U.S.-Panama Trade Promotion Agreement (TPA)

Rules of Origin

Step 3: Identify the Rule of Origin under U.S.-Panama TPA

The rules of origin define which products qualify for the FTA-negotiated preferential tariff rate (FTA rate) under the U.S.-Panama TPA.

Broadly speaking, products that are originating in either the United States or Panama are eligible for the FTA rate – although only the Panama Customs Service can definitively make a determination about FTA eligibilityfor imports into Panama. A product is originating under the U.S.-Panama TPA if it is a) wholly obtained or produced entirely in the United States or Panama, b) produced entirely in the U.S. and Panama and each of the non-originating materials (inputs) that are part of the good (product) being exported have met the relevant product-specific rule of origin; or c) produced entirely in the U.S. or Panama from originating materials (inputs). A simplistic illustration of this might be a wooden bowl, which to be originating could be a) made in the U.S. from U.S. wood; b) made in the U.S. from Argentine wood, but because the wood has been transformed into a bowl, it now meets the rule of origin for a bowl; or c) made in the U.S. from Panama wood.

Product specific rules are listed by HS Code in Annex 4.1 of the Agreement. If your product is produced in the U.S. or Panama and contains non-originating inputs (non-U.S. and non-Panamanian content, including content from an unknown origin), you will need to look at the specific rule of origin for your product to determine whether it is originating under the U.S.-Panama TPA.

There is a limited de minimis exception (Chapter 4, Article 4.6) available for most products where the non-originating inputs do not exceed 10 percent of the adjusted value of the product. However, there are restrictions on this exception for various agricultural products (Chapter 3, Section F). Different rules, including de minimis rule, apply for textiles and apparel products.

Although rules of origin under the U.S.-Panama TPA differ by product, they typically fall within three general categories, consisting of:

1) A change in tariff classification (tariff-shift); or

2) A regional value-content requirement (RVC); or

3) A combination of change in tariff classification and regional value content.

Step 4: Documenting Origin

The information presented on this website is meant to serve as a general guide. Only the agreement text and the customs regulations issued to implement the agreement are definitive. For complex issues or where interpretation is required, U.S. exporters should seek legal assistance.