Sanitary and phytosanitary measures, by prod uct affected and by type of measure, 1995-07 
Number of measures Classification 
1995-97a 1997-99b 2000-07c Total 
By product affected     
Live animals in general 1 2 2 5 
Bovine, sheep, goat, swine and buffa lo meat products and by-products 5 1 1 7 
Bovine meat and/or bovine cattle 1 2 4 7 
Poultry products and/or poultry meat 4 - - 4 
Fish products and/or crustaceans 2 - - 2 
Pesticides, additives and/or fertilizers 2 2 - 4 
Plants and plant products in general 1 2 2 5 
Plant products with wood packing - - 1 1 
Food and beverages 2 1 2 5 
Salt - 1 1 2 
Wheat flour 1 - 1 2 
Dairy products or raw milk 2 - - 2 
Honey - 1 - 1 
Coffee - - 1 1 
Rice, bananas, maize et al. - 1 - 1 
Total 21 13 15 49 
By type of measure     
Prohibition or suspension of importation 3 - 3 6 
Regulatory change without a specific measure 2 2 3 7 
Removal of prohibition on importation - - 2 2 
Classification or inspecti on of abattoirs and farms 5 1 - 6 
Transport or movement regulations 1 3 - 4 
Product registration regulations 2 1 - 3 
Addition of iodine to salt - 1 1 2 
Other measures 8 5 6 18 
Total 21 13 15 49 
a Before Panama joined the WTO in September 1997. 
b After Panama joined the WTO in September 1997. 
c Up to May 2007. 
Note: The Table includes only the sanitary and phytosanitary measures notified to the WTO. 
Source : WTO Secretariat, based on WTO documents of the G/SPS/N/PAN/ series. 
128. In the Committee on Sanitary and Phytosanita ry Measures, two Members expressed concern 
regarding the application by Panama  of the requirements relating to im ported dairy products.  In 2000, 
the European Union mentioned the difficulties in obtaining permits to import milk powder into 
Panama.84  In 2005, Costa Rica expressed concern regarding risk assessment and the scientific 
grounds for the new sanitary measure on the importation of dulce de leche  (caramelized milk spread) 
and condensed milk.85  The authorities have pointed out that Canada has removed Panama from the 
list of specific trade concerns as a result of the el imination of double pre-inspection for foods;  the 
                                                      
84 WTO document G/SPS/GEN/220 of 22 November 2000. 
85 WTO document G/SPS/GEN/582 of 28 June 2005. WT/TPR/S/186 Trade Policy Review 
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creation of AUPSA made it possible to combine the inspections previously carried out by MINSA and 
MAD. 
129. Except in emergencies, MAD must allow not less than 60 days between the publication of a 
SPM in the Official Gazette and its entry into force,  in order to give time for the producers to adapt 
and the WTO to be notified.86  According to the Panamanian authorities, all the measures are 
consistent with international rules or recommendations. 
130. MAD and AUPSA are responsible for coordinating the accreditation of sanitary and 
phytosanitary sampling laboratories with the Consejo Nacional de Acreditación  (National 
Accreditation Council – CNA).  In mid-2007, the C NA had not accredited any foreign laboratory.  
However, Panama recognizes sampling done by refere nce laboratories accredited with international 
organizations. 
131. Panama reserves the right to take  samples in the country at the time of arrival of cargo at any 
official entry point87, and in those cases in which risk analysis gives rise to any doubts.  Spot checks 
are made on all imports, with a sampling frequency that  depends on the risk attached to each product, 
its country of origin and, where possible, the record  of the importer.  Where imports of live animals, 
fresh meat, fresh fruit and vegetables, grain and live plants are concerned, samples are taken in all 
cases. 
132. A prior zoosanitary licence is required for th e importation of live animals and inputs for 
animals not deemed to be food, as well as a phytosanitary licence for the importation of plants and phytosanitary inputs.
88  These licences incorporate a list of san itary and phytosanitary requirements 
with which the national authority of the exporting country must certify that the exporter complies.  
The list is specific for each country and can be obtai ned by making an official application or consulted 
on the MAD web site.89  If a licence is refused, the reasons must be given;  moreover, in animal or 
plant health emergencies,  licences can be revoked.90  The authorities have indicated that in 2005 some 
97 per cent of all import licences were granted within sev en days, and note that in that year more than 
100,000 licences were authorized. 
133. First-time imports require a pre-inspection of the foreign installations or processing plants, 
regions and/or countries by means of a pest risk  analysis based on the animal and plant health 
requirements laid down in the Panamanian legislation.   The method of risk analysis employed is the 
same as that applied for border control purposes.  Th is phyto- or zoosanitary pre-inspection must be 
carried out by MAD and AUPSA professionals with th e support of laboratories accredited in Panama.  
The territorial extent of the assessment of each c ountry depends on the information provided by the 
competent sanitary authorities of the country concer ned, the geographical extent of the country, and 
the product to be imported. 
134. The Panamanian legislation does not specify  a time limit for MAD to conclude the 
assessment, but the authorities have indicated that in recent years, on average, the process of source 
risk analysis has taken 30 to 40 days.  The cost of  the pre-inspection is borne by the enterprise or 
country inspected.  According to the authorities,  in 2006, MAD carried out pre-inspections in the 
                                                      
86 Article 22 of Law No. 23 of 15 July 1997. 
87 The official entry points are those recognized by the DGA, such as ports, airports, land borders, 
customs offices and railway stations. 
88 MAD Resolution No. DAL-004-ADM-07 of 1 February 2007. 
89 Available for consultation at:  http://www.mida.gob.pa/. 
90 Law No. 47 of 9 July 1996 and Law No. 23 of 15 July 1997. Panama WT/TPR/S/186 
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following countries:  Chile, Costa Rica, Cuba, Ec uador, Guatemala, Honduras, Mexico, Nicaragua, 
Peru, and United States;  these pre-inspections  covered four different  groups of products. 
135. Medicaments and biological and pharmaceutical pr oducts for animal use must be registered 
with the National Animal Health Directorate.91 
136. There is no legislation in Panama prohibiting th e importation of genetically modified products 
for human or animal consumption.  However, as of mid-2007 no imports of such products had been 
registered.  At the same time, Panama prohibits  the production, importation, marketing and use of 
veterinary products that contain certain animal feed additives. 
137. Decree Law No. 11 of 22 February 2006 introduced changes in the food import procedures.  
Since February 2006, for statistical purposes, all food imports have required the filing of an import 
form through the Sistema de Notificación de Importaciones de Alimentos  (Food Import Notification 
System – SISNIA) 48 hours before unloading.  The computer system determines whether the product 
on the corresponding form is classified as high ri sk, and if so the system warns the competent 
authorities of the need to carry out sampling at the bor der.  No prior permit, licence or authorization is 
required to import food apart from the above-mentioned form.  Nevertheless, the sanitary authority of 
the country of origin of the food must issue a san itary or phytosanitary certificate indicating that the 
food complies with AUPSA requirements;  thes e requirements are public and available on the 
AUPSA web site.92 
138. Moreover, the importation of ca nned, bottled or packaged food must be registered with 
AUPSA.  Registration is an automatic procedure,  there is no cost and no approval is required.93  
However, the Panamanian Government may draw up a list of products by origin whose sanitary 
standards are internationally recognized.  In this  case, the product in ques tion will also be exempt 
from registration and it is only necessary to present the free sale certificate of the country of origin.94 
139. MAD and AUPSA are authorized to charge fees based on the cost of the sanitary and 
phytosanitary services they provide, such as inspec tions, isolation, laboratory analyses, permits and 
licences.  The cost of applying any other technical measure contracted out by the MAD or AUPSA to 
private laboratories must be borne by the importer.  The fees must be published in the Official Gazette 
and may not be a function of the value of the goods to which the service relates.95 
140. An application for reconsideration may be made to the same official of the authority that 
adopted the SPM decision in question, that is to say, the MAD Directorate of Animal Health, Plant 
Health or Agricultural Quarantine or AUPSA, with in five working days of notification of the 
decision.  It is also possible to appeal to the Minister of Agricultural Development or the 
AUPSA Scientific and Technical Food Safety Council.  In all cases, the responsible official must rule 
on the matter within a maximum of 30 days. 
                                                      
91 Article 23 of Law No. 23 of 15 July 1997. 
92 See:  www.aupsa.gob.pa. 
93 The application for registration must contain the following information:  name of product, 
manufacturer and importer;  provenance;  description of product and method of manufacture;  date of production 
and use-by date;  four labels;  free sale certificate of  country of origin;  a sample of packaging;  and a 
description of the batching system. 
94 Article 55 of Decree Law No. 11 of 22 February 2006. 
95 Article 11 of Law No. 47 of 9 July 1996, Article 10 of Law No. 23 of 15 July 1997, and Decree Law 
No. 11 of 22 February 2006. WT/TPR/S/186 Trade Policy Review 
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141. MAD and AUPSA may recognize and accept as e quivalent the sanitary or zoosanitary 
measures and registrations of other countries, even if they differ from the measures applied in Panama, if it can be shown that they ensure an a ppropriate level of protection in accordance with the 
provisions of the Panamanian legislation.  For example, MAD and AUPSA recognized the 
equivalence of the sanitary and phytosanitary sy stem of the United States through Resolution 
No. DAL-216-06 of 23 August 2006. 
142. Panama has a cooperation and coordination agr eement on plant health and quarantine with 
Argentina.
96  Moreover, most of the preferential agre ements that Panama has in force contain 
SPM cooperation clauses.97 
(3) MEASURES AFFECTING EXPORTS  
(i) Procedures, documentation and registration 
143. The entity responsible for regulating everythi ng concerned with export procedures is the 
Foreign Trade Subministry (VICOMEX).  Ther e is a single window for export formalities in 
VICOMEX, established and governed by Executive Decree No. 53 of 15 July 1985 and incorporated 
in Law No. 53 of 21 July 1998 establishing VICO MEX.  VICOMEX coordinates its activities with 
respect to export procedures with a number of ag encies, including the Ministry of Agricultural 
Development (MAD), through the Executive Agricultu ral Quarantine Directorate, Phytosanitary 
Export Licences Section;  the Ministry of the Economy and Finance, through the DGA, Customs Permits Section;  and the Ministry of Health  (MOH), through the Food Inspection Department. 
144. In order to export from Panama, it is necessary to  present an export declaration form, a signed 
commercial invoice, a certificate of origin, and the tax registration of the exporting enterprise. 
145. In accordance with Executive Decree No. 53 of 15 July 1985, the Single Window is the 
technical unit responsible for centralizing and expediting export forma lities through permanent 
interaction and collaboration with the various public  entities concerned with Panama's international 
trade.  In Panama there are seven single windows, in the Colon, Coclé, Chiriquí, Los Santos, Bocas 
del Toro, Herrera, and Panama regional zones. 
146. Through the Single Window, VICOMEX issues a general certificate of origin for all exports, 
except for those under FTAs or Partial Scope an d Preferential Trade Agreements, for which a 
certificate of origin is issued for each treaty.
98  The Chamber of Commerce, Industry and Agriculture 
of Panama and the Industry Association of Panama (SIP) are also authorized to issue certificates of 
origin, but these must be authenticated and approved  by the Single Window;  these certificates are not 
used to obtain benefits, but only as a reference for determining the origin of the goods.  The Chamber 
of Commerce also provides a certificate of provenance, as well as the tax registration of the exporting enterprise, which is only presented the first time goods  are exported, so that the enterprise can be 
registered in the DGA's electronic system. 
147. Depending on the requirements of the country of destination, exports of grain and fresh fruit 
and vegetables may require a phytosanitary certificate.  The phytosanitary certificate is applied for in 
the place where the product or packing originates;  it is issued by MAD's Plant Health Directorate and 
                                                     
 
96 Available for consultation at:  http://www.mire.gob.pa. 
97 Available for consultation at:  http://www.mici.gob.pa. 
98 In the case of the FTA between Panama and El Salv ador there is self-certification as a certificate of 
origin is not required.  With regard to export under  preferential treatment to Europe, United States, Canada, 
Japan and Australia, special certificates of origin are issued for this purpose.   Panama WT/TPR/S/186 
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channelled through the Single Window.  Depending on the destination, exports of live animals may 
require a zoosanitary certificate issued by MAD's Na tional Animal Health Directorate.  Depending on 
the requirements of the country of destination, manu factured food products of plant or animal origin 
may require a phytozoosanitary licence, issued  by MAD's Executive Ag ricultural Quarantine 
Directorate.  In the case of fresh products for human consumption, MINSA, through the National 
Food Inspection Directorate, issues a sanitary certificate.  This Dir ectorate also inspects meat, poultry 
and other processing plants and certifies processing plants for export. 
148. In addition, as required by the importing count ry, MINSA, and in some exceptional cases 
MAD also, issues free sale certificates.  The expor tation of seafood products to the main markets 
(United States and Europe) requires the plant to be  certified by a MINSA-endor sed veterinary surgeon 
and the issuing of a sanitary certificate;  this a pplies only on the first occasion on which the products 
are exported.  The export documents are channelle d through the Integrated Foreign Trade System 
(SICE). 
149. Exports in general are not subject to physical inspection, with certain exceptions such as 
wood, inspected by the Autoridad Nacional del Ambiente  (National Environmental Authority – 
ANAM), which issues a wood export permit;  scrap, inspected by the DGA;  shark fins, sandworm 
and lobster tails, inspected by the recently established Autoridad de los Recursos Acuáticos de 
Panama  (Panamanian Aquatic Resources Authority – ARAP), among others.  MAD carries out 
inspections before issuing phytosanitary certificates for the exportation of products of plant origin, 
and zoosanitary certificates for the exportation of  live animals.  MINS A inspects plants and 
installations in which food for export is  processed and issues sanitary certificates. 
(ii) Export duties and taxes 
150. Exports are exempt from internal taxes.  Panama does not use minimum export prices.  There 
are no taxes on exports, except for exports of fini shed products made of native woods, which are 
subject to a 1 per cent tax under Forest Law No. 1 of  3 February 1994. 
(iii) Export prohibitions and restrictions and licensing regimes 
151. As a contracting party to the Convention on International Trade in Endangered Species of 
Wild Fauna and Flora (CITES), Pana ma prohibits exports of certain plants and animals in danger of 
extinction in accordance with that Convention.  Wood exports are governed by Executive Decree 
No. 57 of 5 June 2002, which prohibits the export ation of wood in the form of logs, stumps, 
roundwood or blocks, sawn or roughly dressed, of an y species from natural forests, as well as wood 
submerged in water.  The authorities have noted th at the purpose of the measure is to guarantee the 
domestic supply of wood, in order to encourage the manufacture of furniture at national level. 
152. The exportation of some products calls for sp ecial formalities:  sandworm (marine species) 
and lobster tails require a resolution ( resuelto ) and a marketing permit, respectively, obtained through 
the Marine Resources Directorate (Executive Decrees No. 4 of February 1997 and No. 15 of 
30 March 1981) and issued by ARAP.  Wood requires an export permit issued by ANAM, in 
accordance with Executive Decree No. 57 of 5 June  2002 governing wood exports;  non-ferrous scrap 
requires a special licence granted by the DGA (Executive Decree No. 32 of 8 February 1991). 
153. Inflammable products require the approval of th e Panama Fire Service in accordance with 
Law No. 48 of 31 January 1963, as amended by Law No. 21 of 18 October 1982 and regulated by 
Resolution No. CDZ03-99 of 11 February 1999 (pet roleum derivatives) and Resolution No. 132-05 of 
31 August 2005 (compressed gases), which require the marketing, sale, purchase, importation and 
exportation of inflammable products to be checked a nd approved by the Fire Service.  Under Decree WT/TPR/S/186 Trade Policy Review 
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No. 354 of 29 December 1948, Decree No. 2 of 2 January 1991 and Law No. 48 of 1980, exports of 
firearms, ammunition, explosives, accessories and non-le thal defensive articles, and the like require 
an authorization issued by the Ministry of the In terior and Justice for the purpose of completing the 
export formalities in the Single Window. 
(iv) Tariff and tax concessions a nd other export incentives 
154. Panama has notified the WTO of subsidies gran ted to agricultural exports for the period 
1997-2003.  Since 2000 the subsidies have been falli ng, in absolute terms and as a percentage of 
exports:  subsidies were US$15.75 million in 2 000 (20.6 per cent of agricultural exports);  
13.52 million in 2001 (15 per cent);  10.19 million in 2002 (12.9 per cent);  and 9.57 million in 2003 
(12.6 per cent).99 
155. Panama maintains several programmes for prom oting exports in general, although one also 
offers incentives for production for the domestic ma rket.  These are:  the Tax Credit Certificate 
(CAT);  the Export Processing Zone (EPZ) Programme;  the Official National Industry Register (ROIN, see section (4)(iv) below);  the Free Zones and the temporary admission regime. 
156. CAT, EPZ and ROIN have been notified to the WTO as subsidies, in accordance with 
paragraph 1(d) of the procedure proposed for the granting of extensions under Article 27.4 of the 
SCM Agreement to certain developing country Me mbers and the Decision of 22 November 2002 on 
Industrial Free Zones (G/SCM/85) and the Industry Register (G/SCM/84).
100 
(a) Tax Credit Certificate 
157. The Tax Credit Certificate (CAT) is a subsid y for exporters of non-traditional products 
produced or processed wholly or partially in Panama.  The CAT is governed by Law No. 108 of 
30 December 1974 and its amendments, including La w No. 28 of 20 June 1995 adopting measures for 
the universalization of tax incentives for production, and by its regulations (Executive Decree No. 274 
of 29 December 1995).  The period of application of this scheme was extended to 31 December 2005 
by Law No. 62 of 26 December 2002, as a result of  the extension obtained by Panama and other 
developing country Members of the WTO for th e maintenance of programmes identified as export 
subsidies.  Law No. 62 of 2002 stipulated that, from 1 January 2003 to 31 December 2005, only 
exports that had qualified as non-tr aditional would be entitled to apply for a CAT, with the value of 
the CAT being limited to the equivalent of 15 per cent of the domestic value-added of the exported 
goods, and repealed Law No. 108 of 1974. 
158. Law No. 25 of 19 July 2005 extended the period of  application of the CAT, limiting its scope 
by stipulating that, from 1 January 2006 to 31 D ecember 2006, only exports of agricultural, livestock 
and aquaculture goods that qualify as non-traditional w ould be entitled to apply for CAT.  Law No. 5 
of 25 January 2006 made it clear that these benefits  could be granted to exports of both fresh and 
processed products and extended them to fishing.  Law No. 3 of 3 January 2007 extended the period 
of application of the CAT to 30 June 2007. 
159. The CAT is a tax credit consisting of a tran sferable non-interest-bearing document (bond) 
made out to a person and issued by the Ministry  of the Economy and Finance, with a redemption 
period of nine months, that can be used to pay inte rnal and import taxes.  In order to benefit from the 
CAT the exporter of non-traditional products must m eet the requirement of a minimum percentage of 
national content or national value-added of 20 per cent for persons located in the metropolitan region 
                                                      
99 WTO document G/AG/N/PAN/9 of 19 April 2005. 
100 WTO document G/SCM/N/146/PAN of 4 July 2006. Panama WT/TPR/S/186 
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and 10 per cent for persons located outside the me tropolitan region.  The credit received is an 
increasing function of the national value-added, with the beneficiary receiving up to 15 per cent of the 
national value-added contai ned in the exported goods.101  The total amount of CAT granted was 
US$32.01 and 23.77 million for 2001 and 2002, respec tively;  in 2003, it was US$23.5 million;  in 
2004, US$24,58 million;  and in 2005, US$30.99 million. 
(b) Export processing zones 
160. One of the principal support programmes for exports is the Export Processing Zone (EPZ) 
programme.  EPZs are tax-free areas (defined as "free and free-enterprise zones").  The purpose of the 
programme is to contribute to national developmen t by generating employment  and foreign exchange, 
encouraging investment creation, and stimulati ng the scientific, technological, economic, cultural, 
educational and social development of the country .  Any natural or legal person, Panamanian or 
foreign, interested in the production of goods an d services may participate in a EPZ and the licences 
may be of several kinds:  for promoters, opera tors, and established or installed enterprises. 
161. The EPZs are governed by Law No. 25 of 30 November 1992, its amendments and 
regulations.102  The Law grants tax incentives and special labour and migration benefits.  Enterprises 
established in the EPZs, together with any activit y or transfer of property and the purchase or 
importation of any goods or services required for thei r operations within the EPZ, are totally free of 
national direct and indirect taxes, contributions, ch arges, duties and levies.  The capital of enterprises 
established in EPZs is also free of national direct a nd indirect taxes.  The legislation does not establish 
a date for the expiration of the regime. 
162. To qualify for the benefits of the EPZ regime it  is necessary to add value in the zone.  Re-
exportation is not permitted.  There are no minimum i nvestment requirements in general, only in order 
to take advantage of the migration regime (see be low).  To install themselves in a EPZ, enterprises 
must obtain a licence to operate in the Zone and an official registration document issued by the MTI's 
National Export Promotion Directorate.  Enterpri ses that have received a licence are enrolled in the 
Official Export Processing Zone Register.  EPZ promoters must obtain the prior approval of the 
Cabinet Council. 
163. The legislation establishes a special migration regime for foreigners whose enterprises are 
installed in a EPZ or have been authorized as EPZ promoters or operators, provided that the 
investment amounts to more than B 250,000.  Unde r this regime, foreign investors are entitled to 
apply for a permanent residence visa as an investor , and to employ executives, experts and technicians 
who are entitled to apply for a temporary residence visa  valid for the duration of their contract.  There 
are also certain special labour provisions for enterprises incorporated in the EPZ regime. 
                                                      
101 WTO document G/SCM/N/48/PAN,  G/SCM/N/60/PAN, G/SCM/N/71/PAN of 4 January 2002.  
The domestic value-added was calculate d in accordance with the value of th e domestic raw materials, domestic 
labour, domestic containers and packaging, national and m unicipal taxes, and domestic utilities in relation to the 
value of the products to be exported. 
102 Executive Decree No. 28 of 19 May 1993 (regulating Law No. 25 of 30 November 1992 in relation 
to the Immigration Regime);  Executive Decree No. 1-D of 28 January 1994 (regulating Law No. 25 of 
30 November 1992 in relation to the commercial activity of enterprises subject to the Export Processing Zone Regime);  Law No. 28 of 1 February 1996 (cancelling special passports issued on the basis of Law No. 25 of 
1992 and introducing other provisions);  Decree Law No. 3 of 7 January 1997 (adding an article to Law 
No. 25 of 30 November 1992);  and Law No. 53 of 21 July 1998 (repealing  Articles 5 and 6 of Law No. 25 of 30 November 1992). WT/TPR/S/186 Trade Policy Review 
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164. The movement of goods into and out of the EPZ is recorded by means of a Commercial 
Movement Declaration, in accordance with th e provisions of Executive Decree No. 1 D of 
28 January 1994.  Imports must be accompanied by an Entry Declaration, together with a commercial 
invoice, air waybill, bill of lading or land transpor t waybill;  the signature and stamp of the enterprise, 
and the signature and stamp of the window.  Expo rts require an Exit Declaration and must be 
accompanied by a commercial invoice, the signature and stamp of the enterprise, and the signature 
and stamp of the window. 
165. In the case of exportation into Panamanian terri tory, the Exit Declaration must also be 
accompanied by the consolidated  customs assessment of the local importing enterprise.  The 
authorities have noted that, although Law No. 25 of 1992 does not establish a maximum or a 
minimum for EPZ production destined for the local market, in practice between 10 and 20 per cent 
may be sold internally.  When goods are rem oved from the EPZ for consumption in Panamanian 
customs territory, they pay the appropriate import ta xes, that is to say, import duties and internal 
taxes.  Enterprises installed in a EPZ are not require d to pay income tax on sales to enterprises located 
in Panamanian territory. 
166. At the end of 2006, Panama had 12 EPZs a nd a total of 62 registered EPZ enterprises.103  The 
enterprises installed in the EPZs engage in vari ous activities, including:  manufacture of plastic, 
pharmaceutical, chemical and glass products, read y-made clothing and manufactured aluminium 
products;  waste recycling (cardboard, steel, wood, pl astics, etc.);  storage, transport and cargo 
handling services;  provisioning services for intern ational vessels;  electrical plant assembly and 
maintenance services;  maintenance of underground st ructures;  petroleum and derivatives inspection 
and analysis services;  diesel engine assembly and repair;  tuna fishing net repair and cleaning services;  and data processing, storage and transmission services, among others.
104  The total value of 
exports from the EPZs increased from US$26.0 million in 2000 to 77.8 million in 2005 and 
88.2 million in 2006.105 
(c) Other export incentives 
Colon Free Zone 
167. The Colon Free Zone (ZLC), established by Decree Law No. 18 of 17 June 1948, promotes 
domestic and foreign investment in commercial and industrial activities.  However, in practice, for 
about the last 13 years, only re-exportation and co mmercial service activities have been carried on in 
the ZLC.  The general aspects of the ZLC's legal regi me are incorporated in a series of laws, decrees 
and resolutions that have been approved over the years by the Executive Board of the ZLC.106  To 
establish operations in the ZLC companies are not required to have a trading licence or a minimum 
                                                      
103 PANEXPORT (17 enterprises), Marpesca, S.A. (14), Davis (9), Isla Margarita (6), Albrook (8), 
Telepuerto Panama,  S.A. (2), Proinexport (2), Schlo bhom (2), Eurofusión (1), Rail Road Export Processing 
Zone (1), Tocumen (0), Espanam Iberoamérica (0). 
104 Information provided by the authorities and WTO document G/SCM/Q4/PAN/5 of 
11 October 2006. 
105 Office of the Comptroller General of the Republic and Subministry of Foreign Trade of the Ministry 
of Trade and Industry. 
106 Executive Decree No. 665 of 2 October 1951, approving the Rules and Regulations of the Colon 
Free Zone;  Resolution No. 13 of 28 June 1993, promulgating rules on certain incentives in the Colon Free 
Zone,  Law No. 29 of 30 December 1992 adopting a speci al Free Port system for the Province of Colon;  
Cabinet Decree No. 38 of 27 November 1996 regulating the drawback system established by Article 1 of Law 28 of 1995 for goods exported. Panama WT/TPR/S/186 
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investment capital but must comply with certain rules.  In particular, they must employ at least 
five local workers and re-export at l east 60 per cent of the goods imported. 
168. Imports, exports and re-exports of goods into a nd from the ZLC are free of tax;  enterprises 
operating in the Zone are also exempt from IT BMS and any internal tax on their export activities.107  
The repatriation of capital or divide nds generated abroad is not treated as profits for tax purposes.  
ZLC enterprises must pay full income tax in respect of the income derived from sales made in the 
customs territory of Panama.108  On the taxable income from fore ign operations they pay income tax 
at the single reduced rate of 15 per cent.  Earni ngs from commission and services provided within the 
ZLC are considered to be local operations and pay income tax, unless they produce their effects 
abroad.  The employees of natural or legal pers ons established in the ZLC pay income tax, as do 
professional service contracts. 
169. The ZLC operates as a global goods distribution and logistical hub;  in 2006 there were some 
2,462 enterprises established in the Zone.109  The Zone generates some 27,000  direct and indirect jobs.  
In 2006, imports into the Zone totaled B 6,935.6 million, while re-exports recorded a total of 
B 7,632.2 million. 
170. The Government's objective is to transform the ZL C into a multimodal centre.  To this end, in 
mid-2000, the Government adopted as a national stra tegy the development of a logistical hub for 
multimodal transport (sea, air, rail and road), services  and industry.  The project calls for investment 
estimated at US$1,104 million, of which by 2006 so me 410 million had been invested;  the aim is to 
improve the supply chain for goods and services in the ZLC and enable the commercial area to 
expand its markets.110  The project also includes the creati on of an industrial estate with seven 
interconnected zones producing free of taxes. 
Other Free Zones 
171. Apart from the ZLC, there are other free zones with their own legislation that constitute 
special customs areas.  These incl ude the Barú Free Zone, and the Howard Zone or Special Economic 
Area of Panama. 
172. The Barú Free Zone was established by Law No . 19 of 4 May  2001.  This Law created a 
tourist and multimodal logistical support free zone under a special tax and customs regime in Barú 
(Chiriquí province).  The law permits importation,  re-exportation, unloading, forwarding, storage, 
manufacturing, packaging, assembly and other co mmercial activities.  It also authorizes the 
establishment of utilities and the construction of ports, airports and other infrastructure.  Activities in 
the Barú Free Zone are exempt from all domestic tax es, and imports into the zone are duty-free, but 
those working in the zone do not benefit from any tax concessions.  Goods removed from the zone for 
use or consumption in the fiscal territory of Pana ma pay the corresponding customs duties and taxes. 
173. The Panama Pacific Special Economic Area was created as a result of the conversion of the 
former Howard Air Base inside the Canal Zone after it reverted to Panama.  Its purpose is to use the 
telecommunications and logistical infrastructure avai lable at Howard to encourage services activities, 
                                                      
107 Under the Tax Code (Article 701) , export operations are taken to m ean:  sale transactions involving 
domestic or foreign goods that leav e the ZLC bound for customers located  outside Panamanian territory;  
transfers of goods within the ZLC a nd with the Free Zone of Tocumen International Airport;  and the income 
from such transfers. 
108 See:  http://www.zonefrancadebaru.com/z.f.b_regimen.htm. 
109 See:  http://www.zonelibredecolon.com.pa/main.htm. 
110 See:  http://www.zonelibredecolon.com.pa/menu06/concepto.htm. WT/TPR/S/186 Trade Policy Review 
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thereby strengthening Panama's role as a transpor t, telecommunications and international services 
hub.  The Panama Pacific Special Economic Area Agency is the government entity responsible for 
assisting investors, informing them about the oppor tunities for doing business in the Panama Pacific 
Special Economic Area, and implementing the Panama  Pacific Project for th e Area's development. 
Drawback, replacement of goods and temporary admission procedures 
174. The drawback procedure, the rules for which are laid down in Law No. 28 of 20 June 1995, 
establishes a mechanism for reducing import tariffs on raw materials and inputs used by industry.  The 
procedure is available to manufacturing enterpri ses engaged in both outward processing (exportation 
of domestic goods for processing abroad, after re-i mportation into Panama) and inward processing 
(temporary admission of imports for processing in  Panama and subseque nt exportation).  The 
concession consists in the initial payment by all i ndustrial enterprises of a 3 per cent import duty on 
raw materials, intermediate goods and capital goods , which is refunded when the finished product is 
exported.111 
175. Law No. 28 of 20 June 1995 also lays down th e rules for the duty-free replacement of goods 
procedure, which allows the duty-free importation of goods equivalent (similar  in kind, quality and 
technical characteristics) to imported goods used to  obtain products previously exported outright. 
176. The temporary admission procedure provides for conditional relief from customs duties, 
general sales tax, and other taxes and surcharges on the importation of raw materials, semi-processed 
products, packaging and other inputs for produci ng goods or services intended for exportation (see 
section (2) above). 
(v) Export finance, insurance and promotion 
177. Panama does not have official export finance or  insurance programmes.  There is a private 
company that provides export credit insu rance on a commercial basis, namely, the Compañía National 
de Seguros , S.A., which is authorized to market a global export credit insurance policy under 
Resolution No. 320 of 13 June 1996 of the Superintendencia de Seguros y Reaseguros  (Supervisory 
Authority for Insurance and Reinsura nce).  The credits covered may not have a term of more than one 
year;  only risks of a commercial nature are covered.   The insurance covers up to 85 per cent of the 
final net loss incurred by the businessman.  The premiu m is based on the buyer's financial situation;  
the economic situation and political stability of the c ountry of destination of the goods, and the nature 
of the transaction.  Panamericana de Seguros  S.A. sells CONASE policies. 
178. VICOMEX is the department responsible for e xport promotion in Panama;  within the Sub-
Ministry there is a National Export Promotion Directorate, the unit responsible for promoting 
Panamanian exports.  The Directorate administer s the Single Foreign Trade Window and the existing 
export support and promotion instruments and pr ovides technical assistance for export-oriented 
enterprises. 
179. The programmes for which the Directorate is responsible include EXPORTA, the principal 
national export promotion programme.  The aim of this initiative is to boost Panamanian exports of 
non-traditional products (for example, pineapples and watermelons) to new markets.  The quantitative 
target of the EXPORTA programme is to increase exports  in general by 15 per cent in two years, and 
by 32 per cent in five years, while stepping up non-traditional exports by 10 and 20 per cent, 
                                                      
111 For the purposes of the Law, exportation is also  considered to include the sale on the domestic 
market of raw materials, semiprocessed products, and containers and packaging of domestic manufacture, provided that they are supplied to enterprises that export at least 90 per cent of their production. Panama WT/TPR/S/186 
 Page 57 
 
 
respectively, during the same periods.  It is also intended to increase the number of exporting 
enterprises, by creating 40 new ones, and to enc ourage the installation of up to 20 international 
enterprises. 
180. The implementation of the EXPORTA programme  includes:  support for exports through 
promotion campaigns;  the preparation of guides for potential exporters;  the organization of seminars, 
workshops, business conferences, fairs, traini ng and technical assistance programmes;  the 
modernization of the single window system;  and the awarding of a prize for Exporter of the Year. 
181. The support documentation prepared under the programme includes the compilation of an 
Exporter's Handbook112, and a study of Panama's exportables.113  This study concluded, among other 
things, that in the short and medium term there w ould be no significant variation in the composition or 
volume of Panama's merchandise exports.  The st udy identified deficiencies with regard to 
commercial structures and marketing activities, in re lation to studies of production conditions and 
with regard to information systems on the part of the principal institutions responsible for trade 
promotion policies.  The study recommended measu res to encourage the expansion of opportunities 
for entering new markets and the adaptation of the export range to those markets. 
182. VICOMEX is also trying to stimulate the export activities of SMEs, by implementing export 
development programmes for suppliers and associ ations.  For exporter development purposes in 
general, VICOMEX is in process of creating an Exporter Development Services Centre. 
183. The Asociación Panameña de Exportadores  (Panamanian Exporters Association – APEX), 
founded in 1971, is the Panamanian private-sector in stitution that brings together and represents the 
interests of the exporting enterprises.114  APEX participates in all public and private initiatives relating 
to exportation, being the private institution that re presents national exporters in their dealings with 
government departments and the international orga nizations connected with the sector.  APEX 
participates in the Comisión Nacional de Negociaciones Comerciales Internacionales  (National 
Commission on International Trade Negotiations),  on which it represents the interests of the 
exporters.  Other private organizations that re present the interests of exporters are:  the Grupo de Agro 
Exportadores no Tradicionales de Panama (Group of Non-Traditional Agro-Exporters of Panama – 
GANTRAP), the Asociación de Productores y Exportadores de Productos del Mar  (Seafood Product 
Producers and Exporters Association – APPEXMAR) and the Sindicato de Industriales de Panama  
(Panama Industry Association – SIP). 
(4) OTHER MEASURES AFFECTING PRODUCTION AND TRADE  
(i) Company formation and taxation 
184. The formation, operation and liquidation of commercial companies are governed by the 
Commercial Code (Law No. 44 of  10 March 1917), Law No. 24 of 1966 on private limited companies 
(empresas de responsabilidad limitada ), and Law No. 32 of 1927 on public limited companies 
(sociedades anónimas ).  The Civil Code (Law No. 2 of 1916) governs civil-law companies.  The 
MTI's Directorate General of Internal Trade is th e entity responsible for organizing, supervising, 
regulating and protecting commercial and in dustrial activities carried on in Panama. 
185. Commercial companies can be formed as public limited companies, private limited 
companies, civil-law companies, general partnershi ps, limited partnerships, lim ited partnerships with 
                                                      
112 The Handbook is available for consultation a t: http://www.mici.gob.pa/manual_exportador.php. 
113 Sub-Ministry of Foreign Trade of Panama (2005).   
114 See:  http://www.industriales. org/apexartlicledetail.asp?id=23. WT/TPR/S/186 Trade Policy Review 
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shares, majority state-owned companies, cooperatives,  branches of foreign enterprises, joint ventures, 
private foundations, trusts, franchises, etc. 
186. The type of company most used in Panama is the public limited company.  Public limited 
companies are governed by Law No. 32 of 1927 an d the Commercial Code and must have at least 
two subscribers, of any nationality and without an y residence requirement, who by law acquire the 
first two shares in the company (one each), alt hough later the company may operate with a single 
shareholder.  Public limited companies must have at least three directors and must have an agent 
resident in Panama.  The minimum capital require d to form a public limited company is B 10,000.  
Private limited companies are govern ed by Law No. 24 of 1966;  the number of shareholders may not 
exceed 20, and the subscribed capital may be anywhe re between B 2,000 and B 500,000.  There are 
no nationality or legal residence r estrictions on the shareholders. 
187. Agreements to form or make changes in a commercial company must be recorded in the 
Public Register.  Public limited companies and pr ivate foundations are required to pay an annual fee 
of B 250 in the first year and B 300 thereafter.  In the case of a foreign enterprise, if it is going to do 
business in or from Panama, it must deposit in the P ublic Registry, among other things, a translation 
of the incorporation papers, the resolution of the me eting of shareholders authorizing registration, and 
a certificate from a Panamanian Consul confirming that the enterprise exists and is organized in 
accordance with the laws of the country in which the head office is located. 
188. Under the regime in force up to July 2007,  commercial and industria l operations required a 
licence or commercial registration issued by the Licensing Department of the MTI's Directorate-
General for Internal Trade.115  A licence was not required for agricultural, bee-keeping or poultry 
farming activities or for the manufacture and sale of  craft products.  Commercial registrations and 
licences were classified as:  Type A, for wholesale trading;  Type B, for both wholesale and retail 
trading activities;  and industrial, for extractive or manufacturing activities, and for selling wholesale 
to the state the products extracted or manufactured. 
189. Since July 2007, the commercial licence and co mmercial registration have been replaced by a 
document called the " Aviso de Operación " or operation notice, stating that the MTI has been duly 
informed of the activity which the natural or legal person is going to carry on.  No operation notice is 
required for agricultural, bee-keeping or poultry fa rming activities or for the manufacture and sale of 
craft products.  Company operation notices are subject to a 2 per cent tax on the company capital, with a minimum of B 100 and a maximum of B 40,000, amounts similar to those paid under the 
licensing system.  Natural and legal persons with an invested capital of less than B 10,000 are exempt. 
190. Enterprises resident in Panama pay taxes only on their income generated in the country.  
Income tax is levied on companies at the rate of 30 per cent of their taxable income up to B 100,000,  after which the rate increases progressively up to 42  per cent on taxable inco me above B 500,000.  In 
February 2005, an alternative method of calculation,  equivalent to a tax of 1.4 per cent on the gross 
income of enterprises operating in Panama, was intr oduced, together with a tax of 1 per cent on the 
firms operating in the Colon Free Zone.  A provisi on for the payment of a "minimum income tax" 
equivalent to 4.67 per cent of gross company income  was also introduced;  the income tax payable is 
the greater of this amount and the result of applyi ng the 30 per cent rate.  Moreover, employers must 
pay 10.75 per cent in social security contributions. 
191. Dividends paid by Panamanian enterprises are not subject to income tax, but they are subject 
to the payment of a withholding tax of 10 per cent, ex cept for bearer stock for which the rate is set at 
                                                     
 
115 Commercial registrations could be issued for amounts up to B 10,000, whereas commercial licences 
were issued for amounts of B 10,001 or more. Panama WT/TPR/S/186 
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20 per cent.  A retained profits tax of 10 per cent is  applied if less than 40 per cent of taxable income 
is distributed;  this payment can be used as credit against the tax applicable to distributed profits.  
Subsidiaries of foreign companies pay withholding ta x on all their profits.  Branches of foreign legal 
persons pay as income tax 10 per cent of their taxa ble income obtained in Panama.  Interest credited 
to the accounts of foreign lenders must pay a withholding tax of 6 per cent. 
192. Since the tax reforms introduced in 2005 the re mittance abroad of income generated in 
Panama has been subject to the payment of with holding tax.  Among other things, this includes 
payments for patents and other in tellectual property rights, royalties and technology transfers.  The 
base for calculating the withholding tax is 50 per cent of the remittance income.  Services contracted 
for abroad are subject to a 15 per cent tax. 
193. An annual tax is paid on the value of immova ble property and another on capital gains from 
the disposal of immovable property.   This tax is based on the offici al valuation of the property and 
varies between 0.7 per cent and 1 per cent of that valu ation.  The capital gains tax is applied at a flat 
rate of 10 per cent, unless the operation is in the ta xpayer's normal course of business, in which case 
the rate is determined in accordan ce with the tables for the payment of income tax.  In addition, there 
is a 2 per cent property transfer tax paid by the seller. 
(ii) Price controls 
194. Panama does not apply price controls in th e case of goods.  However, Law No. 29 of 1996 
and amendments permit, by regulation, the appli cation of price controls to those products whose 
import tariff exceeds 40 per cent ad valorem  (with some exceptions su ch as products derived from 
petroleum and staples).  Controls can be applied for maximum periods of six months, which can be 
extended for the same length of time.  The authorities have pointed out that the last general regulation 
establishing controlled prices dates from September 1997.   In addition, Law No. 1 of 2001 authorizes 
the application of controls on the wholesale prices of medicaments.  The authorities have pointed out 
that the last regulation in this respect expired in  July 2004 and there are now no medicaments whose 
price is controlled.  However, distributors of medicaments must inform the Authority for the 
Protection of the Consumer and Defence of Co mpetition of any changes in pharmacy prices. 
195. In the case of services, there are some activities whose prices are controlled, including:  land 
passenger transport, where the fares are fixed by the Autoridad de Tránsito y Transporte Terrestre  
(Transit and Land Transport Authority);  electricity distribution and marketing;  and telecommunications services, where there is only one concession-holder operating (see chapter IV(5)). 
196. Furthermore, the National Consumer Protec tion Directorate of the Authority for the 
Protection of the Consumer and Defence of Compe tition monitors the prices of some products, which 
are published in reports and are available on the Authority's web site.
116  The aim is to keep the 
consumer informed and promote competition;  th e products whose prices are monitored include:  
fuels, medicaments, the 50 items included in the basic basket (food and beverages), and some goods 
and services classified as "special products", such as cars and educational services. 
(iii) Competition policy 
197. Panama's main competition legislation is cont ained in Law No. 29 of 1 February 1996, as 
amended by Decree Law No. 9 of 2006, in Executi ve Decree No. 31 of September 1998, and in 
Decree Law No. 9 of 20 February 2006 establishing th e Authority for the Protection of the Consumer 
and Defence of Competition.  There are also gui delines on the monitoring of business mergers, the 
                                                      
116 Available for consultation at:  http://www.autoridaddelconsumidor.gob.pa/. WT/TPR/S/186 Trade Policy Review 
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analysis of vertical restrictions on free compe tition, and on conducting a competition audit.  Since 
May 2006, the body responsible for safeguardi ng competition has been the Authority for the 
Protection of the Consumer and Defence of Competition.117  The Authority, headed by an 
Administrator, performs the functions previously performed by the Comisión de Libre Competencia y 
Asuntos del Consumidor  (Commission on Free Competition and Consumer Affairs – CCLICAC).  
Within the Authority, the National Free Competiti on Directorate is responsible for competition policy 
issues. 
198. According to Law No. 29 of 1 February 1996, its purpose is to protect and ensure free 
competition by eradicating monopolistic practices and other restrictions on the efficient operation of 
the markets in goods and services, in the best inte rests of the consumer.  The Law applies to all 
economic operators, whether natural or legal persons, private-sector enterprises or state or municipal 
institutions, and to those who for whatever reason ac tively take part in economic activity.  However, 
the Law does not apply to state monopolies in bran ches of economic activity that the Constitution and 
other laws reserve exclusively for the state a nd which have not been put out to concession (for 
example, electricity transmission and airport management). 
199. Law No. 9 of 2006 introduced amendments to  the Panamanian competition legislation, 
including changes in the way in which decisions are adopted within the Authority.  It also broadened 
the Authority's powers to investigate anti-competitiv e behaviour on the part of utility companies and 
provided for the possibility of state entities consulting the Authority if in the course of their activities 
free competition might be affected.  Law No. 9 of 2006 also increased the maximum fine from 
B 100,000 to B 1,000,000 and established an advisory council on competition with members 
representing both business and the consumer associations. 
200. The Panamanian legislation prohib its absolute monopolistic practices per se , these being 
defined as "any act, contract or practice that restrict s, lessens, injures, prevents or in any other way 
harms free competition in the production, processing, distribution, supply or marketing of goods or 
services".  However, the law does not prohibit a monopoly position or the pursuit of such a position, 
provided that it is not achieved by means of prohi bited practices.  Relative monopolistic practices are 
not prohibited per se ;  they must be shown to be unlawful and the costs and benefits of applying 
measures to end them must be weighed by analysing their reasonableness. 
201. Law No. 29 of 1996 establishes a general excep tion from its application for transactions, 
agreements, pacts or any other association entere d into by economic operators for the purpose of 
increasing, saving on or improving the production and/or distribution of goods or services or 
promoting technical or economic progress that gene rate benefits for consumers or the market, 
provided that they involve:  (a) the exchange of technical information or technology;  (b) the joint 
establishment and/or development of infrastructure,  equipment, resources or production facilities and 
technology;  (c) the joint establishment and/or de velopment of collection, storage, transport and 
distribution facilities;  or (d) exported products. 
202. The Authority can apply administrative penalti es for noncompliance with the legislation and 
may refer the case to the courts for the applicati on of civil measures of another nature, such as the 
imposition of fines, of up to three times the amount of  the damage and injury caused as a result of the 
unlawful act, plus legal costs. 
203. The Authority is responsible for examining merger s, whether at the request of the interested 
party or ex officio, by carrying out both prelimin ary checks and post facto investigations.  Although it 
is not compulsory to notify a merger in advance, if  it has previously been verified by the Authority 
                                                      
117 See:  http://www.autoridaddelconsumidor.gob.pa/. Panama WT/TPR/S/186 
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and received a favourable opinion, it cannot subsequen tly be challenged on the basis of the elements 
verified, unless the favourable opinion was obtained on the basis of false or incomplete information provided by the interested operator.  In general, the Authority can refuse to give a favourable opinion 
on a merger submitted to it for verification only if:  (a) it potentially confers on the economic operator 
resulting from the merger the power to fix prices or materially restrict the supply of the relevant 
market;  (b) may be intended to displace other competitors, or block their access to the relevant 
market;  or (c) materially facilitates the exercise of prohibited monopolistic practices.  Mergers that 
have not submitted voluntarily to verification may be challenged for up to three years after having 
entered into effect.  If an investigation finds that  a merger submitted for verification is leading to a 
prohibited practice, the Authority may subject the granting of a favourable opinion on the transaction 
to compliance with the conditions n ecessary to bring it into conformity with the law, or challenge the 
merger in the appropriate courts with a view to  obtaining a decision ordering the partial or total 
demerger of what was improperly merged.  In addition, the Authority and the courts may apply penalties. 
204. The principal mergers examined since 2000 invo lve the following sectors:  dairy products 
(Nestlé-Borden, 2000);  the automotive sector (Aut omóviles Mitsubishi Motor Corporation, 2001);  
and brewing (Cervecero Grupo Bava ria and Cervecería Barú, 2002).  The first two mergers were 
authorized, whereas in the case of the merger of  the brewing companies a favourable opinion was 
denied.
118  Moreover, in October 2006 and April 2007 a favourable opinion was given in connection 
with the mergers between HSBC Asia Holdings, B.V. and Grupo Banistmo and between Banco 
General and Banco Continental, respectively.  In  both cases, the opinions were made conditional on 
the temporary (about two years) non-applicatio n of penalty clauses to the lenders for early 
cancellation of the loans. 
205. The main cases decided in connection with i nvestigations for monopolistic practices, which 
involved both Panamanian and foreign enterprises, include:  price fixing and market sharing between 
flour companies (1998);  fixing of the price band for cuts of beef between vertically integrated 
abattoirs and supermarket chains  (2002);  and coordinated bidding on contracts to supply medical 
oxygen to the Social Insurance Fund (2001);  the flour and beef cases resulted in fines being imposed 
by the courts in 2006.  Other cases initiated but s till pending in January 2007 include:  price fixing by 
five oil companies (2000);  concerted action by five  airlines to reduce the co mmission paid to travel 
agencies (2001);  code-sharing agreement among three ai rlines;  forced purchases of metals at special 
prices (2001);  monopolistic practices of a network interconnection company directed against certain 
financial institutions (2002);  and concerted acti on by advertising agencies to manipulate or impose 
the price of services for planning investment in adver tising (2003).  The Authority (or prior to that the 
Commission) found violations of the competition la w in all these cases and they were referred to the 
courts.119 
206. In general, the level of competition in Panama appears to be high in services, particularly in 
areas characterized by the presence of foreign compan ies (banking, insurance), but less so in relation 
to certain goods with a limited number of pro ducers (dairy products, cement, biscuits, oils, 
plastics, etc.) and/or a high level of effective pr otection (cattle and pig br eeding, poultry farming, 
rice).  In the case of banking services, the authorities have noted that, although mergers have resulted in a considerable increase in the concentration indi cators, there is keen rivalry between institutions, 
and accordingly they do not consider that ther e has been any restriction of competition. 
                                                     
 
118 See:  http://www.autoridadddelconsumidor.gob.pa/pdf/resolucion%20concentracion%20nestle%20 
borden.pdf. 
119 The Authority's web site contains updated information on the progress of these cases.  See:  
http://www.clicac.gob.pa. WT/TPR/S/186 Trade Policy Review 
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207. The bilateral trade agreement between Panama and Singapore contains clauses that invite 
cooperation in competition policy and call on each part y to adopt or maintain competition legislation 
and an agency responsible for its application, but anti-competitive practices are excluded from the 
scope of the dispute settlement chapter.  The agre ement with Chinese Taipei states that "each Party 
shall adopt and maintain measures to prohibit anti-co mpetitive practices".  The agreements with Chile 
and the United States do not contain any references to competition policy. 
(iv) Incentives 
208. With reference to the proposed amendmen t to the procedures for extensions under 
Article 27.4 of the SCM Agreement for certain developing country Members and the period of 
extension itself submitted to the SCM Committee by  a group of proponent countries with small, 
vulnerable economies in April 2006120, Panama has expressed its strong support and interest in the 
continuation of the granting of extensions throug h to the end of 2018, subject to annual reviews 
during that period to verify that the transpar ency and standstill requirements are being fulfilled.121 
(a) Exemptions for Enterprises included in the O fficial National Industry Register (ROIN) 
209. Apart from export-related incentives (section (3 )(iv) above), Panama maintains incentives 
under the programme of exemptions granted to ente rprises included in the ROIN .  The basic objective 
of the programme is to offer suitable incentives fo r the promotion of industrial activity and exports, 
factors of importance for the country's progress and economic development. 
210. To be eligible for the programme, enterprises must  be registered in the ROIN.  Law No. 28 of 
20 June 1995 (adopting measures for the universa lization of tax incentives to production and 
introducing other provisions) repealed Law No. 3 of  20 March 1986 (adopting an incentive regime for 
the promotion and development of national indust ry and exports), which regulated the ROIN.  
Although Law No. 28 of 1995 repealed all of the pr ovisions of Law No. 3, the existing benefits of 
registration were maintained for enterprises which enjoyed the incentives until 2010.  Other 
legislation regulating the programme includes Ex ecutive Decree No. 274 of 29 December 1995, the 
regulations of Law No. 28 of 20 J une 1995, and Law No. 26 of 4 June 2001.  No enterprise has been 
able to take advantage of the programme since 1995;   the law provides for the benefits granted to 
those previously registered to end at the latest in 2010, provided that the Committee on Subsidies and 
Countervailing Measures grants a new extension of the programme, since the present one runs until 
31 December 2007. 
211. While Law No. 3 of 20 March 1986 was in force, th e registration of an enterprise in the ROIN 
was ordered by a Resolution issued by the MTI, c onferring on the holder, from the date of issue and 
for the period of validity of the respective registra tion, the right to enjoy the benefits and incentives 
provided by the programme, in accordance with the m odality selected.  Any enterprise established in 
Panama and engaged in industr ial manufacturing or assembly activities could benefit from this 
programme.  The duration of the benefits depended on  the period of validity of the registration, which 
was for a maximum of 15 years. 
212. In the ROIN, enterprises were registered as eith er:  (a) enterprises all of whose production is 
intended for export;  (b) enterprises producing partly  for export;  and (c) enterprises producing for the 
domestic market.  The benefits depended on the type of registration, being greater for enterprises that 
                                                      
120 WTO document G/SCM/W/535 of 12 April 2006.  The countries in question are:  Antigua and 
Barbuda, Barbados, Belize, Dominica, Dominican Republic , El Salvador, Fiji, Granada, Jamaica, Mauritius, 
Papua New Guinea, St. Kitts and Nevis, Saint Vincent and the Grenadines, and Saint Lucia. 
121 WTO document G/SCM/W/537 of 23 June 2006. Panama WT/TPR/S/186 
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exported all their production and less substantial for those that produced only for the domestic market 
(Table III.9).  Thus, enterprises that exported their production could import inputs free of customs duties and other import charges, whereas producers for the domestic market had to pay import duties 
of 3 per cent.  Moreover, the former were exempt  from ITBMS on imports of machinery, equipment 
and spare parts used in the production process, wher eas enterprises producing for the domestic market 
had to pay ITBMS, in addition to import duty at the reduced rate of 3 per cent. 
Table III.9 
Tax incentives granted under the Official National Industry Register 
1. Enterprises producing wholly for export 
(a) Exemption from all levies and charges and customs duties, as  well as from ITBMS on the importation of machinery, equipment and 
spare parts used in the production process, with the exception of building materials, vehicles, furniture, office supplies, and  any other 
inputs not used in the production process 
(b) Total exemption from income tax on profits, with the exception of extractive industries and those that exploit Panama's nat ural 
resources 
(c) Total exemption from export duty (if applicable) 
(d) Total exemption from sales tax;  total exemption from production tax 
(e) Total exemption from taxes on company capital and assets, except for licence and real estate taxes 
(f) Establishment of special financing programmes on terms mo re favourable than those normally available on the market 
2. Enterprises producing partly for export 
(a) Total exemption from income tax on profits obtained from pr oduction for export, with the exception of extractive industries  and those 
that exploit Panama's natural resources 
(b) Total exemption from export duty 
(c) Total exemption from expor t sales tax (if applicable) 
(d) Total exemption from export production tax 
(e) Establishment of special financing programmes on terms mo re favourable than those normally available on the market 
(f) Deduction from taxable income of fixed costs, such as inte rest, depreciation and maintenan ce, provided total export sales d o not 
exceed 20 per cent of the total value of sales 
3. Enterprises producing for the domestic market 
(a) Import duty equivalent to 3 per cent of the c.i.f. value of the foreign inputs on the importation of raw materials, semi-fi nished or 
intermediate products, inputs, spare parts fo r machinery and equipment, containers a nd packaging entering into the composition or 
the production process, on which ITBMS will also be paid  
(b) Exemption from income tax on the net profits reinvested in  order to expand production capacity or produce new articles, app licable 
to the portion of that reinvestment in excess of 20 per cent of taxable in come in the tax year in question  
(c) Special carry-over regime for losses  
(d) Special depreciation formula  
(e) Application of an import tax of 3 per cent of the c.i.f. va lue on the introduction of machinery and equipment used in the p roduction 
process, with the additional payment of ITBMS  
(f) Enterprises established in the district s of Santiago, Chitré, Bugaba, Chorrera, Los Santos, Las Tablas, Aguadulce, Natá, an d 
Penonomé and in the provinces of Colon are granted:  (a) 100 per cent exemption from real estate  taxes for a period of ten years ;  
(b) 100 per cent exemption from income tax on profits from sales on the domestic market for the first five years of production and 
50 per cent exemption for the next three years 
Source : Information provided by the authorities.  WTO document G/SCM/N/95/PAN of 3 July 2003. 
213. Of the enterprises producing for the domestic ma rket, those located in certain areas receive 
special tax treatment for a period of 10 years from the time of registration in the ROIN.  Enterprises 
that benefited from total exemption from income tax on the profits generated by export activity could 
not benefit from the CAT incentive, with the excep tion of persons engaged in agricultural or agro-
industrial non-traditional product export activities. 
214. The amount of the benefits granted under th e programme of exemptions for enterprises 
included in the ROIN fluctuated from year to year.  Between 2000 and 2002 it was observed to 
decrease, but began to increase again starting in 2003.  Altogether, during the period 2000-2005, 
disbursements totalled US$241 million (Table III.10).   A good proportion of these benefits (47 per WT/TPR/S/186 Trade Policy Review 
Page 64 
 
 
cent of the total between 2000 and 2005) corresponded to import duty exemptions or reductions.  By 
October 2006 the number of enterprises registered in the ROIN had fallen to 371 as compared with 
1,170 in 1995. 
Table III.10 
Amount of Tax Incentives Granted under the Official National Industry Register, 2000-2005 
(US$ million) 
Type of benefit  2000  2001  2002  2003  2004  2005 
Total or partial relief from import duty  27.3  22.2  15.2  18.7  17.5  14.1 
Total or partial relief from tax on reinvestme nt income  15.2  11.3  11.5  8.7  11.6  9.7 
Exemption from income tax  7.4  6.6  6.9  9.8  10.7  16.6 
Total  49.9  40.1  33.6  37.2  39.8  40.4 
Source : Department of Fiscal Studies, Di rectorate-General for Revenue, Mini stry of the Economy and Finance. 
215. The elimination of the benefits intended exclusively for enterprises producing partly or 
wholly for export was initially envisaged for 1 Janua ry 2003.  In conformity with its Decision of 
22 November 2002, the Committee on Subsidies and Countervailing Measures decided to extend this 
period to 31 December 2003.122  This extension was subse quently itself extended by the 
SCM Committee, the latest extension being up to 31 December 2007.123  MTI Resolution No. 32 of 
31 December 2002 incorporated the initial extension,  and subsequent ones, up to the end of 2007, in 
the Panamanian legislation. 
(b) Other fiscal and financial incentives 
216. Law No. 33 of 25 July 2000 contains support measures and incentives for promoting the 
strengthening, consolidation and self-sustainability of micro, sma ll and medium-sized enterprises 
(MSMEs).  The Micro, Small and Medium-Sized Enterprise Authority (AMPYME), established by Law No. 8 of 29 May 2000, is the authority respons ible for implementing Law No. 33 of 2000 and is 
charged with fostering the development of MSME s by carrying out promotion and strengthening 
policies.
124  Between 2000 and 2006, AMPYME issued 3,132 income tax exemption certificates;  
between January and May 2007 a total of 515 certificates were issued. 
217. The Authority provides support for company formation and the implementation of training 
programmes;  it also acts as an intermediary with  the financial system to facilitate access to credit.125  
However, the Law authorizes the State to estab lish the financial, customs and fiscal support 
programmes it considers appropriate for facilitati ng and promoting MSME activities.  The authorities 
have acknowledged that in prac tice this has not happened. 
218. Law No. 33 of 2000 established a Guarantee Fund,  administered by the Authority, for 
guaranteeing loans and for training and technical assistance for micro and small businesses, with annual funding of at least B 5 million deposited in th e National Bank of Panama.  The resources of the 
Fund come from the proceeds of the Fondo Fiduciario para el Desarrollo  (Trust Fund for 
Development);  other state contributions;  the income  generated by its own ope rations;  and donations.  
Of the Fund's resources, 50 per cent is used for guaranteeing loans for MSMEs;  30 per cent for 
training;  and 20 per cent for technical assistance.  The guarantees are for a maximum of B 25,000 and 
                                                     
 
122 WTO document G/SCM/84  of 12 December 2002. 
123 WTO document G/SCM/84/Add.4 of 13 November 2006. 
124 AMPYME classifies enterprises as follows:  micro enterprise:  gross income or annual turnover up 
to B 150,000;  small enterprise:  from B 150,000.01 to B 1,000,000;  medium-sized enterprise:  from 
B 1,000,000.01 to B 2.5 million (http://www.ampyme.gob.pa/index.html). 
125 For example, in 2001, AMPYME signed such  an agreement (Agreem ent No. 002-01) with 
MULTICREDIT BANK, a bank which established a financing programme especially for MSMEs. Panama WT/TPR/S/186 
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can only cover up to 80 per cent of the amount owed.  The authorities have noted that on average they 
cover 60 per cent of the debt.  During the pe riod from 2004 to 2006, 764 guarantees totalling 
B 2,000,000 were granted. 
219. Law No. 9 of 19 January 1989 provided micro and small businesses engaged in 
manufacturing with a series of incentives, including total exemption from income tax during the first 
five years of their existence, a reduction of 75 per cent during the next five years, and 25 per cent for 
the rest of their existence.  Moreover, they were granted total exemption from import duties on 
equipment, capital goods, spare parts and raw ma terials and from dividend tax, and ten years' 
exemption from the tax on real property.  To bene fit from these incentives, businesses had to register 
in the MTI's Register of Small and Medium-Sized Manufacturing Enterprises.  This register lasted 
15 years.  Although Law No. 9 of 1989 was repealed by Law No. 8 of 29 May 2000, there was provision for pending benefits to continue to apply, expiring together with the registration of the last 
beneficiaries. 
220. The authorities have noted that, since it w as introduced 134 enterprises have benefited from 
total or partial relief from income tax under Law No. 9 of 1989;  in mid-2007, 74 enterprises were 
enjoying benefits up to th e end of their corresponding 15-year period .  The last benefits will be paid in 
2015, when the registration of the last enterprises to take advantage of the scheme in the year 2000 
expires.  In addition, between 2001 and 2007, 12 5 permits were granted for the importation of 
products exempt from import duties. 
221. Law No. 8 of 14 June 1994 establishes tax incentiv es for tourism activities, mainly in order to 
promote foreign investment in this sector.  The incentives granted include total exemption from:  
income tax for a period of 15 years;  real estate tax for a period of 20 years;  import duties on materials and furniture needed by the investment  company to meet its building and equipment 
requirements, provided the goods are not produced in sufficient quality and quantity in Panama;  taxes 
and fees for the use of wharves and airports built by the investment company, for a period of 20 years;  
and tax on the income that creditors can generate in tourism investment operations. 
222. Law No. 3 of 28 January 1988 permits the duty -free importation of materials, spare parts, 
machinery and equipment for use in mining activities.   Law No. 7 of 10 July 1990 includes incentives 
for enterprises engaged in leasing movable property.  The lease of property situated outside Panamanian territory is free of taxes, and the pr ofits from Panamanian vessel chartering transactions 
are totally exempt from tax. 
223. Under Law No. 24 of 23 November 1992, as amended by Law No. 6 of 2 February 2005 
(Law on Fiscal Equity), the profits derived by natu ral or legal persons exclusively from the marketing 
of products extracted from man-made plantations, at the time of final felling of the plantation, are 
exempt from income tax for a period of 13 years from the entry into force of the Law on Fiscal Equity 
(under the Law of 1992 the period was 25 years, up to 26 November 2017).  Farms with more than 
75 per cent of their area dedicated exclusively to re forestation are also exempt from the payment of 
real estate tax and ITBMS;  in both cases, the farms must be registered in the Forest Registry of the 
Autoridad National del Ambiente  (National Environmental Authority). 
224. The National Strategic Plan for the Developm ent of Science, Technology and Innovation 
2006-2010, implemented by the Government  through Cabinet Resolution No. 104 of 
21 December 2005, is coordinated by the Secretaría National de Ciencia, Tecnología e Innovación  
(National Science, Technology and Innovation Secr etariat – SENACYT).  This Plan structures 
SENACYT's activities, the aim of which is to support the development of science, technology and 
innovation for the purpose of modernizing the public , private and academic sectors and increasing WT/TPR/S/186 Trade Policy Review 
Page 66 
 
 
their productivity.  The Plan recognizes five core sectors for innovation and technological 
modernization in the private sector:  intermodal transport and logistics, information technology, 
biosciences, tourism, and agro-industry.126  The main action taken within the context of the Plan 
includes:  establishing funds, open to competitive bidding, for promoting research, development and 
innovation;  the implementation of innovation and t echnological modernization projects in priority 
areas;  the strengthening of conglomerates;  and innovation capacity-building at enterprise level. 
225. Law No. 2 of 20 March 1986 on Agricultural Ex ports, as amended by Law No. 28 of 1995, 
establishes measures and in centives in favour of agricultural prod uction and exports, with a view to 
encouraging agro-industrial development (chapter IV(2)). 
(c) Credit incentives 
226. There are two development banks in Panama:  the National Bank and the Banco de Desarrollo 
Agrícola (see also chapter IV(5)(iii)).  The Na tional Bank of Panama is the principal financial 
institution of the State and operates as a commerc ial, government and development bank;  it is 
governed by Decree Law No. 4 of 18 January 2006.  In its capacity of develo pment bank, the National 
Bank supports the development of pr ojects with an economic and soci al impact, and grants loans to 
private-sector producers and, in special circ umstances, to public-sector institutions. 
227. In 2006, the National Bank granted loans wo rth a total of B 1,976 billion, of which 
B 1,203 billion went to the private sector and th e rest to the public sector.  Agricultural loans 
accounted for 15.7 per cent of private-sector lending;   commercial loans for 14.2 per cent;  industrial 
loans for 0.9 per cent;  and small business loans fo r 1.4 per cent.  The balance consisted of home 
mortgages, personal loans, loans to credit institu tions, overdrafts and leases.  On 31 December 2005 
the annual interest rate on loans ranged from 2 to 15 per cent;  the weighted average interest rate for 
2005 was 6.9 per cent.127 
228. The agricultural sector, including agro-industry, can benefit from special loans granted by the 
Agricultural Development Bank and the National Bank (see chapter IV(2)). 
(v) Government procurement 
229. There are no official statistics on the value of  government procurement in Panama.  Central 
government expenditure on goods and services to talled US$215 million in 2005, the equivalent of 
1.4 per cent of GDP, while capital expenditure am ounted to 277 million or 1.8 per cent of GDP.  
Moreover, in 2006 the public contract market of the Panama Canal Authority (ACP) was 
US$236.6 million, distributed as follows:  open tender ing (34 per cent);  contracts negotiated on the 
basis of the lowest price (44 per cent);  contracts ne gotiated on the basis of best value (21 per cent);  
the remainder corresponding to two-stage open te ndering and micro-purchases.  The authorities have 
pointed out that 80 per cent of ACP contracting (i n terms of both number of contracts and value) 
involves Panamanian participation. 
230. Following the entry into force of new Law No. 22 of 2006, between 28 December 2006 and 
May 2007, there were 19,185 minor contracts awar ded, 679 open tender procedures, 46 best value 
awards, 1 framework agreement award, and 484 cases of single tendering. 
                                                      
126 Cabinet Resolution No. 11 of 2 February 2007 esta blishing and adopting the National Strategic Plan for 
the Development of Science, Technology and Innova tion 2006-2010.  Available for consultation at:  
http://www.senacyt.gob.pa/media/documentosDireccionGes tion/Plan%20Estrategico% 20actualizaci on%202007.pdf. 
127 National Bank of Panama (2006). Panama WT/TPR/S/186 
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231. Panama is not a party to the WTO's Plurilate ral Agreement on Government Procurement, but 
it participates in the WTO Working Group on Transp arency in Government Procurement.  The FTAs 
signed by Panama with Chinese Taipei, El Salvador  and Singapore and the recently negotiated treaty 
with the United States have a government proc urement chapter with clauses that promote 
transparency, non-discrimination and market access in relation to government purchases.  The treaty 
with the United States is the first to include the ACP in the government procurement chapter. 
232. Law No. 22 of 27 June 2006 has governed gov ernment procurement in Panama since 
28 December 2006.  The Law was regulated by Exec utive Decree No. 366 of 28 December 2006.  Up 
to then, the main provisions were those of Law No . 56 of 1995 and its Regulations, contained in 
Executive Decree No.8 of 1996.  Other government procurement legislation includes Law No. 1 of 
2001 and Law No. 51 of 2005. 
233. Law No. 56 of 1995 established a decentrali zed contracting system and allowed both 
domestic and foreign suppliers to pa rticipate, without granting preferences.  Similarly, Law No. 22 of 
2006 enshrined the principle of national treatment, by allowing the participation of domestic and 
foreign suppliers, whether natural or legal pe rsons, in government procurement procedures.  
Executive Decree No. 98 of 2 September 2005 created  the electronic government procurement system 
called " PanamaCompra " (PanamaBuys) through which public purchases have had to be made since 
October 2005.128  "PanamaCompra " maintains an electronic catalogue of products and services which 
contains all the products and services included in framework agreements already concluded and in 
force (see below). 
234. Since 28 December 2006, the body responsible for establishing and monitoring compliance 
with the provisions governi ng government procurement of goods and services has been the Dirección 
General de Contrataciones Públicas  (Directorate-General for Public Contracts – DGCP), established 
by Law No. 22 of 2006.129  The DGCP is subject to oversight by the Office of the Comptroller 
General of the Republic and to the policies of the Executive, through the MEF.  The DGCP issues the 
general guidelines for the operation of the " PanamaCompra " system in coordination with the 
Presidential Secretariat for Government Innovati on, and maintains the electronic catalogue of 
products and services.  The DGCP's mandate is to promote as much competition as possible in government procurement procedures. 
235. Contracts are awarded on a decentralized basis.   Law No. 56 of 27 December 1995 introduced 
the decentralization of the government purchasi ng system, previously centralized in the Dirección 
General de Proveeduría y Gastos  (Directorate-General for Supply and Expenditure) of the Ministry of 
the Economy and Finance.  Law No. 22 of 20 06 established an Administrative Government 
Procurement Tribunal for settling disputes relating to the procedures for awarding contracts.  It also 
laid down the rules for public contracts awarde d by central government, the autonomous and 
semiautonomous entities, financial intermediaries and public limited companies in which the state 
owns 51 per cent or more of the shares or assets for:  (i) the purchase or leasing of goods by the state;  
(ii) the execution of public works;  (iii) the disposal of state goods, including leasing;  (iv) the provision of services;  (v) the operation or administration of goods;  (vi) concessions or any other contract not governed by special law, such as th e ACP's purchases and contracts system and the milk 
and nutritional biscuit distribution programme (see below).  Law No. 22 of 2006 applies residually to contracts awarded by municipalities, communal and lo cal authorities, and the Social Insurance Fund. 
                                                     
 
128 See:  www.panamacompra.gob.pa. 
129 The DGCP replaced the Directorate for Government  Procurement.  Available for consultation at:  
http://www.mef. gob.pa/Contrataciones%20 Publicas/Contenido/Rese%C3%B1a.asp. WT/TPR/S/186 Trade Policy Review 
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236. The procedures for selecting contractors are listed in Table III.11.  Minor contracts, up to 
B 30,000, are awarded under simplified procedures.  Only contracts worth less than B 1,000 may be 
based on a single bid.  Calls for bids on minor cont racts which exceed that amount are issued through 
"PanamaCompra ".  Contracts worth more than B 30,000 should, in principle, be awarded on the basis 
of competitive bidding, but Law No. 22 of 2006 prov ides for exceptions under which single tendering 
may be authorized for any value.  For example,  when there is not more than one bidder, in 
emergencies, in the case of cont racts authorized or governed by special law, contracts awarded on 
merit for science, technology, innovation and culture , and those related with public safety or state 
security, among others. 
Table III.11 
Procedures for public sector purchases, 2007 
Procedure Value of 
contract Comments 
Regular procedures 
Minor contract Up to B 30,000 Can be awarded under simplified procedures 
Open tendering From B 30,000 According to Law No. 22 of 2006, open tendering is the contractor selection procedure in 
which the determining factor is the price 
Best value tendering From B 30,000 Used when the goods, works or  services to be contracted for have a high degree of 
complexity.  The technical, economic, administrative and financial  aspects of the bids are 
weighed and the contract is awarded to the bidde r who obtains the most points as a result of 
applying the weighting method specified in th e bidding conditions.  The price must have a 
weighting of not less than 30 per cent and not  more than 50 per cent of the total points 
considered in awarding the contract. 
Tendering under a 
framework agreement Not specified One or more bidders are selected and i nvited to sign a contract for products or services for 
mass and daily use, called a framework agreem ent, which establishes specific prices and 
conditions for a specified period of not more than one year.  The tendering procedure for a 
framework agreement can only be carried out by the DGCP.  Once the corresponding 
framework agreement has been awarded, th e products and services contained in the 
agreement are included in the Electronic Catal ogue of Products and Services.  Products and 
services are purchased directly during the term of the contract, through purchase orders 
covered by the framework agreement. 
Reverse auction Not specified For mass consumption goods.  It is a process of bidding and re-bidding for the purpose of 
obtaining the best price for goods, services or wo rks for the institution or  institutions, within 
a fixed period.  Bidders compete in real time and on-line through " PanamáCompra ".  The 
contracting authority establishes a maximum reference price, and the lowest price is 
published in " PanamáCompra " to permit re-bidding at lower prices.  Once the auction 
process has ended, the tendering authority aw ards the contract to the lowest bidder. 
Auction of public 
property Independent of 
amount Applies to the sale or lease of movable and im movable state property a nd can be effected by 
public auction, which can only be arranged by the MEF.  Auctions can be conducted 
electronically through " PanamaCompra ". 
Special procedure 
Single tendering Not specified Allowed for goods and services where there is not more than one bidder, in cases of 
emergency, contracts authorized or governed by special law, and contracts related with 
public safety or state security, among others. 
Source : Information provided by the authorities. 
237. No preferences are given to domestic suppliers and neither are there preferences or minimum 
quotas for small suppliers.  However, Article 7 of Law No. 22 of 2006 provides for the state to 
promote the competitive participation of micro, sm all and medium-sized enterprises in certain public 
contractor selection procedures.  The authorities ha ve noted that there are no regulations for this 
aspect of the Law;  in mid-2007, the authorities were  not considering granting preferences to micro, 
small and medium-sized enterprises,  but had not dismissed the idea. 
238. Preferences are granted to domestic products under the milk and nutritional biscuit or fortified 
nutritive cream distribution programme for official  preschool and primary education centres, which 
requires that all products used in implementi ng the programme be purchased from the domestic Panama WT/TPR/S/186 
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production sector and be manufactured from domestic pr oducts, in accordance with the provisions of 
Law No. 35 of 6 July 1995. 
239. Law No. 22 of 2006 provides for procurement employ ing public funds to be made, subject to 
exceptions, under the contractor selection procedures.  If the products or services required by the 
procuring entity are in the Electronic Catalogue of Products and Services, the entity must purchase the 
products or services from that catalogue, although it may request the DGCP to carry out a contractor selection procedure (open tender) if that is deemed to be more advantageous.  Under the contractor 
selection procedures, tender notices and the decisions adopted must be published in 
"PanamáCompra ".  Purchases of goods and services involving information and communications 
technology worth more than B 175,000 require th e approval of the Presidential Secretariat for 
Government Innovation. 
240. Natural and legal persons and c onsortia or partnerships, domes tic or foreign, wishing to 
participate in a contractor selection procedure for more than B 30,000, concluded electronically, like 
those awarded a contract under a contractor selectio n procedure, must be registered in the DGCP's 
Bidders Register.  To register a person must show that  he is not a delinquent state debtor;  that he has 
a commercial licence authorizing him to carry on the corresponding activity;  and, in the case of 
public works contracts, that he is registered with the Junta Técnica de Ingeniería y Arquitectura  
(Technical Authority for Architecture and Engineering). 
241. The recent reform of Panama's government procurement regime has made good certain 
deficiencies identified in the previous system.  A report on the government procurement system 
applied in Panama since December 2006 indicates that there were loopholes in the Law on 
Government Procurement which mainly re flected the lack of proper regulation.
130  The report also 
mentions that one weakness of the system was the widespread use of single tendering as an exception 
to the open tendering mechanism, which encouraged  the exercise of discretionary authority in 
procurement.  The report also notes the excessive number of objection mechanisms for prolonging the 
competitive bidding procedure in the event of an unfavourable outcome and observes that in 
administrative litigation (Third Chamber of the Supreme Court of Justice) the waiting time can be 
very long. 
242. The authorities have noted that, in making good the deficiencies identified in the previous 
legislation, Law No. 22 of 2006 and its regulations reduce the number of situations in which single 
tendering can be used, but maintain the ground of clear emergency.  Moreover, it provides for all 
single tendering procedures to be published in " PanamaCompra ".  The new law also creates a special 
tribunal for government procurement,  which should expedite litigation. 
243. The ACP has its own procurement system.  Th e ACP's Procurement Regime has its legal 
basis in Constitutional Title XIV, Art. 319. 6, and in Organizational Law No. 19 of 
11 June 1999-Section Four.  The main provisions governing the procurement process are contained in 
the Procurement Regulations, in force since 31 De cember 1999, and in the amendments adopted by 
Decisions of the Executive Board.  Decisi on No. 24 of 4 October 1999 approved the ACP's 
Procurement Regulations.  These Regulations establis h the rules applicable to contracts for and 
purchases of works, goods and services necessary fo r the operation, maintenance, preservation and 
modernization of the Panama Canal;  the disposal a nd sale of Authority property;  and the granting of 
concessions and contracting for special services. 
                                                      
130 Transparency International (2007). WT/TPR/S/186 Trade Policy Review 
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244. An Internet tendering system is used for all procurement.131  All procurement for amounts in 
excess of B 1,000, except for contracts governed or authorized by special law, or concluded by the 
Authority with other state agencies, must be subjected  to some form of contr actor selection procedure, 
which must be publicly advertised.  Contractors ar e selected by tender if the value of the contract 
exceeds B 100,000.  A simplified purchase procedure is used if the value of the contract is between 
B 1,000.01 and 100,000.132  In both cases one of the tende ring procedures c ontained in the 
Regulations is used for advertising and awarding the contract.  The administrative authorities may 
purchase goods and services by issuing purchase orders for not more than B 10,000 per order, on the basis of price list decisions containing lists of offici al unit prices, with a period of validity of not more 
than one year.  They may also use purchase or ders for purchases of betw een B 10,000 and 100,000, 
but in these cases the purchase order is issued  by the centralized procurement office. 
245. Tendering may be open based on price;  negotiate d;  or two-stage open.  Negotiated tendering 
may be based on the lowest price or best value.  Th ere is no single tendering, but there may be limited 
tendering, in cases of emergency.  ACP imports are exempt from duty. 
(vi) State trading and state trading enterprises 
246. Panama has notified the WTO that it has no stat e trading enterprises within the meaning of 
Article XVII of the GATT.
133 
247. In January 2007, Panama had the following state-owned enterprises:  Instituto de Acueductos 
y Alcantarillados Nacionales  (National Water Supply and Sewerage Company – IDAAN);  Empresa 
de Transmisión Eléctrica S.A.  (Power Transmission Company – ETESA);  Empresa de Generación 
Eléctrica S.A.  (Power Generation Company – EGESA, established in 2006);  Aeropuerto 
Internacional de Tocumen S.A.  (Tocumen International Airport Co.);  National Bank of Panama;  
Caja de Ahorros  (Savings Bank);  National Bingos;  Instituto de Mercadeo Agropecuario  
(Agricultural Marketing Institute);  Agencia Panamá Pacífico  (Panama Pacific Agency);  Lotería 
Nacional de Beneficencia  (National Welfare Lottery);  and the Colon Free Zone. 
248. Moreover, in January 2007, the state held 51 pe r cent of the shares in the power generators 
Empresa de Generación Fortuna , Empresa de Generación Chiriquí  (La Estrella and Los Valles 
hydroelectric power plants), and Empresa de Generación Bayano , as well as owning 49 per cent of 
the distributors Empresa de Distribución Eléctrica Metro-Oeste , Empresa de Distribución Eléctrica 
Chiriquí  and Empresa de Distribución Eléctrica Noreste .  The state also owned 49 per cent of the 
shares in the power generator Empresa de Generación Bahía Las Minas  and Cable & Wireless 
Panama, S.A . 
249. In the middle and late nineties, Panama implemented a privatization process that included the 
partial sale to the private sector of state shares in  electricity and telecommunications companies, the 
sale of a cement company (Bayano), and the privati zation of the operation of  some ports (concession 
of the ports of Colon to Manzanillo  International Port, Cristóbal an d Balboa to Hutchitson Port and 
the port of Coco Solo to Colon Port Terminal (E vergreen), railways (Panama Canal Railway) and 
highways (North and South Corridors).  Later, Tocu men International Airport was converted into a 
private-regime company, Aeropuerto International de  Tocumen, S.A., but all its shares remained in 
state ownership. 
                                                      
131 See:  http://www.pancanal.com/esp/procsales/buy.html. 
132 As a general rule, purchases between B 0.01 and B 1,000 (micro purchases) must be listed on the 
Internet, in accordance with Decisi on No.107 of 15 December 2005. 
133 WTO document G/STR/N/10/PAN of 25 August 2004. Panama WT/TPR/S/186 
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250. The legal framework for the privatizations in Panama is contained in Law No. 16 of 
14 July 1992;  the Unidad Coordinadora para el Proceso de Privatización  (Coordinating Unit for the 
Privatization Process – Proprivat) was established under this Law.  This MEF department is responsible for regulating the process of privatizati on of state-owned enterprises, goods and services.  
The privatizations governed by Law No. 16 of 1992 include the total or partial sale of state assets, 
concessions, administration contracts and leases (Article IV).
134  The legal framework for 
privatizations in Panama makes no distinction between domestic and foreign investors, and both 
Panamanian and foreign enterprises participated in the process.  From the start of the privatization 
process up to the beginning of 2007, 20 privatiza tion projects were carried out, mostly during the 
nineties.  Out of a total of 21 pr ojects planned only the privatization of the Atrapas Convention Centre 
remains pending, and in June 2007 this was in progress. 
(vii) Intellectual property rights 
(a) General aspects 
251. The WTO Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) 
entered into force in Panama when it joined th e WTO on 6 September 1997;  no transition period was 
applied.135  As part of the preparations for accession, Panama amended its industrial property and 
copyright legislation to adapt it to the TRIPS Agreement. 
252. As well as being a member of the World Intellectual Property Organization (WIPO), Panama 
is a signatory to several international agreements on intellectual property rights, including:  the Rome 
Convention for the Protection of Performers,  Producers of Phonograms and Broadcasting 
Organizations, in force since 2 September 1983;  th e Berne Convention for the Protection of Literary 
and Artistic Works, 8 June 1996;  the Universal  Copyright Convention of 1952;  the Brussels 
Convention relating to the Distribution of Pr ogramme-Carrying Signals Transmitted by Satellite, 
25 September 1985;  the WIPO Convention of 17 September 1983;  the UPOV Convention of 
23 May 1999;  the Paris Convention for the Protecti on of Industrial Property, of 19 October 1996;  the 
Phonogram Convention of 29 June 1974;  the WI PO Copyright Treaty of 6 March 2002;  and the 
WIPO Performances and Phonograms Treaty, of 20 May  2002.  Where registration is concerned, 
Panama is a member of the Paris Convention, the TRIPS Agreement and the Washington Trademark 
Convention of 1929. 
253. Panama is not a party to the Patent Cooperation Treaty or to any classification treaty, 
although Law No. 35 of 10 May 1996 provides for marks to be registered in accordance with the 
international classification system. 
254. Under Art. 63 of the TRIPS Agreement, Panama  has notified WTO Members of its laws and 
regulations relating to intellectual property rights  (IPR) and has provided in formation on its national 
enforcement system.  On the basis of these notifications, the TRIPS Council examined the 
Panamanian IPR legislation in 1999.136  Panama answered the questions raised, which concerned such 
aspects as the retroactivity of copyright protection;  protection of compilations of data;  rental rights 
for computer programs;  licences for trademarks;  pr otection of well-known marks;  term and scope of 
trademark protection;  patent uses;  and enforcement.137 
                                                      
134 See:  http://www.mef.gob.pa/proprivat/. 
135 WTO document WT/ACC/PAN/19 of 20 September 1996. 
136 WTO document IP/Q/PAN/1 of 13  April 1999. 
137 WTO document IP/Q/PAN/1, IP/Q2/PAN/1, IP/Q3/PAN/1 of 13  April 1999. WT/TPR/S/186 Trade Policy Review 
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255. Apart from its multilateral commitments, Pana ma has entered into IPR commitments under 
the free trade agreements it has signed with Chinese Ta ipei and El Salvador.  The agreement with the 
United States (not yet signed in mid-2007) also cont ains provisions relating to intellectual property. 
256. The MTI is responsible for the formulation and implementation of Panamanian industrial 
property policy.  The MTI's Dirección General del Registro  de la Propiedad Industrial  (Directorate-
General for Industrial Property Registration – DI GERPI) is the department responsible for the 
registration of industrial property.  Its activiti es are governed by Law No. 35 of 10 May 1996 and 
regulated by Executive Decree No. 7 of 17 February 1998.  The Dirección Nacional de Derecho de 
Autor  (National Copyright Directorate – DNDA), under the Ministry of Education, performs 
copyright registration, depository, monitoring and inspection functions, as well as being responsible, 
among other things, for conciliation and arbitration a nd for authorizing and auditing the operation of 
collective management bodies, in accordance w ith Law No. 15 of 8 August 1994.  The Oficina de 
Registro del Derecho de Autor y Derechos Conexos  (Office for the Registration of Copyright and 
Related Rights), attached to the DNDA, is responsible  for handling applications for the registration of 
works, productions and contracts.  The DNDA is  also empowered to authorize the operation of 
collective management bodies. 
257. Panama has notified the WTO that the Dirección de Negociaciones Comerciales 
Internationales  (International Trade Negotiations Director ate – DINECI), DIGERPI, the Intellectual 
Property Department of the DGA, the Intellectual Property Department of the Colon Free Zone and 
the Tenth Circuit Public Prosecutor's Office (specia lizing in intellectual property offences) of the 
Department of Public Prosecution are the contact points specified in Article 69 of the 
TRIPS Agreement.138 
258. According to DIGERPI data, between 2001 and 2005, there were 35,766 applications to 
register trademarks and 34,979 certificates were granted.139  Most trademark, patent and industrial 
design owners are foreigners.  For example, betw een 2001 and 2005, out of the 892 patents granted 
only 13 went to Panamanian nationals;  out of the 2,000 technology-related certificates (patents, 
industrial designs and utility m odels) granted, only 151 went  to Panamanian nationals. 
259. The Panamanian legislation addresses almost all aspects of the TRIPS Agreement 
(Table III.12). 
Table III.12 
Overview of the protection of in tellectual property rights, 2007 
Law/Scope Term Comments, limitations and exclusions 
Copyright and related rights   
Law No. 15 of 8 August 1994 on Copyright and 
Related Rights;  Decree No. 261 of 1995 regulating 
Law No. 15 of 1994 
Scope:  Copyright on all literary, artistic, 
educational or scientific production capable of 
being disclosed or published by means of any 
medium or process (including computer programs).  Related rights include the rights of performers, 
phonogram producers and broadcasting 
organizations. Lifetime of author (or 
last co-author) plus 
50 years.  Anonymous or pseudonymous works, 
50 years from disclosure 
or first publication.  Audiovisual works, 
collective works and 
computer programs, 50 years from first 
publication or 
termination No registration is required for protection;  
registration is declaratory and does not constitute a 
right.  By the mere fact of creation, the author of a work has the original ownership of the right in the 
work, which includes the economic and moral rights 
defined in the Law. 
Laws, decrees, official regulations, public treaties, 
judicial decisions and other official acts are not 
subject to protection, nor are generic expressions of folklore, news, or mere facts and data. 
Table III.12 (cont'd)
 
                                                      
138 WTO document IP/N/3/Rev.9 of 8 November 2005. 
139 See:  http://www.mici.gob.pa/dig erpi_docs/Marcas/Table_marcas29.pdf. Panama WT/TPR/S/186 
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Law/Scope Term Comments, limitations and exclusions 
Patents   
Law No. 35 of 10 May 1996 (adopting provisions 
on industrial property);  Executive Decree No. 7 of 
17 February 1998 (Regulations) 
Scope:  Inventions, of products or processes, that 
are new, involve an inventive step and are capable 
of industrial application.  The law does not provide 
for the granting of compulsory licences 20 years from filing of 
application, non-
extendable The following, inter alia , are not considered 
inventions:  theoretical principles, computer programs, aesthetic works, methods of surgical, 
therapeutic or diagnostic tr eatment applicable to the 
human body and those relating to animals.  The 
following cannot be patented:  plants and plant 
varieties, animals;  biological material existing in nature, inventions relating to living tissue that makes 
up the human body.  Panama recognizes retroactivity 
in patents only when a priority right is invoked. 
Industrial designs   
Law No. 35 of 10 May 1996;  Executive Decree 
No. 7 of 17 February 1998. 
Scope:  Two-dimensional or three-dimensional 
form which, incorporated in a product, gives it a 
special appearance or makes it suitable for use as a 
type or model for manufacturing purposes. 10 years from filing of 
application for 
registration in Panama, extendable for one 
additional period of 
five years Protection through registration.  The protection 
conferred does not include those elements or 
characteristics of the design which serve only to obtain a technical effect.  Possibility of  protection cumulated with copyright 
Utility models   
Law No. 35 of 10 May 1996;  Executive Decree 
No. 7 of 17 February 1998 
Scope:  Any shape, configur ation or arrangement of 
the elements of a device, tool, instrument, 
mechanism or other object that makes possible an improvement or change in the functioning, use or 
manufacture of the object in which it is 
incorporated, or provides it with some utility, advantage or technical eff ect which it did not have 
before. 10 years from date of 
filing of application, 
non-extendable Protection through regist ration and a utility model 
patent. 
To be eligible for regist ration models must be new 
and have an industrial app lication.  Models that 
differ only in minor ways from previous models 
cannot be registered. 
Layout-designs of integrated circuits    
Law No. 15 of 8 August 1994 on Copyright and 
related Rights;  Decree No. 261 of 1995 regulating 
Law No. 15 of 1994 
Scope:  Original layout-designs. Life + 50 years Protection through copyright if the requirements 
necessary to be treated as a protected work are met. 
Product or service marks   
Law No. 35 of 10 May 1996;  Executive Decree 
No. 7 of 17 February 1998 
Scope:  Subject to registration, any mark, sign, 
word or combination of th ese elements capable of 
distinguishing a product or service in trade.  The 
right to register a mark is acquired by use.  The 
owner of a mark may, by contract, grant a licence 
for its use.  10 years from being 
granted, indefinitely 
renewable for 10-year periods. 
Use of the mark not 
compulsory The following, inter alia , may not be registered:  
(a) descriptive or generic indications;  (b) titles of 
literary or scientific works;   (c) the shape given to 
products lacking in originality;  (d) those which are 
identical, similar or alike to used marks;  (e) national or foreign designations of or igin which may give rise 
to confusion or error in this respect;  (f) misleading 
names. 
Geographical indications   
Law No. 35 of 10 May 1996;  Executive Decree 
No. 7 of 17 February 1998 
Scope:  Designations of origin, understood as the 
geographical designation of a country, region or 
locality that serves to id entify a product originating 
therein and whose quality or characteristics are 
exclusively or essentially  attributable to the 
geographical environment;  indications of provenance, defined as an  expression or sign used 
to indicate that a product or service comes from a 
particular country, region or place. Not specified Protection through re gistration and certificate issued 
by DIGERPI.  Designations of origin and indications 
of provenance that do not correspond to the country, locality or region of manufacture may not be used. 
Table III.12 (cont'd) 
 
  
 
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Law/Scope Term Comments, limitations and exclusions 
New plant varieties   
Law No. 23 of 15 July 1997, Title V;  Law No. 12 
of 3 May 1999 (accession of Panama to UPOV) 
Scope:  New plant varieties.  Right granted to the 
breeder for 20 years, from the date of granting 
of the protection title.  25 years for vines, forest 
trees, fruit trees and 
ornamental trees Protection through breeder certificates.  A variety is 
considered new if on the date of filing of the 
application or priority date the reproductive or 
multiplication material or harvested material of the variety has not been offered for sale or marketed, by 
the breeder or his successor in title:  in Panama, 
more than one year prior to the filing or priority 
date;  in the territory of any other country, more than 
four years or, in the case of trees and vines, more 
than six years prior to that date. 
Protection of undisclosed information   
Law No. 35 of 10 May 1996;  Executive Decree 
No. 7 of 17 February 1998 
Scope:  Art. 39.2 of TRIPS Not specified Industrial and comm ercial secrets are protected:  
information with industrial or commercial 
applications which means obtaining or maintaining an economic competitive advantage over third 
parties and with respect to which adequate measures 
have been taken to maintain its confidentiality and 
restricted access. 
Source : WTO Secretariat. 
260. Law No. 15 of 8 August 1994 on Copyright an d Related Rights and its regulations (Decree 
No. 261 of 1995) protect all original literary, ar tistic, educational and scien tific creations, including 
computer programs and databases.  Registration is not required in order to be granted protection.  
Both the pecuniary and non-pecuniary rights of au thors and related rights in original and derived 
works are protected, and national treatment is acco rded to foreigners who publish their works in 
Panama.  Pecuniary rights are protected for the entire  life of the author (or the last co-author) plus 
50 years;  for 50 years from disclosure or first pub lication for anonymous and pseudonymous works;  
and for 50 years from first publication or termin ation for collective and audiovisual works and 
computer programs.  Performers, phonogram producer s and broadcasting organizations enjoy related 
rights.  Phonogram producers have the right to receive remuneration for the communication of the 
phonogram to the public and must pay the performers of works included in the phonogram 50 per cent 
of the net amount that the producer receives from the collective management body.  The body responsible for the collective management of copyright in musical works is the Sociedad Panameña 
de Autores y Compositores  (Panamanian Society of Authors and Composers – SPAC).  This body 
collected B 841,628 in 2006.  In January 2007, the DNDA approved the operation of the Sociedad 
Panameña de Productores Fonográficos  (Panamanian Society of Phonographic Producers – 
PRODUCE), as a collective management body. 
261. The Law on Industrial Property of 1996 contains  the rules on patents, utility models and 
industrial designs.  Patents are granted for a period of  20 years from the filing of the application, with 
no provision for extension, and are published in the Boletín Oficial del Registro de la Propiedad 
Industrial  (Official Bulletin of the Industrial Proper ty Register – BORPI).  Utility models are 
protected by granting utility model registration certificates for a period of ten years, with no provision for extension.  Industrial designs are protected by  means of ten-year registration certificates, which 
can be extended for a further period of five y ears.  The Law on Industrial Property also governs 
everything relating to trademarks, geographical i ndications and undisclosed information.  Panama 
grants protection to trademarks and other distin ctive signs, provided they are registered in the 
Industrial Property Register, for periods of ten year s, which can be renewed for an equal number of 
years at the request of the party.  Protection for ge ographical indications and a ppellations of origin is 
granted by registration, for an indefinite term.  The Law on Industrial Property and the Penal Code 
protect industrial and commercial secrets, without the need for registration and for an indefinite 
period, as long as the constituent information is not  generally known.  Pa nama does not have any 
specific legislation on the protection of layout-designs, which are protected under the copyright Panama WT/TPR/S/186 
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legislation, provided they meet the requirement s for being treated as a protected work.  The 
Panamanian legislation does not provide for the granting of compulsory licences for the use of a patent, although licences may be granted on a voluntary basis. 
262. The legislation on new plant varieties is based on Article 276 of Title V of Law No. 23 of 
15 July 1997 and its regulations (Executive Decree  No. 13 of 19 March 1999), which introduced rules 
for recognizing and guaranteeing the rights of the plant breeder in Panama and created the Consejo 
para la Protección de las Obtenciones Vegetales  (Council for the Protection of New Plant Varieties – 
COPOV) for the purpose of organizing the national syst em for the protection of new plant varieties.  
COPOV is chaired by the Minister for Agricultural Development.  Panama is a member of the 
International Union for the Protection of New Varieti es of Plants (UPOV).  At the end of 2006, there 
were 25 botanical genera protected in Panama and declared to UPOV, including varieties of rice, 
maize, coffee, sugar cane, kidney bean, and a series of fruits and vegetables. 
263. In principle, parallel imports are not prohibite d where industrial property is concerned, since 
Panama recognizes the international exhaustion of IPRs;  however, the right holder may bring an 
action.  Neither are such imports prohibited in the case of copyright;  nevertheless, anyone who 
imports in parallel an intellectual good protected by  copyright may not exploit it in unauthorized 
ways.  The authorities have noted that, in practice, there are certain limitations on the parallel importation of pharmaceutical products, since the importer requires a sanitary registration. 
264. The authorities have indicated that, at the beginning of 2007, a preliminary draft reform of 
Law No. 15 of 1994 and Law No. 35 of 1996 was being pr epared to adapt the Panamanian legislation 
to the WIPO treaties on Copyright, Performance and Phonograms and Information Technologies and 
Modes of Exploitation of Protected Works, Producti ons and Artistic Performances, and to incorporate 
the amendments to the intellectual property legi slation that would follow from ratification of the 
agreement negotiated with the United States. 
(b) Enforcement of intellectual property rights 
265. Panama replied to the Checklist of Issues on Enforcement in 1998.
140  The legislation on 
IPR enforcement includes:  Resolution No. 9 of 27 December 2002;  Resolution No. 013 of 
9 March 2006;  Law No. 45 of 4 June 2003;  and La w No. 1 of 5 January 2004.  Moreover, the Law 
on Copyright provides for administrative, civil and criminal proceedings in cases of copyright 
infringement. 
266. The Intellectual Property Department of the Dir ectorate-General of Customs is entrusted with 
border surveillance for the protection of IPRs.  Th e Intellectual Property Department of the Colon 
Free Zone is responsible for protecting IPRs pert aining to goods and services marketed through that 
zone.  The Department of Public Prosecutions is the institution responsible for prosecuting intellectual 
property offences.  The Comisión Interinstitucional de la Propiedad Intelectual  (Interinstitutional 
Intellectual Property Commission), established by  Law No. 35 of 10 May 1996 and composed of 
representatives of the above-mentioned institutions  and the DINECI, is responsible for the 
harmonization, coordination and monitori ng of intellectual property policies. 
267. The Fiscalía Especializada in Delitos contra la Propiedad Intelectual  (public prosecutor's 
office specializing in intellectual property offences) is responsible for initiating the investigation of 
intellectual property offences and br inging criminal proceedings before the competent courts.  It 
carried out 107 searches in 2005, seizing 33,249 items  as evidence of copyright infringements and 
2.47 million as evidence of infringements of industrial property rights.  The technical branch of the 
                                                      
140 WTO document IP/N/6/PAN/1 of 23 June 1998. WT/TPR/S/186 Trade Policy Review 
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police, under the direct supervision of the Propert y Offences Division, assists the Department of 
Public Prosecutions and the judiciary in the investigation, prosecution and punishment of 
IPR offences and their perpetrators.  At judicial le vel, there are courts that specialize in IPRs, under 
Law No. 29 of 1996 which established Circuit Courts and a Third Commercial High Court with 
Jurisdiction in Intellectual Property Matters. 
268. Border measures include administrative and judi cial measures to suspend the release of goods 
through the enforcement of provisional measures, whic h must subsequently be reviewed by a court.  
Under Executive Decree No. 123 of 26 November 1996, which regulates Articles 176 and 177 of Law 
No. 35 of 10 May 1996, customs officers are em powered to inspect or detain goods they are 
processing that may be infringing the intellectual property legislation in force.141  In 2006, customs 
seized infringing goods with a total value of B 10 million. 
                                                      
141 In the Colon Free Zone IPRs are enforced under Resolutions No. 03-98 of 11 June 1998;  No. 04-98 
of 11 June 1998;  No. 05-98 of 26 August 1998;  and No. 18-98 of 14 February 1998.