(c) its recommendations, if any, to settle the dispute; and
(d) if this is the case, the timeframe for the implementation of the report in accordance with paragraphs 2 and 3 of Article 19.17.
3. Arbitrators may furnish separate opinions in writing on matters in which the consensus is not reached.
4. The Parties may make comments in writing to the arbitral group about the preliminary report within fourteen (14) days of its presentation.
5. In such an event and after examining the written comments, the arbitral group may ex officio or at the request of a disputing Party:
(a) request the comments from the Parties;
(b) reconsider its preliminary report; and
(c) take any steps deemed appropriate.
Article 19.16. Final Report
1. The arbitral group shall notify the Parties of its final report by majority vote, including any separate opinions in writing on matters in which there is no consensus, within thirty (30) days of the presentation of the preliminary report, unless the Parties agree on a different timeframe.
2. No arbitral group may reveal in its preliminary or final report the identity of the arbitrators that have joined either the majority or the minority vote.
3. The final report shall be published within fifteen (15) days of its notification to the Parties, unless they agree otherwise.
Article 19.17. Implementation of the Final Report
1. The final report shall make mandatory for the Parties the requirements and periods that it orders. The timeframe for implementing the final report shall not exceed 6 months from the date on which the final report was notified to the Parties, unless the Parties agree on a different timeframe.
2. If the final report of the arbitral group states that the measure is inconsistent with this Agreement, the defendant Party shall refrain from executing the measure or shall repeal it. The arbitral group shall determine a timeframe for implementation, taking into account the complexity of the de facto and de jure issues implied and the nature of the final report. This period shall not exceed 180 days.
3. If the final report states that the measure is a cause of nullification or impairment as set out in Annex 19.03, it shall specify the degree of nullification or impairment and may suggest the adjustments that it considers mutually satisfactory for the Parties. At the same time, the timeframe for reaching mutually satisfactory solutions should be determined, taking into account, the complexity of the de facto and de jure issues implied and the nature of the final report. This period should not exceed 180 days.
4. Within 5 days after the expiration of the timeframe determined by the arbitral group, the defendant Party shall inform the arbitral group and the other Party of actions adopted to comply with the final report. Within thirty (30) days after expiration of the timeframe as referred to in paragraphs 2 and 3, the arbitral group shall determine whether the defendant Party has complied with the final report. In case the arbitral group determines that the defendant Party has not complied with the final report, the complaining Party may suspend benefits in accordance with Article 19.18.
Article 19.18. Suspension of Benefits
1. The complaining Party may suspend the benefits to the defendant Party arising from this Agreement that have an effect equivalent to the benefits not received, if the arbitral group decides that:
(a) a measure is inconsistent with the obligations of this Agreement and that the defendant Party has not complied with the final report within the timeframe determined by the arbitral group in the final report; or
(b) a measure is a cause of nullification or impairment as set out in Annex 19.03 and the Parties have not reached a mutually satisfactory agreement on the dispute within the timeframe determined by the arbitral group.
2. The suspension of benefits shall last until the defendant Party complies with the final report or until the Parties reach a mutually satisfactory agreement on the dispute, as the case may be. When the defendant Party, after suspension of benefits, considers that it has adopted measures necessary to implement the final report and the complaining Party does not restore benefits previously suspended, it may ask for the establishment of an arbitral group in accordance with paragraph (4) to determine if it has complied with the final report.
3. In considering the benefits to be suspended in accordance with this Article:
(a) the complaining Party shall endeavor first to suspend benefits within the same sector or sectors affected by the measure or by other matter considered by the arbitral group as inconsistent with the obligations arising from this Agreement or that has been a cause of nullification or impairment as set out in Annex 19.03; and
(b) if the complaining Party considers that it is not feasible nor effective to suspend benefits in the same sector or sectors, it may suspend benefits in other sectors.
4. Once the benefits have been suspended pursuant to this Article, the Parties, by request in writing from a Party, shall establish an arbitral group if necessary to determine if the final report has been complied with or if the level of benefits suspended to the defendant Party by the complaining Party under this Article is obviously excessive. To the extent practicable, the arbitral group shall be composed of the same arbitrators who have knowledge over the dispute.
5. The proceedings before the arbitral group established for purposes of paragraph 4 shall be carried forward pursuant to the Model Rules of Procedure set out in Article 19.13 and the final report shall be issued within sixty (60) days of the nomination of the last arbitrator, or any other timeframe agreed upon by the Parties. If this arbitral group was composed of the same arbitrators who have knowledge over the dispute, it shall present its final report within thirty (30) days of the presentation of the request referred to in paragraph 4.
Section B. Domestic Proceedings and Settlement of Private Commercial Disputes
Article 19.19. Interpretation of the Agreement Before Judicial and Administrative Proceedings
1. The Commission shall endeavor to give, as soon as possible, an appropriate and non-binding interpretation or response, where:
(a) a Party considers that a matter of interpretation or application of this Agreement arisen or that arises in a judicial or administrative proceeding of the other Party merits an interpretation by the Commission; or
(b) a Party communicates to the Commission of the reception of a request for an opinion about a matter of interpretation or implementation of this Agreement in a judicial or administrative proceeding of this Party.
2. The Party in which territory a judicial or administrative proceeding is taking place shall present in the proceeding the interpretation or response of the Commission in accordance with the procedures of that forum.
3. When the Commission does not agree upon an interpretation or response, a Party may submit its own opinion to the judicial or administrative proceeding in accordance with the procedures of that forum.
Article 19.20. Private Rights
No Party may provide for a right of action under its domestic law against the other Party on the grounds that a measure of that Party is inconsistent with this Agreement.
Article 19.21. Alternative Dispute Settlement Methods between Individuals
1. Each Party shall promote and facilitate arbitration and other alternative methods to settle international commercial disputes between individuals in the territories of the Parties.
2. For purposes of paragraph 1, each Party shall have appropriate procedures ensuring the observance of the international arbitration conventions that it has ratified and the recognition and implementation of arbitral awards in these disputes.
3. The Commission may establish a Consultative Committee o n Private Commercial Disputes, composed of persons with specialized knowledge or experience in the resolution of private international commercial disputes. Once the Committee is created, it shall present reports and recommendations in general nature about the existence, use and efficiency of arbitration and other procedures for dispute settlement.
Chapter 20. EXCEPTIONS
Article 20.01. Definitions
For purposes of this Chapter, the following terms shall be understood as:
IMF: the International Monetary Fund;
international capital transactions: "international capital transactions" as defined under the Articles of Agreement of the International Monetary Fund;
payments for current international transactions: "payments for current international transactions" as defined under the Articles of Agreement of the International Monetary Fund;
tax convention: a convention for the avoidance of double taxation or other international taxation agreement or arrangement; and
transfers: international transactions and related international transfers and payments.
Article 20.02. General Exceptions
1. Article XX of GATT 1994 and its interpretative notes are incorporated into this Agreement and form an integral part of it for purposes of:
(a) Part Two (Trade in Goods), except to the extent that some of its provisions apply to services or investment;
(b) Part Three (Technical Barriers to Trade), except to the extent that some of its provisions apply to services or to investment; and
(c) Part Five (Competition Policy), to the extent that some of its provisions apply to goods.
2. Subparagraphs (a), (b) and (c) of Article XIV of GATS are incorporated into this Agreement and form an integral part of it, for purposes of:
(a) Part Two (Trade in Goods), to the extent that some of its provisions apply to services;
(b) Part Three (Technical Barriers to Trade), to the extent that some of its provisions apply to services;
(c) Chapter 10 (Investment);
(d) Chapter 11 (C ross-border Trade in Services);
(e) Chapter 12 (Financial Services) ;
(f) Chapter 13 (Telecommunications) ;
(g) Chapter 14 (Temporary Entry for Business Persons); and
(h) Chapter 15 (Competition Policy, Monopolies and State Enterprises), to the extent that some of its provisions apply to services.
Article 20.03. National Security
Nothing in this Agreement shall be construed to:
(a) require any Party to furnish or allow access to any information the disclosure of which it determines to be contrary to its essential security interests;
(b) prevent any Party from taking any actions that it considers necessary for the protection of its essential security interests:
(i) relating to the traffic in arms, ammunition and implements of war and to such traffic and transactions in other goods, materials, services and technology undertaken directly or indirectly for the purposes of supplying a military or other security establishment,
(ii) taken in time of war or other emergency in international relations, or
(iii) relating to the implementation of national policies or international agreements respecting the non-proliferation of nuclear weapons or other nuclear explosive devices; or
(c) prevent any Party from taking action in fulfilling of its obligations under the United Nations Charter for the maintenance of international peace and security.
Article 20.04. Balance of Payments
1. Nothing in this Agreement shall be construed to prevent a Party from adopting or maintaining measures that restrict transfers when the Party is facing serious balance of payments difficulties, or the threat thereof, so long as such restrictions are consistent with this Article. A Party taking such measure shall do so in accordance with the conditions established under Article XII of GATT 1994 and the Understanding on the Balance-of-Payments Provisions of the GATT 1994.
2. The Party shall notify the other Party within thirty (30) days after the adoption of a measure in accordance with paragraph 1. In the event that both Parties become party to the Articles of Agreement of the IMF, the procedure of the following paragraph (paragraph 3 of this Article) should be followed.
3. As soon as feasible after a Party has applied a measure conforming with this Article, in accordance with the Party’s international obligations, the Party shall:
(a) submit any current account exchange restrictions to the IMF for review under Article VIII of the Articles of Agreement of the IMF;
(b) enter into good faith consultations with the IMF on economic adjustment measures to address the fundamental underlying economic problems causing the difficulties; and
(c) adopt or maintain economic policies consistent with such consultations.
4. A measure adopted or maintained under this Article shall:
(a) avoid unnecessary damage to the commercial, economic or financial interests of the other Party;
(b) not be more burdensome than necessary to deal with the balance of payments difficulties or threat thereof;
(c) be temporary and be phased out progressively as the balance of payments situation improves;
(d) be consistent with paragraph 3(c) and with the Articles of Agreement of the IMF; and
(e) be applied on a national treatment or most-favored-nation treatment basis, whichever is more favorable.
5. A Party may adopt or maintain a measure under this Article that gives priority to services that are essential to its economic program, provided that a Party does not impose a measure for the purposes of protecting a specific industry or sector unless the measure is consistent with paragraph 3(c) and with Article VIII(3) of the Articles of Agreement of the IMF.
6. Restrictions imposed on transfers:
(a) where they apply to payments for current international transactions, shall be consistent with Article VIII(3) of the Articles of Agreement of the IMF;
(b) where they apply to international capital transactions, shall be consistent with Article VI of the Articles of Agreement of the IMF and be imposed only in conjunction with measures imposed on current international transactions under paragraph 3(a); and
(c) may not take the form of tariff surcharges, quotas, licenses or other similar measures.
Article 20.05. Disclosure of Information
Nothing in this Agreement shall be construed to require a Party to furnish or allow access to information of which the disclosure would impede law enforcement or would be contrary to the Party's Constitution or public interest or its laws for protecting personal privacy or the financial affairs and accounts of individual customers of financial institutions.
Article 20.06. Taxation
1. Except as set out in this Article, nothing in this Agreement shall apply to taxation measures.
2. Nothing in this Agreement shall affect the rights and obligations of any Party under any tax convention. In the event of any inconsistency between any such convention and this Agreement, the tax convention shall prevail to the extent of the inconsistency.
3. Notwithstanding paragraph 2:
(a) Article 3.03 (National Treatment) and other provisions of this Agreement necessary to make said Article effective shall apply to taxation measures to the same extent as does Article III of the GATT 1994; and
(b) Article 3.14 (Export Taxes) shall apply to taxation measures.
4. For purposes of this Article, taxation measures do not include:
(a) a “customs duty” as defined in Article 2.01 (Definitions of General Application); nor
(b) the measures listed in exceptions (b), (c) and (d) under the definition of customs duty.
5. Subject to paragraph 2:
(a) Articles 11.03 (National Treatment) and 12.06 (National Treatment) shal apply to taxation measures on profits, capital gains or on taxable capital of enterprises related to the purchase or consumption of particular services;
(b) Articles 10.02 (National Treatment), 10.03 (Most-Favored-Nation Treatment), 11.03 (National Treatment), 11.04 (Most-Favored-Nation Treatment), 12.06 (National Treatment) and 12.07 (Most-Favored-Nation Treatment) shall apply to taxation measures other than those related to profits, capital gains or taxable capital of enterprises, as well as estate, inheritance and gift taxes, except that nothing in those Articles shall apply to:
(i) any most-favored-nation obligations with respect to an advantage accorded by a Party in fulfillment of a tax convention;
(ii) any existing taxation measure which provides different tax treatment between residents and non-residents;
(iii) the amendment to a non-conforming provision of any existing tax measure as provided for in paragraph (d) above to the extent that the amendment does not decrease its conformity, at the time of the amendment with any of these Articles; or
(iv) any new tax measure which aims at ensuring the equitable and effective imposition or collection of taxes, and that does not arbitrarily discriminate between persons, goods or services of the Parties or arbitrarily nullify or impair benefits accorded pursuant to those Articles, in the sense of Annex 19.03 (Nullification and Impairment).
Chapter 21. FINAL PROVISIONS
Article 21.01. Modifications
1. Any modification of this Agreement shall be agreed upon by both Parties.
2. The modifications agreed upon shall enter into force after their approval according to the applicable legal procedures of each Party and shall be made a part of this Agreement.
Article 21.02. Reservations
This Agreement may not be subject to reservations or interpretative declarations by either Party at the time of its ratification.
Article 21.03. Validity
1. This Agreement shall have indefinite duration and shall enter into force between Panama and the ROC on the thirtieth day after the day on which the countries have exchanged their ratification instruments certifying that the procedures and legal formalities have been concluded.
2. For this Agreement to become effective between Panama and the ROC, it shall be stated in the ratification instruments that the legal procedures and requirements have been completed, which includes:
(a) Annex 3.04 (Tariff Reduction Schedule), relating to the Tariff Reduction Schedule between Panama and the ROC;
(b) Section C of Annex 4.03 (Specific Rules of Origin), applicable between Panama and the ROC;
(c) Annexes I, II, III and IV of Chapter 10 (Investment), relating to applicable reservations and restrictions on investment between Panama and the ROC;
(d) Annexes I, II and V of Chapter 11 (Cross-border Trade in Services), relating to applicable reservations and restrictions on cross-border services between Panama and the ROC;
(e) Annex VI of Chapter 12 (Financial Services), relating to applicable reservations and restrictions on financial services between Panama and the ROC;
(f) Annex 3.11(6) (Import and Export Restrictions), as appropriate; and
(g) Other matters as agreed upon by the Parties.
Article 21.04. Annexes
The Annexes to this Agreement constitute an integral part of this Agreement.
Article 21.05. Termination
1. Either Party may terminate this Agreement.
2. The termination shall enter into force 180 days after notification to the other Party without prejudice to a different date that the Parties may agree.
Article 21.06. Authentic Texts
The English, Spanish and Chinese texts of this Agreement are equally authentic. In the event of any discrepancy in the interpretation of this Agreement, the English version shall prevail.
Conclusion
IN WITNESS WHEREOF, the undersigned, being duly authorized by their respective Governments, have signed this Agreement.
DONE at Taipei, in duplicate in the Chinese, Spanish and English languages, this twenty-first day of August of the year two thousand and three.
FOR THE GOVERNMENT OF THE REPUBLIC OF CHINA:
Chen Shui-bian President Republic of China
FOR THE GOVERNMENT OF THE REPUBLIC OF PANAMA:
Mireya Moscoso Rodriguez President
Republic of Panama