J.1-Panama OverviewPanama Overview
The United States-Panama Trade Promotion Agreement (TPA) entered into force on October 31, 2012. On this day, over 87 percent of U.S. industrial goods exports to Panama became duty-free including information technology equipment, agricultural and construction equipment, aircraft and parts, medical and scientific equipment, environmental products, pharmaceuticals, fertilizers, and agro-chemicals.
Other benefits of the TPA include:
- Tariff elimination on more than half of U.S. exports of agricultural commodities to Panama became duty-free on day one. Products include high-quality beef, frozen turkeys, sorghum, soybeans, soybean meal, crude soybean and corn oil, almost all fruit and fruit products, wheat, peanuts, whey, cotton, and many processed products.
- Stronger protection and enforcement of intellectual property rights in Panama.
- Increased access to Panama’s $20.6 billion services market, including in priority areas such as financial, telecommunications, computer, distribution, express delivery, energy, environmental, and professional services.
- Significant infrastructure opportunities in the ongoing $5.25 billion Panama Canal expansion project, as well as through the almost $10 billion in other significant infrastructure projects, including construction of a highway between Colon and Panama City, the expansion and modernization of the Tocumen International Airport, and a mega-port project for container ships on the Pacific side of the Panama Canal.
Qualifying Products for US-Panama TPA Preferential Treatment
The five basic steps below help ascertain whether your product may qualify for the negotiated preferential tariff rate under the U.S.-Panama TPA. The steps include finding your product’s classification number, determining if it is beneficial to claim preferential tariff rate, locating product-specific rule of origin, certifying (documenting) origin and record keeping.
Determine product’s classification number
Determining product’s classification can be a multi-step process. Your importer or freight forwarder may be able to provide the likely Panama’s tariff classification for your product However, only Panama’s Customs Service can definitively determine whether a product is classified correctly under Panama’s tariff schedule. Provided here are steps that should help you get reasonably close to classifying your product in order to determine whether to claim tariff preferences under the TPA.
You may begin with locating first Schedule B number for the product you are exporting. We recommend starting with the U.S. Census Bureau’s Schedule B database. This plain language search tool, where you can enter “laptop” instead of “portable digital automated data processing machine,” helps you locate the probable ten digit U.S. Schedule B number for your product. For example, the U.S. Schedule B classification for laptop is 8471.30.0100. The first six digits of the Schedule B is the HS Code. For laptops, the HS code is 8471.30. To learn more about product classification, including a video on using Schedule B, visit Tariff and Import Fees. Sometimes it is helpful to look at an overall U.S. tariff schedule structure to understand how it is organized.
Determine whether there is an advantage to claiming preferential treatment under the U.S.-Panama TPA
- Compare current standard (Most Favored Nation –MFN rate) to the TPA preferential rate for your product. Since there are time and record-keeping costs associated with claiming eligibility of your product for the TPA rate, it is always a good idea to double check the current MFN tariff rate and compare it to the TPA rate. Sometimes a country’s tariff on an imported product from all countries (MFN rate) can be as low as or lower than the currently applicable TPA-negotiated preferential tariff rate (TPA rate). In such case, there is no reason to proceed with qualifying your good (some exception apply).
- FTA Tariff Tool You can input the HS Code or tariff classification into the FTA Tariff Tool to identify the FTA rate agreed to for the product for this year and for future years. Panama’s preferential rates for most products were set at zero as of October31, 2012, but rates on some products are staged down (reduced) in increments from their starting rates to zero over a period of years. Where applicable, the new tariff rates will take effect on January 1st of each year. The FTA tariff tool is especially useful if you are looking to determine your product’s competitiveness for current as well as the future years and for market research.
- Customs Info Database – This tariff tool database allows you to look up the most recent Panama MFN tariff rates for shipments originating in the United States as well as the most up-to-date FTA rate. By plugging in the first four to six digits of the product’s HS Code, you can compare both rates and determine the level of benefit (difference between MFN and FTA rate) Users of Export.gov are offered a free access of the system, with registration. This database also includes the Value Added Tax for Panama and formulas on how to calculate tariffs and taxes. This database will not show you the tariff reduction of your product over time.
- U.S.-Panama Trade Promotion Agreement Final Text
- Certificate of Origin (sample)
- U.S. Commercial Service in Panama
- U.S. Export Assistance Center in your neighborhood
- Industry Offices
- FTA Tariff Tool
- USTR Overview
- USDA Overview
Panama Free Trade Agreements