19–010 

Calendar No. 191 

112TH CONGRESS REPORT " ! SENATE 2d Session 112–224 

UNITED STATES-PANAMA TRADE PROMOTION 

AGREEMENT IMPLEMENTATION ACT 

SEPTEMBER 20, 2012.—Ordered to be printed 

Mr. BAUCUS, from the Committee on Finance, 

submitted the following 

R E P O R T 

together with 

ADDITIONAL VIEWS 

[To accompany S. 1643] 

[Including cost estimate of the Congressional Budget Office] 

The Committee on Finance, to which was referred the bill (S. 

1643) to implement the United States-Panama Trade Promotion 

Agreement, having considered the same, reports favorably thereon 

without amendment and recommends that the bill do pass. 

CONTENTS 

Page 

I. Report and Other Materials of the Committee ........................................... 2 

A. Report of the Committee on Finance ...................................................... 2 

B. Summary of Congressional Consideration of the Agreement ............... 2 

1. Background ........................................................................................ 2 

2. Trade Promotion Authority Procedures in General ........................ 2 

3. Notification Prior to Negotiations .................................................... 3 

4. Notification of Intent To Enter Into an Agreement ........................ 3 

5. Development of the Implementing Legislation ............................... 4 

6. Formal Submission of the Agreement and Implementing Legislation ................................................................................................... 4 

7. Committee and Floor Consideration ................................................ 5 

C. Trade Relations with Panama ................................................................ 5 

1. United States-Panama Trade ........................................................... 5 

2. Tariffs and Trade Agreements ......................................................... 6 

3. U.S. International Trade Commission Study .................................. 7 

D. Overview of the Agreement ..................................................................... 7 

1. Background ........................................................................................ 7 


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2. Office of the U.S. Trade Representative Summary of the Agreement ................................................................................................. 8 

E. General Description of the Bill To Implement the Agreement ............ 36 

Title I—Approval of, and General Provisions Relating to, the 

Agreement ....................................................................................... 36 

Title II—Customs Provisions ................................................................ 38 

Title III—Relief from Imports .............................................................. 41 

Title IV—Miscellaneous ........................................................................ 46 

Title V—Offsets ...................................................................................... 46 

F. Vote of the Committee in Reporting the Bill ......................................... 47 

II. Budgetary Impact of the Bill ........................................................................ 47 

III. Regulatory Impact of the Bill and Other Matters ...................................... 53 

IV. Additional Views ............................................................................................ 54 

V. Changes in Existing Law Made by the Bill, as Reported ........................... 58 

I. REPORT AND OTHER MATERIALS OF THE COMMITTEE 

A. REPORT OF THE COMMITTEE ON FINANCE

The Committee on Finance, to which was referred the bill (S. 

1643) to implement the United States-Panama Trade Promotion 

Agreement (‘‘Agreement’’), having considered the same, reports favorably thereon without amendment and recommends that the bill 

do pass. 

B. SUMMARY OF CONGRESSIONAL CONSIDERATION OF THE

AGREEMENT

1. Background 

On November 18, 2003, U.S. Trade Representative Robert 

Zoellick, on behalf of President Bush, notified Congress of the Administration’s intent to negotiate a free trade agreement (‘‘FTA’’) 

with the Republic of Panama (‘‘Panama’’). The two governments 

launched the negotiations on April 26, 2004, and successfully concluded negotiations on December 19, 2006, with the understanding 

that the Agreement would be subject to further discussions regarding labor. 

The President notified Congress of his intent to enter into the 

Agreement on March 30, 2007, and published notice of his intent 

in the Federal Register on April 2, 2007. On April 27, 2007, the 

U.S. Trade Representative submitted to Congress and the President the reports from 27 trade advisory groups commenting on the 

final text of the Agreement. The Office of the U.S. Trade Representative also made the reports publicly available on its website. 

On May 10, 2007, the Bush Administration and the bipartisan 

leadership of the U.S. Senate Committee on Finance and the U.S. 

House of Representatives Committee on Ways and Means reached 

an agreement on trade policy. As discussed further below in Section I.D., the May 10 bipartisan trade deal required groundbreaking changes to the labor, environmental, intellectual property, 

government procurement, services, and investment provisions of 

the Agreement. The United States and Panama agreed to incorporate these changes in the Agreement, which U.S. Trade Representative Susan C. Schwab and Panamanian Minister of Commerce and Industry Alejandro Ferrer signed on June 28, 2007. 

2. Trade Promotion Authority procedures in general 

Article I, section 8 of the Constitution of the United States vests 

Congress with the authority to regulate international trade. ConVerDate Mar 15 2010 07:04 Sep 26, 2012 Jkt 019010 PO 00000 Frm 00002 Fmt 6659 Sfmt 6602 E:\HR\OC\SR224.XXX SR224

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gress has periodically delegated a portion of this authority to the 

President in order to advance the economic interests of the United 

States. This delegation represents a compact between Congress and 

the Administration, by which Congress guarantees it will vote on 

a trade agreement entered into by the Administration without 

amendment and the Administration guarantees close consultation 

with Congress during the negotiation of the trade agreement in 

order to achieve the objectives that Congress identifies. Thorough 

and timely consultation by the Administration with Congress is the 

essential bedrock upon which Congress’s delegation of constitutional authority rests. This longstanding compact, spanning decades, has resulted in the successful negotiation and implementation of numerous trade agreements that have contributed significantly to increased economic growth and prosperity in the United 

States. 

The most recent incarnation of this compact is found in the Bipartisan Trade Promotion Authority Act of 2002 (‘‘the Act’’), which 

was included in the Trade Act of 2002 (Pub. L. 107–210). The Act 

includes prerequisites for congressional consideration of a trade 

agreement under expedited procedures (known as Trade Promotion 

Authority (‘‘TPA’’) procedures), which are found in sections 2103 

through 2106 of the Act (19 U.S.C. §§ 3803–3806) and section 151 

of the Trade Act of 1974 (19 U.S.C. § 2191). Section 2103 of the Act 

authorizes the President to enter into reciprocal trade agreements 

with foreign countries to reduce or eliminate tariff or nontariff barriers and other trade-distorting measures. Section 2102 of the Act 

outlines the negotiating objectives that the President must achieve 

if the President intends to use TPA procedures to implement a 

trade agreement. And section 151 of the Trade Act of 1974 sets 

forth expedited procedures for congressional consideration of a 

trade agreement without amendment. The President’s authority 

under section 2103 extends to trade agreements entered into on or 

before June 30, 2007. 

3. Notification prior to negotiations 

Under section 2104(a)(1) of the Act, the President must provide 

written notice to Congress at least 90 calendar days before initiating negotiations. On November 18, 2003, the U.S. Trade Representative notified Congress of the President’s intent to initiate 

negotiations with Panama. The negotiations were initiated on April 

26, 2004. Section 2104(a)(2) requires the President, before and after 

submission of the notice, to consult regarding the negotiations with 

the relevant congressional committees and the Congressional Oversight Group established under section 2107 of the Act. The Administration engaged in the requisite consultations with respect to this 

Agreement, including an appearance by the U.S. Trade Representative at meetings of the Congressional Oversight Group on November 6, 2003, and May 6, 2004. 

4. Notification of intent to enter into an agreement 

Under section 2105(a)(1)(A) of the Act, the President must notify 

Congress at least 90 calendar days before entering into an agreement of his intent to enter into the agreement. On March 30, 2007, 

the President notified Congress of his intent to enter into the 


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United States-Panama Trade Promotion Agreement. The Agreement was signed on June 28, 2007. 

5. Development of the implementing legislation 

Under TPA procedures, Congress and the Administration work 

together to produce legislation that implements a free trade agreement. Draft legislation is developed in close consultation between 

the Administration and the committees with jurisdiction over the 

laws that must be enacted or amended to implement the agreement. The committees may hold informal meetings to consider the 

draft legislation and to make non-binding recommendations to the 

Administration. The Administration then finalizes the implementing legislation for formal submission to Congress and referral 

to the committees of jurisdiction. These procedures are meant to 

ensure close cooperation between the executive and legislative 

branches of government to develop legislation that faithfully implements the agreement. Under TPA and predecessor legislation, 

trade agreement implementing bills may include only those provisions that are necessary or appropriate to implement the agreement. 

The Senate Committee on Finance met in open executive session 

on July 7, 2011, to consider informally the draft implementing legislation for the Agreement and the draft Statement of Administrative Action (‘‘SAA’’). The Committee approved the draft legislation 

and draft SAA without amendment by a roll call vote of 22 ayes, 

2 nays, a majority of the Committee being present. Ayes: Baucus, 

Conrad, Bingaman, Kerry (proxy), Wyden, Schumer, Cantwell, Nelson, Menendez, Carper, Cardin, Hatch, Grassley, Snowe, Kyl 

(proxy), Crapo (proxy), Roberts, Enzi, Cornyn (proxy), Coburn 

(proxy), Thune (proxy), and Burr (proxy). Nays: Rockefeller (proxy) 

and Stabenow. Separately, the Committee on Ways and Means in 

the House of Representatives approved the draft implementing legislation and draft SAA, as amended, on July 7, 2011, by a roll call 

vote of 22 ayes, 15 nays. 

6. Formal submission of the agreement and implementing legislation 

When the President formally submits a trade agreement to Congress under section 2105 of the Act, the President must include in 

the submission the final legal text of the agreement, together with 

implementing legislation, an SAA describing regulatory and other 

changes to implement the agreement, a statement setting forth the 

reasons of the President regarding how and to what extent the 

agreement makes progress in achieving the applicable purposes, 

policies, priorities, and objectives set forth in the Act, and a statement setting forth the reasons of the President regarding how the 

agreement serves the interests of U.S. commerce. The implementing legislation is introduced in both Houses of Congress on the 

day it is submitted by the President and is referred to committees 

with jurisdiction over its provisions. 

On October 3, 2011, the President transmitted to Congress the 

final text of this Agreement, the implementing legislation, the SAA, 

and the other supporting information required under section 2105 

of the Act. That same day, Mr. Baucus, for himself, Mr. Hatch and 

Mr. McConnell introduced the bill as S. 1643. The legislation was 


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also introduced that same day in the House of Representatives 

(H.R. 3079). 

To qualify for TPA procedures, the implementing legislation itself 

must contain provisions formally approving the agreement and the 

SAA. And, as noted above, the implementing legislation must contain only those provisions necessary or appropriate to implement 

the Agreement. The implementing bill reported here—which approves the Agreement and the accompanying SAA and contains 

provisions necessary or appropriate to implement the Agreement 

into U.S. law—was referred to the Senate Committee on Finance. 

7. Committee and floor consideration 

When the requirements of the Act are satisfied, implementing 

revenue bills, such as the United States-Panama Trade Promotion 

Agreement Implementation Act, are subject to the legislative procedures of section 151 of the Trade Act of 1974. The following schedule for congressional consideration applies under these procedures: 

(i) House committees have up to 45 calendar days in session in 

which to report the bill; any committee which does not do so in that 

period will be automatically discharged from further consideration. 

(ii) A vote on final passage by the House must occur on or before 

the 15th calendar day in session after the committees report the 

bill or are discharged from further consideration. 

(iii) Senate committees must act within 15 calendar days in session of receiving the implementing revenue bill from the House or 

within 45 calendar days in session of Senate introduction of the implementing bill, whichever is later, or they will be discharged automatically. 

(iv) The full Senate then must vote within 15 calendar days in 

session on the implementing bill. 

Once the implementing bill has been formally submitted by the 

President and introduced, no amendments to the bill are in order 

in either House of Congress. Floor debate in each House is limited 

to no more than 20 hours, to be equally divided between those favoring the bill and those opposing the bill. 

The Committee on Finance met in open executive session on October 11, 2011, to consider favorably reporting S. 1643. At the 

meeting, the Committee favorably reported S. 1643 without amendment by voice vote, a majority of members being present. The Committee on Ways and Means in the House of Representatives favorably reported the House version of the legislation, H.R. 3079, on 

October 5, 2011, by a roll call vote of 32 ayes, 3 nays. 

The House passed H.R. 3079 on October 12, 2011, by a roll call 

vote of 300 ayes, 129 nays. On the same day, the Senate passed 

H.R. 3079 by a roll call vote of 77 ayes, 22 nays. President Barack 

H. Obama signed H.R. 3079 into law on October 21, 2011 (Pub. L. 

112–43). 

C. TRADE RELATIONS WITH PANAMA

1. United States-Panama Trade 

In 2010, the United States exported $6.1 billion worth of goods 

and imported nearly $400 million from Panama, producing a U.S. 

trade surplus of $5.7 billion, the second largest in the Western 

Hemisphere. Panama ranked as the 36th largest export market for 


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U.S. goods and the 93rd largest supplier of U.S. imports. Major 

U.S. exports to Panama include oil and capital- and technology-intensive manufactured goods such as aircraft, pharmaceuticals, machinery, medical equipment, and motor vehicles. Bulk commodities 

such as wheat, corn, rice, and soybeans make up the greatest percentage of U.S. agricultural exports to Panama. 

2010 U.S. EXPORTS TO PANAMA 

HTS Code—Product Value in USD 

27—MINERAL FUEL, OIL ETC.; BITUMIN SUBST; MINERAL WAX ................................................................... 2,451,566,679 

84—NUCLEAR REACTORS, BOILERS, MACHINERY ETC.; PARTS .................................................................... 533,060,219 

85—ELECTRIC MACHINERY ETC; SOUND EQUIP; TV EQUIP; PTS .................................................................. 426,925,884 

88—AIRCRAFT, SPACECRAFT, AND PARTS THEREOF ..................................................................................... 396,799,366 

98—SPECIAL CLASSIFICATION PROVISIONS, NESOI ....................................................................................... 272,744,144 

87—VEHICLES, EXCEPT RAILWAY OR TRAMWAY, AND PARTS ETC ............................................................... 229,290,875

10—CEREALS ................................................................................................................................................. 144,537,635 

90—OPTIC, PHOTO ETC, MEDIC OR SURGICAL INSTRMENTS ETC ................................................................ 130,734,420 

33—ESSENTIAL OILS ETC; PERFUMERY, COSMETIC ETC PREPS .................................................................. 108,016,224 

39—PLASTICS AND ARTICLES THEREOF ........................................................................................................ 98,485,680 

OTHER ............................................................................................................................................................. 1,270,649,149 

TOTAL ..................................................................................................................................................... 6,062,810,275 

(Source: U.S. Department of Commerce, International Trade Administration). 

2010 U.S. IMPORTS FROM PANAMA 

HTS Code—Product Value in USD 

98—SPECIAL CLASSIFICATION PROVISIONS, NESOI ....................................................................................... 131,572,707 

03—FISH, CRUSTACEANS & AQUATIC INVERTEBRATES ................................................................................ 85,458,515 

71—NAT ETC PEARLS, PREC ETC STONES, PR MET ETC; COIN ................................................................... 61,129,961 

08—EDIBLE FRUIT & NUTS; CITRUS FRUIT OR MELON PEEL ....................................................................... 20,590,128 

17—SUGARS AND SUGAR CONFECTIONARY .................................................................................................. 18,116,959 

33—ESSENTIAL OILS ETC; PERFUMERY, COSMETIC ETC PREPS .................................................................. 8,509,369

09—COFFEE, TEA, MATE & SPICES ............................................................................................................... 7,912,709 

85—ELECTRIC MACHINERY ETC; SOUND EQUIP; TV EQUIP; PTS .................................................................. 5,609,846 

76—ALUMINUM AND ARTICLES THEREOF ...................................................................................................... 5,103,797 

84—NUCLEAR REACTORS, BOILERS, MACHINERY ETC.; PARTS .................................................................... 5,103,261 

OTHER ............................................................................................................................................................. 31,874,820 

TOTAL ..................................................................................................................................................... 380,982,072 

(Source: U.S. Department of Commerce, International Trade Administration). 

2. Tariffs and trade agreements 

Panama acceded to the World Trade Organization (‘‘WTO’’) in 

1997, with an average bound tariff rate of 23.5 percent for all goods 

(27.7 percent for agricultural goods and 22.9 percent for nonagricultural goods). In 2009, Panama maintained an average applied tariff rate of 7.2 percent for all goods (13.4 percent for agricultural goods and 6.2 percent for nonagricultural goods). The United 

States, by contrast, provides duty-free treatment to most products 

from Panama. In 2010, 98 percent of imports from Panama entered 

the United States duty free under our most-favored nation tariff 

rates and U.S. trade preference programs. Given that the Agreement will greatly reduce this existing tariff asymmetry, the U.S. 

International Trade Commission (‘‘Commission’’) found that the 

Agreement likely will result in a larger increase in U.S. exports to 

Panama than in U.S. imports from Panama. 

Panama has FTAs in place with Costa Rica, Chile, El Salvador, 

Guatemala, Honduras, Nicaragua, Singapore, and Taiwan. Panama 


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also concluded FTA negotiations with Canada in May 2010 and initialed an agreement with the European Union in March 2011. In 

addition, Panama is negotiating an FTA with Colombia and considering negotiations with Korea, India, and Peru. Panama has bilateral investment treaties with Argentina, Canada, Chile, Taiwan, 

Czech Republic, Dominican Republic, France, South Korea, Mexico, 

Netherlands, Spain, Switzerland, Ukraine, United Kingdom, and 

Uruguay. 

3. U.S. International Trade Commission study 

In September 2007, the Commission released the results of its investigation (Investigation No. TA–2104–025) into the probable economic effect of the Agreement (USITC Pub. 3948). The Commission 

found that the expected growth in U.S. trade with Panama under 

the Agreement would likely have a small but positive impact on the 

U.S. economy. The Commission indicated, however, that these benefits may be tempered by the relatively small size of Panama’s 

economy, its small share of total U.S. trade, and its existing dutyfree access to the U.S. market under U.S. trade preference programs. 

As noted above, the Commission also concluded that the Agreement likely will result in a larger increase in U.S. exports to Panama than in U.S. imports from Panama. More specifically, it estimated that U.S. exports to Panama will increase by 9 to 145 percent while U.S. imports from Panama are unlikely to increase significantly due to the fact that the vast majority of goods from Panama already receive duty-free treatment in the U.S. market. It further estimated the U.S. goods exports that would experience relatively large percentage increases include beef, pork, rice, washing 

machines, and passenger vehicles. 

With respect to services, the Commission concluded that U.S. 

service firms will benefit from improved market access, national 

treatment, and regulatory transparency under the Agreement. The 

Commission noted, however, that these benefits will be modest because of the relatively small size of Panama’s economy. Further, 

the Agreement likely will not have a significant effect on U.S. imports of services from Panama because the U.S. services market is 

generally open to foreign firms, including those from Panama, and 

because the Panamanian industry is small. 

D. OVERVIEW OF THE AGREEMENT

1. Background 

The Agreement establishes a bilateral free trade area that eliminates tariffs on trade between the United States and Panama for 

all qualifying goods except sugar. The Agreement also liberalizes 

trade in services and contains provisions that address telecommunications, electronic commerce, intellectual property rights, 

labor, environment, government procurement, and investment 

issues. In addition, the Agreement contains provisions that promote bilateral consultation and cooperation, procedural and substantive due process, administrative and judicial review, transparency, and the rule of law. It also contains a mechanism for settling disputes that arise under the Agreement. 


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As noted above, the Bush Administration and the bipartisan 

leadership of the U.S. Senate Committee on Finance and the U.S. 

House of Representatives Committee on Ways and Means reached 

an agreement on trade policy on May 10, 2007. The United StatesPanama Trade Promotion Agreement incorporates the provisions of 

the May 10 agreement. This Agreement therefore includes the following provisions: (1) fully enforceable commitments by the Parties 

to adopt, maintain, and enforce the 5 core international labor 

standards incorporated in the 1988 International Labor Organization Declaration on Fundamental Principles and Rights at Work; 

(2) fully enforceable commitments by the Parties to adopt, maintain, and enforce their obligations under certain common multilateral environmental agreements; (3) modifications to the intellectual 

property chapter that balance the need for access to medicines with 

patent protections for pharmaceutical products; (4) modifications to 

the government procurement chapter that allow the Parties to condition government contracts on adherence to core labor standards; 

(5) confirmation that the United States can prevent foreign companies from supplying services at U.S. ports if the United States 

deems such action necessary to protect our national security; and 

(6) confirmation that the Agreement accords foreign investors in 

the United States no greater substantive rights with regard to investor protections than U.S. investors in the United States. 

2. Office of the U.S. Trade Representative summary of the Agreement 

The Office of the U.S. Trade Representative prepared a summary 

of the Agreement that was included among the documents that the 

President transmitted to Congress on October 3, 2011. This summary was distributed to Members of the Committee to aid in their 

consideration of the implementing legislation, and it is reprinted 

below: 

THE UNITED STATES-PANAMA TRADE PROMOTION 

AGREEMENT 

Summary of the Agreement 

This summary briefly describes key provisions of the United 

States-Panama Trade Promotion Agreement (‘‘Agreement’’) that the 

United States has concluded with Panama and represents an authoritative expression of Administration views regarding the interpretation of the Agreement both for purposes of U.S. international 

obligations and domestic law. 

PREAMBLE

The Preamble to the Agreement provides the Parties’ underlying 

objectives in entering into the Agreement and provides context for 

the provisions that follow. It includes the following statement: 

‘‘AGREE that foreign investors are not hereby accorded greater 

substantive rights with respect to investment protections than domestic investors under domestic law where, as in the United 

States, protections of investor rights under domestic law equal or 

exceed those set forth in this Agreement.’’ 

This statement clarifies that, as stated in the Bipartisan Trade 

Promotion Authority Act of 2002, under the Agreement foreign inVerDate Mar 15 2010 06:52 Sep 26, 2012 Jkt 019010 PO 00000 Frm 00008 Fmt 6659 Sfmt 6602 E:\HR\OC\SR224.XXX SR224

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vestors in the United States are not to be accorded greater substantive rights with respect to investment protections than United 

States investors in the United States. 

CHAPTER ONE: INITIAL PROVISIONS

Chapter One sets out provisions establishing a free trade area 

and affirming the Parties’ existing rights and obligations with respect to each other under the Marrakesh Agreement Establishing 

the World Trade Organization (WTO) and other agreements to 

which they are party. 

The Agreement does not change the provisions of any agreement 

the United States has previously negotiated with Panama. Article 

1.3.2 of the Agreement suspends Articles VII and VIII of the Treaty 

Between the United States of America and the Republic of Panama 

Concerning the Treatment and Protection of Investments, with 

Annex and Agreed Minutes, signed at Washington on October 27, 

1982 (the ‘‘Treaty’’) concerning investor-to-state and state-to-state 

dispute settlement, respectively. However, Article 1.3.3 of the 

Agreement preserves, for ten years, the option of invoking dispute 

settlement under the Treaty with respect to investments covered by 

the Treaty as of the date of entry into force of the Agreement and 

in the case of disputes that arose prior to the date of entry into 

force of the Agreement. Article 1.3.3 also preserves investor-to-state 

dispute settlement under the Treaty with respect to disputes arising on or after the date of entry into force of the Agreement out 

of an investment agreement that was in effect before the date of 

entry into force of the Agreement. If the Agreement terminates, the 

dispute settlement provisions of the Treaty will automatically resume operation. 

CHAPTER TWO: GENERAL DEFINITIONS

Chapter Two defines certain terms that recur in various chapters 

of the Agreement. 

CHAPTER THREE: NATIONAL TREATMENT AND MARKET ACCESS FOR

GOODS

Chapter Three and its relevant annexes and appendices set out 

the Agreement’s principal rules governing trade in goods. It requires each Party to treat products from the other Party in a nondiscriminatory manner, provides for the phase-out and elimination 

of tariffs on ‘‘originating’’ goods (as defined in Chapter Four (Rules 

of Origin and Origin Procedures)) traded between the Parties, and 

requires the elimination of a wide variety of non-tariff trade barriers that restrict or distort trade flows. 

Tariff Elimination. Chapter Three provides for the elimination of 

customs duties on originating goods traded between the Parties. 

Duties on most tariff lines covering industrial and consumer goods 

will be eliminated as soon as the Agreement enters into force. Duties on other goods, including all industrial goods, will be phased 

out over periods of up to ten years. Some agricultural goods will 

have longer periods for elimination of duties or be subject to other 

provisions, including, in some cases, the application of preferential 

tariff-rate quotas (TRQs). The General Notes to each Party’s Schedule to Annex 3.3 include detailed provisions on staging of tariff reVerDate Mar 15 2010 06:52 Sep 26, 2012 Jkt 019010 PO 00000 Frm 00009 Fmt 6659 Sfmt 6602 E:\HR\OC\SR224.XXX SR224

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ductions and application of TRQs for certain agricultural goods. 

The Chapter provides that the Parties may agree to speed up tariff 

phase-outs on a product-by-product basis after the Agreement takes 

effect. 

Waiver of Customs Duties. The Parties may not adopt new duty 

waivers or expand existing duty waivers conditioned on the fulfillment of a performance requirement. Chapter Three defines the 

term ‘‘performance requirements’’ so as not to restrict a Party’s 

ability to provide duty drawback on goods imported from the other 

Party. 

Temporary Admission. The Parties agreed to provide duty-free 

temporary admission for certain products. Such items include professional equipment, goods for display or demonstration, and commercial samples. The Chapter also includes specific provisions on 

transit of vehicles and containers used in international traffic. 

Import/Export Restrictions, Fees, and Formalities. The Agreement clarifies that restrictions prohibited under the General Agreement on Tariffs and Trade 1994 (GATT 1994) and this Agreement 

include export and import price requirements (except under antidumping and countervailing duty orders and undertakings) and import licensing conditioned on the fulfillment of a performance requirement. In addition, a Party must limit all fees and charges imposed on or in connection with importation or exportation to the 

approximate cost of services rendered. The United States agreed 

not to apply its merchandise processing fee on imports of originating goods. Panama agreed not to require a person of the United 

States to have or maintain a relationship with a ‘‘dealer’’ as a condition for allowing the importation of a good. Panama also agreed 

not to prohibit or restrict the importation of any good of the United 

States as a remedy for a violation or alleged violation of any law, 

regulation, or other measure relating to the relationship between 

a ‘‘dealer’’ in its territory and a person of the United States. 

Distinctive Products. Panama will recognize Bourbon Whiskey 

and Tennessee Whiskey as ‘‘distinctive products’’ of the United 

States, meaning Panama will not permit the sale of any product as 

Bourbon Whiskey or Tennessee Whiskey unless it was manufactured in the United States in accordance with applicable laws and 

regulations. 

Committee on Trade in Goods. Chapter Three also establishes a 

Committee on Trade in Goods to consider matters arising under 

Chapters Three, Four (Rules of Origin and Origin Procedures), and 

Five (Customs Administration and Trade Facilitation). The functions of the Committee are to (i) promote trade in goods between 

the Parties, (ii) address barriers to trade in goods between the Parties, and (iii) provide advice and recommendations on trade capacity building with respect to matters those chapters cover. 

Agriculture 

TRQs. Chapter Three requires each government to administer 

TRQs in a manner that is transparent, non-discriminatory, responsive to market conditions, and minimally burdensome on trade. The 

Parties must make every effort to administer TRQs in a manner 

that allows importers to fully utilize import quotas. In addition, the 

Chapter provides that Parties may not condition application for, or 


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utilization of, import licenses or quota allocations on the re-export 

of an agricultural good. 

Export Subsidies. Each Party will eliminate export subsidies on 

agricultural goods destined for the other Party. Under Article 3.15, 

neither Party may introduce or maintain an export subsidy on agricultural goods destined for the other Party unless the exporting 

Party believes that a third country is subsidizing its exports to the 

other Party. In such a case, the exporting Party may initiate consultations with the importing Party to develop measures the importing Party may adopt to counteract such subsidies. If the importing Party agrees to such measures, the exporting Party must 

refrain from applying export subsidies to its exports of the good to 

the importing Party. 

Safeguards. Chapter Three sets out a transitional agricultural 

safeguard mechanism that allows a Party to impose a temporary 

additional duty on specified agricultural products if imports exceed 

an established volume ‘‘trigger.’’ The safeguard measure will remain in force until the end of the calendar year in which the measure applies. A Party may not apply an agricultural safeguard on 

a good after the date that the good is subject to duty-free treatment 

under the Party’s Schedule to Annex 3.3 of the Agreement. 

A Party may not apply an agricultural safeguard measure to a 

good while the good is subject to a safeguard measure under (i) 

Chapter Eight (Trade Remedies), or (ii) Article XIX of the GATT 

1994 and the WTO Agreement on Safeguards. All agricultural safeguard measures must be applied and maintained in a transparent 

manner, and the Party applying such a measure must, on request, 

consult with the other Party concerning the application of the 

measure. 

Neither Party may impose safeguard duties pursuant to the 

WTO Agreement on Agriculture on originating goods. 

Sugar. The United States agreed to establish three TRQs on 

sugar goods of Panama. These three TRQs cover, respectively: (i) 

raw sugar, (ii) specialty sugar, and (iii) raw sugar, refined sugar, 

and certain sugar-containing products. The duty-free quantity 

under the TRQ on raw sugar starts at 6,060 metric tons and increases by 60 metric tons annually through year ten, after which 

the duty-free quantity will remain at 6,600 metric tons. The dutyfree quantity under the TRQ on specialty sugar is 500 metric tons 

per year (with no annual increases). The duty-free quantity under 

the TRQ on raw sugar, refined sugar, and certain sugar-containing 

products will be limited in each year to the lesser of (i) the dutyfree quantity set out in the agreement for that year (505 metric 

tons in year one, increasing by five metric tons annually), or (ii) 

Panama’s trade surplus in specific sugar goods. Panama’s ‘‘trade 

surplus’’ is the amount by which Panama’s exports of specified 

sugar and sweetener goods to all destinations exceed its imports of 

these goods from all sources, except that Panama’s exports of sugar 

to the United States and its imports of high fructose corn syrup 

from the United States are not included in the calculation of its 

trade surplus. 

In contrast to how it will treat other commodities subject to 

TRQs, the United States will not eliminate its over-quota duty on 

imports of goods that the three TRQs cover. The Agreement also 

includes a mechanism that allows the United States in any year, 


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at its option, to provide some form of alternative compensation to 

Panamanian exporters in place of duty-free imports under the 

three TRQs on sugar goods. 

Ethanol. The United States agreed to continue to treat Panama 

as a beneficiary country under the Caribbean Basin Initiative (CBI) 

preference program with respect to ethanol imports. Accordingly, 

Panama will continue to share in the duty-free quota that the 

United States makes available to CBI beneficiary countries. 

Additional Provisions. Chapter Three provides for the creation of 

a Committee on Agricultural Trade. The Committee will be established within 90 days after the date the Agreement enters into 

force and will provide a forum for promoting cooperation in the implementation and administration of the Agreement, as well as for 

consultations on matters related to the agricultural provisions of 

the Agreement. The Chapter also provides for the establishment of 

an Agriculture Review Commission. The Commission will be established 14 years after the Agreement enters into force and will review the implementation and operation of the Agreement as it relates to trade in agricultural goods, including whether to extend 

the agricultural safeguard mechanism. 

Textiles and apparel 

Tariff Elimination. Chapter Three provides for duties on all originating textile or apparel goods to be eliminated on the date the 

Agreement enters into force. 

Safeguards. The Chapter also establishes a transitional safeguard procedure for textile and apparel goods, under which an importing Party may temporarily impose additional duties up to the 

level of the normal trade relations (most-favored-nation) 

(NTR(MFN)) duty rates on imports of textile or apparel goods that 

cause, or threaten to cause, serious damage to a domestic industry 

as a result of the elimination or reduction of duties under the 

Agreement. A Party may not impose a textile safeguard measure 

more than once on the same textile or apparel good. The measure 

may not be in place for more than three years. The ability to impose or maintain textile safeguards lapses five years after the 

Agreement enters into force. A Party may not apply a textile safeguard measure to a good while the good is subject to a safeguard 

measure under (i) Chapter Eight (Trade Remedies), or (ii) Article 

XIX of the GATT 1994 and the WTO Agreement on Safeguards. 

A Party imposing a textile safeguard measure under Chapter 

Three must provide the exporting Party with mutually agreed compensation in the form of trade concessions for textile or apparel 

goods that have a value substantially equivalent to the increased 

duties resulting from application of the safeguard measure. If the 

Parties cannot agree on compensation, the exporting Party may 

raise duties on any goods from the importing Party in an amount 

that has a value substantially equivalent to the increased duties 

resulting from application of the safeguard measure. 

Rules of Origin and Related Matters. A textile or apparel good 

will generally qualify as an ‘‘originating’’ good eligible to receive 

preferential treatment under the Agreement only if all processing 

from the yarn stage to the final product (e.g., yarn-spinning, fabric 

production, cutting, and assembly) takes place in the United 

States, Panama, or both, or if there is an applicable change in tariff 


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classification under the specific rules of origin contained in Annex 

4.1 of the Agreement. 

Chapter Three sets out special rules for determining whether a 

textile or apparel good is an ‘‘originating’’ good, including a de 

minimis exception for non-originating yarns or fibers, a process for 

designating inputs not available in commercial quantities, a rule 

for treatment of sets, an exception for use of certain nylon filament 

yarn, and consultation provisions. 

The de minimis rule applies to goods that ordinarily would not 

be considered originating goods because certain of their fibers or 

yarns do not undergo an applicable change in tariff classification. 

Under the rule, the Parties will consider a good to be ‘‘originating’’ 

if those fibers or yarns constitute ten percent or less of the total 

weight of the component of the good that determines origin. This 

special rule does not apply to goods containing elastomeric yarns 

in the component of the good that determines the classification. 

Annex 3.25 of the Agreement sets out a list of fabrics, yarns, and 

fibers that the Parties have determined are not available in commercial quantities in a timely manner from producers in the 

United States and Panama. A textile or apparel good that includes 

the fabrics, yarns, or fibers included in this list will be treated as 

if it is ‘‘originating’’ for purposes of the specific rules of origin in 

Annex 4.1 of the Agreement, regardless of the actual origin of those 

inputs. Chapter Three establishes procedures under which the 

United States will determine whether additional fabrics, yarns, or 

fibers are not available in commercial quantities in the United 

States and Panama. The United States may also remove a fabric, 

yarn, or fiber from the list if it determines that the fabric, yarn, 

or fiber has become available in commercial quantities. 

Customs Cooperation. Chapter Three commits the Parties to cooperate in enforcing their laws related to trade in textile and apparel goods, to ensure the accuracy of claims of origin, and to prevent circumvention of the Parties’ laws or agreements relating to 

trade in textile and apparel goods. The Chapter also provides that, 

under certain circumstances, the exporting Party must conduct a 

verification to determine whether a claim of origin is accurate, or 

to determine compliance with relevant laws, regulations, and procedures. A verification may include visits to the premises of the exporter or producer of the goods in question. If there is insufficient 

information to make the relevant determination, or if an enterprise 

provides incorrect information, the importing Party may take appropriate action, which may include denying application of preferential tariff treatment or denying entry to the goods in question. 

Further, either Party may convene consultations to resolve technical or interpretive issues arising with respect to customs cooperation or may request technical assistance from the other Party in 

implementing the Chapter’s customs cooperation provisions. 

Additional Provisions. Chapter Three provides for duty-free 

treatment for goods that the United States and Panama agree 

qualify as handmade, hand-loomed, or traditional folklore goods. 

The United States agreed to provide duty-free treatment for certain 

(i) Guayabera-style dresses and shirts that are cut and sewn or 

otherwise assembled in Panama or the United States; and (ii) socks 

that are sewn or otherwise assembled in Panama with U.S. thread 

from components knit-to-shape in the United States from U.S. 


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yarn. The United States also agreed that goods assembled in Panama from U.S. components with U.S. thread that do not qualify as 

‘‘originating’’ goods will be subject to NTR (MFN) duties on only the 

value of the assembled good minus the value of U.S. components 

used in the good. 

CHAPTER FOUR: RULES OF ORIGIN AND ORIGIN PROCEDURES

To benefit from various trade preferences provided under the 

Agreement, including reduced duties, a good must qualify as an 

‘‘originating’’ good under the provisions set out in Chapter Four 

and Annex 4.1 (Specific Rules of Origin). These rules ensure that 

preferential tariff treatment and other benefits of the Agreement 

accrue primarily to firms or individuals that produce or manufacture goods in the Parties’ territories. 

Key Concepts. Chapter Four provides general criteria under 

which a good may qualify as ‘‘originating’’: • When the good is wholly obtained or produced entirely in 

Panama, the United States, or both countries (e.g., crops harvested or minerals extracted in the United States); or • When the good is produced entirely in Panama, the United 

States, or both countries and: (i) is manufactured or assembled 

from non-originating materials that undergo a specified change 

in tariff classification in Panama, the United States, or both 

countries; or (ii) meets any applicable ‘‘regional value content’’ 

requirement (see below); and (iii) satisfies all other requirements of Chapter Four, including Annex 4.1; or 

• When the good is produced entirely in Panama, the United 

States, or both countries, exclusively from ‘‘originating’’ materials. 

De Minimis. Even if a good does not undergo a specified change 

in tariff classification, it will be treated as an originating good if 

the value of non-originating materials that do not undergo the required tariff shift does not exceed ten percent of the adjusted value 

of the good, and the good otherwise meets the criteria of the Chapter. This de minimis exception does not apply to certain agricultural and textile goods. 

Regional Value Content. Some origin rules under the Agreement 

require that certain goods meet a regional value content test in 

order to qualify as an ‘‘originating’’ good, meaning that a specified 

percentage of the value of the good must be attributable to originating materials. In general, the Agreement provides two methods 

for calculating that percentage: (i) the ‘‘build-down method’’ (based 

on the value of non-originating materials used); and (ii) the ‘‘buildup method’’ (based on the value of originating materials used). The 

regional value content of certain automotive goods, however, may 

be calculated on the basis of the net cost of the good. Finally, accessories, spare parts, and tools delivered with a good are considered 

part of the material making up the good so long as these items are 

not separately classified or invoiced and their quantities and values 

are customary. The de minimis rule does not apply in calculating 

regional value content. 

Claims for Preferential Tariff Treatment. Under the Chapter, importers may make a claim for preferential tariff treatment based 

on: (i) a certification issued by the importer, exporter, or producer, 

or (ii) the importer’s knowledge that the good is an originating 


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good. Each Party may require an importer making a claim for preferential tariff treatment to: declare in its importation document 

that the good is an originating good; have in its possession a certification at the time the claim is made (if a certification forms the 

basis of the claim); provide a copy of the certification, on request, 

to the Party’s customs authority (if a certification forms the basis 

of the claim); and demonstrate, on request of the customs authority, that the good is an originating good under the Chapter. A 

Party may only deny preferential tariff treatment through a written determination that the claim is invalid as a matter of law or 

fact. The Chapter establishes a procedure for filing claims for preferential tariff treatment for up to one year after a good is imported 

and for seeking a refund of any excess duties paid. Chapter Four 

also provides that a Party will not penalize an importer if the importer promptly and voluntarily corrects an incorrect claim and 

pays any duties owed. 

Verification. Each Party must ensure that its customs authority 

is empowered to conduct verifications for purposes of determining 

whether a good is an originating good. Where an importing Party 

determines through a verification that an importer, exporter, or 

producer has engaged in a pattern of conduct in providing false or 

unsupported statements, declarations, or certifications that a good 

is an originating good, the Party may suspend preferential tariff 

treatment to identical goods from that importer, exporter, or producer until the importing Party determines that the importer, exporter, or producer is in compliance with the rules set out in the 

Chapter. 

Additional Rules. Chapter Four provides specific rules with respect to the treatment of (i) packing materials and containers; (ii) 

indirect materials; (iii) fungible goods; and (iv) sets of goods for 

purposes of determining origin. The Chapter provides that a Party 

may not treat a good as an originating good if it undergoes production or any other operation in a third country other than unloading, 

reloading, or any other operation necessary to preserve the good in 

good condition or to transport the good to the territory of a Party, 

or if the good is shipped through a third country and does not remain under the control of customs authorities in that country. 

CHAPTER FIVE: CUSTOMS ADMINISTRATION AND TRADE FACILITATION

Chapter Five establishes rules designed to encourage transparency, predictability, and efficiency in the operation of each Party’s customs procedures and to provide for cooperation between the 

Parties on customs matters. 

General Principles. Chapter Five commits each Party to observe 

certain transparency obligations. Each Party must promptly publish its customs measures, including on the Internet, and, where 

possible, solicit public comments before amending its customs regulations. Each Party must also provide written advance rulings, on 

request, to its importers and to exporters and producers of the 

other Party, regarding whether a product qualifies as an ‘‘originating’’ good under the Agreement, as well as on other customs 

matters. In addition, each Party must guarantee importers access 

to both administrative and judicial review of customs decisions. 

The Parties must adopt or maintain procedures to release goods 

from customs promptly and expeditiously clear express shipments. 


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After the Agreement enters into force Panama will have one year 

to comply with the Chapter’s rules on express shipments; two years 

to comply with certain of the Chapter’s transparency obligations 

and its requirement to provide advance rulings; and three years to 

comply with its obligations to adopt electronic processing and risk 

management systems. 

Cooperation. Chapter Five also is designed to enhance customs 

cooperation. It encourages the Parties to give each other advance 

notice of customs developments likely to affect the Agreement. The 

Chapter calls for the Parties to cooperate in securing compliance 

with each other’s customs measures related to the implementation 

and operation of the provisions of the Agreement governing importations and exportations. It includes specific provisions requiring 

the Parties to share customs information where a Party has a reasonable suspicion of unlawful activity relating to its laws and regulations governing importations. 

Panamanian Free Zone Monitoring Program. Chapter Five requires Panama to maintain its existing program for monitoring the 

importation into, exportation from, and processing or manipulation 

of goods in Panamanian free zones. The Chapter also provides that 

if the United States has a reasonable suspicion that a good for 

which a U.S. importer has made a claim for preferential tariff 

treatment under another U.S. free trade agreement has undergone 

processing in a Panamanian free zone (other than unloading, reloading, or other operations necessary to preserve the good or 

transport it to the United States), the United States may request 

Panama to make relevant records available or visit facilities in the 

free zone to verify whether the good was imported into, exported 

from, or processed or manipulated in the free zone. 

CHAPTER SIX: SANITARY AND PHYTOSANITARY MEASURES

Chapter Six defines the Parties’ obligations to each other regarding sanitary and phytosanitary (SPS) measures. It reflects the Parties’ understanding that implementation of existing obligations 

under the WTO Agreement on the Application of Sanitary and 

Phytosanitary Measures (SPS Agreement) is a shared objective. 

Nothing in the Agreement imposes new limitations on the United 

States in terms of maintaining high safety and inspection standards. 

Key Concepts. SPS measures are laws or regulations that protect 

human, animal, or plant life or health from certain risks, including 

plant- and animal-borne pests and diseases, additives, contaminants, toxins, or disease-causing organisms in food and beverages. 

Cooperation. Under Chapter Six, the Parties will establish an 

SPS Committee consisting of relevant trade and regulatory officials. The objectives of the Committee are to (i) help each Party to 

implement the WTO SPS Agreement; (ii) assist each Party to protect human, animal, or plant life or health; (iii) enhance consultation and cooperation between the Parties on SPS matters; and (iv) 

address SPS measures affecting trade between the Parties. The 

Committee will also provide a forum for enhancing mutual understanding of each Party’s SPS measures and the regulatory processes that relate to those measures; consulting on SPS matters that 

may affect trade between the Parties; and consulting on issues, 


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agendas, and positions for meetings of certain international organizations that address SPS matters. 

Dispute Settlement. Neither Party may invoke the Agreement’s 

dispute settlement procedures for a matter arising under Chapter 

Six. Instead, any dispute between the Parties involving an SPS 

measure must be resolved through the WTO. 

CHAPTER SEVEN: TECHNICAL BARRIERS TO TRADE

Chapter Seven builds on WTO rules related to technical barriers 

to trade to promote transparency, accountability, and cooperation 

between the Parties on regulatory issues. 

Key Concepts. The term ‘‘technical barriers to trade’’ (TBT) refers 

to barriers that may arise in preparing, adopting, or applying voluntary product standards, mandatory technical regulations, and 

procedures used to determine whether a particular good meets such 

standards and regulations, i.e., ‘‘conformity assessment procedures.’’ 

International Standards. The principles articulated in the WTO 

TBT Committee’s Decision on Principles for the Development of 

International Standards, Guides and Recommendations emphasize 

the need for openness and consensus in the development of international standards. Under Chapter Seven, the Parties will apply 

these principles when determining whether an international standard exists and consult on pertinent matters under consideration by 

relevant international or regional bodies. 

Cooperation. Chapter Seven establishes a Committee on Technical Barriers to Trade through which the Parties will cooperate to 

reduce technical barriers and improve market access. The Committee’s specific functions will include: (i) enhancing cooperation in the 

development and improvement of standards, technical regulations, 

and conformity assessment procedures; (ii) facilitating sectoral cooperation between governmental and non-governmental conformity 

assessment bodies; (iii) exchanging information on developments in 

non-governmental, regional, and multilateral fora engaged in activities related to standards, technical regulations, and conformity 

assessment procedures; and (iv) consulting, at a Party’s request, on 

any matter arising under the Chapter. 

Conformity Assessment. Chapter Seven provides for a dialogue 

between the Parties on ways to facilitate the acceptance of conformity assessment results. Each Party will recognize conformity 

assessment bodies in the territory of the other Party on terms no 

less favorable than it accords conformity assessment bodies in its 

own territory. 

Transparency. Chapter Seven contains various transparency obligations, such as requiring each Party to: (i) allow persons of the 

other Party to participate in the development of technical regulations, standards, and conformity assessment procedures on terms 

no less favorable than those accorded to its own persons; (ii) transmit regulatory proposals notified under the WTO Agreement on 

Technical Barriers to Trade directly to the other Party; (iii) describe in writing the objectives of proposed technical regulations or 

conformity assessment procedures and the rationale for the approach the Party is proposing; and (iv) consider comments on such 

proposals and respond in writing to significant comments it receives. Each Party must implement the Chapter’s transparency 


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provisions as soon as practicable, and no later than five years after 

the Agreement enters into force. 

CHAPTER EIGHT: TRADE REMEDIES

Safeguards. Chapter Eight establishes a safeguard procedure 

that will be available to aid domestic industries that sustain or are 

threatened with serious injury due to increased imports resulting 

from tariff reduction or elimination under the Agreement. The 

Chapter does not affect the Parties’ rights or obligations under the 

WTO’s safeguard provisions (global safeguards) or under other 

WTO trade remedy rules. 

Chapter Eight authorizes each Party to impose temporary duties 

on an imported originating good if, as a result of the reduction or 

elimination of a duty under the Agreement, the good is being imported in such increased quantities and under such conditions as 

to constitute a substantial cause of serious injury, or threat of serious injury, to a domestic industry producing a ‘‘like’’ or ‘‘directly 

competitive’’ good. 

A safeguard measure may be applied on a good only during the 

Agreement’s ‘‘transition period’’ for phasing out duties. A safeguard 

measure may take one of two forms—a temporary increase in duties to NTR (MFN) levels or a temporary suspension of duty reductions called for under the Agreement. A Party may not impose a 

safeguard measure under Chapter Eight more than once on the 

same good. A safeguard measure may be in place for a total of four 

years, including any extensions of the measure. A Party may extend a measure if it determines that the industry is adjusting and 

the measure remains necessary to facilitate adjustment and prevent or remedy serious injury. If a measure lasts more than one 

year, the Party must scale it back at regular intervals. 

If a Party imposes a safeguard measure, Chapter Eight requires 

it to provide offsetting trade compensation to the other Party. If the 

Parties cannot agree on the amount or nature of the compensation, 

the exporting Party may unilaterally suspend ‘‘substantially equivalent’’ trade concessions that it has made to the importing Party. 

Global Safeguards. Chapter Eight maintains each Party’s right 

to take action against imports from all sources under Article XIX 

of the GATT 1994 and the WTO Agreement on Safeguards. A Party 

may exclude imports of an originating good from the other Party 

from a global safeguard measure if those imports are not a substantial cause of serious injury or do not create a threat of serious 

injury. A Party may not apply a safeguard measure under Chapter 

Eight at the same time that it applies a safeguard measure on the 

same good under Article XIX of the GATT 1994 and the WTO 

Agreement on Safeguards. 

Antidumping and Countervailing Duties. Chapter Eight confirms 

that the Parties retain their rights and obligations under the WTO 

Agreement relating to the application of antidumping and countervailing duties. Antidumping and countervailing duty measures may 

not be challenged under the Agreement’s dispute settlement procedures. The Chapter provides that the United States will continue 

to treat Panama as a CBI beneficiary country for purposes of Sections 771(7)(G)(ii)(III) and 771(7)(H) of the Tariff Act of 1930 (19 

U.S.C. 1677(7)(G)(ii)(III) and 1677(7)(H)), which preclude the U.S. 

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lating’’) imports from CBI beneficiary countries with imports from 

non-beneficiary countries in determining in antidumping and countervailing duty investigations whether imports of a particular product from such beneficiary countries are injuring or threaten to injure a U.S. industry. 

CHAPTER NINE: GOVERNMENT PROCUREMENT

Chapter Nine provides comprehensive obligations requiring each 

Party to apply fair and transparent procurement procedures and 

rules and prohibiting each government and its procuring entities 

from discriminating in purchasing practices against goods, services, 

and suppliers from the other Party. The rules of Chapter Nine are 

broadly based on the rules of the WTO Agreement on Government 

Procurement. 

General Principles. Chapter Nine establishes a basic rule of ‘‘national treatment,’’ meaning that each Party’s procurement rules 

and the entities applying those rules must treat goods, services, 

and suppliers of such goods and services from the other Party in 

a manner that is ‘‘no less favorable’’ than their domestic counterparts. The Chapter also bars discrimination against locally established suppliers on the basis of foreign affiliation or ownership. 

Chapter Nine also provides rules aimed at ensuring a fair and 

transparent procurement process. 

Coverage and Thresholds. Chapter Nine applies to purchases and 

other means of obtaining goods and services valued above certain 

dollar thresholds by those government departments, agencies, and 

enterprises listed in each Party’s Schedule in Annex 9.1. Specifically, the Chapter applies to procurements by listed agencies of the 

‘‘central government,’’ which for the United States is the federal 

government, of goods and services valued at $193,000 or more and 

construction services valued at $7,407,000 or more. The equivalent 

thresholds for purchases by listed ‘‘sub-central’’ government entities (i.e., provincial governments for Panama and U.S. state government agencies) are $526,000 and $7,407,000, for goods and services and construction services, respectively. The Chapter applies to 

purchases of goods and services that the Panama Canal Authority 

makes of (i) goods and services valued over $593,000, and (ii) construction services valued over $12 million for the first 12 years that 

the Agreement is in force and $10.3 million thereafter. The Chapter’s thresholds for other governmental entities are either $250,000 

or $593,000 for goods and services, and $7,407,000 for construction 

services. All thresholds (other than the $250,000 threshold for 

other government entities and the Panama Canal Authority’s transitional $12 million threshold for construction services) are subject 

to adjustment every two years on January 1, with the next adjustment set for January 1, 2012. 

Transparency. Chapter Nine establishes rules designed to ensure 

transparency in procurement procedures. Each Party must publish 

its laws, regulations, and other measures governing procurement, 

along with any changes to those measures. Procuring entities must 

publish notices of procurement opportunities in advance. The Chapter also lists minimum information that such notices must include. 

Tendering Rules. Chapter Nine provides rules for setting deadlines on ‘‘tendering’’ (bidding on government contracts). It requires 

procuring entities to give suppliers all the information they need 


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to prepare tenders, including the criteria that procuring entities 

will use to evaluate tenders. Entities must also, where appropriate, 

base their technical specifications (i.e., detailed descriptions of the 

goods or services to be procured) on performance-oriented criteria 

and international standards. Chapter Nine provides that procuring 

entities may not write technical specifications with the purpose or 

effect of creating an unnecessary obstacle to trade between the Parties while clarifying that an entity may adopt technical specifications to promote environmental conservation. The Chapter also 

clarifies that an entity may adopt technical specifications that require suppliers to comply with generally applicable laws regarding 

fundamental principles and rights at work and acceptable conditions of work with respect to minimum wages, hours of work, and 

occupational safety and health in the territory where they make 

the product or perform the service that the entity will purchase. It 

also sets out the circumstances under which procuring entities are 

allowed to use limited tendering, i.e., award a contract to a supplier without opening the procurement to all interested suppliers. 

Award Rules. Chapter Nine provides that to be considered for an 

award, a tender must be submitted by a qualified supplier. The 

tender must meet the criteria set out in the tender documentation, 

and procuring entities must base their award of contracts on those 

criteria. Procuring entities must publish information on awards, including the name of the supplier, a description of the goods or services procured, and the value of the contract. Chapter Nine also 

calls for each Party to ensure that suppliers may bring challenges 

against procurement decisions before independent reviewers. 

Additional Provisions. Chapter Nine builds on the anti-corruption provisions of Chapter Eighteen (Transparency), including by 

requiring each Party to maintain procedures to declare suppliers 

that have engaged in fraudulent or other illegal actions in relation 

to procurement ineligible for participation in the Party’s procurement. It establishes procedures under which a Party may modify 

its coverage under the Chapter, such as when a Party privatizes 

an entity whose purchases are covered under the Chapter. It also 

provides that a Party may adopt or maintain measures necessary 

to protect: (i) public morals, order, or safety; (ii) human, animal, or 

plant life or health, including environmental measures necessary to 

protect human, animal, or plant life or health; or (iii) intellectual 

property. Parties may also adopt measures relating to goods or 

services of handicapped persons, philanthropic institutions, or prison labor. 

CHAPTER TEN: INVESTMENT

Chapter Ten establishes rules to protect investors from a Party 

against wrongful or discriminatory government actions when they 

invest or attempt to invest in the other Party’s territory. The Chapter’s provisions reflect traditional standards incorporated in earlier 

U.S. bilateral investment treaties, previous trade agreements, and 

customary international law. 

Key Concepts. Under Chapter Ten, the term ‘‘investment’’ covers 

all forms of investment, including enterprises, securities, certain 

forms of debt, intellectual property rights, licenses, and certain contracts. Chapter Ten covers both investments existing when the 

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vestor of a Party’’ encompasses U.S. and Panamanian nationals as 

well as firms (including branches) established in one of the Parties. 

General Principles. Under the Agreement, investors enjoy six 

basic protections: (i) the right to non-discriminatory treatment relative both to domestic investors and investors of non-Parties; (ii) 

limits on imposition by the host Party of ‘‘performance requirements;’’ (iii) the right to free transfer of funds related to an investment; (iv) protection from expropriation except when in conformity 

with customary international law; (v) the right to the minimum 

standard of treatment of aliens in accordance with customary international law; and (vi) the right to hire key managerial personnel 

without regard to nationality. (As to this last protection, a Party 

may require that a majority of the board of directors be of a particular nationality, as long as this does not prevent the investor 

from controlling its investment.) 

Sectoral Coverage and Non-Conforming Measures. With the exception of investments in or by regulated financial institutions 

(which are treated in Chapter Twelve (Financial Services)), Chapter Ten generally applies to all sectors, including service sectors. 

However, each Party negotiated a limited list, in Annex I and II, 

of exemptions from the Chapter’s obligations relating to national 

treatment, most-favored-nation treatment, performance requirements, or senior management and boards of directors (‘‘non-conforming measures’’). Annex I contains each Party’s list of existing 

non-conforming measures at the central and regional levels of government. The United States has scheduled an exemption from all 

of the aforementioned obligations for all existing state measures. 

All existing local measures are exempted from these obligations for 

both Parties without the need to be listed. If a Party liberalizes any 

of these non-conforming Annex I measures, it must thereafter 

maintain the measure at least at that level of openness. Each 

Party has listed in Annex II sectors or activities in which it reserves the right to adopt or maintain future non-conforming measures. (Annexes I and II also include exemptions from Chapter Eleven (Cross-Border Trade in Services). See below.) 

Investor-State Disputes. Chapter Ten provides a mechanism for 

an investor of a Party to submit to binding international arbitration a claim for damages against the other Party. The investor may 

assert that the Party has breached a substantive obligation under 

the Chapter or that the Party has breached an ‘‘investment agreement’’ with, or an ‘‘investment authorization’’ granted to, the investor or a covered investment that the investor owns or controls. ‘‘Investment agreements’’ and ‘‘investment authorizations’’ are arrangements between an investor and a host government based on 

contracts and authorizations, respectively. These terms are defined 

in Chapter Ten. 

Chapter Ten affords public access to information on investorState arbitrations conducted pursuant to the Agreement. For example, Chapter Ten requires that hearings be generally open to the 

public and that key documents be publicly available, with exceptions for confidential information, including confidential business 

information. The Chapter also authorizes tribunals to accept amicus submissions from the public. In addition, the Chapter includes 

provisions similar to those used in U.S. courts to dispose quickly 

of claims a tribunal finds to be frivolous. Finally, within three 


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years after the Agreement enters into force the Parties will consider whether to establish an appellate body, or similar mechanism, to review arbitral awards rendered by tribunals under the 

Chapter. 

Chapter Ten provides that, ‘‘except in rare circumstances,’’ nondiscriminatory regulatory actions designed and applied to meet legitimate public welfare objectives, such as public health, safety, 

and the environment, are not indirect expropriations. 

The Agreement does not require the United States to give Panamanian investors greater substantive rights than U.S. companies 

already enjoy in the United States. 

Panama Canal Authority. Chapter Ten clarifies that nothing in 

it or Chapter Eleven (Cross-Border Trade in Services) constrains 

Panama’s right to appoint the Panama Canal Authority as the entity exclusively responsible for administering the Panama Canal. 

The Chapter provides that an investor alleging that an act of the 

Panama Canal Authority breaches an ‘‘investment agreement’’ 

must first submit the claim to the Panama Canal Authority for resolution. At the expiration of a three-month period, the investor may 

submit its claim to investor-State arbitration under the Agreement 

regardless of whether the Panama Canal Authority has issued a 

decision regarding the claim. 

CHAPTER ELEVEN: CROSS-BORDER TRADE IN SERVICES

Chapter Eleven governs measures affecting cross-border trade in 

services between the Parties. Certain provisions also apply to 

measures affecting investments to supply services. 

Key Concepts. Under the Agreement, cross-border trade in services covers supply of a service: • from the territory of one Party into the territory of the 

other Party (e.g., electronic delivery of services from the United 

States to Panama); • in the territory of a Party by a person of that Party to a 

person of the other Party (e.g., a Panamanian company provides services to U.S. visitors in Panama); and 

• by a national of a Party in the territory of the other Party 

(e.g., a U.S. lawyer provides legal services in Panama). 

Chapter Eleven should be read together with Chapter Ten (Investment), which establishes rules pertaining to the treatment of 

service firms that choose to provide their services through a local 

presence, rather than cross-border. Chapter Eleven applies where, 

for example, a service supplier is temporarily present in the territory of a Party and does not operate through a local investment. 

General Principles. Among Chapter Eleven’s core obligations are 

requirements to provide national treatment and most-favored-nation treatment to service suppliers of the other Party. Thus, each 

Party must treat service suppliers of the other Party no less favorably than its own suppliers or those of any other country. This 

commitment applies to state and local governments as well as the 

federal government. The Chapter’s provisions apply to existing 

service suppliers as well as those who seek to supply services. The 

Chapter also includes a provision prohibiting the Parties from requiring firms to establish a local presence as a condition for supplying a service on a cross-border basis. In addition, certain types 

of market access restrictions on the supply of services (e.g., that 


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limit the number of firms that may offer a particular service or 

that restrict or require specific types of legal structures or joint 

ventures with local companies in order to supply a service) are also 

barred. The Chapter’s market access rules apply both to services 

supplied on a cross-border basis and through a local investment. 

Sectoral Coverage and Non-Conforming Measures. Chapter Eleven applies across virtually all services sectors. The Chapter excludes financial services (which are addressed in Chapter Twelve 

(Financial Services)), except that certain provisions of Chapter 

Eleven apply to investments in financial services that are not regulated as financial institutions and are covered by Chapter Ten (Investment). In addition, Chapter Eleven does not cover air transportation, although it does apply to specialty air services and aircraft 

repair and maintenance. 

Each Party has listed in Annexes I and II measures or sectors 

for which it negotiated exemptions from Chapter Eleven’s core obligations (national treatment, most-favored-nation treatment, market 

access, and local presence). Annex I contains each Party’s list of existing non-conforming measures at the central and regional levels 

of government. The United States has scheduled an exemption 

from the national treatment, NTR (MFN), and local presence obligations for all existing state measures. With respect to the market 

access discipline, the United States has reserved the right to take 

measures that are not inconsistent with the U.S. commitments in 

the WTO General Agreement on Trade in Services (GATS). All existing local measures are exempted for both Parties without the 

need to be listed. If a Party liberalizes any of these non-conforming 

Annex I measures, it must thereafter maintain the measure at 

least at that level of openness. Each Party has listed in Annex II 

sectors or activities in which it reserves the right to adopt or maintain future non-conforming measures. 

Specific Commitments. Chapter Eleven includes a comprehensive 

definition of express delivery services that requires each Party to 

provide national treatment, most-favored-nation treatment, and additional benefits to express delivery services of the other Party. The 

Chapter provides that the Parties will try to maintain the level of 

market openness for express delivery services they provided on the 

date the Agreement was signed. The Chapter provides that Panama may not adopt or maintain any restriction on express delivery 

services that was not in place on the date the Agreement was 

signed. The Chapter also addresses the issue of postal monopolies 

directing revenues derived from monopoly postal services to confer 

an advantage on express delivery services. 

Transparency and Domestic Regulation. Provisions on transparency and domestic regulation complement the core rules of 

Chapter Eleven. The transparency rules apply to the development 

and application of regulations governing services. The Chapter’s 

rules on domestic regulation govern the operation of approval and 

licensing systems for service suppliers. Like the Chapter’s market 

access rules, its provisions on transparency and domestic regulation cover services supplied both on a cross-border basis and 

through a local investment. 

Exclusions. Chapter Eleven excludes any service supplied ‘‘in the 

exercise of governmental authority’’—that is, a service that is provided on a non-commercial and non-competitive basis. Chapter 


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Eleven also does not apply to government subsidies. In addition, 

the Chapter makes clear that the Agreement does not impose any 

obligation on a Party with respect to its immigration measures, including admission or conditions of admission for temporary entry. 

CHAPTER TWELVE: FINANCIAL SERVICES

Chapter Twelve of the Agreement covers measures relating to 

the supply of financial services. It provides rules governing each 

Party’s treatment of: (i) financial institutions of the other Party; (ii) 

investors of the other Party, and their investments, in financial institutions; and (iii) cross-border trade in financial services. 

Key Concepts. The Chapter defines a ‘‘financial institution’’ as 

any financial intermediary or other enterprise authorized to do 

business and regulated or supervised as a financial institution 

under the law of the Party where it is located. A ‘‘financial service’’ 

is any service of a financial nature, including, for example, insurance, banking, securities, asset management, financial information 

and data processing services, and financial advisory services. 

General Principles. Chapter Twelve’s core obligations parallel 

those in Chapters Ten (Investment) and Eleven (Cross-Border 

Trade in Services). Specifically, Chapter Twelve imposes rules requiring national treatment and most-favored-nation treatment, prohibits certain quantitative restrictions on market access of financial 

institutions, and bars restrictions on the nationality of senior management. As appropriate, these rules apply to measures affecting financial institutions, investors and investments in financial institutions of the other Party, and services companies that are currently 

supplying and that seek to supply financial services on a cross-border basis. The rules do not apply to measures adopted or maintained by a Party relating to certain specified services and activities—for example, activities or services forming part of a public retirement plan or statutory system of social security—unless the 

Party allows its financial institutions to compete with a public entity or a financial institution to supply such services and activities. 

Provisions such as the prudential and monetary and exchange rate 

exceptions ensure that governments may continue to regulate the 

financial sector and take action to ensure the stability and integrity of the financial system in a financial crisis. 

Non-Conforming Measures. Similar to Chapters Ten (Investment) 

and Eleven (Cross-Border Trade in Services), each Party has listed 

in Annex III particular measures for which it negotiated exemptions from the Chapter’s core obligations. Existing non-conforming 

U.S. state and local laws and regulations are exempted from these 

obligations. If a Party, including a state or local government, liberalizes one of these non-conforming measures with respect to investment, however, it must, in most cases, maintain the measure at 

least at that new level of openness. 

Other Provisions. Chapter Twelve also includes provisions on regulatory transparency, ‘‘new’’ financial services, self-regulatory organizations, and the expedited availability of insurance products. 

Relationship to Other Chapters. Measures that a Party applies to 

financial services suppliers of the other Party, other than regulated 

financial institutions, that make or operate investments in the Party’s territory are covered principally by Chapter Ten (Investment) 

and certain provisions of Chapter Eleven (Cross-Border Trade in 


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Services). In particular, the core obligations of Chapter Ten apply 

to such measures, as do the market access, transparency, and domestic regulation provisions of Chapter Eleven. Chapter Twelve incorporates by reference certain provisions of Chapter Ten, such as 

those relating to transfers and expropriation. 

CHAPTER THIRTEEN: TELECOMMUNICATIONS

Chapter Thirteen includes disciplines beyond those imposed 

under Chapters Ten (Investment) and Eleven (Cross-Border Trade 

in Services) on regulatory measures affecting telecommunications 

trade and investment between the Parties. It is designed to ensure 

that service suppliers of each Party have non-discriminatory access 

to public telecommunications networks in the territory of the other 

Party. In addition, the Chapter requires each Party to regulate its 

major telecommunications suppliers in ways that will ensure a 

level playing field for new entrants. Chapter Thirteen also seeks to 

ensure that telecommunications regulations are set by independent 

regulators applying transparent procedures, and is designed to encourage adherence to principles of deregulation and technological 

neutrality. 

Key Concepts. Under Chapter Thirteen, a ‘‘public telecommunications service’’ is any telecommunications service that a Party requires to be offered to the public generally. The term includes voice 

and data transmission services. It does not include the offering of 

‘‘information services’’ (e.g., services that enable users to create, 

store, or process information over a network). A ‘‘major supplier’’ is 

a company that, by virtue of its market position or control over certain facilities, can materially affect the terms of participation in the 

market. 

Competition. Chapter Thirteen establishes rules promoting effective competition in telecommunications services. It also provides 

flexibility to account for changes that may occur through new legislation or regulatory decisions. The Chapter includes commitments 

by each Party to: • ensure that all service suppliers of the other Party that 

seek to access or use a public telecommunications network in 

the Party’s territory can do so on reasonable and non-discriminatory terms (e.g., Panama must ensure that its public phone 

companies do not provide preferential access to Panamanian 

banks or Internet service providers, to the detriment of U.S. 

competitors); • give the other Party’s telecommunications suppliers, in 

particular, the right to interconnect their networks with public 

networks in the Party’s territory; • ensure that telecommunications suppliers of the other 

Party enjoy the right to lease lines to supplement their own 

networks or, alternatively, purchase telecommunications services from domestic suppliers and resell them in order to build 

a customer base; and • impose disciplines on the behavior of ‘‘major suppliers.’’ 

Regulation. The Chapter addresses key regulatory concerns that 

may create barriers to trade and investment in telecommunications 

services. In particular, each Party: • will adopt procedures that will help ensure that they 

maintain open and transparent telecommunications regulatory 


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regimes, including requirements to make interconnection 

agreements and service tariffs publicly available; • will require their telecommunications regulators to resolve 

disputes between suppliers and provide foreign suppliers the 

right to seek judicial review of those decisions; • may elect to deregulate telecommunications services when 

competition emerges and certain standards are met; and • will avoid impeding telecommunications suppliers from 

choosing technologies they consider appropriate for supplying 

their services. 

CHAPTER FOURTEEN: ELECTRONIC COMMERCE

Chapter Fourteen establishes rules designed to prohibit discriminatory regulation of electronic trade in digitally encoded products 

such as computer programs, video, images, and sound recordings. 

The provisions in this and other recent U.S. trade agreements represent a major advance over previous international understandings 

on this subject. 

Customs Duties. Chapter Fourteen provides that a Party may not 

impose customs duties on digital products of the other Party transmitted electronically and will determine the customs value of an 

imported carrier medium bearing a digital product based on the 

value of the carrier medium alone, without regard to the value of 

the digital product stored on the carrier medium. 

Non-Discrimination. The Parties will apply the principles of national treatment and most-favored-nation treatment to trade in 

electronically-transmitted digital products. Thus, a Party may not 

discriminate against electronically-transmitted digital products on 

the grounds that they have a nexus to another country, either because they have undergone certain specific activities (e.g., creation, 

production, first sale) there or are associated with certain categories of persons of the other Party or a non-Party (e.g., authors, 

performers, producers). Nor may a Party provide less favorable 

treatment to digital products that have a nexus to the other Party 

than it gives to like products that have a nexus to a third country. 

The non-discrimination rules do not apply to non-conforming measures adopted under Chapters Ten (Investment), Eleven (Cross-Border Trade in Services), or Twelve (Financial Services). 

Additional Provisions. Chapter Fourteen contains additional provisions relating to authentication, online consumer protection, and 

paperless trade administration. 

CHAPTER FIFTEEN: INTELLECTUAL PROPERTY RIGHTS

Chapter Fifteen complements and enhances existing international standards for the protection of intellectual property and 

the enforcement of intellectual property rights, consistent with U.S. 

law. 

General Provisions. Chapter Fifteen commits the Parties to ratify 

or accede to several agreements on intellectual property rights, including, by the date the Agreement enters into force, the WIPO 

Copyright Treaty, the WIPO Performances and Phonograms Treaty, 

the Convention Relating to the Distribution of Programme-Carrying 

Satellite Signals, and the Patent Cooperation Treaty, and, within 

specified periods, the International Convention for the Protection of 

New Varieties of Plants and the Trademark Law Treaty. The 


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United States is already a party to these agreements. With very 

limited exceptions, Chapter Fifteen commits each Party to provide 

national treatment to the other Party’s nationals with respect to 

the enjoyment and protection of the intellectual property rights 

covered by the Chapter. 

Trademarks and Geographical Indications. Chapter Fifteen requires each Party to protect trademarks and geographical indications, including by refusing protection or recognition of a geographical indication that is likely to cause confusion with a preexisting trademark. The Chapter calls for trademarks to include 

collective marks and certification marks. The Chapter also requires 

each Party to establish, to the maximum degree practical, an electronic system for applying for, registering, and maintaining trademarks, as well as to work to provide an online database. Each 

Party must also provide efficient and transparent procedures governing applications to protect trademarks and geographical indications. Furthermore, the Chapter requires each Party’s Internet domain name management system to include a dispute resolution 

procedure to address trademark cyber-piracy. 

Copyright and Related Rights. Chapter Fifteen obligates the Parties to provide broad protection for copyright and related rights, affirming and building on rights set out in several international 

agreements. For instance, each Party must provide copyright protection for the life of the author plus 70 years (for works measured 

by a person’s life). The Chapter also provides enhancements of the 

rights of copyright owners over digital copies of their works. It also 

calls for each Party to provide a right of communication to the public, including the exclusive right to authorize making protected 

works available online. The Chapter specifically requires each 

Party to protect the rights of performers and producers of 

phonograms. 

To curb copyright piracy, the Chapter requires government agencies of the Parties to use only legitimate computer software, setting 

an example for the private sector. The Chapter also includes provisions on anti-circumvention of technological measures, under which 

the Parties commit to prohibit tampering with technology used to 

protect copyrighted works. In addition, Chapter Fifteen sets out obligations with respect to the liability of Internet service providers 

in connection with copyright infringements that take place over 

their networks. Finally, recognizing the importance of satellite 

broadcasts, Chapter Fifteen provides that each Party will protect 

encrypted program-carrying satellite signals. It obligates the Parties to extend protection to the signals themselves, as well as to the 

content contained in the signals. 

Patents. Chapter Fifteen includes a variety of provisions for the 

protection of patents. The Parties agree to make patents available 

for any invention, subject to limited exclusions. To guard against 

arbitrary revocation of patents, each Party must limit the grounds 

for revoking a patent to the grounds that would have justified a refusal to grant the patent. Under Chapter Fifteen, each Party must 

make best efforts to process patent applications and marketing approval applications expeditiously. With respect to most products, a 

Party must adjust the patent term to compensate for unreasonable 

delays that occur while granting a patent. For pharmaceutical 

products, a Party may provide for such adjustments if there is an 


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unreasonable delay in granting a patent or providing marketing 

approval for a product. 

Certain Regulated Products. Chapter Fifteen includes additional 

specific provisions relating to pharmaceuticals and agricultural 

chemicals. Among other things, the Chapter protects test data that 

a company submits in seeking marketing approval for such products by precluding other firms from relying on the data. It provides 

specific periods for such protection—normally five years for pharmaceuticals and ten years for agricultural chemicals. This means, 

for example, that during the period of protection, test data that a 

company submits for approval of a new agricultural chemical product cannot be used without that company’s consent in granting approval to market a new product. If a Party bases its decision to approve a pharmaceutical product for marketing in its territory on a 

marketing approval the other Party has granted for that product, 

and it approves the product within six months after the company 

applies for the approval in the Party, the period of test data protection will be counted from the date the other Party approved the 

product. The Chapter’s rules governing test data protection for 

pharmaceutical products are subject to a public health exception in 

accordance with the Doha Declaration on the TRIPS Agreement 

and Public Health. The Chapter also requires the Parties to implement procedures for the expeditious adjudication of disputes concerning the validity or infringement of a patent, a transparent system to provide notice to a patent holder that another person is 

seeking to market an approved pharmaceutical product during the 

term of a patent, and sufficient time and opportunity for a patent 

holder to seek, prior to the marketing of an allegedly infringing 

product, available remedies for an infringing product. 

Public Health. Chapter Fifteen expresses the Parties’ understanding that its obligations do not and should not prevent a Party 

from taking measures to protect public health, in accordance with 

the Doha Declaration on the TRIPS Agreement and Public Health, 

by promoting access to medicines for all. 

Enforcement Provisions. Chapter Fifteen also creates obligations 

with respect to the enforcement of intellectual property rights in 

administrative, civil, and criminal proceedings, and at the border. 

For example, the Parties, in determining damages in civil proceedings involving copyright infringement or trademark counterfeiting, must take into account the value of the legitimate goods as 

well as the infringer’s profits, and must also provide for damages 

based on a fixed range (i.e., ‘‘pre-established damages’’), as an option that the right holder can elect instead of actual damages. 

Chapter Fifteen further provides that each Party’s law enforcement agencies must have authority to seize suspected pirated and 

counterfeit goods, the equipment used to make or transmit them, 

and documentary evidence. Each Party must give its courts authority to order the forfeiture and/or destruction of such items. The 

Chapter also provides that each Party must apply criminal penalties against willful counterfeiting and piracy, including end-user 

piracy, on a commercial scale. 

Chapter Fifteen also requires each Party to empower its law enforcement agencies to take ex officio enforcement action at the border against pirated or counterfeit goods without waiting for a formal complaint. 


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Transition Periods. Most obligations in the Chapter take effect on 

the date the Agreement enters into force. However, Panama may 

delay giving effect to certain specified obligations for periods ranging from one year to three years after that date. 

CHAPTER SIXTEEN: LABOR

Chapter Sixteen sets out the Parties’ commitments and undertakings regarding trade-related labor rights. 

Fundamental Labor Rights. Each Party commits to adopt and 

maintain in its statutes, regulations, and practice certain enumerated labor rights, as stated in the 1998 ILO Declaration on Fundamental Principles and Rights at Work and Its Follow Up. Specifically, these are (i) freedom of association; (ii) the effective recognition of the right to collective bargaining; (iii) the elimination of all 

forms of forced or compulsory labor; (iv) the effective abolition of 

child labor and, for purposes of the Agreement, a prohibition on the 

worst forms of child labor; and (v) the elimination of discrimination 

in respect of employment and occupation. In order to establish a 

violation of this obligation, a Party must demonstrate that the 

other Party has failed to comply in a manner affecting trade or investment between the Parties. Neither Party may waive or otherwise derogate from its statutes or regulations implementing this 

obligation in a manner affecting bilateral trade or investment 

where the waiver or derogation would be inconsistent with one of 

the enumerated rights. For the United States, the Chapter’s provisions regarding fundamental labor rights apply to federal law only. 

Effective Enforcement. Each Party commits not to fail to effectively enforce its labor laws on a sustained or recurring basis in a 

manner affecting trade or investment between the Parties. The 

Chapter defines ‘‘labor laws’’ to include laws directly related to the 

ILO fundamental labor rights, as well as laws providing for acceptable conditions of work with respect to minimum wages, hours of 

work, and occupational safety and health, and laws providing labor 

protections for children and minors, including a prohibition on the 

worst forms of child labor. For the United States, ‘‘labor laws’’ includes federal statutes and regulations addressing these areas, but 

it does not cover state or local labor laws. 

Procedural Guarantees. Each Party commits to afford procedural 

guarantees that ensure workers and employers have access to tribunals for the enforcement of its labor laws. To this end, each 

Party must ensure that proceedings before these tribunals are fair, 

equitable, and transparent and comply with due process of law. Decisions of such tribunals must be in writing, made publicly available, and based on information or evidence in respect of which the 

parties were offered the opportunity to be heard. In addition, hearings in such proceedings must be open to the public, except where 

the administration of justice otherwise requires. Each Party also 

commits to make remedies available to ensure the enforcement of 

its labor laws. Such remedies might include orders, fines, penalties, 

or temporary workplace closures. 

Dispute Settlement. Chapter Sixteen provides for cooperative consultations as a first step if a Party considers that the other Party 

is not complying with its obligations under the Chapter. The complaining Party may, after an initial 60-day consultation period 

under Chapter Sixteen, invoke the Agreement’s general dispute 


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settlement mechanism by requesting additional consultations or a 

meeting of the Agreement’s cabinet-level Free Trade Commission 

under Chapter Twenty (Dispute Settlement). If the Commission is 

unable to resolve the dispute, the matter may be referred to a dispute settlement panel. The Parties will maintain a roster of experts 

to serve on any dispute settlement panel convened to hear disputes 

arising under the Chapter. 

Institutional Arrangements, Cooperation, and Capacity Building. 

Chapter Sixteen establishes a cabinet-level Labor Affairs Council to 

oversee the Chapter’s implementation and to provide a forum for 

consultations and cooperation on labor matters. The Chapter requires each Party to designate a contact point for communications 

with the other Party and the public regarding the Chapter. Each 

Party’s contact point must provide transparent procedures for the 

submission, receipt, and consideration of communications from persons of a Party relating to the Chapter. 

The Chapter also creates a labor cooperation and capacity building mechanism through which the Parties will work together to address labor matters of common interest. In particular, the mechanism will assist the Parties to establish priorities for, and carry 

out, cooperation and capacity building activities relating to such 

topics as: the effective application of fundamental labor rights; legislation and practice relating to compliance with ILO Convention 

182 on the worst forms of child labor; strengthening labor inspection systems and the institutional capacity of labor administrations 

and tribunals; mechanisms for supervising compliance with laws 

and regulations pertaining to working conditions; and the elimination of gender discrimination in employment. 

CHAPTER SEVENTEEN: ENVIRONMENT

Chapter Seventeen sets out the Parties’ commitments and undertakings regarding environmental protection. 

General Principles. Each Party must strive to ensure that its environmental laws provide for and encourage high levels of environmental protection and continue to improve its respective levels of 

environmental protection. Each Party also commits not to waive or 

otherwise derogate from its environmental laws to weaken or reduce the levels of environmental protection in a manner affecting 

trade or investment between the Parties other than pursuant to a 

provision in its environmental law providing for waivers or derogations. Chapter Seventeen further includes commitments to enhance 

cooperation between the Parties in environmental matters and encourages the Parties to develop voluntary, market-based mechanisms as one means for achieving and sustaining high levels of environmental protection. 

Multilateral Environmental Agreements. The Parties recognize 

that certain multilateral environment agreements (MEAs) play an 

important role globally and domestically in protecting the environment. The Chapter includes a provision requiring each Party to 

adopt, maintain, and implement laws, regulations, and all other 

measures to fulfill its obligations under certain MEAs to which 

both governments are parties (‘‘covered agreements’’). To establish 

a violation of this obligation a Party must demonstrate that the 

other Party has failed to comply in a manner affecting trade or investment between the Parties. 


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Chapter Seventeen provides that in the event of any inconsistency between a Party’s obligations under the Agreement and a covered agreement, the Party must seek to balance its obligations 

under both agreements, but this will not preclude a Party from taking measures to comply with the covered agreement as long as the 

measure’s primary purpose is not to impose a disguised restriction 

on trade. 

Effective Enforcement. Each Party commits not to fail to effectively enforce its environmental laws, and its laws, regulations, and 

other measures to fulfill its obligations under the covered agreements, on a sustained or recurring basis in a manner affecting 

trade or investment between the Parties. For the United States, 

‘‘environmental laws’’ comprise federal environmental statutes and 

regulations promulgated under those statutes that are enforceable 

by action of the federal government. 

Procedural Matters. Each Party commits to make judicial, quasijudicial, or administrative proceedings available to sanction or remedy violations of its environmental laws. Each Party must ensure 

that such proceedings are fair, equitable, and transparent, and, to 

this end, comply with due process of law and are open to the public, except where the administration of justice otherwise requires. 

The Chapter requires each Party to ensure that interested persons 

may request the Party’s competent authorities to investigate alleged violations of its environmental laws and that those authorities duly consider such requests. Each Party must also make appropriate and effective remedies available for violations of its environmental laws. These remedies may include, for example, fines, 

injunctions, or requirements to take remedial action or pay for the 

cost of containing or cleaning up pollution. 

Environmental Performance. Each Party will encourage the development and use of flexible, voluntary, and incentive-based mechanisms for environmental protection and will encourage the development and improvement of goals and indicators for measuring environmental performance as well as flexible means for achieving 

performance goals. 

Institutional Arrangements and Cooperation. Chapter Seventeen 

establishes a cabinet-level Environmental Affairs Council to oversee the implementation of the Chapter. The Council will provide for 

the public to participate in its work, including by affording an opportunity at each Council meeting, unless the Parties otherwise 

agree, for the public to express views on how the Chapter is being 

implemented. The Council must also provide appropriate opportunities for the public to participate in the development and implementation of joint environmental activities, including those developed under a separate bilateral environmental cooperation agreement that the Parties have negotiated. 

Public Participation and Submissions. Each Party must provide 

for the receipt and consideration of submissions from persons of a 

Party on matters related to implementation of the Chapter. Each 

Party will also convene a national advisory committee to solicit 

views on matters related to the implementation of the Chapter. In 

addition, the Chapter provides that any person of a Party may file 

a submission with an independent secretariat asserting that a 

Party is failing to effectively enforce its environmental laws. The 

secretariat will review the submission according to specified criVerDate Mar 15 2010 06:52 Sep 26, 2012 Jkt 019010 PO 00000 Frm 00031 Fmt 6659 Sfmt 6602 E:\HR\OC\SR224.XXX SR224

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teria and in appropriate cases recommend to the Environmental 

Affairs Council that a factual record concerning the matter be developed. The secretariat will prepare a factual record if a member 

of the Environmental Affairs Council instructs it to do so. The 

Council will consider the record and, where appropriate, provide 

recommendations to an environmental cooperation commission that 

will be created under a related environmental cooperation agreement. U.S. persons who consider that the United States is failing 

to effectively enforce its environmental laws may invoke the comparable public submissions process under the North American 

Agreement on Environmental Cooperation. The Parties will designate the secretariat and make related arrangements through a 

separate understanding. 

Dispute Settlement. Chapter Seventeen provides for cooperative 

consultations as a first step if a Party considers that the other 

Party is not complying with its obligations under the Chapter. The 

complaining Party may, after an initial 60-day consultation period, 

invoke the Agreement’s general dispute settlement mechanism by 

requesting additional consultations or a meeting of the Agreement’s 

cabinet-level Free Trade Commission under Chapter Twenty (Dispute Settlement). If the Commission is unable to resolve the dispute, the matter may be referred to a dispute settlement panel. 

The Parties will maintain a roster of experts to serve on any dispute settlement panel convened to hear disputes arising under the 

Chapter. 

CHAPTER EIGHTEEN: TRANSPARENCY

Section A of Chapter Eighteen sets out requirements designed to 

foster openness, transparency, and fairness in the adoption and application of measures on matters covered by the Agreement. It requires that each Party must promptly publish all laws, regulations, 

procedures, and administrative rulings of general application concerning subjects covered by the Agreement, or otherwise make 

them available. It requires that, to the extent possible, Parties publish proposed regulations in advance and give interested persons a 

reasonable opportunity to comment. Wherever possible, each Party 

must provide reasonable notice to the other Party’s nationals and 

enterprises that are directly affected by an agency process, including an adjudication, rulemaking, licensing, determination, and approval process. A Party is to afford such persons a reasonable opportunity to present facts and arguments prior to any final administrative action, when time, the nature of the process, and the public interest permit. 

Chapter Eighteen also provides for independent review and appeal of final administrative actions. Appeal rights must include a 

reasonable opportunity to present arguments and to obtain a decision based on evidence in the administrative record. 

In Section B of Chapter Eighteen, the Parties affirm their commitment to eliminate bribery and corruption, including bribery in 

international trade and investment. To this end, each Party is obligated to make it a criminal offense for their public officials to solicit or accept a bribe, and for any person subject to its jurisdiction 

to bribe a public official of that Party or a foreign public official in 

exchange for favorable government action in matters affecting 

international trade or investment. The Parties must also endeavor 


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to protect persons who, in good faith, report acts of bribery or corruption and to work together to encourage and support initiatives 

in relevant international fora to prevent bribery and corruption. 

CHAPTER NINETEEN: ADMINISTRATION OF THE AGREEMENT AND

TRADE CAPACITY BUILDING

Chapter Nineteen creates a Free Trade Commission to supervise 

the implementation and overall operation of the Agreement. The 

Commission comprises the Parties’ trade ministers and will meet 

annually. The Commission will assist in the resolution of any disputes that may arise under the Agreement. The Commission may, 

among other things, issue interpretations of the Agreement and 

agree to accelerate duty elimination on particular products and adjust the Agreement’s product-specific rules of origin. 

Each Party must designate an office to provide administrative 

assistance to dispute settlement panels and perform such other 

functions as the Commission may direct. 

Chapter Nineteen also establishes a Committee on Trade Capacity Building. The overall objective of the Committee is to assist 

Panama to implement the Agreement and adjust to liberalized bilateral trade. Particular functions of the Committee include: 

prioritizing trade capacity building projects; inviting international 

donor institutions, private sector entities, and non-governmental 

organizations to assist in the development and implementation of 

trade capacity building projects; and monitoring and assessing 

progress in implementing those projects. 

CHAPTER TWENTY: DISPUTE SETTLEMENT

Chapter Twenty sets out detailed procedures for the resolution of 

disputes between the Parties over compliance with the Agreement. 

Those procedures emphasize amicable settlements, relying wherever possible on bilateral cooperation and consultations. When disputes arise under provisions common to the Agreement and other 

agreements (e.g., the WTO agreements), the complaining government may choose a forum for resolving the matter that is set forth 

in any valid agreement between the Parties. The selected forum 

will be the exclusive venue for resolving that dispute. 

Consultations. A Party may request consultations with the other 

Party on any actual or proposed measure that it believes might affect the operation of the Agreement. If the Parties cannot resolve 

the matter through consultations within a specified period (normally 60 days), either Party may refer the matter to the Free 

Trade Commission, which will attempt to resolve the dispute. 

Panel Procedures. If the Commission cannot resolve the dispute 

within a specified period (normally 30 days), the Party that referred the matter to the Commission may refer the matter, if it involves an actual measure, to a panel comprising independent experts that the Parties select. The Parties will set rules to protect 

confidential information, provide for open hearings and public release of submissions, and allow an opportunity for the panel to accept submissions from non-governmental entities in the Parties’ 

territories. 

Unless the Parties agree otherwise, a panel is to present its initial report within 120 days after the last panelist is selected. Once 

the panel presents its initial report containing findings of fact and 


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a determination on whether a Party has met its obligations, the 

Parties will have the opportunity to provide written comments to 

the panel. When the panel receives these comments, it may reconsider its report and make any further examination that it considers 

appropriate. Within 30 days after it presents its initial report, the 

panel will submit its final report. The Parties will then seek to 

agree on how to resolve the dispute, normally in a way that conforms to the panel’s determinations and recommendations. Subject 

to protection of confidential information, the panel’s final report 

will be made available to the public 15 days after the Parties receive it. 

Suspension of Benefits. If the Parties cannot resolve the dispute 

after they receive the panel’s final report, the Parties will seek to 

agree on acceptable trade compensation. If they cannot agree on 

compensation, or if the complaining Party believes the defending 

Party has failed to implement an agreed resolution, the complaining Party may provide notice that it intends to suspend trade 

benefits equivalent in effect to those it considers were impaired, or 

may be impaired, as a result of the disputed measure. 

If the defending Party considers that the proposed level of benefits to be suspended is ‘‘manifestly excessive,’’ or believes that it 

has modified the disputed measure to make it conform to the 

Agreement, it may request the panel to reconvene and decide the 

matter. The panel must issue its determination no later than 90 

days after the request is made (or 120 days if the panel is reviewing both the level of the proposed suspension and a modification of 

the measure). 

The complaining Party may suspend trade benefits up to the 

level that the panel sets or, if the panel has not been asked to determine the level, up to the amount that the complaining Party has 

proposed. The complaining Party cannot suspend benefits, however, 

if the defending Party provides notice that it will pay an annual 

monetary assessment to the other Party. The amount of the assessment will be established by agreement of the Parties or, failing 

that, will be set at 50 percent of the level of trade concessions the 

complaining Party was authorized to suspend. 

Compliance Review Mechanism. If, at any time, the defending 

Party believes it has made changes in its laws or regulations sufficient to comply with its obligations under the Agreement, it may 

refer the matter to the panel. If the panel agrees, the dispute ends 

and the complaining Party must withdraw any offsetting measures 

it has put in place. Concurrently, the defending government will be 

relieved of any obligation to pay a monetary assessment. 

The Parties will review the operation of the compliance procedures either five years after the Agreement enters into force or 

within six months after benefits have been suspended or assessments paid in five proceedings initiated under this Agreement, 

whichever occurs first. 

Settlement of Private Disputes. The Parties will encourage the 

use of arbitration and other alternative dispute resolution mechanisms to settle international commercial disputes between private 

parties. Each Party must provide appropriate procedures for the 

recognition and enforcement of arbitral awards, for example by 

complying with the 1958 United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards or the 1975 


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Inter-American Convention on International Commercial Arbitration. 

CHAPTER TWENTY-ONE: EXCEPTIONS

Chapter Twenty-One sets out provisions that generally apply to 

the entire Agreement. Article XX of the GATT 1994 and its interpretive notes are incorporated into and made part of the Agreement, mutatis mutandis, and apply to those Chapters related to 

treatment of goods. Likewise, for the purposes of Chapters Eleven 

(Cross-Border Trade in Services), Thirteen (Telecommunications), 

and Fourteen (Electronic Commerce), GATS Article XIV (including 

its footnotes) is incorporated into and made part of the Agreement. 

For both goods and services, the Parties understand that these exceptions include certain environmental measures. 

Essential Security. Chapter Twenty-One makes clear that nothing in the Agreement prevents a Party from taking actions it considers necessary to protect its essential security interests, and specifically provides that an arbitration panel must apply the essential 

security exception if a Party invokes it. The United States has 

clarified with respect to non-conforming measures relating to port 

activities listed in Annex II that the landside aspects of port activities are subject to the Agreement’s essential security exception. 

Taxation. An exception for taxation limits the field of tax measures subject to the Agreement. For example, the exception generally provides that the Agreement does not affect a Party’s rights 

or obligations under any tax convention. The exception sets out certain circumstances under which tax measures are subject to the 

Agreement’s: (i) national treatment obligation for goods; (ii) national treatment and most-favored-nation treatment obligations for 

services; (iii) prohibitions on performance requirements; and (iv) 

expropriation rules. 

Balance of Payments. Chapter Twenty-One establishes criteria 

that a Party must follow if it applies a balance-of-payments measure on trade in goods. 

Disclosure of Information. The Chapter also provides that a 

Party may withhold information from the other Party where such 

disclosure would impede domestic law enforcement, otherwise be 

contrary to the public interest, or prejudice the legitimate commercial interests of particular enterprises. 

CHAPTER TWENTY-TWO: FINAL PROVISIONS

Chapter Twenty-Two provides that (i) the annexes, appendices, 

and footnotes are part of the Agreement, (ii) the Parties may 

amend the Agreement subject to the legal requirements of each 

Party, and (iii) the English and Spanish texts are both authentic. 

It also provides for consultations if any provision of the WTO 

Agreement that the Parties have incorporated into the Agreement 

is amended. 

Chapter Twenty-Two establishes the procedures for the Agreement to enter into force and terminate. 


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E. GENERAL DESCRIPTION OF THE BILL TO IMPLEMENT THE

AGREEMENT

Sec. 1. Short title; table of contents 

This section provides that the short title of the act implementing 

the Agreement is the ‘‘United States-Panama Trade Promotion 

Agreement Implementation Act’’ (‘‘Implementation Act’’). Section 1 

also provides the table of contents for the Implementation Act. 

Sec. 2. Purposes 

This section provides that the purposes of the Implementation 

Act are to approve and implement the Agreement, to strengthen 

and develop economic relations between the United States and 

Panama, to establish free trade between the United States and 

Panama through the reduction and elimination of barriers to trade 

in goods and services and to investment, and to lay the foundation 

for further cooperation to expand and enhance the benefits the 

Agreement. 

Sec. 3. Definitions 

This section defines the terms ‘‘Agreement,’’ ‘‘Commission,’’ 

‘‘HTS,’’ and ‘‘Textile or apparel good’’ for purposes of the Implementation Act. 

TITLE I—APPROVAL OF, AND GENERAL PROVISIONS 

RELATING TO, THE AGREEMENT 

Sec. 101. Approval and entry into force of the Agreement 

This section provides congressional approval for the Agreement 

and its accompanying SAA. Section 101 also provides that, if the 

President determines that Panama has taken measures necessary 

to comply with obligations that take effect at the time the Agreement enters into force, the President may exchange notes with 

Panama providing for the entry into force of the Agreement with 

respect to the United States on or after January 1, 2012. 

Sec. 102. Relationship of the Agreement to United States and state 

law 

This section establishes the relationship between the Agreement 

and U.S. law. Section 102 clearly states that no provision of the 

Agreement will be given effect if it is inconsistent with any federal 

law. 

Section 102 also provides that only the United States may bring 

a court action to resolve a conflict between a state law and the 

Agreement. And it precludes any private right of action against the 

federal government, state or local governments, or a private party 

based on the provisions of the Agreement. 

Sec. 103. Implementing actions in anticipation of entry into force 

and initial regulations 

This section provides that, following the enactment of the Act, 

the President may proclaim such actions, and other appropriate officers of the federal government may issue such regulations, as 

may be necessary to ensure that provisions of the legislation that 

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priately implemented on that date. Section 103 further provides 

that, with respect to any action proclaimed by the President that 

is not subject to the consultation and layover provisions contained 

in section 104, such action may not take effect before the 15th day 

after the date on which the text of the proclamation is published 

in the Federal Register. The 15-day restriction is waived, however, 

to the extent that it would prevent an action from taking effect on 

the date the Agreement enters into force. Section 103 also provides 

that, to the maximum extent feasible, initial regulations necessary 

or appropriate to carry out the actions required by the Implementation Act or proposed in the SAA shall be issued within 1 year after 

the date on which the Agreement enters into force. In accordance 

with the SAA, any agency unable to issue a regulation within 1 

year must report to the relevant Congressional committees, at least 

30 days prior to the end of the 1-year period, the reasons for the 

delay and the expected date for issuance of the regulation. 

Sec. 104. Consultation and layover provisions for, and effective date 

of, proclaimed actions 

This section sets forth consultation and layover steps that must 

precede the President’s implementation of any action by proclamation that is subject to the requirements of this section. Under the 

consultation and layover provisions, the President must obtain advice regarding the proposed action from the Commission and from 

the appropriate advisory committees established under section 135 

of the Trade Act of 1974 (19 U.S.C. § 2155). The President must 

also submit to the Senate Committee on Finance and the House 

Committee on Ways and Means a report that sets forth the action 

proposed, the reasons for the proposed action, and the advice of the 

appropriate advisory committees and the Commission. Section 104 

sets aside a 60-day period following the date of transmittal of the 

report for the President to consult with the Senate Committee on 

Finance and the House Committee on Ways and Means on the proposed action. 

Sec. 105. Administration of dispute settlement proceedings 

This section authorizes the President to establish or designate 

within the Department of Commerce an office responsible for providing administrative assistance to dispute settlement panels established under Chapter 20 of the Agreement. Section 105 also authorizes the appropriation of funds to support this office. 

Sec. 106. Arbitration of claims 

This section authorizes the United States to use binding arbitration to resolve certain claims against the United States pursuant 

to the Investor-State Dispute Settlement procedures set forth in 

section B of chapter 10 of the Agreement. 

Sec. 107. Effective dates; effect of termination 

This section provides that the provisions of the Implementation 

Act and the amendments made by it take effect on the date on 

which the Agreement enters into force, except for sections 1 

through 3, title I, and title V, which take effect on the date of enactment of the Act. This section also provides that the amendments 

made by section 204, 205, 207, and 401 of the Implementation Act 


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take effect on the date of enactment of the Implementation Act and 

apply with respect to Panama on the date on which the Agreement 

enters into force. Section 107 also provides that the provisions of 

the Implementation Act (other than this subsection and title V) 

and the amendments to other statutes made by it (other than the 

amendments made by title V) will cease to have effect on the date 

on which the Agreement terminates. 

TITLE II—CUSTOMS PROVISIONS 

Sec. 201. Tariff modifications 

Section 201(a) authorizes the President to implement by proclamation the modification or continuation of any duty, imposition of 

any additional duties, or the continuation of duty-free or excise 

treatment that the President determines to be necessary or appropriate to carry out or apply Articles 3.3, 3.5, 3.6, 3.26, 3.27, 3.28, 

and 3.29, and Annex 3.3 of the Agreement. In addition, section 

201(a) requires the President to terminate the designation of Panama as a beneficiary developing country for purposes of the Generalized System of Preferences and the Caribbean Basin Economic 

Recovery Act program on the date the Agreement enters into force. 

Section 201(b) authorizes the President, subject to the consultation and layover provisions of section 104, to proclaim the modification or continuation of any duty, the modification of the staging of 

any duty elimination, the imposition of additional duties, or the 

continuation of duty-free or excise treatment that the President determines to be necessary or appropriate to maintain the general 

level of reciprocal and mutually advantageous concessions with respect to Peru provided by the Agreement. 

Section 201(c) authorizes the President, with respect to any good 

for which the base rate of duty in the Tariff Schedule of the United 

States to Annex 3.3 of the Agreement is a specific or compound 

rate of duty, to substitute for the base rate an ad valorem rate that 

the President determines to be equivalent to the base rate. 

Section 201(d) authorizes the President, in implementing the tariff rate quotas set forth in the Agreement, to take actions necessary 

to ensure that imports of agricultural goods do not disrupt the orderly marketing of commodities in the United States. 

Sec. 202. Additional duties on certain agricultural goods 

Section 202 implements the agricultural safeguard provisions of 

the Agreement. Section 202(a) defines the terms ‘‘applicable NTR 

(MFN) rate of duty,’’ ‘‘safeguard good,’’ ‘‘schedule rate of duty,’’ 

‘‘trigger level,’’ ‘‘year 1 of the agreement’’ and ‘‘years other than 

year 1 of the agreement’’ for purposes of section 202. Section 202(b) 

requires the Secretary of the Treasury (‘‘Secretary’’) to impose additional duties on imports of certain Panamanian agricultural goods 

if the Secretary determines that, prior to such importation, the 

total volume of the imported good in a calendar year exceeds the 

volume by amounts set forth in this section and in the Schedule 

of the United States to Annex 3.3 of the Agreement. Section 202(c) 

provides that the Secretary may not impose an additional duty on 

a good if, at the time of entry, the good is subject to a safeguard 

measure under the procedures set out in subtitle A of title III of 

the Implementation Act or under the safeguard procedures set out 


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in chapter 1 of title II of the Trade Act of 1974. Finally, Section 

202(d) provides that the additional duties shall cease to apply to 

a good on the date on which duty-free treatment must be provided 

to that good under the Schedule of the United States to Annex 3.3 

of the Agreement. 

Sec. 203. Rules of origin 

Section 203 implements the general rules of origin set forth in 

Chapter 4 of the Agreement. These rules define the circumstances 

under which a good imported from Panama qualifies as an originating good and is thus eligible for preferential tariff treatment 

under the Agreement. 

Section 203(a) establishes the Harmonized Tariff Schedule of the 

United States (‘‘HTS’’) as the basis of any tariff classification. It 

also provides that any cost or value referred to in section 203 shall 

be recorded and maintained in accordance with the generally accepted accounting principles applicable in the territory of the country in which the good is produced. 

Section 203(b) provides that a good is an originating good if it 

falls within one of three specified categories. First, a good qualifies 

as an originating good if it is wholly obtained or produced entirely 

in the territory of Panama, the United States, or both. Second, a 

good qualifies as an originating good if the good is produced in the 

territory of Panama, the United States, or both, and the materials 

used to produce the good that are not themselves originating goods 

are transformed in such a way as to cause their tariff classification 

to change and to meet other requirements specified in Annex 4.1 

of the Agreement. Third, and finally, a good qualifies as an originating good if the good is produced entirely in the territory of Panama, the United States, or both, exclusively from materials that 

fall within the first two categories. 

The remainder of section 203 sets forth specific rules related to 

determining whether a good meets the Agreement’s specific requirements to qualify as an originating good. Section 203(c) implements provisions in Annex 4.1 of the Agreement that require certain goods to have a specified percentage of ‘‘regional value content’’ to qualify as originating goods. It prescribes alternative methods for calculating regional value content, as well as a specific 

method that must be used in the case of certain automotive goods. 

Section 203(d) addresses how materials are to be valued for purposes of calculating the regional value content of a good under subsection 203(c) and for purposes of applying the de minimis rules 

under subsection 203(f). Section 203(e) provides a rule of accumulation for originating materials from the territory of Panama or the 

United States that are used in the production of a good in the territory of the other country. Section 203(f) provides that a good is not 

disqualified as an originating good if it contains de minimis quantities of non-originating materials that do not undergo a change in 

tariff classification. Section 203(g) addresses how to determine 

whether fungible goods and materials qualify as originating or nonoriginating under the Agreement. Section 203(h) provides rules for 

the treatment of accessories, spare parts, or tools that are delivered 

with a good. Sections 203(i) and (j) address the treatment of packaging materials and containers for retail sale and for shipment in 

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tion 203(k) provides that indirect materials shall be treated as originating materials without regard to where they are produced. Section 203(l) provides rules for the treatment of goods that undergo 

further production in a third country or that otherwise transit 

through a third country. And section 203(m) provides rules for the 

treatment of goods classifiable as sets. 

Section 203(n) defines various terms used in section 203. Section 

203(o) authorizes the President to proclaim the specific rules of origin set forth in Annex 4.1 of the Agreement and to modify certain 

rules of origin in the Agreement by proclamation subject to the consultation and layover provisions of section 104. 

Sec. 204. Customs user fees 

This section provides for the immediate elimination of the merchandise processing fee for goods qualifying as originating goods 

under the Agreement. Processing of goods qualifying as originating 

goods will be financed from the General Fund of the Treasury. 

Sec. 205. Disclosure of incorrect information; false certifications of 

origin; denial of preferential tariff treatment 

Section 205(a) amends section 592 of the Tariff Act of 1930 (19 

U.S.C. § 1592) to impose penalties on an importer, exporter, or producer that makes an invalid claim for preferential tariff treatment 

under the Agreement through negligence, gross negligence, or 

fraud, unless the importer, exporter, or producer, after discovering 

that the claim is invalid, promptly and voluntarily corrects the 

claim and pays any customs duties owed. Section 205(b) amends 

section 514 of the Tariff Act of 1930 (19 U.S.C. § 1514) to provide 

that, if an importer, exporter, or producer has engaged in a pattern 

of conduct in providing false representations that a good qualifies 

as originating, the United States may suspend preferential tariff 

treatment under the Agreement to identical goods covered by any 

subsequent representations that the person may make. 

Sec. 206. Reliquidation of entries 

Section 206 amends section 520(d) of the Tariff Act of 1930 (19 

U.S.C. § 1520(d)) to allow an importer to claim preferential tariff 

treatment for an originating good within 1 year of importation, 

even if no such claim was made at the time of the importation. 

Sec. 207. Recordkeeping requirements 

Section 207 amends section 508 of the Tariff Act of 1930 (19 

U.S.C. § 1508) to establish recordkeeping requirements for U.S. exporters and producers that issue certifications of origin for goods 

exported to Panama. 

Sec. 208. Enforcement relating to trade in textile or apparel goods 

This section authorizes the President to apply anti-circumvention 

provisions concerning trade in textile and apparel goods. Pursuant 

to article 3.21 of the Agreement, the Secretary may request that 

the Government of Panama conduct a verification to determine the 

compliance of exporters and producers with applicable customs 

laws, regulations, and procedures regarding trade in textile or apparel goods, and to determine the accuracy of a claim of origin for 

a textile or apparel good. Section 208(a) provides that the President 


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may direct the Secretary to take ‘‘appropriate action’’ while the 

verification is being conducted. Under section 208(b), such appropriate action includes detaining, suspending preferential tariff 

treatment of, or denying entry to, any textile or apparel good that 

the person subject to the verification has produced or exported or 

for which a claim has been made that is the subject of the 

verification if the Secretary determines there is insufficient information to support a claim for such treatment. 

Section 208(c) permits the President to direct the Secretary to 

take ‘‘appropriate action’’ after a verification has been completed. 

Section 208(d) defines ‘‘appropriate action’’ to include the denial of 

preferential treatment or entry to textile or apparel goods that the 

person subject to the verification has exported or produced until 

such time as the Secretary receives information sufficient to prove 

compliance or until an earlier date as the President may direct. 

Finally, section 208(e) permits the Secretary to publish the name 

of any person that the Secretary determines has engaged in circumvention of applicable laws, regulations, or procedures affecting 

trade in textile or apparel goods or has failed to demonstrate that 

it produces, or is capable of producing, textile or apparel goods. 

Sec. 209. Regulations 

Section 209 authorizes the Secretary to prescribe regulations necessary to carry out the rules of origin and customs user fee provisions in the Implementation Act and to carry out the President’s 

proclamation authority under section 203(o). 

TITLE III—RELIEF FROM IMPORTS 

Sec. 301. Definitions 

This section defines the terms ‘‘Panamanian article’’ and ‘‘Panamanian textile or apparel article’’ for purposes of this title. Section 

301(1) defines ‘‘Panamanian article’’ as an article that qualifies as 

an originating good under section 203(b) of the Act. And section 

301(2) defines ‘‘Panamanian textile or apparel article’’ as a textile 

or apparel good as defined in section 3(4) of the Implementation 

Act that is a Panamanian article. 

Subtitle A—Relief From Imports Benefiting From the Agreement 

Subtitle A of title III implements the bilateral safeguard provisions set out in Chapter Eight of the Agreement. It authorizes the 

President, after an investigation and affirmative determination by 

the Commission, to suspend duty reductions or impose duties temporarily up to normal trade relations (NTR)/most-favored-nation 

(MFN) rates on a ‘‘Panamanian article’’ when, as a result of the reduction or elimination of a duty under the Agreement, the article 

is being imported into the United States in such increased quantities and under such conditions as to be a substantial cause of serious injury or threat of serious injury to a domestic industry that 

produces a like or directly competitive good. The standards and 

procedures set out in this subtitle closely parallel the procedures 

for global safeguards set forth in sections 201 through 204 of the 

Trade Act of 1974 (19 U.S.C. §§ 2251–2254). 


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Sec. 311. Commencing of action for relief 

Section 311(a) requires an entity that is representative of an industry to file a petition with the Commission to commence a bilateral safeguard investigation. Section 311(a) defines an entity to include a trade association, firm, certified or recognized union, or a 

group of workers. 

Section 311(b) provides that, upon the filing of a petition, the 

Commission shall promptly initiate an investigation to determine 

whether, as a result of the reduction or elimination of a duty provided for under the Agreement, a Panamanian article is being imported into the United States in such increased quantities and 

under such conditions that imports of the Panamanian article constitute a substantial cause of serious injury, or threat of serious injury, to the domestic industry producing an article that is like, or 

directly competitive with, the imported article. 

Section 311(c) extends certain provisions (both substantive and 

procedural) contained in subsections (b), (c), and (i) of section 202 

of the Trade Act of 1974 (19 U.S.C. § 2252(b), (c), and (i)), which 

apply to global safeguard investigations, to any bilateral safeguard 

initiated under the Agreement. These provisions include, inter alia, 

the requirement that the Commission publish notice of the commencement of an investigation; the requirement that the Commission hold a public hearing at which interested parties and consumers have the right to be present and to present evidence; the 

factors to be taken into account by the Commission in making its 

determinations; and authorization for the Commission to promulgate regulations providing access to confidential business information under protective order to authorized representatives of interested parties in an investigation. 

Section 311(d) precludes the initiation of a bilateral safeguard investigation with respect to any Panamanian article for which import relief has already been provided under subtitle A. 

Sec. 312. Commission action on petition 

Section 312(a) establishes deadlines for Commission action following the initiation of a bilateral safeguard investigation. Section 

312(b) applies certain statutory provisions regarding an equally divided vote by the Commission in a global safeguard investigation 

under section 202 of the Trade Act of 1974 (19 U.S.C. § 2252) to 

Commission determinations and findings under this section. If the 

Commission renders an affirmative injury determination or a determination that the President may treat as an affirmative determination in the event of an equally divided vote by the Commission, section 312(c) requires the Commission to find and recommend to the President the amount of import relief that is necessary to remedy or prevent the injury and to facilitate the efforts 

of the domestic industry to make a positive adjustment to import 

competition. Section 312(d) requires the Commission to submit a 

report to the President regarding its determination and specifies 

the information that the Commission must include in the report. 

Upon submitting the report to the President, section 312(e) requires the Commission to promptly release the report to the public, 

except for any confidential information contained therein, and to 

publish a summary of the report in the Federal Register. 


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Sec. 313. Provision of relief 

Section 313(a) directs the President, not later than 30 days after 

receiving the report from the Commission, to provide relief from 

imports of the article subject to an affirmative determination by 

the Commission, or a determination that the President treats as affirmative, to the extent that the President determines is necessary 

to remedy or prevent the injury and to facilitate the efforts of the 

domestic industry to make a positive adjustment to import competition. Section 313(b), however, provides that the President need not 

provide import relief if the President determines that the import 

relief will not provide greater economic and social benefits than 

costs. 

Section 313(c) specifies the nature of the import relief that the 

President may impose, which includes the suspension of any further reduction in the rate of duty imposed on the article in question under Annex 3.3 of the Agreement and an increase in the rate 

of duty imposed on such article to a level that does not exceed the 

lesser of (1) the NTR (MFN) duty rate at the time the import relief 

is provided; or (2) the NTR (MFN) duty rate on the day before the 

Agreement enters into force. Section 313(c) also requires the President to provide for the progressive liberalization of import relief at 

regular intervals during the period of its application if that period 

exceeds 1 year. 

Section 313(d) limits any import relief that the President imposes 

in a bilateral safeguard action to no more than 4 years in the aggregate. The initial period of import relief that the President imposes may not exceed 2 years. The President may extend the relief 

up to an additional 2 years, however, if (1) the Commission makes 

an affirmative determination, or a determination that the President treats as affirmative, that import relief continues to be necessary to remedy or prevent serious injury and that there is evidence that the domestic industry is making a positive adjustment 

to import competition; and (2) the President makes a determination 

to the same effect. 

Section 313(e) specifies the duty rate to be applied to Panamanian articles after termination of a safeguard action. On the termination of import relief, the rate of duty for the remainder of the 

calendar year shall be the rate that was scheduled to have been in 

effect 1 year after the initial provision of import relief. For the rest 

of the duty phase-out period, the President may set the duty either 

at the rate called for under the Schedule of the United States to 

Annex 3.3 of the Agreement or in a manner that eliminates the 

duty in equal annual stages ending on the date set out in that 

Schedule. 

Section 313(f) precludes the application of import relief pursuant 

to the bilateral safeguard provisions with respect to any Panamanian article that is (1) subject to import relief under the global 

safeguard provisions in chapter 1 of title II of the Trade Act of 

1974 (19 U.S.C. §§ 2251 et seq.); (2) subject to import relief under 

subtitle B of title III of the Act; or (3) subject to an additional duty 

assessment under section 202(b) of the Act. 

Sec. 314. Termination of relief authority 

This section provides that the President’s authority to impose import relief under the bilateral safeguard expires 10 years after the 


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date on which the Agreement enters into force. If, however, the period for elimination of duties on a particular article exceeds 10 

years, relief may be provided for that article until the date on 

which the duty elimination period ends. 

Sec. 315. Compensation authority 

This section authorizes the President, under section 123 of the 

Trade Act of 1974 (19 U.S.C. § 2133), to grant new concessions to 

Panama as compensation for the imposition of import relief pursuant to the bilateral safeguard. 

Sec. 316. Confidential business information 

This section applies the same procedures for the treatment and 

release of confidential business information by the Commission in 

a global safeguard investigation under chapter 1 of title II of the 

Trade Act of 1974 (19 U.S.C. §§ 2251 et seq.) to investigations 

under title III of the Act. 

Subtitle B—Textile and Apparel Safeguard Measures 

Subtitle B of title III implements the Agreement’s textile and apparel safeguard. 

Sec. 321. Commencement of action for relief 

Section 321(a) requires an interested party to file a request with 

the President in order to commence action for relief under the textile and apparel safeguard. Upon the filing of a request, the President must review the request to determine, from information presented in the request, whether to commence consideration of the 

request on its merits. Section 321(b) provides that, if the President 

determines that the request contains the information necessary for 

the request to be considered on the merits, the President must publish notice in the Federal Register stating that the request will be 

considered and seeking public comments on the request. The notice 

must contain a summary of the request and the dates by which 

comments and rebuttals must be received. 

The Committee notes our regulatory processes should be administered in an open and transparent manner that can serve as a 

model for our trading partners. For example, the Committee understands that, in addition to publishing a summary of a request for 

safeguard relief, the President plans to make the full text of the 

request available on the U.S. Department of Commerce’s International Trade Administration website, subject to the protection of 

confidential business information, if any. The Committee encourages this and similar efforts to enhance government transparency. 

Sec. 322. Determination and provision of relief 

Section 322 sets out the procedures to be followed in considering 

a request filed under section 321. If a positive determination is 

made under section 321(b), section 322(a) requires the President to 

determine whether, as a result of the elimination of a duty under 

the Agreement, a Panamanian textile or apparel article is being 

imported into the United States in such increased quantities and 

under such conditions as to cause serious damage, or actual threat 

thereof, to a domestic industry producing an article that is like, or 

directly competitive with, the imported article. Section 322(a) also 


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provides that, in making such a determination, the President shall 

examine the effect of increased imports on the domestic industry’s 

output, productivity, capacity utilization, inventories, market 

share, exports, wages, employment, domestic prices, profits and 

losses, and investment, none of which is necessarily decisive. Finally, section 322(a) provides that the President shall not consider 

changes in consumer preference or technology as factors supporting 

a determination of serious damage or actual threat thereof. 

Section 322(b) authorizes the President, in the event of an affirmative determination of serious damage or actual threat thereof, 

to provide import relief to the extent that the President determines 

is necessary to remedy or prevent the serious damage and to facilitate adjustment by the domestic industry. Section 322(b) also specifies the nature of the import relief that the President may impose, 

which consists of an increase in the rate of duty imposed on the 

article to a level that does not exceed the lesser of (1) the NTR 

(MFN) duty rate in place for the textile or apparel article at the 

time the import relief is provided; or (2) the NTR (MFN) duty rate 

for that article on the day before the Agreement enters into force. 

Sec. 323. Period of relief 

Section 323(a) limits any import relief that the President imposes 

under the textile and apparel safeguard to no more than 3 years 

in the aggregate. Section 323(b) provides that if the initial period 

of import relief is less than 3 years, the President may extend the 

relief (to a maximum of 3 years) if the President determines that 

continuation is necessary to remedy or prevent serious damage and 

to facilitate adjustment, and that the domestic industry is, in fact, 

adjusting to import competition. 

Sec. 324. Articles exempt from relief 

Section 324 of the bill provides that relief may not be granted to 

an article under the textile and apparel safeguard if: (i) relief previously has been granted to that article under the textile and apparel safeguard; or (ii) the article is subject, or becomes subject, to 

a safeguard measure under (a) Chapter Eight of the Agreement 

(corresponding to subtitle A of title III of the bill), or (b) chapter 

1 of title II of the Trade Act of 1974. 

Sec. 325. Rate after termination of import relief 

This section provides that on the date import relief terminates, 

imports of the textile or apparel article that was subject to the 

safeguard action will be subject to the rate of duty that would have 

been in effect on that date in the absence of the relief. 

Sec. 326. Termination of relief authority 

This section provides that authority to provide relief under the 

textile and apparel safeguard will expire 5 years after the date on 

which the Agreement enters into force. 

Sec. 327. Compensation authority 

This section authorizes the President, under section 123 of the 

Trade Act of 1974 (19 U.S.C. § 2133), to grant new concessions to 

Panama as compensation for the imposition of import relief pursuant to the textile and apparel safeguard. 


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Sec. 328. Confidential business information 

This section provides that confidential business information submitted in the course of consideration of a request for a textile or 

apparel safeguard may not be released absent the consent of the 

party providing the information. It also provides that a party submitting confidential business information in a textile or apparel 

safeguard proceeding must submit a non-confidential version of the 

information or a summary of the information. 

Subtitle C—Cases Under Title II of the Trade Act of 1974 

Subtitle C of title III implements the global safeguard provisions 

of the Agreement. It authorizes the President, in granting global 

import relief under the global safeguard provisions in sections 201 

through 204 of the Trade Act of 1974 (19 U.S.C. §§ 2251–2254), to 

exclude imports of originating articles from the relief when certain 

conditions are present. 

Sec. 331. Findings and action on goods of Panama 

Section 331(a) provides that, if the Commission makes an affirmative determination, or a determination that the President may 

treat as an affirmative determination, in a global safeguard investigation initiated under chapter 1 of title II of the Trade Act of 

1974 (19 U.S.C. §§ 2251 et seq.), the Commission must find and report to the President whether imports of the article from Panama 

that qualify as originating goods under section 203(b) of the Implementation Act are a substantial cause of serious injury or threat 

thereof. Section 331(b) provides that, if the Commission makes a 

negative finding under section 331(a), the President may exclude 

the Panamanian articles from the global safeguard action. 

TITLE IV—MISCELLANEOUS 

Sec. 401. Eligible products 

This section amends section 308(4)(A) of the Trade Agreements 

Act of 1979 (19 U.S.C. § 2518(4)(A)) to implement the government 

procurement provisions of the Agreement. 

Sec. 402. Modification to the Caribbean Basin Economic Recovery 

Act 

Section 402 of the Implementation Act amends the Caribbean 

Basin Economic Recovery Act to delete Panama from the list of 

countries that the President may designate as beneficiary countries. The amendment takes effect on the date on which the President terminates Panama’s designation as a beneficiary country 

pursuant to section 201(a)(3) of the Act. 

TITLE V—OFFSETS 

Sec. 501. Customs user fees 

This section amends section 13031(j)(3) of the Consolidated Omnibus Budget Reconciliation Act of 1985 (19 U.S.C. § 58c(j)(3)) to extend the collection of passenger and conveyance processing fees 

from September 1, 2021 to September 30, 2021. 


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Sec. 502. Time for payment of corporate estimated taxes 

This section increases the amount of the required installment of 

estimated tax otherwise due from a corporation with at least $1 billion in assets in (1) July, August, or September 2012 by 0.25 percent; and (2) July, August, or September 2016 by 0.25 percent. The 

bill reduces the next required installment to reflect the prior increase. 

F. VOTE OF THE COMMITTEE IN REPORTING THE BILL

In compliance with section 133 of the Legislative Reorganization 

Act of 1946, the Committee states that on October 11, 2011, S. 

1643 was ordered favorably reported, without amendment, by voice 

vote, a quorum being present. 

II. BUDGETARY IMPACT OF THE BILL 

U.S. CONGRESS, 

CONGRESSIONAL BUDGET OFFICE, 

Washington, DC, October 12, 2011. 

Hon. MAX BAUCUS, Chairman, Committee on Finance, 

U.S. Senate, Washington, DC. 

DEAR MR. CHAIRMAN: The Congressional Budget Office has prepared the enclosed cost estimate for S. 1643, the United StatesPanama Trade Promotion Agreement Implementation Act. 

If you wish further details on this estimate, we will be pleased 

to provide them. The CBO staff contact is Kalyani Parthasarathy. 

Sincerely, 

DOUGLAS W. ELMENDORF, 

Director. 

Enclosure. 

S. 1643—United States-Panama Trade Promotion Agreement Implementation Act 

Summary: S. 1643 would approve the trade promotion agreement 

between the government of the United States and the government 

of Panama that was signed on June 28, 2007. It would provide for 

tariff reductions and other changes in law related to implementation of the agreement. In addition, the bill would extend user fees 

collected by Customs and Border Protection (CBP) that expire 

under current law. The bill also would shift some corporate income 

tax payments between fiscal years. 

The Congressional Budget Office (CBO) and the staff of the Joint 

Committee on Taxation (JCT) estimate that enacting S. 1643 would 

increase revenues by $118 million in 2012 but would reduce revenues by $6 million over the 2012–2021 period. CBO estimates that 

enacting S. 1643 would increase direct spending by $1 million in 

2012 but would decrease direct spending by $8 million over the 

2012–2021 period. Thus, the net impact of those effects is an estimated reduction in deficits of $2 million over the 2012–2021 period. 

Pay-as-you-go procedures apply because enacting the legislation 

would affect direct spending and revenues. 


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Further, CBO estimates that implementing the legislation would cost $4 million over the 2012–2016 period, assuming the availability of appropriated funds. 

CBO has determined that the nontax provisions of S. 1643 contain no intergovernmental mandates as defined in the Unfunded 

Mandates Reform Act (UMRA) and would impose no costs on state, 

local, or tribal governments. 

CBO has determined that the nontax provisions of the bill contain private-sector mandates with costs that would fall below the 

annual threshold established in UMRA for private-sector mandates 

($142 million in 2011, adjusted annually for inflation). 

JCT has determined that the tax provision of S. 1643 contains 

no intergovernmental or private-sector mandates as defined in 

UMRA. 

The estimated budgetary impact of S. 1643 is shown in the following table. The costs of this legislation fall within budget functions 150 (international affairs), 370 (commerce and housing credit), 750 (administration of justice), and 800 (general government). 


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By fiscal year, in millions of dollars— 

2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2012– 2016 2012– 2021 

CHANGES IN REVENUES 

Preferential Trade Agreement ............................................................................................. * * * * ¥1 ¥1 ¥1 ¥1 ¥1 ¥2 ¥2 ¥6 

Corporate Payment Shift .................................................................................................... 118 ¥118 0 0 172 ¥172 0 0 0 0 172 0 

Estimated Revenues .................................................................................................. 118 ¥118 * * 171 ¥173 ¥1 ¥1 ¥1 ¥2 170 ¥6 

CHANGES IN DIRECT SPENDINGa

Extend Customs User Fees: 

Estimated Budget Authority ...................................................................................... 0 0 0 0 0 0 0 0 0 ¥16 0 ¥16 

Estimated Outlays ..................................................................................................... 0 0 0 0 0 0 0 0 0 ¥16 0 ¥16 

Exemption from Merchandise Processing Fee: 

Estimated Budget Authority ...................................................................................... 1 1 1 1 1 1 1 1 0 0 5 8 Estimated Outlays ..................................................................................................... 1 1 1 1 1 1 1 1 0 0 5 8 

Total Direct Spending:a

Estimated Budget Authority ...................................................................................... 1 1 1 1 1 1 1 1 0 ¥16 5 ¥8 

Estimated Outlays ..................................................................................................... 1 1 1 1 1 1 1 1 0 ¥16 5 ¥8 

NET INCREASE OR DECREASE (¥) IN THE DEFICIT FROM CHANGES IN DIRECT SPENDING AND REVENUES 

Impact on Deficit ............................................................................................................... ¥117 119 1 1 ¥170 174 2 2 1 ¥14 ¥165 ¥2 

Source: Congressional Budget Office and the staff of the Joint Committee on Taxation. Notes: Components may not sum to totals because of rounding. * Indicates a loss of revenue less than $500,000. a In addition, CBO estimates that implementing the provisions of S. 1643 would have a discretionary cost of $4 million over the 2012–2016 period, assuming appropriation of the necessary amounts. 


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Basis of estimate: For the purposes of this estimate, CBO assumes that S. 1643 will be enacted early in fiscal year 2012. 

Revenues 

Under the United States-Panama trade promotion agreement, 

tariffs on U.S. imports from Panama would be phased out over 

time. The tariffs would be phased out for individual products at 

varying rates, ranging from immediate elimination on the date the 

agreement enters into force to gradual elimination over 10 or more 

years. According to the U.S. International Trade Commission, the 

United States collected about $240,000 in customs duties in 2010 

on $380 million of imports from Panama. However, since 1983, imports to the United States from Panama have been subject to reduced tariff rates in accordance with the Caribbean Basin Initiative 

(CBI), which was expanded in legislation enacted in 2000, and is 

scheduled to expire on September 30, 2020. The CBI overlaps to a 

large extent with the trade promotion agreement that would be implemented by this bill. As a result, enacting the bill would effectively replace trade preferences under the CBI for Panama until 

2021, while also lowering tariff rates not covered by the CBI. 

Based on expected imports from Panama, CBO estimates that 

implementing the tariff schedule outlined in the U.S.-Panama 

trade promotion agreement would reduce revenues by less than 

$500,000 in 2012 and by $6 million over the 2012–2021 period, net 

of income and payroll tax offsets. 

This estimate includes the effects of increased imports from Panama that would result from the reduced prices of imported products in the United States, reflecting the lower tariff rates. It is likely that some of the increase in U.S. imports from Panama would 

displace imports from other countries. In the absence of specific 

data on the extent of this substitution effect, CBO assumes that an 

amount equal to one-half of the increase in U.S. imports from Panama would displace imports from other countries. 

S. 1643 also would shift payments of corporate estimated taxes 

between fiscal years 2012 and 2013 and between fiscal years 2016 

and 2017. For corporations with at least $1 billion in assets, the 

bill would increase the portion of corporate estimated payments 

due from July through September in both 2012 and 2016. JCT estimates that those changes would increase revenues by $118 million 

in 2012 and decrease them by $118 million in 2013, and would increase revenues by $172 million in 2016 and decrease them by 

$172 million in 2017. 

Direct spending 

Under current law, certain fees (known as COBRA fees, which 

were established in the Consolidated Omnibus Budget Reconciliation Act of 1985) collected by CBP will expire in January 2020. 

The bill would permit CBP to collect those fees from September 1, 

2021, to September 30, 2021. CBO estimates that this change 

would increase offsetting receipts (a credit against direct spending) 

by $16 million in 2021. 

In addition, the bill would exempt imports from Panama from 

merchandise processing fees. CBO estimates that this would reduce 

offsetting receipts by $8 million over the 2012–2021 period. 


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Spending subject to appropriation 

Implementing provisions of S. 1643 would increase the costs of 

several agencies affected by the bill including: 

• The Department of Commerce to provide administrative 

support for dispute-settlement panels established in the agreement; 

• The International Trade Commission to conduct investigations, if petitioned, into whether Panamanian imports might 

threaten or cause serious injury to domestic competitors; and 

• The Department of the Treasury and the United States 

Trade Representative to establish regulations to carry out provisions of the agreement. 

Based on information from the agencies, CBO estimates that 

those activities would cost $4 million over the 2012–2016 period, 

assuming appropriation of the necessary amounts. 

Pay-As-You-Go considerations: The Statutory Pay-As-You-Go Act 

of 2010 establishes budget-reporting and enforcement procedures 

for legislation affecting direct spending or revenues. The net 

changes in outlays and revenues that are subject to those pay-asyou-go procedures are shown in the following table. 


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CBO ESTIMATE OF PAY-AS-YOU-GO EFFECTS FOR S. 1643 AS ORDERED REPORTED BY THE SENATE COMMITTEE ON FINANCE ON OCTOBER 11, 2011 

By Fiscal year, in millions of dollars— 

2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2012– 2016 2012– 2021 

NET INCREASE OR DECREASE (¥) IN THE DEFICIT 

Statutory Pay-As-You-Go Impact .................................................................... ¥117 119 1 1 ¥170 174 2 2 1 ¥14 ¥165 ¥2 

Memorandum: 

Changes in Revenues ............................................................................ 118 ¥118 0 0 171 ¥173 ¥1 ¥1 ¥1 ¥2 170 ¥6 Changes in Outlays ............................................................................... 1 1 1 1 1 1 1 1 0 ¥16 5 ¥8 


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Estimated impact on state, local, and tribal governments: CBO 

has determined that the nontax provisions of S. 1643 contain no 

intergovernmental mandates as defined in UMRA, and would impose no costs on state, local, or tribal governments. JCT has determined that the tax provision of S. 1643 contains no intergovernmental mandates as defined in UMRA. 

Estimated impact on the private sector: CBO has determined 

that the nontax provisions of S. 1643 would impose private-sector 

mandates, as defined in UMRA, by extending the customs user fees 

and by enforcing new recordkeeping requirements on exporters of 

goods to Panama. CBO estimates that the aggregate costs of those 

mandates would not exceed the annual threshold established in 

UMRA for private-sector mandates ($142 million in 2011, adjusted 

annually for inflation). JCT has determined that the tax provision 

of S. 1643 contains no private-sector mandates as defined in 

UMRA. 

Previous CBO estimate: On October 5, 2011, CBO transmitted a 

cost estimate for H.R. 3079, the United States-Panama Trade Promotion Agreement Implementation Act, as ordered reported by the 

House Committee on Ways and Means on October 5, 2011. S. 1643 

and H.R. 3079 are similar, and the CBO cost estimates are the 

same. 

Estimate prepared by: Federal Revenues: Kalyani Parthasarathy; 

Federal Spending: Sunita D’Monte, Mark Grabowicz, Matthew 

Pickford, and Susan Willie; Impact on State, Local, and Tribal Governments: Lisa Ramirez-Branum; Impact on the Private Sector: 

Marin Randall. 

Estimate approved by: Peter H. Fontaine, Assistant Director for 

Budget Analysis; Frank Sammartino, Assistant Director for Tax 

Analysis. 

III. REGULATORY IMPACT OF THE BILL AND OTHER 

MATTERS 

Pursuant to the requirements of paragraph 11(b) of rule XXVI of 

the Standing Rules of the Senate, the Committee states that the 

bill will not significantly regulate any individuals or businesses, 

will not affect the personal privacy of individuals, and will result 

in no significant additional paperwork. 

The following information is provided in accordance with the Unfunded Mandates Reform Act of 1995 (‘‘UMRA’’) (Pub. L. No. 104– 

04). The Committee has reviewed the provisions of S. 1643 as approved by the Committee on October 11, 2011. In accordance with 

the requirements of UMRA, the Committee has determined that 

the bill contains no intergovernmental mandates, as defined in the 

UMRA, and will not affect the budgets of State, local, or tribal governments. The Committee has determined that the nontax provisions of S. 1643 would impose private-sector mandates, as defined 

in UMRA, by extending the customs user fees and by enforcing new 

recordkeeping requirements on exporters of goods to Panama. The 

aggregate costs of those mandates would not exceed the annual 

threshold established in UMRA for private-sector mandates ($142 

million in 2011, adjusted annually for inflation). The Committee 

has determined that the tax provision of S. 1643 contains no private-sector mandates as defined in UMRA. 


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IV. ADDITIONAL VIEWS OF RANKING MEMBER 

ORRIN G. HATCH AND SENATOR JON KYL 

Several elements of this report deserve significant elaboration. 

The May 10, 2007 agreement (May 10th Agreement) negotiated by 

some in Congress and the Bush Administration was intended to secure votes for the four free trade agreements (FTAs) with Colombia, Panama, Peru, and South Korea, but it did not reflect an 

agreement on a new trade policy as the Majority contends. We 

were not part of the negotiations of these new provisions. We continue to harbor misgivings over several aspects of these changes, 

including in the areas of labor, the environment, and intellectual 

property. The May 10th Agreement, however, failed—as only a vote 

on Peru was allowed by Democrat congressional leaders during the 

110th Congress—and the other three FTAs had to wait for more 

than four years before a vote was secured. The Bush administration and the governments of Colombia, Panama, Peru, and South 

Korea upheld their ends of the bargain by incorporating the May 

10th Agreement changes into each FTA, but the Democrat leadership of Congress refused to honor its part of the May 10th Agreement and allow a vote on any of the three remaining FTAs. The 

Obama administration continued this pattern of delay for nearly 

three years. 

In the area of labor, the revised Panama FTA incorporates binding labor obligations predicated upon norms contained in the International Labor Organization Declaration on Fundamental Principles and Rights at Work and its Follow-up (1998) (ILO Declaration). Over the years, we have expressed serious concerns that by 

incorporating binding dispute resolution for obligations which rely 

upon amorphous and ever-evolving standards set by an international organization, our labor chapters potentially expose the 

United States to risk of sanction—especially if these standards 

were to be construed expansively in the context of dispute resolution. Unfortunately, we believe that recent actions by the Obama 

administration are compounding this risk. 

Labor provisions in our existing trade agreements are being interpreted by the Obama administration in a manner which appears 

to be increasingly divorced from any nexus to trade. Expansive interpretations of the labor obligations contained in trade agreements, and the blurring of their nexus to trade, risk setting precedents which could result in unintended consequences for the 

United States in the context of future labor-related disputes. 

The purpose of trade agreements is to foster increased growth in 

the economy of the United States and those of our trading partners, which in turn, helps raise the standards of living for U.S. and 

foreign workers. Assessing trade sanctions for labor violations is 

counterproductive as it impedes economic growth in the United 


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States and the partner country, thereby punishing the very workers it purports to assist. 

Rather than seeking to punish countries and their workers for 

labor protections deemed to be inadequate, the United States 

should be encouraging the development of capacity-building and 

technical assistance programs that more effectively improve labor 

conditions on the ground in poor developing countries. We should 

work to ensure that the labor provisions in the Panama FTA, and 

any substantive labor obligations in future trade agreements: (1) 

are clear and narrowly tailored so as not to expose the United 

States to the risk of retaliatory sanctions; (2) are not used as a 

means to change U.S. labor law indirectly by potentially binding 

the United States to international standards that exceed current 

U.S. law; (3) allow flexibility for the United States and our trading 

partners to adopt and change labor laws as needed; (4) are closely 

linked to trade; (5) actually help workers both in the United States 

and abroad; and (6) do not unduly impede U.S. businesses operating in markets abroad. 

The Committee report asserts that the intellectual property 

rights (IPR) provisions in the Panama FTA were revised under the 

May 10th Agreement to ‘‘balance the need for access to medicines 

with patent protections for pharmaceutical products’’. We do not 

believe that is what occurred. On the contrary, these new provisions impede the development of new treatments and cures, while 

putting an important, world-leading, and job-creating U.S. industry 

at a disadvantage. 

First, the Panama FTA makes patent linkage optional. Linkage 

requires a country, before it approves a generic medicine for sale, 

to ensure that the brand-name medicine is no longer under patent. 

Without linkage, governments can help facilitate patent infringement. Linkage doesn’t hinder access to medicines and is simply 

about protecting basic patent rights. The changes to the Panama 

FTA replace this simple enforcement procedure with a complex one. 

Second, in certain circumstances, the changes shorten the period 

of data exclusivity for innovative medicines, authorizing a shorter 

period than we require here in the United States. This change is 

not only unfair to U.S. innovators but devalues the incentive for 

launching new drugs in developing countries. In developing countries, it is often difficult to enforce patent rights. But data protection is effective and relatively easy to administer. It often provides 

the only real protection biopharmaceutical companies have when 

they invest significant resources to launch new products. You take 

away the protection and you take away the incentive to launch. 

Finally, the template no longer requires countries to add time to 

patent terms for pharmaceuticals to make up for undue delays in 

marketing approval or patent grant. The United States requires 

patent restoration, so why not require the same abroad? Critics 

argue that patent terms are long enough as they are. But without 

patent term restoration, we actually move IPR protection in the 

other direction. Without patent term restoration, the effective patent term could actually shrink significantly. 

Some argue that strong intellectual property rights protection result in some countries having poor health care. We strongly disagree. In many of these poor countries, IPR protection for pharmaVerDate Mar 15 2010 06:52 Sep 26, 2012 Jkt 019010 PO 00000 Frm 00055 Fmt 6604 Sfmt 6602 E:\HR\OC\SR224.XXX SR224

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ceuticals and medical devices is weak at best. On top of that, the 

vast majority of drugs on the World Health Organization’s (WHO) 

essential medicines list are not protected by patent. The fact is that 

without IPR protection, there would be few medicines for anyone 

to access. 

Poor infrastructure, high taxes and tariffs, ineffective health care 

systems, and misplaced government funding priorities are far more 

acute problems when it comes to access to medicine. To cite one example, until 2005, India did not grant product patents for pharmaceuticals. Yet India’s access to medicines was woeful. WHO statistics indicate that only 20 percent of India’s population had access 

to unpatented essential medicines from 2000–2007. Access remains 

a challenge in India today, despite the fact that more than 95 percent of the medicines available in India are not covered by patents. 

As we continue to strive to achieve the appropriate balance between innovation and access to medicines, we hope that the Obama 

and future administrations will take these factors into consideration. 

Finally, we would note our extreme disappointment in President 

Obama’s unprecedented delay in sending the Panama FTA to Congress for our consideration. For far too long, U.S. workers, 

innovators, and farmers have been barred from taking advantage 

of this trade agreement. While the United States delayed, others 

countries entered into trade agreements with Panama that gave 

their workers better access to its growing market. We hope the Finance Committee will continue working together to ensure that future agreements are considered expeditiously. 


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ADDITIONAL VIEWS OF SENATOR CHUCK GRASSLEY 

The Majority has stated that, ‘‘On May 10, 2007, the Bush Administration and the bipartisan leadership of the U.S. Senate Committee on Finance and the U.S. House of Representatives Committee on Ways and Means reached an agreement on trade policy.’’ 

However, as Ranking Member of the Finance Committee during 

that time period, I strongly disagree with the Majority’s statement 

that the agreement was an agreement ‘‘on trade policy.’’ The Majority’s terminology implies the terms of the agreement reached on 

May 10, 2007 with President Bush are somehow now the blueprint 

for future trade agreements. This is not the case. The May 10th 

agreement was made out of necessity by President Bush as he attempted to gain support from the democratically-controlled Congress for approving the South Korea, Panama, Peru, and Colombia 

trade agreements. As I expressed at the time, I have reservations 

about many of the provisions included in the May 10th agreement, 

including the terms regarding labor, environment, and intellectual 

property. I continue to have reservations about the May 10th provisions. Most, if not all, of the members on our side do not see the 

May 10th provisions as part of a blueprint for future trade agreements. Those provisions were part of a bargain between President 

Bush and Democrat leaders in Congress, for those specific free 

trade agreements at the time, not an ‘‘agreement on trade policy’’ 

as the Majority suggests. 


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V. CHANGES IN EXISTING LAW MADE BY THE BILL, AS 

REPORTED 

In compliance with paragraph 12 of Rule XXVI of the Standing 

Rules of the Senate, changes in existing law made by the bill, as 

reported, are shown as follows (existing law proposed to be omitted 

is enclosed in black brackets, new matter is printed in italics, and 

existing law in which no change is proposed is shown in roman): 

SECTION 13031 OF THE CONSOLIDATED OMNIBUS 

BUDGET RECONCILIATION ACT OF 1985 

SEC. 13031. FEES FOR CERTAIN CUSTOMS SERVICES. 

(a) * * * 

(b) LIMITATIONS ON FEES.—(1) * * * 

* * * * * * * 

(21) No fee may be charged under subsection (a)(9) or (10) with 

respect to goods that qualify as originating goods under section 203 

of the United States-Panama Trade Promotion Agreement Implementation Act. Any service for which an exemption from such fee is 

provided by reason of this paragraph may not be funded with 

money contained in the Customs User Fee Account. 

* * * * * * * 

(j) EFFECTIVE DATES.—(1) * * * 

* * * * * * * 

(3)(A) * * * 

* * * * * * * 

(D) Notwithstanding subparagraph (B)(i), fees may be charged 

under paragraphs (1) through (8) of subsection (a) during the period 

beginning on September 1, 2021, and ending on September 30, 

2021. 

* * * * * * * 

TARIFF ACT OF 1930 

* * * * * * * 

TITLE IV—ADMINISTRATIVE PROVISIONS 

Part III—ASCERTAINMENT, COLLECTION, AND 

RECOVERY OF DUTIES 

* * * * * * * 

SEC. 508. RECORDKEEPING. 

(a) * * * 

* * * * * * * 

(k) CERTIFICATION OF ORIGIN FOR GOODS EXPORTED UNDER THE

UNITED STATES-PANAMA TRADE PROMOTION AGREEMENT.— 

(1) DEFINITIONS.—In this subsection: 

(A) RECORDS AND SUPPORTING DOCUMENTS.—The term 

‘‘records and supporting documents’’ means, with respect to 


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an exported good under paragraph (2), records and documents related to the origin of the good, including— 

(i) the purchase, cost, and value of, and payment for, 

the good; 

(ii) the purchase, cost, and value of, and payment 

for, all materials, including indirect materials, used in 

the production of the good; and 

(iii) the production of the good in the form in which 

it was exported. 

(B) PANAMA TPA CERTIFICATION OF ORIGIN.—The term 

‘‘Panama TPA certification of origin’’ means the certification established under article 4.15 of the United StatesPanama Trade Promotion Agreement that a good qualifies 

as an originating good under such Agreement. 

(2) EXPORTS TO PANAMA.—Any person who completes and 

issues a Panama TPA certification of origin for a good exported 

from the United States shall make, keep, and, pursuant to rules 

and regulations promulgated by the Secretary of the Treasury, 

render for examination and inspection all records and supporting documents related to the origin of the good (including 

the certification or copies thereof). 

(3) RETENTION PERIOD.—The person who issues a Panama 

TPA certification of origin shall keep the records and supporting documents relating to that certification of origin for a 

period of at least 5 years after the date on which the certification is issued. 

* * * * * * * 

SEC. 514. PROTEST AGAINST DECISIONS OF THE CUSTOMS SERVICE. 

(a) * * * 

* * * * * * * 

(l) DENIAL OF PREFERENTIAL TARIFF TREATMENT UNDER THE

UNITED STATES-PANAMA TRADE PROMOTION AGREEMENT.—If U.S. 

Customs and Border Protection or U.S. Immigration and Customs 

Enforcement of the Department of Homeland Security finds indications of a pattern of conduct by an importer, exporter, or producer 

of false or unsupported representations that goods qualify under the 

rules of origin provided for in section 203 of the United States-Panama Trade Promotion Agreement Implementation Act, U.S. Customs and Border Protection, in accordance with regulations issued 

by the Secretary of the Treasury, may suspend preferential tariff 

treatment under the United States-Panama Trade Promotion Agreement to entries of identical goods covered by subsequent representations by that importer, exporter, or producer until U.S. Customs and 

Border Protection determines that representations of that person are 

in conformity with such section 203. 

* * * * * * * 

SEC. 520. REFUNDS AND ERRORS. 

(a) * * * 

* * * * * * * 

(d) GOODS QUALIFYING UNDER FREE TRADE AGREEMENT RULES

OF ORIGIN.—Notwithstanding the fact that a valid protest was not 


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filed, the Customs Service may, in accordance with regulations prescribed by the Secretary, reliquidate an entry to refund any excess 

duties (including any merchandise processing fees) paid on a good 

qualifying under the rules of origin set out in section 202 of the 

North American Free Trade Agreement Implementation Act, section 202 of the United States-Chile Free Trade Agreement Implementation Act, section 203 of the Dominican Republic-Central 

America-United States Free Trade Agreement Implementation Act, 

section 202 of the United States-Oman Free Trade Agreement Implementation Act, øor¿ section 203 of the United States-Peru Trade 

Promotion Agreement Implementation Act øfor which¿, or section 

203 of the United States-Panama Trade Promotion Agreement Implementation Act for which no claim for preferential tariff treatment was made at the time of importation if the importer, within 

1 year after the date of importation, files, in accordance with those 

regulations, a claim that includes— 

(1) * * * 

* * * * * * * 

PART V—ENFORCEMENT PROVISIONS 

* * * * * * * 

SEC. 592. PENALTIES FOR FRAUD, GROSS NEGLIGENCE, AND NEGLIGENCE. 

(a) * * * 

* * * * * * * 

(c) MAXIMUM PENALTIES.— 

(1) * * * 

* * * * * * * 

(12) PRIOR DISCLOSURE REGARDING CLAIMS UNDER THE

UNITED STATES-PANAMA TRADE PROMOTION AGREEMENT.—An 

importer shall not be subject to penalties under subsection (a) 

for making an incorrect claim that a good qualifies as an originating good under section 203 of the United States-Panama 

Trade Promotion Agreement Implementation Act if the importer, in accordance with regulations issued by the Secretary 

of the Treasury, promptly and voluntarily makes a corrected 

declaration and pays any duties owing with respect to that 

good. 

* * * * * * * 

(k) FALSE CERTIFICATIONS OF ORIGIN UNDER THE UNITED

STATES-PANAMA TRADE PROMOTION AGREEMENT.— 

(1) IN GENERAL.—Subject to paragraph (2), it is unlawful for 

any person to certify falsely, by fraud, gross negligence, or negligence, in a Panama TPA certification of origin (as defined in 

section 508 of this Act) that a good exported from the United 

States qualifies as an originating good under the rules of origin 

provided for in section 203 of the United States-Panama Trade 

Promotion Agreement Implementation Act. The procedures and 

penalties of this section that apply to a violation of subsection 

(a) also apply to a violation of this subsection. 


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61 

(2) PROMPT AND VOLUNTARY DISCLOSURE OF INCORRECT IN- FORMATION.—No penalty shall be imposed under this subsection 

if, promptly after an exporter or producer that issued a Panama 

TPA certification of origin has reason to believe that such certification contains or is based on incorrect information, the exporter or producer voluntarily provides written notice of such 

incorrect information to every person to whom the certification 

was issued. 

(3) EXCEPTION.—A person shall not be considered to have violated paragraph (1) if— 

(A) the information was correct at the time it was provided in a Panama TPA certification of origin but was 

later rendered incorrect due to a change in circumstances; 

and 

(B) the person promptly and voluntarily provides written 

notice of the change in circumstances to all persons to 

whom the person provided the certification. 

* * * * * * * 

TRADE ACT OF 1974 

* * * * * * * 

TITLE II—RELIEF FROM INJURY CAUSED BY 

IMPORT COMPETITION 

CHAPTER 1—POSITIVE ADJUSTMENT BY INDUSTRIES 

INJURED BY IMPORTS 

* * * * * * * 

SEC 202. INVESTIGATIONS, DETERMINATIONS, AND RECOMMENDATIONS BY COMMISSION. 

(a) PETITIONS AND ADJUSTMENT PLANS.— (1) * * * 

* * * * * * * 

(8) The procedures concerning the release of confidential 

business information set forth in section 332(g) of the Tariff 

Act of 1930 shall apply with respect to information received by 

the Commission in the course of investigations conducted 

under this chapter, part 1 of title III of the North American 

Free Trade Agreement Implementation Act, title II of the 

United States-Jordan Free Trade Area Implementation Act, 

title III of the United States-Chile Free Trade Agreement Implementation Act, title III of the United States-Singapore Free 

Trade Agreement Implementation Act, title III of the United 

States-Australia Free Trade Agreement Implementation Act, 

title III of the United States-Morocco Free Trade Agreement 

Implementation Act, title III of the Dominican Republic-Central America-United States Free Trade Agreement Implementation Act, title III of the United States-Bahrain Free Trade 

Agreement Implementation Act, title III of the United StatesOman Free Trade Agreement Implementation Act, øand¿ title 

III of the United States-Peru Trade Promotion Agreement ImVerDate Mar 15 2010 06:52 Sep 26, 2012 Jkt 019010 PO 00000 Frm 00061 Fmt 6602 Sfmt 6602 E:\HR\OC\SR224.XXX SR224

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62 

plementation Act, and title III of the United States-Panama 

Trade Promotion Agreement Implementation Act. The Commission may request that parties providing confidential business 

information furnish nonconfidential summaries thereof or, if 

such parties indicate that the information in the submission 

cannot be summarized, the reasons why a summary cannot be 

provided. If the Commission finds that a request for confidentiality is not warranted and if the party concerned is either unwilling to make the information public or to authorize its disclosure in generalized or summarized form, the Commission 

may disregard the submission. 

* * * * * * * 

TRADE AGREEMENTS ACT OF 1979 

* * * * * * * 

TITLE III—GOVERNMENT PROCUREMENT 

* * * * * * * 

SEC. 308. DEFINITIONS. 

As used in this title— 

(1) * * * 

* * * * * * * 

(4) ELIGIBLE PRODUCTS.— 

(A) IN GENERAL.—The term ‘‘eligible product’’ means, 

with respect to any foreign country or instrumentality that 

is— 

(i) * * * 

* * * * * * * 

(x) a party to the United States-Panama Trade Promotion Agreement, a product or service of that country 

or instrumentality which is covered under that agreement for procurement by the United States. 

* * * * * * * 

(ix) a party to the United States-Panama Trade Promotion Agreement, a product or service of that country 

or instrumentality which is covered under that agreement for procurement by the United States. 

* * * * * * * 

CARIBBEAN BASIN ECONOMIC RECOVERY ACT 

* * * * * * * 

TITLE II—CARIBBEAN BASIN INITIATIVE 

* * * * * * * 


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Subtitle A—Duty-Free Treatment 

* * * * * * * 

SEC. 212. BENEFICIARY COUNTRY. 

(a) * * * 

(b) In designating countries as ‘‘beneficiary countries’’ under this 

title the President shall consider only the following countries and 

territories or successor political entities: 

Anguilla Jamaica 

Antigua and Barbuda Nicaragua 

Bahamas, The øPanama¿ 

Barbados Saint Lucia 

Belize Saint Vincent and the 

Grenadines 

Costa Rica Suriname 

Dominica Trinidad and Tobago 

Dominican Republic Cayman Islands 

El Salvador Montserrat 

Grenada Netherlands Antilles 

Guatemala Saint Christopher-Nevis 

Guyana Turks and Caicos Islands 

Haiti Virgin Islands, British 

Honduras 

In addition, the President shall not designate any country a beneficiary country under this title— 

(1) * * * 

* * * * * * * 

Æ 


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