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 re-
ferred to the Committee on International Relations, and in addition to
the Committee on Ways and Means, for a period to be subsequently de-
termined 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.
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 1998’’.
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 has maintained a military presence in
Panama for over 90 years.
(3) In recent decades, the mission of United
States military forces stationed in Panama has
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 coun-
tries and other agencies of the United States Gov-
ernment.
(4) Under the terms of the Panama Canal
Treaty of 1977, the United States is obligated to
withdraw all United States military personnel from
Panama no later than December 31, 1999, and turn
over all United States military facilities to the Gov-
ernment 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 will retain re-
sponsibilities for the defense of the Panama Canal
after December 31, 1999.
(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 favor a con-
tinuation of the United States military 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 the
United States military 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 military presence.
(10) After it became clear that no agreement
could be reached on extending the United States
military presence in Panama past 1999 in its cus-
tomary form, Panama proposed negotiations on the
establishment of a Multinational Counternarcotics
Center (MCC), which would permit the continuation
of a limited United States military presence in Pan-
ama 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 military presence in Panama beyond
1999, and both countries 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 UNITED STATES MILI-
TARY BASES IN PANAMA AFTER DECEMBER
31, 1999.
(a) SUBMISSION OF CERTIFICATION AND REPORT.—
At any time before December 31, 1999, the President may
submit to the Congress the certification described in sub-
section (b) and the report described 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 beginning
on January 1, 2000, to maintain its military presence at
Howard Air Force Base, Fort Kobbe, Rodman Naval Sta-
tion, and Fort Sherman, under terms and conditions sub-
stantially similar to those that have applied since October
1, 1979, to these facilities with respect to—
(1) United States force levels;
(2) missions performed;
(3) command and control of United States ele-
ments;
(4) legal status of United States personnel;
(5) quality of life of United States personnel;
and
(6) physical security of United States person-
nel.
(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 have applied since October 1, 1979,
to those facilities with respect to each of the items
set forth in paragraphs (1) through (6) of subsection
(b).
(3) If the agreement provides for a United
States military presence at the facilities subject to
the agreement 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 (g) 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 approve a grant or grants to as-
sist in the design, financial planning, and other pre-
paratory steps for the construction of a new bridge
across the Panama Canal.
(2) REPORTING REQUIREMENT.—Not later than
one year after the date on which the President sub-
mits the certification and report under section 3, the
Director 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) 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
one year after the date on which the President sub-
mits the certification and report under section 3, the
Administrator of the Agency for International Devel-
opment 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).
(d) 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 (g)(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.
(e) 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.
(f) CUSTOMS PROCEDURES.—
(1) IN GENERAL.—
(A) REGULATIONS.—Any importer that
claims preferential tariff treatment under sub-
section (d) or (e) shall comply with customs
procedures 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 pro-
mulgated 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 (d) or (e) 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 (d) is claimed, then the President shall deny
all benefits under subsections (d) and (e) of this sec-
tion to such exporter, and any successors of such ex-
porter, for a period of 2 years.
(4) STUDY BY COMMISSIONER OF CUSTOMS ON
COOPERATION CONCERNING CIRCUMVENTION.—The
United States Commissioner of Customs shall con-
duct a study analyzing the extent to which Pan-
ama—
(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, consist-
ent with its domestic laws and procedures, and
has worked closely to seek the cooperation of
any third country to prevent such circumvention
from taking place in that third country.
The Commissioner of Customs shall submit to the
Congress, not later than October 1, 1999, a report
on the study conducted under this paragraph.
(g) DEFINITIONS.—For purposes of this section—
(1) AGREEMENT
PERIOD.—The term ‘‘agree-
ment period’’ means the period that begins on Janu-
ary 1, 2000, and ends on December 31, 2014, 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 of the enactment of this Act and ends on the
earlier of—
(A) the date that is 3 years after such date
of enactment; 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)), and
that should remain in effect at least until
the end of the agreement period.
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 Panama Relations Act of 1998,’’
after ‘‘Tax Reform Act of 1986,’’.
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