(a) destroys a good’s essential characteristics or creates a new or commercially different good; or
(b) transforms an unfinished good into a finished good.
Article 3.7. Duty-Free Entry of Commercial Samples of Negligible Value and Printed Advertising Materials
Each Party shall grant duty-free entry to commercial samples of negligible value and to printed advertising materials, imported from the territory of the other Party, regardless of their origin, but may require that:
(a) such 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 consignment.
Section D. Non-Tariff Measures
Article 3.8. Import and Export Restrictions
1. Except as otherwise provided in this Agreement, neither Party may adopt or maintain any prohibition or restriction on the importation of any good of the other Party or on the exportation or sale for export of any good destined for the territory of the other Party, except in accordance with Article XI of the GATT 1994 and its interpretative notes, and to this end Article XI of the GATT 1994 and its interpretative notes are incorporated into and made a part of this Agreement, mutatis mutandis. (1)
2. The Parties understand that the GATT 1994 rights and obligations incorporated by paragraph 1 prohibit, in any circumstances in which any other form of restriction is prohibited, a Party from adopting or maintaining:
(a) export and import price requirements, except as permitted in enforcement of countervailing and antidumping duty orders and undertakings;
(b) import licensing conditioned on the fulfillment of a performance requirement, except as provided in a Party’s Schedule to Annex 3.3; or
(c) voluntary export restraints inconsistent with Article VI of the GATT 1994, as implemented under Article 18 of the SCM Agreement and Article 8.1 of the AD Agreement.
3. In the event that a Party adopts or maintains a prohibition or restriction on the importation from or exportation to a non-Party of a good, nothing in this Agreement shall be construed to prevent the Party from:
(a) limiting or prohibiting the importation from the territory of the other Party of such good of that non-Party; or
(b) requiring as a condition of export of such good of the Party to the territory of the other Party, that the good not be re-exported to the non-Party, directly or indirectly, without being consumed in the territory of the other Party.
4. In the event that a Party adopts or maintains a prohibition or restriction on the importation of a good from a non-Party, the Parties, on the request of either Party, shall consult with a view to avoiding undue interference with or distortion of pricing, marketing, or distribution arrangements in the other Party.
5. Paragraphs 1 through 4 shall not apply to the measures set out in Annex 3.2.
6. Panama may not, as a condition for engaging in importation or for the import of a good, require a person of the United States to establish or maintain a contractual or other relationship with a dealer in its territory.
7. Panama may not remedy a violation or alleged violation of any law, regulation, or other measure regulating or otherwise relating to the relationship between any dealer in its territory and any person of the United States, by prohibiting or restricting the importation of any good of the United States.
8. For purposes of this Article:
dealer means a person of Panama who is responsible for the distribution, agency, concession, or representation in the territory of Panama of goods of the United States; and
remedy means to obtain redress or impose a penalty, including through a provisional, precautionary, or permanent measure.
Article 3.9. Import Licensing
1. Neither Party may adopt or maintain a measure that is inconsistent with the Import Licensing Agreement.
2. Promptly after entry into force of this Agreement, each Party shall notify the other Party of any existing import licensing procedures, and thereafter shall notify the other Party of any new import licensing procedure and any modification to its existing import licensing procedures, within 60 days before it takes effect. A notification provided under this Article shall:
(a) include the information specified in Article 5 of the Import Licensing Agreement; and
(b) be without prejudice as to whether the import licensing procedure is consistent with this Agreement.
3. Neither Party may apply an import licensing procedure to a good of the other Party unless it has provided notification in accordance with paragraph 2.
Article 3.10. Administrative Fees and Formalities
1. Each Party shall ensure, in accordance with Article VIII:1 of the GATT 1994 and its interpretive notes, that all fees and charges of whatever character (other than customs duties, charges equivalent to an internal tax or other internal charge applied consistently with Article III:2 of the GATT 1994, and antidumping and countervailing duties) imposed on or in connection with importation or exportation are limited in amount to the approximate cost of services rendered and do not represent an indirect protection to domestic goods or a taxation of imports or exports for fiscal purposes.
2. Neither Party may require consular transactions, including related fees and charges, in connection with the importation of any good of the other Party.
3. Each Party shall make available and maintain through the Internet a current list of the fees and charges it imposes in connection with importation or exportation.
4. The United States shall eliminate its merchandise processing fee on originating goods.
Article 3.11. Export Taxes
Neither Party may adopt or maintain any duty, tax, or other charge on the export of any good to the territory of the other Party, unless such duty, tax, or charge is also adopted or maintained on the good when destined for domestic consumption.
Section E. Other Measures
Article 3.12. Distinctive Products
1. Panama shall recognize Bourbon Whiskey and Tennessee Whiskey, which is a straight Bourbon Whiskey authorized to be produced only in the State of Tennessee, as distinctive products of the United States. Accordingly, Panama shall not permit the sale of any product as Bourbon Whiskey or Tennessee Whiskey, unless it has been manufactured in the United States in accordance with the laws and regulations of the United States governing the manufacture of Bourbon Whiskey and Tennessee Whiskey.
2. At the request of a Party, the Committee on Trade in Goods shall consider whether to recommend that the Parties amend the Agreement to designate a good as a distinctive product for purposes of this Article.
Section F. Agriculture
Article 3.13. Scope and Coverage
This Section applies to measures adopted or maintained by a Party relating to trade in agricultural goods.
Article 3.14. Administration and Implementation of Tariff-Rate Quotas
1. Each Party shall implement and administer the tariff-rate quotas for agricultural goods set out in Appendix I to its Schedule to Annex 3.3 (hereafter “TRQs”) in accordance with Article XIII of the GATT 1994, including its interpretive notes, and the Import Licensing Agreement.
2. Each Party shall ensure that:
(a) its procedures for administering its TRQs are transparent, made available to the public, timely, nondiscriminatory, responsive to market conditions, and minimally burdensome to trade;
(b) subject to subparagraph (c), any person of a Party that fulfills the Party’s legal and administrative requirements shall be eligible to apply and to be considered for an in-quota quantity allocation under the Party’s TRQs;
(c) it does not, under its TRQs:
(i) allocate any portion of an in-quota quantity to a producer group;
(ii) condition access to an in-quota quantity on purchase of domestic production; or
(iii) limit access to an in-quota quantity only to processors.
(d) solely government authorities administer its TRQs and government authorities do not delegate administration of its TRQs to producer groups or other non- governmental organizations, except as provided in Appendix I to the General Notes of the Schedule of Panama to Annex 3.3; and
(e) it allocates in-quota quantities under its TRQs in commercially viable shipping quantities and, to the maximum extent possible, in the amounts that importers request.
3. Each Party shall make every effort to administer its TRQs in a manner that allows importers to fully utilize them.
4. Neither Party may condition application for, or use of, an in-quota quantity allocation under a TRQ on the re-export of an agricultural good.
5. Neither Party may count food aid or other non-commercial shipments in determining whether an in-quota quantity under a TRQ has been filled.
6. On request of either Party, the Parties shall consult regarding the administration of the importing Party’s TRQs.
Article 3.15. Agricultural Export Subsidies
1. The Parties share the objective of the multilateral elimination of export subsidies for agricultural goods and shall work together toward an agreement in the WTO to eliminate those subsidies and prevent their reintroduction in any form.
2. Except as provided in paragraph 3, neither Party may introduce or maintain any export subsidy on any agricultural good destined for the territory of the other Party.
3. Where the exporting Party considers that a non-Party is exporting an agricultural good to the territory of the other Party with the benefit of export subsidies, the importing Party shall, on written request of the exporting Party, consult with the exporting Party with a view to agreeing on specific measures that the importing Party may adopt to counter the effect of such subsidized imports. If the importing Party adopts the agreed-on measures, the exporting Party shall refrain from applying any export subsidy to its exports of the good to the territory of the importing Party. If the importing Party does not adopt the agreed-on measures, the exporting Party may apply an export subsidy on its exports of the good to the territory of the importing Party only to the extent necessary to counter the trade-distorting effect of subsidized exports of the good from the non-Party to the importing Party’s territory.
Article 3.16. Export State Trading Enterprises
The Parties shall work together toward an agreement on export state trading enterprises in the WTO that:
(a) eliminates restrictions on the right to export;
(b) eliminates any special financing granted directly or indirectly to state trading enterprises that export for sale a significant share of their country’s total exports of an agricultural good; and
(c) ensures greater transparency regarding the operation and maintenance of export state trading enterprises.
Article 3.17. Agricultural Safeguard Measures
1. Notwithstanding Article 3.3, a Party may apply a measure in the form of an additional import duty on an originating agricultural good listed in that Party’s Schedule to Annex 3.17, provided that the conditions in paragraphs 2 through 8 are met. The sum of any such additional import duty and any other customs duty on such good shall not exceed the lowest of:
(a) the base rate of duty provided in the Party’s Schedule to Annex 3.3;
(b) the prevailing most-favored-nation (MFN) applied rate of duty; or
(c) the MFN applied rate of duty in effect on the day immediately preceding the date of entry into force of this Agreement.
2. A Party may apply an agricultural safeguard measure during any calendar year if the quantity of imports of the good during such year exceeds the trigger level for that good set out in its Schedule to Annex 3.17.
3. The additional duty under paragraph 1 shall be set according to each Party’s Schedule to Annex 3.17.
4. Neither Party may apply an agricultural safeguard measure and at the same time apply or maintain:
(a) a safeguard measure under Chapter Eight (Trade Remedies); or
(b) a measure under Article XIX of GATT 1994 and the Safeguards Agreement,
with respect to the same good.
5. Neither Party may apply or maintain an agricultural safeguard measure on a good:
(a) on or after the date that the good is subject to duty-free treatment under the Party’s Schedule to Annex 3.3; or
(b) that increases the in-quota duty on a good subject to a TRQ.
6. A Party shall implement an agricultural safeguard measure in a transparent manner.
Within 60 days after applying such a measure, the Party applying the measure shall notify the other Party, in writing, and shall provide it relevant data concerning the measure. On request, the Party applying the measure shall consult with the other Party regarding application of the measure.
7. A Party may maintain an agricultural safeguard measure only until the end of the calendar year in which the Party applies the measure.
8. Neither Party may apply on an originating agricultural good any safeguard duty pursuant to the WTO Agreement on Agriculture or any successor provisions thereof.
9. The Commission and the Committee on Agricultural Trade may review the implementation and operation of this Article.
10. For purposes of this Article and Annex 3.17, agricultural safeguard measure means a measure described in paragraph 1.
Article 3.18. Sugar Compensation Mechanism
1. In any year, the United States may, at its option, apply a mechanism that results in compensation to Panama’s exporters of sugar goods in lieu of according duty-free treatment to some or all of the duty-free quantities of sugar goods established for Panama in paragraph 6 of Appendix I to the General Notes of the Schedule of the United States to Annex 3.3. Such compensation shall be equivalent to the estimated economic rents that Panama’s exporters would have obtained on exports to the United States of any such amounts of sugar goods and shall be provided within 30 days after the United States exercises this option. The United States shall notify Panama at least 90 days before it exercises this option and, on request, shall enter into consultations with Panama regarding application of the mechanism.
2. For purposes of this Article, sugar good means a good provided for in paragraph 6(c), (g), or (j) of Appendix I to the General Notes of the Schedule of the United States to Annex 3.3.
Article 3.19. Agriculture Review Commission
The Parties shall establish an Agriculture Review Commission in the 14th year after the date of entry into force of this Agreement to review the implementation and operation of the Agreement as it relates to trade in agricultural goods. The Agriculture Review Commission shall evaluate the effects of trade liberalization under the Agreement, the operation of Article 3.17 and possible extension of agricultural safeguard measures under that Article, progress toward global agricultural trade reform in the WTO, and developments in world agricultural markets. The Agriculture Review Commission shall report its findings and any recommendations to the Commission.
Article 3.20. Committee on Agricultural Trade
1. No later than 90 days after the date of entry into force of this Agreement, the Parties shall establish a Committee on Agricultural Trade, comprising representatives of each Party.
2. The Committee shall provide a forum for:
(a) monitoring and promoting cooperation on the implementation and administration of this Section;
(b) facilitating trade in agricultural goods between the Parties;
(c) consultation between the Parties on matters related to this Section in coordination with other committees, subcommittees, working groups, or other bodies established under this Agreement;
(d) addressing barriers to trade in agricultural goods; and
(e) undertaking any additional work that the Commission may assign.
3. The Committee shall meet at least once a year unless it decides otherwise. Meetings of
the Committee shall be chaired by the representatives of the Party hosting the meeting.
4. All decisions of the Committee shall be taken by mutual agreement.
Section G. Textiles and Apparel
Article 3.21. Customs Cooperation
1. The customs authorities of the Parties shall cooperate for purposes of:
(a) enforcing or assisting in the enforcement of their respective laws, regulations, and procedures affecting trade in textile or apparel goods;
(b) ensuring the accuracy of claims of origin for textile or apparel goods; and
(c) deterring circumvention of laws, regulations, and procedures of either Party or international agreements affecting trade in textile or apparel goods.
2. In furtherance of paragraph 1, each Party shall adopt or maintain laws that:
(a) authorize its officials to take swift action to deter circumvention and to carry out obligations under this Chapter relating to customs cooperation and information sharing; and
(b) establish criminal penalties and civil or administrative penalties that effectively deter engaging in, attempting to engage in, or facilitating activities related to circumvention.
3. On request of a Party, the other Party shall provide, consistent with its laws, regulations,
and procedures, production, trade, and transit documents and other information necessary to determine:
(a) that an enterprise has made an accurate claim of origin for a textile or apparel good; or
(b) that an enterprise is complying with applicable customs laws, regulations, and procedures regarding trade in textile or apparel goods, including:
(i) laws, regulations, and procedures that the exporting Party adopts or maintains pursuant to this Agreement; and
(ii) laws, regulations, and procedures of the importing Party or the exporting Party that give effect to other international agreements regarding trade in textile or apparel goods.
Article 5.6 (Confidentiality) shall apply to any information that the providing Party designates as confidential.
4. (a)
On the written request of the importing Party, the exporting Party shall conduct a verification for purposes of enabling the importing Party to make the determination described in paragraph 3(a) or (b), regardless of whether an importer claims preferential tariff treatment for a textile or apparel good for which a claim of origin has been made.
(b) A request under subparagraph (a) shall include specific information regarding the reason the importing Party is requesting the verification and the determination the importing Party is seeking to make.
(c) The exporting Party may conduct a verification of exporting enterprises within its territory on its own initiative.
(b) A request under subparagraph (a) shall include specific information regarding the reason the importing Party is requesting the verification and the determination the importing Party is seeking to make.
(c) The exporting Party may conduct a verification of exporting enterprises within its territory on its own initiative.
5. The exporting Party may allow the importing Party to participate in a verification conducted under paragraph 4, including through a site visit. If the importing Party believes it is necessary for it to participate in a site visit, the competent authority of the importing Party shall provide a written request to the competent authority of the exporting Party. Site visits shall be conducted in accordance with the laws, regulations, and procedures of the exporting Party. (2) If the exporting Party does not allow the participation of the importing Party, the importing Party may take appropriate action, which may include denying preferential tariff treatment to the type of goods of the enterprise that would have been the subject of the verification.
6. (a) The competent authority of the importing Party shall provide a written request to participate in a site visit not less than 14 days before the proposed dates of the site visit. The request shall identify the number of enterprises to be visited, the proposed dates of the visit, and the reason for the visit.
(b) The importing Party shall ensure that its competent authority does not inform any person, other than the responsible officials of the exporting Party, of a request under subparagraph (a) or its contents. The exporting Party shall ensure that its competent authority and any other person in its territory do not provide prior notice to the enterprise to be visited. The exporting Party or, if the exporting Party requests or authorizes the importing Party to undertake such a verification, the importing Party shall seek permission to conduct a site visit from a responsible person of the enterprise at the time of the visit.
(c) If the enterprise denies permission to conduct a site visit: (3)
(i) the visit shall not occur;
(ii) the exporting Party shall not issue any certificates, visas, or export licenses that may be required to accompany textile or apparel goods that the enterprise produces or exports when such goods are exported to the importing Party, until the exporting Party receives information sufficient to enable it to make the determination in paragraph 3(a) or (b); and
(iii) the importing Party may deny entry of textile or apparel goods produced or exported by the enterprise, until the importing Party receives information sufficient to enable it to make the determination in paragraph 3(a) or (b).
(d) On completion of a site visit in which the importing Party has participated, the importing Party and exporting Party shall discuss their findings and the importing Party shall subsequently provide to the exporting Party a written report of the results of the visit. The exporting Party shall have the opportunity to respond to the report. The written report shall include:
(i) the name of the enterprise visited;
(ii) for each shipment checked, information discovered relating to circumvention;
(iii) observations made at the enterprise relating to circumvention; and
(iv) an assessment of whether the enterprise’s production records and other documents support its claims of origin for:
(A) a textile or apparel good subject to a verification conducted under paragraph 4(a) for the purpose of making the determination in paragraph 3(a); or
(B) in the case of a verification conducted under paragraph 4(a) for the purpose of making the determination in paragraph 3(b), any textile or apparel good exported or produced by the enterprise.
7. (a) (i) During a verification conducted under paragraph 4(a), if there is insufficient information to support a claim for preferential tariff treatment, the importing Party may take appropriate action, which may include suspending the application of such treatment to:
(A) in the case of a verification conducted under paragraph 4(a) for the purpose of making the determination in paragraph 3(a), the textile or apparel good for which a claim for preferential tariff treatment has been made; and
(B) in the case of a verification conducted under paragraph 4(a) for the purpose of making the determination in paragraph 3(b), any textile or apparel good exported or produced by the enterprise subject to that verification for which a claim for preferential tariff treatment has been made.
(ii) On completion of a verification conducted under paragraph 4(a), if there is insufficient information to support a claim for preferential tariff treatment, the importing Party may take appropriate action, which may include denying the application of such treatment to any textile or apparel good described in clauses (i)(A) and (B).
(iii) During or on completion of a verification conducted under paragraph 4(a), if the importing Party discovers that an enterprise has provided incorrect information to support a claim for preferential tariff treatment, the importing Party may take appropriate action, which may include denying the application of such treatment to any textile or apparel good described in clauses (i)(A) and (B).
(b) (i) During a verification conducted under paragraph 4(a), if there is insufficient information to determine the country of origin, the importing Party may take appropriate action, which may include detention of any textile or apparel good exported or produced by the enterprise subject to the verification.
(ii) On completion of a verification conducted under paragraph 4(a), if there is insufficient information to determine the country of origin, the importing Party may take appropriate action, which may include denying entry to any textile or apparel good exported or produced by the enterprise subject to the verification.
(iii) During or on completion of a verification conducted under paragraph 4(a), if the importing Party discovers that an enterprise has provided incorrect information as to the country of origin, the importing Party may take appropriate action, which may include denying entry to any textile or apparel good exported or produced by the enterprise subject to the verification.
(c) The importing Party may continue to take appropriate action under any provision of this paragraph only until it receives information sufficient to enable it to make the determination in paragraph 3(a) or (b), as the case may be.
8. Not later than 45 days after it completes a verification on behalf of the importing Party under paragraph 4(a), the exporting Party shall provide the importing Party a written report on the results of the verification. The report shall include all documents and facts supporting any conclusion that the exporting Party reaches. After receiving the report, the importing Party shall notify the exporting Party of any action it will take under paragraph 7(a)(ii) or (iii) or 7(b)(ii) or (iii), taking into account the information provided in the report.