The Government of the Republic of China (hereinafter referred to
as "the ROC") and the Government of the Republic of Panama (her-
einafter 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 pro-
duced 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 prote-
cion of investments in their territories;

RESPECT their respective rights and obligations under the Marra-
kesh Agreement Establishing the World Trade Organization (WTO),
as well as other bilateral and multilateral cooperation instrum-
ents;

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 enviro-
nmental 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 GENERAL ASPECTS
CHAPTER 1 INITIAL PROVISIONS

Article 1.01 Establishment of the Free Trade Area
Through this Agreement and consistent with Article XXIV of the
General Agreement on Tariffs and Trade of 1994 and Article V of
the General Agreement on Trade in Services, the Parties hereby
establish a free trade area.

Article 1.02 Enforcement
Each Party shall ensure the adoption of all necessary measures
in accordance with its constitutional rules in order to comply
with the provisions of this Agreement in its territory and in
all levels of its government.

Article 1.03 Relation to Other International Agreements
1.The Parties affirm their existing rights and obligations with
respect to each other under the WTO Agreement and other agree-
ments 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 pre-
vail to the extent of the inconsistency, except as otherwise
provided in this Agreement.
3.In the event of any inconsistency between this Agreement and
the specific trade obligations set forth in:
(a) the Convention on International Trade in Endangered Species
of Wild Fauna and Flora (CITES), done at Washington, March
3, 1973, as amended June 22, 1979;
(b) the Montreal Protocol on Substances that Deplete the Ozone
Layer done at Montreal, September 16, 1987, as amended June
29, 1990; or
(c) the Basel Convention on the Control of Trans-boundary Movem-
ents of Hazardous Wastes and Their Disposal, done at Basel,
March 22, 1989,
these obligations shall prevail to the extent of the inconsiste-
ncy, provided that where a

Party has a choice among equally effective and reasonably avail-
able 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 internat-
ional agreement shall be made in the same terms to its successor
treaty or international agreement to which the Parties are party
.

CHAPTER 2
GENERAL DEFINITIONS
Article 2.01 Definitions of General Application
For purposes of this Agreement, except as otherwise provided for
in another Chapter, the following terms shall be understood as:

chapter: the first two digits of the Harmonized System;

Commission: the Administrative Commission of the Agreement esta-
blished pursuant to Article 18.01 (Administrative Commission of
the Agreement);

customs duty: any customs or import duty and charges of any kind
imposed on or in
connection with the importation of a good, including any form of
surtax or surcharge in connection with such importation, but not
including any:
(a) charge equivalent to an internal tax imposed consistently
with Article III: 2 of GATT 1994;
(b) antidumping or countervailing duty that is applied pursuant
to a Party's legislation and applied consistently with Chap-
ter 7 (Unfair Trade Practices);
(c) fee or other charge in connection with importation commensu-
rate with the cost of services rendered; and
(d) premium offered or collected on or in connection with an im-
ported good arising out of any tendering system in respect
of the administration of quantitative import restrictions,
tariff rate quotas or tariff preference levels;

Customs Valuation Agreement: the Agreement on Implementation of
Article VII of the General Agreement on Tariffs and Trade 1994,
including its interpretative notes which forms part of the WTO
Agreement;

days: calendar days, including Saturdays, Sundays and holidays;

enterprise: any legal entity constituted or organized under the
applicable laws of a Party, whether or not for profit, and whe-
ther privately-owned or governmentally-owned, including any co-
mpany, corporation, foundation, trust, partnership, sole propr-
ietorship, joint venture or other association;

existing: in effect on the date of entry into force of this Ag-
reement;

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, inc-
luding goods originating in that Party. Goods of a Party may in-
corporate materials from non-Parties;

Harmonized System: the "Harmonized Commodity Description and Co-
ding System" as in effect, including its general rules of inter-
pretation and the legal notes of its sections, chapters, headin-
gs 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 ass-
embles 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 Ar-
ticle 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 estab-
lished 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 ac-
cordance with Article 5.12 (Uniform Regulations); and

WTO Agreement: the Marrakesh Agreement Establishing the World
Trade Organization (WTO) on April 15, 1994.

ANNEX 2.01
COUNTRY-SPECIFIC DEFINITIONS
For purposes of this Agreement, unless otherwise specified in
other Chapters, it shall be understood as:
National:
in the case of Panama:
(a) a Panamanian national by birth according to Article 9 of the
Constitution of the Republic of Panama;
(b) a Panamanian national by naturalization according to Article
10 of the Constitution of the Republic of Panama; or
(c) a Panamanian national by adoption according to Article 11 of
the Constitution of the Republic of Panama; and
in the case of the ROC:
a person who has the nationality of the Republic of China by bi-
rth or naturalization according to Article 3 of the Constitut-
ion and Article 2 of the Nationality Law of the Republic of
China.

PART TWO TRADE IN GOODS
CHAPTER 3

NATIONAL TREATMENT AND MARKET ACCESS FOR GOODS
Section A-Definitions and Scope of Application

Article 3.01 Definitions
For purposes of this Chapter, the following terms shall be unde-
rstood as:

advertising films: recorded visual media, with or without sound-
tracks, 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 terri-
tory of a Party, provided that the films are suitable for its
exhibitions to potential customers, and are not for the broadca-
sting 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 chapt-
ers, headings or subheadings of the Harmonized System, according
to the 1996 revision:

(Note: the descriptions are provided for reference)

Tariff Classification Description

Chapters 01 to 24 less fish and fish products

Subheading 2905.43 Mannitol

Subheading 2905.44 Sorbitol

Heading 33.01 essential oils

Headings 35.01 to 35.05 albuminoidal substances, modi-
fied starches, glues

Subheading 3809.10 finishing agents

Subheading 3824.60 sorbitol other than that of
subheading No. 2905.44

Headings 41.01 to 41.03 hides and skins

Heading 43.01 raw fur skins

Headings 50.01 to 50.03 raw silk and silk waste

Headings 51.01 to 51.03 wool and animal hair

Headings 52.01 to 52.03 raw cotton, cotton waste and
cotton carded or combed

Heading 53.01 raw flax

Heading 53.02 raw hemp

commercial samples of negligible value or of non-commercial val-
ue: commercial samples (individually or in the aggregated shipm-
ent) valued no more than one US dollar or the equivalent amount
counted in whatever currency of the Parties, or marked, torn,
perforated or treated in the way which are unsuitable for sales
or for any way except of sample use;

consumed:

(a) actually consumed; or
(b) further processed or manufactured so as to result in a subs-
tantial change in value, form or use of the good or in the
production of another good;

goods for exhibition or demonstration: including components, au-
xiliary 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, leafle-
ts, 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 distrib-
uted free of charge, and are classified in Chapter 49 of the Ha-
rmonized System;

repairs or alterations: activities which do not include operati-
ons or processes that destroy the basic characteristics of a go-
od or create a new or commercially different good. For this pur-
pose, it shall be understood that an operation or process that
forms part of the production or assembly of an unfinished good
and transform it into a finished good does not mean a repair or
alteration of the unfinished good;

subsidies to exports of agriculture goods: those are related to
:

(a) the provision by governments or their agencies of direct su-
bsidies, including payments-in-kind, to a firm, to an indus-
try, to producers of an agricultural good, to a cooperative
or other association of such producers, or to a marketing
board, contingent on export performance;

(b) the sale or disposal for export by governments or their age-
ncies of noncommercial stocks of agricultural goods at a pr-
ice lower than the comparable price charged for the like pr-
oduct to buyers in the domestic market;

(c) payments on the export of an agricultural good that are fin-
anced by virtue of governmental action, whether or not a ch-
arge on the public account is involved, including payments
that are financed from the proceeds of a levy imposed on the
agricultural goods concerned or on agricultural goods from
which the exported product is derived;

(d) the provision of subsidies to reduce the costs of marketing
exports of agricultural goods (other than widely available
export promotion and advisory services) including handling,
upgrading and other processing costs, and the costs of inte-
rnational transport and freight;

(e) internal transport and freight charges on export shipments,
provided or mandated by governments, on terms more favorable
than for domestic shipments; or

(f) subsidies on agricultural goods contingent on their incorpo-
ration in exported products; and

temporary admission of goods: the temporary admission of goods
or the temporary import of goods.

Article 3.02 Scope of Application

This Chapter applies to the trade in goods between the Parties,
except as otherwise provided in this Agreement.

Section B- National Treatment
Article 3.03 National Treatment
1.Each Party shall accord national treatment to the goods of the
other Party in accordance with Article III of GATT 1994, inclu-
ding 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 mo-
st favorable treatment granted by this Party to the like, dire-
ctly 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 comm-
it themselves to ensuring access to their respective markets
by means of elimination of customs duties, on the trade of or-
iginating goods according to the tariff reduction schedule de-
scribed 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 in-
creasing a customs tariff as may be allowed by the WTO Agreem-
ent or any other agreement which forms part of the WTO.

3.Paragraph 1 does not prohibit a Party from increasing a custo-
ms 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 esta-
blished in the tariff reduction schedule. During the tariff
reduction process the Parties shall undertake to apply in the-
ir trade in originating goods the lowest tariff obtained by
comparing the level established in accordance with its respec-
tive tariff reduction schedule and the level in force accordi-
ng to Article I of GATT 1994.

4.At the request of any Party, the Parties shall carry out cons-
ultations to consider the possibility of accelerating the pha-
sing out of customs tariffs under the tariff reduction schedu-
les.

5.Notwithstanding the provisions of paragraphs 1 through 4, a
Party may maintain, adopt or modify any tariff on goods exclu-
ded from the tariff reduction schedule as provided in Annex 3.
04.

Article 3.05 Temporary Admission of Goods

1.Each Party shall grant duty-free temporary admission to import
from the territory of the other Party for:

(a) professional equipment necessary for carrying out the busin-
ess activity, trade or profession of a business person who
qualifies for temporary entry pursuant to Chapter 14 (Tempo-
rary Entry for Business Persons);

(b) equipment for the press or for radio or television broadcas-
ting and cinematographic equipment;

(c) goods imported for sports purposes or goods intended for di-
splay or demonstration; and

(d) commercial samples and advertising films.

2.Except as otherwise provided in this Agreement, neither Party
may impose any condition upon the duty-free temporary admissi-
on of a good referred to in paragraph 1(a), (b) or (c), other
than the requirement that such a good:

(a) be imported by a national or resident of the other Party who
seeks temporary entry;
(b) be used solely by visitors or under the personal supervision
of such person in the exercise of the business activity, tr-
ade or profession of that person;

(c) not be sold or leased while in its territory;

(d) be accompanied by a bond in an amount no greater than 110
percent of the charges that would otherwise be owed on entry
or final importation, or by another form of security, relea-
sable on exportation of the good, except that a bond for cu-
stoms duties shall not be required for the original goods;

(e) be easily identifiable when exported;

(f) be exported on the departure of that person or within such
period of time as is reasonably related to the purpose of
the temporary admission; and

(g) be imported in no greater quantity than is reasonable for
its intended use.

3.Except as otherwise provided in this Agreement, neither Party
may impose any condition upon the duty-free temporary admissi-
on of a good referred to in paragraph 1(d), other than the
requirement that such a good:

(a) be imported solely for the solicitation of orders for goods
or services provided from the territory of the other Party
or a non-Party;

(b) not be sold, leased or put to any use other than exhibition
or demonstration while in its territory;

(c) be easily identifiable when exported;

(d) be exported within such period as is reasonably related to
the purpose of the temporary admission; and

(e) be imported in no greater quantity than is reasonable for
its intended use.

4.Where a good temporarily admitted duty-free under paragraph 1
do not fulfill whatever conditions that a Party imposes under
paragraph 2 or 3 that Party may impose:
(a) customs tariff and other charges which are levied on the
import; and
(b) any criminal, civil or administrative penalties as may be
appropriate under the circumstances.

Article 3.06 Duty-Free Entry of Certain Commercial Samples of
Negligible Value or of Non-Commercial Value and Printed Adverti-
sing Materials

Each Party shall grant duty-free entry to commercial samples of
negligible value or of non-commercial value, and to printed adv-
ertising materials, imported from the territory of the other Pa-
rty but may require that:

(a) such commercial samples be imported solely for the solicita-
tion of orders for goods or services provided from the terr-
itory 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 sh-
ipment.

Article 3.07 Goods Re-Entered after Repair or Alteration
1.Neither Party may apply a customs tariff to a good that re-en-
ters 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 tem-
porarily 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, sha-
ll 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 Parti-
es 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 establis-
hed 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 deci-
des to support its agriculture producers, it shall endeavor to
work toward the domestic support policy that:
(a) has minimal or no trade distorting or production effects; or
(b) is in accordance with its respective commitments in the WTO.

2.In order to ensure the transparency of the support policy to
agriculture, the Parties agree to carry out continuous and pe-
rmanent analysis of such policy. For these purposes, the acqu-
ired information shall be used as principal reference in these
respective annual notifications to the WTO Committee on Agric-
ulture, and the copies of the notifications may be exchanged
upon the request of a Party. Without prejudice to the aforeme-
ntioned, 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 for-
ce of this Agreement, shall cooperate to achieve such objecti-
ves.
2.The Parties are also committed not to re-introducing any expo-
rt 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 Ar-
ticle XX and XXI of GATT 1994, and those regulated in Chapter
8 (Sanitary and Phytosanitary Measures) and Chapter 9 (Standa-
rd, 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 exporta-
tion or sale for export of any goods destined for the territo-
ry 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 inc-
orporated 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:

(a) be construed to prevent the Party from limiting or prohibit-
ing the importation of goods of that non-Party from the ter-
ritory of the other Party;
or

(b) allow the Party requiring as a condition of export of such
goods of the Party to the territory of the other Party, that
the goods not be re-exported to a non-Party country, direct-
ly or indirectly, without being consumed in the territory of
the other Party.

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, ma-
rketing 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, ne-
ither Party shall apply an existing customs processing fee,
nor shall adopt new customs processing fees on originating go-
ods.

2.Upon the entry into force of this Agreement, neither Party sh-
all collect consular fees or charges, nor shall require consu-
lar 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, Artic-
le 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 implementa-
tion of their laws on country of origin marking does not have
the purpose or effect of creating unnecessary barriers to tra-
de between the Parties.

Article 3.14 Export Taxes
Neither Party may adopt or maintain any duty, tax or other char-
ge 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 199
4, 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) (Comm-
ittees), the Committee shall have the following functions:

(a) to submit to the Commission for its consideration of the ma-
tters that impede the access of goods to the territory of
the Parties, especially the implementation of non-tariff me-
asures; and

(b) to promote trade in goods between the Parties through consul-
tations and studies intended to modify the period established
in Annex 3.04, in order to accelerate the tariff reduction.

ANNEX 3.11(6)
IMPORT AND EXPORT RESTRICTIONS
Section A - Panama Measures
Notwithstanding Articles 3.03 and 3.11, Panama may adopt prohib-
itions or restrictions on imports of the products described in
the following customs tariff codes of Panama:
┌────────┬─────────────────────┐
│HS 96 Code │Description │
├────────┼─────────────────────┤
│1301.90.20 │Resin of cannabis and other narcotics │
├────────┼─────────────────────┤
│1302.11.10 │Saps and extracts of opium │
├────────┼─────────────────────┤
│1302.11.90 │The others (of opium) │
├────────┼─────────────────────┤
│1302.19.20 │Extracts and dyeing of cannabis │
├────────┼─────────────────────┤
│1302.19.30 │Concentrated of doze, and other narcotics │
├────────┼─────────────────────┤
│2903.46.10 │Bomoclorodifluorometano │
├────────┼─────────────────────┤
│2903.46.20 │Bromotrifluorometano │
├────────┼─────────────────────┤
│2903.46.30 │Dibromotetrafluoroetanos │
├────────┼─────────────────────┤
│3601.00.00 │Propellent powders │
├────────┼─────────────────────┤
│3602.00.00 │Prepared explosives; other than propellent│
│ │powders │
├────────┼─────────────────────┤
│4004.00.00 ex │Waste, parings and scrap of rubber (other │
│ │than hard rubber) and powders and granules│
│ │obtained │
├────────┼─────────────────────┤
│4012.10 ex │Retreated tires │
├────────┼─────────────────────┤
│4012.20 ex │Pneumatic tires │
├────────┼─────────────────────┤
│4907.00.52 │Lottery tickets official in circulation │
├────────┼─────────────────────┤
│6201- 6217 ex │Used clothing │
├────────┼─────────────────────┤
│6401- 6402 ex │Used shoes │
├────────┼─────────────────────┤
│8701- 8716 ex │Used vehicles │
├────────┼─────────────────────┤
│8710.00.00 │Tanks and other fighting vehicles fitted │
│ │with weapons │
├────────┼─────────────────────┤
│8906.00.10 │Warships │
├────────┼─────────────────────┤
│8908.00.10 │Vessel for war │
├────────┼─────────────────────┤
│9301.00.00 │Military weapons, other than revolvers, │
│ │pistols knifes │
├────────┼─────────────────────┤
│9305.90.10 │Weapons of war │
├────────┼─────────────────────┤
│9306.30.10 │For weapons of war and its parts │
├────────┼─────────────────────┤
│9306.90.10 │Other war supplies, missiles, grenades │
│ │and its parts │
├────────┼─────────────────────┤
│9307.00.10 │Swords, cutlasses for military use │
├────────┼─────────────────────┤
│9504.10.11 │Other providing prizes (video games) │
├────────┼─────────────────────┤
│9504.30.10 │Other providing prizes (games) │
├────────┼─────────────────────┤
│9504.90.11 │Used for money and can be paid as prizes │
└────────┴─────────────────────┘
Notwithstanding Articles 3.03 and 3.11, Panama will adopt or ma-
intain measures related to the exports of woods of whatever spe-
cies of natural forests, according to the Executive Decree No.
57, June 5, 2002.

Section B - The ROC Measures
Notwithstanding Articles 3.03 and 3.11, the ROC may adopt prohi-
bitions or restrictions on imports of the products described in
the following customs tariff codes of the ROC:

1.Commodities subject to import prohibition
┌────────┬────────────────────┐
│CCC Code │Description │
├────────┼────────────────────┤
│0208.90.20ex │Meat of dogs, fresh, chilled or frozen │
├────────┼────────────────────┤
│0303.79.99ex │Puffer fish, frozen │
├────────┼────────────────────┤
│0305.30.90ex │Ball puffer fillets, dried, salted or in│
│ │brine, but not smoked; Puffer fish, │
│ │dried │
├────────┼────────────────────┤
│0602.90.10ex │Mushroom spawn, containing narcotics ( │
│ │the composition of which is as set forth│
│ │by the Executive Yuan in accordance with│
│ │Article 2.3 of the "Statute for Narcoti-│
│ │cs Hazard Control") │
├────────┼────────────────────┤
│1207.99.20ex │Other Huo Ma Jen (Cannabis Fructus) │
├────────┼────────────────────┤
│1404.90.99ex │Mushroom products, containing narcotics │
│ │ (the composition of which is as set fo-│
│ │rth by the Executive Yuan in accordance │
│ │with Article 2.3 of the "Statute for │
│ │Narcotics Ha zard Control".) │
├────────┼────────────────────┤
│1604.19.90ex │Ball puffer fish, whole or in pieces, │
│ │but not minced, prepared or preserved, │
│ │frozen;Other ball puffer fish, whole or │
│ │in pieces, but not minced, prepared or │
│ │preserved │
├────────┼────────────────────┤
│2710.00.51ex │Blending oils containing 70% or more by │
│ │weight of petroleum products (containing│
│ │polychlorobiphenyls) │
├────────┼────────────────────┤
│2710.00.91ex │Oil, electric transformer, containing │
│ │polychlorobiphenyls, polychlorinated na-│
│ │phthalene chloronaphthalen, polychlorin-│
│ │ated terphrnyls or hexachloro benzene, │
│ │perchlorobenzene │
├────────┼────────────────────┤
│2710.00.93ex │Condenser oil, electric, containing pol-│
│ │ychlorobiphenyls, polychlorinated napht-│
│ │halene chloronaphthalen, polychlorinated│
│ │terphrnyls or hexachloro benzene, perch-│
│ │loro benzene │
├────────┼────────────────────┤
│2830.90.00ex │Trinickel disulfide │
├────────┼────────────────────┤
│2903.14 │Carbon tetrachloride │
├────────┼────────────────────┤
│2903.19.10ex │Trichloroethane │
├────────┼────────────────────┤
│2903.41 │Trichlorofluoromethane │
├────────┼────────────────────┤
│2903.42 │Dichlorodifluoromethane │
├────────┼────────────────────┤
│2903.43 │Trichlorotrifluoroethane │
├────────┼────────────────────┤
│2903.44 │Dichlorotetrafluoroethane and Chloropen-│
│ │tafluoroethane │
├────────┼────────────────────┤
│ │ │
├────────┼────────────────────┤
│CCC Code │Description │
├────────┼────────────────────┤
│2903.45.00ex │Chlorotrifluoromethane (CFC-13) ; Penta-│
│ │chlorofluoroethane (CFC-111); Tetrachlo-│
│ │rodifluoroethane (CFC-112); Heptachloro-│
│ │fluoropropane (CFC-211); Hexachlorodifl-│
│ │uoropropane (CFC-212); Pentachlorotrifl-│
│ │uoropropane (CFC-213); Tetrachlorotetra-│
│ │fluoropropane (CFC-214); Trichloropenta-│
│ │fluoropropane (CFC-215); Dichlorohexafl-│
│ │uoropropane (CFC-216); Chloroheptafluor-│
│ │opropane (CFC-217) 2903.46 Bromochlorod-│
│ │ifluoromethane, bromotrifluoromethane │
│ │and dibromotetrafluoroethanes │
├────────┼────────────────────┤
│2903.49.00 │1,2-Dibromo-3-Chloropropane (DBCP) │
├────────┼────────────────────┤
│2903.51 │1, 2, 3, 4, 5, 6-Hexachlorocyclohexane │
├────────┼────────────────────┤
│2903.62.20ex │Hexachlorobenzene;Ddt [1,1,1-trichloro-2│
│ │,2-bis (p-chlorophenyl ethane)] │
├────────┼────────────────────┤
│2904.20.00ex │P-nitrobiphenyl │
├────────┼────────────────────┤
│2908.10.10ex │Pentachlorophenol (PCP) and its salts │
├────────┼────────────────────┤
│2908.10.90ex │2,4,5-trichlorophenol │
├────────┼────────────────────┤
│2909.19.90ex │Dichloromethyl ether;Chloromethyl methyl│
│ │ether │
├────────┼────────────────────┤
│2921.44.00ex │4-amino diphenyl;4 -amino diphenyl hcl │
├────────┼────────────────────┤
│2921.45.00ex │2-naphthylamine (beta-naphthylamine);2- │
│ │naphthylamine (betanaphthylamine) aceta-│
│ │te;2-naphthylamine (beta-naphthylamine) │
│ │hcl │
├────────┼────────────────────┤
│2929.90.00ex │Alpha-bromobenzyl cyanide (benzeneaceto-│
│ │nitrile, bromo) │
├────────┼────────────────────┤
│2931.00.30ex │Organo-mercury compounds │
├────────┼────────────────────┤
│3301.90.11ex │Extracted oleoresins of opium │
├────────┼────────────────────┤
│3403.19.90ex │Lubricating preparations, containing po-│
│ │lychlorinated biphenyls, polychlorinated│
│ │naphthalene, chloronaphthalene, polychl-│
│ │orinated terphenyls or hexachloro benze-│
│ │ne, perchlorobenzene, (as basic constit-│
│ │uents,70% or more by weight of petroleum│
│ │oils or of oils obtained from bituminous│
│ │minerals are classified in heading No. 2│
│ │710) │
├────────┼────────────────────┤
│3404.90.90ex │Waxes composed of polychloro-biphenyls │
│ │or polychloronaphthalenes │
├────────┼────────────────────┤
│3604.10 │Fireworks, toy;Fireworks other than toy │
├────────┼────────────────────┤
│3604.90.90ex │Other pyrotechnic articles │
├────────┼────────────────────┤
│3813.00.00ex │Preparations and charges for fire-extin-│
│ │guishers, containing bromotrifluorometh-│
│ │ane (halon-1301), bromochlorodifluorome-│
│ │thane (halon-1211)or dibromotetrafluoro-│
│ │ethane (halon-2402) │
└────────┴────────────────────┘
┌────────┬────────────────────┐
│ CCC Code │Description │
├────────┼────────────────────┤
│ 3824.90.23ex │Condenser oil not of mineral oil origin,│
│ │(containing polychlorinated biphenyls, │
│ │polychlorinated naphthalene, chloronaph-│
│ │thalene, polychlorinated terphenyls or │
│ │hexachloro benzene, perchlorobenzene) │
├────────┼────────────────────┤
│ 3824.90.99ex │Polychlorobiphenyls │
├────────┼────────────────────┤
│ 8112.91.21ex │Mixed metal scrap │
├────────┼────────────────────┤
│ 8424.10.00ex │Fire-extinguishers, containing bromotri-│
│ │fluoromethane (halon-1301), bromochloro-│
│ │difluoromethane (halon-1211)or dibromot-│
│ │etrafluoroethane (halon-2402) │
├────────┼────────────────────┤
│ 8548.10.10ex │Waste lead-acid accumulators and spent │
│ │lead-acid accumulators │
└────────┴────────────────────┘
Notwithstanding Articles 3.03 and 3.11, the ROC may adopt pro-
hibitions or restrictions on exports of the products described
in the following customs tariff codes of the ROC:

2.Commodities subject to export prohibition
┌────────┬────────────────────┐
│CCC Code │Description │
├────────┼────────────────────┤
│0208.90.20ex │Meat of dogs, fresh, chilled or frozen │
├────────┼────────────────────┤
│0301.91.00 │Live trout (Salmo trutta, Oncorhynchus │
│ │mykiss, Oncorhynchus clarki, Oncorhy ag-│
│ │uabonita, Oncorhynchus gilae, Oncorhync-│
│ │hus apache and Oncorhynchus chrysogaster│
│ │) │
├────────┼────────────────────┤
│0302.11.00 │Trout (Salmo trutta, Oncorhynchus mykiss│
│ │, Oncorhynchus clarki, Oncorhynchus agu-│
│ │abonita, Oncorhynchus gilae, Oncorhynch-│
│ │us apache and Oncorhynchus chrysogaster)│
│ │, fresh or chilled │
├────────┼────────────────────┤
│0302.12.10 │Pacific salmon (Oncorhynchus nerka, Onc-│
│ │orhynchus gorbuscha, Oncorhynchus keta, │
│ │Oncorhynchus tschawytscha, Oncorhynchus │
│ │kisutch, Oncorhynchus masou and Oncorhy-│
│ │nchus rhodurus), fresh or chilled │
├────────┼────────────────────┤
│0302.12.20 │Atlantic salmon (Salmo salar) and Danube│
│ │salmon (Hucho hucho), fresh or chilled │
├────────┼────────────────────┤
│0302.19.00ex │Other salmonidae, fresh or chilled │
├────────┼────────────────────┤
│0303.10.00 │Pacific salmon (Oncorhynchus nerka, Onc-│
│ │orhynchus gorbuscha, Oncorhynchus keta, │
│ │Oncorhynchus tschawytscha, Oncorhynchus │
│ │kisutch, Oncorhynchus masou and Oncorhy-│
│ │nchus rhodurus), frozen, excluding live-│
│ │rs and roes │
├────────┼────────────────────┤
│0303.21.00 Trout│ (Salmo trutta, Oncorhynchus mykiss, On-│
│ │corhynchus clarki, Oncorhynchus aguabon-│
│ │ita, Oncorhynchus gilae, Oncorhynchus │
│ │apache and Oncorhynchus chrysogaster), │
│ │frozen │
├────────┼────────────────────┤
│0303.22.00 │Atlantic salmon (Salmo salar) and Danube│
│ │salmon (Hucho hucho), frozen │
└────────┴────────────────────┘
┌────────┬────────────────────┐
│CCC Code │Description │
├────────┼────────────────────┤
│0303.29.00ex │Other salmonidae, frozen │
├────────┼────────────────────┤
│0304.10.50ex │Trout fillets and its meat (whether or │
│ │not minced), fresh or chilled │
├────────┼────────────────────┤
│0304.10.90ex │Salmon fillets and its meat (whether or │
│ │not minced), fresh or chilled │
├────────┼────────────────────┤
│0304.20.20ex │Salmon fillets, frozen │
├────────┼────────────────────┤
│0304.20.30ex │Trouts, fillets, frozen │
├────────┼────────────────────┤
│0305.30.90ex │Salmon and trouts fillets, dried, salted│
│ │or in brine, but not smoked │
├────────┼────────────────────┤
│0305.41.00 │Pacific salmon (Oncorhynchus nerka, Onc-│
│ │orhynchus gorbuscha, Oncorhynchus keta, │
│ │Oncorhynchus tschawytscha, Oncorhynchus │
│ │kisutch, Oncorhynchus masou and Oncorhy-│
│ │nchus rhodurus), Atlantic salmon (Salmo │
│ │salar) and Danube salmon (Hucho hucho), │
│ │smoked │
├────────┼────────────────────┤
│0305.49.30ex │Trout, smoked │
├────────┼────────────────────┤
│0305.69.10ex │Fish, salmon, salted or in brine │
├────────┼────────────────────┤
│0602.10.90ex │Sugar-cane, unrooted cuttings and slips │
└────────┴────────────────────┘
┌────────┬────────────────────┐
│CCC Code │Description │
├────────┼────────────────────┤
│0602.90.10ex │Mushroom spawn, containing narcotics ( │
│ │the composition of which is as set forth│
│ │in article 2.3 of Executive Yuan "Statu-│
│ │te for Narcotics Hazard Control".) │
├────────┼────────────────────┤
│0602.90.91ex │Other bamboo planting stock │
├────────┼────────────────────┤
│1212.92.00ex │Sugar cane, for sugar extraction │
├────────┼────────────────────┤
│1404.90.99ex │Mushroom products, containing narcotics │
│ │ (the composition of which is as set fo-│
│ │rth in article 2.3 of Executive Yuan " │
│ │Statute for Narcotics Hazard Control".) │
├────────┼────────────────────┤
│1604.11.00ex │Salmon, whole or in piece, but not minc-│
│ │ed, prepared or preserved, frozen;Salmon│
│ │, whole or in pieces, but not minced, │
│ │prepared or preserved, canned;Other sal-│
│ │mon, whole or in pieces, but not minced,│
│ │prepared or preserved │
├────────┼────────────────────┤
│1604.19.90ex │Trouts, whole or in pieces, but not min-│
│ │ced, prepared or preserved, frozen;Trou-│
│ │ts, whole or in pieces, but not minced, │
│ │prepared or preserved, canned;Other tro-│
│ │uts, whole or in pieces, but not minced,│
│ │prepared or preserved │
├────────┼────────────────────┤
│2903.51.00ex │1, 2, 3, 4, 5, 6-Hexachlorocyclohexane │
├────────┼────────────────────┤
│2921.44.00ex │4-amino diphenyl;4 -amino diphenyl hcl │
├────────┼────────────────────┤
│2921.45.00ex │2-naphthylamine (beta-naphthylamine);2 │
│ │-naphthylamine (betanaphthylamine) acet-│
│ │ate;2-naphthylamine (beta-naphthylamine)│
│ │hcl │
├────────┼────────────────────┤
│8710.00.00 │Tanks and other armoured fighting vehic-│
│ │les, motorised, whether or not fitted │
│ │with weapons;Parts of tanks and other │
│ │armoured fighting vehicles, motorised │
├────────┼────────────────────┤
│8906.00.10ex │Warships │
├────────┼────────────────────┤
│9301.00.00 │Military weapons, other than revolvers, │
│ │pistols and the arms of heading No. 93. │
│ │07 │
├────────┼────────────────────┤
│9705.00.00 │Collections and collectors' pieces of │
│ │weapon;Other collections and collectors │
│ │pieces of zoological, botanical, minera-│
│ │logical, anatomical, historical, archae-│
│ │ological, palaeontological, ethnographic│
│ │or numismatic interest │
├────────┼────────────────────┤
│9706.00.00 │Other antiques of an age exceeding one │
│ │hundred years │
└────────┴────────────────────┘

ANNEX 3.16
COMMITTEE ON TRADE IN GOODS
The Committee on Trade in Goods under Article 3.16 shall be com-
posed of:

(a) in the case of Panama, the Ministry of Trade and Industries,
represented by the Vice-ministry of Foreign Trade or its su-
ccessor; and

(b) in the case of ROC, the Ministry of Economic Affairs, repre-
sented by the Bureau of Foreign Trade or its successor.

CHAPTER 4
RULES OF ORIGIN

Article 4.01 Definitions
For purposes of this Chapter, the following terms shall be unde-
rstood as:

CIF: the value of imported goods including the costs of insuran-
ce 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 identi-
cal and which are impossible to tell apart from visual examinat-
ion alone;

generally accepted accounting principles: principles applied in
the territories of each Party which give a substantial and auth-
orised support to the registration of income, costs, expenditur-
es, assets and liabilities related to the information and prepa-
ration of financial statements. These indicators, practical rul-
es and procedures used generally in accounting can become a com-
prehensive guide with general applicability;

goods wholly obtained or produced entirely in a Party:

(a) mineral goods extracted or taken in the territory of that
Party;

(b) plants and plant products harvested, picked or gathered in
the territory of that Party;

(c) live animals born and raised in the territory of that Party;

(d) goods obtained by hunting, trapping, fishing, gathering or
capturing in the territory of that Party;

(e) goods obtained from live animals in the territory of that
Party;

(f) fish, shellfish and other marine life taken outside the ter-
ritorial sea of the Parties by fishing vessels registered or
recorded with that Party and owned by a person of that Party
and flying its flag, or by rented fishing vessels of a comp-
any established in the territory of that Party;

(g) goods obtained or produced on board factory ships from the
goods referred to in subparagraph (f) provided such factory
ships are registered or recorded with that Party and flying
its flag, or on rented board factory ships of a company est-
ablished in the territory of that Party;

(h) goods taken by that Party or a person of that Party from the
seabed or beneath the seabed outside the territorial sea of
that Party, provided that Party has rights to exploit such
seabed;

(i) waste and scrap derived from manufacturing or processing op-
erations or from consumption in the territory of that Party
and fit only for disposal or for the recovery of raw materi-
als;

(j) articles collected in the territory of that Party which can
no longer perform their original purpose in its territory,
nor are capable of being restored or repaired and which are
fit only for disposal or for the recovery of parts or raw
materials; or

(k) goods produced in the territory of one or both of the Parti-
es exclusively from goods referred to in subparagraphs (a)
through (j) above;

indirect material: a good used in the production, testing or in-
spection 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 :

(a) fuel, energy, catalysts and solvents;

(b) equipment, devices, and supplies used for testing or inspec-
ting goods;

(c) gloves, glasses, footwear, clothing, safety equipment and
supplies;

(d) tools, dies and molds;

(e) spare parts and materials used in the maintenance of equipm-
ent and buildings;

(f) lubricants, greases, compounding materials and other materi-
als used in production or used to operate equipment or main-
tain buildings; and

(g) any other materials or products that are not incorporated
into the good but whose use in the production of the good
can reasonably be demonstrated to be a part of that product-
ion;

material: a good that is used in the production of another good
including ingredients, parts, components, subassemblies and goo-
ds 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 Custo-
ms Valuation Agreement, adjusted in accordance with the princip-
le 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 pay-
able for a material related to the transaction done by the prod-
ucer of the good, according to the principles of Article 1 of
the Customs Valuation Agreement, adjusted in accordance with pa-
ragraphs 1, 3 and 4 of its Article 8, regardless whether the ma-
terial 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:

(a) The Harmonized System shall be the basis for the tariff cla-
ssification of goods; and

(b) The principles and rules of the Customs Valuation Agreement
shall be applied to determine the value of a good or materi-
al.

2.For purposes of this Chapter, when applying the Customs Valua-
tion Agreement to determine the origin of a good:

(a) the principles and rules of the Customs Valuation Agreement
shall apply to domestic transactions, with such modificatio-
ns as may be required by the circumstances as would apply to
international transactions; and

(b) the provisions of this Chapter shall prevail over the provi-
sions of the Customs Valuation Agreement to the extent of
any inconsistency.

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:

(a) the good is wholly obtained or produced entirely in the ter-
ritory of that Party;

(b) the good is produced entirely in the territory of one or bo-
th Parties exclusively from originating materials according
to this Chapter;

(c) the good is produced in the territory of one or both Parties
from nonoriginating materials that complying with the change
in tariff classification, regional value content or other
requirements, according to the specifications stated in Ann-
ex 4.03, and the good satisfies all the other applicable re-
quirements of this Chapter; or

(d) the good is produced in the territory of one or both of the
Parties but one or more of the non-originating materials th-
at are used in the production of the good does not undergo a
change in tariff classification due to :

(i) the good was imported into the territory of a Party in an
unassembled or a disassembled form and was classified as
an assembled good pursuant to General Rule of Interpretat-
ion 2(a) of the Harmonized System,

(ii) the tariff heading for the good provides for and specifi-
cally describes both the good itself and its parts and is
not further subdivided into subheadings, or

(iii) the tariff subheading for the good provides for and spe-
cifically describes both the good itself and its parts;

provided that the regional value content of the good, deter-
mined in accordance with Article 4.07 is not less than thir-
ty five (35%) percent and the good satisfies the other prov-
isions applicable in this Chapter, unless the applicable ru-
le of Annex 4.03, under which the good is classified, speci-
fied a different requirement of regional value content, in
which case such requirement has to be met.

The rules provided for in this subparagraph do not apply to
the goods in Chapters 61 through 63 of the Harmonized System
.

2.If a good of a Party satisfies the rules of origin specified
in Annex 4.03, there is no need to require additional complia-
nce 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 4.0
3, shall be done entirely in the territory of one or both Par-
ties, and the good has to satisfy any applicable regional val-
ue-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 ou-
tcome of the operations set out in Article 4.04 and carried
out in the territory of the Parties that gives their final fo-
rm 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 co-
mbination do not confer origin to a good are:

(a) operations necessary for the preservation of goods during
the transportation or storage (including airing, ventilation
, drying, refrigeration, freezing, elimination of damaged
part, application of oil, antirust paint or protective coat-
ing, placing in salt, sulphur dioxide or other aqueous solu-
tion);

(b) simple operations consisting of cleaning, washing, sieving ,
sifting or straining, selection, classification or grading,
culling; peeling, shelling or striping, grain removal, pitt-
ing, pressing or crushing, soaking, elimination of dust or
of spoiled, sorting, division of consignments in bulk, grou-
ping in packages, placing of marks, labels or distinctive
signs on products and their packages, packing, unpacking or
repackaging;

(c) combination or mixing operations of goods which have not re-
sulted in any important difference in the characteristics of
the goods before and after such combination or mixing;

(d) simple joining or assembling of parts of products to make a
complete good, formation of set or assortments of goods;

(e) simple diluting operations or ionization and salting, which
have not changed the nature of the goods; and

(f) slaughter of animals.

Article 4.05 Indirect Materials
Indirect materials shall be considered to be originating materi-
als 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 do-
ne by such producer, provided that the good satisfies the req-
uirements of Article 4.03.

Article 4.07 Regional Value Content
1.The regional value content of goods shall be calculated accor-
ding to the following method:

RVC = [(TV - VNM) / TV] * 100
Where:
RVC: is the regional value content, expressed as a percentage;
TV: is the transaction value of the good adjusted to a FOB
basis, unless as stated in paragraph 2. In the event that the-
re does not exist or it is not possible to determine the value
in accordance with the principles and rules of Article 1 of
the Customs Valuation Agreement, then this shall be calculated
according to the principles and rules of Articles 2 through 7
of that Agreement; and

VNM: is the transaction value of non-originating materials ad-
justed 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 val-
ue 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 re-
gional value content shall be registered and maintained accor-
ding to the generally accepted accounting principles applicab-
le in the territory of the Party from where the good is produ-
ced.

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, insura-
nce, packing costs and any other cost incurred in the transpo-
rtation 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 det-
ermined in Article 4.07.

2.For a good provided for in Chapters 50 through 63 of the Harm-
onized System, the percentage indicated in the paragraph 1 re-
fers to the weight of fibers or yarns with respect to the wei-
ght 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 materi-
al 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 origina-
ting or nonoriginating fungible goods, the origin of these go-
ods can be determined by the application of one of the followi
ng methods of inventory management, to be selected by the pro-
ducer:

(a) first in, first out (FIFO) method;

(b) last in, first out (LIFO) method; or

(c) averaging method.

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, rel-
oading or any other necessary movement in the territory of the
Party before the exportation to keep the good in good conditi-
on or to transport them to the territory of the other Party,
the origin of the goods shall be determined by one of the inv-
entory 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 assortme-
nt shall qualify as originating, provided that every good inc-
luded in the set or assortment complies with the rules of ori-
gin established in this Chapter and in Annex 4.03.

2.Notwithstanding paragraph 1, a set or assortment of goods sha-
ll be considered originating if the value of all non-originat-
ing 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 th-
at 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:

(a) The accessories, spare parts or tools are not invoiced sepa-
rately from the good; and
(b) The quantities and value of these accessories, spare parts
and tools are customary for the good.

2.Where a good is subject to a regional value content requireme-
nt, its value of the accessories, spare parts or tools shall
be considered as either originating or nonoriginating materia-
ls, as the case may be, in order to calculate the regional va-
lue content of the good.

3.For those accessories, spare parts and tools that do not sati-
sfy 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 Harmoni-
zed 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, i n 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:

(a) the non-originating materials used in the production of the
good undergo an applicable change in tariff classification
as set out in Annex 4.03; and

(b) the good satisfies the regional value content requirement.

Article 4.14 Transshipment

The originating goods of the other Party shall not lose such st-
atus when they are:

(a) transported directly from the territory of the other Party;
or

(b) transported through the territory or territories of one or
more non-Parties for the purpose of transit or temporary st-
oring in warehouses in such territory or territories, provi-
ded that they do not undergo operations other than unloading
, reloading or any other operation to preserve them in good
condition.

CHAPTER 5
CUSTOMS PROCEDURES

Article 5.01 Definitions

1.For purposes of this Chapter, the following terms shall be un-
derstood 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 aut-
hority is the Vice-ministry of Foreign Trade, or its successor
;

commercial importation: the importation of a good into the te-
rritory 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 implementati-
on 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, in-
cluding physical characteristics, quality and reputation, irr-
espective of minor differences in appearance which are not re-
levant for the determination of origin of such goods under Ch-
apter 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 Ta-
riff Reduction Schedule, pursuant to Article 3.04 (Tariff Red-
uction 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 pro-
cedure which establishes whether a good qualifies as originat-
ing 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, sign-
ed 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, pursua nt to
the provision of this Chapter; and

value: the value of a good or material for the purpose of app-
lication 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 in-
to force, the Parties shall develop a single format of Certif-
icate of Origin, which shall enter into force with this Agree-
ment 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 territo-
ry 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 comple-
te and sign a Certificate of Origin for any exportation of go-
ods for which an importer may claim preferential tariff treat-
ment.

4.The Certificate of Origin shall be certified by the certifying
authority of the exporting Party. For this purpose the certif-
ying authority shall ensure that the good to which a Certific-
ate of Origin is applicable, satisfies the requirements estab-
lished in Chapter 4 (Rules of Origin) and in the Annex to Art-
icle 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 orig-
in 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 inform-
ation provided and for those established in the Certificate of
Origin. The certification shall be valid, while the circumsta-
nces or facts on which the certification is based do not chan-
ge.

7.The certifying authority of the exporting Party shall:

(a) maintain the administrative procedures for certification of
the Certificate of Origin that its producer or exporter com-
pleted and signed;

(b) provide, if requested by the customs authority of the impor-
ting Party, information about the origin of the imported go-
ods with preferential tariff treatment; and

(c) notify in writing before this Agreement enters into force, a
list of bodies entitled to issue the certificate referred to
in subparagraph (a) of this Article, with the list of the
name of the authorized officials and the corresponding seals
and signatures. Modifications to this list shall be notified
immediately in writi ng to the other Party and shall enter
into force thirty (30) days after the date on which that Pa-
rty receives that notification of the modification.

8.Each Party shall require that the Certificate of Origin be co-
mpleted and signed by the exporter applicable to a single imp-
ortation of one or more goods.

9.Each Party shall require that the Certificate of Origin be ac-
cepted 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 treat-
ment 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:

(a) complete a written declaration in the importation document
required by its legislation, based on a valid Certificate of
Origin, that a good qualifies as an originating good;

(b) have the Certificate of Origin in its possession at the time
the declaration is made;

(c) provide, upon the request of customs authority of that Party
, a copy of the Certificate of Origin; and

(d) promptly make a corrected declaration and pay any duties ow-
ing where the importer has reason to believe that a Certifi-
cate of Origin on which a declaration was based contains in-
correct information. Where the importer presents the mentio-
ned declaration before the customs authorities notify the
revision, according to the domestic laws of each Party, the
importer shall not be sanctioned.

2.Each Party shall require that, where an importer in its terri-
tory 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 qualif-
ied as an originating good when it was imported into the terr-
itory of that Party but no claim for preferential tariff trea-
tment 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 exem-
pt the importer from the obligation to pay the corresponding
customs tariffs according to the applicable laws of the impor-
ting 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 com-
pleted 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 co-
mpleted and signed a Certificate of Origin or has provided in-
formation to its certifying authority, and that has reason to
believe that this Certificate contains incorrect information,
to notify promptly in writing :

(a) all persons to whom this Certificate was given;

(b) its certifying authority; and

(c) its customs authority according to its legislation,

of any change that could affect the accuracy or validity of
this Certificate, in which case the exporter or producer may
not be sanctioned for having presented an incorrect certifica-
tion or information.

3.Each Party:

(a) shall provide that if a false certification or information
by its exporter or producer resulted in a good to be export-
ed to the territory of the other Party qualifying as an ori-
ginating good, that exporter or producer shall have the sim-
ilar legal consequences, as would apply to an importer in
its territory for contravening its customs laws and regulat-
ions by false statement or representation; and

(b) may apply such measures as the circumstances may warrant wh-
ere its exporter or producer fails to comply with any requi-
rement of this Chapter.

4.The customs authority and the certifying authority of the exp-
orting 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:

(a) its exporter or producer that completes and signs a Certifi-
cate of Origin or provides information to its certifying au-
thority shall maintain for a minimum period of five years
from the date the Certificate was signed, all records and
documents associated with the origin of the good, including
those relating to:

(i) the purchase, costs, value of, and payment for the good
exported from its territory,

(ii) the purchase, costs, value of, and payment for all the
materials, including indirect ones, used in the producti-
on of the good exported from its territory, and

(iii) the production of the good in the form in which it is
exported from its territory;

(b) an importer applying for preferential tariff treatment shall
maintain the Certificate of Origin and all the other docume-
ntation relating to the importation requested by the import-
ing Party for a minimum period of five years from the date
of importation of the good; and

(c) the certifying authority of the exporting Party that has is-
sued a Certificate of Origin shall maintain all documentati-
on relating to the issuance of the Certificate for a minimum
period of five years from the issuing date of the Certifica-
te.

2.A Party may deny preferential tariff treatment to a good subj-
ect to verification of origin, if the exporter, producer or
importer of the good who shall maintain records or documents
according to paragraph 1:

(a) does not maintain the records or documents for determining
the origin of the good, according to the provisions of this
Chapter and Chapter 4 (Rules of Origin); or

(b) denies access to the records or documents.

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 pre-
ferential tariff treatment qualifies as originating, each Par-
ty may verify the origin of the good through its customs auth-
ority by means of:

(a) written questionnaires to an exporter or a producer in the
territory of the other Party;

(b) verification visits to an exporter or a producer in the ter-
ritory of the other Party to review the records and documen-
ts that show compliance with rules of origin under Article
5.05 and to inspect the facilities used in the production of
the good, and those used in the production of materials; or
may commission the embassy in the territory of the other Pa-
rty to visit the exporter or producer to verify the origin;
or

(c) other procedures as the Parties may agree.

3.For purposes of this Article , the notifications of questionn-
aires, official letters, decisions, notices and other written
communications sent to the exporter or producer for origin ve-
rification, shall be considered valid, provided that they are
done by the following means:

(a) certified mail with acknowledgement of receipt or any other
means that confirm the reception of this document by the ex-
porter or producer; or

(b) any other means as the Parties may agree.

4.The provision of paragraph 2 shall be applied without prejudi-
ce to the authority of verification by the customs authority
of the importing Party regarding the enforcement of other obl-
igations of their own importers, exporters or producers.

5.The written questionnaire referred to in paragraph 2(a) shall:

(a) indicate the period available to the exporter or producer,
which shall be no less than thirty (30) days from the date
of receipt, to respond to the authority and return the ques-
tionnaire or the information and documentation requested;
and

(b) include the notice of intention to deny preferential tariff
treatment, in the event that the exporter or producer does
not comply with the requirement of submitting the questionn-
aire duly completed or the requested information, within su-
ch period.

6.The exporter or producer that receives a questionnaire accord-
ing to paragraph 2(a) shall respond to and return the questio-
nnaire 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 sha-
ll 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 corres-
ponding period, each Party may still request for more informa-
tion to determine the origin of the goods subject to verifica-
tion. It may request, through its customs authority, for addi-
tional information from the exporter or producer, by means of
a subsequent questionnaire, in which case the exporter or pro-
ducer 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 resp-
ond to the questionnaires, or does not return the questionnai-
re within the corresponding period, as referred to in paragra-
phs 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 produ-
cer, 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 occ-
ur, 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 in-
tends to visit.

10. The notification referred to in paragraph 9 shall include:

(a) the identity of the customs authority issuing the notific-
ation;

(b) the name of the exporter or producer to whom it intends to
visit;

(c) the date and place of the proposed verification visit;

(d) the object and scope of the proposed verification visit,
including specific reference to the goods that are the su-
bject of the verification;

(e) the names (personal information) and titles of the offici-
als performing the verification visit; and

(f) the legal authority for the verification visit.

11.Any modification of the information referred to in paragraph
10(e) shall be notified in writing to the exporter or produc-
er, to the customs authority and to the certifying authority
of the exporting Party before the verification visit. Any mo-
dification of the information referred to in paragraph 10(a),
(b), (c), (d) and (f) shall be notified according to paragra-
ph 9.

12.Where an exporter or a producer has not given its written co-
nsent to a proposed verification visit within thirty (30) da-
ys 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 ve-
rification 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 propos-
ed verification visit for a period not exceeding sixty (60)
days from the date the notification is received, or for a lo-
nger period as the Parties may agree.

14.A Party shall not deny preferential tariff treatment to a go-
od solely due to the postponement of a verification visit pu-
rsuant 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 obse-
rvers to be present during the visit, provided that the obse-
rvers do not participate in a manner other than as observers,
and the failure of the exporter or producer to designate obs-
ervers shall not result in the postponement of the visit.

16.Each Party shall require that an exporter or a producer prov-
ide 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 export-
er or a producer, it may request the producer or supplier of
the materials to deliver them to the customs authority in ch-
arge of the verification.

17.Each Party shall verify the compliance of the requirements on
regional value content, the de minimis calculation or any ot-
her measure included in Chapter 4 (Rules of Origin) by its
customs authority, according to the generally accepted accou-
nting 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 ex-
porter or producer of the goods subject to verification, det-
ermining whether the good is qualified as originating, inclu-
ding the findings of fact and the legal basis for the determ-
ination.

20.Where the customs authority denies preferential tariff treat-
ment to a good or goods subject to a verification, this auth-
ority shall issue a written decision, well founded and reaso-
ned, which shall be notified to the exporter or producer acc-
ording 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 prefer-
ential tariff treatment to the identical good that this pers-
on exports or produces, until that person establishes compli-
ance with Chapter 4 (Rules of Origin) .

22.If, in two or more verifications of origin, two or more writ-
ten 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 Pa-
rty qualifies as originating

23.When the competent authority of the importing Party determin-
es 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 deci-
sion where:

(a) the customs authority of the Party from whose territory the
good was exported has issued a decision on the tariff class-
ification or on the value of such materials, on which a per-
son 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 pro-
ducer of the good, concerning:

(a) whether a good qualifies as originating, pursuant to Chapter
4 (Rules of Origin);

(b) whether the non-originating materials used in the production
of a good comply with the corresponding change of tariff cl-
assification in Annex 4.03 (Specific Rules of Origin);

(c) whether a good satisfies the regional value content require-
ment set out in Chapter 4 (Rules of Origin);

(d) whether the method applied by an exporter or a producer in
the territory of the other Party according to the principles
of the Customs Valuation Agreement for calculating the tran-
saction value of the good or of the materials used in the
production of the good for which an advance ruling is requi-
red is appropriate for the purpose of determining whether a
good satisfies a regional value content requirement under
Chapter 4 (Rules of Origin);

(e) whether a good that re-enters its territory after it has be-
en exported from its territory to the territory of the other
Party for repair or alteration qualifies for preferential
tariff treatment under Article 3.07 (Goods Re-Entered after
Repair or Alteration); and

(f) such other matters as the Parties may agree.

2.Each Party shall adopt or maintain procedures for issuing adv-
ance rulings, including:

(a) the information which is reasonably required to process an
application;

(b) the power of the customs authority to request at any time
additional information from the person applying for the rul-
ing, during the course of the evaluation;

(c) the obligation of the customs authority to issue the advance
ruling within a period no longer than 120 days, once all ne-
cessary information has been collected from the applicant;
and

(d) the obligation of the customs authority to issue the advance
ruling in a completed, well-founded and reasoned manner.

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:

(a) if the ruling is based on an error

(i) of fact,

(ii) in the tariff classification of a good or a material that
is the subject of the ruling,

(iii) in the application of a regional value content requireme-
nt under Chapter 4 (Rules of Origin) , or

(iv) in the application of the rules for determining whether a
good that reenters its territory after it has been export-
ed from its territory to the territory of the other Party
for repair or alteration qualifies for preferential tariff
treatment under Article 3.07 (Goods Re-Entered after Repa-
ir or Alteration);

(b) if the ruling is not in accordance with an interpretation
agreed by the Parties regarding Chapter 3 (National Treatme-
nt and Market Access for Goods) or Chapter 4 (Rules of Orig-
in);

(c) if there is a change in the facts or circumstances on which
the ruling is based;

(d) to conform with a modification of Chapter 3 (National Treat-
ment and Market Access), Chapter 4 (Rules of Origin), or th-
is Chapter; or

(e) to conform with an administrative or judicial decision or a
change in the domestic law of the Party that issued the adv-
ance ruling.

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 da-
te as may be specified therein, and may not be applied to imp-
orts 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 exa-
mines the regional value content of a good for which it has
issued an advance ruling, it shall evaluate whether:

(a) the exporter or producer has complied with the terms and co-
nditions of the advance ruling;

(b) the exporter's or producer's operations are consistent with
the substantial facts and circumstances on which the advance
ruling is based; and

(c) the supporting data and calculations used in the application
of criteria or methods for calculating value were correct in
all substantial aspects.

8.Each Party shall provide that where its customs authority det-
ermines that any requirement in paragraph 7 has not been sati-
sfied, it may modify or revoke the advance ruling as the circ-
umstances may warrant.

9.Each Party shall provide that, where the person to whom an ad-
vance ruling was issued demonstrates that it used reasonable
care and acted in good faith in presenting the facts and circ-
umstances 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 ru-
ling to a person that has misrepresented or omitted substan-
tial facts or circumstances on which the ruling is based or
has failed to act in accordance with the terms and conditio-
ns of the ruling, the customs authority that issued the adv-
ance ruling may apply measures in accordance with the legis-
lation of each Party.

11. The Parties shall provide that the holder of an advance rul-
ing may use it only while the facts or circumstances on whi-
ch 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 para-
graph 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 co-
nfidentiality of confidential information collected pursuant
to this Chapter and shall protect it from disclosure.

2.The confidential information collected pursuant to this Chapt-
er 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:

(a) the goods remained under the control of the customs authori-
ty of the reexporting Party;

(b) the goods were not subject to further processing or other
operations, excepting marketing, unloading, reloading or any
other operation necessary to maintain them in good shape;
and

(c) the previous requirements are documentarily proved.

2.Based on paragraph 1, each Party shall require that a re-expo-
rter 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 importati-
on of one or more goods to its territory.

3.Each Party, through its customs authority, may request the im-
porter in its territory who imports goods from a free zone to
submit the re-exportation certificate at the time of importat-
ion 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 parti-
es 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-expor-
tation certificate that qualified as originating in conformity
with other agreements or trade conventions signed by the impo-
rting Party with third parties do not lose the prefe rence or
tariff benefits granted by the importing Party, due to the fa-
ct that the imports come from a free zone .

5.For the purpose of the application of paragraph 4, the Parties
shall:

(a) establish a mechanism for the administration and control of
these goods;
and

(b) request the submission of a certificate of origin issued by
third countries that benefit from the preferential tariff
treatment described in paragraph 4.

Article 5.10 Penalties

1.Each Party shall establish or maintain measures imposing crim-
inal, 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 Certific-
ate 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 import-
ers, or to the exporters or producers of the other Party who
complete and sign a Certificate of Origin, or provide informa-
tion 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 establish-
ed 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 paragra-
ph.

3.The rights referred to in paragraphs 1 and 2 include access to
at least one administrative review, independent from the offi-
cial 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 admini-
strative review, according to the laws of each Party.

Article 5.12 Uniform Regulations

1.The Parties shall establish, and implement through their resp-
ective 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 Part-
ies.

2.Each Party shall implement any modification of or addition to
the Uniform Regulations no later than 180 days after the Part-
ies agree on such modification or addition, or such other per-
iod as the Parties may agree.

Article 5.13 Cooperation

1.Each Party shall notify the other Party of the following dete-
rminations, measures and rulings, including to the greatest
extent practicable those that are prospective in application:

(a) a determination of origin issued as the result of verificat-
ion conducted pursuant to Article 5.06, once the petitions
of review and appeal referred to in Article 5.11 of this Ch-
apter are exhausted;

(b) a determination of origin that the Party considers contrary
to a ruling issued by the customs authority of the other Pa-
rty with respect to the tariff classification or value of a
good, or of materials used in the production of a good;

(c) a measure establishing or significantly modifying an admini-
strative policy that is likely to affect future determinati-
ons of origin; and

(d) an advance ruling or its modification, pursuant to Article 5
.07 of this Chapter.

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 cus-
toms 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-rela-
ted matters as the collection and exchange of statistics
regarding the importation and exportation of goods, the st-
andardization of data elements and the exchange of informa-
tion;

(c) to the extent possible, the collection and exchange of doc-
umentation 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 investigati-
ons or inquiries, and to issue the corresponding reports.

CHAPTER 6
SAFEGUARD MEASURES

Article 6.01 Definitions
For purposes of this Chapter, the following terms shall be unde-
rstood 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 Safeg-
uards;

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 dire-
ctly 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 inc-
lude 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 Sc-
hedule 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 res-
ult of reduction or elimination of a customs tariff in accord-
ance with this Agreement, an originating product from the ter-
ritory of a Party is being imported into the territory of the
other Party, in such increased quantity, in relation to domes-
tic production and under such conditions that the imports of
that product to the Party itself constitutes a substantial ca-
use of serious injury, or a threat thereof to the domestic in-
dustry 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 in-
jury, or threat thereof:

(a) suspend the further reduction of any rate of duty provided
for under this Agreement on the product; or

(b) increase the rate of duty on the product to a level not to
exceed the lesser of:

(i) the most-favored-nation (MFN) applied customs tariff in
effect at the time the measure is taken, and

(ii) the MFN applied customs tariff in effect on the day immed-
iately preceding the date of entry into force of this Agr-
eement.

3.The following conditions and limitations shall be observed in
the proceeding that may result in the application of a safegu-
ard measure according to paragraph 2:

(a) a Party shall, without delay and in writing , notify the ot-
her Party of the initiation of the proceeding which could
have as a consequence the application of a safeguard measure
against a product originating in the territory of the other
Party;

(b) any safeguard measure shall be initiated no later than one
year counted from the date of the initiation of the procedu-
re;

(c) no safeguard measure may be maintained:

(i) for more than two years, extendable for a period of one ad-
ditional consecutive year, according to the proceeding sta-
ted in Article 6.04(21), or

(ii) after the termination of the transition period, unless wi-
th consent of the Party against whose product the measure
is applied;

(d) during the transition period, the safeguard measures, with
or without extension, may only be applied twice on the same
product;

(e) a safeguard measure may be applied for a second time, provi-
ded that at least a period equivalent to the half of that
one during which the safeguard measure has been applied at
the first time has been passed;

(f) the period which a provisional safeguard measure has been
applied shall be calculated for the purpose of determining
the period of duration of the definitive safeguard measure
established in subparagraph (c);

(g) the provisional measures that are not definitive shall be
excluded from the limitation provided for in subparagraph (d
);

(h) on the termination of the safeguard measure, the applied ra-
te of import duty shall be the rate as that in the Tariff
Reduction Schedule.

4.In critical circumstances where any delay would cause damage
which it would be difficult to repair, a Party may apply bila-
teral 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 inju-
ry. 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 ther-
eof, to the domestic industry tha t arise from the implementa-
tion of this Agreement.

6.The Party applying a safeguard measure according to this Arti-
cle shall provide to the other Party a mutually agreed compen-
sation, in the form of concessions having substantially equiv-
alent trade effects or being equivalent to the value of the
additional customs tariff expected to result from the safegua-
rd measure. If the Parties concerned are unable to agree on
the compensation, the Party against whose product the safegua-
rd measure is applied may take tariff measures with trade eff-
ects substantially equivalent to the effects of the safeguard
measure applied pursuant to this Article. The Party shall app-
ly 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 accord-
ance with Article XIX of GATT 1994 and the Agreement on Safeg-
uards, 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 par-
agraph 1 shall exclude goods imported from the other Party
from this measure unless:

(a) imports from the other Party account for a substantial share
of total imports; and

(b) imports from the other Party contribute importantly to the
serious injury, or threat thereof, caused by total imports.

3.To determine if:

(a) imports from the other Party account for a substantial share
of total imports, those imports normally shall not be consi-
dered to be substantial if that Party is not among the top
five suppliers of the product subject to the proceeding, me-
asured in terms of its import share during the most recent
three-year period; and

(b) imports from the other Party contribute importantly to the
serious injury, or threat thereof, the investigating author-
ity shall consider factors such as the change in the import
share of the other Party in the total imports, as well as
the import volume of the other Party and the change of that
volume has occurred. Normally the imports from a Party shall
not be considered to contribute importantly to serious inju-
ry or the threat thereof, if its growth rate of imports from
a Party during the period in which the injurious surge in
imports occurred is appreciably lower than the growth rate
of total imports from all sources during the same period.

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 paragra-
ph 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 co-
nsultation with the other Party, as much far in advance of ta-
king 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 liberalizati-
on compensation in the form of concessions having substantial-
ly equivalent trade effects or equivalent to the value of the
additional customs tariffs expected to result from the safegu-
ard 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 eq-
uivalent to the effects of the safeguard measure applied purs-
uant to paragraph 1.

Article 6.04 Administration of Safeguard Measure Proceedings

1.Each Party shall ensure the consistent and impartial applicat-
ion of its laws, regulations, decisions and rulings governing
all safeguard measures proceedings.

2.Each Party shall entrust the application of safeguard measure,
the dete rmination of the existence of serious injury, or thr-
eat thereof, to an investigating authority of each Party. The-
se decisions may be subject to review by judicial or administ-
rative 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 modificati-
on by the investigating authority, unless the modification is
required by such judicial or administrative review. The inves-
tigating 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, transpa-
rent and effective procedures for the application of safeguard
measures, in accordance with the requirements indicated in th-
is Article.
Institution of a Proceeding

4.The investigating authority may institute a proceeding, ex of-
ficio 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 repre-
sentative of the domestic industry producing a product like or
directly competitive with the imported product. For this purp-
ose 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 info-
rmation 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:

(a) product description: the name and description of the import-
ed product concerned, the tariff subheading under which that
product is classified, its current tariff treatment and the
name and description of the like or directly competitive do-
mestic product concerned;

(b) representativeness:

(i) the names and addresses of the entities who present the
request, as well as the location of the establishments wh-
ere they produce the domestic product concerned,

(ii) the percentage of domestic production of the like or dir-
ectly competitive product that such entities account for
and the reasons for claiming that they are representative
of the domestic industry, and

(iii) the names and locations of all other domestic establish-
ments in which the like or directly competitive product
is produced;

(c) import data: import data for each of the 3 full years immed-
iately prior to the initiation of the proceedings relative
to the application of a safeguard measure, that form the af-
firmative basis that the product concerned is imported in a
steadily increasing manner, either in absolute terms or rel-
ative to domestic production as appropriate;

(d) domestic production data: data on total domestic production
of the like or directly competitive product, for each of the
3 full years immediately previous to the initiation of the
proceedings relative to the application of a safeguard meas-
ure;

(e) data showing injury, or threat thereof: quantitative and ob-
jective data indicating the nature and extent of injury, or
threat thereof to the concerned domestic industry, such as
data showing changes in the level of sales, prices, product-
ion, productivity, installed capacity utilization, market
share, profits and losses, and employment;

(f) cause of injury: an enumeration and description of the alle-
ged causes of the injury, or threat thereof, and a summary
of the basis for the assertion that the increased imports,
relative to domestic production, of the imported goods are
causing or threatening to cause serious injury, supported
by pertinent data; and

(g) criteria for inclusion: quantitative and objective data ind-
icating the share of imports coming from the territory of
the other Party, and the petitioner's views on the extent to
which such imports are contributing importantly to the seri-
ous injury, or threat thereof.

7.Once a petition is accepted, it shall promptly be made availa-
ble for public inspection, except that it contains confidenti-
al information. Consultations

8.Once a petition filed in accordance with paragraph 6 is accep-
ted 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 clarify-
ing 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 oth-
ers, the issues relating to the investigation procedures,
elimination of the measure, the issues referred to in Artic-
le 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 Par-
ty 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 bei-
ng requested, access to the Party whose product is the subj-
ect of the investigation to the public file , including the
non-confidential summary of the confidential information us-
ed for the initiation or during the course of the investiga-
tion.
Notice Requirements

13. When initiating a proceeding for the application of a safeg-
uard 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 acc-
ordance with the domestic laws of each Party, within the pe-
riod 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 notif-
ication 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 pr-
esented 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, re-
ports, 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 safegu-
ard 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 car-
efully first if the petition meets the requirements set out
in paragraph 6. Public Hearing

15.In the course of each proceeding, the investigating authorit-
ies shall:

(a) without prejudice to the Party's legislation, and after pro-
viding reasonable notice, notify all interested parties, in-
cluding importers, exporters, consumer groups and other int-
erested parties the date and place of a public hearing fift-
een (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 thre-
at 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 in-
terested 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 provi-
ded. Unless it is demonstrated that the information is accur-
ate, in a convincing way and from an appropriate source, the
authorities may disregard that information.

17.The investigating authority shall not disclose any confident-
ial 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 sh-
all gather, to the best of its ability, all relevant informa-
tion appropriate to the determination it must make. It shall
evaluate all relevant factors of an objective and quantifiab-
le 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 domest-
ic industry, the share of the domestic market taken by the
increased imports, and changes in the level of sales, produc-
tion, productivity, installed capacity utilization, profits
and losses, and employment. In making its determination, the
investigating authority may also consider other economic fac-
tors, such as changes in prices and inventories, and the abi-
lity of entities in the domestic industry to generate capital
.
Deliberation and Determination

19.Except in critical circumstances and in global safeguard mea-
sures involving perishable agricultural goods, the investiga-
ting authority, before making an affirmative determination in
a proceeding for the application of a safeguard measure, sha-
ll allow sufficient time to gather and check the relevant in-
formation, 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 ci-
rculated 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:

(a) the domestic industry seriously injured or threatened with
serious injury;

(b) information supporting a finding that imports are increasing
, the domestic industry is seriously injured or threatened
with serious injury, and increasing imports are causing or
threatening serious injury; and

(c) if provided for by domestic law, any finding or recommendati-
on regarding the appropriate remedy, as well as the basis th-
erefor.
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 purp-
ose 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 readjus-
tment plan including variables controllable by the domestic
industry or production involved.

23.The notifications of extension and compensation shall be pre-
sented 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.

ANNEX 6.01
INVESTIGATING AUTHORITY

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
UNFAIR TRADE PRACTICES

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 Implementat-
ion of Article VI of GATT 1994 and the Agreement on Subsidies
and Countervailing Measures, that form part of the WTO Agreeme-
nt. 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 para-
graph 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 mi-
nimis, or that sufficient evidence of dumping , subsidy, inju-
ry, or causal link does not exist; or where its competent aut-
hority determines that the volume of the dumped or subsidized
imports is insignificant.

2.For purposes of paragraph 1, it shall be considered that:

(a) the dumping margin is de minimis when it is less than 6%,
expressed as a percentage of the export price;

(b) the amount of the subsidy is de minimis when it is less than
6% ad valorem; and

(c) the volume of the dumped or subsidized imports is insignifi-
cant if it represents less than 6% of the total imports of
the like products of the importing Party.

3.An applicant may, at any time, withdraw its investigation req-
uest. Once a request for withdrawal is filed after the invest-
igation has been initiated, the competent authority shall not-
ify the rest of the applicants for the purpose of exerting th-
eir 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 TECHNICAL BARRIERS TO TRADE

CHAPTER 8
SANITARY AND PHYTOSANITARY MEASURES

Article 8.01 Definitions
For purposes of this Chapter, the Parties shall apply the defin-
itions and terms set out in:

(a) the Agreement on the Application of Sanitary and Phytosanit-
ary Measures, that forms a part of the WTO Agreement, herei-
nafter referred to as ASPS;

(b) the Office International des Epizooties, hereinafter referr-
ed to as OIE;

(c) the International Plant Protection Convention, hereinafter
referred to as IPPC; and

(d) the Codex Alimentarius Commission, hereinafter referred to
as Codex.

Article 8.02 General Provisions

1.The authorities legally responsible for ensuring the complian-
ce 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 frame-
work 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:

(a) establish, adopt, maintain or implement any sanitary and ph-
ytosanitary measures in their territories, only to the exte-
nt necessary to protect human life and health (food safety)
and animal life and health or to preserve plant health, even
if they are stricter than international standards, guidelin-
es or recommendations, provided that there is a scientific
basis to justify them;

(b) implement the sanitary and phytosanitary measures only to
the extent necessary to reach an appropriate level of prot-
ection; and

(c) verify that plants, animals, products and by-products bound
for export are subject to sanitary and phytosanitary monito-
ring to ensure conformity with the requirements of the sani-
tary and phytosanitary measures established by the importing
Party.

Article 8.04 Obligations of the Parties

1.Sanitary and phytosanitary measures shall not constitute a di-
sguised 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 scienti-
fic 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 interna-
tional standards, guidelines or recommendations.

4.Where conditions are identical or similar, sanitary and phyto-
sanitary measures shall not discriminate arbitrarily or unjus-
tifiably.

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:

(a) each Party shall use international standards, guidelines or
recommendations as reference guideline for its sanitary and
phytosanitary measures;

(b) each Party may adopt, implement, establish or maintain a sa-
nitary or phytosanitary measure with a level of protection
different from or stricter than that of international stand-
ards, guidelines or recommendations, provided that there is
scientific justification for the measure;

(c) with the aim of reaching a higher degree of harmonization,
each Party shall follow the guidelines of the ASPS, the IPPC
for plant health, the OIE for animal health and the Codex on
food safety and tolerance limits; and

(d) the Parties shall establish harmonized systems for the proc-
edures of control, inspection and approval of the sanitary
and phytosanitary measures for animals, plants, their produ-
cts and by-products as well as food safety.

Article 8.06 Equivalence

With the aim of implementing the sanitary and phytosanitary mea-
sures in the territory of the Parties, the Parties shall implem-
ent control, inspection and approval procedures according to the
following principles:

(a) the Party shall accept the sanitary or phytosanitary measur-
es of the other Party as equivalent, even if these measures
differ from its own in the same product, if the other Party
objectively demonstrates to the Party that its measures, ba-
sed on scientific information and risk assessment, achieve
the Party's appropriate level of sanitary or phytosanitary
protection. The other Party shall give reasonable access up-
on request to the Party for information related to its insp-
ection, testing and other relevant procedures;
and

(b) The Parties shall facilitate access to their territories wi-
th respect to inspection, testing and other relevant proced-
ures in order to establish equivalence between their sanita-
ry and phytosanitary measures.

Article 8.07 Assessment of Risk and Determination of the Approp-
riate

Level of Sanitary and Phytosanitary Protection

According to the guidelines developed by relevant international
organizations:

(a) the Parties shall ensure that their sanitary or phytosanita-
ry measures are based on an assessment, as appropriate to
the circumstances, of the existing risk to the protection of
human life and health (food safety) and animal health, or to
protect plant health taking into account the guidelines and
risk assessment techniques developed by relevant internatio-
nal organizations;

(b) the Parties shall provide necessary access for assessing sa-
nitary and phytosanitary services through the procedures in
force for verification of control, inspections, approval pr-
ocedures, measure implementation and programs on sanitary
and phytosanitary matters, on the basis of the guidelines
and recommendations of the international organizations reco-
gnized by the WTO;

(c) in assessing the risk of a commodity and in establishing the
appropriate level of protection, the Parties shall take into
account the following factors:

(i) available scientific and technical information,

(ii) existence of pests or diseases,

(iii) pest and disease epidemiology,

(iv) analysis of critical control points to the sanitary (food
safety) and phytosanitary aspects,

(v) the physical, chemical and biological hazards in foods,

(vi) relevant ecological and environmental conditions ,

(vii) production processes and methods, and the i nspection,
sampling and testing methods,

(viii) structure and organization of sanitary and phytosanita-
ry services,

(ix) procedures for protection, epidemiological supervision,
diagnostics and treatment to ensure food safety,

(x) loss of production or sales in the event of the entry, es-
tablishment, spread or dissemination of a pest or disease,

(xi) applicable quarantine measures and treatments that shall
satisfy the importing Party on risk mitigation, and

(xii) costs of controlling or eradicating pests or diseases in
the territory of the importing Party and relative cost-
effectiveness of other possible methods to reduce the
risk;

(d) for the purpose of establishing and harmonizing the appropr-
iate level of protection, the Parties shall avoid arbitrary
or unjustifiable distinctions that may result in discrimina-
ion or disguised restriction to trade;

(e) where relevant scientific evidence is insufficient for carr-
ying out risk assessment, the Party may provisionally adopt
sanitary or phytosanitary measures on the basis of available
pertinent information, including that from the relevant int-
ernational organizations described in this Chapter. In such
circumstances, the Parties shall seek to obtain the additio-
nal information necessary for a more objective assessment of
risk and review the sanitary or phytosanitary measure accor-
dingly within a reasonable time frame, and with this aim the
following procedures shall be applied:

(i) the importing Party that applies the provisional measure
shall request to the other Party, within thirty (30) days
of the adoption of the provisional measure, necessary tec-
hnical information to complete the risk assessment, and
the other Party shall provide the information. If the inf-
ormation is not provided, the provisional measure shall be
sustained, and if on expiration of this period the inform-
ation has not been requested, the provisional measure sha-
ll be withdrawn,

(ii) if the importing Party has requested the information, th-
ere shall be a period of sixty (60) days from the date of
provision of this information to revise, withdraw or keep
as final the provisional measure. If necessary, the Party
can extend the period of time,

(iii) the importing Party may request clarification about the
information provided b y the exporting Party after its
receipt,

(iv) the importing Party shall allow the exporting Party to
present its comments and shall take them into account for
its conclusion of the risk assessment, and

(v) the adoption or revision of the sanitary or phytosanitary
measure shall be immediately notified to the other Party
through the notification authorities established under the
ASPS;

(f) if the result of the risk assessment implies non-acceptan-
ce of the importation, the scientific basis for the deci-
sion shall be notified in writing;
and

(g) when a Party has reasons to believe that a sanitary or ph-
ytosanitary measure established or maintained by the other
Party restricts or may restrict its exports and that the
measure is not based on relevant international standards,
guidelines or recommendations, or such standards, guideli-
nes or recommendations do not exist, the Party may demand
an explanation for the reasons of the sanitary and phytos-
anitary measures and the Party maintaining these measures
shall provide the explanation within sixty (60) days from
the date of receipt of the inquiry by the competent autho-
rity.

Article 8.08 Recognition of Pest- or Disease- Free Areas and Ar-
eas of Low Pest or Disease Prevalence

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, epidemiologi-
cal surveillance and the effecti veness of sanitary and phyto-
sanitary 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 phytosanit-
ary 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 agree-
ment on specific requirements for recognition of pest or dise-
ase 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 pro-
visions of Annex C to the ASPS on control, inspection and app-
roval procedures, including approval of the use of additives
or establishment of tolerances for contaminants in food, beve-
rages 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 bet-
ween the Parties in those cases where they can be justified,
for example for reasons relating to the seasonality of a prod-
uct. When the inspection is completed, the competent authority
of the importing Party shall issue a decision based on the re-
sults 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 sani-
tary or phytosanitary measure of general application in the
central level, shall notify the following:

(a) adoptions and modifications of these measures. It shall also
provide information on measures according to the provisions
of Annex B to the ASPS, and shall implement the relevant ad-
justment;

(b) changes or revisions in sanitary or phytosanitary measures
that have a significant effect on trade between the Parties,
within sixty (60) days prior to the entry into force of the
new provision, to allow the other Party to comment; such re-
quirement shall be exempted for emergencies, according to
the provisions of Annex B to the ASPS;

(c) changes in the status of animal health, as the occurrence of
exotic diseases and diseases in List A of the OIE, within
twenty four (24) hours after confirming the disease;

(d) changes in the phytosanitary status, as the occurrence of
quarantine pests and diseases or spread of quarantine pests
and diseases under official control, within seventy two (72
) hours of their verification; and

(e) disease outbreaks which are scientifically shown to be caus-
ed by the consumption of imported food and food products,
natural or processed.

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 immediate-
ly 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 Cen-
ter), each Party shall answer any reasonable request for info-
rmation from the other Party and shall provide relevant docum-
entation according to the principles of paragraph 3 of the An-
nex B to the ASPS.

Article 8.11 Committee on Sanitary and Phytosanitary Measures

1.The Parties hereby establish the Committee on Sanitary and Ph-
ytosanitary 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 car-
ry out the following functions:

(a) promoting the means necessary for the training and speciali-
zation of technical staffs;

(b) promoting the active participation of the Parties in intern-
ational bodies;
and

(c) creating and updating a database of specialists qualified in
the fields of food safety, plant and animal health, for the
purpose of the provisions of

Article 18.07 (Expert Groups).

Article 8.12 Technical Cooperation

Each Party may provide the other Party with advice, information
and technical cooperation, on mutually agreed terms and conditi-
ons to strengthen its sanitary and phytosanitary measures, as
well as activities, processes and systems on this matter.

ANNEX 8.11
COMMITTEE ON SANITARY AND PHYTOSANITARY MEASURES

The Committee on Sanitary and Phytosanitary Measures, establish-
ed by Article 8.11(1) shall be composed of:

(a) in the case of Panama, the Ministry of Trade and Industries,
represented by the Vice-ministry of Foreign Trade, the Mini-
stry of Agriculture and the Ministry of Health, or their su-
ccessors; and

(b) in the case of the ROC, the Council of Agriculture, represe-
nted by the Bureau of Animal and Plant Health Inspection and
Quarantine, the Department of Health, represented by the Bu-
reau of Food Sanitation, and the Ministry of Economic Affai-
rs, represented by the Bureau of Standards, Metrology and
Inspection, or their successors.

CHAPTER 9
MEASURES ON STANDARDS, METROLOGY AND AUTHORIZATION
PROCEDURES

Article 9.01 Definitions

1.For purposes of this Chapter, the following terms shall be
understood as: administrative refusal: action taken in the ex-
ercise 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, conformi-
ty 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 st-
andard is fulfilled, including sampling, testing, inspection,
evaluation, verification, assurance of conformity, registrati-
on, accreditation and approval as well as their combinations;

international standard: a standard, guide or recommendation,
adopted by an international standardizing body and made avail-
able to the public;

international standardizing or metrological body: a standardi-
zing or metrological body whose membership is open to at least
all the Members of the WTO, including the International Organ-
ization for Standardization (ISO), the International Electrot-
echnical Commission (IEC), the Codex Alimentarius Commission (
CAC), the International Organization of Legal Metrology (OIML)
, the International Commission on Radiation Units and Measure-
ments, Inc. (ICRU), or any other body that the Parties design-
ate ;

legitimate objectives: national security requirements, preven-
tion of deceptive practices, protection of human health or sa-
fety, 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 character-
istics 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, ma-
rking or labelling requirements as they apply to a good, proc-
ess 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 exclusiv-
ely 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 Parti-
es 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 me-
asures.

Article 9.04 Basic Rights and Obligations
Right to Adopt Standardization Measures

1.Each Party may develop, adopt, apply and maintain:
(a) measures on standards, authorization procedures and metrolo-
gy, according to the provisions of this Chapter; and

(b) technical regulations and conformity assessment procedures
that allow the Party to reach its legitimate objectives.
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 tr-
ade 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 favo-
urable 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 stand-
ardization, 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, ex-
cept where such international standards would not be an effec-
tive or appropriate means for fulfilling the legitimate objec-
tives because of fundamental climatic, geographical, technolo-
gical 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:

(a) risk assessments carried out by international standardizing
or metrological bodies;

(b) available scientific evidence or technical information;

(c) related processing technology; or

(d) intended end uses of goods.

2.Where a Party establishes a level of protection that it consi-
ders 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, wh-
ere the distinctions:

(a) result in arbitrary or unjustifiable discrimination against
goods of the other Party;

(b) constitute a disguised restriction on trade between the Par-
ties; or

(c) discriminate between similar goods for the same use under
the same conditions that pose the same level of risk and pr-
ovide similar benefits.

3.A Party shall provide to the other Party, upon request, relev-
ant 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 pract-
ical 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 leg-
itimate 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 assessme-
nt procedures to accord access to like goods from the territo-
ry of the other Party under conditions no less favourable than
those accorded to its like goods or to those of any other cou-
ntry, in a comparable situation.

2.With regard to its conformity assessment procedures, each Par-
ty shall:

(a) initiate and complete these procedures as expeditiously as
possible and on a non-discriminatory basis;

(b) publish the procedure and the normal period of each procedu-
re or, upon request, to convey this information to the appl-
icant;

(c) have the competent body or authority review without delay
upon receipt of an application if the documentation is comp-
lete and communicate to the applicant as soon as possible
and with accuracy and thoroughness the findings of the asse-
ssment, so that the applicant may take corrective measures
as needed, and even when the application shows deficiencies,
proceed with the conformity assessment as far as possible if
requested by the applicant and, upon request, inform the ap-
plicant of the stage of the procedure and explain any possi-
ble delay;

(d) request only the information necessary to assess the confor-
mity and calculate the fees;

(e) respect the confidentiality of the information about a good
of the other Party obtained by such procedures or provided
in connection with them, in the same manner as in the case
of goods from the Party, so as to protect the legitimate
trade interests;

(f) make equitable the fees imposed for assessing the conformity
of a good of the other Party, compared with the fees that
would be collected for assessing the conformity of a like
good of this Party, taking into account communication, tran-
sportation and other costs due to differences in location of
the applicant's premises and of the conformity assessment
body;

(g) ensure that the location of premises used in conformity ass-
essment procedures and sampling procedures do not cause unn-
ecessary inconvenience to applicants or their agents;

(h) if the specifications of a good are modified after the dete-
rmination of its conformity with technical regulations or
applicable standards, limit the conformity assessment proce-
dure for the modified good to the extent necessary to deter-
mine with due assurance that the good shall continue to con-
form to the technical regulations or applicable standards;
and

(i) establish a procedure for reviewing the claims related to
the application of a conformity assessment procedure and ad-
opt corrective measures if the claim is justified.

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 conform-
ity assessment procedures.

4.To the extent practicable each Party shall accept the results
of conformity assessment procedures carried out in the territ-
ory of the other Party, provided that those procedures offer
enough confidence, equivalent to the confidence of its own pr-
ocedures 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 proce-
dure 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, inclu-
ding the verified compliance with relevant international stan-
dards through means such as accreditation.

6.Each Party, recognizing that the outcome shall be to the mutu-
al advantage of both Parties, shall accredit, approve or reco-
gnize conformity assessment bodies in the territory of the ot-
her Party, in conditions no less favourable than those accord-
ed 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 proce-
dures to accord access to like goods from the territory of the
other Party under conditions no less favourable than that acc-
orded 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:

(a) initiate and complete these procedures as expeditiously as
possible and in a non-discriminatory manner;

(b) publish the procedure and the normal period of each procedu-
re or upon request to convey this information to the applic-
ant;

(c) have the competent authority review without delay upon rece-
ipt of an application if the documentation is complete and
communicate to the applicant as soon as possible and with
accuracy and thoroughness the results of the authorization,
so that the applicant may take corrective measures as needed
, and even when the application shows deficiencies, proceed
with the authorization procedure as far as possible if requ-
ested by the applicant and, upon request, inform the applic-
ant of the stage of the procedure and explain any possible
delay;

(d) request only the information necessary to authorize and cal-
culate the fees;

(e) respect the confidentiality of the information about a good
of the other Party obtained by such procedures or provided
in connection with them, in the same manner as in the case
of goods from the Party, in order to protect the legitimate
trade interests;

(f) make equitable the fees imposed for authorization procedure
with respect to a good of the other Party, compared with the
fees that would be collected for an authorization procedure
of a like good of this Party, taking into account communica-
tion, transportation and other costs due to differences in
location of the applicant's premises and of the authorizing
body; and

(g) establish a procedure for reviewing the claims related to
the application of an authorization procedure and adopt cor-
rective measures if the claim is justified.

Article 9.09 Metrology

Each Party shall ensure, to the extent practicable, the documen-
ted traceability of its standards and the calibration of its me-
asuring instruments, according to the recommendations of the Bu-
reau International des Poids et Mesures (BIPM) and the Internat-
ional 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 writ-
ing to the other Party the proposed measure, at least sixty (6
0) days before its adoption, allowing the interested parties
to make comments, discuss these comments upon request, and ta-
ke these comments and the results of these discussion into ac-
count.

2.If a Party faces serious problems or the threat of serious pr-
oblems related to safety, health, environment protection and
national security, this Party may not present the communicati-
on prior to the project, but once adopted shall notify the ot-
her Party.

3.The notifications under paragraphs 1 and 2 shall be done foll-
owing 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 de-
signated to carry out the notifications under this Article.

5.Each Party shall notify in writing the other Party of its sta-
ndardization plans and programmes.

6.Where a Party rejects a shipment by an administrative decision
, the Party shall notify without delay and in writing the per-
son 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 Ce-
ntre 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 mea-
sure on standards, metrology, conformity assessment procedures
or authorization procedures adopted or proposed in its territ-
ory 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 ref-
erred to in paragraph 1 they shall be delivered without cost.
The interested persons from the other Party shall receive cop-
ies 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, Metr-
ology 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)(Commi-
ttees) shall have the following functions:

(a) analyzing and proposing ways to resolve measures on standar-
ds, authorization procedures and metrology that a Party con-
siders a technical barrier to trade;

(b) facilitating the process by which the Parties shall make co-
mpatible their measures on standards and metrology, giving
priority, inter alia, to labelling and packaging;

(c) promoting technical cooperation activities between the Part-
ies;

(d) providing assistance to the risk assessment activities carr-
ied out by the Parties;

(e) working together to develop and strengthen the standards and
metrology measures of the Parties; and

(f) facilitating the process by which the Parties shall establi-
sh mutual recognition agreements.

Article 9.13 Technical Cooperation

1.Each Party shall promote the technical cooperation between th-
eir 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)
INFORMATION CENTRES

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
COMMITTEE ON STANDARDS, METROLOGY AND AUTHORIZATION
PROCEDURES

The Committee on Standards, Metrology and Authorization Procedu-
res 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
INVESTMENT, SERVICES AND RELATED MATTERS

CHAPTER 10
INVESTMENT

Section A - Investment

Article 10.01 Scope and Coverage

1.This Chapter applies to measures adopted or maintained by a
Party relating to:

(a) investors of the other Party with respect to all aspects of
its investments;

(b) investments of investors of the other Party in the territory
of the Party; and

(c) all investments of the investors of a Party in the territory
of the other Party with regard to Article 10.07.

2.This Chapter does not apply to:

(a) measures adopted or maintained by a Party in relation to fi-
nancial services;

(b) measures adopted by a Party to limit the participation of
investment of investors of the other Party in its territory
for reasons of public order or national security;

(c) economic activities reserved by each Party pursuant to its
law in force on the date of the signing of this Agreement,
as listed in Annex III on economic activities reserved to
each Party;

(d) government services or functions such as law enforcement,
correctional services, income security or unemployment insu-
rance, social security services, social welfare, public edu-
cation, public training, health, and child care;

(e) disputes or claims arising before the entry into force of
this Agreement or relating to facts that occurred before it
entered into force, even if their effects persist thereafter
; and

(f) government procurement.

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 treat-
ment no less favorable than that it accords, in like circumst-
ances, 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 ot-
her 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, managem-
ent, conduct, operation, and sale or other disposition of inv-
estments.

Article 10.03 Most-Favored-Nation Treatment

1.Each Party shall accord to investors of the other Party treat-
ment no less favorable than that it accords, in like circumst-
ances, to investors of a non-Party with respect to the establ-
ishment, acquisition, expansion, management, conduct, operati-
on, and sale or other disposition of investments.

2.Each Party shall accord to investments of investors of the ot-
her 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, ma-
nagement, 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 the-
ir investments treatment in accordance with international law,
including fair and equitable treatment as well as full protecti-
on 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 stri-
fe, non-discriminatory treatment on any measure adopted or main-
tained in relation to such losses.

Article 10.07 Performance Requirements

1.No Party may impose or enforce any of the following requireme-
nts, 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:

(a) to export a given level or percentage of goods or services;

(b) to achieve a given level or percentage of domestic content;

(c) to purchase, use or accord a preference to goods produced
or services provided in its territory, or to purchase goods
or services from persons in its territory; or

(d) to relate in any way the volume or value of imports to the
volume or value of exports or to the amount of foreign exch-
ange inflows associated with such investment.

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:

(a) to achieve a given level or percentage of domestic content;

(b) to purchase, use or accord a preference to goods produced in
its territory, or to purchase goods from producers in its
territory; or

(c) to relate in any way the volume or value of imports to the
volume or value of exports or to the amount of foreign exch-
ange inflows associated with such investment.

This paragraph does not apply to any requirements other than
indicated herein.

3.The provisions included in:

(a) paragraph 1(a), (b), and (c) and paragraph 2(a) and (b) do
not apply to requirements relating to the qualification of
goods and services for programs of export promotion and for-
eign aid programs;

(b) paragraph 1(b) and (c) and paragraph 2(a) and (b) do not ap-
ply to the procurement by a Party or by a state enterprise;
and

(c) paragraph 2(a) and (b) does not apply to the requirements
imposed by an importing Party related to the contents of a
good necessary to qualify it for preferential tariffs or qu-
otas.

4.Nothing in paragraph 2 shall be construed to prevent a Party
from conditioning the receipt or continued receipt of an adva-
ntage, 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 work-
ers, 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 restri-
ction to international trade or investment, nothing in paragr-
aph 1(b) or (c) or 2(a) or (b) shall be construed to prevent a
Party from adopting or maintaining measures, including enviro-
nment measures, necessary to:

(a) ensure compliance with laws and regulations that are not in-
consistent with the provisions of this Agreement;

(b) protect human, animal or plant life or health; or

(c) conserve living or non-living exhaustible natural resources.

6.In the case where, in opinion of a Party, the imposition by the
other Party of any of the following requirements shall adverse-
ly affect trade flows or constitutes a significant barrier to
investment by an investor of a Party, the matter shall be cons-
idered by the Commission:

(a) to restrict sales of goods or services in its territory that
such investment produces or provides by relating such sales
in any way to the volume or value of its exports or foreign
exchange earnings; (b) to transfer technology, production
process or other proprietary knowledge to a person in its
territory, except when the requirement is imposed by a court
, administrative tribunal or competition authority to remedy
an alleged violation of competition laws or to act in a man-
ner not inconsistent with other provisions of this Agreement
; or

(c) to act as the exclusive supplier of the goods it produces or
services it provides to a specific region or world market.

7.A measure that requires an investment to use a technology to
meet generally applicable health, safety or environmental req-
uirements shall not be construed to be inconsistent with para-
graph 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 abo-
ve requirements adversely affects the trade flow, or represen-
ts 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 se-
nior management positions individuals of any particular natio-
nality.

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 in-
vestor of the other Party, be of a particular nationality, or
resident in the territory of the Party, provided that the req-
uirement does not materially impair the ability of the invest-
or 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:

(a) any existing non-conforming measure that is maintained by:

(i) a Party at the national level, as set out in its Schedule
to Annex I or III,
or
(ii) a local or municipal government;

(b) the continuation or prompt renewal of any non-conforming me-
asure referred to in subparagraph (a); or

(c) the amendment of any non-conforming measure referred to in
subparagraph (a), provided that this amendment does not dec-
rease the conformity of the measure as it existed before its
amendment by Articles 10.02, 10.03, 10.07, and 10.08.

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 secto-
rs, sub-sectors or activities, as are indicated in their Sche-
dule to Annex II.

3.No Party may, under any measure adopted after the date of ent-
ry 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:

(a) procurement by a Party or a state enterprise; and

(b) subsidies or grants provided by a Party or a state enterpri-
se, including government supported loans, guarantees and in-
surance.

Article 10.10 Transfers

1.Each Party shall permit all transfers relating to an investme-
nt of an investor of the other Party in the territory of the
Party to be made freely and without delay. Such transfers inc-
lude:

(a) profits, dividends, interest, capital gains, royalty paymen-
ts, management fees, technical assistance and other fees,
returns in kind and other amounts derived from the investme-
nt;

(b) proceeds from the sale of all or any part of the investment
or from the partial or complete liquidation of the investme-
nt;

(c) payments made under a contract entered into by the investor,
or its investment, including payments made pursuant to a lo-
an agreement;

(d) payments made pursuant to Article 10.11; and

(e) payments arising from the mechanism of dispute settlement
under section B of this Chapter.

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, pr-
ofits or other amounts derived from, or attributable to, inve-
stments in the territory of the other Party.

4.Notwithstanding paragraphs 1 and 2, a Party may prevent a tra-
nsfer through the equitable, non-discriminatory and good faith
application of its laws relating to:

(a) bankruptcy, insolvency or the protection of the rights of
creditors;

(b) criminal or penal offenses;

(c) reports of transfers of currency or other monetary instrume-
nts;

(d) ensuring the satisfaction of judgments and arbitral awards
in adjudicatory proceedings; or

(e) issuing, trading or dealing in securities.

5.Paragraph 3 shall not be construed to prevent a Party from im-
posing 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 territ-
ory or take a measure tantamount to nationalization or exprop-
riation of such an investment ("expropriation"), except:

(a) for a public purpose, or public order and social interest;

(b) on a non-discriminatory basis;

(c) in accordance with due process of law; and

(d) on payment of compensation in accordance with this Article.

2.Compensation shall be equivalent to the fair market value of
the expropriated investment immediately before the expropriat-
ion took place ("date of expropriation"), and shall not refle-
ct any change in value occurring because the intended expropr-
iation had become known earlier. Valuation criteria shall inc-
lude 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 realiza-
ble.

4.The amount paid as compensation shall be no less than the equ-
ivalent 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 int-
erests computed from the day of dispossession of the expropri-
ated investment until the day of payment, and shall be comput-
ed on the basis of a commercially applicable rate for this cu-
rrency 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 lic-
enses granted in relation to intellectual property rights, or
to the revocation, limitation or creation of intellectual pro-
perty 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 co-
nsidered 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 Par-
ty from adopting or maintaining a measure that prescribes sp-
ecial formalities in connection with the establishment of in-
vestments by investors of the other Party, such as a require-
ment that investors be residents of the Party or that invest-
ments 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 terr-
itory, to provide routine information concerning that investm-
ent solely for informational or statistical purposes. The Par-
ty 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 an-
other 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 co-
ndition 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 Pa-
rty according to Article 10.39 and the enterprise has no subs-
tantial business activities in the territory of the Party und-
er 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 undertak-
en under its ecological or environmental laws.

2.The Parties recognize that it is inappropriate to encourage
investment by relaxing domestic health, safety or environment-
al 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, acqu-
isition, expansion or retention in its territory of an invest-
ment of an investor. If a Party considers that the other Party
has offered such an encouragement, it may request consultatio-
ns with the other Party.

Section B-Settlement of Disputes between a Party and an Inves-
tor 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 ent-
erprise 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 Cha-
pter.

2.An investor may not make a claim if more than 3 years have el-
apsed 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 oth-
er Party that is a juridical person that the investor owns or
controls directly or indirectly, may submit to arbitration un-
der 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 fr-
om the date on which the enterprise first acquired, or should
have first acquired, knowledge of the alleged breach and know-
ledge that the enterprise has suffered losses or damages.

3.Where an investor makes a claim under this Article and the in-
vestor 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 inte-
rests of a disputing party would be prejudiced thereby.

4.An investment may not submit a claim to arbitration under th-
is Section.

Article 10.19 Settlement of a Claim through Consultation and Ne-
gotiation

The disputing parties should first attempt to settle a claim th-
rough consultation or negotiation.

Article 10.20 Notice of Intent to Submit a Claim to Arbitration

The disputing investor shall deliver to the disputing Party wri-
tten notice of its intention to submit a claim to arbitration at
least ninety (90) days before the claim is submitted, which not-
ice shall specify:

(a) the name and address of the disputing investor and, where a
claim is made under Article 10.18, the name and address and
the type of business of the enterprise;

(b) the provisions of this Chapter alleged to have been breach-
ed and any other relevant provisions;

(c) the issues and the factual basis for the claim; and

(d) the relief sought and the approximate amount of damages cla-
imed.

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:

(a) the ICSID Convention, provided that both the disputing Party
and the Party of the investor are parties to the Convention;

(b) the Additional Facility Rules of ICSID , provided that eith-
er the disputing Party or the Party of the investor, but not
both, is a party to the ICSID Convention;

(c) the UNCITRAL Arbitration Rules; or

(d) the ICC Arbitration Rules.

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 administrat-
ive remedies as a condition for consenting to the arbitration
under this Chapter. Nevertheless, if 6 months have elapsed fr-
om the date on which the administrative remedies were lodged
and the administrative authorities have not issued a final re-
solution, the investor may directly appeal to arbitration, ac-
cording to the provisions of this Section.

3.A disputing investor may submit a claim under Article 10.17 to
arbitration only if:

(a) the investor consents to arbitration in accordance with the
procedures set out in this Section; and

(b) the investor and, where the claim is for losses or damages
to an interest in an enterprise of the other Party that is
a juridical person that the investor owns or controls direc-
tly or indirectly, the enterprise, waive their right to ini-
tiate or continue before any administrative tribunal or cou-
rt under the law of any Party, or other dispute settlement
procedures, any proceedings with respect to the measure of
the disputing Party that is alleged to be a breach referred
to in Article 10.17, except for proceedings for injunctive,
declaratory or other extraordinary relief, not involving the
payment of damages, before an administrative tribunal or co-
urt under the law of the disputing Party.

4.A disputing investor may present a claim to the arbitration
procedure according to Article 10.18 only if both investor and
enterprise:

(a) consent to submit the claim to arbitration in accordance wi-
th the procedures set out in this Section; and

(b) waive their right to initiate or continue before any admini-
strative tribunal or court under the law of any Party, or
other dispute settlement procedures, any proceedings with
respect to the measure of the disputing Party that is alleg-
ed to be a breach referred to in Article 10.18, except for a
proceeding for injunctive, declaratory or other extraordina-
ry relief, not involving the payment of damages, before an
administrative tribunal or court under the law of the dispu-
ting Party.

5.The consent and the waiver required by this Article shall be
stated in writing, delivered to the disputing Party and inclu-
ded 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 enterpri-
se.

Article 10.23 Consent to Arbitration

1.Each Party consents to the submission of a claim to arbitrati-
on in accordance with the procedures and requirements set out
in this Section.

2.The consent given by paragraph 1 and the submission by a disp-
uting investor of a claim to arbitration shall be deemed as
having satisfied the requirement of:

(a) Chapter II of the ICSID Convention (Jurisdiction of the Cen-
tre) and the Additional Facility Rules for written consent
of the parties; and

(b) Article II of the New York Convention for an agreement in
writing.

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 Disputing Parties Are Unable to Agree on a
Presiding Arbitrator

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 proce-
eding shall be designated, according to this Section.

2.Where a Tribunal, not being the one created according to Arti-
cle 10.27, is not constituted within a period of ninety (90)
days from the date on which the claim is submitted to arbitra-
tion, the Secretary-General of the ICSID, the Secretary-Gener-
al 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 nationa-
ls of the disputing Party or the Party of the disputing inves-
tor.

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 Tr-
ibunal 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 arbit-
rators 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 wh-
ich may be national of a Party, who comply with the rules con-
templated 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.

Article10.26 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 witho-
ut prejudice to an objection to an arbitrator based on Article 1
0.25(3) or on a ground other than nationality:

(a) the disputing Party agrees to the appointment of each indiv-
idual member of a Tribunal established under the ICSID Conv-
ention or the ICSID Additional Facility Rules;

(b) a disputing investor referred to in Article 10.17 may submit
a claim to arbitration, or continue a claim, under the ICSID
Convention or the ICSID Additional Facility Rules, only on
condition that the disputing investor agrees in writing to
the appointment of each individual member of the Tribunal;
and

(c) a disputing investor referred to in Article 10.18(1) may
submit a claim to arbitration, or continue a claim, under
the ICSID Convention or the ICSID Additional Facility Rules
, only on condition that the disputing investor and the ent-
erprise agree in writing to the appointment of each individ-
ual member of the Tribunal.

Article 10.27 Consolidation

1.A Tribunal established under this Article shall be established
under the UNCITRAL Arbitration Rules and shall conduct its pr-
oceedings 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 Tri-
bunal may, in the interests of fair and efficient resolution
of the claims, and after hearing the disputing parties, by
order:

(a) assume jurisdiction over, and hear and determine together,
all or part of the claims; or

(b) assume jurisdiction over, and hear and determine one or more
of the claims, the determination of which it believes would
assist in the resolution of the others.

3.A disputing party that seeks an order under paragraph 2 shall
request the Secretary-General to establish a Tribunal and sha-
ll specify in the request:

(a) the name of the disputing Party or disputing investors agai-
nst which the order is sought;

(b) the nature of the order sought; and

(c) the grounds on which the order is sought.

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 Secreta-
ry-General shall establish a Tribunal comprising three arbitr-
ators. The Secretary-General shall appoint the presiding arbi-
trator 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 availab-
le 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 parag-
raph 2, and shall specify in the request:

(a) the name, address and the type of business of the enterprise
of the disputing investor;

(b) the nature of the order sought; and

(c) the grounds on which the order is sought.

7.A disputing investor referred to in paragraph 6 shall deliver
a copy of its request to the disputing parties named in a req-
uest made under paragraph 3.

8.A Tribunal established under Article 10.21 shall not have jur-
isdiction to decide a claim, or a part of a claim, over which
a Tribunal established under this Article has assumed jur-
isdiction .

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 alrea-
dy 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:

(a) a request for arbitration made under paragraph (1) of Art-
icle 36 of the ICSID Convention;

(b) a notice of arbitration made under Article 2 of Schedule C
of the ICSID Additional Facility Rules;

(c) a notice of arbitration given under the UNCITRAL Arbitration
Rules; or (d) a request for arbitration made under ICC Arbi-
tration Rules.

11.A disputing Party shall deliver to the Secretariat a copy of
a request made under paragraph 3:

(a) within fifteen (15) days of receipt of the request, in the
case of a request made by a disputing investor; or

(b) within fifteen (15) days of making the request, in the case
of a request made by the disputing Party.

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 docu-
ments referred to in paragraphs 10, 11 and 12.

Article 10.28 Notice

A disputing Party shall deliver to the other Party:

(a) written notice of a claim that has been submitted to arbitr-
ation no later than thirty (30) days after the date that the
claim is submitted; and
(b) copies of all pleadings filed in the arbitration.

Article 10.29 Participation by a Party

On written notice to the disputing parties, a Party may make su-
bmissions 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:

(a) the evidence that has been tendered to the Tribunal accordi-
ng to this Section; and

(b) the written argument of the disputing parties.

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 establ-
ished under this Section shall hold an arbitration in the terri-
tory of a party to the New York Convention, selected in accorda-
nce with:

(a) the ICSID Additional Facility Rules if the arbitration is
under those Rules, or the ICSID Convention;

(b) the UNCITRAL Arbitration Rules if the arbitration is under
those Rules; or (c) the ICC Arbitration Rules if the arbit-
ration is under those Rules.

Article 10.32 Governing Law

1.A Tribunal established under this Section shall decide the is-
sues in dispute in accordance with this Agreement and applica-
ble rules of international law.

2.An interpretation by the Commission of a provision of this Ag-
reement 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 disputi-
ng Party, the Tribunal shall request the interpretation of the
Commission on the issue. The Commission, within sixty (60) da-
ys of delivery of the request, shall submit in writing its in-
terpretation to the Tribunal.

2.Further to Article 10.32(2), a Commission interpretation subm-
itted under paragraph 1 shall be binding on the Tribunal esta-
blished 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 Artic-
le 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) monetary damages and any applicable interest; or

(b) restitution of property, in which case the award shall prov-
ide that the disputing Party may pay monetary damages and
any applicable interest in lieu of restitution.

A tribunal may also award costs in accordance with the appl-
icable arbitration rules.

2. Subject to paragraph 1, where a claim is made under Article
10.18(1):
(a) an award of restitution of property shall provide that rest-
itution be made to the enterprise; or

(b) an award of monetary damages and any applicable interest sh-
all provide that the sum be paid to the enterprise.

3.The award shall provide that it is made without prejudice to
any right that any person may have in the relief under applic-
able domestic law.

Article 10.37 Finality and Enforcement of an Award

1.An award made by a Tribunal established under this Section sh-
all 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:

(a) in the case of a final award made under the ICSID Convention

(i) 120 days have elapsed from the date the award was rendered
and no disputing party has requested revision or annulment
of the award, or

(ii) explanation, revision or annulment proceedings have been
completed; and

(b) in the case of a final award under the ICSID Additional Fac-
ility Rules or the UNCITRAL Arbitration Rules

(i) ninety (90) days have elapsed from the date the award was
rendered and no disputing party has commenced a proceeding
to revise, set aside or annul the award, or

(ii) a court has dismissed or allowed an application to revise,
set aside or annul the award and there is no further appe-
al.

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 wh-
ose 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:

(a) a determination that the failure to abide by or comply with
the final award is inconsistent with the obligations of this
Agreement; and

(b) a recommendation that the Party abide by or comply with the
final award.

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 parag-
raph 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 Conv-
ention.

Article 10.38 General Provision
Time when a Claim is Submitted to Arbitration

1.A claim is submitted to arbitration under this Section when:

(a) the request for arbitration under paragraph (1) of Article
36 of the ICSID Convention has been received by the Secret-
ary-General;

(b) the notice of arbitration under Article 2 of Schedule C of
the ICSID Additional Facility Rules has been received by
the Secretary-General;

(c) the notice of arbitration given under the UNCITRAL Arbitrat-
ion Rules is received by the disputing Party; or

(d) the request for arbitration under Article 4 of the ICC Arbi-
tration Rules has been received by the Secretariat.
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, pur-
suant 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 unde-
rstood 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 Par-
ty ;

disputing Party: a Party against which a claim is made under Sec
tion B of this Chapter;

disputing party: the disputing investor or the disputing Party;
enterprise: an "enterprise" as defined in Chapter 2 (General De-
finitions ), 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 Di-
sputes;

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 oth-
er business objective, acquired with resources transferred or
reinvested by an investor, and including:

(a) an enterprise, shares in an enterprise, shares in the capit-
al of an enterprise that allow the owner to participate in
its income or profits. Debt instruments of an enterprise and
loans to an enterprise where:

(i) the enterprise is an affiliate of the investor, or

(ii) the date of maturity of the debt instrument or loan is at
least 3 years,

(b) a stake in an enterprise that grants to the owner the right
to participate in the assets of this enterprise in a liquid-
ation, provided that they do not arise from a debt instrume-
nt or a loan excluded under subparagraph (a);

(c) real estate or other properties, tangible or intangible, in-
cluding rights in the intellectual property field, as well
as any other proprietary right (such as mortgages, liens,
usufruct and similar rights), acquired with the expectation
of or used with the purpose of obtaining an economic benefit
or other business objectives;

(d) share or benefits arising from the allocation of capital or
other resources to the developing of an economic activity in
the territory of a Party according, inter alia; to:

(i) contracts that involve the presence of the property of an i
nvestor in the territory of a Party, including concessions
and construction and turnkey contracts, or

(ii) contracts where remuneration substantially depends on the
production, income or profits of an enterprise, but invest-
ment does not include:

(e) a payment obligation or a credit granted to the State or a
state enterprise,

(f) monetary claims exclusively derived from:

(i) commercial contracts for the sale of goods or services by
a national or an enterprise in the territory of a Party to
an enterprise in the territory of the other Party, or

(ii) a credit granted in relation to a commercial transaction,
of which expiration date is less than 3 years, such as tra-
de financing, except a loan covered by the provisions of
subparagraph (a); or

(g) any other monetary claim that does not involve the kinds of
interests as set out in subparagraphs (a) through (d);

investor of a Party: a Party or a state enterprise of a Par-
ty 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 Un-
ited Nations Commission on International Trade Law, approved
by the United Nations General Assembly on December 15, 1976.

ANNEX 10.38(2)
DELIVERY OF NOTIFICATIONS AND OTHER DOCUMENTS

1.For purposes of the Article 10.38(2), the place for the deliv-
ery of notifications and other documents will be:

(a) in the case of Panama:
Ministry of Trade and Industries
Vice-ministry of Foreign Trade
Via Ricardo J. Alfaro, Plaza Edison, Piso #3
Panama, Republica de Panama

(b) in the case of the ROC:
Ministry of Economic Affairs
No.15 Fu-Chou Street, Taipei
Taiwan
The Republic of China

2.The Parties shall communicate any change of the designated pl-
ace for the delivery of notifications and other documents.

CHAPTER 11
CROSS-BORDER TRADE IN SERVICES

Article 11.01 Definitions
For purposes of this Chapter, the following terms shall be unde-
rstood as:
cross-border provision of a service or crossborder trade in ser-
vices: the provision of a service:

(a) from the territory of a Party into the territory of the oth-
er Party;

(b) in the territory of a Party to the services consumer of the
other Party; or

(c) by a service provider of a Party, through presence of natur-
al persons of a Party in the territory of the other Party,
but does not include the provision of a service in the terr-
itory 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 De-
finitions);

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 imp-
oses limitations on:

(a) the number of service providers, whether in the form of a
quota, a monopoly or an economic needs test, or by any other
quantitative means;
or

(b) the operations of any service provider, whether in the form
of a quota or an economic needs test, or by any other quant-
itative means;

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 provi-
des 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:

(a) the production, distribution, marketing, sale and delivery
of a service;

(b) the purchase or use of, or payment for, a cross-border serv-
ice;

(c) the access to and use of distribution and transportation sy-
stems in connection with the provision of a cross-border se-
rvice;

(d) the access to networks and public services of telecommunica-
tion and its use;

(e) the presence in its territory of a cross-border service pro-
vider of the other Party; and

(f) the provision of a bond or other form of financial security
as a condition for the provision of a cross-border service.

2.For purposes of this Chapter, it shall be understood that the
measures adopted or maintained by a Party include measures ad-
opted or maintained by non-governmental institutions or bodies
in the performance of regulatory, administrative or other fun-
ctions of a governmental nature delegated to them by the Party
.

3.This Chapter does not apply to:

(a) subsidies or grants provided by a Party or a state enterpri-
se, including government-supported loans, guarantees and in-
surance;

(b) air services, including domestic and international air tran-
sportation services, whether scheduled or non-scheduled, and
related services in support of air services, other than

(i) aircraft repair and maintenance services during which an
aircraft is withdrawn from service,

(ii) the selling and marketing of air transport services, and

(iii) computer reservation system (CRS) services;

(c) government services or functions such as law enforcement,
correctional services, income security or unemployment insu-
rance or social security services, social welfare, public
education, public training, health, and child care;

(d) cross-border financial services; and

(e) government procurement done by a Party or state enterprise.

4.Nothing in this Chapter shall be construed to impose any obli-
gation on a Party with respect to a national of the other Par-
ty 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 chara-
cter of the relevant services or service suppliers.

Article 11.04 Most-Favored-Nation Treatment

Each Party shall accord to cross-border services and service pr-
oviders of the other Party treatment no less favorable than that
it accords, in like circumstances, to services and service prov-
iders of any non-Party.

Article 11.05 Standard of Treatment
Each Party shall accord to cross-border services and service pr-
oviders 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 en-
terprise, 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 Certific-
ation

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 const-
itute an unnecessary barrier to cross-border trade, each Party
shall endeavor to ensure that any such measure:

(a) is based on objective and transparent criteria, such as com-
petence and the ability to provide a cross-border service;

(b) is not more burdensome than necessary to ensure the quality
of a crossborder service; and

(c) does not constitute a disguised restriction on the cross-bo-
rder provision of a service.

Article 11.08 Reservations

1.Articles 11.03,11.04 and 11.06 do not apply to:

(a) any existing non-conforming measure that is maintained by

(i) a Party at the national level, as set out in its Schedule
to Annex I,

(ii) a local or municipal government;

(b) the continuation or prompt renewal of any non-conforming me-
asure referred to in subparagraph (a) ; or

(c) an amendment to any non-conforming measure referred to in
subparagraph (a) to the extent that the amendment does not
decrease the conformity of the measure, as it existed immed-
iately before the amendment, with Articles 11.03,11.04 and 1
1.06.

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 quant-
itative 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 quantitati ve 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 wi-
th Articles 17.04 (Provision of Information) and 19.06 (Consult-
ations), a Party may deny the benefits of this Chapter to a ser-
vice provider of the other Party where the Party decides, accor-
ding 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 rest-
rictions listed under Article 11.08(1) and (2).

Article 11.12 Procedures

The Parties shall establish procedures for:

(a) a Party to notify and include in its relevant Schedule

(i) amendments of measures referred to in Article 11.08(1) and
(2), and

(ii) quantitative restrictions in accordance with Article 11.0
9; and

(b) consultations on reservations or quantitative restrictions
for further liberalization, if any.

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 la-
ws or otherwise be damaging to the public interest, or that may
injure legitimate trade interests of state and private enterpri-
ses.

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 provisi-
ons of Article 18.05(2)(Committees), shall have the following
functions:

(a) supervising the implementation and administration of Chapte-
rs 10 (Investment) and 11 (Cross-border Trade in Services);

(b) discussing matters relating to investment and cross-border
trade in services presented by a Party;

(c) analyzing matters that are discussed in other international
fora;

(d) facilitating the exchange of information between the Parties
and cooperating in giving advice on investment and cross-bo-
rder trade in services; and

(e) establishing working groups or convening panels of experts
on matters of interest to the Parties.

3.The Committee shall meet when necessary or at any other time
at the request of either Party. Representatives of other inst-
itutions may also take part in its meetings if the relevant a-
uthorities deem it appropriate.

ANNEX 11.14
COMMITTEE ON INVESTMENT AND CROSS-BORDER TRADE IN SERVICES
The Committee on Investment and Cross-border Trade in Services
set up under Article 11.14 shall be composed of:

(a) in the case of Panama, the Ministry of Trade and Industries,
represented by the Vice-ministry of Foreign Trade or its su-
ccessor; and

(b) in the case of the ROC, the Ministry of Economic Affairs,
represented by the Bureau of Foreign Trade or its successor.

CHAPTER 12
FINANCIAL SERVICES

Article 12.01 Definitions

For purposes of this Chapter, the following terms shall be unde-
rstood as:
cross-border provision of financial services or cross-border tr-
ade of financial services: the provision of a financial service:

(a) from the territory of a Party to the territory of the other
Party;

(b) in the territory of a Party to a consumer of services of the
other Party;
or

(c) by a service provider of a Party through the presence of na-
tural persons of a Party in the territory of the other Party
;

disputing investor: an investor that submits to arbitration a c-
laim under Article 12.19 and Section B of Chapter 10 (Investment
) ;

enterprise: "enterprise" defined in Chapter 2 (General Definiti-
ons);

financial institution: any financial intermediary or other ente-
rprise 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 instituti-
on, 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 se-
rvice 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 oth-
er business objective, acquired with resources transferred or
reinvested by a n investor, and including:

(a) an enterprise, shares in an enterprise, shares in the capit-
al of an enterprise that allow the owner to participate in
its income or profits. Debt instruments of an enterprise
and loans to an enterprise where:

(i) the enterprise is an affiliate of the investor, or

(ii) the date of maturity of the debt instrument or loan is at
least 3 years;

(b) a stake in an enterprise that grants to the owner the right
to participate in the assets of this enterprise in a liquid-
ation, provided that they do not arise from a debt instrume-
nt or a loan excluded under subparagraph (a);

(c) real estate or other properties, tangible or intangible, in-
cluding rights in the intellectual property field, as well
as any other proprietary right (such as mortgages, liens,
usufruct and similar rights), acquired with the expectation
of or used with the purpose of obtaining an economic benefit
or other business objectives;

(d) share or benefits arising from the allocation of capital or
other resources to the developing of an economic activity in
the territory of a Party according, inter alia, to:

(i) contracts that involve the presence of the propriety of an
investor in the territory of a Party, including concessions
and construction and turnkey contracts, or

(ii) contracts where remuneration substantially depends on the
production, income or profits of an enterprise, and

(e) a loan granted by a provider of cross-border financial serv-
ices or a debt instrument owned by the provider, except a
loan to a financial institution or a debt instrument issued
by it, but investment does not include:

(f) a payment obligation or a credit granted by the State or a
state enterprise;

(g) monetary claims exclusively derived from:

(i) commercial contracts for the sale of goods or services by
a national or an enterprise in the territory of a Party to
an enterprise in the territory of the other Party, or

(ii) a credit granted in relation to a commercial transaction,
of which expiration date is less than 3 years, such as tr-
ade financing, except a loan covered by the provisions of
subparagraph (a);

(h) any other monetary claim that does not involve the kinds of
interests as set out in subparagraphs (a) through (e); or

(i) a loan to a financial institution or a debt instrument iss-
ued by a financial institution, except if it is a loan to
or a debt instrument issued by a financial institution tre-
ated as capital for regulatory purposes by a Party in whose
territory the financial institution is located;

investment of an investor of a Party: an investment owned or di-
rectly 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 equ-
ity interest.

An investment is controlled by an investor of a Party if the in-
vestor has the power to:

(a) designate a majority of directors; or

(b) legally manage its operations in any other way;

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 mate-
rialize 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 fin-
ancial 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 controll-
ed 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, includ-
ing any securities or futures exchange or market, clearing agen-
cy, 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:

(a) financial institutions of the other Party;

(b) investors of the other Party, and investments of such inves-
tors, in financial institutions in the territory of the Par-
ty; and
(c) cross-border trade in financial services.

2.Nothing in this Chapter shall be construed to prevent a Party,
or its public entities, from exclusively conducting or provid-
ing in its territory:

(a) activities conducted by the monetary authorities or by any
other public institution with the aim of implementing monet-
ary or exchange policies;

(b) activities or services forming part of a public retirement
plan or statutory system of social security; or

(c) other activities or services for the account or with the gu-
arantee or using the financial resources of the Party, or
its public entities.

3.The provisions of this Chapter shall prevail upon those of ot-
her 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 Whe-
re 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 organ-
ization to provide a financial service in or into the territo-
ry of that Party, the Party shall ensure observance of the ob-
ligations 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 establishme-
nt 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 Pa-
rty located in the territory of that other Party. This obliga-
tion 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 obli-
gation.

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 treat-
ment no less favorable than that it accords to its own invest-
ors 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 institu-
tions, with respect to the establishment, acquisition, expans-
ion, management, conduct, operation, and sale or other dispos-
ition of financial institutions and investments.

3.Subject to Article 12.05, where a Party permits the cross-bor-
der 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 prov-
ision of such service.

4.A Party's treatment of similar financial institutions and sim-
ilar cross-border financial service providers of the other Pa-
rty, whether different or identical to that accorded to its
own institutions or providers in like circumstances, is consi-
stent with paragraphs 1 through 3 if the treatment affords eq-
ual competitive opportunities.

5.A Party's treatment does not afford equal competitive opportu-
nities 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 compa-
red with the ability of the Party's own financial institutions
and similar financial service providers to provide such servi-
ces.

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 invest-
ors 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:

(a) unilaterally granted;

(b) reached through harmonization or other means; or

(c) based on an agreement or arrangement with the other Party or
with the non-Party.

2.The Party that grants the recognition of prudential measures
according to paragraph 1, shall give the other Party appropri-
ate opportunities to show the existence of circumstances in
which there are or shall be equivalent regulations, supervisi-
on and implementation of regulations and, as appropriate, pro-
cedures 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 arrangeme-
nt.

4.No provision of this Article shall be construed as the applic-
ation of a mandatory procedure of review of the financial sys-
tem 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:

(a) the protection of fund administrators, investors, deposito-
rs, financial market participants, policyholders, policy
claimants, or persons to whom a fiduciary duty is owed by a
financial institution or cross-border financial service pr-
ovider;

(b) the maintenance of the safety, soundness, integrity or fin-
ancial responsibility of financial institutions or cross-
border financial service providers;, and

(c) ensuring the integrity and stability of the financial system
of a Party.

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 poli-
cies. 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 fina-
ncial service referred to in Article 12.02 paragraph 2(b).

4.Notwithstanding Article 12.17(1), (2) and (3), a Party may pr-
event 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 serv-
ice 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 Agre-
ement 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 app-
lications relating to the provision of financial services.

2.On the request of an applicant, the regulatory authorities sh-
all inform the applicant of the status of its application. If
such authorities require additional information from the appl-
icant, they shall notify the applicant without undue delay.

3.Each regulatory authority shall make an administrative decisi-
on on a completed application of an investor in a fina ncial
institution, a financial institution or a cross-border financ-
ial service provider of the other Party relating to the provi-
sion of a financial service within 120 days. The authority sh-
all promptly notify the applicant of the decision. An applica-
tion shall not be considered complete until all relevant hear-
ings are held and all necessary information is received. Where
it is not practicable for a decision to be made within 120 da-
ys, the regulatory authority shall notify the applicant witho-
ut 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:

(a) information related to the financial affairs and accounts of
individual customers of financial institutions or cross-bor-
der financial service providers; or

(b) any confidential information, the disclosure of which would
impede law enforcement or otherwise be contrary to the publ-
ic interest or prejudice legitimate commercial interests of
particular enterprises.

Article 12.11 Committee on Financial Services

1.The Parties hereby establish the Committee on Financial Servi-
ces, 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) (Comm-
ittees), shall have the following functions:

(a) supervising the implementation of this Chapter and its furt-
her elaboration;
(b) considering issues regarding financial services that are re-
ferred to it by a Party;

(c) participating in the dispute settlement procedures in accor-
dance with Articles 12.18 and 12.19; and

(d) facilitating the exchange of information between the superv-
ising authorities, cooperating on advising about prudential
regulation and endeavoring to harmonize the normative frame-
works for regulations as well as the other policies, if it
considers appropriate.

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 se-
rvices. The other Party shall give sympathetic consideration
to the request. The consulting Parties shall report the resul-
ts 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 regardi-
ng 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 re-
questing Party.

4.Nothing in this Article shall be construed to require regulat-
ory authorities participating in consultations under paragraph
3 to disclose information or take any action that would inter-
fere 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 ot-
her Party or a cross-border financial service provider in the
territory of the other Party, the Party may approach the comp-
etent regulatory authority of the other Party to seek the inf-
ormation.

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 instituti-
ons according to its law. The Party may decide the institutio-
nal 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 dis-
positions 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 Arti-
cles 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 activiti-
es 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 administr-
ative 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:

(a) any existing non-conforming measure that is maintained by a
Party at the national level, as set out in Section A of its
Schedule to Annex VI;

(b) the continuation or prompt renewal of any non-conforming me-
asure referred to in subparagraph (a); or

(c) an amendment to any non-conforming measure referred to in
subparagraph (a) to the extent that the amendment does not
decrease the conformity of the measure, as it existed immed-
iately before the amendment, with Articles 12.04 through 12.
07, 12.13 and 12.14.

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 cert-
ain specific commitments by that Party.

4.In Chapters 10 (Investment) and 11 (Cross-border Trade in Se-
rvices) a reservation on matters relating to local presence,
national treatment, most-favorednation treatment, senior mana-
gement and board of directors and administrative council shall
be deemed to constitute a reservation from Article 12.04 thro-
ugh 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 serv-
ice is being provided by an enterprise that does not conduct su-
bstantial 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 investme-
nt of an investor of the other Party in the territory of the
Party to be made freely and without delay. Such transfers inc-
lude:

(a) profits, dividends, interests, capital gains, royalty payme-
nts , management fees, technical assistance and other fees,
returns in kind and other amounts derived from the investme-
nt;

(b) proceeds from the sale or liquidation of all or part of the
investment;

(c) payments made under a contract entered into by the investor,
or its investment, including payments made pursuant to a lo-
an agreement;

(d) payments made pursuant to Article 10.11 (Expropriation and
Compensation); and

(e) proceeds from a dispute settlement procedure between a Party
and an investor of the other Party pursuant to this Chapter
and Section B of Chapter 10 (Investment).

2.Each Party shall permit transfers to be made without delay in
a currency of free convertibility at the market rate of excha-
nge 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, pro-
fits or other amounts derived from, or attributable to, inves-
tments in the territory of the other Party.

4.Notwithstanding paragraphs 1 and 2, a Party may prevent a tra-
nsfer through the fair and non-discriminatory application of
its laws in cases of:

(a) bankruptcy, insolvency or the protection of the rights of
creditors;

(b) criminal or penal offenses or confirmed administrative reso-
lutions;

(c) non-compliance with the requirement to report on currency
transfers or other monetary instruments;

(d) ensuring the satisfaction of judgments and awards in adjudi-
catory proceedings; or

(e) ensuring the enforcement of laws and regulations on issues,
trade and operations of securities.

5.Paragraph 3 shall not be construed to prevent a Party from im-
posing any measure through the fair and non-discriminatory ap-
plication of its laws relating to the matters set out in para-
graph 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 Chap-
ter.

2.The Committee on Financial Services shall maintain by consens-
us a roster of up to eighteen (18) individuals including five
(5) individuals of each Party, who are willing and able to se-
rve 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 susp-
ension of benefits is processed under Chapter 19 (Dispute Set-
tlement) and the measure affects:

(a) only the financial services sector, the complaining Party
may suspend benefits only in this sector;

(b) the financial services sector and any other sector, the com-
plaining Party may suspend benefits in the financial servic-
es sector that have an effect equivalent to the purpose of
the measure in the Party's financial services sector; or

(c) only a sector other than the financial services sector, the
complaining Party may not suspend benefits in the financial
services sector.

Article 12.19 Investment Disputes Settlement in Financial Servi-
ces Between an Investor of a Party and the Other Party

1.Section B of Chapter 10 (Investment) shall be incorporated in-
to this Chapter and be made as a part of it.

2.Where an investor of the other Party submits a claim under Ar-
ticle 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 (Inv-
estment) against a Party and the disputing Party invokes Arti-
cle 12. 09, on request of the disputing Party, the Tribunal
shall refer the matter in writing to the Committee for a deci-
sion. The Tribunal may not proceed before the receipt of a de-
cision under this Article.

3.In a referral pursuant to paragraph 2, the Committee shall de-
cide 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 Tr-
ibunal 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 re-
quest 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 tra-
nsmit 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
COMMITTEE ON FINANCIAL SERVICES
The Committee on Financial Services, established under Article 1
2.11, 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 appropria-
te (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 th-
rough the Bureau of Foreign Trade, or its successor, in con-
sultation with the competent authorities as appropriate.

CHAPTER 13 TELECOMMUNICATIONS

Article 13.01 Definitions

For purposes of this Chapter, the following terms shall be unde-
rstood as:

authorized equipment: terminal or other equipment that has been
approved for attachment to the public telecommunications transp-
ort network in accordance with a Party's conformity assessment
procedures;

conformity assessment procedure: "conformity assessment procedu-
re" 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 serv-
ices employing computer processing applications that:

(a) act on the format, content, code, protocol or similar aspec-
ts of a customer's transmitted information;

(b) provide a customer with additional, different or restructur-
ed information; or

(c) involve customer interaction with stored information;
Intra-corporate communications: subject to Annex 13.01(B),
telecommunications through which an enterprise communicates:

(a) internally, with or among its subsidiaries, branches or aff-
iliates, as defined by each Party; or

(b) on a non-commercial basis with other persons that are funda-
mental 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 cap-
acity to deeply affect the conditions of participation (from
the point of view of prices and supply) of the telecommunic-
ation services in a given market due to its control of esse-
ntial 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 al-
lowed, as the exclusive provider of telecommunication netwo-
rks or public services in any relevant market in the territ-
ory of a Party;

network termination point: the final demarcation of the pub-
lic telecommunications transport network at the customer's
premises;

private telecommunications network: subject to Annex 13.01(B
), a telecommunications transport network that is used excl-
usively for intra-corporate communications or between prede-
termined persons ;

protocol: a set of rules and formats that govern the exchan-
ge of information between two peer entities for purposes of
transferring signali ng or data information;

public telecommunications transport network: public telecom-
munications infrastructure which permits telecommunications
between and among defined network termination points;

public telecommunications transport service: any telecommun-
ications transport service required by a Party, explicitly
or in effect, to be offered to the public generally, includ-
ing telegraph, telephone, telex and data transmission, that
typically involves the real-time transmission of customer-s-
upplied information between two or more points without any
end-to-end change in the form or content of the customer in-
formation;

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, opt-
ical means or other electromagnetic systems;

telecommunications service: a service supplied by signal tr-
ansmission and reception through physical lines, radio-elec-
tricity, optical means or other electromagnetic systems, but
does not mean distribution by cable, radio broadcasting or
other kind of electromagnetic distribution of radio and tel-
evision programmes; and terminal equipment: any analog or d-
igital device capable of processing, receiving, switching,
signaling or transmitting signals by electromagnetic means
and that is connected by radio or wire to a public telecomm-
unications transport network at a termination point.

Article 13.02 Scope and Coverage

1.This Chapter applies to:

(a) subject to Annex 13.01(A), measures adopted or maintained by
a Party relating to access to and use of public telecommuni-
cations transport networks or services by persons of the ot-
her Party, including prices fixing and access and use by su-
ch persons operating private networks for intracorporate co-
mmunications;

(b) measures adopted or maintained by a Party relating to the p-
rovision of enhanced or value-added services by persons of
the other Party in the territory, or across the borders, of
a Party; and

(c) standards-related measures relating to attachment of termin-
al or other equipment to public telecommunications transport
networks.

2.Except to ensure that persons operating broadcast stations and
cable systems have continued access to and use of public tele-
communications 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 telev-
ision programming.

3.Nothing in this Chapter shall be construed to:

(a) require a Party to authorize a person of the other Party to
establish, construct, acquire, lease, operate or provide te-
lecommunications transport networks or telecommunications t-
ransport services;

(b) require a Party, or require a Party to oblige any person, to
establish, construct, acquire, lease, operate or supply tel-
ecommunications transport networks or telecommunications tr-
ansport services not offered to the public generally;

(c) prevent a Party from prohibiting persons operating private
telecommunication networks from using their networks to pro-
vide public telecommunications transport networks or servic-
es to third persons; or

(d) require a Party to oblige a person engaged in the cable or
broadcast distribution of radio or television programming to
make available its cable or broadcast facilities as a public
telecommunications transport network.

Article 13.03 Access to and Use of Public Telecommunications Tr-
ansport Networks and Services

1.For purposes of this Article, "non-discriminatory" means on t-
erms 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 the-
ir business, on reasonable and non-discriminatory terms and c-
onditions, including as set out in the rest part of this Arti-
cle.

3.Subject to paragraphs 7, 8 and Annex 13.01(B), each Party sha-
ll ensure that such persons are permitted to:

(a) purchase or lease, and attach terminal or other equipment t-
hat interfaces with the public telecommunications transport
network;

(b) interconnect private leased or owned circuits with public t-
elecommunications transport networks in the territory, or a-
cross the borders, of that Party, including for use in prov-
iding dial-up access to and from their customers or users,
or with circuits leased or owned by another person on terms
and conditions mutually agreed by those persons, according
to those set out in Annex 13.01(B);

(c) perform switching, signaling and processing functions; and

(d) use operating protocols of their choice, according to the t-
echnical plans of each Party.

4.Without prejudice to its applicable law, each Party shall ens-
ure that the pricing of public telecommunications transport s-
ervices 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 n-
etworks or services for the movement of information in its te-
rritory or across its borders, including for Intra-corporate
communications, and for access to information contained in da-
ta 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:

(a) ensure the security and confidentiality of messages; or

(b) protect the privacy of subscribers to public telecommunicat-
ions transport networks or services.

7.Further to Article 13.05, each Party shall ensure that no con-
dition is imposed on access to and use of public telecommunic-
ations transport networks or services, other than that necess-
ary to:

(a) safeguard the public service responsibilities of providers
of public telecommunications transport networks or services,
in particular their ability to make their networks or servi-
ces available to the public generally; or

(b) protect the technical integrity of public telecommunications
transport networks or services.

8.Provided that conditions for access to and use of public tele-
communications transport networks or services satisfy the cri-
teria 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, includ-
ing interface protocols, for interconnection with such netw-
orks or services;

(c) a restriction on interconnection of private leased or owned
circuits with such networks or services or with circuits le-
ased or owned by another person, where the circuits are used
in the provision of public telecommunications transport net-
works or services; and

(d) a licensing, permit, concession, registration or notificati-
on procedure which, if adopted or maintained, is transparent
and applications filed thereunder are processed expeditious-
ly.

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 notifica-
tion procedure that it adopts or maintains relating to the
provision of enhanced or valueadded services is transparent
and non-discriminatory, and that applications filed thereun-
der are processed diligently; and

(b) information required under such procedures, adjustable under
the existing law of the Parties, to demonstrate that the ap-
plicant has the financial solvency to begin providing servi-
ces or to assess conformity of the applicant's terminal or
other equipment with the Party's applicable standards or te-
chnical regulations.

2.Without prejudicing the law of either Party, neither Party may
require a service provider of enhanced or value-added services
to:
(a) provide those services to the public generally;

(b) adjust its rates or price on cost base;

(c) file a tariff or price;

(d) interconnect its networks with any particular customer or n-
etwork; or

(e) conform with any particular standard or technical regulation
for interconnection other than for interconnection to a pub-
lic telecommunications transport network.

3.Notwithstanding paragraph 2(c), a Party may require the filing
of a tariff by:

(a) such provider to remedy a practice of that provider that the
Party has found in a particular case to be anticompetitive
under its law; or

(b) a monopoly, main provider, incumbent carrier to which Artic-
le 13.06 applies.

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:

(a) prevent technical damage to public telecommunications trans-
port networks;

(b) prevent technical interference with, or degradation of, pub-
lic telecommunications transport services;

(c) prevent electromagnetic interference, and ensure compatibil-
ity, with other uses of the electromagnetic spectrum;

(d) prevent billing equipment malfunction;

(e) ensure users' safety and access to public telecommunications
transport networks or services; or

(f) ensure electromagnetic spectrum's efficiency.

2.A Party may require approval for the attachment to the public
telecommunications transport network of terminal or other equ-
ipment 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 f-
or its public telecommunications transport networks are defin-
ed 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 equipm-
ent that serves as a protective device fulfilling the criteria
of paragraph 1 .

5.Each Party shall:

(a) ensure that its conformity assessment procedures are transp-
arent and non-discriminatory and that applications filed th-
ereunder are processed expeditiously;

(b) permit any technically qualified entity to perform the test-
ing required under the Party's conformity assessment proced-
ures for terminal or other equipment to be attached to the
public telecommunications transport network, subject to the
Party's right to review the accuracy and completeness of the
test results; and

(c) ensure that any measure that it adopts or maintains requiri-
ng to be authorized to act as agents for suppliers of telec-
ommunications equipment before the Party's relevant conform-
ity assessment bodies is nondiscriminatory.

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 facil-
ities in the territory of the other Party for tests performed
in accordance with the accepting Party's standards-related me-
asures and procedures.

Article 13.06 Monopolies or Anti-competition Practice

1.Where a Party maintains or designates a monopoly, or main pro-
vider or incumbent carrier, to provide public telecommunicati-
ons 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 s-
ervices 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 anticompetiti-
ve conduct in those markets, either directly or through its d-
ealings with its affiliates, in such a manner as to affect ad-
versely a person of the other Party. Such conduct may include
cross-subsidization, predatory conduct and the discriminatory
provision of access to public telecommunications transport ne-
tworks or services.

2.To prevent such anticompetitive conduct, each Party shall make
efforts to conform with or maintain effective measures as ref-
erred to paragraph 1, such as:

(a) accounting requirements;

(b) requirements for structural separation;

(c) rules to ensure that the monopoly, main provider or incumbe-
nt carrier accords its competitors access to and use of its
public telecommunications transport networks or services on
terms and conditions no less favorable than those it accords
to itself or its affiliates; or

(d) rules to ensure the timely disclosure of technical changes
to public telecommunications transport networks and their i-
nterfaces.

Article 13.07 Transparency

Further to Article 17.03 (Publication), each Party shall make p-
ublicly available its measures relating to access to and use of
public telecommunications transport networks or services, inclu-
ding measures relating to:

(a) tariffs, price and other terms and conditions of service;

(b) specifications of technical interfaces with the networks or
services;

(c) information on bodies responsible for the preparation and a-
doption of standards-related measures affecting such access
and use;

(d) conditions applying to attachment of terminal or other equi-
pment to the networks; and

(e) notification, permit, registration, certificate licensing or
concession requirements.

Article 13.08 Relation to Other Chapters

In the event of any inconsistency between this Chapter and anot-
her Chapter, this Chapter shall prevail to the extent of the in-
consistency.

Article 13.09 Relation to Other International Organizations and
Agreements

The Parties recognize the importance of international standards
for global compatibility and interoperability of telecommunicat-
ion networks or services and undertake to promote those standar-
ds 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 telecommunicati-
ons transport services infrastructure, the Parties shall coop-
erate in the exchange of technical information, the developme-
nt of government-to-government training programs and other re-
lated 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 feas-
ibility of further liberalizing trade in all telecommunicatio-
ns services, including public telecommunications transport ne-
tworks and services.

ANNEX 13.01 (A)
CONFORMITY ASSESSMENT PROCEDURE

For purposes of this Chapter, conformity assessment procedures
include:

In the case of Panama:

(a) Act No. 31, February 8, 1996, on the rules governing teleco-
mmunications in the Republic of Panama;

(b) Executive Decree No. 73, April 9, 1997, Telecommunication R-
ules;

(c) Resolution JD-119, October 28, 1997, by which the Regulatory
Body prohibits the importation into the Republic of Panama
of telephonic equipment and wireless intercommunication equ-
ipment that do not comply with the National Scheme of Frequ-
ency Assignation;

(d) Resolution JD-952, August 11, 1998, by which the Regulatory
Body adopts procedures to test new technology equipment that
use frequencies of the radio-electric spectrum; and

(e) Resolution JD-1785, January 3, 2000, that establishes the p-
rocedure for registering and authorizing the introduction in
Panamanian territory of wireless intercommunication telepho-
nes or equipment.

In the case of the ROC:

(a) Telecommunications Act, May 21, 2003;

(b) Compliance Approval Regulations of Telecommunications Termi-
nal Equipment, June 28, 2000;

(c) Regulations on Inspection and Certification of Controlled T-
elecommunications Equipment, August 30, 2002;

(d) Administrative Regulations on Low-Power Radio Waves Radiated
Devices, October 23, 2002;

(e) Administrative Regulations on Controlled Telecommunications
Equipment Radio-Frequency Devices, September 14, 2000;

(f) Rules Governing the Third Generation (3G) Mobile Telecommun-
ications Service, March 6, 2003;

(g) Administrative Regulations governing 1900Mhz Digital Low-Ti-
er Cordless Telephony Business, March 6, 2003;

(h) Regulations Governing Fixed Network Telecommunications Busi-
nesses, March 6, 2003;

(i) Administrative Rules on Satellite Communication Services, M-
arch 6, 2003;

(j) Regulations Governing Mobile Telecommunications Businesses,
March 6, 2003; and

(k) Administrative Regulations On Amateur Radios, October 11,
2000.

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 priva-
te communications of a company may not be connected with publ-
ic telecommunications transport networks nor may be used to p-
rovide telecommunication services, even free of charge, to th-
ird persons who are not subsidiaries, branch offices or affil-
iates 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 a-
nd it allows the interconnection of the private telecommunica-
tion networks used in the internal communications of enterpri-
ses to the public telecommunication transport networks and the
provision to third persons of services that are key for the e-
conomic activities of an enterprise and that maintain a conti-
nued contractual relation with it.

CHAPTER 14 TEMPORARY ENTRY FOR BUSINESS PERSONS

Article 14.01 Definitions

1.For purposes of this Chapter, the following terms shall be un-
derstood as:
business activities: legitimate commercial activities underta-
ken 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 acti-
vities;

national: "national" as defined in Chapter 2 (General Definit-
ions), but not including those permanent residents or definit-
ive residents;

labour certification: procedure applied by the competent admi-
nistrative authority with the purpose of determining if a nat-
ional of a Party who seeks a temporary entry into the territo-
ry 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 im-
migration 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 bus-
iness person of the other Party without the intention to esta-
blish 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:

(a) managing the administration of the organization, or of a re-
levant component, or function within it;

(b) establishing the policies and objectives of the organization
, component or function; or

(c) receiving supervision or general direction only from execut-
ives in a higher level, the board of directors or the admin-
istrative council of the organization or its shareholders.

management functions: functions assigned in an organization to a
person who shall have the following basic responsibilities:

(a) managing the organization or an essential function within it
;

(b) supervising and controlling the work of other professional
employees, supervisors or administrators;

(c) having the authority to engage and dismiss or to recommend
these actions, and to undertake other actions related to ma-
nagement of the personnel directly supervised by this person
, and to perform senior functions within the organization h-
ierarchy or functions related to his position; or

(d) performing discretionary actions related to the daily opera-
tion of the function over which this person has the authori-
ty; and

functions requiring specialized knowledge: functions that requi-
re special knowledge of goods, services, research, equipment, t-
echniques, 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 t-
he organization.

Article 14.02 General Principles

This Chapter reflects the preferential trading relationship bet-
ween the Parties, the desirability of facilitating temporary en-
try on a reciprocal basis and of establishing transparent crite-
ria and procedures for temporary entry, and the necessity to en-
sure 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 part-
icular, shall apply expeditiously those measures so as to avo-
id 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 criter-
ia, 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 r-
elating 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 whe-
re the temporary entry of that person might affect adversely:

(a) the settlement of any labor dispute that is in progress at
the place or intended place of employment; or

(b) the employment of any person who is involved in such dispute
.

3.When a Party refuses a temporary entry in accordance with par-
agraph 2, the Party shall:

(a) inform in writing the business person of the reasons for the
refusal; and

(b) promptly notify in writing the Party whose business person
has been refused entry of the reasons for the refusal.

4.Each Party shall limit any fees for processing applications f-
or 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 for-
ce in the territory of the Party authorizing the temporary en-
try.

Article 14.05 Provision of Information

1.Further to Article 17.03 (Publication), each Party shall:

(a) provide to the other Party such materials as will enable it
to become acquainted with its measures relating to this Cha-
pter; and

(b) no later than one year after the date of entry into force of
this Agreement, prepare, publish and make available in its
own territory, and in the territory of the other Party, exp-
lanatory material in a consolidated document regarding the
requirements for temporary entry under this Chapter in such
a manner as will enable business persons of the other Party
to become acquainted with them.

2. Each Party shall collect, maintain, and make available to the
other Party the information respecting the granting of tempo-
rary entry under this Chapter to business persons of the oth-
er Party who have been issued immigration documentation, inc-
luding data specific to each authorized category.

Article 14.06 Dispute Settlement

1.A Party may not initiate proceedings under Article 19.06 (Con-
sultations) regarding a refusal to grant temporary entry under
this Chapter or a particular case arising under Article 14.03
unless:

(a) the matter involves a pattern of practice; and

(b) the business person has exhausted the available administrat-
ive review regarding the particular matter.

2.The administrative review referred to in paragraph 1(b) shall
be deemed to be exhausted if a final determination in the mat-
ter has not been issued by the competent authority within 6 m-
onths of the institution of an administrative proceeding, and
the failure to issue a determination is not attributable to d-
elay caused by the business person.

Article 14.07 Relation to Other Chapters

Except for this Chapter, Chapters 1 (Initial Provisions), 2 (Ge-
neral 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 (A-
dministrative Proceedings for Adopting Measures of General Appl-
ications), no provision of this Agreement shall impose any obli-
gation on a Party regarding its immigration measures.

ANNEX 14.04 TEMPORARY ENTRY FOR BUSINESS PERSONS Section A - Bu-
siness Visitors

1.Each Party shall grant temporary entry and expedite document
verification to a business person seeking to engage in a busi-
ness activity set out in Appendix 14.04(A)(1), without other
requirements than those established by the existing immigrati-
on measures applicable to temporary entry, on presentation of:

(a) proof of nationality of a Party;
(b) documentation demonstrating that the business person will be
so engaged and describing the purpose of entry, and evidence
demonstrating that the proposed business activity is intern-
ational in scope and that the business person is not seeking
to enter the local labor market.

2.Each Party shall consider that a business person satisfies the
requirements of paragraph 1(b) by demonstrating that:

(a) the primary source of remuneration for the proposed business
activity is outside the territory of the Party granting tem-
porary entry; and

(b) the business person's principal place of business and the a-
ctual place of accrual of most of the profits remain outside
such territory.

For purpose of this paragraph, a Party that authorizes tempor-
ary entry shall normally accept a declaration as to the princ-
ipal place of business and the actual place of accrual of pro-
fits. Where the Party requires further proof, it should be co-
nducted according to its law.

3.Each Party shall grant temporary entry to a business person s-
eeking 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 s-
et out in Appendix 14.04(A)(3).

4.No Party may:

(a) as a condition for temporary entry under paragraph 1 or 3,
require prior approval procedures, petitions, labor certifi-
cation tests or other procedures of similar effect; or

(b) impose or maintain any numerical restriction relating to te-
mporary entry in accordance with paragraph 1 or 3.

5.Notwithstanding paragraph 4, a Party may require a business p-
erson seeking temporary entry under this Section to obtain a
visa or its equivalent prior to entry. The Parties shall cons-
ider removing their visa or equivalent document requirement.

Section B - Traders and Investors

1.Each Party shall grant temporary entry and provide documentat-
ion verification to a business person, who in a capacity that
is supervisory, managerial, executive or requiring specialized
knowledge, provided that the business person otherwise compli-
es with existing immigration measures applicable to temporary
entry, and seeks to:

(a) carry on substantial trade in goods or services principally
between the territory of the Party of which the business pe-
rson is a national and the territory of the other Party into
which entry is sought; or

(b) establish, develop, administer or provide advice or key tec-
hnical services to the operation of an investment to which
the business person or the business person's enterprise has
committed, or is in the process of committing, a substantial
amount of capital,

2.No Party may:

(a) as a condition for authorizing temporary entry under paragr-
aph 1, require labor certification tests or other procedures
of similar effect; or

(b) impose or maintain any numerical restriction relating to te-
mporary entry in accordance with paragraph 1.

3.Notwithstanding paragraph 2, a Party may require a business p-
erson seeking temporary entry under this Section to obtain a
visa or its equivalent prior to entry. The Parties shall cons-
ider avoiding or removing their visa or equivalent document r-
equirement.

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 requir-
ing specialized knowledge to that enterprise or a subsidiary
or affiliate thereof, provided that the business person other-
wise complies with effective immigration measures applicable
to temporary entry. A Party may require the person to have be-
en employed continuously by the enterprise for 1 year immedia-
tely preceding the date of the application for admission.

2.No Party may:
(a) as a condition for temporary entry under paragraph 1, requi-
re labor certification tests or other procedures of similar
effect; or

(b) impose or maintain any numerical restriction relating to te-
mporary entry under paragraph 1.

3.Notwithstanding paragraph 2, a Party may require a business p-
erson seeking temporary entry under this Section to obtain a
visa or its equivalent prior to entry. The Parties shall cons-
ider avoiding or removing their visa or equivalent document r-
equirement.

ANNEX 14.04 (1) SPECIAL PROVISION REGARDING TEMPORARY ENTRY OF
BUSINESS PERSONS For Panama:

1.It shall be considered that the business persons who enter Pa-
nama under any of the categories established in Annex 14.04 c-
arry out activities that are useful or beneficial to the coun-
try.

2.The business persons who enter Panama under any of the catego-
ries of Annex 14.04 shall hold a temporary residence permit a-
nd may renew this permit for consecutive periods as long as t-
he conditions are maintained. Such persons may not request pe-
rmanent 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 De-
cree of the Cabinet No. 363, December 17, 1970. For the ROC:

1.The business person shall obtain a visitor or resident visa p-
rior to entry. A visitor visa of which validity no longer than
1 year, multiple entry and 90- day duration of stay may be is-
sued. The business person in possession of a resident visa may
stay in the ROC provided the work permit remains valid. The d-
uration of stay may be extendable for consecutive periods as
long as the conditions justifying it are maintained. Such a p-
erson may not require permanent residence unless satisfying t-
he 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 Regul-
ations, the person must apply for entry permit according to t-
he said Statute and Regulations.

APPENDIX 14.04(A)(1) BUSINESS VISITORS 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 condu-
cting commercial operation for an enterprise established in t-
he territory of the other Party.

Marketing

- Market researchers and analysts conducting independent resear-
ch or analysis, or research or analysis for an enterprise est-
ablished in the territory of the other Party.

- Trade fair and promotional personnel attending a trade conven-
tion.

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 territ-
ory of the other Party.

After-sale Service

- Installation, repair and maintenance personnel, and superviso-
rs, possessing specialized knowledge essential to a seller's
contractual obligation, performing services or training worke-
rs to perform services, pursuant to a warranty or other servi-
ce 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 t-
he other Party.

- Financial services personnel engaging in commercial operation
for an enterprise established in the territory of the other P-
arty.

- Public relations and advertising personnel consulting with bu-
siness associates, or attending or participating in conventio-
ns.

- Tourism personnel (tour and travel agents, tour guides or tour
operators) attending or participating in conventions or condu-
cting a tour that has begun in the territory of the other Par-
ty.

APPENDIX 14.04(A)(3) EXISTING IMMIGRATION MEASURES

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 Gaz-
ette 16,758,on December 24, 1970.

In the case of the ROC, the Immigration Law, promulgated No. 880
0119740 on May 21, 1999; the Statute Governing Issuance of ROC
Visas on Foreign Passports, promulgated on June 02, 1999, and t-
he 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 COMPETITION POLICY CHAPTER 15 COMPETITION POLICY, MON-
OPOLIES AND STATE ENTERPRISES Section A-Competition Policy Arti-
cle 15.01 Objectives

The objectives of the this Chapter consist of assuring that the
benefits of the trade liberalization are not reduced by anticom-
petitive activities and promoting the cooperation and coordinat-
ion between the authorities of the Parties.

Article 15.02 Cooperation

1.The Parties recognize the importance of the cooperation and c-
oordination 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, reco-
gnizing 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 designat-
ing or maintaining a monopoly or a state enterprise if and wh-
enever its law permits it.

2.If a Party's law does permit it, where the Party intends to d-
esignate a monopoly or a state enterprise, and the designation
may affect the interests of persons of the other Party, the P-
arty shall:

(a) wherever possible, provide prior written notification to the
other Party of the designation; and

(b) endeavor to introduce at the time of designation such condi-
tions on the operation of the monopoly as will minimize or
eliminate any nullification or impairment of benefits under
this Agreement.

3.Each Party shall ensure, if designation or maintenance of a m-
onopoly or a state enterprise is permitted by the Party's law,
that any monopoly or any state enterprise designated or maint-
ained by the Party:

(a) acts in a manner that is not inconsistent with the Party's
obligations under this Agreement wherever such a monopoly or
a state enterprise exercises any regulatory, administrative
or other governmental authority that the Party has delegated
to it in connection with the monopolized goods or services
such as the power to grant import or export licenses, appro-
ve commercial transactions or impose quotas, fees or other
charges;

(b) provides non-discriminatory treatment to investments of inv-
estors, to goods and to service providers of the other Party
in its purchase or sale of the monopolized goods or services
in the relevant market; and

(c) does not use its monopoly position to engage, either direct-
ly or indirectly, in anticompetitive practices that adverse-
ly affect an investment of an investor of the other Party.

4.Paragraph 3 does not apply to procurement by governmental age-
ncies of goods or services for official purposes and not with
a view to commercial resale or with a view to use in the prod-
uction of goods or the provision of services for commercial s-
ale.

PART SIX INTELLECTUAL PROPERTY RIGHTS CHAPTER 16 INTELLECTUAL P-
ROPERTY

Section A - General Provisions Article 16.01 General Provisions

The Parties agree that TRIPS and the following intellectual pro-
perty (IP) related international conventions shall govern and a-
pply to all intellectual property issues arising from this Agre-
ement:

(a) the Paris Convention for the Protection of Industrial Prope-
rty (1967);

(b) the Bern Convention for the Protection of Literary and Arti-
stic Works (1971);

(c) the International Convention for the Protection of Performe-
rs, Producers of Phonograms and Broadcasting Organizations;

(d) the Geneva Convention for the Protection of Producers of Ph-
onograms 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) Copyrig-
ht Treaty of 1996; and

(g) the World Intellectual Property Organization (WIPO) Perform-
ances 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 appropri-
ate protection and enforcement of intellectual property rights
referred to in this Chapter and shall ensure that measures in-
tended for the enforcement of these rights do not create obst-
acles to legitimate trade.

2.Each Party may accord in its legislation a broader protection
to the intellectual property rights than the protection requi-
red in this Chapter, provided that this protection is not inc-
onsistent 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 cop-
yright and related rights shall not hinder free trade of legi-
timate 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 a-
nd 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 A-
greement to incorporate this principle into its national legi-
slation.

Article 16.04 Protection of Geographic Indications

1.Each Party shall recogni ze and protect the geographical indi-
cations of another Party provided for in this Article.

2.Neither Party shall permit the importation, manufacture or sa-
le of goods using a geographical indication protected by the
other Party, unless it is processed and certified in the orig-
inating Party according to the applicable legislation governi-
ng 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 ac-
cede to protection, each Party shall notify the other Party of
the geographical indications, which comply with the above-men-
tioned requirements and shall be included in the scope of pro-
tection.

4.The above mentioned provisions shall be understood without pr-
ejudice 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 origin-
ating in Panama. Consequently it shall not be permitted in the
ROC the importation, manufacture or sale of this product, unl-
ess 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 righ-
ts, aiming at emphasizing the indigenous sociological and cul-
tural values of the indigenous people and the local communiti-
es and bring to them social justice.

2.Each Party shall recognize that the customs, traditions, beli-
efs, spirituality, religiosity, cosmos vision, folklore expre-
ssions, artistic manifestations, traditional skills and any o-
ther 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 exc-
lusivity by unauthorized third parties applying the intellect-
ual property system, unless the request is done by the indige-
nous people and local communities or by third parties with th-
eir 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 Par-
ty will participate in benefits derived from the use of its g-
enetic 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 e-
xpressions.

3.Each Party shall ensure that the protection accorded to the i-
ndustrial property shall safeguard its biological and genetic
heritage. Consequently, the licensing of patents on inventions
developed from material obtained from such heritage or tradit-
ional knowledge shall be subject to the condition that this m-
aterial was acquired according to relevant national and inter-
national 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 f-
or in the relevant laws and regulations in the territory of e-
ach Party, as well as through the mechanism of mutual recogni-
tion 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 in-
tellectual property right which accords to its holder an excl-
usive 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 inh-
eritable. 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 s-
hall be applied to any kind of plants and seeds, and to any p-
art thereof that can be used as reproduction or propagation m-
aterial. 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 fr-
om 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 accordan-
ce with TRIPS.

2.The Parties recognize that the growing importance of IP prote-
ction in traditional knowledge and folklore, genetic resources
, geographic indications, plant breeders and other related ma-
tters is critical to economic competitiveness in the knowledge
-based economy and to sustainable economic development. The P-
arties, therefore, confirm that either Party which is not par-
ty to one or more of the multilateral agreements listed in Ar-
ticle 16.01 shall undertake with the best efforts to pursue a-
ffiliation, in due course, to the said agreements.

Article 16.10 Enforcement of Intellectual Property Rights

Each Party shall establish in its legislation administrative, c-
ivil and criminal procedures, effective with the objective to r-
each an adequate and effective protection of the intellectual p-
roperty rights. Also for all the procedures as mentioned above,
the due process as regards the relationship between the plainti-
ff 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 a-
ction 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 ruli-
ngs 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 be-
come acquainted with them.

Article 16.13 Committee on Intellectual Property

1.The Parties hereby establish the Committee on Intellectual Pr-
operty, as set out in Annex 16.13, to discuss a nd 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 thr-
ee IP experts from the Intellectual Property Office in each P-
arty. The Committee or the Expert Group on Intellectual Prope-
rty 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 b-
etween the Parties and within the framework of the WTO on matte-
rs relating to intellectual property,

particularly in areas of newly developed IP -related issues.

ANNEX 16.13 COMMITTEE ON INTELLECTUAL PROPERTY

The Committee on Intellectual Property under Article 16.13 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, Ministry of Economic Affairs through
the Intellectual Property Office, or its successor.

PART SEVEN ADMINISTRATIVE AND INSTITUTIONAL PROVISIONS CHAPTER
17 TRANSPARENCY

Article 17.01 Definitions

For purposes of this Chapter, "administrative ruling of general
application" means an administrative ruling or interpretation t-
hat applies to all persons and situations of fact that fall gen-
erally within its ambit and that establishes a norm of conduct
but does not include:

(a) a determination or ruling made in an administrative proceed-
ing that applies to a particular person, good or service of
the other Party in a specific case; or

(b) a ruling that adjudicates with respect to a particular act
or practice.

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 t-
he 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 en-
able the other Party and any interested person to become acquai-
nted 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 aff-
ecting the interests of the other Party in terms of this Agre-
ement.

2.Each Party, on request of the other Party, shall provide info-
rmation and respond promptly to questions pertaining to any a-
ctual 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 procee-
dings related to the application of any measure referred to in
Article 17.03 the guarantees on hearing, legality and due proce-
ss 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 consiste nt, impartial and r-
easonable manner all measures of general application which affe-
ct 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:

(a) wherever possible, persons of the other Party that would be
directly affected by a proceeding are provided with reasona-
ble notice, in accordance with domestic procedures, when a
proceeding is initiated, including a description of the nat-
ure of the proceeding, a declaration of the authority which
legally corresponds to the initiation of the proceeding and
a general description of all of the issues in controversy;

(b) the said persons are afforded a reasonable opportunity to p-
resent facts and arguments in support of their positions pr-
ior to any final administrative action, provided that the t-
ime, the nature of the proceeding and the public interest p-
ermit; and

(c) its procedures are in accordance with its legislation.

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 re-
garding matters covered by this Agreement. Such tribunals sha-
ll be impartial and independent of the office or authority en-
trusted 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:

(a) a reasonable opportunity to support or defend their respect-
ive positions and arguments; and

(b) a decision based on the evidence and arguments presented by
them.

3.Subject to appeal or further review as provided for in its la-
ws, each Party shall ensure that such decisions are implement-
ed by the offices or authorities.

Article 17.08 Communications and Notifications

Except any provision to the contrary, a communication or notifi-
cation shall be considered delivered to a Party upon its receipt
by the national section of the Secretariat of such Party.

CHAPTER 18 ADMINISTRATION OF THE AGREEMENT 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:

(a) supervising the accomplishment and correct implementation of
the provisions of this Agreement;

(b) evaluating the results achieved by the implementation of th-
is Agreement;

(c) monitoring developments and making recommendations to the P-
arties for modifications as it deems appropriate;

(d) resolving any dispute arising from the interpretation or ap-
plication of this agreement, in accordance with Chapter 19 (
Dispute Settlement);

(e) supervising the work of all committees established or creat-
ed under this Agreement and pursuant to Article 18.05(3); a-
nd

(f) cosidering any other matter that may affect the functioning
of this Agreement or that is entrusted to the Commission by
the Parties.

3.The Commission may:

(a) create ad hoc or standing committees, or expert groups as n-
ecessary for implementing this Agreement, and assign functi-
ons to them;

(b) for purposes of accomplishing the objectives of this Agreem-
ent, modify:

(i) the schedule of goods of a Party contained in Annex 3.04 (
T-ariff Reduction Schedule) with the purposes of incorpor-
ating one or more of the goods excluded in the Tariff Red-
uction Schedule,

(ii) the period established in Annex 3.04 (Tariff Reduction S-
chedule) with the purpose of accelerating tariff reducti-
on,

(iii) the rules of origin set out in Annex 4.03 (Specific Rul-
es of Origin) ,

(iv) the Uniform Regulations,

(v) Annex I, II, III and IV of Chapter 10 (Investment),

(vi) Annex I, II and V of Chapter 11 (Cross-border Trade in S-
ervices), and (vii) Annex VI of Chapter 12 (Financial Se-
rvices);

(c) seek the advice of non-governmental persons or groups;

(d) make and approve regulations required for the implementation
of this Agreement; and

(e) take any other action in the exercise of its functions as t-
he Parties may agree upon.

4.The modifications referred to in paragraph 3(b) shall be impl-
emented 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 s-
ession. 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 o-
ut in Annex 18.02 or persons designated by them.

2.The Sub-commission shall have the following functions:

(a) developing and reviewing the technical documents necessary
for taking decisions under the Agreement;

(b) following up the decisions adopted by the Commission;

(c) without prejudice to Article 18.01(2), may also supervise t-
he work of all committees, sub-committees and expert groups
established under this Agreement and pursuant to Article 18.
05(3); and

(d) reviewing any other matter that may affect the functioning
of this Agreement and that is assigned by the Commission.

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:

(a) shall designate a permanent office or official responsible
for acting on behalf of the national section of the Secreta-
riat of such Party and shall notify the Commission of the a-
ddress, phone number and any other relevant information whe-
re its national section is located;

(b) shall be responsible for:

(i) the operation and costs of its section; and

(ii) the remuneration and payment of the expenses of arbitrat-
ors, their assistants and the assigned experts under this
Agreement, as set out in Annex 18.03; and

(c) shall designate a Secretary to serve in its national section
, who shall be responsible for its administration.

3.The Secretariat shall have the following functions:

(a) providing assistance to the Commission and to the Sub-commi-
ssion;

(b) providing administrative support to the arbitral groups cre-
ated according to Chapter 19 (Dispute Settlement), in accor-
dance with the proceedings established pursuant to Article
19.13(Model Rules of Procedure);

(c) by instructions of the Commission, supporting the work of t-
he committees, sub-committees and expert groups established
under this Agreement;

(d) conducting communications and notifications pursuant to Art-
icle 17.08 (Communications and Notifications); and

(e) other matters as assigned by the Commission.

Section B- Committees, Sub-committees and Expert Groups

Article 18.04 General Provisions

1.The provisions stated in this section shall, in a supplementa-
ry manner, apply to all committees, sub-committees and expert
groups created under this Agreement.

2.Each committee, sub-committee and expert group shall be compo-
sed 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 establi-
shed according to Annex 18.04.

2.All committees shall have the following functions:

(a) monitoring by its jurisdiction the implementation of the Ch-
apters of this Agreement;

(b) reviewing matters submitted by a Party claiming that a meas-
ure in force of the other Party by its jurisdiction has aff-
ected the effective implementation of the undertakings incl-
uded in the Chapters of this Agreement;

(c) requesting the competent authority to prepare technical rep-
orts and taking necessary actions to settle the issue;

(d) assessing and recommending proposals to the Commission to m-
odify, amend or add to the provisions of this Agreement wit-
hin its competency;

(e) proposing to the Commission the revision of measures in for-
ce of a Party which it considers may be inconsistent with t-
he obligations of this Agreement or may cause nullification
or impairment in the sense of Annex 19.03 (Nullification and
Impairment); and

(f) carrying out other tasks that the Commission may assign to
it pursuant to the provisions of this Agreement and other i-
nstruments derived from it.

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 cre-
ate standing subcommittees for matters specifically delegated
to them, and supervise their work. Each sub-committee shall h-
ave the same functions as a committee on matters for which it
was delegated.

2.Each sub-committee shall report to the committee on the imple-
mentation 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-commi-
ttee may also create ad hoc expert groups, with the purpose of
conducting necessary technical research that it deems appropr-
iate for accomplishing its functions, and shall supervise the-
ir 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 MEMBERS OF THE ADMINISTRATIVE COMMISSION OF THE AGR-
EEMENT

The Administrative Commission of the Agreement under Article 18.
01(1) shall be composed of:

(a) in the case of Panama, the Minister of Trade and Industries,
or his successor; and

(b) in the case of the ROC, the Minister of Economic Affairs, or
his successor.

ANNEX 18.02 MEMBERS OF THE ADMINISTRATIVE SUB-COMMISSION OF THE
AGREEMENT

The Administrative Sub-commission of the Agreement under Article
18.02 is composed of:

(a) in the case of Panama, the National Director for Internatio-
nal Trade Negotiations, Ministry of Trade and Industries, or
his successor; and

(b) in the case of the ROC, the Director General of the Bureau
of Foreign Trade, Ministry of Economic Affairs, or his succ-
essor.

ANNEX 18.03 REMUNERATION AND PAYMENT OF EXPENSES

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 gener-
al expenses of arbitral groups, shall be covered in equal par-
ts 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

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 (Art-
icle 11.14)

Committee on Financial Services (Article 12.11)

Committee on Intellectual Property (Article 16.13)

CHAPTER 19 DISPUTE SETTLEMENT

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 Arti-
cle 19.06;

defendant Party: the Party against which a complaint is made; a-
nd 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 inter-
pretation and application of this Agreement, and shall make e-
very 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 impa-
ir the benefits for the Parties deriving from it, nor shall i-
mpede 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 procedu-
res of this Chapter shall apply:

(a) to prevent or settle disputes between the Parties regarding
the application or interpretation of this Agreement; or

(b) when a Party considers that an actual measure of the other
Party is or would be inconsistent with the obligations of t-
his Agreement or might cause nullification or impairment as
set out in Annex 19.03.

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 a-
ccordance with the WTO Agreement may be settled in one of tho-
se 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 Ag-
reement, the forum chosen shall be used to the exclusion of t-
he 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 pr-
oceedings.

2.In cases of perishable agricultural goods, fish and fish prod-
ucts that are perishable:

(a) a consulting Party may request in writing that the Commissi-
on meet, when an issue is not resolved in accordance with A-
rticle 19.06 within fifteen (15) days following the submiss-
ion of the request for consultations; and

(b) the Party that has requested the intervention of the Commis-
sion, may request in writing the formation of an arbitral g-
roup when the issue has not been resolved within fifteen (15
) days after the meeting of the Commission, or if the Commi-
ssion has not met, within fifteen (15) days after submitting
the request for such a meeting.

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 establishm-
ent of an arbitral group respectively.

Article 19.06 Consultations

1.A Party may request in writing to enter into consultations wi-
th the other Party regarding any actual measure or any other
matter that the Party considers may affect the operation of t-
his Agreement in terms of Article 19.03.

2.The complaining Party requesting consultations shall submit t-
heir 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 u-
nder this Article or other consultative provisions of this Ag-
reement. To this end, the consulting Parties shall:

(a) provide information to allow the undertaking of the examini-
ng of how the actual measures or any other matter might aff-
ect the operation of this Agreement; and

(b) treat the confidential information exchanged in the course
of consultations on the same basis as the Party providing t-
he information.

The Initiation of the Proceedings

Article 19.07 Commission Intervention

1.Any consulting Party may request in writing that the Commissi-
on meet provided that:

(a) an issue that has not been resolved in accordance with Arti-
cle 19.06 within thirty (30) days following the submission
of the request for consultations, unless that the Parties a-
gree another deadline by mutual consent; or

(b) the Party that has been delivered the request for consultat-
ions has not answered within the deadline of ten (10) days
following the submission of the request.

2.The request referred to in paragraph 1 shall indicate the mea-
sure 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 res-
olution, may:

(a) call on technical advisors or create expert groups as it co-
nsiders necessary;

(b) request the good offices, conciliation or mediation of a pe-
rson or group of persons or other alternative ways of dispu-
te resolution; or

(c) formulate recommendations.

4.Unless otherwise decided, the Commission shall consolidate 2
or more proceedings under this Article relating to the same m-
easure. The Commission may accumulate 2 or more proceedings u-
nder 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 p-
rejudice to the rights of either Party in any further proceed-
ings under these procedures.

3.Good offices, conciliation or mediation may be requested at a-
ny time by either Party to a dispute. They may begin and be t-
erminated 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 Commissi-
on, 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:

(a) thirty (30) days after the meeting of the Commission, or if
this has not been held, thirty (30) days after the submissi-
on of the request for a meeting of the Commission;

(b) thirty (30) days after the Commission has met and accumulat-
ed the most recent issue in accordance with Article 19.07(4)
; or

(c) any other period that the Parties may agree upon.

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 sha-
ll 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 es-
tablish 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) arbitrat-
ors 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. N-
otwithstanding, the Commission might revise, by request of a Pa-
rty, the roster of arbitrators before the expiration of this pe-
riod.

3.The members of the rosters of arbitrators shall meet the qual-
ifications set forth in Article 19.11.

Article 19.11 Qualifications of the Arbitrators

1.All the arbitrators shall meet the following qualifications:

(a) have specialized knowledge or experience in law, internatio-
nal trade, other matters related to this Agreement, or in t-
he settlement of disputes arising from international trade
agreements;

(b) be elected strictly according to their objectivity, integri-
ty, reliability and good judgement;

(c) be independent, not associated with, and not accepting inst-
ructions from any Party; and

(d) observe the Code of Conduct that the Commission establishes.

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:

(a) the arbitral group shall be composed of three members;

(b) the Parties shall endeavor to agree on the designation of t-
he chair of the arbitral group within fifteen (15) days aft-
er the submission of the request for the establishment of t-
he arbitral group;

(c) if the Parties do not reach an agreement within the above-m-
entioned timeframe, on the designation of the chair of the
arbitral group, he or she shall be chosen by drawing lot fr-
om the "List of Arbitrators of non-Party Countries";

(d) within fifteen (15) days after the designation of the chair,
each Party shall select an arbitrator from the "List of Arb-
itrators of the Parties", and the arbitrator selected could
be one of the disputing Party's nationality; and

(e) if a disputing Party does not select an arbitrator, the arb-
itrator shall be chosen by drawing lot from the "List of Ar-
bitrators of the Parties" and shall be of that Party's nati-
onality.

2.Where a disputing Party considers that an arbitrator has viol-
ated 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 s-
hall establish the Model Rules of Procedure in accordance with
the following principles:

(a) the procedures shall ensure the right of a hearing before t-
he arbitral group and the opportunity to present allegations
and rebuttals in writing; and

(b) the hearings before the arbitral group, the deliberations a-
nd the preliminary report, as well as all the writings and
communications presented in it shall be confidential.

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 arbitr-
al group shall be:

"To examine in light of the provisions of this Agreement the
dispute submitted for its consideration under the terms set f-
orth in the request for the meeting of the Commission, and ma-
ke reports as p rovided for in Articles 19.15 and 19.16".

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 reach-
es conclusions about the extent of the adverse trade effects
brought upon by the measure adopted by the other Party and co-
nsidered by the disputing Party as inconsistent with the Agre-
ement, or that the measure has caused nullification or impair-
ment 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, un-
less the Parties agree otherwise.

2.Unless the Parties agree otherwise, the arbitral group shall
present to the Parties, within ninety (90) days of the nomina-
tion of the last arbitrator a preliminary report which includ-
es :

(a) findings of fact, including any findings pursuant to a requ-
est under Article 19.13(6);

(b) a decision about the inconsistency or possible inconsistency
of the measure in question with the obligations arising from
this Agreement or about the measure being a cause of nullif-
ication or impairment as set out in Annex 19.03 or any other
decision requested in the mandate;

(c) its recommendations, if any, to settle the dispute; and

(d) if this is the case, the timeframe for the implementation of
the report in accordance with paragraphs 2 and 3 of Article
19.17.

3.Arbitrators may furnish separate opinions in writing on matte-
rs in which the consensus is not reached.

4.The Parties may make comments in writing to the arbitral group
about the preliminary report within fourteen (14) days of its
presentation.

5.In such an event and after examining the written comments, the
arbitral group may ex officio or at the request of a disputing
Party:

(a) request the comments from the Parties;

(b) reconsider its preliminary report; and

(c) take any steps deemed appropriate.

Article 19.16 Final Report

1.The arbitral group shall notify the Parties of its final repo-
rt by majority vote, including any separate opinions in writi-
ng 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 repo-
rt 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 otherwi-
se.

Article 19.17 Implementation of the Final Report

1.The final report shall make mandatory for the Parties the req-
uirements and periods that it orders. The timeframe for imple-
menting the final report shall not exceed 6 months from the d-
ate on which the final report was notified to the Parties, un-
less the Parties agree on a different timeframe.

2.If the final report of the arbitral group states that the mea-
sure 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 implementa-
tion, taking into account the complexity of the de facto and
de jure issues implied and the nature of the final report. Th-
is period shall not exceed 180 days.

3.If the final report states that the measure is a cause of nul-
lification or impairment as set out in Annex 19.03, it shall
specify the degree of nullification or impairment and may sug-
gest 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 issu-
es implied and the nature of the final report. This period sh-
ould 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 a-
rbitral group and the other Party of actions adopted to comply
with the final report. Within thirty (30) days after expirati-
on 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 de-
termines that the defendant Party has not complied with the f-
inal report, the complaining Party may suspend benefits in ac-
cordance with Article 19.18.

Article 19.18 Suspension of Benefits

1.The complaining Party may suspend the benefits to the defenda-
nt Party arising from this Agreement that have an effect equi-
valent to the benefits not received, if the arbitral group de-
cides that:

(a) a measure is inconsistent with the obligations of this Agre-
ement and that the defendant Party has not complied with the
final report within the timeframe determined by the arbitral
group in the final report; or

(b) a measure is a cause of nullification or impairment as set
out in Annex 19.03 and the Parties have not reached a mutua-
lly satisfactory agreement on the dispute within the timefr-
ame determined by the arbitral group.

2.The suspension of benefits shall last until the defendant Par-
ty complies with the final report or until the Parties reach a
mutually satisfactory agreement on the dispute, as the case m-
ay 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 b-
enefits previously suspended, it may ask for the establishment
of an arbitral group in accordance with paragraph (4) to dete-
rmine if it has complied with the final report.

3.In considering the benefits to be suspended in accordance with
this Article:

(a) the complaining Party shall endeavor first to suspend benef-
its within the same sector or sectors affected by the measu-
re or by other matter considered by the arbitral group as i-
nconsistent with the obligations arising from this Agreement
or that has been a cause of nullification or impairment as
set out in Annex 19.03; and

(b) if the complaining Party considers that it is not feasible
nor effective to suspend benefits in the same sector or sec-
tors, it may suspend benefits in other sectors.

4.Once the benefits have been suspended pursuant to this Article
, the Parties, by request in writing from a Party, shall esta-
blish an arbitral group if necessary to determine if the final
report has been complied with or if the level of benefits sus-
pended to the defendant Party by the complaining Party under
this Article is obviously excessive.

To the extent practicable, the arbitral group shall be compos-
ed of the same arbitrators who have knowledge over the dispute
.

5.The proceedings before the arbitral group established for pur-
poses of paragraph 4 shall be carried forward pursuant to the
Model Rules of Procedure set out in Article 19.13 and the fin-
al report shall be issued within sixty (60) days of the nomin-
ation of the last arbitrator, or any other timeframe agreed u-
pon 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 prese-
ntation of the request referred to in paragraph 4.

Section B – Domestic Proceedings and Settlement of Private Com-
mercial Disputes

Article 19.19 Interpretation of the Agreement Before Judicial a-
nd Administrative Proceedings

1.The Commission shall endeavor to give, as soon as possible, an
appropriate and non-binding interpretation or response, where:

(a) a Party considers that a matter of interpretation or applic-
ation of this Agreement arisen or that arises in a judicial
or administrative proceeding of the other Party merits an i-
nterpretation by the Commission; or

(b) a Party communicates to the Commission of the reception of a
request for an opinion about a matter of interpretation or
implementation of this Agreement in a judicial or administr-
ative proceeding of this Party.

2.The Party in which territory a judicial or administrative pro-
ceeding is taking place shall present in the proceeding the i-
nterpretation 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 l-
aw 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 In-
dividuals

1.Each Party shall promote and facilitate arbitration and other
alternative methods to settle international commercial disput-
es 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 arbit-
ration conventions that it has ratified and the recognition a-
nd implementation of arbitral awards in these disputes.

3.The Commission may establish a Consultative Committee on Priv-
ate Commercial Disputes, composed of persons with specialized
knowledge or experience in the resolution of private internat-
ional commercial disputes. Once the Committee is created, it
shall present reports and recommendations in general nature a-
bout the existence, use and efficiency of arbitration and oth-
er procedures for dispute settlement.

ANNEX 19.03 NULLIFICATION AND IMPAIRMENT

1.A Party may resort to the dispute settlement mechanism of this
Chapter, when in light of the application of a measure from t-
he other Party that does not contravene this Agreement, it co-
nsiders that the benefits that might be reasonably expected a-
re nullified or impaired in:

(a) Part Two (Trade in Goods);

(b) Part Three (Technical Barriers to Trade); or

(c) Chapter Eleven (Cross-border Trade in Services)

2.With respect to any measure subject to an exception in accord-
ance with Article 20.02 (General Exceptions), a Party may not
invoke:

(a) paragraph 1(a) or (b), to the extent that the benefit arises
from any crossborder trade in services provision of Part Two
(Trade in Goods), or of Part Three (Technical Barriers to
Trade); or

(b) paragraph 1 (c).

3.To determine the elements of nullification and impairment, the
Parties may take into account the principles set out in the j-
urisprudence of paragraph 1(b) of Article XXIII of GATT 1994.

CHAPTER 20 EXCEPTIONS

Article 20.01 Definitions

For purposes of this Chapter, the following terms shall be unde-
rstood as:

IMF: the International Monetary Fund;

international capital transactions: "international capital tran-
sactions" as defined under the Articles of Agreement of the Int-
ernational Monetary Fund;

payments for current international transactions: "payments for
current international transactions" as defined under the Articl-
es of Agreement of the International Monetary Fund;

tax convention: a convention for the avoidance of double taxati-
on 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 inco-
rporated into this Agreement and form an integral part of it
for purposes of:

(a) Part Two (Trade in Goods), except to the extent that some of
its provisions apply to services or investment;

(b) Part Three (Technical Barriers to Trade), except to the ext-
ent that some of its provisions apply to services or to inv-
estment; and

(c) Part Five (Competition Policy), to the extent that some of
its provisions apply to goods.

2.Subparagraphs (a), (b) and (c) of Article XIV of GATS are inc-
orporated into this Agreement and form an integral part of it,
for purposes of:

(a) Part Two (Trade in Goods), to the extent that some of its p-
rovisions apply to services;

(b) Part Three (Technical Barriers to Trade), to the extent that
some of its provisions apply to services;

(c) Chapter 10 (Investment);

(d) Chapter 11 (Cross-border Trade in Services);

(e) Chapter 12 (Financial Services);

(f) Chapter 13 (Telecommunications);

(g) Chapter 14 (Temporary Entry for Business Persons); and

(h) Chapter 15 (Competition Policy, Monopolies and State Enterp-
rises), to the extent that some of its provisions apply to
services.

Article 20.03 National Security

Nothing in this Agreement shall be construed to:

(a) require any Party to furnish or allow access to any informa-
tion the disclosure of which it determines to be contrary to
its essential security interests;

(b) prevent any Party from taking any actions that it considers
necessary for the protection of its essential security inte-
rests:

(i) relating to the traffic in arms, ammunition and implements
of war and to such traffic and transactions in other goods
, materials, services and technology undertaken directly
or indirectly for the purposes of supplying a military or
other security establishment,

(ii) taken in time of war or other emergency in international
relations, or

(iii) relating to the implementation of national policies or
international agreements respecting the non-proliferati-
on of nuclear weapons or other nuclear explosive devices
; or

(c) prevent any Party from taking action in fulfilling of its o-
bligations under the United Nations Charter for the mainten-
ance of international peace and security.

Article 20.04 Balance of Payments

1.Nothing in this Agreement shall be construed to prevent a Par-
ty from adopting or maintaining measures that restrict transf-
ers when the Party is facing serious balance of payments diff-
iculties, 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 und-
er Article XII of GATT 1994 and the Understanding on the Bala-
nce-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 parag-
raph (paragraph 3 of this Article) should be followed.

3.As soon as feasible after a Party has applied a measure confo-
rming with this Article, in accordance with the Party's inter-
national obligations, the Party shall:

(a) submit any current account exchange restrictions to the IMF
for review under Article VIII of the Articles of Agreement
of the IMF;

(b) enter into good faith consultations with the IMF on economic
adjustment measures to address the fundamental underlying e-
conomic problems causing the difficulties; and

(c) adopt or maintain economic policies consistent with such co-
nsultations.

4.A measure adopted or maintained under this Article shall:

(a) avoid unnecessary damage to the commercial, economic or fin-
ancial interests of the other Party;

(b) not be more burdensome than necessary to deal with the bala-
nce of payments difficulties or threat thereof;

(c) be temporary and be phased out progressively as the balance
of payments situation improves;

(d) be consistent with paragraph 3(c) and with the Articles of
Agreement of the IMF; and

(e) be applied on a national treatment or most-favored-nation t-
reatment basis, whichever is more favorable.

5.A Party may adopt or maintain a measure under this Article th-
at gives priority to services that are essential to its econo-
mic program, provided that a Party does not impose a measure
for the purposes of protecting a specific industry or sector
unless the measure is consistent with paragraph 3(c) and with
Article VIII(3) of the Articles of Agreement of the IMF.

6.Restrictions imposed on transfers:

(a) where they apply to payments for current international tran-
sactions, shall be consistent with Article VIII(3) of the A-
rticles of Agreement of the IMF;

(b) where they apply to international capital transactions, sha-
ll be consistent with Article VI of the Articles of Agreeme-
nt of the IMF and be imposed only in conjunction with measu-
res imposed on current international transactions under par-
agraph 3(a); and

(c) may not take the form of tariff surcharges, quotas, licenses
or other similar measures.

Article 20.05 Disclosure of Information

Nothing in this Agreement shall be construed to require a Party
to furnish or allow access to information of which the disclosu-
re would impede law enforcement or would be contrary to the Par-
ty's Constitution or public interest or its laws for protecting
personal privacy or the financial affairs and accounts of indiv-
idual 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 obligat-
ions of any Party under any tax convention. In the event of a-
ny inconsistency between any such convention and this Agreeme-
nt, the tax convention shall prevail to the extent of the inc-
onsistency.

3.Notwithstanding paragraph 2:

(a) Article 3.03 (National Treatment) and other provisions of t-
his Agreement necessary to make said Article effective shall
apply to taxation measures to the same extent as does Artic-
le III of the GATT 1994; and

(b) Article 3.14 (Export Taxes) shall apply to taxation measures
.

4.For purposes of this Article, taxation measures do not include
:

(a) a "customs duty" as defined in Article 2.01 (Definitions of
General Application); nor

(b) the measures listed in exceptions (b), (c) and (d) under the
definition of customs duty.

5.Subject to paragraph 2:

(a) Articles 11.03 (National Treatment) and 12.06 (National Tre-
atment) shall apply to taxation measures on profits, capital
gains or on taxable capital of enterprises related to the p-
urchase or consumption of particular services;
(b) Articles 10.02 (National Treatment), 10.03 (Most-Favored-Na-
tion Treatment), 11.03 (National Treatment), 11.04 (Most-Fa-
vored-Nation Treatment), 12.06 (National Treatment) and 12.
07 (Most-Favored-Nation Treatment) shall apply to taxation
measures other than those related to profits, capital gains
or taxable capital of enterprises, as well as estate, inher-
itance and gift taxes, except that nothing in those Articles
shall apply to:
(i) any most-favored-nation obligations with respect to an ad-
vantage accorded by a Party in fulfillment of a tax conve-
ntion;

(ii) any existing taxation measure which provides different t-
ax treatment between residents and non-residents;

(iii) the amendment to a non-conforming provision of any exis-
ting tax measure as provided for in paragraph (d) above
to the extent that the amendment does not decrease its
conformity, at the time of the amendment with any of th-
ese Articles; or
(iv) any new tax measure which aims at ensuring the equitable
and effective imposition or collection of taxes, and that
does not arbitrarily discriminate between persons, goods
or services of the Parties or arbitrarily nullify or imp-
air benefits accorded pursuant to those Articles, in the
sense of Annex 19.03 (Nullification and Impairment).

CHAPTER 21 FINAL PROVISIONS

Article 21.01 Modifications

1. Any modification of this Agreement shall be agreed upon by b-
oth Parties.

2. The modifications agreed upon shall enter into force after t-
heir 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 interpreta-
tive declarations by either Party at the time of its ratificati-
on.

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 af-
ter the day on which the countries have exchanged their ratif-
ication 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, wh-
ich includes:

(a) Annex 3.04 (Tariff Reduction Schedule), relating to the Tar-
iff Reduction Schedule between Panama and the ROC;

(b) Section C of Annex 4.03 (Specific Rules of Origin), applica-
ble between Panama and the ROC;

(c) Annexes I, II, III and IV of Chapter 10 (Investment), relat-
ing to applicable reservations and restrictions on investme-
nt between Panama and the ROC;

(d) Annexes I, II and V of Chapter 11 (Cross-border Trade in Se-
rvices), relating to applicable reservations and restrictio-
ns on cross-border services between Panama and the ROC;

(e) Annex VI of Chapter 12 (Financial Services), relating to ap-
plicable reservations and restrictions on financial services
between Panama and the ROC;

(f) Annex 3.11(6) (Import and Export Restrictions), as appropri-
ate; and

(g) Other matters as agreed upon by the Parties.

Article 21.04 Annexes

The Annexes to this Agreement constitute an integral part of th-
is Agreement.

Article 21.05 Termination

1.Either Party may terminate this Agreement.

2.The termination shall enter into force 180 days after notific-
ation 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 eq-
ually 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 thou-
sand and three.

FOR THE GOVERNMENT OF FOR THE GOVERNMENT OF
THE REPUBLIC OF CHINA: THE REPUBLIC OF PANAMA:


Chen Shui-bian Mireya Moscoso Rodriguez
President President
Republic of China Republic of Panama


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