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    "title": "Panama Canal Treaty Negotiations: January - April 16, 1976",
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    "ocrText": "The original documents are located in Box 6, folder \"Panama Canal Treaty Negotiations:\nJanuary-April 16, 1976\" of the White House Special Files Unit Files at the Gerald R. Ford\nPresidential Library.\nCopyright Notice\nThe copyright law of the United States (Title 17, United States Code) governs the making of\nphotocopies or other reproductions of copyrighted material. Gerald Ford donated to the United\nStates of America his copyrights in all of his unpublished writings in National Archives collections.\nWorks prepared by U.S. Government employees as part of their official duties are in the public\ndomain. The copyrights to materials written by other individuals or organizations are presumed to\nremain with them. If you think any of the information displayed in the PDF is subject to a valid\ncopyright claim, please contact the Gerald R. Ford Presidential Library.\nPROTERY (i) YHE MASED\n10:12 A.M. CST\n/PRIL 7, 3976\nPRIDAY\nIn the Crystal Ballroom\nAt the Mare Plaza Notel\nMilesukee, Wisconsin\nTHE PRESIDENT: Thank you very such, Mr. Thompson.\nIf I could take one minute.\nFlying out here this morning I learned that the\nDepartment of Lebor issued come more good economic news,\nThas indicated that the unexployment figure went down\nagain for the month of March to 7.5 percent. I ack you\nto compare that with 8.9, as I recell, in May of 1975.\nThe most encouraging news was the fact that this\nreport indicates that 86,700,000 people are maintally\nemployed -- the highest number of people employed in the\nhistory of the United States -- and since March of last\nyear we have added 2,600,000 nore jobs in the United States,\nSo WE are making real progress in reducing unemployment\nand, at the same time, increasing employment.\nWith that, I will be glad to answer any questions,\nQUESTION: No. President, I really have two\nquestions, if you will.\nFORD\nMilwoukee has been undered to integrate its\npublic schools. Do you have any thoughts on how to achieve\nracial integration?\nAMERICA\nTHE PRESIDENT: Well, I have always believed that\nthe Constitutional right of equality must be protected by\nthe courts of the land and by all other public officials.\non the other hand, I do not believe that court ordered\nforced Lusing TO schieve moial balance is the right vey\nto net quality counation.\nPR have ample evidence that in those instances\nwhere it her been applicd--court ordered forced busing--\nthere has not !men an increase in quality Aducation. It in\nmy belief that there is a better way to improve educational\nopportunities and, at the same time, to improve the\nintegration of our society 30 guaranteed by the Constitution.\nThe Doch Amendment, which was passed by the Congress\nin 1974 and sirace by no, provides a series of stops whereby\nva CER desagements and, at the sure time, improve educational\nopportunity lath an emphasis on the neighborhood mohools.\nMORE\nDigitized from Box 6 of the White House Special Files Unit Files at the Gerald R. Ford Presidential Library\nbecause that is i. respons.ibility of the Judicial system,\nwas .') vaser th ⑉814 of office THAT 1 160%\nhave to enforce Un 159 ii! decided by the cuarts, but H\nyou want quality education, which ] Think He all want,\ncourt ordered forced busing is not the best remedy,\nQUESTION: Every indication WC have says that\nyou will win in Wisconsin, How do you prodict that you will\ndo on April 07\nTHE PRESIDENT: I always assume -- I think it\nis true here in Wisconsin -- that we will win, but I am\nnot noing to get in any numbers game. It is a hard bottle.\n1 think WC have the affirmative programs and affirmative\npolicies both at home and abroad, and ) believe that i:\nmajority of the people voting in the Republicen primary\nin Hisconsin will support By candidacy,\nQUESTION: Mr. President, in regard to the good\njob news, now there is a Teamsters strike that might cloud\nup the job picture, Bow long will you wait before\ninvoking the Taft-Hartley Act as the talks progress?.\nTHE PRESIDENT: We are counting on the labor-\nmanagement negotiations to settle the differences. 1 have\nbeen in constant communicationwith the Secretary of Labor,\nMr. bill Usery, who is working with both Jahor and management\ntrying to get an agreement. As is matter of fact, I talked\nto his last night late and he called we thin morning 1:8\nwe arrived here in Milwaukee, and no settlement has been\nagreed 10, but progress is being made and I don't think\nit is advisable for me to comment as long as the two parties\nare negotiating.\nI am optimistic and hopeful and, therefore, it\nis my belief that the proper procedure is to let the\nnegotiations take their course and 3 think a settlement\nwill be accomplished.\nQUESTION: Mr. President, Governor Reagen has\nraised questions about the sovereignty of the l'anama Canal.\nWill you tell US who owns the Panama Canal and who will\nown it in 10 years?\nTHE PRESIDENT: Well, the United States made an\nagreement 6 good many years \"go for the utilization of 8\nstrip of land and for the construction of a canal. The\nUnited States over the years has maintained the national\nsecurity of that strip of land and the operation of that\ncanal, and we have operated the cenal,\nThe White House, with Precident Johnson first,\nPresident Mixon Record, and ryself third, hes been\nnegotiating with the Panamanian Government to find 8 way 10\navoid the time of incident that took plece in 1995 where\n30 people vere Hilled, including, as 1 recall, some 10\nAmericans. if the can nagotiate an agreement which will protect\nour; right to defend that canal and 10 maintain and operate\nthat came), there is i: possibility that an agreement will be\nreached but none has yet, and it is comething that is in the\nnegotisting process and no further.\nMORP\nPANAMA CANAL\nISSUE BRIEF NUMBER IB74138\nAUTHOR:\nStorrs, K. Larry\nForeign Affairs and National Defense Division\nSklar, Barry A.\nForeign Affairs and National Defense Division\nTHE LIBRARY OF CONGRESS\nCONGRESSIONAL RESEARCH SERVICE\nMAJOR ISSUES SYSTEM\nDATE ORIGINATED 11/06/74\nDATE UPDATED 01/02/76\nFOR ADDITIONAL INFORMATION CALL 426-5700\n0107\nCRS- 1\nIB74138 UPDATE-01/02/76\nISSUE DEFINITION\n(\nAfter a decade of fruitless negotiations, Secretary of State Kissinger and\nPanamanian Foreign Minister Juan Antonio Tack signed a statement of agreed\nprinciples, on February 7, 1974, to guide continuing negotiations for a new\n( treaty between the United States and Panama governing the Panama Canal. The\nprinciples provide for the abrogation of the 1903 Treaty and the elimination\nof the \"in perpetuity\" concept, phased termination of U.S. jurisdiction in\n( the Canal Zone, increasing Panama's share of the economic benefits, and\ngrowing participation by Panama in the operation and defense of the Canal for\nthe duration of the new treaty.\nSentiment in Congress is divided between members who believe that a new\ntreaty accommodating Panamanian grievances is essential for continued safe\n( and efficient operation of the Canal, and those who oppose any change on\ngrounds that undiluted U.S. sovereignty, legally obtained and guaranteed in\nthe 1903 Treaty. is required for the successful defense and maintenance of\n( the Canal.\n( BACKGROUND AND POLICY ANALYSIS\nThe strategic geographical location of the Isthmus of Panama, affording\n( the potential of a short-cut route between the Atlantic and Pacific Oceans,\n(\ngenerated United States interest in a canal early in the 19th century.\nDuring the period, the United States concluded treaties with various nations\n( to secure a U.S. interest in any canal constructed in the area. While the\nterritory of the Isthmus was still a part of Colombia, the United States\nconcluded a treaty with that nation (the Hay-Herran Treaty, signed in January\n( 1903) providing for U.S. construction and operation of a canal across the (\nIsthmus. After Colcmbia rejected the treaty, the Panamanians, many of whom\nhad long sought an independent Panamanian nation, proclaimed their\n( independence (November 3. 1903) with U.S. military forces standing by\noffshore.\n(\nOn December 2. 1903, the new Provisional Government of Panama ratified a\ncanal pact titled the Convention for the Construction of a Ship Canal\n(Hay-Bunau-Varilla Treaty). based substantially on the rejected Hay-Herran\n( Treaty. Its basic provisions (1) granted to the United States \"in perpetuity\nthe use, occupation and control\" of a specified zone of land through\nPanamanian territory for the construction, operation, and defense of a ship\n( canal (Article I) ; (2) afforded the United States \"all the rights, power and\nauthority within the zone which the United States would possess and\nexercise if it were the sovereign of the territory. to the entire exclusion\n( of the exercise by the Republic of Panama of any such sovereign rights, power\nor authority\" (Article III); and (3) provided for payment of U.S.\ncompensation to Panama of an initial $10 million and a yearly annuity\n( (Article XIV).\nSince the 1903 Treaty's inception, Panamanians have charged that its basic\n(\nterms involve concessions extracted from an immature new republic under the\nadvice and influence of unscrupulous individuals and foreign interests. The\nprincipal Panamanian objections are the terms of Articles I and III, which\n(\nafford the United States rights, control, and governmental jurisdiction over\na portion of Panamanian territory for a limitless duration. Other primary\nCRS- 2\nIB74138 UPDATE-01/02/76\nobjections of Panama include: (1) the size of the U.S. military presence and\nthe existence of U.S. military training facilities located in the Canal Zone;\n(2) the amount of U.S. annuity to Panama and allegedly inequitable sharing of\nthe economic benefits derived from canal operations, and (3) the amount of\nland area within the zone unused by the United States but not available for\nPanamanian use.\nThe United States, in efforts to improve its treaty relations with Panama,\nhas periodically altered provisions of the 1903 treaty, primarily through two\nadditional treaties of 1936 and 1955; however, the sovereignty principle has\nremained unchanged. Mounting Panamanian nationalist sentiment over the canal\nissue erupted in serious demonstrations in 1959 and culminated in the\nanti-United States flag riots of January 1964. The incident precipitated a\nmajor diplomatic crisis between the two nations during which Panama broke\nrelations with the United States and put its case before the United Nations\nand the Organization of American States.\nOn December 18, 1964, President Johnson announced the U.S. intention to\nnegotiate new treaties with Panama which would abrogate the 1903 treaty,\nrecognize Panamanian sovereignty over the Canal Zone, and end the \"in\nperpetuity\" provision, while still retaining \"the rights which are necessary\nfor the effective operation and the protection of the canal and the\nadministration of the areas that are necessary for these purposes.\" Bilateral\nnegotiations began in January 1965, culminating in the joint announcement by\nthe United States and Panama in June 1967 that three new draft treaties had\nbeen agreed upon. Action was never taken by either nation, however,\nattributable in part to the premature publication of the treaty terms in the\npress (which touched off considerable opposition in both countries), and to\nthe fact that both nations were then involved in major election campaigns.\nIn August 1970, the government of General Omar Torrijos, in power as a result\nof a military coup in October 1968, formally rejected the draft treaties\nwhile indicating willinqness to pursue the negotiations.\nTalks resumed in June 1971, and on February 7, 1974, Secretary of State\nHenry Kissinger and Panamanian Foreign Minister Juan Antonio Tack signed a\nstatement of general principles which would serve as guidelines for the new\nPanama Canal treaties. Principal terms include: (1) elimination of the \"in\nperpetuity\" provision of the former treaty, with provision for a fixed\ntermination date; (2) termination of U.S. sovereignty and jurisdiction in\nthe Canal Zone, with the United States granted the rights, facilities, and\nland necessary for U.S. operation and defense of the canal for the duration\n(\nof the new treaty; (3) Panamanian participation in the administration and\ndefense of the canal, with provision for the eventual reversion of canal\noperation and control to Panama upon termination of the new treaty; and (4) a\n(. just and equitable sharing of the economic benefits derived from the canal.\nAt the present time, negotiations on the specific terms of the treaty are\nsaid to be proceeding slowly but satisfactorily. Most observers predict that\n( a draft treaty will not be submitted to Congress for consideration until\nafter the 1976 election.\n(\nAt issue considering new Panama Canal treaties is whether or not the\nUnited States should maintain its current status of full governmental\njurisdiction within the Canal Zone, and whether the United States should\n( continue to assume full responsibility for operation and defense of the\npresent canal indefinitely. Since canal negotiations began, U.S. officials\nhave been confident that an accommodation could be reached which would meet\nthe reasonable aspirations of Panama while safequarding U.S. vital interests (\nin the canal and Canal Zone and in no way weakening the United States posture\nCRS- 3\nIB74138 UPDATE-01/02/76\nin the area.\nIn the view of the United States Government, some members of Congress, and\nother propcrents of new treaties, reaching a reasonable and mutually\nacceptable accord with Panama on this highly sensitive issue is essential to\nU.S. foreign policy and security concerns with regard to Panama and to the\nLatin American region as a whole. They see the issue cast in the context of\nthe changing nature of international political relations wherein the\nincreasing economic and political interdependency of nations is causing the\nUnited States and other nations to forge new relationships based on mutual\nequality. cooperation, and respect. Proponents argue that in today's world\nthe 1903 treaty is an anachronism which will continue to serve as a rallying\npoint for Panamanian and other Latin American nationalist sentiment directed\nagainst the United States. In like manner, the treaty provides a ready\ntarget for elements hostile to the United States outside the region.\nA further factor bearing on the issue of new treaties relates to future\nU.S. and world commercial interests and to U.S. and allied defense concerns. (\nThe demands of rapidly increasing world commerce and the advent of modern\nshipbuilding technology resulting in vessels of much greater size will\nrequire major expansion of the capacity of the present canal and probably (\neventual construction of a sea-level canal in the area. The United States\noption to expand and modernize the present canal and to construct a sea-level\ncanal in Panama along the route recommended by the Atlantic and Pacific\nInteroceanic Canal Study Commission are both issues in the current canal\ntreaty negotiations.\nNegotiation of new Panama Canal treaties has met substantial opposition in\nthe U.S. Congress, among a variety of interest groups in this country, and to\nsome extent, in the Department of Defense. The principal argument advanced <\nby opponents holds that if vital U.S. commercial and strategic interests are\nto be safequarded, the United States must continue to exercise sole\nresponsibility for the operation, control, and defense of the canal, and must\nretain sovereignty and U.S. jurisdiction within the Canal Zone area. Also of\nmajor concern is United States acceptance of treaty provisions which would\nlimit or reduce the current U.S. military presence in the Canal Zone.\nOpponents cite the vital strategic function performed by the U.S. military in\nthe Canal Zone in protecting U.S. interests in the canal directly and in\nserving as a deterrent to the ambitions of powers hostile to the United\nStates, thereby safequarding national security and hemisphere defense\ninterests as well.\nOther arquments advanced by opponents of new treaties include: (1) the\nmandate for permanent U.S. sovereignty and control of the canal and Canal\nZone was legally vested in the United States by the 1903 treaty, duly signed -\nand ratified by Panama, and all rights and titles to lands now under United\nStates control were justly purchased by the U.S. Government; (2) under terms\nof the treaty the United States undertook to construct, and for the past 60 L\nyears has continued to effectively maintain, operate, and defend the canal to\nthe benefit of all the world's nations and at a U.S. taxpayers net investment\nof almost $6 billion; (3) the continued efficient U.S. operation of the canal -\nhas resulted in major economic benefits for Panama, providing a major\ncontribution to the Panamanian economy and affording it the highest per\ncapita income in Central America and the fourth highest in Latin America; and (\n(4) Panama's history of political instability and its lack of technical and\nmanagerial expertise and other required resources demonstrates that Panama\ndoes not possess the capacity to effectively manage, operate, and defend the (\ncanal.\nCRS- 4\nIB74138 UPDATE-01/02/76\nCongressional and other opponents of new treaties believe that the United\nStates can continue to make adjustments to improve its relationship with\nPanama under the existing treaty. Concern for U.S. retention of sovereignty\nand complete jurisdiction and control of the canal and Canal Zone has\nresulted in the introduction of numerous resolutions in this and prior\nCongresses calling upon the United States Government to retain the full\nrights and status which it now enjoys. In the summer and fall of 1975\nopponents in the House attempted, without success, to ban funds for\nnegotiation of new treaties from the State Department appropriations bill. A\ncompromise measure expressed the sense of Congress that any new agreement\nmust preserve U.S. vital interests in the area.\nOne legislative approach by opponents of new treaties has been the\nintroduction of legislation to implement an earlier proposal to modernize the\nexisting lock canal in lieu of construction of a sea-level canal through\nPanamanian territory, one of the chief areas of negotiation in the current\ntreaty talks. They arque that implementation of the Terminal Lakes-Third\nLocks Plan, a project partially authorized by Congress in 1939, would provide\nfor a major increase of capacity and operational improvement of the existing\nlock canal under present treaty provisions. Such action, supporters believe,\nwould afford the United States the best operational canal at the least cost.\nIt would also obviate the need for new treaties with Panama, thereby\neliminating a confrontation with Panama over demand for major concessions\nthat would almost certainly be made in negotiations for a sea-level canal\nthrough its territory. Critics of the existing treaties contend that this\napproach overlooks the basic issue, which is Panamanian dissatisfaction with\nthe status quo.\nLEGISLATION\nS. Con. Res. 78 (McGee) Apr. 1, 1974, 93d Congress\nExpresses it to be the sense of the Congress that negotiations for a new\nPanama Canal Treaty are necessary in the interests of both the Republic of\nPanama and the United States. Affirms that, with reference to the\npromulqation of such a treaty, the Congress of the United States endorses\nspecified principles agreed to by the United States of America and the\nRepublic of Panama on Feb. 7, 1974, at Panama City. No action was taken on\nthe bill by the Senate Committee on Foreign Relations.\nH. Pes. 23 (Flood), 94th Congress\nDeclares it to be the sense of the House that: (1) the Government of the\nUnited States should maintain and protect its sovereign rights and\njurisdiction over the Caral Zone, and should in no way cede, dilute, forfeit,\nnegotiate, or transfer any of these sovereign rights, power, authority.\njurisdiction, territory, or property that are indispensably necessary for the\nprotection and security of the United States and the entire Western\nHemisphere: (2) there be no relinquishment or surrender of any presently\nvested United States sovereign right, power. authority, or property, tangible\nor intangible. except by treaty authorized by the Congress and duly ratified\nby the United States: and (3) there be no cession to Panama, or other\ndivestiture of any United States-owned property. tangible or intangible,\nwithout pricr authorization by the Congress (House and Senate), as provided\nin Article IV. Section 3, Clause 2 of the United States Constitution. H.Res.\n23 was introduced on Jan. 14, 1975, and referred to the House International\nCRS- 5\nIB74138 UPDATE-01/02/76\nRelations Committee. Thirty five similar resolutions have been introduced,\nwith a total of 126 cosponsors.\nS. Res. 97 (Thurmond), 94th Congress\nDeclares it to be the sense of the Senate that the Government of the\nUnited States should retain sovereign rights in the Canal Zone, all\nmodifications to be submitted to Congress. (Similar to H. Res. 23) S. Res. 97\nwas introduced on March 4. 1975 and referred to the Senate Foreign Relations\nCommittee. At present there are 37 cosponsors.\nAmendment to H.R. 8121 (Snyder), 94th Congress\nAn amendment to the State Dept. Appropriations Bill, providing in Sec. 104\nthat \"none of funds appropriated shall be used for the purposes of\nnegotiating the surrender or relinguishment of any U.S. rights in the Panama\nCanal Zone. passed 246-164, on June 26, 1975. The Senate struck the Snyder\namendment from the Appropriations Bill which passed September 3, 1975. On\nSeptember 18, 1975, the House-Senate Conference, in lieu of the Snyder\namendment, reported a compromise to the effect that: \"It is the sense of the\nCongress that any new Panama Canal treaty or agreement must protect the vital\ninterests of the United States in the operation, maintenance, property and\ndefense of the Panama Canal. The House, on September 24, 1975, failed\n(197-203) to recede from its disagreement with the Senate and insisted on the\nSnyder amendment. On September 26, 1975, the Senate refused to accept the\nSnyder amendment and further conference negotiations were scheduled. The\nHouse, on October 7. 1975, approved (212-201) a second conference compromise\nstating the sense of Congress \"that any new Panama Canal treaty or agreement\nmust protect the vital interests of the United States in the Canal Zone and\nin the operation, maintenance, property and defense of the Panama Canal. \"\nThe Senate accepted the compromise the following day.\nH.R. 10083 (Flood). Panama Canal Modernization Act\nDirects the Governor of the Canal Zone, under supervision of the Secretary\nof the Army. to undertake the work necessary to enlarge and improve the\noperations of the Panama Canal through adaptation of the Third Locks Project\n(House Doc. no. 210, 76th Congress) at a total cost not to exceed\n$1,150,000.000. It also establishes the Panama Canal Advisory and Inspection\nBoard, composed of five members appointed by the President, by and with the\nadvice and consent of the Senate, to study and review plans and designs for\nthe Third Locks Project. Provisions of the Act remain in effect only as long\nas the United States retains sovereign rights in the Canal Zone. H.R. 10083\nwas introduced on October 8, 1975 (replacing H.R. 198) and referred to the\nHouse Merchant Marine and Fisheries Committee.\nHEARINGS\nU.S. Congress House. Committee on Appropriations. Subcommittee\non the Department of Transportation and Related Agencies\nAppropriations. Department of Transportation and Related Agencies\nAppropriations for 1976. Hearings, 94th Congress, 1st session.\nWashington, U.S. Govt. Print. Off., 1975. Hearings on Panama\nCanal, Apr. 17, 1975. p. 1-218.\nU.S. Congress. House. Committee on Foreign Affairs.\nSubcommittee on Inter-American Affairs. Panama Canal, 1971.\nCRS- 6\nIB74138 UPDATE-01/02/76\nHearings, 92d Congress, 1st session, on H. Res. 74, 154, 156,\nand other resolutions. Sept. 22 [and] 23, 1971. Washington,\nU.S. Govt. Print. Off., 1971. 173 p.\nUnited States relations with Panama. Hearings, 93d Congress,\n1st session. Feb. 20, 1973. Washington, U.S. Govt. Print.\noff., 1973. 53 p.\nU.S. Congress. House. Committee on Foreign Affairs. Subcommittee\non Inter-American Affairs and International Organization and\nMovements. Committee on Merchant Marine and Fisheries.\nSubcommittee on Panama Canal. United Nations Security Council\nmeeting in Panama. Hearings, 93d Congress, 1st session.\nApr. 3, 1973. Washington, U.S. Govt. Print. off., 1973. 34 p.\nU.S. Congress. House, Committee on Merchant Marine and Fisheries.\nSubcommittee on Panama Canal. Panama Canal briefings.\nHearings, 93d Congress, 1st session Apr. 13, 1973. Washington,\nU.S. Govt. Print. off., 1973. 78 p.\nBriefings concerning treaty negotiations and current activities\nof the Panama Canal and Canal Zone.\n\"Serial no. 93-8\"\nPanama Canal treaty negotiations. Hearings, 92d Congress,\n1st and 2d sessions on treaties affecting the operations of the\nPanama Canal. Washington, U.S. Govt. Print. Off., 1972. 371 p.\nHearings held Nov. 29, 30; Dec. 2, 6, 10, 1971; Jan. 17-18;\nJuly 24: Aug. 10. 1972.\n\"Serial no. 92-30\"\nPanama canal treaty negotiations. Hearings, 92d Congress,\n2d session. Washington, U.S. Govt. Print. off., 1972.\n373-511 p.\nAddendum to hearings held Nov. 29 Dec. 10. 1971;\nJan. 17 Aug. 10, 1972.\nREPORTS AND CONGRESSIONAL DOCUMENTS\nU.S. Congress. House. Committee on Foreign Affairs. Subcommittee\non Inter-American Affairs. Report on United States relations\nwith Panama pursuant to H. Res. 113, 86th Congress, 2d session.\nWashington, U.S. Govt. Print. Off., 1960. 98 p.\n(86th Congress, 2d sesssion. House. Report no. 2218)\nOTHER CONGRESSIONAL ACTION\nAccording to U.S. legislative procedure, new treaties would be submitted\nsolely to the Senate for ratification; however, many opponents of new Panama\nCanal treaties in the House of Representatives have raised the issue that\nHouse approval is necessary before any U.S. territory or property under U.S.\njurisdiction within the Canal Zone can be ceded to Panama. House members\ncite as legal justification for their position the United States\nConstitution, Article IV, Section 3, Clause 2. which states \"The Congress\nshall have power to dispose of and make all needful rules and regulations\nrespecting the territory or other property belonging to the United States.\n=\nHouse members who support this position contend that \"Congress\" must be\nCRS- 7\nIB74138 UPDATE-01/02/76\ninterpreted as both the Senate and the House of Representatives, and\ntherefore any new canal treaties providing for the disposal of\nU.S.-controlled territories or properties would be invalid unless the\nrequired approval of both Houses were obtained. Language to ensure House\njurisdiction had been included in House and Senate resolutions recently\nintroduced. Furthermore, the issue was examined at length during hearings on\nDecember 2, 1971, by the House Merchant Marine and Fisheries Committee's\nSubcommittee on the Panama Canal concerning \"Panama Canal Treaty\nNegotiations\" (pp. 95-147).\nCHRONOLOGY OF EVENTS\n12/02/75 -- Chief Negotiator Ellsworth Bunker, in a speech in\nLos Angeles, characterized the talks as progressing\nthrough three stages during the past two years. The\nfirst stage ended with the signing of the Kissinger-Tack\nprinciples; the second stage involved identification of\nmajor issues under the principles; and during stage\nthree, which began in June 1974, the specific terms\nare being formalized. According to Ambassador Bunker,\nagreement in principle has been achieved on three main\npoints, namely that U.S. jurisdiction in the Canal Zone\nwill pass to Panama in a transitional fashion, that Panama\nwill increasingly participate in the operation of the\nCanal, and that Panama will grant the United States \"use\nrights\" for defending the waterway. The parties are\nagreed, he said, that the United States will retain\nprimary responsibility for the operation and defense\nof the Canal for the duration of the new treaty, with\nPanamanian participation increasing gradually. The\nimportant issues yet to be resolved include the duration\nof the new treaty, the amount of economic benefits for\nPanama, and the territory to be made available for\ndefense of the Canal.\n10/07/75 -- Backing off from efforts to ban funds for Panama Canal\nnegotiations, the House approved (212-201) a second\nconference compromise on State Dept. appropriations stating\nthe sense of Congress \"that any new Panama Canal treaty or\nagreement must protect the vital interests of the United\nStates in the Canal Zone and in the operation, maintenance,\nproperty and defense of the Panama Canal.\" The new\ncompromise added a reference to protecting U.S. vital\ninterests in \"the Canal Zone,\" thus eliminating a principal\nHouse objection expressed on Sept. 24. The Senate accepted\nthe compromise the following day. State Dept. officials\nsaid they were pleased with the vote removing the cloud\nover negotiation funding.\n09/26/75 -- By voice vote the Senate rejected the House-passed \"Snyder\namendment\" ban on funds for Panama Canal negotiations and\nasked for new negotiations with the House.\n09/24/75 -- Panama's President and the Foreign Ministry formally\napologized to the U.S. embassy for the incident of the\nprevious day.\nCRS- 8\nIB74138 UPDATE-01/02/76\nThe House voted 203 to 197 to reject the House-Senate\nconference compromise on State Department appropriations\nfor Panama Canal negotiations which stated the sense of\nCongress that any new agreement \"must protect the vital\ninterests of the United States in the operation,\nmaintenance, property and defense of the Panama Canal.\"\nInstead, it restored the \"Snyder amendment, If passed June 26,\nbarring the use of funds to negotiate the \"surrender or\nrelinquishment of any U.S. rights in the Panama Canal Zone. If\n09/23/75 -- About 800 left-wing Panamanian students, demonstrating\nagainst U.S. military bases in the Canal Zone, attacked\nthe U.S. embassy in Panama with rocks and Molotov\ncocktails in the most serious incident since the \"flag\nriots\" of 1964. The U.S. embassy delivered a \"strong\nnote\" of protest to Panama, alleging that the National\nGuard hesitated before dispersing the crowd with tear gas.\n09/20/75 -- Criticizing U.S. demands for the right to defend the Canal\n\"for an indefinite time, which is tantamount to perpetuity,\"\nPanama broke negotiation secrecy and publicly disclosed the\ndivergent positions. The report said the United States\naccepts Panama's desire for a 25-year limit on a new\ntreaty, however, the U.S. seeks rights to defend the Canal\nfor 50 years initially and then for a time which is\ntantamount to perpetuity. The United States wishes to\nretain 85% of the Zone and all 14 of the military\ninstallations, while Panama wants a reduction of the Zone\nto 10% of present size and three military installations.\nBoth parties were reportedly agreed that a joint\nadministration would replace the Panama Canal Company, and\nPanamanian police, postal, and judicial jurisdiction\nwould take effect in the Zone three years after the new\ntreaty.\n09/17/75 -- As Ambassador Bunker ended the latest 10-day round of\nnegotiations in Panama, claiming that Kissinger's remarks\nhad been \"distorted and misinterpreted,\" he gave Foreign\nMinister Juan Antonio Tack a statement which said \"I am\nsure that the Secretary meant to say that our country could\nnot renounce our right to defend the canal from foreign\nenemies until we have achieved with Panama effective\nagreements for the canal's defense.\nAs we both know,\nwe are working toward a situation in which the defense of\nthe Panama Canal will be a joint operation, in which the\nPanamanian National Guard will play an important role.\nPanama announced that \"very little progress\" had been\nmade in the recent talks.\n09/16/75 -- In response to a question by Governor George Wallace at\nthe Southern Governors Conference in Orlando, Florida,\nSecretary Kissinger stated that \"the United States must\nmaintain the right, unilaterally, to defend the Panama\nCanal for an indefinite future, or for a long future. On\nthe other hand, the United States can ease some of the\nother conditions in the Canal Zone. In Panama,\nKissinger's remarks, particularly the terms \"unilaterally\"\nand \"indefinite,\" were denounced as completely contrary to\nCRS- 9\nIB74138 UPDATE-01/02/76\nthe February 1974 jointly agreed principles. Bus and taxi\ndrivers went on strike to protest the remarks.\n09/03/75 -- Senator Harry Byrd announced he was delaying an attempt\nin the Senate to block funds for treaty negotiations\nin response to a request from State Department\nofficials to wait until Ambassador Bunker returns\nfrom his September 7 trip to Panama for further\ntalks.\nThe Washington Post reported that an \"internal\nadministration compromise\" was reached within the\nexecutive branch which essentially will meet Panama's\ninsistence on making the year 2000 the termination\ndate of U.S. authority over the Canal. The Department\nof Defense had been arquing for extending U.S. authority\nfor 50 more years, with continued participation\nof U.S. forces in the defense of the Canal. In what\nwas interpreted as a symbol of agreement between the\nDepartments of State and Defense, Deputy Secretary of\nDefense Clements, Chairman of the Joint Chiefs of Staff\nGeneral Brown, and Assistant Secretary of State for\nLatin American Affairs William D. Rogers left (September\n2) for a one-day visit to the Canal.\n09/01/75 -- The New York Times reported that Ambassador Bunker,\nscheduled to leave for Panama to open another round of\ntalks after a delay of many months, would propose that\nthe United States turn over operation of the canal by\nthe year 2000 while asking Panama to accept participation\nof American forces in the defense of the canal for a\nlonger period.\n08/11/75 -- An article in the Journal of Commerce reported that\naccording to Panama's consul-general in New York Juan\nAntonio Stagg, who was formerly a negotiator in the\ntreaty talks, four points still remained to be resolved\nbetween the United States and Panama: (1) duration of the\ntreaty (the year most frequently mentioned was 2000) ;\n(2) lands and waters necessary to operate and defend the\ncanal; (3) construction of a new sea level canal (Panama\nwill give the United States a 5-year option to undertake\na new canal but the United States doesn't want to hurry into\nit) ; (4) economic compensation. According to Stagg, the\nUnited States would maintain a military presence in the\nCanal Zone under the new treaty.\n08/02/75 -- Senator Harry Byrd announced that he was delaying a\nlegislative attempt to block funds for further negotiation\non a new Panama Canal Treaty. The Senator had intended\nto introduce a resolution similar to the Snyder amendment\nwhich passed the House on June 26. State Department\nofficials said that 59 of the 93 Senators present had\ncommitted themselves to a move to table the Byrd resolution.\n07/24/75 -- The head of the Panamanian Government, Gen. Omar Torrijos,\nwarned that further delay in treaty negotiations might\ncause hostility in Panama that could not be contained, and\nCRS-10\nIB74138 UPDATE-01/02/76\nmight even lead to his own overthrow. Torrijos accused\nthe Ford Administration of stalling the negotiations\nbecause of political pressures in the United States.\n07/23/75 -- An article in the Miami Herald reported that the Panamanian\nGovernment, in displeasure over the status of treaty\nnegotiations, resorted to public disclosure of differences\nbetween the United States and Panama in a position paper\ncirculated among Panamanian student leaders last week and\n-\ndiscussed by Panamanian negotiators in the National Assembly.\nThe action came after General Torrijos charged that the\nUnited States violated the secrecy accord by leaking\ninformation to the Congress, the Pentagon and civilian\nresidents of the Canal Zone. Among the disclosures reported\nin the Herald were: the Pentagon wants to hold on to\nmuch more land for defense purposes than Panama is willing\nto concede; the U.S. wants three times more land for the\noperation of the Canal than Panama will allow; Panama wants\na new treaty to expire after 25 years, with full control\nof the canal reverting to Panam, while the United States wants\na 50-year treaty, with 30 additional years if it builds a\nsea-level canal: both countries agree on the integration of\nthe Canal Zone into the Republic of Panama within three\nyears: Panama would agree initially to allow the United\nStates to keep three of the 14 military installations in\nthe Canal Zone and then gradually eliminate those three;\nPanama is dissatisfied with a U.S. offer to increase the\npresent $2.3 million annuity to $44 million.\n06/26/75 -- In a significant show of congressional sentiment on\nthe Panama Canal issue, an amendment by Representative\nSnyder to the State Department appropriations bill\ndenying funds for the treaty negotiations passed\n246-164.\n02/07/74 -- Secretary of State Henry Kissinger and Panamanian\nForeign Minister Juan Tack signed a Statement of\nPrinciples establishing eight guidelines for new canal\ntreaties.\n09/13/73 -- U.S. Ambassador-at-Larqe Ellsworth Bunker was officially\nconfirmed as the new chief U.S. Panama Canal negotiator.\n(Former representative Robert Anderson resigned in July\n1973).\n03/21/73 -- The United States vetoed a U.N. Security Council resolution\nreferring to a new Panama Canal treaty which would\n\"quarantee full respect for Panama's effective sovereignty\nover all of its territory,\" on grounds that the treaty\nnegotiations were a bilateral matter. (Of the 15 Security\nCouncil members, 13 voted in favor of the resolution, and\none abstained).\n06/29/71 -- The United States and Panama resumed negotiations on new\ncanal treaties.\n12/01/70 -- The Atlantic-Pacific Interoceanic Canal Study Commission,\nin its final report, recommended construction of a\nCRS-11\nIB74138 UPDATE-01/02/76\nsea-level canal in Panama and urged the U.S. Government\nto negotiate a treaty with Panama concerning the existing\ncanal and sea-level canal providing for their operation and\ndefense \"in an equitable and mutually acceptable\nrelationship between the United States and Panama.\"\n09/01/70 -- The Panamanian government notified the United States that\nthe three draft Panama Canal treaties of 1967 were\nunacceptable as a basis for resuming treaty negotiations.\n08/20/70 -- The United States announced the termination of an agreement\nwith Panama permitting it free and exclusive use of the\nRio Hato region for military training. (Rio Hato was the\nonly area in Panama outside the Canal Zone being used by\nU.S. troops).\n10/11/68 -- Colonel Omar Torrijos, head of the Panamanian National\nGuard, led a military coup which overthrew President\nArnulfo Arias, and assumed leadership of the nation.\n06/26/67 -- President Johnson and Panamanian President Robles announced\nthat agreement had been reached on the \"form and content\"\nof three new canal treaties, governing administration of\nthe existing canal, the defense and neutrality of the\nexisting canal, and the possible construction of a\nsea-level canal.\n09/24/65 -- President Lyndon Johnson and Panamanian President Marco A.\nRobles issued a joint statement announcing that three new\nPanama Canal treaties would be negotiated and outlining\ncertain principles to be included in the new treaties.\n(United States and Panamanian negotiators began talks\nconcerning the terms for a new Panama Canal treaty in\nJanuary 1965.)\n09/22/64 -- The President signed P.L. 88-609 authorizing the\nestablishment of the Atlantic-Pacific Interoceanic Canal\nStudy Commission to investigate the feasibility of a more\nsuitable site for the construction of a sea-level canal.\n(Commission members were appointed on April 18, 1965).\n04/03/64 -- The Organization of American States published a joint\ndeclaration of the Governments of Panama and the United\nStates in which they agreed to reestablish diplomatic\nrelations and to designate Special Ambassadors to seek\nthe prompt elimination of the causes of conflict between\nthe two countries. (Diplomatic relations were established\nand the ambassadors appointed on April 4. 1964.)\n02/04/64 -- The OAS Council voted to invoke the Inter-American Treaty\nof Reciprocal Assistance (Rio Treaty) in the dispute\nbetween the United States and Panama (the first time that\nthe regional defense machinery had been utilized in a\ndispute involving the United States).\n01/29/64 -- The Panamanian Government called upon the Council of the\nOrganization of American States to take up its charges of\naggression against the United States as a result of the\nCRS-12\nIB74138 UPDATE-01/02/76\nCanal Zone flaq riots.\n01/10/64 -- Panama suspended relations with the United States,\ncharged the United States with aggression at the United\nNations, and filed a complaint with the Inter-American\nPeace Committee of the Organization of American States.\nfollowing rioting over the display of the U.S. flag.\n(Relations were officially broken on January 17, 1964).\n01/10/63 -- United States and Panamanian conferees announced\nagreement concerning the flaq issue in the Canal Zone to\nthe effect that the Panamanian flag would be flown in the\nZone at all points where the U.S. flag is flown by civilian\nauthorities.\n06/13/62 -- President Kennedy and visiting Panamanian President\nRoberto Chiari issued a joint communique stating that\nrepresentatives of the two nations would be named to\ndiscuss points of dissatisfaction concerning the Panama\nCanal and Canal Zone within the perimeters of the existing\ncanal treaties. (Talks began in July 1962 and ended in\nJuly 1963).\n11/16/61 -- The Panamanian National Assembly unanimously adopted a\nresolution calling for the abrogation of canal treaties\nwith the United States and the negotiation of a new treaty\nto include affirmation of Panamanian sovereignty over the\nCanal Zone and a fixed date for the turnover of the canal\nto Panama.\n09/08/61 -- Panamanian President Roberto Chiari, in a letter to\nPresident Kennedy, requested a revision of the Panama Canal\ntreaty. (President Chiari formally announced his\ngovernment's desire to negotiate a new canal treaty on\nSeptember 11, 1961).\n02/02/60 -- The House of Representatives passed H. Con. Res. 459,\nexpressing the sense of Congress that any variance in the\ntraditional interpretation of the Panama Canal treaties,\nespecially with respect to territorial sovereignty, should\nbe made only by treaty.\n11/28/59 -- Rioting broke out as Panamanian demonstrators attempting\nsecond time to enter the Canal Zone to implant the\nPanamanian flaq were turned back by Panamanian and\nU.S. forces.\n11/24/59 -- Deputy Undersecretary of State Livingstone Merchant, on\nan official mission to Panama. declared that the United\nStates \"recognizes that titular sovereignty over the Canal\nZone remains in the Government of Panama.'\n11/03/59 -- The Governor of the Canal Zone called for U.S. Armed\nForces to quell a riot resulting from Panamanian\ndemonstrators attempting to implant the Panamanian flag\nwithin the Zone.\n09/25/59 -- The Government of Panama formally requested that the\nCRS-13\nIB74138 UPDATE-01/02/76\nPanamanian flag be flown in the Canal Zone.\n01/25/55 -- The United States and Panama signed the Treaty of Mutual\nUnderstanding and Cooperation which revised, redefined or\nrenounced certain rights of the United States and Panama\nprovided in the basic 1903 canal treaty and the 1936\ntreaty, and increased the annual annuity to Panama to\n$1,930,000.\n03/02/36\n-- The United States and Panama signed the General Treaty of\nFriendship and Cooperation which revised, redefined or\nrenounced certain rights of the United States and Panama\nprovided in the original 1903 canal treaty, and increased\nthe annual annuity to Panama to $430,000.\n03/01/22 -- The United States and Colombia exchanged ratifications of\nthe Thomson-Urrutia Treaty (signed on April 6. 1914)\nwhereby Colombia recognized the exclusive U.S. title to\nthe Panama Canal.\n08/15/14 -- The Panama Canal was opened to navigation.\n04/18/06 -- Secretary of War William H. Taft, in testimony before the\nSenate Committee on Interoceanic Canals, stated:\n\"(Article III of the Panama Canal treaty) is peculiar in\nnot conferring sovereignty directly upon the United States,\nbut in giving to the United States the powers which it\nwould have if it were sovereign. This gives rise to the\nobvious implication that a mere titular sovereignty is\nreserved in the Panamanian Government.\n02/23/04 -- The U.S. Senate approved the Hay-Bunau-Varilla Treaty.\n(The treaty was officially proclaimed by President\nRoosevelt on February 26, 1903.)\n01/20/04 -- Secretary of State John Hay, in a letter to Senator\nSpooner concerning the Panama Canal treaty, wrote: \"we\nshall have a treaty vastly advantageous to the United\nStates, and, we must confess not so advantageous to\nPanama\nYou and I know too well how many points there\nare in this treaty to which a Panamanian patriot could\nobject.\"\n12/02/03 -- The provisional government of Panama ratified the Hay-\nBunau-Varilla Treaty.\n11/18/03 -- The United States and Panama signed the Convention for the\nConstruction of a Ship Canal (Hay-Bunau-Varilla Treaty)\ngranting the United States full rights and authority\n\"in perpetuity\" over a specified zone of land in Panamanian\nterritory for the construction, operation and protection of\na ship canal.\n11/06/03 -- The United States recognized the new Republic of Panama,\nwhich had declared its independence from Colombia three\ndays earlier.\n08/12/03 -- The Colombian Senate unanimously rejected the Hay-Herran\nCRS-14\nIB74138 UPDATE-01/02/76\nTreaty.\n01/22/03 -- The United States and Colombia signed the Hay-Herran\nTreaty granting the United States a 100-year lease\n(with option for renewal) on a specified zone of land\nacross the Isthmus of Panama, with the exclusive right to\nconstruct, operate, and protect a ship canal.\n(\n06/02/02 -- The U.S. Congress enacted the Spooner Act authorizing the\nPresident to acquire the assets of the former French canal\ncompany and to acquire a specified strip of land and\nadditional rights and territory from Colombia for the\nconstruction and operation of a ship canal.\n(\n11/18/01 -- The United States and Great Britain signed the Hay-\nPauncefote Treaty granting the United States the\nexclusive right to construct, regulate, and manage a ship\ncanal across Central America.\n00/00/99 -- In 1899 the U.S. Congress passed a law directing the\nPresident to name a commission to examine all practical\nroutes for the construction of a ship canal across Central\nAmerica.\n00/00/98 -- In 1898 President McKinley, in a message to Congress,\nstated that a maritime highway across the Central American\n(\nisthmus and its control by the United States was\nindispensable to U.S. commerical interests and territorial\nexpansion.\n05/18/78 -- In 1878 a French interoceanic canal company procured a\nconcession from the Government of Colombia to build a\nmaritime canal through its territory. (The French canal\nenterprise collapsed in 1889).\n12/12/46 -- In 1846 the United States and New Granada (Colombia) signed\nthe Treaty of Peace. Amity, Navigation, and Commerce\nquaranteeing the rights of sovereignty and property\npossessed by Colombia over the Isthmus of Panama and the\nneutrality of the Isthmus, and guaranteeing to the United\nStates free right of way or transit across the Isthmus.\n03/02/39 -- In 1839 the House passed a resolution requesting the\nPresident to negotiate with other interested nations\nconcerning the construction of a ship canal across the\nIsthmus of Panama. This followed by four years a similar\nSenate action.\n05/18/26 -- In 1826 Secretary of State Henry Clay proposed that\ndelegates from the United States and the newly\nindependent South American republics meeting at the\nCongress of Panama consider a joint undertaking to\nconstruct a canal across the Central American isthmus.\nCRS-15\nIB74138 UPDATE-01/02/76\nADDITIONAL REFERENCE SOURCES\nA gathering storm over that other canal. New York times, Jan. 6,\n1974: 12-13, 53-54, 56, 58.\nNewsp.\nA Latin American Vietnam. Foreign Service journal, V. 51, Jan. 1974:\n15-17.\nLRS74-824\nBunker. Ellsworth. Panama and the United States: a design for\npartnership. Speech before the Center for Inter-American\nRelations at New York City, Mar. 19, 1974. Dept. of State\nbulletin, V. 70, Apr. 29, 1974: 453-457.\nConstitution of Panama, 1972. Washington, Organization of American\nStates, 1974. 45 p.\nLRS74-3796\nCox, Robert G. Choices for Partnership or Bloodshed in Panama.\nIn Commission on United States-Latin American Relations. The\nAmericans in a changing world. New York, Quadrangle, 1975,\np. 132-155.\nForty-fifth annual report of the work and operation fiscal year 1973.\nCommunication from President transmitting the 45th annual report...\npursuant to 22 U.S.C. 278a, together with a report on the\nresearch activities of the Gorgas Memorial Institute-Middle\nAmerica Research Unit, and the Comptroller General's examination\nof the financial statements of the Institute for fiscal years 1972\nand 1973. Washington, U.S. Govt. Print. Off., 1974. 60 p.\nLRS74-3146\nGeorgetown University. Center for Strategic Studies. Panama: canal\nissues and treaty talks. Washington, Georgetown Univ. The\nCenter for Strategic Studies, Mar. 1967 (Special Report Series:\nNo. 3) 89 p.\nHammarskjold Forums. The Panama canal; background of the sixth\nHammarskjold forum. New York, May 28, 1964 [by] Richard R.\nBaxter and Doris Carroll. Dobbs Ferry, N.Y., Published for the\nAssociation of the Bar of the City of New York by Oceana\nPublications, 1965. 118 p.\nLangley. Lester D. U.S.-Panamanian relations since 1941. Journal of\ninter-American studies and world affairs, V. 12, July 1970:\n339-366.\nLucier, James P. Panama Canal: focus of power politics.\nStrategic review, V. 2, spring 1974: 34-43.\nPanama. NACLA's Latin America and empire report, V. 8, Sept. 1974: 1-16.\nLRS74-25752\nParama's struggle for independence. Current history, V. 66, Jan. 1974:\nCRS-16\nIB74138 UPDATE-01/02/76\n19-22, 38.\nLRS74-98\nPanama: the proposed transfer of the Canal and Canal Zone by treaty.\nGeorgia journal of international & comparative law, V. 5,\nwinter 1975: 195-215.\nLRS75-7648\nRising public sector investment in Panama spurs many new projects.\nIMF survey, V. 4, Feb. 3, 1975: 45-47.\nLRS75-895\nRosenfeld, Stephen S. The Panama negotiations--a close run thing.\nForeign affairs, V. 54, Oct. 1975: 1-13.\nShould U.S. yield control of the Panama Canal? Congressional\nquarterly weekly report, V. 32. Mar. 2, 1974: 584-581.\nLRS74-2734\nU.S. Atlantic-Pacific Interoceanic Canal Study Commission.\nInteroceanic canal studies, 1970. Final report of the Atlantic-\nPacific Interoceanic Canal Study Commission to the President,\nDec. 1. 1970, as required by P.L. 88-609, 88th Congress.\n(Washington, U.S. Govt. Print. Off., 1971. 1 V. (various\npagings)\nU.S. Dept. of State. Bureau of Public Affairs. Office of\nMedia Services, U.S., Panama agree on principles for canal\nnegotiations; (together with) Background and status of the\nPanama Canal treaty negotiations. (Washington) U.S.,\nDepartment of State, News Release, Feb. 7. 1974. 7 p.\nU.S. Library of Congress. Congressional Research Service.\nNegotiation of new Panama Canal treaties: background and pros\nand cons [by] Virginia M. Hagen. [Washington] Nov. 23, 1971.\n30 P.\nMultilith 71-250 F\nPRESIDENTIAL STATEMENT IN DALLAS\nI think it is premature to come to any conclusion as to what might be\nthe final resolution of the longstanding differences between the\nUnited States and Panama. Three previous Presidents have had\nrepresentatives negotiating on this very controversial issue. I can\nsimply say and say it very emphatically, that the United States will\nnever give up its defense rights to the Panama Canal and will never\ngive up its operational rights as far as Panama is concerned. Since\nthere is no resolution today, I don't think I should prejudge any\ndetailed final settlement in the conflict or controversy. I can assure\neverybody in the United States that we will protect defense and\noperational responsibilities as far as the Panama Canal is concerned.\nPRESS CONTERENCE NO. 28\nof the\nPRESIDENT OF THE UNITED STATES\nAt 12:02 P.M. EST\nMarch 13, 1970\nSaturday\nAt Guilford College\nGreensboro, North Carolina\nTORD\nQUESTION: Mr. President, my question is this.\nyou sec the United States relinquishing control of the\nCanal in the next four years, and, if so, under what\ntumptances?\nTHE PRESIDENT: Three Presidents have been negotiating\nsince 1965 with the Government of Panama to resolve the dispute\nthat arose following the very sad and tragic incident that\nhappened at that time where some 30 people were killed,\nincluding, as I recall, approximately 10 Americans.\nThese negotiations have gone on for about 10-plus\nyears.\nI can assure you of this. The United States, as long\nas I am President, will do nothing to give up the control of the\noperations of the Canal, and will do nothing to give up the\nmilitary protection of the Canal, and that is what the exports in\nour Government are most concerned about. And whatever is\nagreed to, if anything, will be submitted openly to the United\nStates Congress for consideration.\nOFFICE or THE WHITE HOUSE PRESS SECRETARY\n(Peoria, Illinois)\nTHE WHITE HOUSE\nREMARKS OF THE PRESIDENT\nAND\nQUESTION AND ANSWER SESSION\nAT THE\nEVERETT McKINLEY DIRKSEN FORUM\nBRADLEY UNIVERSITY\nQUESTION: Mr. President, I am pastor of a church\nhere in Peoria. From time to time we get reports, printed\nsometimes, to the effect that Mr. Kissinger and the State\nDepartment have already made promises and commitments\nregarding the Panama Canal to a Government which is something\nless than friendly to us, and, furthermore, it has been\nsuggested that the constitutional clause which forbids any\nUnited States property to be sold without approval of the\nCongress, that that will be circumvented by retaining title\nto it but nevertheless technically not selling it, but in\nreality giving all the controls and direction and jurisdiction\nto the Panama Government which only the owner of the property\nshould have.\nI would like you, Mr. President, to comment on that\nif you would.\nTHE PRESIDENT: First, let me say that whatever\nis done, if it reaches that point, will be fully submitted\nto the United States Congress, both the House as well as the\nSenate. If property is sold -- and I am not saying it is --\nor is transferred, it would have to be approved by both\nthe House and the Senate and, of course, if it is a treaty, it\nwould have to be approved by the Senate alone, so you can\nrest assured that whatever is done, if anything is done,\nwill be submitted in its entirety and completely open and\nabove board.\nNow the situation is that since 1964 when they had\na series of riots in the Panama area, the Canal Zone and the\nGovernment of Panama, some 30 people were killed in these\nriots, including a significant number of Americans. Those\ncircumstances precipitated negotiations that have been\ncarried on by three Presidents. Those negotiations are going\non today between the Government of Panama and the United States.\nI can only assure you -- because the negotiations\nhave not been completed -- that the United States, as far\nas I am concerned, will never give up its national defense\ninterests, nor give up its interests in the operation of the\nPanama Canal. And whatever is negotiated -- and nothing has\nbeen concluded -- will be submitted in its entirety to the\nCongress of the United States.\nMORE\nGOP Reception - San Antonio Civic Center April 9, 1976\nQUESTION: Mr. President, please do not give away the Panama Canal.\n(Laughter)\nTHE PRESIDENT: Sir, I don't think you have to worry about that.\n(Laughter) The United States, as far as I am concerned, will never\ngive up its defense responsibilities and capability. It will never give\nup the rights of navigation and so forth. You just don't have to worry.\nQUESTION: Thank you very much.\nCONGRESSMAN GENE SNYDER\nApril 13, 1976\n2330 Rayburn House Office Building\nFOR IMMEDIATE RELEASE\nWashington D.C. 20515\nContact: Nicholas Nonnenmacher\n(202) 225-2099\nPresident Ford personally has issued written instructions to the State\nDepartment to negotiate away the Canal Zone and the Panama Canal itself, Co.,-\ngressman Gene Snyder today asserted.\nSnyder said that during secret testimony before the Panama Canal Subcom-\nmittee on April 8th, it was unanimously agreed that he could make public his\nline of questioning of Ambassador Ellsworth Bunker, Chief U.S. Negotiator with\nPanama, and his aides. (pages 30, 34 and 112 of April 8 transcript.)\nFollowing is a brief excerpt from the record:\nAmbassador Bunker. Mr. Congressman, we are proceeding to negotiate\nunder guidelines established by the President, both by President\nNixon and President Ford.\nMr. Snyder. I do not think that is responsive to my question.\nI want to know what directive or directives the State Department\nhas received from President Ford to do this?\nAmbassador Bunker. We have been directed to proceed with the nego-\ntiations on the basis of the guidelines --\nMr. Snyder. To give it up? To give up the Canal Zone over a period\nof time?\nAmbassador Bunker. To give up the Canal Zone after a period of\ntime, that is correct.\nMr. Snyder. And the Canal over a longer period of time?\nAmbasssador Bunker. Longer period of time.\nMr. Snyder. Longer period of time. And what are the directives?\nAre they written memorandums?\nAmbassador Bunker. The directives are in written memorandum.\nMr. Snyder. Signed by the President?\nAmbassador Bunker. Signed by the President.\nMr. Snyder. Under what date?\nAmbassador Bunker. Varying -- various dates.\nSnyder declared:\n\"I am shocked that Mr. Ford as President, now is not only going along\nwith, but is actually directing an even more shocking settlement than the one\nhe opposed as House Minority Leader (President Johnson's draft treaty with\nPanama) The situation in the Caribbean is far worse today than when Mr. Ford\nvoiced his strenuous opposition in 1967.\nThe soft underbelly of the United States from Texas to Florida, the East\nCoast, and, in fact, the whole country east of the Mississippi, is threatened\nby nuclear armed Soviet U-boats that berth in Cuban submarine pens less than\n100 miles from our border. Some 12,000 to 15,000 Cuban troops have received\nactual combat training under fire in Angola.\"\nSTATEMENT OF THE HONORABLE GENE SNYDER, MEMBER OF CONGRESS\nFOURTH DISTRICT OF KENTUCKY, APRIL 13, 1976 on\nTHE FUTURE OF THE CANAL ZONE AND THE PANAMA CANAL\nIt is incumbent upon President Ford to immediately try to explain to the\nAmerican people the validity of whatever reasons he has for directing the De-\npartment of State to surrender the Canal Zone and the Panama Canal to a for-\neign power in the relatively near future.\nI make this statement on the basis of State Department testimony before\nthe Panama Canal Subcommittee of the House Merchant Marine and Fisheries Com-\nmittee last Thursday, April 8th. The bulk of that testimony was in closed\nsession, with Mrs. Leonor K. Sullivan, the full Committee Chairman, presiding.\nThe Subcommittee, however, agreed unanimously that my line of questions and\nthe answers to them would be on the record unless the Department witnesses\nspecifically wanted them off. No such request was forthcoming from those wit-\nnesses regarding what I state here or any other question of mine.\nThose of us in Congress opposed to this giveaway which has absolutely no\nCongressional mandate, long have been critical of the State Department for its\nintention. We have, however, not been at all clear as to the President's ul-\ntimate thinking or decision when a treaty would be drawn.\nAs of last Thursday, there is no more question. Ambassador Ellsworth\nBunker, Chief U.S. Negotiator with the Republic of Panama, in answer to my\ndirect questions, flatly declared that President Ford has directed the Sec-\nretary of State and the negotiators to come up with a treaty with the Republic\nof Panama by which we will give up the Canal Zone entirely after a period of\ntime, and the Canal over a longer period of time. My further questions dis-\nclosed that the directions are in writing, over President Ford's signature.\nLater, the Subcommittee requested that it be supplied the documents.\nThe following brief exchange is quoted directly from the record:\nMr. Snyder. On whose specific authorization is the State\nDepartment pursuing its stated goal of yielding the Canal\nand the Zone to the Republic of Panama?\nAmbassador Bunker. Negotiations are being carried out on\nthe authorization of the President.\nMr. Snyder. Madam Chairman, at this point I would like to\nask unanimous consent to include all of the newspaper article\nfrom the Chicago Tribune of July 8, 1967. I will not read it\nall, but its story is headlined \"New treaty perils canal: Ford.\nThe item is sub-titled \"Terms found shocking by GOP leader.\"\nAnd the headline on the carry-over story on another page:\n\"Canal treaty terms to shock U.S. public Representative Ford\n\"\nwarns.\nNow, the article is consistent with the headlines if not\nmore $0.\nIn my opinion a comparison of the proposed 1967 treaty as\nprinted in the Chicago Tribune on July 15, 1967, and the ei ht\npoints Secretary Kissinger agreed to February 7, 1974, con-\nvinces me that the current proposal envisions a more complete\n2\nsurrender of the Zone than did the 1967 draft.\nIn view of then Congressman Ford's very vehement oppo-\nsition to President Johnson's treaty, what directive or\ndirectives has the Department of State received from Presi-\ndent Ford saying he desires you to negotiate turning over\nto Panama the Canal, or supporting the Department seeking\nthis end purpose, within some period of time?\nAmbassador Bunker. Mr. Congressman, we are proceeding to\nnegotiate under guidelines established by the President, both\nby President Nixon and President Ford.\nMr. Snyder. I do not think that is responsive to my question.\nI want to know what directive or directives the State De-\npartment has received from President Ford to do this?\nAmbassador Bunker. We have been directed to proceed with\nthe negotiations on the basis of the guidelines--\nMr. Snyder. To give it up? To give up the Canal Zone over\na period of time?\nAmbassador Bunker. To give up the Canal Zone after a period\nof time, that is correct.\nMr. Snyder. And the Canal over a longer period of time?\nAmbassador Bunker. Longer period of time.\nMr. Snyder. Longer period of time.\nAnd what are the directives? Are they written memo-\nrandums?\nAmbassador Bunker. The directives are in written memorandum.\nMr. Snyder. Signed by the President?\nAmbassador Bunker. Signed by the President.\nMr. Snyder. Under what date?\nAmbassador Bunker. Varying -- various dates.\nThe time periods involved in this giveaway are not way off in the future.\nThe press in this country and in Panama has already reported that we would\nabolish the Canal Zone government probably some six months after treaty rati-\nfication, and give up all jurisdiciton over the Zone within three years. The\nsurrender of the Canal and its operation would take place probably during a\ntwenty five to fifty year period, a term still not agreed upon by the nego-\ntiators.\nI' am shocked that Mr. Ford as President, now is not only going along with,\nbut is actually directing an even more shocking settlement than the one he\nopposed as House Minority Leader. In that same 1967 news story, Mr. Ford was\nfurther quoted in these words:\nWith Cuba under control of the Soviet Union via Castro and\nincreased communist subversion in Latin America, a communist\nthreat to the canal is a real danger.\nAny action on our\npart to meet a threat involving the national security of the\nUnited States should not be ham-strung by the need for time-\nconsuming consultation with a government that might be reluc-\ntant to cooperate in the defense, or possibly be in opposition\nto our best interests.\n3\nThe situation in the Caribbean is far worse today than when Mr. Ford\nmade those remarks in 1967. The soft underbelly of the United States from\nTexas to Florida, the East Coast, and, in fact, the whole country east of the\nMississippi, is threatened by nuclear armed Soviet U-boats that berth in Cuban\nsubmarine pens less than 100 miles from our border.\nSome 12,000 to 15,000 Cuban troops have received actual combat training\nunder fire in Angola.\nCuban schools of subversion have trained thousands of students from every\nLatin American country and our own, in guerrilla and sabotage techniques, as\nwell as in all aspects of Marxist-Leninist philosophy, agitation and propagan-\nda.\nPanamanian dictator, General Omar Torrijos, who recently exiled nearly\na dozen top Panamanian business leaders whose opposition he feared, has been\nplaying footsie with Castro for several years. Castro promised Torrijos when\nhe visited Havana in January, to give him every help to gain control of the\nCanal Zone. Torrijos himself has boasted repeatedly he would lead an assault\non the Zone, if necessary, to gain that control, if we did not surrender it.\nIn my opinion, the President has the immediate responsibility to make a\nclean breast of his intentions regarding the Canal Zone. The Nation has the\nright to know the full truth.\nOur citizen-taxpayers to date have invested some $7 billion in the out-\nright purchase of this unincorporated territory of the United States: in the\nexcavation of the canal linking the Caribbean and the Pacific; and in the\ncivil and military installations vital for its continued operation, mainte-\nnance and defense. And all of this has benefited, not only ourselves, but\nPanama and the entire world for some 62 years.\nThere is nothing to prevent Torrijos, should he gain control of the\nCanal Zone, from inviting the Soviet Union in to protect it.\nThere is no way in the world he could defend it -- or his own country,\nfor that matter -- against a Cuban conquest, even without Moscow supporting\nCastro in such an attack.\nIn either event, Soviet submarines, missiles and bombers would soon be\nin place, capable of striking at our heartland from another outpost, which,\nunless the American people force Mr. Ford to reverse his position, will soon\n4\nbe within our enemy's grasp instead of remaining our own.\nNeither Ambassador Bunker nor his aides were able to substantiate in\nthe slightest degree the claim they have been making around the country in\npublic speeches that a phrase in Article III of the 1936 treaty of friendship\nwith Panama refers to the Canal Zone as \"territory of the Republic of Panama\nunder the jurisdiction of the United States.\" They have cited this to support\ntheir argument that we do not have sovereignty over the Zone. Deputy Nego-\ntiator Morey Bell did so in a letter to me last December.\nUnder my insistent questioning seeking substantiation, the claim -- which\nthe American Law Division of the Library of Congress had already reported to\nme was refuted by Article XI of the same treaty -- was merely repeated.\nI feel obligated by my office to further demand that President Ford pub-\nlicly substantiate this State Department claim -- which I consider to be ab-\nsolutely without legal grounds, and totally false -- or order the Department\npublicly to immediately retract the claim and to desist from using it.\nTo my knowledge, President Ford has not made the claim of which I speak.\nHe may not even realize the State Department is making it in order to promote\nthe Canal Zone giveaway among the American people.\nHe is now on notice, however, and has the duty to thoroughly explore the\nmatter. The Supreme Court has declared the Canal Zone belongs to the United\nStates, specifically stating it had been ceded to us by Panama in a duly rati-\nfied treaty.\nThe President and the State Department have a right to argue their case\non its merits.\nTo lie to the American people is nothing less than malfeasance in office.\nThe President cannot allow this serious business of the Canal Zone's fu-\nture to be decided without the support of the American people whose very se-\ncurity is involved.\nNeither can he allow falsehoods to play a role in trying to secure that\nsupport in spite of their better judgment.\nI hope Mr. Ford will publicly come to grips with this entire question\nin the very near future.\nApril 14, 1976\nPANAMA CANAL\n&:\nDid the President instruct the State Department to negotiate\na new treaty with Panama which would give up the Canal and\nour authority in the Zone?\nA:\nLet me make clear that Presidential instructions to the State\nDepartment relate to negotiations which have been carried on\nsince 1964 with Panama. These negotiations are aimed at\nachieving a new treaty relationship with Panama relating to\nthe Canal. That treaty, which would continue in force for a\nsubstantial period of time, would maintain US control of the\nCanal's operation and defense. Negotiations which the President\nhas authorized relate only to the effort currently underway to\nnegotiate a modernized treaty relationship that will protect US\nbasic long-term interests in the efficient operation and security\nof the Panama Canal. Those negotiations are still in progress\nand important issues remain to be discussed and agreed upon.\nIt is therefore not possible or useful at this stage to predict the\nfinal form of such an agreement or when and if such an arrangement\nmay be possible. However, the President has repeatedly stressed\nthat he will not approve or support any agreement that does not\nprotect vital US interests in the operation and defense of the Canal.\nBRIEF SUMMARY OF REAGAN\nNEWS CONFERENCE\nAustin, Texas\nApril 14, 1976\nHe strongly criticized the Ford Administration's handling of the Panama\nCanal negotiations. Reagan quoted the President as telling an audience in\nDallas last weekend that the United States would never surrender all of its\ncontrol of the Canal Zone.\n\"Now testimony at closed hearings shows the Administration is negotiating to\ngive up some rights to the canal and in the long run to surrender it, \" Reagan\nsaid.\nHe said that historically leaders such as Hitler, who tried to dominate the\nworld, have considered the PanamaCanal a strategic passage.\nReagan said continued American control of the Canal is vital to the defense\nof the Western Hemisphere. He described the President of Panama as a\n\"Communist-leaning dictator\" and said the Ford Administration is planning to\nturn over the Canal to such a dictator.\nTHE PANAMA CANAL\nA \"Give Away\" or a \"Throw Away\"?\nPresidential Candidate Ronald Reagan has stated that the United States\nshould break off the negotiations with Panama and tell General Torrijos:\n\"We bought it, we paid for it, we built it, and we intend to keep it. 11\nReagan says the Canal Zone is sovereign U.S. territory every bit the\nsame as Alaska.\nUnfortunately, Governor Reagan's words SO distort the facts and ignore\nthe reality of the situation regarding the Panama Canal that his state-\nments may do more to endanger America's ability to use the Canal than\nany imagined \"give away\" through the current negotiations.\nWhat are the facts?\nNegotiations between the United States and Panama to replace the 1903\nCanal Treaty have been pursued by three successive American presidents.\nThe purpose of these negotiations is to protect our use of the Canal over\nthe long term and our national security interests, not to diminish them.\nThe issue before us is not between continuing the present treaty and nego-\ntiating a new one, but rather between successful negotiations and the\nconsequences of no new treaty. Absence of a new treaty would mean\nconfrontations with the people of Panama supported by Latin America\nand the rest of the world--including major users of the Canal like Japan.\nA new treaty is needed because:\nA cooperative arrangement with Panama is the only way the United\nStates can safeguard its long term interests in an open, efficient and secure\nCanal.\nPanama wants a new treaty. Without a new treaty, we will have\na confrontation with a Panamanian government backed by a united people\nand the unequivocal support of all Latin American nations.\nIf the current opportunity is lost to achieve a treaty that satisfies\nthe legitimate interests of both Panama and the United States, we can\nexpect both a deterioration of our relations throughout the hemisphere\nand real dangers to the continuous operation of the Canal.\n-2-\nThe current Panamanian government, which has been in power for\neight years, is committed to a new treaty. It is prepared to offer terms\nwhich recognize our interest in the Canal's operation and defense. If\nthis effort does not succeed, we can be sure the terms available next\ntime will be less favorable.\nA delay in negotiations risks increasing Panamanian frustration\nand a recurrence of the riots and confrontations that occurred in 1957\nand those in 1964, in which over 20 Panamanians and 4 American soldiers\ndied.\nFurthermore, Governor Reagan's view that the Canal Zone is sovereign\nU.S. territory is totally wrong. Legal interpretations do vary, but there\nare clear limitations on U.S. jurisdiction. For example, not just any\nAmerican can live in the Canal Zone and children born in there are not\nautomatically U.S. citizens. But more importantly, Governor Reagan\nmisses the point. The real issue is not our legal position in Panama,\nbut how to find the best way to assure protection of our fundamental\ninterest in the Canal. It is the rights granted and the relationship\ncreated by a 72-year-old treaty which now seriously offend the\nPanamanian people. If the relationship is not redefined and moder-\nnized, our jurisdiction over the Canal Zone may not prove to be the\nbest means of protecting our greater interest in an open and secure\nCanal.\nDespite these realities, Governor Reagan would handle the Canal issue\nby refusing to negotiate with Panama, by insulting its leaders, and\noffending our friends throughout Latin America. A breakoff of nego-\ntiations could lead to a closure of the Canal and serious damage to our\nrelations with Latin America, the opposite of what he says he wants.\nHe doesn't mention it, but his stance carries with it the commitment\nFORD\nof large U.S. military forces to protect the Canal and the possibilit\nof their being used in a prolonged anti-guerrilla, anti-terrorist\ncampaign. It thus appears to be based on a willingness to protect\nour interests through military occupation.\nA refusal to negotiate in good faith simply risks throwing away our ability\nto safeguard our real interests in the Panama Canal.\nIn contrast, President Ford is seeking a treaty which will create a\nmature relationship making the U.S. and Panama partners in the\noperation of the Canal and which protects the essential interests of\nthe United States for the long term. The President has no intention\nof proposing to the Congress any agreement that would not protect our\nvital interests. Any treaty reached will be submitted to the full consti-\ntutional process, including Senate approval.\nApril 15, 1976\nMEMORANDUM FOR:\nFRED SLIGHT\nFROM:\nJOY MANSON In\nSUBJECT:\nPanama Canal\nMr. James E. Smith, a professor in the Department of History,\nCarney State College, Carney, Nebraska 68847, called in this\nmorning with an analogy that may be useful in Texas with\nregard to the Panama Canal.\nIn reading the actual treaty with Panama, Mr. Smith notes that\nthe U.S. specifically is entitled only to use the agreed-upon\nland for the construction, operation and maintenance of the Canal,\nand he draws a distinction between these specific \"rights\" and\nthe purchasing \"rights\" the U.S. has in Alaska (where the land\nis ours to do with as we wish).\nMr. Smith said one thing Texans are very familiar with are\nMineral Rights -- whereby an owner of valuable land may lease\nit to an oil company for drilling, digging purposes but the\nowner technically still maintains ownership of said land.\nDescribing the Panama Canal Treaty as a \"Mineral Rights lease\"\nis Mr. Smith's recommendation to clarify the specificity of\nthe rights inherent in the Panama Treaty. Smith further suggested\nthat a follow-up analogy might include that \"as the control of the\nCanal is by the United States, so is the control of the leased\noil land by the oil company -- and I may employ your son in the\noperation of the Canal as an oil company may employ your son to\noperate the pumps.\"\nTHE WHITE HOUSE\nWASHINGTON\nApril 15, 1976\nMR PRESIDENT:\nReply to Leonor Sullivan's Letter\nConcerning the Panama Canal\nCompany\nIn addition to the staffing mentioned in Brent Scowcroft's\nmemorandum on the above subject, this memorandum\nwas staffed to Messrs. Buchen, Cannon and Seidman. .\nAll approved and Phil Buchen added the following\ncomments:\n\"Although we note that it may appear\nunusual to have an Assistant Secretary\nanswer on behalf of the Secretary of the\nArmy while the President answers directly,\nCounsel's Office int erposes no objection.\"\nJim Connor\n\\\nTrudy -\ninto\nThanks\n359\nKaten\nMr. DuBois may come in to review this\nfile.\nSend copy of letters from Congress to\nMr. DuBoix (3/31)\n----\n(Joseph Jacobs was\nmessenger) He still might come to review\nthe inhouse mem\nGBF\nTHE WHITE HOUSE\nWASHINGTON\nMarch 23, 1976\nDear Madam Chairman:\nThis is in further reply to your December letter\nto me regarding the measurement rule amendments\nproposed by the Panama Canal Company and the\nSecretary of the Army.\nI have, carefully reviewed the issúes and decided\nto approve the proposed amendments with the\nexception of the so-called \"on-deck cargo\"\namendment.\nSincerely,\nFord\nThe Honorable Leonor K. Sullivan\nChairman\nCommittee on Merchant Marine\nand Fisheries\nHouse of Representatives\nWashington, D.C. 20515\nGERALD\nTHE WHITE HOUSE\nWASHINGTON\nMarch 23, 1976\nDear Mr. Chairman:\nThis is in further reply to your December letter\nto me regarding the measurement rule amendments\nproposed by the Panama Canal Company and the\nSecretary of the Army.\nI have carefully reviewed the issues and decided\nto approve the proposed amendments with the ex-\nception of the so-called \"on-deck cargo\" amendment.\nSincerely,\nHerald R. Ford\nThe Honorable Warren G. Magnuson\nChairman\nCommittee on Commerce\nUnited States Senate\nWashington, D.C. 20510\nEXECUTIVE OFFICE OF THE PRESIDENT\nOFFICE OF MANAGEMENT AND BUDGET\nWASHINGTON, D.C. 20503\nFEB 24 1976\nACTION\nMEMORANDUM FOR:\nTHE PRESIDENT\nFROM:\nJames T. Lynn\nSUBJECT:\nPanama Canal Tolls Rules Changes\nIssue\nShould approval be given to the Panama Canal Company to\nmodify cargo measurement rules which determine toll\nassessments for ships transiting the Panama Canal?\nBackground\nYou have been requested to approve seven substantive changes\nin tonnage measurement rules governing tolls for vessels\ntransiting the Panama Canal. The proposed changes were\nadopted by the Board of Directors of the Panama Canal Company\nand have been forwarded by the Secretary of the Army in his\ncapacity as \"stockholder\" of the Company (Tab A). Below is\na brief discussion of the issues, along with recommendations.\nA more detailed discussion of the issue is attached (Tab B).\nThe purpose of the changes, according to the Company, is to\nredistribute costs more equitably among Canal users. Cost\nredistribution would be accomplished by altering the\ndefinitions of space availability on board vessels for\ncarrying freight and passengers. The last systematic review\nof tonnage measurement rules was conducted in 1937. In\naddition to redistributing costs, the changes would increase\ntotal revenue from tolls, as shown below:\n(dollars in millions)\nGeneral\nContainer\nCargo\nAll\nShip\nShip\nother\nTotal\nAll-Flags Tolls\n+4.6\n+3.1\n+4.6\n+12.3\n% Increase\n+28%\n+10%\n+6%\n+9%\nU.S.-Flag Tolls\n+1.7\n+0.4\n+0.2\n+ 2.3\n% Increase\n+37%\n+12%\n+4%\n+17%\n2\nThe disproportionately large tolls increase for containerships\n(modern vessels which carry pre-boxed cargo) is primarily a\nresult of one rules change--the \"on-deck cargo\" amendment.\nThis amendment would require the measurement, and toll\nassessment, of all on-deck cargo. Currently this cargo is\nexempt from measurement. Of the total annual $12.3 million\ntolls revenue increase, $6.0 million is attributable to the\non-deck cargo amendment, mostly relating to containership\noperations.\nThe financial health of the Panama Canal Company has been weak\nin recent years largely as a consequence of rising costs and\ndeclining traffic. If approved, the revenues gained by the\nmeasurement rule amendments would help alleviate, but would\nnot eliminate, a projected 1976-1977 operating deficit. In\nfact, either with or without the proposed amendments, a\ngeneral toll increase will be needed in the coming year.\nA large toll increase is certain to be strongly opposed by\nthe maritime industry--as are the proposed amendments.\nWithout additional revenues, however, the Company will be\nforced to request U.S. Government assistance.\nOptions\n#1. Approve all seven amendments in their entirety.\n#2. Approve all but the on-deck cargo amendment.\n#3. Disapprove all seven amendments.\nDiscussion of the Proposed Amendments\nThe existing Panama Canal toll assessments are based on\ncommonly-accepted, international principles of ship \"earning\ncapacity.' Earning capacity is measured by the volume of\nbelow-deck space (gross tonnage), with deductions for space,\nsuch as the engine room, which is not available for\nrevenue-producing carriage (net tonnage). The actual\nutilization of ship space is not considered in determining\ntolls charged for a particular transit. A primary reason\nfor this approach is to avoid the costly delays that would\nbe involved in measuring the volume, weight or value of\ncargo actually carried on each transit. Under the existing\nmeasurement system, a particular ship only needs to be\nmeasured once instead of each transit.\nSix of the seven proposed amendments seek to remove minor\nanomalies in the existing measurement system. Four of the\nchanges would increase and two would decrease toll assessments.\n3\nGenerally, the amendments would abolish \"double counting\"\nof space and/or refine measurement standards in accord with\nmodern ship design. They would change capacity measurement\nrules for the following spaces: fuel tanks, hatchways,\nwater tanks, public rooms on passenger ships, and selected\nshop and store rooms. These six changes are all consistent\nwith the established principle of basing tolls on the\nmeasurement of earning capacity. Few specific objections\nhave been filed to these proposed amendments.\nThe seventh amendment constitutes a major change in the\napproach to assessing tolls. In addition to the traditional\nmethod of establishing tolls for below-deck carrying capacity,\nit would charge tolls for cargo actually carried on the ship\ndeck during each transit. This means that if a ship were\nonly partially loaded below deck, and carried on-deck cargo,\nit would be charged for its full below-deck capacity as well\nas for its actual on-deck cargo. By comparison, a ship\ncarrying the same tonnage, all below deck, would have to pay\nonly for its below-deck capacity, even though it may have a\ncapability of carrying on-deck cargo.\nThis proposed change would be a departure from the traditional\nprinciple of basing tolls only on carrying capacity. It also\nwould establish different standards for below-deck and on-deck\ncargo carriage.\nThe effect of this change would be to penalize ships which\ncarry on-deck cargo but which do not or can not fully utilize\nbelow-deck space. Containerships, in particular, would be\nimpacted by the change. Containerships are designed to\ncarry significant on-deck loads, but they are not able to\nfully utilize below-deck space because the rectangular\ncontainers cannot use curved hull space on the sides, front\nand back, and because space between and around containers\nis needed for purposes of loading and unloading. Consequently,\nwith the current method of establishing tolls, containerships\non the average pay more per cargo ton actually carried than\ndo other ships. Recent data show that containerships pay\ntolls averaging $2.12 per cargo ton, compared with about $1.15\nper ton for general cargo ships.\nFew would disagree with the Canal Company's position that, in\ntheory, on-deck cargo carriage should be subject to toll\nassessment. The Company's proposal, however, does not seem\nto be an equitable means of assessing such tolls, particularly\nwhen applied to containerships. It may be necessary to\nestablish an entirely new method of assessing tolls for\ncontainerships, rather than simply modifying a measurement\nsystem which did not anticipate containership technology.\n4\nRecommendation\nOption #2 is recommended. We believe that the six relatively\nminor amendments are sensible and would not be inequitable.\nThe on-deck cargo amendment, however, represents a major\ndeparture from traditional measurement practices, and it\nappears that it would create greater inequities than it\nwould remove. It is recommended that the issue of how to\nassess tolls for on-deck cargo be studied further.\nPositions of Interested Parties\nMaritime interests have expressed across-the-board objections\nto the proposed amendments. Their concern, however, is\nprimarily focused on the on-deck cargo amendment. Two major\nU.S. shipping company associations--the American Institute\nof Merchant Shipping and the American Maritime Association--\nhave privately indicated that if the on-deck cargo amendment\nwere dropped (option #2), their opposition to the remaining\namendments would be minimal.\nAlthough the Congress has no statutory role relative to the\nestablishment of Panama Canal tolls, the maritime interests\nhave generated strong support in both the House and Senate.\nIn the House, Mrs. Sullivan (Chairman of the Merchant Marine\nand Fisheries Committee) and Mr. Metcalfe (Chairman of the\nPanama Canal Subcommittee), as well as 29 other members,\nhave cosigned a letter to you asking that Presidential action\nbe delayed until the House has had the opportunity to review\nthe measurement rules. Senators Magnuson (Chairman of the\nCommerce Committee) and Long (Chairman of the Merchant Marine\nSubcommittee) have likewise requested that you delay action\n(letters at Tab C). Insofar as congressional opposition to\nthe amendments is generated by the maritime interests, we\nexpect that rejection of the on-deck cargo amendment would\nalso minimize congressional concerns.\nThe following agencies have expressed no objection to the\nproposed amendments: Justice, Treasury, Federal Maritime\nCommission, National Security Council, and Council of\nInternational Economic Policy. Although both Commerce and\nTransportation have recommended that the amendments be\ndelayed or disapproved pending further analysis, both report\nthat option #2 largely mitigates their concerns. State\nadvises that the amendments have no effect on the sensitive\ntreaty negotiations over the status of the Panama Canal.\nAlthough State indicates that Greece, Norway, Spain, Japan,\nItaly and Sweden have made oral representations to the\nDepartment critical of the changes, State does not oppose\ntheir approval.\n5\nThe Panama Canal Company and the Secretary of Army stand by\ntheir recommendation, option #1. However, they report that\noption #2 is preferable to option #3.\nDecision\n-- Option #1: Approve all seven amendments\n-- Option #2 (Recommended) : Approve all but the\non-deck cargo amendment\n-- Option #3: Disapprove all amendments\n-- See me\nAction\nTo carry out option #2, it is necessary for you to sign the\nattached resolution approving all but the on-deck cargo\namendment. Additionally, we recommend that you sign the\nattached letters to the chairmen of the House and Senate\nauthorizing committees explaining your decision, and to\nthe Secretary of the Army requesting additional review of\nthe tonnage measurement system and indicating the necessity\nfor the Panama Canal Company to take action to restrain\ncosts. These signature documents are at Tab D.\nAttachments\nSECRETARY OF THE ARMY\nWASHINGTON\nDecember 12, 1975\nThe President\nThe White House\nWashington, D. C. 20500\nDear Mr. President:\nIn my capacity as \"stockholder\" of the Panama Canal\nCompany under authority delegated to me by Executive Order\n11305 of September 12, 1966, I am forwarding for your\napproval a Resolution adopted by the Board of Directors of\nthe Panama Canal Company on November 17, 1975, amending the\nrules of measurement of vessels for the Panama Canal.\nThe action by the Board of Directors is based on Sections\n411 and 412 of Title 2 of the Canal Zone Code under which the\nPanama Canal Company is authorized to prescribe rules of\nmeasurement for determining the earning capacity of vessels\nusing the Canal. Section 412 provides that changes in the\nmeasurement rules shall be subject to and take effect upon\nthe approval of the President of the United States. Section\n411 requires six months' notice of the changes in the measure-\nment rules. This notice was published in the FEDERAL REGISTER\non July 31, 1975, so that the earliest date on which the new\nrules could become effective is January 30, 1976.\nFollowing publication of the notice in the FEDERAL\nREGISTER, the Panama Canal Company invited written comments\nfrom the public and held a public hearing in accordance with\napplicable regulations. After consideration of all relevant\nmatter presented in the written comments received and presented\nat the hearing, the Board of Directors adopted the proposed\namendments of the measurement rules, subject to your approval.\nThe inclosures to this letter set out in detail the\nbackground of the proposed changes in the rules and the pro-\nceedings by the Board of Directors leading up to the adoption\nof the amendments\nYour approval of the proposed changes in the measurement\nrules is recommended, effective January 30, 1976.\nRespectfully yours,\nInclosures\nMartin R. Hoffmann\nas\nATTACHMENT\nFORD\nGERALD\nDISCUSSION OF PANAMA CANAL TOLLS RULES CHANGES\nBackground\nThe attached letter from the Secretary of the Army requests\nPresidential approval of proposed changes in rules governing\ntolls for ships transiting the Panama Canal. The proposal\nwas adopted by the Board of Directors of the Panama Canal\nCompany on November 17 and was forwarded to the President\nby the Secretary of the Army, in his capacity as \"stockholder\"\nof the Company, on December 12. The rules changes require\nPresidential approval and can be put into effect on or after\nJanuary 30, 1976, a minimum statutory 6 months after notice\nof the proposal was published in the Federal Register.\nSince the beginning of Panama Canal operations in 1914, tolls\nhave been based on ship \"earning capacity.\" The measure of\nship earning capacity has been the space available (net\ntonnage) for carrying freight and passengers. The Panama\nCanal Company argues that the measurement rules which\ndetermine ship earning capacity should now be altered because:\n(a) the last systematic review was conducted in 1937; (b) ship\nconfiguration and technology have dramatically changed in the\npast 38 years; and (c) the operating costs of the Canal are no\nlonger equitably distributed to reflect the earning capacity\nof vessels using the Canal. Consequently, the Company has\nproposed seven substantive changes to the measurement rules,\nrequiring thirty amendments to the Code of Federal Regulations.\nThe Company has. found that the proposed rules \"better reflect\nthe earning capacity of vessels than the present rules, are\nnondiscriminatory, just and equitable.'\nOMB is the coordinating agency for Panama Canal Company toll\nproposals. We have solicited the views of the following\nagencies on the proposal: State, Commerce, Transportation,\nJustice, Treasury, Agriculture, Federal Maritime Commission,\nNational Security Council, and Council of International\nEconomic Policy Mevalso have received unsolicited comments\nfrom members of Congress and the maritime industry (shipping\ncompanies, unions and port authorities) These views will be\ndiscussed below, as well as other issues pertaining to the\nproposal.\nPanama Canal Company Financial Condition and Canal Toll Issues\nThe Panama Canal Company is a wholly-owned Government corporation\nwhose primary purpose is maintaining and operating the inter-\noceanic Canal. From the Canal's tolls and other charges, the\n2\nCompany is expected to be self-sustaining. Additionally, the\nCompany is expected to reimburse the U.S. Treasury for:\n(a) uncovered costs accrued by the Canal Zone Government;\n(b) interest payments relating to original Canal construction\ncosts borne by the U.S. Government; and (c) annuity payments\nmade by the U.S. to the Republic of Panama pursuant to the\nTreaty of 1903, as amended in 1936.\nFor the past five years, the Panama Canal Company has\nexperienced rapidly rising costs and declining traffic. For\nexample, between 1970-1975, the number of transits declined\nfrom 15,500 to 14,700, while operating costs climbed from\n$172 million to $261 million. As a result, the first toll\nincrease since the Canal's 1914 opening was instituted in\nJuly 1974 (+20% in toll rates). Despite the toll increase,\nthe Company's financial condition has continued to deteriorate\nas a result of: (a) continuing cost-of-doing-business increases;\nand (b) traffic downturns in the wake of worldwide economic\nrecession, the diversionary impact of the opening of the Suez\nCanal, and the dampening effect of the 1974 toll increase.\nWhereas the Company had planned to handle 40 ships daily in\nFY 1976, an average of only 36 daily have been transiting the\nCanal to date. The net effect of the financial downturn is\nthat the Company has sustained losses in the past two year\nand is expected to continue to run losses in 1976 and 1977\nas shown below (millions of dollars):\nest.\nest.\n1974 deficit\n1975 deficit\n1976 deficit\n1977 deficit\n$-11.8\n$-6.4\n$-18.0*\n$-38.0*\n*assumes no toll changes, measurement rules amendments,\nor other remedial actions.\nIf approved, the measurement rules amendments would help\nalleviate, but would not eliminate, projected Company deficits\nin 1976 and 1977. The amendments would increase the measurements\nof vessel net tonnage, leading to higher annual toll assessments\non the order of $12-13 million (further discussed below). The\nCompany argues, however, that it is incorrect to equate the\nproposed amendments with a toll increase rather, the purpose\nof the amendments is to redistribute the operating costs of the\nPanama Canal more equitably. In the Company framework of\nthinking, the processes of establishing tolls and changing\nmeasurement rules, although related, are separate. Any positive\nrevenue effects resulting from the proposed amendments would be\naccounted for in computing the need for future toll rate changes\n(i.e., future toll increases would be reduced by the amount of\nadditional revenues gained by the proposed amendments).\n3\nIn fact, either with or without the proposed rules changes,\nthe Panama Canal Company is now indicating that a substantial\ngeneral toll increase will be required in the next 12 months\nto meet the anticipated deficits. This would be the second\ngeneral toll increase in three years. Required toll rate in-\ncreases are shown below. The figures presume the imposition\nof moderate cost-cutting measures and the continued operation\nof the Company on a self-sustaining basis.\n($ in millions)\nMeasurement\nMeasurement\nRules\nRules Not\nApproved\nApproved\nAdditional revenue required\nto meet FY 1977 deficit\n$26\n$38\nFuture required toll increase\n+17%\n+28%\nAdditional revenue required\nto meet FY 1977 deficit as\nwell as recoup FY 1976\ndeficit over five years\n$28\n$42\nFuture required toll increase\n+19%\n30%\nThe Company has pointed out that its statutory authorities\nprovide several alternative means for handling long term\ndeficits. It can: (a) defer payment to the U.S. Treasury\nof interest and/or the net cost of the Canal Zone Government\nto the extent the required amounts are not earned; (b) request\nCongressional authority to waive entirely payment of the net\ncost of the Canal Zone Government; (c) request a separate\nappropriation for the Company to meet losses; or (d) use\navailable borrowing authority up to a maximum of $40 million.\nCompany officials are increasingly talking about the necessity\nof employing these fallback authorities. For example, in a\nJanuary meeting, the Company's Board of Directors authorized\nCompany staff to explore the desirability of using one or\nmore of the authorities in the context of the future 1978\nbudget request. Utilization of the above authorities would\nbe highly undesirable from a budgetary point of view in that\nthey would entail U.S. Government subsidization of potentially\nsizable Company deficits.\nOf course; the future required toll increase can be reduced\nby the extent to which the Company undertakes reductions in\nservices, employee benefits, and planned capital construction\nprojects. The President of the Company cum Governor of the\nCanal Zone Government has already taken measures to cut\nspending, but has shied away from major reductions which would\nlead to strong opposition from Panama Canal employee groups,\n(e.g., elimination of a 15% tropical pay differential).\n4\nImpact of the Proposed Measurement Rules Amendments\nOf the seven substantive amendments, five will increase total\nmeasurement tons, leading to higher toll assessments, and two\nwill lower total assessments. The net effects of the amend-\nments on tolls are shown below:\nCompany Estimates of Annual Tolls Impact of Rules Amendments1/\n($ in thousands)\nShip Type\nMeasurement Rule\nGeneral\nContainer\nAll\nAmendments\nCargo\nShip\nPassenger\nOther2/Total\nAmendments which Increase\nMeasurement tons:\nDeck Cargo\n+578\n+4,332\n+9\n+1,038\n+5,957\nFuel\n+2,290\n+356\n+117\n+2,965\n+5,728\nHatch Exemption\n+209\n+101\n+5\n+477\n+792\nPublic Rooms\n--\n--\n+423\n--\n+423\nWater tanks\n+198\n+1\n+3\n+290\n+492\nAmendments which Decrease\nMeasurement tons:\nBoatswain's Stores\n-118\n-213\n-7\n-641\n-979\nEngr. Shops\n-11\n-8\n-1\n-45\n-65\nAll Flags Tolls Increase\n+3,146\n+4,569\n+550\n+4,083\n+12,348\n% Increase\n+10%\n+28%\n+28%\n+4%\n+98\nU.S. Flag Tolls Increase\n+410\n+1,708\n+59\n+156\n+2,333\n% Increase\n+12%\n+37%\n+16%\n+3%\n+179\n1/\nShipping companies generally believe that the Company's\nestimates of tolls impact are understated\n2/\nIncludes dry bulk carriers, tankers, specialized product\ncarriers.\nMaritime Industry Views\nShipping companies, unions, port authorities and selected\nindustries (e.g., lumber companies) have filed objections with\nthe Panama Canal Company regarding the proposed amendments. The\nmost commonly-cited objections to the amendments have been the\nfollowing:\n--the amendments constitute a \"de facto\" toll increase, the\nimpact of which has not been satisfactorily evaluated.\n5\nthe amendments particularly impact containerships and\nhence are \"discriminatory. Furthermore, because the\nU.S.-flag fleet has more containerships than do\nforeign-flag fleets, U.S. shipping companies sustain\na proportionally greater financial injury.\nthe amendments do not improve the accuracy of the\nmeasurement of ship cargo capacity, and hence are not\nmore equitable.\nthe amendments' impact on tolls will have negative side\neffects; it will:\nfurther reduce Canal traffic and therefore dampen\npositive revenue effects of the amendments.\nincrease ocean freight rates and contribute to\ninflation.\nlead to the abandonment of some shipping services\nand divert cargo passing through North Atlantic\nU.S. ports to cross-continental rail or truck\ntransportation (leading to possible environmental\ndegradation).\nthe amendments, and the perceived toll increases they\ncause, beg the issue of the Company's ability to cut\ncosts and thereby obviate the need for additional\nrevenue.\nThe Company published the amendments in the Federal Register\nin July 1975, received written replies, opened the issue to\nhearings, and in November the Company's Board of Directors\napproved the original recommendations. The maritime industry\nis highly irritated over the fact that the Board approved the\namendments without change, seemingly having ignored the\nindustry's many objections.\nDespite the wide range of objections filed with the Company, the\nmaritime industry is principally concerned with only one amend-\nment the \"on-deck cargo\" amendment. This amendment would\nhave the effect of measuring all on-deck cargo transiting the\nCanal, and assessing tolls accordingly. Currently on-deck\ncargo is excluded from measurement and toll assessment.\nMeasurement by the Company of deck loads of 102 containerships\ntransiting the Canal showed that the net tonnage (and therefore\ntolls) for these ships as a result of the application of the\ndeck cargo rule would increase by 28% in the aggregate, although\nthe net tonnage of U.S.-flag vessels in the group would increase\nby 37%. As shown in the table in the previous section, the\non-deck cargo rule accounts for about half of the annual\nestimated rules toll increase of $12 million.\n6\nTwo major U.S. shipping company associations-- the American\nInstitute of Merchant Shipping (AIMS) and the American\nMaritime Association (AMA) have privately indicated to us\nthat if the on-deck cargo rule were dropped from the package\nof amendments, the opposition of their member companies to\nthe remainder of the amendments would be minimal.\nCongressional Views\nAlthough the Congress has no statutory role relative to the\nestablishment of Panama Canal Company tolls, the maritime\nindustry has generated strong support for its position in both\nthe House and Senate. In the House, Mrs. Sullivan (Chairman\nof the Merchant Marine and Fisheries Committee) and Mr. Metcalfe\n(Chairman of the Panama Canal Subcommittee), as well as 29\nother members of the House, have cosigned a letter to the\nPresident asking that no action be taken on the pending measure-\nment rules amendments until the House has had the opportunity\nto review the measurement formulas in detail at future hearings\n(letter attached). Likewise in the Senate, Senators Magnuson\n(Chairman of the Commerce Committee) and Long (Chairman of\nthe Merchant Marine Subcommittee) have \"join[ed] with Members\nof the House of Representatives who have expressed their\ninterests in this to you and request that no action be taken\non these proposed changes until adequate Congressional review\nof this important subject has been undertaken.\"\nMrs. Sullivan and Mr. Metcalfe have also requested a \"full\ninvestigation\" of the financial situation of the Panama Canal\nCompany by the GAO, and have sent an extensive list of questions\non the anticipated impact of the proposed measurement rules\nto the Company. However, hearings have not yet been scheduled\nin either House or Senate. Company staff report that little\ncongressional action could be expected if the President were\nto delay action on the amendments--that the primary purpose\nof congressional intervention is to obstruct Company action\nwhich would be injurious to the U.S. merchant marine.\nAgency Views\nThe following agencies have expressed no objection to the proposed\namendments: Justice, Treasury, Federal Maritine Commission,\nAgriculture, National Security Council, and Council of Inter-\nNational Economic Policy. Agencies which have expressed: concerns\nare as follows:\n7\nCommerce. The Commerce Department opposes the proposed\namendments and recommends that Presidential approval\n\"be delayed until a thorough assessment of the problems\nwhich are raised by these proposals can be completed. \"\nCommerce reiterates most of the objections raised\nby the maritime industry, along with the following\nadditional points:\nThe amendments deviate from the concepts established\nin 1937 by a Presidentially-appointed committee. The\namendments should be evaluated by a body of the same\nlevel before approval.\nThe amendments adversely impact U.S.-flag containerships,\nthe most competitive element of the U.S.-flag fleet.\nIn the long term, the amendments could result in an\nincreased need for Federal assistance to the U.S.\nmerchant fleet.\nThe on-deck cargo amendment is not precisely defined\nand administration may be difficult.\nTransportation. DOT recommends that \"additional analysis\nwould be desirable before\nissuance of the regulations\"\nbased on the following:\nIf diversion of cargo from ocean carriage to cross-\ncontinential land carriage were to result from the\namendment, there could be benefits to the U.S. railroad\nindustry but disbenefits to the U.S. shipping industry.\nThis should be assessed.\nThe Senate may ratify the 1969 International Convention\non Tonnage Measurement of Ships, which would establish\nnew parameters for measuring shipping tonnages.\nAlthough the law would not enter into force until at\nleast two years later, and although the Company would\nnot be legally required to alter its measurement\nsystem, \"it might seem reasonable for the\nCompany\nto consider developing a system employing the same\nparameters as those used in the Tonnage Convention.\n\"\nState. The State Department advises that the amendments\nhave no effect on the sensitive U.S. treaty negotiations\nwith the Republic of Panama over the status of the Panama\nCanal. State further reports that foreign shipping\ninterests have objected to the amendments and the govern-\nments of Greece, Norway, Spain, Japan, Italy and Sweden\nhave made representations to the Department of State\ncritical of the changes. State concludes that the\n\"complaints should be carefully considered and treated\nappropriately in any final decision. \"\n8\nDiscussion of the Merits and Demerits of the Proposed Amendments\nThe rules of measurement currently employed by the Panama\nCanal Company are based on the principle that canal tolls are\nto be assessed on the \"earning capacity\" of vessels. Earning\ncapacity of vessels is defined as space available for\ncarriage of cargo and passengers. In the most general terms,\nthis determination is made by measuring the volume of the\nspace enclosed by the entire vessel (gross tonnage) and\ndeducting from this total, that space, such as the engine\nroom, which is not available for the carriage of cargo or\npassengers (net tonnage). The assumption is that every net\ncubic foot of below-deck space can be potentially used. A\nship's net capacity, therefore, is currently the sole basis\nfor toll assessments. Net capacity does not consider such\nfactors as volume, weight, or value of cargoes carried\n(utilization of capacity). Because the system entails\nmeasuring the ship instead of the cargo, ships only need\nto be measured once, instead of transit-by-transit, and\nadministration of the system is thereby facilitated.\nThe Panama Canal vessel measurement system, like almost all\nother vessel measurement systems, is derived from principles\noriginally laid down in nineteenth century England by George\nMoorsom. Moorsom established the principle of measuring vessels\nnet capacities as determined by all enclosed (below-deck)\nspaces as measured in cubic feet, divided by 100, SO that one\nton represents 100 cubic feet of space. Almost all vessel\nmeasurement systems start with the Moorsom method for\ndetermining gross tonnage. However, differences often result\nfrom the application of differing exemptions and deductions\nin arriving at net tonnage figures. Panama Canal and Suez\nCanal systems are similar and produce similar net tonnages.\nSix Minor Amendments\nOf the seven substantive measurement rule amendments proposed\nby the Panama Canal Company, six are relatively non-controver-\nsial. These six would alter, in a minor way, existing\nexemptions and deductions for the following spaces: fuel\ntanks, hatchways, water tanks, public rooms on passenger\nvessels, boatswain's stores, and engineer's shops. The first\nfour would have the effect of increasing tonnage measurements.\nThe last two would have the effect of decreasing tonnage\nmeasurements. These are further described below:\nAmendments which increase measurement tons:\nFuel. The amendment would substitute actual\nmeasurement of fuel spaces for the existing\nrule by which the deduction for fuel is normally\ncomputed at 75% of the measured space of the\nengine room.\n9\nHatch Exemption. The amendment would eliminate\nthe current exclusion of the cubical contents of\nhatchways. In modern shin design, hatch covers\nfit over the top of hatchways and the space under\nthe hatch cover is available for cargo.\nWater Tanks. The amendment would eliminate the\ncurrent exclusion of the measurement of water\ntanks used for fresh water for ship use. This\nwould achieve consistency with the treatment of\nother like spaces that are not allowed as\nmeasurement deductions.\nPublic Rooms. The amendment would eliminate the\ncurrent exclusion of the measurements of public\nrooms (e.g., dining rooms, lounges, barber shops,\nswimming pools). This is based on the premise\nthat public rooms are spaces available for the\nuse of the passengers and hence a consistent\napplication of the earning capacity concept\nprecludes deduction of these spaces.\nAmendments which decrease measurement tons;\nBoatswain's Stores. The amendment would permit\nexclusion of measurements for boatswain's stores\non the premise that space used for this purpose\nis unavailable for stowage of cargo, passenger\nuse, or other directly related purposes.\nEngineers' Shops. This amendment would allow\ndeductions of measurements for engineers' shop\nspace over the current arbitrary deduction\nceiling of 50 tons. Actual measurements of\nengineers' shops would determine the applicable\ndeduction.\nThe intent of these six amendments is to avoid \"double counting\"\nof selected ship spaces and/or refine measurement standards in\naccord with changed ship design. None of the above six\nproposed amendments have been strongly opposed by the maritime\nindustry as a whole. However, passenger vessel operators are\nupset over the \"public rooms\" amendment which would increase\ntheir toll assessments by about $550 thousand annually (+288)\nU.S. -flag vessel operators account for only $59 thousand of\nthe total.\nThe On-Deck Cargo Amendment\nCurrently, on-deck cargo (e.g., containerized cargo, stores,\nlivestock) is excluded from measurement and toll assessment.\nThe seventh amendment proposed by the Panama Canal Company\n10\nwould require the measurement of all on-deck cargo for every\nvessel transit. The proposed amendment describes this as\nfollows:\n\"The deck space occupied by the goods thus carried\nshall be determined at the time of the application\nof the vessel for passage through the canal and\nshall be deemed to be the space limited by the\narea occupied by the goods and by straight lines\nenclosing a rectangular space sufficient to\ninclude the goods.\nThe on-deck cargo amendment has generated a great deal of heat\non the part of the maritime industry (e.g., the amendment is\nalleged to be \"arbitrary and capricious\" and \"discriminatory\"\nagainst both containership operators and the U.S.-flag fleet).\nContainerships are the primary carriers of on-deck cargo.\nBy this amendment, if a containershin operator transited the\nCanal with no on-deck containers on one occasion, 50 on\nanother, and 100 on another, he would be charged differently\non each occasion. The Panama Canal Company believes the\namendment is desirable because there is \"no doubt that the\nuse of the deck for deckloads adds to the space of the vessel\navailable for carrying cargo, and hence is a valuable component\nof earning capacity of the vessel required to be measured.'\nFew would disagree with the proposition that, in theory,\non-deck cargo carriage should be subject to toll assessment.\nHowever, the Company's proposal for assessing on-deck cargo\nposes serious problems, principally because it is inconsistent\nwith other Company cargo measurement rules. The inconsistency\nresults from the fact that the on-deck cargo amendment requires\nmeasurement and toll assessment for all cargo actually carried\non deck. Utilization of on-deck space, therefore, would be\nthe basis for toll assessment. However, as previously\nexplained, the existing Panama Canal ship measurement system\nfor below-deck space is based on the principle of net ship\ncapacity, assuming no wasted space resulting from the type of\ncargo carried or manner of carriage and irrespective of the\namount of cargo actually carried on a given transit.\nThe result of the inconsistency is a toll assessment system\nwhich appears to be prejudicial to containership operators.\nMuch of the below-deck space is lost in containerships\nbecause rectangular container cells cannot fully utilize\nthe curved spaces against the hull of the vessel and because\nspaces must be left between containers. As partial compen-\nsation for this lost space, containerships carry containers\non deck. In effect, the containership operator has chosen\n11\nto offset the somewhat reduced carrying capacity of the vessel\nwith greater efficiency in cargo handling. In this light,\nthe proposed amendment does not account for \"lost space\" on\ncontainerships and thereby constitutes a serious deviation\nfrom the concept of measurement which requires tolls to be\nassessed against vessels' actual cargo carrying capacities.\nApproval of the on-deck cargo amendment would penalize this\nform of cargo carriage. It would require continued toll\nassessment for all below-deck space, whether or not utilized,\nand would superimpose a tolls burden for on-deck cargo\ncarriage. In fact, it appears that containership operators\nare already relatively \"over assessed. FY 1975 data indicate\nthat, when recomputed on a dollar-per-ton-carried basis,\ncontainership operators were assessed $2.12 per ton compared\nwith $1.15 for general cargo ship operators.\nBased on the above, it may be appropriate for the Panama\nCanal Company to reevaluate the tonnage measurement system\nto determine if it is prejudicial to certain classes of\ncarriers, and, if so, to recommend remedial actions.\nOptions\n#1. Approve all seven amendments in their entirety.\n#2. Approve all but the on-deck cargo amendment. Request the\nCompany to reevaluate on-deck cargo measurement rules in\nthe context of the overall equities/inequities of the\nexisting measurement system.\n#3. Disapprove all seven amendments. Request the Company to\nfurther study alleged prejudicial aspects of the existing\nmeasurement system.\nDiscussion of Options\nOption #1\nPro\nThe amendments, in the aggregate, improve the tonnage\nmeasurement standards which have been in force for\nthe past 38 years in terms of accuracy and equity.\n-- The amendments add revenues to the Company (until a\ntoll increase is put into effect) in a period in\nwhich the Company's financial situation is seriously\ndeteriorated.\n12\nInsofar as the Company is able to collect additional\nrevenues now, the magnitude of the future general\ntoll increase could be reduced. The smaller the\ngeneral toll increase, the less strenuous will be\nthe opposition to it.\nCon\n-- The appropriateness of the on-deck cargo amendment is\nnot clear. It is inconsistent with the existing\nmeasurement system and appears prejudicial to\ncontainership operators who would suffer a heavy\ntoll burden (+37%).\nApproval of the amendments may give the false\nimpression of curing the Company's financial woes,\nwhereas only a general toll increase can generate\nsufficient revenues to make the Company self-sustaining.\nApproval of the amendments runs counter to expressed\nmaritime industry and congressional requests to the\nPresident. This could lead to congressional action\nto restrict Administration authority relative to\nthe Canal (e.g., make all toll proposals subject to\ncongressional review). This, in turn, could endanger\nthe more important future general toll increase.\nOption #2\nPro\n-- It retains most of the amendments, thereby improving\nthe overall cargo measurement system.\nInsofar as there are justifiable grievances against\nthe on-deck cargo amendment and/or the cargo measure-\nment system as a whole, the issues could be further\nstudied by the Company.\nDisapproval of the on-deck cargo amendment would\nalmost entirely diffuse U.S. maritime industry\ndissatisfaction with the amendments package.\nIt allows Congress to hold hearings on the on-deck\ncargo issue, per congressional requests to the\nPresident. Congressional action to circumscribe\nAdministration authorities would be unlikely.\n13\nCon\nInsofar as approximately $6 million in revenues will\nbe forfeited if the amendment is not approved, the\ndeficit situation of the Company will worsen by a\nlike amount and the amount of the general toll\nincrease will have to be raised accordingly to\naccommodate the loss. The higher the toll increase,\nthe more likely will be strenuous industry opposition\nto it.\nOption #3\nPro\nIt would completely negate maritime industry and\ncongressional criticisms.\nInsofar as the industry and the Congress will have\nbeen mollified on this issue, it may lessen tensions\nrelative to the announcement of a future toll increase\n(although the magnitude of the increase will certainly\nbe an issue of contention).\nCon\n-- The measurement rule anomalies of the current system\nwill be maintained indefinitely.\n-- It may make it more difficult to approve future Canal\ntoll proposals by leading the industry and Congress\nto think that vigorous opposition to such proposals\nwill lead to their rejection by the President.\nInsofar as approximately $12 million in revenues will\nbe forfeited if the amendment is not approved, the\ndeficit situation of the Company will worsen by a\nlike amount and the amount of the general toll increase\nwill have to be raised accordingly to accommodate\nthe loss.\nWARREN O. MAGNUSON, WASH CHAIRMAN\nJOHN o. PASTORE, R.I.\nJAMES B. PEARSON, KANS.\nVANCE MARTKE, IND.\nRCBERT P. GRIFFIN, MICH.\nPHILIP A. HART. MICH.\nHOWARD H. BAKER. JR., TENN.\nLOWARD v. CANNON, NEV.\nTED STEVENS, ALASKA\nRUSSELL B. LONG, LA.\nJ. CLENN BEALL, JR., MO.\nUnited States Senate\nFRANK E. MOSS, UTAH\nLOWELL P. WEICKER, JR., CONN.\nERNEST F. HOL LINGS, S.C.\nJAMES L. BUCKLEY, N.Y.\nDANIEL K. INDUYE, HAWAII\nCOMMITTEE ON COMMERCE\nJOHN V. TUNNEY, CALIF.\nADLAI E. STEVENSON, ILL.\nWASHINGTON, D.C. 20510\nWENDELL H. FORD, KY.\nJOHN A. DURKIN, N.H.\nMICHAEL PERTSCHUK. CHIEF COUNSEL\nS. LYNN SUTCLIFFE, GENERAL COUNSEL\nARTHUR PANKOPF. JR., MINORITY COUNSEL\nDecember 19, 1975\nThe Honorable Gerald A. Ford\nPresident of the United States\nThe White House\nWashington, D. C. 20500\n?\nDear Mr. President:\nGreat concern has been expressed to us over the anticipated\nconsequences on U. S.-flag ocean carriers, particularly container-\nship operators and forest product shippers, resulting from the\nproposed changes in the rules for measuring vessels transiting\nthe Panama Canal.\nThe Panama Canal Company's proposal will actually result in\nthe third increase in Canal toll charges in less than 18 months.\nDespite a large number of written and oral statements presented\nto the company concerning the proposed changes which were published\nin the Federal Register on July 31, 1975, the measurement rules\nchanges have been submitted for your action without modification.\nThere appears to be a substantial number of very serious\nquestions regarding statutory requirements and treaty provisions\nas well as significant economic and transportation issues involved\nin these proposals.\nWe join with Members of the House of Representatives who\nhave expressed their interests in this to you and request that\nno action be taken on these proposed changes until adequate\nCongressional review of this important subject has been under-\ntaken.\nSincerely yours,\nWarren Insurancen\nWARREN G. MAGNUSON, U.S.S.\nNee\nRUSSELL B. LONG, U.S.S.\nK, MS. JOHN RULLIVAN, MO., CHAIRMAN\nTHOMAS L. MERLEY. or o\nPHILIP E. MUFFE. MICH.\nCHIEF CLERK\nJOHN D. DINGELL. MICH\nCHARLES A. MOTHER, own\nFRANCES STILL\nTHOMAS N. DOWNING. VA.\nPAUL H. MCCLOSKEY, JM., CALIF.\nPAUL o. nogring. FLA.\nOLNE SHYDER. KY,\nU.S. Mouse of Representatives\nMINORITY COUNSEL\nJOHN M. MURPHY, N.Y.\nEDWIN b. FORSYTHE N.J.\nWALTER B. JONES. N.C.\nPICMAE 8. (PETE) DUTONT, DEL\nCommittee on\nRICHARD N. SHAROOD\nPOSTRT L. LEGGETT, CALIF.\nDAVID C. TREEN, LA.\nMAHIO BIAGGI. N.T.\nJOEL PRITCHAND, WASH.\nMerchant Stlarine and Fisheries\nCLENN M. ANDERSON, CALIF.\nDON TOUNG. ALASKA\nI (KIKA) DE LAGARIA, TEX.\nROBERT r. BAUMAN, MO.\nNALPH H. METCALE ILL.\nNORMAN F. LENT. N.Y.\nRoom 1334, Longworth Douse Office Unilding\nJOHN M. BREAUX, 1A.\nMATTHEW J. RINALDO. N.J.\nFRED D. MOONEY. PA.\nDAVID r. EMERT, MAINE\nPAUL B. SARBANES, MD.\nWashington, D.C. 20515\n00 GINN, GA.\nDLRRY E. STUDDS, MAS3,\nDAVID R. BOWEN, MISS.\nDecember 8, 1975\nJOSHUA EILBERO. PA.\nRON DE LUGO. V.I.\nCARROLL HUDBARD, JR., KY.\nDON BONKER, WASH.\nLES AUCOIN, OREG.\nNORMAN E. D'AMOURS, N.H.\nJERRY M. PATTERSON. CALIF,\nLEO ZEFEHETTI. N.Y.\nJAMES L OBERSTAR, MINN.\nThe President\nThe White House\nWashington, D. C.\nDear Mr. President:\nWe have been advised that the Board of Directors\nand Stockholder of the Panama Canal Company have\ntransmitted for your approval certain changes to their\nRules for Measurement of Vessels. Since historically\nit has been the responsibility of the President of the\nUnited States to gauge the effect of changes in Panama\nCanal rules on the national transportation policy of\nthe United States, we wish to communicate to you some\nof our concerns which we feel you should be cognizant\nof in making your decision on this matter. The pur-\npose of this letter is to request that you sign the\nproposed rules only after a thorough review of the\nnational economic consequences of these changes and\nupon the advice of those agencies in the Executive\nBranch who can best speak to the effect of the proposed\nrules on this Nation's commerce.\nWe are increasingly concerned with the financial\nwell-being of the Canal. In July of 1974, a 19.7 per-\ncent toll rate increase was approved, the first since\nthe opening of the Canal. We should note that no toll\nincrease was required during these many years since the\nconstantly escalating number of vessel transits and\nincreasing vessel size generated sufficient revenue to\nkeep ahead of constantly rising Canal Company costs:\nThe President\nPage Two\nDecember 8, 1975\nThe need for the 1974 general increase in the toll\nrate was premised upon certain accounting changes made\nby the Company, decreasing vessel transits, and increasing\noperating and overhead costs. We were assured it was\nnecessary if the Company were to continue in a \"break-even\"\nstatus, as is required by statute. The additional\nfinancial burden placed on America's commerce was estimated\nto be many millions of dollars annually. It is noted\nthat the current proposed rules change would result in an\nadditional 37 percent assessment for deck cargo on con-\ntainerships. Our carriers simply cannot afford these\nadded operating costs, and the current proposed rules\ncould be much more detrimental to U. S. commerce than the\n1974 increase.\nThe proposed rules in question represent another\nde facto toll rate increase, although the burden would\nbe largely borne by certain types of vessels, notably\nU.S.-flag containerships. While only eight percent of\nthe annual transits of the Canal are made by yessels of\nU.S.-flag registry, approximately 37 percent of the con-\ntainerships which transit the Canal are .S.-flag vessels.\nThe average containership which transits the Canal today\npays about $19,000 in tolls. Under the proposed measure-\nment rules, it would pay approximately $26,000. Since\nthe Company has not yet prepared and released its fiscal\nyear 1975 report, except for traffic statistics, it is\nnot now possible to assess either the increased revenue\nresulting from the 1974 toll increase or the necessity\nfor these proposed rules. We do know that vessel transits\nand cargo tonnage are continuing to decline, and that\nCompany costs are continuing to rise. We believe that\nsteps can and must be taken to reverse these trends.\nAt the time of the tolls increase last year, the\nCommittee did not take any action since we felt the in-\ncrease was reasonable inasmuch as it was the first and\nonly increase since the Canal has been in existence.\nThe present proposal to change the Canal Company's Rules\nfor Measurement of Vessels presents a different picture,\nhowever. Among other things, it will affect the competi-\ntive balance between the continental railroads and the\nwater carrier Canal users, and the burden will fall most\nheavily on several U.S.-flag container and passenger ship\noperators. In addition, if this change is approved, we\nThe President\nPage Three\nDecember 8, 1975\nnote the Canal Company's continuing emphasis on the\nalleged need for increased revenues, which suggests that\nthe Company may propose another tolls increase in the\nnear future.\nWe anticipate that the Committee and its Panama\nCanal Subcommittee will be reviewing the toll and tonnage\nmeasurement formulas in some detail at future hearings.\nWe will be particularly interested in evaluating the\nadverse impact of the proposed rules on the well-being of\nthe U. S. merchant marine and American commercial inter-\nests. We will keep you advised of our progress and plans,\nand again ask that no action be taken at this time on\nthe pending measurement rules change.\nSincerely,\nLemor TV. Succivan\nLeonor K. (Mrs. John B.) Sullivan\nChairman\nReeph H.Miterlys\nRalph H. Metcalfe\nIll Biogs Chairman Subcommittee Juln on m Panama murphy Canal\nJas Parthund\nPaul Sarbaner Edin Dytho\nW altriB Joses Forus n Dawney\nThe President\nPage Four\nDecember 8, 1975\nhw & Befutte\n2 de\nDavidR. Bewen\nJohn Buanx\nJoshua Ecberg\nBe Sinn\nCanoll Hubbard Matter J. Revalls\nalone Treen Jan ha Gugo\nDadF.Eney\nton Boaver\nDear Now\nNorman F. Lent\nresarcime\nDEMOCRATS\nDEMOCRATS\nSigned\nDid not Sign\nLeonor K. Sullivan, MO\nThomas L. Ashley, OH\nJohn D. Dingell, MI\nRobert L. Leggett, CA\nThomas N, Downing, VA\nGerry E. Studds, MA\nPaul G. Rogers, FL\nJerry M. Patterson, CA\nJohn M. Murphy, NY\nWalter B. Jones, NC\nMario Biaggi, NY\nGlenn M. Anderson, CA\nE (Kika) de la Garza, TX\nRalph H. Metcalfe, IL\nJohn B. Breaux, LA\nFred B. Rooney, PA\nPaul S. Sarbanes, MD\nBo Ginn, GA\nDavid R. Bowen, MS\nJoshua Eilberg, PA\nRon de Lugo,\nCarroll Hubbard, Jr., KY\nDon Bonker, WA\nLes AuCoin, OR\nNorman E. D'Amours, NH\nLeo C. Zeferetti, NY\nJames L. Oberstar, MN\nREPUBLICANS\nREPUBLICANS\nSigned\nDid not Sign\nPaul N. McCloskey, Jr., CA\nPhilip E. Ruppe, MI\nEdwin B. Forsythe, NJ\nCharles A. Mosher, OH\nDavid C. Treen, LA\nM. G. Snyder, KY\nJoel Pritchard, WA\nPierre S. du Pont IV, DE\nDon Young, AL\nRobert E. Bauman, MD\nNorman F. Lent, NY\nMatthew J. Rinaldo, NJ\nDavid F. Emery, ME\nRESOLUTION\nWHEREAS, pursuant to the authority of sections 411 and 412 of\nTitle 2 of the Canal Zone Code, (76A Stat. 27), at a special meeting\non July 28, 1975, the Board of Directors of the Panama Canal Company\nproposed certain amendments to the rules for measurement of vessels\nfor the Panama Canal for the purpose of more accurately reflecting\nthe earning capacity of vessels using the Canal; and\nWHEREAS, at the special meeting of the Board of Directors on\nJuly 28, 1975, pursuant to the provisions of the applicable regulations\nof the Panama Canal Company, five members of the Board of Directors\nwere designated as a panel to conduct a public hearing on the proposed\nchanges in the measurement rules; and\nWHEREAS, notice of the proposed amendments was published in the\nFederal Register on July 31, 1975, (40 FR 32140) and a correction was\npublished in the Federal Register on August 11, 1975, (40 FR 34619); and\nWHEREAS, the notice of the proposed amendments of the measure-\nment rules invited interested parties to participate in the rulemaking pro-\ncess through submission of written data, views or arguments, and sub-\nmission of supplementary data, views or arguments at a public hearing\nto be held in Washington, D. C on October 6, 1975; and\nWHEREAS, in accordance with the notice and the provisions of the\nCompany's regulations governing procedures for rulemaking, interested\nparties did submit written data, views and arguments and, at the public\nhearing on October 6, 1975, submitted supplementary data, views and\narguments in reference to the proposed amendments of the measurement\nrules; and\nWHEREAS, the panel designated by the Board of Directors to con-\nduct the hearing has submitted its report, including the written data\nsubmitted by interested parties and a full transcript of the hearing, with\ncopies of documents submitted at the hearing and thereafter within the\ntime fixed by the panel, and the recommendations of the panel with\nrespect to the proposed amendments of the measurement rules; and\nWHEREAS, all relevant matters presented have been considered by\nthe Board of Directors; and\nWHEREAS, the Board of Directors, having given careful consideration\nto the assessment of the environmental impact of the proposed amendments\nof the measurement rules, has determined that such amendments would not\nsignificantly affect the quality of the human environment;\nNOW, THEREFORE BE IT RESOLVED, That, in accordance with sections\n411 and 412 of Title 2 of the Canal Zone Code, (76A Stat. 27) the rules\nof measurement of vessels for the Panama Canal prescribed by the President\nby Proclamation 2248 of August 25, 1937, be amended upon approval by the\nPresident, but not earlier than six months from July 31, 1975, the date of\n2\npublication of notice of the proposed change in the Federal Register,\nby amendment of Part 135 of Title 35 of the Code of Federal Regulations\nas follows:\nPART 135 -- RULES FOR MEASUREMENT\nOF VESSELS\n$ 135.82 [Amended]\nby multiplying together the length,\n1. In § 135.82 the references to § 135.86\nbreadth and depth of said rectangular\nare amended to read $ 135.85.\nspace or spaces and dividing the prod-\n$ 135.83 [Amended]\nuct by 100 or 2.83, according as the meas-\nurements are taken in feet or meters.\n2. In the last line of $ 135.83 the ref-\nNothing in this section shall in any\nerence to $ 135.88 is amended to read\nmanner affect the provisions of §§ 135.-\n$ 135.85.\n41-42; 135.61-63; or 135.81-88.\n3. Section 135.85 is revised to read as.\n§ 135.142 [Amended]\nfollows:\n6. In § 135.142 the reference to 135.-\n171-135.182 is amended to read §§ 135.-\n§ 135.85 Certain spaces between inner\n171-135.183.\nand outer plating of double bottom.\n§ 135.175 [Amended]\nSpace or spaces between the inner and\nouter plating of the double bottom of a\n7. In § 135.175 the last sentence is\nvessel shall be exempted from measure-\namended by adding the words \"or fuel\"\nment, except when used, designated or\nbetween the words \"cargo\" and \"the\nintended for carrying cargo or fuel; but\ntonnage.\"\nthe tonnage of such spaces within the\n8. Following $ 135.182 a new § 135.183\ndouble bottom as are or may be used for\nis added, reading as follows:\ncarrying cargo or fuel shall be deter-\n§ 135.183 Hatchways.\nmined and included in the gross tonnage.\nThe cubical contents of hatchways\nThe tonnage of double bottom tanks\nshall be obtained by multiplying the\navailable for cargo or fuel may be\nlength and breadth together and the\nobtained by multiplying the liquid-ca-\nproduct by the mean depth taken from\npacity weight by the proper conversion\nthe top of beam to the underside of the\nfactor to get tons of 100 cubic feet.\nhatch cover.\n§ 135.86 [Revoked]\n§ 135.211 [Amended]\n4. Section 135.86 is revoked.\n9. In § 135.211 the reference in the\n5. Following § 135.112 a new $ 135.113,\nfourth line to 5 135.132 is amended to\npreceded by the undesignated center\nread $ 135.183.\nheading \"DECK CARGO,\" is added, reading\nas follows:\n§ 135.271 [Amended]\nDECK CARGO\n10. In $ 135.271 the reference in the\n$ 135.113 Deck cargo.\nsecond line to $ 135.286 is amended to\nread § 135.285.\nIf any ship carries stores, timber,\nlivestock, containers, or other cargo in\n$ 135.273 [Amended]\nany space upon an open deck not perma-\n11. In $ 135.273 the reference in the\nnently covered or in spaces exempted\nlast line to $ 135.286 is amended to read\nunder paragraphs (a) and (b) of § 135.-\n$ 135.285.\n82, all tolls and other charges payable\n12. In § 135.274. paragraph (c) is\non the vessel's net tonnage shall be pay-\namended to read as follows:\nable upon the vessel's net tonnage (as\ndefined below in §§ 135.271-287 and\n$ 135.274 Spaces for stowage of stores\n§§ 135.321-327) increased by the ton-\nor cargo, not deducted.\nnage of the space occupied at the time\nat which the tolls or other charges be-\n(c) On supply ships, stores, supplies\ncome payable by the goods carried upon\nof all kinds, distilling machinery and\ndeck and not permanently covered or\ndistilled water, machines, tools and ma-\nclosed-in. The deck space occupied by\nterial for repair work, mines and mining\nthe goods thus carried shall be deter-\nmaterials, torpedoes, arms, and ammuni-\nmined at the time of the application of\ntion.\nthe vessel for passage through the canal\n13. Section 135.231 is revised to read\nand shall be deemed to be the space lim-\nas follows:\nited by the area occupied by the goods\nand by straight lines enclosing 2 rectan-\ngular space sufficient to include the\ngoods. The tonnage of the space occu-\npied by the goods shall be ascertained\n3\n§ 135.281 Spaces used for boatswain's\n§ 135.327 Propelling power deductions,\nstores, deducted.\nhow made.\nSpaces used exclusively for boatswain's\nThe deductions made for propelling\nstores, including paint and lamp rooms,\npower provided for in $5 135.323-135.325\nshall be deducted. The deduction of\nshall be made by adding to the space\nspaces under this section shall be rea-\noccupied by the engine room as defined\nsonable in extent.\nin !! 135.352-135.354 and 135.332, the\n14. Section 135.282 13 revised to read\nspaces available for fuel as defined in\nas follows:\n§§ 135.390 and 135.391.\n§ 135.232 Spaces used for engineer's\n21. The undesignated center heading\nshops, deducted.\npreceding $ 135.351 is amended to read\nSpaces used exclusively for engineer's\nas follows:\nshops shall be deducted. The deduction\nSPACE OCCUPIED BY ENGINE ROOM\nof spaces under this section shall be rea-\nsonable in extent.\n§ 135.351 [Revoked]\n15. In § 135.285 the heading of the sec-\n22. Section 135.351 is revoked.\ntion and paragraph (a) are revised to\n23. In $ 135,352 the last four sentences\nread as follows:\nare revised to read as follows:\n§ 135.285 Water ballast spaces, de-\n§ 135.352 What understood by space\nducted.\noccupied by engine rooms.\n(a) Water ballast spaces, other than\nWhen 2 portion of the space\nspaces in the vessel's double bottom, shall\nwithin the boundary of the engine or\nbe deducted if they are adapted and used\nboiler room is occupied by a tank or\nonly for water ballast, have for entrance\ntanks for the storage of fresh water,\nonly ordinary circular or oval manholes\nlubricating oil, or fuel, including settling\nwhose greatest diameter does not exceed\ntanks, the space considered to be within\n30 inches, and are not available for the\nthe engine room shall be reduced by the\ncarriage of cargo, stores, or fuel. Spaces\nspace taken up by such tanks. Installa-\nthat would otherwise qualify as water\ntions not strictly required for the work-\nballast except that they are also used\ning of the engines or boilers are not to\nfor fuel for the vessel's own use shall be\nbe included in the engine room measure-\nregarded as part of the vessel's fuel space\nment no matter where situated but given\nas defined in § 135.390.\nseparate deductions when they qualify\nunder §§ 135.271-135.285 and are listed\nS 135.286 [Revoked]\nunder the appropriate item on page 2 of\nthe Panama Canal Certificate.\n16. Section 135.286 is revoked.\n24. In $ 135.353 the last sentence is\n17. Section 135.287 is revised to read\nrevised to read as follows:\nas follows:\n$ 135.287 Marking and use of deducted\n§ 135.353 Manner of ascertaining cubi-\ncal content of spaces occupied by en-\nspaces.\ngine room.\nEach of the spaces enumerated in\nAdd such contents, as well as\n$5 135.275-135.285, unless otherwise spe-\nthose of the space occupied by the shaft\ncifically stated, shall be subject to such\ntrunk and by any donkey engine and\nconditions and requirements as to mark-\nboiler located within the boundary of the\ning or designation and use or purpose\nengine room or of the light and air cas-\nas are contained in the navigation or reg-\ning above the engine room and used in\nistry laws of the several countries, but\nconnection with the main machinery for\nno space shall be deducted unless the use\nto which it is to be exclusively devoted\npropelling the ship, to the cubical con-\nhas been appropriately designated by of-\ntents of the space below the crown of the\nficial marking. In no case, however, shall\nengine room; divide the sum by 100 or\nan arbitrary maximum limit be fixed to\nby 2.33, according as the measurements\nthe aggregate deduction made under\nare taken in feet or meters, and the re-\n§§ 135.271-135.285.\nsult shall be deemed to be the space\n§ 135.322 [Amended]\noccupied by the engine room for pur-\nposes of calculating the deduction for\n18. In $ 135.322 the reference to § 135.-\npropelling power.\n286 in the heading and in the second line\n25. Section 135.354 is revised to read\nof the section is amended to read is 135\nas follows:\n235.\n§ 135.354 Manner of ascertaining cubi-\n§ 135.324 [Amended]\ncal content of spaces occupied by en-\n19. In § 135.324 the reference to\ngine room; where engines and boilers\n§§ 135.331-135.333 is amended to read\nare in separate compartments.\n§§ 135.252-135.354 135.382.\nIf in any ship in which the space for\n20. Section 135.327 is revised to read\npropelling power is to be measured the\nas follows:\nengines and boilers are in separate com-\npartments, the contents of each com-\npartment shall be measured separately\n4\nin like manner, according to the above\nS 135.412 [Amended]\nmethod; and the sum of the tonnage of\nthe spaces included in the several com-\n20. In s 135.412 the words and figures\npartments shall be deemed to be the\nin the second. third, and fourth lines\nspace occupied by the engine room for\n\"other than fuel spaces deducted under\npurposes of calculating the deduction\n§§ 135.351-135.354\" are revoked.\nfor propelling power.\n30. Section 135.511 is revised to read\nas follows:\n§ 135.381 [Revoked]\n§ 135.511 Administration of rules.\n26. Section 135.381 and the undesig-\nnated center heading preceding that sec-\nThe rules of measurement provided in\ntion reading \"PROPELLING POWER DEDUC-\nthis part shall be administered by the\nTION FOR VESSELS WITH FIXED BUNKERS,\nPresident of the Panama Canal Com-\nOR HAVING FUEL-On COMPARTMENTS\npany.\nTHAT CANNOT BE USED TO STOW CARGO OR\n[FR Doc.75-31475 Filed 11-20-75;8:45 am]\nSTORES\" are revoked.\n§ 135.383 [Revoked]\n27. Section 135.383 is revoked.\n28. Two new sections numbered\n§§ 135.390 and 135.391, preceded by an\nundesignated center heading \"SPACES\nAVAILABLE FOR CARRIAGE OF FUEL\" are\nadded, reading as follows:\nSPACES AVAILABLE FOR CARRIAGE OF FUEL\n$ 135.390 Spaces available for the car-\nriage of fuel.\nThe spaces available for the carriage\nof fuel will include the actual volume of\ntanks or fixed compartments for the\nstorage of lubricating oil or fuel, includ-\ning settling tanks, which cannot be used\nto stow cargo or stores and which have\nbeen certified Ly official marking to be\nspaces for the vessel's own fuel. Dual\npurpose fuel tanks whose only other use\nis for the carriage of water ballast will\nbe included in the fuel deduction pro-\nvided they have been included in the\ngross tonnage and qualify in all other\nrespects for a deduction.\n§ 135.391 Manner of ascertaining cubi-\ncal contents of spaces available for\nthe carriage of fuel.\nThe cubical contents of the above-\nnamed spaces available for the carriage\nof fuel shall be ascertained in accordance\nwith the following provisions: For each\nfuel tank or compartment. measure the\nmean length. Ascertain the area of three\ntransverse sections of the ship (as set\nforth in §§ 135.141 or 135.143-135.241 for\nthe calculation of the gross tonnage) to\nthe deck which covers the tank or com-\npartment. One of these three sections\nmust pass through the middle of the\naforesaid length, and the two others\nthrough the two extremeties. Add to the\nsum of the two extreme sections four\ntimes the middle one, and multiply the\nsum thus obtained by the third of the\ndistance between the two section. This\nproduct, divided by 100 if the measure-\nments are taken in English feet, or by\n2.83 if they are taken in meters, gives\nthe tonnage of the spaced measured.\nWhen they cannot be readily measured,\nthe tonnage of tanks may also be ob-\ntained by using liquid capacity times the\nconversion factor with one-sixth off for\nframes in case of peak tanks and one-\ntwelfth off in case of wings or deep tanks.\n5\nBE IT FURTHER RESOLVED, That the Secretary of the Panama Canal\nCompany cause notice of the adoption of the amendments of the mea-\nsurement rules to be published in the Federal Register in the form pre-\nscribed by applicable laws and regulations.\nBE IT FURTHER RESOLVED, That upon publication of the said notice\nof amendment of the measurement rules in the Federal Register, the\nStockholder of the Panama Canal Company transmit the amendments of\nsaid rules to the President for his approval.\nApproved except for Section 135.113 which would provide for\nthe inclusion in net tonnage of the space occupied\nby deck cargo:\nDate:\n6\nTHE WHITE HOUSE\nWASHINGTON\nDear Mr. Secretary:\nPursuant to Section 411 of Title 2 of the Canal Zone Code, I have\nreviewed the request of yourself and the Panama Canal Company regarding\nrules of measurement of vessels transiting the Panama Canal.\nI have approved the proposed amendments with the exception of 35 CFR\n135.113, the provision for the inclusion in net tonnage of space\noccupied by on-deck cargo. In principle, I concur that on-deck\ncargo should be subject to toll assessment, like below-deck cargo.\nI am concerned, however, that this proposed amendment may tend to\ndiscriminate against containership operators. I note, for example,\nthat 1975 data show that toll assessments per ton carried were $2.12\nfor containerships compared with $1.15 for general cargo ships. The\non-deck cargo amendment would dramatically increase containership\ntoll assessments and therefore increase this disparity. I encourage\nyou and the Company to further review the tonnage measurement\nsystem to determine if it is prejudicial to certain classes of\ncarriers and, if so, to recommend remedial measures.\nI am also greatly concerned over the Panama Canal Company's financial\ncondition, generated by rapidly rising costs and declining vessel\ntransits. Recognizing that the Panama Canal Company and Canal Zone\nGovernment are actively seeking to restrain cost increases, I\nnevertheless request that your office and the Company determine\nwhere further reductions can be taken. These reductions are necessary\nto retain the Company's strict self-sustaining financial status and to\nminimize any general toll increase which may be needed. Your review\nshould encompass both capital construction and operating expenses of\nthe Panama Canal Company and the Canal Zone Government.\nRespectfully,\nHonorable Martin R. Hoffman\nSecretary of the Army\nWashington, D. C. 20310\nTHE WHITE HOUSE\nWASHINGTON\nDear Mrs. Sullivan:\nThis is in further reply to your December letter to me regarding the\nmeasurement rule amendments proposed by the Panama Canal Company\nand the Secretary of the Army.\nI have carefully reviewed the issues. For the reasons cited in my\nletter to the Secretary of the Army (copy attached), I have approved\nthe proposed amendments with the exception of the so-called \"on-deck\ncargo\" amendment. As you know, this is the most important of the\namendments proposed for my approval.\nAs you will note, I have encouraged the Secretary of the Army and\nthe Panama Canal Company to review further the tonnage measurement\nsystem to determine if it is prejudicial to certain classes of\ncarriers, and if so, to recommend remedial action. This action\nalso will provide your committee the opportunity to review issues\npertaining to the Company's toll structure and financial status,\nas the committee finds appropriate.\nRespectfully,\nHonorable Leonor K. Sullivan\nChairman\nMerchant Marine and Fisheries\nHouse of Representatives\nWashington, D. C. 20515\nAttachment\nCC: Honorable Ralph H. Metcalfe\nTHE WHITE HOUSE\nWASHINGTON\nDear Mr. Chairman:\nThis is in further reply to your December letter to me regarding the\nmeasurement rule amendments proposed by the Panama Canal Company and\nthe Secretary of the Army.\nI have carefully reviewed the issues. For the reasons cited in my\nletter to the Secretary of the Army (copy attached), I have approved\nthe proposed amendments with the exception of the so-called \"on-deck\ncargo\" amendment. As you know, this is the most important of the\namendments proposed for my approval.\nAs you will note, I have encouraged the Secretary of the Army and the\nPanama Canal Company to review further the tonnage measurement system\nto determine if it is prejudicial to certain classes of carriers,\nand if so, to recommend remedial action. This action also will\nprovide your committee the opportunity to review issues pertaining\nto the Company's toll structure and financial status, as the\ncommittee finds appropriate.\nRespectfully,\nHonorable Warren G. Magnuson\nChairman\nCommittee on Commerce\nUnited States Senate\nWashington, D. C. 20510\nAttachment\nCC: Russell B. Long\nTHE WHITE HOUSE\nWASHINGTON\nDate April 16,1976\nTO:\nTHE PRESIDENT\nFROM: John G. Carlson\nPer your request\nApril 16, 1976\nINTERVIEW OF AQUILINO BOYD\nFOREIGN MINISTER OF PANAMA\nON THE\nCBS MORNING NEWS\n7:41 A.M. EST\nQUESTION: Dr. Boyd, you heard what Ronald Reagan\nhas to say. What do you have to say?\nMR. BOYD: I think that without trying to mingle\ninto the political campaign of the United States, since\nthis is a very important issue for my country, I must say\nthat Mr. Reagan is willfully deceiving the people of the\nUnited States.\nOne clear proof of this is that if you are born\nin the Canal zone, you don't become automatically a citizen\nof the United States. The United States only bought rights\nfor specific purposes in Panama, for the construction,\nmaintenance and protection of the Panama Canal. Panama has\nnever given up sovereignty. What we are now doing is\nnegotiating within a reasonable time of duration for the\nreversal to Panama of the jurisdictional rights that we\ngranted to the United States in the treaty that was approved\nin 1903.\nQUESTION: What effect is the appearance of this\nissue as a major campaign issue going to have on the conclusion\nof the treaty?\nMR. BOYD: Well, I think that that all depends on\nthe outcome of the political campaign in the United States.\nI think that Dr. Kissinger and Ambassador Bunker are conducting\nthe negotiations according to a framework established in the\nso-called eight-point tactics in your agreement that was\ngoing to serve as a guideline for this negotiations.\nThe basic points are the obligation of the 1903\ntreaty and the perpetuity clause, which must be changed for\na'fixed period of time of duration for a new treaty.\nPage 2\nQUESTION: In other words, the Canal and the zone\nmust, at the end of the expiration of the treaty, revert to\nPanama.\nMR. BOYD: Definitely. We consider the Canal\nzone of Panama is an anachronism that can now take top\nplace in the modern world. You have witnessed the decoloni-\nzation of the whole continent of Africa, and this is an enclave\nthat has all the characteristics of a colony, a Government\nwithin a Government that divides my country in two, and\naccording to a charter of the United States, with which you\nare well familiarized, this is an obstruction to the unity\nand to the territorial integrity of my country. I am very\nhopeful of the outcome of this negotiation.\nQUESTION: But I think one of the problems in the\nUnited States is that a great many people feel if the U.S.\nlost control of the zone the U.S. Navy, for instance, might\nnot be able to transit the Canal whenever it chose to. How\ncould you guarantee that?\nMR. BOYD: Well, there are many ways to guarantee\nthat the United States Government will always have free\npassage at reasonable ports like all other nations of the\nworld without any type of discrimination. I think that\nthrough the United Nations, through the Organization of\nAmerican States, we can secure the American people on the use\nof the Canal that Panama intends to have the neutral status\non the Canal that should be respected by all countries in the\nworld.\nQUESTION: The White House says that if the new\ntreaty is not signed, or if it is delayed, that there may very\nwell be riots again in Panama.\nMR. BOYD: I am afraid this is a very explosive\nsituation that we are having in Panama, and people like Ronald\nReagan, in a very irresponsible manner, are inflaming patience\nin my country. I think that we have to diffuse this explosive\nsituation but by negotiation, by negotiating within the next\n12 months, the new Canal treaty that would be fair for both\ncountries.\nI think the backbone of the negotiations is to find\na reasonable period of time of duration for the treaty. We\nthink that the actual Government is in a position and the\nleader of the Government, General Torrijos, already has stated\nthat a period that will go until the end of the year will be\nacceptable by Panama.\nPage 3\nThat means that the United States will hold control\nfor the operation and the defense of the Canal until the turn\nof the century. When you witnessed yesterday the signing\nbetween Greece and the United States of a treaty for a four-\nyear military base, that is going to cost $700 billion for\nUnited States taxpayers.\nWhen you witness the signing of the treaty last\nmonth with Turkey for $1 billion, when you witnessed in\nFebruary of this year the signing with Spain of a treaty\nthat will cost one thousand two hundred million dollars to\nthe taxpayer, is money, In Panama, the Canal has been a\nFederal agency that has subsidized the Merchant Marine of\nthis country.\nQUESTION: I am afraid we have run out of time.\nForgive me, we must end this.\nEND\n(AT 7:49 A.M. EST)"
}