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Free trade Agreement between 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 protecion 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:
PART ONE CHAPTER 1 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 inconsiste ncy 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:
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 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:
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 Harmonized 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.
For purposes of this Agreement, unless otherwise specified in other Chapters, it shall be understood as: National: in the case of Panama:
in the case of the ROC:
PART TWO CHAPTER 3 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 subheadings of the Harmonized System, according to the 1996 revision: (Note: the descriptions are provided for reference) Tariff Classification Description
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:
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:
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 schedules. 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:
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:
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:
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- 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. 3. The terms “re-entered its territory” referred to in paragraph 1, and “imported temporarily” referred to in paragraph 2, shall be understood under the respective laws of the Parties. Article 3.08 Customs Valuation Upon the entry into force of
this Agreement, the principles of customs valuation applied to regulating trade between
the Parties shall be that established in the Customs Valuation Agreement,
including its annexes. Besides, the Parties shall not determine the customs value of the goods
based on the officially established minimum value. Section D- Non-Tariff Measures Article 3.09 Domestic Supports 1. The Parties recognize that domestic support measures may be of crucial importance to their agriculture sectors, but it may also distort trade and affect production. In this sense the Parties shall apply domestic supports in accordance with the Agreement on Agriculture of the WTO, and any other successor agreements to which the Parties are party. Where a Party decides to support its agriculture producers, it shall endeavor to work toward the domestic support policy that:
2. In order to ensure the transparency of the support policy to agriculture, the Parties agree to carry out continuous and permanent analysis of such policy. For these purposes, the acquired information shall be used as principal reference in these respective annual notifications to the WTO Committee on Agriculture, and the copies of the notifications may be exchanged upon the request of a Party. Without prejudice to the aforementioned, each Party may request the other Party for additional information and explanations . Such request shall be responded immediately. The information and the resulting evaluations may be subject to consultations, at the request of the other Party, in the Committee on Trade in Goods. Article 3.10 Export Subsidies 1. The Parties share the objective of the elimination of export subsidies for agricultural and non-agricultural products as required under the WTO Agreement, and upon the entry into force of this Agreement, shall cooperate to achieve such objectives. 2. The Parties are also committed not to re-introducing any export subsidies notwithstanding the result of future multilateral negotiations on the Agreement on Subsidies and Countervailing Measures and the Agreement on Agriculture. Article 3.11 Import and Export Restrictions 1. The Parties agree to eliminate non-tariff barriers immediately, with exception of the Parties’ rights in accordance with Article XX and XXI of GATT 1994, and those regulated in Chapter 8 (Sanitary and Phytosanitary Measures) and Chapter 9 (Standard, Metrology-related Measures and Authorization Procedures) 2. Except as otherwise provided in this Agreement, neither Party may adopt or maintain any prohibition or restriction on the importation of any goods of the other Party or on the exportation or sale for export of any goods destined for the territory of the other Party, except in accordance with Article XI of GATT 1994, including its interpretative notes, and to this end Article XI of GATT 1994 and its interpretative notes, are incorporated into and form part of this Agreement. 3. In any circumstances in which any other form of restriction is prohibited, the Parties understand that the GATT 1994 rights and obligations incorporated by paragraph 2 prohibit export price requirements and, except as permitted in enforcement of countervailing and antidumping orders and undertakings, import price requirements. 4. In the event that a Party adopts or maintains a prohibition or restriction on the importation or exportation of goods from or to a non-Party, nothing in this Agreement shall:
5. In the event that a Party adopts or maintains a prohibition or restriction on the importation of goods from a non-Party, the Parties, on request of any Party, shall consult with a view to avoiding undue interference with or distortion of pricing, marketing and distribution arrangements in the other Party. 6. Paragraphs 1 through 4 shall not apply to the measures set in Annex 3.11(6). Article 3.12 Customs Processing Fees and Consular Fees 1. After two years of the entry into force of this Agreement, neither Party shall apply an existing customs processing fee, nor shall adopt new customs processing fees on originating goods. 2. Upon the entry into force of this Agreement, neither Party shall collect consular fees or charges, nor shall require consular transactions on originating goods. Article 3.13 Country of Origin Marking 1. Each Party shall apply to the goods of the other Party, while appropriate, its laws related to country of origin marking, according to Article IX of GATT 1994. For this purpose, Article IX of GATT 1994 is incorporated into and forms part of this Agreement. 2. Each Party shall accord to the goods from the other Party a treatment no less favorable than that it accords to the goods from a non-Party, regarding the application of rules on marks of origin, according to Article IX of GATT 1994. 3. Each Party shall ensure that the establishment and implementation of their laws on country of origin marking does not have the purpose or effect of creating unnecessary barriers to trade between the Parties. Article 3.14 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 adopted or maintained on any such good when destined for local consumption. Article 3.15 Measures under Intergovernmental Agreements Before adopting a measure under any intergovernmental agreement on goods, pursuant to subparagraph (h) of Article XX of GATT 1994, that may affect the trade in basic commodities between the Parties, a Party shall consult with the other Party to prevent the nullification or impairment of a concession granted by the Party according to Article 3.04. Article 3.16 Committee on Trade in Goods 1. The Parties hereby establish the Committee on Trade in Goods, as set out in Annex 3.16. 2. The Committee shall consider matters relevant to this Chapter, Chapter 4 (Rules of Origin), Chapter 5 (Customs Procedures), and Uniform Regulations. 3. Without prejudice to the provisions of Article 18.05(2) (Committees), the Committee shall have the following functions:
ANNEX 3.11(6) Section A - Panama Measures Notwithstanding Articles 3.03 and 3.11, Panama may adopt prohibitions or restrictions on imports of the products described in the following customs tariff codes of Panama:
Notwithstanding Articles 3.03 and 3.11, Panama will adopt or maintain measures related to the exports of woods of whatever species of natural forests, according to the Executive Decree No. 57, June 5, 2002.
Notwithstanding Articles 3.03 and 3.11, the ROC may adopt prohibitions or restrictions on imports of the products described in the following customs tariff codes of the ROC: 1. Commodities subject to import prohibition
Notwithstanding Articles 3.03 and 3.11, the ROC may adopt prohibitions or restrictions on exports of the products described in the following customs tariff codes of the ROC: 2. Commodities subject to export prohibition
ANNEX 3.16 The Committee on Trade in Goods under Article 3.16 shall be composed of:
CHAPTER 4 Article 4.01 Definitions For purposes of this Chapter, the following terms shall be understood as: CIF: the value of imported goods including the costs of insurance and freight to the port or place in the importing country; FOB: free on board, regardless of the mode of transportation, at the point of direct shipment by the seller to the buyer; fungible goods: goods or materials that are interchangeable for commercial purposes and whose properties are essentially identical and which are impossible to tell apart from visual examination alone; generally accepted accounting principles: principles applied in the territories of each Party which give a substantial and authorised support to the registration of income, costs, expenditures, assets and liabilities related to the information and preparation of financial statements. These indicators, practical rules and procedures used generally in accounting can become a comprehensive guide with general applicability; goods wholly obtained or produced entirely in a Party:
indirect material: a good used in the production, testing or inspection of another good but not physically incorporated into that good, or a good used in the maintenance of buildings or the operation of equipment associated with the production of another good, including :
material: a good that is used in the production of another good including ingredients, parts, components, subassemblies and goods that were physically incorporated into another good or were subject to a process in the production of another good; producer: a “producer” according to Article 2.01 (Definitions of General Application); production: methods of obtaining goods including manufacturing, producing, assembling, processing, raising, growing, breeding, mining, extracting, harvesting, fishing, trapping, gathering, collecting, hunting, and capturing; transaction value of a good: the price actually paid or payable for a good related to the transaction done by the producer of the good, according to the principles of Article 1 of the Customs Valuation Agreement, adjusted in accordance with the principle of paragraphs 1, 3 and 4 of its Article 8, regardless whether the good is sold for export. For purposes of this definition, the seller referred to in the Customs Valuation Agreement shall be the producer of the good; transaction value of a material: the price actually paid or payable for a material related to the transaction done by the producer of the good, according to the principles of Article 1 of the Customs Valuation Agreement, adjusted in accordance with paragraphs 1, 3 and 4 of its Article 8, regardless whether the material be sold for export. For purposes of this definition the seller referred to in the Customs Valuation Agreement shall be the supplier of the material, and the buyer referred to in the Customs Valuation Agreement shall be the producer of the good; and value: the value of a good or a material according to the rules of the Customs Valuation Agreement. Article 4.02 Application Instruments and Interpretation 1. For purposes of this Chapter:
2. For purposes of this Chapter, when applying the Customs Valuation Agreement to determine the origin of a good:
Article 4.03 Originating Goods 1. Except as otherwise provided in this Chapter, a good shall be regarded as originating in the territory of a Party where:
2. If a good of a Party satisfies the rules of origin specified in Annex 4.03, there is no need to require additional compliance with the regional value content established in paragraph 1(d). 3. For purposes of this Chapter, the production of a good from non-originating materials that satisfies a change in tariff classification and other requirements, as set out in Annex 4.03, shall be done entirely in the territory of one or both Parties, and the good has to satisfy any applicable regional value-content requirement in the territory of one or both Parties. 4. Notwithstanding other provisions of this Article, goods shall not be considered originating, if they are exclusively the outcome of the operations set out in Article 4.04 and carried out in the territory of the Parties that gives their final form for marketing, where non-originating materials are used in such operations, unless the specific rules of origin of Annex 4.03 state the opposite. Article 4.04 Minimal Operations or Processes The minimal operations or processes that by themselves or in combination do not confer origin to a good are:
Article 4.05 Indirect Materials Indirect materials shall be considered to be originating materials regardless of their place of manufacturing or production and the value of these materials shall be the costs as indicated in the accounting records of the producer of the good. Article 4.06 Accumulation 1. A Party may only accumulate origin with goods originating from the territories of the Parties. 2. Originating materials or originating goods from the territory of a Party, incorporated into a good in the territory of the other Party shall be considered originating from the territory of the latter. 3. For purposes of determining whether a good is an originating good, the producer of such good may accumulate its production with that of other producer or producers in the territory of one or both Parties, of materials incorporated into the good, so that the production of these materials is considered as done by such producer, provided that the good satisfies the requirements of Article 4.03. Article 4.07 Regional Value Content 1. The regional value content of goods shall be calculated according to the following method: Where: RVC:
is the regional value content, expressed as a percentage; VNM: is the transaction value of non-originating materials adjusted to a CIF basis, unless stated in the paragraph 5. In the event that there does not exist or it is not possible to determine the value according to the principles and provisions of Article 1 of the Custom Valuation Agreement, this shall be calculated in accordance with the principles and provisions of Articles 2 through 7 of that Agreement. 2. When the producer of a good does not export directly, the value shall be adjusted to the point where the buyer receives the good in the territory where the producer is located. 3. When the origin is determined by the method of regional value content, the percentage required is specified in Annex 4.03. 4. All the records of costs considered for the calculation of regional value content shall be registered and maintained according to the generally accepted accounting principles applicable in the territory of the Party from where the good is produced. 5. When a producer of a good acquires a non-originating material in the territory of the Party where it is located, the value of non-originating material shall not include freight, insurance, packing costs and any other cost incurred in the transportation of material from the warehouse of the supplier to the place of the producer. 6. For purposes of calculating the regional value content, the value of the nonoriginating material used in the produc tion of a good shall not include the value of the non-originating materials used in the production of the originating material acquired and used in the production of that good. Article 4.08 De Minimis 1. A good shall be considered to be an originating good if the value of all nonoriginating materials used in the production of that good that do not satisfy the requirement of change in tariff classification set out in Annex 4.03 is not more than ten percent (10%) of the transaction value of the good as determined in Article 4.07. 2. For a good provided for in Chapters 50 through 63 of the Harmonized System, the percentage indicated in the paragraph 1 refers to the weight of fibers or yarns with respect to the weight of the good being produced. 3. Paragraph 1 does not apply to a non-originating material used in the production of goods provided for in Chapters 1 through 27 of the Harmonized System unless the non-originating material is provided for in a different subheading than the good for which origin is being determined under this Article. Article 4.09 Fungible Goods 1. In the preparation or production of a good which uses originating or nonoriginating fungible goods, the origin of these goods can be determined by the application of one of the followi ng methods of inventory management, to be selected by the producer:
2. Where originating or non-originating fungible goods are mixed or combined physically in warehouse and do not go through any production process or any operation other than unloading, reloading or any other necessary movement in the territory of the Party before the exportation to keep the good in good condition or to transport them to the territory of the other Party, the origin of the goods shall be determined by one of the inventory management methods. 3. Once the method of inventory management is selected it shall be used during the entire period or a fiscal year. Article 4.10 Sets or Assortments of Goods 1. Sets or assortments of goods classified according to rule 3 of the General Rules of Interpretation of the Harmonized System and the goods whose description according to the Harmonized System nomenclature is specifically that of a set or assortment shall qualify as originating, provided that every good included in the set or assortment complies with the rules of origin established in this Chapter and in Annex 4.03. 2. Notwithstanding paragraph 1, a set or assortment of goods shall be considered originating if the value of all non-originating goods used in making the set or assortment does not exceed the percentage set out in Article 4.08(1) with respect to the value of the set or assortment, adjusted to the point set out in Article 4.07(1) or (2), as the case may be. 3. The provisions of this Article shall prevail over the specific rules established in Annex 4.03. Article 4.11 Accessories, Spare Parts and Tools 1. Accessories, spare parts and tools delivered with the good that usually form part of the good shall be considered one with the good and shall be disregarded in determining whether all the non-originating materials used in the production of the good undergo the applicable change in tariff classification set out in Annex 4.03, provided that:
2. Where a good is subject to a regional value content requirement, its value of the accessories, spare parts or tools shall be considered as either originating or nonoriginating materials, as the case may be, in order to calculate the regional value content of the good. 3. For those accessories, spare parts and tools that do not satisfy the conditions mentioned above, the rules of origin shall apply to each of them respectively and separately. Article 4.12 Containers and Packaging Materials for Retail Sale 1. Containers and packaging materials in which a good is packaged for retail sale shall, if classified with the good by Harmonized System code, be disregarded in determining whether all the non-originating materials used in the production of the good undergo the applicable change in tariff classification set out in Annex 4 .03. 2. If the good is subject to a regional value content requirement, the value of such containers and packaging materials shall be taken into account as originating or nonoriginating materials, as the case may be, in calculating the regional value content of the good. Article 4.13 Containers and Packing Materials for Shipment Containers and packing materials in which the good is packed for shipment shall be disregarded in determining whether:
Article 4.14 Transshipment The originating goods of the other Party shall not lose such status when they are:
CHAPTER 5 Article 5.01 Definitions 1. For purposes of this Chapter, the following terms shall be understood as: certifying authority: in the case of the Republic of China, the designated authority is the Bureau of Foreign Trade (BOFT), Ministry of Economic Affairs (MOEA), or other agencies as authorized by BOFT; in the case of Panama, the designated authority is the Vice-ministry of Foreign Trade, or its successor; commercial importation: the importation of a good into the territory of one of the Parties for the purpose of sale, or any commercial, industrial or other like use; customs authority: the competent authorities responsible under their respective laws for the administration and implementation of customs laws and regulations; customs value: value of a good used for calculating the cus toms tariff according to the legislation of each Party; days: “days” according to Article 2.01 (Definitions of General Application); exporter: an exporter located in the territory of a Party from where the good is exported and who, according to this Chapter, is required to maintain records in the territory of that Party under Article 5.05(1)(a); identical goods: goods which are the same in all respects, including physical characteristics, quality and reputation, irrespective of minor differences in appearance which are not relevant for the determination of origin of such goods under Chapter 4 (Rules of Origin); importer: an importer located in the territory of a Party, and required to maintain records in the territory of that Party, under Article 5.05(1)(b); preferential tariff treatment: the application of the tariff rate corresponding to an originating good according to the Tariff Reduction Schedule, pursuant to Article 3.04 (Tariff Reduction Schedule); producer: a “producer” according to Article 2.01 (Definitions of General Application), located in the territory of a Party, and required to maintain records in the territory of that Party, under Article 5.05(1)(a); resolution of origin determination: a resolution issued by the customs authority made as a result of an origin-verifying procedure which establishes whether a good qualifies as originating according to Chapter 4 (Rules of Origin); valid Certificate of Origin: a certificate of origin written in the format referred to in Article 5.02(1), completed, signed and dated by an exporter of a good in the territory of a Party according to the provision of this Chapter and to the instructions for completing the certificate, and certified by the certifying authority of the exporting Party, pursuant to the provision of this Chapter; and value: the value of a good or material for the purpose of application of Chapter 4 (Rules of Origin). 2. Unless defined in this Article, the definitions established in Chapter 4 (Rules of Origin) are incorporated into this Chapter. Article 5.02 Certification of Origin 1. For purposes of this Chapter, before this Agreement enters into force, the Parties shall develop a single format of Certificate of Origin, which shall enter into force with this Agreement and may thereafter be modified by mutual agreement. 2. The Certificate of Origin referred to in paragraph 1 shall be served to certify that a good being exported from the territory of a Party into the territory of the other Party qualifies as an originating good. 3. Each Party shall require exporters in its territory to complete and sign a Certificate of Origin for any exportation of goods for which an importer may claim preferential tariff treatment. 4. The Certificate of Origin shall be certified by the certifying authority of the exporting Party. For this purpose the certifying authority shall ensure that the good to which a Certificate of Origin is applicable, satisfies the requirements established in Chapter 4 (Rules of Origin) and in the Annex to Article 4.03 (Specific Rules of Origin). 5. Each Party shall require the Certificate of Origin be sealed, signed and dated by the certifying authority of the exporting Party, when the goods may be considered originating according to the requirement established in Chapter 4 (Rules of Origin) and in the Annex to Article 4.03 (Specific Rules of Origin). The Certificate of Origin shall also carry a serial number allowing its identification. 6. The certifying authority of each Party shall certify the origin of the goods covered by a Certificate of Origin, based on the information provided by the exporter or producer of the good, who shall be responsible for the veracity of the information provided and for those established in the Certificate of Origin. The certification shall be valid, while the circumstances or facts on which the certification is based do not change. 7. The certifying authority of the exporting Party shall:
8. Each Party shall require that the Certificate of Origin be completed and signed by the exporter applicable to a single importation of one or more goods. 9. Each Party shall require that the Certificate of Origin be accepted by the customs authority of the importing Party for a period of one year from the signature date of the certifying authority. 10. Each Party shall require that the preferential tariff treatment not be denied if the goods covered by a Certificate of Origin are invoiced by the branches, subsidiary companies or agents of the producer or exporter in the territory of a non-Party, and provided that such goods are directly shipped from the territory of the other Party, without prejudice to the provisions of Article 4.14 (Transshipment). Article 5.03 Obligations Regarding Importation 1. Each Party shall require the importer in its territory that claims preferential tariff treatment for a good imported into its territory from the territory of the other Party to:
2. Each Party shall require that, where an importer in its territory does not comply with any requirement established in this Chapter, the preferential tariff treatment for a good imported from the territory of the other Party shall be denied. 3. Each Party shall require that, where a good would have qualified as an originating good when it was imported into the territory of that Party but no claim for preferential tariff treatment was made at the time of entry, the importer of the good will not request for a refund or compensation of any excess duties paid. 4. Compliance with the provisions of this Article does no t exempt the importer from the obligation to pay the corresponding customs tariffs according to the applicable laws of the importing Party, when the customs authority denies the preferential tariff treatment to goods imported, according to Article 5.06. Article 5.04 Obligations Regarding Exportation 1. Each Party shall require its exporter or producer who has completed and signed a Certificate of Origin to present a copy of the Certificate of Origin to its customs authority on request. 2. Each Party shall require its exporter or producer that has completed and signed a Certificate of Origin or has provided information to its certifying authority, and that has reason to believe that this Certificate contains incorrect information, to notify promptly in writing :
3. Each Party:
4. The customs authority and the certifying authority of the exporting Party shall notify in writing to the customs authority of the importing Party about the notification referred to in paragraph 2. Article 5.05 Records 1. Each Party shall provide that:
2. A Party may deny preferential tariff treatment to a good subject to verification of origin, if the exporter, producer or importer of the good who shall maintain records or documents according to paragraph 1:
Article 5.06 Origin Verification Procedure 1. The importing Party may request through its customs authority to the certifying authority of the exporting Party information about the origin of a good. 2. For the purpose of determining whether a good imported into its territory from the territory of the other Party under preferential tariff treatment qualifies as originating, each Party may verify the origin of the good through its customs authority by means of:
3. For purposes of this Article , the notifications of questionnaires, official letters, decisions, notices and other written communications sent to the exporter or producer for origin verification, shall be considered valid, provided that they are done by the following means:
4. The provision of paragraph 2 shall be applied without prejudice to the authority of verification by the customs authority of the importing Party regarding the enforcement of other obligations of their own importers, exporters or producers. 5. The written questionnaire referred to in paragraph 2(a) shall:
6. The exporter or producer that receives a questionnaire according to paragraph 2(a) shall respond to and return the questionnaire duly completed in the period established in paragraph 5(a), starting from the date of receipt. During this period, the exporter or producer may request in writing to the customs authority of the importing Party for an extension, which in this case shall not exceed thirty (30) days. This request shall not have the consequence of denying the preferential tariff treatment. 7. Each Party shall provide that where it received the responded questionnaire referred to in paragraph 2(a) within the corresponding period, each Party may still request for more information to determine the origin of the goods subject to verification. It may request, through its customs authority, for additional information from the exporter or producer, by means of a subsequent questionnaire, in which case the exporter or producer shall respond to the request and turn in the information in a period not exceeding thirty (30) days, from the date of receipt. 8. In case that the exporter or producer does not correctly respond to the questionnaires, or does not return the questionnaire within the corresponding period, as referred to in paragraphs 6 and 7 above, the importing Party may deny preferential tariff treatment to the goods subject to verification, by a prior decision in writing, addressed to the exporter or producer, including findings of fact and the legal basis for the determination. 9. Prior to conducting a verification visit pursuant to paragraph 2(b), the importing Party shall, through its customs authority, provide a written notification of its intention to conduct the visit. The notification shall be sent to the exporter or producer to be visited, certifying authorities and the customs authority of the Party in whose territory the visit is to occur , and to the other Party’s embassy in the territory of the importing Party, if it is requested by that other Party. The importing Party shall, through its customs authority, request the written consent of the exporter or producer to whom it intends to visit. 10. The notification referred to in paragraph 9 shall include:
11. Any modification of the information referred to in paragraph 10(e) shall be notified in writing to the exporter or producer, to the customs authority and to the certifying authority of the exporting Party before the verification visit. Any modification of the information referred to in paragraph 10(a), (b), (c), (d) and (f) shall be notified according to paragraph 9. 12. Where an exporter or a producer has not given its written consent to a proposed verification visit within thirty (30) days of its receipt of a notification pursuant to paragraph 9, the importing Party may deny preferential tariff treatment to the good or goods that would have been the subject of the verification visit. 13. Each Party may require, where its customs authority receives a notification pursuant to paragraph 9 within fifteen (15) days of its receipt of the notification, postpone the proposed verification visit for a period not exceeding sixty (60) days from the date the notification is received, or for a longer period as the Parties may agree. 14. A Party shall not deny preferential tariff treatment to a good solely due to the postponement of a verification visit pursuant to paragraph 13. 15. Each Party shall permit an exporter or a producer whose good is the subject of a verification visit to designate two observers to be present during the visit, provided that the observers do not participate in a manner other than as observers, and the failure of the exporter or producer to designate observers shall not result in the postponement of the visit. 16. Each Party shall require that an exporter or a producer provide the records and documents referred to in Article 5.05(1)(a) to the customs authority of the importing Party. Where the records and documents are not in possession of an exporter or a producer, it may request the producer or supplier of the materials to deliver them to the customs authority in charge of the verification. 17. Each Party shall verify the compliance of the requirements on regional value content, the de minimis calculation or any other measure included in Chapter 4 (Rules of Origin) by its customs authority, according to the generally accepted accounting principles applied in the territory of the Party from where the good is exported. 18. The customs authority of the importing Party shall write a minute of the visit that shall include the facts confirmed by it. The producer or exporter and the designated observers may sign this minute accordingly. 19. Within 120 days after the conclusion of the verification, the customs authority shall provide a written decision to the exporter or producer of the goods subject to verification, determining whether the good is qualified as originating, including the findings of fact and the legal basis for the determination. 20. Where the customs authority denies preferential tariff treatment to a good or goods subject to a verification, this authority shall issue a written decision, well founded and reasoned, which shall be notified to the exporter or producer according to paragraph 3 and shall take effect the day after the receipt. 21. Where a verification by a Party demonstrates that an exporter or a producer has certified or provided more than once in a false or unfounded manner stating that a good qualifies as an originating good, the importing Party may suspend the preferential tariff treatment to the identical good that this person exports or produces, until that person establishes compliance with Chapter 4 (Rules of Origin). 22. If, in two or more verifications of origin, two or more written decisions were made denying preferential tariff treatment to goods same as the good subject to verification, it shall be considered that an exporter or a producer has certified or provided information more than once in a false or unfounded manner stating that a good imported to the territory of a Party qualifies as originating 23. When the competent authority of the importing Party determines that a good imported into its territory does not qualify as originating, according to the tariff classification or the value applied by the Party to one or more materials used in the production of the good, and it differs from the tariff classification or from the value applied to the materials by the Party from where the good was exported, that Party shall provide that its decision shall not take effects until it is notified in writing to the importer of the goods and to the person who has filled in and signed the Certificate of Origin, as well as to the producer of the good. 24. A Party shall not apply a decision issued under paragraph 23 to an importation made before the effective date of the decision where: (a) the customs authority of the Party from whose territory the good was exported has issued a decision on the tariff classification or on the value of such materials, on which a person is entitled to rely; and (b) the mentioned decisions were given prior to the initiation of origin verification. Article 5.07 Advance Rulings 1. Each Party shall, through its customs authority, provide for the expeditious issuance of written advance rulings, prior to the importation of a good into its territory. These advance rulings shall be expeditiously issued by the customs authority to an importer in its territory or an exporter or a producer in the territory of the other Party, on the basis of the facts and circumstances presented by such importer, exporter or producer of the good, concerning:
2. Each Party shall adopt or maintain procedures for issuing advance rulings, including:
3. Each Party shall implement an advance ruling for the imports into its territory, from the date of its issue or a later date as may be specified in the ruling, unless the advance ruling has been modified or revoked according to paragraph 5. 4. Each Party shall provide to any person requesting an advance ruling the same treatment, including the same interpretation and application of provisions of Chapter 4 (Rules of Origin), regarding a determination of origin given to any other person to whom it issued an advance ruling, provided that the facts and circumstances are identical in all substantial aspects. 5. The advance ruling may be modified or revoked in the following cases:
6. Each Party shall provide that any modification or revocation of an advance ruling shall be effective on the date on which the modification or revocation is issued, or on such later date as may be specified therein, and may not be applied to imports of a good that have occurred prior to that date, unless the person to whom the advance ruling was issued has not acted in accordance with its terms and conditions. 7. Each Party shall provide that where its customs authority examines the regional value content of a good for which it has issued an advance ruling, it shall evaluate whether:
8. Each Party shall provide that where its customs authority determines that any requirement in paragraph 7 has not been satisfied, it may modify or revoke the advance ruling as the circumstances may warrant. 9. Each Party shall provide that, where the person to whom an advance ruling was issued demonstrates that it used reasonable care and acted in good faith in presenting the facts and circumstances on which the advance ruling was based, and where the customs authority of a Party determines that the ruling was based on incorrect information, the person to whom the ruling was issued shall not be subject to penalties. 10. Each Party shall provide that where it issues an advance ruling to a person that has misrepresented or omitted substantial facts or circumstances on which the ruling is based or has failed to act in accordance with the terms and conditions of the ruling, the customs authority that issued the advance ruling may apply measures in accordance with the legislation of each Party. 11. The Parties shall provide that the holder of an advance ruling may use it only while the facts or circumstances on which its issuance was based are maintained. In this case, the holder of the ruling may present the necessary information so that the issuing authority may proceed according to paragraph 5. 12. A good subject to a verification of origin or a request of review or appeal in the territory of either Party shall not be subject to an advance ruling. Article 5.08 Confidentiality 1. Each Party shall maintain, in accordance with its law, the confidentiality of confidential information collected pursuant to this Chapter and shall protect it from disclosure. 2. The confidential information collected pursuant to this Chapter may only be disclosed to those authorities responsible for the administration and enforcement of determinations of origin, and of customs and taxation matters. Article 5.09 Recognition and Acceptance of the Re-Exportation Certificate 1. Without prejudice to paragraph 4, the Parties hereby establish the Re-Exportation Certificate, with the aim of identifying that goods re-exported from a free zone of one Party to the territory of the other Party are goods that come from a third country, provided that the following requirements are met:
2. Based on paragraph 1, each Party shall require that a re-exporter of goods located in the free zone shall complete and sign a re-exportation certificate, which shall be authenticated by the customs authority and by the administrative authorities of the re-exporting free zone and shall cover only one importation of one or more goods to its territory. 3. Each Party, through its customs authority, may request the importer in its territory who imports goods from a free zone to submit the re-exportation certificate at the time of importation and to provide one copy thereof if the customs authority requires it, covering the goods that qualify as originating under agreements or trade conventions signed with third parties by the importing Party and that claim the trade preferences granted therein. 4. Provided the requirements of paragraph 5 are met, each Party shall require that the imports of goods covered by a re-exportation certificate that qualified as originating in conformity with other agreements or trade conventions signed by the importing Party with third parties do not lose the prefe rence or tariff benefits granted by the importing Party, due to the fact that the imports come from a free zone. 5. For the purpose of the application of paragraph 4, the Parties shall:
Article 5.10 Penalties 1. Each Party shall establish or maintain measures imposing criminal, civil or administrative penalties for violations of its laws and regulations related to the provisions of this Chapter. 2. Each Party shall establish criminal, civil or administrative penalties for the certifying authority that issues a Certificate of Origin in a false or unfounded manner. Article 5.11 Review and Appeal 1. Each Party shall accord the same rights of review and appeal of determinations of origin and advance rulings to its importers, or to the exporters or producers of the other Party who complete and sign a Certificate of Origin, or provide information for a good that has been the subject of a determination of origin pursuant to paragraph 19 of Article 5.06, or to whom have received an advance ruling pursuant to Article 5.07. 2. When a Party denies preferential tariff treatment to a good by a decision based on the non-fulfillment of a period established in this Chapter, with regard to the submission of records or other information to the customs authority of this Party, the ruling made in the review or appeal shall only deal with the compliance of the time period referred to in this paragraph. 3. The rights referred to in paragraphs 1 and 2 include access to at least one administrative review, independent from the official or office responsible for the determination or advance ruling under review, and access to a judicial review of the determination or ruling taken at the final instance of administrative review, according to the laws of each Party. Article 5.12 Uniform Regulations 1. The Parties shall establish, and implement through their respective laws or regulations by the date this agreement enters into force, Uniform Regulations regarding the interpretation, application and administration of Chapter 4 (Rules of Origin), this Chapter and other matters as may be agreed by the Parties. 2. Each Party shall implement any modification of or addition to the Uniform Regulations no later than 180 days after the Parties agree on such modification or addition, or such other period as the Parties may agree. Article 5.13 Cooperation 1. Each Party shall notify the other Party of the following determinations, measures and rulings, including to the greatest extent practicable those that are prospective in application:
2. The Parties shall cooperate in the following aspects: (a) the enforcement of their respective customs-related laws or regulations implementing this Agreement, and under any customs mutual assistance agreements or other customs-related agreement to which they are party; (b) to the extent possible and for purposes of facilitating the flow of trade between their territories, such customs-related matters as the collection and exchange of statistics regarding the importation and exportation of goods, the standardization of data elements and the exchange of information; (c) to the extent possible, the collection and exchange of documentation on customs procedures; and (d) to the extent possible and for purposes of verifying the origin of a good, the customs authority of the importing Party may request to the certifying authority of the other Party to conduct in its territory some related investigations or inquiries, and to issue the corresponding reports
CHAPTER 6 Article 6.01 Definitions For purposes of this Chapter, the following terms shall be understood as: Agreement on Safeguards: the Agreement on Safeguards which forms part of the WTO Agreement; causal link: “causal link” as defined in the Agreement on Safeguards; critical circumstances: those circumstances where a delay in the application of safeguard measure would cause damage difficult to repair; domestic industry: the producers as a whole of the like or directly competitive goods which operate within the territory of a Party, or those producers whose whole production of the like or directly competitive goods constitutes a major proportion of the total domestic production of these goods; investigating authority: “investigating authority” as according to Annex 6.01; safeguard measure: all kinds of tariff measures as applied in accordance with the provisions of this Chapter. It does not include any safeguard measure derived from a proceeding initiated before the entry into force of this Agreement; serious injury: “serious injury” as defined in the Agreement on Safeguards; threat of serious injury: “threat of serious injury” as defined in the Agreement on Safeguards; and transition period: the period stated in the Tariff Reduction Schedule plus 2 years. Article 6.02 Bilateral Safeguard Measures 1. The application of the bilateral safeguard measures shall be governed by this Chapter, and supplementary by Article XIX of GATT 1994, the Agreement on Safeguards and the respective laws of each Party. 2. Subject to paragraphs 4 through 6 and during the transition period, each Party may apply a safeguard measure if, as a result of reduction or elimination of a customs tariff in accordance with this Agreement, an originating product from the territory of a Party is being imported into the territory of the other Party, in such increased quantity, in relation to domestic production and under such conditions that the imports of that product to the Party itself constitutes a substantial cause of serious injury, or a threat thereof to the domestic industry of the like or directly competitive product. The Party into whose territory the product is being imported may, to the minimum extent necessary, to remedy or prevent the serious injury, or threat thereof:
3. The following conditions and limitations shall be observed in the proceeding that may result in the application of a safeguard measure according to paragraph 2:
4. In critical circumstances where any delay would cause damage which it would be difficult to repair, a Party may apply bilateral provisional safeguard measure pursuant to a preliminary determination that there is clear evidence that, as a result of the reduction or elimination of a customs tariff under this Agreement, the imports of the goods originating from the other Party have been increased in such rate and amount and under such conditions as to cause or threaten to cause serious injury. The duration of provisional measures shall not exceed 120 days. 5. Only with the consent of the other Party, a Party may apply a safeguard measure after the termination of transition period, in order to deal with cases of serious injury, or threat thereof, to the domestic industry tha t arise from the implementation of this Agreement. 6. The Party applying a safeguard measure according to this Article shall provide to the other Party a mutually agreed compensation, in the form of concessions having substantially equivalent trade effects or being equivalent to the value of the additional customs tariff expected to result from the safeguard measure. If the Parties concerned are unable to agree on the compensation, the Party against whose product the safeguard measure is applied may take tariff measures with trade effects substantially equivalent to the effects of the safeguard measure applied pursuant to this Article. The Party shall apply the tariff measure only during the minimum necessary period to achieve the substantially equivalent effects. Article 6.03 Global Safeguard Measures 1. Each Party shall reserve its rights and obligations in accordance with Article XIX of GATT 1994 and the Agreement on Safeguards, except those relating to compensation or retaliation and exclusion of a safeguard measure which are inconsistent with the provisions of this Article. 2. Any Party applying a safeguard measure in accordance with paragraph 1 shall exclude goods imported from the other Party from this measure unless:
3. To determine if:
4. A Party shall, without delay and in writing, notify the other Party of the initiation of a proceeding that may result in the application of a safeguard measure in accordance with paragraph 1. 5. No Party may apply a measure under paragraph 1 which imposes restrictions on a product, without prior written notification to the Commission, and without appropriate opportunity for consultation with the other Party, as much far in advance of taking the action as practical. 6. Where a Party determines, in accordance with this Article, to apply a safeguard measure to those goods originating from the other Party, the measure applied to those goods shall consist, only and exclusively, of tariff measures. 7. The Party taking a safeguard measure under this Article shall provide to the other Party mutually agreed trade liberalization compensation in the form of concessions having substantially equivalent trade effects or equivalent to the value of the additional customs tariffs expected to result from the safeguard measure. 8. If the Parties are unable to agree on the compensation, the Party against whose product the safeguard measure is applied may impose measures which have trade effects substantially equivalent to the effects of the safeguard measure applied pursuant to paragraph 1. Article 6.04 Administration of Safeguard Measure Proceedings 1. Each Party shall ensure the consistent and impartial application of its laws, regulations, decisions and rulings governing all safeguard measures proceedings. 2. Each Party shall entrust the application of safeguard measure, the determination of the existence of serious injury, or threat thereof, to an investigating authority of each Party. These decisions may be subject to review by judicial or administrative proceedings of the Party, as provided in its domestic laws. The negative determinations on the existence of serious injury, or threat thereof, shall not be subject to modification by the investigating authority, unless the modification is required by such judicial or administrative review. The investigating authority under the domestic laws, in order to carry out these proceedings, shall be provided with all necessary resources to fulfill its duties. 3. Each Party shall adopt or maintain equitable, timely, transparent and effective procedures for the application of safeguard measures, in accordance with the requirements indicated in this Article. Institution of a Proceeding 4. The investigating authority may institute a proceeding, ex officio or by a request of the authorized entities in accordance with its laws, for the application of safeguard measure. The entity filing the petition shall demonstrate that it is representative of the domestic industry producing a product like or directly competitive with the imported product. For this purpose it shall be construed that the major proportion shall not be less than twenty five percent (25%). 5. Except as stated in this Article, the time periods that govern these proceedings shall be established in the domestic laws of each Party. Contents of a Petition 6. Entities representing a domestic industry that file a petition to initiate an investigation shall provide the following information in the petition, to the extent that such information is publicly available from governmental or other sources, or its best estimates and the basis therefore if such information is not thus available:
7. Once a petition is accepted, it shall promptly be made available for public inspection, except that it contains confidential information. Consultations 8. Once a petition filed in accordance with paragraph 6 is accepted and in any case before the initiation of the investigation, the Party that intend to initiate the case shall notify and invite the other Party to hold consultations aimed at clarifying the situation. 9. During all the investigation period, the Party, whose goods are subject to the investigation, shall be given an adequate opportunity to continue consultations. 10. During these consultations, the Parties may deal, among others, the issues relating to the investigation procedures, elimination of the measure, the issues referred to in Article 6.02 (5) and, in general, to exchange opinions about the measure. 11. Without prejudice to the obligation to provide appropriate opportunity to hold consultations, the provisions of the paragraphs 8, 9 and 10 above regarding consultations are not aimed at preventing the competent authorities of either Party from proceeding promptly to initiate an investigation or from making preliminary or final determinations, positive or negative, nor to prevent them from applying measures under this Agreement. 12. The Party carrying out an investigation shall allow, if being requested, access to the Party whose product is the subject of the investigation to the public file , including the non-confidential summary of the confidential information used for the initiation or during the course of the investigation. Notice Requirements 13. When initiating a proceeding for the application of a safeguard measure, the investigating authority shall publish the notice of the initiation of the proceeding in the official journal or the other nationally circulated newspaper in accordance with the domestic laws of each Party, within the period of thirty (30) days starting from the acceptance of the petition. The above-mentioned publication shall be notified to the other Party, without delay and in writing. The notification shall contain the following data: the name of the applicant; the indication of the imported product that is the subject of the proceeding and its tariff item number; the nature and timing of the determination to be made; the place where the request and other documents presented during the proceeding may be inspected; and the name, address and telephone number of the office to be contacted for more information. The periods to present the proofs, reports, statement and other documents shall be established in accordance with the legislation of each Party. 14. With respect to a proceeding for the application of a safeguard measure, initiated on the basis of a petition filed by an entity alleging itself as the representative of the domestic industry, the investigating authority shall not publish the notification required by paragraph 13 without evaluating carefully first if the petition meets the requirements set out in paragraph 6. Public Hearing 15. In the course of each proceeding, the investigating authorities shall: (a) without prejudice to the Party’s legislation, and after providing reasonable notice, notify all interested parties, including importers, exporters, consumer groups and other interested parties the date and place of a public hearing fifteen (15) days before it is held, to allow them to appear in person or by representative, to present evidence, allegation and to be heard on the questions of serious injury, or threat thereof, and the appropriate remedy; and (b) provide an opportunity to all interested parties appearing at the hearing to cross- exam the arguments presented by interested parties. Confidential Information 16. For the purposes of Article 6.02, the investigating authority shall establish or maintain procedures for the treatment of confidential information, protected under domestic law, that is provided in the course of a proceeding, and shall request the interested parties providing such information furnish non-confidential written summaries thereof. If the interested parties indicate that the information cannot be summarized, they shall explain the reasons why a summary cannot be provided. Unless it is demonstrated that the information is accurate, in a convincing way and from an appropriate source, the authorities may disregard that information. 17. The investigating authority shall not disclose any confidential information provided in accordance with any obligation related to the confidential information, that it has obtained in the course of the proceedings. Evidence of injury, or threat thereof 18. In conducting its proceedings the investigating authority shall gather, to the best of its ability, all relevant information appropriate to the determination it must make. It shall evaluate all relevant factors of an objective and quantifiable nature having a bearing on the situation of that domestic industry, including the rate and amount of the increase in imports of the product concerned in relation with the domestic industry, the share of the domestic market taken by the increased imports, and changes in the level of sales, production, productivity, installed capacity utilization, profits and losses, and employment. In making its determination, the investigating authority may also consider other economic factors, such as changes in prices and inventories, and the ability of entities in the domestic industry to generate capital. Deliberation and Determination 19. Except in critical circumstances and in global safeguard measures involving perishable agricultural goods, the investigating authority, before making an affirmative determination in a proceeding for the application of a safeguard measure, shall allow sufficient time to gather and check the relevant information, shall hold a public hearing and provide adequate opportunity for all interested parties to prepare and submit their views. 20. The investigating authority shall publish promptly a final determination in the official journal or other nationally circulated newspaper which shall indicate the results of the investigation and the reasoned conclusions on all pertinent issues of law and fact. The determination shall describe the imported product and its tariff item number, the standard applied and the finding made in the proceedings. The statement of reasons shall set out the basis for the determination, including a description of:
Extension 21. If the importing Party determines that the reasons justifying the application of a bilateral safeguard measure, the Party shall notify to the competent authority of the other Party its intention of extending the measure, at least ninety (90) days before it is expected to expire, and shall prove that the reasons leading to its application persist, for the purpose of holding respective consultations which shall be done according to the provisions of this Article . 22. Additionally, entities representing a domestic industry that submit the request for an extension, shall present a readjustment plan including variables controllable by the domestic industry or production involved. 23 The notifications of extension and compensation shall be presented pursuant to this Article before the expiration of the applied measures. Article 6.05 Dispute Settlement in Safeguard Measure Matters No Party shall request the establishment of an arbitral group under Article 19.09 (Request for an Arbitral Group) before the applicaton of any safeguard measure by the other Party.
For purposes of this Chapter, the investigating authority shall be: (a) in the case of the ROC, the International Trade Commission of the Ministry of Economic Affairs, or its successor; and (b) in the case of Panama, the Commission of Free Competition and Consumer Affairs, or its successor.
CHAPTER 7 Article 7.01 Scope and Coverage 1. The Parties confirm their rights and obligations according to Articles VI and XVI of GATT 1994, the Agreement on Implementation of Article VI of GATT 1994 and the Agreement on Subsidies and Countervailing Measures, that form part of the WTO Agreement. In this sense, the Parties shall ensure that their laws are consistent with the commitments taken in these agreements. 2. Each Party may initiate an investigation procedure and apply countervailing duties or antidumping duties in accordance with this Chapter, the agreements and articles referred to in paragraph 1, as well as its laws. Article 7.02 Obligation for Completing an Investigation 1. The importing Party may end an investigation with respect to an interested party, where its competent authority determines that the dumping margin or the amount of the subsidy is de minimis, or that sufficient evidence of dumping, subsidy, injury, or causal link does not exist; or where its competent authority determines that the volume of the dumped or subsidized imports is insignificant. 2. For purposes of paragraph 1, it shall be considered that:
3. An applicant may, at any time, withdraw its investigation request. Once a request for withdrawal is filed after the investigation has been initiated, the competent authority shall notify the rest of the applicants for the purpose of exerting their right of concurrence. If the applicants who disagree with the withdrawal do not represent a percentage of the national production necessary to initiate an investigation, then the investigation shall be terminated and the interested parties will be notified. The investigation may not be continued on the competent authority’s own motion under any circumstance.
PART THREE CHAPTER 8 Article 8.01 Definitions For purposes of this Chapter, the Parties shall apply the definitions and terms set out in:
Article 8.02 General Provisions 1. The authorities legally responsible for ensuring the compliance with the sanitary and phytosanitary obligations provided in this Chapter shall be deemed as the competent authorities. 2. The Parties, on the basis of the ASPS, established this framework of rules and disciplines that shall guide the adoption and implementation of sanitary and phytosanitary measures. 3. The Parties shall facilitate trade through mutual cooperation to prevent the introduction or spreading of pests or diseases and to improve plant health, animal health and food safety. Article 8.03 Rights of the Parties The Parties, according to the ASPS, may:
Article 8.04 Obligations of the Parties 1. Sanitary and phytosanitary measures shall not constitute a disguised restriction to trade and shall not have the purpose or effect of creating an unnecessary obstacle to trade between the Parties. 2. Sanitary and phytosanitary measures shall be based on scientific principles, shall only be maintained if there are reasons to sustain them and shall be based on a risk assessment. 3. Sanitary and phytosanitary measures shall be based on international standards, guidelines or recommendations. 4. Where conditions are identical or similar, sanitary and phytosanitary measures shall not discriminate arbitrarily or unjustifiably. Article 8.05 International Standards and Harmonization With the aim to harmonize sanitary and phytosanitary measures, the procedures of control, inspection and approval of sanitary and phytosanitary measures of the Parties shall be based on the following principles:
Article 8.06 Equivalence With the aim of implementing the sanitary and phytosanitary measures in the territory of the Parties, the Parties shall implement control, inspection and approval procedures according to the following principles:
Article 8.07 Assessment of
Risk and Determination of the Appropriate Level of Sanitary and
According to the guidelines developed by relevant international organizations:
Article 8.08 Recognition of
Pest- or Disease- Free Areas and Areas of Low Pest or Disease 1. The Parties shall recognize the pest- or disease- free areas and the areas of low pest or disease prevalence according to international standards, guidelines or recommendations, taking into account geographical situation, ecosystems, epidemiological surveillance and the effecti veness of sanitary and phytosanitary controls in the area. 2. The Party claiming that an area within its territory is free from a specific pest or disease, shall demonstrate objectively to the importing Party this condition and ensure that it will be maintained as such, on the basis of the protection measures implemented by those in charge of the sanitary and phytosanitary services. 3. The Party interested in obtaining recognition that an area is free from a specific pest or disease shall send the request to the other Party and provide relevant scientific and technical information. 4. The Party that receives the request for recognition may carry out inspections, testing and other verification procedures. If the Party does not accept the request, it shall indicate in writing the technical basis for its decision. 5. The Parties may initiate consultation in order to reach agreement on specific requirements for recognition of pest or disease free areas or areas of low pest or disease prevalence. In view of lack of international standards for the recognition of areas of low pest or disease prevalence, it is agreed by both Parties that the recognition of such areas shall be pending until the establishment of the international standards. Article 8.09 Control, Inspection and Approval Procedures 1. The Parties, according to this Chapter, shall observe the provisions of Annex C to the ASPS on control, inspection and approval procedures, including approval of the use of additives or establishment of tolerances for contaminants in food, beverages and feedstuffs. 2. When the competent authority of the exporting Party requests for the first time to the competent authority of the importing Party to inspect a production unit or production process in its territory, the competent authority of the importing Party shall, upon completion of review and evaluation of necessary documents and information and risk assessment required by the importing Party, carry out the inspection within a period of 100 days. This period can be extended by mutual agreement between the Parties in 71 those cases where they can be justified, for example for reasons relating to the seasonality of a product. When the inspection is completed, the competent authority of the importing Party shall issue a decision based on the results of the inspection and shall notify the exporting Party within ninety (90) days after the inspection. Article 8.10 Transparency 1. Each Party, when proposing adoption or modification of a sanitary or phytosanitary measure of general application in the central level, shall notify the following:
2. The Parties shall use the notification authorities and enquiry points established under the ASPS as communication channels. When emergency measures are needed, the Party shall immediately notify the other Party in writing, indicating briefly the aims and basis of the measure, and the nature of the problem. 3. According to the provisions of Article 17.02 (Information Center), each Party shall answer any reasonable request for information from the other Party and shall provide relevant documentation according to the principles of paragraph 3 of the Annex B to the ASPS. Article 8.11 Committee on Sanitary and Phytosanitary Measures 1. The Parties hereby establish the Committee on Sanitary and Phytosanitary Measures, as set out in Annex 8.11. 2. The Committee shall hear matters relating to this Chapter and, without prejudice to Article 18.05(2) (Committees), shall carry out the following functions:
Article 8.12 Technical Cooperation Each Party may provide the other Party with advice, information and technical cooperation, on mutually agreed terms and conditions to strengthen its sanitary and phytosanitary measures, as well as activities, processes and systems on this matter.
ANNEX 8.11 The Committee on Sanitary and Phytosanitary Measures, established by Article 8.11(1) shall be composed of:
Article 9.01 Definitions 1. For purposes of this Chapter, the following terms shall be understood as: administrative refusal: action taken in the exercise of its authorities by a public body of the importing Party to prevent the entry in its territory of a consignment that does not comply with its technical regulations, conformity assessment procedures or metrological requirements; assessment of risk: evaluation of potential adverse effects on legitimate objectives that could impede trade; authorization procedure: any mandatory administrative procedure for granting registration, license or any other approval for a good to be produced, marketed or used for a stated purpose or under stated conditions; comparable situation: situation that offers the same level of safety or protection for reaching a legitimate objective ; conformity assessment procedure: any procedure used, directly or indirectly, to determine that a technical regulation or standard is fulfilled, including sampling, testing, inspection, evaluation, verification, assurance of conformity, registration, accreditation and approval as well as their combinations; international standard: a standard, guide or recommendation, adopted by an international standardizing body and made available to the public; international standardizing or metrological body: a standardizing or metrological body whose membership is open to at least all the Members of the WTO, including the International Organization for Standardization (ISO), the International Electrotechnical Commission (IEC), the Codex Alimentarius Commission (CAC), the International Organization of Legal Metrology (OIML), the International Commission on Radiation Units and Measurements, Inc. (ICRU), or any other body that the Parties designate ; legitimate objectives: national security requirements, prevention of deceptive practices, protection of human health or safety, animal or plant life or health, or the environment; make compatible: to bring different standards-related measures of the same scope approved by different standardizing bodies to a level such that they are either identical, equivalent or have the effect of permitting goods to be used in place of one another or for fulfilling the same purpose; standard: document approved by a recognized body that provides, for common and repeated use, rules, guidelines or characteristics for goods or related processes and production methods, with which compliance is not mandatory. It may also include, or deal exclusively with, terminology, symbols, packaging, marking or labelling requirements as they apply to a good, process or production method; standardization measures: the rules, technical regulations or procedures for conformity assessment; TBT Agreement: The Agreement on Technical Barriers to Trade, that forms a part of World Trade Organization (WTO);and technical regulation: document which lays down characteristics of goods or their related processes and production methods, including the applicable administrative provisions with which compliance is mandatory. It may also include or deal exclusively with terminology, symbols, packaging, marking or labelling requirements as they apply to a good, process, or production method. 2. Except as defined in paragraph 1, the Parties shall use the terms of the current ISO/IEC Guide 2:1996 “Standardization and Related Activities-General Vocabulary.” Article 9.02 General Provisions In addition to the provisions of the WTO Agreement, the Parties shall apply the provisions of this Chapter. Article 9.03 Scope and Coverage 1. This Chapter shall apply to the measures adopted by the Parties on standards, authorization procedures and metrology, as well as on related measures that may directly or indirectly affect the trade in goods between the Parties. 2. This Chapter shall not apply to sanitary and phytosanitary measures. Article 9.04 Basic Rights and Obligations Right to Adopt Standardization Measures 1. Each Party may develop, adopt, apply and maintain:
Unnecessary Barriers 2. No Party shall develop, adopt, maintain or apply measures on standards, authorization procedures or metrology that have the purpose or effect of creating unnecessary barriers to trade with the other Party. Non-Discriminatory Treatment 3. Each Party shall, in relation to measures on standardization, authorization procedures and metrology, accord to the goods of the other Party national treatment and treatment no less favourable than that it accords to like goods of any other country. Use of International Standards 4. In the development or implementation of its measures on standardization, authorization procedures or metrology, each Party shall use international standards where they exist or their completion is imminent, or use the relevant parts of them, except where such international standards would not be an effective or appropriate means for fulfilling the legitimate objectives because of fundamental climatic, geographical, technological or infrastructural factors, or scientifically verified reasons. Article 9.05 Assessment of Risk 1. In pursuing its legitimate objectives, each Party conducting risk assessments shall take into account:
2. Where a Party establishes a level of protection that it considers appropriate and conducts an assessment of risk, it shall avoid arbitrary or unjustifiable distinctions between similar goods in the level of protection it considers appropriate, where the distinctions:
3. A Party shall provide to the other Party, upon request, relevant documentation on its risk assessment processes and on the factors taken into account when conducting the assessment and definition of protection levels, according to Article 9.04. Article 9.06 Compatibility and Equivalence 1. Without prejudice to the rights conferred by this Chapter and taking into account the international activities on standards and metrology, the Parties shall to the greatest extent practical make compatible their respective standards and metrology measures, without reducing the level of safety or protection to human, animal or plant life or health, the environment and consumers. 2. A Party shall accept as equivalent to its own any technical regulations of the other Party, when in cooperation with the other Party, the importing Party determines that the technical regulations of the exporting Party adequately fulfill the legitimate objectives of the importing Party. 3. The importing Party shall provide to the exporting Party, on request, its reasons in writing for not treating a technical regulation as equivalent under paragraph 2. Article 9.07 Conformity Assessment 1. Each Party shall develop, adopt and apply conformity assessment procedures to accord access to like goods from the territory of the other Party under conditions no less favourable than those accorded to its like goods or to those of any other country, in a comparable situation. 2. With regard to its conformity assessment procedures, each Party shall:
3. With the aim of advancing the facilitation of trade, a Party shall consider favourably a request from the other Party to initiate negotiations designed to conclude agreements for the mutual recognition of the results of their respective conformity assessment procedures. 4. To the extent practicable each Party shall accept the results of conformity assessment procedures carried out in the territory of the other Party, provided that those procedures offer enough confidence, equivalent to the confidence of its own procedures and that the good meets the technical regulations or applicable standards adopted or maintained in the territory of this Party. 5. Before accepting the results of a conformity assessment procedure under paragraph 4 and with the aim of strengthening the sustained reliability of the results of conformity assessment of each Party, the Parties may consult about matters such as the technical capacity of conformity assessment bodies, including the verified compliance with relevant international standards through means such as accreditation. 6. Each Party, recognizing that the outcome shall be to the mutual advantage of both Parties, shall accredit, approve or recognize conformity assessment bodies in the territory of the other Party, in conditions no less favourable than those accorded to conformity assessment bodies in its territory. 7. The Parties may use the capacity and technical infrastructure of the accredited bodies established in the territory of the Parties in the conformity assessment procedures. Article 9.08 Authorization Procedures 1. Each Party shall develop, adopt and apply authorization procedures to accord access to like goods from the territory of the other Party under conditions no less favourable than that accorded to its goods or to the goods of any other country, in a comparable situation. 2. In relation to its authorization procedures, each Party shall:
Article 9.09 Metrology Each Party shall ensure, to the extent practicable, the documented traceability of its standards and the calibration of its measuring instruments, according to the recommendations of the Bureau International des Poids et Mesures (BIPM) and the International Organization of Legal Metrology (OIML), comply with the requirements set out in this Chapter. Article 9.10 Notification 1. In cases where there is no relevant international standard, or the technical content of a proposed technical regulation or of a conformity assessment procedure does not conform with the technical content of the relevant international standards, and if these technical regulations may have a significant impact on trade between the Parties, each Party shall notify in writing to the other Party the proposed measure, at least sixty (60) days before its adoption, allowing the interested parties to make comments, discuss these comments upon request, and take these comments and the results of these discussion into account. 2. If a Party faces serious problems or the threat of serious problems related to safety, health, environment protection and national security, this Party may not present the communication prior to the project, but once adopted shall notify the other Party. 3. The notifications under paragraphs 1 and 2 shall be done following the models established in the TBT Agreement. 4. Within thirty (30) days of entry into force of this Agreement, each Party shall notify the other Party of the institution designated to carry out the notifications under this Article. 5. Each Party shall notify in writing the other Party of its standardization plans and programmes. 6. Where a Party rejects a shipment by an administrative decision, the Party shall notify without delay and in writing the person in charge of the shipment of the technical reasons for the rejection. 7. Once the information required under paragraph 5 is completed the Party shall immediately transmit it to the Information Centre of the other Party. Article 9.11 Information Centres 1. Each Party shall ensure the existence of an information centre in its territory that may answer all reasonable questions and requests from the other Party and from interested persons and supply the relevant updated documentation relating to any measure on standards, metrology, conformity assessment procedures or authorization procedures adopted or proposed in its territory by governmental or non-governmental bodies. 2. Each Party designates the centre set out in Annex 9.11(2) as Information Centre. 3. If an information centre requests copies of the documents referred to in paragraph 1 they shall be delivered without cost. The interested persons from the other Party shall receive copies of the documents at the same price as the nationals from this Party, plus the actual cost of shipment. Article 9.12 Committee on Standards, Metrology and Authorization Procedures 1. The Parties hereby establish the Committee on Standards, Metrology and Authorization Procedures, as set out in Annex 9.12. 2. The Committee will hear matters relating to this Chapter, and without prejudice to the provisions of Article 18.05(2)(Committees) shall have the following functions:
Article 9.13 Technical Cooperation 1. Each Party shall promote the technical cooperation between their standards and metrology bodies, providing information or technical assistance to the extent possible and on mutually agreed terms, in order to assist the implementation of this Chapter and strengthen the activities, processes, systems and measures related to standards and metrology. 2. The Parties may make joint efforts to manage the activities of technical cooperation coming from non-Party countries. ANNEX 9.11(2) The Information Centre referred to in Article 9.11(2) shall be composed of: (a) in the case of Panama, the Ministry of Trade and Industries, through the General Directorate of Standards and Industrial Technology, or its successor; and (b) in the case of the ROC, the Ministry of Economic Affairs, through the Bureau of Standards, Metrology and Inspection, or its successor.
ANNEX 9.12 The Committee on Standards, Metrology and Authorization Procedures established in Article 9.12(1) shall be composed of: (a) in the case of Panama, the Ministry of Trade and Industries, through the Vice-ministry of Foreign Trade or its successor; and (b) in the case of the ROC, the Ministry of Economic Affairs, through its Viceministry or its successor.
PART FOUR CHAPTER 10 Section A - Investment Article 10.01 Scope and Coverage 1. This Chapter applies to measures adopted or maintained by a Party relating to:
2. This Chapter does not apply to:
3. This Chapter applies to the entire territory of the Parties and to any level of government regardless of any inconsistent measures that may exist in the law of these government levels. 4. Notwithstanding the provisions of paragraph 2(d), if a duly authorized investor from a Party provides services or carries out functions such as correctional services, income security or unemployment insurance, social security services, social welfare, public education, public training, health, and child care, the investment of this investor shall be protected by the provisions of this Chapter. 5. This Chapter shall apply to both investments made prior to and after the entry into force of this Agreement, by investors of a Party in the territory of the other Party. Article 10.02 National Treatment 1. Each Party shall accord to investors of the other Party treatment no less favorable than that it accords, in like circumstances, to its own investors with respect to the establishment, acquisition, expansion, management, conduct, operation, and sale or other disposition of investments. 2. Each Party shall accord to investments of investors of the other Party treatment no less favorable than that it accords, in like circumstances, to investments of its own investors with respect to the establishment, acquisition, expansion, management, conduct, operation, and sale or other disposition of investments. Article 10.03 Most-Favored-Nation Treatment 1. Each Party shall accord to investors of the other Party treatment no less favorable than that it accords, in like circumstances, to investors of a non-Party with respect to the establishment, acquisition, expansion, management, conduct, operation, and sale or other disposition of investments. 2. Each Party shall accord to investments of investors of the other Party treatment no less favorable than that it accords, in like circumstances, to investments of investors of a non-Party with respect to the establishment, acquisition, expansion, management, conduct, operation, and sale or other disposition of investments. Article 10.04 Fair and Equitable Treatment Each Party shall accord to investors of the other Party and their investments treatment in accordance with international law, including fair and equitable treatment as well as full protection and security. Article 10.05 Standard of Treatment Each Party shall accord to investors of the other Party and to investments of investors of the other Party the better of the treatment required by Articles 10.02, 10.03 and 10.04. Article 10.06 Compensation for Losses Each Party shall accord the investors of the other Party whose investments have been adversely affected in its territory due to armed conflict, state of emergency, insurrection, or civil strife, non-discriminatory treatment on any measure adopted or maintained in relation to such losses. Article 10.07 Performance Requirements 1. No Party may impose or enforce any of the following requirements, or enforce any commitment or undertaking, in connection with the establishment, acquisition, expansion, management, conduct or operation of an investment of an investor of the other Party in its territory:
This paragraph does not apply to any requirement other than indicated herein. 2. No Party may condition the receipt or continued receipt of an advantage, in connection with an investment in its territory of an investor of the other Party, on compliance with any of the following requirements:
This paragraph does not apply to any requirements other than indicated herein. 3. The provisions included in:
4. Nothing in paragraph 2 shall be construed to prevent a Party from conditioning the receipt or continued receipt of an advantage, in connection with an investment in its territory of an investor of the other Party, on compliance with a requirement to locate production, provide a service, train or employ workers, construct or expand particular facilities, or carry out research and development, in its territory. 5. Provided that these measures are not applied in an arbitrary or unjustified manner or do not constitute a disguised restriction to international trade or investment, nothing in paragraph 1(b) or (c) or 2(a) or (b) shall be construed to prevent a Party from adopting or maintaining measures, including environment measures, necessary to:
6. In the case where, in opinion of a Party, the imposition by the other Party of any of the following requirements shall adversely affect trade flows or constitutes a significant barrier to investment by an investor of a Party, the matter shall be considered by the Commission:
7. A measure that requires an investment to use a technology to meet generally applicable health, safety or environmental requirements shall not be construed to be inconsistent with paragraph 6(b). For greater certainty, Articles 10.02 and 10.03 apply to the measure. 8. If the Commission finds that the imposition of any of the above requirements adversely affects the trade flow, or represents a significant barrier to investment by an investor of the other Party, it shall recommend that the practice in question be suspended. Article 10.08 Senior Management and Boards of Directors 1. No Party may require that an enterprise of that Party that is an investment of an investor of the other Party appoint to senior management positions individuals of any particular nationality. 2. A Party may require that a majority of the board of directors, of an enterprise of that Party that is an investment of an investor of the other Party, be of a particular nationality, or resident in the territory of the Party, provided that the requirement does not materially impair the ability of the investor to exercise control over its investment. Article 10.09 Reservations and Exceptions. 1. Articles 10.02, 10.03, 10.07 and 10.08 do not apply to:
2. Articles 10.02, 10.03, 10.07 and 10.08 shall not apply to any measure adopted or maintained by a Party in relation to sectors, sub-sectors or activities, as are indicated in their Schedule to Annex II. 3. No Party may, under any measure adopted after the date of entry into force of this Agreement and covered by its Schedule to Annex II, require an investor of the other Party, by reason of its nationality, to sell or otherwise dispose of an investment existing at the time the measure becomes effective. 4. Article 10.03 does not apply to treatment accorded by a Party under agreements, or with respect to sectors included in its Schedule to Annex IV. 5. Articles 10.02, 10.03 and 10.08 do not apply to:
Article 10.10 Transfers 1. Each Party shall permit all transfers relating to an investment of an investor of the other Party in the territory of the Party to be made freely and without delay. Such transfers include:
2. Each Party shall permit transfers to be made without delay in a freely convertible currency at the market rate of exchange prevailing on the date of transfer. 3. No Party may require its investors to transfer, or penalize its investors that fail to transfer, the income, earnings, profits or other amounts derived from, or attributable to, investments in the territory of the other Party. 4. Notwithstanding paragraphs 1 and 2, a Party may prevent a transfer through the equitable, non-discriminatory and good faith application of its laws relating to:
5. Paragraph 3 shall not be construed to prevent a Party from imposing any measure through the equitable, non-discriminatory and good faith application of its laws relating to the matters set out in subparagraphs (a) through (e) of paragraph 4. Article 10.11 Expropriation and Compensation 1. No Party may directly or indirectly nationalize or expropriate an investment of an investor of the other Party in its territory or take a measure tantamount to nationalization or expropriation of such an investment ("expropriation"), except:
2. Compensation shall be equivalent to the fair market value of the expropriated investment immediately before the expropriation took place ("date of expropriation"), and shall not reflect any change in value occurring because the intended expropriation had become known earlier. Valuation criteria shall include going concern value, asset value including declared tax value of tangible property, and other criteria, as appropriate, to determine fair market value. 3. Compensation shall be paid without delay and be fully realizable. 4. The amount paid as compensation shall be no less than the equivalent amount that would have been paid on that date to the expropriated investor in a currency of free convertibility in the international financial market according to the exchange rate in force on the date in which the fair market price was determined. The compensation shall include the payment of interests computed from the day of dispossession of the expropriated investment until the day of payment, and shall be computed on the basis of a commercially applicable rate for this currency set by the national bank system of the Party where the expropriation occurred. 5. Upon payment, the compensation shall be freely transferable according to Article 10.10. 6. This Article does not apply to the issuance of compulsory licenses granted in relation to intellectual property rights, or to the revocation, limitation or creation of intellectual property rights, to the extent that such issuance, revocation, limitation or creation is consistent with TRIPS. 7. For purposes of this Article and for greater certainty, a non-discriminatory measure of general application shall not be considered a measure tantamount to an expropriation of a debt security or loan covered by this Chapter solely on the ground that the measure imposes costs on the debtor that cause it to default on the debt. Article 10.12 Special Formalities and Information Requirements 1. Nothing in Article 10.02 shall be construed to prevent a Party from adopting or maintaining a measure that prescribes special formalities in connection with the establishment of investments by investors of the other Party, such as a requirement that investors be residents of the Party or that investments be legally constituted under the laws or regulations of the Party, provided that such formalities do not materially impair the protections afforded by a Party to investors of the other Party and investments of investors of the other Party pursuant to this Chapter. 2. Notwithstanding Articles 10.02 and 10.03, a Party may require an investor of the other Party, or its investment in its territory, to provide routine information concerning that investment solely for informational or statistical purposes. The Party shall protect such information that is confidential from any disclosure that would prejudice the competitive position of the investor or the investment. Nothing in this paragraph shall be construed to prevent a Party from otherwise obtaining or disclosing information in connection with the equitable and good faith application of its law. Article 10.13 Relation to Other Chapters 1. In the event of any inconsistency between this Chapter and another Chapter, the latter shall prevail to the extent of the inconsistency. 2. A requirement by a Party that a service provider of the other Party post a bond or other form of financial security as a condition of providing a service into its territory does not of itself make this Chapter applicable to the provisions of that of cross border service. This Chapter applies to that Party's treatment of the posted bond or financial security. Article 10.14 Denial of Benefits Upon notification and consultation done according to Articles 17.04 (Provision of Information) and 19.06 (Consultations), a Party may deny the benefits under this Chapter to an investor of the other Party that is an enterprise of such other Party and to the investment of this investor, if investors of a non Party are owners of or control the enterprise under the terms set out in the definition “investment” of an investor of a Party according to Article 10.39 and the enterprise has no substantial business activities in the territory of the Party under whose law it is constituted or organized. Article 10.15 Environmental Measures 1. Nothing in this Chapter shall be construed to prevent a Party from adopting, maintaining or enforcing any measure otherwise consistent with this Chapter that it considers appropriate to ensure that investment activity in its territory is undertaken under its ecological or environmental laws. 2. The Parties recognize
that it is inappropriate to encourage investment by relaxing domestic health, safety or
environmental measures. Accordingly, a Party shall not waive or otherwise derogate from,
or offer to waive or otherwise derogate from, such measures as an encouragement
for the establishment, acquisition, expansion or retention in its territory
of an investment of an investor. If a Party considers that the other Party has offered such
an encouragement, it may request consultations with the other Party. Section B-Settlement of Disputes between a Party and an Investor of the other Party Article 10.16 Purpose Without prejudice to the rights and obligations of the Parties under Chapter 19 (Dispute Settlement), this Section establishes a mechanism for the settlement of investment disputes arising from the violation of obligations established under Section A of this Chapter that assures both equal treatment among investors of the Parties in accordance with the principle of reciprocity and due process before an impartial tribunal. Article 10.17 Claim by an Investor of a Party on Its Own Behalf 1. An investor of a Party may submit to arbitration under this Section a claim on the grounds that the other Party or an enterprise controlled directly or indirectly by the other Party, has breached an obligation under this Chapter if the investor has suffered losses or damages from the violation of this Chapter. 2. An investor may not make a claim if more than 3 years have elapsed from the date on which the investor first acquired, or should have first acquired, knowledge of the alleged breach and knowledge that the investor has suffered losses or damages. Article 10.18 Claim by an Investor of a Party on Behalf of an Enterprise 1. An investor of a Party, on behalf of an enterprise of the other Party that is a juridical person that the investor owns or controls directly or indirectly, may submit to arbitration under this Section a claim that the other Party or an enterprise controlled directly or indirectly by that Party has breached an obligation under this Chapter, whenever the enterprise has suffered losses or damages due to that violation or arising therefrom. 2. An investor may not make a claim on behalf of an enterprise described in paragraph 1 if more than 3 years have elapsed from the date on which the enterprise first acquired, or should have first acquired, knowledge of the alleged breach and knowledge that the enterprise has suffered losses or damages. 3. Where an investor makes a claim under this Article and the investor or a noncontrolling investor in the enterprise makes a claim under Article 10.17 arising out of the same events that gave rise to the claim under this Article, and two or more of the claims are submitted to arbitration under Article 10.21, the claims should be heard together by a Tribunal established under Article 10.27, unless the Tribunal finds that the interests of a disputing party would be prejudiced thereby. 4. An investment may not submit a claim to arbitration under this Section. Article 10.19 Settlement of a Claim through Consultation and Negotiation The disputing parties should first attempt to settle a claim through consultation or negotiation. Article 10.20 Notice of Intent to Submit a Claim to Arbitration The disputing investor shall deliver to the disputing Party written notice of its intention to submit a claim to arbitration at least ninety (90) days before the claim is submitted, which notice shall specify:
Article 10.21 Submission of a Claim to Arbitration 1. Provided that six months have elapsed since the events giving rise to a claim, a disputing investor may submit the claim to arbitration under:
2. The applicable arbitration rules shall govern the arbitration established in this Chapter except to the extent modified by this Section. Article 10.22 Conditions Precedent to Submission of a Claim to Arbitration 1. Consent of the disputing parties in the arbitration procedure according to this Chapter shall be considered as a consent to this arbitration that excludes any other procedure. 2. Each Party may demand the exhaustion of its local administrative remedies as a condition for consenting to the arbitration under this Chapter. Nevertheless, if 6 months have elapsed from the date on which the administrative remedies were lodged and the administrative authorities have not issued a final resolution, the investor may directly appeal to arbitration, according to the provisions of this Section. 3. A disputing investor may submit a claim under Article 10.17 to arbitration only if:
4. A disputing investor may present a claim to the arbitration procedure according to Article 10.18 only if both investor and enterprise:
5. The consent and the waiver required by this Article shall be stated in writing, delivered to the disputing Party and included in the submission of the claim to arbitration. 6. The waiver by the enterprise, under paragraphs 3(b) and 4(b), shall not be required if, and only if, the disputing Party had deprived the disputing investor of the control of an enterprise. Article 10.23 Consent to Arbitration 1. Each Party consents to the submission of a claim to arbitration in accordance with the procedures and requirements set out in this Section. 2. The consent given by paragraph 1 and the submission by a disputing investor of a claim to arbitration shall be deemed as having satisfied the requirement of:
Article 10.24 Number of Arbitrators and Method of Appointment Except in respect of a Tribunal established under Article 10.27, and unless the disputing parties otherwise agree, the Tribunal shall comprise three arbitrators, one arbitrator appointed by each of the disputing parties and the third, who shall be the presiding arbitrator of the Tribunal, appointed by agreement of the disputing parties. Article 10.25 Constitution
of a Tribunal When a Party Fails to Appoint an Arbitrator or the 1. In the event a disputing party does not appoint an arbitrator or an agreement is not reached about the appointment of the presiding arbitrator of the Tribuna l, the arbitrator or the presiding arbitrator of the Tribunal in the arbitration proceeding shall be designated, according to this Section. 2. Where a Tribunal, not being the one created according to Article 10.27, is not constituted within a period of ninety (90) days from the date on which the claim is submitted to arbitration, the Secretary-General of the ICSID, the Secretary-General of the ICC or an appropriate official at an international organization agreed upon by the disputing parties (hereinafter the Secretary-General), shall appoint the not yet appointed arbitrator or arbitrators, except for the presiding arbitrator of the Tribunal who shall be appointed according to paragraph 3. In any case, the majority of arbitrators may not be nationals of the disputing Party or the Party of the disputing investor. 3. The Secretary-General shall appoint the presiding arbitrator of the Tribunal from the roster of arbitrators referred to in paragraph 4, ensuring that the presiding arbitrator of the Tribunal is not a national of the disputing Party or a national of the Party of the disputing investor. In case of not finding in the roster an available arbitrator to head the Tribunal, the Secretary- General shall appoint from the roster of arbitrators of the ICSID the presiding arbitrator of the Tribunal, provided that he or she is of a nationality different from the disputing Party or from the Party of the disputing investor. 4. On the date of entry into force of this Agreement, the Parties shall establish and maintain a roster of six (6) arbitrators as possible presiding arbitrators of the Tribunal, none of which may be national of a Party, who comply with the rules contemplated in Article 10.21 and have experience in International Law and in investment matters. The members of the roster shall be appointed by mutual agreement, regardless of nationality, for a period of two (2) years that may be extended if the Parties so decide. In case of death or resignation of one member of the roster, the Parties shall appoint by mutual agreement the other person to substitute him or her in its functions for the remaining period to which the former person was appointed. Article 10.26 Agreement to Appointment of Arbitrators For purposes of Article 39 of the ICSID Convention and Article 7 of Schedule C to the ICSID Additional Facility Rules, and without prejudice to an objection to an arbitrator based on Article 10.25(3) or on a ground other than nationality:
Article 10.27 Consolidation 1. A Tribunal established under this Article shall be established under the UNCITRAL Arbitration Rules and shall conduct its proceedings in accordance with those Rules, except as modified by this Section. 2. Where a Tribunal established under this Article is satisfied that claims have been submitted to arbitration under Article 10.21 that have a question of law or fact in common, the Tribunal may, in the interests of fair and efficient resolution of the claims, and after hearing the disputing parties, by order:
3. A disputing party that seeks an order under paragraph 2 shall request the Secretary-General to establish a Tribunal and shall specify in the request:
4. The disputing party shall deliver a copy of the request to the disputing Party or disputing investors against which the order is sought. 5. Within sixty (60) days of receipt of the request, the Secretary-General shall establish a Tribunal comprising three arbitrators. The Secretary-General shall appoint the presiding arbitrator from the roster referred to in Article 10.25(4). In the event that no such presiding arbitrator is available to serve, the Secretary-General shall appoint, from the ICSID Panel of Arbitrators, a presiding arbitrator who is not a national of any of the Parties. The Secretary-General shall appoint the two other members from the roster referred to in Article 10.25(4), and to the extent not available from that roster, from the ICSID Panel of Arbitrators, and to the extent not available from that Panel, in the discretion of the Secretary-General. One member shall be a national of the disputing Party and one member shall be a national of the Party of the disputing investors. 6. Where a Tribunal has been established under this Article, a disputing investor that has submitted a claim to arbitration under Article 10.17 or 10.18 and that has not been named in a request made under paragraph 3 may make a written request to the Tribunal that it be included in an order made under paragraph 2, and shall specify in the request:
7. A disputing investor referred to in paragraph 6 shall deliver a copy of its request to the disputing parties named in a request made under paragraph 3. 8. A Tribunal established under Article 10.21 shall not have jurisdiction to decide a claim, or a part of a claim, over which a Tribunal established under this Article has assumed jurisdiction. 9. On application of a disputing party, a Tribunal established under this Article, pending its decision under paragraph 2, may order that the proceedings of a Tribunal established under Article 10.21 be stayed, unless the latter Tribunal has already adjourned its proceedings, until there is a decision about the propriety of consolidation. 10. A disputing Party shall deliver to the Secretariat, within 15 days of receipt by the disputing Party, a copy of:
11. A disputing Party shall deliver to the Secretariat a copy of a request made under paragraph 3:
12. A disputing Party shall deliver to the Secretariat a copy of a request made under paragraph 6 within fifteen (15) days of receipt of the request. 13. The Secretariat shall maintain a public register of the documents referred to in paragraphs 10, 11 and 12. Article 10.28 Notice A disputing Party shall deliver to the other Party:
Article 10.29 Participation by a Party On written notice to the disputing parties, a Party may make submissions to a Tribunal on a question of interpretation of this Agreement. Article 10.30 Documents 1. A Party shall be entitled, at its own cost, to receive from the disputing Party a copy of:
2. A Party receiving information pursuant to paragraph 1 shall treat the confidential information as if it were a disputing Party. Article 10.31 Venue of Arbitration Unless the disputing parties agree otherwise, a Tribunal established under this Section shall hold an arbitration in the territory of a party to the New York Convention, selected in accordance with:
Article 10.32 Governing Law 1. A Tribunal established under this Section shall decide the issues in dispute in accordance with this Agreement and applicable rules of international law. 2. An interpretation by the Commission of a provision of this Agreement shall be binding on a Tribunal established under this Section. Article 10.33 Interpretation of Annexes 1. Where a disputing Party asserts as a defense that the measure alleged to be a breach is within the scope of a reservation or exception set out in those Annexes, on request of the disputing Party, the Tribunal shall request the interpretation of the Commission on the issue. The Commission, within sixty (60) days of delivery of the request, shall submit in writing its interpretation to the Tribunal. 2. Further to Article 10.32(2), a Commission interpretation submitted under paragraph 1 shall be binding on the Tribunal established under this Section. If the Commission fails to submit an interpretation within sixty (60) days, the Tribunal shall decide the issue. Article 10.34 Expert Reports Without prejudice to the appointment of other kinds of experts where authorized by the applicable arbitration rules, a Tribunal, at the request of a disputing party or, on its own initiative, may appoint one or more experts to report to it in writing on any factual issue concerning the controversy. Article 10.35 Interim Measures of Protection A Tribunal established under this Section may request, or the disputing parties may petition to, in accordance with domestic legislation, national courts for imposing an interim measure of protection to preserve the rights of a disputing party, or to ensure that the Tribunal's jurisdiction is made fully effective. A Tribunal may not order attachment or enjoin the application of the measure alleged to constitute a breach referred to in Article 10.17 or 10.18. Article 10.36 Final Award 1. Where a Tribunal established under this Section makes a final award against a Party, the Tribunal may award, only:
A tribunal may also award costs in accordance with the applicable arbitration rules. 2. Subject to paragraph 1, where a claim is made under Article 10.18(1):
3. The award shall provide that it is made without prejudice to any right that any person may have in the relief under applicable domestic law. Article 10.37 Finality and Enforcement of an Award 1. An award made by a Tribunal established under this Section shall have no binding force except between the disputing parties and in respect of the particular case. 2. Subject to paragraph 3 and the applicable review procedure for an award, a disputing party shall abide by and comply with an award without delay. 3. A disputing party may not seek enforcement of a final award until:
4. Each Party shall provide for the enforcement of an award in its territory. 5. If a disputing Party fails to abide by or comply with a final award, the Commission, on delivery of a request by a Party whose investor was a party to the arbitration, shall establish a panel under Article 19.09 (Request for an Arbitral Group). The requesting Party may seek in such proceedings:
6. A disputing investor may seek enforcement of an arbitration award under the New York Convention, or the ICSID Convention, regardless of whether proceedings have been taken under paragraph 5. 7. A claim that is submitted to arbitration under this Section shall be considered to arise out of a commercial relationship or transaction for purposes of Article I of the New York Convention. Article 10.38 General Provision Time when a Claim is Submitted to Arbitration 1. A claim is submitted to arbitration under this Section when:
Delivery of Notifications and Other Documents 2. Delivery of notifications and other documents on a Party shall be made to the place named for that Party in Annex 10.38(2). Receipts under Insurance or Guarantee Contracts 3. In an arbitration under this Section, a Party shall not assert, as a defense, counterclaim, right of setoff or otherwise, that the disputing investor has received or will receive, pursuant to an insurance or guarantee contract, indemnification or other compensation for all or part of its alleged damages. Publication of an Award 4. The awards shall be published only if there is an agreement in writing by the disputing parties. Section C - Definitions Article 10.39 Definitions For purposes of this Chapter, the following terms shall be understood as: Additional Facility Rules of ICSID: Additional Facility Rules of ICSID established in 1978; claim: the claim made by the disputing investor against a Party under Section B of this Chapter; disputing investor: an investor that makes a claim under Section B of this Chapter; disputing parties: the disputing investor and the disputing Party; disputing Party: a Party against which a claim is made under Section B of this Chapter; disputing party: the disputing investor or the disputing Party; enterprise: an "enterprise" as defined in Chapter 2 (General Definitions ), and a branch of an enterprise; enterprise of a Party: an enterprise constituted or organized under the law of a Party, and a branch located in the territory of a Party and carrying out business activities there; ICC: the International Chamber of Commerce; ICSID: the International Centre for Settlement of Investment Disputes; ICSID Convention: the Convention on the Settlement of Investment Disputes between States and Nationals of other States, done at Washington, March 18, 1965; investment: any kind of goods or rights of any nature acquired or used with the purpose of obtaining an economic profit or other business objective, acquired with resources transferred or reinvested by an investor, and including:
investor of a Party: a Party or a state enterprise of a Party or a national or an enterprise of a Party that makes or has made an investment in the territory of the other Party; New York Convention: the United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards, done at New York, June 10, 1958; Secretary-General: the Secretary-General of the ICSID, or the ICC; transfers: remittance and international payments; Tribunal: an arbitration tribunal established under Article 10.21,and Article 10.27; and UNCITRAL Arbitration Rules: the arbitration rules of the United Nations Commission on International Trade Law, approved by the United Nations General Assembly on December 15, 1976.
1. For purposes of the Article 10.38(2), the place for the delivery of notifications and other documents will be: (a) in the case of Panama:
(b) in the case of the ROC: 2. The Parties shall communicate any change of the designated place for the delivery of notifications and other documents.
Article 11.01 Definitions For purposes of this Chapter, the following terms shall be understood as: cross-border provision of a service or cross-border trade in services: the provision of a service:
Party in the territory of the other Party, but does not include the provision of a service in the territory of a Party by an investment, as defined in Article 10.39 (Definitions), in that territory; enterprise: an "enterprise" as defined in Chapter 2 (General Definitions); enterprise of a Party: an enterprise constituted or organized under the law of a Party, and a branch located in the territory of a Party and carrying out business activities there; quantitative restriction: a non-discriminatory measure that imposes limitations on:
services provided in the performing of government functions: any cross-border service provided by a public institution in non-commercial conditions and without competing with one or more service providers; and. service provider of a Party: a person of a Party that provides or seeks to provide a cross-border service. Article 11.02 Scope and Coverage 1. This Chapter applies to measures adopted or maintained by a Party relating to cross-border trade in services by service providers of the other Party, including measures respecting:
2. For purposes of this Chapter, it shall be understood that the measures adopted or maintained by a Party include measures adopted or maintained by non-governmental institutions or bodies in the performance of regulatory, administrative or other functions of a governmental nature delegated to them by the Party. 3. This Chapter does not apply to:
4. Nothing in this Chapter shall be construed to impose any obligation on a Party with respect to a national of the other Party seeking access to its employment market, or employed on a permanent basis in its territory, or to confer any right on that national with respect to that access or employment. Article 11.03 National Treatment 1. Each Party shall accord to cross-border services and service providers of the other Party treatment no less favorable than that it accords, in like circumstances, to its own services and service providers. 2. Specific commitments assumed under this Article shall not be construed to require any Party to compensate for any inherent competitive disadvantages which result from the foreign character of the relevant services or service suppliers. Article 11.04 Most-Favored-Nation Treatment Each Party shall accord to cross-border services and service providers of the other Party treatment no less favorable than that it accords, in like circumstances, to services and service providers of any non-Party. Article 11.05 Standard of Treatment Each Party shall accord to cross-border services and service providers of the other Party the better of the treatment required by Articles 11.03 and 11.04. Article 11.06 Local Presence No Party may require a service provider of the other Party to establish or maintain a representative office or any form of enterprise, or to be resident, in its territory as a condition for the cross-border provision of a service. Article 11.07 Permission, Authorization, Licensing and Certification With a view to ensuring that any measure adopted or maintained by a Party relating to the permission, authorization, licensing or certification of nationals of the other Party does not constitute an unnecessary barrier to cross-border trade, each Party shall endeavor to ensure that any such measure:
Article 11.08 Reservations 1. Articles 11.03,11.04 and 11.06 do not apply to:
2. Articles 11.03, 11.04 and 11.06 do not apply to any measure that a Party adopts or maintains with respect to sectors, sub-sectors or activities, as set out in its Schedule to Annex II. Article 11.09 Quantitative Restrictions 1. Each Party shall set out in its Schedule to Annex V any quantitative restriction that it maintains. 2. Each Party shall notify the other Party of any quantitative restriction that it adopts, other than at the local government level, after the date of entry into force of this Agreement and shall set out the restriction in its Schedule as referred to in paragraph 1. 3. Regularly, at least every 2 years, the Parties shall endeavour to negotiate with the aim of liberalizing or eliminating: (a) existing quantitative restrictions maintained by a Party, according to the list referred to in paragraph 1; or (b) quantitative restrictions adopted by a Party after the entry into force of this Agreement. Article 11.10 Denial of Benefits Subject to prior notification and consultation in accordance with Articles 17.04 (Provision of Information) and 19.06 (Consultations), a Party may deny the benefits of this Chapter to a service provider of the other Party where the Party decides, according to its effective law that the service is being provided by an enterprise that is owned or controlled by persons of a non-Party having no substantial business activities in the territory of the other Party. Article 11.11 Future Liberalization The Parties, through future negotiations to be convened by the Commission, shall deepen the liberalization reached in different service sectors, with the aim of eliminating the remaining restrictions listed under Article 11.08(1) and (2). Article 11.12 Procedures The Parties shall establish procedures for:
Article 11.13 Disclosure of Confidential Information No provision in this Chapter may be construed as imposing on the Parties the obligation to provide confidential information of which the disclosure may be an obstacle to the observance of laws or otherwise be damaging to the public interest, or that may injure legitimate trade interests of state and private enterprises. Article 11.14 Committee on Investment and Cross-border Trade in Services 1. The Parties hereby establish the Committee on Investment and Cross-border Trade in Services, as set out in Annex 11.14. 2. The Committee shall hear matters relating to this Chapter and Chapter 10 (Investment) and, without prejudice to the provisions of Article 18.05(2)(Committees), shall have the following functions:
3. The Committee shall meet
when necessary or at any other time at the request of either Party.
Representatives of other institutions may also take part in its meetings
if the relevant authorities
deem it appropriate. ANNEX 11.14 The Committee on Investment and Cross-border Trade in Services set up under Article 11.14 shall be composed of:
CHAPTER 12 Article 12.01 Definitions For purposes of this Chapter, the following terms shall be understood as: cross-border provision of financial services or cross-border trade of financial services: the provision of a financial service:
disputing investor: an investor that submits to arbitration a claim under Article 12.19 and Section B of Chapter 10 (Investment); enterprise: “enterprise” defined in Chapter 2 (General Definitions); financial institution: any financial intermediary or other enterprise that is authorized to do financial service business and regulated or supervised as a financial institution under the law of the Party in whose territory it is located; financial institution of the other Party: a financial institution, including a branch, established under the existing law located in the territory of a Party that is owned or controlled by persons of the other Party; financial service: a service of a financial nature, including bank, insurance, reinsurance, securities, futures, and a service related or auxiliary to a service of a financial nature; investment: any kind of goods or rights of any nature acquired or used with the purpose of obtaining an economic profit or other business objective, acquired with resources transferred or reinvested by an investor, and including:
investment of an investor of a Party: an investment owned or directly controlled by an investor of the Party. In the case of an enterprise, an investment is property of an investor of a Party if this investor holds more than fifty per cent (50%) of it equity interest. An investment is controlled by an investor of a Party if the investor has the power to:
investor of a Party: a Party or a state enterprise thereof, or a national or enterprise of the Party, that seeks to make, makes or has made an investment in the territory of the other Party. The intention of trying to realize an investment may demonstrate, among other forms, by means of juridical acts tending to materialize the investment, or being in process of compromising the necessary resources to realize it; new financial service: a financial service not provided in the territory of a Party that is provided within the territory of the other Party, and includes any new form of delivery of a financial service or the sale of a financial product that is not sold in the territory of a Party; provider of cross-border financial services of a Party: a person authorized by a Party who undertakes the business of providing financial services in its territory and who tries to conduct or conducts cross-border financial services; provider of financial services of a Party: a person of a Party who undertakes the business of providing some financial service in the territory of the other Party; public entity: a central bank or monetary authority of a Party, or any financial institution of public nature owned or controlled by a Party, and does not have commercial functions; regulatory authorities: any governmental body that exercises a supervising authority over providers of financial services or financial institutions; and self-regulatory organization: any non-governmental body, including any securities or futures exchange or market, clearing agency, or other organization or association, that exercises its own or delegated regulatory or supervisory authority over financial service providers or financial institutions. Article 12.02 Scope and Coverage 1. This Chapter applies to measures adopted or maintained by a Party relating to:
2. Nothing in this Chapter shall be construed to prevent a Party, or its public entities, from exclusively conducting or providing in its territory:
3. The provisions of this Chapter shall prevail upon those of other Chapters, except where there is an explicit reference to these Chapters. 4. Article 10.11 (Expropriation and Compensation) forms a part of this Chapter. Article 12.03 Self-regulatory Organizations Where a Party requires a financial institution or a cross-border financial service provider of the other Party to be a member of, participate in, or have access to, a selfregulatory organization to provide a financial service in or into the territory of that Party, the Party shall ensure observance of the obligations of this Chapter by such selfregulatory organization. Article 12.04 Right of Establishment 1. The Parties recognize the principle that investors of a Party shall be permitted to establish a financial institution in the territory of the other Party through any forms of establishment and operation that the law of that Party permits. 2. Each Party may impose terms and conditions on establishment of a financial institution that are consistent with Article 12.06. Article 12.05 Cross-border Trade 1. No Party may adopt any measure restricting any type of cross-border trade in financial services by cross-border financial service providers of the other Party that the Party permits on the date of entry into force of this Agreement, except to the extent set out in Section B of the Schedule to Annex VI of the Party. 2. Each Party shall permit persons located in its territory, and its nationals wherever located, to purchase financial services from cross-border financial service providers of the other Party located in the territory of that other Party. This obligation does not require a Party to permit such providers to do business or solicit in its territory. The Parties may define "solicitation" and "doing business" for purposes of this obligation. 3. Without prejudice to other means of prudential regulation of cross-border trade in financial services, a Party may require the registration of cross-border financial service providers of the other Party and of financial instruments. Article 12.06 National Treatment 1. Each Party shall accord to investors of the other Party treatment no less favorable than that it accords to its own investors with respect to the establishment, acquisition, expansion, management, conduct, operation, and sale or other disposition of similar financial institutions and investments in similar financial institutions in its territory. 2. Each Party shall accord to financial institutions of the other Party and to investments of investors of the other Party in financial institutions treatment no less favorable than that it accords to its own similar financial institutions and to investments of its own investors in similar financial institutions, with respect to the establishment, acquisition, expansion, management, conduct, operation, and sale or other disposition of financial institutions and investments. 3. Subject to Article 12.05, where a Party permits the cross-border provision of a financial service it shall accord to the cross-border financial service providers of the other Party treatment no less favorable than that it accords to its own similar financial service providers, with respect to the provision of such service. 4. A Party's treatment of similar financial institutions and similar cross-border financial service providers of the other Party, whether different or identical to that accorded to its own institutions or providers in like circumstances, is consistent with paragraphs 1 through 3 if the treatment affords equal competitive opportunities. 5. A Party's treatment does not afford equal competitive opportunities if it disadvantages similar financial institutions and similar cross-border financial service providers of the other Party in their ability to provide financial services as compared with the ability of the Party's own financial institutions and similar financial service providers to provide such services. Article 12.07 Most-Favored-Nation Treatment Each Party shall accord to investors, financial institutions, investments of investors in financial institutions and cross-border financial service providers of the other Party treatment no less favorable than that it accords in similar circumstances to the investors, financial institutions, investments of investors in financial institutions and cross-border financial service providers of any non-Parties. Article 12.08 Recognition and Harmonization 1. Where a Party applies measures included in this Chapter it may recognize the prudential measures of the other Party or of a non-Party. This recognition may be:
2. The Party that grants the recognition of prudential measures according to paragraph 1, shall give the other Party appropriate opportunities to show the existence of circumstances in which there are or shall be equivalent regulations, supervision and implementation of regulations and, as appropriate, procedures to share information between the Parties. 3. Where a Party grants recognition to the prudential measures according to paragraph 1(c) and the circumstances of paragraph 2 exist, this Party shall give appropriate opportunities to the other Party to negotiate the accession to the agreement or arrangement, or to negotiate a similar agreement or arrangement. 4. No provision of this Article shall be construed as the application of a mandatory procedure of review of the financial system or the prudential measures of a Party by the other Party. Article 12.09 Exceptions 1. Nothing in this Chapter shall be construed to prevent a Party from adopting or maintaining prudential measures such as:
2. Nothing in this Chapter applies to non-discriminatory measures of general application taken by any public entity in pursuit of monetary and related credit policies or exchange rate policies. This paragraph shall not affect a Party's obligations of Investment Performance Requirements with respect to measures covered by Chapter 10 (Investment) or Article 12.17. 3. Article 12.06 shall not apply to the granting by a Party to a financial institution of an exclusive right to provide a financial service referred to in Article 12.02 paragraph 2(b). 4. Notwithstanding Article 12.17(1), (2) and (3), a Party may prevent or limit transfers by a financial institution or cross-border financial service provider to, or for the benefit of, an affiliate of or person related to such institution or service provider, through the equitable, and non-discriminatory application of measures relating to maintenance of the safety, soundness, integrity or financial responsibility of financial institutions or cross-border financial service providers. This paragraph does not prejudice any other provision of this Agreement that permits a Party to restrict transfers. Article 12.10 Transparency In addition to the Article 17.03 (Publication), each Party shall undertake the following: 1. Each Party's regulatory authorities sha ll make available to interested persons all related information for completing applications relating to the provision of financial services. 2. On the request of an applicant, the regulatory authorities shall inform the applicant of the status of its application. If such authorities require additional information from the applicant, they shall notify the applicant without undue delay. 3. Each regulatory authority shall make an administrative decision on a completed application of an investor in a fina ncial institution, a financial institution or a cross-border financial service provider of the other Party relating to the provision of a financial service within 120 days. The authority shall promptly notify the applicant of the decision. An application shall not be considered complete until all relevant hearings are held and all necessary information is received. Where it is not practicable for a decision to be made within 120 days, the regulatory authority shall notify the applicant without undue delay and shall endeavor to make the decision within 60 days thereafter. 4. Nothing in this Chapter requires a Party to disclose or allow access to:
Article 12.11 Committee on Financial Services 1. The Parties hereby establish the Committee on Financial Services, as set out in Annex 12.11. 2. The Committee shall hear matters relating to this Chapter and, without prejudice to the provisions of Article 18.05(2) (Committees), shall have the following functions:
3. The Committee shall meet as necessary or by request of either Party to assess the implementation of this Chapter. Article 12.12 Consultations 1. Without prejudice to Article 19.06 (Consultations), a Party may request consultations with the other Party regarding any matter arising under this Agreement that affects financial services. The other Party shall give sympathetic consideration to the request. The consulting Parties shall report the results of their consultations to the Committee at its meeting. 2. Consultations under this Article shall include officials of the authorities specified in Annex 12.11. 3. A Party may request that regulatory authorities of the other Party participate in consultations under this Article regarding measures of general application of that other Party which may affect the operations of financial institutions or cross-border financial service providers in the territory of the requesting Party. 4. Nothing in this Article shall be construed to require regulatory authorities participating in consultations under paragraph 3 to disclose information or take any action that would interfere with individual regulatory, supervisory, administrative or enforcement matters. 5. Where a Party requires information for supervisory purposes concerning a financial institution in the territory of the other Party or a cross-border financial service provider in the territory of the other Party, the Party may approach the competent regulatory authority of the other Party to seek the information. Article 12.13 New Financial Services and Data Processing 1. Each Party shall allow a financial institution of the other Party to provide any new financial service of a type similar to those that the Party allows to its own financial institutions according to its law. The Party may decide the institutional and juridical forms through which this service shall be offered and may require authorization for the provision of the service. Where an authorization is required, the relevant dispositions shall be issued in a reasonable period of time and may only be denied for prudential reasons, provided that the reasons are not contrary to the law of the Party, and to Articles 12.06 and 12.07. 2. Each Party shall allow the financial institutions of the other Party to transfer information for processing into or out of the territory of the Party, using any means authorized within it, if this is necessary to conduct regular business activities in these institutions. 3. Each Party commits itself to respecting the confidentiality of the information processed within its territory and originating in a financial institution located in the other Party. Article 12.14 Senior Management and Board of Directors 1. No Party may require financial institutions of the other Party to engage individuals of any particular nationality as senior managerial or other essential personnel. 2. No Party may require that the board of directors or administrative council of a financial institution of the other Party be composed of nationals of the Party, persons residing in the territory of the Party, or a combination thereof. Article 12.15 Reservations and Specific Commitments 1. Articles12.04 through 12.07, 12.13 and 12.14 do not apply to:
2. Articles 12.04 through 12.07, 12.13 and 12.14 do not apply to any nonconforming measure that a Party adopts or maintains in accordance with Section B of its Schedule to Annex VI. 3. Section C of each Party's Schedule to Annex VI sets out certain specific commitments by that Party. 4. In Chapters 10 (Investment) and 11 (Cross-border Trade in Services) a reservation on matters relating to local presence, national treatment, most-favorednation treatment, senior management and board of directors and administrative council shall be deemed to constitute a reservation from Article 12.04 through 12.07, 12.13 and 12.14, as the case may be, to the extent that the measure, sector, sub-sector or activity set out in the reservation is covered by this Chapter. Article 12.16 Denial of Benefits A Party may partially or wholly deny the benefits arising from this Chapter to a provider of financial services of the other Party or to a provider of cross-border financial services of the other Party, upon notification and consultations, according to Articles 12.10 and 12.12, if the Party determines that the service is being provided by an enterprise that does not conduct substantial trade activities in the territory of the other Party and is owned by persons of a non-Party or is under their control. Article 12.17 Transfers 1. Each Party shall permit all transfers relating to an investment of an investor of the other Party in the territory of the Party to be made freely and without delay. Such transfers include:
2. Each Party shall permit transfers to be made without delay in a currency of free convertibility at the market rate of exchange prevailing on the date of transfer. 3. No Party may require its investors to transfer, or penalize its investors that fail to transfer the income, earnings, profits or other amounts derived from, or attributable to, investments in the territory of the other Party. 4. Notwithstanding paragraphs 1 and 2, a Party may prevent a transfer through the fair and non-discriminatory application of its laws in cases of:
5. Paragraph 3 shall not be construed to prevent a Party from imposing any measure through the fair and non-discriminatory application of its laws relating to the matters set out in paragraph 4. Article 12.18 Dispute Settlement Between the Parties 1. Chapter 19 (Dispute Settlement) applies as modified by this Article to the settlement of disputes arising under this Chapter. 2. The Committee on Financial Services shall maintain by consensus a roster of up to eighteen (18) individuals including five (5) individuals of each Party, who are willing and able to serve as arbitrators in disputes related to this Chapte r. The roster members shall meet the quality set out in Chapter 19 (Dispute Settlement) and have broad practicing experience in financial sectors or financial regulation. 3. For purposes of constituting the arbitral group, the roster referred to in paragraph 2 shall be used, unless the disputing Parties agree that the arbitral group may comprise individuals not included in this roster, provided that they conform to the requirements under paragraph 2. The president shall always be elected from that roster. 4. In any dispute where the arbitral group finds a measure to be inconsistent with the obligations of this Chapter when a suspension of benefits is processed under Chapter 19 (Dispute Settlement) and the measure affects:
Article 12.19 Investment Disputes Settlement in Financial Services Between an Investor of a Party and the Other Party 1. Section B of Chapter 10 (Investment) shall be incorporated into this Chapter and be made as a part of it. 2. Where an investor of the other Party submits a claim under Article 10.17 (Claim by an Investor of a Party on Its Own Behalf) or 10.18 (Claim by an Investor of a Party on Behalf of an Enterprise) to arbitration under Section B of Chapter 10 (Investment) against a Party and the disputing Party invokes Article 12.09, on request of the disputing Party, the Tribunal shall refer the matter in writing to the Committee for a decision. The Tribunal may not proceed before the receipt of a decision under this Article. 3. In a referral pursuant to paragraph 2, the Committee shall decide the issue of whether and to what extent Article 12.09 is a valid defense to the claim of the investor. The Committee shall transmit a copy of its decision to the Tribunal and to the Commission. The decision shall be binding on the Tribunal. 4. Where the Committee has not decided the issue within sixty (60) days of the receipt of the referral under paragraph 2, the disputing Party or the Party of the disputing investor may request the establishment of an arbitral group under Article 19.09 (Request for an Arbitral Group). The arbitral group shall be constituted in accordance with Article 12.18 and shall transmit its final report to the Committee and to the Tribunal. The report shall be binding on the Tribunal. 5. Where no request for the establishment of an arbitral group pursuant to paragraph 4 has been made within ten (10) days of the expiration of the 60-day period referred to that paragraph, the Tribunal may proceed to decide the matter. ANNEX 12.11 The Committee on Financial Services, established under Article 12.11, shall be composed of: (a) in the case of Panama, the Ministry of Trade and Industries through the Vice-ministry of Foreign Trade, or its successor, in consultation with the competent authority as appropriate (Superintendence of Banks, Superintendence of Insurance, Reinsurance and National Commission of Securities); and (b) in the case of the ROC, the Ministry of Economic Affairs through the Bureau of Foreign Trade, or its successor, in consultation with the competent authorities as appropriate.
CHAPTER 13 Article 13.01 Definitions For purposes of this Chapter, the following terms shall be understood as: authorized equipment: terminal or other equipment that has been approved for attachment to the public telecommunications transport network in accordance with a Party's conformity assessment procedures; conformity assessment procedure: "conformity assessment procedure" as defined in Article 9.01 (Definitions), and includes the procedures referred to in Annex 13.01(A); enhanced or value-added services: those telecommunications services employing computer processing applications that:
Intra-corporate communications: subject to Annex 13.01(B), telecommunications through which an enterprise communicates: (a) internally, with or among its subsidiaries, branches or affiliates, as defined by each Party; or (b) on a non-commercial basis with other persons that are fundamental to the economic activity of the company and that have a continuing contractual relationship with it, but does not include telecommunications services provided to persons other than those described herein; main provider or dominant operator: a provider with the capacity to deeply affect the conditions of participation (from the point of view of prices and supply) of the telecommunication services in a given market due to its control of essential infrastructure or the use of its market position; monopoly: a body, including a consortium or a governmental body, maintained or designed according to its law, if so allowed, as the exclusive provider of telecommunication networks or public services in any relevant market in the territory of a Party; network termination point: the final demarcation of the public telecommunications transport network at the customer's premises; private telecommunications network: subject to Annex 13.01(B), a telecommunications transport network that is used exclusively for intra-corporate communications or between predetermined persons ; protocol: a set of rules and formats that govern the exchange of information between two peer entities for purposes of transferring signaling or data information; public telecommunications transport network: public telecommunications infrastructure which permits telecommunications between and among defined network termination points; public telecommunications transport service: any telecommunications transport service required by a Party, explicitly or in effect, to be offered to the public generally, including telegraph, telephone, telex and data transmission, that typically involves the real-time transmission of customer-supplied information between two or more points without any end-to-end change in the form or content of the customer information; standards-related measure: a "standards-related measure" as defined in Article 9.01 (Definitions); telecommunications: any transmission, emission or reception of signs, signals, writings, images, sounds and information of any kind, through a physical line, radioelectricity, optical means or other electromagnetic systems; telecommunications service: a service supplied by signal transmission and reception through physical lines, radio-electricity, optical means or other electromagnetic systems, but does not mean distribution by cable, radio broadcasting or other kind of electromagnetic distribution of radio and television programmes; and terminal equipment: any analog or digital device capable of processing, receiving, switching, signaling or transmitting signals by electromagnetic means and that is connected by radio or wire to a public telecommunications transport network at a termination point. Article 13.02 Scope and Coverage 1. This Chapter applies to:
2. Except to ensure that persons operating broadcast stations and cable systems have continued access to and use of public telecommunications transport networks and services, this Chapter does not apply to any measure adopted or maintained by a Party relating to cable or broadcast distribution of radio or television programming. 3. Nothing in this Chapter shall be construed to:
Article 13.03 Access to and
Use of Public Telecommunications Transport Networks and 1. For purposes of this Article, "non-discriminatory" means on terms and conditions no less favorable than those accorded to any other customer or user of like public telecommunications transport networks or services in like circumstances. 2. Each Party shall ensure that persons of the other Party have access to and use of any public telecommunications transport network or service, including private leased circuits, offered in its territory or across its borders for the conduct of their business, on reasonable and non-discriminatory terms and conditions, including as set out in the rest part of this Article. 3. Subject to paragraphs 7, 8 and Annex 13.01(B), each Party shall ensure that such persons are permitted to:
4. Without prejudice to its applicable law, each Party shall ensure that the pricing of public telecommunications transport services reflects economic costs directly related to providing the services. Nothing in this paragraph shall be construed to permit a party to establish cross-subsidization between public telecommunications transport services. 5. Under Annex 13.01(B), each Party shall ensure that persons of the other Party may use public telecommunications transport networks or services for the movement of information in its territory or across its borders, including for Intra-corporate communications, and for access to information contained in data bases or otherwise stored in machine -readable form in the territory of either Party. 6. Further to Article 20.02 (General Exceptions), nothing in this Chapter shall be construed to prevent a Party from adopting or enforcing any measure necessary to:
7. Further to Article 13.05, each Party shall ensure that no condition is imposed on access to and use of public telecommunications transport networks or services, other than that necessary to:
8. Provided that conditions for access to and use of public telecommunications transport networks or services satisfy the criteria set out in paragraph 7, such conditions may include: (a) a restriction on resale or shared use of such services; (b) a requirement to use specified technical interfaces, including interface protocols, for interconnection with such networks or services; (c) a restriction on interconnection of private leased or owned circuits with such networks or services or with circuits leased or owned by another person, where the circuits are used in the provision of public telecommunications transport networks or services; and (d) a licensing, permit, concession, registration or notification procedure which, if adopted or maintained, is transparent and applications filed thereunder are processed expeditiously. Article 13.04 Conditions for the Provision of Enhanced or Value-added Services 1. Each Party shall ensure that: (a) any licensing, permit, concession, registration or notification procedure that it adopts or maintains relating to the provision of enhanced or valueadded services is transparent and non-discriminatory, and that applications filed thereunder are processed diligently; and (b) information required under such procedures, adjustable under the existing law of the Parties, to demonstrate that the applicant has the financial solvency to begin providing services or to assess conformity of the applicant's terminal or other equipment with the Party's applicable standards or technical regulations. 2. Without prejudicing the law of either Party, neither Party may require a service provider of enhanced or value-added services to:
3. Notwithstanding paragraph 2(c), a Party may require the filing of a tariff by:
Article 13.05 Standards-Related Measures 1. Each Party shall ensure that its standards-related measures relating to the attachment of terminal or other equipment to the public telecommunications transport networks, including those measures relating to the use of testing and measuring equipment for conformity assessment procedures, are adopted or maintained only to the extent necessary to:
2. A Party may require approval for the attachment to the public telecommunications transport network of terminal or other equipment that is not authorized, provided that the criteria for that approval are consistent with paragraph 1. 3. Each Party shall ensure that the network termination points for its public telecommunications transport networks are defined on a reasonable and transparent basis. 4. Neither Party may require separate authorization for equipment that is connected on the customer's side of authorized equipment that serves as a protective device fulfilling the criteria of paragraph 1 . 5. Each Party shall:
6. When the condition allows it, each Party shall adopt, as part of its conformity assessment procedures, provisions necessary to accept the test results from laboratories or testing facilities in the territory of the other Party for tests performed in accordance with the accepting Party's standards-related measures and procedures. Article 13.06 Monopolies or Anti-competition Practice 1. Where a Party maintains or designates a monopoly, or main provider or incumbent carrier, to provide public telecommunications transport networks or services, and the monopoly, directly or through an affiliate, competes in the provision of enhanced or value-added services or other telecommunications-related services or telecommunications-related goods, the Party shall ensure that the monopoly, main provider or incumbent carrier does not use its monopoly position to engage in anticompetitive conduct in those markets, either directly or through its dealings with its affiliates, in such a manner as to affect adversely a person of the other Party. Such conduct may include cross-subsidization, predatory conduct and the discriminatory provision of access to public telecommunications transport networks or services. 2. To prevent such anticompetitive conduct, each Party shall make efforts to conform with or maintain effective measures as referred to paragraph 1, such as:
Article 13.07 Transparency Further to Article 17.03 (Publication), each Party shall make publicly available its measures relating to access to and use of public telecommunications transport networks or services, including measures relating to:
Article 13.08 Relation to Other Chapters In the event of any inconsistency between this Chapter and another Chapter, this Chapter shall prevail to the extent of the inconsistency. Article 13.09 Relation to Other International Organizations and Agreements The Parties recognize the importance of international standards for global compatibility and interoperability of telecommunication networks or services and undertake to promote those standards through the work of relevant international bodies, including the International Telecommunication Union and the International Organization for Standardization. Article 13.10 Technical Cooperation and Other Consultations 1. To encourage the development of interoperable telecommunications transport services infrastructure, the Parties shall cooperate in the exchange of technical information, the development of government-to-government training programs and other related activities. In implementing this obligation, the Parties shall give special emphasis to existing exchange programs. 2. The Parties shall consult with a view to determining the feasibility of further liberalizing trade in all telecommunications services, including public telecommunications transport networks and services.
ANNEX 13.01 (A) For purposes of this Chapter, conformity assessment procedures include: In the case of Panama:
In the case of the ROC:
ANNEX 13. 01 (B)PRIVATE NETWORKS INTERCONNECTION (PRIVATE CIRCUITS) 1. In the case of both Panama and the ROC, it shall be understood that the private telecommunication networks used in the private communications of a company may not be connected with public telecommunications transport networks nor may be used to provide telecommunication services, even free of charge, to third persons who are not subsidiaries, branch offices or affiliates of a company or that are not owned by it nor are under its control. 2. The provisions of paragraph 1 shall no longer be effective in Panama or the ROC after its present legal conditions change and it allows the interconnection of the private telecommunication networks used in the internal communications of enterprises to the public telecommunication transport networks and the provision to third persons of services that are key for the economic activities of an enterprise and that maintain a continued contractual relation with it.
CHAPTER 14 Article 14.01 Definitions 1. For purposes of this Chapter, the following terms shall be understood as: business activities: legitimate commercial activities undertaken and operated with the purpose of obtaining profits in the market, not including the possibility of obtaining employment, wages or remuneration from a labour source in the territory of a Party; business person: a national of a Party who is engaged in trade of goods, provision of services or conduct of investment activities; national: "national" as defined in Chapter 2 (General Definitions), but not including those permanent residents or definitive residents; labour certification: procedure applied by the competent administrative authority with the purpose of determining if a national of a Party who seeks a temporary entry into the territory of the other Party displaces national workers in the same domestic industry or noticeably harms labour conditions in it; pattern of practice: a practice repeatedly followed by the immigration authorities of one Party during the representative period immediately before the execution of the same; temporary entry: entry into the territory of a Party by a business person of the other Party without the intention to establish permanent residence. 2. For purposes of Annex 14.04: executive functions: functions assigned in an organization to a person who shall have the following basic responsibilities:
management functions: functions assigned in an organization to a person who shall have the following basic responsibilities:
functions requiring specialized knowledge: functions that require special knowledge of goods, services, research, equipment, techniques, management of an organization or of its interests and their application in international markets, or an advanced level of knowledge or experience in the processes and procedures of the organization. Article 14.02 General Principles This Chapter reflects the preferential trading relationship between the Parties, the desirability of facilitating temporary entry on a reciprocal basis and of establishing transparent criteria and procedures for temporary entry, and the necessity to ensure border security and to protect the domestic labor force and permanent employment in their respective territories. Article 14.03 General Obligations 1. Each Party shall apply its measures relating to the provisions of this Chapter in accordance with Article 14.02 and, in particular, shall apply expeditiously those measures so as to avoid unduly delaying or impairing trade in goods or services or conduct of investment activities under this Agreement. 2. The Parties shall endeavor to develop and adopt common criteria, definitions and interpretations for the implementation of this Chapter. Article 14.04 Grant of Temporary Entry 1. Each Party shall grant temporary entry to business persons who are otherwise qualified for entry under applicable measures relating to public health and safety and national security, in accordance with this Chapter, including the provision of Annex 14.04 and 14.04(1). 2. A Party may refuse a temporary entry to a business person where the temporary entry of that person might affect adversely:
3. When a Party refuses a temporary entry in accordance with paragraph 2, the Party shall:
4. Each Party shall limit any fees for processing applications for temporary entry of business persons to the approximate cost of services rendered. 5. An authorization of temporary entry under this Chapter, does not supersede the requirements demanded by the exercise of a profession or activity according to the specific rules in force in the territory of the Party authorizing the temporary entry. Article 14.05 Provision of Information 1. Further to Article 17.03 (Publication), each Party shall:
2. Each Party shall collect, maintain, and make available to the other Party the information respecting the granting of temporary entry under this Chapter to business persons of the other Party who have been issued immigration documentation, including data specific to each authorized category. Article 14.06 Dispute Settlement 1. A Party may not initiate proceedings under Article 19.06 (Consultations) regarding a refusal to grant temporary entry under this Chapter or a particular case arising under Article 14.03 unless:
2. The administrative review referred to in paragraph 1(b) shall be deemed to be exhausted if a final determination in the matter has not been issued by the competent authority within 6 months of the institution of an administrative proceeding, and the failure to issue a determination is not attributable to delay caused by the business person. Article 14.07 Relation to Other Chapters Except for this Chapter, Chapters 1 (Initial Provisions), 2 (General Definitions), 18 (Administration of the Agreement) and 21 (Final Provisions) and Articles 17.02 (Information Centre), 17.03 (Publication), 17.04 (Provision of Information) and 17.06 (Administrative Proceedings for Adopting Measures of General Applications), no provision of this Agreement shall impose any obligation on a Party regarding its immigration measures. ANNEX 14.04 Section A - Business Visitors 1. Each Party shall grant temporary entry and expedite document verification to a business person seeking to engage in a business activity set out in Appendix 14.04(A)(1), without other requirements than those established by the existing immigration measures applicable to temporary entry, on presentation of:
2. Each Party shall consider that a business person satisfies the requirements of paragraph 1(b) by demonstrating that:
For purpose of this paragraph, a Party that authorizes temporary entry shall normally accept a declaration as to the principal place of business and the actual place of accrual of profits. Where the Party requires further proof, it should be conducted according to its law. 3. Each Party shall grant temporary entry to a business person seeking to engage in a business activity other than those set out in Appendix 14.04(A)(1), on a basis no less favorable than that provided under the existing provisions of the measures set out in Appendix 14.04(A)(3). 4. No Party may:
5. Notwithstanding paragraph 4, a Party may require a business person seeking temporary entry under this Section to obtain a visa or its equivalent prior to entry. The Parties shall consider removing their visa or equivalent document requirement. Section B - Traders and Investors 1. Each Party shall grant temporary entry and provide documentation verification to a business person, who in a capacity that is supervisory, managerial, executive or requiring specialized knowledge, provided that the business person otherwise complies with existing immigration measures applicable to temporary entry, and seeks to:
2. No Party may:
3. Notwithstanding paragraph 2, a Party may require a business person seeking temporary entry under this Section to obtain a visa or its equivalent prior to entry. The Parties shall consider avoiding or removing their visa or equivalent document requirement. Section C - Intra-corporate Transferees 1. Each Party shall grant temporary entry and provide confirming documentation to a business person employed by an enterprise who seeks to render management, executive or functions requiring specialized knowledge to that enterprise or a subsidiary or affiliate thereof, provided that the business person otherwise complies with effective immigration measures applicable to temporary entry. A Party may require the person to have been employed continuously by the enterprise for 1 year immediately preceding the date of the application for admission. 2. No Party may:
3. Notwithstanding paragraph 2, a Party may require a business person seeking temporary entry under this Section to obtain a visa or its equivalent prior to entry. The Parties shall consider avoiding or removing their visa or equivalent document requirement. ANNEX 14.04 (1) For Panama: 1. It shall be considered that the business persons who enter Panama under any of the categories established in Annex 14.04 carry out activities that are useful or beneficial to the country. 2. The business persons who enter Panama under any of the categories of Annex 14.04 shall hold a temporary residence permit and may renew this permit for consecutive periods as long as the conditions are maintained. Such persons may not request permanent residence nor change their immigration status, unless they comply with the general provisions of the Migration Law, Decree No. 16, June 30, 1960 and its amendments and of the Decree of the Cabinet No. 363, December 17, 1970. For the ROC: 1. The business person shall obtain a visitor or resident visa prior to entry. A visitor visa of which validity no longer than 1 year, multiple entry and 90- day duration of stay may be issued. The business person in possession of a resident visa may stay in the ROC provided the work permit remains valid. The duration of stay may be extendable for consecutive periods as long as the conditions justifying it are maintained. Such a person may not require permanent residence unless satisfying the provisions of the Immigration Law. 2. If a business person is
defined as a resident in the Mainland China area by the Statute Governing the
Relations Between the People of the Taiwan Area and the Mainland Area and its
Regulations, the person must apply for entry permit according to the said Statute and
Regulations. APPENDIX 14.04(A)(1) Research and Design - Technical, scientific and statistical researchers conducting independent research or research for an enterprise established in the territory of the other Party. Cultivation, Manufacture and Production Purchasing - Purchasing and production personnel at managerial level conducting commercial operation for an enterprise established in the territory of the other Party. Marketing - Market researchers and analysts conducting independent research or analysis, or research or analysis for an enterprise established in the territory of the other Party. - Trade fair and promotional personnel attending a trade convention. Sales - Sales representatives and agents taking orders or negotiating contracts on goods or services for an enterprise established in the territory of the other Party but not delivering goods or providing services. - Buyers purchasing for an enterprise established in the territory of the other Party. After-sale Service - Installation, repair and maintenance personnel, and supervisors, possessing specialized knowledge essential to a seller's contractual obligation, performing services or training workers to perform services, pursuant to a warranty or other service contract incidental to the sale of commercial or industrial equipment or machinery, including computer software, purchased from an enterprise located outside the territory of the Party into which temporary entry is sought, during the life of the warranty or service agreement. General Service - Consultants conducting business activities at the level of the provision of crossborder services. - Management and supervisory personnel engaging in a commercial operation for an enterprise established in the territory of the other Party. - Financial services personnel engaging in commercial operation for an enterprise established in the territory of the other Party. - Public relations and advertising personnel consulting with business associates, or attending or participating in conventions. - Tourism personnel (tour and travel agents, tour guides or tour operators) attending or participating in conventions or conducting a tour that has begun in the territory of the other Party. APPENDIX 14.04(A)(3) In the case of Panama, the Migration Law, Decree No.16, June 30, 1960, and the amendment, published by the Official Gazette 14,167, on July 05, 1960；the Cabinet Decree No.363, December 17, 1970, published by the Official Gazette 16,758,on December 24, 1970. In the case of the ROC, the Immigration Law, promulgated No. 8800119740 on May 21,1999; the Statute Governing Issuance of ROC Visas on Foreign Passports, promulgated on June 02, 1999, and the Regulations for Issuance of ROC Visas on Foreign Passports, promulgated on May 31, 2000. Employment Service Act, Promulgated on May 8, 1992, amended on January 21, 2002；Enforcement Rules of the Employment Service Act, amended by the Council of Labor Affairs on October 31, 2001.
PART FIVE CHAPTER 15 Section A-Competition Policy Article 15.01 Objectives The objectives of the this Chapter consist of assuring that the benefits of the trade liberalization are not reduced by anticompetitive activities and promoting the cooperation and coordination between the authorities of the Parties. Article 15.02 Cooperation 1. The Parties recognize the importance of the cooperation and coordination in the application of their enforcement mechanisms, including notification, consultations and mutual exchange of information regarding the enforcement of the competition laws and policies in the area of free trade as long as they do not contravene legal obligations regarding confidentiality. 2. To such end, each Party shall adopt and maintain measures to prohibit anticompetitive trade practices and shall apply the appropriate enforcement mechanisms under those measures, recognizing that such measures will contribute to the fulfillment of the objectives as set forth in this Agreement. Section B- Monopolies and State Enterprises Article 15.03 Monopolies and State Enterprises 1. Nothing in this Agreement shall prevent a Party from designating or maintaining a monopoly or a state enterprise if and whenever its law permits it. 2. If a Party’s law does permit it, where the Party intends to designate a monopoly or a state enterprise, and the designation may affect the interests of persons of the other Party, the Party shall:
3. Each Party shall ensure, if designation or maintenance of a monopoly or a state enterprise is permitted by the Party’s law, that any monopoly or any state enterprise designated or maintained by the Party:
4. Paragraph 3 does not apply to procurement by governmental agencies of goods or services for official purposes and not with a view to commercial resale or with a view to use in the production of goods or the provision of services for commercial sale.
PART SIX CHAPTER 16 Section A - General Provisions Article 16.01 General Provisions The Parties agree that TRIPS and the following intellectual property (IP) related international conventions shall govern and apply to all intellectual property issues arising from this Agreement: (a) the Paris Convention for the Protection of Industrial Property (1967); (b) the Bern Convention for the Protection of Literary and Artistic Works (1971); (c) the International Convention for the Protection of Performers, Producers of Phonograms and Broadcasting Organizations; (d) the Geneva Convention for the Protection of Producers of Phonograms Against Unauthorized Reproduction; (e) the Convention of the International Union for the Protection of New Varieties of Plants (UPOV), Act of 1978 or Act of 1991 according to the country; (f) the World Intellectual Property Organization (WIPO) Copyright Treaty of 1996; and (g) the World Intellectual Property Organization (WIPO) Performances and Phonograms Treaty of 1996. Section B - Protection of the Intellectual Property Rights Article 16.02 General Obligations 1. Each Party shall accord nationals of the other Party appropriate protection and enforcement of intellectual property rights referred to in this Chapter and shall ensure that measures intended for the enforcement of these rights do not create obstacles to legitimate trade. 2. Each Party may accord in its legislation a broader protection to the intellectual property rights than the protection required in this Chapter, provided that this protection is not inconsistent with the provision of the Chapter. Article 16.03 Exhaustion of the Copyright and Related Rights 1. The Parties agree to apply the principle of the copyright and related rights exhaustion, meaning that the holder of the copyright and related rights shall not hinder free trade of legitimate products in a Party, once legally introduced for trade into that Party, by the same right or license holder or by any other authorized third person, provided that these products and the packages that are in immediate contact with them have not suffered any modification or alteration. 2. The Parties have one year from the entry into force of this Agreement to incorporate this principle into its national legislation. Article 16.04 Protection of Geographic Indications 1. Each Party shall recognize and protect the geographical indications of another Party provided for in this Article. 2. Neither Party shall permit the importation, manufacture or sale of goods using a geographical indication protected by the other Party, unless it is processed and certified in the originating Party according to the applicable legislation governing the geographic indication. 3. The provisions in paragraphs 1 and 2 shall only be effective with regard to the geographical indications that are protected by the legislation of the Party demanding protection and whose definition agreed upon by section 3 of TRIPS. Likewise, to accede to protection, each Party shall notify the other Party of the geographical indications, which comply with the above-mentioned requirements and shall be included in the scope of protection. 4. The above mentioned provisions shall be understood without prejudice to the recognition that the Parties may accord to the homonymous geographical indications that may lawfully belong to a non-Party. Appellation of Origin for Seco 5. The ROC shall recognize the appellation of origin “Seco” for exclusive use as a kind of spirits made from sugarcane originating in Panama. Consequently it shall not be permitted in the ROC the importation, manufacture or sale of this product, unless it is processed in Panama, according to Panamanian laws, rules, technical regulations and standards applicable to the said product. 6. The provisions of Section C (Enforcement) of this Chapter, as well as those established in Article 23 (1) of TRIPS shall be applicable to the appellation of origin for Seco. Article 16.05 Protection of Traditional Knowledge 1. Each Party shall protect the collective intellectual property rights and the traditional knowledge of indigenous people on their creations, subject to commercial use, through a special system of registration, promotion and marketing of their rights, aiming at emphasizing the indigenous sociological and cultural values of the indigenous people and the local communities and bring to them social justice. 2. Each Party shall recognize that the customs, traditions, beliefs, spirituality, religiosity, cosmos vision, folklore expressions, artistic manifestations, traditional skills and any other form of traditional expression of the indigenous people and local communities are a part of their cultural heritage. 3. The cultural heritage shall not be subject to any form of exclusivity by unauthorized third parties applying the intellectual property system, unless the request is done by the indigenous people and local communities or by third parties with their authorization. Article 16.06 Protection of Folklore Each Party shall ensure the effective protection of all folklore expressions and manifestations and of artistic manifestations of the traditional and popular culture of the indigenous and local communities. Article 16.07 Relation between Access to Genetic Resources and Intellectual Property 1. Each Party shall protect the access to its genetic resources and the traditional knowledge developed by indigenous people and local communities on the uses of the biological resources containing these genetic resources, against the indiscriminate use of biological diversity, as well as ensuring that the Party will participate in benefits derived from the use of its genetic resources. 2. Each Party shall accord a fair and equitable participation in the benefits derived from the access to its genetic resources and from the uses of its traditional knowledge and folklore expressions. 3. Each Party shall ensure that the protection accorded to the industrial property shall safeguard its biological and genetic heritage. Consequently, the licensing of patents on inventions developed from material obtained from such heritage or traditional knowledge shall be subject to the condition that this material was acquired according to relevant national and international laws and regulations. Article 16.08 Plant breeders 1. Each Party shall recognize and ensure the so called “breeder’s right” through a special system of registration as provided for in the relevant laws and regulations in the territory of each Party, as well as through the mechanism of mutual recognition to be developed as agreed upon by the Parties, with the aim of protecting the rights originating from the use of plant varieties. 2. The right accorded to the breeder of a plant variety is an intellectual property right which accords to its holder an exclusive right, so that his or her authorization is required to conduct some acts of exploitation of the protected variety. 3. The breeder’s right shall be marketable, transferable and inheritable. The owner of the right may accord to third persons license to exploit the protected varieties. 4. The breeder’s right covers all plant species and genera and shall be applied to any kind of plants and seeds, and to any part thereof that can be used as reproduction or propagation material. The breeder’s right shall also be accorded where the variety is new, different, homogeneous and stable. 5. The right conferred on the breeder shall be granted for twenty (20) years in Panama and for fifteen (15) years in the ROC from the date of concession of the title of protection. In the case of vines, forest trees, fruit trees and ornamental trees, including in each case their rootstocks, the protection shall have a term of twenty five (25) years in Panama and of fifteen (15) years in the ROC. Once the protection term expires, the varieties shall be considered as in the public domain. Section C - Enforcement Article 16.09 Applications 1. The Parties confirm the effective rights and obligations among them with respect to the procedures of observance in accordance with TRIPS. 2. The Parties recognize that the growing importance of IP protection in traditional knowledge and folklore, genetic resources, geographic indications, plant breeders and other related matters is critical to economic competitiveness in the knowledge-based economy and to sustainable economic development. The Parties, therefore, confirm that either Party which is not party to one or more of the multilateral agreements listed in Article 16.01 shall undertake with the best efforts to pursue affiliation, in due course, to the said agreements. Article 16.10 Enforcement of Intellectual Property Rights Each Party shall establish in its legislation administrative, civil and criminal procedures, effective with the objective to reach an adequate and effective protection of the intellectual property rights. Also for all the procedures as mentioned above, the due process as regards the relationship between the plaintiff and the defendent shall be taken into account. Article 16.11 Enforcement of Border Measures Each Party shall adopt legislation on measures in border control, to the extent that the customs authorities shall be granted action to inspect or to retain merchandise, with the purposes of suspending or avoiding the free circulation of the merchandise involved to accord the rightholders protection. Article16.12 Transparency The Parties shall notify the Committee on Intellectual Property under this Agreement the laws, regulations and the dispositions. In relation to final judicial decisions and administrative rulings of general application, the foregoing shall be published, or where such publication is not practical made publicly available, to enable the governments of each Party and right holders to become acquainted with them. Article 16.13 Committee on Intellectual Property 1. The Parties hereby establish the Committee on Intellectual Property, as set out in Annex 16.13, to discuss and review all IP related issues arising from this Agreement. 2. An Expert Group of Intellectual Property shall be established under the Committee on Intellectual Property, composed of three IP experts from the Intellectual Property Office in each Party. The Committee or the Expert Group on Intellectual Property shall meet, in principle, once a year or as requested by either Party, subject to mutual agreement. The location of the meeting shall rotate between the Parties. Article 16.14 Technical Cooperation The Parties shall establish a system of technical cooperation between the Parties and within the framework of the WTO on matters relating to intellectual property, particularly in areas of newly developed IP -related issues. ANNEX 16.13 The Committee on Intellectual Property under Article 16.13 shall be composed of:
PART SEVEN CHAPTER 17 Article 17.01 Definitions For purposes of this Chapter, “administrative ruling of general application” means an administrative ruling or interpretation that applies to all persons and situations of fact that fall generally within its ambit and that establishes a norm of conduct but does not include:
Article 17.02 Information Centre 1. Each Party shall designate an office as an information centre for facilitating the communications between the Parties on any subject covered in this Agreement. 2. When a Party requests it, the information centre of the other Party shall indicate the office or official responsible for the matter and shall offer assistance required for facilitating communications with the requesting Party. Article 17.03 Publication Each Party shall ensure that its laws, regulations, procedures and administrative rulings of general application which are in reference to any matter covered by this Agreement are promptly published or otherwise made available in such a manner as to enable the other Party and any interested person to become acquainted with them. Article 17.04 Provision of Information 1. Each Party shall, to the maximum extent possible, notify the other Party of any actual measure in force which it considers could affect in the future or might already be materially affecting the interests of the other Party in terms of this Agreement. 2. Each Party, on request of the other Party, shall provide information and respond promptly to questions pertaining to any actual measure in force. 3. Any notification or the supplying of information on measures in force or proposed as referred to under this Article shall be made without prejudice to whether the measure is consistent with this Agreement. Article 17.05 Guarantees on Hearing, Legality and Due Process Each Party shall ensure that in legal and administrative proceedings related to the application of any measure referred to in Article 17.03 the guarantees on hearing, legality and due process established in their own laws are respected in the sense of Articles 17.06 and 17.07. Article 17.06 Administrative Proceedings for Adopting Measures of General Applications For purposes of administering in a consistent, impartial and reasonable manner all measures of general application which affect aspects covered by this Agreement, each Party shall, in its administrative proceedings which are applying measures referred to in Article 17.03 with respect to persons, goods or services in particular of the other Party in specific cases, ensure that:
Article 17.07 Review and Appeal 1. Each Party shall maintain tribunals or judicial proceedings or proceedings of an administrative nature according to the Party’s laws for purposes of a prompt and timely review and, where warranted, correction of definitive administrative actions regarding matters covered by this Agreement. Such tribunals shall be impartial and independent of the office or authority entrusted with administrative enforcement and shall not have any substantial interest in the outcome of the matter. 2. Each Party shall ensure that, before the said tribunals or in its procedures, the parties to the proceeding have the right to:
3. Subject to appeal or further review as provided for in its laws, each Party shall ensure that such decisions are implemented by the offices or authorities. Article 17.08 Communications and Notifications Except any provision to the contrary, a communication or notification shall be considered delivered to a Party upon its receipt by the national section of the Secretariat of such Party.
CHAPTER 18 Section A- Commission, Sub-commission and Secretariat Article 18.01 Administrative Commission of the Agreement 1. The Parties hereby establish the Administrative Commission of the Agreement, which is composed of the officials referred to in Annex 18.01 or of the persons designated by them. 2. The Commission shall have the following functions:
3. The Commission may:
4. The modifications referred to in paragraph 3(b) shall be implemented by the Parties according to their respective national laws . 5. The Commission may establish its rules and procedures, and all its decisions shall be made by consensus. 6. The Commission shall convene at least once a year in regular session, and shall convene by request of a Party in special session. The location of the meeting shall rotate between the Parties. Article 18.02 Administrative Sub-commission of the Agreement 1. The Parties hereby establish the Administrative Sub-commission of the Agreement, which is composed of the officials as set out in Annex 18.02 or persons designated by them. 2. The Sub-commission shall have the following functions:
3. The Commission may establish rules and procedures applicable to the proper operation of the Sub-commission. Article 18.03 Secretariat 1. The Commission shall establish and oversee a Secretariat which is composed of their national sections. 2. Each Party:
3. The Secretariat shall have the following functions:
Section B- Committees, Sub-committees and Expert Groups Article 18.04 General Provisions 1. The provisions stated in this section shall, in a supplementary manner, apply to all committees, sub-committees and expert groups created under this Agreement. 2. Each committee, sub-committee and expert group shall be composed of representatives of each Party and all their decisions shall be made by consensus. Article 18.05 Committees 1. The Commission may create committees other than those established according to Annex 18.04. 2. All committees shall have the following functions:
3. The Commission and the Sub-commission shall supervise the work of all committees established or created under this Agreement. 4. Each committee may establish its own rules and procedures and shall meet upon the request of a Party or the Commission. Article 18.06 Sub-Committees 1. With the aim of delegating its functions, a committee may create standing subcommittees for matters specifically delegated to them, and supervise their work. Each sub-committee shall have the same functions as a committee on matters for which it was delegated. 2. Each sub-committee shall report to the committee on the implementation of its mandate. 3. The rules and procedures of a sub-committee may be established by the committee that created it. Sub-committees shall meet at the request of a Party or their corresponding committee. Article 18.07 Expert Groups 1. Notwithstanding Article 18.01(3)(a), a committee or sub-committee may also create ad hoc expert groups, with the purpose of conducting necessary technical research that it deems appropriate for accomplishing its functions, and shall supervise their work. The expert groups shall strictly accomplish what they have been entrusted to do, and within the terms and timeframes established. Each expert group shall report to the committee or sub-committee that created it. 2. The rules and procedures of an expert group may be established by the committee or sub-committee that created it. ANNEX 18.01 The Administrative Commission of the Agreement under Article 18.01(1) shall be composed of:
ANNEX 18.02 The Administrative Sub-commission of the Agreement under Article 18.02 is composed of:
ANNEX 18.03 1. The Commission shall establish the amounts of remuneration and expenses that shall be paid to arbitrators, their assistants and experts. 2. The remuneration for these arbitrators, their assistants and experts, their travel and lodging expenses, and all the general expenses of arbitral groups, shall be covered in equal parts by the Parties. 3. Each arbitrator,
assistant and expert shall keep a record and render a final account of the person's time
and expenses; the arbitral group shall keep a similar record and a final account of all
general expenses. ANNEX 18.04 Committee on Trade in Goods (Article 3.16) Committee on Sanitary and Phytosanitary Measures (Article 8.11) Committee on Standards, Metrology and Authorization Procedures(Article 9.12) Committee on Investment and Cross-border Trade in Services (Article 11.14) Committee on Financial Services (Article 12.11) Committee on Intellectual Property (Article 16.13)
CHAPTER 19 Section A - Dispute Settlement Article 19.01 Definitions For purposes of this Chapter, the following definitions shall be understood as: complaining Party: the Party that makes a claim; consulting Party: any Party that holds consultations under Article 19.06; defendant Party: the Party against which a complaint is made; and disputing Party: the complaining Party or the defendant Party. Article 19.02 General Provisions 1. The Parties shall at all times endeavor to agree on the interpretation and application of this Agreement, and shall make every attempt through cooperation and consultations to arrive at a mutually satisfactory resolution of any matter that might affect its operation. 2. Any settlement of matters raised under this Chapter shall be consistent with this Agreement and shall not nullify nor impair the benefits for the Parties deriving from it, nor shall impede the attainment of any objective of this Agreement. 3. The mutually satisfactory solutions reached by the Parties of any matters raised in accordance with the provisions of this Chapter, shall be notified to the Commission within a period of fifteen (15) days after the agreement on the settlement of the dispute in question is reached. Article 19.03 Scope of Application Except as otherwise provided for in this Agreement, the procedures of this Chapter shall apply:
Article 19.04 Choice of Fora 1. The disputes arising in connection with the provisions of this Agreement and the WTO Agreement or agreements negotiated in accordance with the WTO Agreement may be settled in one of those fora, as the complaining Party chooses. 2. Where a Party has requested the establishment of an arbitral group under Article 19.09 or has requested the establishment of a panel under Article 6 of the Understanding on Rules and Procedures Governing the Settlement of Disputes of the WTO Agreement, the forum chosen shall be used to the exclusion of the other. Article 19.05 Urgent Cases 1. In cases of urgency including such cases, as contemplated in paragraphs 2 and 3, the Parties and the arbitral groups shall make every effort to accelerate to the greatest extent the proceedings. 2. In cases of perishable agricultural goods, fish and fish products that are perishable:
3. In cases of urgency other than those referred to in paragraph 2, the Parties shall try to the extent possible to reduce by half the timeframe as provided for in Articles 19.07 and 19.09 for requesting a meeting of the Commission and the establishment of an arbitral group respectively. Article 19.06 Consultations 1. A Party may request in writing to enter into consultations with the other Party regarding any actual measure or any other matter that the Party considers may affect the operation of this Agreement in terms of Article 19.03. 2. The complaining Party requesting consultations shall submit their request to the responsible agency of the other Party. 3. The Parties shall make every attempt to arrive at a mutually satisfactory resolution on any matter through consultations under this Article or other consultative provisions of this Agreement. To this end, the consulting Parties shall:
The Initiation of the Proceedings Article 19.07 Commission Intervention 1. Any consulting Party may request in writing that the Commission meet provided that:
2. The request referred to in paragraph 1 shall indicate the measure or any other issue that is the object of a claim and the applicable provisions of this Agreement. 3. Unless otherwise decided, the Commission shall meet within ten (10) days following the submission of the request, and with the purpose of obtaining a mutually satisfactory dispute resolution, may:
4. Unless otherwise decided, the Commission shall consolidate 2 or more proceedings under this Article relating to the same measure. The Commission may accumulate 2 or more proceedings under this Article in relation to other issues, when considered convenient to examine them jointly. Article 19.08 Good Offices, Conciliation and Mediation 1. Good offices, conciliation and mediation are procedures that are initiated on a voluntary basis if the Parties so agree. 2. Proceedings involving good office, conciliation and mediation, and in particular the positions of the Parties to the dispute during these proceedings, shall be confidential and without prejudice to the rights of either Party in any further proceedings under these procedures. 3. Good offices, conciliation or mediation may be requested at any time by either Party to a dispute. They may begin and be terminated at any time. Proceeding of Arbitral Group Article 19.09 Request for the Establishment of an Arbitral Group 1. The Party that has requested the intervention of the Commission, according to Article 19.07, may request in writing to the other Party for the establishment of an arbitral group, when the dispute in question cannot be resolved within:
2. The request for the establishment of an arbitral group shall be made in writing, and shall state whether the consultations have been held, and in case that the Commission has met, state the actions taken; and the Party shall give the reason for the request, including identification of the measures at issue and an indication of the legal basis for the complaint. 3. Within fifteen (15) days of the submission of the request to the responsible agency of the other Party, the Commission shall establish the arbitral group in accordance with Article 19.12. 4. Unless the Parties agree otherwise, the arbitral group shall be established and shall exercise its functions in accordance with the provisions of this Chapter. Article 19.10 List of Arbitrators 1. Upon entry into force of this Agreement, the Parties shall establish and maintain a list of up to twenty individuals with the required qualification to serve as arbitrators. Said list shall be composed of the “List of Arbitrators of the Parties” and the “List of Arbitrators of Non-Party Countries”. Each Party may designate five (5) national arbitrators to form the “List of Arbitrators of the Parties”, and five (5) arbitrators of Non- Party countries to form the “List of Arbitrators of Non-Party Countries”. 2. The rosters of arbitrators might be modified every 3 years. Notwithstanding, the Commission might revise, by request of a Party, the roster of arbitrators before the expiration of this period. 3. The members of the rosters of arbitrators shall meet the qualifications set forth in Article 19.11. Article 19.11 Qualifications of the Arbitrators 1. All the arbitrators shall meet the following qualifications:
2. Persons that have participated in a dispute under Article 19.07 (3) cannot serve as arbitrators for the same dispute. Article 19.12 Composition of the Arbitral Group 1. In the establishment of the arbitral group, the Parties shall observe the following procedures:
2. Where a disputing Party considers that an arbitrator has violated the Code of Conduct, the Parties shall hold consultations and decide whether to remove that arbitrator and select a new one pursuant to the provisions of this Article. Article 19.13 Model Rules of Procedure 1. Upon the entry into force of this Agreement, the Commission shall establish the Model Rules of Procedure in accordance with the following principles:
2. The Commission may modify the Model Rules of Procedure. 3. Unless the Parties agree otherwise, the proceeding before the arbitral group shall follow the Model Rules of Procedure. 4. Unless the Parties agree otherwise, the mandate of the arbitral group shall be:
5. If the complaining Party claims that a matter was a cause of nullification or impairment of benefits in the sense of Annex 19.03, the mandate shall state it. 6. When a disputing Party requests that the arbitral group reaches conclusions about the extent of the adverse trade effects brought upon by the measure adopted by the other Party and considered by the disputing Party as inconsistent with the Agreement, or that the measure has caused nullification or impairment in the sense of Annex 19.03, the mandate shall state it. Article 19.14 Information and Technical Advice At the request of a disputing Party or ex officio, the arbitral group may seek information and technical advice from the persons or institutions that it deems appropriate under the Model Rules of Procedure. Article 19.15 Preliminary Report 1. The arbitral group shall issue a preliminary report based on the arguments and submissions presented by the Parties and on any information received in accordance with Article 19.14, unless the Parties agree otherwise. 2. Unless the Parties agree otherwise, the arbitral group shall present to the Parties, within ninety (90) days of the nomination of the last arbitrator a preliminary report which includes :
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:
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:
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:
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 1. The Commission shall endeavor to give, as soon as possible, an appropriate and non-binding interpretation or response, where:
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 on 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. ANNEX 19.03 1. A Party may resort to the dispute settlement mechanism of this Chapter, when in light of the application of a measure from the other Party that does not contravene this Agreement, it considers that the benefits that might be reasonably expected are nullified or impaired in:
2. With respect to any measure subject to an exception in accordance with Article 20.02 (General Exceptions), a Party may not invoke:
3. To determine the elements of nullification and impairment, the Parties may take into account the principles set out in the jurisprudence of paragraph 1(b) of Article XXIII of GATT 1994.
CHAPTER 20 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:
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:
Article 20.03 National Security Nothing in this Agreement shall be construed to:
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:
4. A measure adopted or maintained under this Article shall:
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:
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:
4. For purposes of this Article, taxation measures do not include:
5. Subject to paragraph 2:
CHAPTER 21 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:
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. 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.
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