Panama: agriculture
From Handelswijzer Midden-Amerika
Policy objectives
The Ministry of Agricultural Development (MIDA) is responsible for formulating and implementing agricultural policy, as well as for coordinating some of the procedures relating to sanitary and phytosanitary measures. The main bodies belonging to or cooperating with the MIDA and assisting it to implement the policy are the Banco de Desarrollo Agropecuario – BDA (Agricultural Development Bank), the Instituto de Seguro Agropecuario – ISA (Agricultural Insurance Institute), the Instituto de Investigación Agropecuario – IDIAP (Agricultural Research Institute) and the Instituto de Mercadeo Agropecuario – IMA (Agricultural Marketing Institute).
According to the authorities, during the period 1994-1999, the Framework Guidance for Sectoral Policy was used as a reference to move ahead with the negotiations on accession to the WTO, mainly for the selection of sensitive products. Already during the period 2000-2004, the Rural Panama Plan proposed, inter alia, to speed up the process of agricultural technological development, to expand agricultural trade and to develop new markets. In 2004, the Government defined new strategic guidelines for agricultural development. The new strategy's objectives include increasing production and enhancing competitiveness, promoting demand-focused and export-oriented agricultural conversion, improving plant protection and animal health, and raising the living standards of the rural population.
Policy instruments
In 2007, the agricultural sector (according to the ISIC classification) benefited from average tariff protection of 10.6 per cent. The groups of agricultural products (according to the WTO classification) given high average tariff protection include dairy products (41.8 per cent), animals and products of animal origin (24.3 per cent) and cereals (23.7 per cent).
For sanitary and phytosanitary reasons, prior authorization is required before importing agricultural products.
Agricultural products are not subject to the sales tax (the ITBMS). Imports of capital goods and inputs to be used exclusively in the agricultural sector are exempt from import tariffs.
Panama has notified the WTO that, during the period 1997-2004, it did not make use of the special safeguard provisions reserved in its schedule, which include six tariff lines in the milk and cream chapter.
Mexico requested consultations with the Government of Panama following the publication of Cabinet Decree No. 20 of 17 July 2002 under which Panama abolished the tariff item for modified milk (at a bound tariff of 5 per cent) and subsequently replaced it by two new tariff items (at tariffs of 0 and 65 per cent, respectively). The Parties reached a mutually agreed solution with the reduction of the 65 per cent tariff to 5 per cent following publication of Cabinet Decree No. 18 of 3 August 2005.
Panama undertook to administer tariff quotas for a list of products in the context of the commitment on market access opportunities contained in the WTO Agreement on Agriculture.9 Panama has submitted five notifications to the WTO on the administration of tariff quotas for the period 1997-2004.
During the period 2004-2006, Panama administered tariff quotas for all the products on its schedule of market access commitments, covering a total of 60 tariff lines. For all these products, the in-quota bound tariff rate is 15 per cent while the out-of-quota rate ranges from 30 to 260 per cent. For some products, the in-quota tariff applied can be one of two figures (3 or 15 per cent), whereas for the others it is only one figure (15 per cent). The authorities have indicated that in those cases where the in-quota tariff applied is 3 or 15 per cent, approximately 95 per cent of the volume of the announced quota is intended for buyers holding an industrial licence (granted by the MICI); this is done through an auction called a "raw material" auction at a tariff of 3 per cent. The remaining 5 per cent of the quota goes to any registered buyer through an auction called a "finished product" auction at a tariff of 15 per cent. In the case of the other products, for which the tariff applied only has one rate (15 per cent), the quota goes to any registered buyer through a regular auction.
Close to 100 per cent of quotas are used in most cases, with the exception of dairy products and poultry meat. In the latter case, Panama has been self-sufficient and has not imported either in-quota or out-of-quota. According to the authorities, a quota for poultry meat has been opened but no offers have been received.
Resolution No. 5-98 of 18 November 1998 contained the implementing regulations for Law No. 23 of 15 July 1997 as far as the award of tariff quotas is concerned. Under this Resolution, the Comisión de Licencias de Contingentes Arancelarios (Tariff Quota Licensing Commission) is responsible for preparing the invitation to tender for the quota and for sending it to the Bolsa Nacional de Productos S.A. – BAISA (National Products Exchange). In early 2007, the BAISA was the only private exchange for products and was licensed by the Comisión Nacional de Bolsas de Productos (National Product Exchange Commission) to negotiate agricultural quotas in Panama. The Licensing Commission must publish the opening of quotas widely at least 21 calendar days prior to making them available to the public.
In order to allow both importers (buyers) and foreign exporters (sellers) to participate in the negotiating round, a registration form must be submitted and a broker's office duly accredited to the BAISA must be appointed. Once the period for receiving the forms has expired, the volumes requested individually by each importer are allocated, free-of-charge, provided that their total does not exceed the total amount of the quota. If the total volume does exceed the quota, the Technical Secretariat of the Licensing Commission and the MICI's Directorate General of Industry determine the percentage and amount of each applicant's share based on their previous import record.12 The importers must then negotiate sales contracts for the goods with foreign exporters by means of an auction mechanism within the BAISA. Immediately after the auction has been held, the BAISA issues a provisional import certificate, which must be replaced by the definitive import licence granted by the Licensing Commission within one or two days.
The allocation of quotas to supplier countries is on a global scale, with the exception of the quota for pig meat for which a special quota of 130 tonnes for Costa Rica (approximately 17 per cent of the total quota) was negotiated when Panama acceded to the WTO.
Non-automatic import licences issued following the auction of quotas are not transferable. Imports under the licences must also comply with the sanitary measures, technical regulations and other requirements in effect in Panama.
The Licensing Commission decides on the number of lots and the intervals at which tariff quotas are made available to the public, depending on each product's specifications. There is no preestablished maximum period within which the products must actually be imported and the Licensing Commission determines the maximum period on a case-by-case basis.
Panama applies autonomous tariff quotas for the supply of products declared by the Cabinet Council of the President's Office to be sensitive items. In early 2007, onions, coffee, sugar cane, and all the products on the market access commitment schedule, were deemed to be sensitive. During the period 2004-2006, autonomous quotas applied to the import of onions and the existing quotas for tomato concentrate, maize and rice were increased. The procedures for allocating these quotas are virtually the same as those applicable to ordinary quotas.
Panama applies additional quotas under trade agreements with other Central American countries. The products covered and the volume of the quotas depends on the agreement with the country concerned.
Internal measures
Panama does not apply any form of price control to agricultural or food products. The Government does, however, monitor prices, which are made public through the IMA and the Autoridad de Protección al Consumidor y Defensa de la Competencia (Consumer Protection and Competition Authority).
Panama notified to the WTO domestic support granted for information and training services, pest and disease control, extension and advisory services, marketing and promotion services, natural disaster relief and the programme in support of agricultural conversion, which are considered to be "green box" measures. These measures amounted to around US$347 million during the period 1997-2002. Panama has not made any notifications on domestic support for the years after 2002.
The programme in support of agricultural conversion is intended to facilitate the transition to different crops and new technologies. Panama also notified subsidies for investment in agriculture (loans to small producers), for an annual average amount of US$21.5 million during the period 1997-2002. It likewise notified the WTO of direct payments for the production of maize and swine made solely during the period 1999-2002. This programme ended in 2002, but some payments to producers were pending and were disbursed in 2003 and 2004. The calculation of the aggregate measurement of support for these special products was lower than the de minimis level throughout the years during which it applied.
Panama notified subsidies for the export of non-traditional agricultural products under the Certificados de Abono Tributario – CAT (Tax Credit Certificates) general programme, whose term was extended until June 2007. Different products were classified as nontraditional each year and received the benefit of the programme.
The Government has agricultural loan programmes through special credit lines from the BDA. The latter grants loans both for traditional items such as rice, maize, beans, livestock, and for non-traditional crops and agro-industry. The credit terms are favourable as regards interest rates, security and duration. In general, in 2006, the interest rates offered was 6 per cent on loans of up to B 25,000 and 7.5 per cent on other loans, which is below the market interest rates for commercial and industrial loans (8.1 and 8.3 per cent, respectively). The BDA requires security for its loans, which may be in the form of mortgages, liens, bonds, future crops or a combination thereof. The terms and amortization schedule are drawn up taking into account various aspects of the project to be financed, for example, the investment plan and the marketing calendar.
During the first eight months of 2006, the BDA granted 592 new loans for a total of B 17.9 million, giving a cumulative total of outstanding loans of B 93.8 million.22 The authorities have indicated that, between 2001 and 2005, the BDA utilized 86 per cent of the B 172 million available to it to finance agricultural and agro-industry projects.
Law No. 2 of 20 March 1986 on Agricultural Exports, amended by Law No. 28 of 1995, provides measures and incentives to encourage agricultural production and exports in order to promote agro-industrial development. These include the following: (a) a preferential rate for the installation and consumption of electricity used for agricultural activities, up to 30 per cent less than the regular rate; (b) tax exemption of up to 30 per cent for the sums invested in agricultural, livestock, fisheries, aquaculture and agro-industrial activities, although the amount may not exceed 40 per cent of income tax. This exemption entails the obligation to maintain the investment in the production of goods or the introduction of technology for over three years. According to the authorities, there are no special official programmes for agricultural export credits.
Bron: Organization of American State's Foreign Trade Information System (SICE)
