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[Senate Report 112-224]
[From the U.S. Government Publishing Office]

                                                       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
          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. Congress 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. 
Sec. Sec. 3803-3806) and section 151 of the Trade Act of 1974 
(19 U.S.C. Sec. 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 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 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 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         2,451,566,679
 WAX.................................................
84--NUCLEAR REACTORS, BOILERS, MACHINERY ETC.; PARTS.        533,060,219
85--ELECTRIC MACHINERY ETC; SOUND EQUIP; TV EQUIP;           426,925,884
 PTS.................................................
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           229,290,875
 ETC.................................................
10--CEREALS..........................................        144,537,635
90--OPTIC, PHOTO ETC, MEDIC OR SURGICAL INSTRMENTS           130,734,420
 ETC.................................................
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;             5,609,846
 PTS.................................................
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 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 duty-free 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.
    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 States-
Panama 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 investors 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 non-discriminatory 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 reductions 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 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 duty-free 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 duty-free 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, 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 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. 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 ``build-up 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 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. 
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, 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 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. 
International Trade Commission from aggregating (or 
``cumulating'') 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 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 Agreement enters into force 
and future investments. The term ``investor 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 
investor-State 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 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 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 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 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 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 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 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.
    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 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.
    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, 
quasi-judicial, 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 criteria 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 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 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 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.

     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 take effect on the date the Agreement 
enters into force are appropriately 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. Sec. 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 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 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 
non-originating 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 determining whether a good qualifies 
as an originating good. Section 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. Sec. 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. Sec. 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. Sec. 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. Sec. 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 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. 
Sec. Sec. 2251-2254).

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. Sec. 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. Sec. 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.

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. Sec. Sec. 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 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. Sec. 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. Sec. Sec. 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 
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. Sec. 2133), to grant new 
concessions to Panama as compensation for the imposition of 
import relief pursuant to the textile and apparel safeguard.

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. Sec. Sec. 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. Sec. Sec. 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. Sec. 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. 
Sec. 58c(j)(3)) to extend the collection of passenger and 
conveyance processing fees from September 1, 2021 to September 
30, 2021.

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 
States-Panama 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.
    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).

--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                            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.
aIn 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.

    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.

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-as-you-go procedures are shown in the 
following table.

              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
--------------------------------------------------------------------------------------------------------------------------------------------------------

    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.

                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 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 pharmaceuticals 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.

               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.
        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 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 States-Panama 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 
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, [or] section 203 
of the United States-Peru Trade Promotion Agreement 
Implementation Act [for 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.
          (2) Prompt and voluntary disclosure of incorrect 
        information.--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 States-Oman Free Trade 
        Agreement Implementation Act, [and] title III of the 
        United States-Peru Trade Promotion Agreement 
        Implementation 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

           *       *       *       *       *       *       *

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                      [Panama]
  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) * * *

           *       *       *       *       *       *       *

                                  
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