Bureau of Foreign Trade Ministry of Economic Affairs August 2003

1
Benefits to Bilateral Trade and Investment from
the ROC-Panama FTA
Taiwan
Panama

• Bureau of Foreign TradeMinistry of Economic
  AffairsAugust 2003

2
Contents

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

3
The Introduction of the ROC-Panama FTA

4
Why the ROC choose Panama as its firstpartner
for an FTA

• The willingness of trading partners ,the FTA
  strategies of the ROC and the impact to our
  domestic industries
• the geographical advantages of Panama

5
The Bilateral trade of Panama and the ROC
6
The Negotiation of ROC- Panama FTA

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

7
The ROC-Panama FTA

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

8
The Content of the ROC-Panama Agreement(1)

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

9

The Content of the ROC-Panama Agreement(2)

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

10
The Economic Benefits of the R.O.C.-Panama FTA on
Goods

11
Pre-ROC-Panama FTA Tariff Rates

• Present tariff rates on Panama imports to ROC
  3.46 (5.7 for agricultural products, 0.3 for
  industrial products )
• Panama tariff rates on ROC exports 6.37 (10.27
  for agricultural products, 6.19 for industrial
  products )
• In 2002, the ROC had a US122 million trade
  surplus with Panama, 25 times the value of Panama
  exports to the ROC

12
Pre-FTA ROC-Panama Trade in Goods

• Despite many industrial products manufactured in
  the ROC enjoy a comparative advantage, few are
  sold to Panama for the following reasons
• Large geographical distance
• Lack of familiarity with Panamanians consumption
  habits
• Panamas small domestic market

13
Post-FTA Trade in industrial products

• Reduced tariffs and lower costs will increase
  interest of manufacturers.
• Bilateral exchanges will increase manufactures
  familiarity with Panama market conditions and
  needs
• Panama Products expected to export to the ROC
  mens and childrens underwear, jackets, suits,
  shirts, womens blouses and mens undershirts

14
ROC Tariff Reduction Schedule
15
Panama Tariff Reduction Schedule
16
The Percentage of Zero-tariff items of ROC
17
The Percentage of Zero-Tariff items of Panama
18
The ROCs Tariff Reduction on Panamanian
Agricultural Products

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

19
The Panamas Tariff Reduction on ROC Agricultural
Products

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

20
The ROCs Tariff Reduction on Panamanian
Industrial Products

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

21
The Panamas Tariff Reduction on ROC Industrial
Products

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

22

• Ten years after the agreement goes into effect,
  the ROC will allow 97 of all Panamanian products
  to enter its market tariff-free, with Panama
  allowing 95 of all ROC products to enter its
  market tariff-free.
• In the first year after the FTA goes into effect,
  the ROC will save an estimated US500,000 in
  tariff payments on exports to Panama, with
  savings expected to grow to at least US1.3
  million after ten years. Likewise, Panama can
  expect to see substantial tariff savings on its
  exports to the ROC.

23
The Economic Benefits of the R.O.C.-Panama FTA on
Services
24
Benefits of Legal Assurance (Investments)

• National Treatment and Most-Favored-Nation
  Treatment
• No Performance Requirement unless specified in
  the negative list
• No Nationality Requirement of Senior Managers
  unless specified in the negative list
• Investors Can Sue the Government to settle
  disputes

25
Benefits of Legal Assurance (Cross-Border Trade
in Services and others)

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

26
Benefits of Market Access (1)

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

27
Benefits of Market Access (2)
WTO-plus (FTAgtWTO) of this FTA
ROC Panama
Larger extent market access Health and Social Transport Recreation, Cultural, and Sports Services Business Health and Social Communications Tourism Recreation, Cultural, and Sports Transport Services
Certain extent market access Business Financial Communications Tourism Services Distribution Education Financial Services
28
Benefits to Market Access (3)

• Example- Multi-Modal Transport ROC maritime and
  air transport investors are allowed to invest
  100 in Panamanian road transportation companies.
• Example- Financial Panamanian banks without
  being ranked as top 500 or 1000 of the worlds
  banks are granted a waiver to establish branches
  in ROC.

29
Benefits Market Access (4)

• Example-Telecommunications For Panamanian
  investors, they can invest up to 49 of telecom
  companies in ROC, not the 20 ceiling in ROCs
  WTO commitments. For ROC investors, they can
  invest in value-added services in Panama.
• Example- RD, leasing, market survey, technical
  testing and analysis, advertising, equipment
  maintenance these business-related services are
  opened for foreigners to provide services.

30
Benefits of Corporate Strategy (1)

• ROCs Advantage
• Location heart of east Asia economic zone.
• high-tech industries and supporting services such
  as RD, transportation, financial, and
  telecommunications.

Korea
Japan
China
ROC
ASEAN countries
31
Benefits of Corporate Strategy (2)

• Panamas Advantage
• Location heart of Americas and bridge of oceans.
• Canal Colon Free Zone No foreign exchange risk
  against US
• Member of future FTAA

NAFTA
Atlantic Ocean
Panama
Pacific Ocean
Latin America
32
The Economic Benefits of the R.O.C.-Panama FTA
on Investment
33
The ROC investment in Panama
Resource IDIC, MOEA
34
Panama could serve as Gateway to FTAA

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

35
Geographical Advantage of Panama

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

36
Investment Protection Agreement

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

37
Conclusion- benefits After the signing of the
ROC-Panama FTA
38
The Benefits After the Signing of the ROC-Panama
FTA

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

39

• Taiwan
• Your Global Market Partner