WORLD TRADE  
ORGANIZATION  G/SCM/Q2/PAN/12 
27 April 2010 
 (10-2219) 
Committee on Subsidies and 
Countervailing Measures Original:   Spanish 
 
 
 
SUBSIDIES 
 
Replies to Questions Posed by the UNITED STATES1 
Regarding the New and Full Subsidies Notification of PANAMA2 
 
  The following communication, dated 26 April 2010,  has been circulated at the request of the 
delegation of Panama.  
_______________ 
 
 
Export Processing Zones
 
 Question 
 
• Could Panama please provide details of the legislative amendments governing the 
procedures for cancelling the developers'  licenses?  Have these amendments been 
implemented yet?  If not, does Panama have an estimated time frame of when they will 
be implemented? 
 Reply
 
  Article 35 of Law 25 of 30 November 1992 on Export Processing Zones states that failure to comply with obligations regarding the amounts and period allowed for investment may give rise to 
cancellation of licences awarded to deve lopers, operators or enterprises. 
 
 Between January and April 2010, three developers in the Processing Zones and six enterprises 
saw their operating licences cancelled.  These can cellations were decided in accordance with 
Article 35 of Law 25 of 30 November 1992 owing to non-compliance with the amounts and periods 
allowed for investment.  Question 
 
• The United States welcomes the fact that Panama has established a Working Group 
which has been entrusted with developing an action plan for eliminating these export subsidies.  In that regard, the United States would welcome an explanation of the specific internal steps Panama has taken to prepare for the termination of this export 
subsidy programme.  Please provide a descript ion of what the action plan entails. 
 
                                                     
 
1 G/SCM/Q2/PAN/11. 
2 G/SCM/N/192/PAN. G/SCM/Q2/PAN/12 
Page 2  
 
  Reply
 
  The Working Group will be carrying out the following actions:  
• The Technical Commission of the Minist ry of Commerce and Industry will be 
drawing up a draft law to eliminate the export subsidies provided for in Law 25 of 
30 November 1992. 
 
• This draft law will be submitte d to the National Assembly. 
 
• Under Panama's Constitution, the draft law will have to be passed by the National 
Assembly in three debates on different days, and approved by the Executive. 
 
• Once it has approved the draft, the Execu tive will send it for publication as a law. 
  To date, the following actions have been taken:  
• As of February 2009, the following clause was included in the text of the Cabinet 
Resolution approving the establishment a nd operation of Processing Zones:  
"Whereas pursuant to the commitments assu med by Panama upon its accession to the 
World Trade Organization (WTO), the be nefits under Law 25 of 30 November 1992 
shall remain in force until 31 December 2015". 
 
• As of March 2009, the following was included in the text of the operating licences 
issued by the Ministry both to developers and to enterprises establishing themselves:  "The benefits under Law 25 of 30 N ovember 1992 shall remain in force until 
31 December 2015 pursuant to the commi tments assumed by Panama upon accession 
to the World Trade Organization (WTO)". 
 
• On 25 January 2008, an e-mail was sent to the developers of the Processing Zones, 
forwarding digital information from the WT O - 2007 News Items - stating that the 
SCM Committee had decided to continue to grant extensions of the transition period 
until the end of 2013, with a final phase-out period of two years, ending no later than 
31 December 2015. 
 
• On 9 March 2009, a communication from the Processing Zone Unit was forwarded to 
the Processing Zone developers with the information that the WTO Committee on 
Subsidies and Countervailing Measures was ex tending the export subsidies (including 
the Processing Zone export subsidies) up to 31 December 2015, after which no 
further extension requests would be considered. 
 
• By Note N-306/09 of 6 July 2009, signed by the National Director for Export 
Promotion, all enterprises of the Processi ng Zone (developers and enterprises located 
in the Zones) were personally notified th at "no further export subsidies within the 
meaning of SCM Article 3.1(a)" would be  granted to them, "nor will existing 
subsidies be maintained beyond the end of calendar year 2015, with no requests to the 
WTO for extension corresponding to this progr amme", and that "in the light of the 
importance of the Export Processing Zone  programme to the development of 
Panama's export sector ... the required analyses, assessments and reviews are already under way, with a view to securing viable alternatives for this sector which are in 
keeping with Panama's  WTO commitments." 
  G/SCM/Q2/PAN/12 
 Page 3 
 
 
  • Since July 2009, no more operating licences ha ve been issued to developers from the 
Processing zones, since investors consider th e incentive period to be very short in 
relation to the amount of investment that the development of a Zone would involve. 
 
Official Industry Register  
 
Question 
 
• Has Panama informed the beneficiaries of this program that the measure must be 
eliminated by 31 December 2015?  If not, can Panama provide an update on the process it is undertaking to inform all manufacturers who are benefiting from this programme? 
 Reply
 
  Yes.  
__________