WORLD TRADE  
ORGANIZATION  WT/TPR/G/186/Rev.1 
2 November 2007  
 
(07-4757) 
Trade Policy Review Body Original: Spanish 
   
 
  
 
TRADE POLICY REVIEW 
 
Report by 
 
PANAMA 
 
Revision 
 
 
 
 
Pursuant to the Agreement Establishi ng the Trade Policy Review Mechanism 
(Annex 3 of the Marrakesh Agreement Establishing the World Trade 
Organization), the policy statement by Panama is attached. 
 
 
Note: This report is subject to restricted circ ulation and press embargo until the end of the first 
session of the meeting of the Trade Policy Review Body on Panama. Panama WT/TPR/G/186/Rev.1 
 Page 3 
 
 
 CONTENTS 
 
 Page 
I. INTRODUCTION 5 
II. ECONOMIC ENVIRONMENT 5 
 1. E CONOMIC AND SOCIAL POLICY  5 
  1.1 Economic Policy 6 
   1.1.1 Privatization 6    1.1.2 Public Finances 8 
   1.1.3 Trade Liberalization 8 
  1.2 Social Policy 9    1.2.1 Health and Housing 9 
   1.2.2 Education 10 
   1.2.3 Poverty Reduction 11 
 2. E
CONOMIC PERFORMANCE  (1997-2006) 11 
  2.1 Economic Performance by Sector 11 
   2.1.1 Primary Sector 11    2.1.2 Secondary Sector 12 
   2.1.3 Tertiary Sector 13 
  2.2 Labour Market 13 
  2.3 Balance of Payments 14 
  2.4 Public Finances 15   2.5 Inflation 16 
III. TRADE POLICY 17 
 1. E
VOLUTION OF TRADE POLICY  17 
  1.1 Panama and the WTO 17 
   1.1.1 Tariff Structure 18 
   1.1.2 Tariff Quotas 20    1.1.3 Production Support Programmes 21 
   1.1.4 Export Subsidies and Support Programmes 23 
   1.1.5 Trade Remedies 25    1.1.6 Technical Barriers to Trade 25 
   1.1.7 Sanitary and Phytosanitary Measures 26 
   1.1.8 Intellectual Property 27    1.1.9 Services 30 
   1.1.10 The Doha Round 34 
  1.2 Bilateral Trade Agreements 35   1.3 Investment Promotion 38 
 2. F
OREIGN TRADE STRATEGY  43 
  2.1 Export Promotion 43 
  2.2 National Competitiveness 43 
  2.3 Agro-Industrial Development 44   2.4 Supplementary Agenda 44 
 WT/TPR/G/186/Rev.1 Trade Policy Review 
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  Page 
IV. GROWTH OF FOREIGN TRADE AND INVESTMENT 45 
 1. T RADE IN GOODS   45 
 2. T RADE IN SERVICES  48 
V. MODERNIZATION OF THE STATE 52 
 1. C ONSUMER PROTECTION AND DEFENCE OF COMPETITION  52 
 2. F OOD SAFETY   52 
 3. E NVIRONMENT   53 
 4. G OVERNMENT PROCUREMENT  53 
 5. R EGISTRATION OF INDUSTRIAL PROPERTY  54 
 6. C USTOMS   54 
 7. S CIENCE AND TECHNOLOGY  55 
 8. O FFICE FOR INTERNATIONAL TRADE NEGOTIATIONS  55 
VI. CONCLUSIONS AND PROSPECTS 56 
 Panama WT/TPR/G/186/Rev.1 
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 I. INTRODUCTION 
1. Since its accession to the World Trade Organization (WTO) on 6 September 1997, Panama 
has taken significant steps towards modernizing its economic and social structure, and has 
implemented a growing and sustained open trade process. 
2. As detailed in this report, Panama has gradua lly strengthened and built institutions to ensure 
that the context for this growth and social deve lopment is a market economy designed to stimulate 
higher levels of efficiency and competitiveness, t hus creating room for private initiative to play a 
decisive role. 
3. At the same time, the necessary amendments have  been made to domestic law in order to 
channel market forces towards higher levels of su stainable growth, while protecting the interests of 
the country and society as a whole. 
4. In this connection, Panama has redoubled its e fforts to simplify procedures and strengthen the 
performance of institutions that  safeguard proper and optimum functioning of the market, for 
example, by regulating natural monopolies, and ensuring competitive practices and sustainable 
development. 
5. Regarding trade liberalization, the country has carried out a continuous process of eliminating 
tariff and non-tariff barriers.  It has also managed to sign trade agreements with major partners, both 
in the region and in other hemispheres, while honouring its commitments unde r all trade agreements, 
whether multilateral or bilateral, and strengt hening its participation in world trade. 
6. With respect to public administration, huge effort s have been made to change the pattern of 
State intervention in the economy, by reducing th e State's direct role in public enterprises and 
transferring their operations to the private sector. 
7. In addition, the State has strengthened its ro le in contributing to the development of 
entrepreneurial capacities and competitiveness, incl uding among small and medium-sized enterprises.  
An example of this is the Supplementary Ag enda currently being executed by the national 
Government.  The purpose of this ambitious pr ogramme, which to date has US$100 million at its 
disposal, is to facilitate the integration of  domestic production in the global economy.  The 
programme is focused on strengthening the capacity  of the production sector in order to increase 
exports, energize human resources, and spur innovation and technological development. 
8. The above demonstrates the importance of intern ational trade to Panama:  it is one of the 
strategic areas of economic growth, for which ot her institutional, political, social, and cultural 
developments are also a prerequisite. 
II. ECONOMIC ENVIRONMENT 
1. ECONOMIC AND SOCIAL POLICY  
9. Until the 1980s, Panama's economic policy re volved around an import substitution and State 
intervention model.  With respect to internationa l trade, high tariff and non-tariff barriers prevailed, 
including a large number of specifi c tariffs.  The virtual non-growth of the Panamanian economy, and 
the increased poverty and social inequality that characterized economic development in the 1980s, WT/TPR/G/186/Rev.1 Trade Policy Review 
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 were unmistakable signs of the need for a new m odel, one that would eliminate deep-seated economic 
distortions and pave the way for mo re sustained and equitable growth.1 
10. By the end of 1989, the political crisis that  Panama was experiencing had exacerbated the 
already deteriorated economic conditions, causing  unemployment to reach record levels and 
prompting a sharp contraction in the gross domestic  product (GDP), as a result of which Panama even 
suspended payment on its external debt. 
11. These circumstances were the preamble to a ser ies of economic and social reforms launched 
at the beginning of the 1990s.  At the economic leve l, these reforms were focu sed on basic objectives, 
such as paving the way for eventually normalizing ex ternal debt payments, partially restoring a fiscal 
balance (the non-financial public sector deficit went  from -2.4 per cent as a percentage of GDP in 
1998 to 0.5 per cent in 2006), and privatizing some State-owned enterprises.  In the social sphere, 
objectives such as poverty reduction, improving income  distribution, development of human capital, 
and modernization of the State moved to the top of the agenda.  On the political front, democracy and 
civil society representation were strengthened. 
12. In the mid-1990s, a change of government o ccurred that marked the beginning of an 
accelerated phase of social and economic reforms, including the application of a more aggressive 
open trade policy.  Likewise, the price control syst em was dismantled, and in stitutions and standards 
to promote competitive practices were placed in opera tion.  In addition, a regulatory and institutional 
framework was established to regulate the vari ous public service companies that were being 
privatized. 
1.1 Economic Policy 
 
1.1.1 Privatization 
 
13. The programme to privatize State-owned ente rprises was launched in the period 1991-1994 to 
increase enterprise efficiency and production capacity, free up and expand State resources for priority 
investments and attract foreign private investment .  A framework law was a dopted to regulate the 
process and a Privatization Office (PROPRIVAT) attach ed to the former Ministry of Finance and the 
Treasury was established.  During this peri od, only small enterprises, such as the Cooperativa 
Bananera del Atlántico  – COBANA (Atlantic Banana Cooperative), the Cooperativa Bananera del 
Pacífico  – COBAPA (Pacific Ba nana Cooperative) and Cítricos de Chiriquí  (Chiriquí Citrus Fruits), 
were privatized; Air Panamá  (Air Panama) was also liquidated.  In addition, the Corporación 
Azucarera la Victoria  (Victoria Sugar Corporation) w as privatized in August 1993 and Cemento 
Bayano  (Bayano Cement) in 1994. 
14. In June 1997, the sale of 49 per cent of th e shares of the National Telecommunications 
Institute ( Instituto Nacional de Telecomunicaciones S.A . – INTEL, S.A.) to the United Kingdom 
company Cable & Wireless (C&W) concluded with  a value of US$652 million.  The company was 
awarded a 20-year management contract to provide  residential and public fixed telephony services, as 
well as domestic and international long-distance calls .  In addition, concessions were granted for the 
operation of a mobile telephony system.  In Ma rch 1996, a concession was granted to the United 
States company Bell South in the amount of US$7 2.4 million for the operation of Band A, and in 
October 1997, Band B was awarded to C&W Panama for the same amount. 
                                                      
1 Source:  Annual Economic Reports of the Ministry of the Economy and Finance (MEF). Panama WT/TPR/G/186/Rev.1 
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 15. The opening of the telecommunications sector to competition began in January 2003.  
However, a bidding process was launched in July 2001 so that interested companies could obtain 
concessions to operate basic telecommunications services, such as local basic telecommunications 
service, nationwide basic telecommunications service , international basic telecommunications service, 
public and semi-public telephone service, and lease d voice circuit service.  The modernization and 
increased competitiveness of the sector are reflecte d in the trend of the following indicators. 
Table No. 1 
Basic telecommunications sector indicators, 1998 and 2005 
Years Indicator 
1998 2005 
Mobile telephony subscribers 86,389 1,748,740 
Annual ratio of mobile telephone s per 100 inhabitants 3.10 58.60 
Population coverage (m obile telephony) 68% 89% 
Total  number of full-time employees in  telecommunications services 4,621,00 6,562,00 
Percentage of breakdowns repaired within 24 hours 66% 98% 
Internet subscribersa 17,350 86,518 
Public telephones 7,026 8,202 
Number of companies providing ILD serviceb 1 11 
a There are 14 service providers. 
b ILD:  international long distance. 
Source : Public Services Authority. 
16. The Hydraulic Resources and Electrification Institute ( Instituto de Recursos Hidráulicos y 
Electrificación  – IRHE)2 was originally divided into four generating companies, three distribution 
companies3 and one transmission company.  After priva tization through a consolidation process, three 
generating companies remained.4  The Government retained control of the transmission company 
(ETESA) and, more recently (in 2006), established an electricity-generating public enterprise 
(EGESA).  It is important to note that followi ng the privatization process, new private generating 
companies were established, such as Pedregal Power Co., Corporación de Energía S.A.  – COPESA 
(Energy Corporation, Inc.), PAN AM Genera ting Ltd, and other small power stations. 
17. Privatization also encompassed the port sector .  A concession was granted to the company 
Manzanillo Internacional Terminal  (Manzanillo International Terminal),  located in the city of Colon 
at the Atlantic mouth of the Panama Canal, whic h began operating in April 1995.  A concession was 
also granted to the Empresa Evergreen  (Evergreen Company) in Coco  Solo, an area located near 
Colon.  In addition, the ports of Balboa and Cristobal, located in Pa nama City and Colon, 
respectively, were transferred to the Empresa Panamá Ports Company  (Panama Ports Company) 
under a concession arrangement in 1997.  The comp etitive advantage of Panamanian ports, stemming 
from the country's strategic location, has been expl oited by privatizing the operations of State-owned 
ports by means of land-use concessions.  This po licy has been reflected in the 15.8 per cent annual 
growth of port operations, from 809,478 twenty -foot equivalent units (TEU) in 1997 to 
3,029,872 TEU in 2006. 
                                                      
2 The State granted 51 per cent of the shares of the distribution and thermoelectric generating 
companies and  49 per cent of the hydroelectric generating companies.  Data supplied by the National Public 
Services Authority ( Autoridad Nacional de Servicios Públicos  – ASEP). 
3 The three distribution companie s are:  EDEMET, EDECHI and Elektra Noreste  (Elektra Northeast).  
Source:  ASEP. 
4 The three generating companies are:  EGE Fort una S.A., AES Panamá and BLM CORP., S.A. WT/TPR/G/186/Rev.1 Trade Policy Review 
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 18. Management concessions were also awarded, bot h for the construction of the North and South 
Corridors, which contributed significantly to improving road interconnectivity in the capital, and for the management of the Panama Canal Railway, whic h in turn strengthened the connectivity of the 
trans-isthmus highway between the endpoints of Panama City and Colon. 
19. In 1998, a management concession was granted for the national casinos, and the national 
racetrack began to be operated privately.  Subse quently, in 2003, Tocumen International Airport was 
converted into an autonomous company, but th e shares continued to belong to the State. 
20. Lastly, from the start of the 1990s to the present, entities
5 were restructured and established to 
reflect modern concepts of privatized banking an d exchange regulation and competition and consumer 
protection. 
1.1.2 Public Finances 
 
21. Beginning in the mid-1990s, the basic public fi nance objectives included reducing current 
expenditure, increasing investment and renegotiating external debt.  This process was effectively 
accomplished in July 1996 under the "Brady Plan" fi nancial arrangement.  This operation represented 
a direct reduction of the debt balance by some  US$600 million, and placed the total value of the 
restructured commercial debt at approximately US$3.227 billion.6  This debt renegotiation enabled 
Panama to improve its risk rating, thereby opening up possibilities for obtaining new loans. 
22. By the end of 2000, the Government achieved a s ound fiscal balance.  Accordingly, there was 
no need for a higher level of indebtedness, and the deficit was reduced by streamlining expenditure.  
Furthermore, in 2002 the Fiscal Responsibility Law was adopted to reduce and monitor public 
expenditure, along with the Tax Re organization and Simplification Law, which sought to increase the 
neutrality of the tax system. 
23. From 2005 onward, public finances registered a steady " strengthening ", achieved largely 
through the adoption of a new fiscal reform called the Fiscal Equity Law , which included an 
expenditure reduction programme, improved the fiscal  equity concept still further, and sought to 
reduce opportunities for tax evasion.7  In the same period, as a result of a broad dialogue with civil 
society and cooperation with the United Nations Development Programme (UNDP), a consensus was 
achieved on restoring the financial and actuarial su stainability of the public pension system managed 
by the Social Security Fund ( Caja de Seguro Social  – CSS).8  In addition, the Panama Canal 
Expansion Project, which has strengthened the count ry's medium- and long-term economic and trade 
expectations, was approved by popular referendum. 
1.1.3 Trade Liberalization 
 
24. A crucial step in the achievement of the objectives set by the country was Panama's accession 
to the WTO in 1997.9   During the accession process, quantitative restrictions on imports were 
abolished, tariffs were reduced, the applicati on of protection measures and trade remedies was 
                                                      
5 Described in chapter V of this report (Modernization of the State). 
6 This strategy was adopted to restructure the debt incurred by developing countries with commercial 
banks, based on debt reduction and debt service operations voluntarily carried out under market conditions. 
7 Law No. 6 of 2 February 2005. 
8 Law No. 172 of 2005. 
9 This subject is addressed in chapter II I of this report (Panama and the WTO). Panama WT/TPR/G/186/Rev.1 
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 regulated, and rules were established regarding, inter alia , intellectual property, competition policy, 
government procurement, and environment, in accordance with multilateral trade principles. 
25. A stand-by arrangement with the International Monetary Fund (IMF) was signed in 2000.10 
26. Beginning in 2002, consistent with the trade liberalization policy, a number of free trade 
agreements (FTAs) with count ries in different hemispheres11 were approved and implemented.  These 
agreements allow positive steps to be taken to wards liberalization across the board, through 
commitments that provide duty-free entry for a la rge number of products, both linear and non-linear 
tariff reduction, the minimizing and phasing out of customs procedures that limit trade, and a forum for dispute mediation and settlement.  Being based on reciprocity, because of the benefits the partners 
grant each other these agreements are a source of mu tual encouragement towards open markets in the 
future which, while not global, are nonetheless important and positive for world trade. 
1.2 Social Policy 
 
1.2.1 Health and Housing 
 27. At the end of the 1990s, in the framework of a policy programme called " Economically 
Efficient Social Development " (Desarrollo Social con Eficiencia Económica ), the country increased 
public investment in social projects.
12  These included the building of the San Miguel Arcángel 
Hospital (San Miguelito district) and four regional  hospitals (in the district capitals of Santiago, 
Aguadulce, Las Tablas and La Chorrera).  With re spect to housing, the Ministry of Housing/Inter-
American Development Bank progr amme (MIVI-BID) provided subsidies to middle-income groups 
for access to housing and the purchase of construction materials.  In the same period, rural health 
projects to reduce malnutrition in children under five years of age and pregnant women, a safe drinking water programme, and a rural basi c sanitation programme were carried out. 
28. During the period 1999-2003, housing programmes,  such as serviced lots and land title 
programmes, were carried out through the ne w, restructured Social Investment Fund ( Fondo de 
Inversión Social  – FIS), resulting in nearly 15,000 housing solutions, including in the Kuna Yala 
indigenous region.  The new Santo Tomás Hospital w as also built, as well as an extensive network of 
latrines, rural aqueducts, and access roads. 
29. In 2005, Panama and the IDB signed the " Programme for the Development of New 
Operational Instruments for Low-Cost Housing ", aimed at equipping the Government with 
instruments capable of expanding access to housi ng for low- and moderate-income groups.  The 
programme has four components:  the Compre hensive Neighbourhood Improvement Programme 
(Programa de Mejoramiento Integral de Barrios  – PROMEBA), the Rapid Assistance Programme for 
Low-Cost Housing ( Programa de Apoyo Rápido a la Vivienda de Interés Social  – PARVIS), the 
                                                     
 
10 The IMF approved a short-term credit arrange ment giving Panama access to Special Drawing 
Rights (SDRs) totalling US$64 million for a period of 21 months, counted from June 2000, to support the 
economic programme.  Source:  Ministry of the Economy and Finance (Annual Economic Reports). 
11 This subject is addressed in  chapter III of this report (Bilateral Trade Agreements). 
12 The IDB granted a loan totalling more than US$70 million to support social investment and small-
scale infrastructure projects in low-income communities during the period 1994-1999.  One part of this loan was 
channelled through the Social Emergency Fund ( Fondo de Emergencia Social  – FES) and the other through 
various ministries.  The FES was reorganized in November 1999 and renamed the Social Investment 
Fund (FIS).  Source:  Ministry of the Economy and Finance (MEF) and the Inter-American Development 
Bank (IDB). WT/TPR/G/186/Rev.1 Trade Policy Review 
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 Programme for the Provision of Basic Infrastructure ( Programa de Dotación de Infraestructura 
Básica  – PRODIBA) and the Housing Support Programme ( Programa de Vivienda Solidaria  – 
PROVISOL).13  In addition, the "Urban Development/ Land Management Law" was adopted in 2006 
with a view to streamlining and regulating urban grow th and the construction boom that the country is 
experiencing, especially in the capital. 
30. In the area of health, nutrition and rural h ealth programmes for the low-income population 
were launched in this period, and designs for th e Panama City and Bay Sanitation Project were 
prepared and approved.  The project will improve  sanitation and reduce pollution of tributaries and 
rivers in the metropolitan area by expanding the sewer  system and installing treatment plants.  Just 
recently, in June 2007, the Governments of Panama  and Japan signed a financing agreement in an 
amount of US$160 million for the second phase of stage one of the Panama City and Bay Sanitation Project.  The agreement amounts to a formula for the recovery and cleanup of the entire capital city and bay area, which will directly improve the quality of life of one third of the country's population. 
31. Lastly, by means of Decree-Law No. 1 of 9 January 2006, the Community Development for 
Public Infrastructure Programme (PRODEC) was established for the purpose of identifying and 
planning projects to improve quality of life, mainly  among the rural population.  The funds for these 
investments come from Panama Canal operatin g surpluses, and include components for the 
construction of road infrastructure, aqueducts, sewer  systems, health facilities, and other community 
facilities and services.  The project provides for a total annual amount of US$50 million. 
1.2.2 Education 
 
32. In the area of education, for the period 1994-1 999, greater access to the school system for 
low-income groups and better-quality  primary and secondary education
14 were promoted through an 
IDB loan.  In addition, a Modernization of E ducation Law was adopted with the objectives of 
expanding education coverage na tionwide, improving the quality of teaching (teacher training), 
designing new courses and curricula, providing teaching resources (equipment and laboratories), and 
repairing and building school facilities. 
33. Beginning in 2004, education and training effort s were redoubled as part of the new economic 
and social strategy.  Among the latter's programmes, the following should be underscored:  "Development of Human Capital", to promote moderni zation of the education system at all levels;  
"English for Life", to offer training to people w ho aspire to jobs created by the new international 
projects in Panama;  and the technological infr astructure programme, to provide computers and 
Internet access (through the progr amme "Connect to Knowledge" ( Conéctate al Conocimiento )).
15  
Mention should be made of the scholarships and assistance granted to indigenous communities that 
have benefited approximately  1,300 students from different administrative districts ( comarcas ).  
Scholarships were also granted to students living in Veraguas Province and Gnobe Buglé 
Administrative District (regions marked by high poverty levels and a larg e indigenous population).16  
Likewise, students received scholarships from the as sistance programme for the eradication of child 
labour, on condition that they enrolled or remained in school. 
                                                      
13 Source:  Ministry of Housing (MIVI). 
14 See footnote 12. 
15 Set out in the document "Economic Development and Employment:  A Strategic Vision for 2009" 
(Visión Estratégica de Desarrollo Económico y de Empleo hacia 2009 ), which contains the new economic and 
fiscal strategies initiated by the Government during the period. 
16 Source:  Institute for Human Resources Training and Utilization ( Instituto para la Formación y 
Aprovechamiento de Recurso Humanos  – IFARHU). Panama WT/TPR/G/186/Rev.1 
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 1.2.3 Poverty Reduction 
 
34. Beginning in the mid-1990s, through the new economic and social policy ( Desarrollo Social 
con Eficiencia Económica) , Panama set the objective of reduci ng poverty and inequality through more 
efficient and effective social expenditure, focu sing investment on projects and specific areas of 
greatest need, and increasing access to public services fo r low-income groups.  In pursuit of this 
objective, the State coordinated an extensive inv estigation of living conditions and poverty in the 
country (the last such investigation having been ca rried out in 1983).  As a result, a "New Strategic 
Approach to Confronting Poverty" ( Nuevo Enfoque Estratégico Frente a la Pobreza ) was devised.  It 
was based on a concept of community developmen t and food production that would provide support 
for producers in marginalized areas and areas of extreme poverty in the form of food distribution, 
loans, and basic infrastructure programmes. 
35. In 2000, the national Government issued the document "Social Development Policy and 
Strategy, 2000-2004" ( Política y Estrategia de Desarrollo Social 2000-2004 ).  Its specific objectives 
included drastically reducing child malnutrition, ma king this the number one priority for all State 
entities.  At the same time, an extensive programme of self-sustaining arable farms was carried out in 
the poorest areas.  In addition, the Government of Panama, by means of Law No. 8 of 29 May 2000, 
established the Micro, Small, and Medium-Sized Enterprise Authority ( Autoridad de la Micro, 
Pequeña y Mediana Empresa  – AMPYME) as the entity responsible for providing support to small 
and medium-sized enterprises to enable them to create jobs. 
36. Beginning in 2005, a wide range of progra mmes and works was launched, focusing on low-
income groups or communities situ ated in towns identified as low income on the Poverty Map.  In 
addition, significant investments were made that indi rectly improved the quality of life of other social 
groups.  These investments included school nutriti on programmes and food assistance for mothers and 
children and indigenous people, for example, the Rural Sustainable Development and Rural 
Competitiveness programmes, which have indigenous assistance components. 
37. Lastly, beginning in 2005, the Labour Integra tion Programme, which seeks to integrate more 
than 4,000 Panamanian workers in the private sect or by the end of 2007, was undertaken through the 
Ministry of Labour and Work Development (MITR ADEL).  The project goes hand in hand with the 
human capital and workforce development project of  the National Institute of Vocational Training for 
Human Development ( Instituto Nacional de Formación Profesional y Capacitación para el 
Desarrollo Humano  – INADEH), an institution at the forefront of the strategic vision on economic 
development and employment for the period 2004-2009. 
2. ECONOMIC PERFORMANCE (1997  – 2006) 
2.1 Economic Performance by Sector 
 
2.1.1 Primary Sector 
 
38. In the period 1997-2006, the primary sector in ge neral grew steadily, at an annual rate of 
6.4 per cent;  the vast majority of activities averag ed a positive growth rate, with the exception of the 
fishing sector, which posted a decline in 1999 owing to  the white spot virus that affected shrimp 
exports.  Subsequently, in 2002, the agricultura l subsector suffered a setback due to an uneven 
performance in some areas caused mainly by adverse weather conditions and other factors such as the 
European Union's discriminatory treatment of banana exports from Latin American countries. WT/TPR/G/186/Rev.1 Trade Policy Review 
Page 12 
 
 
 
Chart No. 1
Gross Domestic Product of the Panamanian Primary Sector at 1996 Prices
 1997-2006
10.0110.0210.0310.0410.0510.0610.0710.0
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 (In millions of US$)
Agriculture, livestock, hunting and forestry Fishing Mining and quarrying
 
 
39. The primary sector represented on average 8.2 per cent of Panama's GDP in the years 
2004-2006.  The steady growth of non-traditional agricultural exports since 2004 has contributed 
significantly to diversifying the exportable suppl y and offsetting the poor contribution of banana 
production. 
2.1.2 Secondary Sector 
 
40. During the period 1997-2006, the secondary sector represented on average more than 16 per 
cent of GDP.  In addition, during the period 1997- 2000, all components of the secondary sector posted 
favourable rates, including manufacturing, electricity , water, and construction.  During this period, 
manufacturing underwent an adjustment and restructuring process in response to the opening up of 
trade.  This transformation of industry generated new concepts of efficiency, reflected in more 
dynamic entrepreneurial activity in resp onse to competition from imported products. 
41. Subsequently, in the period 200 0-2003, the secondary sector posted a decline, specifically in 
the construction and industry subsectors, owing main ly to the closure of the national oil refinery 
(Refinería Nacional ). 
42. Lastly, manufacturing growth was 3 per cent in 2005 and 5.1 per cent in 2006, while 
electricity generation and water grew by 5 per cent and 3.6 per cent, respectively.  Construction, 
meanwhile, has seen a marked expansion and been  a key engine of growth for the Panamanian 
economy in recent years.  In 2003 and 2004, for ex ample, it expanded by 34.4 per cent and 14.4 per 
cent, respectively.  While in 2005 the sector grew  by 1 per cent, in the following period it improved 
even further, with 17.4 per cent growth, indicatin g that, despite annual fluctuations, this activity 
shows a favourable and steady medium-term trend. Panama WT/TPR/G/186/Rev.1 
 Page 13 
 
 
 
Chart No. 2
Gross Domestic Product of the Panamanian Secondary Sector at 1996 Prices
 1997-2006
0.0200.0400.0600.0800.01,000.01,200.0
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 (In millions of US$)
Manufacturing Electricity, gas and water supply Construction
 
2.1.3 Tertiary Sector 
 
43. Historically, the sector that provides the greatest  support to Panama's GDP has been services.  
In 1997 and 1998, services grew by 6.5 per cent and 7. 3 per cent, respectively.  Nevertheless, this 
situation changed in 2000, 2001, and 2002, when slow er growth was seen (2.7 per cent, 0.6 per cent, 
and 2.2 per cent, respectively). 
44. In the past three years (2004, 2005, and 2006), the tertiary sector has developed significantly, 
with growth rates of 6.8 per cent, 9.4 per cent, and 9.3 per cent.  Mention should be made of the Colon 
Free Zone and of the hotel and restaurant subsector, which grew by more than 10 per cent.  Other components of the sector also trended upwards si gnificantly, such as financial intermediation, 
wholesale and retail commerce, and real estate.  The high percentage of GDP that this sector represents and has represented in the past, shows that  Panama is a service-oriented economy.  In 2006 
the sector accounted for 74 per cent of GDP. 
2.2 Labour Market 
 
45. At the end of 1999 and in 2000, the labour mark et was affected by a declining demand for 
jobs.  This led to an increase in the unemp loyment rate, which went from 11.8 per cent in 
August 1999 to 13.3 per cent in August 2000. 
46. In mid-2004, there was a change in trend, w ith robust employment growth thanks to job 
creation in areas such as telemarketing and the ca ll centres that have sprung up in Panama, opening up 
thousands of job opportunities.  Indeed, the to tal employed population (including the indigenous 
population) increased by 60,000 during 2005, i.e., by 5 per cent.  This positive trend in new job 
creation was stimulated by labour-intensive sectors, such as construction, hotels, and commerce, in 
addition to the impetus given by exports of non- traditional agricultural and agro-industrial products. 
47. Another important consideration is that the new jobs are of better quality, as evidenced by the 
4.3 per cent growth in 2006 of the wage-earning population (excluding domestic workers) and only WT/TPR/G/186/Rev.1 Trade Policy Review 
Page 14 
 
 
 2.5 per cent growth of the non-wage-earning population.   Mention should also be made of the 8.6 per 
cent annual increase in employment in the construc tion sector.  In addition, there was a significant 
increase in job creation, mainly in urban areas. 
Chart No. 3
Gross Domestic Product of Panama's Tertiary Sector at 1996 Prices
 1997-2006
0.01,000.02,000.03,000.04,000.05,000.06,000.07,000.08,000.09,000.0
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 (In millions of US$)
Tertiary Sector
 
 
48. Steady economic growth in the past five years has had a positive impact on the labour market.  
The unemployment rate has trended downwards, mo ving from 13.6 per cent in 2003 to 7.3 per cent in 
2007, with manufacturing, hotels and restaurants,  construction, and commerce being the most 
dynamic industries in terms of job creation. 
2.3 Balance of Payments 
 
49. During the period 1998-2002, Panama posted a re current balance-of-payments deficit in its 
current account as a result of negative balances in the goods component, which recorded a shortfall of 
approximately US$1.0371 billion.  Among the product s most affected were bananas, shrimp, flour, 
and fish oil, as well as beef cattle on the hoof.  It  should be emphasized that there was significant 
growth in some products, for example, melon (77. 2 per cent), watermelon (29.6 per cent), and beef 
(23.6 per cent).  The services component also ha d favourable balances, totalling US$979.2 million, as 
a result of increased income from tourist services provi ded to cruise ships that docked at the ports of 
Colon 2000, Cristóbal, and Fuerte Amador;  ba nking and financial services;  and transportation 
(specifically the tolls collected from vessels transiting through the Pa nama Canal).  This confirms 
Panama's uniqueness as a country that imports goods and exports services.17 
50. Likewise in 2002, the income component showed  a deficit of B 284 million as a result of the 
losses suffered by general-licence foreign banks.  Th e negative balance in the capital and financial 
account was the result of equilibrium in the asset and liability flows of the international banking 
centre and of favourable external debt operations, as Brady bond buybacks not only reduced the debt 
but also generated a nominal saving. 
                                                      
17 Office of the Comptroller General of the Republic, Panama's balance-of-payment reports. Panama WT/TPR/G/186/Rev.1 
 Page 15 
 
 
 
-2,000.0-1,500.0-1,000.0-500.00.0500.01,000.01,500.02,000.02,500.0Millions of US$
1998 1999 2000 2001 2002 2003 2004 2005 2006Chart No. 4
Current Account Balances in Panama's Balance of Payments
1998-2006 
Goods Services
 Income
 Current Transfers
 
 
51. Balance of payments behaviour in the period 2003-2006 was similar to that of the previous 
period, except for the income balance.  The servi ces balance was positive during this period, reaching 
US$2.2099 billion in 2006 as a result of the boost from Panama Canal toll charges, a good 
performance by port services (specifically, cargo and container services), and the boom in tourist 
services.  In addition, telecommunications services generated income of US$65.5 million, of which approximately 60 per cent derived from resale co mpanies which offer basic and mobile services 
through public, fixed-network and mobile telephones, and the remaining 40 per cent from call centres.  
Current transfers showed a similar trend, am ounting to US$257.9 million in 2006 as a result of 
remittances received from workers (mainly from the United States) which remained stable, while 
outward remittances, primarily to Colombia, increased by 4.5 per cent. 
52. In the capital account, there was a significant in crease in foreign direct investment (FDI), 
which rose from approximately US$1 billion betwee n 2004 and 2005 to US$2 .560 billion in 2006.  
The main explanation for this increase is th e purchase of local banks by foreign banks.
18 
2.4 Public Finances 
 
53. During the period 1993-1997, public sector savi ng rose from 6.6 per cent to 7.5 per cent of 
GDP, falling back to 6.2 per cent in 1998.  Mean while, the surplus recorded between 1994 and 1996 
became a deficit of 0.3 per cent in 1997 and 2.5 per cent in 1998.  This deterioration was due mainly 
to the decline in current transfers, which the privatized State-owned enterprises had ceased to 
contribute.  Subsequently, in 1999, tax revenues im proved as a result of an agreement for the payment 
of B 49.9 million in National Bank dividends to amortize accumulated debt. 
                                                      
18 An outgrowth of the purchase of the Banco del Istmo  (Isthmus Bank) by HSBC, which generated a 
transaction worth nearly US$1.7 billion. WT/TPR/G/186/Rev.1 Trade Policy Review 
Page 16 
 
 
 54. As from 2000, the Office of the Comptroller General of the Republic has included the 
Panama Canal Authority ( Autoridad del Canal de Panamá  – ACP) as a non-consolidated agency, so 
that its net liquid asset flows (equivalent to the AC P surplus or deficit) are reflected in the fiscal 
balance of the non-financial public sector (NFPS).  This  enables Canal surpluses to  be used for social 
investment programmes (as in the PRODEC programme in 2006). 
55. Public finances were strengthened in 2005.  First, reforms were approved both to the tax 
system, through the Fiscal Equity Law, and to the public pension system of the Social Security Fund.  Secondly, tax revenues increased sharply as a result of economic growth and higher taxation of electricity companies.  Management of public fi nances in 2005 consisted essentially in achieving a 
large increase in revenue with a low increase in expe nditure.  Most noteworthy is that this balancing 
coincided with the implementation that year of  a solid investment programme of more than 
US$800 million, nearly double that of previous year s.  Sound fiscal management thus enabled the 
deficit to GDP ratio to be reduced from 4.9 per cent in 2004 to 3.2 per cent in 2005 (2.5 per cent if the exceptional debt refinancing is excluded). 
56. According to the 2006 economic report, the N FPS went from a deficit of US$500.1 million in 
2005 to a surplus of US$87.8 million in 2006.  Current saving, meanwhile, went from B 33.3 million 
in 2005 to US$576.4 million in 2006.  At the same  time, non-financial public investment increased, 
from US$466.3 million to US$530.3 million in 2006.  In that year, the central Government's finances 
reflected revenue increases resulting from economic  growth, better fiscal management, and an 
increase in non-recurrent revenue (including US$19 9.6 million in additional contributions from the 
Panama Canal, which contributed US$603.5 million for the year), the special payment received from 
the Panamá Ports  company, and taxes on the capital gains stemming from the sale of a large private 
bank ( Banco del Istmo ).  Likewise, the operating result of the Social Security Fund (CSS) was 
favourable, going from a deficit of US$67.2 m illion in 2003 to a small surplus in 2006. 
57. As noted in the preceding paragraphs, the efforts and controls undertaken in the fiscal area 
yielded positive results, as reflected in the marked im provement in the risk rating attributed to Panama 
in recent years.  Standard and Poor h as upgraded Panama's rating to BB/Stable.
19 
2.5 Inflation 
 
58. Panama has historically enjoyed a high level of  macroeconomic stability.  Inflation has been 
low and stable.  The average increase in the consumer  price index (CPI) over the past seven years has 
been only 1.5 per cent.  The low inflation is attri butable to the fact that there is no excess money 
supply and that the Government cannot monetize the defi cit.  In Panama, changes in price levels stem 
mainly from changes in international inflation, ad justed for domestic economic policy factors (taxes 
and tariffs).  Import prices serve as a transmission  mechanism;  and local prices are adjusted to 
expected global inflation.  Inflation in Panama co mpares favourably with inflation in Latin America, 
where annual inflation rates above 10 per cent are common. 
59. The oil price rise has been reflected in slight increases in domestic price levels.  In 2006, the 
inflation rate (as measured by the CPI) was 2.3 per cent, slightly lower than the 3.3 per cent recorded 
in 2005. 
60. As well as low inflation, Panama's economic stability is a result of its monetary system and 
the stability of its income from services exports, which are related to its geographical position and 
account for a large percentage of its economy.  Macr oeconomic stability is enha nced by the fact that 
                                                      
19 www.standardandpoor.com. Panama WT/TPR/G/186/Rev.1 
 Page 17 
 
 
 Panama issues no currency, which means that th ere is a budgetary limit on public expenditure (hard 
budget constraint).  There are no policies that create  fiscal imbalances.  When there is a need to 
reduce the deficit, expenditure is reduced, particul arly investment expenditure, and taxes are increased 
occasionally. 
61. Lastly, the country's macroeconomic stability h as been strengthened by the implementation of 
a set of structural reforms that ha ve enabled Panama to visibly impr ove its level of economic growth.  
More importantly, at present, the country has a promising future that will enable it to undertake 
substantial poverty reduction and bring about a signif icant improvement in social equity.  All of the 
above is the result of the social and economic policie s of successive administrations that have adhered 
to the highest standards of transparency and democr atic continuity.  Furthermore, the groundwork has 
been laid for the country to enjoy solid growth in  the coming years, based on the expansion of private 
investment and foreign trade. 
III. TRADE POLICY 
1. EVOLUTION OF TRADE POLICY  
62. Beginning in the 1990s, Panama's trade policy pursued the objective of an increasingly open 
economy.  Prior to that, Panama ha d maintained a conservative position vis-à-vis  the trade 
liberalization process.  This process began with a transformation of trade policy, which underwent 
profound changes based on the various plans a nd programmes implemented from the start of the 
decade which included the privatization of State- owned enterprises, attracting foreign investment, 
opening up and liberalizing trade, accession to the General Agreement on Tariffs and Trade (GATT), 
signing free trade agreements and establishing a more competitive domestic environment. 
63. In October 1991, as part of the implementation of its new trade policy Panama expressed its 
intention to accede to the GATT.  This set off a process of ongoing legislative and institutional change 
and adjustment. 
64. With the changes introduced in pursuit of a more open economy, and Panama's accession to 
the WTO in 1997, new needs arose that were refl ected and addressed in a National Foreign Trade 
Strategy ( Estrategia Nacional de Comercio Exterior ).  This strategy has focused mainly on 
stimulating competitiveness in the supply of goods and services both in domestic and in international 
markets, promoting access to new markets by op ening up trade both multilaterally and bilaterally, 
promoting opportunities to attract foreign invest ment, and strengthening comparative advantages. 
65. Over the years new needs have been created, requiring government administrators to make 
constant changes and adjustments to domestic policies and regulations in response to the 
commitments and opportunities arising from the trade liberalization process. 
1.1 Panama and the WTO 
 
66. By Law No. 23 of 15 July 1997 Panama approve d the Marrakesh Agreement Establishing the 
World Trade Organization (WTO) and embarked upo n a new phase in the regulatory and institutional 
adjustment process, adopting various laws and establishing mechanisms enabling them to be 
implemented in accordance with th e commitments undertaken and the challenges of the liberalization 
process. 
67. A number of issues that illustra te the efforts Panama undertook to meet its obligations, and 
the opportunities that its accession to the WTO has afforded, are reviewed below. WT/TPR/G/186/Rev.1 Trade Policy Review 
Page 18 
 
 
 1.1.1 Tariff Structure 
 
68. Accession to the WTO required Panama to develop a set of tariff reforms.  That process 
began in 1995 with the adoption of the National Import Tariff ( Arancel Nacional de Importación ).  
Based on the Harmonized Commodity Description and Coding System20, this nomenclature is 
versatile and multifunctional for customs purposes, and is also widely used by different countries. 
69. From then onwards, a number of reforms were made to the National Import Tariff the main 
achievements of which were:  (1) elimination of all existing specific and combined customs tariffs and their conversion to a wholly ad valorem system
21;  (2) adjustment of all customs tariffs to the levels 
bound at accession, in many cases achieving greater  reductions than established in commitments22;  
(3) simplification of the tariff classification and rate structure23;  and (4) elimination of all existing 
non-tariff barriers, such as quotas, prior licences, authorizations, and other requirements for the import of certain products.
24 
70. In view of the continuing need for tariff adju stment and reform, Panama adopted the Fourth 
Amendment to the Harmonized System Nomenclature  in May 2007, so as to keep the National Import 
Tariff up to date in respect of technological de velopments and interna tional trade requirements.25 
71. The tariff reductions implemented as a consequence of Panama's accession to the WTO was 
much deeper than that agreed w ith the Organization.  Bearing in mind that Panama's tariffs were 
bound at a ceiling of 40 per cent to be reduced to 30  per cent over five years with the exception of 
certain agricultural products, already by Dece mber 1996 approximately 90 per cent of the tariff 
universe had an import tariff of 30 per cent or less.   At that time the National Import Tariff had 
8,401 items, a simple average applied rate of 15.86 per cent, and a standard deviation of 37.85 per 
cent, which indicates the level of tariff dispersion. 
72. It has been Panama's consistent policy to redu ce and simplify its applied tariff rates, which 
were lowered from an average of 15.86 per cent in December 1996 to an average of 8.6 per cent in 
March 2006, with a spread not exceeding a standard de viation of 6 per cent.  It is nonetheless worth 
noting that a number of adjustments have also been made on an exceptional basis in the tariffs applied 
to certain sensitive products, although the correspondi ng tariff bindings have always been observed.26  
This is the case for a number of dairy products, gr ains, poultry and pig meat, and certain vegetables 
and tubers, inter alia , on which tariffs were adjusted at the end of 1999 and beginning of 2000. 
                                                      
20 Cabinet Decree No. 21 of 12 July 1994. 
21 Cabinet Decree No. 46 of 12 December 1996. 
22 Cabinet Decree No. 25 of 1 November 1995;  Cabinet Decree No. 20 of 11 July 1996;  Cabinet 
Decree No. 44 of 12 December 1996;  Cabinet Decree No. 38  of 8 August 1997;  Cabinet Decree No. 68 of 
12 November 1997. 
23 Cabinet Decree No. 2 of 10 January 1995. 
24 Cabinet Decree No. 47 of 26 December 1996.  O fficial Gazette No. 23, 196 of 3 January 1997. 
25 Cabinet Decree No. 12 of 16 May 2007.  Official Gazette No. 22,795 of 21 May 2007. 
26 Cabinet Decree No. 25 of 13 October 1999 and Cabinet Decree No. 2 of 26 January 2000. Panama WT/TPR/G/186/Rev.1 
 Page 19 
 
 
 Table No. 2 
Evolution of Panama's average applied tariff, 1996-2006 
Date Average Tariffa No. of items 
December 1996 15.860 8,401 
January 1997 14.187 8,375 
January 1998 8.982 8,417 
June 1999 9.000 8,542 
February 2000 9.197 8,548 
December 2001 8.631 8,578 
October 2002 8.831 8,852 
December 2003 8.700 8,876 
January 2004 8.760 8,902 
January 2005 8.760 8,912 
March 2006 8.620 8,921 
a Applied tariff rate (simple average). 
Source : Ministry of Trade and Industry. 
73. Currently, Panama's applied tariff on agricultura l products is a simple average of 15.3 per 
cent, while its average applied industrial tariff is  7.2 per cent.  Panama's WTO applied and bound 
tariffs can be seen in the following table. 
Table No. 3 
WTO applied and bound tariffs 
Product Applied tariff Bound tariff 
Agricultural  15.3%  28.7% 
Non-agricultural  7.2%  22.6% 
Source : Ministry of Trade and Industry. 
74. With respect to the applied tariff, it can be poi nted out that the current National Import Tariff 
is concentrated at three basic levels (0, 10 and 15 per cent);  29.8 per cent of the applied tariff lines 
have a rate of 0 per cent;  13.2 per cent have a rate  of between 1 per cent and 5 per cent;  22.3 per cent 
have a rate of between 6 per cent and 10 per cent;  32.2 per cent have a rate of between 11 per cent 
and 15 per cent;  and 2.6 per cent have a rate of ove r 15 per cent.  The tariff lines with a rate of over 
15 per cent are products such as chicken cuts, dairy products, sugar, rice, potat oes, coffee, tomatoes, 
onions, hams, etc. 
75. The following table summarizes Pana ma's applied tariff structure: 
Table No. 4 
Applied tariff structure of Panama, September 2006 
Applied tariff Tariff lines Percentage Cumulative percentage 
0 2,659 29.8% 29.8% 
1% - 5% 1,178 13.2% 43.0% 
6% - 10% 1,985 22.3% 65.3% 
11% - 15 % 2,870 32.2% 97.4% 
Over 15% 229 2.6% 100.0% 
Total 8,921   
Note: Panama does not apply specific tariffs. WT/TPR/G/186/Rev.1 Trade Policy Review 
Page 20 
 
 
 Source : Ministry of Trade and Industry. 
76. In addition, Panama is currently preparing re gulations that provide for the elimination of 
tariffs on a number of information technology products, in accordance with the Information 
Technology Agreement (ITA), which will reduce the pe rcentages of the applied and bound rates for 
non-agricultural products. 
1.1.2 Tariff Quotas 
 
77. While Panama is in favour of market liberaliza tion, it is aware that the opening up of trade, 
with the consequent reduction in tariffs, needs to be gradual enough to allow production to adjust to 
the new competitive environment.  In this way the sensitivity of the products concerned can be 
safeguarded and at the same time  important opportunities can be afforded to WTO Members that wish 
to participate in the Panamanian market for such products. 
78. In accordance with Titles III and IV of Law No. 23 of July 1997 approving Panama's 
accession to the WTO, the Licensing Committee, c onsisting of the Minister of Agricultural 
Development, the Minister of the Economy and Fina nce, and the Minister of Trade and Industry, is 
responsible for administering tariff quotas, prom oting, approving, supervising and regulating the 
establishment and running of the Commodity Exchanges27, disseminating the opening of quotas 
before they are made available to the public, and determining, on the basis of the product's 
characteristics, the periods for which they will be available to interested parties.28  This mechanism 
was established in accordance with law and th e WTO Market Access and Import Licensing 
Agreements. 
79. Pursuant to domestic law, the Technical S ecretariat of the Tariff Quota Licensing Committee 
was established in the Trade Policy Office of the Mini stry of Agricultural Development.  Its functions 
include:  organizing notification of the opening of  tariff quotas, coordinating the registration of 
economic agents interested in participating in  the bidding for the products under quota, issuing 
certification to the buyers awarded licences to im port products under quota , and carrying out such 
other functions as the Committee assigns to it in  accordance with Law No. 23 of July 1997. 
80. The agricultural products subject to tariff quotas under the WTO are:  pig meat (20 items plus 
subdivisions), meat of fowls (2 items plus subdi visions), milk and dairy products (25 items plus 
subdivisions), potatoes (1 item), beans (1 item), ma ize (3 items), rice (4 items), and tomato by-
products (3 items). 
81. Panama's mechanism for administering tariff quot as has proved to be efficient, transparent 
and secure for any domestic or foreign entity with the desire and capacity to use it, thanks to some of 
the procedures followed, such as publishing all proceedings and making information accessible. 
82. Bidding for products subject to tariff quotas h as been carried out in accordance with the 
prescriptions of the relevant agreements.  The requis ite bidding rounds have been held for purchase of 
the quantities announced.  Under the corresponding tari ff preferences, importers have been able to 
bring into the country the quota quantities they have allocated during the bidding rounds held in the Commodity Exchange. 
                                                     
 
27 Articles 147 and 164 of Law No. 23 of 1997. 
28 Articles 6 and 7 of Resolution No. 5-98 of 18 November 1998. Panama WT/TPR/G/186/Rev.1 
 Page 21 
 
 
 Table No. 5 
Summary of results of bidding for ordinary tariff quotas, 2004-2006 
(In metric tons) 
Breakdown Announced 
2004 Allocated 
2004 Supplier 
countries Announced 
2005 Allocated 
2005 Supplier 
countries Announced 
2006 Allocated 
2006 Supplier 
countries 
Pig meata  800 607.3 United 
States and 
Canada 840 697.7 United 
States and 
Canada 880 873.5 United 
States, 
Canada, and Costa Rica 
Meat of fowl 660 
b Void 708 b Void 756 b Void 
Milk and 
dairy 
productsc 11,763.9 6,988.6 New 
Zealand, 
Chile, Costa Rica, and 
United 
States 11,918.5 6,816 Chile, 
Costa 
Rica, United 
States, 
New Zealand, and Mexico 12,073 7,942 Chile, Costa 
Rica, United 
States, Mexico, and 
New 
Zealand 
Potatoes 562.9 562.9 United 
States, Netherlands 590.4 530.4 United 
States 618 480 Canada, 
United 
States, 
Netherlands 
Beans 444.4 444.4 Argentina 472.2 472.2 United 
States, 
Canada, 
Argentina 500 490 Argentina 
Riced 8,664.6 8,664.6 United 
States, 
Guyana 9,188.1 9,188.1 Guyana, 
United 
States 9,711.6 9,114.5 Guyana, 
United 
States 
Maize - 
sorghum 143,669.8 143,669.8 United 
States 146,835 146,835 United 
States, 
Argentina 150,000 150,000 United 
States, 
Argentina 
Tomato 
by-products 1,495.8 1,085.7 United 
States 1,576 1,286 United 
States 2,056.3 2,056.3 Spain, 
United States, Chile 
a This quota includes a volume exclusively for Costa Rica that wa s declared void in 2004 and 20 05 because neither bidders nor 
buyers came forward.  The total corresponding to Costa Rica was allocated in 2006. 
b Panama is self-sufficient in the produc tion of fowls.  Although quotas were announced, neither bidders nor buyers came forwar d;  
accordingly, the process was d eclared void and the quotas were not allocated .  Nor were there any out-of-quota imports. 
c Some of the dairy product items were declared void because the buyers and bidders did not agree on the product type. 
d One item was not allocated because the buyers and bidders did not agree on the product type. 
Source : Ministry of Agricultural Development. 
1.1.3 Production Support Programmes 
 
83. In respect of production support programmes, the Ministry of Agricultural Development 
(MIDA) together with other State agencies im plements policies and programmes to support the 
agricultural sector.  The MIDA applies only "Green  Box" and "Development Agenda" special and 
differential measures;  to this end, the sector receives some benefits. 
• Adjustment Support Programme 
 
84. Four categories are included in the adjustment  programme:  swine, throughout the country 
except in Darién;  vegetables in Tierras Altas de Chiriquí;  industrial tomatoes in Herrera and Los 
Santos;  and maize and sorghum in Cocl é, Herrera, Los Santos, and Veraguas. WT/TPR/G/186/Rev.1 Trade Policy Review 
Page 22 
 
 
 85. The total programme budget was estimated at B 36, 446,364.00.  It is destined to provide non-
refundable support according to the following breakdown by category: 
Table No. 6 
Adjustment Programme Budget by Category 
(In thousands of US$) 
Category Original budget 
Maize-sorghum 10,433,940.00 
Industrial tomatoes 1,982,424.00 
Swine 17,780,000.00 
Vegetables 6,250,000.00 
Total 36,446,364.00 
Source : Ministry of Agricultural Development 
 
86. The notable changes experienced by producer s participating in the programme have 
encouraged others to start using the new tec hnologies acquired.  Many producers have had the 
backing and confidence of State-owned and pr ivate banks, as well as cooperatives and commercial 
firms, to make these new investments. 
87. During implementation of the programme, swin e producers have invested in individual 
farrowing and rearing pens, suspended floors with  better ventilation for the animals, automatic 
feeders, water tanks and oxidation vats that meet envi ronmental standards.  All of this is reflected in 
improved competitiveness and reduced costs thanks  to better standards of cleanliness on farms, 
greater utilization of feed and fewer diseases. 
88. Vegetable producers have made adjustments in  order to establish controlled-environment 
nurseries (greenhouses), thereby increasing pro ductivity and reducing costs and crop losses. 
89. The programme has also enabled tomato a nd maize producers to improve their production 
processes by using sprinkler and drip irrigation and plastic mulching to control soil erosion. 
• Agricultural Credit Programme 
 
90. The agricultural credit programme provides assistan ce to virtually all agricultural and agro-
industrial categories, provided they are economically feasible and are eligible according to the 
parameters of the Credit Regulations Manual, with the exception of forestry projects.  The latter may 
be considered, however, if they are part of or co mplementary to an agricultural project, for example, 
agro-silvo-pastoral projects implemented in watersheds. 
91. In the period 2001-2005, the Agricultural Development Bank ( Banco de Desarrollo 
Agropecuario  – BDA) had US$172.1 million at its disposal to finance agricultural projects, of which 
US$147.6 million (85 per cent) was used.  These lo ans, averaging US$7,000 per operation, went 
mainly to micro and small producers.  Lack of  a market or a sale and purchase agreement, low 
profitability of projects, and a high level of inde btedness on the part of borrowers were the main 
obstacles to obtaining financing from the Bank. Panama WT/TPR/G/186/Rev.1 
 Page 23 
 
 
 Table No. 7 
Implementation of BDA Agricultural Credit Budget 
Fiscal years 2001-2005 
(In thousands of US$) 
Fiscal year Budget Implemented Per cent 
2001  48,019  44,040  91.7 
2002  39,839  37,432  94.0 
2003  30,540  21,163  69.3 
2004  28,087  22,414  79.8 
2005  25,589  22,605  88.3 
Total 2001-2005  172,074  147,654  85.8 
Source : BDA Planning Office. 
92. The lack of mortgage guarantees (farms with regi stered titles) is not a serious hindrance to the 
development loans offered by the BDA, since othe r guarantees are accepted, for example, rights of 
possession, agricultural, livestock, and equipment ple dges, fiduciary guarantees and other instruments, 
such as loan surety bonds, issued by the Mi cro, Small, and Medium-Sized Enterprise 
Authority (AMPYME) and the Agri cultural Insurance Institute ( Instituto de Seguro Agropecuario  –
ISA). 
93. The regular portfolio consists of three Bank lending programmes:  Own Resources, and the 
BDA-CBN and BDA-FCA agreements, the last two being financed with resources from the Interest Compensation Special Fund ( Fondo Especial de Compensación de Intereses  – FECI).  The special 
portfolio concerns loans granted under the BDA-FECC Programme (Law No. 24 of 2001) with 
resources from the Special Fund for Stand-By Loans ( Fondo Especial para Créditos de 
Contingencias  – FECC), provided by the central Government through the Ministry of Agricultural 
Development (MIDA). 
• Other Programmes 
 
94. There are also other programmes, such as the pr eferential charges granted for the installation 
and use of electricity in agricultural activities, am ounting to a reduction of up to 30 per cent in the 
prevailing charge;  and the simplification of land title procedures by the Ministry of Agricultural 
Development (MIDA) for any producer applying for the first time for title to a smallholding of less 
than 50 hectares, through the use of aerial photography  and waiving the requirement for submission of 
an income tax clearance certificate to the Public Registry. 
1.1.4 Export Subsidies and Support Programmes 
 
95. In accordance with the Agreement on Su bsidies and Countervailing Measures 
(SCM Agreement), Panama has some programmes th at are regarded as subsidies by the WTO.  In 
respect of export support and incentive programmes,  Panama has implemented three programmes in 
this category, i.e., the Export Processing Zones ( Zonas Procesadoras para la Exportación  – ZPE), 
Official National Industry Register ( Registro Oficial de la Industria Nacional  – ROIN), and Tax 
Credit Certificate ( Certificado de Abono Tributario  – CAT) programmes, for which extensions were 
requested under Article 27.4 of the SCM Agreement. 
96. The Export Processing Zones (ZPE) pr ogramme is based on Law No. 25 of 
30 November 1992, and its objective is to prom ote social and economic development through tax 
incentives and labour and migration benefits.  Purs uant to Article 27.4 of the SCM Agreement and WT/TPR/G/186/Rev.1 Trade Policy Review 
Page 24 
 
 
 document G/SCM/39, the Committee on Subsidi es and Countervailing Measures granted the 
programme an extension until 31 December 2007, on th e basis of a commitment by Panama to notify 
the status of the programme annually and the possib ility for Panama to request an extension of the 
programme or to avail itself of the two-year phasing-out period .29 
Table No. 8 
Panama:  Value of exports from processing zones, 2001-2006 
(In millions of US$) 
Year Number of enterprises f.o.b. value 
2001 57 51.9 
2002 68 52.4 
2003 74 67.2 
2004 45 69.2 
2005 56 77.8 
2006 61 88.2 
Source : Office of the Comptroller-General of the Republic;  Vi ce-Ministry of Foreign Trade, Ministry of Trade and 
Industry. 
97. Currently, Panama, like other Members, has submitted a request for extension of the 
programme to the Committee on Subsidies and Countervailing Measures on the basis of its economic, 
financial and development needs.30 
98. The objective of the Official National Industry Register (ROIN) is to promote exports and 
stimulate the development of the industrial sector .  The programme has its basis in Law No. 3 of 
20 March 1986, repealed by Law No. 28 of 20 June  1995 which prohibited enterprises not registered 
by 1995 from benefiting from the programme, wher eas registered enterprises would enjoy the rights 
granted under the programme until 2010, prov ided the WTO Committee on Subsidies and 
Countervailing Measures granted an extension be yond 2007.  Extension of this programme was 
granted under the same parameters as for the ZPE programme .31 
Table No. 9 
Amount of fiscal incentives granted under th e Official National Industry Register, 2004-2006 
(In millions of US$) 
Years Type of benefit 
2004 2005 2006 
Import tax exemption or rebate 17.5 14.1 18.6 
Income tax exemption or rebate  for reinvestment 11.6 9.7 3.4 
Other incentivesa 10.7 16.6 10.4 
Total 39.8 40.4 32.7 
a Income tax exemption only. 
Source : Department of Tax Studies, Direct orate-General of Revenue, Minist ry of the Economy and Finance. 
99. The purpose of the Tax Credit Certificate (CAT ) is to encourage and assess the establishment 
and development of the manufacture and export of non-traditional products, and to promote the 
development of the production sector.  This programme is regulated by Law No. 108 of 
30 December 1974, as amended by Law No. 2 of 20 March 1986 and Law No. 28 of 20 June 1995 
and regulated by Executive Decree No. 274 of 29 December 1995. 
                                                      
29 Document G/SCM/85. 
30 Document G/SCM/W/537. 
31 Document G/SCM/84. Panama WT/TPR/G/186/Rev.1 
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 100. The programme was extended by the Committe e on Subsidies and Countervailing Measures 
until 31 December 2005 and adopted by means of Law No. 62 of 26 December 2002.  In view of the 
economic and social needs of the agro-industrial sector , which is concentrated mainly in rural areas 
with a peasant and indigenous population where the le vels of poverty, mortality, malnutrition, and 
illiteracy are the highest in the country, Panama deci ded to guarantee agro-industrial sustainability by 
extending the programme until 31 December 2006 by  means of Law No. 25 of 19 July 2005, and 
limiting programme benefits to non- traditional agricultural, livestock, and aquaculture products.  It 
was subsequently extended until 30 September 2009 by  means of Law No. 3 of 8 January 2007 and 
successive provisions. 
1.1.5 Trade Remedies 
 
101. Panama believes that trade remedies are tools to reaffirm the objectives of trade opening in 
that they provide sufficient security to the producti on sectors, make the open trade process consistent, 
and help to strengthen it. 
102. The Directorate-General of Trade Defence of the Ministry of Trade and Industry (MICI) is 
currently the agency responsible for safeguarding the commercial interests of Panamanian industry 
which has suffered injury from unfair practices, through the use of established investigation 
procedures.  The Directorate validates negotiati ons on issues pertaining to safeguards and unfair 
practices, monitors the trading of goods liable to investigation proceedings, and discloses the relevant 
information. 
103. Safeguard and anti-dumping a nd countervailing proceedings are currently governed by 
Decree-Law No. 7 of 15 February 2006 and the Ma rrakesh Agreement, adopted through Law No. 23 
of 1997, which establish rules for trade protectio n and defence.  The establishment of the new 
Directorate-General of Trade Defence and the adopti on of the relevant legisl ation have strengthened 
institutional capacity, thus ensuring the credibility of trade reforms and the objectives of domestic 
liberalization. 
104. Only one investigation for dumping has been carried out, involving certain imports of sugar 
from Mexico and Colombia (May 1998);  in that  case, the application to impose dumping duties was 
disallowed (February 2000).  One safeguards case has b een initiated, concerning certain printed roll 
polypropylene and polyvinyl chloride (PVC) film  for manufacturing flexible packaging (2006).32   In 
the area of countervailing duties, no investigation has been carried out. 
1.1.6 Technical Barriers to Trade 
 
105. Technical standards and regulations in Panama  are governed by Law No. 23 of 15 July 1997, 
which approved the Marrakesh Agreement and enact ed provisions on technical standardization, 
conformity assessment, accreditation, quality certif ication, metrology and conversion to the 
International System of Units. 
106. The National Standardization Agency ( Organismo Nacional de Normalización  – ONN) is the 
Directorate-General of Standa rds and Industrial Technology ( Dirección General de Normas y 
Tecnología Industrial  – DGNTI)33, which is responsible for ongoi ng promotion and development of 
                                                      
32 At June 2007, there is a final resolution which re commends definitive measures, subject to approval 
by the Cabinet Council. 
33 Established by means of Cabinet Decree No. 225 of 1969, organizing the Ministry of Trade and 
Industry and assigning functions to it. WT/TPR/G/186/Rev.1 Trade Policy Review 
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 technical standardization activities, quality mana gement, and conformity certification.  These 
mechanisms help to ensure that the goods and services produced in Panama or imported into the 
country comply with internati onally established quality levels. 
107. The DGNTI oversees the legal and institutional envi ronment for the formulation of technical 
standards and regulations and monitors the process leading to their adoption, implementation and/or 
accreditation.  Technical standards and regulations  in Panama are established on the basis of 
legitimate criteria for the protection of life, human, animal, or plant health, and the environment, and 
for the prevention of misleading practices. 
108. The DGNTI also organizes, develops, facilitates,  and promotes a national quality system to 
pave the way for domestic and international comp etitiveness through technical standardization and 
regulation.  It engages in ongoing activities to de velop a quality management "culture" for the well-
being, safety, and health of the population. 
109. In addition to its standardizing and certifying role, the DGNTI is also the national enquiry 
point for the WTO.  It provides information through the Regulatory Information Centre ( Centro de 
Información Normativa  – CIN), offering ongoing assistance to users with respect to domestic and 
international technical manuals,  standards, and regulations. 
110. Panama is a member of the International Organization for Standardization (ISO), which 
allows the DGNTI to maintain communication and pa rticipate directly in standardization processes at 
the international level, and is also a member of the Codex Alimentarius Commission specifically 
established by the Food and Agriculture Organiza tion of the United Nations (FAO) to address 
technical standardization in the area of food.  In  addition, as the national standardization agency, the 
DGNTI is the Codex Alimentarius focal point and c oordinator in Panama.  It is a member of the 
International Electrotechnical Commission (IEC) ;  the Pan American Standards Commission 
(COPANT);  the American Society for Testing and Materials (ASTM), which ensures technical standardization in the area of construction;  th e Colombian Technical Standards and Certification 
Institute ( Instituto Colombiano de Norm as Técnicas y Certificación  – ICONTEC);  and the Spanish 
Association for Standardisation and Certification ( Asociación Española de Normalización y 
Certificación  – AENOR). 
111. To date, Panama has 15 technical manuals, 495 technical standards, and 84 technical 
regulations.  Approximately 67 per cent of the tech nical regulations pertain to the food technology 
sector, and the remaining 33 per cent are divided among the following sectors:  construction materials 
and buildings, petroleum and its by-products, metrol ogy, and chemical products.  All the technical 
regulations adopted by Panama are based on international principles and standards. 
1.1.7 Sanitary and Phytosanitary Measures 
 
112. The WTO Agreement on Sanitary and Phyto sanitary Measures (SPS Agreement) is an 
essential element in taking advantage of the benefits of trade liberalization, since it regulates the 
adoption and application of sanitary and phytosanit ary measures and prevents them from becoming 
non-tariff barriers. 
113. Panamanian law on sanitary and phytosanitary measures is based on the 
WTO SPS Agreement;  Law No. 23 of 15 July 1997, approving Panama's Prot ocol of Accession to 
the WTO and setting forth Title I on animal he alth and agricultural quarantine measures and 
authorities;  Law No. 47 of 9 July 1996, establishing phytosanitary protection measures;  and Law Panama WT/TPR/G/186/Rev.1 
 Page 27 
 
 
 No. 11 of 22 February 2006, establishing the Panamanian Food Security Authority ( Autoridad 
Panameña de Seguridad de Alimentos  – AUPSA) and setting out rules on food security. 
114. The launching of AUPSA in mid-2006 led to important changes in the application of sanitary 
and phytosanitary measures.  Significant progress was achieved in improving the system regulating 
food imports. 
115. The AUPSA is the State lead agency responsib le for establishing sanitary and phytosanitary 
requirements and measures for the import, transit, and transshipment of food.  It is also entrusted with 
establishing equivalency among sanitary and phytosan itary measures relating to food imports at the 
system level.  In addition, it is responsible fo r regionalization;  verification of compliance with 
sanitary and phytosanitary import, transit, and tran sshipment requirements at Panamanian entry points 
(land borders, ports, and airports);   food analysis and diagnostic assessment to prevent the entry of 
pests and diseases subject to quarantine;  sanitary registration of pre-packaged foods whose import 
into the country is desired;  and certification of la boratories specializing in this area with a view to 
their accreditation by the National Accreditation Council ( Consejo Nacional de Acreditación  – CNA). 
116. Strenuous efforts are currently being made to  complete the establishment of the National 
Commission on Sanitary and Phytosanitary Measures ( Comisión Nacional de Medidas Sanitarias y 
Fitosanitarias ), on which all the relevant authorities will be represented.  The Commission's objective 
is to support international trade negotiatio ns and coordinate im plementation of the 
WTO SPS Agreement with other releva nt international organizations. 
117. In addition to enacting SPS legislation, Panama is a member of the Codex Alimentarius 
Commission and the World Organisation for Animal H ealth, and is a party to the International Plant 
Protection Convention and a signatory to the Convention on Biological Diversity. 
118. Following its accession to the WTO in 199 7, Panama submitted approximately 
30 notifications to the Committee on Sanitary and Phytosanitary Measures.  Of the notifications 
submitted in this period, only a small percenta ge constitute measures prohibiting the import of 
agricultural products;  those measures are based on the principles laid down in the SPS Agreement. 
119. In view of international support through the Inter-American Institute for Cooperation on 
Agriculture (IICA) and its own efforts and interests,  Panama participates actively in the Committee on 
Sanitary and Phytosanitary Measur es, which enables it to remain up to date and in the forefront 
regarding the transformation processes developed and applied by other Members in the area of SPS.  
This Committee also provides Panama with a foru m in which to make its activities and projects 
known, raise its concerns, and obtain techni cal assistance and cooperation in improving the 
implementation of the SPS Agreement. 
1.1.8 Intellectual Property 
 
120. Intellectual property rights have broad covera ge in the Law on Industrial Property, Law 
No. 35 of 10 May 1996, and its Regulation, and by  Law No. 23 of 15 July 1997 (the Marrakesh 
Agreement). 
121. The agencies directly involved in the prot ection and enforcement of intellectual property 
rights are the Directorate-General of the Industrial Property Register ( Dirección General del Registro 
de la Propiedad Industrial  – DIGERPI), the Council for the Protection of New Varieties of Plants 
(Consejo para la Protección de las Obtenciones Vegetales  – COPOV), the Directorate of 
International Trade Negotiations ( Dirección de Negociaciones Comerciales Internacionales  – WT/TPR/G/186/Rev.1 Trade Policy Review 
Page 28 
 
 
 DINECI), the Inter-Agency Intellectual Property Commission ( Comisión Interinstitucional de 
Propiedad Intelectual ), the National Copyright Directorate ( Dirección Nacional de Derecho de 
Autor ), the Office of the Special Prosecut or for Intellectual Property Offences ( Fiscalía Especializada 
en Delitos contra la Propiedad Intelectual ), the Third Higher Court (Courts of Special Jurisdiction) 
(Tercer Tribunal Superior (Juzgados Especiales de la Competencia) ), and the Colon Free Zone 
Intellectual Property Office ( Oficinas de Propiedad Intelectual de Zona Libre de Colón ), the 
Directorate-General of Customs ( Dirección General de Aduanas  – DGA), and the Judicial Technical 
Police ( Policía Técnica Judicial – PTJ). 
122. Through the Ministry of Trade and Industry (MICI), the IDB, and the World Intellectual 
Property Organization (WIPO), Panama has developed a project that promotes measures to reduce red 
tape, institutional excellence and the strengthening of management.  As part of this objective, there is 
a technology infrastructure programme that provid es for an Automated Industrial Property System 
(Sistema Automatizado de Propiedad Industrial  – SIDPI), through which document digitization, a 
web site (www.digerpi.gob.pa), and interconnectivit y (http://sidpil.digerpi.gob.pa) were implemented. 
123. Implementation of the various programmes rela ted to this subject and to institutional 
modernization, involves national capacity-building through a formal education programme, seminars, 
and workshops for the public and private sectors, as  well as links to universities.  Promotion and 
dissemination of the programmes through publicati ons and user guides that are distributed at 
conferences and information centres, have also had an important role. 
124. The National System for the Protection of New Varieties of Plants (COPOV) is governed by 
the Standards for the Protection of New Varieties of  Plants, Law No. 23 of 15 July 1997, Title V, and 
its Regulation.  This system is based on the 1978 Act of the International Convention for the 
Protection of New Varieties of Plants (UPO V Convention) and Executive Decree No. 13 of 
19 March 1999 (Regulation).  The Law's objective is to recognize and guarantee the protection of 
plant varieties through patents or a sui generis  (customized) system.  The UPOV system affords the 
simplest means for countries to have their own systems for protecting plant varieties, with broad 
international recognition.  The Council for the Pr otection of New Varieties of Plants (COPOV) is 
chaired by the Minister of Agricultural Development. 
125. Collective intellectual property rights and the traditional knowledge of indigenous peoples are 
protected by Law No. 20 of 26 June 2000 and its Re gulation, which establishes a special system of 
registration, promotion, and marketing to highlight indigenous cultural values, encourage the return of 
income to indigenous communities and provide them with social justice. 
126. The Inter-Agency Intellectual Property Commissi on was established by Law No. 35 of 
10 May 1996 (Article 197) and regulated by mean s of Resolution No. 177 of 2 May 2001.  The 
Commission ensures the harmonization, coordination,  and monitoring of policy in the area of 
intellectual property.  It consists of the Director ate of International Trade Negotiations of the MICI, 
the Directorate-General of the Industrial Propert y Register of the MICI, the National Copyright 
Directorate of the Ministry of Education (MEDUC A), the Customs Intellectual Property Department, 
the Colon Free Zone Intellectual Property Department , and the Attorney General's Office, through its 
Special Prosecutor's Office. 
127. MEDUCA's National Copyright and Related Rights Directorate is governed by the Law on 
Copyright and Related Rights (No. 15 of 8 Augus t 1994) and by Decree No. 261 of 1995 regulating 
Law No. 15 of 1994.  It deals directly with ma tters related to copyright, performance, phonograms, Panama WT/TPR/G/186/Rev.1 
 Page 29 
 
 
 information technology, and the data base of the historical archive of works registered in the 
Copyright and Related Rights Register. 
128. There is a collecting society that administers copyright and economic rights to musical works 
for its members and representatives, the Panamanian Society of Authors and Composers ( Sociedad 
Panameña de Autores y Compositores  – SPAC), established through Resolution No. 8 of 
30 December 1996. 
129. The Attorney General's Office takes action through Law No. 15 of 1994 to eradicate the 
pirating of protected works, and does so in coor dination with the SPAC in the interests of more 
effective action with a view to fostering respect fo r intellectual property rights.  Various entities play a 
role in proceedings related to intellectual property;   among them are prosecutors, judges, the Judicial 
Technical Police, and the National Police.  Prev entive and security measures are carried out by 
Customs and the Colon Free Zone. 
130. Resolution No. 9 of 27 December 2002 estab lished the Office of the Special Public 
Prosecutor for Intellectual Property Offences.  In addition, under Resolution No. 013 of 
9 March 2006, Law No. 45 of 4 June 2003, and La w No. 1 of 5 January 2004 articles and machinery 
used in the infringement of intellectual property rights may be donated or destroyed, the Special 
Prosecutor's Office has the right to take over crim inal matters from the Ninth Public Prosecutor's 
Office and offences against the rights of others and abuse of industrial property rights may be merged.  
In intellectual property offences, the Prosecutor's Office carries out formalities for investigation, 
discovery of the truth and production of evidence,  seeks to identify offe nders and accomplices and 
brings criminal proceedings before the competen t courts at the national level.  From 2005 to 
April 2007, there were 151 searches, 38 inspections, and 201 expert evaluations.  The evidence seized 
in copyright infringement cases was worth B 81, 216, and the evidence sei zed in cases involving 
infringement of industrial property rights came to B 2,979,532 during the same period. 
131. The Judicial Technical Police has a Special Section for Intellectual Property Offences at the 
national level, which was introduced by Resolu tion No. DG-143-03.  It operates under the direct 
supervision of the Auxiliary Property Offences Di vision of the Attorney General's Office and the 
Judicial Authority in the investigation and pr osecution of intellectual property offences and the 
punishment of offenders and accomplices. 
132. Through Law No. 29 of 1996 on Defence of Co mpetition, the Judicial Authority established 
circuit courts and the Third Higher Commercial Cour t with jurisdiction in the area of intellectual 
property. 
133. The Directorate-General of Customs has the pow er to inspect or retain merchandise being 
processed in customs that may be in fringing the existing legal provisions  on intellectual property;  this 
authority is granted through Executive Decree No. 123 of 26 November 1996, regulating Articles 176 and 177 of Law No. 35 of 10 May 1996. 
134. Executive Decree No. 79 of 1 August 1997 regulated Articles 176 and 177 of Law No. 35 in 
respect of the Colon Free Zone and other free or processing zones managed by the State, and 
established the Industrial Property Department in the Colon Free Zone.  Resolution No. 03-98 of 
11 June 1998 established the functions and inte rnal organization of the Intellectual Property 
Department;  Resolution No. 04-98 of 11 June 1998 set  rates for the entry of rights obtained in the 
Intellectual Property Register;  Resolution No. 05-98 of 26 August 1998 set rates for provision of WT/TPR/G/186/Rev.1 Trade Policy Review 
Page 30 
 
 
 inspection services in the area of industrial property;   and Resolution No. 18- 98 of 14 February 1998 
adopted the regulation on registration of licences for protected rights. 
135. All these efforts have resulted in an efficient system for the protection and observance of 
intellectual property rights and copyright, which de monstrates Panama's clear commitment in this 
area. 
1.1.9 Services 
 
136. Trade, and the competitiveness it generates, has brought with it the formation of so-called 
"clusters" or groups of enterprises producing go ods and/or services that complement one another 
within the same geographical area.  In spite of  their recognition by the WTO, the obligations 
contracted for each of the various services and th e trade in goods carried out within the clusters 
continue to be those laid down in the relevant  Agreements and bindings, irrespective of the 
coordinated relationship between these groups. 
• Financial Services 
 
137. The Panamanian Financial Centre, consisting largely of banking services, insurance, and 
securities, is one of the key strategic areas of the country's economy.  In recent years, the 
regionalization of banking and insurance in Latin  America has redefined the structure of the 
Panamanian Financial Centre, which seeks to expand and diversify its operations in the region.  For 
this reason, Panama is promoting open trade practices in the sector, in order to achieve greater access to other markets. 
138. In this context it should be emphasized that, in line with Panama's WTO commitments, there 
is a good level of open trade in financial services.   These include banking and other financial services 
(excluding insurance), such as:  deposit-taking;  all types of loans, including personal and mortgage 
loans;  financial leasing services;  payment and mo ney transfer services;  guarantees and pledges;  
trading on the institution's own account  or on behalf of clients, be it on an exchange, in an over-the-
counter market, or in some other form;  taking part in issues of all categories of securities;  foreign 
exchange brokerage;  asset management, for exam ple, management of securities portfolios and 
pension funds;  payment and clearing services invol ving financial assets;  supply and transfer of 
financial information and financia l data processing;  advisory services and other back-office financial 
services. 
139. In relation to the insurance and related services sector, Panama has no limitations on 
commercial presence, but does impose certain restri ctions on cross-border supply and consumption 
abroad. 
140. In order to grow, developing countries need cap ital and a financial infrastructure which also 
guarantee soundness and stability.  As foreign investment flows to emerging markets, it will increase the volume and breadth of those markets.  For this  reason, in the current negotiating process, Panama 
is seeking improved access conditions that would allow, inter alia , an increase in the number of 
licences for foreign financial institu tions and guaranteed levels of fo reign participation in the capital 
of branches or bank subsidiaries, insurance compan ies, other financial entities, and other financial 
services.  This will make the sector more compe titive, increasing opportunities in external markets 
and promoting more efficient service delivery. Panama WT/TPR/G/186/Rev.1 
 Page 31 
 
 
 • Tourism Services 
 
141. For Panama, it is important to guarantee acces s to the tourism service provider market.  
According to official figures, in the first quarter of 2006, the number of tourists increased by 14.4 per 
cent and the number of travellers in transit and cr ew members by 16.4 per cent, producing an increase 
of 19.2 per cent in expendit ures made during these visits. 
142. Nevertheless, guaranteeing the e limination of barriers to small-scale tourism investment in 
hotels and restaurants is also important, as is preventing discriminatory use and anti-competitive practices by some service providers as regards access to computerized reservation systems and other instruments used in the tourism i ndustry that enhance competitiveness. 
143. As a result of the obligations Panama undert ook upon its accession, there is unrestricted 
market access with respect to consumption abro ad and commercial presence.  These commitments are 
included in Schedule CXLI, Part II, on Specific Commitments on Services, under 9, A and B, of 
Panama's Protocol of Accession to the WTO.
34 
144. During the discussions held at the WTO in February 200135, the conclusion was reached that 
tourism development also requires competitive servi ces in the areas of transport (air and land), 
finance, and health.  Some of these, such as fina ncial and health services, were negotiated in the 
framework of the WTO.  In the case of financial services, Panama bound access to its existing market.  
In the area of health, hospital services were bound, but not medical services.  Air transport services 
were excluded from coverage under the General Agre ement on Trade in Servic es (GATS) in respect 
of airspace and frequency of flights, inasmuch as  they are regulated by the International Civil 
Aviation Organization (ICAO), and land transport services were not bound in the WTO.  Other 
tourism-related services are distributio n, advertising, and construction. 
145. In the framework of the current round of negotiations, many WTO Members have made 
commitments in tourism services.  "This level is greater than for any other sector, and indicates the 
desire of most Members to expand their tourism sectors and to increase inward FDI as part of efforts 
to promote economic growth"36, a desire promoted and shared by Panama. 
• Logistical Services 
 
146. Currently, there is no separate category for logi stical services in the WTO Services Sectoral 
Classification List.37  Nevertheless, elements related to logi stics are included under various headings, 
for example, in the "Transport Services" sector (freight transportation, cargo-handling services, storage and warehouse services, freight transport agency services, etc.) and the "Business Services" 
sector (inventory control, order processing, etc.).  Other related elements, such as customs clearance 
services, container station and depot services, and maritime agency services, were in fact introduced in the Maritime Model Schedule that served as the b asis for the latest negotiations on this sector.  
Despite the suspension of those negotiations in June 1996, WTO Members generally recognized the 
specific characteristics and the importance of those elements in achieving the unfettered delivery of 
goods. 
                                                     
 
34 Law No. 23 of 15 July 1997. 
35 www.wto.org/English/news_e/pres01_e/pr211_e.htm. 
36 Document S/C/W/51. 
37 Document W/120. WT/TPR/G/186/Rev.1 Trade Policy Review 
Page 32 
 
 
 147. The express delivery service sector is believed to be taking on ever greater importance in 
issues related to logistics and inventories.  A clear  linkage is also seen between logistical services and 
other activities, such as electronic commerce and customs and health procedures, areas in which 
Panama has strengthened its institutional frame work and implemented speedier procedures. 
148. An analysis of the status of each of these servi ce sectors in terms of their bindings and their 
development, is set forth below. 
• Transport Services 
 
149. There are several classifications and subclassifi cations for the transport sector, in accordance 
with the Central Product Classification (CPC).  In air transport, despite broad freedom of access, there 
is private regulation through the International Air Tran sport Association (IATA).  On this topic, in the 
WTO Panama bound trade opening in aircraft maintenance. 
150. As far as rules are concerned, all the various other types of transport are covered by the 
GATS, but there is no commitment to opening trade. 
151. Owing to the importance of the shipping industry to WTO Members, the Ministerial Decision 
on Negotiations on Maritime Transport Services  was promulgated dur ing the Uruguay Round 
negotiations in 1993.  This Decision establishe d the Negotiating Group on Maritime Transport 
Services with a mandate to carry out negotiations  during the period from 16 May 1994 to June 1996. 
152. Panama did not bind any offer of access to th e maritime transport services sector during its 
WTO accession process, since by that time, the scope  of access in the sector was being negotiated at 
the multilateral level. 
153. In spite of the mandate and the efforts of many  countries, the negotiations were suspended in 
1996, and a new Ministerial Decision was established with a commitment to resume negotiations in a 
future round. 
154. As part of the Guidelines on Trade in Servi ces in the Doha Development Round, the request-
offer approach was established as the plurilate ral negotiation method for negotiating access to 
markets, and a plurilateral request was made on mar itime services as a sector of interest to several 
Members, with a view to greater liberalization in international maritime freight and passenger transportation, auxiliary services in storage and warehousing and cargo handling, shipping agencies, 
and access to/use of port facilities,  such as pilotage, berthing and anchorage, provisioning, and 
multimodal transport. 
155. These negotiations are of great importance to Panama.  The movement of containerized 
freight through the Panama Canal and provision of auxiliary services give Panama a competitive 
advantage as a maritime service provider.  For this reason, the country is seek ing greater liberalization 
in other markets, especially in freight movement and unrestricted port facilities. 
156. From the standpoint of open trade practices at the domestic level, Panama's economy is 
broadly liberalized and there is a high degree of competition in port services, although market 
limitations restrict such liberalization.  Ther e are virtually no limitations on access to auxiliary 
services and international transport. Panama WT/TPR/G/186/Rev.1 
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 • Technology Services 
 
157. The WTO classifies technology services as computer and related services.  Panama bound 
trade opening, without restrictions on cross-borde r, consumption abroad, and commercial presence 
modes of supply, for the following technology se rvices:  consultancy services related to the 
installation of computer hardware;  software implementation services;  data processing services;  
database services;  and equipment maintenance and re pair services.  This sector is broadly open to 
trade, which allows competitive deve lopment of logistical services. 
158. Related consultancy services in science and technology were bound with no access or national 
treatment limitations for consumption abroad and comme rcial presence.  In this sector, there is also 
liberalization for presence of natural persons other th an engineers, who must be licensed in Panama. 
• Telecommunication Services 
 
159. It is important to mention the quality of the supply to which telecommunication service 
providers have access in Panama.  Panama's bindi ng under the WTO has been bettered by its own 
domestic law.  In fact, at the time its WTO co mmitments were negotiate d, Panama had not yet 
embarked upon an open trade process for this sector, wh ich was in its beginnings.  This was reflected 
in the bindings, which essentially were made only for telecommunication services with added value38, 
while companies were limited to providing these services through partnership with INTEL, S.A. for the first five years and thereafter directly.  Basic telecommunication services were unbound. 
160. The domestic telecommunication market in Panama  has developed more rapidly than agreed 
in the WTO framework.  The formation of the joint venture Cable & Wireless de Panamá  
(Cable & Wireless Panama) allowed private capital to  have limited access, for five years, to basic 
telecommunication services and international ca lls, and through approval of Law No. 31 of 
8 February 1996, added-value services were opened up.
39 
161. Moreover, given that Law No. 31 of 1996 regulates services and not technology, 
telecommunication infrastructure providers were comp letely liberalized, since there is no special law 
regulating that area.  In addition, Law No. 23 of  1996 establishes international trade standards and 
confirms the market opening for telecommunication infrastructure providers. 
162. These two laws have made Panama the country in the region where a fibre-optic submarine 
cable can be laid most easily and with the fewest restrictions.  This has given rise to an impressive 
boom in the laying of submarine cables, which pr ovide vast infrastructure capacity, making Panama 
highly competitive in the use of telecommunications in logistical services. 
                                                      
38 Electronic mail, voice mail, online information and data base retrieval, electronic data 
interchange (EDI), enhanced/value-added facsimile servi ces (including store and retrieve), code and protocol 
conversion, online information and/or data processing (including transaction processing), and others. 
39 Panama adopted a system of service definitions, the legal basis of which is contained in a resolution 
of the Regulatory Agency, No. JD-025 of 2 December 1996.  These defin itions do not conform to the definitions 
used by the WTO, but it can be stated with certainty that  nearly all the services immediately liberalized by this 
resolution are classified as value-added services  according to the WTO.  Decree-Law No. 10 of 
22 February 2006 amended and supplemented Law No. 26 of 29 January 1996, restructuring the Public Service 
Regulatory Agency under the name Nati onal Public Service Authority (ASEP). WT/TPR/G/186/Rev.1 Trade Policy Review 
Page 34 
 
 
 • Business Services 
 
163. Under the category "Other Business Services" in its schedule of commitments, Panama bound 
a long list of services.  These include services relate d to management consu lting (inventory control 
services) and related scientific and technological consultancy services, on which Panama has made 
substantial commitments that guarantee market  access, thus facilitating the management of 
distribution companies. 
1.1.10 The Doha Round 
 
164. Panama has participated as a Member in all the WTO Ministerial Conferences that have been 
held since its accession;  in particular, at the Four th WTO Ministerial Conference held in Doha, Qatar, 
in December 2001, it supported the launching of the new round of negotiations. 
165. The Doha Round gave Panama an important oppor tunity to participate in decision making on 
the rules that will govern world trade.  Panama recogn izes the value of trade liberalization, clear rules, 
and transparency;  for this reason, it participates act ively in the various negotiations.  It also echoes 
the call for observance of special and differential trea tment, which should be present in all areas of the 
negotiations. 
166. In relation to services negotiations, Panama s ubmitted its initial offer in April 2003.  It 
contains improvements in certain sectors, such as a dult education, food supply,  maritime transport, 
collection and elimination of hospital waste, a nd value-added telecommunication services.  Panama 
has kept its domestic consultati on process open in order to prepar e its revised offer on services. 
167. With respect to financial services negotiati ons, Panama submitted a joint proposal for 
financial services liberalization40 which specifically seeks liberalization commitments in the 
establishment of joint ventures or branches, elimination of discrimination between domestic and foreign suppliers, and elimination of monopolies,  numerical quotas, economic needs tests, and 
mandatory cessions.  The proposal also seeks transparen cy in the formulation and application of laws 
and regulations, transparent and swift licensi ng procedures, and other regulatory issues. 
168. Panama has participated actively in the maritime sector as a co-sponsor of greater trade 
liberalization proposals.  It has also participat ed in such topics as computer and related services, 
audiovisual services, distribution services, logistical services, architectural and engineering services, and integrated engineering services. 
169. In the framework of the agri culture negotiations, Panama submitted, together with other 
countries
41, proposals on modalities and implementation for the fullest liberalization of tropical and 
alternative products.42  This proposal also provides support for agricultural safeguards and recognition 
of special products. 
170. Panama co-sponsored a proposal that promot es differential treatment in agriculture43 and an 
outcome that goes beyond the level for devel oping countries in the market access negotiations44 for 
recently acceded Members. 
                                                      
40 WTO documents TN/S/W/43, S/FIN/W/43. 
41 G-33 (Friends of Tropical Products). 
42 WTO document TN/AG/GEN/19. 
43 WTO document TN/AG/GEN/24. Panama WT/TPR/G/186/Rev.1 
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 171. Panama supports the group of small and vuln erable economies and the group of recently 
acceded Members on a cross-cutting basis and favours gr eater trade liberalization for fish and fish 
products.45 
172. Regarding trade facilitation, Panama co-sponsor ed a proposal that introduces a causal link 
between the scope of commitments and capacity fo r implementation, creating possible elements or 
bases of interest for developing country Member s on technical cooperation and capacity-building.46 
173. In the intellectual property negotiations, Pa nama fully supported, including through 
ministerial notes, the position of easing access to medicines for the production of generics.  In addition, it supported the establishment of a multilate ral system for the registration of geographical 
indications and the linkage of intellectual property ri ghts and biodiversity, in terms of respect for the 
biological aspects of biodiversity;  to this end, the National Environmental Authority ( Autoridad 
Nacional del Ambiente  – ANAM) has a regulation which establishes such a measure. 
1.2 Bilateral Trade Agreements 
 
174. Panama does not belong to any economic bloc;  th e dynamics of its trade are therefore largely 
determined by the multilateral context, its rights a nd obligations under the WT O, and its relationship 
with various partners through trade agreements. 
175. The conclusion of trade agreements is encouraged , bearing in mind that such agreements seek 
to reduce the transaction costs of trade relations and provide a set of rules binding on their members 
that promote stability, foster transparency, and en sure compliance with the agreed rules.  This 
strengthens investment opportunities in the coun try, which boosts the economy through production 
and job creation and stimulates ec onomic and social well-being. 
176. Panama initiated bilateral ne gotiations with Chile, Mexico, and Central America, and 
succeeded in concluding a basic text with Centra l America, which was signed on 26 March 2002.  
Once the negotiations on this text were concluded, bilateral negotiations were  initiated with each of 
the five Central American countries to establish the level of access to goods, services, and investment, 
as well as the specific rules of origin for the products covered in the basic text.  The bilateral protocol 
with El Salvador was signed together with the basi c text and entered into force on 11 April 2003.  The 
bilateral protocol with Honduras was signed on 15 June  2007.  Negotiations on the bilateral protocol 
with Costa Rica concluded on 22 June 2007, and negotiations with Nicaragua and Guatemala are in 
their final phase. 
177. Since the entry into force of the bilateral protoc ol with El Salvador, Panamanian exports have 
averaged 17.6 per cent annual growth.  Accordi ng to recent figures on investment in Panama, 
El Salvador is one of Panama's five key investment partners in the region.  Salvadoran investments are 
distinguished by their presence in sectors such as banking, construction, and distribution and sale of 
motor vehicles and related parts and accessories. 
178. With respect to access by Panamanian products to  the Salvadoran market, nearly the whole of 
El Salvador's tariff universe (81 per cent) is dut y free (0 per cent).  As to access by Salvadoran 
products to the Panamanian market, 79 per cent of the products enter duty free (0 per cent).  In both 
cases, the remaining products are subj ect to the tariff reduction programme. 
                                                                                                                                                                    
 
44 WTO document TN/MA/W/83. 
45 WTO document TN/MA/W/63/Add.1. 
46 WTO document TN/TF/W/41. WT/TPR/G/186/Rev.1 Trade Policy Review 
Page 36 
 
 
 179. Panama has also signed trade agreements w ith Chinese Taipei, Singapore, and the United 
States.  In June 2003 it signed a free trade agreem ent (FTA) with Chinese Taipei, which entered into 
force on 1 January 2004.  This treaty seeks to im prove the free trade area between the partners, 
eliminate barriers to trade, facilitate the moveme nt of goods and services, and increase investment in 
the territories of the parties.  The tariff reducti on programme allows immediate access to the Chinese 
Taipei market for 97 per cent of Panamanian e xports, while 60 per cent of imports from Chinese 
Taipei receive the same treatment. 
180. In March 2006, Panama signed an FTA with Singapore, which entered into force on 
1 July 2006.  This treaty was signed in the interest of attracting investment in maritime, port, air, and 
processing zone activities, and of achieving technological cooperation in computer and 
telecommunication services.  Panama achieved i mmediate access to Singapore for 100 per cent of 
agricultural and industrial goods of Panamanian  origin, while granting Singapore immediate 
liberalization for 94 per cent of its exports to Pa nama and different import tariff phase out periods for 
other tariff lines.  Negotiations on market access in i nvestment focused on specific areas of interest to 
both countries, such as ports, telecommunications, c onsumer services and goods , and participation in 
public service companies. 
181. Likewise, negotiations on an FTA with Chile concluded in February 2006.  The negotiated 
agreement received the approval of the Panamanian National Assembly on 12 January 2007 and from 
the Chilean Chamber of Deputies on 4 July 2007.  The agreement will enter into force 60 days after 
the exchange of notes between the two parties.  One of  the main benefits of the FTA with Chile is that 
Panama will be trade-integrated with one of the mo st flourishing economies in  South America.  This 
is the first FTA concluded with a South American  country.  Panama achieved immediate duty free 
access to the Chilean market for 92.5 per cent of  its tariff lines.  The FTA establishes suitable 
conditions for attracting Chilean investment to Pana ma, and at the same time nurtures the possibility 
of Panamanian investment in Chile.  This trading pa rtner is one of the largest users of the Colon Free 
Zone, and the FTA will enable Chilean entrepreneurs to benefit from the advantages and facilities that 
Panama offers foreign investors. 
182. Panama also concluded a trade promotion agreement (TPA) with the United States, which 
was signed on 28 June 2007 and is currently be ing ratified by the United States Congress and the 
Panamanian National Assembly.  The United States is  Panama's main trading partner, with a 40 per 
cent share of its total exports, while imports from th e United States market account for 30 per cent of 
total imports (see Charts Nos. 5 and 6). 
183. The objective of the TPA with the United States is to solidify and expand current trade with 
Panama's most important trading partner, thereby also increasing foreign investment, the competitiveness of Panamanian enterprises, a nd exports to the United States market. 
184. The United States is the country that has the la rgest share of foreign investment in Panama, 
with great potential for annual growth.  In consideration of that fact, ve ry flexible rules of origin were 
negotiated, allowing goods to be assembled and e xported to the United States duty free.  Recognition 
for re-manufactured goods was also achieved,  making it possible to promote Panama as a 
re-manufacturing logistical centre through outsourcing for United States companies. 
185. For Panama, the TPA represents duty free entr y to the United States for 100 per cent of 
current exports from the industrial and fishing sectors.  Guayabera  shirts, handicrafts, folk and 
traditional goods, and sunfish will receive the same treatment. Panama WT/TPR/G/186/Rev.1 
 Page 37 
 
 
 186. In the area of cross-border trade in services, all service sectors are included with the exception 
of financial services, some air services, services provi ded by the State (health, education, etc.), and the 
permanent labour market. 
0%5%10%15%20%25%30%35%40%45%
United
StatesEuropean
UnionLatin
Am ericaAsia OthersChart No. 5 
Panama:  Worldwide Exports and Key Destinations:  2005 
(Percentage)
Source: Office of the Comptroller-General of the Republic 
 
0%10%20%30%40%50%60%
CACM Others Andean
GroupDominican
RepublicCARICOMChart No. 6 
Panama:  Key Destinations of Exports to Latin America and the 
Caribbean - 2005 (Percentage)1/
1/ Excluding the United States and Canada. 
Source: Office of the Comptroller-General of the Republic
 
 WT/TPR/G/186/Rev.1 Trade Policy Review 
Page 38 
 
 
 187. These trade agreements have speeded up the ma rket liberalization process and are helping to 
improve domestic regulatory standards rela ted to international trade.  Based on, inter alia , the 
performance of international trade and the results of  trade agreements, evaluations are carried out that 
provide a basis for country proposals at the multilatera l, plurilateral and bilate ral level and are aimed 
at helping countries respond and adapt to global trends in the most positive manner possible. 
1.3 Investment Promotion 
 
188. Investment promotion in Panama has led to st ructural changes designed to project the image 
of a safe territory.  A set of legal and regulatory provisions have been im plemented, ranging from an 
Investment Framework Law (No. 54 of July 1998) to  the signing of reciprocal  investment promotion 
and protection agreements, interna tional dispute settlement agreements in the area of investment, and 
modernization of laws related to, inter alia , competition, privatization, and telecommunications. 
189. Panama's geographical position enables it to offer a modern logistical platform via sea, land, 
and air to both domestic and foreign investors.  The Panama Canal is the main hub of the system of container terminals between the Pacific and the Ca ribbean.  Supported by the inter-oceanic railway, it 
is the freight transshipment and redistribution centre.   In addition, Panama has the largest merchandise 
redistribution free zone in the Western Hemisphere (the Colon Free Zone), as well as the Panama Pacific Special Economic Area ( Área Económica Especial Panamá Pacífico ), an area reserved for the 
production of high technology services. 
190. Panama offers efficient air service through Tocume n International Airport.  It has five fibre-
optic submarine cables offering substantial connectiv ity with North and South America, Europe, Asia 
and the Caribbean, making it an ideal location for telecommunication companies and data centres.  It has a sound banking structure governed by the Basel Convention principles.  Its medical and health 
services enjoy international recognition.  It has nu merous hotels, including some belonging to large 
international chains;  excellent restaurants;  larg e shopping centres;  and a variety of entertainment 
venues.  These factors have enabled Panama to be chosen as the registered address of large 
multinational companies (Samsung Electronics, In c., DHL, DELL, Hutchinson Port Holding Group, 
HSBC, BICSA, SCOTIABANK, Assicurazioni Genera li, American Life Insurance Company, etc.) 
and international organizations (the United Nati ons Children's Fund (UNICEF), the United Nations 
Development Programme (UNDP), the Organization of American States (OAS), the Spanish International Cooperation Agency ( Agencia Española de Cooperación Internacional  – AECI), and 
Bladex, among others). 
191. Another positive factor for investment promoti on is that since Panama was founded in 1904, 
it has used the United States dollar as legal tender.  This has enabled it to enjoy inflation of under 
2 per cent in the past 40 years, with zero risk of devaluation. 
192. Panama's general legal regime applies equally to  nationals and foreigne rs.  This equality is 
recognized in the 1972 Political Constitution, as amended by the 1978 Re form Acts, the 1983 
Constitutional Act, and by Legislative Acts Nos.  1 of 1993, 2 of 1994, and 1 and 2 of 2004. 
193. There are constitutional provisions that promote private property and protect intellectual 
property, free enterprise, and the principle of non-discrimination.  The Constitution provides that 
foreigners who are in the national territory shall r eceive same treatment as nationals (Articles 19 and 
20 of the Political Constitution of Panama). Panama WT/TPR/G/186/Rev.1 
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 194. Panama has an investment stability law, Law No. 54 of July 1998, which guarantees equal 
rights to all foreign and domestic investors. 
195. Foreign investment does not require prior aut horization, except for investments that take 
advantage of incentive schemes. 
196. The Ministry of Trade and Industry is the public body tasked with promoting investment in 
the country.  With the establishment of the Vice-Ministry (VICOMEX) in 1998, the various 
responsibilities of the Panamanian Foreign Trade Institute ( Instituto Panameño de Comercio Exterior  
– IPCE) and the Export Promotion Office ( Oficina de Promoción de las Exportaciones  – PRO 
PANAMA), such as offering specific information and proj ects to investors, became part of that body's 
activities. 
197. With this restructuring, the Vice-Ministry w as assigned various objectives related to foreign 
investment, among which are attracting investment  through export promotion and foreign trade 
services, as well as promoting foreign investment in sectors such as tourism, export processing zones, ports, mining, and the reverted areas. 
198. The entity tasked with regulating and promoting activities related to foreign investment is the 
Investments and Exports Advisory Council ( Consejo Consultivo de Inversiones y Exportaciones ), 
which consists of the Minister of Trade and Industr y, the Minister of the Economy and Finance, the 
Minister for Foreign Affairs, and the Minister of Agricultural Development, as well as the Vice-
Minister of Foreign Trade and a representative of each of the following institutions:  the Chamber of 
Commerce, Industry, and Agriculture ( Cámara de Comercio, Industrias y Agricultura ), the 
Panamanian Industrialists' Union ( Sindicato de Industriales de Panamá  – SIP), the Panamanian 
Association of Exporters ( Asociación Panameña de Exportadores  – APEX), the National Union of 
Panamanian Agricultural Producers ( Unión Nacional de Producto res Agropecuarios de Panamá  – 
UNPAP), the Panamanian Maritime Authority ( Autoridad Marítima de Panamá ), the Colon Free 
Zone, and the legislature. 
199. Currently, the National Directorate of Investment Promotion ( Dirección Nacional de 
Promoción de las Inversiones ) of the Ministry of Trade and Industry is the body responsible for 
offering the following services to investors:  expediting airport procedures upon their arrival in Panama;  providing advisory services and guidance in identifying potential investment sectors and 
setting up their businesses in Panama;  managi ng business appointments and trade contacts;  
organizing promotional tours, talks, and presen tations;  organizing and coordinating trade and 
investment missions from and to Panama;  provi ding current trade data and information on 
international trade fairs;  disseminating updated pr omotional material on st atistics, laws, economic 
sectors, and investment projects;  providing a link between investors and the public and private sectors;  and periodically monitoring investors. 
200. Panama has signed investment protection agreem ents with 18 countries:  the United States 
(October 1982), France (November 1982), the United Kingdom (October 1983), Switzerland 
(October 1983), Germany (November 1983), Chinese Ta ipei (March 1992), Argentina (May 1996), 
Canada (September 1996), Chile (November  1996), Spain (November 1997), Uruguay 
(February 1998), Cuba (January 1999), the Czech Republic (August 1999), the Netherlands 
(August 2000), the Republic of Korea (July 2001), the Dominican Republic (February 2003), Ukraine (November 2003), and Mexico (October 2005).  Of these agreements, those signed with the 
Dominican Republic and Ukraine are pending entry into force. WT/TPR/G/186/Rev.1 Trade Policy Review 
Page 40 
 
 
 201. Panama has also signed a number of multilateral reciprocal investment protection agreements, 
i.e., the Agreement Establishing the Inter-Ame rican Investment Corporation (August 1985), the 
Convention Establishing the Multilate ral Investment Guarantee Agen cy (MIGA) (January 1995), the 
Convention on the Settlement of Investment Disput es between States and Nationals of Other States 
(November 1995), and the Agreement Establishi ng the Multilateral Investment Fund (MIF) 
(February 1992). 
202. Law No. 54 of 22 July 1998, enacting measures fo r the legal stability of investments, is a 
response to the process of Panama's economic modern ization, integration into the global economy and 
market liberalization, and to the need for legislati on affording legal certainty to stimulate investment 
and provide a reliable and safe environment. 
203. Under this law, the Ministry of Trade and Indu stry is the authority responsible for promoting 
and protecting investments in Panama.  "Investment" is  defined as the disposal of funds, in the form 
of cash or credit facilities, capital goods, or asset tran sfers for actual production of goods and services, 
in activities such as tourism, industry, export ag riculture, agro-forestry, mining, export processing 
zones, trade and petroleum free zones, tel ecommunications, construction, port and railway 
development, electricity generation, irrigation projects, and efficient use of water resources. 
204. Natural or legal persons inves ting in Panama shall, for a period of ten years, enjoy the 
benefits of legal stability, national and municipa l tax stability, and stability of customs and labour 
regimes.  To this end, the Advisory Council on the Legal Stability of Investments, consisting of 
representatives of different Panamanian business entities,  was established in the Ministry of Trade and 
Industry.  Natural or legal persons  investing in Panama who wish to  avail themselves of the benefits 
provided under the law must invest a minimum sum of US$2 million. 
205. The main areas in which investment is promoted and protected are: 
• Tourism 
 
206. Tourism in Panama is promoted through La w No. 8 of 14 June 1994, which establishes 
certain incentives in the tourism development areas, such as total exemption from income tax for a 
period of 15 years;  total exemption from property ta x for a period of 20 years;  total exemption from 
import tax on construction materials,  furniture, and equipment of the investor company, subject to 
certain requirements;  total exemption from taxes fo r a period of 20 years on the use of the dock and 
airport built by the investor company;  and to tal exemption from income taxes on any interest 
accruing to creditors in tourism investment operations. 
• Export Processing Zones 
 
207. Law No. 25 of 30 November 1992 granted tax, labour, and migration incentives for the 
establishment of export processing zones.  These are defined as Free Zones and Free Enterprise Zones 
(Art. 10).  In these zones, all infrastructure, inst allations, buildings, systems, and supporting services, 
as well as the necessary operating structure and administrative management, are developed according 
to criteria of maximum efficiency.  For this r eason, companies from all over the world that produce 
goods and services for export are established in these zones. 
208. The immediate objective of the zones is to promote optimum conditions of efficiency and 
comparative advantages to guarantee exporting co mpanies high levels of competitiveness in 
international markets. Panama WT/TPR/G/186/Rev.1 
 Page 41 
 
 
 209. Any natural or legal person, domestic or forei gn (Art. 20), wishing to engage in activities for 
the production of goods and services, such as manuf acturing, assembly, processing of finished or 
semi-finished products, and exports of services, may participate in these zones. 
210. The export processing zones are tax free (Art. 27);  accordingly, the companies to which this 
law refers, as well as any activity, operation, transacti on, procedure, transfer of goods and property, 
purchase and import of construction equipment and mate rials, raw materials, equipment, machinery, 
tools, accessories, inputs, and any goods or service s required for their operations in these zones are 
100 per cent free of national direct and indirect taxes, contributions, charges, duties, and levies. 
211. The processing zones' capital, and that of th e companies established in them, is free of 
national direct and indirect taxes, including business and licence taxes. 
212. The export processing zones are free trade and fr ee enterprise zones (Art. 31).  Accordingly, 
service fees and product prices are set freely by each company that provides or produces them in accordance with the rules of supply and demand, bearing in mind the competitiveness required to 
participate successfully in the world market. 
213. Foreigners who demonstrate that  they have invested a sum of at least US$250,000 (Art. 41) in 
companies duly authorized as promoters or opera tors of export processing zones or in companies 
established in the zones shall have the right to request a permanent residence visa as investors. 
• Colon Free Zone 
 
214. The Colon Free Zone ( Zona Franca de Colón  – ZLC) was established by means of Decree-
Law No. 18 of 17 June 1948, which promotes domes tic and foreign investment in commercial and 
industrial activity.  Goods entering the ZLC are exem pt from any customs duties.  The ZLC is located 
in the port area at the Atlantic mouth of the Panama Canal, which is also a strategic point for imports 
and exports. 
215. The main external factors that contribute to  the productivity and competitiveness of the ZLC 
are frequent transits through the Canal, especially  from Asia;  the ports and their transshipment 
activities;  International Banking Centre loans;  ta x-free operating conditions;  management facilities;  
and international communications.  The main comp etitive factors that characterize operators in the 
ZLC, in addition to the traditional services of quality,  reliability, punctuality, and efficiency, are, inter 
alia, logistical services, just-in-time delivery, invent ory control, and computerized sales.  Likewise, 
intermodal transport systems are an important complement to the logistical services, and the combination of maritime ports, airports, railway, a nd hauling facilities are essential components in the 
effectiveness of ZLC trade.  The transit of vessel s through the Canal, and the frequency of air freight, 
add versatility to the Zone's operations.  In the past 20 years, 12.6 per cent of shipments from the ZLC by weight (36.6 per cent by value) were sent by air transport. 
216. During the past 20 years, the Zone's trade activ ities have increased at an annual average rate 
of over 3 per cent, compared with Latin American  trade patterns.  This growth demonstrates the 
competitive advantages of the ZLC.  However, the Zone's operations are facing growing competition 
throughout Latin America.  Other free zones in Miami, Iquique, and Urugu ay engage in similar 
re-export business.  Nevertheless, the growing open tr ade policies and financial stability seen in most 
Latin American countries favour the strengthening of the ZLC as a regional logistical and redistribution centre, in view of its competitive advant ages.  Currently, new systems, such as logistical 
services combined with intermodal transport and au tomated procedures, are being introduced to WT/TPR/G/186/Rev.1 Trade Policy Review 
Page 42 
 
 
 improve productivity, at the same time that the ZLC  is adapting to modern technology and procedures 
that enhance the effectiveness of customs controls and inspection. 
217. Among the tax benefits of the ZLC is a preferen tial tax programme applied to earnings of less 
than 8 per cent on the first US$100,000 of income and 8 per cent on subsequent income;  merchandise 
imports and re-exports are tax free;   repatriation of capital or divi dends generated abroad are not 
considered earnings for tax purposes. 
218. Companies established in the ZLC that engage  solely in export activities are tax-exempt 
provided they directly create a certain number of jobs. 
• Panama Pacific Special Economic Area 
 219. The Panama Pacific Special Economic Area w as conceived as the Business Centre of the 
Americas for companies seeking better investment opportunities or wishing to establish their 
operations on the American continent. 
220. The Area offers excellent benefits for trade and services, such as tax, migration, and labour 
incentives, simplification of establishment proced ures, operations, the best connectivity on the 
continent, an excellent quality of life, a skille d labour supply, employee training, and a special 
customs regime. 
• Other Investment Incentives 
 
221. Law No. 24 of 23 November 1992 provides incentives for reforestation investments that 
benefit domestic and foreign invest ors, as well as banks and other financial institutions providing 
reforestation loans.  Reforestation consists of planting forest species on uncultivated land. 
222. Some of the incentives offered are:  any re forestation between 27 November 1992 and 
26 November 2017 is exempt from income tax for a pe riod of 25 years;  the sums invested by natural 
or legal persons in forest improvement and gr owth are deductible from expenses;  machinery, 
agricultural, forestry, and industrial equipment, ch emical and agricultural ma terials and instruments, 
forest research material, forest seeds and plants, a nd other materials required for forestry activities are 
exempt from taxes upon entering the country;  dividends and earnings on bonds or sales of shares and 
securities are also exempt from income taxes;  interest on loans for reforestation activities are 
deductible from expenses;  loans for reforestation ac tivities carry preferential interest rates, and the 
interest paid on these loans is deductible from income taxes;  financial institutions that provide these 
loans receive an annual tax credit for the first te n years of the contract;  foreign investors who 
demonstrate that they have invested a sum of at least US$40,000, directly or indirectly, in 
reforestation in Panama shall have the righ t to request an immigrant visa as investors. 
223. The Law on Chattel Leasing, Law No. 7 of 10 July 1990, also creates incen tives for investors.  
The leasing of property situated outside Panamanian te rritory is 100 per cent tax free, and earnings on 
leases of Panamanian vessels are completely tax fr ee.  In addition, the law sets no limitations on the 
type of lease.  Leasing companies can be organized quickly, with no requirements other than 
obtaining a commercial licence and being registered in  the Ministry of Trade and Industry's Directory 
of Companies.  Leasing companies are organized under Law No. 32, promul gated in 1927, which 
regulates Panamanian corporations. Panama WT/TPR/G/186/Rev.1 
 Page 43 
 
 
 224. Under Law No. 32 of 26 February  1927, financial corporations in Panama also enjoy positive 
features for investors.  For example, earnings on activities performed outside Panamanian territory are 
not subject to income tax.  In addition, a corpora tion's capital may not be ta xed or given in payment, 
and the corporation is not required to cover the total amount of its authorized capital.  Neither 
directors nor officers need be shareholders or resi dents of Panama, and the corporation's directors are 
not required to be managers.  Mee tings of shareholders and/or dir ectors may be held outside Panama, 
and both the directors and the shareholders may use a proxy.  Lastly, a Panamanian corporation can be 
organized in approximately four days, and the inte rested parties need not be physically present in 
Panama. 
2. FOREIGN TRADE STRATEGY  
225. The National Foreign Trade Strategy ( Estrategia Nacional de Comercio Exterior ) is 
implemented by the Ministry of Trade and Industry (MICI) through the Vice-Ministry of Foreign Trade.  The strategy's basic pillars are:  concludi ng international foreign tr ade agreements;  promoting 
Panamanian exports;  promoting the internal ch anges necessary to improve domestic production;  
incorporating active participation by the private sector tailored to improving the business climate;  
providing periodic information on activities;  and promoting the formation of conglomerates or 
clusters in the sectors chosen as having priority.  The strategy is aimed at developing four specific 
areas:  export promotion, competitiveness, agro-industrial development, and the Supplementary Agenda. 
2.1 Export Promotion 
 
226. The MICI executes the national export promotion programme " Programa Exporta ", the 
purpose of which is to increase Panamanian expor ts to new markets.  A part of programme 
implementation involves creating an alliance to st rengthen the export production sector by promoting 
collaboration between business associations and othe r organizations related to business development, 
as well as universities and government agencies. 
227. The Export Programme provides for various projects, namely:  export promotion, the 
exporter's manual, export credit agencies (ECA) (ex port insurance), single window and international 
network (digitized), and the Exporter of the Year Prize. 
2.2 National Competitiveness 
 228. To strengthen its economic and social growth and facilitate the regional integration process 
and its positioning in the global economy, Pana ma, in conjunction with the IDB, has been 
implementing the Programa Compite Panamá  (Panama Competes Programme) since 2002.  This 
programme's objective is to promote the competiti veness of Panamanian companies by creating a 
national consensus;  to this end, strategies are de termined with the private sector, a competitiveness 
fund was created, and the impact of that fund is  monitored.  This State programme is built on 
two main levels, the National Competitiveness Strategy ( Estrategia de Competitividad Nacional ) and 
the Cluster Competitiveness Strategy ( Estrategia de Competitividad de Clusters ), both of which are 
part of the National Foreign Trade Strategy, inas much as they are involved in State policy and 
encompass all public and private sectors related to productivity. 
229. The Competitiveness Group, which consists of four Ministers of State, the Canal 
Administrator, four representatives of the private sector, two representatives of the academic sector, 
and two labour representatives, is the highest body coordinating the Panama Competes Programme. WT/TPR/G/186/Rev.1 Trade Policy Review 
Page 44 
 
 
 230. The National Competitiveness Strategy was prepar ed with participation by the public and 
private sectors.  Its purpose is to identify the barri ers to production, create mechanisms to improve the 
business climate, and stimulate public investment projects to pave the way for increasing production in various sectors of the economy, so that they can gradually contribute  to improving national 
economic output. 
231. The Cluster Competitiveness Strategy was formulated and implemented through a 
participatory process.  Its purpose is to implem ent a new institutional mechanism to promote the 
establishment of business conglomerates and support th em through specialized technical assistance.  
As a result of this strategy, different conglomerates are emerging in the four sectors of greatest 
potential for the Panamanian economy, namely, services (professional, tourism, financial, transport, 
and logistical services);  technology and communi cation (software, teleco mmunications, call centres, 
data centres);  energy (hydrocarbons, petroleum, a lternative energy sources, wind energy, geothermal 
energy, hydroelectric energy, etc.);  agro-industry;  and tourism. 
2.3 Agro-Industrial Development 
 232. The MICI, in coordination with the Ministry of Agricultural Development (MIDA), promotes 
mechanisms to stimulate domestic production, th ereby creating opportunities and potential in the 
agricultural sector with a view to greater participation in foreign markets. 
233. The agro-industrial development strategy seeks to increase growth opportunities for existing 
non-traditional products and to research and deve lop new products that meet the demands of 
international consumers.  The produc ts that have aroused the greatest interest in international markets 
are the "non-traditional products", such as pin eapples, melons, watermelons, pumpkins, cassava, 
yams, handicrafts, beef, and chicken. 
234. In addition, new promotional policies are being developed by markets and sectors, for 
example, the agricultural, marine, handicrafts, i ndustrial, and service sectors, and a schedule of 
activities is being implemented in coordination with diplomatic missions abroad to evaluate the best 
opportunities for export promotion. 
235. The strategy's objective is to attract inv estors who are not only looking for business 
opportunities with local partners, but are also  incorporating new technologies in processing, 
packaging, and preservation – added value which improves product quality and fills market niches – 
and innovating with new products  that yield higher profits. 
2.4 Supplementary Agenda 
 
236. The Supplementary Agenda Programme is a tool  created by the current Government as an 
outgrowth of dialogue with Panamanian society.  It  is aimed at spurring profound transformations in 
the public and private sector through different proj ects and tangible initiatives that will enable Panama 
to derive the greatest possible benefit from the open trade process. 
237. The Agenda includes a number of projects a nd initiatives that fit into the following 
four central action thrusts:  modernization of the State;  strengthening human capital;  preparing the production sectors for the transition to free trade;  and promoting systemic competitiveness. 
238. This programme pursues the following objectiv es:  strengthening the national economy;  
raising the productivity of enterprises;  increasi ng national exports to in ternational markets;  
positioning Panama as a destination for foreign dir ect investment (FDI);  turning human resources, Panama WT/TPR/G/186/Rev.1 
 Page 45 
 
 
 innovation, and technological development into forces that drive the economy;  and improving trade 
facilitation schemes through nimble export mechanisms. 
239. The factors to be utilized in this basic thru st of the Supplementary Agenda are:  the 
programme for micro and small enterprises;  the sectoral development projects in agriculture, 
industry, and services;  specialized technical advice,  training, and business management;  research and 
technological development;  improveme nt of production infrastructure;  infrastructure investments;  
quality standards;  advice on product development;  marketing and marketing techniques;  compliance 
with standardization measures, metrology, and SP S;  the use of clean and sustainable production 
techniques;  and programmes on forming partners hips, export consortia, st rategic alliances, and 
business social responsibility. 
240. The Supplementary Agenda also promot es cross-cutting programmes that support 
improvement of the business climate;  good governance, which promotes transparency and confidence;  and reduction of red tape. 
IV. GROWTH OF FOREIGN TRADE AND INVESTMENT 
241. The external sector has been a major strategic area of economic growth for Panama during the 
past ten years (1997–2006).  In 1997, trade in goods  and services represented 27 per cent of GDP;  by 
the end of the decade, the ratio was 33 per cen t.  Net exports of both goods and services have 
averaged 8.4 per cent annual growth, from US$2.3 b illion to US$4.9 billion, which represents 32 per 
cent of GDP.  Exports of goods, meanwhile, have gr own year after year, especially in the second half 
of the decade, when they grew by 7.8 per cent.  In  addition, the f.o.b. value of exports grew at an 
annual average rate of 5.3 per cent during the pe riod 1997-2001, increasing to 7.8 per cent during the 
period 2002-2006.  Service exports  have posted more robust grow th in comparison with goods 
exports, from 3.9 per cent to 14.7 per cent during the same period. 
242. The performance of trade in goods and services and investment for the period covered by this 
report is described below. 
1. T
RADE IN GOODS  
243. Between 1997 and 2006, exports of goods averaged 5 per cent growth, from US$658 million 
to US$1.022 billion, driven mainly by fishing a nd marine products (10 per cent on average), which 
have come to represent slightly more th an one third of Panama's total exports. 
244. However, the analysis of goods exports by five -year periods shows a mi xed performance.  For 
the period 1997-2001, while fishing exports show ed greater buoyancy (19.1 per cent), agricultural 
products posted a decline of 3.2 per cent, and indus trial products grew by 2.2 per cent.  Meanwhile, 
the agricultural sector has been th e one most affected by price fluctuations on the international 
market, especially in bananas and coffee, while pi neapples, melons, and watermelons are gaining in 
importance. 
245. Industrial exports have remain ed stable, with the sector recording movements on 240 tariff 
items on average.  The most notable exports are pe troleum by-products, medicaments, scrap of metal 
(iron and aluminium), and articles of apparel and clothing accessories of textile materials. 
246. In the period 2002-2006, goods exports grew by 7.8 per cent annually, a figure higher than in 
the previous five-year period, when growth was 5.3 per cent.  This period was marked by a change of 
trend, with the agricultural sector becoming the e ngine of growth in total exports, increasing at a WT/TPR/G/186/Rev.1 Trade Policy Review 
Page 46 
 
 
 16.9 per cent annual rate.  The good performance of th e agricultural sector wa s associated with the 
growth of melon, watermelon, a nd pineapple exports, which together  grew at an annual rate of 
49.2 per cent.  The growth of gourd family exports  can be seen more clearly in terms of total 
agricultural exports, for while in 2002 the valu e of melon, watermelon, and pineapple exports 
represented 18.2 per cent [of GDP], by 2006 that ratio was 48.2 per cent. 
247. In absolute terms, in the past five years banana exports have totalled around 
US$105.6 million, while the contribution of this ca tegory to total agricultural exports has posted a 
decline, from 48.4 per cent in 2002 to 25.9 per cent in 2006;  as stated earlier, it  has been affected by 
market distortions and the tariff policies established by the European Union. 
248. The fishing sector accounts for approximately 46  per cent of total exports for the period 
2002-2006.  The most important categories are fish, fresh, chilled, or frozen, with 74 per cent (US$280.9 million), and crustaceans, including  the shrimp category, with 18 per cent 
(US$67.5 million) of fishing sector exports. 
249. Regarding the destination of trade, the United St ates has been Panama's main trading partner, 
accounting for 45.3 per cent of exports and 30.1 per cent of imports during the period 2002-2006.  In 
the same period, the European Union accounted fo r 26 per cent of Panamani an exports (averaging 
US$237.8 million), which consist mainly of bananas,  melons, watermelons, pi neapples, and shrimp, 
and for 7 per cent of its imports  (approximately US$263 million). 
250. The total value of imports in 2006 reached US$4.83 billion.  Spain, Germany, the United 
Kingdom, and Belgium were the four European Uni on countries with the largest number of goods 
exports to Panama, accounting for 1.5 per cent, 1.2 per cent, 0.7 per cent, and 0.5 per cent, 
respectively.  Also in 2006, exports reached US$1. 021 billion.  Spain, the Netherlands, Sweden, and 
Belgium were the main importers in the European  Union, representing 8.1 per cent, 6.7 per cent, 
5.6 per cent, and 3.8 per cent, respectively, of these exports. 
251. The Central American region is of great importa nt to Panama as a trading partner.  In 2006, 
Panama's exports to Central America represented 12 per cent of its global exports (US$124 million).  
Costa Rica occupies first place in the ranking of des tinations for Panamanian exports to the region, 
with an export value of US$45 million, follo wed by Guatemala, Honduras, Nicaragua, and 
El Salvador (US$33 million, US$17.9 million, US$17.5 million, and US$9.2 million, respectively).  Live bovine animals, aluminium packing materials,  petroleum by-products, medicaments, prepared or 
preserved meat, meat, marine products (fish, shrimp ), paper, fruit and vegetables, and chemical 
products stand out among the main export categories. 
252. The c.i.f. value of goods imports from the Ce ntral American region reached US$420.5 million 
in 2006.  Costa Rica was the main supplier, with 59 per cent, followed by Guatemala (21 per cent), 
El Salvador (15 per cent), Honduras (4 per cent), and Nicaragua (2 per cent).  The main products 
imported from the region are pharmaceuticals, electronic equipment, plastics and articles thereof, 
detergents and chemical products, edible preparations, and paper and paperboard. 
253. As the Central American region as a whole is one of Panama's main trading partners, the 
country is moving forward in c oncluding new-generation treaties to  obtain greater access for its 
exports of goods and services.  In this way, Pana ma is seeking to obtain better and sounder terms in 
those markets to which it already has access, while e xploring the feasibility of access to new markets, 
in consonance with its foreign trade policy. Panama WT/TPR/G/186/Rev.1 
 Page 47 
 
 
 254. With respect to trade in the Colon Free Zone, th e main suppliers of goods (imports) originate 
in various Asian countries, incl uding Hong Kong, China, the Republic of Korea, Thailand, and 
Chinese Taipei.  The volume of imports from Asia re presents nearly 70 per cent, by weight, of the 
total goods imported by the Colon Free Zone (mainly textiles, footwear and apparel, and electronic 
articles). 
255. As to the main customers of the Colon Free Z one, Colombia remains the chief destination, 
followed by Venezuela and Panama itself.  Colomb ia accounts for 17 per cent, Venezuela for 16 per 
cent, Panama for 13 per cent, Ecuador for 4.2 pe r cent, and Central America for 20.9 per cent, on 
average, of exports from the Colon Free Zone. 
256. Lastly, mention should be made of Panama 's reduced dependence on its ten main export 
markets during the period covered by this report .  Thus, with respect to exports of goods by 
destination country, Panama has reduced its de pendence on its ten key export markets, from a 
concentration of 85 per cent in 1996 to 79 per cent in 2006 (see Table No. 10).  The same holds true 
for imports, where the share of the ten main supp lier countries has declined from 82 per cent to 76 per 
cent, favouring greater participation and opportuniti es for new suppliers in the domestic market (see 
Table No. 11). 
Table No. 10 
Panama:  Exports by destination country, 2006 and 1996 
(In millions of US$) 
Rank Destination country f.o.b. value 2006 Destination country f.o.b. value 1996 
1 United States 392.9 United States 269.5 
2 Spain 83.2 Sweden 57.8 
3 Netherlands 68.3 Costa Rica 37.7 
4 Sweden 56.9 Germany 25.2 
5 Costa Rica 45.7 Belgium/Luxembourg 23.7 
6 Belgium/Luxembourg 38.7 Puerto Rico 15.6 
7 United Kingdom 34.7 Guatemala 15.0 
8 Guatemala 33.0 Spain 14.4 
9 Italy 26.4 Canada 11.4 
10 Chinese Taipei 23.7 Colon Free Zone 11.1 
 Others (66 additional destinations) 218.5 Others (65 additional destinations) 87.9 
Total  1,022.0  569.3 
Source : Ministry of Trade and Industry. 
 
Table No. 11 
Panama:  Imports by country of origin, 2006 and 1996 
(In millions of US$) 
Rank Country of origin c.i.f. value 
2006 Country of origin  c.i.f. value 
1996 
1 United States 1,294.3 United States 1,037.4 
2 Colon Free Zone 574.6 Colon Free Zone 378.2 
3 Curaçao 488.2 Venezuela 198.8 
4 Costa Rica 247.6 Japan 168.0 
5 Japan 229.2 Ecuador 107.4 
6 Mexico 173.0 Mexico 106.9 
7 Colombia 170.0 Colombia 98.3 
8 China 169.2 Costa Rica 75.4 
9 Republic of Korea 165.6 Republic of Korea 55.8 
10 Petroleum Free Zone 162.7 Germany 46.7 
 Others (79 additional supplier countries) 1,156. 4 Others (102 additional supplier countries) 506.9 
 Total 4,830.9 Total 2,779.7 
Source : Ministry of Trade and Industry. 
 WT/TPR/G/186/Rev.1 Trade Policy Review 
Page 48 
 
 
 2. TRADE IN SERVICES  
257. During the period 1997-2006, the Panamanian economy exported more than US$24 billion 
worth of services.  In 1997, exports represented 17 pe r cent of GDP, and in 2006 that share increased 
to 26 per cent (see Chart No. 7).  A sharper increase was seen at the be ginning of 2002, driven mainly 
by transport services, which represented approxima tely 57 per cent of Panama's service exports. 
Chart No. 7
Relative Share of Exports of Services in the Economy
1997-2006
10%12%14%16%18%20%22%24%26%28%
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006
Source:  Office of the Comptroller-General of the RepublicX Services/GDP
 
258. According to the balance of payments nationa l record of accounts, transport, travel, and 
financial services, with the exception of insurance,  represent 85 per cent of Panama's service exports. 
259. In addition, "transport" covers all transport ( sea, air, and other – including land, internal 
waterway, space, and pipeline) services that are pe rformed by residents of one economy for those of 
another and that involve the carriage of passengers, the movement of goods, rentals of carriers with 
crew, and related supporting and auxiliary services.47  In Panama, exports of transport services 
represented more than 50 per cent of service expor ts for the period 1997-2006.  This category of 
services averaged 10.4 per cent growth for the period under review, from US$909 million in 1997 to 
more than US$2.2 billion in 2006. 
260. Within the transport services segment, the most important components are the Canal toll 
revenues and port services, which together surpass ed US$1.6 billion in 2006.  The port services, 
aircraft, and railway sector continued its annual gr owth of around 20 per cent, mainly because of the 
ongoing expansion of airline services (COPA) and th e increase in container movements (measured in 
                                                      
47 International Monetary Fund, Balance of Payments Manual, 1993, Chapter XI, page 61. Panama WT/TPR/G/186/Rev.1 
 Page 49 
 
 
 TEUs), which averaged 16 per cent during the past five  years.  In addition, freight transport by rail 
averaged 55 per cent annual growth during the period 2002-2006. 
261. Tourism services classified as travel according to the fifth edition of the Balance of Payments 
Manual cover mainly the goods and services acquired from an economy by travellers during visits of 
less than one year in that economy.48 
262. Panama has been a net exporter of travel services, which increased from US$211 million in 
1997 to US$688 million in 2006.  The activity that s upports this sector is personal travel for purposes 
other than health or education (tourism/leisure activities and shopping).  There is a high correlation 
between this type of travel and the air transport services mentioned earlier. 
Chart No. 8
Panama
Exports and Imports of Travel Services 1997-2006
(In millions of US$)
-400-200-2004006008001,0001,200
1997 1998
1999
2000 2001 2002
2003
2004 2005 2006
Source:  Office of the Comptroller-General of the RepublicExports Imports
 
263. Exports of banking services averaged 16 per cen t annual growth for th e period 1997-2006 as a 
result of the National Banking Centre boom and its expansion in Central America, as well as the good 
performance of the Latin American economies. 
                                                      
48 Ibid.  Chapter XII, page 64. WT/TPR/G/186/Rev.1 Trade Policy Review 
Page 50 
 
 
 Chart No. 9
Panama
Exports of Financial Services 1997-2006 
(In millions of US$)
-50100150200250300350
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006
Source:  Office of the Comptroller-General of the Republic
 
 
264. The role of foreign direct investment (FDI) in stimulating the economy of any country, 
especially an open and small economy like that of Panama, is indisputable.  The common 
denominator of investments is the necessity for certa in conditions to exist in the host country.  What 
stands out in Panama's case are its political a nd economic stability and the broad freedom of capital 
movements that it offers. 
265. Foreign investment is characterized by its participation in sectors such as mining, public 
services, the food and chemical industries, transport,  wholesale trade, information, finance, and some 
professional, scientific, and technical services.  The most important of these are finance, wholesale trade, and public services. 
266. After a contraction between 1997 and 2002 owing to  the end of the cycle of privatizations and 
government concessions, the closing of some banks since 1999 (and bank losses in 2002), and the transformation of the Canal Commission into a na tional capital stock company in 2002, FDI has 
increased significantly since 2003. 
267. In 2006, for example, Panama received FDI totalling US$2.56 billion, a figure that was nearly 
triple the receipts in 2005.  In addition, this  sum makes Panama the second destination for foreign 
investment in the region, and ranks it as one of th e 10 most important Latin American and Caribbean 
countries in terms of its ability to attract investment.
49 
268. The rebound in 2006 was due in large part to the acquisition of Banistmo and other large 
banks with registered addresses in Panama.  Other sectors in which major investments were made were infrastructure, real estate, and tourism.  The expansion of the Pana ma Canal, approved by 
referendum in October 2006, should have substantial effects on inward FDI in the next several years 
                                                     
 
49 United Nations Economic Commission for Latin America and the Caribbean (ECLAC), Foreign 
Investment in Latin Ameri ca and the Caribbean, 2006. Panama WT/TPR/G/186/Rev.1 
 Page 51 
 
 
 (according to 2006 data from the Office of the Co mptroller-General and the Ministry of the Economy 
and Finance). 
Chart No. 10
Panama 
Foreign Direct Investment 1997-2006
(In millions of US$)
-5001,0001,5002,0002,5003,000
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006
Source:  Office of the Comptroller-General of the Republic
 
269. On the basis of data relating to the origin of FDI received by other countries, Panama is 
perceived as one of the key investors in the region.  Th is is partly a reflection of its characteristics as a 
financial centre, as well as its political and economic stability. 
270. According to the Index of Economic Freedom, Pana ma is regarded as one of the world's most 
open economies, ranking higher (at No. 47, and in fourth place in Latin America) than countries such as Costa Rica, Argentin a, Colombia, Brazil, and Mexico.  This factor, recognized worldwide, is due to 
the absence of the restrictions that typically affect the establishment, operation, conduct, and 
management of investments.
50 
271. Given the realities of attracting investment to the region in general, Panama has developed a 
policy that gives it an increasingly important role in promoting factors that are decisive for investment, such as clear rules for trade operati ons, moderate tax rates, low levels of State 
intervention in the economy, low inflation, and free movement of capital. 
272. Projects such as expanding the Canal, estab lishing new port facilities that will enhance 
Panama's potential as a regional and international freight transshipment centre, the Colon Free 
Zone (ZLC), upgrading the (Howard) Panama Paci fic Special Economic Area, and strengthening the 
financial sector are clear opportunities that will increase the flow of inward FDI. 
                                                     
 
50 The Heritage Foundation, 2007 Index of Economic Freedom. WT/TPR/G/186/Rev.1 Trade Policy Review 
Page 52 
 
 
 273. Other such opportunities would be agribusiness, establishing a collection centre and 
multimodal hub for the export and re-export of peri shable products, establishing lines for operating air 
freight redistribution centres, and research and innovation in the Ciudad del Saber  (City of 
Knowledge) to promote and facilita te synergies between universities.51  In the tourism and energy 
sectors, mention can be made of the regional refine ry, a lubricant processing plant, and the maritime 
gas pipeline from Cartagena, Colo mbia, to the city of Colon. 
274. It is important to note that in its quest to a ttract foreign investment, Panama is not neglecting 
the living standards of its citizens.  For this reas on, quality of life is a basic objective of Panama's 
trade policy and approach to attracting investment.  Lastly, the signing of new trade treaties enhances 
conditions for attracting FDI and its variables (investme nt of capital and securities), by leaving behind 
the uncertainty that surro unded the investment process and reinforc ing legal certainty for investments. 
V. MODERNIZATION OF THE STATE 
275. The adoption of a policy of trade liberaliza tion made it necessary to adapt and reform 
Panama's institutional and legislative structure.  These reforms have been in troduced in connection 
with the adoption of various international trade trea ties and agreements, starting in the 1990s.  As will 
be seen, the result has been to endow Panama w ith a modern, practical and efficient legal and 
institutional framework. 
276. The following paragraphs describe the institu tions, laws and projects that have been 
developed in order to fulfil the requirements of globalized trade and the commitments entered into as 
a result of joining the WTO. 
1. CONSUMER PROTECTION AND DEFENCE OF COMPETITION  
277. The Comisión de Libre Competencia y Asuntos del Consumidor  (Commission on Free 
Competition and Consumer Affairs – CLICAC) wa s established by Law No. 29 of 1996, recently 
amended by Decree Law No. 9 of 2006, for the purpose of overseeing free co mpetition and consumer 
protection. 
278. Market requirements made it necessary to restru cture CLICAC, in order to create other bodies 
to expedite the procedures by decentralizing deci sion-making.  This restructuring was approved by 
Decree Law No. 9 of 2006, which modifi es the institution and adopts the title Autoridad de 
Protección al Consumidor y Defensa de la Competencia  (Authority for the Protection of the 
Consumer and the Defence of Competition). 
279. At the same time, the Ministry of Trade and Industry and the Ente Regular de los Servicios 
Públicos  (Public Utilities Regulatory Body) underwent certa in changes with respect to their structure 
and powers.  The changes relating exclusively to the subject of Trade Protection are described later in 
this Section. 
2. FOOD SAFETY  
280. The Autoridad Panameña de Se guridad de Alimentos  (Panamanian Food Safety Authority – 
AUPSA) was established by Decree Law No. 11 of 22 February 2006, for decentralization purposes 
                                                      
51 The City of Knowledge is an international complex for education, research and innovation, organized 
to promote and facilitate synergy betw een universities, scientif ic research centres, new economy businesses and 
international bodies. Panama WT/TPR/G/186/Rev.1 
 Page 53 
 
 
 and to create a body to supervise the importation, transit and transhipment of food for human and 
animal consumption. 
281. The AUPSA has taken over the functions prev iously performed by the Ministry of 
Agricultural Development and the Ministry of Hea lth in relation to the importation, transit and 
transhipment of food, with account for the diversity and quality of supplies. 
282. The establishment of this new authority has exped ited and facilitated the international trade in 
goods via Panama by ensuring transparency, certain ty, flexibility and a reduction in the costs of 
import, transit and transhipment formalities. 
3. ENVIRONMENT  
283. Law No. 41 of 1998 established the Autoridad Nacional del Medio Ambiente  (National 
Environmental Authority – ANMA) and the principles and broad outlines of national environmental policy.  This favours the creation of promotion t ools and mechanisms and incentives to encourage the 
process of conversion of the productive system to operating methods compatible with the protection 
of the environment. 
284. With respect to trade, the National Environmen tal Authority follows up the implementation of 
the Convention on the International Trade in Wild Fauna and Flora (CITES).  The main objective of 
the Convention is to prevent international trade from becoming a threat to the survival of wild fauna 
and flora.  This is achieved by including them in an approved list in order to  regulate and continuously 
monitor the trade in these species and others that might come to be threatened or endangered. 
285. With respect to liberalization and commercial tr affic in the field of genetic resources, by 
Executive Decree No. 257 of 17 October 2006 the Gove rnment of Panama regulated article 71 of 
General Environmental Law No. 41 of 1 July 1998, which among other things established the Unidad 
de Acceso al Recurso Genético  (Genetic Resource Access Unit – UNARGEN). 
286. Within the framework of the international commitments entered into under the Biological 
Diversity Convention, adopted at the United Na tions Conference on Environment and Development 
held in Rio de Janeiro, Brazil, in 1992 and all the bilateral treaties ratified by Panama, ANMA's 
fundamental objective is to ensure fair and equitable participation in  the benefits to be derived from 
the use of genetic and other natural resources, in order to achieve a balance between trade 
liberalization and the sustainability of the environment. 
4. G
OVERNMENT PROCUREMENT  
287. Law No. 22, which entered into force on 28 December 2006, established the Dirección 
General de Contrataciones Públicas  (Directorate-General for Government Procurement) as an 
autonomous entity, with its own assets, legal pers onality and independence in the performance of its 
functions.  This made the govern ment procurement process more transparent and reaffirmed the 
principle of non-discrimination. 
288. Previously, government procurement had been  handled by a non-autonomous directorate-
general which was structurally part of the Mi nistry of the Economy and Finance.  The new 
directorate-general is responsible for regulating,  interpreting, supervising and advising on the 
contractor selection procedures employed by state institutions. WT/TPR/G/186/Rev.1 Trade Policy Review 
Page 54 
 
 
 289. This Law lays down the rules applicable to all contracts for goods, services and works 
awarded by state entities, with the exclusion of the municipalities, communal and local councils, the 
Social Insurance Fund, and the Panama Canal Authority by constitutional provision. 
290. The Directorate-General for Government Procurem ent has identified within its action plan the 
implementation of  certain investment projects for the year 2007.  These will be aimed at building the 
capacity of the Directorate and government purchasi ng agencies, modernizing the system, positioning 
PanamáCompra  and providing support for micro, small and medium-sized enterprises so as to create 
conditions enabling them to participate in cer tain public contractor selection procedures. 
5. REGISTRATION OF INDUSTRIAL PROPERTY  
291. In Panama, industrial property falls within the jurisdiction of the Dirección General del 
Registro de la Propiedad Industrial  (Directorate-General for the Registration of Industrial Property – 
DIGERPI), which was established by Law No. 2 of 11 February 1982 as part of the Ministry of Trade 
and Industry, for the purpose of encouragi ng and supporting the technological and economic 
development of the country by fostering and promoting inventiveness and creativity through 
appropriate legal protection for all areas of industr ial property.  Since it was first established, 
DIGERPI has been responsible for promoting, disse minating, developing, pr otecting and supervising 
industrial property, as the country's policy-making body. 
292. In order to comply with the principles of tr ade policy and harmonize procedures, DIGERPI is 
implementing the non-refundable technical c ooperation project known as "Development and 
Promotion of Intellectual Property", the aim of which is to increase legal certainty in order to improve 
the conditions of competitiveness and investment in Panama with the specific aim of increasing 
familiarity and compliance with intellectual pr operty law and raising the number of national 
registrations. 
293. Where industrial property is concerned, there is  a preliminary draft amendment to Law No. 35 
of 10 May 1996, aimed at creating the legal structure necessary to permit the use of electronic media to speed up and automate all DIGERPI's administrative procedures, by legalizing the electronic 
submission of applications via the Internet  and adapting to international commitments. 
6. C
USTOMS  
294. Panama's accession to the World Trade Organi zation and the negotiation and ratification of 
various trade agreements have given rise to a br oad panoramic view of the new responsibilities and 
commitments that the state must assume in relati on to the modernization of the customs system. 
295. The Directorate-General of Customs of Pana ma, through the Ministry of the Economy and 
Finance, is initiating legal and structural changes to the institution in order to be able to provide an 
automated and efficient service that ensures due resp ect and protection for the tariff benefits conferred 
on our trading partners under the Agreements. 
296. The changes include the establishment of the Autoridad Nacional de Aduanas  (National 
Customs Authority) as an autonomous authority independent of the Ministry of the Economy and 
Finance, together with the definition of its f unctions and powers and, in general terms, its 
administrative organization. 
297. In addition, customs auxiliaries and intermediari es are identified and some special rules for 
customs brokers and others relating to the Junta de Evaluación de los Agentes Corredores de Aduana  Panama WT/TPR/G/186/Rev.1 
 Page 55 
 
 
 (Customs Brokers Evaluation Board) are established.  Similarly, en forcement powers are granted to 
the competent authority, and the procedural princi ples, the rights of those administered, the question 
of minor and more serious offences, the corres ponding penalties, the modes of participation in 
offences, the circumstances that modify responsibilit y and possible defences are defined.  At the same 
time, the ranges of behaviour characterized as a misdemeanour, smuggling or customs fraud are 
broadened, and particular treatment  is reserved for cases of non-decl aration or false declaration of 
currency, which is classed as a special customs offence. 
298. The preliminary draft deals with everything re lating to the administrative and enforcement 
procedures of the customs authority, including such as pects as notifications and their rules;  means of 
challenging decisions;  the procedure for sanctioning minor customs offences, the administrative 
procedure for settling disputes concerning technical va luation discrepancies, the investigation of the 
more serious customs offences and the ad ministrative bodies for hearing such cases. 
299. Finally, the preliminary draft incorporates tran sitional, repealing and application provisions 
and includes framework rules under which the Cabine t Council retains the right to issue regulatory 
provisions in development of the present proposal. 
7. SCIENCE AND TECHNOLOGY  
300. The National Strategic Plan for the Developm ent of Science, Technology and Innovation 
2006-2010, implemented by the State through Cabinet Resolution No. 104 of 21 December 2005, is coordinated by the Secretaría Nacional de Ciencia, Tecnología e Innovación  (National Secretariat for 
Science, Technology and Innovation – SENACYT), the unit responsible for the monitoring and 
evaluation of the plan.  All SENACYT's activities, projects and programmes are aimed at 
strengthening, supporting, influenc ing and promoting the development of science, technology and 
innovation with a view to raising the level of pr oductivity, competitiveness and modernization in the 
private, government and academic research sectors and in the population at large. 
301. The principal measures taken in the context of the National Strategic Plan, especially in 
relation to the promotion of economic incentives, are:  the establishment of funds open to public 
competition with peer review for the promoti on of research, development and innovation;  the 
implementation of innovation and t echnological modernization projects in the priority areas;  the 
strengthening of clusters;  innovation capacity building at enterprise level. 
8. O
FFICE FOR INTERNATIONAL TRADE NEGOTIATIONS  
302. In 1998, the Ministry of Trade and Industry included among its projects the restructuring of 
the institution through the establishment of a vice-mi nistry with special responsibility for promoting 
foreign trade and attracting investment.  Through Law No. 53 of 21 July 1998 this restructuring led to 
the establishment of the Vice-Ministry of Foreign Trade. 
303. From the growth of bilateral trade relations and participation in WTO fora there arose the 
need to reorganize and modernize the procedures app lied to the management of trade relations.  To 
this end, the Ministry of Trade and Industry, th rough Decree Law No. 6 of 15 February 2006, set up 
the Oficina de Negociaciones Comerciales Internacionales  (Office for International Trade 
Negotiations – ONCI), which took over some of the f unctions of the Vice-Ministry of Foreign Trade 
and was assigned functions relating to unfair trad ing practices and the protection of trade, under 
Decree Law No. 7 of 2006. WT/TPR/G/186/Rev.1 Trade Policy Review 
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 304. The Office of the Head of International Tr ade Negotiations has three administrative units, 
namely: the Permanent Mission of Panama to th e World Trade Organization (WTO), the National 
Directorate for International Trade Negotiations a nd the National Directorate for the Administration 
of International Trade Treaties and Trade Protection. 
305. The Permanent Mission in Geneva represents the Office of the Head of International Trade 
Negotiations in the World Trade Organization a nd carries out and coordinates its instructions. 
306. The National Directorate for International Trad e Negotiations carries out and coordinates the 
instructions issued by the Office of the Head  of International Trade Negotiations, as well as 
negotiating foreign trade agreements, treaties and conventions, multilateral, regional and bilateral. 
307. The National Directorate for the Administration of International Trade Treaties and Trade 
Protection carries out the instructions issued by the Office of the Head of International Trade 
Negotiations and oversees the pr oper implementation and enforcement of the trade treaties and 
agreements ratified by the Republic of Panama, as well as investigating unfair practices and safeguard 
measures. 
308. The above-mentioned institutional and legisla tive reforms and those envisaged in Annex 1 
demonstrate the robust efforts made by Panama to  improve its institutional capacity in accordance 
with the commitments it has undertaken and on  the basis of the objec tives of its trade and 
development policy, efforts which have succeeded in  strengthening the orga nizational and functional 
structure of the public sector.  This has made it po ssible to build up administrative capacity to meet 
the standards of present-day international trad e and, moreover, to pursue a policy of state 
modernization which takes into account the fact that  its effective implementation depends on its being 
constantly updated and refined. 
VI. CONCLUSIONS AND PROSPECTS 
309. During the period under review, Panama has de veloped and put into practice a series of 
policies and changes which have led to a pr omising economic and trade performance after 
approximately ten years of reforms.  This has made  it possible to maintain a sustained growth rate, 
which reached 8.1 per cent in 2006, the highest of th e decade and one of the highest in Latin America. 
310. Trade liberalization has been a decisive factor in the country's growth, contributing to the 
achievement of higher levels of competitiven ess and increases in productivity, especially in export-
related sectors.  By making good use of its geogra phical position and the advantages generated by the 
Panama Canal and the Financial Centre, the country  has established liberal policies and centred its 
economy on activities related with those advantages.   Maritime sector activities linked with the 
international maritime transport of cargo and passenge rs and auxiliary services have been promoted;  
re-exportation from the Colon Free Zone has been  stepped up; and more recently, with the 
privatization of the Atlantic and Pacific ports a nd the Trans-Isthmus Railway, a boost has been given 
to the distribution and storage of goods, by generating a structure that will support the provision of 
logistical services.  A policy of liberalization of  the tourism sector is also being developed. 
311. All these activities are based on Panama's compar ative advantages, such as its geographical 
position combined with the use, for more than 100 years, of the US dollar as legal tender.  These 
advantages have defined the course which the country  has followed;  nevertheless, Panama is aware 
that, to ensure their primacy and enjoy their bene fits, they must be con tinuously regenerated. Panama WT/TPR/G/186/Rev.1 
 Page 57 
 
 
 312. Panama's membership of the WTO has played a dom inant role in this transformation, together 
with the free trade agreements it has concluded wh ich have helped to expand Panama's opportunities 
for trade in both goods and services and to attract  investment.  This has ensured not only improved 
access to markets but also a better environment fo r trade with Panama's various partners, by 
guaranteeing non-discrimination, increasing certainty a nd providing efficient instruments to facilitate 
trade. 
313. In the coming years it is hoped to achieve an  even greater growth rate.  Panama is 
experiencing a new trend characterized by strong growth, reinforced by the large number of mega-projects in the design or implementation phase, toge ther with a real estate boom, port expansion, 
major public investment projects, refinery and elect rical interconnection projects, and the project for 
the enlargement of the Panama Canal.  Exports are expected to continue their vigorous growth, 
boosted by an expanding world economy, particularly  in Asia and Latin America (with the latter 
benefiting from high prices for oil and raw materials);  at the same time, a greater volume of traffic 
and higher tolls should increase the income of the Panama Canal Authority (ACP), while new exports 
of ores and agricultural products will come onstream. 
314. Panama will continue developing its state m odernization policy with the intention of 
strengthening its institutions and improving admi nistrative efficiency in order to meet its 
commitments and the challenges of trade liberalization. 
315. At the same time, it reaffirms its commitment to trade liberalization and the need to take due 
account of the challenges which that poses for the pr oductive sectors.  It also regards the process of 
validation and consultation as the appropriate mechanism for seeking consensus and greater 
opportunities for national development.  In this conn ection, it will continue to be an agent and active 
promoter of change based on the multilateral system, w ith a view to achieving an ever freer and fairer 
trading system. WT/TPR/G/186/Rev.1 Trade Policy Review 
Page 58 
 
 
 ANNEX 1 
 
PRINCIPAL LEGISLATIVE REFORMS AND ADAPTATIONS WITHIN 
THE CONTEXT OF PANAMA'S ACCE SSION TO THE WTO AND THE 
CONSEQUENT PROCESS OF INSTITUTIONAL MODERNIZATION 
 
(i) Customs procedures and cl earance (imports and exports)  (www.aduanas.gob.pa): 
 
• Law No. 41 of 1 July 1996.  Introducing gene ral rules to be followed by the Cabinet 
Council in issuing provisions concerning the Customs Regime.  Pub lished in Official 
Gazette No. 23.070 of 2 July 1996. 
 
• Cabinet Decree No. 41 of 11 December 2002.  Developing the provisions concerning 
the Customs Regime under Law No.  41 of 1 July 1996.  Published in Official Gazette No. 24.700 of 16 December 2002. 
 (ii) Prohibitions, licences and other cont rols applied to imports and exports 
(www.aduanas.gob.pa): 
 
• Law No. 23 of 15 July 1997, Title III (Gen eral Provisions for the Processing of 
Import Licences Issued by State Institutions).   Approving the Marrakesh Agreement 
Establishing the World Trade Organization;  Panama's Protocol of Accession to that 
Agreement, together with its Annexes a nd Schedules of Commitments;  adapting the 
domestic legislation to international norms and introducing other provisions.  
Published in Official Gazette No. 23.340 of 26 July 1997. 
 
• Resolution No. 5 of 18 November 1998.  Regulations for administering the granting 
of Licences for the Importation of Products subject to Tariff Rate Quotas.  Published 
in Official Gazette No. 23.687 of 8 December 1998. 
 
(iii) Customs valuation, minimum and ref erence prices, and preshipment inspection  
(www.aduanas.gob.pa): 
 
• Cabinet Decree No. 26 of 1 August 1996.  Introducing provisions concerning the 
Customs Regime with respect to the Customs Valuation System.  Published in 
Official Gazette No. 23.096 of 7 August  1996. 
 
• Resolution No. 704-04-019 of 10 January 1997.  Procedure used for the valuation of 
used vehicles. Published in Official  Gazette No. 23.348 of 5 August 1997. 
 
• Resolution No. 704-04-532 of 17 September 1997.  Regulating the value of goods in 
accordance with Decree No. 26 of 1 August 1996.  Published in Official Gazette 
No. 23.402 of 20 October 1997. 
 
• Resolution No. 704-04-528 of 10 October 1997.   Regulations for the valuation of 
used goods.  Published in Official Gazette No. 23.405 of 23 October 1997. 
 Panama WT/TPR/G/186/Rev.1 
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 (iv) Provisions in force in relation to tariff concessions on both imports and exports (for 
example, repayment or deferred payment of duties, free zones) (www.aduanas.gob.pa): 
 
• Law No. 28 of 20 June 1995.  Adopting m easures for the universalization of tax 
incentives to production and introducing othe r provisions.  Published in Official 
Gazette No. 22.810 of 22 June 2005. 
 
• Executive Decree No. 274 of 29 December 1995.  Regulating Law No. 28 of 
20 June 1995 relating to the universalization of tax incentives.  Published in Official 
Gazette No. 22.956 of 22 January 1996. 
 
• Law No. 41 of 20 July 2004.  Creating a special regime for the establishment and 
operation of the Panama-Pacific Special Ec onomic Area, and an autonomous state 
entity known as the Panama-Pacific Special  Economic Area Agency.  Published in 
Official Gazette No. 25.103-A of 28 July 2004. 
 (v) Anti-dumping and countervailing duties, safeguards  (www.mici.gob.pa): 
 
• Decree Law No. 7 of 15 February 2006.  Establishing rules for the protection and 
defence of domestic production and introduc ing other provisions.  Published in 
Official Gazette No. 25.491 of 22 February 2006. 
 (vi) Government procurement  (www.mef.gob.pa): 
 
• Law No. 56 of 27 December 1995.  G overning Government Procurement and 
introducing other provisions.  Publishe d in Official Gazette No. 22.939 of 
28 December 1995. 
 
• Executive Decree No. 18 of 25 January 1996.  Regulating Law No. 56 of 
27 December 1995, which governs Governme nt Procurement and introduces other 
provisions.  Published in Official Ga zette No. 22.961 of 29 January 1996. 
 
• Law No. 22 of 27 June 2006.  Governing Government Procurement and introducing 
other provisions.  Published in Official  Gazette No. 25.576 of 28 June 2006. 
 (vii) Competition policy  (www.autoridaddelconsumidor.gob.pa): 
 
• Law No. 29 of 1 February 1996, establishi ng rules on the defence of competition and 
adopting other measures. 
 
• Executive Decree No. 31 of 15 July 1997.  Regulating Articles 103 and 112 of Law 
No. 29 of 1 February 1996 on the defence of competition.  Published in Official 
Gazette No. 23.334 of 18 July 1997. 
 
• Decree Law No. 9 of 20 February 2006.  Creating the Authority for the Protection of 
the Consumer and the Defence of Compe tition, amending and adding provisions to 
Law No. 29 of 1 February 1996 and adopting ot her provisions.  Published in Official 
Gazette No. 25.493 of 24 February 2006. 
 WT/TPR/G/186/Rev.1 Trade Policy Review 
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 (viii) Standards and technical regulations  (www.mici.gob.pa): 
 
• Law No. 23 of 15 July 1997, Title II (Pr ovisions on Technical Standardization, 
Conformity Assessment, Accreditation, Quality Certification, Metrology and 
Conversion to the International System of Units).  Approving the Marrakesh 
Agreement Establishing the World Trade Or ganization;  Panama's Protocol of 
Accession to that Agreement, together  with its Annexes and Schedules of 
Commitments;  adapting the domestic legislation to international norms and introducing other provisions.  Publishe d in Official Gazette No. 23.340 of 
26 July 1997. 
 
(ix) Sanitary and phytosanitary measures  (www.mida.gob.pa;  www.minsa.gob.pa): 
 
 Animal and Plant Health: 
 
• Law No. 47 of 9 July 1996.  Creating the National Plant Health Directorate and 
introducing phytosanitary protection measur es.  Published in Official Gazette 
No. 23.078 of 12 July 1996. 
 
• Law No. 23 of 15 July 1997, Title I (Zoosanitary and agricultural quarantine 
measures and powers).  Approving the Marra kesh Agreement Establishing the World 
Trade Organization;  Panama's Protocol of Accession to that Agreement, together with its Annexes and Schedules of Commitmen ts;  adapting the domestic legislation 
to international norms and introducing ot her provisions.  Published in Official 
Gazette No. 23.340 of 26 July 1997. 
 
• Executive Decree No. 39 of 31 August 1999.  Approving the organization, 
administration and functions of the Ministry  of Agricultural Development.  Published 
in Official Gazette No. 23.880 of 7 September 1999. 
 
 Food Safety: 
 
• Decree Law No. 11 of 22 February 2006.  Creating the Panamanian Food Safety 
Authority and introducing other provisions.  Published in Official Gazette No. 25.493 of 24 February 2006. 
 
(x) Financial services  (www.superbancos.gob.pa): 
 
• Decree Law No. 9 of 26 February 1998.  On the Banking Regime and the Banking 
Supervisory Authority of Panama.  Pub lished in Official Gazette No. 23.499 of 
12 March 1998. 
 
• Decision No. 4 of 1998.  Framework Agreem ent for the conclusion of agreements and 
understandings with foreign supervisory bo dies.  Published in Official Gazette 
No. 23.667 of 10 November 1998. 
 
• Decision No. 3-2001 of 5 September 2001.  On Banking Licences.  Published in 
Official Gazette No. 24.409 of 15 October 2001.  See Decision No. 2-2006. 
 Panama WT/TPR/G/186/Rev.1 
 Page 61 
 
 
 • Decision No. 4 of 2001.  Corporate Governance.  Published in Official Gazette 
No. 24.409 of 15 October 2001. 
 
• Decision No. 4 of 2002.  Opening of transborder establishments by Panamanian 
banks.  Published in Official Gazette No. 24.529 of 11 April 2002. 
 
• Decision No. 2-2003.  On Microfinance Licences.  Published in Official Gazette 
No. 24.765 of 21 March 2003.  As amended by Decision No. 6-2003. 
 
• Decision No. 5 of 2003.  Electronic Banking Regulations.  Published in Official 
Gazette No. 24.833 of 30 July 2003. 
 
• Decision No. 6 of 2003.  Amending Articles 3 and 7 of Decision No. 2-2003 on 
Microfinance Banks.  Published in Official  Gazette No. 24.903 of 7 October 2003. 
 
• Decision No. 1 of 2004.  Mergers and Ta keovers.  Revoking Decision No. 10-2003.  
Published in Official Gazette No. 25.213 of 7 January 2005. 
 
• Decision No. 2 of 2005.  Bank Transfers.  P ublished in Official Gazette No. 25.236 of 
14 February 2005. 
 
• Decision No. 9 of 2005.  Developing Outsour cing.  Published in Official Gazette 
No. 25.420-A of 2 November 2005. 
 
• Decision No. 12-2005 of 14 December 2005.  Prevention of the Improper Use of 
Banking and Fiduciary Services.  Publishe d in Official Gazette No. 25.452 of 
27 December 2005. 
 
• Special Decision No. 12-2005 of 14 December 2005.  Handbook of Examples of 
Suspicious Transactions.  Published in Official Gazette No. 25.455 of 
30 December 2005. 
 
• Resolution J. D. No. 032-2005 of 21 December 2005.  Establishing the scope of the 
notion of due diligence contained in Article 3 of Decision No. 12-2005.  Published in 
Official Gazette No. 25.469 of 23 January 2006. 
 
• Decision No. 2 of 2006.  Amending Articles 7, 9, 10 and 13 of Decision No. 3-2001 
of 5 September 2001 on Banking Licences.  Pub lished in Official Gazette No. 25.510 
of 24 March 2006. 
 (xi) Telecommunications Services  (www.asep.gob.pa): 
 
• Law No. 26 of 29 January 1996.   Establishing the Regulatory Body for Public 
Utilities.  Published in Official Ga zette No. 22.962 of 30 January 1996. 
 
• Law No. 5 of 9 February 1995.  Restru cturing the National Telecommunications 
Institute (INTEL) as a public limited compan y.  Published in Official Gazette 
No. 22.724 of 14 February 1995. 
 WT/TPR/G/186/Rev.1 Trade Policy Review 
Page 62 
 
 
 • Law No. 43 of 21 July 1995.  Establishi ng the tendering procedure for Cellular 
Mobile Telephony Band A.  Published in Official Gazette No. 22.833 of 
25 July 1995. 
 
• Executive Decree No. 21 of 12 January 1996.  Issuing the Regulations on the 
Operation of the Cellular Mobile Telephony Se rvice.  Published in Official Gazette 
No. 22.957 of 23 January 1996. 
 
• Law No. 31 of 8 February 1996.  Es tablishing rules for the regulation of 
telecommunications in the Republic of Panama.  Published in Official Gazette No. 22.971 of 9 February 1996.  Law No. 31 of 1996 was amended, in its turn, by Law No. 24 of 30 June 1999.  Publis hed in Official Gazette No. 23.832 of 
5 July 1999. 
 
• Executive Decree No. 73 of 9 April 1997.  Regulating Law No. 31 of 
8 February 1996.  Published in Official  Gazette No. 23.263 of 10 April 1997. 
 
• Resolution No. JD-080 of 10 April 1997, establishing the tendering conditions for 
service No. 106 known as Personal Communications (PCS). 
 
• Resolution No. JD-106 of 30 September 1997, adopting the first part of the National 
Technical Telecommunications Plan, which includes the National Routing Plan, the National Synchronization Plan, the Nati onal Signaling Plan and the National 
Transmission Plan. 
 
• Resolution No. JD-107 of 30 September 1997, adopting the Plan for the Use of the 
Radio Frequency Spectrum and the Nationa l Frequency Allocation Plan.  Amended 
by Resolutions:  No. JD-115 of 23 Oc tober 1997, No. JD-740 of 22 May 1998, 
No. JD-2019 of 13 June 2000, No. JD-2375 of 14 September 2000, No. JD-2481 of 1 November 2000, No. JD-3250 of 21 Ma rch 2002, No. JD-4879 of 24 August 2004, 
No. JD-5110 of 14 January 2005 and No. JD-5824 of 24 January 2006. 
 
• Resolution No. JD-179 of 12 February 1998 and its amendments, adopting the 
National Numbering Plan, which forms an in tegral part of the National Technical 
Telecommunications Plan. 
 
• Executive Decree No. 138 of 15 June 1998.  Introducing rules for the use of 
installations dedicated to the provision of public telecommunications, radio and television services.  Published in Offici al Gazette No. 23.568 of 19 June 1998. 
 
• Resolution No. JD-2802 of 11 June 2001, adopting the Rules governing the provision 
of Basic Telecommunications Services, as from 2 January 2003, and adopting other measures. 
 
• Resolution No. JD-3127 of 19 December 2001, amending Resolution No. JD-025 of 
1996, for locating within the classification of Telecommunications Services type "B" 
Service No. 223 known as the Call Centre Service. 
 Panama WT/TPR/G/186/Rev.1 
 Page 63 
 
 
 • Executive Decree No. 97 of 25 September 2002.  Regulating Article 2 of Law No. 54 
of 25 October 2001 and adding a paragra ph to Article 14 of Executive Decree 
No. 1-D of 28 January 1994 (benefits for Call Centres).  Published in Official Gazette 
No. 24.650 of 1 October 2002. 
 
• Resolution No. JD-4408 of 18 December 2003, adopting the Rules for enterprises 
providing Cellular Mobile Telephony Servi ce Bands A and B to offer Automatic 
Routing (pre-subscription) and Access Code  facilities on Domestic and International 
Long Distance calls.  Published in Offici al Gazette No. 24.961 of 6 January 2004. 
 
• Resolution No. JD-5690 of 5 December 2005, amending Resolution No. JD-102 of 
1 September 1997 and in consequence adop ting the text detailing the regulations 
applicable to the AUDIOTEXTO Value A dded Service.  Published in Official 
Gazette No. 25.455 of 30 December 2005. 
 
• Decree Law No. 10 of 22 February 2006.  Re organizing the structure and functions of 
the Public Utilities Regulatory Body and introducing other provisions.  Published in Official Gazette No. 25.493 of 24 February 2006. 
 
(xii) Air Transport Services  (www.aeronautica.gob.pa): 
 
• Resolution No. 079-JD of 18 June 2002.   Approving the Panama Civil Aviation 
Regulations.  Published in Official Gazette No. 24.651 of 2 October 2002. 
 
• Resolution No. 095-JD of 27 August 2002.  Amending Resolution No. 079, sections 
of Books VI and XIV.  Published in Official Gazette No. 24.649 of 30 September 2002. 
 
• Law No. 21 of 29 January 2003.  Governing Civil Aviation, replacing Decree 
Law No. 19 of 1963 and introducing other provisi ons.  Published in Official Gazette 
No. 24.731 of 31 January 2003. 
 
• Law No. 22 of 29 January 2003.  Repea ling Cabinet Decree No. 13 of 1969 and 
establishing the Civil Aviation Authority.  Published in Official Gazette No. 24.731 of 31 January 2003. 
 
• Law  No. 23 of 29 January 2003.  Adopting the regulatory framework for the 
administration of Panama's airports and ai rfields.  Published in Official Gazette 
No. 24.731 of 31 January 2003. 
 
• Resolution No. 174-AL-DG-AAC of 17 September 2003.  Defining the 
Organizational Structure of the Civil Aviation Authority. 
 
• Resolution No. 009-AL-DG-AAC of 2 February 2004.  Annulling Resolution 
No. 174-AL-DG-AAC of 17 September 2003 and defining the Organizational 
Structure of the Civil Aviation Authority. 
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Page 64 
 
 
 • Resolution No. 002-JD of 12 February 2004 .  Amending several books of Resolution 
No. 079 and adding others.  Published in Official Gazette No. 25.031 of 
19 April 2004. 
 
• Resolution No. 009-JD of 12 February 2004.  Approving Book XXIII on Airfield 
Certification.  Published in Official Gazette No. 25.066 of 7 June 2004. 
 
• Resolution No. 030-AL-DG-AAC of 30  March 2004.  Annulling Resolution 
No. 009-AL-DG-AAC of 2 February 2004 a nd defining the Organizational Structure 
of the Civil Aviation Authority. 
 (xiii) Maritime Transport Services  (www.amp.gob.pa): 
 
• Law No. 38 of 4 June 1995.  United Nations Convention on the Law of the Sea done 
in Montego Bay 10 December 1982.  Publishe d in Official Gazette No. 23.056 of 
12 June 1996. 
 
• Law No. 36 of 6 July 1995.  Amending, adding and repealing articles of the Fiscal 
Code.  Yacht licences, registration of gr oups of vessels and discounts, arrangements 
for payment.  Published in Official Gazette No. 22.825 of 13 July 1995. 
 
• Law No. 25 of 18 July 1997.  Amending ar ticle 3 of Law No. 2 of 1980 and article 
1053 of the Fiscal Code and introducing othe r provisions.  Published in Official 
Gazette No. 23.338 of 24 July 1997. 
 
• Decree Law No. 7 of 10 February 1998.  Establishing the Panama Maritime 
Authority.  Published in Official Gazette No. 23.484 of 17 February 1998. 
 (xiv) Tourism Services  (www.panamatramita.gob.pa): 
 
• Law No. 8 of 14 June  1994.  Promoting t ourism activities in the Republic of Panama.  
Published in Official Gazette No. 22.558 of 15 June 1994. 
 
• Decree Law No. 4 of 1998.  Amending Law No. 8 of 1994 promoting tourism 
activities in Panama.  Published in Official  Gazette No. 23.480 of 12 February 1998. 
 
(xv) Opening Businesses: 
 
• Law No. 5 of 11 January 2007, expediti ng the process of opening businesses and 
establishing other provisions.  Publishe d in Official Gazette No. 25.709 of 
12 January 2007. 
 
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