Auto and Auto Parts

Trade and Tariffs

The automotive sector covers motor vehicles and parts.

Automotive products accounted for 3.0 percent of U.S. industrial exports to Panama in 2006, totaling $65 million. The top U.S. exports to Panama in this sector were road tractors, trucks, and passenger motor vehicles. Panamanian tariffs range between zero and 20 percent with an average tariff of 10.5 percent.

Panamanian exports to the United States totaled $283 thousand in 2006 or less than 1 percent of industrial exports to the United States. Top Panamanian exports to the U.S. were engines, radio broadcast receivers, and safety glass. U.S. automotive tariffs range from zero to 25 percent, with an average of 2.4 percent. All Panamanian exports in this sector enter the United States duty-free under the Caribbean Basin Economic Recovery Act (CBERA) and Caribbean Basin Trade Promotion Act (CBTPA) tariff preference programs.

Tariff Elimination

Tariffs will be phased-out according to four tariff elimination categories: immediate elimination; linear cuts over five years; linear cuts over ten years; and nonlinear cuts over ten years. Tariff elimination under the nonlinear ten-year staging category will proceed with a 3 percent cut in the tariff in years one and two, a 5 percent cut in years three through six, an 18 percent cut in years seven and eight, and a 19 percent cut each in years nine and ten.

For motor vehicles, 55.2 percent of U.S. industrial exports will receive duty-free treatment immediately upon implementation of the Agreement including road tractors, trucks under five metric tons, SUVs, and shock absorbers. Tariffs on another 15.6 percent of exports will be eliminated over five years. Duties on the remaining 29 percent of U.S. exports will be eliminated over ten years, including used vehicles, large trucks, and buses.

For auto parts, 97 percent of U.S. industrial exports will receive duty-free treatment immediately upon implementation of the Agreement with the remaining 3 percent eliminated over ten years.

The United States agreed to consolidate all CBERA and CBTPA tariff preferences into the final tariff elimination schedule, therefore all auto and auto parts exports from Panama will continue to receive duty-free treatment.

Non-Tariff Barriers

Panama will eliminate its prohibition on the importation of remanufactured autos and auto parts, as defined in Chapter 4—Rules of Origin, on entry into force of the Agreement.

International Trade Administration
Manufacturing and Services
Office of Trade Policy Analysis