I

105TH CONGRESS

2D SESSION H. R. 4858

To provide certain benefits to Panama if Panama agrees to permit the

United States to maintain military bases there after December 31, 1999.

IN THE HOUSE OF REPRESENTATIVES

OCTOBER 20, 1998

Mr. GILMAN (for himself, Mr. RANGEL, Mr. COX of California, Mr. HASTERT,

Mr. MENENDEZ, Mr. DREIER, Mr. SPENCE, Mr. HYDE, Mr. BURTON of

Indiana, and Mr. MCCOLLUM) introduced the following bill; which was referred to the Committee on International Relations, and in addition to

the Committee on Ways and Means, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions

as fall within the jurisdiction of the committee concerned

A BILL

To provide certain benefits to Panama if Panama agrees

to permit the United States to maintain military bases

there after December 31, 1999.

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled,

3 SECTION 1. SHORT TITLE.

4 This Act may be cited as the ‘‘United States-Panama

5 Partnership Act of 1998’’.

6 SEC. 2. FINDINGS.

7 Congress makes the following findings:
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1 (1) Since Panama gained its independence in

2 1903, the United States and Panama have main3 tained extremely close relations, resting primarily on

4 the shared interest of both countries in the smooth

5 operation and defense of the Panama Canal.

6 (2) In order to defend the Panama Canal, the

7 United States has maintained a military presence in

8 Panama for over 90 years.

9 (3) In recent decades, the mission of United

10 States military forces stationed in Panama has

11 evolved to include significant responsibilities for the

12 conduct of counter narcotics operations in Latin

13 America and the Caribbean, and for the provision of

14 logistical support to such operations by other coun15 tries and other agencies of the United States Gov16 ernment.

17 (4) Under the terms of the Panama Canal

18 Treaty of 1977, the United States is obligated to

19 withdraw all United States military personnel from

20 Panama no later than December 31, 1999, and turn

21 over all United States military facilities to the Gov22 ernment of Panama.

23 (5) Under the terms of the Treaty Concerning

24 the Permanent Neutrality and Operation of the Pan25 ama Canal of 1977, the United States will retain re-
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1 sponsibilities for the defense of the Panama Canal

2 after December 31, 1999.

3 (6) A 1977 protocol to the Treaty Concerning

4 the Permanent Neutrality and Operation of the Pan5 ama Canal provides that ‘‘Nothing in the treaty

6 shall preclude the Republic of Panama and the

7 United States from making . . . agreements or ar8 rangements for the stationing of any United States

9 military forces or the maintenance of defense sites

10 after [December 31, 1999] in Panama that Panama

11 and the United States may deem necessary or ap12 propriate’’.

13 (7) Public opinion surveys in Panama in recent

14 years consistently have shown that approximately 70

15 percent of the population of Panama favor a con16 tinuation of the United States military presence in

17 Panama.

18 (8) On September 6, 1995, during an official

19 visit of Panama’s President Ernesto Perez

20 Balladares to the United States, it was announced

21 that Presidents Clinton and Perez Balladares had

22 agreed to begin informal consultations on the pos23 sible extension beyond December 31, 1999, of the

24 United States military presence in Panama.
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1 (9) Early discussions pursuant to the announce2 ment of September 6, 1995, were very encouraging,

3 but the discussions foundered after the United

4 States refused to consider providing any form of

5 compensation to Panama in exchange for an exten6 sion of the United States military presence.

7 (10) After it became clear that no agreement

8 could be reached on extending the United States

9 military presence in Panama past 1999 in its cus10 tomary form, Panama proposed negotiations on the

11 establishment of a Multinational Counternarcotics

12 Center (MCC), which would permit the continuation

13 of a limited United States military presence in Pan14 ama past 1999 and for which no compensation

15 would be expected.

16 (11) On December 24, 1997, the United States

17 and Panama announced that preliminary agreement

18 had been reached on establishment of the MCC, but

19 the Government of Panama subsequently reopened a

20 number of issues on which preliminary agreement

21 had been reached.

22 (12) Following rejection by the voters of Pan23 ama on August 30, 1998, of a proposed constitu24 tional amendment to permit President Perez

25 Balladares to seek reelection, the United States and
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1 Panama announced on September 24, 1998, that the

2 MCC negotiations had failed and would be termi3 nated.

4 (13) Panama and the United States continue to

5 have a strong shared interest in maintaining a

6 United States military presence in Panama beyond

7 1999, and both countries should seek to agree on an

8 appropriate package of benefits to facilitate such a

9 presence.

10 SEC. 3. CERTIFICATION AND REPORT REGARDING AGREE11 MENT TO MAINTAIN UNITED STATES MILI12 TARY BASES IN PANAMA AFTER DECEMBER

13 31, 1999.

14 (a) SUBMISSION OF CERTIFICATION AND REPORT.—

15 At any time before December 31, 1999, the President may

16 submit to the Congress the certification described in sub17 section (b) and the report described in subsection (c).

18 (b) CONTENT OF CERTIFICATION.—The certification

19 referred to in subsection (a) is a certification by the Presi20 dent that the United States and the Government of Pan21 ama have reached an agreement permitting the United

22 States, for a period of not less than 15 years beginning

23 on January 1, 2000, to maintain its military presence at

24 Howard Air Force Base, Fort Kobbe, Rodman Naval Sta25 tion, and Fort Sherman, under terms and conditions sub-
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1 stantially similar to those that have applied since October

2 1, 1979, to these facilities with respect to—

3 (1) United States force levels;

4 (2) missions performed;

5 (3) command and control of United States ele6 ments;

7 (4) legal status of United States personnel;

8 (5) quality of life of United States personnel;

9 and

10 (6) physical security of United States person11 nel.

12 (c) CONTENT OF REPORT.—The report referred to

13 in subsection (a) is a report containing the following:

14 (1) The text of the agreement described in sub15 section (b) that has been reached between the

16 United States and the Government of Panama.

17 (2) A detailed explanation of the manner in

18 which the agreement ensures that the United States

19 will be able to use the facilities subject to the agree20 ment under terms and conditions substantially simi21 lar to those that have applied since October 1, 1979,

22 to those facilities with respect to each of the items

23 set forth in paragraphs (1) through (6) of subsection

24 (b).
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1 (3) If the agreement provides for a United

2 States military presence at the facilities subject to

3 the agreement for a period longer than 15 years, a

4 statement of the date on which that presence expires

5 under the agreement.

6 (d) SUBMISSION IN CLASSIFIED FORM.—To the de7 gree necessary, the report under subsection (c) may be

8 submitted in classified form.

9 SEC. 4. BENEFITS.

10 (a) IN GENERAL.—If the President submits the cer11 tification and report under section 3, then the provisions

12 of subsections (b) through (g) apply.

13 (b) ASSISTANCE FOR BRIDGE PROJECT IN PAN14 AMA.—

15 (1) ACTION BY TRADE AND DEVELOPMENT

16 AGENCY.—The Director of the Trade and Develop17 ment Agency shall approve a grant or grants to as18 sist in the design, financial planning, and other pre19 paratory steps for the construction of a new bridge

20 across the Panama Canal.

21 (2) REPORTING REQUIREMENT.—Not later than

22 one year after the date on which the President sub23 mits the certification and report under section 3, the

24 Director of the Trade and Development Agency shall

25 submit a report to the Committee on International
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1 Relations of the House of Representatives and the

2 Committee on Foreign Relations of the Senate re3 garding the steps taken pursuant to paragraph (1)

4 and the status of planning for construction of a new

5 bridge across the Panama Canal.

6 (c) SCHOLARSHIP PROGRAM FOR PANAMA.—

7 (1) ACTION BY AGENCY FOR INTERNATIONAL

8 DEVELOPMENT.—The Administrator of the Agency

9 for International Development shall ensure that, for

10 the duration of the agreement period, up to

11 $2,000,000 of the funds made available each year to

12 the Cooperative Association of States for Scholar13 ships program shall be made available for scholar14 ships for deserving students from Panama to study

15 in the United States.

16 (2) REPORTING REQUIREMENT.—Not later than

17 one year after the date on which the President sub18 mits the certification and report under section 3, the

19 Administrator of the Agency for International Devel20 opment shall submit a report to the Committee on

21 International Relations of the House of Representa22 tives and the Committee on Foreign Relations of the

23 Senate regarding the steps taken pursuant to para24 graph (1).
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1 (d) TREATMENT OF CERTAIN TEXTILE AND AP2 PAREL ARTICLES.—

3 (1) EQUIVALENT TARIFF AND QUOTA TREAT4 MENT.—During the transition period—

5 (A) the tariff treatment accorded at any

6 time to any textile or apparel article that origi7 nates in Panama shall be identical to the tariff

8 treatment that is accorded at such time under

9 section 2 of the Annex to an article described

10 in the same 8-digit subheading of the HTS that

11 is a good of Mexico and is imported into the

12 United States;

13 (B) duty-free treatment under the Carib14 bean Basin Economic Recovery Act shall apply

15 to any textile or apparel article that is imported

16 into the United States from Panama and

17 that—

18 (i) is assembled in Panama, from fab19 rics wholly formed and cut in the United

20 States from yarns formed in the United

21 States, and is entered—

22 (I) under subheading 9802.00.80

23 of the HTS; or

24 (II) under chapter 61, 62, or 63

25 of the HTS if, after such assembly,
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1 the article would have qualified for

2 treatment under subheading

3 9802.00.80 of the HTS, but for the

4 fact the article was subjected to

5 bleaching, garments dyeing, stone6 washing, enzyme-washing, acid-wash7 ing, perma-pressing, oven-baking, or

8 embroidery;

9 (ii) is knit-to-shape in Panama from

10 yarns wholly formed in the United States;

11 (iii) is made in Panama from fabric

12 knit in Panama from yarns wholly formed

13 in the United States;

14 (iv) is cut and assembled in Panama

15 from fabrics wholly formed in the United

16 States from yarns wholly formed in the

17 United States; or

18 (v) is identified under paragraph (3)

19 as a handloomed, handmade, or folklore

20 article of Panama and is certified as such

21 by the competent authority of that coun22 try; and

23 (C) no quantitative restriction or consulta24 tion level may be applied to the importation
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1 into the United States of any textile or apparel

2 article that—

3 (i) originates in the territory of Pan4 ama, or

5 (ii) qualifies for duty-free treatment

6 under clause (i), (ii), (iii), (iv), or (v) of

7 subparagraph (B).

8 (2) TREATMENT OF OTHER NONORIGINATING

9 TEXTILE AND APPAREL ARTICLES.—

10 (A) PREFERENTIAL TARIFF TREAT11 MENT.—Subject to subparagraph (B), the

12 President may place in effect at any time dur13 ing the transition period with respect to any

14 textile or apparel article that—

15 (i) is a product of Panama, but

16 (ii) does not qualify as a good that

17 originates in the territory of Panama or is

18 eligible for benefits under paragraph

19 (1)(B),

20 tariff treatment that is identical to the in-pref21 erence-level tariff treatment accorded at such

22 time under Appendix 6.B of the Annex to an

23 article described in the same 8-digit subheading

24 of the HTS that is a product of Mexico and is

25 imported into the United States. For purposes
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1 of this subparagraph, the ‘‘in-preference-level

2 tariff treatment’’ accorded to an article that is

3 a product of Mexico is the rate of duty applied

4 to that article when imported in quantities less

5 than or equal to the quantities specified in

6 Schedule 6.B.1, 6.B.2., or 6.B.3. of the Annex

7 for imports of that article from Mexico into the

8 United States.

9 (B) LIMITATIONS ON ALL ARTICLES.—Tar10 iff treatment under subparagraph (A) may be

11 extended, during any calendar year, to not more

12 than 6,750,000 square meter equivalents of cot13 ton or man-made fiber apparel, to not more

14 than 225,000 square meter equivalents of wool

15 apparel, and to not more than 3,750,000 square

16 meter equivalents of goods entered under sub17 heading 9802.00.80 of the HTS.

18 (C) PRIOR CONSULTATION.—The Presi19 dent may implement the preferential tariff

20 treatment described in subparagraph (A) only

21 after consultation with representatives of the

22 United States textile and apparel industry and

23 other interested parties regarding—

24 (i) the specific articles to which such

25 treatment will be extended, and
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1 (ii) the annual quantities of such arti2 cles that may be imported at the pref3 erential duty rates described in subpara4 graph (A).

5 (3) HANDLOOMED, HANDMADE, AND FOLKLORE

6 ARTICLES.—For purposes of paragraph (1), the

7 United States Trade Representative shall consult

8 with representatives of Panama for the purpose of

9 identifying particular textile and apparel goods that

10 are mutually agreed upon as being handloomed,

11 handmade, or folklore goods of a kind described in

12 section 2.3 (a), (b), or (c) or Appendix 3.1.B.11 of

13 the Annex.

14 (4) BILATERAL EMERGENCY ACTIONS.—(A)

15 The President may take—

16 (i) bilateral emergency tariff actions of a

17 kind described in section 4 of the Annex with

18 respect to any textile or apparel article im19 ported from Panama if the application of tariff

20 treatment under paragraph (1) to such article

21 results in conditions that would be cause for the

22 taking of such actions under such section 4

23 with respect to an article described in the same

24 8-digit subheading of the HTS that is imported

25 from Mexico; or
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1 (ii) bilateral emergency quantitative re2 striction actions of a kind described in section

3 5 of the Annex with respect to imports of any

4 textile or apparel article described in clauses (i)

5 and (ii) of paragraph (2)(A) if the importation

6 of such article into the United States results in

7 conditions that would be cause for the taking of

8 such actions under such section 5 with respect

9 to a like article that is a product of Mexico.

10 (B) The requirement in paragraph (5) of sec11 tion 4 of the Annex (relating to providing compensa12 tion) shall not be deemed to apply to a bilateral

13 emergency action taken under this paragraph.

14 (C) For purposes of applying bilateral emer15 gency action under this paragraph—

16 (i) the term ‘‘transition period’’ in sections

17 4 and 5 of the Annex shall be deemed to be the

18 period defined in subsection (g)(8); and

19 (ii) any requirements to consult specified

20 in section 4 or 5 of the Annex are deemed to

21 be satisfied if the President requests consulta22 tions with Panama and Panama does not agree

23 to consult within the time period specified

24 under such section 4 or 5, whichever is applica25 ble.
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1 (e) TREATMENT OF CERTAIN OTHER ARTICLES

2 ORIGINATING IN PANAMA.—

3 (1) EQUIVALENT TARIFF TREATMENT.—

4 (A) IN GENERAL.—Subject to subpara5 graph (B), the tariff treatment accorded at any

6 time during the transition period to any article

7 referred to in any of paragraphs (2) through

8 (5) of section 213(b) of the Caribbean Basin

9 Economic Recovery Act that originates in Pan10 ama shall be identical to the tariff treatment

11 that is accorded at such time under Annex

12 302.2 of the NAFTA to an article described in

13 the same 8-digit subheading of the HTS that is

14 a good of Mexico and is imported into the

15 United States.

16 (B) EXCEPTION.—Subparagraph (A) does

17 not apply to any article accorded duty-free

18 treatment under U.S. Note 2(b) to subchapter

19 II of chapter 98 of the HTS.

20 (2) RELATIONSHIP TO OTHER DUTY REDUC21 TIONS.—If at any time during the transition period

22 the rate of duty that would (but for action taken

23 under paragraph (1)(A) in regard to such period)

24 apply with respect to any article under section

25 213(h) of the Caribbean Basin Economic Recovery
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1 Act is a rate of duty that is lower than the rate of

2 duty resulting from such action, then such lower

3 rate of duty shall be applied for the purposes of im4 plementing such action.

5 (f) CUSTOMS PROCEDURES.—

6 (1) IN GENERAL.—

7 (A) REGULATIONS.—Any importer that

8 claims preferential tariff treatment under sub9 section (d) or (e) shall comply with customs

10 procedures similar in all material respects to

11 the requirements of Article 502(1) of the

12 NAFTA as implemented pursuant to United

13 States law, in accordance with regulations pro14 mulgated by the Secretary of the Treasury.

15 (B) DETERMINATION.—In order to qualify

16 for such preferential tariff treatment and for a

17 Certificate of Origin to be valid with respect to

18 any article for which such treatment is claimed,

19 there shall be in effect a determination by the

20 President that Panama has implemented and

21 follows, or is making substantial progress to22 ward implementing and following, procedures

23 and requirements similar in all material re24 spects to the relevant procedures and require25 ments under chapter 5 of the NAFTA.
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1 (2) CERTIFICATE OF ORIGIN.—The Certificate

2 of Origin that otherwise would be required pursuant

3 to the provisions of paragraph (1) shall not be re4 quired in the case of an article imported under sub5 section (d) or (e) if such Certificate of Origin would

6 not be required under Article 503 of the NAFTA

7 (as implemented pursuant to United States law), if

8 the article were imported from Mexico.

9 (3) PENALTIES FOR TRANSSHIPMENTS.—If the

10 President determines, based on sufficient evidence,

11 that an exporter has engaged in willful illegal trans12 shipment or willful customs fraud with respect to

13 textile or apparel articles for which preferential tar14 iff treatment under paragraph (1) or (2) of sub15 section (d) is claimed, then the President shall deny

16 all benefits under subsections (d) and (e) of this sec17 tion to such exporter, and any successors of such ex18 porter, for a period of 2 years.

19 (4) STUDY BY COMMISSIONER OF CUSTOMS ON

20 COOPERATION CONCERNING CIRCUMVENTION.—The

21 United States Commissioner of Customs shall con22 duct a study analyzing the extent to which Pan23 ama—

24 (A) has cooperated fully with the United

25 States, consistent with its domestic laws and
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1 procedures, in instances of circumvention or al2 leged circumvention of existing quotas on im3 ports of textile and apparel goods, to establish

4 necessary relevant facts in the places of import,

5 export, and, where applicable, transshipment,

6 including investigation of circumvention prac7 tices, exchanges of documents, correspondence,

8 reports, and other relevant information, to the

9 extent such information is available;

10 (B) has taken appropriate measures, con11 sistent with its domestic laws and procedures,

12 against exporters and importers involved in in13 stances of false declaration concerning fiber

14 content, quantities, description, classification,

15 or origin of textile and apparel goods; and

16 (C) has penalized the individuals and enti17 ties involved in any such circumvention, consist18 ent with its domestic laws and procedures, and

19 has worked closely to seek the cooperation of

20 any third country to prevent such circumvention

21 from taking place in that third country.

22 The Commissioner of Customs shall submit to the

23 Congress, not later than October 1, 1999, a report

24 on the study conducted under this paragraph.

25 (g) DEFINITIONS.—For purposes of this section—
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1 (1) AGREEMENT PERIOD.—The term ‘‘agree2 ment period’’ means the period that begins on Janu3 ary 1, 2000, and ends on December 31, 2014, or

4 such later date as is reported to the Congress under

5 section 3(c)(3).

6 (2) ANNEX.—The term ‘‘the Annex’’ means

7 Annex 300–B of the NAFTA.

8 (3) ENTERED.—The term ‘‘entered’’ means en9 tered, or withdrawn from warehouse for consump10 tion, in the customs territory of the United States.

11 (4) HTS.—The term ‘‘HTS’’ means the Har12 monized Tariff Schedule of the United States.

13 (5) NAFTA.—The term ‘‘NAFTA’’ means the

14 North American Free Trade Agreement entered into

15 between the United States, Mexico, and Canada on

16 December 17, 1992.

17 (6) ORIGINATING.—An article shall be deemed

18 as originating in the territory of Panama if the arti19 cle meets the rules of origin for a good set forth in

20 chapter 4 of the NAFTA, and, in the case of an ar21 ticle described in Appendix 6.A of the Annex, the re22 quirements stated in such Appendix 6.A for such ar23 ticle to be treated as if it were an originating good.

24 In applying such chapter 4 or Appendix 6.A with re25 spect to Panama for purposes of this section—
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1 (A) no countries other than the United

2 States and Panama may be treated as being

3 Parties to the NAFTA,

4 (B) references to trade between the United

5 States and Mexico shall be deemed to refer to

6 trade between the United States and Panama,

7 and

8 (C) references to a Party shall be deemed

9 to refer to the United States or Panama, and

10 references to the Parties shall be deemed to

11 refer to Panama and the United States.

12 (7) TEXTILE OR APPAREL ARTICLE.—The term

13 ‘‘textile or apparel article’’ means any article re14 ferred to in paragraph (1)(A) that is a good listed

15 in Appendix 1.1 of the Annex.

16 (8) TRANSITION PERIOD.—The term ‘‘transi17 tion period’’ means the period that begins on the

18 date of the enactment of this Act and ends on the

19 earlier of—

20 (A) the date that is 3 years after such date

21 of enactment; or

22 (B) the date on which—

23 (i) the United States first applies the

24 NAFTA to Panama upon its accession to

25 the NAFTA; or
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1 (ii) there enters into force with re2 spect to the United States and Panama a

3 free trade agreement comparable to the

4 NAFTA that makes substantial progress

5 in achieving the negotiating objectives set

6 forth in section 108(b)(5) of the North

7 American Free Trade Agreement Imple8 mentation Act (19 U.S.C. 3317(b)(5)), and

9 that should remain in effect at least until

10 the end of the agreement period.

11 SEC. 5. APPLICABILITY OF BENEFITS.

12 The tariff treatment under section 4 may be accorded

13 to goods of Panama only during such periods as a designa14 tion of Panama as a beneficiary country under the Carib15 bean Basin Economic Recovery Act is in effect.

16 SEC. 6. CONFORMING AMENDMENT.

17 Section 213(a)(1) of the Caribbean Basin Economic

18 Recovery Act is amended by inserting ‘‘and except as pro19 vided in section 4 of the Panama Relations Act of 1998,’’

20 after ‘‘Tax Reform Act of 1986,’’.

Æ