Frequently Asked Questions
What is PAN-PEQ?
Panama Poultry Export Quota, Inc. is a not-for-profit corporation formed to administer the chicken leg quarter quota negotiated in the U.S. – Panama Trade Promotion Agreement that went into effect October 31, 2012. The company operates as an Export Trading Company (ETC) and has received an Export Trade Certificate of Review from the U.S. Department of Commerce covering its activities in administering the quota. The quota is administered through an open-tender auction.
How much is the quota and what are the tariffs?
The quota volume consists of 1,286 metric tons (MT) for 2019 and rises annually, reaching 3,033 tons in 2028 before being eliminated in 2029. Chicken leg quarters within the quota will enter the importing country duty free. Over quota imports will pay a tariff of 260% from 2012 through 2021, and the tariff declines in equal increments from 2022 through 2028 before being eliminated in 2029.
How does the auction operate?
The tariff rate quota for chicken leg quarters is allocated through an open and public auction system. Bids are submitted specifying the total amount of quota eligibility the bidder seeks, and the price (minimum $200.00/metric ton) the bidder is offering. The bidders submitting the highest priced bids— irrespective of the volume they seek— are awarded the amount of quota they seek until the full amount of quota available in the auction has been allocated.
What is an Export Trading Company (ETC)?
An Export Trading Company is " . . . a person, partnership, association or similar organization . . .organized and operating principally for the purpose of (A) exporting goods produced in the United States; or (B) facilitating the exports of goods produced in the United States by providing one or more export trade services." » [15 U.S.C § 4002(a)(4)].
Who are the members of PAN-PEQ?
Members of PAN-PEQ are national trade associations representing the poultry industries of The United States and Panama. A six-member Board of Directors appointed by these Associations governs the Company.
How ‘fair’ is the system for companies not on the Board?
The system ensures fairness to all persons and provides no special benefits to companies who have a representative on the PAN-PEQ Board. The Certificate of Review issued by the Department of Commerce that entitles PAN-PEQ to operate under the Export Trading Company Act specifically stipulates that members of the Board of Directors may not be involved in determining the results of any auction or in issuing export certificates. Only the PAN-PEQ Administrator, its independent auditors and legal counsel can be involved in those determinations. The duties of the Board of Directors are to hire an Administrator, to provide general guidance about trade in poultry that aids the Administrator in developing the auction system, and to ensure that the proceeds of the auction are disbursed in accordance with the terms of the ETC certificate of review. In addition, PAN-PEQ is required to provide annual reports about its operations to the Department of Commerce and is subject to oversight by the Department of Commerce.
What do companies bid on?
Interested parties bid on a certificate that gives them the right to import chicken leg quarters duty free into Panama. Under the U.S.-Panama TPA, Panama is authorized to establish an out-of-quota duty starting at 260%. Panamanian regulations require that a PAN-PEQ certificate be provided to obtain duty free entry.
What is the minimal bid amount, increments, and limits?
Bid can be submitted in units of metric tons, with a minimum bid of one metric ton, and a minimum bid price of $200.00 US dollars per metric ton. Bids should not be submitted in amounts that include fractions of a cent. A security deposit must accompany bids.
How much is the security deposit?
Bidders in the auction must submit acceptable security in the amount of $50,000 or the bid amount, whichever is less, within two full business days of submission of their bid.
What is an acceptable form of payment for the security deposit?
Bidders can present their security deposit by wire transfer of funds to PAN-PEQ, Inc., verifiable irrevocable Letter of Credit for the benefit of PAN-PEQ issued by an FDIC-insured U.S. bank and advised through Capital One Bank, N.A. or Cashier's check payable to "Panama Poultry Export Quota, Inc."
What happens if a winning bidder can't use the total amount of the quota that it obtains in the auction?
Quota certificates or portions thereof, are fully transferable. If a party cannot use the entire amount of the quota that it obtained in the auction, it can sell or transfer that portion to another exporter, and provisions regarding such transfers are included in the Certificate of Review. Rules for transfer of the certificates can be reviewed on this website.
What are the auction dates?
A calendar of auctions can be found on this website under calendar.
When will the awarded quota expire?
Certificates will be valid for entry into Panama through December 31 of the quota year for which they were issued.
Does PAN-PEQ assist bidders in obtaining and shipping chicken leg-quarters?
No. PAN-PEQ's sole functions are to operate the open-tender auction and to assist the Board of Directors in the allocation of auction proceeds. Successful bidders in PAN-PEQ auctions acquire chicken leg-quarters and arrange for the export. PAN-PEQ has no role in the acquisition, sale or export of chicken leg-quarters.
What are the auction proceeds used for?
Proceeds from the auction are used first to cover the administrative cost of the auction. Of the remaining proceeds, fifty percent are distributed to the United States’ member for export market development, educational, scientific and technical projects to benefit the United States poultry industry and fifty percent are distributed to the Panamanian member to fund market development, educational, scientific and technical projects to benefit the poultry industry of Panama.