Laws and Regulations
The trucking industry in Panama and in Central America has many laws and regulations. The most important and influential legal aspects are trucking operations, international trade and border crossing.
These regulations state the different negotiations that the signatory countries have done in order to help the industry, promote international trading, and strengthen the competitive advantage of Central American markets.
There are important documents relating to the laws and regulations of the trucking industry:
- Ley 10 de 24 de enero de 1989: Regulates weights and dimensions of trucks. [View document]
- Ley 34 de 28 de julio de 1999: Creates “La autoridad del tránsito y transporteterrestre” (ATTT) and defines its functions. [View document]
- Ley 47 de 14 de agosto de 2001:That dictates rules on safety standards for freight vehicles and collective and selective transport. [View document]
- No. 65-2001 Regulation on international customs inland transit system, declaration form, and instructions. [View document]
- Decreto Ejecutivo 63 de 2002: By which Law No. 47 of August 14, 2001 is regulated and other provisions are enacted [View document]
- Ley 24 de 3 de febrero de 2003: Free trade agreement Panama – Central America. [View document]
- Decreto Ejecutivo No. 640, 27 de diciembre de 2006: By which the Vehicle Traffic Regulation is issued. [View document]
- Ley 42 de 22 de octubre de 2007: modifies Ley 34 de 1999. [View document]
- Ley 51 de 28 de junio de 2017: Regulation of the transport of cargo [View document]
- Executive Decree No. 229 of 2018: That regulates Law 51 of June 28 [View document]
International Customs Inland Transit System
The Annex for Resolution No. 65-2001 is the list of the actual regulations for the trucking industry within Central America and Panama. This set of regulations, also called the regulations on international customs inland transit system, it’s backed up by the Free Trade Agreement.
The regulations are based on 2 important points of the Resolution No. 65-2001 which are:
Full freedom of transit through their territories to all means of inland freight cargo, means of transport coming or going to any of the member states; Freedom of transit implies:
- Ensuring free competition in the contracting of inland freight transport subject to country of origin or destination;
- National treatment to the transport of all states in the territory of any of them, with the origin and destinations identified in item a).
- The freight service is subject to the payment of taxes normally applicable to nationals of any of the signatories on the provisions of service, which in no case constitute charges or import taxes.
The regulations in mention are "intended to facilitate, harmonize, and simplify procedures in the international customs transit operations carried out by land."
Free Trade Agreements
The FTA of Panama with Central America (Law 24 February 3rd 2003) contains seven specific chapters that influence the trucking industry. Even though the FTA does not talk deeply about the trucking industry and how it is supposed to operate there are different aspects in which the industry depends on. The following table shows the seven chapters.
|Chapter||Focal Points||Information||Relation to Trucking Industry|
- Free trade zones establishment
|All parties establish the objectives of the FTA and the bases for creating and implementing a free trade zone based in the World Trade Organization´s "General Agreement on Tariffs and Trade (GATT)."||Free trade zones are a great way of helping the trucking industry since these are zones that are supposed to simplify processes and speed up trading. However, some free trade zones in the region, such as borders, are somewhat time consuming to cross. New investments and technology are being introduced (Ex. Panama-Costa Rica border) to help make these zones more efficient.|
NATIONAL TREATMENT & GOODS'ACCESS TO MARKET
- Each party grants same treatment of goods to all the other parties
- Total elimination of custom tariffs for goods originating from the importing country
|The chapter explains the different treatment of goods based on the type of product that is being traded. Products are categorized in groups such as agricultural, sporting goods, printed advertising material, marine products, and others.||Clarifying and specifying the treatment of products helps the trading processes by making them more efficient. If there is an easy access of goods to the different markets the industry benefits from it since it may reduce transportation time and costs as well as help keep the quality of product and reduce lead times.|
RULES OF ORIGIN
- Tax cut application instruments
- Transfer of goods and direct expedition or international transit
- Originating merchandise
|Basing the value of goods on the incoterms CIF and FOB, some products are qualified as “originating goods” meaning that since they originate from one of the parties, this kind of product gets different tax deductions and treatments.||During the transportation process goods can lose their qualification as “originating goods.” For example, if a load is not closely checked by custom agencies then it can lose the privileges of an “originating load” and be treated like any other product. Even though tax payments are not counted as transportation costs, if a tax is cut this it helps to maintain a more profitable business.|
- Certification of origin and declaration of origin
- Tax cut requirements for imports and/or exports
- Procedures to verify origin of load
- Early resolution
|There are certain obligations in order to trade goods in the region. Requirements such as declaration and certification of origin as well as other documents and measurements are needed. However, thanks to the standardization of documents the process can be somewhat efficient even though each custom office operates different than the others.||Customs' procedures are extremely important for having smooth processes. These procedures need to be very clear and constantly updated. In the present the documentation needed is mostly standardized. However, the processes between the different parties and their borders are different to certain extent.|
DISLOYAL TRADING PRACTICES
|Each party is entitled to go through the pertinent investigations in any case there is a suspicion of disloyal trading practices. Practices such as antidumping are talked about. However, this chapter needs to take into consideration other practices such as smuggling and be a little more specific on how these situations are managed.||Disloyal trading practices may slow down the transportation process in many ways. In some countries there are random checks in order for authorities to have a better control of what is being traded. One of these countries is Nicaragua where there are random narcotic checks. More than for security reasons these checks are realized mostly for police “donations.” Usually the seal of the containers is cut in this situation.|
BORDER TRADE SERVICES
- International inland cargo transportation
- General Facts
|This is the only chapter of the FTA that actually talks about inland cargo transportation and establishes a mechanism to maintain a nondiscriminatory treatment for international inland cargo transportation. Also, freedom of transit is mentioned for all parties. Finally, it is stated that no payments for services, not mentioned in the agreement, are allowed. This is not the case.||For the trucking industry the border trade services are extremely important since it influences everything from lead time to quality of product and customer satisfaction. It is vital for international trading to have good, efficient, and fast border trade services. This is a great way of adding value to the product by offering quality services in order to preserve quality, decrease lead times, and have no losses during the transportation process.|
- Does not apply between Panama and Costa Rica
- General Facts
|This chapter does not apply to Panama and Costa Rica. It states the options that the other parts have to be able to have telecommunication within companies.||Having the availability of good telecommunications systems is critical to have a clear communication within a company. Part of having and efficient and optimal transportation service is having good communication within your supply chain.|