WORLD TRADE  
ORGANIZATION  WT/REG264/1  
7 January 2011 
 (11-0029) 
Committee on Regional Trade Agreements  
  
 
   
 
 
FACTUAL PRESENTATION 
 
Bilateral Protocol between Costa Rica  and Panama to the Free Trade Treaty 
between 
Central America and Panama 
(Goods and Services) 
 
Report by the Secretariat 
 
 
 
 This report, prepared for the consideration of the Bilateral Protocol Agreement between 
Costa Rica and Panama that operationalizes the Free Trade Treaty (FTT) between 
Central America and Panama, has been drawn up by the WTO Secretariat on its own 
responsibility and in full consultation with the Parties.  The report has been drawn up in 
accordance with the rules and procedures cont ained in the Decision for a Transparency 
Mechanism for Regional Trade Agreements (WT/L/671).   Any technical questions arising from this report may be addressed to Maria Pillinini 
(tel.: +41 22 739 52 44). 
   WT/REG264/1 
 Page i 
 
 
  TABLE OF CONTENTS 
 
  Page 
I. TRADE ENVIRONMENT 1  
A. OVERVIEW  1 
B. MERCHANDISE TRADE  1  
C. SERVICES TRADE  5  
II. CHARACTERISTIC ELEMENTS OF THE TREATY 9  
A. BACKGROUND INFORMATION  9  
III. TRADE IN GOODS 10  
A. NATIONAL TREATMENT AND MARKET ACCESS PROVISIONS ON TRADE IN GOODS  10  
1. Import duties and charges, and quantitative restrictions 10  
(a) General provisions 10  
(b) Liberalization of tariff lines and trade 11  
(c) Tariff-rate quotas 13  
(d) Costa Rica's liberalization schedule 14  
(e) Panama's liberalization schedule 17  
2. Rules of origin 20  
3. Export duties and charges, and quantitative restrictions 23  
B. REGULATORY PROVISIONS ON TRADE IN GOODS  23  
1. Standards 23  
(a) Standards 23  
(b) Sanitary and Phytosanitary Measures 24  
2. Safeguard mechanisms 25  
(a) Bilateral safeguard measures 25  
(b) Global safeguard measures 26  
3. Anti-dumping and coun tervailing measures 27  
4. Subsidies and State-aid 28  
5. Customs-related procedures 28  
IV. TRADE IN SERVICES AND INVESTMENT 30  
A. SCOPE AND DEFINITIONS  30  
B. DENIAL OF BENEFITS  32  
C. GENERAL PROVISIONS ON TRADE IN SERVICES AND INVESTMENT  32  
1. Market access 33  
2. National and MFN treatment 33  
3. Local presence 34  
4. Movement of natural persons 34  
5. Performance requirements 35  
6. Requirements for senior management and board of directors 36  
7. Other provisions on trade in services 36  
8. Other investment  provisions 37  
D. LIBERALIZATION COMMITMENTS  37  
1. Costa Rica 38  
2. Panama 43  
E. REGULATORY PROVISIONS ON TRADE IN SERVICES  47  
1. Domestic regulation 47  
2. Recognition 47  WT/REG264/1 
Page ii  
 
  F. SECTOR SPECIFIC PROVISIONS ON TRADE IN SERVICES  48  
1. Financial services 48  
V. GENERAL PROVISIONS OF THE TREATY 49  
1. Transparency 49  
2. Current payments and capital movements 49  
3. Exceptions 49  
4. Accession 50  
5. Institutional framework 50  
6. Dispute settlement 51  
7. Relationship with other agreements concluded by the Parties 54  
8. Government procurement 55  
9. Intellectual property rights 56  
10. Competition policy 56  
ANNEX I 57 
ANNEX II 61 
ANNEX III 63 
  WT/REG264/1 
 Page 1 
 
 
   
 
Key Facts 
 
Parties to the Bilateral Protocol: 
Costa Rica and Panama 
(Parties to the Free Trade Treaty between Central America and Panama: Panama and Costa Rica, El Salvador , Guatemala, Honduras and Nicaragua) 
 Date of Signature of the Bilateral Protocol:  7 August 2007 
(Date of Signature of the Treaty:  6 March 2002) 
 Date of Entry into Force:  23 November 2008 
 Date of Notification:  7 April 2009 
 
 
 
I. TRADE ENVIRONMENT 
A. OVERVIEW  
1. The Bilateral Protocol between Costa Rica and Panama to the Free Trade Treaty between 
Central America and Panama is Costa Rica's seventh regional trade agreement, and Panama's 
fifth one.  It is the second bilateral Protocol of the relevant Treaty that has been notified to the WTO. 
2. Though in terms of population and economic size Costa Rica is slightly larger than Panama, 
they are within a similar band.  In 2008, their respective population reached 4.5 and 3.4 million, while 
the GDP attained respectively 29,834 and 23,088 milli on US$.  GDP per capita is however slightly 
higher in the case of Panama –6,800 US$ compared to 6,590 US$ for Costa Rica.1 
3. As regards the size of their external sectors, in 2008 Costa Rica ranked before Panama as 
regards trade in goods, both imports and exports , while the opposite occurred as regards trade in 
services.  Actual figures for trade in goods ranked Costa Rica in 80th place as goods importer and 87th 
as an exporter, with a 0.09% share of world imports  and a 0.06% share of exports.  Panama, for its 
part, was in 96th place in the world for goods imports and 142nd place for exports, accounting for 
0.06% and 0.01% of world imports and exports, respectively.  As regards trade in services, in 2008 
Panama's world ranking was 86th for imports, with 0.07% of the total, and 62nd for exports, with 
0.15% of the total;  the corresponding figures for Costa Rica were 0.06% and 0.11%, respectively, giving it a world ranking of 99
th for imports and 72nd for exports. 
B. MERCHANDISE TRADE  
4. Charts I.1 and I.2 below show development in merchandise trade between the Parties and 
between them and the rest of the world.  Both  Costa Rica and Panama present a trade deficit vis-à-vis  
the world (with the exception of the year 1999 for Co sta Rica), though that of Panama is significantly 
higher than that of Costa Rica.  The growth of Panama's deficit vis-à--vis  the world has speed up in 
particular from 2006 onwards;  by 2008, imports am ounted to around eight times the import revenue. 
                                                      
1 The cumulative figures used in this section are taken from the WTO trade statistics database.  They 
may therefore not coincide with the data provided by the national authorities. WT/REG264/1 
Page 2  
 
  5. Intra-trade shows a trade surp lus in favour of Costa Rica.
2  In the case of Panama, exports to 
Costa Rica have seen a descending trend up to 2003,  when the situation reversed;  imports have 
however continuously increased.  As for Costa Rica,  both imports from and exports to Panama have 
fluctuated in the period 1998-2005, but, as from 2006, they have both been following an upward trend. 
02468101214161820
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 20080.00.20.40.60.81.01.21.41.61.82.0US$billion US$billionChart I.1- Costa Rica: Merchandise imports from and exports to 
world and Panama, 1998-2008
Source : UNSD, Comtrade database.Imports from Panama
Exports to PanamaTotal imports
Total exportsLeft hand scale: Right hand scale:
 
                                                      
2 In the charts below, there is a major discrepancy in bilateral trade figures;  this is because the figures 
from Panama do not include the Colón Free Zone, but the opposite occurs as regards the figures from 
Costa Rica.  WT/REG264/1 
 Page 3 
 
 
  0246810
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 20080.00.20.40.60.81.0US$billion US$billionChart I.2 - Panama: Merchandise imports from and exports to 
world and Costa Rica, 1998-2008
Source : UNSD, Comtrade database; WTO-IDB (2004 Panama imports from world and Costa Rica).Imports from Costa Rica
Exports to Costa RicaTotal imports
Total exportsLeft hand scale: Right hand scale:
 
 
6. Chart I.3 shows the composition of trade between the Parties and their exports and imports to 
and from the rest of the world, on the basis of Harmonized System (HS) product categories, using the 
annual average of trade flows during the period 2006 2008. 
7. Around one third (32.5%) of Costa Rica's imports  from the world were machinery products,  
the other the two largest imports were minerals and chemicals, accounting respectively for 11.2% and 
10.9%.  Panama had the same two top imports from th e world, with minerals at 20.5% and machinery 
at 19.6%, after these, vehicles came third in the im port rank, representing 11% of total imports.  On 
global exports, Costa Rica's profile was made of  a mix of new and traditional products, with 
machinery accounting for 32.5% and fruit and vegetabl es for 22%.  Around three fourths of Panama's 
exports to the world were concentrated in live an imals and their products, in particular fish, which 
reached 40.7%, and fruits and vegetables at 36.3%. 
8. Costa Rica's imports from Panama were dive rsified;  about one fourth (29.1%) was 
concentrated on chemicals, but other five categorie s of products had a share between 10.7% and 7.1% 
- namely machinery, animals and their products , textiles, pulp of wood and base metals.  
This contrasts with the largely concentrated export profile of Panama vis-à-vis  the world. 
9. Panama's imports from Costa Rica were relatively less diversified;  more than one third 
(35.4%) were chemical products, four other categor ies - prepared foods, machinery, base metals and 
plastics - had a ratio between 16% and 9.9%.  Taken together, these five categories accounted for 83% 
of imports from Costa Rica. WT/REG264/1 
Page 4  
 
   
Chart I.3
Costa Rica and Pana ma: product composition of merchandise trade, annual 
average (2006-2008)
Costa Rica's imports from Panama Panama's imports from Costa Rica
 Source:  UNSD, Comtrade database.Per cent
Total:  US$209 million Total:  US$343 million
Total:  US$13, 039 million
Total:  US$8,642 millionCosta Rica's global exportsPanama's global exportsCosta Rica's global imports Panama's global importsOther
7.0
Chemicals 
29.1 Footwear 2.5Other 
5.0
Stone, cement 2.2
Other 
5.7Machinery 
10.7Base metals 7.1
Animals 2.1
Machinery
32.5Vegetable 4.8
Chemicals 5.3Textiles 3.3Animals 
10.2
Plastics 4.5Optical 2.3
Other 
7.5Prepared foods 3.5
Chemicals
 10.9Base metals 
7.7Plastics 7.1Pulp of wood 6.4
Pulp of wood 7.5
Base metals 3.8 Textiles 3.7
Vehicles 5.2Machinery 
32.5
Minerals
 11.2Minerals 3.4
Pulp of wood 4.9Prepared foods 4.8Plastics
 9.9
Pulp of wood  1.9
Vegetable
 22.0Prepared foods
7.6Other 
9.3
Vehicles
 10.1Base metals 
8.4Plastics 8.0Machinery 
38.8Other 
9.3
Vehicles
 10.1Base metals 
8.4Plastics 8.0Machinery 
38.8Other 
8.0
Pulp of wood 3.5
Vehicles
 11.0Chemicals 9.3Base metals 
8.4Minerals 20.5
Plastic 4.0
Machinery 
19.6Prepaared foods 6.2Vegetables 3.1
Prepared foods 6.0Animals
40.7Base metals 5.2Pulp of wood 2.7Other 
5.3
Vegetables  
36.3Chemicals 2.3Precious stones 1.5Total:  US$6, 902 million
Total:  US$1,096 millionVehicles 2.1
Chemicals
35.4
Optical 2.7
Optical  9.5Textiles 3.2Minerals 1.4
Miscellaneous 3.0Textiles 
8.5Plastics 4.8
Prepared foods 16.0Machinery 
11.4Base metals 10.9Fats and oils 1.5
  WT/REG264/1 
 Page 5 
 
 
  C. SERVICES TRADE  
10. In 2008, Costa Rica's commercial services exports amounted to US$4.055 million, 
representing 0.11% of world exports, while impor ts amounted to US$1.878 million and represented 
0.06% of world imports.  The value of services exports  is less than half of Costa Rica's exports of 
goods;  the value of goods imports is nine times bigger than services imports. 
11. The evolution of Costa Rica's total commercia l services trade during the period 2000-2008 is 
shown in Chart I.4.  Between 2000 and 2008, the value of exports to the world doubled, while 2008 imports were 1.5 times higher than those of 2000.  Costa Rica has a constant trade surplus in 
commercial services. 
12. As regards the composition of exports, travel  services remained the leading sector over the 
entire period, but with its importance reduced from 67% of exports in 2000 to 55% in 2008;  transport 
services, second sector of export importance, has seen  a similar trend passing from 14% to 9% during 
that same period.  Conversely, exports of computer  and information services have faced an ascending 
trend passing from 9% in 2000 to 18%  in 2008.  With respect to imports, travel and transport account 
each for around one third of services imports;  the sect oral distribution of imports has remained stable 
during the period under consideration. 
0.00.51.01.52.02.53.03.54.04.55.0
2000 2001 2002 2003 2004 2005 2006 2007 20080.00.51.01.52.02.53.03.54.04.55.0
2000 2001 2002 2003 2004 2005 2006 2007 2008Chart I.4
Costa Rica, total commercial services trade, 2000-2008
Exports Imports
Transport services
Travel services
Source : Central Bank of Costa Rica.Telecommunications servicesUS$ billion
Financial services
Computer and information services
Royalties and license feesOther business services
Personal and cultural and 
recreational servicesUS$ billion
 Insurance services Government services
 
 WT/REG264/1 
Page 6  
 
  13. Chart I.5 show that Costa Rica's current infl ows of FDI from Panama and the world in the 
period 2000-2009.  While the inflow of FDI from Panama has been irregular over the period surveyed, a constant upward trend (with the exception of 2003 and 2009) has been registered on FDI inflow from the world, reaching the maximum figure of US$2.078 billion in 2008, up from 409 million in 2000. 
-238131823283338434853586368
2000
2001
2002200320042005
2006
20072008200902004006008001,0001,2001,4001,6001,8002,0002,200
2000
2001
2002
2003
2004
2005
2006
20072008
2009Chart I.5
Costa Rica, foreign direct investment flow with Panama and world, 2000-2008
Panama WorldUS$ millionUS$ million
Source:  BCCR, CINDE,PROCOMER, COMEX e ICT. 
 
14. In 2008, Panama's commercial services exports  amounted to US$5.826 million, representing 
0.15% of world exports, while imports amounted  to US$2.621 million and represented 0.07% of 
world imports.  Panama's dynamism in services exports  is reflected in its extremely high proportion of 
Panama's external trade, accounting for 83.6% of total exports;  the proportion of services in total 
imports is however significantly lower – i.e. 16.4%. 
15. The evolution of Panama's total commercial  services trade during the period 2000-2008 is 
shown in Chart I.6.  In 2008, 2008, Panama's expor ts to the world was almost  three times bigger than 
those of 2000;  imports have also followed an upward trend, but with yearly variations, and at a lower 
increase path:  in 2008, they had increased by 130.8%. 
16. As regards the composition of exports, transpor t services remained the leading sector over the 
entire period, accounting for more than half (55.3% ) of Panama's total services exports, with the 
single sub sector of maritime transport accounting for around 40%.  Travel and financial services 
immediately follow, accounting for a growing share of total exports.  Sectors that emerged during this 
period were communication and construction, ex ports of which increased from US$34 million to 
US$238 million.  Transportation also represents the la rgest share in Panama's imports, with the value 
in 2008 being almost three times that of 2000;  in pa rticular, such increase has accelerated since 2006.  
Imports of financial and travel services also showed an upturn. Source :  BCCR, CINDE, PROCOMER, COMEX and ICT.  WT/REG264/1 
 Page 7 
 
 
  0.01.02.03.04.05.06.0
2000 2001 2002 2003 2004 2005 2006 2007 20080.00.51.01.52.02.53.03.5
2000 2001 2002 2003 2004 2005 2006 2007 2008Chart I.6 - Panama: Total commercial services trade, 2000-2008
Exports ImportsUS$ billion
Transport services
Other business servicesTravel services
Financial servicesCommunication and construction servicesComputer and information services
Royalties and licence fees
Government services
 
17. Chart I.7 shows FDI flows and stock of FDI in relation to the world, by branch of economic 
activity.  While the stock of FDI has constantly increased during 2001 and 2007, flows have followed 
a more erratic evolution.  The stock of FD I in 2007 reaches US$14.5 billion in 2007, up from 
US$7.3 billion in 2001.  Figures show that financia l intermediation is the sector that concentrates 
most of the FDI, followed by wholesale and retail trad e.  In the latter sector, positive flows have been 
registered throughout the whole period, while in th e former negative flows have been registered in 
2001 and 2002, following an irregular evolution in the following years.  
18. Figures for the bilateral FDI stock and flows from Costa Rica in Panama are available for the 
years 2001-2007 (Table I.1).  These figures show that  investment from Costa Rica in Panama is of 
limited importance, amounting to less than 1% of th e stock in the years considered.  Flows during the 
period considered have also followed an inconstant path. WT/REG264/1 
Page 8  
 
  0123456789101112131415
2001 2002 2003 2004 2005 2006 2007Chart I.7 - Panama:  FDI by branch of economic activity, 2001-2008
                   Stock                                                                       Flows
Manufacturing  industry
Financial itermediation
Source: Office of the Comptroller General of the Republic of Panama.Wholesale and retail trade
Transport, storage and communication
Other activitiesElectricity, gas and water supply
Community, social and personal activitiesReal estate activitiesUS$ billion                                                                               US$ million
 2001 2002 2003 2004 2005 2006 2007 2008 
 
316.3 -75.9 3.1 41.4 25.7 123.7 104.2  
 
94.8 150.0 126.1 264.8 245.2 497.4 536.2  
 
78.8 53.3 120.7 289.7 272.3 78.2 247.4  
 
-56.9 -184.8 311.8 427.5 296.8 1,659.6 417.1  
 
19.0 0.8 0.1 23.6 119.6 130.5 290.8  
 
82.9 78.9 76.6 3.8 85.8 -1.8 127.2  
 
-1.5 0.1 12.8 0.3 7.2 0.8 154.5  
 
-66.4 76.1 166.4 -32.1 -134.8 10.0 29.5  
Total 467.1 98.4 817.6 1,019.0 917.7 2,497.8 1,907.1 2,196.2 
 
 
Table I.1 
FDI Stock and Flows from World and Costa Rica, 2001-2007 (US$ million) 
FDI Stock FDI Flows Year From World From Costa Rica From World From Costa Rica 
2001 7,314.1 n.a. 467.1 11.6 
2002 7,412.5 n.a. 98.4 22.8 
2003 8,230.1 n.a. 817.6 -21.5 
2004 9,249.1 n.a. 1,019.0 1.1 
2005 10,166.8 61.0 917.7 15.3 
2006 12,723.8 51.3 2,497.8 4.9 
2007 14,500.4 63.2 1,907.1 24.6 
 
Source:  Office of the Comptroller General of the Republic of Panama. 
  WT/REG264/1 
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  II. CHARACTERISTIC ELEMENTS OF THE TREATY 
A. BACKGROUND INFORMATION  
19. A Free Trade Treaty between Central America and Panama (hereinafter the Treaty) was 
signed on 6 March 2002 by the respective Governments.3  The Treaty contains the regulatory text 
governing the trade in goods and services between Pana ma and each of the five member countries of 
the Central America, but not the trade between members of the Central American Common Market 
(CACM).  The entry into force of the bilateral re gulatory framework is subject to the conclusion of 
bilateral Protocols between Panama and each of th e CACM countries, which are to include a tariff 
elimination programme, import and export restrictions , specific rules of origin, and reservations and 
restrictions regarding trade in services and investme nt.  Unless otherwise indicated, the Treaty applies 
on a bilateral basis between Panama and each  of the Central American countries.   
20. The Treaty between Panama and Costa Rica entered into force on 23 November 2008, 
following the signature of the bila teral Protocol on 7 August 2007.4  On 7 April 2009, pursuant to 
Article XXIV:7(a) of the GATT 1994 and Article V: 7(a) of the GATS, the Parties notified to the 
WTO the Treaty's and the bilateral Protocol's as pects relating to trade in goods and services, 
respectively.5  
21. The Treaty comprises 22 chapters with annexes, divided into eight parts, together with a 
Bilateral Protocol between the Pa rties which contains the annexes on matters agreed bilaterally 
between them.  The structure of the Treaty is as set forth in Table II.1: 
Table II.1 
Free Trade Treaty between Central America and Panama 
Preamble  
Part One General Aspects 
Chapter 1  Initial Provisions 
Chapter 2  General Definitions 
Part Two Trade in Goods 
Chapter 3 National Treatment and Market Access for Goods 
Chapter 4   Rules of Origin 
Chapter 5 Customs Procedures 
Chapter 6   Safeguard Measures 
Chapter 7 Unfair Trading Practices 
Part Three Technical Barriers to Trade 
Chapter 8   Sanitary a nd Phytosanitary Measures 
Chapter 9  Standards-related Measures, Metr ology and Approval Procedures 
Part Four Investment, Serv ices and Related Matters 
Chapter 10   Investment 
Chapter 11   Cross-Border Trad e in Services 
Chapter 12 Financial Services 
                                                      
3 The member countries of the Central America Common Market (CACM) are the Republics of 
Costa Rica, El Salvador, Guatem ala, Honduras and Nicaragua. 
4 As of August 2010, the Treaty had entered into fo rce for all the Parties.  The Protocol relating to 
Panama-El Salvador had been notified in February 2005 and is in force since 11 April 2003;  a Factual Presentation has been distributed in document WT/REG196/3 of 9 May 2008;  that of Panama-Honduras had 
been notified in December 2009 and is in force since 9 January 2009;  a Fact ual Presentation was being drafted.  
The Protocols relating to Panama-Guatemala and Panama-Nicaragua, in force since 22 June 2009 and 21 November 2009, respectively, had not been notified as of August 2010. 
5 WTO document WT/REG264/N/1 - S/C/N/325 of 17 April 2009.  The Council for Trade in Goods 
and the Council for Trade in Services took note of the Treaty in their meetings of 12 May and 23 June 2009, respectively (documents G/C/M/97 and S/C/M/94).  The text of the Treaty and the Protocol are available, 
together with their Annexes, at the official web sites of the Parties:  
http://www.comex.go.cr/acuerdos/Pana ma2/Paginas/Partenormativa.aspx 
(Treaty) 
http://www.comex.go.cr/acuerdos/Pana ma2/Paginas/Protocolobilateral.aspx  (Protocol), and   
http://www.mici.gob.pa/tlc-pma-costarica.php . WT/REG264/1 
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  Preamble  
Chapter 13   Telecommunications 
Chapter 14   Temporary Entry of Business Persons 
Part Five Competition Policy 
Chapter 15 Competition Policy, Monopolies and State Enterprises  
Part Six Government Procurement 
Chapter 16  Government Procurement 
Part Seven Intellectual Property 
Chapter 17 Intellectual Property 
Part Eight  Administrative and Institutional Provisions 
Chapter 18   Transparency 
Chapter 19 Administration of the Treaty  
Chapter 20   Dispute Settlement 
Chapter 21   Exceptions 
Chapter22   Final Provisions 
 
Source: Free Trade Treaty between Central America and Panama.  
 
22. Disciplines relating to trade in goods are dealt with in Parts Two and Three (Chapters 3-9), 
disciplines regarding trade in services are contained in Part Four (Chapters 10-14).  Parts Five to 
Seven contain provisions on competition policy, gov ernment procurement and intellectual property, 
respectively. 
23. The Treaty provides no specific time-limit for implementation.  Progressive elimination of 
trade restrictions for both goods and services starts as normally at the date of entry into force of the 
individual bilateral Protocols;  however, for the b ilateral Protocols between Panama and Costa Rica, 
two situations are envisaged:  if the Treaty enters into force between 1 January and 30 June, the first 
tariff reduction begins as of the Treaty's entry into force;  if the Treaty enters into force between 
1 July and 31 December, the first tariff reduction begi ns as of 1 January of the year after.  Thus, the 
first implementation of tariff re duction took place on 1 January 2009. 
24. Chapter 2 lays down general definitions appli cable to the Treaty as a whole, whether of 
general application (Article 2.01) or country-specifi c (Article 2.02).  Those of general application 
include the terms "substantial business activities", defined on the basis of a number of objective 
criteria6;  "measure", defined as any law, regulation, procedure, requirement, provision or practice;  
"person of a Party", defined as a national or an en terprise of a Party.  Country-specific definitions 
provide in both cases that a "national" encomp ass those having the nationality by birth or by 
naturalization (also by adoption in the case of Panama) and also permanent residents in their 
respective territories. 
III. TRADE IN GOODS 
A. NATIONAL TREATMENT AND MARKET ACCESS PROVISIONS ON TRADE IN GOODS  
1. Import duties and charges, and quantitative restrictions 
(a) General provisions 
25. The provisions relating to the liberalization of go ods imports are contained in Chapter 3 of the 
Treaty.  Article 3.03 provides that the Parties shall accord national treatment to each other in 
accordance with Article III of the GATT 1994, that is , that they shall afford to the goods of the other 
Party treatment no less favourable than the most favourable treatment accorded to like goods of 
national origin. 
                                                      
6 See Section C.2.e below.  WT/REG264/1 
 Page 11 
 
 
  26. Under Article 3.04, the Parties undertake to elim inate tariffs, fees and charges on imports of 
originating goods other than those set out in An nex 3.04 (Tariff Elimination Programme, TEP);  in 
practice, however, this "negative list" encompasses the entire tariff universe and includes all products, 
regardless of the tariff elimination date (see section III. A.1(b) below).  It is also forbidden to increase, 
or apply new, tariffs above the levels specified in  the TEP.  Article 3.11 extends that prohibition to 
customs processing fees and consular fees, and el iminates the current ones.  Tariff-rates quotas are 
allowed for some products (see paragraph 35 below). 
27. Under Articles 3.05 and 3.06, the Parties authorize duty-free temporary admission for certain 
goods imported from the other Party, regardless of origin, including, inter alia , goods intended for 
display and goods of no commercial value.  Goods that are re-im ported after undergoing repairs or 
alterations cannot be subject to customs duties (Article 3.07). 
28. Customs valuation matters are governed by the WTO Customs Valuation Agreement, with the 
provision that those countries which have negotiate d reservations before the WTO under Annex III of 
the Agreement on Implementation of Article VI I of the GATT 1994 shall fully implement the 
Customs Valuation Agreement after the lapse of two years from the date of entry into force of this 
Treaty.7  Customs processing fees and consular fees are also eliminated (Article 3.11). 
29. Article 3.10 provides for the elimination of all non-tariff measure as from the entry into force 
of the Treaty, except those applied in accordan ce with Articles XX and XXI of the GATT 1994, and 
Chapters 8 and 9 of the Treaty (sanitary and phyto sanitary measures, technical barriers to trade).  
The Parties undertake not to adopt or maintain an y restriction on the importation of any good from the 
other Party, except in accordance with Article XI of  the GATT 1994, which is incorporated into the 
Treaty.  Import price requirements are prohibited, except as permitted for enforcement of 
countervailing and anti-dumping duties and price undertakings.  If a Party maintains a restriction or 
prohibition on imports from a third country, it may not prevent the other Party from importing goods from that country. 
30. Paragraph 6 of Article 3.10 of the Treaty pr ovides that the general prohibition of import 
restrictions, as described above, do not apply for tho se measures listed in Annex 3.10(6).  This, read 
together with Article 1 of the bilateral Protocol a nd the list attached to it, allows the maintenance of 
import prohibitions as follows: 
(a) For Costa Rica, on crude petroleum and derivatives, asphalt and naptha;  ethyl 
alcohol and rum;  and any action authorized by the WTO Dispute Settlement Body; 
(b) for Panama, on official lottery tickets or coupons in circulation;  videos and other 
games of tariff heading 9504 which distribute prizes in cash;  and any action 
authorized by the WTO Dispute Settlement Body. 
(b) Liberalization of tariff lines and trade 
31. Under the TEP, tariffs are eliminated in accordance with 11 different categories for 
Costa Rica and 12 for Panama, while a last categor y applies for products that are excluded from the 
Treaty.  In accordance with paragraph 2(a)(ii) of Annex 3.04 of the Protocol, the first instalment of 
the tariff dismantling took place on 1 January 2009.
8  Transition periods of respectively 16 and 
17 years will apply to Costa Rica and Panama - t hus running until 2025 and 2026.  Box III.1 below 
summarizes the TEP and its scope of application in terms of tariff lines. 
                                                      
7 No reservation is applied by the Parties. 
8 This paragraph provides that if the Treaty enters into force between 1 January and 30 June, the first 
instalment takes place at the Treaty's entry into force, ot herwise it is postponed to 1 January of the year after. WT/REG264/1 
Page 12  
 
  Box III.1 
Tariff Elimination Programme in the Co sta Rica-Panama Prot ocol to the FTT 
Category  Tariff Elimination Schedule  
A Elimination of customs tariffs on 1 January 2009. 
B3 Tariff elimination in 3 equal instalments;   tariff liberalization on 1 January 2011. 
B Tariff elimination in 5 equal instalments;   tariff liberalization on 1 January 2013. 
B8 Tariff elimination in 8 equal instalments;  tariff liberalization on 1 January 2016.   
C Tariff elimination in 10 equal instalments;  tariff liberalization on 1 January 2018. 
C11 Tariff elimination in 11 equal instalments;  tariff liberalization on 1 January 2019. 
C12 Tariff elimination in 12 equal instalments;  tariff liberalization on 1 January 2020. 
C13 Tariff elimination in 13 equal instalments;  tariff liberalization on 1 January 2021. 
D Tariff elimination in 15 equal instalments;  tariff liberalization on 1 January 2023. 
F Elimination of tariffs in 7 equal instalments starti ng on 1.1.2013;  tariff liberalization on 1.1.2019. 
G Elimination of tariffs in 6 equal instalments starti ng on 1.1.2019;  tariff liberalization on 1.1.2024. 
H Elimination of tariffs in 12 equal instalments startin g on 1.1.2014;  tariff liberalization on 1.1.2025. 
I Elimination of tariffs in 7 equal instalments starti ng on 1.1.2019;  tariff liberalization on 1.1.2025. 
J (Panama) Elimination of tariffs in 10 equal instalments startin g on 1.1.2011;  tariff liberalization on 1.1.2020. 
EXCL Not subject to TEP, MFN rate applies.  
 
Source:  Annex 3.04 of the Bilateral Protoc ol between Panama and Costa Rica. 
 
32. The base rate for establishing the TEP is defined at  tariff line level for Costa Rica and Panama 
(in Annex 3.04 of the Bilateral Protocol);  the esta blished base rate for Costa Rica corresponds to the 
MFN tariffs in effect in March 2006 (Third Ame ndment), except for a few lines for which the base 
rate is lower than the MFN, and the establishe d base rate for Panama corresponds to the third 
amendment version updated at 1 January 2007.9  In addition, paragraph 3 of Article 3.04 of the Treaty 
provides that the customs duties applied to imports of  originating goods shall be the lesser of either 
the duties established under the TEP or the MFN applied customs duty. 
33. In accordance with paragraph 2(a)(ii) of  Annex 3.04 of the bilateral Protocol10, the first step 
of implementation of tariff reducti ons has taken place on 1 January 2009. 
34. Tables III.1A and III.IB below show total ta riff elimination under the Treaty.  For both 
countries, liberalization is front-loaded, with however  a distinct starting point:  while prior to entry 
into force around one third of Panama's tariff lines  and half of its imports from Costa Rica were 
already duty-free, these figures were around 2% for Cost a Rica.  As of entry into force, however, this 
distinction vanishes – for both countries, duty-free applies with respect to around 86%-91% in terms 
of tariff lines and trade.  By 2018 – i.e. the tent h year of implementation – these figures would raise to 
around 97%, to reach around 98% at the end of the transition period.  The TEP has therefore produced 
a double symmetric liberalization – i.e. in terms of li beralisation by Party, and in terms of tariff lines 
and trade.  The remaining differences in terms of  coverage are negligible: by year 10, 97.8% of 
Costa Rica's imports from Panama – 97.5% of the ta riff lines – will become duty-free;  the equivalent 
figures for Panama are 96.5% and 97.5%.  At the e nd of the transition period, the respective figures 
will be 98.7%-98.2% for Costa Ri ca and 98.5%-97.5% for Panama.  Excluded products, similar for 
both countries, represent around 2% of tariff lines and trade in both cases and include pig and poultry meat, eggs, potatoes, onions, coffee and coffee extracts,  rice, animal and vegeta l fats and oils, sugar, 
motor cars and vehicles, trucks and motorcycles. 
                                                     
 
9 For Costa Rica, this apply to 0207.11.00, 0207.12.00, 0207.13.91 and 0207.14.91, as reflected in 
paragraph 3 of Annex 3.04 of Costa Rica.  For Panama this apply to 0201.90.11, 0102.90.19, 0102.90.20, 
0102.90.90, 0201.10.00, 0201.20.00, 0201.30.00, 0202.10.00, 0202.20.00, 0201.30.00 and 2103.20.10, as 
specified in paragraphs 3-5 of Annex 3.04 of Panama. 
10 This paragraph states that in cases where the Tr eaty enters into force be tween July and December, 
the first tariff reduction will take place the year after.  WT/REG264/1 
 Page 13 
 
 
  Table III.1 
Tariff elimination commitments under the Treaty and corresponding average trade 
A. Costa Rica 
Duty phase-out 
period Number of lines % of total lines in Costa 
Rica's tariff schedule Value of Costa Rica's imports 
from Panama  
(2006-2008) 
in million US$ % of Costa Rica's 
total imports from 
Panama 2006-2008 
MFN duty free (2009) 116 1.8 4.9 2.3 
2009 5,594 88.7 174.9 83.5 
2011 7 0.1 0.0 0.0 
2013 82 1.3 0.9 0.4 
2016 15 0.2 0.6 0.3 
2018 340 5.4 23.6 11.3 
2019 7 0.1 1.9 0.9 
2020 17 0.3 0.0 0.0 
2021 6 0.1 0.0 0.0 
2023 6 0.1 0.0 0.0 
2024 2 0.0 0.0 0.0 
2025 4 0.1 0.0 0.0 
Remain dutiable 109 1.7 2.7 1.3 
Total 6,305 100.0 209.5 100.0 
 
Note: Based on the HS 2002 nomenclature.  
Source :  WTO estimates based on da ta provided by Costa Rica. 
 
Table III.1 
Tariff elimination commitments under the Treaty and corresponding average trade 
B. Panama 
Duty phase-out 
period Number of lines % of total lines in 
Panama's tariff 
schedule Value of Panama's imports 
from Costa Rica  
(2006-2008) 
in million US$ % of Panama's 
total imports from  
Costa Rica  
2006-2008 
MFN duty free (2009) 2,797 31.3 171.2 49.9 
2009 4,957 55.5 140.0 40.8 
2011 8 0.1 0.0 0.0 
2013 158 1.8 5.2 1.5 
2016 24 0.3 2.3 0.7 
2018 715 8.0 12.2 3.6 
2019 9 0.1 5.5 1.6 
2020 17 0.2 1.2 0.3 
2021 12 0.1 0.1 0.0 
2023 4 0.0 0.0 0.0 
2024 3 0.0 0.0 0.0 
2025 5 0.1 0.2 0.1 
2026 2 0.0 0.0 0.0 
Remain dutiable 225 2.5 5.0 1.4 
Total 8,936 100.0 343.0 100.0 
 
Source :  WTO estimates based on data provi ded by Panama and the WTO-IDB. 
 
(c) Tariff-rate quotas 
35. Appendix I to Annex 3.04 of th e Protocol provides the discip lines applying to the tariff-rate 
quotas (TRQs) provided for under the TEP.  These TRQs, for which the in-quota rate is duty-free, are used either as a temporary instrument in force onl y during the progressive phasing-out of the relevant 
tariff (bovine meat, milk, sausages and ham, prepared  meat of fowls, articles of paper, hoses and 
socks) or – for those products that are excluded from the TEP – as a permanen t mechanism (pig meat 
and palm oil).  For other tomato sauces (subhead ing 2103.20), a duty-free TRQ is associated with a 
less-stringent rule of origin (change of tariff s ubheading).  Out of the quota, these products – which 
are under category A – benefit from duty-free at entry in to force only if they qualify as originating in 
accordance with the specific rule of origin that requires 50% domestic tomato solid content (both rules 
of origin are listed in section C of Annex 4.03, see also paragraph 47 below).  Details on the TRQs 
provided for are contained in Annex II of this document. WT/REG264/1 
Page 14  
 
  (d) Costa Rica's liberalization schedule 
36. Costa Rica's tariff in 2009 had a total of 6,30 5 tariff lines (8-digit level), generally those 
applied by CACM common tariff system (see paragr aph 175 below).  In 2009, the MFN applied tariff 
was zero for 1.8% of the lines;  up to 20% for 96.7% of lines, between 20% and 40% for 0.22% of the lines, 14 lines between at 40% and 50%, and 73 lines accounting for 1.2% of the lines above 50% 
(at 51%, 66% and 151%), which apply on dairy produc ts, poultry meat and preparations thereof;  no 
specific rate of duty was applied.  The eliminati on of these higher tariffs started as from entry into 
force, with liberalization affecting 17 lines – dair y products except milk, which is only liberalized in 
2020.  Other representative years for the liberalizati on of higher tariffs are 2018, 2023 and the final 
year of implementation, 2025.  The chart shows th e important liberalization as from entry into force 
of lower tariffs:  only 2.2% of the lines up to at 6% and 10% were not liberalized in 2009, and more 
than two thirds of the lines at 15% became duty free at that year.  At year 10 – i.e. 2018 – liberalization of lines up to 10% was virtually comp leted, and less that 5% of the lines at 15% were 
still subject to tariffs;  of these, 3.1% were excluded from the TEP.  For the 16 lines having a MFN rate between 20% and 40%, 1 was liberalized at entry into force, 5 in 2018 and by 2025, 
5 remained subject to duties.  Out of the other 104 lines that remained subject to duties, 84 had MFN 
rates below 20% and 20 had rates above 40%. 
0 500 1,000 1,500 2,000 2,500 3,000 3,500 4,000 4,500 5,000 5,500 6,000 6,50020092011201320162018201920202021202320242025Chart III.1
Costa Rica's duty elimination under the Treaty
Year of duty free treatment   
Source: WTO Secretariat estimates, based on data provided by Costa Rica.Number of duty-free lines (cumulative)
<10% <20% <30% MFN is: <40% <50% >50% duty free
 
  WT/REG264/1 
 Page 15 
 
 
  37. Table III.2 shows Costa Rica's trade libera lization commitments under the Treaty at the 
HS 8-digit level, organized by HS section produc t categories.  All sections will benefit from some 
liberalization at entry into force, with eight sections  being fully liberalized at  that moment – VIII (raw 
hides and skins, leather, fur skins and articles ther eof), XII-XIV (footwear, articles of stone, pearls 
and precious stones), XVI (machinery), XVIII (pre cision equipment), XIX (arms and ammunition) 
and XXI (works of art).  In addition, more than  90% of lines of all se ctions covering industrial 
products – with the exception of sections XI (textiles and articles thereof) and XVII (vehicles) – will also become duty-free at that time.  Around three fifths of Costa Rica's imports from Panama are 
concentrated in sections I (live animals), VI (chemicals), XI (textiles and article thereof) and 
XVI (machinery);  the latter three will be fully liberalized at the latest on 2018, but 14 lines 
(out of 289) of section I will remain dutiable.  This section is where the average final tariff will be the 
highest, attaining 68.4%;  in terms of coverage of lines, however, the higher protection is applied on 
products of section III (animal and ve getable fats and oils), with 24 lines (out of 54) remaining subject 
to duties. 
Table III.2 
Costa Rica: Tariff elimination under the Treaty, by HS section 
Number of duty-free lines  
HS 
section MFN 
avg.%  Total 
No of 
lines MFN 
2009 
2009 
2011 
2013 
2016 
2018 
2019 
2020 2021 
2023 2024 2025 
Remain 
dutiable 
Avg. Final 
Tariff 
(Dutiable) 
I 20.9 289   228 7 5   17   8   6 2 2 14 68.4 
II 10.3 371   310   23 1 8   9       1 19 27.7 
III 8.9 54   26   4                 24 12.1 
IV 14.1 272   2   14 4 5 4   6     1 6 35.7 
V 3.6 177 11 161   2   3                
VI 2.8 920 1 907   1 1 10                
VII 4.9 330   8       2                
VIII 8.8 108   108                        
IX 8.2 90   88   2                    
X 5.7 285   3   3 1 5 3              
XI 9.9 914   638     8 268                
XII 12.5 63   63                        
XIII 6.8 160   160                        
XIV 7.5 54   54                        
XV 3.9 694   677   15   2                
XVI 2.9 901 89 812                        
XVII 6.1 191   137   8                 46 5.9 
XVIII 4.5 245 15 230                        
XIX 12.9 21   21                        
XX 10.9 157   152   5                    
XXI 8.2 9   9                        
Total 6.9 6,305 116 5,594 7 82 15 340 7 17 6 6 2 4 109 20.7 
 
Note: Based on the HS 2002 nomenclature. 
 
Source:  WTO estimates based on data  provided by Costa Rica. 
 
Source: WTO estimates based on data provided by Costa Rica. 
 
38. Chart III.2 shows a comparison of average du tiable rates in those HS sections where 
preferential duties are to remain at the end of the implementation period.  The comparison is made between the average preferential and MFN rates onl y for lines subject to preferential duties.  
Chart III.3 makes a similar comparison but in terms of  average dutiable rates by  HS Chapter.  Both 
Charts show that, both in terms of HS sections and Chapter, the Treaty and its TEP had no impact on 
tariff peaks, which remain at the same level for both preferential and MFN duties.  The only 
preferential treatment that applies concern quotas for products of Chapters 2, 4, 15 and 21 (see Annex II of this document). WT/REG264/1 
Page 16  
 
  0 1 02 03 04 05 06 07 08 0XXIXXXIXXVIIIXVIIXVIXVXIVXIIIXIIXIXIXVIIIVIIVIVIVIIIIIIChart III.2
Costa Rica:  Average of dutia ble rates, by HS SectionHS Section  
Source :  WTO Secretariat estimates, based on data provided by Costa Rica.Average rate of duty (%)
MFN Preferential
 
 
0 1 02 03 04 05 06 07 08 0872117151009070402Chart III.3
Costa Rica:  Average of dutia ble rates, by HS ChapterHS Chapter  
Source : WTO Secretariat estimates, based on data provided by Costa Rica.Average rate of duty (%)
MFN Preferential
  WT/REG264/1 
 Page 17 
 
 
  (e) Panama's liberalization schedule 
39. Chart III.4 shows Panama's tariff elimination schedule.  Panama's tariff universe in 2009 
comprised 8,936 tariff lines (8-digit level);  98.4% of these lines had a MFN rate up to 20% (31.3% were duty-free, 36.2% up to 10% and 30.9%  up to 20%), 70 lines were at 50% or above and 
the remainder 72 lines were between 22.5% and 50%;  no specific rate of duty was applied.  From the 
chart, it can be seen that the TEP reflects well Panama 's tariff structure, with liberalization equally 
distributed among the various tariff ranges.  At entry into force, all tariff ranges – except the three 
lines at 40% (maize and cereal grains, liberalized at year 10 in 2018) – will benefit from some liberalization, including 15 lines at 50% or above.  At the end of the trans ition period in 2026, all 
tariff ranges – except the 14 lines with MFN rates of 40% and 50% (concentrated milk or cream, 
buttermilk, ketchup) – will however have some tariff lines subject to duties: more than half of the 
lines above 50%, and about one fourth of the lines between 22.5% and 30%.  After year 10 – i.e. as 
from 2019 – 13 lines at 50% or above will be libera lized, while the corresponding figure for tariffs 
under 10%, 20% and 30% are 3, 26 and 10. 
0 1,000 2,000 3,000 4,000 5,000 6,000 7,000 8,000 9,000200920112013201620182019202020212023202420252026Chart III.4
Panama's duty elimination under the Treaty
Year of duty free treatment   
Source: WTO Secretariat estimates, based on data provided by Panama.Number of duty-free lines (cumulative)
<10% <20% <30% MFN is: <40% <50% >50% duty free
 
 
40. Table III.3 shows Panama's trade liberali zation commitments under the Treaty at the 
HS 8-digit level, organized by HS section produc t categories.  All sectors benefited from some 
liberalization at entry into force, with the same  eights section as Costa Rica being fully liberalized 
(i.e. VIII, XII-XIV, XVI, XVIII, XIX and XXI;  besides, more than 90% of lines of all sections except I-IV, XI and XVII will also become duty-free at th at date.  As indicated in Chart I.3, more than 
half of imports of Costa Rica into Panama are of sections IV (prepared f oods), VI (chemicals) and 
XVI (machinery);  while the latter two will be fully liberalized – sections XVI at entry into force, 
section VI by 2018 – liberalization of lines of section IV  will start at entry into force and take place 
until 2025, with 11 lines (out of 572) remaining dutiable.  All other secti ons covering agricultural 
products will also have lines subject to duties;  for industrial products, onl y Section XVII (vehicles) WT/REG264/1 
Page 18  
 
  will still have lines dutiable as of 2026.  In terms of coverage, vegetable oils (section III) and vehicles 
remain as the most protected sections under the Tr eaty – with respectively 33.8% and 42.7% of lines 
remaining dutiable – while live animals and meat ar e those products having the highest average rate 
of duty. 
Table III.3 
Panama: Tariff elimination under the Treaty, by HS section 
Number of duty-free lines  
HS 
section MFN 
avg.%  Total 
No of 
lines MFN 
2009 
2009 
2011 
2013 
2016 
2018 
2019 
2020 
2021 
2023 
2024 2025 2026 
Remain 
dutiable 
Avg. Final 
Tariff 
(Dutiable) 
I 22.3 400 22 289 8 9  28  10  4 3  2 25 68.7 
II 10.1 429 148 229  25  7  6    2  12 61.8 
III 10.8 71 21 18  4  4        24 18.8 
IV 14.0 572 87 356  35 7 55 5 1 12   3  11 57.3 
V 7.0 199 84 107  2  6          
VI 2.5 1,268 843 388  6 3 28          
VII 4.3 460 258 199    3          
VIII 12.3 121 3 118              
IX 7.3 176 69 102  5            
X 7.4 485 205 259  6 1 10 4         
XI 7.9 1,285 476 225   13 571          
XII 11.8 164 6 158              
XIII 9.7 294 40 254              
XIV 7.2 66 24 42              
XV 7.4 930 344 532  51  3          
XVI 6.0 1,029 121 908              
XVII 11.5 358 20 179  6          153 12.5 
XVIII 9.7 306 19 287              
XIX 14.6 27  27              
XX 11.7 287 3 275  9            
XXI 7.8 9 4 5              
Total 8.3 8,936 2,797 4,957 8 158 24 715 9 17 12 4 3 5 2 225 24.2 
 
Note: Based on the HS 2002 nomenclature. 
 
Source:  WTO estimates based on data provi ded by Panama and the WTO-IDB. 
 
41. Chart III.5 shows a comparison of average du tiable rates in those HS sections where 
preferential duties are to remain at the end of the implementation period.  The comparison is made between the average preferential and MFN rates only for lines subject to preferential duties.  As can 
be seen, only in the case of HS section I (live anim als) is the preferential rate lower than the 
MFN rate;  in particular, tariff peaks of sections II and IV, with an average rate beyond 50%, remain.  
This is reflected in terms of average dutiable rate s by HS Chapter in Chart III.6, which shows that 
only in the case of Chapter II (meat and edible meat offal) the average dutiable preferential rate is 
lower than the corresponding MFN rate: 73.3% for th e preferential rate and 80.9% for the MFN rate.
11  
Additional preferential treatment granted to these pr oducts concern quotas for products of Chapters 2, 
4, 15 and 21 (see Anne x II of this document). 
                                                      
11 As indicated previously, pig and poultry meat are excluded from the TEP – 25 lines out of the 
66 tariff lines relating to these products are excluded, with MFN rates at 15% (2 lines), 60%, 70% and 260%;  
lines not excluded face MF N rates of 10% or 15%.  WT/REG264/1 
 Page 19 
 
 
  0 1 02 03 04 05 06 07 08 0XXIXXXIXXVIIIXVIIXVIXVXIVXIIIXIIXIXIXVIIIVIIVIVIVIIIIIIChart III.5
Panama:  Average of dutiable rates, by HS Section
HS Section  
Source :  WTO Secretariat estimates, based on data provided by Panama.Average rate of duty (%)
MFN Preferential
 
0 1 02 03 04 05 06 07 08 09 0 1 0 0872117151009070402Chart III.6
Panama:  Average of dutiable rates, by HS Chapter
HS Chapter  
Source : WTO Secretariat estimates, based on data provided by Panama.Average rate of duty (%)
MFN Preferential
 WT/REG264/1 
Page 20  
 
  2. Rules of origin 
42. The provisions relating to rules of origin are c ontained in Chapter 4 of the Treaty;  customs 
procedures are dealt with in its Chapter 5.  Rules of origin provisions of the Treaty are complemented 
by other provisions in the bilateral Protocol;  in pa rticular, specific rules of origin are listed either in 
the Treaty or in the Protocol (see below).  This fra gmentation of specific rules of origin results in 
origin of a "Party" being defined differently to either include any of the six signatories of the Treaty or 
only the two signatories of the Protocol – thus having effects on cumulation possibilities. 
43. Article 4.01 contains definitions concerning rul es of origin and Articles 4.02-4.14 deal with 
the substantive aspects.  The basic requirements for a good to be considered originating (Article 4.03) 
are the following: 
(a) The good is wholly obtained or produced entir ely in the territory of one or more of 
the Parties
12; 
(b) the good is produced in the territory of one or more of the Parties exclusively from 
originating materials as defined in the Chapter; 
(c) the good is produced in the territory of one or more of the Parties from 
non-originating materials that undergo a change  in tariff classification, comply with a 
regional value content or other requirements, as set out in Annex 4.03 (either that of  
the Treaty or that of the Protocol), a nd the good satisfies all other applicable 
provisions of the Chapter; 
(d) the good is produced in the territory of one or more of the Parties, but one or more of 
the non-originating materials that are used in the production of the good do not 
undergo a change in tariff classification for one of the three reasons described in 
Article 4.03(d), provided that the regional value content (RVC) is not less than 30%. 
44. Annex 4-03 on Specific Rules of Origin is composed of three sections;  sections A and B are 
included in the Annex to the Treaty itself – thus applying to all CACM countries and Panama – while 
section C is included in Annex 4-03 to the Protocol, thus only applying to the bilateral trade between 
Costa Rica and Panama.  Section A contains the general interpretative notes and section B lists the 
specific criteria that must be fulfilled by non-orig inating materials in order for a final product to 
acquire the status of originating product;  these ru les of origin – applicable to trade between all 
Central American countries and Panama – apply for 35 HS Chapters in full and partially for 42 other 
Chapters (see Table III.4).  For the remainder 19 Chapte rs, rules of origin are specific to each bilateral 
relation and thus included in secti on C of Annex 4-03, which also includes a general interpretative 
note. 
                                                      
12 This concept is defined in Article 4.01 and in ge neral refers to mineral goods, vegetable goods and 
animals extracted, harvested, raised and obtained in the territory or on vessels of th e Parties, as well as goods 
and waste derived from production in  the territory of the Parties.  WT/REG264/1 
 Page 21 
 
 
  Table III.4 
Treatment of Rules of Origin in the context of the Cost a Rica-Panama Protocol and Panama-Central America FTT  
All HS Chapter dealt with  
in the FTT 
(fully harmonized ROO) All HS Chapter dealt with in the  
bilateral Protocol 
(ROO specific to each bilateral Protocol)  Part of the HS Chapter in FTT, 
part in the bilateral Protocol 
(partially harmonised ROO) 
1, 5-7, 10, 13, 14, 26, 35-37, 45-49, 2, 15, 19, 20, 30, 39, 42, 43, 44, 54,  3, 4, 8*(all but mixture of nuts  
65-68, 70, 71, 74, 75, 78-82, 86,  56-64 and dried fruits), 9, 11, 12,  
88, 89, 91-93  16-18, 21-25, 27-29, 31-34, 38,  
  40, 41,50, 51-53, 55, 69, 72, 73, 
  76, 83-85, 87, 90, 94-97 
 
* Only in cases where one subheading is treat ed differently from the whole of the Chap ter, a reference is made to the product 
concerned.   
 
Source: Annex 3-04 to the FTT and to the Bilateral Protocol. 
 
45. In the vast majority (around three fourths of the cases), the product acquires originating status 
if the working or processing carried out in the territo ry of the Parties results in a change of tariff 
heading (CTH).  A change in tariff chapter (CTC ) is however required for agricultural products as 
well as for few minerals, pharmaceuticals, raw hid es and skins, wood and pulp, textiles, footwear, 
articles of stone and cement, transport equipmen t and furniture.  Requirements for a change in 
tariff subheading (CTS) apply with respect to few sp ices, cereal grains, prepared vegetables, prepared 
foodstuff, chemicals, plastics, chemicals, gla ss and glassware, base metals, vehicles, optical 
instruments, furniture and to mach inery and mechanical appliances. 
46. In some cases – some agricultural products of HS Chapters 1, 4, 6-10, 12-14, 18 and 
tariff headings 2101 and 2201 – an alternative ru le is provided, where the "whole obtained or 
produced" concept applies.  A RVC of 30% is also provided as an alternative rule for some products 
of HS Chapters 32, 39, 44, 84-85, 90, 94 and 96;  in many cases, this is combined with a CTS 
requirement.  For dolls (HS 9502.10), the RVC threshold in increased to 40%.  Tea is the only product 
for which only a RVC requirement applies;  the threshold is also set at 30%.  
47. The rules of origin regime of the Protocol h as particularities applying to two HS subheadings 
which are worth underlining;  for both Costa Ri ca and Panama, these subheadings are under Category 
A, i.e. becoming duty-free at entry into force.  First, for processed cheese not grated or powdered 
(HS 0406.30)13, a rule of origin requiring a CTS and an originating content of solid weight of 20% 
applies for 12 years;  from thereon (i.e. 2021), orig in will be from the country where the milk was 
obtained.  Second, for other tomato sauces (HS 2103.20)14, one rule of origin applies for imports 
under TRQs – whereby a CTH is required – while the out-of-quota rule of origin requires an originating content of solid weight of 50%.
15  Article 6 of the Protocol provides that, in cases where 
the out-of-quota rule cannot be complied with due to shortage, the in-quota rule of origin will apply to 
the extent necessary fulfil the tomato solid we ight content not domestically supplied;  the 
Administrative Commission is empowered to activate this mechanism. 
48. Article 4.07 provides the formula for calcula ting the RVC, which is obtained by deducting 
from the transaction value of the good (adjusted to  a fob basis, except in cases where the good is not 
exported directly) the transaction value of non origina ting materials (adjusted to a cif basis, except in 
cases where it has been acquired in  the domestic market).  In cases where the transaction value cannot 
be determined in accordance with Article 1 of th e WTO Agreement on Implementation of Article VII 
of the GATT 1994, the value shall be determined in accordance with the provisions of Articles 2-7 of 
the latter.  
                                                      
13 MFN 2009 rates are as follows:  66% for Costa Rica and 30% for Panama. 
14 MFN 2009 rates are as follows:  15% for Costa Rica and for Panama either 25% or 50% depending 
on the content of dried tomato extract. 
15 Conversely, ketchup is subject to a single rule of origin requiring a CTH;  it does not however benefit 
from a TRQ. WT/REG264/1 
Page 22  
 
  49. Article 4.06 provides, in bilateral trade with Panama, for cumulation between Panama and the 
Central American countries for which the Treaty, an d the corresponding Protocol, have entered into 
force;  as of 1 January 2010, cumulation was in force for all the five CACM countries and Panama.
16  
Cumulation is applied on condition that either the sp ecific rule of origin is common to all the Parties 
(i.e. those rules of origin included in the Annex 4.03 to the Treaty), or where the same rule of 
origin and the same TEP for a good are common to  a group of no fewer than three countries.  
The Parties of the Treaty have agreed to examine, tw o years after its entry into force for all Parties – 
i.e. by end November 2011 – the possibility that materials of Panamanian origin benefit from 
cumulation on trade carried out in the context of the CACM (paragraph 5 of Article 4.06). 
50. The Treaty implicitly establishes the absorpti on principle, under which a non-originating 
material that has acquired originating status by meeting the corresponding requirement, is considered 
to be 100 per cent originating once incorporated into  a final product.  Paragraph 3 of Article 4.03 
provides that production using non-originating materials shall take place in one or more of the Parties, 
and that RVC shall also be fully fulfilled in the territory of one or more of the Parties, thereby 
allowing full cumulation. 
51. Article 4.08 provides for a tolerance/ de minimis  rule so that a good not meeting the CTC 
requirements prescribed in Annex 4.03 will be grante d originating status, it may still be considered as 
originating if the value of all non-originating mate rials does not exceed 10% of the value of the good, 
calculated on the basis of Article 4.07 (Article 4.08).17  This rule does not apply to non-originating 
materials used in the production of goods classifi ed in HS Chapters 1-27, unless the material in 
question is included in a subheading other than that of  the good in which it is to be incorporated.  For 
textiles goods of HS Chapters 50-63, the 10% refers to  the weight of the fibres and yarns compared to 
the weight of the good produced. 
52. Paragraph 3 of Article 5.03 of the Treaty provides for the possibility of claiming a duty 
drawback, within a year of the date of importa tion, in respect of goods for which no claim for 
preferential treatment had been made at the time of importation, provided the relevant documentation 
is supplied at the time of the request.   
53. Minimum operations that do not confer origin  are listed in Article 4.04.  As regards 
territoriality, originating goods shall lose their or iginating status unless that transit through third 
countries is justified for geogra phical reasons or reasons relate d to international transport 
requirements, that the good had not entered for cons umption or placed on the market of the country of 
transit, and that it had remained under customs cont rol during transit (Article 4.14).  The origin of 
fungible goods shall be determin ed in accordance with one of the three inventory management 
methods described in Article 4.09.18  Sets or assortments of goods shall qualify as originating 
provided that each of the goods contained th erein complies with the corresponding rules 
(Article 4.10).  Accessories, spare parts and tools accompanying goods shall be disregarded in determining whether the good has undergone a CTC, subject to conditions, but shall be taken into 
account in calculating the RVC (A rticle 4.11).  Articles 4.12 and 4.13 lay down requirements for 
containers and packing and packaging materials. 
                                                     
 
16 By the end of 2009 the Treaty was in force for all parties;  the TEP in the context of 
Panama-Nicaragua Protocol was the last one to become operational on 1 January 2010. 
17 This rule does not apply to non-originating materials of goods classified in HS Chapters 1-27 unless 
the material in question is included in a subheading other than that of the good in which it is to be incorporated.  
For goods classified in HS Chapters 50-63 the 10% refers to the weight of the fibres  and yarns compared to the 
weight of the good produced. 
18 First-in-first-out;  last-in-firs t-out;  and method of averages.  WT/REG264/1 
 Page 23 
 
 
  Box III.2 
Rules of Origin:  Summary of basic characteristics   
• No rules of origin of general scope. 
• Specific criteria for each product: 
o Goods wholly obtained or produced in the case of agricultural products; 
o the most common rule is CTH alth ough CTC and CTS are also used; 
o in some cases, the RVC (30% except one case of 40%) is used in combination with a CTC;   
o only in the case of tea the RVC is used  alone to confer originating status. 
• Some flexibility in the CTC requirement for unassembled goods and goods accompanied by parts. 
• Absorption principle. 
• De minimis  rule at 10% of the value (or of the total weight in the case of textile products) of the good. 
• Duty-drawback possible within one year from importation. 
• Direct transhipment and shipment permitted in certain cases. 
 
Source:  Text of the Treaty and of the Bilateral Protocol. 
 
3. Export duties and charges, and quantitative restrictions 
54. Under Article 3.10, the Parties undertake not to ad opt or maintain any restriction on exports to 
the other Party, except in accordan ce with Article XI of the GATT 1994.  Export price requirements 
are also prohibited.  If a Party maintains a restric tion or prohibition on trade with a third country, it 
may not prevent the other Party from re-exporting goods to that country.  Paragraph 6 of Article 3.10 of the Treaty provides that this general prohibitio n of export restrictions do not apply for those 
measures listed in Annex 3.10(6).  This, read together  with Article 1 of the bilateral Protocol and the 
list attached to it, allows the mainte nance of export prohibitions as follows: 
(a) For Costa Rica, on wood in logs of any species from the natural forest;  
hydrocarbons;  coffee;  ethyl alcohol and rum;  bananas (as relates to minimum export prices);  and any action authorized by the WTO Dispute Settlement Body; 
(b) for Panama, on wood from the natural forest  and any action authorized by the WTO 
Dispute Settlement Body. 
55. The Parties agree not to maintain or adopt any duty on the export of goods to the other Party, 
unless the same duty is applied to the same good when destined for domestic consumption 
(Article 3.14).  Goods listed in Annex 3.14 (annexed to the Protocol) are exempted form this 
prohibition;  Costa Rica is thus authorized to maintain export taxes on bananas, coffee and meat.  
Panama has not taken any such exemption. 
B. R
EGULATORY PROVISIONS ON TRADE IN GOODS  
1. Standards 
(a) Standards 
56. Chapter 9 deals with standards-related measu res, metrology and approval procedures.  
The Parties state that the provisions of this Chap ter shall apply in addition to those of the WTO 
Agreement on Technical Barriers to Trade (TBT).  Th e Parties guarantee the right of each of them to 
adopt standards-related measures, approval proce dures and metrology-related measures, as well as 
technical regulations and applicable conformity assessment procedures, provided that such measures do not create an unnecessary obstacle to trade and are applied on the basis of international standards, 
and provided that MFN treatment is accorded to good s of the other Party.  Risk assessment must also WT/REG264/1 
Page 24  
 
  be carried out with due regard for international st andards and available scientific information, as well 
as related technology and end uses of the product (Article 9.05). 
57. The Parties undertake, where possible, to make compatible their respec tive standards-related 
and metrology related measures, and to treat tec hnical regulations as equivalent when the importing 
Party determines that the technical regulations of the other Party are in line with its objectives 
(Article 9.06). 
58. Article 9.07 deals with conformity assessment pr ocedures.  Each Party is required to apply 
MFN treatment to the procedures applicable to the other Party.  At the same time, the Parties are 
urged to finalize mutual recognition agreements a nd to accept the results of assessment procedures 
conducted by competent bodies of the other Part y, which shall be accredited under the same 
conditions as their own bodies.  MFN treatment also  applies to approval procedures (Article 9.08). 
59. Articles 9.10 and 9.11 establish criteria for no tification and designation of enquiry points, 
respectively.  Under Article 9.13, the Parti es guarantee technical cooperation between the bodies 
responsible for standardization and metrology. 
60. A Committee on Standardization, Metrology and Approval Procedures is set up under 
Article 9.12 to monitor implementation of the Ch apter and to promote and facilitate cooperation 
between the Parties in this field. 
(b) Sanitary and Phytosanitary Measures 
61. Sanitary and phytosanitary (SPS) measures are pr ovided for in Chapter 8 of the Treaty, which 
is based on the Agreement on the Applicati on of Sanitary and Phytosanitary Measures 
(SPS Agreement).  The rights and ob ligations applicable to the Parti es are set out in Articles 8.03 and 
8.04, respectively, which permit them to apply SPS where necessary to protect  human and animal life 
and health or to preserve plant health, provided that they are applied to the extent necessary to achieve 
an appropriate level of protection;   do not constitute a disguised trade restriction or create unnecessary 
obstacles to trade;  are based on scientific principles;   are based on internationa l standards, guidelines 
or recommendations, except if it can be scientifically proved that they do not provide an efficient or 
adequate protection;  and that they do not arbitr arily discriminate between domestic goods and similar 
goods of a Party, nor between goods of the other Party and of a non-Party. 
62. The Parties undertake to base procedures fo r control, inspection and approval of 
SPS measures on international and/or scientifica lly demonstrable standards and to establish 
harmonized SPS systems for sampling, diagnosis, inspection and certification, as well as to accept their SPS measures as equivalent to the fullest extent possible (Articles 8.05 and 8.06). 
63. The procedures and principles necessary for risk assessment and determination of the 
appropriate level of SPS protection are dealt with in Article 8.07, under which a Party is permitted 
to adopt provisional measures in cases where the conclusion of a risk assessment points to 
insufficient scientific information.  As regards th e application of provisional measures, the Parties 
agreed on a 30-day period following the adoption of  such measures to allow the importing Party to 
ask the exporting Party for the technical information required to complete the risk assessment.  If the 
information has not been requested within this pe riod, the measure shall be withdrawn.  Should the 
importing Party request the information, a 60-day peri od is established as of the date of submission of 
the additional technical information to allow the im porting Party to either withdraw the measure or 
impose it as a definitive measure.  According to Ar ticle 8.08, a Party wishing to declare an area 
pest-or disease-free shall provide the necessary information to the importing Party, which shall be 
responsible for establishing whether the description is accurate.  In Article 8.09 the Parties undertake 
to apply the provisions of Annex C to the SPS Agr eement relating to control,  inspection and approval  WT/REG264/1 
 Page 25 
 
 
  procedures.  In addition, the Pa rties agreed to establish a maximum period of 90 days, counted from 
the date on which the request was first submitted, fo r the importing Party to conduct an inspection of a 
productive unit of the exporting Party, where such an inspection is a prerequis ite for import.  Once the 
inspection has been conducted, the authority of the importing Party shall issue a reasoned decision and notify it within a maximum of 30 days of th e date on which the inspection was completed. 
64. Transparency requirements under the Treaty go beyond those of the WTO SPS Agreement;  
the notifications under the Treaty are made through the procedures established under it.  While the latter provides only for the notification of a SPS measur e for which an equivalent does not exist at the 
international level or whenever their content are not substantially the same – without specific 
deadlines – Article 8.10 requirements apply to all S PS measures of general application at the central 
level of government, as follows: 
(a) Each Party is to notify to the other Parties of any proposal, modification or adoption 
on these measures; 
(b) prior notification of at least 60 days for changes in SPS measures having a significant 
trade effect on trade among the Parties, except in urgent cases;   
(c) timeframes for notifying changes in animal and plant health:  significant changes in 
respect to animal health within 24 hours and in plant health 72 hours, other findings 
within 10 days;  
(d) notification of outbreaks of diseases where the linkage to consumption of imported, 
natural or processed food products has been scientifically proved; 
(e) notification of reasons for having refused a good from the other Party. 
65. The Parties also agree to provide mutual techni cal cooperation in this field (Article 8.12).  
To deal with SPS matters, a Committee on SPS Measures is established under Article 8.11. 
2. Safeguard mechanisms 
(a) Bilateral safeguard measures 
66. Article 6.02 contains the disciplines for the a pplication of bilateral safeguards, which may 
only be applied during the transition period applicable  to the product concerned;  beyond that period, 
a safeguard may only be imposed upon consent of the Party concerned (paragraph 5).  Proceedings 
related to the application of the safeguard measure s (Article 6.04) are described in paragraph 72 
below. 
67. Disciplines relating to the application of safe guards on goods originating in the other Party 
are as follows:  
(a) The importation of such goods causes or thr eatens to cause serious injury to the 
domestic industry
19;  
(b) the measure may either consist of the suspension the foreseen tariff reduction 
provided for in the TEP, or of an increase in  the tariff to the lowest tariff between the 
applied MFN or the MFN prevailing on 22 November 2008; 
                                                      
19 Both serious injury and threat of serious injury are defined as in the WTO Agreement on Safeguards. WT/REG264/1 
Page 26  
 
  (c) prompt written notification to the other Pa rty upon the beginning of the proceedings; 
(d) a safeguard measure shall take effect at the latest within one year from the beginning 
of the proceedings; 
(e) in critical circumstances and on the basis of a preliminary determination of the link 
between the TEP and increased imports, a provisional measure may be imposed for a 
maximum duration of 120 days;  
(f) a maximum duration of two years (incl uding any provisional measure), plus a 
possible extension of one year;  no product may be subject (application and extension) to a safeguard measure more than  twice.  When a safeguard is applied a 
second time on a product, a time interval of at least half of the time it had been 
applied has to be respected;  
(g) in cases of the extension of a safeguard meas ure, the tariff shall be gradually reduced 
to the level of the TEP; 
(h) at the termination of a safeguard measure, the tariff shall be that originally foreseen in 
the TEP; 
(i) finally, the Party imposing the measure must  offer mutually agreed compensation in 
the form of concessions having substantially e quivalent trade effects or equivalent to 
the value of the additional duties.  If the Pa rties fail to reach agreement, the affected 
Party shall be free to retaliate. 
(b) Global safeguard measures 
68. Global safeguard measures are described in Article  6.03.  The Parties reaffirm their rights and 
obligations under Article XIX of the GATT 1994 and the WTO Agreement on Safeguards, except 
those regarding compensation or retaliation and exclusion from a safeguard measure.  In cases where a Party applies a global safeguard measure, imports from the other Party shall be exempted unless they account for a substantial share of total impor ts and the imports from the other Party contribute 
significantly to the serious injury or  threat thereof caused by total imports.  In general, only imports 
from the five main suppliers ar e considered as "substantial"
20 and a contribution is "not significant" if 
the growth rate of imports for the concerned period is appreciably lowe r than the growth rate of total 
imports from all sources (paragraph 3 (a) and (b) of Article 6.03). 
69. A Party shall promptly notify in written form the other Party of the beginning of global 
safeguard proceeding.  Any application of a globa l safeguard requires previous notification to the 
Treaty's Administrative Commission;  adequate opportunity for prior consultation with the other Party 
shall also be provided. 
70. The Party applying a global measure must pr ovide the other Party with mutually agreed 
compensation in the form of concessions having substan tially equivalent trade effects or equivalent to 
the value of the additional duties;  if agreement cannot be reached, the affected Party is free to 
retaliate. 
71. Details of safeguard measures and the provisions a pplicable to them are given in Chapter 6 of 
the Treaty.  Such measures are divided into two categories, bilateral and global, as described in 
                                                      
20 On the basis of the three mo st recent years of statistics.  WT/REG264/1 
 Page 27 
 
 
  points (a) and (b) below in which the Parties affirm that the investigating authority shall conform to 
the provisions of Article XIX of the GATT 1994 and the WTO Agreement on Safeguards. 
72. The administrative procedures governing applica tion of the two types of safeguard measure 
are set out in Article 6.04, which calls for the consis tent, transparent, fair and impartial application of 
safeguard measure procedures.  The responsibility for de termining injury or threat of injury shall lie 
with the investigating authority of each  Party, as designated in Annex 6.01.21  The investigating 
authorities have the capacity to initiate proceedings for the application of safeguard measures, either 
ex-officio  or at the request of an entity "representative"  of the domestic industry of a like or directly 
competitive product – defined, in paragraph 4 of th at Article, as representing at least 25% of the 
domestic production.  The remainder of the Article deals with the applicable requirements concerning 
the contents of a petition, consultations, notifi cation of rulings, public hearings, treatment of 
confidential information, evidence of injury or thr eat thereof and deliberation and report, where it is 
established that, except in regard to global safegua rd measures involving perishable goods, before 
making an affirmative determination the investigati ng authority shall hold a public hearing at which 
all interested parties will be given an opportunity to express their views.   
73. Lastly, as stipulated by the Treaty's dispute se ttlement provisions, Article 6.05 makes it clear 
that the Parties may not request the establishment of an arbitral panel regarding any safeguard 
measure that has simply been proposed. 
3. Anti-dumping and countervailing measures 
74. Chapter 7 of the Treaty contains provisions on un fair trading practices.  In this Chapter the 
Parties confirm their rights and obligations unde r Articles VI and XVI of the GATT 1994 and under 
the WTO Agreements on Implementation of Artic le VI of the GATT 1994 and on Subsidies and 
Countervailing Measures (SCM).  Accordingly, the Par ties undertake to ensure that their legislation is 
in conformity with the commitments assumed unde r these Agreements (Article 7.01).  Beyond those 
WTO rules, additional disciplines are provided for anti-dumping duties, while for countervailing measures, the disciplines are those of the WTO. 
75. Any investigation carried out for more than 18 months shall be immediately terminated 
without the imposition of any definitive anti-dumping (AD) duty (Article 7.02).  In cases where an investigation has resulted on the non-imposition of an AD  duty, an interval of at least 12 months is 
required before a new investigation concerning the same product and Party shall be initiated, unless 
the domestic industry so requesting accounts for at least 50% of the total domestic production of the 
like product (Article 7.03). 
76. Definitive anti-dumping duties shall be termin ated within a period of not more than 
60 months from the date of imposition a nd may not be extended (Article 7.04).
22 
77. Under the terms of Article 7.06, the Parties ag ree to cooperate within the framework of the 
Treaty, the Free Trade Area of the Americas and th e WTO in proposing reforms to reduce the impact 
of measures of this kind and to clarify the definiti on of some related concepts.  A rendezvous clause is 
set within two years from the entry into force of the Treaty for all Parties – i.e. by November 2011 – 
for the adoption of a work programme dealing in part icular with the determination of reasonable profit 
margins and of existence of threat of serious injury. 
                                                      
21 For Costa Rica, the investigating authority is the De partment of Trade Defence of the Ministry of the 
Economy, Industry and Trade.  For Panama, the investigating authority is the National Directorate for the 
Administration of Trade Treaties and Trade Protec tion of the Ministry of Trade and Industry. 
22 The WTO Agreement allows for the 5 year maximum duration to be extended if a sunset review 
shows that the expire of the duty would be likely to lead to a continuation of the dumping and injury. WT/REG264/1 
Page 28  
 
  78. As at December 2010, none of the Parties had applied anti-dumping or countervailing 
measures against the other Party. 
4. Subsidies and State-aid 
79. In accordance with Article 3.09, disciplines re garding domestic support for agricultural goods 
and export subsidy programmes are defined in the cont ext of the bilateral Protocol and included in an 
annex.  Chapter 7 of the Treaty reaffirm the Parti es' rights and obligations under Article VI and XVI 
of the GATT 1994 and under the WTO SCM Agreement. 
80. In the Annex to Article 3-09, attached to the Protocol, the Parties agree to eliminate export 
subsidies for agricultural and non-agricultural products in their mutual trade at the entry into force of 
the Treaty, through a few inconsistent measures ar e allowed provided they are in conformity with 
Article 27.4 of the SCM Agreement.
23  Both Costa Rica and Panama maintain export subsidy 
programmes, which they have notified so as to benefit from the extension under Article 27.4. 
81. Accordingly, export subsidies may be maintain ed both in bilateral trade and trade with 
third parties in the context of Costa Rica's pr ogrammes related to the "Free Zone Regime" and 
"Inward Processing Regimes" and of Panama's "O fficial Industry Register" and "Export Processing 
Zones" up to December 2015, provided that they comp ly with the procedure for further extensions of 
the transition period set forth in Article 27.2(b)  of the Agreement on Subsidies and Countervailing 
Measures, which are granted to certain devel oping country Members under Article 27.4 of the 
Agreement.24 
82. The Parties also undertake to cooperate in orde r to eliminate all export subsidies in the WTO 
context, and to achieve the maximum possible reduction of trade-distorting domestic support 
measures to agriculture. 
5. Customs-related procedures 
83. Chapter 5 of the Treaty is concerned with customs procedures.  In accordance with 
Article 5.12, which requires all Parties to the FTT to agree within 60 days from the signature of the 
Treaty on uniform regulations for the interpretation, application and administration of Chapters 3, 4 
and 5 of the FTT, these have been agreed by all Parties, and are in force between Costa Rica and 
Panama since the date of entry into force of the Treaty and the Protocol.25  Single forms for both the 
certificate of origin26 and the declaration of origin27 have also been agreed upon, as required in 
Article 5.02. 
84. Self-certification by the exporter is the rule fo r the certificate of origin;  these are valid one 
year from the date of its signature.  Certificates of origin may be used with respect to more than one 
import of identical goods into the territory of the other Party, provided a specific deadline not beyond 
                                                      
23 This Article provides special and differentia l treatment for developing country members by 
establishing a temporary exemption for such member s from the general prohibition on export subsidies. 
24 See document WT/L/691. 
25 The Uniform Regulations for the Interpretation, Application and Administration of Chapters 3, 4 and 
5 of the FTT  can be found at:  
http://www.comex.go.cr/acuerdos/ Panama2/Certificado/VF%20Rev%2 0Legal%20RU%20CAPAN%20140303.
pdf and http://www.mici.gob.pa/Reglamentaciones% 20Uniformes%20al%20TLC%20Centroamerica-Pma.pdf. 
26 The certificate of orig in can be found at: 
http://www.comex.go.cr/acuerdos/Panama2/Certifi cado/Certificado%20de%20origen%20Panam%C3%A1.doc 
and http://www.mici.gob.pa/tratados/Cer tificadoDeOrigen.doc;  instructions  regarding how to fill it in at: 
http://www.comex.go.cr/acuerdos/Panama2/Cer tificado/Instructivo%20llenado%20CO.pdf. 
27 See: http://www.mici.gob.pa/tratados/DeclaracionDeOrigen.doc.  WT/REG264/1 
 Page 29 
 
 
  one year is specified in the Certificate.  A Declara tion of Origin is to be filled in by the producer and 
also have a one year validity;  it shall be  voluntarily provided to the exporter.   
85. Articles 5.03 and 5.04 give details of the Partie s' rights and obligations regarding importation 
and exportation, respectively, including the documents  to be presented by importers.  Provisions are 
also made for the exchange of information between  the Parties' customs authorities, equal treatment 
for exporters and importers in cases of false decl aration or certification of origin, duty-drawback 
(see paragraph 52 above) and the time-frame (five years) during which all documentation relating to 
the origin of the product imported/exported shall be kept. 
86. Article 5.05 provides that unless imports are made  separately with the aim of circumventing 
certification requirements, a Certificate of Origin  is waived in three cases, namely commercial 
imports below US$1,000 (an invoice indicating that  the good is originating may be required);  
non-commercial imports below US$1,000 (in both cases a Party may establish a higher threshold);  and imports of a good for which the importing Party h as waived the need for presenting the Certificate 
of Origin (Article 4.18). 
87. Articles 5.08 of the Treaty and 24 of the Uniform Regulations establish the proceedings for 
verifying the origin of goods.  Verification by the customs authorities of the importing Party may be 
done through either written questionnaires to be filled in by the exporters or producers, visits to the 
exporter or producer in the territory of the other Pa rty – subject to prior notification – or any other 
means jointly agreed by the Parties.  Verification procedures shall be concluded within one year and 
shall be communicated in writing;  in dully justif ied cases and only once at a time, an extension of 
90 days is possible provided previous notification is  given to the exporter/producer (Article 5.08(12) 
of the Treaty and Article 24(19) of the Uniform Regul ations).  Deadlines are as sociated with each step 
of the verification proceedings.  Failure to res pond to a written questionnaire or to consent to a 
verification visit within the set deadlines (30 days up on receipt;  for the reply of the questionnaire, one 
extension of 30 days is possible) allows the importi ng Party not to grant the preferential treatment.  
Should the exporter fail to respond to the questionnaire or to consent to the verification visit, the 
competent authority shall refuse to grant prefer ential treatment, by means of a written decision 
pursuant to the paragraph 13 of Article 5.08. 
88. Provisions for advanced ruling prior to importation are dealt with in Articles 5.09 of the 
Treaty and 25 of the Uniform Regulations;  these ar e issued by the authorities of the importing Party 
upon request of its importer, or the exporter or produ cer of the other Party.  Advanced rulings may be 
modified or revoked in particular in cases of e rror or modifications;  these shall not be applied 
retroactively and Parties are to delay by 90 days such modification or revocation in cases of good faith 
of the importer, exporter or producer, as relevant. 
89. Each Party shall grant the same rights regard ing review and appeal procedures to its own 
importers as well as producers and e xporters of the other Party (Artic le 5.10).  Applicable penalties, 
which may reach the level of criminal penalties, may be imposed as stipulated in Article 5.11. 
90. Goods re-exported from a free zone of a Party shall be considered to originate in a 
third country and the treatment, preferential or ot herwise, granted to that third country by the 
importing Party shall be applied to them, subject  to compliance with the conditions set out in 
Article 5.14. 
91. Article 5.13 defines the areas of cooperation between the Parties, which include, inter alia , 
the notification of a range of measures and rulings, as well as the exchange of customs information.  
Other provisions relate to invoicing by a third co untry operator (Article 5.06) and confidentiality 
(Article 5.07). WT/REG264/1 
Page 30  
 
  IV. TRADE IN SERVICES AND INVESTMENT 
A. S
COPE AND DEFINITIONS  
92. As regards bilateral trade on services and invest ment between Costa Rica and Panama, Part 
IV of the Treaty contains specific provisions on trade in services in Chapters 10-12 and 14.  "Cross border trade in services", as defined in Chap ter 11, covers cross-border supply, consumption 
abroad and partially the presence of natural pers ons (GATS equivalent modes of supply 1, 2 and 
partially 4) in services sectors, with the excepti on of "Financial Services", which is covered by 
Chapter 12. GATS mode 3 (commercial presence) is covered by Chapter 10 on "Investment";  mode 4 
(temporary movement of persons) is also covere d in Chapter 14 on "Temporary Entry of Business 
Persons".  Chapter 13 on "Telecommunications" – wh ich contains a series of rights and obligations 
related exclusively to the telecommunications sector – do not apply between the two countries 
(Article 13.01);  however, the telecommunications sector  is not excluded from the coverage as trade in 
this sector remains subject to the disciplines of Ch apters 10, 11 and 14 and to  the reservations laid 
down in the Annexes on Non-Conforming Measures.  Si nce the entry into force of the Treaty, there 
have been changes to Costa Rican legislation on telecommunications, which was amended to abolish 
monopoly and allow free competition;  nonetheless, the Parties have not agreed to modify the Treaty's 
provisions relating to telecommunications services. 
93. With the aim of increasing the Treaty's covera ge as relates to insurance and reinsurance 
sectors (which in Costa Rica is subject to a State monopoly), the Parties agreed – in Article 4 of the Protocol – to review trade developments in t hose sectors as from one year from entry into force – 
i.e. as of November 2009 – and once a new regulatory framework for these sectors would be in force 
in Costa Rica.  Since the entry into force of the Treaty, and although Costa Rica has amended its 
legislation on insurance to abolish monopoly and allow free competition, as at December 2010 the 
Parties had not yet revised the provisions relating to insurance services. 
94. Article 11.02 provides that disciplines relating to the cross-border trade in services do not 
apply to the following: 
(a) Subsidies or donations granted by the government or State-owned companies, 
including government-supported loan s, guarantees and insurance; 
(b) air transport services, including domestic and international air transport services, 
whether scheduled or non-scheduled, and re lated services in support of air services, 
except aircraft repair and maintenance servi ces during the period in which an aircraft 
is withdrawn from service, specialty air services and computerized reservation 
systems; 
(c) government services, such as law enforcemen t, social readaptation, retirement, 
services related to income security or insuran ce, social security, social welfare, public 
education and training, and childcare; 
(d) financial services (dealt with in Chapter 12);  and 
(e) government procurement, including procurement by a State-owned enterprise. 
95. Chapter 10 on Investment includes a number of pr ovisions that are relevant for GATS mode 3 
on commercial presence;  these are described in the re levant sections below.   Regarding coverage, 
Article 10.01 provides that Chapter 10 covers (a) invest ors of the other Party in all investment-related 
matters;  (b) investments made in the territory of a Party from other Party's investors;  and (c) all 
investments of investors from a Party in the territory  of the other Party with respect to Article 10.07  WT/REG264/1 
 Page 31 
 
 
  (performance requirements).  It is also specified that disciplines on investment apply in all of the 
Party's territories and with respect to all levels of government28, and to investments in place at entry 
into force as well as forthcoming.  Other disciplines of the Chapter include, inter alia , transfers, 
expropriation and indemnification, extraterritorial a pplication of a Party's legislation, and promotion 
of investments.  In cases of inconsistency between a provision of this Chapter and any other Chapter, 
the provision of the latter shall prevail to the extent of the inconsistency.  The Chapter also includes a 
mechanism to settle disputes between a Pa rty and investors from the other Party. 
96. Excluded from the Investment's Chapter coverage are: 
(a) financial services (dealt with in Chapter 12); 
(b) measures taken by a Party to restrict investment by investors of the other Party in its 
territory for public policy or national security reasons; 
(c) economic activities reserved for each Party, pursuant to its legislation in force at the 
time of signature of this Treaty, which are listed in Annex III on economic activities 
reserved for each Party;  and disputes or claims that arose prior to the Treaty's entry into force or related to events preceding the Treaty' enactment, including those which 
continue to produce their effects af ter its entry into force;  and  
(d) government services or functions as described  in paragraph 93(c) above.  In cases 
where an authorization has been granted for an investor of the other Party to 
nevertheless supply any of these services, then the relevant investments will also be covered by the disciplines of the Chapter. 
97. The relevant definitions of the Treaty's Part IV  are divided between those general definitions 
applicable to the Treaty as a whole and de finitions specific to individual chapters.  
"Investment" (Article 10.40) means any kind of goods or rights acquired or used in any way for the purpose of obtaining an economic profit or fo r other business purposes, acquired with funds 
transferred or re-invested by an investor, and including, inter alia , an enterprise, shares in an 
enterprise, real estate or other property, tangible or intangible
29;  "investor of a Party" means a 
national or an enterprise of a Party that is making,  has made or seeks to make an investment in the 
territory of the other Party30;  "investment of an investor of a Party" means an investment owned or 
controlled directly or indirectly by an investor of such Party.31  "Enterprise" is defined in Article 2.1 
as any entity constituted or organized under the appli cable law of a Party, whether or not for profit, 
and whether privately owned or government-owned, including companies, firms, foundations, trusts, 
partnerships, sole proprietorships, joint ventures or other associations.  "Service provider" is defined 
in Article 11.01 as a person of the Party that pr ovides or seeks to provide a cross-border service.  
For the purposes of Chapter 14, the definition of "n ational" excludes permanent residents, which are 
considered "nationals" for the other Chapte rs of the Treaty (see paragraph 24 above). 
                                                      
28 However, the Parties maintain reservations with rega rd to measures taken at local or municipal level. 
29 The definition of investment in the Chapter on financial services differs form the one contained in 
Chapter 10 in that the former includes loans granted by providers of cross-border services other than loans to 
financial institutions. 
30 As explained earlier, the term "national of a Party" , in the case of Costa Rica and Panama, is taken to 
refer to permanent residents.  However, for the purposes of Chapter 14, the definition of "national" excludes 
permanent residents. 
31 An investment is understood to be owned by an investor when the latter has more than 
50% ownership of the registered capital, and it is under the investor's direct control when the latter has the 
power to appoint a majority of the directors or legally manage its operations. WT/REG264/1 
Page 32  
 
  B. D
ENIAL OF BENEFITS  
98. Denial of benefits are foreseen in the context of both investment and trade in services 
(Articles 10.14 and 11.10, respectively).  Subject to  prior notification and consultation in accordance 
with Articles 18.04 and 20.06, a Party may deny the benefits of those Chapters to: 
(a) Service suppliers of the other Party, if it is determined that the services are being 
provided by an enterprises that is not undertaking "substantial business activities" in 
the territory of the other Party and that, in  accordance the latter's legislation, this 
enterprise is owned or controlled by investors from a non-Party.  "Substantial business activities", as defined in Article  2.01, require that the enterprise 
(a) is registered as an income tax payer in th e territory of that Party;  (b) has a payroll 
duly registered with the corresponding authorit y of that Party;  or (c) has permanent 
premises, facilities or offices in that Party, which are not restricted to receiving notifications. 
(b) investors of the other Party that constitute an  enterprise, and their investments, if the 
enterprise is owned or controlled by investors from a non-Party (as defined in 
Article 10.40)
32, and this enterprise is not undertak ing "substantial business activities" 
in the territory of that Party. 
C. GENERAL PROVISIONS ON TRADE IN SERVICES AND INVESTMENT  
99. The Treaty covers all the services sectors, excep t for those mentioned a bove.  It is based on a 
"negative list" approach;  thus, the principles of  national and most-favoured-nation treatment, as well 
as other provisions – e.g. performance  requirements, local presence – are of general application unless 
non-conforming measures have been listed (in Annexes)  as exceptions to general rules.  These are 
included in Articles 10.09 and 11.08 an d in additional provisions of both chapters, as described below. 
100. Generally, the Parties reserve the right to mainta in measures that do not conform, in the case 
of investment, with the principles of national and MFN treatment, as well as restrictions regarding performance requirements and nationality of senior ma nagement and executives.  As far as trade in 
services is concerned, the reservation relates to c onformity with the principles of national and MFN 
treatment and local presence.  Accordingly, the following are excluded from the Treaty's coverage: 
(a) Existing non-conforming measures listed in Annex I (services and investment) or III 
(investment only) applied at a national level, as well as their extension or modification, provided that their level of non-conformity is not increased (Articles 10.09(1) and 11.08(1)); 
(b) existing non-conforming measures applied at a local or municipal level of 
government, as well as their extension or modification provided this do not increase their level of non-conformity; 
(c) existing non-conforming measures or any more  restrictive measure adopted in future 
with respect to sectors, subsectors or ac tivities listed in Annex II (Articles 10.09(2) 
and 11.08(2)). 
                                                     
 
32 An investment is defined as being from an investor of a Party if, for an enterprise, the "national" 
investor owns more than 50% of the social capital, and, for an investment, if the "national" investor controls it 
so to nominate the majority of its directors or are able to legally di rect operations in another way.  WT/REG264/1 
 Page 33 
 
 
  1. Market access 
101. The Treaty contains no article on market access akin to Article XVI of the GATS.  
102. Quantitative restrictions are defined in Artic le 11.01 as non-discriminatory measures which 
place limitations on the number of service suppliers or their operations, either in the form of a quota or an economic needs test, or by any other quantit ative means.  The Parties are required to establish 
procedures for notifying quantitative restrictions and for specifying their undertakings to liberalize 
quantitative restrictions, as well as for consultations w ith a view to further liberalize such restrictions 
(Article 11.12).  Article 11.09 provides that existi ng QRs are to be listed in Annex V, that any new 
such measure shall be notified to the other Party an d included in Annex V, and that at least once every 
two years Parties shall aim at negotiate the liberalization or elimination of these measures.  
In Annex V attached to the Protocol, Costa Rica and Panama have agreed not to elaborate such a list, 
making clear however that the rights afforded by the Article remained valid.  As part of the process of 
establishing the Administrative Commission, the Pa rties are drawing up the lists of the sectors, 
subsectors or activities to which they apply quantita tive restrictions;  as at December 2010, they had 
not completed their work. 
2. National and MFN treatment 
103. The Parties undertake to accord to investment s and services, as well as to investors and 
service suppliers, treatment no less favourable than  that accorded in similar circumstances to 
investments, services, investors and service suppliers of their own (national treatment in Articles 10.02 and 11.03) or any third country (MFN treatment in Articles 10.03 and 11.04).  Moreover, the Parties are to grant to services, inv estments, investors and service suppliers whichever 
is the better of the treatment granted under th e principles of national or most-favoured-nation 
treatments (Articles 10.04 and 11.05). 
104. Non-discriminatory treatment is granted to inv estors of the other Party in the event of losses 
caused by armed conflict or civil strife, in respect of  any measure adopted or maintained in relation to 
such losses (Article 10.05).  Investments from the other Party's investors are granted a fair and 
equitable treatment as well as full protection and security, in accordance w ith international law 
(Article 10.06).  Measures of ge neral application requiring the use of  a particular technology in order 
to comply with health, security or environment requi rements of general application are also subject to 
the basic non-discriminatory principles (Article 10.07(7)). 
105. National and MFN treatment do not apply as follows:   
(a) For both trade in services and investment, measures listed in Annexes I (when applied 
at the national level of government) and II, and non-conforming measures applied at a 
local or municipal level of government;  and 
(b) for investment only, requirements for an investor of the other Party to provide 
information about itself or its investment (Article 10.12(3)) and measures related to 
government procurement or subsidies.
33  
106. Further, and for investment only, national treatme nt does not apply with respect to formalities 
related to the establishment of investments by inv estors of the other Party, provided that such 
measures do not materially impair the protection affo rded by the investment Chapter (Article 10.12). 
                                                      
33 As explained above, government procurement and subsidies are excluded from the application of the 
whole of Chapter 11. WT/REG264/1 
Page 34  
 
  107. The MFN principle does not apply in the following additional cases: 
(a) For investment and trade in services, cases of  bilateral or multilateral treaties in force 
or signed prior to the Treaty's entry into force between the two Parties, or those signed after that date covering aviation, fish eries or maritime affairs, including rescue 
(Article 10.09(4), as listed in Annex IV ).  Both Parties also specify the 
non-application of the MFN principle to ex isting or future international cooperation 
programmes aiming at economic development;  and 
(b) for trade in services only, recognition of higher education qualific ations, although the 
Parties are required to afford each other an opportunity to demonstrate that qualifications obtained in the other Part y should also be recognized (Annex 11.13).
34 
3. Local presence 
108. With regard to trade in services, no Party may require a service supplier to establish or 
maintain a representation office or any other type of ente rprise or be resident in its territory in order to 
be entitled to provide a cross-border service (Article  11.06).  Reservations made by the Parties and 
listed in Annexes I and II may however modify this clause.  
4. Movement of natural persons 
109. Chapter 14 contains provisions relating to the temporary entry of business persons, which 
shall normally be granted if the re levant requirements are fulfilled.35  The Parties recognize the 
desirability of facilitating temporary entry in accordance with the principle of reciprocity 
(Article 14.02).  The Parties agree to exchange in formation on measures app lied in this regard and 
they undertake to prepare a consolidated documen t regarding the requirements for temporary entry 
(Article 14.05).  As at December 2010, the Parties ha d not reviewed this aspect on a bilateral basis. 
110. The denial of a temporary entry of business pers ons is allowed if such entry might adversely 
affect (a) the settlement of any labour dispute th at is in progress at the place or intended place of 
employment;  or (b) the employment of any person who is involved in the dispute.  In this case, the Party refusing the entry must inform/notify in writing respectively the business person and the Party 
of the national of the reasons for the refusal (Art icle 14.04).  In addition, the temporary entry of 
business persons is also subject to existing immigra tion measures, as described in sections A, B and C 
of Annex 14.04.  Consultations provided for in  the context of the settlement of disputes of 
Article 20.6 may not be initiated as a result of a re fusal to grant temporary entry, unless the matter 
involves a recurrent practice and the affected pe rson has exhausted all administrative remedies 
(Article 14.06). 
111. Annex 14.04 lays down the conditi ons applicable to the entry of  business visitors, traders and 
investors and to intra-company transferees.  Th ese conditions are summarized in Table IV.1 below: 
                                                     
 
34 Moreover, the basis for the mutual recognition of qualifications is set out in Annex 11.13. 
35 "Business person" means a national who is engaged in trade in goods, the supply of services or the 
conduct of investment activities.  "National" in the context of Chapter 14 does not include permanent or 
definitive residents, who are therefore exclud ed from the benefits of this Chapter.  WT/REG264/1 
 Page 35 
 
 
  Table IV.1 
Conditions for the temporary entry of business persons 
Category Requirements Prohibitions Residence 
Business 
visitors Engagement in any activity referred to in Appendix 14.04(A)(1) 
with supporting documentationa 
Proof of citizenship 
Evidence that the activity  in question is international in scope and 
that the business person is not seek ing to enter the labour market 
Compliance with existing immigration measures, as listed in 
Appendix 14.04(A)(3) 
Traders and 
investors Employment in a supervisory or executive capacity, or one that 
involves specialized knowledge 
Intention to carry on substantial trade 
Intention to establish, develop, administer or provide advice or 
key technical services for the operation of an investment to which 
a substantial amount of capital has been or is in the process of 
being committed 
Compliance with existing immigration measures, as listed in 
Appendix 14.04(A)(3) 
Intra-company transferees Intention to carry out management or executive functions in the 
enterprise 
Previous continuous employment for one year within the three 
years preceding the date of the application 
Compliance with existing immigration measures, as listed in 
Appendix 14.04(A)(3) No Party may: 
Require prior approval 
procedures, petitions, 
labour certifications 
tests or other 
procedures of similar 
effect; 
Impose or maintain 
any numerical 
restriction on 
temporary entry In Panama: 
Temporary residence 
renewable as long as 
the conditions under 
which it was granted are maintained. 
A request for 
permanent residency or modification of its 
migratory status is 
not allowed unless conditions set out in 
domestic migratory 
laws are fulfilled. 
a See Annex III of this document. 
Source : Text of the Treaty, Chapter 14. 
5. Performance requirements  
112. Disciplines on performance requirements are contai ned in Article 10.07.  With respect to the 
establishment, acquisition, expansion, administration,  conduct or operation of an investment from an 
investor of the other Party in the territory of the Party, the following performance requirements are 
prohibited (paragraph 1): 
(a) Export performance requirements, i.e. the setti ng of a target/ratio for the export of 
goods or services; 
(b) the setting of a local content requirement; 
(c) the granting of preferences to goods produced  or services supplied in the territory of 
the Party or acquiring goods or services from a person in its territory;  and 
(d) trade-balancing and foreign exchange-bal ancing requirements, i.e. relating the 
volume or value of imports with those of e xports or with foreign exchange inflows. 
113. The receipt or continuing receipt of any bene fit in relation with an investment from an 
investor of the other Party in the territory of the Party cannot be connected with the following requirements (paragraph 2): 
(a) The setting of a local content requirement; 
(b) the granting of preferences to domestically  produced goods or acquiring goods from a 
person in its territory;  and WT/REG264/1 
Page 36  
 
  (c) trade-balancing and foreign ex change-balancing requirements. 
(d) parties remain however free to connect the granting of these benefits to requirements 
that the production, supply of a service, training or employment of workers, construction of particular facilities, or  the conduct of research and development 
activities be carried out in its territory (paragraph 4). 
114. Exceptions to the prohibitions listed above exist in the following cases (paragraphs 3 and 5): 
(a) In the context of export promotion and fo reign aid programmes, only trade-balancing 
and foreign exchange-balancing requirements remain prohibited; 
(b) in the context of government procurement,  export performance, trade-balancing and 
foreign exchange-balancing requirements remain prohibited; 
(c) in the context of granting preferential treatment in respect to tariff and QRs, all 
requirements related to the investment itsel f (i.e. those of paragraph 111 above), as 
well as subjecting the granting of a benefit to  an investment to trade-balancing and 
foreign exchange-balancing requirements, remain prohibited;  and  
(d) local content requirements and preferential treatment to domestically produced goods 
and services, and domestic sellers unde r paragraphs 111-112 above, may be 
maintained or established in order to (i) in sure compliance with laws and regulations 
not otherwise inconsistent with the Treaty, ( ii) protect human, animal or plant life or 
health, or (iii) preserve exhaustible natural resources;  provided that such measures do 
not constitute a disguised restriction and are not applied in an arbitrary or unjustifiable manner.  
115. Finally, paragraph 6 lists those requirements th at, while not being prohibited, shall be dealt 
with by the Administrative Commission, upon requ est of a Party which deems that they adversely 
affect trade or constitute a significant barrier to investment from its own investors in the territory of the other Party.  In cases of a positive determinati on, the Commission shall provide for its elimination 
and incorporate such discipline into the Treaty.  As at December 2010, no such case had arisen. 
116. Reservations entered by the Parties into Anne xes I and II may modify disciplines regarding 
performance requirements.   
6. Requirements for senior management and board of directors 
117. Article 10.08 prohibits nationality requirements for senior management positions in an  
enterprise of a Party which is constituted through an i nvestment from an investor of the other Party.  
However, a nationality requirement relating to the majority of the members of the governing body is 
authorized, provided it does not materially impair the ability of the investor to exercise control over its 
investment.  Reservations entered by the Parties in to Annexes I and II may modify this discipline.  
Further, as already mentioned, this prohibition do not apply to local and municipal levels of 
government nor to measures related to government procurement or subsidies. 
7. Other provisions on trade in services 
118. The Parties undertake not to require the provision of any confidential information, the 
disclosure of which may create an obstacle to the obs ervance of laws or may be harmful to the public 
interest or undermine legitimate trade interests of public or private enterprises (Article 11.14).  WT/REG264/1 
 Page 37 
 
 
  119. Annex 11.16 provides guarantees for full freed om of transit through the territories of the 
Parties for inland transportation of freight from one Pa rty to any other Party with no collection of any 
charges for services other than those specified in Appendix 11.16(6) , and reaffirms that 
Articles 11.03, 11.04 and 11.06 (national treatment, MFN and local presence) apply to the Annex.  
In Appendix 11.16(6), the Parties agreed that duti es, fees and taxes contrary to the MFN and national 
treatment provisions will not be charged;  other taxation measures that do not run counter to the 
provisions in Annex 11.16 remain however author ized.  Parties also agreed to eliminate any 
documentation other than that required by the "Re gulations on the International Inland Customs 
Transit Regime, Declaration Form and Instructions".36 
8. Other investment provisions 
120. The Parties agree to eliminate any restriction on transfers relating to an investment of an 
investor of one Party in the territory of the other Pa rty, and to permit transfers to be made in a freely 
convertible currency.  No Party may require its invest ors to transfer, or penalize its investors that fail 
to transfer, any amounts derived from investments in the other Party (Article 10.10).  Under the terms 
of Article 10.11, the Parties may expropriate or nationa lize an investment of an investor, provided that 
this is done in the public interest or for reasons  of public order and social interest, pursuant to 
Annex 10.1137, on a non-discriminatory basis, in accordan ce with the principle of legality, with 
guarantees as to whichever of national or most-favour ed treatment is better and subject to the payment 
of compensation as described in the remainder of th e Article.  In Article 10.15, the Parties reaffirm 
their right to adopt or maintain any measure designe d to ensure that investment activity complies with 
environmental legislation, provided that such measur e is consistent with the rest of the chapter. 
121. Section B of Chapter 10 (Articles 10.16 to 10.39) provides for a m echanism whereby an 
investor, on its own behalf or on beha lf of an enterprise, may submit to arbitration a violation claim.  
The choice of this mechanism by the investor or enterprise shall be to the exclusion of any other 
arbitration mechanism;  prior to consenting to this  mechanism, however, each Party may require that 
all administrative remedies have been exhausted.  A final award by a tribunal may only provide for  
either a monetary damage or the restitution of prope rty, which may be paid in the form of monetary 
damage.  The Parties have agreed to allow for dis pute settlement on all matters related to the Chapter, 
without any exception (Article 3 of the Protocol is respect to Article 10.39 of the Treaty). 
D. LIBERALIZATION COMMITMENTS  
122. Disciplines on trade in financial services, rule d by Chapter 12 disciplines, are presented later 
in this document.  Overall, however, the basic prin ciple applying to all other sectors – i.e. a negative 
list, with the list of non-conforming measures being pr ovided in an annex – also applies for financial 
services.  Therefore, for sake of completeness of the liberalization commitments, those measures 
exempted from the coverage of the Treaty, which are included in each Party's Annex VI, are included 
in this section.  As for the other sectors, there are two types of non-conforming measures, those equivalent to "Annex I" measures are listed in section A, while tho se equivalent to "Annex II" are 
listed in section B. 
                                                     
 
36 Local freight transport by vehicle or cabotage, local or international freight and passenger transport 
by rail and local or international passenger transport are excluded.  Two years af ter the Agreement has come 
into force, consideration shall be given to the possibility of achieving broader coverage. 
37 For Costa Rica, for reasons of "public interest" and for Panama for reasons of "public usefulness" 
and "social interest", as defined in their respective national Constitutions.  This Annex is attached to the 
Protocol. WT/REG264/1 
Page 38  
 
  123. Any comparison made in relation to the GATS shall take into account the fact that any 
non-conforming measure applied at the local or muni cipal level of government  are excluded from the 
Treaty's coverage (see paragraph 99 above).  
1. Costa Rica
38  
124. In its Annex I, Costa Rica has listed reserva tions for existing non-conforming measures in a 
number of sectors (Table IV.2) including restrictions  on the national treatment obligation, generally in 
the form of nationality or establishment requirements.   Six MFN reservations have also been listed – 
in professional, transportation and audiovisual services – reflecting e ither reciprocity arrangements in 
place or other arrangements with Central American countries in activities such as.  All limitations 
listed operate at the national level. 
125. One out of the two horizontal limitations under the GATS – i.e. the limitation on the number 
of foreigners in the senior management of enterprises  – has been lifted overall but maintained in some 
subsectors.  The second horizontal limitation re garding activities in the costal area has been 
maintained in reservation I-CR-8.  Two horizontal li mitations are listed;  these require establishment 
through a local agent with general powers, and in  the cases of the grant of a concession, allow for 
preferential treatment to nationals and require  the constitution of an "anonymous society."  
Performance requirements applying to enterprises est ablished in free-trade zones with respect to the 
sales of goods and services to the domestic market can also be considered as a third horizontal limitation. 
Table IV.2 
Non-conforming measures listed by Costa Rica in Annex I 
Sector/Subsector Obligations Mode De scription/Reduction of Restriction 
All LP CBTS Establishment of an ag ent with general powers required. 
All NT/LP I/CBTS In cases of the granti ng of a concession, preference given to 
domestic supplier if the tender re sults in equality.  Constitution of 
local "anonymous society" needed for the signing of a concession contract. 
Professional services NT/MFN/L P CBTS Reciprocity and/or resi dency requirements. Nationality 
requirements for services related to agronomical engineering, 
agricultural sciences, political scie nce and international relations. 
Registration requirements for supplie rs of the latter two services. 
Preference to nationals in recr uitment of medical and dental 
services. 
Maritime land zone (applies to 
all sectors) NT/LP I/CBTS Nationality and equity requirements for tourist activities in the 
maritime land zone.  Concessions in this area are based on 
nationality, residency, domicile , incorporation and equity 
requirements.  Cession of a concessi on to foreigners is forbidden. 
Land transportation services - 
transportation of passengers NT/MFN I/CBTS Preferences for domestic companies on domestic routes. 
International transportation of pa ssengers can only be supplied by 
companies domestically constituted,  and are subject to reciprocity 
and equity requirements, with preferential treatment for Central American inputs.  Transportation of passengers in national territory
not open to international transport vehicles. 
Land transportation services – local freight transportation NT/MFN/SMBD I/CBTS Nationality requirements.   Equity and nationality requirements 
relating to the effective contro l of the company.  Domestic 
registration requirements, with certain exceptions for Central 
American vehicles.  Transportation in national territory not open to 
international transport vehicles. 
                                                      
38 Costa Rica has only once modified its Schedule of Specific Commitments (SSC) under the GATS, 
with the integration of commitments in the financial sector in February 1998.  WT/REG264/1 
 Page 39 
 
 
  Sector/Subsector Obligations Mode De scription/Reduction of Restriction 
Water transport services NT/MFN/LP I/ CBTS Nationality and equity  requirements for the supply of the service. 
Registration based on nationality an d establishment requirements. 
Establishment of an agent with general powers required. Transportation in local routes not open to internationally-registered 
boats.  Deposit requirements for foreigners in the command of a 
domestically-registered boat.  QRs on the number of foreign crew 
staff for international transporta tion in a domestically-registered 
boat stopping in domestic ports. 
Air transport services – air transport and specialty services NT/MFN/LP/ 
SMBD I/CBTS Nationality and equity requirements for the supply of the service on 
domestic routes.  Foreigners are not allowed in the Senior Board of 
the company.  Certification of planes and the right to supply 
services based on reciprocity, and requires establishment of an 
operation and maintenance basis.  Registration of planes by 
foreigners only allowed if local residency and for non-commercial 
use.  Foreign companies require the establishment of a permanent 
agent with general powers required.  
Tourist guides  NT/LP CBTS Nationa lity or residency requirements. 
Transport services – Customs 
agents and their auxiliaries, 
customs carriers NT/LP CBTS Nationality requirements for customs officers.  Customs carriers 
and other customs-related customs services require a local 
representative or the headquarters in Costa Rica. 
Radio and television services NT I Nationality a nd equity requirements for the establishment, 
management and exploitation of wireless transmission services. 
Research and development 
services NT/LP I/CBTS Foreigners or foreign companies providing scientific research 
services in relation to biodiversity require the establishment of a 
permanent agent with residency in Costa Rica. Licence required; 
granted for different time-periods and prices for 
nationals/foreigners with resi dency and foreigners without 
residency. 
Audiovisuals – advertising, 
services of cinema, radio, 
television and other shows NT/MFN/PR/LP I/CBTS Registration requirem ents.  Domestic content requirements 
regarding advertisement in favour  of companies benefiting from 
government subsidies;  preferential treatment given to Central 
American nationals of countri es providing for reciprocity. 
Registration, nationality and/or  residency requirements for 
speakers.   
Electric energy NT/LP I/CBTS Foreign investment a llowed for operating plants of limited capacity, 
subject to equity requirements and local presence. 
Higher education services NT/SMBD CBTS Nationality require ments and limitation on number of foreigners as 
relates to professors, administra tive staff and senior management. 
News agency services NT/LP CBTS Residency requireme nts;  exceptions allowed for restricted time and 
subject to previous authorization. 
Marinas and tourist quays and related services NT/LP I/CBTS Concessions may be granted for developing tourist quays, but with 
establishment requirements.  Bo ats of foreign flags can only 
provide cruiser services. 
Free zones PR I Limitations apply on sales of goods and services to the domestic 
market by companies benefiting from the free zone regime. 
Private security services NT/LP CBTS Nationality or residency requirements. 
Note: CBTS:  Cross -border trade in services;  Investment;  LP:  Local pres ence requirements;  MFN: Restriction to MFN treatment;  
 NT: National treatment restriction;  PR:  Performance requireme nts;  SMBD:  Restrictions af fecting senior management and 
 board of directors. 
Source: Annex I to the FTT between Costa Rica and Panama. 
 
126. Table IV.3 below lists those non-confor ming measures for which the degree of 
non-conformity may be increased, as listed in Annex II.  Reservations to the basic principles of 
non-discrimination as regards trade in services and investment covering various sectors have been taken vis-à-vis  minority-related issues, electrical energy, cultural industries and natural resources;  
other Annex II reservations are sector-specific.
39 
                                                      
39 Others sector-specific reservations listed in Annex II are referred to in the paragraphs below dealing 
with particular sectors. WT/REG264/1 
Page 40  
 
  Table IV.3 
Non-conforming measures listed by Costa Rica in Annex II 
Sector/Subsector Obligations Mode De scription/Reduction of Restriction 
Minority related issues NT/MFN/LP/ 
PR/SMBD I/CBTS Any measure with respect to the ri ghts or preferences granted to 
minorities with social or economical disadvantages. 
Electrical energy NT/MFN/LP/ 
PR/SMBD I/CBTS Any measure with respect to the production, transmission, 
transformation, distribution and trading of electrical engineering. 
Transport services – railways, ports and airports NT/MFN/LP/ 
PR/SMBD I/CBTS Any measure with respect to granting concessions or supplying 
services related to the operation, exploitation, administration and 
execution of works in railways, ports and airports. 
Telecommunications – wire and 
wireless services NT/MFN/LP/ 
PR/SMBD I/CBTS Any measure with respect to the exploitation, administration, 
operation and supply of wire and wireless telecommunication 
services;  telegraph, telephone , radiotelegraph and radiophone 
services;  value-added services ;  telecommunication and telecom 
network services.  Some of these restrictions may be removed on 
the basis of reciprocity, as specified in paragraph 129 below. 
Social services NT/MFN/LP/ 
PR/SMBD I/CBTS Any measure with respect to law enforcement and social 
readaptation, as well as social serv ices of public interest such as 
retirement, services related to inco me security or insurance, social 
security, social welfare, public education and training, health, 
childcare, sewage and water supply. 
Electronic betting services NT/MFN/LP/ 
PR/SMBD I/CBTS Any measure with respect to electronic betting services. 
Services of cultural industries  NT/MFN/LP/ 
PR/SMBD I/CBTS Any measure with respect to cultural industries. 
Services related to natural 
resources NT/MFN/ 
PR/SMBD I/CBTS Any measure relating to th e preservation, administration, 
protection, exploitation, extracti ons and exploration of natural 
resources, including the production, manipulation, trading, 
industrialization and use of genetic materials from plants and 
animals, as well as their parts and sub-products. 
Fisheries and services incidental 
to fishing NT/MFN/LP/ 
PR/SMBD I Any measure with resp ect to these services. 
Note: CBTS:  Cross-border trade in services;  I:  Investment;  LP:  Local presence re quirements;  MFN:  Restriction to MFN trea tment;  
NT: National treatment restriction;  SMBD :  Senior management and Board of dir ectors restriction;  PR:  performance 
requirements. 
Source : Annex II to the Costa Rica-Panama FTT. 
127. Economic activities reserved for the Parties are lis ted in Annex III;  Costa Rica has specified 
the following: 
• Crude oil and its derivatives:  import, refining, distribution and wholesale trade; 
• alcohol production and use for liquor pr oduction and industrial use, and the 
elaboration of rums.  The production and e xport of some alcohols is open to private 
enterprises if these are not produced by the State-owner enterprise; 
• postal services; water supply services: sewag e and industrial liquid waste collection 
disposal services;  water supply and sewerage services;  and  
• services of administration and distribution of lotteries. 
128. In terms of sectoral coverage, these subsectors, as well as air transport services and 
government services, provide the complete picture of overall sectoral exclusion from the Treaty's coverage.
40  Costa Rica's commitments under the GATS are limited to 5 of the 11 sector groups in the 
W/120 classification;  thus, the Treaty goes significantly beyond its commitments under the GATS. 
                                                      
40 Government procurement is excluded from the coverage of both the Treaty and the GATS.  WT/REG264/1 
 Page 41 
 
 
  129. Costa Rica's commitments under the GATS for bu siness services are limited to a partial 
coverage of computer and related services;  these are fully liberalized under the Treaty.  All other 
subsectors are opened up, with reservations – nor mally nationality or residency requirements – 
applying only on professi onal, research and development and private security services. 
130. Costa Rica has no GATS commitments on communication services.  The Treaty reserves 
postal activities for the State but fully liberalizes c ourier services.  As for telecommunication, while 
Annex I reservations provides for nationality and equity requirement s for wireless services, Annex II 
reservations significantly restrict the access to a number of wire and wireless services.  However, on the basis of reciprocity (and effective market access of Costa Rica's service suppliers and investors) 
and provided domestic legislation so authorizes, th ese services may be opened to service suppliers and  
investors of Panama.  Audiovisual services are subj ect to registration requirements, and numerous 
non-conforming measures are applied vis-à-vis  advertisements, such as domestic content 
requirements, nationality of the speaker and discr imination among foreign speakers.  Further, an 
Annex II reservation has been taken for any m easure with respect to cultural industries. 
131. Construction and related engineering services;  distribution services;  environmental services;  
and recreational, cultural and sporting services are also not subject to commitments under the GATS.  
As regards construction ser vices, reservations apply vis-à-vis  electrical energy, where foreign 
investment is only allowed for plants of limited ca pacity and subject to equity (51% of capital of 
Costa Ricans) and local presence requirements;  furthe r, electrical energy is also listed in Annex II.  
This limitation also apply to distribution services of  electrical energy;  the only other restriction 
applying in distribution services relate to crude oil and derivatives, which is reserved to the State.  
As for environmental services, sewage and water supply services are reserved for the State, others 
subsectors are opened up to Panama.  Recreationa l, cultural and sporting services are opened up;  
however, news agency services are subject to residency requirements, administration and distribution of lotteries is reserved to the State and electronic be tting service is listed in Annex II (that is also the 
case for services of cultural industries). 
132. Costa Rica has partial commitments in all le vels of education under the GATS;  under the 
Treaty, public education and training are incl uded in Annex II and limitation on the number of 
foreigners in private higher education applies – at  least 85% of professors, administrative staff senior 
managers, and the Dean, are nationa ls.  No other restriction apply vis-à-vis  the rest of the education 
sector. 
133. While transport services are not subject to commitments under the GATS, all transport 
services other than air transport have been incorpor ated in the Treaty subject to various limitations.  
Construction and exploitation of railways, ports an d airports are listed in Annex II.  The few air 
transport services subsectors covered by the Treaty are subject to various limitations in terms or 
national treatment and market access, in particular  if the service involve a domestic route.  Land 
transport services of both passengers and freight an d water transport services in domestic routes are 
not opened to enterprises of Panama.  Various other reservations apply, with nationality, equity or 
reciprocity requirements;  in many instances, local presence is also mandatory. 
134. Health services are partially included under th e GATS.  Under the Treaty, public health and 
certain social services are reserved to the State, but  otherwise no restriction apply.  With respect to 
tourism and travel-related services, tourism activities in coastal land zones are subject to various requirements, in particular those of  nationality and/or that the relevant  enterprise has at least 50% of 
national capital.  As regards tourist guides, Pana manians with a residency in Costa Rica may supply 
these services;  in GATS, only nationals are allowed in these services. WT/REG264/1 
Page 42  
 
  135. Table IV.4 below provides the summary of non-conforming measures with respect to 
financial services listed in Annex VI to the Treaty.  Costa Rica has partial commitments in the financial sector under the GATS, covering banking and other financ ial services (deposits, lending, 
credit card services, provision and transfer of fina ncial information, financial data processing and 
related software, and leasing) but  not covering insurance, with full liberalization of the right of 
establishment for subsidiaries but not for branch es but with the other three modes of delivery 
remaining generally unbound, except for services of pr ovision and transfer of financial information, 
which are fully liberalized. 
136. Insurance and reinsurance, as well as pension fu nds, remain de facto outside the Treaty's 
scope given that these subsectors have been liste d in section B of Annex IV and in relation to 
restrictions on right of establishment, national treatment, MFN, senior management and Board of 
directors and new financial services.  It shall however  be underlined that th e Protocol provides for a 
rendezvous clause in respect to insurance and rein surance (see paragraph 92 above).  Also listed in 
section B are limitations on national treatment and cr oss-border trade with respect to all financial 
services except for the provision and transfer of fina ncial information and advi sory and other auxiliary 
financial services.  These two subsectors are therefor e fully liberalized;  that  was also the case under 
the GATS for the former, but not for the latter wh ich was not subject of a specific commitment. 
137. As regards other subsectors that have been liberalized, few existing non-conforming measures 
have been listed in section A;  these apply in resp ect to banks and financia l intermediation, securities 
and investment funds.  In particular, discriminati on is allowed in relation to the commercialization of 
funds from certain countries – but not from Panama  – and nationality requirements apply to senior 
managers of banks and to traders. 
Table IV.4 
Financial services:  Non-conforming meas ures listed by Costa Rica in Annex VI 
Sector/Subsector Obligations Descri ption/Reduction of Restriction 
Section A  (existing measures) 
Banks and financial 
intermediation  NT/SMBD Nationality requirements for senior positions.  A minimum number of 
national cooperatives are needed for establishing of a cooperative bank. 
A minimum number of national employee-sponsored solidarista
associations are needed to establish a solidarista  bank. 
Securities NT/MFN Exceptions to restriction on the supply of foreign-issued securities may 
apply in accordance with treaties and conventions signed by Costa Rica. Securities from small and medium enterprises of Costa Rica may register 
for a "restricted public offer".  Nati onality or residency requirements for 
registration as a trader.  
Investment funds MFN Preferential treatment by au thorizing trade of real estate funds from 
United States, Spain, Mexico, Colombia, Chile, Canada, Brazil and 
England and any other country as pr ovided for in domestic legislation. 
Section B  (future measures) 
Financial services  CBTS/ NT Any measure relating to the cross- border trade in financial services, except 
for the provision and transfer of fi nancial information, financial data 
processing and related software, and a dvisory and other a uxiliary financial 
services (classified as 7.B(l) and (k ), respectively, in MTN.GNS/W/120).   
Insurance and reinsurance Right of establishment 
CBTS/NT/MFN/SMBD New financial services and 
data processing State monopoly.  Reservation with resp ect to any measure of insurance and 
reinsurance for all its modalities a nd for insurance intermediation. 
Pension funds Right of establishment 
CBTS/NT/MFN/SMBD 
New financial services and data processing Any measure with respect to pension funds and labour capitalization. 
Note: CBTS:  Cross-border trade in services;  MFN:  Restric tion to MFN treatment;  NT: National treatment restriction;  
SMBD:  Senior management and Bo ard of directors restriction. 
Source : Annex VI to the Costa Rica-Panama FTT.  WT/REG264/1 
 Page 43 
 
 
  2. Panama 
138. Under this Treaty, Panama considerably exte nds its GATS commitments, particularly with 
regard to the number of sectors subject to liber alization commitments;  while it has commitments 
under the GATS in all 11 sector groups in the SSC, these cover less than half of the 160-odd subsectors comprising the List.   
139. The GATS horizontal limitation restricting forei gn ownership of real state within 10 km. from 
the coastal area is maintained;  all other GATS hor izontal limitations in mode 4 (e.g. 90% of the 
employees of any foreign investor must be Panama nian or must have resided in the country for 
ten years) are not listed horizontally but may have been maintained as sector-specific reservations.  
The Treaty includes a horizontal limitation whereby the control/authority upon any part of national 
territory is prohibited to forei gn governments or their entities, except in the case of Embassies. 
140. With regard to the Panama Canal, Panama maintains the right to give preference to 
Panamanians over foreigners in recruitment for pos ts within the Canal Authority.  Finally, an 
horizontal limitation requires that the majority of the capital (no specific percentage is provided) of 
private enterprises of public services be from Pana ma, subject to exceptions established by law. 
141. In business services, Panama fully liberalizes rese arch and development services, real estate 
services and a large number of other business service s subsectors.  Nationality requirements and local 
presence apply for a wide spectrum of professional services (under the GATS, mode 4 for professional services were generally unbound).  Also, engineering and architecture enterprises have to 
be established in Panama to operate, unless otherwi se agreed in another international agreement;  
under the GATS, a hiring of a national was required if  the foreigner was to work for more than one 
year.  In order to be able to practise, lawyers are to be Panamanians and have a licence granted by the 
Supreme Court of Justice.  Services incidental to mining, energy distribution and petroleum are 
subject to numerous restrictions , in particular nationality requir ements, local presence and exclusion 
clauses of foreign governments;  none of th ese are opened up under the GATS.  Other business 
services such as private security agencies, adver tisement and printing and publishing services are also 
subject to some type of nationality requirement, and Chief of Security and Sworn guards are to be of 
Panamanian nationality. 
142. In communication services, Panama's postal and telegraph activities are restricted to the 
government, but courier services, which is uncom mitted under the GATS, is fully liberalized.  
With respect to telecommunications, mobile phone operators are subject to concessions and their 
number limited, establishment in Panama is require d, and foreign governments are not allowed in the 
sector;  however, capital from the Costa Rican governme nt or their enterprises may be authorized if 
Costa Rica reciprocates by authorizing capital from Panama in its telecom services sector.  In audiovisual services, Panama only reserved th e right to maintain non-conforming measures with 
respect to radio and television broadcasting, e.g.  nationality and equity requirements, and licence 
requirements for speakers.  Under the GATS, in the whole communication sector only value-added 
telecom services were partially liberalized. 
143. With regard to distribution services, Panama re serves retail sales services to nationals, subject 
to some exceptions in particular for foreigners alre ady in the business prior to  entry into force of the 
regulation (1972) and for sales of own production;  this subsector is uncommitted under the GATS.  
Furthermore, the State reserves the operation of the electricity transmission services.  Other subsectors 
are fully liberalized, as generally also under the GATS. 
144. In education services, the only reservation with respect to Costa Rica is that history of 
Panama and civic education be taught by Pana manians;  under the GATS, this sector is also 
significantly liberalized.  Private health services are fu lly liberalized;  that also applied in the case of WT/REG264/1 
Page 44  
 
  the GATS for hospital services.  In tourism services, the coverage is extended to cover all subsectors, 
while in the GATS commitments are limited to hotel s and certain travel agencies and tour operator 
services.  Requirements applying to travel agencies  are those applying to retail sales, thus normally 
requiring that the service supplier be Panamanian.  In recreational services, the entire sector is liberalized under the Treaty – with the exception of  games of luck and chance, which may only be 
operated by the State (Annex III), and artistic activiti es, for which there is a requirement that every 
time a Costa Rican band is hired, Panamanian music artists must be hired on the same conditions, and 
a minimum wage for nationals is also foreseen.  Th e GATS coverage is limited to partly liberalizing 
mode two commitments on entertainment services.  
145. Panama has undertaken commitments in all tran sport services but in only few subsectors of  
air transport, as foreseen in the Treaty's scope;  for the latter services, nationality and equity 
requirements apply.  Limitations apply on maritime  transport services, with nationality requirements 
for pilot trainees, preference given to Panamanians in  the crew of boats of Panamanian flag, and an 
establishment requirement for crew placement agencies.  In the GATS, the only commitment 
regarding transport services relates to "aircraft repa ir and maintenance" whic h is fully liberalized. 
Table IV.5 
Non conforming measures listed by Panama in Annex I  
Sector Obligations Mode Description 
Retail Sales NT I Nationality requirement.  Some exception apply, in 
particular for foreigners already in the business prior 
to entry into force of the regulation (1972) and for sales of own production. 
All sectors NT I Nationality require ments:  Control/authority upon any 
part of national territory prohibited to foreign governments or their entities, except for Embassies, in 
accordance with the Law.  Foreign natural or legal 
persons and fully or partially foreign-owned Panamanian legal entities may not acquire national or 
individually-owned land located less than 10 km. from 
the border. 
Public Utilities NT I Equity requireme nts (major part of capital from 
Panama) on private enterprises of public services. 
Issues related to the Panama Canal NT/SMBD I/CBTS Preference for nationals for positions in the Panama 
Canal Authority.  
Services of artistic activities – musicians NT CBTS Hiring of a foreign band requires hiring of a domestic 
band;  minimum remuneration applies.  Free presentation of a foreign band subject to prior 
approval. 
Travel agencies services NT I/CBTS Requirement s for retail sales have to be fulfilled, with 
the exception of services related to the promotion, 
organization, operation and sale of tourist packages to 
travel into Panama. 
Services of transmission of radio/TV programs NT/MFN/SMBD I/CBTS Concession needed ;  nationality or  equity (65%) 
requirements apply.  Paid TV and radio may have 
more than 50% of foreign capital.  Nationality 
requirements for each and every SMBD in cases of free-to-air radio and TV.  Participation of foreign 
governments or their entities prohibited in the capital 
of public TV and radio.  Licence required for speakers, with nationality requirements. Diffusion of 
advertisements from non-licensed speakers subject to 
reciprocity. 
Telecommunications services NT/LP I/CBTS Partic ipation of foreign governments or their entities 
prohibited in the capital of enterprises of 
telecommunication services. Telecom services directly supplied to users in Panama require an 
establishment in Panama.  Mobile telephone services 
subject to concessions;  limitations on their number apply (4).  Some of these restrictions may be removed 
on the basis of reciprocity, as specified in 
paragraph 141 above. 
Education services NT CBTS Nationality requirement for pr ofessors of history of 
Panama and civil education.  WT/REG264/1 
 Page 45 
 
 
  Sector Obligations Mode Description 
Electrical energy services NT/SMBD I Nationa lity requirement for Board of Directors.  
Enterprises of mixed capital cannot be controlled by foreign governments. 
Crude petroleum and natural gas NT/LP/PR I/CBTS Cont racts in this area require the contractor to be 
established in Panama.  Import taxes on inputs waived if no domestic good can be supplied.  Imports of goods and services authorized only if these are not available 
in Panama or do not comply with normal industry 
requirements. 
Operation of mines NT/PR I/CBTS Participa tion of foreign governments or their entities 
prohibited cannot be granted concessions for 
exploitation of mines.  Prior authorization required for these actors to own equipment used for mining 
exploitation.  Preference given to nationals in mining-
exploitation activities.  Limitations for hiring foreign senior managers, scientific and technical staff (25% of 
staff, 25% of wages). 
Exploration/exploitati on of non-metallic 
minerals services NT I Reserved to nationals and enterprises constituted in 
Panama. can have contracts for the supply of the 
service.  Participation of foreign governments or their 
entities prohibited in th e capital of any such 
enterprises. 
Private security agencies servi ces NT/SMBD I/CBTS Registry requirements.  Ownership subject to 
nationality requirements;  in case of enterprises, requirements are those applying for retail sales.  
Nationality requirements for Chief of Security and 
Sworn Guards.  Pre-authorization requirements for foreigners. 
Advertising services NT CBTS Nationality and licence requirement for dubbing of 
foreign-produced advertisements. 
Maritime transport services NT CBTS Na tionality requirements for Pilot Trainees. 
Maritime transport services NT/LP/PR I/CBTS Prefer ence to Panamanian nationals to crews of boats 
with Panamanian flag.  Foreign Placement agencies have to establish an agent of Panamanian nationality with general powers.   
Air transport services NT I Certification granted only on the basis of nationality or 
minimum equity requirements – at 51%, increased to 60% for domestic transportation. 
Air transport auxiliary services NT CBTS Nationality  requirement for technical crew;  foreigners 
only through prior authorization. 
Business services - Printing and 
publishing services NT/SMBD I Nationality requirements for senior management. 
Professional services – Lawyers NT I/CBTS Nationality requirement for lawyers. 
Professional services NT/MFN/LP CBTS Nationality  requirement (multiple  professions, e.g. 
economist, accountant, nurse, architect, etc.).  
Architectural and engineering firms require 
registration with the Engineers and Architects Association in order to operate;  this requires establishment in Panama and due accreditation to the 
responsible persons.  Exception may apply with 
respect to establishment in accordance with existing 
international agreements.  
Note: CBTS:  Cross-border trade in services ;  Investment;  LP:  Local presence requirements;  MFN: Restriction to MFN treatment ;  
NT:  National treatment restriction;  PR:  Performance requireme nts;  SMBD:  Restrictions a ffecting senior management and 
board of directors. 
Source: Annex I to the FTT between Costa Rica and Panama. 
 
146. Table IV.6 contains the non-conforming measur es listed by Panama on which it has reserved 
the right to adopt or maintain existing or future measures as listed in its Annex II.  These reservations, 
which go against the basis principles of the Treaty, ha ve been taken with respect to issues related to 
native population and minorities, social services,  State-enterprises and/or government entities, 
construction services, domestic road transport services and fisheries. WT/REG264/1 
Page 46  
 
  Table IV.6 
Non conforming measures listed by Panama in Annex II 
Sector   Obligations Mode Description 
Issues related to native 
populations NT/MFN/LP/ 
PR/SMBD I/CBTS Any measure in relation to rights or preferences granted to native 
populations. 
Social services NT/MFN/LP/ 
PR/SMBD I/CBTS Any measure in relation to as re tirement, services related to income 
security or insurance, social security , social welfare, public education and 
training, water supply, health and childcare.  
Minority related issues NT/MFN/LP/ 
PR/SMBD I/CBTS Any measure in relation to the ri ghts or preferences granted to minorities 
with social or economical disadvantages. 
Issues related to the 
Panama Canal NT/MFN/LP/ 
PR/SMBD I/CBTS Any measure related to use, management, administration, operation, 
maintenance, conservation, moderniza tion, exploitation, administration, 
development and ownership of the Panama Canal. 
Issues related to State 
enterprises/governmental 
entity NT/MFN/LP/ 
PR/SMBD I/CBTS Any measure (a) limiting the supply of  services, ownership of interests or 
goods, and technical and financial capac ity and experience when selling or 
disposing shareholding interests or goods;  (b) controlling the foreign 
partnership in such enterprises;  an d (c) nationality requirements of SMBD 
in the case of the enterprise's sale  or any other type of disposal. 
Construction services NT/LP CBTS Any measure related to provision of construction services by foreign 
natural, juridical persons or organi zations, in the sense of residency 
requirements, local presence or financial guarantees. 
Domestic road transport 
services NT/MFN/LP/ 
PR/SMBD I/CBTS Any measure in relation to the transport of passengers, rental of 
commercial vehicles with driver, bus station services.  Domestic freight 
transportation services is reserved  to Panamanian transporters.  
Fisheries NT/MFN I Measures relating to investme nt, ownership, control, operation of vessels 
engaged in fishing and related activ ities in Panamanian jurisdictional 
waters. 
Note: CBTS:  Cross-border trade in services;  I: Investment;  LP:  Local presence requi rements;  MFN: Restriction to MFN treatm ent;  
NT: National treatment restriction;  PR: Performance requirements;   SMBD: Restrictions affecti ng senior management and board 
of directors. 
 
Source: Annex II to the FTT between Costa Rica and Panama. 
 
147. In accordance with Annex III that allows Partie s to reserve certain economic activities to the 
State, services related to postal and telegraph, gambling and betting and the distribution of electrical 
energy have been reserved by Panama. 
148. Table IV.7 below provides the summary of non-conforming measures with respect to 
financial services listed in annex VI to the FTA.  Panama has partial commitments in the financial 
sector under the GATS, covering both insurance (life,  non-life and reinsurance) and banking and other 
financial services (deposits, lending, leasing, paymen ts and money transmission, guarantees, trading, 
participation in securities and money broking), with  mode 4 unbound for brokers and stock brokers.  
In the GATS, insurance-related services are normally unbound on modes 1, 2 and 4 and fully 
liberalized on mode 3, while for baking modes 1, 2 and 3 are fully liberalized and mode 4 is unbound. 
149. As in the case of Costa Rica, pension funds a nd the cross-border trade with respect to all 
financial services except the provision and transfer of  financial information and advisory and other 
auxiliary financial services remain de facto outside  the Treaty's scope given its inclusion in section B 
of Annex VI.  Liberalization in the bank sector is s ubject to the requirement that two general agents be 
designated, of which one is to be a national of Panama, and nationality requirements for senior 
management at two State banks.  Insurance companies from Costa Rica are not allowed to cover 
property and persons in Panama's territory.  As for reinsurance, the same requirements as those of the 
bank sector apply.  WT/REG264/1 
 Page 47 
 
 
  Table IV.7 
Financial services: Non-conforming meas ures listed by Panama in Annex VI 
Sector/Subsector Obligations Descri ption/Reduction of Restriction 
Section A  
Banks  NT Foreign banks have to designate at least two agents with general powers
and resident in Panama, of which one has to be national of Panama. 
Banks  SMBD Nationality requirement fo r senior positions of the "Caja de Ahorros" 
(Saving Bank). 
Banks  SMBD Nationality requirement for senior pos itions of the "Banco Nacional de 
Panama". 
Insurance companies, Administrative centre of insurance 
companies, Insurance brokers CBTS/NT/MFN All Panamanian-
based goods and persons insurance have to be 
contracted with insurance companies authorized in Panama;  exceptions 
may be granted.  Registration re quirements.  Licence required for 
insurance broker;  reserved to Pa namanians resident in Panama or 
foreigners allowed in the retail tr ade business.  Licence required for 
insurance broker enterprises;  its legal representative and stockholders 
have to have a insurance broker license (except in case of heritage). 
Only those persons with an insura nce broker license may constitute a 
company supplying these services. 
Reinsurance entities, Managers of  
reinsurance, Reinsurance brokers NT Authorized enterprises have to desi gnate at least two agents with general 
powers and resident in Panama, of which one has to be national of 
Panama. 
Bank and insurance CBTS Only those enterprises regi stered to operate in Panama with recognized 
as economically solvent by a government body are allowed to provide 
secured bonds or guarantees for government procurement. 
Financial services – Senior 
managers, stockbrokers, analysts  NT Licence required, granted on the ba sis of residency in Panama and a 
police statement.  
Section B  
Pension funds Right of establishment 
CBTS/NT/MFN/SMBD New financial services 
and data processing Any measure with respect to pension funds. 
Financial services CBTS/NT Any measure relating to the cross- border trade in financial services, 
except for the provision and transfer of financial inform ation, financial 
data processing and related software , and advisory and other auxiliary 
financial services (classified as 7.B(l) and (k), respectively, in 
MTN.GNS/W/120).   
Note: CBTS:  Cross-border trade in services;  MFN:  Restric tion to MFN treatment;  NT: National treatment restriction;  
SMBD:  Senior management and Bo ard of directors restriction. 
Source : Annex VI to the Costa Rica-Panama FTT. 
E. REGULATORY PROVISIONS ON TRADE IN SERVICES  
1. Domestic regulation 
150. With a view to ensuring that measures relating to qualification requirements and procedures, 
technical standards, and licensing requirements do not  constitute unnecessary barriers to trade, a best 
endeavour clause provides that each Party should en sure that such measur es:  (a) are based on 
objective and transparent criteria, such as competence  and the ability to supply the service;  (b) are not 
more burdensome than necessary to ensure the quality of the service;  and (c) are not in themselves a 
restriction on the cross-border supply of a service (Article 11.07). 
2. Recognition 
151. Annex 11.13 establish the rules for recognition of higher education qualifications.  This 
Annex makes clear that, in cases where a Party gran ts recognition to titles obtained in another third 
country, the Treaty does not oblige the Party to exte nd such recognition to titles obtained in the other 
Party.  In such cases, however, opportunity shall be given for the latter to pursue discussions within 
that aim.  the annex also provides the basi s under which recognition is to be granted. WT/REG264/1 
Page 48  
 
  F. S
ECTOR SPECIFIC PROVISIONS ON TRADE IN SERVICES  
1. Financial services 
152. The provisions relating to trade in financial servi ces are set out in Chapter 12.  According to 
the definitions contained in Article 12.01, "financial  service" means any service of a financial nature, 
including banking, insurance, reinsurance and an y service related or auxiliary to a service of a 
financial nature.  The remaining definitions of Ch apter 12 replicate those of Chapters 10 and 11, 
except that, for this Chapter, a lo an granted by a services' provider other than a loan to a financial 
institution is considered as an "investment". 
153. Also in the case of financial services liberaliza tion is done on a "negative list" approach.  
Chapter 12 covers the four modes of supply define d in the GATS, although liberalization differs by 
mode.  Thus, in Article 12.06, each Party guarant ees national treatment for investors of the other 
Party, and its investments (mode 3).  As regards trade in services, national treatment is restricted to those services for which authorization has been gran ted, which is only guaranteed (Article 12.05) for 
the consumption of a service in the territory of one Party by a consumer of the other Party (mode 2).  
Even so, the Parties agree not to increase the degree of non-conformity of their measures relating to 
cross-border trade in services, except with rega rd to the measures provided for in section B of 
Annex VI of each Party.  Most-favoured-nation treatment  (Article 12.07) is in fact granted in respect 
of both investments and trade.  In Article 12. 04, the Parties likewise guarantee the right of 
establishment (mode 3) under conditions no less favourable  than those granted to their own investors. 
154. Each Party shall permit financial institutions of  the other Party to provide any new financial 
service that they permit their own institutions to  provide, in accordance with most-favoured-nation 
treatment and national treatment  principles (Article 12.13).
41  Moreover, any type of restriction on 
grounds of nationality is prohibited in respect of the senior management and governing bodies or 
boards of directors of financia l institutions (Article 12.14). 
155. The Parties reserve the right to maintain exis ting measures that are not in conformity with 
Articles 12.04, 12.05, 12.06, 12.07, 12.13 and 12.14, provided that they are included in section A of 
Annex VI, and to adopt or maintain measures not in conformity with those articles, in accordance 
with the provisions of section B of  the same Annex.  A summary of these reservations for both Parties 
has been provided above in the section relating to the liberalization commitments.  Finally, section C 
of Annex would contain commitments to liberali ze reservations undertaken;  these commitments have 
however not been undertaken by Costa Rica or Panama. 
156. In Article 12.09, the Parties reserve the right  to adopt or maintain prudential measures.  
Furthermore, pursuant to paragraph 3 of the Annex on Financial Services to the GATS, each Party is 
given the possibility of recognizing, where appropria te, the prudential measures of the other Party, 
when it has recognized the prudential measures of non- Parties (Article 12.08).  The provisions of this 
Chapter do not apply to the activities of monetary authorities, activities that form part of public 
retirement plans or statutory social security systems,  or other activities that have the Party's guarantee 
or use financial resources of the Party (Article 12.02). 
157. The provisions on transfers in the Chapter on investment apply mutatis mutandis  to the 
Chapter on financial services (Article 12.17).  Ot her provisions of that Chapter specify the 
transparency requirements which the Parties unde rtake to fulfil (Article 12.10), as well as the 
additional procedures regarding cons ultations and dispute settlement in  the financial services sector, 
                                                      
41 "New financial service" means a financial service not provided in the territory of a Party that is 
provided in the territory of the other Party and includes any new form of delivery of a financial service or sale of 
a financial product that is not sold in the territory of the first Party.  WT/REG264/1 
 Page 49 
 
 
  which partly modify the provisions of Chapter 20 (Articles 12.12 and 12.18).  Thus, where a Party 
suspends benefits in response to a measure affec ting the financial services sector in any way, it may 
suspend benefits only in that sector.  This Chapte r incorporates section B of Chapter 10 on disputes 
between an investor and a Party, in addition to other provisions specifically relating to financial 
investment disputes (Article 12.19). 
158. The denial of benefits under this Chapter is provided for in the same way as in Chapter 11, 
but does not extend to financial investments (Article 12.16). 
159. Lastly, a Committee on Financial Services is esta blished.  Its functions include overseeing the 
application of this Chapter and taking part in  dispute settlement procedures and facilitating the 
exchange of information (Article 12.11). 
V. GENERAL PROVISIONS OF THE TREATY 
1. Transparency 
160. Pursuant to Chapter 18, the Parties agree to  implement a number of measures to ensure 
transparency in the administration of the Treaty.  Such measures comprise, inter alia , the 
establishment of contact points, the exchange of in formation, and the provisi on of safeguards in terms 
of hearings, legality and due process respecting matters42 that may affect the operation of the Treaty, 
as well as the procedures to be followed for the adoption of measures of general application and 
review and appeal by the Parties of administrative decisions relating to the Treaty. 
2. Current payments and capital movements 
161. Article 10.10 and 12.17 provide for the transfer of capitals related to investment from the 
other Party shall be made without restrictions and delays.  It provides the possibility, however, for  
restrictive measures on capital movements to be introduced in case of balance-of-payments (BOP) 
difficulties faced by any of the Parties (Article 21.04). 
3. Exceptions 
162. The exceptions applicable to matters concerni ng trade in goods and trade in services are set 
forth in Chapter 21.  Article XX of the GATT 1994 (Gen eral Exceptions) is incorporated in the Treaty 
for the purposes of trade in goods43, and Article XIV, subparagraphs (a), (b) and (c), of the GATS 
form part of the Treaty for the purposes of trade in services.44 
163. Article 21.03 specifies the exceptions on nationa l security grounds, which are derived from 
the security exceptions contained in Article XXI of the GATT 1994.  The exceptions relating to BOP difficulties are set forth in Article 21.04.  Measu res applied under the latter exception shall avoid 
unnecessary damage to the commercial economic or fina ncial interests of the other Party;  not be 
more burdensome than necessary;  be temporary and be  phased out gradually;  be consistent with the 
Articles of Agreement of the International Monetary Fund (IMF);  and be applied on a 
most-favoured-nation or national treatment basis, whichever may be more favourable.  A Party may 
maintain a measure that gives priority to its  own services essential to its economic programme, 
                                                     
 
42 Laws, regulations, procedures and administrative rulings of general application. 
43 Part Two (Trade in Goods), Pa rt Three (Technical Barriers to Trade), and Chapters 15 (Competition 
Policy, Monopolies and State Enterprises)  and 16 (Government Procurement), to the extent that they affect trade 
in goods. 
44 Chapters 10-14 (Investm ent, Cross-Border Trade in Servi ces, Telecommunications, and Temporary 
Entry of Business Persons, respectively), Parts Two and Thre e, and Chapters 15 and 16, to the extent that they 
affect trade in services. WT/REG264/1 
Page 50  
 
  provided that the measure is not being applied for protectionist purposes.  Restrictions on transfers 
must be consistent with Article VIII(3) of the IM F Articles of Agreement where they are imposed on 
payments for international current transactions, cons istent with Article VI of the IMF Articles of 
Agreement and apply only in conjunction with measures imposed on international current 
transactions, where they are imposed on internationa l capital transactions, and may not take the form 
of tariff surcharges, quotas, licences or similar measures. 
164. The exception concerning disclosure of informa tion (Article 21.05) reite rates that it is not 
mandatory to furnish or give access to informa tion, the disclosure of which might run counter, 
inter alia , to the public interest, people's private liv es, financial matters, and the bank accounts of 
individual clients or financial institutions. 
165. Lastly, Article 21.06 stipulates that nothing in the Treaty shall apply to taxation measures or 
affect the rights and obligations of any of the Parties under any tax convention.  In the event of inconsistency between any such c onvention and the Treaty, the convention shall prevail to the extent 
of the inconsistency.  However, the national treat ment provisions shall apply to taxation measures to 
the same extent as does Article III of the GATT 1994;   taxation measures are also subject to the 
export tax provisions. 
4. Accession 
166. The Treaty does not contain a provision relating to accession from other countries. 
5. Institutional framework 
167. In addition to the Articles establishing bodi es concerned with the various spheres of 
implementation, the institutional framework is  laid down in Chapter 19 of the Treaty, 
which comprises two sections.  The first provid es for the establishment of the Administrative 
Commission, Sub-Commission and Secretariat;  the second covers matters rela ting to the committees, 
sub-committees and groups of experts. 
168. The functions of the Administrative Commission,  established at ministerial level, encompass 
monitoring and evaluating the Treaty's implementation;  resolving disputes;  and supervising the 
work of committees.  It is empowered to establish ad hoc or standing committees and groups of 
experts, and to modify concessions relating to  goods, services, and government procurement.  
All of the Commission's decisions must be adopted by consensus (Article 19.01).  The Administrative 
Sub-Commission, established under Article 19.02, is responsible for reviewing the technical dossiers 
necessary for decision-making;  following up on the decisions of the Commission, which lays 
down the procedures of the Sub-Commission;  and fo r helping to oversee the work of the committees, 
sub-committees and groups of experts.  Article 19. 03 provides, moreover, that the Commission shall 
establish a Secretariat in charge of providing s upport for the Commission and the Sub-Commission;  
supporting committees, sub-committees a nd expert groups in their work;  assisting arbitral panels in 
the settlement of disputes;  and dealing with such  notifications and communications as provided for in 
Chapter 18.
45 
169. The committees, sub-committees and groups of experts are governed by section B of the 
Chapter.  Each committee has a sphere of competence involving inter alia , monitoring 
implementation of the Treaty, assisting in the decision-making process, and recommending to the 
                                                      
45 The Administrative Commission of the Free Trade Treaty between Central America and Panama 
provided in Decision No. 2 of 7 October 2010 that for Costa Rica, the Secretariat would be composed of the 
Directorate-General of Foreign Trade of the Ministry of Foreign Trade, and for Panama, of the National 
Directorate for the Administration of Trade Treaties and Trade Protection.  WT/REG264/1 
 Page 51 
 
 
  Commission proposals for modifications and review  of measures which, in its view, may be 
inconsistent with the Treaty (Article 19.05).  In addition, the committees may establish their own 
procedures and create permanent sub-committees, wh ich have the same functions as the committees 
with respect to the matters referred to them.  At  the first meeting of the Administrative Commission 
on 7 October 2010, the Committee on Goods was instru cted to establish the Sub-Committee on Origin 
and the Committee on Investment and Cross-Border Trade in Services to establish the Sub-Committee 
on Freight Transport, which is due to take pl ace at the first meeting of these Committees.  
The Committees have not yet convened.  Lastly, not only the Commission but also the committees 
and the sub-committees may establish groups of  experts to handle technical matters. 
6. Dispute settlement 
170. Procedures governing the settlement of disputes are laid down in Chapter 20.  They are 
applicable to the settlement of any dispute regard ing application or interpretation of the Treaty, 
wherever a Party considers that an actual or proposed  measure of the other Part y might be inconsistent 
with obligations under the Treaty or, in the case of trade in goods, wherever te chnical barriers to trade 
or cross-border trade in services may cause nullification or impairment of benefits expected (without 
infringement).  Any dispute arising under the Treaty or the WTO Agreement or conventions 
negotiated in accordance with the latter may be h eard by either forum at the discretion of the 
complaining Party, although once an arbitral pane l has been established, th e forum selected excludes 
recourse to any other. 
171. The Treaty provides that the Parties are to cons ult prior to the establishment of an arbitral 
panel (AP), for which they may call on the committees and sub-committees, and, failing agreement, 
on the Commission, in accordance with  the procedures set forth in Articles 20.06 and 20.07, as well as 
Article 19.04(4-5).  Thirty days after the Commission  has convened, or if no such meeting has taken 
place, the Party that requested the meeting of the Commission may request the establishment of an AP 
(Article 20.08), inter alia .  In the event that more than one Party requested the meeting and a single 
Party requests the establishment of an AP, all Parti es must be duly informed and given the possibility 
of participating as complaining Parties.  Deta ils concerning the roster of panellists, their 
qualifications, and the composition and establishment of the AP are set out in Articles 20.09-20.11.  
A third party has the right to be heard by the AP and to submit written comments.46 
172. No later than 90 days following its establishment, the AP is required to issue its initial report, 
on which the disputing Parties may make comments.  Within the next 30 days, notification must be given of the final report, which the Parties are required to implement within a maximum period of 
six months following the notification.  The report co ntains a finding of consistency or inconsistency 
of the measure, in which latter case the measure must  not be implemented or must be revoked, and the 
level of nullification or impairment;  it may s uggest the recommendations considered necessary.  
If the Parties fail to notify the Commission of satisfact ory implementation of the final report, it is for 
the AP to determine whether the Party complained against has complied with the report.  If the AP 
finds that the Party complained ag ainst has not complied or the Parti es fail to reach agreement in the 
case of a measure causing nullification or impairment of benefits without infringement, the complaining Party may suspend benef its of equivalent effect to those which it has ceased to receive, 
in accordance with Article 20.18. 
                                                     
 
46 A Party entitled to participate as a complaining Party which decides to abstain from doing so may 
participate as a third Party, provided that it notifies its  intention within the relevant time period.  A Party that 
decides to participate neither as a complaining Party nor as a third Party foregoes its right to institute proceedings regarding the same matter, other than in the event of a significant change in economic 
circumstances. WT/REG264/1 
Page 52  
 
  173. Article 20.20 stipulates that a Party may not pr ovide for right of action in its legislation 
against the other Party, and Article 20.21 encourag es the Parties to promote alternative means for 
dispute settlement, in that it provides for the est ablishment, at the Commission's behest, of an 
Advisory Committee on Private Disputes to examine matters relating to the resolution of disputes 
among private parties. 
174. Article 20.19 of the Treaty stipulates that the Commission shall endeavour to agree on a 
non-binding interpretation, where a Party so requests,  on questions of interpretation in a judicial or 
administrative proceeding.  Failing consensus with in the Commission, any Party may interpret the 
situation according to its own views.  WT/REG264/1 
 Page 53 
 
 
  Outline of dis pute settlement procedures (Chapter 20 )
Consultations 
(Article 3.2-6) 
Within 30 days of 
the request for 
consultations 
(15 days in urgent 
cases) Request for a meeting of the 
Commission within 10 days of 
delivery of the request 
(Articles 20.07 and 19.04) 
Within 
10 days of 
the request 
for the establishment 
of an arbitral 
panel Request for the establishment 
of an arbitral panel (Article Within 30 days of 
the meeting of the 
Commission (15 
days in ur gent 
Establishment of the arbitral 
panel (Article 20.08-20.10)   Within 15 days of 
the panel request 
(15 days after the 
notification of other Parties, as 
appropriate)  Model Rules of Procedure for 
the arbitral panel 
(Article 20.12) 
Initial report ( Article 20.15)  Within 90 days of 
the establishment of 
the arbitral panel Information and technical 
advice (Article 20.14) 
Comments by the Parties 
(Article 20.15)  Within 14 days of 
the issue of the 
initial report 
Notification of the final report 
to the Parties 
(Article 20.16)  Within 30 days of 
the issue of the 
initial report  
Implementation of the report
(Article 20.17 )Within 6 months 
of notification of Determination by the arbitral 
panel as to whether the Party 
complained against has 
complied with the final re port Failure to 
comply  
Suspension of benefits 
(Article 20.18)  
Request for the establishment 
of an arbitral panel if the 
Party complained against 
considers that the level of 
suspension of benefits is 
excessive, or if the final report 
has not yet been implemented 
(Article 20.18) Communication by the Parties 
of implementation of the final 
report 
(Article 20.18) 
Report of the arbitral panel
(Article 20.18) Within 60 days of 
the establishment 
of the arbitral panel 
(30 days following 
the panel request if 
the panellists are 
the same) Request for consultations 
(Article 20.06) Notification of the other Party 
and other Parties to the 
Agreement, which may take 
part in the consultations  Within 10 days of 
disclosure of the 
request for 
consultations  
Notification of the other Party 
and other Parties having 
requested a meeting of the 
Commission, which may join 
in the request  
Presence of third Parties 
(Article 20.13)  
Publication of the report 
(Article 20.16) Within 15 days 
of notification 
of the Parties 
Within 15 days of 
expiry of the term 
specified in the 
final report 15 days 
following 
expiry of the 
term specified 
in the final 
report 
Once the benefits have 
been suspended 
 WT/REG264/1 
Page 54  
 
  7. Relationship with other agreements concluded by the Parties 
175. Article 5 of the Protocol provides that as of the Treaty's entry into force, the preferential 
Treaty of 1973 between Costa Rica and Panama ceased  to apply.  Transition measures have been 
foreseen;  they provide that the certificates of orig in would remain valid until the importation actually 
takes place, and that quotas granted in the contex t of these preferences would remain valid up to 
eight days prior to the Treaty's entry into force. 
176. In 1963 Costa Rica signed the General Treaty which established the CACM;  it has also 
signed the two legal instruments that updated the Ge neral Treaty, namely the Tegucigalpa Protocol – 
which created the Central American Integration System, aimed at achieving effective Central American integration – and the Guatemala Protocol  – defining the objectives, principles and measures 
for achieving a Central American Economic Union.
47  As of July 2009, intra-trade was free with 
respect to all products except those included in Annex A to the General Treaty48;  the common 
external tariff – which includes 6392 tariff lines ex cluding vehicles and provides for tariff levels at 
rates of 0, 5, 10, and 15% – was harmonized fo r 96% of the items with exceptions applying to 
products such as medicines, metals, petrol eum, agricultural products and others.49 
177. The Treaty on Investment and Trade in Serv ices between the Republics of Costa Rica, 
El Salvador, Guatemala, Honduras and Nicaragua  was signed on 24 March 2002, and entered into 
force on 6 January 2006.  The objectives of the Treat y are to (a) establish a legal framework for the 
liberalization of trade in services and for investment s, consistent with the General Treaty, the GATS, 
and other relevant bilateral a nd multilateral instruments;  (b) encourage the expansion and 
diversification of trade in services and investment;  (c) facilitate the circulation of services;  
(d) promote, protect and increase substantially investments in each Party;  and (e) create efficient 
procedures for the Treaty's application, administration and for solving disputes.  The Treaty liberalized services through a negative list approach, a nd the Parties agreed to complete the lists of 
reservations following its signing;  however, at entr y into force, these had not yet been completed. 
178. Five years after, on 22 February 2007, a Prot ocol amending the Treaty was signed by the 
same parties.  The Protocol was drafted in order to  adapt the previously negotiated instrument to other 
related instruments concluded after the Treaty;  it al so includes the lists of exceptions and reservations 
of all Parties.  As of August 2010, the Protocol  was in force for Guatemala, El Salvador and 
Honduras.  In the case of Costa Rica, the Treaty and its  Protocol are currently before the Legislative 
Assembly for approval. 
179. As already indicated, Panama has signed bilatera l Protocols under this Treaty with the other 
signatories;  from November 2009, all of these lega l instruments were in force (see paragraph 20 
above). 
                                                     
 
47 Both instruments were also signed by Panama but to date that country has ratified and put into force 
only the Tegucigalpa Protocol. 
48 Sugar and unroasted coffee for all five countries, petroleum derivates between El Salvador and 
Honduras, ethylic alcohol between El Salvador with Honduras and with Costa Rica, distilled alcohol beverages 
between El Salvador and  Honduras, and roasted coffee between Costa Rica and the other countries. 
49 Figures extracted from the report of the Central American Economic Integration Secretariat on the 
Central American Customs Union, available online at  
http://www.sieca.org.gt/site/Vis orDocs.aspx?IDDOC=Cache/17990000003052/17990000003052.swf.  WT/REG264/1 
 Page 55 
 
 
  180. All RTAs signed by Costa Rica and Panama whic h are in force as of August 2010 are listed in 
table V.1 below. 
Table V.1 
Costa Rica and Panama:  Participation in other RTAs (n otified and non-notified in force), as of August 2010  
GATT/WTO Notification Partner / Agreement Date of entry  
into force Type of agreement 
Year WTO Provision 
COSTA  RICA 
DR-CAFTA  01.01.09 (CR) Goods & Services 2006 GATT Art. XXIV & GATS Art. V 
Canada 07.11.02 Goods 2003 GATT Art. XXIV 
Chile 15.02.02 Goods & Services 2002 GATT Art. XXIV & GATS Art. V 
Mexico 01.01.95 Goods & Services 2006 GATT Art. XXIV & GATS Art. V 
CACM 04.06.61 Goods 1961 GATT Art. XXIV 
Dominican Republic 07.03.02 Goods & Services  Not notified 
CARICOM 15.11.05 Goods & Services  Not notified 
CACM 06.01.06 Investment & Services  Not notified 
PANAMA 
Singapore 24.07.06 Goods & Services 2007 GATT Art. XXIV & GATS Art. V 
El Salvador (Central America) 11.04.03 Goods & Services 2005 GATT Art. XXIV & GATS Art. V 
Chile 07.03.08 Goods & Services 2008 GATT Art. XXIV & GATS Art. V 
Honduras (Central America) 08.01.09 Goods & Se rvices 2009 GATT Art. XXIV & GATS Art. V 
Chinese Taipei 01.01.04 Goods & Services 2009 GATT Art. XXIV & GATS Art. V 
Colombia 18.01.95 Goods Not notified 
Dominican Republic 08.06.87 Goods Not notified 
Guatemala (Central America) 20.06. 09 Goods & Services Not notified 
Mexico 24.04.86 Goods Not notified 
Nicaragua (Central America) 21.11. 09 Goods & Services Not notified 
 
DR-CAFTA:  Dominican Republic-Central Amer ica-United States Free Trade Agreement. 
CACM:  Central American Common Market. 
CARICOM: Caribbean Community and Common Market. 
 
Source: WTO Secretariat.  
 
8. Government procurement50 
181. Government procurement aspects are addressed in Chapter 16;  it entered into force jointly 
with the rest of the Treaty.51  As stipulated in Article 16. 01, the Chapter covers government 
procurement of goods, public works and services,  subject to the Annexes to Chapters 11 
(Cross Border Trade) and 12 (Financial Services).  Excluded from the coverage are (a) procurement 
by entities listed in Annex to Article 16.0152;  (b) subsidies accorded by the Parties or 
State enterprises;  (c) government services or functions;  (d) procurement made by the Authority of 
the Panama Canal;  and, (e) in accordance with Annex 16.02, the following forms of 
                                                      
50 Neither Panama nor Costa Rica is party to th e WTO Agreement on Government Procurement, 
although Panama is in the process of acceding thereto. 
51 The Parties have agreed, in Article 3 of the Protocol, to waive the 18 months transition period 
foreseen in Article 16.15. 
52 These are, for Costa Rica,  the State enterprise of water supply and sewage and of electricity, and for 
Panama, the Authority of the Panama Canal and the State enterprise of water supply and sewage. Article 16.08 
provides for their potential dismantli ng, with the exception of the Panama Canal.  As at December 2010, no 
liberalization had taken place. WT/REG264/1 
Page 56  
 
  government procurement: that related to national security, that made by staff in the fulfilment of their 
enterprise's duties, that for which the entity or person financing provides conditions not compatible 
with the Chapter, and concessions.  A Party may de ny the benefits accruing under this Chapter to a 
service provider of the other Party, where it determ ines that the provider has no substantial business 
activity in the territory of the othe r Party and, in accordance with the la w of that other Party, is owned 
or controlled by persons of a non Party (Article 16.06). 
182. In Article 16.03, the Parties undertake to appl y measures relating to government procurement 
that are non-discriminatory and non-arbitrary and that provide for transparency and equal access among the Parties.  Each Party accords to goods, services and suppliers of the other Party national 
treatment for any government contracting procedure other than direct contracting (Article 16.04).  
The Parties agree to implement appeal procedures permitting review of administrative decisions 
affecting government procurement for suppliers of th e other Party (Article 16.07).  Neither Party may 
demand compensation from the other in cases where privatization occurs (Article 16.09). 
183. A Committee on Government Procurement is est ablished under Article 16.11.  Its functions 
include review and expansion of cont ent in this sphere.  This Chapte r takes precedence in the event of 
inconsistency with any other provision of th e Treaty and is not subject to Chapter 20 
(Dispute Settlement) (Articles 16.13 and 16.14). 
184. Other provisions cover the use of informati on technology (Article 16.10), and cooperation 
and technical assistance (Article 16.12). 
9. Intellectual property rights 
185. Intellectual property matters are governed by Ch apter 17 of the Treaty, in which the Parties 
confirm their rights and obligations under the Ag reement on Trade-Related Aspects of Intellectual 
Property Rights (TRIPS).  A Committee on Intellectua l Property is established under Article 17.05.  
Its main function is to review the implemen tation of rights and obligations under the TRIPS 
Agreement.  Article 17.06 clarifies that whenever disputes cannot be solved through consultations, the 
dispute settlement mechanism provided for in Chapter 20 ca be used. 
10. Competition policy 
186. Chapter 15 of the Treaty contains the provisi ons on competition policy and those relating to 
monopolies and State enterprises. 
187. As regards competition policy, the Parties inte nd to cooperate in establishing mechanisms to 
facilitate and promote the development of competiti on policies and ensure the application of rules 
governing free competition.  The Parties set themselves a period of two years in which to examine the 
possibility of elaborating on the content of Chapter 15.  At the First Meeting of the Treaty's 
Administrative Sub-Commission on 13 August 2010, the Parties agreed to decide on the proper time to discuss these matters more in depth. 
188. Under Article 15.03, the Parties may designate or  maintain monopolies or State enterprises;  
this provision further establishes that the Party d esignating a new monopoly is required to endeavour, 
if its legislation so permits, to introduce in the operation of the monopoly such conditions as will 
minimize any impairment of benefits, and to notify th e other Party of the designation.  Except in the 
case of procurement by government agencies of goods or services for non-commercial purposes, the Parties must ensure, within the limits of th eir respective legislation, that monopolies and 
State enterprises act in a manner consistent with th e Treaty, do not discriminate between investors and 
service providers and are not used to engage in anti-competitive practices.  WT/REG264/1 
 Page 57 
 
 
  ANNEX I 
 
 1. A comparison between preferential tariffs applied under the scheduled elimination 
programmes of each Party and the MF N applied duties, by total, agricultural (WTO definition) and 
non-agricultural products, is shown in Tables AI.1 (Costa Rica) and AI.2 (Panama).  Applied MFN 
duty rates in 2009 serve as a comparison. 
2. In 2009, Costa Rica had a variable tariff structure and 116 tariff lines – all non-agricultural – 
were duty free on an MFN basis.  Its (unweighted) average MFN rate was 6.9% on all goods, with the average tariff for agricultural goods being almost three times that for non agricultural products.  
On entry into force of the Treaty, Panama's expor ters enjoyed a relative margin of preference of 
59.3% on agricultural products vis-à-vis  the prevailing average MFN tariff in 2009, and a relative 
margin of preference of 83.9% on non-agricultura l goods;  these figures will increase to respectively 
85% and 98.2% in 2025.  At entry into force, the share of duty-free lines increased to 77.5% and 
92.8% for agricultural and non-agricultural products, resp ectively.  By the end of the transition period 
in 2025, the average tariff faced by Panama's expor ters on all products is set  to be 0.4%, with the 
share of duty-free tariff lines increasing to 93.2 % and 99.1% for agricultu ral and non-agricultural 
products, respectively.  By 2025, the average app lied tariff on dutiable rates will be 20.7%, with an 
average rate of 31.6% for agricultural pr oducts and 5.9 to non-agricultural products. 
Table AI.1 
Costa Rica: Indicators of MFN tariff rates and preferential rates for imports from Panama 
ALL PRODUCTS Agricultural products a Non-agricultural products 
Average applied 
tariff Average applied 
tariff Average applied 
tariff Origin of 
goods Year 
Overall 
(%) On 
dutiable 
(%) Share of 
duty-free 
tariff lines 
(%) Overall 
(%) On 
dutiable 
(%) Share of 
duty-free 
tariff lines 
(%) Overall 
(%) On 
dutiable 
(%) Share of 
duty-free 
tariff lines 
(%) 
MFN 2009 6.9 7.0 1.8 14.0 14.0 0.0 5.6 5.7 2.0 
Panama 2009 1.6 16.6 90.6 5.7 25.3 77.5 0.9 11.9 92.8 
 2010 1.4 15.0 90.6 5.2 23.3 77.5 0.8 10.5 92.8 
 2011 1.3 13.6 90.7 4.8 22.1 78.2 0.7 9.2 92.8 
 2012 1.1 12.1 90.7 4.4 20.2 78.2 0.6 7.8 92.8 
 2013 1.0 12.2 92.0 4.0 23.6 83.2 0.5 7.1 93.5 
 2014 0.9 10.8 92.0 3.7 22.0 83.2 0.4 5.8 93.5 
 2015 0.8 9.4 92.0 3.4 20.4 83.2 0.3 4.5 93.5 
 2016 0.6 8.3 92.2 3.2 19.4 83.7 0.2 3.3 93.7 
 2017 0.5 6.9 92.2 2.9 17.8 83.7 0.1 2.1 93.7 
 2018 0.4 18.1 97.6 2.6 24.1 89.1 0.1 5.6 99.1 
 2019 0.4 18.0 97.7 2.5 23.7 89.5 0.1 5.9 99.1 
 2020 0.4 19.4 98.0 2.3 27.0 91.3 0.1 5.9 99.1 
 2021 0.4 18.8 98.0 2.3 26.1 91.3 0.1 5.9 99.1 
 2022 0.4 19.2 98.1 2.2 27.5 92.0 0.1 5.9 99.1 
 2023 0.4 19.8 98.2 2.1 29.0 92.6 0.1 5.9 99.1 
 2024 0.4 20.0 98.2 2.1 29.8 92.8 0.1 5.9 99.1 
 2025 0.4 20.7 98.3 2.1 31.6 93.2 0.1 5.9 99.1 
 a WTO Definition. 
 
Source : WTO Secretariat estimates based on data provided by Costa Rica. 
 
3. In 2009, Panama had a variable MFN tariff structure.  Its (unweighted) average MFN tariff 
(2009) was 8.3%, with the average for agricultural products being twice that of non-agricultural – 
i.e. 14.6% and 7.1%, respectively.  On entry into force of the Treaty, Costa Rica's exporters enjoyed a relative margin of preference of 62.4% on agricultural products vis-à-vis  the prevailing average 
MFN tariff in 2009, and a relative margin of preference of 80.3% on non-agricultural goods.  
The share of duty-free lines at the MFN level increased to 78.5% for agricultural products and 88.3% 
for non agricultural products (from respectively 22.4%  and 32.8%).  By the end of the transition 
period in 2026, the corresponding figures will be 94.9%  and 98%.  At that date, the average tariff WT/REG264/1 
Page 58  
 
  faced by Costa Rica's exporters on all products is set to  be 0.6%;  on its turn, the average applied tariff 
on those lines which remain dutiable will be 24.2%, and 49.1% for agricultural products. 
Table AI.2 
Panama:  Indicators of MFN ta riff rates and preferential rate s for imports from Costa Rica 
ALL PRODUCTS Agricultural products a Non-agricultural products 
Average applied 
tariff Average applied 
tariff Average applied 
tariff Origin of 
goods Year 
Overall 
(%) On 
dutiable 
(%) Share of 
duty-free 
tariff 
lines (%) Overall 
(%) On 
dutiable 
(%) Share of 
duty-free 
tariff lines 
(%) Overall 
(%) On 
dutiable 
(%) Share of 
duty-free 
tariff lines 
(%) 
MFN 2009 8.3 12.1 31.3 14.6 18.9 22.4 7.1 10.6 32.8 
Costa Rica 2009 2.0 15.2 86.8 5.5 25.8 78.5 1.4 11.6 88.3 
 2010 1.8 13.9 86.8 5.1 23.9 78.5 1.2 10.4 88.3 
 2011 1.7 12.6 86.9 4.7 22.5 79.1 1.1 9.3 88.3 
 2012 1.5 11.2 86.9 4.3 20.7 79.1 0.9 8.1 88.3 
 2013 1.3 11.4 88.6 3.9 25.1 84.3 0.8 7.7 89.4 
 2014 1.2 10.3 88.6 3.7 23.6 84.3 0.7 6.6 89.4 
 2015 1.0 9.1 88.6 3.5 22.1 84.3 0.6 5.5 89.4 
 2016 0.9 8.2 88.9 3.3 21.4 84.8 0.5 4.6 89.6 
 2017 0.8 7.1 88.9 3.0 19.9 84.8 0.4 3.5 89.6 
 2018 0.7 21.2 96.9 2.8 32.9 91.5 0.3 12.3 97.9 
 2019 0.6 21.4 97.0 2.7 33.2 91.8 0.3 12.5 98.0 
 2020 0.6 22.4 97.2 2.6 37.8 93.0 0.3 12.5 98.0 
 2021 0.6 23.2 97.3 2.6 42.3 93.9 0.3 12.5 98.0 
 2022 0.6 23.1 97.3 2.6 41.9 93.9 0.3 12.5 98.0 
 2023 0.6 23.3 97.4 2.5 43.5 94.2 0.3 12.5 98.0 
 2024 0.6 23.6 97.4 2.5 45.0 94.4 0.3 12.5 98.0 
 2025 0.6 24.0 97.5 2.5 47.9 94.7 0.3 12.5 98.0 
 2026 0.6 24.2 97.5 2.5 49.1 94.9 0.3 12.5 98.0 
 
a WTO Definition. 
 
Source : WTO Secretariat estimates based on data provided by Panama and the WTO-IDB. 
 
4. Table AI.3 shows the market access conditions in Costa Rica for Panama's top 25 exports, 
covering 62 tariff lines, which in 2006-2008 accounted  for three fourths of its global exports.  
The vast majority of the top export products will be nefit from full liberalization at entry into force – 
i.e. 55 tariff lines and 74.5% of Panama's globa l exports;  none of these lines were duty-free on a 
MFN basis.  Two other products – fresh or ch illed boneless bovine meat and paper cartons – 
accounting each for 1 tariff line and around 1% of glob al exports, will be fully liberalized in 2011 and 
2018.  Finally, at the end of the transition period in 2025, sugar cane and not decaffeinated coffee will 
remain subject to duties at 46% and 10% or 15%  respectively;  these two products accounted for 
five tariff lines and 3% of Panama's global exports.  The margin of preference granted to Panama by 
Costa Rica under the Treaty ranges from 1% to 15%. 
Table AI.3 – Costa Rica:  Market  access opportunities under the Trea ty for Panama's top 25 exports 
Access Conditions to Costa Rica's import markets  Panama's top export products in 2006-2008  MFN (2009)  Duty-free in  
HS number and description of the product  Share in 
global  
exports MFN 
average  No. of 
dutiable 
tariff 
lines 2009 2011 2018 
Remain 
Dutiable  
080719 Other 10.0 15.0 1 1    
080300 Bananas, including plantains, fresh or dried. 9.8 15.0 4 4    
030410 Fresh or chilled 7.8 15.0 1 1    
080711 Watermelons 7.7 15.0 1 1    
030342 Yellowfin tunas (Thunnus albacares) 7.4 1.0 1 1    
030219 Other 5.3 10.0 1 1    
030613 Shrimps and prawns 4.5 10.0 3 3    
080430 Pineapples 3.5 15.0 1 1    
030749 Other 2.6 5.5 2 2    
030420 Frozen fillets 2.2 15.0 8 8    
070990 Other 2.1 15.0 5 5    
720410 Waste and scrap of cast iron 1.8 1.0 1 1     WT/REG264/1 
 Page 59 
 
 
  Access Conditions to Costa Rica's import markets  Panama's top export products in 2006-2008  MFN (2009)  Duty-free in  
HS number and description of the product  Share in 
global  
exports MFN 
average  No. of 
dutiable 
tariff 
lines 2009 2011 2018 
Remain 
Dutiable  
170111 Cane sugar 1.6 46.0 1    1 
010210 Pure-bred breeding animals 1.4 1.0 1 1    
030269 Other 1.4 15.0 8 8    
090111 Not decaffeinated 1.4 13.8 4    4 
020130 Boneless 1.2 15.0 1  1   
300490 Other 1.2 3.5 6 6    
071490 Other 1.1 15.0 5 5    
760200 Aluminium waste and scrap. 1.1 1.0 1 1    
481910 Cartons, boxes and cases, of corrugated paper or 
paperboard 1.1 10.0 1   1  
711291 Of gold, including metal clad with gold but 
excluding sweepings containing other precious metals 1.0 1.0 1 1    
030379 Other 1.0 10.0 1 1    
230120 Flours, meals and pellets, of fish or of crustaceans, 
molluscs or other aquatic invertebrates 0.8 3.5 2 2    
030232 Yellowfin tunas (Thunnus albacares) 0.8 1.0 1 1    
 Total of above  79.8  62 55 1 1 5 
 
Source:  WTO estimates based on data provided by th e Costa Rica and UNSD, Comtrade database. 
 
5. Table AI.4 shows the market access conditions in Panama for Costa Rica's top 25 exports, 
covering 91 tariff lines, which in 2006-2008 accounted for 63% of its global exports.  Out of these 
91 lines, 29 were already duty-free prior to the entry into force of the Treaty.  None of these products 
will be subject to a longer transition period than  10 years;  however, two products, accounting for 
4.1% of global exports – not decaffeinated coffe e and crude palm oil – will remain subject to 
MFN duties at rates of 30% and 20%, respectively.  At entry into force, 56 tariff lines, out of the 
62 dutiable, will be fully liberalized:  in total, in  2009, 57.4% of Costa Rica's global exports could 
enter Panama on a duty-free basis.  The remain ing two products, accounting for 4 tariff lines and 
1.5% of global exports, will become duty-free in  2018.  The margin of preference granted to 
Costa Rica by Panama under the Treaty ranges from 0 to 15%. 
Table AI.4 – Panama:  Market access opportunities  under the Treaty for Costa Rica's top 25 exports 
Access Conditions to Panama's import markets  
Costa Rica's top export products in 2006-2008  MFN (2009)  Duty-free 
in 
No. of lines 
HS number and description of the product  Share in 
global 
exports MFN 
average  duty-
free dutiable 
2009 
2018 
Remain 
Dutiable  
847330 Parts and accessories of the machines of 
heading 84.71 10.4 3.0  1 1   
080300 Bananas, including plantains, fresh or 
dried. 7.9 13.8  4 4   
854221 Digital 6.5 10.0  1 1   
080430 Pineapples 5.8 15.0  2 2   
901839 Other 5.4 10.0  1 1   
090111 Not decaffeinated 3.2 30.0  1   1 
300490 Other 2.6 0.0 5     
854229 Other 2.5 10.0  1 1   
854260 Hybrid integrated circuits 2.3 10.0  1 1   
854890 Other 2.3 5.0  1 1   
210690 Other 1.7 6.6 9 13 13   
901890 Other instruments and appliances 1.7 6.3 2 2 2   
902190 Other 1.2 0.0 1     
854449 Other 1.1 13.3  3 3   
401110 Of a kind used on motor cars (including 
station wagons and racing cars) 1.1 10.0  1 1   
151110 Crude oil 0.9 20.0  1   1 
080719 Other 0.9 15.0  1 1   WT/REG264/1 
Page 60  
 
  Access Conditions to Panama's import markets  
Costa Rica's top export products in 2006-2008  MFN (2009)  Duty-free 
in 
No. of lines 
HS number and description of the product  Share in 
global 
exports MFN 
average  duty-
free dutiable 
2009 
2018 
Remain 
Dutiable  
610821 Of cotton 0.8 15.0  2  2  
401693 Gaskets, washers and other seals 0.7 0.0 1     
481840 Sanitary towels and tampons, napkins and 
napkin liners for babies and similar 
sanitary articles 0.7 11.0  5 5   
620711 Of cotton 0.7 15.0  2  2  
060491 Fresh 0.7 10.0  2 2   
271019 Other 0.6 9.6 4 8 8   
701090 Other 0.6 8.0 7 8 8   
200919 Other 0.6 15.0  1 1   
 Total of above  63.0  29 62 56 4 2 
 
Source : WTO estimates based on data provided by Pa nama, WTO-IDB and UNSD,  Comtrade database. 
  WT/REG264/1 
 Page 61 
 
 
  ANNEX II 
 
Tariff-Rate Quotas under the Treaty  
  
1. The various schemes for the application of pref erential tariff-rate quotas between the Parties, 
provided for upon the conclusion of the Protoc ol, are described in Table AIII.1 below. 
Table AII.1 
Tariff-rate quotas of Costa Rica and Panama for products originating in the other Party 
HS Code (description) Category In-quota rate Out-of-quota rate Quantity (annual) as of 1.1.2009 
Bovine meat  
0201.10.00; 0201.20.00; 0201.30.00; 
0202.10.00; 0202.20.00; 0202.30.00 B3 Duty-free As B3 500 metric tons, simple annual increase 
of 5%.  Duty-free on 1.1.2011. 
 
Pigmeat 
CR: 0203.11.00; 0203.12.00; 0203.19.00; 
0203.21.00; 0203.22.00; 0203.29.00; 
0210.11.00; 0210.19.00 
Pan: 0203.11.10; 0203.11.20; 0203.12.10; 
0203.12.90; 0203.19.10; 0203.19.20; 0203.19.90; 0203.21.10; 0203.21.20; 
0203.22.10; 0203.22.90; 0203.29.10; 
0203.29.20; 0203.29.90; 0210.11.11; 0210.11.19; 0210.11.90; 0210.19.10; 
0210.19.21; 0210.19.29; 0210.19.90  
 For CR only
, in addition for 0203.11.00; 
0203.12.00; 0203.19.00; 0203.21.00; 
0203.22.00; 0203.29.00; 0210.11.00; 0210.19.00 EXCL 
        
EXCL Duty-free 
        
15% 
 As EXCL (MFN)  
CR:
 MFN of 46% in 
2009 
 
Pan: MFN of 70% 
in 2009, except for 
3 tariff lines 
   
As EXCL (MFN) 170 metric tons, simple annual increase 
of 6%.  As of 1.1.2019, indefinite annual 
increase of 10.2 metric tons. 
 
 
     Additional quota of 130 metric tons.  
Milk, pasteurized and chilled 
CR: 0401.10.00; 0401.20.00  
Pan: 0401.10.00; 0401.20.90  C12 Duty-free As C12 547,500 litres. Compound annual 
increase of 5%.  Duty-free on 1.1.2020. 
Milk, UHT 
CR: 0401.10.00; 0401.20.00  
Pan: 04011000; 04012010; 04012090  C12 Duty-free As C12 547,500 litres. Compound annual 
increase of 5%.  Duty-free on 1.1.2020. 
Skimmed milk powder 
CR: 0402.10.00 
Pan: 0402.10.91; 0402.10.99 C12 Duty-free As C12 340 metric tons.  Compound annual 
increase of 5%.  Duty-free on 1.1.2020. 
Up to 25% of the quota may be imported 
in packs of less than 25kg, packed for 
retail sale. 
Whole milk powder, in bulk 
CR: 0402.21.22 
Pan: 0402.21.99; 0402.29.99 C12 Duty-free As C12 125 metric tons.  Compound annual 
increase of 5%.  Duty-free on 1.1.2020. 
Palm oil, crude 
1511.10.00 EXCL Duty-free As EXCL (MFN) 
In 2009, MFN of  6% for CR
 and 20% 
for Pan   450 metric tons, not increased. 
Palm oil, refined 
CR:1511.90.10; 1511.90.90 
Pan: 1511.90.00  EXCL Duty-free As EXCL (MFN) 
In 2009, MFN of  
and 6% (15119010) 
-15% (15119090) and 20% for Pan 200 metric tons, not increased. 
Sausages  
CR:1601.00.10; 1601.00.20;1601.00.30; 
1601.00.80; 1601.00.90 
Pan: 1601.00.11; 1601.00.19; 1601.00.21; 
1601.00.29; 1601.00.31; 1601.00.39; 
1601.00.41; 1601.00.49; 1601.00.91; 
1601.00.99  C13 Duty-free As C13 50 metric tons, not increased.  Duty-free
on 1.1.2021. WT/REG264/1 
Page 62  
 
  HS Code (description) Category In-quota rate Out-of-quota rate Quantity (annual) as of 1.1.2009 
Prepared meat of fowls 
1602.32.10; 1602.32.90 B8 Duty-free As B8 50 metric tons, not increased.  Duty-free
on 1.1.2016. 
Ham 
CR: 1602.41.00 
Pan: 1602.41.11 C13 Duty-free As C13 150 metric tons, not increased.  Duty-free
on 1.1.2021. 
Other prepared meat of swine 
CR: 1601.00.30 
Pan: 1602.49.13  C13 Duty-free As C13 50 metric tons, not increased.  Duty-free
on 1.1.2021. 
Other tomato sauces 
CR: 2103.20.00 
Pan: 2103.20.91; 2103.20.99  A 
   Duty-free As A, but with a 
more stringent rule 
of origin (see next column) 
  1,000 metric tons, subject to a specific 
rule of origin requiring change of tariff 
sub-heading (Section C of Annex 4.03). Simple annual increase of 2%, with 
indefinite duration. 
Out of the quota, the benefits of the TEP 
for other tomato sauces under category A 
(duty-free at entry into force) are only 
provided for products which conform 
with the rule of origin of 50% domestic content. 
Toilet paper 
4818.10.00  F Duty-free As F (MFN up to 
31.12.2012, reduced 
as of 1.1.2013) 
In 2009, MFN of  
15% for CR  and  
Pan 440 metric tons, not increased.  Duty-free
on 1.1.2019. 
Paper tablecloth  
CR: 4818.20.00 
Pan: 4818.20.20 F Duty-free  As F (MFN up to 
31.12.2012, reduced 
as of 1.1.2013) 
In 2009, MFN of  
15% for CR  and  
Pan 16 metric tons, not increased.  Duty-free
on 1.1.2019. 
Paper handkerchiefs 
CR: 4818.30.00 
Pan: 4818.30.10 F Duty-free  As F (MFN up to 
31.12.2012, reduced as of 1.1.2013) 
In 2009, MFN of  
15% for CR
 and  
Pan 44 metric tons, not increased.  Duty-free
on 1.1.2019. 
Women’s panty hoses  
6115.20.00; 6115.93.90  B8 Duty-free B8 6,000 dozens of pairs of panty hoses. 
Duty-free on 1.1.2016. 
Other men’s, women’s and children’s hoses and socks  
CR
: 6111.20.00; 6115.91.00; 6115.92.00; 
6115.93.90; 6115.99.00 
Pan: 6111.20.90; 6115.91.00; 6115.92.00; 
6115.93.10; 6115.93.90; 6115.99.10; 
6115.99.90  B8 Duty-free B8 20,000 dozens of pairs of hoses/socks. 
Duty-free on 1.1.2016. 
Source : Appendix I to Annex 3.04 of the Protocol.  WT/REG264/1 
 Page 63 
 
 
  ANNEX III 
 
 
Table AIII.1 
Activities for which business visitors may be granted entry 
Research and design 
Technical, scientific and statistical resear chers conducting independent research or research for an enterprise located in the 
territory of the other Party. 
 
Growth, manufacture and production 
Purchasing and production management pers onnel conducting commercial transactions for an enterprise located in the 
territory of the other Party. 
 
Marketing 
Market researchers and analysts conducting research independently  or for an enterprise located in the territory of the other 
Party. 
 
Trade fair and promotional pers onnel attending a trade convention. 
 
Sales 
Sales representatives and agents taking orde rs or negotiating contracts for goods or serv ices for an enterprise located in the 
territory of the other Party but not delivering goods or providing services. 
 
Buyers purchasing for an enterprise located  in the territory of the other Party. 
 
After-sales service 
Installers, repair and maintenance personnel, and supervisor s, possessing specialized techni cal knowledge essential to a 
seller's contractual obligation, performing services or training workers to perf orm services, pursuant to a warranty or other 
service contract incidental to the sale of commercial or industrial equipment or machinery, including computer software, 
purchased from an enterprise located outside the territory of the Party into which temporary entry is sought, during the life o f 
the warranty or service agreement. 
 
General service 
Consultants engaging in a business activity i nvolving the cross-border provision of services. 
 
Management and supervisory pers onnel engaging in a commercial transaction for an  enterprise located in the territory of the 
other Party. 
 
Financial services personnel engaging in comm ercial transactions for an enterprise lo cated in the territory of the other Party.   
In the case of Panama and Honduras, this category shall be defined as:  specialized  professional personne l providing advice in 
the area of financial services for an enterprise established in the territo ry of the other Party. 
 
Public relations and advertising personnel consulting with business associates, or at tending or participating in conventions. 
 
Tourism personnel (tour and travel agents, tour guides or t our operators) attending or par ticipating in conventions or 
conducting a tour that has begun in the territory of the other Party. 
 
 
__________