Volume 5, Number 10, Page 1

Report on Panama

by Eduardo Morgan

Negotiations Begin for FTA

Negotiations are underway with the Andean Pact for a customs cooperation and free trade agreement. Both documents will enter into force at the same time regardless of negotiations’ end; negotiations are expected to begin in 1999 before the next Andean Presidential Council. With these agreements, Panama will have access to a market of some 100 million people in countries with a gross national income of $190 billion, compared to Panama’s $9 billion. Panama exports only 21.5 million bolivares to member countries of the Andean Pact and imports 412.9 million bolivares; thus the commercial imbalance favors the Andean Pact. Among issues to be considered are rules of origin, certification and confirmation, customs procedures, competition policies, dumping practices, protection, health and sanitation rules and technical regulations, services, investments, double taxation and dispute resolution mechanisms. Negotiations are proceeding well regarding the free trade agreement with Chile. Law No. 19 of 1998 approves the Agreement for the Reciprocal Promotion and Protection of Investments between Panama and Chile.

Provisional Trade Matters Announced

The President of Panama adopted Resolution No. 64 -98 of the Council of Ministers Responsible for the Economic Integration and Regional Development (COMRIEDRE). This new piece of legislation facilitates commercial relations among members of the System of Central America Integration (SICA) by providing guidelines for transportation of merchandise until a free trade agreement with the Central America Common Market members is executed.

IP Issues

Executive Decree No. 79 of 1997, regulating intellectual property (IP) matters in the Colón-free zone and other industrial free zones of Panama, has come into effect. This decree introduced new measures to protect intellectual property rights such as giving discretionary powers to free zone authorities to conduct investigations and retain merchandise suspected to be counterfeit. This decree also requires holders of IP rights to provide a sample of goods and to file registration rights (trademarks, patents and copyrights) in the free zone. Previously such rights had to be registered at the industrial property office or the copyright office depending on the case. It is expected that this new legislation will greatly facilitate protection of IP rights and the prevention of their infringement in such important trade centers.

New Banking Law

Law Decree No. 9 of 1998 approves modifications to the Banking Law of the Republic of Panama and creates the "Banking Intendency and Independent Governmental Agency” with broad powers of enforcement. This new law incorporates concepts of “consolidated supervision" and “cooperation” with authorities from other countries having high liquidity and capital requirements, in order to ensure the financial stability of the bank for customers’ protection.

Convention Adopted

Law No. 17 of 1998 ratifies the U.N. Convention of Independent Warranties and Contingent Letters of Credit, adopted in New York in 1995.

Eduardo E. Morgan is an attorney with the Panamanian law firm of Morgan & Morgan (http://www.morimor.com). Practice areas include banking, securities, insurance, tax, labor, intellectual property and environment. The law firm has branch offices in London, Madrid and Belize, as well as offshore service offices in Zurich, Geneva and Lugano.