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Panamá, en defensa de su economía de servicios

By Dr. Brett Patton and Dr. Eduardo De Alba

Published by Martes Financiero

July 8th, 2014

Widely known are the efforts made by pressure groups conformed largely by powerful countries at economic and/or political level, including the so-called G-8 and G-20, like the Organization for Economic Co-operation and Development (OECD) and its appendix, the Global Forum. These demand changes in countries like Panama, so that our legal rules fit their national interests in preference to ours.
It is clear that Panama is part of the international community of nations and should behave as such, within the principles upon which the United Nations (UN) was founded, of which our country was a founder in 1945, and at a regional level, the Organization of American States (OAS), of which Panama was also a founder in 1948. Both organizations have existed since the beginning of the postwar and have general acceptance on a global and regional level.
Panama must respect and act towards the requirements of third countries, whilst effectively taking into account the individual rights that constitutionally protect any person, national or foreign, domiciled or resident in Panama or with property or activities in Panama, and consistently with the obligations that it has contracted in the with international conventions to which it is a party.
Critical to this analysis are the guarantees that any person, national or foreign, has in Panama: i) to due process of  law concerning any  accusation or investigation carried out with regards to its person, its activities or property; ii) to the presumption of innocence until being convicted in a public trial, adjusted to due process of law and determined  by a final and unappealable judgment and iii) to privacy and, thus, to the confidentiality of the documents and information which are obtained from such person.
Therefore, Panama must not cede in the discharge of its territorial and legal sovereignty faced with the pressures of any other State or group of States, regardless of how strong they may actually be, as we are entitled to demand and receive equal and fair treatment of any other State, and to establish, autonomously and in furtherance of our right to free self-determination, our own legal system, be it public or private, and for the same to be respected by the community of nations.
Panama should comply in all seriousness with the commitments that it acquires towards third countries, through international, bilateral or multilateral agreements to set up, gather, compile, update and disclose to the competent authorities of those States the statistics and information covered by such agreements.
It must do so, however, always safeguarding and requiring the confidentiality of such information and that it be used solely in the course of an  investigation authorized and carried out within the framework of these agreements, in the course of which the above referred to individual rights are duly observed.
For these reasons, Panama must not obligate itself to supply information in an automatic fashion which may affect the security of or the rights of nationals or foreigners that seek to be protected by the Panamanian legal framework.
Panama has every right to establish and maintain the tax regime that it considers to best serve its interests, for the benefit of its nationals and foreigners domiciled or resident in Panama, or with properties or activities in Panama, or who lawfully take advantage (in accordance with the Panamanian legal framework) of its institutions and structures, be they public or private. It should be noted that the principle of fiscal territoriality in Panama was adopted over 60 years ago, so it is long established and accepted as a cornerstone of our legal system, and it is not the product of a recent whimsical or opportunistic measure.
The same can be said of our system of companies limited by shares (including the possibility of issuing bearer shares), adopted in 1927, more than 80 years ago.
It is worth remembering that our international service economy was conceived to provide or export services to the world, according to the vision of illustrious governing leaders that dates back to 1916, with the enactment of the Commercial Code of Panama.
We can note that the preamble of the Code contemplated, among other things, that we should prepare ourselves to be “the theater where men of all nationalities or interests of every nature are to be found in constant activity.”
This spirit of openness has led the country to a great development in international trade and in the creation of legal entities, the strategy of which is to promote services for the benefit of the international community and which significantly contribute to the welfare of Panama. Among them stands out, in the first place, the Panama Canal, with its legal structure of administration and development in charge of the Panama Canal Authority, enhanced by entities and activities, such as the commercial movement within the Colon Free Zone, banking, insurance and reinsurance services, the ports and the multimodal cargo transshipment system across the Isthmus, the law of Headquarters for Multinational Companies, and a legal framework that has allowed us to become the country with the largest  merchant marine fleet in the world, both in number of ships and tonnage, and in a world-class center for the creation and organization of various types of legal entities.
As a member of the OAS and with respect to the other Member States of this organization, Panama must be respectful of its postulates regarding the realization of social justice (i.e. job opportunities, improvement in the distribution of wealth, opportune access to quality education and health care, among others). In this sense, Panama must collaborate with other Member States in achieving these objectives, including in regards to their tax systems, provided these are fair and equitable with respect to both their nationals and foreign nationals subject to their jurisdictions.
This said, Panama does not have to accept nor may it be lawfully the subject discriminatory, punitive or confiscatory measures that any such State may pretend to adopt unilaterally against our country, based on a qualification made of Panama, its institutions and its legal framework, as that pertaining to an alleged “fiscal paradise”. The differences that any of these countries may have with Panama because of its tax system must be addressed through the mechanisms of direct negotiations, mediation or arbitration or those of a similar nature to which the OAS Charter refers, as does the UN Charter as well.
This, however, excludes any action of unilateral aggression by any one of such other Member States against Panama or its nationals or those foreigners who seek to be covered under the scope of Panamanian laws and structures. It should be emphasized that the concept of “aggression” under the  OAS Charter is not limited to physical or military force, but it includes discriminatory, punitive or confiscatory economic measures that any other Member State may pretend  to impose against our country, or against the activities or property that our nationals and those foreigners, including those whose country of origin is that other Member State, undertake or maintain in Panama, or by taking advantage of the legal structures that our system places at the disposition of nationals and foreigners alike.
Panama must consider that, through the appropriate diplomatic channels, its representatives denounce before the general assemblies of the members of the UN and the OAS, and before any other instance of these organizations that may be available for these purposes (be these organisms of consultation , permanent  representations, secretariats or others), these  courses of conduct that typify acts of aggression against Panama by other Member States, pretending to rely on organizations of which Panama is not a member , nor to the decisions, purposes or designs of which Panama needs to submit , such as is the case of the OECD.
The demands, for reasons of their own convenience, that these States have made against Panama, calling it a tax haven, become arbitrary claims and violate the international commitments of these countries towards Panama, under the basic principles of both the UN and OAS.  Even when these requirements are intended to reflect the pursuit of bilateral or multilateral agreements, at the end of the day, their real purpose is to force and coerce the free will of our country to accommodate it to such demands.
These agreements, obtained through threat or coercion, vitiate the consent of Panama as a sovereign and independent state, and, therefore, they suffer from nullity and voidability pursuant to public international law.
The demands that are tried to be imposed upon us represent complex changes oriented to reduce the importance and competitiveness of countries that, as ours, have significant economies based on international services. The implementation of the  measures entailed by these requirements entail  encompass the need for our country to assume a high cost, both at a public and private level, in addition to the decrease in revenues derived from activities that would be affected by the consequent reduction in our competitiveness.
Panama’s national interests would be affected if we allowed ourselves to be carried by the heat of these pressures i) politically, as a sovereign and independent country and with the right to its free self-determination, pursuant to the basic principles of public international law; ii) economically, due to the contribution that our platform of international services makes to our production of goods and services, in place  for many decades, and iii) socially, because of the cost in human and financial resources we would have to assume in order to satisfy the demands of these states at the expense of our true priorities, which are to improve the opportunities and  the standard of living of our citizens and of those foreigners who make Panama their home and who contribute with their daily efforts to our development.
Considering the direction of the aforementioned pressure groups to turn the globalized world into a world supervised by them, Panama should raise its voice of protest against the underscored position of these countries to pretend to make themselves guarantors of democratic values, and demand, for our part, that the rights established by our Constitution and our laws, and by universally accepted principles of public international law, be respected.

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