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Benefits to Bilateral Trade and Investment from the ROC-Panama FTA: 

Bureau of Foreign Trade Ministry of Economic Affairs August 2003 Benefits to Bilateral Trade and Investment from the ROC-Panama FTA


Contents The introduction of the ROC-Panama FTA The economic benefits of the ROC-Panama FTA for goods The economic benefits of the ROC-Panama FTA for services The economic benefits of the ROC-Panama FTA for investment Conclusion

The Introduction of the ROC-Panama FTA: 

The Introduction of the ROC-Panama FTA

Why the ROC choose Panama as its first partner for an FTA: 

Why the ROC choose Panama as its first partner for an FTA The willingness of trading partners ,the FTA strategies of the ROC and the impact to our domestic industries the geographical advantages of Panama


The Bilateral trade of Panama and the ROC


The Negotiation of ROC- Panama FTA first round : Oct.3-4, 2002 in Panama second round : Jan.13-17, 2002 in Taipei Third round : Mar. 17-21, 2003 in Panama Fourth round : May 19-23 in Miami special meeting for agriculture: June 20, 2003 in San Francisco Fifth round: Aug.1-10 in Taipei


The ROC-Panama FTA is the ROC’s first The presidents of both countries has signed the Agreement during the ROC and Central American countries summit on August 21, 2003 in Taipei The ROC-Panama FTA


The Content of the ROC-Panama Agreement(1) Preamble Ch1. Initial Provision Ch2. General Definition Ch3. National Treatment and Market Access for Goods Ch4. Rules of Origin Ch5. Customs Procedures Ch6. Safeguard measures Ch7. Unfair Trade Practices Ch8. Sanitary and Phytosanitary Measures Ch9.Measures on Standards, Metrology and Authorization Procedures Ch10. Investment Services and Related Matters


The Content of the ROC-Panama Agreement(2) Ch11. Cross-border Trade in Service Ch12. Financial Service Ch13. Telecommunications Ch14. Temporary Entry for Business Persons Ch15. Competition Policy Ch16. Intellectual Property Ch17. Transparency Ch18. Administration of the Agreement Ch19. Dispute Settlement Ch20. Exceptions Ch21. Final Provisions

The Economic Benefits of the R.O.C.-Panama FTA on Goods: 

The Economic Benefits of the R.O.C.-Panama FTA on Goods


Present tariff rates on Panama imports to ROC: 3.46% (5.7% for agricultural products, 0.3% for industrial products ) Panama tariff rates on ROC exports: 6.37% (10.27% for agricultural products, 6.19% for industrial products ) In 2002, the ROC had a US$122 million trade surplus with Panama, 25 times the value of Panama exports to the ROC Pre-ROC-Panama FTA Tariff Rates:


Despite many industrial products manufactured in the ROC enjoy a comparative advantage, few are sold to Panama for the following reasons: Large geographical distance Lack of familiarity with Panamanians consumption habits Panama’s small domestic market Pre-FTA ROC-Panama Trade in Goods


Reduced tariffs and lower costs will increase interest of manufacturers. Bilateral exchanges will increase manufacture’s familiarity with Panama market conditions and needs Panama Products expected to export to the ROC: men’s and children’s underwear, jackets, suits, shirts, women’s blouses and men’s undershirts Post-FTA Trade in industrial products :


ROC Tariff Reduction Schedule


Panama Tariff Reduction Schedule


The Percentage of Zero-tariff items of ROC


The Percentage of Zero-Tariff items of Panama


Reductions will go into effect immediately for tariffs on some live animals and fish (chapters 1 and 3), coffee (chapter 9), oil seeds and fruits (chapter 12), gums and resin (chapter 13), plant materials (chapter 14), and plant and animal oils (chapter 15). The ROC open up tariff quotas for certain Panamanian products (pork belly,mackerel, sardine and herring, carangid, liquid milk, bananas, pineapples, meat of fowls, meat offal of fowls, and refined sugar) at a rate equivalent to between 2 and 14 % of the ROC’s WTO tariff quotas for 2004. The ROC’s Tariff Reduction on Panamanian Agricultural Products :


The Panama’s Tariff Reduction on ROC Agricultural Products : Panama will open up its markets to ROC agricultural products such as fish and other aquatic invertebrates (chapter 3), products of animal origin (chapter 5), live trees and other plants (chapter 6), grains (chapter 10), oilseeds and fruits (chapter 12), and gums and resins (chapter 13). Certain agricultural products from the ROC, including eels, benito, beans and vegetables, and fruits, should see increased exports after Panama opens up its markets.


The ROC’s Tariff Reduction on Panamanian Industrial Products : Reductions will go into effect immediately for tariffs on dyes, cosmetic, photographic goods (chapters 29 to 38), plastics (chapter 39), paper products (chapter 48), man-made fabrics, cotton and fabrics (chapter 54 and 58), shoes (chapter 64), steel products (chapter 73), base metals (chapter 82 and 83), machinery (chapter 84), electrical equipment (chapter 85), optical instruments (chapter 90), and miscellaneous manufactured articles (chapter 96).


The Panama’s Tariff Reduction on ROC Industrial Products : The ROC enjoys advantage in terms of industrial products, especially in areas such as textiles, dyes, machinery and mechanical appliances, printed circuits assemblies, monitors, automobile parts, and motorcycle parts. The ROC can expect to see a considerable increase in export opportunities after the FTA goes into effect. Given the complementarities of the industrial structures of the two countries, the agreement will be sure to create a win-win situation for both countries once it goes into effect


Ten years after the agreement goes into effect, the ROC will allow 97% of all Panamanian products to enter its market tariff-free, with Panama allowing 95% of all ROC products to enter its market tariff-free. In the first year after the FTA goes into effect, the ROC will save an estimated US$500,000 in tariff payments on exports to Panama, with savings expected to grow to at least US$1.3 million after ten years. Likewise, Panama can expect to see substantial tariff savings on its exports to the ROC.

The Economic Benefits of the R.O.C.-Panama FTA on Services: 

The Economic Benefits of the R.O.C.-Panama FTA on Services

Benefits of Legal Assurance (Investments): 

Benefits of Legal Assurance (Investments) National Treatment and Most-Favored-Nation Treatment No Performance Requirement unless specified in the negative list No Nationality Requirement of Senior Managers unless specified in the negative list Investors Can Sue the Government to settle disputes


Benefits of Legal Assurance (Cross-Border Trade in Services and others) Cross-Border Provision of Services without Commercial Presence should be allowed unless specified in the negative list Facilitate the Temporary Entry of Business Persons Establish Committees to Monitor and Review the Enforcement of this Agreement Telecom: access to networks, anti-competitive behaviors forbidden, laboratory test recognition


Benefits of Market Access (1) Negative list: Enabling bilateral commitments of larger extent of market access, with reservations made for the sectors by listing legal measures that do not conform to the articles of this FTA. Exceptions(1): Measures beyond the scope of this FTA: such as government services, government procurement, air services under traffic rights. Exceptions(2): Measures maintained by local or municipal governments.


Benefits of Market Access (2) WTO-plus (FTA>WTO) of this FTA


Benefits to Market Access (3) Example- Multi-Modal Transport: ROC maritime and air transport investors are allowed to invest 100% in Panamanian road transportation companies. Example- Financial: Panamanian banks without being ranked as top 500 or 1000 of the world’s banks are granted a waiver to establish branches in ROC.


Benefits Market Access (4) Example-Telecommunications: For Panamanian investors, they can invest up to 49% of telecom companies in ROC, not the 20% ceiling in ROC’s WTO commitments. For ROC investors, they can invest in value-added services in Panama. Example- R&D, leasing, market survey, technical testing and analysis, advertising, equipment maintenance: these business-related services are opened for foreigners to provide services.


ROC’s Advantage Location: heart of east Asia economic zone. high-tech industries and supporting services such as R&D, transportation, financial, and telecommunications. ROC Japan Korea China ASEAN countries Benefits of Corporate Strategy (1)


Panama’s Advantage Location: heart of Americas and bridge of oceans. Canal; Colon Free Zone ; No foreign exchange risk against US$ Member of future FTAA Panama NAFTA Latin America Atlantic Ocean Pacific Ocean Benefits of Corporate Strategy (2)


The Economic Benefits of the R.O.C.-Panama FTA on Investment

The ROC investment in Panama: 

The ROC investment in Panama Resource: IDIC, MOEA


The FTAA (free trade agreement of the Americas) will be completed by 2005. Panama and the other American countries will combine with the North American Free Trade Area to form the biggest economic entity in the world, a $13 trillion market of 34 countries and nearly 800 million people . This will make Panama an even more attractive destination for investment from Taiwan. Panama could serve as Gateway to FTAA


Panama is located at the central point of Central America and serves as a link between North and South America, and between the Pacific and Atlantic ocean It also offers high-quality manpower, and it has become a base for investment by Taiwanese companies. Geographical Advantage of Panama


The ROC signed an investment protection agreement with Panama in March, 1992, providing an extra level of assurance for investors. Investment Protection Agreement


Conclusion- benefits After the signing of the ROC-Panama FTA


The Benefits After the Signing of the ROC-Panama FTA the industries of ROC and Panama are complementary Expanding the overseas market Increasing bilateral economic corporation and serving as the gateway for FTAA Increasing the willingness of other trading partners to negotiate an FTA with ROC


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