World Trade Organization |
RESTRICTED |
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WT/TPR/G/186 | |
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(07-3370) |
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Trade Policy Review Body |
Original: Spanish |
TRADE POLICY REVIEW Report by Panama |
Pursuant to the Agreement Establishing the Trade Policy Review Mechanism (Annex 3 of the |
Note: This report is subject to restricted circulation and press embargo until the end of the first session of the meeting of the Trade Policy Review Body on Panama.
CONTENTS
Page
I. INTRODUCTION 5
II. ECONOMIC ENVIRONMENT 5
1. Economic and Social Policy 5
1.1 Economic Policy 6
1.1.1 Privatization 6
1.1.2 Public Finances 8
1.1.3 Trade Liberalization 8
1.2 Social Policy 9
1.2.1 Health and Housing 9
1.2.2 Education 10
1.2.3 Poverty Reduction 10
2. Economic Performance (1997-2006) 11
2.1 Economic Performance by Sector 11
2.1.1 Primary Sector 11
2.1.2 Secondary Sector 12
2.1.3 Tertiary Sector 13
2.2 Labour Market 13
2.3 Balance of Payments 14
2.4 Public Finances 15
2.5 Inflation 16
III. TRADE POLICY 17
1. Evolution of Trade Policy 17
1.1
1.1.1 Tariff Structure 18
1.1.2 Tariff Quotas 20
1.1.3 Production Support Programmes 21
1.1.4 Export Subsidies and Support Programmes 23
1.1.5 Trade Remedies 25
1.1.6 Technical Barriers to Trade 25
1.1.7 Sanitary and Phytosanitary Measures 26
1.1.8 Intellectual Property 27
1.1.9 Services 30
1.1.10 The
1.2 Bilateral Trade Agreements 35
1.3 Investment Promotion 38
2. Foreign Trade Strategy 43
2.1 Export Promotion 43
2.2 National Competitiveness 43
2.3 Agro-Industrial Development 44
2.4 Supplementary Agenda 44
Page
IV. GROWTH OF FOREIGN TRADE AND INVESTMENT 45
1. Trade in Goods 45
2. Trade in Services 47
V. MODERNIZATION OF THE STATE 52
1. Consumer Protection and Defence of Competition 52
2. Food Safety 52
3. Environment 53
4. Government Procurement 53
5. Registration of Industrial Property 54
6. Customs 54
7. Science and Technology 55
8. Office for International Trade Negotiations 55
VI. CONCLUSIONS AND PROSPECTS 56
I. introduction
1. Since its accession to the World Trade Organization (WTO) on
2. As detailed in this report,
3. At the same time, the necessary amendments have been made to domestic law in order to channel market forces towards higher levels of sustainable growth, while protecting the interests of the country and society as a whole.
4. In this connection,
5. Regarding trade liberalization, the country has carried out a continuous process of eliminating tariff and non-tariff barriers. It has also managed to sign trade agreements with major partners, both in the region and in other hemispheres, while honouring its commitments under all trade agreements, whether multilateral or bilateral, and strengthening its participation in world trade.
6. With respect to public administration, huge efforts have been made to change the pattern of State intervention in the economy, by reducing the State's direct role in public enterprises and transferring their operations to the private sector.
7. In addition, the State has strengthened its role in contributing to the development of entrepreneurial capacities and competitiveness, including among small and medium-sized enterprises. An example of this is the Supplementary Agenda currently being executed by the national Government. The purpose of this ambitious programme, which to date has US$100 million at its disposal, is to facilitate the integration of domestic production in the global economy. The programme is focused on strengthening the capacity of the production sector in order to increase exports, energize human resources, and spur innovation and technological development.
8. The above demonstrates the importance of international trade to
II. ECONOMIC ENVIRONMENT
1. Economic and Social Policy
9. Until the 1980s,
10. By the end of 1989, the political crisis that
11. These circumstances were the preamble to a series of economic and social reforms launched at the beginning of the 1990s. At the economic level, these reforms were focused on basic objectives, such as paving the way for eventually normalizing external debt payments, partially restoring a fiscal balance (the non-financial public sector deficit went from -2.4 per cent as a percentage of GDP in 1998 to 0.5 per cent in 2006), and privatizing some State-owned enterprises. In the social sphere, objectives such as poverty reduction, improving income distribution, development of human capital, and modernization of the State moved to the top of the agenda. On the political front, democracy and civil society representation were strengthened.
12. In the mid-1990s, a change of government occurred that marked the beginning of an accelerated phase of social and economic reforms, including the application of a more aggressive open trade policy. Likewise, the price control system was dismantled, and institutions and standards to promote competitive practices were placed in operation. In addition, a regulatory and institutional framework was established to regulate the various public service companies that were being privatized.
1.1 Economic Policy
1.1.1 Privatization
13. The programme to privatize State-owned enterprises was launched in the period 1991-1994 to increase enterprise efficiency and production capacity, free up and expand State resources for priority investments and attract foreign private investment. A framework law was adopted to regulate the process and a Privatization Office (PROPRIVAT) attached to the former Ministry of Finance and the Treasury was established. During this period, only small enterprises, such as the Cooperativa Bananera del Atlántico – COBANA (Atlantic Banana Cooperative), the Cooperativa Bananera del Pacífico – COBAPA (Pacific Banana Cooperative) and Cítricos de Chiriquí (Chiriquí Citrus Fruits), were privatized; Air Panamá (Air Panama) was also liquidated. In addition, the Corporación Azucarera la Victoria (Victoria Sugar Corporation) was privatized in August 1993 and Cemento Bayano (Bayano Cement) in 1994.
14. In June 1997, the sale of 49 per cent of the shares of the National Telecommunications Institute (Instituto Nacional de Telecomunicaciones S.A. –
15. The opening of the telecommunications sector to competition began in January 2003. However, a bidding process was launched in July 2001 so that interested companies could obtain concessions to operate basic telecommunications services, such as local basic telecommunications service, nationwide basic telecommunications service, international basic telecommunications service, public and semi-public telephone service, and leased voice circuit service. The modernization and increased competitiveness of the sector are reflected in the trend of the following indicators.
Table No. 1
Basic telecommunications sector indicators, 1998 and 2005
Indicator |
Years | |||
1998 |
2005 | |||
Mobile telephony subscribers |
86,389 |
1,748,740 |
| |
Annual ratio of mobile telephones per 100 inhabitants |
3.10 |
58.60 |
| |
Population coverage (mobile telephony) |
68% |
89% |
| |
Total number of full-time employees in telecommunications services |
4,621,00 |
6,562,00 |
| |
Percentage of breakdowns repaired within 24 hours |
66% |
98% |
| |
Internet subscribersa |
17,350 |
86,518 |
| |
Public telephones |
7,026 |
8,202 |
| |
Number of companies providing ILD serviceb |
1 |
11 |
| |
a There are 14 service providers.
b ILD: international long distance.
Source: Public Services Authority.
16. The Hydraulic Resources and Electrification Institute (Instituto de Recursos Hidráulicos y Electrificación – IRHE)[2] was originally divided into four generating companies, three distribution companies[3] and one transmission company. After privatization through a consolidation process, three generating companies remained.[4] The Government retained control of the transmission company (ETESA) and, more recently (in 2006), established an electricity-generating public enterprise (EGESA). It is important to note that following the privatization process, new private generating companies were established, such as Pedregal Power Co., Corporación de Energía S.A. – COPESA (Energy Corporation, Inc.), PAN AM Generating Ltd, and other small power stations.
17. Privatization also encompassed the port sector. A concession was granted to the company Manzanillo Internacional Terminal (Manzanillo International Terminal), located in the city of
18. Management concessions were also awarded, both for the construction of the North and South Corridors, which contributed significantly to improving road interconnectivity in the capital, and for the management of the Panama Canal Railway, which in turn strengthened the connectivity of the trans-isthmus highway between the endpoints of Panama City and Colon.
19. In 1998, a management concession was granted for the national casinos, and the national racetrack began to be operated privately. Subsequently, in 2003,
20. Lastly, from the start of the 1990s to the present, entities[5] were restructured and established to reflect modern concepts of privatized banking and exchange regulation and competition and consumer protection.
1.1.2 Public Finances
21. Beginning in the mid-1990s, the basic public finance objectives included reducing current expenditure, increasing investment and renegotiating external debt. This process was effectively accomplished in July 1996 under the "Brady Plan" financial arrangement. This operation represented a direct reduction of the debt balance by some US$600 million, and placed the total value of the restructured commercial debt at approximately US$3.227 billion.[6] This debt renegotiation enabled
22. By the end of 2000, the Government achieved a sound fiscal balance. Accordingly, there was no need for a higher level of indebtedness, and the deficit was reduced by streamlining expenditure. Furthermore, in 2002 the Fiscal Responsibility Law was adopted to reduce and monitor public expenditure, along with the Tax Reorganization and Simplification Law, which sought to increase the neutrality of the tax system.
23. From 2005 onward, public finances registered a steady "strengthening", achieved largely through the adoption of a new fiscal reform called the Fiscal Equity Law, which included an expenditure reduction programme, improved the fiscal equity concept still further, and sought to reduce opportunities for tax evasion.[7] In the same period, as a result of a broad dialogue with civil society and cooperation with the United Nations Development Programme (UNDP), a consensus was achieved on restoring the financial and actuarial sustainability of the public pension system managed by the Social Security Fund (Caja de Seguro Social – CSS).[8] In addition, the Panama Canal Expansion Project, which has strengthened the country's medium- and long-term economic and trade expectations, was approved by popular referendum.
1.1.3 Trade Liberalization
24. A crucial step in the achievement of the objectives set by the country was
25. A stand-by arrangement with the International Monetary Fund (IMF) was signed in 2000.[10]
26. Beginning in 2002, consistent with the trade liberalization policy, a number of free trade agreements (FTAs) with countries in different hemispheres[11] were approved and implemented. These agreements allow positive steps to be taken towards liberalization across the board, through commitments that provide duty-free entry for a large number of products, both linear and non-linear tariff reduction, the minimizing and phasing out of customs procedures that limit trade, and a forum for dispute mediation and settlement. Being based on reciprocity, because of the benefits the partners grant each other these agreements are a source of mutual encouragement towards open markets in the future which, while not global, are nonetheless important and positive for world trade.
1.2 Social Policy
1.2.1 Health and Housing
27. At the end of the 1990s, in the framework of a policy programme called "Economically Efficient Social Development" (Desarrollo Social con Eficiencia Económica), the country increased public investment in social projects.[12] These included the building of the San Miguel Arcángel Hospital (San Miguelito district) and four regional hospitals (in the district capitals of
28. During the period 1999-2003, housing programmes, such as serviced lots and land title programmes, were carried out through the new, restructured Social Investment Fund (Fondo de Inversión Social – FIS), resulting in nearly 15,000 housing solutions, including in the Kuna Yala indigenous region. The new
29. In 2005,
30. In the area of health, nutrition and rural health programmes for the low-income population were launched in this period, and designs for the
31. Lastly, by means of Decree-Law No. 1 of
1.2.2 Education
32. In the area of education, for the period 1994-1999, greater access to the school system for low-income groups and better-quality primary and secondary education[14] were promoted through an IDB loan. In addition, a Modernization of Education Law was adopted with the objectives of expanding education coverage nationwide, improving the quality of teaching (teacher training), designing new courses and curricula, providing teaching resources (equipment and laboratories), and repairing and building school facilities.
33. Beginning in 2004, education and training efforts were redoubled as part of the new economic and social strategy. Among the latter's programmes, the following should be underscored: "Development of Human Capital", to promote modernization of the education system at all levels; "English for Life", to offer training to people who aspire to jobs created by the new international projects in Panama; and the technological infrastructure programme, to provide computers and Internet access (through the programme "Connect to Knowledge" (Conéctate al Conocimiento)).[15] Mention should be made of the scholarships and assistance granted to indigenous communities that have benefited approximately 1,300 students from different administrative districts (comarcas). Scholarships were also granted to students living in
1.2.3 Poverty Reduction
34. Beginning in the mid-1990s, through the new economic and social policy (Desarrollo Social con Eficiencia Económica), Panama set the objective of reducing poverty and inequality through more efficient and effective social expenditure, focusing investment on projects and specific areas of greatest need, and increasing access to public services for low-income groups. In pursuit of this objective, the State coordinated an extensive investigation of living conditions and poverty in the country (the last such investigation having been carried out in 1983). As a result, a "New Strategic Approach to Confronting Poverty" (Nuevo Enfoque Estratégico Frente a la Pobreza) was devised. It was based on a concept of community development and food production that would provide support for producers in marginalized areas and areas of extreme poverty in the form of food distribution, loans, and basic infrastructure programmes.
35. In 2000, the national Government issued the document "Social Development Policy and Strategy, 2000-2004" (Política y Estrategia de Desarrollo Social 2000-2004). Its specific objectives included drastically reducing child malnutrition, making this the number one priority for all State entities. At the same time, an extensive programme of self-sustaining arable farms was carried out in the poorest areas. In addition, the Government of Panama, by means of Law No. 8 of
36. Beginning in 2005, a wide range of programmes and works was launched, focusing on low-income groups or communities situated in towns identified as low income on the Poverty Map. In addition, significant investments were made that indirectly improved the quality of life of other social groups. These investments included school nutrition programmes and food assistance for mothers and children and indigenous people, for example, the Rural Sustainable Development and Rural Competitiveness programmes, which have indigenous assistance components.
37. Lastly, beginning in 2005, the Labour Integration Programme, which seeks to integrate more than 4,000 Panamanian workers in the private sector by the end of 2007, was undertaken through the Ministry of Labour and Work Development (MITRADEL). The project goes hand in hand with the human capital and workforce development project of the National Institute of Vocational Training for Human Development (Instituto Nacional de Formación Profesional y Capacitación para el Desarrollo Humano – INADEH), an institution at the forefront of the strategic vision on economic development and employment for the period 2004-2009.
2. Economic Performance (1997 – 2006)
2.1 Economic Performance by Sector
2.1.1 Primary Sector
38. In the period 1997-2006, the primary sector in general grew steadily, at an annual rate of 6.4 per cent; the vast majority of activities averaged a positive growth rate, with the exception of the fishing sector, which posted a decline in 1999 owing to the white spot virus that affected shrimp exports. Subsequently, in 2002, the agricultural subsector suffered a setback due to an uneven performance in some areas caused mainly by adverse weather conditions and other factors such as the European Union's discriminatory treatment of banana exports from Latin American countries.
39. The primary sector represented on average 8.2 per cent of
2.1.2 Secondary Sector
40. During the period 1997-2006, the secondary sector represented on average more than 16 per cent of GDP. In addition, during the period 1997-2000, all components of the secondary sector posted favourable rates, including manufacturing, electricity, water, and construction. During this period, manufacturing underwent an adjustment and restructuring process in response to the opening up of trade. This transformation of industry generated new concepts of efficiency, reflected in more dynamic entrepreneurial activity in response to competition from imported products.
41. Subsequently, in the period 2000-2003, the secondary sector posted a decline, specifically in the construction and industry subsectors, owing mainly to the closure of the national oil refinery (Refinería Nacional).
42. Lastly, manufacturing growth was 3 per cent in 2005 and 5.1 per cent in 2006, while electricity generation and water grew by 5 per cent and 3.6 per cent, respectively. Construction, meanwhile, has seen a marked expansion and been a key engine of growth for the Panamanian economy in recent years. In 2003 and 2004, for example, it expanded by 34.4 per cent and 14.4 per cent, respectively. While in 2005 the sector grew by 1 per cent, in the following period it improved even further, with 17.4 per cent growth, indicating that, despite annual fluctuations, this activity shows a favourable and steady medium-term trend.
2.1.3 Tertiary Sector
43. Historically, the sector that provides the greatest support to
44. In the past three years (2004, 2005, and 2006), the tertiary sector has developed significantly, with growth rates of 6.8 per cent, 9.4 per cent, and 9.3 per cent. Mention should be made of the Colon Free Zone and of the hotel and restaurant subsector, which grew by more than 10 per cent. Other components of the sector also trended upwards significantly, such as financial intermediation, wholesale and retail commerce, and real estate. The high percentage of GDP that this sector represents and has represented in the past, shows that
2.2 Labour Market
45. At the end of 1999 and in 2000, the labour market was affected by a declining demand for jobs. This led to an increase in the unemployment rate, which went from 11.8 per cent in August 1999 to 13.3 per cent in August 2000.
46. In mid-2004, there was a change in trend, with robust employment growth thanks to job creation in areas such as telemarketing and the call centres that have sprung up in
47. Another important consideration is that the new jobs are of better quality, as evidenced by the 4.3 per cent growth in 2006 of the wage-earning population (excluding domestic workers) and only 2.5 per cent growth of the non-wage-earning population. Mention should also be made of the 8.6 per cent annual increase in employment in the construction sector. In addition, there was a significant increase in job creation, mainly in urban areas.
48. Steady economic growth in the past five years has had a positive impact on the labour market. The unemployment rate has trended downwards, moving from 13.6 per cent in 2003 to 7.3 per cent in 2007, with manufacturing, hotels and restaurants, construction, and commerce being the most dynamic industries in terms of job creation.
2.3 Balance of Payments
49. During the period 1998-2002,
50. Likewise in 2002, the income component showed a deficit of B 284 million as a result of the losses suffered by general-licence foreign banks. The negative balance in the capital and financial account was the result of equilibrium in the asset and liability flows of the international banking centre and of favourable external debt operations, as Brady bond buybacks not only reduced the debt but also generated a nominal saving.
51. Balance of payments behaviour in the period 2003-2006 was similar to that of the previous period, except for the income balance. The services balance was positive during this period, reaching US$2.2099 billion in 2006 as a result of the boost from Panama Canal toll charges, a good performance by port services (specifically, cargo and container services), and the boom in tourist services. In addition, telecommunications services generated income of US$65.5 million, of which approximately 60 per cent derived from resale companies which offer basic and mobile services through public, fixed-network and mobile telephones, and the remaining 40 per cent from call centres. Current transfers showed a similar trend, amounting to US$257.9 million in 2006 as a result of remittances received from workers (mainly from the
52. In the capital account, there was a significant increase in foreign direct investment (FDI), which rose from approximately US$1 billion between 2004 and 2005 to US$2.560 billion in 2006. The main explanation for this increase is the purchase of local banks by foreign banks.[18]
2.4 Public Finances
53. During the period 1993-1997, public sector saving rose from 6.6 per cent to 7.5 per cent of GDP, falling back to 6.2 per cent in 1998. Meanwhile, the surplus recorded between 1994 and 1996 became a deficit of 0.3 per cent in 1997 and 2.5 per cent in 1998. This deterioration was due mainly to the decline in current transfers, which the privatized State-owned enterprises had ceased to contribute. Subsequently, in 1999, tax revenues improved as a result of an agreement for the payment of B 49.9 million in National Bank dividends to amortize accumulated debt.
54. As from 2000, the Office of the Comptroller General of the Republic has included the Panama Canal Authority (Autoridad del Canal de Panamá – ACP) as a non-consolidated agency, so that its net liquid asset flows (equivalent to the ACP surplus or deficit) are reflected in the fiscal balance of the non-financial public sector (NFPS). This enables Canal surpluses to be used for social investment programmes (as in the PRODEC programme in 2006).
55. Public finances were strengthened in 2005. First, reforms were approved both to the tax system, through the Fiscal Equity Law, and to the public pension system of the Social Security Fund. Secondly, tax revenues increased sharply as a result of economic growth and higher taxation of electricity companies. Management of public finances in 2005 consisted essentially in achieving a large increase in revenue with a low increase in expenditure. Most noteworthy is that this balancing coincided with the implementation that year of a solid investment programme of more than US$800 million, nearly double that of previous years. Sound fiscal management thus enabled the deficit to GDP ratio to be reduced from 4.9 per cent in 2004 to 3.2 per cent in 2005 (2.5 per cent if the exceptional debt refinancing is excluded).
56. According to the 2006 economic report, the NFPS went from a deficit of US$500.1 million in 2005 to a surplus of US$87.8 million in 2006. Current saving, meanwhile, went from B 33.3 million in 2005 to US$576.4 million in 2006. At the same time, non-financial public investment increased, from US$466.3 million to US$530.3 million in 2006. In that year, the central Government's finances reflected revenue increases resulting from economic growth, better fiscal management, and an increase in non-recurrent revenue (including US$199.6 million in additional contributions from the Panama Canal, which contributed US$603.5 million for the year), the special payment received from the Panamá Ports company, and taxes on the capital gains stemming from the sale of a large private bank (Banco del Istmo). Likewise, the operating result of the Social Security Fund (CSS) was favourable, going from a deficit of US$67.2 million in 2003 to a small surplus in 2006.
57. As noted in the preceding paragraphs, the efforts and controls undertaken in the fiscal area yielded positive results, as reflected in the marked improvement in the risk rating attributed to
2.5 Inflation
58.
59. The oil price rise has been reflected in slight increases in domestic price levels. In 2006, the inflation rate (as measured by the CPI) was 2.3 per cent, slightly lower than the 3.3 per cent recorded in 2005.
60. As well as low inflation,
61. Lastly, the country's macroeconomic stability has been strengthened by the implementation of a set of structural reforms that have enabled
III. TRADE POLICY
1. Evolution of Trade Policy
62. Beginning in the 1990s,
63. In October 1991, as part of the implementation of its new trade policy
64. With the changes introduced in pursuit of a more open economy, and
65. Over the years new needs have been created, requiring government administrators to make constant changes and adjustments to domestic policies and regulations in response to the commitments and opportunities arising from the trade liberalization process.
1.1
66. By Law No. 23 of
67. A number of issues that illustrate the efforts
1.1.1 Tariff Structure
68. Accession to the WTO required
69. From then onwards, a number of reforms were made to the National Import Tariff the main achievements of which were: (1) elimination of all existing specific and combined customs tariffs and their conversion to a wholly ad valorem system[21]; (2) adjustment of all customs tariffs to the levels bound at accession, in many cases achieving greater reductions than established in commitments[22]; (3) simplification of the tariff classification and rate structure[23]; and (4) elimination of all existing non-tariff barriers, such as quotas, prior licences, authorizations, and other requirements for the import of certain products.[24]
70. In view of the continuing need for tariff adjustment and reform,
71. The tariff reductions implemented as a consequence of
72. It has been
Table No. 2
Evolution of
Date |
Average Tariffa |
No. of Items |
December 1996 |
15.860 |
8,401 |
January 1997 |
14.187 |
8,375 |
January 1998 |
8.982 |
8,417 |
June 1999 |
9.000 |
8,542 |
February 2000 |
9.197 |
8,548 |
December 2001 |
8.631 |
8,578 |
October 2002 |
8.831 |
8,852 |
December 2003 |
8.700 |
8,876 |
January 2004 |
8.760 |
8,902 |
January 2005 |
8.760 |
8,912 |
March 2006 |
8.620 |
8,921 |
a Applied tariff rate (simple average).
Source: Ministry of Trade and Industry.
73. Currently,
Table No. 3
WTO applied and bound tariffs
Product |
Applied tariff |
Bound tariff |
Agricultural |
15.3% |
28.7% |
Non-agricultural |
7.2% |
22.6% |
Source: Ministry of Trade and Industry.
74. With respect to the applied tariff, it can be pointed out that the current National Import Tariff is concentrated at three basic levels (0, 10 and 15 per cent); 29.8 per cent of the applied tariff lines have a rate of 0 per cent; 13.2 per cent have a rate of between 1 per cent and 5 per cent; 22.3 per cent have a rate of between 6 per cent and 10 per cent; 32.2 per cent have a rate of between 11 per cent and 15 per cent; and 2.6 per cent have a rate of over 15 per cent. The tariff lines with a rate of over 15 per cent are products such as chicken cuts, dairy products, sugar, rice, potatoes, coffee, tomatoes, onions, hams, etc.
75. The following table summarizes
Table No. 4
Applied tariff structure of
Applied tariff |
Tariff lines |
Percentage |
Cumulative percentage |
0 |
2,659 |
29.8% |
29.8% |
1% - 5% |
1,178 |
13.2% |
43.0% |
6% - 10% |
1,985 |
22.3% |
65.3% |
11% - 15 % |
2,870 |
32.2% |
97.4% |
Over 15% |
229 |
2.6% |
100.0% |
Total |
8,921 |
|
|
Note:
Source: Ministry of Trade and Industry.
76. In addition,
1.1.2 Tariff Quotas
77. While
78. In accordance with Titles III and IV of Law No. 23 of July 1997 approving Panama's accession to the WTO, the Licensing Committee, consisting of the Minister of Agricultural Development, the Minister of the Economy and Finance, and the Minister of Trade and Industry, is responsible for administering tariff quotas, promoting, approving, supervising and regulating the establishment and running of the Commodity Exchanges[27], disseminating the opening of quotas before they are made available to the public, and determining, on the basis of the product's characteristics, the periods for which they will be available to interested parties.[28] This mechanism was established in accordance with law and the WTO Market Access and Import Licensing Agreements.
79. Pursuant to domestic law, the Technical Secretariat of the Tariff Quota Licensing Committee was established in the Trade Policy Office of the Ministry of Agricultural Development. Its functions include: organizing notification of the opening of tariff quotas, coordinating the registration of economic agents interested in participating in the bidding for the products under quota, issuing certification to the buyers awarded licences to import products under quota, and carrying out such other functions as the Committee assigns to it in accordance with Law No. 23 of July 1997.
80. The agricultural products subject to tariff quotas under the WTO are: pig meat (20 items plus subdivisions), meat of fowls (2 items plus subdivisions), milk and dairy products (25 items plus subdivisions), potatoes (1 item), beans (1 item), maize (3 items), rice (4 items), and tomato by-products (3 items).
81.
82. Bidding for products subject to tariff quotas has been carried out in accordance with the prescriptions of the relevant agreements. The requisite bidding rounds have been held for purchase of the quantities announced. Under the corresponding tariff preferences, importers have been able to bring into the country the quota quantities they have allocated during the bidding rounds held in the Commodity Exchange.
Table No. 5
Summary of results of bidding for ordinary tariff quotas, 2004-2006
(In metric tons)
Breakdown |
Announced 2004 |
Allocated 2004 |
Supplier Countries |
Announced 2005 |
Allocated 2005 |
Supplier Countries |
Announced 2006 |
Allocated 2006 |
Supplier Countries |
|
Pig meata |
800 |
607.3 |
|
840 |
697.7 |
|
880 |
873.5 |
|
|
Meat of fowl |
660 |
b |
Void |
708 |
b |
Void |
756 |
b |
Void |
|
Milk and dairy productsc |
11,763.9 |
6,988.6 |
|
11,918.5 |
6,816 |
|
12,073 |
7,942 |
|
|
Potatoes |
562.9 |
562.9 |
|
590.4 |
530.4 |
|
618 |
480 |
|
|
Beans |
444.4 |
444.4 |
|
472.2 |
472.2 |
|
500 |
490 |
|
|
Riced |
8,664.6 |
8,664.6 |
|
9,188.1 |
9,188.1 |
|
9,711.6 |
9,114.5 |
|
|
Maize - sorghum |
143,669.8 |
143,669.8 |
|
146,835 |
146,835 |
|
150,000 |
150,000 |
|
|
Tomato |
1,495.8 |
1,085.7 |
|
1,576 |
1,286 |
|
2,056.3 |
2,056.3 |
|
|
a This quota includes a volume exclusively for
b
c Some of the dairy product items were declared void because the buyers and bidders did not agree on the product type.
d One item was not allocated because the buyers and bidders did not agree on the product type.
Source: Ministry of Agricultural Development.
1.1.3 Production Support Programmes
83. In respect of production support programmes, the Ministry of Agricultural Development (MIDA) together with other State agencies implements policies and programmes to support the agricultural sector. The MIDA applies only "Green Box" and "Development Agenda" special and differential measures; to this end, the sector receives some benefits.
· Adjustment Support Programme
84. Four categories are included in the adjustment programme: swine, throughout the country except in Darién; vegetables in Tierras Altas de Chiriquí; industrial tomatoes in Herrera and Los Santos; and maize and sorghum in Coclé, Herrera, Los Santos, and Veraguas.
85. The total programme budget was estimated at B 36,446,364.00. It is destined to provide non-refundable support according to the following breakdown by category:
Table No. 6
Adjustment Programme Budget by Category
(In thousands of US dollars)
Category |
Original budget |
Maize-sorghum |
10,433,940.00 |
Industrial tomatoes |
1,982,424.00 |
Swine |
17,780,000.00 |
Vegetables |
6,250,000.00 |
Total |
36,446,364.00 |
Source: Ministry of Agricultural Development
86. The notable changes experienced by producers participating in the programme have encouraged others to start using the new technologies acquired. Many producers have had the backing and confidence of State-owned and private banks, as well as cooperatives and commercial firms, to make these new investments.
87. During implementation of the programme, swine producers have invested in individual farrowing and rearing pens, suspended floors with better ventilation for the animals, automatic feeders, water tanks and oxidation vats that meet environmental standards. All of this is reflected in improved competitiveness and reduced costs thanks to better standards of cleanliness on farms, greater utilization of feed and fewer diseases.
88. Vegetable producers have made adjustments in order to establish controlled-environment nurseries (greenhouses), thereby increasing productivity and reducing costs and crop losses.
89. The programme has also enabled tomato and maize producers to improve their production processes by using sprinkler and drip irrigation and plastic mulching to control soil erosion.
· Agricultural Credit Programme
90. The agricultural credit programme provides assistance to virtually all agricultural and agro-industrial categories, provided they are economically feasible and are eligible according to the parameters of the Credit Regulations Manual, with the exception of forestry projects. The latter may be considered, however, if they are part of or complementary to an agricultural project, for example, agro-silvo-pastoral projects implemented in watersheds.
91. In the period 2001-2005, the Agricultural Development Bank (Banco de Desarrollo Agropecuario – BDA) had US$172.1 million at its disposal to finance agricultural projects, of which US$147.6 million (85 per cent) was used. These loans, averaging US$7,000 per operation, went mainly to micro and small producers. Lack of a market or a sale and purchase agreement, low profitability of projects, and a high level of indebtedness on the part of borrowers were the main obstacles to obtaining financing from the Bank.
Table No. 7
Implementation of BDA Agricultural Credit Budget
Fiscal years 2001-2005
(In thousands of US dollars)
Fiscal year |
Budget |
Implemented |
Per cent |
2001 |
48,019 |
44,040 |
91.7 |
2002 |
39,839 |
37,432 |
94.0 |
2003 |
30,540 |
21,163 |
69.3 |
2004 |
28,087 |
22,414 |
79.8 |
2005 |
25,589 |
22,605 |
88.3 |
Total 2001-2005 |
172,074 |
147,654 |
85.8 |
Source: BDA Planning Office.
92. The lack of mortgage guarantees (farms with registered titles) is not a serious hindrance to the development loans offered by the BDA, since other guarantees are accepted, for example, rights of possession, agricultural, livestock, and equipment pledges, fiduciary guarantees and other instruments, such as loan surety bonds, issued by the Micro, Small, and Medium-Sized Enterprise Authority (AMPYME) and the Agricultural Insurance Institute (Instituto de Seguro Agropecuario –ISA).
93. The regular portfolio consists of three Bank lending programmes: Own Resources, and the BDA-CBN and BDA-FCA agreements, the last two being financed with resources from the Interest Compensation Special Fund (Fondo Especial de Compensación de Intereses – FECI). The special portfolio concerns loans granted under the BDA-FECC Programme (Law No. 24 of 2001) with resources from the Special Fund for Stand-By Loans (Fondo Especial para Créditos de Contingencias – FECC), provided by the central Government through the Ministry of Agricultural Development (MIDA).
· Other Programmes
94. There are also other programmes, such as the preferential charges granted for the installation and use of electricity in agricultural activities, amounting to a reduction of up to 30 per cent in the prevailing charge; and the simplification of land title procedures by the Ministry of Agricultural Development (MIDA) for any producer applying for the first time for title to a smallholding of less than 50 hectares, through the use of aerial photography and waiving the requirement for submission of an income tax clearance certificate to the Public Registry.
1.1.4 Export Subsidies and Support Programmes
95. In accordance with the Agreement on Subsidies and Countervailing Measures (SCM Agreement),
96. The Export Processing Zones (ZPE) programme is based on Law No. 25 of
Table No. 8
(In millions of US dollars)
Year |
Number of enterprises |
f.o.b. value |
2001 |
57 |
51.9 |
2002 |
68 |
52.4 |
2003 |
74 |
67.2 |
2004 |
45 |
69.2 |
2005 |
56 |
77.8 |
2006 |
61 |
88.2 |
Source: Office of the Comptroller-General of the Republic; Vice-Ministry of Foreign Trade, Ministry of Trade and Industry.
97. Currently,
98. The objective of the Official National Industry Register (ROIN) is to promote exports and stimulate the development of the industrial sector. The programme has its basis in Law No. 3 of
Table No. 9
Amount of fiscal incentives granted under the Official National Industry Register, 2004-2006
(In millions of US dollars)
Type of benefit |
Years | ||
2004 |
2005 |
2006 | |
Import tax exemption or rebate |
17.5 |
14.1 |
18.6 |
Income tax exemption or rebate for reinvestment |
11.6 |
9.7 |
3.4 |
Other incentivesa |
10.7 |
16.6 |
10.4 |
Total |
39.8 |
40.4 |
32.7 |
a Income tax exemption only.
Source: Department of Tax Studies, Directorate-General of Revenue, Ministry of the Economy and Finance.
99. The purpose of the Tax Credit Certificate (CAT) is to encourage and assess the establishment and development of the manufacture and export of non-traditional products, and to promote the development of the production sector. This programme is regulated by Law No. 108 of
100. The programme was extended by the Committee on Subsidies and Countervailing Measures until
1.1.5 Trade Remedies
101.
102. The Directorate-General of Trade Defence of the Ministry of Trade and Industry (MICI) is currently the agency responsible for safeguarding the commercial interests of Panamanian industry which has suffered injury from unfair practices, through the use of established investigation procedures. The Directorate validates negotiations on issues pertaining to safeguards and unfair practices, monitors the trading of goods liable to investigation proceedings, and discloses the relevant information.
103. Safeguard and anti-dumping and countervailing proceedings are currently governed by Decree-Law No. 7 of
104. Only one investigation for dumping has been carried out, involving certain imports of sugar from
1.1.6 Technical Barriers to Trade
105. Technical standards and regulations in
106. The National Standardization Agency (Organismo Nacional de Normalización – ONN) is the Directorate-General of Standards and Industrial Technology (Dirección General de Normas y Tecnología Industrial – DGNTI)[33], which is responsible for ongoing promotion and development of technical standardization activities, quality management, and conformity certification. These mechanisms help to ensure that the goods and services produced in
107. The DGNTI oversees the legal and institutional environment for the formulation of technical standards and regulations and monitors the process leading to their adoption, implementation and/or accreditation. Technical standards and regulations in
108. The DGNTI also organizes, develops, facilitates, and promotes a national quality system to pave the way for domestic and international competitiveness through technical standardization and regulation. It engages in ongoing activities to develop a quality management "culture" for the well-being, safety, and health of the population.
109. In addition to its standardizing and certifying role, the DGNTI is also the national enquiry point for the WTO. It provides information through the Regulatory Information Centre (Centro de Información Normativa – CIN), offering ongoing assistance to users with respect to domestic and international technical manuals, standards, and regulations.
110.
111. To date,
1.1.7 Sanitary and Phytosanitary Measures
112. The WTO Agreement on Sanitary and Phytosanitary Measures (SPS Agreement) is an essential element in taking advantage of the benefits of trade liberalization, since it regulates the adoption and application of sanitary and phytosanitary measures and prevents them from becoming non-tariff barriers.
113. Panamanian law on sanitary and phytosanitary measures is based on the WTO SPS Agreement; Law No. 23 of 15 July 1997, approving Panama's Protocol of Accession to the WTO and setting forth Title I on animal health and agricultural quarantine measures and authorities; Law No. 47 of 9 July 1996, establishing phytosanitary protection measures; and Law No. 11 of 22 February 2006, establishing the Panamanian Food Security Authority (Autoridad Panameña de Seguridad de Alimentos – AUPSA) and setting out rules on food security.
114. The launching of AUPSA in mid-2006 led to important changes in the application of sanitary and phytosanitary measures. Significant progress was achieved in improving the system regulating food imports.
115. The AUPSA is the State lead agency responsible for establishing sanitary and phytosanitary requirements and measures for the import, transit, and transshipment of food. It is also entrusted with establishing equivalency among sanitary and phytosanitary measures relating to food imports at the system level. In addition, it is responsible for regionalization; verification of compliance with sanitary and phytosanitary import, transit, and transshipment requirements at Panamanian entry points (land borders, ports, and airports); food analysis and diagnostic assessment to prevent the entry of pests and diseases subject to quarantine; sanitary registration of pre-packaged foods whose import into the country is desired; and certification of laboratories specializing in this area with a view to their accreditation by the National Accreditation Council (Consejo Nacional de Acreditación – CNA).
116. Strenuous efforts are currently being made to complete the establishment of the National Commission on Sanitary and Phytosanitary Measures (Comisión Nacional de Medidas Sanitarias y Fitosanitarias), on which all the relevant authorities will be represented. The Commission's objective is to support international trade negotiations and coordinate implementation of the WTO SPS Agreement with other relevant international organizations.
117. In addition to enacting SPS legislation,
118. Following its accession to the WTO in 1997,
119. In view of international support through the Inter-American Institute for Cooperation on Agriculture (IICA) and its own efforts and interests,
1.1.8 Intellectual Property
120. Intellectual property rights have broad coverage in the Law on Industrial Property, Law No. 35 of
121. The agencies directly involved in the protection and enforcement of intellectual property rights are the Directorate-General of the Industrial Property Register (Dirección General del Registro de la Propiedad Industrial – DIGERPI), the Council for the Protection of New Varieties of Plants (Consejo para la Protección de las Obtenciones Vegetales – COPOV), the Directorate of International Trade Negotiations (Dirección de Negociaciones Comerciales Internacionales – DINECI), the Inter-Agency Intellectual Property Commission (Comisión Interinstitucional de Propiedad Intelectual), the National Copyright Directorate (Dirección Nacional de Derecho de Autor), the Office of the Special Prosecutor for Intellectual Property Offences (Fiscalía Especializada en Delitos contra la Propiedad Intelectual), the Third Higher Court (Courts of Special Jurisdiction) (Tercer Tribunal Superior (Juzgados Especiales de la Competencia)), and the Colon Free Zone Intellectual Property Office (Oficinas de Propiedad Intelectual de Zona Libre de Colón), the Directorate-General of Customs (Dirección General de Aduanas – DGA), and the Judicial Technical Police (Policía Técnica Judicial – PTJ).
122. Through the Ministry of Trade and Industry (MICI), the IDB, and the World Intellectual Property Organization (WIPO),
123. Implementation of the various programmes related to this subject and to institutional modernization, involves national capacity-building through a formal education programme, seminars, and workshops for the public and private sectors, as well as links to universities. Promotion and dissemination of the programmes through publications and user guides that are distributed at conferences and information centres, have also had an important role.
124. The National System for the Protection of New Varieties of Plants (COPOV) is governed by the Standards for the Protection of New Varieties of Plants, Law No. 23 of
125. Collective intellectual property rights and the traditional knowledge of indigenous peoples are protected by Law No. 20 of
126. The Inter-Agency Intellectual Property Commission was established by Law No. 35 of
127. MEDUCA's National Copyright and Related Rights Directorate is governed by the Law on Copyright and Related Rights (No. 15 of 8 August 1994) and by Decree No. 261 of 1995 regulating Law No. 15 of 1994. It deals directly with matters related to copyright, performance, phonograms, information technology, and the data base of the historical archive of works registered in the Copyright and Related Rights Register.
128. There is a collecting society that administers copyright and economic rights to musical works for its members and representatives, the Panamanian Society of Authors and Composers (Sociedad Panameña de Autores y Compositores – SPAC), established through Resolution No. 8 of
129. The Attorney General's Office takes action through Law No. 15 of 1994 to eradicate the pirating of protected works, and does so in coordination with the SPAC in the interests of more effective action with a view to fostering respect for intellectual property rights. Various entities play a role in proceedings related to intellectual property; among them are prosecutors, judges, the Judicial Technical Police, and the National Police. Preventive and security measures are carried out by Customs and the Colon Free Zone.
130. Resolution No. 9 of
131. The Judicial Technical Police has a Special Section for Intellectual Property Offences at the national level, which was introduced by Resolution No. DG-143-03. It operates under the direct supervision of the Auxiliary Property Offences Division of the Attorney General's Office and the Judicial Authority in the investigation and prosecution of intellectual property offences and the punishment of offenders and accomplices.
132. Through Law No. 29 of 1996 on Defence of Competition, the Judicial Authority established circuit courts and the Third Higher Commercial Court with jurisdiction in the area of intellectual property.
133. The Directorate-General of Customs has the power to inspect or retain merchandise being processed in customs that may be infringing the existing legal provisions on intellectual property; this authority is granted through Executive Decree No. 123 of
134. Executive Decree No. 79 of
135. All these efforts have resulted in an efficient system for the protection and observance of intellectual property rights and copyright, which demonstrates
1.1.9 Services
136. Trade, and the competitiveness it generates, has brought with it the formation of so-called "clusters" or groups of enterprises producing goods and/or services that complement one another within the same geographical area. In spite of their recognition by the WTO, the obligations contracted for each of the various services and the trade in goods carried out within the clusters continue to be those laid down in the relevant Agreements and bindings, irrespective of the coordinated relationship between these groups.
· Financial Services
137. The Panamanian Financial Centre, consisting largely of banking services, insurance, and securities, is one of the key strategic areas of the country's economy. In recent years, the regionalization of banking and insurance in
138. In this context it should be emphasized that, in line with
139. In relation to the insurance and related services sector,
140. In order to grow, developing countries need capital and a financial infrastructure which also guarantee soundness and stability. As foreign investment flows to emerging markets, it will increase the volume and breadth of those markets. For this reason, in the current negotiating process,
· Tourism Services
141. For
142. Nevertheless, guaranteeing the elimination of barriers to small-scale tourism investment in hotels and restaurants is also important, as is preventing discriminatory use and anti-competitive practices by some service providers as regards access to computerized reservation systems and other instruments used in the tourism industry that enhance competitiveness.
143. As a result of the obligations
144. During the discussions held at the WTO in February 2001[35], the conclusion was reached that tourism development also requires competitive services in the areas of transport (air and land), finance, and health. Some of these, such as financial and health services, were negotiated in the framework of the WTO. In the case of financial services,
145. In the framework of the current round of negotiations, many WTO Members have made commitments in tourism services. "This level is greater than for any other sector, and indicates the desire of most Members to expand their tourism sectors and to increase inward FDI as part of efforts to promote economic growth"[36], a desire promoted and shared by Panama.
· Logistical Services
146. Currently, there is no separate category for logistical services in the WTO Services Sectoral Classification List.[37] Nevertheless, elements related to logistics are included under various headings, for example, in the "Transport Services" sector (freight transportation, cargo-handling services, storage and warehouse services, freight transport agency services, etc.) and the "Business Services" sector (inventory control, order processing, etc.). Other related elements, such as customs clearance services, container station and depot services, and maritime agency services, were in fact introduced in the Maritime Model Schedule that served as the basis for the latest negotiations on this sector. Despite the suspension of those negotiations in June 1996, WTO Members generally recognized the specific characteristics and the importance of those elements in achieving the unfettered delivery of goods.
147. The express delivery service sector is believed to be taking on ever greater importance in issues related to logistics and inventories. A clear linkage is also seen between logistical services and other activities, such as electronic commerce and customs and health procedures, areas in which
148. An analysis of the status of each of these service sectors in terms of their bindings and their development, is set forth below.
· Transport Services
149. There are several classifications and subclassifications for the transport sector, in accordance with the Central Product Classification (CPC). In air transport, despite broad freedom of access, there is private regulation through the International Air Transport Association (IATA). On this topic, in the WTO Panama bound trade opening in aircraft maintenance.
150. As far as rules are concerned, all the various other types of transport are covered by the GATS, but there is no commitment to opening trade.
151. Owing to the importance of the shipping industry to WTO Members, the Ministerial Decision on Negotiations on Maritime Transport Services was promulgated during the Uruguay Round negotiations in 1993. This Decision established the Negotiating Group on Maritime Transport Services with a mandate to carry out negotiations during the period from
152.
153. In spite of the mandate and the efforts of many countries, the negotiations were suspended in 1996, and a new Ministerial Decision was established with a commitment to resume negotiations in a future round.
154. As part of the Guidelines on Trade in Services in the Doha Development Round, the request-offer approach was established as the plurilateral negotiation method for negotiating access to markets, and a plurilateral request was made on maritime services as a sector of interest to several Members, with a view to greater liberalization in international maritime freight and passenger transportation, auxiliary services in storage and warehousing and cargo handling, shipping agencies, and access to/use of port facilities, such as pilotage, berthing and anchorage, provisioning, and multimodal transport.
155. These negotiations are of great importance to
156. From the standpoint of open trade practices at the domestic level,
· Technology Services
157. The WTO classifies technology services as computer and related services. Panama bound trade opening, without restrictions on cross-border, consumption abroad, and commercial presence modes of supply, for the following technology services: consultancy services related to the installation of computer hardware; software implementation services; data processing services; database services; and equipment maintenance and repair services. This sector is broadly open to trade, which allows competitive development of logistical services.
158. Related consultancy services in science and technology were bound with no access or national treatment limitations for consumption abroad and commercial presence. In this sector, there is also liberalization for presence of natural persons other than engineers, who must be licensed in
· Telecommunication Services
159. It is important to mention the quality of the supply to which telecommunication service providers have access in
160. The domestic telecommunication market in
161. Moreover, given that Law No. 31 of 1996 regulates services and not technology, telecommunication infrastructure providers were completely liberalized, since there is no special law regulating that area. In addition, Law No. 23 of 1996 establishes international trade standards and confirms the market opening for telecommunication infrastructure providers.
162. These two laws have made
· Business Services
163. Under the category "Other Business Services" in its schedule of commitments,
1.1.10 The
164.
165. The Doha Round gave
166. In relation to services negotiations,
167. With respect to financial services negotiations,
168.
169. In the framework of the agriculture negotiations,
170.
171.
172. Regarding trade facilitation,
173. In the intellectual property negotiations,
1.2 Bilateral Trade Agreements
174.
175. The conclusion of trade agreements is encouraged, bearing in mind that such agreements seek to reduce the transaction costs of trade relations and provide a set of rules binding on their members that promote stability, foster transparency, and ensure compliance with the agreed rules. This strengthens investment opportunities in the country, which boosts the economy through production and job creation and stimulates economic and social well-being.
176.
177. Since the entry into force of the bilateral protocol with
178. With respect to access by Panamanian products to the Salvadoran market, nearly the whole of
179.
180. In March 2006,
181. Likewise, negotiations on an FTA with
182.
183. The objective of the TPA with the
184. The
185. For
186. In the area of cross-border trade in services, all service sectors are included with the exception of financial services, some air services, services provided by the State (health, education, etc.), and the permanent labour market.
187. These trade agreements have speeded up the market liberalization process and are helping to improve domestic regulatory standards related to international trade. Based on, inter alia, the performance of international trade and the results of trade agreements, evaluations are carried out that provide a basis for country proposals at the multilateral, plurilateral and bilateral level and are aimed at helping countries respond and adapt to global trends in the most positive manner possible.
1.3 Investment Promotion
188. Investment promotion in
189.
190.
191. Another positive factor for investment promotion is that since
192.
193. There are constitutional provisions that promote private property and protect intellectual property, free enterprise, and the principle of non-discrimination. The Constitution provides that foreigners who are in the national territory shall receive same treatment as nationals (Articles 19 and 20 of the Political Constitution of Panama).
194.
195. Foreign investment does not require prior authorization, except for investments that take advantage of incentive schemes.
196. The Ministry of Trade and Industry is the public body tasked with promoting investment in the country. With the establishment of the Vice-Ministry (VICOMEX) in 1998, the various responsibilities of the Panamanian Foreign Trade Institute (Instituto Panameño de Comercio Exterior – IPCE) and the Export Promotion Office (Oficina de Promoción de las Exportaciones – PRO PANAMA), such as offering specific information and projects to investors, became part of that body's activities.
197. With this restructuring, the Vice-Ministry was assigned various objectives related to foreign investment, among which are attracting investment through export promotion and foreign trade services, as well as promoting foreign investment in sectors such as tourism, export processing zones, ports, mining, and the reverted areas.
198. The entity tasked with regulating and promoting activities related to foreign investment is the Investments and Exports Advisory Council (Consejo Consultivo de Inversiones y Exportaciones), which consists of the Minister of Trade and Industry, the Minister of the Economy and Finance, the Minister for Foreign Affairs, and the Minister of Agricultural Development, as well as the Vice-Minister of Foreign Trade and a representative of each of the following institutions: the Chamber of Commerce, Industry, and Agriculture (Cámara de Comercio, Industrias y Agricultura), the Panamanian Industrialists' Union (Sindicato de Industriales de Panamá – SIP), the Panamanian Association of Exporters (Asociación Panameña de Exportadores – APEX), the National Union of Panamanian Agricultural Producers (Unión Nacional de Productores Agropecuarios de Panamá – UNPAP), the Panamanian Maritime Authority (Autoridad Marítima de Panamá), the Colon Free Zone, and the legislature.
199. Currently, the National Directorate of Investment Promotion (Dirección Nacional de Promoción de las Inversiones) of the Ministry of Trade and Industry is the body responsible for offering the following services to investors: expediting airport procedures upon their arrival in Panama; providing advisory services and guidance in identifying potential investment sectors and setting up their businesses in Panama; managing business appointments and trade contacts; organizing promotional tours, talks, and presentations; organizing and coordinating trade and investment missions from and to Panama; providing current trade data and information on international trade fairs; disseminating updated promotional material on statistics, laws, economic sectors, and investment projects; providing a link between investors and the public and private sectors; and periodically monitoring investors.
200. Panama has signed investment protection agreements with 18 countries: the United States (October 1982), France (November 1982), the United Kingdom (October 1983), Switzerland (October 1983), Germany (November 1983), Chinese Taipei (March 1992), Argentina (May 1996), Canada (September 1996), Chile (November 1996), Spain (November 1997), Uruguay (February 1998), Cuba (January 1999), the Czech Republic (August 1999), the Netherlands (August 2000), the Republic of Korea (July 2001), the Dominican Republic (February 2003), Ukraine (November 2003), and Mexico (October 2005). Of these agreements, those signed with the
201. Panama has also signed a number of multilateral reciprocal investment protection agreements, i.e., the Agreement Establishing the Inter-American Investment Corporation (August 1985), the Convention Establishing the Multilateral Investment Guarantee Agency (MIGA) (January 1995), the Convention on the Settlement of Investment Disputes between States and Nationals of Other States (November 1995), and the Agreement Establishing the Multilateral Investment Fund (MIF) (February 1992).
202. Law No. 54 of
203. Under this law, the Ministry of Trade and Industry is the authority responsible for promoting and protecting investments in
204. Natural or legal persons investing in
205. The main areas in which investment is promoted and protected are:
· Tourism
206. Tourism in Panama is promoted through Law No. 8 of 14 June 1994, which establishes certain incentives in the tourism development areas, such as total exemption from income tax for a period of 15 years; total exemption from property tax for a period of 20 years; total exemption from import tax on construction materials, furniture, and equipment of the investor company, subject to certain requirements; total exemption from taxes for a period of 20 years on the use of the dock and airport built by the investor company; and total exemption from income taxes on any interest accruing to creditors in tourism investment operations.
· Export Processing Zones
207. Law No. 25 of
208. The immediate objective of the zones is to promote optimum conditions of efficiency and comparative advantages to guarantee exporting companies high levels of competitiveness in international markets.
209. Any natural or legal person, domestic or foreign (Art. 20), wishing to engage in activities for the production of goods and services, such as manufacturing, assembly, processing of finished or semi-finished products, and exports of services, may participate in these zones.
210. The export processing zones are tax free (Art. 27); accordingly, the companies to which this law refers, as well as any activity, operation, transaction, procedure, transfer of goods and property, purchase and import of construction equipment and materials, raw materials, equipment, machinery, tools, accessories, inputs, and any goods or services required for their operations in these zones are 100 per cent free of national direct and indirect taxes, contributions, charges, duties, and levies.
211. The processing zones' capital, and that of the companies established in them, is free of national direct and indirect taxes, including business and licence taxes.
212. The export processing zones are free trade and free enterprise zones (Art. 31). Accordingly, service fees and product prices are set freely by each company that provides or produces them in accordance with the rules of supply and demand, bearing in mind the competitiveness required to participate successfully in the world market.
213. Foreigners who demonstrate that they have invested a sum of at least US$250,000 (Art. 41) in companies duly authorized as promoters or operators of export processing zones or in companies established in the zones shall have the right to request a permanent residence visa as investors.
·
214. The Colon Free Zone (Zona Franca de Colón – ZLC) was established by means of Decree-Law No. 18 of
215. The main external factors that contribute to the productivity and competitiveness of the ZLC are frequent transits through the Canal, especially from
216. During the past 20 years, the Zone's trade activities have increased at an annual average rate of over 3 per cent, compared with Latin American trade patterns. This growth demonstrates the competitive advantages of the ZLC. However, the Zone's operations are facing growing competition throughout
217. Among the tax benefits of the ZLC is a preferential tax programme applied to earnings of less than 8 per cent on the first US$100,000 of income and 8 per cent on subsequent income; merchandise imports and re-exports are tax free; repatriation of capital or dividends generated abroad are not considered earnings for tax purposes.
218. Companies established in the ZLC that engage solely in export activities are tax-exempt provided they directly create a certain number of jobs.
·
219. The Panama Pacific Special Economic Area was conceived as the Business Centre of the
220. The Area offers excellent benefits for trade and services, such as tax, migration, and labour incentives, simplification of establishment procedures, operations, the best connectivity on the continent, an excellent quality of life, a skilled labour supply, employee training, and a special customs regime.
· Other Investment Incentives
221. Law No. 24 of
222. Some of the incentives offered are: any reforestation between 27 November 1992 and 26 November 2017 is exempt from income tax for a period of 25 years; the sums invested by natural or legal persons in forest improvement and growth are deductible from expenses; machinery, agricultural, forestry, and industrial equipment, chemical and agricultural materials and instruments, forest research material, forest seeds and plants, and other materials required for forestry activities are exempt from taxes upon entering the country; dividends and earnings on bonds or sales of shares and securities are also exempt from income taxes; interest on loans for reforestation activities are deductible from expenses; loans for reforestation activities carry preferential interest rates, and the interest paid on these loans is deductible from income taxes; financial institutions that provide these loans receive an annual tax credit for the first ten years of the contract; foreign investors who demonstrate that they have invested a sum of at least US$40,000, directly or indirectly, in reforestation in Panama shall have the right to request an immigrant visa as investors.
223. The Law on Chattel Leasing, Law No. 7 of
224. Under Law No. 32 of
2. Foreign Trade Strategy
225. The National Foreign Trade Strategy (Estrategia Nacional de Comercio Exterior) is implemented by the Ministry of Trade and Industry (MICI) through the
2.1 Export Promotion
226. The MICI executes the national export promotion programme "Programa Exporta", the purpose of which is to increase Panamanian exports to new markets. A part of programme implementation involves creating an alliance to strengthen the export production sector by promoting collaboration between business associations and other organizations related to business development, as well as universities and government agencies.
227. The Export Programme provides for various projects, namely: export promotion, the exporter's manual, export credit agencies (ECA) (export insurance), single window and international network (digitized), and the Exporter of the Year Prize.
2.2 National Competitiveness
228. To strengthen its economic and social growth and facilitate the regional integration process and its positioning in the global economy,
229. The Competitiveness Group, which consists of four Ministers of State, the Canal Administrator, four representatives of the private sector, two representatives of the academic sector, and two labour representatives, is the highest body coordinating the Panama Competes Programme.
230. The National Competitiveness Strategy was prepared with participation by the public and private sectors. Its purpose is to identify the barriers to production, create mechanisms to improve the business climate, and stimulate public investment projects to pave the way for increasing production in various sectors of the economy, so that they can gradually contribute to improving national economic output.
231. The Cluster Competitiveness Strategy was formulated and implemented through a participatory process. Its purpose is to implement a new institutional mechanism to promote the establishment of business conglomerates and support them through specialized technical assistance. As a result of this strategy, different conglomerates are emerging in the four sectors of greatest potential for the Panamanian economy, namely, services (professional, tourism, financial, transport, and logistical services); technology and communication (software, telecommunications, call centres, data centres); energy (hydrocarbons, petroleum, alternative energy sources, wind energy, geothermal energy, hydroelectric energy, etc.); agro-industry; and tourism.
2.3 Agro-Industrial Development
232. The MICI, in coordination with the Ministry of Agricultural Development (MIDA), promotes mechanisms to stimulate domestic production, thereby creating opportunities and potential in the agricultural sector with a view to greater participation in foreign markets.
233. The agro-industrial development strategy seeks to increase growth opportunities for existing non-traditional products and to research and develop new products that meet the demands of international consumers. The products that have aroused the greatest interest in international markets are the "non-traditional products", such as pineapples, melons, watermelons, pumpkins, cassava, yams, handicrafts, beef, and chicken.
234. In addition, new promotional policies are being developed by markets and sectors, for example, the agricultural, marine, handicrafts, industrial, and service sectors, and a schedule of activities is being implemented in coordination with diplomatic missions abroad to evaluate the best opportunities for export promotion.
235. The strategy's objective is to attract investors who are not only looking for business opportunities with local partners, but are also incorporating new technologies in processing, packaging, and preservation – added value which improves product quality and fills market niches – and innovating with new products that yield higher profits.
2.4 Supplementary Agenda
236. The Supplementary Agenda Programme is a tool created by the current Government as an outgrowth of dialogue with Panamanian society. It is aimed at spurring profound transformations in the public and private sector through different projects and tangible initiatives that will enable
237. The Agenda includes a number of projects and initiatives that fit into the following four central action thrusts: modernization of the State; strengthening human capital; preparing the production sectors for the transition to free trade; and promoting systemic competitiveness.
238. This programme pursues the following objectives: strengthening the national economy; raising the productivity of enterprises; increasing national exports to international markets; positioning Panama as a destination for foreign direct investment (FDI); turning human resources, innovation, and technological development into forces that drive the economy; and improving trade facilitation schemes through nimble export mechanisms.
239. The factors to be utilized in this basic thrust of the Supplementary Agenda are: the programme for micro and small enterprises; the sectoral development projects in agriculture, industry, and services; specialized technical advice, training, and business management; research and technological development; improvement of production infrastructure; infrastructure investments; quality standards; advice on product development; marketing and marketing techniques; compliance with standardization measures, metrology, and SPS; the use of clean and sustainable production techniques; and programmes on forming partnerships, export consortia, strategic alliances, and business social responsibility.
240. The Supplementary Agenda also promotes cross-cutting programmes that support improvement of the business climate; good governance, which promotes transparency and confidence; and reduction of red tape.
IV. GROWTH OF FOREIGN TRADE AND INVESTMENT
241. The external sector has been a major strategic area of economic growth for
242. The performance of trade in goods and services and investment for the period covered by this report is described below.
1. Trade in Goods
243. Between 1997 and 2006, exports of goods averaged 5 per cent growth, from US$658 million to US$1.022 billion, driven mainly by fishing and marine products (10 per cent on average), which have come to represent slightly more than one third of Panama's total exports.
244. However, the analysis of goods exports by five-year periods shows a mixed performance. For the period 1997-2001, while fishing exports showed greater buoyancy (19.1 per cent), agricultural products posted a decline of 3.2 per cent, and industrial products grew by 2.2 per cent. Meanwhile, the agricultural sector has been the one most affected by price fluctuations on the international market, especially in bananas and coffee, while pineapples, melons, and watermelons are gaining in importance.
245. Industrial exports have remained stable, with the sector recording movements on 240 tariff items on average. The most notable exports are petroleum by-products, medicaments, scrap of metal (iron and aluminium), and articles of apparel and clothing accessories of textile materials.
246. In the period 2002-2006, goods exports grew by 7.8 per cent annually, a figure higher than in the previous five-year period, when growth was 5.3 per cent. This period was marked by a change of trend, with the agricultural sector becoming the engine of growth in total exports, increasing at a 16.9 per cent annual rate. The good performance of the agricultural sector was associated with the growth of melon, watermelon, and pineapple exports, which together grew at an annual rate of 49.2 per cent. The growth of gourd family exports can be seen more clearly in terms of total agricultural exports, for while in 2002 the value of melon, watermelon, and pineapple exports represented 18.2 per cent [of GDP], by 2006 that ratio was 48.2 per cent.
247. In absolute terms, in the past five years banana exports have totalled around US$105.6 million, while the contribution of this category to total agricultural exports has posted a decline, from 48.4 per cent in 2002 to 25.9 per cent in 2006; as stated earlier, it has been affected by market distortions and the tariff policies established by the European Union.
248. The fishing sector accounts for approximately 46 per cent of total exports for the period
2002-2006. The most important categories are fish, fresh, chilled, or frozen, with 74 per cent (US$280.9 million), and crustaceans, including the shrimp category, with 18 per cent (US$67.5 million) of fishing sector exports.
249. Regarding the destination of trade, the
250. The total value of imports in 2006 reached US$4.83 billion.
251. The Central American region is of great important to
252. The c.i.f. value of goods imports from the Central American region reached US$420.5 in 2006.
253. As the Central American region as a whole is one of
254. With respect to trade in the Colon Free Zone, the main suppliers of goods (imports) originate in various Asian countries, including
255. As to the main customers of the Colon Free Zone,
256. Lastly, mention should be made of
Table No. 10
(In millions of US$)
Rank |
Destination country |
f.o.b. value 2006 |
Destination country |
f.o.b. value 1996 |
1 |
|
392.9 |
|
269.5 |
2 |
|
83.2 |
|
57.8 |
3 |
|
68.3 |
|
37.7 |
4 |
|
56.9 |
|
25.2 |
5 |
|
45.7 |
Belgium/Luxembourg |
23.7 |
6 |
Belgium/Luxembourg |
38.7 |
|
15.6 |
7 |
|
34.7 |
|
15.0 |
8 |
|
33.0 |
|
14.4 |
9 |
|
26.4 |
|
11.4 |
10 |
Chinese |
23.7 |
|
11.1 |
|
Others (66 additional destinations) |
218.5 |
Others (65 additional destinations) |
87.9 |
Total |
|
1,022.0 |
|
569.3 |
Source: Ministry of Trade and Industry.
Table No. 11
(In millions of US$)
Rank |
Country of origin |
c.i.f. value 2006 |
Country of origin |
c.i.f. value 1996 |
1 |
|
1,294.3 |
|
1,037.4 |
2 |
|
574.6 |
|
378.2 |
3 |
Curaçao |
488.2 |
|
198.8 |
4 |
|
247.6 |
|
168.0 |
5 |
|
229.2 |
|
107.4 |
6 |
|
173.0 |
|
106.9 |
7 |
|
170.0 |
|
98.3 |
8 |
|
169.2 |
|
75.4 |
9 |
|
165.6 |
|
55.8 |
10 |
Petroleum Free Zone |
162.7 |
|
46.7 |
|
Others (79 additional supplier countries) |
1,156.4 |
Others (102 additional supplier countries) |
506.9 |
|
Total |
4,830.9 |
Total |
2,779.7 |
Source: Ministry of Trade and Industry.
2. Trade in Services
257. During the period 1997-2006, the Panamanian economy exported more than US$24 billion worth of services. In 1997, exports represented 17 per cent of GDP, and in 2006 that share increased to 26 per cent (see Chart No. 7). A sharper increase was seen at the beginning of 2002, driven mainly by transport services, which represented approximately 57 per cent of
258. According to the balance of payments national record of accounts, transport, travel, and financial services, with the exception of insurance, represent 85 per cent of
259. In addition, "transport" covers all transport (sea, air, and other – including land, internal waterway, space, and pipeline) services that are performed by residents of one economy for those of another and that involve the carriage of passengers, the movement of goods, rentals of carriers with crew, and related supporting and auxiliary services.[47] In
260. Within the transport services segment, the most important components are the Canal toll revenues and port services, which together surpassed US$1.6 billion in 2006. The port services, aircraft, and railway sector continued its annual growth of around 20 per cent, mainly because of the ongoing expansion of airline services (COPA) and the increase in container movements (measured in TEUs), which averaged 16 per cent during the past five years. In addition, freight transport by rail averaged 55 per cent annual growth during the period 2002-2006.
261. Tourism services classified as travel according to the fifth edition of the Balance of Payments Manual cover mainly the goods and services acquired from an economy by travellers during visits of less than one year in that economy.[48]
262.
263. Exports of banking services averaged 16 per cent annual growth for the period 1997-2006 as a result of the National Banking Centre boom and its expansion in
264. The role of foreign direct investment (FDI) in stimulating the economy of any country, especially an open and small economy like that of
265. Foreign investment is characterized by its participation in sectors such as mining, public services, the food and chemical industries, transport, wholesale trade, information, finance, and some professional, scientific, and technical services. The most important of these are finance, wholesale trade, and public services.
266. After a contraction between 1997 and 2002 owing to the end of the cycle of privatizations and government concessions, the closing of some banks since 1999 (and bank losses in 2002), and the transformation of the Canal Commission into a national capital stock company in 2002, FDI has increased significantly since 2003.
267. In 2006, for example,
268. The rebound in 2006 was due in large part to the acquisition of Banistmo and other large banks with registered addresses in
269. On the basis of data relating to the origin of FDI received by other countries,
270. According to the Index of Economic Freedom, Panama is regarded as one of the world's most open economies, ranking higher (at No. 47, and in fourth place in Latin America) than countries such as Costa Rica, Argentina, Colombia, Brazil, and Mexico. This factor, recognized worldwide, is due to the absence of the restrictions that typically affect the establishment, operation, conduct, and management of investments.[50]
271. Given the realities of attracting investment to the region in general,
272. Projects such as expanding the Canal, establishing new port facilities that will enhance Panama's potential as a regional and international freight transshipment centre, the Colon Free Zone (ZLC), upgrading the (Howard) Panama Pacific Special Economic Area, and strengthening the financial sector are clear opportunities that will increase the flow of inward FDI.
273. Other such opportunities would be agribusiness, establishing a collection centre and multimodal hub for the export and re-export of perishable products, establishing lines for operating air freight redistribution centres, and research and innovation in the Ciudad del Saber (City of Knowledge) to promote and facilitate synergies between universities.[51] In the tourism and energy sectors, mention can be made of the regional refinery, a lubricant processing plant, and the maritime gas pipeline from
274. It is important to note that in its quest to attract foreign investment,
V. MODERNIZATION OF THE STATE
275. The adoption of a policy of trade liberalization made it necessary to adapt and reform
276. The following paragraphs describe the institutions, laws and projects that have been developed in order to fulfil the requirements of globalized trade and the commitments entered into as a result of joining the WTO.
1. Consumer Protection and Defence of Competition
277. The Comisión de Libre Competencia y Asuntos del Consumidor (Commission on Free Competition and Consumer Affairs – CLICAC) was established by Law No. 29 of 1996, recently amended by Decree Law No. 9 of 2006, for the purpose of overseeing free competition and consumer protection.
278. Market requirements made it necessary to restructure CLICAC, in order to create other bodies to expedite the procedures by decentralizing decision-making. This restructuring was approved by Decree Law No. 9 of 2006, which modifies the institution and adopts the title Autoridad de Protección al Consumidor y Defensa de la Competencia (Authority for the Protection of the Consumer and the Defence of Competition).
279. At the same time, the Ministry of Trade and Industry and the Ente Regular de los Servicios Públicos (Public Utilities Regulatory Body) underwent certain changes with respect to their structure and powers. The changes relating exclusively to the subject of Trade Protection are described later in this Section.
2. Food Safety
280. The Autoridad Panameña de Seguridad de Alimentos (Panamanian Food Safety Authority – AUPSA) was established by Decree Law No. 11 of
281. The AUPSA has taken over the functions previously performed by the Ministry of Agricultural Development and the Ministry of Health in relation to the importation, transit and transhipment of food, with account for the diversity and quality of supplies.
282. The establishment of this new authority has expedited and facilitated the international trade in goods via Panama by ensuring transparency, certainty, flexibility and a reduction in the costs of import, transit and transhipment formalities.
3. Environment
283. Law No. 41 of 1998 established the Autoridad Nacional del Medio Ambiente (National Environmental Authority – ANMA) and the principles and broad outlines of national environmental policy. This favours the creation of promotion tools and mechanisms and incentives to encourage the process of conversion of the productive system to operating methods compatible with the protection of the environment.
284. With respect to trade, the National Environmental Authority follows up the implementation of the Convention on the International Trade in Wild Fauna and Flora (CITES). The main objective of the Convention is to prevent international trade from becoming a threat to the survival of wild fauna and flora. This is achieved by including them in an approved list in order to regulate and continuously monitor the trade in these species and others that might come to be threatened or endangered.
285. With respect to liberalization and commercial traffic in the field of genetic resources, by Executive Decree No. 257 of
286. Within the framework of the international commitments entered into under the Biological Diversity Convention, adopted at the United Nations Conference on Environment and Development held in Rio de Janeiro, Brazil, in 1992 and all the bilateral treaties ratified by Panama, ANMA's fundamental objective is to ensure fair and equitable participation in the benefits to be derived from the use of genetic and other natural resources, in order to achieve a balance between trade liberalization and the sustainability of the environment.
4. Government Procurement
287. Law No. 22, which entered into force on
288. Previously, government procurement had been handled by a non-autonomous directorate-general which was structurally part of the Ministry of the Economy and Finance. The new directorate-general is responsible for regulating, interpreting, supervising and advising on the contractor selection procedures employed by state institutions.
289. This Law lays down the rules applicable to all contracts for goods, services and works awarded by state entities, with the exclusion of the municipalities, communal and local councils, the Social Insurance Fund, and the Panama Canal Authority by constitutional provision.
290. The Directorate-General for Government Procurement has identified within its action plan the implementation of certain investment projects for the year 2007. These will be aimed at building the capacity of the Directorate and government purchasing agencies, modernizing the system, positioning PanamáCompra and providing support for micro, small and medium-sized enterprises so as to create conditions enabling them to participate in certain public contractor selection procedures.
5. Registration of Industrial Property
291. In Panama, industrial property falls within the jurisdiction of the Dirección General del Registro de la Propiedad Industrial (Directorate-General for the Registration of Industrial Property – DIGERPI), which was established by Law No. 2 of 11 February 1982 as part of the Ministry of Trade and Industry, for the purpose of encouraging and supporting the technological and economic development of the country by fostering and promoting inventiveness and creativity through appropriate legal protection for all areas of industrial property. Since it was first established, DIGERPI has been responsible for promoting, disseminating, developing, protecting and supervising industrial property, as the country's policy-making body.
292. In order to comply with the principles of trade policy and harmonize procedures, DIGERPI is implementing the non-refundable technical cooperation project known as "Development and Promotion of Intellectual Property", the aim of which is to increase legal certainty in order to improve the conditions of competitiveness and investment in Panama with the specific aim of increasing familiarity and compliance with intellectual property law and raising the number of national registrations.
293. Where industrial property is concerned, there is a preliminary draft amendment to Law No. 35 of 10 May 1996, aimed at creating the legal structure necessary to permit the use of electronic media to speed up and automate all DIGERPI's administrative procedures, by legalizing the electronic submission of applications via the Internet and adapting to international commitments.
6. Customs
294. Panama's accession to the World Trade Organization and the negotiation and ratification of various trade agreements have given rise to a broad panoramic view of the new responsibilities and commitments that the state must assume in relation to the modernization of the customs system.
295. The Directorate-General of Customs of Panama, through the Ministry of the Economy and Finance, is initiating legal and structural changes to the institution in order to be able to provide an automated and efficient service that ensures due respect and protection for the tariff benefits conferred on our trading partners under the Agreements.
296. The changes include the establishment of the Autoridad Nacional de Aduanas (National Customs Authority) as an autonomous authority independent of the Ministry of the Economy and Finance, together with the definition of its functions and powers and, in general terms, its administrative organization.
297. In addition, customs auxiliaries and intermediaries are identified and some special rules for customs brokers and others relating to the Junta de Evaluación de los Agentes Corredores de Aduana (Customs Brokers Evaluation Board) are established. Similarly, enforcement powers are granted to the competent authority, and the procedural principles, the rights of those administered, the question of minor and more serious offences, the corresponding penalties, the modes of participation in offences, the circumstances that modify responsibility and possible defences are defined. At the same time, the ranges of behaviour characterized as a misdemeanour, smuggling or customs fraud are broadened, and particular treatment is reserved for cases of non-declaration or false declaration of currency, which is classed as a special customs offence.
298. The preliminary draft deals with everything relating to the administrative and enforcement procedures of the customs authority, including such aspects as notifications and their rules; means of challenging decisions; the procedure for sanctioning minor customs offences, the administrative procedure for settling disputes concerning technical valuation discrepancies, the investigation of the more serious customs offences and the administrative bodies for hearing such cases.
299. Finally, the preliminary draft incorporates transitional, repealing and application provisions and includes framework rules under which the Cabinet Council retains the right to issue regulatory provisions in development of the present proposal.
7. Science and Technology
300. The National Strategic Plan for the Development of Science, Technology and Innovation 2006-2010, implemented by the State through Cabinet Resolution No. 104 of 21 December 2005, is coordinated by the Secretaría Nacional de Ciencia, Tecnología e Innovación (National Secretariat for Science, Technology and Innovation – SENACYT), the unit responsible for the monitoring and evaluation of the plan. All SENACYT's activities, projects and programmes are aimed at strengthening, supporting, influencing and promoting the development of science, technology and innovation with a view to raising the level of productivity, competitiveness and modernization in the private, government and academic research sectors and in the population at large.
301. The principal measures taken in the context of the National Strategic Plan, especially in relation to the promotion of economic incentives, are: the establishment of funds open to public competition with peer review for the promotion of research, development and innovation; the implementation of innovation and technological modernization projects in the priority areas; the strengthening of clusters; innovation capacity building at enterprise level.
8. Office for International Trade Negotiations
302. In 1998, the Ministry of Trade and Industry included among its projects the restructuring of the institution through the establishment of a vice-ministry with special responsibility for promoting foreign trade and attracting investment. Through Law No. 53 of
303. From the growth of bilateral trade relations and participation in WTO fora there arose the need to reorganize and modernize the procedures applied to the management of trade relations. To this end, the Ministry of Trade and Industry, through Decree Law No. 6 of 15 February 2006, set up the Oficina de Negociaciones Comerciales Internacionales (Office for International Trade Negotiations – ONCI), which took over some of the functions of the Vice-Ministry of Foreign Trade and was assigned functions relating to unfair trading practices and the protection of trade, under Decree Law No. 7 of 2006.
304. The Office of the Head of International Trade Negotiations has three administrative units, namely: the Permanent Mission of Panama to the World Trade Organization (WTO), the National Directorate for International Trade Negotiations and the National Directorate for the Administration of International Trade Treaties and Trade Protection.
305. The Permanent Mission in
306. The National Directorate for International Trade Negotiations carries out and coordinates the instructions issued by the Office of the Head of International Trade Negotiations, as well as negotiating foreign trade agreements, treaties and conventions, multilateral, regional and bilateral.
307. The National Directorate for the Administration of International Trade Treaties and Trade Protection carries out the instructions issued by the Office of the Head of International Trade Negotiations and oversees the proper implementation and enforcement of the trade treaties and agreements ratified by the
308. The above-mentioned institutional and legislative reforms and those envisaged in Annex 1 demonstrate the robust efforts made by
VI. CONCLUSIONS AND PROSPECTS
309. During the period under review,
310. Trade liberalization has been a decisive factor in the country's growth, contributing to the achievement of higher levels of competitiveness and increases in productivity, especially in export-related sectors. By making good use of its geographical position and the advantages generated by the
311. All these activities are based on
312.
313. In the coming years it is hoped to achieve an even greater growth rate.
314.
315. At the same time, it reaffirms its commitment to trade liberalization and the need to take due account of the challenges which that poses for the productive sectors. It also regards the process of validation and consultation as the appropriate mechanism for seeking consensus and greater opportunities for national development. In this connection, it will continue to be an agent and active promoter of change based on the multilateral system, with a view to achieving an ever freer and fairer trading system.
ANNEX 1
PRINCIPAL LEGISLATIVE REFORMS AND ADAPTATIONS WITHIN
THE CONTEXT OF
CONSEQUENT PROCESS OF INSTITUTIONAL MODERNIZATION
(i) Customs procedures and clearance (imports and exports) (www.aduanas.gob.pa)
· Law No. 41 of
· Cabinet Decree No. 41 of
(ii) Prohibitions, licences and other controls applied to imports and exports (www.aduanas.gob.pa):
· Law No. 23 of
· Resolution No. 5 of
(iii) Customs valuation, minimum and reference prices, and preshipment inspection (www.aduanas.gob.pa):
· Cabinet Decree No. 26 of
· Resolution No. 704-04-019 of
· Resolution No. 704-04-532 of
· Resolution No. 704-04-528 of
(iv) Provisions in force in relation to tariff concessions on both imports and exports (for example, repayment or deferred payment of duties, free zones) (www.aduanas.gob.pa):
· Law 28 of
· Executive Decree No. 274 of
· Law No. 41 of
(v) Anti-dumping and countervailing duties, safeguards (www.mici.gob.pa):
· Decree Law No. 7 of
(vi) Government procurement (www.mef.gob.pa):
· Law No. 56 of
· Executive Decree No. 18 of
· Law No. 22 of
(vii) Competition policy (www.autoridaddelconsumidor.gob.pa):
· Law No. 29 of
· Executive Decree No. 31 of
· Decree Law No. 9 of
(viii) Standards and technical regulations (www.mici.gob.pa):
· Law No. 23 of
(ix) Sanitary and phytosanitary measures (www.mida.gob.pa; www.minsa.gob.pa)
Animal and Plant Health:
· Law No. 47 of
· Law No. 23 of
· Executive Decree No. 39 of
Food Safety:
· Decree Law No. 11 of
(x) Financial services (www.superbancos.gob.pa)
· Decree Law No. 9 of
· Decision No. 4 of 1998. Framework Agreement for the conclusion of agreements and understandings with foreign supervisory bodies. Published in Official Gazette No. 23.667 of
· Decision No. 3-2001 of
· Decision No. 4 of 2001. Corporate Governance. Published in Official Gazette No. 24.409 of
· Decision No. 4 of 2002. Opening of transborder establishments by Panamanian banks. Published in Official Gazette No. 24.529 of
· Decision No. 2-2003. On Microfinance Licences. Published in Official Gazette No. 24.765 of
· Decision No. 5 of 2003. Electronic Banking Regulations. Published in Official Gazette No. 24.833 of
· Decision No. 6 of 2003. Amending Articles 3 and 7 of Decision No. 2-2003 on Microfinance Banks. Published in Official Gazette No. 24.903 of
· Decision No. 1 of 2004. Mergers and Takeovers. Revoking Decision No. 10-2003. Published in Official Gazette No. 25.213 of
· Decision No. 2 of 2005. Bank Transfers. Published in Official Gazette No. 25.236 of
· Decision No. 9 of 2005. Developing Outsourcing. Published in Official Gazette No. 25.420-A of
· Decision No. 12-2005 of
· Special Decision No. 12-2005 of
· Resolution J. D. No. 032-2005 of
· Decision No. 2 of 2006. Amending Articles 7, 9, 10 and 13 of Decision No. 3-2001 of
(xi) Telecommunications Services (www.asep.gob.pa):
· Law No. 26 of
· Law No. 5 of
· Law No. 43 of
· Executive Decree No. 21 of
· Law No. 31 of
· Executive Decree No. 73 of
· Resolution No. JD-080 of
· Resolution No. JD-106 of 30 September 1997, adopting the first part of the National Technical Telecommunications Plan, which includes the National Routing Plan, the National Synchronization Plan, the National Signaling Plan and the National Transmission Plan.
· Resolution No. JD-107 of
· Resolution No. JD-179 of
· Executive Decree No. 138 of
· Resolution No. JD-2802 of
· Resolution No. JD-3127 of
· Executive Decree No. 97 of
No. 1-D of
· Resolution No. JD-4408 of
· Resolution No. JD-5690 of
· Decree Law No. 10 of
(xii) Air Transport Services (www.aeronautica.gob.pa)
· Resolution No. 079-JD of
· Resolution No. 095-JD of
· Law No. 21 of
· Law No. 22 of
· Law No. 23 of
· Resolution No. 174-
· Resolution No. 009-
· Resolution No. 002-JD of
· Resolution No. 009-JD of
· Resolution No. 030-
No. 009-
(xiii) Maritime Transport Services (www.amp.gob.pa):
· Law No. 38 of
· Law No. 36 of
· Law No. 25 of
· Decree Law No. 7 of
(xiv) Tourism Services (www.panamatramita.gob.pa)
· Law No. 8 of
· Decree Law No. 4 of 1998. Amending Law No. 8 of 1994 promoting tourism activities in
(xv) Opening Businesses
· Law No. 5 of
__________
[1] Source: Annual Economic Reports of the Ministry of the Economy and Finance (MEF).
[2] The State granted 51 per cent of the shares of the distribution and thermoelectric generating companies and 49 per cent of the hydroelectric generating companies. Data supplied by the National Public Services Authority (Autoridad Nacional de Servicios Públicos – ASEP).
[3] The three distribution companies are: EDEMET, EDECHI and Elektra Noreste (Elektra Northeast). Source: ASEP.
[4] The three generating companies are: EGE Fortuna S.A., AES Panamá and BLM CORP., S.A.
[5] Described in chapter V of this report (Modernization of the State).
[6] This strategy was adopted to restructure the debt incurred by developing countries with commercial banks, based on debt reduction and debt service operations voluntarily carried out under market conditions.
[7] Law No. 6 of
[8] Law No. 172 of 2005.
[9] This subject is addressed in chapter III of this report (
[10] The IMF approved a short-term credit arrangement giving Panama access to Special Drawing Rights (SDRs) totalling US$64 million for a period of 21 months, counted from June 2000, to support the economic programme. Source: Ministry of the Economy and Finance (Annual Economic Reports).
[11] This subject is addressed in chapter III of this report (Bilateral Trade Agreements).
[12] The IDB granted a loan totalling more than US$70 million to support social investment and small-scale infrastructure projects in low-income communities during the period 1994-1999. One part of this loan was channelled through the Social Emergency Fund (Fondo de Emergencia Social –
[13] Source: Ministry of Housing (MIVI).
[14] See footnote 12.
[15] Set out in the document "Economic Development and Employment: A Strategic Vision for 2009" (Visión Estratégica de Desarrollo Económico y de Empleo hacia 2009), which contains the new economic and fiscal strategies initiated by the Government during the period.
[16] Source: Institute for Human Resources Training and Utilization (Instituto para
[17] Office of the Comptroller General of the Republic,
[18] An outgrowth of the purchase of the Banco del Istmo (Isthmus Bank) by HSBC, which generated a transaction worth nearly US$1.7 billion.
[19] www.standardandpoor.com.
[20] Cabinet Decree No. 21 of
[21] Cabinet Decree No. 46 of
[22] Cabinet Decree No. 25 of 1 November 1995; Cabinet Decree No. 20 of 11 July 1996; Cabinet Decree No. 44 of 12 December 1996; Cabinet Decree No. 38 of 8 August 1997; Cabinet Decree No. 68 of 12 November 1997.
[23] Cabinet Decree No. 2 of
[24] Cabinet Decree No. 47 of
[25] Cabinet Decree No. 12 of 16 May 2007. Official Gazette No. 22,795 of 21 May 2007.
[26] Cabinet Decree No. 25 of
[27] Articles 147 and 164 of Law No. 23 of 1997.
[28] Articles 6 and 7 of Resolution No. 5-98 of
[29] Document G/SCM/85.
[30] Document G/SCM/W/537.
[31] Document G/SCM/84.
[32] At June 2007, there is a final resolution which recommends definitive measures, subject to approval by the Cabinet Council.
[33] Established by means of Cabinet Decree No. 225 of 1969, organizing the Ministry of Trade and Industry and assigning functions to it.
[34] Law No. 23 of
[35] www.wto.org/English/news_e/pres01_e/pr211_e.htm.
[36] Document S/C/W/51.
[37] Document W/120.
[38] Electronic mail, voice mail, online information and data base retrieval, electronic data interchange (EDI), enhanced/value-added facsimile services (including store and retrieve), code and protocol conversion, online information and/or data processing (including transaction processing), and others.
[39]
[40] WTO documents TN/S/W/43, S/FIN/W/43.
[41] G-33 (Friends of Tropical Products).
[42] WTO document TN/AG/GEN/19.
[43] WTO document TN/AG/GEN/24.
[44] WTO document TN/MA/W/83.
[45] WTO document TN/MA/W/63/Add.1.
[46] WTO document TN/TF/W/41.
[47] International Monetary Fund, Balance of Payments Manual, 1993. Chapter XI, page 61.
[48] Ibid. Chapter XII, page 64.
[49] United Nations Economic Commission for
[50] The Heritage Foundation, 2007 Index of Economic Freedom.
[51] The City of