Mr. Donald Johnston
Secretary General of the
Organization of Economic Co-operation
and Development
2 Rue Andre Pascal, 75775 Paris, Cedex 26, France

Mr. Secretary General,

The Government of the Republic of Panama addresses you again on this occasion to bring forth the project of the European Union's Savings Tax Directive that was approved by the Council of Economic and Finance Ministers of the fifteen countries last week.

You will remember that on December 2002 past, our Vice Minister of Economy Domingo Latorraca, manifested to you the profound concern of the Government of the Republic of Panama on the preferential conditions that such directive on tax Information Exchange would confer to Austria, Belgium and Luxemburg, as well as outside the EU to Switzerland, all of whom are members of the OECD.

When we verified that the proposal presented by the previous community presidency has been fundamentally adopted in such a way that the countries mentioned above shall not exchange tax information on savings with other members of the European Union - and the OECD - until the year 2010, the Government of Panama reiterates its rejection to such action because it attempts, in a direct form, against the principle of equity reflected in the notion, many times discussed, of "level playing field" and that it is the basis for the commitment signed by my government, in good faith, in order to participate in the Global Forum of the OECD, of the initiative's tasks for the effective fiscal information exchange.

This situation renders it even more unacceptable when it is verified that one of the arguments that justifies the concession of a "special" treatment to these three countries of the EU granted by their community partners in the defense of their economic interests as providers of international financial services.

My Government has come into the knowledge that the governments of Antigua and Barbuda and Saint Vincent & the Grenadines have requested to the Secretary General of the OECD to summon, with urgency, the Global Forum in order to evaluate the tasks on the matter of fiscal information exchange in view of the grave damage that such adopted measure by the EU imposes on said multilateral effort as well as the damage it would cause to all the participants who, in good faith, have issued commitments on the matter and whose economic interests as international financial service providers are equally important, particularly it concerns us, when the enormous majority, are developing countries.

The Government of Panama supports the proposal of Antigua and Barbuda, since tasks at the technical level such as the Ad Hoc Group of Accounts are going forward under premises that have been presumed to be established at the political level as is the case of the absolute compliance of the principle of equity or level playing field. Such tasks cannot continue further until there is absolute certainty that the conditions shall be the same for all the participating jurisdictions.

Consequently, the Government of Panama adheres to the statement of Antigua and Barbuda and states that upon the change of conditions established to continue the tasks at the Global Forum, it does not consider it appropriate to answer any document sent by the OECD until such time as a meeting is called of all the OECD countries and all the non-members of the OECD that participate in the Global Forum in which we should evaluate and decide, collectively, if there are basis and guarantees on the part of all the OECD countries that allow us to continue with the tasks of the Initiative on fiscal information exchange.

With nothing further, I look forward to an answer to the above,

NORBERTO DELGADO D
Minister of Economy and Finance