Title
FREE TRADE AGREEMENT BETWEEN THE REPUBLIC OF CHINA AND THE REPUBLIC OF PANAMA
Preamble
The Government of the Republic of China (hereinafter referred to as “the ROC”) and the Government of the Republic of Panama (hereinafter referred to as “Panama”), resolved to:
STRENGTHEN the traditional bonds of friendship and the spirit of cooperation among their people;
RECOGNIZE each nation’s strategic and geographic position within its respective regional market;
ACHIEVE a better balance in their trade relationship;
CREATE an expanded and secure market for goods and services produced in their own territories;
RECOGNIZE the difference in the levels of development and in the size of their economies and the need to create opportunities for economic development;
AVOID distortions to bilateral trade;
ESTABLISH clear and mutually beneficial rules governing their trade in goods and services, as well as the promotion and protection of investments in their territories;
RESPECT their respective rights and obligations under the Marrakesh Agreement establishing the World Trade Organization (WTO), as well as other bilateral and multilateral cooperation instruments;
ENHANCE the competitiveness of their firms in global markets;
CREATE employment opportunities and improve living standards of their people in their respective territories;
PROMOTE economic development in a manner consistent with environmental protection, conservation, and sustainable development;
PRESERVE their ability to safeguard the public welfare; and
PROMOTE the dynamic participation of different economic groups, particularly from the private sector, in order to strengthen the trade relations between both nations;
HAVE AGREED as follows:
Body
Part ONE. GENERAL ASPECTS
Chapter 1. INITIAL PROVISIONS
Article 1.01. Establishment of the Free Trade Area
Through this Agreement and consistent with Article XXIV of the General Agreement on Tariffs and Trade of 1994 and Article V of the General Agreement on Trade in Services, the Parties hereby establish a free trade area.
Article 1.02. Enforcement
Each Party shall ensure the adoption of all necessary measures in accordance with its constitutional rules in order to comply with the provisions of this Agreement in its territory and in all levels of its government.
Article 1.03. Relation to other International Agreements
1. The Parties affirm their existing rights and obligations with respect to each other under the WTO Agreement and other agreements to which the Parties are party.
2. In the event of any inconsistency between the provisions of this Agreement and the provisions of the agreements referred to in paragraph 1, the provisions of this Agreement shall prevail to the extent of the inconsistency, except as otherwise provided in this Agreement.
3. In the event of any inconsistency between this Agreement and the specific trade obligations set forth in:
(a) the Convention on International Trade in Endangered Species of Wild Fauna and Flora (CITES), done at Washington, March 3, 1973, as amended June 22, 1979;
(b) the Montreal Protocol on Substances that Deplete the Ozone Layer done at Montreal, September 16, 1987, as amended June 29, 1990; or
(c) the Basel Convention on the Control of Trans-boundary Movements of Hazardous Wastes and Their Disposal, done at Basel, March 22, 1989,
these obligations shall prevail to the extent of the inconsistency, provided that where a Party has a choice among equally effective and reasonably available means of complying with such obligations, the Party chooses the alternative that is the least inconsistent with the other provisions of this Agreement.
Article 1.04. Successor Agreement
Any reference in this Agreement to any other treaty or international agreement shall be made in the same terms to its successor treaty or international agreement to which the Parties are party.
Chapter 2. GENERAL DEFINITIONS
Article 2.01. Definitions of General Application
For purposes of this Agreement, except as otherwise provided for in another Chapter, the following terms shall be understood as:
chapter: the first two digits of the Harmonized System;
Commission: the Administrative Commission of the Agreement established pursuant to Article 18.01 (Administrative Commission of the Agreement);
customs duty: any customs or import duty and charges of any kind imposed on or in connection with the importation of a good, including any form of surtax or surcharge in connection with such importation, but not including any:
(a) charge equivalent to an internal tax imposed consistently with Article III: 2 of GATT 1994;
(b) antidumping or countervailing duty that is applied pursuant to a Party's legislation and applied consistently with Chapter 7 (Unfair Trade Practices);
(c) fee or other charge in connection with importation commensurate with the cost of services rendered; and
(d) premium offered or collected on or in connection with an imported good arising out of any tendering system in respect of the administration of quantitative import restrictions, tariff rate quotas or tariff preference levels;
Customs Valuation Agreement: the Agreement on Implementation of Article VII of the General Agreement on Tariffs and Trade 1994, including its interpretative notes which forms part of the WTO Agreement;
days: calendar days, including Saturdays, Sundays and holidays;
enterprise: any legal entity constituted or organized under the applicable laws of a Party, whether or not for profit, and whether privately-owned or governmentally-owned, including any company, corporation, foundation, trust, partnership, sole proprietorship, joint venture or other association;
existing: in effect on the date of entry into force of this Agreement;
GATS: the General Agreement on Trade in Services, which forms part of the WTO Agreement;
GATT 1994: the General Agreement on Tariffs and Trade 1994, which forms part of the WTO Agreement;
goods: any material, substance, product or part;
goods of a Party: domestic products as understood in GATT 1994, or goods granted with this characterization by the Parties, including goods originating in that Party. Goods of a Party may incorporate materials from non-Parties;
Harmonized System: the “Harmonized Commodity Description and Coding System” as in effect, including its general rules of interpretation and the legal notes of its sections, chapters, headings and subheadings, as adopted and implemented by the Parties in their respective laws;
heading: the first four digits of the Harmoni zed System;
measures: any law, regulation, procedure, requirement, provision, or practice among other measures;
national: a natural person in accordance with Annex 2.01;
originating goods: goods that qualify as originating under the rules set out in Chapter 4 (Rules of Origin);
person: a natural person or an enterprise;
person of a Party: a national or an enterprise of a Party; Party: the Republic of Panama or the Republic of China;
producer: a person who manufactures, produces, processes or assembles a good; or who cultivates, grows, breeds, mines, extracts, harvests, fishes, traps, gathers, collects, hunts or captures a good;
Secretariat: "Secretariat" as established in accordance with Article 18.03 (Secretariat); state enterprise: an enterprise that is owned or controlled by a Party through ownership interests;
subheading: the first six digits of the Harmonized System;
tariff reduction schedule: “tariff reduction schedule”as established in accordance with Annex 3.04 (Tariff Reduction Schedule);
territory: the terrestrial, maritime and air space of each Party as well as its exclusive economic zone and its continental shelf over which it exercises its sovereign rights and jurisdiction according to its domestic legislation and international law;
TRIPS: the Agreement on Trade-Related Aspects of Intellectual Property Rights, which forms part of the WTO Agreement;
Uniform Regulations: "Uniform Regulations" as established in accordance with Article 5.12 (Uniform Regulations); and
WTO Agreement: the Marrakesh Agreement Establishing the World Trade Organization (WTO) on April 15, 1994.
Part TWO. TRADE IN GOODS
Chapter 3. NATIONAL TREATMENT AND MARKET ACCESS FOR GOODS
Section A. Definitions and Scope of Application
Article 3.01. Definitions
For purposes of this Chapter, the following terms shall be understood as:
advertising films: recorded visual media, with or without soundtracks, consisting essentially of images which demonstrate the nature or the function of the goods or services offered for sale or for lease by any person established or resident in the territory of a Party, provided that the films are suitable for its exhibitions to potential customers, and are not for the broadcasting to the general public, and provided that they are imported in packets in which each contains no more than one copy of each film and do not form part of a larger shipment;
agricultural goods: the goods classified in the following chapters, headings or sub- headings of the Harmonized System, according to the 1996 revision:
(Note: the descriptions are provided for reference)
Tariff Classification Description
Chapters 01to24 less fish and fish products
Subheading 2905.43 Mannitol
Subheading 2905.44 Sorbitol
Heading 33.01 essential oils
Headings 35.01 to 35.05 albuminoidal substances, modified starches, glues
Subheading 3809.10 finishing agents
Subheading 3824.60 sorbitol other than that of subheading No. 2905.44
Headings 41.01 to 41.03 hides and skins
Heading 43.01 raw fur skins
Headings 50.01 to 50.03 raw silk and silk waste
Headings 51.01 to 51.03 wool and animal hair
Headings 52.01 to 52.03 raw cotton, cotton waste and cotton carded or combed
Heading 53.01 raw flax
Heading 53.02 raw hemp
commercial samples of negligible value or of non-commercial value: commercial samples (individually or in the aggregated shipment) valued no more than one US dollar or the equivalent amount counted in whatever currency of the Parties, or marked, torn, perforated or treated in the way which are unsuitable for sales or for any way except of sample use;
consumed:
(a) actually consumed; or
(b) further processed or manufactured so as to result in a substantial change in value, form or use of the good or in the production of another good;
goods for exhibition or demonstration: including components, auxiliary devices and accessories;
goods imported for the purposes of sports: the sports equipment used in sports contests, events or training in the territory of the Party into whose territory such goods are imported, provided the goods are finished products;
printed advertising materials: the pamphlets, printings, leaflets, trade catalogs, yearbooks published by trade associations, materials and posters of tourism promotions which are used to promote, publicize, or advertise goods or services, are distributed free of charge, and are classified in Chapter 49 of the Harmonized System;
repairs or alterations: activities which do not include operations or processes that destroy the basic characteristics of a good or create a new or commercially different good. For this purpose, it shall be understood that an operation or process that forms part of the production or assembly of an unfinished good and transform it into a finished good does not mean a repair or alteration of the unfinished good;
subsidies to exports of agriculture goods: those are related to:
(a) the provision by governments or their agencies of direct subsidies, including payments-in-kind, to a firm, to an industry, to producers of an agricultural good, to a cooperative or other association of such producers, or to a marketing board, contingent on export performance;
(b) the sale or disposal for export by governments or their agencies of non- commercial stocks of agricultural goods at a price lower than the comparable price charged for the like product to buyers in the domestic market;
(c) payments on the export of an agricultural good that are financed by virtue of governmental action, whether or not a charge on the public account is involved, including payments that are financed from the proceeds of a levy imposed on the agricultural goods concerned or on agricultural goods from which the exported product is derived;
(d) the provision of subsidies to reduce the costs of marketing exports of agricultural goods (other than widely available export promotion and advisory services) including handling, upgrading and other processing costs, and the costs of international transport and freight;
(e) internal transport and freight charges on export shipments, provided or mandated by governments, on terms more favorable than for domestic shipments; or
(f) subsidies on agricultural goods contingent on their incorporation in exported products; and
temporary admission of goods: the temporary admission of goods or the temporary import of goods.
Article 3.02. Scope of Application
This Chapter applies to the trade in goods between the Parties, except as otherwise provided in this Agreement.
Section B. National Treatment
Article 3.03. National Treatment
1. Each Party shall accord national treatment to the goods of the other Party in accordance with Article III of GATT 1994, including its interpretative notes, which are incorporated into and made part of this Agreement.
2. For purposes of paragraph 1, each Party shall grant the goods of the other Party the treatment no less favorable than the most favorable treatment granted by this Party to the like, directly competitive or substitutable goods of its national origin.
Section C. Tariffs
Article 3.04. Tariff Reduction Schedule
1. Upon the entry into force of this Agreement, the Parties commit themselves to ensuring access to their respective markets by means of elimination of customs duties, on the trade of originating goods according to the tariff reduction schedule described in Annex 3.04, unless otherwise provided therein.
2. Except as otherwise provided in this Agreement, the purpose of this Article is not to prevent a Party from maintaining or increasing a customs tariff as may be allowed by the WTO Agreement or any other agreement which forms part of the WTO.
3. Paragraph 1 does not prohibit a Party from increasing a customs tariff to a level not higher than that established in its respective tariff reduction schedule if previously this tariff had been unilaterally reduced to a level lower than that established in the tariff reduction schedule. During the tariff reduction process the Parties shall undertake to apply in their trade in originating goods the lowest tariff obtained by comparing the level established in accordance with its respective tariff reduction schedule and the level in force according to Article I of GATT 1994.
4. At the request of any Party, the Parties shall carry out consultations to consider the possibility of accelerating the phasing out of customs tariffs under the tariff reduction schedule s .
5. Notwithstanding the provisions of paragraphs 1 through 4, a Party may maintain, adopt or modify any tariff on goods excluded from the tariff reduction schedule as provided in Annex 3.04.
Article 3.05. Temporary Admission of Goods
1. Each Party shall grant duty-free temporary admission to import from the territory of the other Party for:
(a) professional equipment necessary for carrying out the business activity, trade or profession of a business person who qualifies for temporary entry pursuant to Chapter 14 (Temporary Entry for Business Persons);
(b) equipment for the press or for radio or television broadcasting and cinematographic equipment;
(c) goods imported for sports purposes or goods intended for display or demonstration; and
(d) commercial samples and advertising films.
2. Except as otherwise provided in this Agreement, neither Party may impose any condition upon the duty-free temporary admission of a good referred to in paragraph 1(a), (b) or (c), other than the requirement that such a good:
(a) be imported by a national or resident of the other Party who seeks temporary entry;
(b) be used solely by visitors or under the personal supervision of such person in the exercise of the business activity, trade or profession of that person;
(c) not be sold or leased while in its territory;
(d) be accompanied by a bond in an amount no greater than 110 percent of the charges that would otherwise be owed on entry or final importation, or by another form of security, releasable on exportation of the good, except that a bond for customs duties shall not be required for the original goods;
(e) be easily identifiable when exported;
(f) be exported on the departure of that person or within such period of time as is reasonably related to the purpose of the temporary admission; and
(g) be imported in no greater quantity than is reasonable for its intended use.
3. Except as otherwise provided in this Agreement, neither Party may impose any condition upon the duty-free temporary admission of a good referred to in paragraph 1(d), other than the requirement that such a good:
(a) be imported solely for the solicitation of orders for goods or services provided from the territory of the other Party or a non-Party;
(b) not be sold, leased or put to any use other than exhibition or demonstration while in its territory;
(c) be easily identifiable when exported;
(d) be exported within such period as is reasonably related to the purpose of the temporary admission; and
(e) be imported in no greater quantity than is reasonable for its intended use.
4. Where a good temporarily admitted duty-free under paragraph 1 do not fulfill whatever conditions that a Party imposes under paragraph 2 or 3 that Party may impose:
(a) customs tariff and other charges which are levied on the import; and
(b) any criminal, civil or administrative penalties as may be appropriate under the circumstances.
Article 3.06. Duty-Free Entry of Certain Commercial Samples of Negligible Value or of Non-Commercial Value and Printed Advertising Materials
Each Party shall grant duty-free entry to commercial samples of negligible value or of non-commercial value, and to printed advertising materials, imported from the territory of the other Party but may require that:
(a) such commercial samples be imported solely for the solicitation of orders for goods or services provided from the territory of the other Party or a non-Party; or
(b) such advertising materials be imported in packets that each contain no more than one copy of each such material and that neither such materials nor packets form part of a larger shipment.
Article 3.07. Goods Re-Entered after Repair or Alteration
1. Neither Party may apply a customs tariff to a good that re-enters its territory after that good has been exported from its territory to the territory of the other Party for repair or alteration.
2. Neither Party may apply a customs duty to a good imported temporarily from the territory of the other Party for repair or alteration.