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Union Calendar No. 567
106TH CONGRESS
2D SESSION
H. R. 3673
[Report No. 106–803, Part I]
To provide certain benefits to Panama if Panama agrees to permit the
United States to maintain a presence there sufficient to carry out coun-
ternarcotics and related missions.
IN THE HOUSE OF REPRESENTATIVES
FEBRUARY 16, 2000
Mr. GILMAN introduced the following bill; which was referred to the Com-
mittee 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
JULY 27, 2000
Reported from the Committee on International Relations
JULY 27, 2000
Referral to the Committee on Ways and Means extended for a period ending
not later than September 22, 2000
SEPTEMBER 21, 2000
Referral to the Committee on Ways and Means extended for a period ending
not later than October 6, 2000
OCTOBER 6, 2000
Additional sponsors: Mr. ROGAN, Mr. CUNNINGHAM, Mr. NETHERCUTT, Mr.
COOK, Mrs. THURMAN, Mr. COOKSEY, Mr. COX, Mr. DREIER, Mr. STU-
PAK, Mr. GOSS, Mr. SPENCE, Mr. HYDE, and Mr. BURTON of Indiana
OCTOBER 6, 2000
Committee on Ways and Means discharged; committed to the Committee of
the Whole House on the State of the Union and ordered to be printed
A BILL
To provide certain benefits to Panama if Panama agrees
to permit the United States to maintain a presence there
sufficient to carry out counternarcotics and related mis-
sions.
Be it enacted by the Senate and House of Representa-
tives of the United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ‘‘United States-Panama
Partnership Act of 2000’’.
SEC. 2. FINDINGS.
Congress makes the following findings:
(1) Since Panama gained its independence in
1903, the United States and Panama have main-
tained extremely close relations, resting primarily on
the shared interest of both countries in the smooth
operation and defense of the Panama Canal.
(2) In order to defend the Panama Canal, the
United States maintained a military presence in
Panama for over 90 years.
(3) In recent decades, the mission of United
States military forces stationed in Panama evolved
to include significant responsibilities for the conduct
of counter narcotics operations in Latin America
and the Caribbean, and for the provision of logistical
support to such operations by other countries and
other agencies of the United States Government.
(4) In accordance with the Panama Canal Trea-
ty of 1977, the United States withdrew all United
States military personnel from Panama by Decem-
ber 31, 1999, and turned over all United States
military facilities to the Government of Panama.
(5) Under the terms of the Treaty Concerning
the Permanent Neutrality and Operation of the Pan-
ama Canal of 1977, the United States retains re-
sponsibilities for the defense of the Panama Canal.
(6) A 1977 protocol to the Treaty Concerning
the Permanent Neutrality and Operation of the Pan-
ama Canal provides that ‘‘Nothing in the treaty
shall preclude the Republic of Panama and the
United States from making . . . agreements or ar-
rangements for the stationing of any United States
military forces or the maintenance of defense sites
after [December 31, 1999] in Panama that Panama
and the United States may deem necessary or ap-
propriate’’.
(7) Public opinion surveys in Panama in recent
years consistently have shown that approximately 70
percent of the population of Panama support a
United States presence in Panama.
(8) On September 6, 1995, during an official
visit 
of 
Panama’s 
President 
Ernesto 
Perez
Balladares to the United States, it was announced
that Presidents Clinton and Perez Balladares had
agreed to begin informal consultations on the pos-
sible extension beyond December 31, 1999, of a
United States presence in Panama.
(9) Early discussions pursuant to the announce-
ment of September 6, 1995, were very encouraging,
but the discussions foundered after the United
States refused to consider providing any form of
compensation to Panama in exchange for an exten-
sion of the United States presence in Panama.
(10) After it became clear that no agreement
could be reached on extending the United States
presence in Panama past 1999 in its customary
form, Panama proposed negotiations on the estab-
lishment of a Multinational Counternarcotics Center
(MCC), which would permit the continuation of a
limited United States presence in Panama past 1999
and for which no compensation would be expected.
(11) On December 24, 1997, the United States
and Panama announced that preliminary agreement
had been reached on establishment of the MCC, but
the Government of Panama subsequently reopened a
number of issues on which preliminary agreement
had been reached.
(12) Following rejection by the voters of Pan-
ama on August 30, 1998, of a proposed constitu-
tional amendment to permit President Perez
Balladares to seek reelection, the United States and
Panama announced on September 24, 1998, that the
MCC negotiations had failed and would be termi-
nated.
(13) Panama and the United States continue to
have a strong shared interest in maintaining a
United States presence in Panama and both coun-
tries should seek to agree on an appropriate package
of benefits to facilitate such a presence.
SEC. 3. CERTIFICATION AND REPORT REGARDING AGREE-
MENT TO MAINTAIN A UNITED STATES PRES-
ENCE IN PANAMA.
(a) SUBMISSION OF CERTIFICATION AND REPORT.—
At any time after the date of the enactment of this Act,
the President may submit to the Committee on Inter-
national Relations of the House of Representatives and
the Committee on Foreign Relations of the Senate the cer-
tification described in subsection (b) and the report de-
scribed in subsection (c).
(b) CONTENT OF CERTIFICATION.—The certification
referred to in subsection (a) is a certification by the Presi-
dent that the United States and the Government of Pan-
ama have reached an agreement permitting the United
States, for a period of not less than 15 years, to maintain
a presence, alone or in conjunction with other friendly
countries, sufficient to carry out necessary counter-
narcotics, search and rescue, logistical, training, and re-
lated missions at Howard Air Force Base, Fort Kobbe,
Rodman Naval Station, and Fort Sherman, under terms
and conditions substantially similar to those applied to the
United States presence at those facilities during the period
beginning on October 1, 1979, and ending on December
31, 1999.
(c) CONTENT OF REPORT.—The report referred to
in subsection (a) is a report containing the following:
(1) The text of the agreement described in sub-
section (b) that has been reached between the
United States and the Government of Panama.
(2) A detailed explanation of the manner in
which the agreement ensures that the United States
will be able to use the facilities subject to the agree-
ment under terms and conditions substantially simi-
lar to those that applied during the period beginning
on October 1, 1979, and ending on December 31,
1999.
(3) If the agreement provides for a United
States presence at the facilities subject to the agree-
ment for a period longer than 15 years, a statement
of the date on which that presence expires under the
agreement.
(d) SUBMISSION IN CLASSIFIED FORM.—To the de-
gree necessary, the report under subsection (c) may be
submitted in classified form.
SEC. 4. BENEFITS.
(a) IN GENERAL.—If the President submits the cer-
tification and report under section 3, then the provisions
of subsections (b) through (h) apply.
(b) ASSISTANCE
FOR BRIDGE PROJECT
IN PAN-
AMA.—
(1) ACTION
BY
TRADE
AND
DEVELOPMENT
AGENCY.—The Director of the Trade and Develop-
ment Agency shall consider a grant or grants to as-
sist in the design, financial planning, training, and
other preparatory steps for the construction of a
new bridge across the Panama Canal.
(2) REPORTING REQUIREMENT.—Not later than
1 year after the date on which the President submits
the certification and report under section 3, the Di-
rector of the Trade and Development Agency shall
submit a report to the Committee on International
Relations of the House of Representatives and the
Committee on Foreign Relations of the Senate re-
garding the steps taken pursuant to paragraph (1)
and the status of planning for construction of a new
bridge across the Panama Canal.
(c) ASSISTANCE FOR SEWAGE TREATMENT PLANT
PROJECT IN PANAMA.—
(1) ACTION
BY
TRADE
AND
DEVELOPMENT
AGENCY.—The Director of the Trade and Develop-
ment Agency shall consider a grant or grants to as-
sist in the design, financial planning, training, and
other preparatory steps for the construction of a
new sewage treatment plant for Panama City.
(2) REPORTING REQUIREMENT.—Not later than
1 year after the date on which the President submits
the certification and report under section 3, the Di-
rector of the Trade and Development Agency shall
submit a report to the Committee on International
Relations of the House of Representatives and the
Committee on Foreign Relations of the Senate re-
garding the steps taken pursuant to paragraph (1)
and the status of planning for construction of a new
sewage treatment plant for Panama City.
(d) SCHOLARSHIP PROGRAM FOR PANAMA.—
(1) ACTION BY AGENCY FOR INTERNATIONAL
DEVELOPMENT.—The Administrator of the Agency
for International Development shall ensure that, for
the duration of the agreement period, up to
$2,000,000 of the funds made available each year to
the Cooperative Association of States for Scholar-
ships program shall be made available for scholar-
ships for deserving students from Panama to study
in the United States.
(2) REPORTING REQUIREMENT.—Not later than
1 year after the date on which the President submits
the certification and report under section 3, the Ad-
ministrator of the Agency for International Develop-
ment shall submit a report to the Committee on
International Relations of the House of Representa-
tives and the Committee on Foreign Relations of the
Senate regarding the steps taken pursuant to para-
graph (1).
(e) TREATMENT
OF CERTAIN TEXTILE
AND AP-
PAREL ARTICLES.—
(1) EQUIVALENT TARIFF AND QUOTA TREAT-
MENT.—During the transition period—
(A) the tariff treatment accorded at any
time to any textile or apparel article that origi-
nates in Panama shall be identical to the tariff
treatment that is accorded at such time under
section 2 of the Annex to an article described
in the same 8-digit subheading of the HTS that
is a good of Mexico and is imported into the
United States;
(B) duty-free treatment under the Carib-
bean Basin Economic Recovery Act shall apply
to any textile or apparel article that is imported
into the United States from Panama and
that—
(i) is assembled in Panama, from fab-
rics wholly formed and cut in the United
States from yarns formed in the United
States, and is entered—
(I) under subheading 9802.00.80
of the HTS; or
(II) under chapter 61, 62, or 63
of the HTS if, after such assembly,
the article would have qualified for
treatment 
under 
subheading
9802.00.80 of the HTS, but for the
fact the article was subjected to
bleaching, garments dyeing, stone-
washing, enzyme-washing, acid-wash-
ing, perma-pressing, oven-baking, or
embroidery;
(ii) is knit-to-shape in Panama from
yarns wholly formed in the United States;
(iii) is made in Panama from fabric
knit in Panama from yarns wholly formed
in the United States;
(iv) is cut and assembled in Panama
from fabrics wholly formed in the United
States from yarns wholly formed in the
United States; or
(v) is identified under paragraph (3)
as a handloomed, handmade, or folklore
article of Panama and is certified as such
by the competent authority of that coun-
try; and
(C) no quantitative restriction or consulta-
tion level may be applied to the importation
into the United States of any textile or apparel
article that—
(i) originates in the territory of Pan-
ama, or
(ii) qualifies for duty-free treatment
under clause (i), (ii), (iii), (iv), or (v) of
subparagraph (B).
(2) TREATMENT
OF
OTHER
NONORIGINATING
TEXTILE AND APPAREL ARTICLES.—
(A) 
PREFERENTIAL
TARIFF
TREAT-
MENT.—Subject to subparagraph (B), the
President may place in effect at any time dur-
ing the transition period with respect to any
textile or apparel article that—
(i) is a product of Panama, but
(ii) does not qualify as a good that
originates in the territory of Panama or is
eligible for benefits under paragraph
(1)(B),
tariff treatment that is identical to the in-pref-
erence-level tariff treatment accorded at such
time under Appendix 6.B of the Annex to an
article described in the same 8-digit subheading
of the HTS that is a product of Mexico and is
imported into the United States. For purposes
of this subparagraph, the ‘‘in-preference-level
tariff treatment’’ accorded to an article that is
a product of Mexico is the rate of duty applied
to that article when imported in quantities less
than or equal to the quantities specified in
Schedule 6.B.1, 6.B.2., or 6.B.3. of the Annex
for imports of that article from Mexico into the
United States.
(B) LIMITATIONS ON ALL ARTICLES.—Tar-
iff treatment under subparagraph (A) may be
extended, during any calendar year, to not more
than 6,750,000 square meter equivalents of cot-
ton or man-made fiber apparel, to not more
than 225,000 square meter equivalents of wool
apparel, and to not more than 3,750,000 square
meter equivalents of goods entered under sub-
heading 9802.00.80 of the HTS.
(C) PRIOR
CONSULTATION.—The Presi-
dent may implement the preferential tariff
treatment described in subparagraph (A) only
after consultation with representatives of the
United States textile and apparel industry and
other interested parties regarding—
(i) the specific articles to which such
treatment will be extended, and
(ii) the annual quantities of such arti-
cles that may be imported at the pref-
erential duty rates described in subpara-
graph (A).
(3) HANDLOOMED, HANDMADE, AND FOLKLORE
ARTICLES.—For purposes of paragraph (1), the
United States Trade Representative shall consult
with representatives of Panama for the purpose of
identifying particular textile and apparel goods that
are mutually agreed upon as being handloomed,
handmade, or folklore goods of a kind described in
section 2.3 (a), (b), or (c) or Appendix 3.1.B.11 of
the Annex.
(4) BILATERAL
EMERGENCY
ACTIONS.—(A)
The President may take—
(i) bilateral emergency tariff actions of a
kind described in section 4 of the Annex with
respect to any textile or apparel article im-
ported from Panama if the application of tariff
treatment under paragraph (1) to such article
results in conditions that would be cause for the
taking of such actions under such section 4
with respect to an article described in the same
8-digit subheading of the HTS that is imported
from Mexico; or
(ii) bilateral emergency quantitative re-
striction actions of a kind described in section
5 of the Annex with respect to imports of any
textile or apparel article described in clauses (i)
and (ii) of paragraph (2)(A) if the importation
of such article into the United States results in
conditions that would be cause for the taking of
such actions under such section 5 with respect
to a like article that is a product of Mexico.
(B) The requirement in paragraph (5) of sec-
tion 4 of the Annex (relating to providing compensa-
tion) shall not be deemed to apply to a bilateral
emergency action taken under this paragraph.
(C) For purposes of applying bilateral emer-
gency action under this paragraph—
(i) the term ‘‘transition period’’ in sections
4 and 5 of the Annex shall be deemed to be the
period defined in subsection (h)(8); and
(ii) any requirements to consult specified
in section 4 or 5 of the Annex are deemed to
be satisfied if the President requests consulta-
tions with Panama and Panama does not agree
to consult within the time period specified
under such section 4 or 5, whichever is applica-
ble.
(f) TREATMENT
OF CERTAIN OTHER ARTICLES
ORIGINATING IN PANAMA.—
(1) EQUIVALENT TARIFF TREATMENT.—
(A) IN
GENERAL.—Subject to subpara-
graph (B), the tariff treatment accorded at any
time during the transition period to any article
referred to in any of paragraphs (2) through
(5) of section 213(b) of the Caribbean Basin
Economic Recovery Act that originates in Pan-
ama shall be identical to the tariff treatment
that is accorded at such time under Annex
302.2 of the NAFTA to an article described in
the same 8-digit subheading of the HTS that is
a good of Mexico and is imported into the
United States.
(B) EXCEPTION.—Subparagraph (A) does
not apply to any article accorded duty-free
treatment under U.S. Note 2(b) to subchapter
II of chapter 98 of the HTS.
(2) RELATIONSHIP
TO
OTHER
DUTY
REDUC-
TIONS.—If at any time during the transition period
the rate of duty that would (but for action taken
under paragraph (1)(A) in regard to such period)
apply with respect to any article under section
213(h) of the Caribbean Basin Economic Recovery
Act is a rate of duty that is lower than the rate of
duty resulting from such action, then such lower
rate of duty shall be applied for the purposes of im-
plementing such action.
(g) CUSTOMS PROCEDURES.—
(1) IN GENERAL.—
(A) REGULATIONS.—Any importer that
claims preferential tariff treatment under sub-
section (e) or (f) shall comply with customs pro-
cedures similar in all material respects to the
requirements of Article 502(1) of the NAFTA
as implemented pursuant to United States law,
in accordance with regulations promulgated by
the Secretary of the Treasury.
(B) DETERMINATION.—In order to qualify
for such preferential tariff treatment and for a
Certificate of Origin to be valid with respect to
any article for which such treatment is claimed,
there shall be in effect a determination by the
President that Panama has implemented and
follows, or is making substantial progress to-
ward implementing and following, procedures
and requirements similar in all material re-
spects to the relevant procedures and require-
ments under chapter 5 of the NAFTA.
(2) CERTIFICATE OF ORIGIN.—The Certificate
of Origin that otherwise would be required pursuant
to the provisions of paragraph (1) shall not be re-
quired in the case of an article imported under sub-
section (e) or (f) if such Certificate of Origin would
not be required under Article 503 of the NAFTA (as
implemented pursuant to United States law), if the
article were imported from Mexico.
(3) PENALTIES FOR TRANSSHIPMENTS.—If the
President determines, based on sufficient evidence,
that an exporter has engaged in willful illegal trans-
shipment or willful customs fraud with respect to
textile or apparel articles for which preferential tar-
iff treatment under paragraph (1) or (2) of sub-
section (e) is claimed, then the President shall deny
all benefits under subsections (e) and (f) of this sec-
tion to such exporter, and any successors of such ex-
porter, for a period of 2 years.
(4) REPORT BY USTR ON COOPERATION CON-
CERNING
CIRCUMVENTION.—The 
United 
States
Commissioner of Customs shall conduct a study ana-
lyzing the extent to which Panama—
(A) has cooperated fully with the United
States, consistent with its domestic laws and
procedures, in instances of circumvention or al-
leged circumvention of existing quotas on im-
ports of textile and apparel goods, to establish
necessary relevant facts in the places of import,
export, and, where applicable, transshipment,
including investigation of circumvention prac-
tices, exchanges of documents, correspondence,
reports, and other relevant information, to the
extent such information is available;
(B) has taken appropriate measures, con-
sistent with its domestic laws and procedures,
against exporters and importers involved in in-
stances of false declaration concerning fiber
content, quantities, description, classification,
or origin of textile and apparel goods; and
(C) has penalized the individuals and enti-
ties involved in any such circumvention, con-
sistent with its domestic laws and procedures,
and has worked closely to seek the cooperation
of any third country to prevent such circumven-
tion from taking place in that third country.
The United States Trade Representative shall sub-
mit to the Congress, not later than 1 year after the
certification is submitted under section 3, a report
on the study conducted under this paragraph.
(h) DEFINITIONS.—For purposes of this section—
(1) AGREEMENT
PERIOD.—The term ‘‘agree-
ment period’’ means the period that begins on the
date on which the certification is submitted under
section 3, and ends on the date that is 15 years
after such date, or such later date as is reported to
the Congress under section 3(c)(3).
(2) ANNEX.—The term ‘‘the Annex’’ means
Annex 300–B of the NAFTA.
(3) ENTERED.—The term ‘‘entered’’ means en-
tered, or withdrawn from warehouse for consump-
tion, in the customs territory of the United States.
(4) HTS.—The term ‘‘HTS’’ means the Har-
monized Tariff Schedule of the United States.
(5) NAFTA.—The term ‘‘NAFTA’’ means the
North American Free Trade Agreement entered into
between the United States, Mexico, and Canada on
December 17, 1992.
(6) ORIGINATING.—An article shall be deemed
as originating in the territory of Panama if the arti-
cle meets the rules of origin for a good set forth in
chapter 4 of the NAFTA, and, in the case of an ar-
ticle described in Appendix 6.A of the Annex, the re-
quirements stated in such Appendix 6.A for such ar-
ticle to be treated as if it were an originating good.
In applying such chapter 4 or Appendix 6.A with re-
spect to Panama for purposes of this section—
(A) no countries other than the United
States and Panama may be treated as being
Parties to the NAFTA,
(B) references to trade between the United
States and Mexico shall be deemed to refer to
trade between the United States and Panama,
and
(C) references to a Party shall be deemed
to refer to the United States or Panama, and
references to the Parties shall be deemed to
refer to Panama and the United States.
(7) TEXTILE OR APPAREL ARTICLE.—The term
‘‘textile or apparel article’’ means any article re-
ferred to in paragraph (1)(A) that is a good listed
in Appendix 1.1 of the Annex.
(8) TRANSITION
PERIOD.—The term ‘‘transi-
tion period’’ means the period that begins on the
date on which the certification is submitted under
section 3, and ends on the earlier of—
(A) the date that is 3 years after such
date; or
(B) the date on which—
(i) the United States first applies the
NAFTA to Panama upon its accession to
the NAFTA; or
(ii) there enters into force with re-
spect to the United States and Panama a
free trade agreement comparable to the
NAFTA that makes substantial progress
in achieving the negotiating objectives set
forth in section 108(b)(5) of the North
American Free Trade Agreement Imple-
mentation Act (19 U.S.C. 3317(b)(5)).
SEC. 5. APPLICABILITY OF BENEFITS.
The tariff treatment under section 4 may be accorded
to goods of Panama only during such periods as a designa-
tion of Panama as a beneficiary country under the Carib-
bean Basin Economic Recovery Act is in effect.
SEC. 6. CONFORMING AMENDMENT.
Section 213(a)(1) of the Caribbean Basin Economic
Recovery Act is amended by inserting ‘‘and except as pro-
vided in section 4 of the United States-Panama Partner-
ship Act of 2000,’’ after ‘‘Tax Reform Act of 1986,’’.
Union Calendar No. 567
106TH CONGRESS
2D SESSION
H. R. 3673
[Report No. 106–803, Part I]
A BILL
To provide certain benefits to Panama if Panama
agrees to permit the United States to maintain
a presence there sufficient to carry out counter-
narcotics and related missions.
OCTOBER 6, 2000
Committee on Ways and Means discharged; committed to
the Committee of the Whole House on the State of the
Union and ordered to be printed