Ask the Scholar
Document scope · 1 page
Scholar
Ask about this object, its catalog metadata, its source description, or the page inventory.
For page-specific OCR and visual context, open one of the page chats.
Scholar Source Context
Document identity
localId
6283041
label
Panama Canal Treaty Negotiations: January - April 16, 1976
core
doc
dtoType
document
citationUrl
pageCount
1
Source metadata
id
6283041
sourceUrl
contentType
document
title
Panama Canal Treaty Negotiations: January - April 16, 1976
citationUrl
collections
White House Special Files Unit Files
Issue Decision Papers for the President
subjects
Panama Canal (Panama)
Treaties
thumbnailUrl
largeImageUrl
imageCount
1
hasImages
yes
source
import
hasTranscription
no
Source extras
naId
6283041
coverageEndDate
day
16
logicalDate
1976-05-16
month
5
year
1976
coverageStartDate
logicalDate
1970-06-01
month
6
year
1970
levelOfDescription
fileUnit
recordType
description
ocrSource
nara-archive
Single page context
seq
1
pageIndex
0
type
document
mediaId
f5131a39cfd0ae15
ocrText
The original documents are located in Box 6, folder "Panama Canal Treaty Negotiations:
January-April 16, 1976" of the White House Special Files Unit Files at the Gerald R. Ford
Presidential Library.
Copyright Notice
The copyright law of the United States (Title 17, United States Code) governs the making of
photocopies or other reproductions of copyrighted material. Gerald Ford donated to the United
States of America his copyrights in all of his unpublished writings in National Archives collections.
Works prepared by U.S. Government employees as part of their official duties are in the public
domain. The copyrights to materials written by other individuals or organizations are presumed to
remain with them. If you think any of the information displayed in the PDF is subject to a valid
copyright claim, please contact the Gerald R. Ford Presidential Library.
PROTERY (i) YHE MASED
10:12 A.M. CST
/PRIL 7, 3976
PRIDAY
In the Crystal Ballroom
At the Mare Plaza Notel
Milesukee, Wisconsin
THE PRESIDENT: Thank you very such, Mr. Thompson.
If I could take one minute.
Flying out here this morning I learned that the
Department of Lebor issued come more good economic news,
Thas indicated that the unexployment figure went down
again for the month of March to 7.5 percent. I ack you
to compare that with 8.9, as I recell, in May of 1975.
The most encouraging news was the fact that this
report indicates that 86,700,000 people are maintally
employed -- the highest number of people employed in the
history of the United States -- and since March of last
year we have added 2,600,000 nore jobs in the United States,
So WE are making real progress in reducing unemployment
and, at the same time, increasing employment.
With that, I will be glad to answer any questions,
QUESTION: No. President, I really have two
questions, if you will.
FORD
Milwoukee has been undered to integrate its
public schools. Do you have any thoughts on how to achieve
racial integration?
AMERICA
THE PRESIDENT: Well, I have always believed that
the Constitutional right of equality must be protected by
the courts of the land and by all other public officials.
on the other hand, I do not believe that court ordered
forced Lusing TO schieve moial balance is the right vey
to net quality counation.
PR have ample evidence that in those instances
where it her been applicd--court ordered forced busing--
there has not !men an increase in quality Aducation. It in
my belief that there is a better way to improve educational
opportunities and, at the same time, to improve the
integration of our society 30 guaranteed by the Constitution.
The Doch Amendment, which was passed by the Congress
in 1974 and sirace by no, provides a series of stops whereby
va CER desagements and, at the sure time, improve educational
opportunity lath an emphasis on the neighborhood mohools.
MORE
Digitized from Box 6 of the White House Special Files Unit Files at the Gerald R. Ford Presidential Library
because that is i. respons.ibility of the Judicial system,
was .') vaser th ⑉814 of office THAT 1 160%
have to enforce Un 159 ii! decided by the cuarts, but H
you want quality education, which ] Think He all want,
court ordered forced busing is not the best remedy,
QUESTION: Every indication WC have says that
you will win in Wisconsin, How do you prodict that you will
do on April 07
THE PRESIDENT: I always assume -- I think it
is true here in Wisconsin -- that we will win, but I am
not noing to get in any numbers game. It is a hard bottle.
1 think WC have the affirmative programs and affirmative
policies both at home and abroad, and ) believe that i:
majority of the people voting in the Republicen primary
in Hisconsin will support By candidacy,
QUESTION: Mr. President, in regard to the good
job news, now there is a Teamsters strike that might cloud
up the job picture, Bow long will you wait before
invoking the Taft-Hartley Act as the talks progress?.
THE PRESIDENT: We are counting on the labor-
management negotiations to settle the differences. 1 have
been in constant communicationwith the Secretary of Labor,
Mr. bill Usery, who is working with both Jahor and management
trying to get an agreement. As is matter of fact, I talked
to his last night late and he called we thin morning 1:8
we arrived here in Milwaukee, and no settlement has been
agreed 10, but progress is being made and I don't think
it is advisable for me to comment as long as the two parties
are negotiating.
I am optimistic and hopeful and, therefore, it
is my belief that the proper procedure is to let the
negotiations take their course and 3 think a settlement
will be accomplished.
QUESTION: Mr. President, Governor Reagen has
raised questions about the sovereignty of the l'anama Canal.
Will you tell US who owns the Panama Canal and who will
own it in 10 years?
THE PRESIDENT: Well, the United States made an
agreement 6 good many years "go for the utilization of 8
strip of land and for the construction of a canal. The
United States over the years has maintained the national
security of that strip of land and the operation of that
canal, and we have operated the cenal,
The White House, with Precident Johnson first,
President Mixon Record, and ryself third, hes been
negotiating with the Panamanian Government to find 8 way 10
avoid the time of incident that took plece in 1995 where
30 people vere Hilled, including, as 1 recall, some 10
Americans. if the can nagotiate an agreement which will protect
our; right to defend that canal and 10 maintain and operate
that came), there is i: possibility that an agreement will be
reached but none has yet, and it is comething that is in the
negotisting process and no further.
MORP
PANAMA CANAL
ISSUE BRIEF NUMBER IB74138
AUTHOR:
Storrs, K. Larry
Foreign Affairs and National Defense Division
Sklar, Barry A.
Foreign Affairs and National Defense Division
THE LIBRARY OF CONGRESS
CONGRESSIONAL RESEARCH SERVICE
MAJOR ISSUES SYSTEM
DATE ORIGINATED 11/06/74
DATE UPDATED 01/02/76
FOR ADDITIONAL INFORMATION CALL 426-5700
0107
CRS- 1
IB74138 UPDATE-01/02/76
ISSUE DEFINITION
(
After a decade of fruitless negotiations, Secretary of State Kissinger and
Panamanian Foreign Minister Juan Antonio Tack signed a statement of agreed
principles, on February 7, 1974, to guide continuing negotiations for a new
( treaty between the United States and Panama governing the Panama Canal. The
principles provide for the abrogation of the 1903 Treaty and the elimination
of the "in perpetuity" concept, phased termination of U.S. jurisdiction in
( the Canal Zone, increasing Panama's share of the economic benefits, and
growing participation by Panama in the operation and defense of the Canal for
the duration of the new treaty.
Sentiment in Congress is divided between members who believe that a new
treaty accommodating Panamanian grievances is essential for continued safe
( and efficient operation of the Canal, and those who oppose any change on
grounds that undiluted U.S. sovereignty, legally obtained and guaranteed in
the 1903 Treaty. is required for the successful defense and maintenance of
( the Canal.
( BACKGROUND AND POLICY ANALYSIS
The strategic geographical location of the Isthmus of Panama, affording
( the potential of a short-cut route between the Atlantic and Pacific Oceans,
(
generated United States interest in a canal early in the 19th century.
During the period, the United States concluded treaties with various nations
( to secure a U.S. interest in any canal constructed in the area. While the
territory of the Isthmus was still a part of Colombia, the United States
concluded a treaty with that nation (the Hay-Herran Treaty, signed in January
( 1903) providing for U.S. construction and operation of a canal across the (
Isthmus. After Colcmbia rejected the treaty, the Panamanians, many of whom
had long sought an independent Panamanian nation, proclaimed their
( independence (November 3. 1903) with U.S. military forces standing by
offshore.
(
On December 2. 1903, the new Provisional Government of Panama ratified a
canal pact titled the Convention for the Construction of a Ship Canal
(Hay-Bunau-Varilla Treaty). based substantially on the rejected Hay-Herran
( Treaty. Its basic provisions (1) granted to the United States "in perpetuity
the use, occupation and control" of a specified zone of land through
Panamanian territory for the construction, operation, and defense of a ship
( canal (Article I) ; (2) afforded the United States "all the rights, power and
authority within the zone which the United States would possess and
exercise if it were the sovereign of the territory. to the entire exclusion
( of the exercise by the Republic of Panama of any such sovereign rights, power
or authority" (Article III); and (3) provided for payment of U.S.
compensation to Panama of an initial $10 million and a yearly annuity
( (Article XIV).
Since the 1903 Treaty's inception, Panamanians have charged that its basic
(
terms involve concessions extracted from an immature new republic under the
advice and influence of unscrupulous individuals and foreign interests. The
principal Panamanian objections are the terms of Articles I and III, which
(
afford the United States rights, control, and governmental jurisdiction over
a portion of Panamanian territory for a limitless duration. Other primary
CRS- 2
IB74138 UPDATE-01/02/76
objections of Panama include: (1) the size of the U.S. military presence and
the existence of U.S. military training facilities located in the Canal Zone;
(2) the amount of U.S. annuity to Panama and allegedly inequitable sharing of
the economic benefits derived from canal operations, and (3) the amount of
land area within the zone unused by the United States but not available for
Panamanian use.
The United States, in efforts to improve its treaty relations with Panama,
has periodically altered provisions of the 1903 treaty, primarily through two
additional treaties of 1936 and 1955; however, the sovereignty principle has
remained unchanged. Mounting Panamanian nationalist sentiment over the canal
issue erupted in serious demonstrations in 1959 and culminated in the
anti-United States flag riots of January 1964. The incident precipitated a
major diplomatic crisis between the two nations during which Panama broke
relations with the United States and put its case before the United Nations
and the Organization of American States.
On December 18, 1964, President Johnson announced the U.S. intention to
negotiate new treaties with Panama which would abrogate the 1903 treaty,
recognize Panamanian sovereignty over the Canal Zone, and end the "in
perpetuity" provision, while still retaining "the rights which are necessary
for the effective operation and the protection of the canal and the
administration of the areas that are necessary for these purposes." Bilateral
negotiations began in January 1965, culminating in the joint announcement by
the United States and Panama in June 1967 that three new draft treaties had
been agreed upon. Action was never taken by either nation, however,
attributable in part to the premature publication of the treaty terms in the
press (which touched off considerable opposition in both countries), and to
the fact that both nations were then involved in major election campaigns.
In August 1970, the government of General Omar Torrijos, in power as a result
of a military coup in October 1968, formally rejected the draft treaties
while indicating willinqness to pursue the negotiations.
Talks resumed in June 1971, and on February 7, 1974, Secretary of State
Henry Kissinger and Panamanian Foreign Minister Juan Antonio Tack signed a
statement of general principles which would serve as guidelines for the new
Panama Canal treaties. Principal terms include: (1) elimination of the "in
perpetuity" provision of the former treaty, with provision for a fixed
termination date; (2) termination of U.S. sovereignty and jurisdiction in
the Canal Zone, with the United States granted the rights, facilities, and
land necessary for U.S. operation and defense of the canal for the duration
(
of the new treaty; (3) Panamanian participation in the administration and
defense of the canal, with provision for the eventual reversion of canal
operation and control to Panama upon termination of the new treaty; and (4) a
(. just and equitable sharing of the economic benefits derived from the canal.
At the present time, negotiations on the specific terms of the treaty are
said to be proceeding slowly but satisfactorily. Most observers predict that
( a draft treaty will not be submitted to Congress for consideration until
after the 1976 election.
(
At issue considering new Panama Canal treaties is whether or not the
United States should maintain its current status of full governmental
jurisdiction within the Canal Zone, and whether the United States should
( continue to assume full responsibility for operation and defense of the
present canal indefinitely. Since canal negotiations began, U.S. officials
have been confident that an accommodation could be reached which would meet
the reasonable aspirations of Panama while safequarding U.S. vital interests (
in the canal and Canal Zone and in no way weakening the United States posture
CRS- 3
IB74138 UPDATE-01/02/76
in the area.
In the view of the United States Government, some members of Congress, and
other propcrents of new treaties, reaching a reasonable and mutually
acceptable accord with Panama on this highly sensitive issue is essential to
U.S. foreign policy and security concerns with regard to Panama and to the
Latin American region as a whole. They see the issue cast in the context of
the changing nature of international political relations wherein the
increasing economic and political interdependency of nations is causing the
United States and other nations to forge new relationships based on mutual
equality. cooperation, and respect. Proponents argue that in today's world
the 1903 treaty is an anachronism which will continue to serve as a rallying
point for Panamanian and other Latin American nationalist sentiment directed
against the United States. In like manner, the treaty provides a ready
target for elements hostile to the United States outside the region.
A further factor bearing on the issue of new treaties relates to future
U.S. and world commercial interests and to U.S. and allied defense concerns. (
The demands of rapidly increasing world commerce and the advent of modern
shipbuilding technology resulting in vessels of much greater size will
require major expansion of the capacity of the present canal and probably (
eventual construction of a sea-level canal in the area. The United States
option to expand and modernize the present canal and to construct a sea-level
canal in Panama along the route recommended by the Atlantic and Pacific
Interoceanic Canal Study Commission are both issues in the current canal
treaty negotiations.
Negotiation of new Panama Canal treaties has met substantial opposition in
the U.S. Congress, among a variety of interest groups in this country, and to
some extent, in the Department of Defense. The principal argument advanced <
by opponents holds that if vital U.S. commercial and strategic interests are
to be safequarded, the United States must continue to exercise sole
responsibility for the operation, control, and defense of the canal, and must
retain sovereignty and U.S. jurisdiction within the Canal Zone area. Also of
major concern is United States acceptance of treaty provisions which would
limit or reduce the current U.S. military presence in the Canal Zone.
Opponents cite the vital strategic function performed by the U.S. military in
the Canal Zone in protecting U.S. interests in the canal directly and in
serving as a deterrent to the ambitions of powers hostile to the United
States, thereby safequarding national security and hemisphere defense
interests as well.
Other arquments advanced by opponents of new treaties include: (1) the
mandate for permanent U.S. sovereignty and control of the canal and Canal
Zone was legally vested in the United States by the 1903 treaty, duly signed -
and ratified by Panama, and all rights and titles to lands now under United
States control were justly purchased by the U.S. Government; (2) under terms
of the treaty the United States undertook to construct, and for the past 60 L
years has continued to effectively maintain, operate, and defend the canal to
the benefit of all the world's nations and at a U.S. taxpayers net investment
of almost $6 billion; (3) the continued efficient U.S. operation of the canal -
has resulted in major economic benefits for Panama, providing a major
contribution to the Panamanian economy and affording it the highest per
capita income in Central America and the fourth highest in Latin America; and (
(4) Panama's history of political instability and its lack of technical and
managerial expertise and other required resources demonstrates that Panama
does not possess the capacity to effectively manage, operate, and defend the (
canal.
CRS- 4
IB74138 UPDATE-01/02/76
Congressional and other opponents of new treaties believe that the United
States can continue to make adjustments to improve its relationship with
Panama under the existing treaty. Concern for U.S. retention of sovereignty
and complete jurisdiction and control of the canal and Canal Zone has
resulted in the introduction of numerous resolutions in this and prior
Congresses calling upon the United States Government to retain the full
rights and status which it now enjoys. In the summer and fall of 1975
opponents in the House attempted, without success, to ban funds for
negotiation of new treaties from the State Department appropriations bill. A
compromise measure expressed the sense of Congress that any new agreement
must preserve U.S. vital interests in the area.
One legislative approach by opponents of new treaties has been the
introduction of legislation to implement an earlier proposal to modernize the
existing lock canal in lieu of construction of a sea-level canal through
Panamanian territory, one of the chief areas of negotiation in the current
treaty talks. They arque that implementation of the Terminal Lakes-Third
Locks Plan, a project partially authorized by Congress in 1939, would provide
for a major increase of capacity and operational improvement of the existing
lock canal under present treaty provisions. Such action, supporters believe,
would afford the United States the best operational canal at the least cost.
It would also obviate the need for new treaties with Panama, thereby
eliminating a confrontation with Panama over demand for major concessions
that would almost certainly be made in negotiations for a sea-level canal
through its territory. Critics of the existing treaties contend that this
approach overlooks the basic issue, which is Panamanian dissatisfaction with
the status quo.
LEGISLATION
S. Con. Res. 78 (McGee) Apr. 1, 1974, 93d Congress
Expresses it to be the sense of the Congress that negotiations for a new
Panama Canal Treaty are necessary in the interests of both the Republic of
Panama and the United States. Affirms that, with reference to the
promulqation of such a treaty, the Congress of the United States endorses
specified principles agreed to by the United States of America and the
Republic of Panama on Feb. 7, 1974, at Panama City. No action was taken on
the bill by the Senate Committee on Foreign Relations.
H. Pes. 23 (Flood), 94th Congress
Declares it to be the sense of the House that: (1) the Government of the
United States should maintain and protect its sovereign rights and
jurisdiction over the Caral Zone, and should in no way cede, dilute, forfeit,
negotiate, or transfer any of these sovereign rights, power, authority.
jurisdiction, territory, or property that are indispensably necessary for the
protection and security of the United States and the entire Western
Hemisphere: (2) there be no relinquishment or surrender of any presently
vested United States sovereign right, power. authority, or property, tangible
or intangible. except by treaty authorized by the Congress and duly ratified
by the United States: and (3) there be no cession to Panama, or other
divestiture of any United States-owned property. tangible or intangible,
without pricr authorization by the Congress (House and Senate), as provided
in Article IV. Section 3, Clause 2 of the United States Constitution. H.Res.
23 was introduced on Jan. 14, 1975, and referred to the House International
CRS- 5
IB74138 UPDATE-01/02/76
Relations Committee. Thirty five similar resolutions have been introduced,
with a total of 126 cosponsors.
S. Res. 97 (Thurmond), 94th Congress
Declares it to be the sense of the Senate that the Government of the
United States should retain sovereign rights in the Canal Zone, all
modifications to be submitted to Congress. (Similar to H. Res. 23) S. Res. 97
was introduced on March 4. 1975 and referred to the Senate Foreign Relations
Committee. At present there are 37 cosponsors.
Amendment to H.R. 8121 (Snyder), 94th Congress
An amendment to the State Dept. Appropriations Bill, providing in Sec. 104
that "none of funds appropriated shall be used for the purposes of
negotiating the surrender or relinguishment of any U.S. rights in the Panama
Canal Zone. passed 246-164, on June 26, 1975. The Senate struck the Snyder
amendment from the Appropriations Bill which passed September 3, 1975. On
September 18, 1975, the House-Senate Conference, in lieu of the Snyder
amendment, reported a compromise to the effect that: "It is the sense of the
Congress that any new Panama Canal treaty or agreement must protect the vital
interests of the United States in the operation, maintenance, property and
defense of the Panama Canal. The House, on September 24, 1975, failed
(197-203) to recede from its disagreement with the Senate and insisted on the
Snyder amendment. On September 26, 1975, the Senate refused to accept the
Snyder amendment and further conference negotiations were scheduled. The
House, on October 7. 1975, approved (212-201) a second conference compromise
stating the sense of Congress "that any new Panama Canal treaty or agreement
must protect the vital interests of the United States in the Canal Zone and
in the operation, maintenance, property and defense of the Panama Canal. "
The Senate accepted the compromise the following day.
H.R. 10083 (Flood). Panama Canal Modernization Act
Directs the Governor of the Canal Zone, under supervision of the Secretary
of the Army. to undertake the work necessary to enlarge and improve the
operations of the Panama Canal through adaptation of the Third Locks Project
(House Doc. no. 210, 76th Congress) at a total cost not to exceed
$1,150,000.000. It also establishes the Panama Canal Advisory and Inspection
Board, composed of five members appointed by the President, by and with the
advice and consent of the Senate, to study and review plans and designs for
the Third Locks Project. Provisions of the Act remain in effect only as long
as the United States retains sovereign rights in the Canal Zone. H.R. 10083
was introduced on October 8, 1975 (replacing H.R. 198) and referred to the
House Merchant Marine and Fisheries Committee.
HEARINGS
U.S. Congress House. Committee on Appropriations. Subcommittee
on the Department of Transportation and Related Agencies
Appropriations. Department of Transportation and Related Agencies
Appropriations for 1976. Hearings, 94th Congress, 1st session.
Washington, U.S. Govt. Print. Off., 1975. Hearings on Panama
Canal, Apr. 17, 1975. p. 1-218.
U.S. Congress. House. Committee on Foreign Affairs.
Subcommittee on Inter-American Affairs. Panama Canal, 1971.
CRS- 6
IB74138 UPDATE-01/02/76
Hearings, 92d Congress, 1st session, on H. Res. 74, 154, 156,
and other resolutions. Sept. 22 [and] 23, 1971. Washington,
U.S. Govt. Print. Off., 1971. 173 p.
United States relations with Panama. Hearings, 93d Congress,
1st session. Feb. 20, 1973. Washington, U.S. Govt. Print.
off., 1973. 53 p.
U.S. Congress. House. Committee on Foreign Affairs. Subcommittee
on Inter-American Affairs and International Organization and
Movements. Committee on Merchant Marine and Fisheries.
Subcommittee on Panama Canal. United Nations Security Council
meeting in Panama. Hearings, 93d Congress, 1st session.
Apr. 3, 1973. Washington, U.S. Govt. Print. off., 1973. 34 p.
U.S. Congress. House, Committee on Merchant Marine and Fisheries.
Subcommittee on Panama Canal. Panama Canal briefings.
Hearings, 93d Congress, 1st session Apr. 13, 1973. Washington,
U.S. Govt. Print. off., 1973. 78 p.
Briefings concerning treaty negotiations and current activities
of the Panama Canal and Canal Zone.
"Serial no. 93-8"
Panama Canal treaty negotiations. Hearings, 92d Congress,
1st and 2d sessions on treaties affecting the operations of the
Panama Canal. Washington, U.S. Govt. Print. Off., 1972. 371 p.
Hearings held Nov. 29, 30; Dec. 2, 6, 10, 1971; Jan. 17-18;
July 24: Aug. 10. 1972.
"Serial no. 92-30"
Panama canal treaty negotiations. Hearings, 92d Congress,
2d session. Washington, U.S. Govt. Print. off., 1972.
373-511 p.
Addendum to hearings held Nov. 29 Dec. 10. 1971;
Jan. 17 Aug. 10, 1972.
REPORTS AND CONGRESSIONAL DOCUMENTS
U.S. Congress. House. Committee on Foreign Affairs. Subcommittee
on Inter-American Affairs. Report on United States relations
with Panama pursuant to H. Res. 113, 86th Congress, 2d session.
Washington, U.S. Govt. Print. Off., 1960. 98 p.
(86th Congress, 2d sesssion. House. Report no. 2218)
OTHER CONGRESSIONAL ACTION
According to U.S. legislative procedure, new treaties would be submitted
solely to the Senate for ratification; however, many opponents of new Panama
Canal treaties in the House of Representatives have raised the issue that
House approval is necessary before any U.S. territory or property under U.S.
jurisdiction within the Canal Zone can be ceded to Panama. House members
cite as legal justification for their position the United States
Constitution, Article IV, Section 3, Clause 2. which states "The Congress
shall have power to dispose of and make all needful rules and regulations
respecting the territory or other property belonging to the United States.
=
House members who support this position contend that "Congress" must be
CRS- 7
IB74138 UPDATE-01/02/76
interpreted as both the Senate and the House of Representatives, and
therefore any new canal treaties providing for the disposal of
U.S.-controlled territories or properties would be invalid unless the
required approval of both Houses were obtained. Language to ensure House
jurisdiction had been included in House and Senate resolutions recently
introduced. Furthermore, the issue was examined at length during hearings on
December 2, 1971, by the House Merchant Marine and Fisheries Committee's
Subcommittee on the Panama Canal concerning "Panama Canal Treaty
Negotiations" (pp. 95-147).
CHRONOLOGY OF EVENTS
12/02/75 -- Chief Negotiator Ellsworth Bunker, in a speech in
Los Angeles, characterized the talks as progressing
through three stages during the past two years. The
first stage ended with the signing of the Kissinger-Tack
principles; the second stage involved identification of
major issues under the principles; and during stage
three, which began in June 1974, the specific terms
are being formalized. According to Ambassador Bunker,
agreement in principle has been achieved on three main
points, namely that U.S. jurisdiction in the Canal Zone
will pass to Panama in a transitional fashion, that Panama
will increasingly participate in the operation of the
Canal, and that Panama will grant the United States "use
rights" for defending the waterway. The parties are
agreed, he said, that the United States will retain
primary responsibility for the operation and defense
of the Canal for the duration of the new treaty, with
Panamanian participation increasing gradually. The
important issues yet to be resolved include the duration
of the new treaty, the amount of economic benefits for
Panama, and the territory to be made available for
defense of the Canal.
10/07/75 -- Backing off from efforts to ban funds for Panama Canal
negotiations, the House approved (212-201) a second
conference compromise on State Dept. appropriations stating
the sense of Congress "that any new Panama Canal treaty or
agreement must protect the vital interests of the United
States in the Canal Zone and in the operation, maintenance,
property and defense of the Panama Canal." The new
compromise added a reference to protecting U.S. vital
interests in "the Canal Zone," thus eliminating a principal
House objection expressed on Sept. 24. The Senate accepted
the compromise the following day. State Dept. officials
said they were pleased with the vote removing the cloud
over negotiation funding.
09/26/75 -- By voice vote the Senate rejected the House-passed "Snyder
amendment" ban on funds for Panama Canal negotiations and
asked for new negotiations with the House.
09/24/75 -- Panama's President and the Foreign Ministry formally
apologized to the U.S. embassy for the incident of the
previous day.
CRS- 8
IB74138 UPDATE-01/02/76
The House voted 203 to 197 to reject the House-Senate
conference compromise on State Department appropriations
for Panama Canal negotiations which stated the sense of
Congress that any new agreement "must protect the vital
interests of the United States in the operation,
maintenance, property and defense of the Panama Canal."
Instead, it restored the "Snyder amendment, If passed June 26,
barring the use of funds to negotiate the "surrender or
relinquishment of any U.S. rights in the Panama Canal Zone. If
09/23/75 -- About 800 left-wing Panamanian students, demonstrating
against U.S. military bases in the Canal Zone, attacked
the U.S. embassy in Panama with rocks and Molotov
cocktails in the most serious incident since the "flag
riots" of 1964. The U.S. embassy delivered a "strong
note" of protest to Panama, alleging that the National
Guard hesitated before dispersing the crowd with tear gas.
09/20/75 -- Criticizing U.S. demands for the right to defend the Canal
"for an indefinite time, which is tantamount to perpetuity,"
Panama broke negotiation secrecy and publicly disclosed the
divergent positions. The report said the United States
accepts Panama's desire for a 25-year limit on a new
treaty, however, the U.S. seeks rights to defend the Canal
for 50 years initially and then for a time which is
tantamount to perpetuity. The United States wishes to
retain 85% of the Zone and all 14 of the military
installations, while Panama wants a reduction of the Zone
to 10% of present size and three military installations.
Both parties were reportedly agreed that a joint
administration would replace the Panama Canal Company, and
Panamanian police, postal, and judicial jurisdiction
would take effect in the Zone three years after the new
treaty.
09/17/75 -- As Ambassador Bunker ended the latest 10-day round of
negotiations in Panama, claiming that Kissinger's remarks
had been "distorted and misinterpreted," he gave Foreign
Minister Juan Antonio Tack a statement which said "I am
sure that the Secretary meant to say that our country could
not renounce our right to defend the canal from foreign
enemies until we have achieved with Panama effective
agreements for the canal's defense.
As we both know,
we are working toward a situation in which the defense of
the Panama Canal will be a joint operation, in which the
Panamanian National Guard will play an important role.
Panama announced that "very little progress" had been
made in the recent talks.
09/16/75 -- In response to a question by Governor George Wallace at
the Southern Governors Conference in Orlando, Florida,
Secretary Kissinger stated that "the United States must
maintain the right, unilaterally, to defend the Panama
Canal for an indefinite future, or for a long future. On
the other hand, the United States can ease some of the
other conditions in the Canal Zone. In Panama,
Kissinger's remarks, particularly the terms "unilaterally"
and "indefinite," were denounced as completely contrary to
CRS- 9
IB74138 UPDATE-01/02/76
the February 1974 jointly agreed principles. Bus and taxi
drivers went on strike to protest the remarks.
09/03/75 -- Senator Harry Byrd announced he was delaying an attempt
in the Senate to block funds for treaty negotiations
in response to a request from State Department
officials to wait until Ambassador Bunker returns
from his September 7 trip to Panama for further
talks.
The Washington Post reported that an "internal
administration compromise" was reached within the
executive branch which essentially will meet Panama's
insistence on making the year 2000 the termination
date of U.S. authority over the Canal. The Department
of Defense had been arquing for extending U.S. authority
for 50 more years, with continued participation
of U.S. forces in the defense of the Canal. In what
was interpreted as a symbol of agreement between the
Departments of State and Defense, Deputy Secretary of
Defense Clements, Chairman of the Joint Chiefs of Staff
General Brown, and Assistant Secretary of State for
Latin American Affairs William D. Rogers left (September
2) for a one-day visit to the Canal.
09/01/75 -- The New York Times reported that Ambassador Bunker,
scheduled to leave for Panama to open another round of
talks after a delay of many months, would propose that
the United States turn over operation of the canal by
the year 2000 while asking Panama to accept participation
of American forces in the defense of the canal for a
longer period.
08/11/75 -- An article in the Journal of Commerce reported that
according to Panama's consul-general in New York Juan
Antonio Stagg, who was formerly a negotiator in the
treaty talks, four points still remained to be resolved
between the United States and Panama: (1) duration of the
treaty (the year most frequently mentioned was 2000) ;
(2) lands and waters necessary to operate and defend the
canal; (3) construction of a new sea level canal (Panama
will give the United States a 5-year option to undertake
a new canal but the United States doesn't want to hurry into
it) ; (4) economic compensation. According to Stagg, the
United States would maintain a military presence in the
Canal Zone under the new treaty.
08/02/75 -- Senator Harry Byrd announced that he was delaying a
legislative attempt to block funds for further negotiation
on a new Panama Canal Treaty. The Senator had intended
to introduce a resolution similar to the Snyder amendment
which passed the House on June 26. State Department
officials said that 59 of the 93 Senators present had
committed themselves to a move to table the Byrd resolution.
07/24/75 -- The head of the Panamanian Government, Gen. Omar Torrijos,
warned that further delay in treaty negotiations might
cause hostility in Panama that could not be contained, and
CRS-10
IB74138 UPDATE-01/02/76
might even lead to his own overthrow. Torrijos accused
the Ford Administration of stalling the negotiations
because of political pressures in the United States.
07/23/75 -- An article in the Miami Herald reported that the Panamanian
Government, in displeasure over the status of treaty
negotiations, resorted to public disclosure of differences
between the United States and Panama in a position paper
circulated among Panamanian student leaders last week and
-
discussed by Panamanian negotiators in the National Assembly.
The action came after General Torrijos charged that the
United States violated the secrecy accord by leaking
information to the Congress, the Pentagon and civilian
residents of the Canal Zone. Among the disclosures reported
in the Herald were: the Pentagon wants to hold on to
much more land for defense purposes than Panama is willing
to concede; the U.S. wants three times more land for the
operation of the Canal than Panama will allow; Panama wants
a new treaty to expire after 25 years, with full control
of the canal reverting to Panam, while the United States wants
a 50-year treaty, with 30 additional years if it builds a
sea-level canal: both countries agree on the integration of
the Canal Zone into the Republic of Panama within three
years: Panama would agree initially to allow the United
States to keep three of the 14 military installations in
the Canal Zone and then gradually eliminate those three;
Panama is dissatisfied with a U.S. offer to increase the
present $2.3 million annuity to $44 million.
06/26/75 -- In a significant show of congressional sentiment on
the Panama Canal issue, an amendment by Representative
Snyder to the State Department appropriations bill
denying funds for the treaty negotiations passed
246-164.
02/07/74 -- Secretary of State Henry Kissinger and Panamanian
Foreign Minister Juan Tack signed a Statement of
Principles establishing eight guidelines for new canal
treaties.
09/13/73 -- U.S. Ambassador-at-Larqe Ellsworth Bunker was officially
confirmed as the new chief U.S. Panama Canal negotiator.
(Former representative Robert Anderson resigned in July
1973).
03/21/73 -- The United States vetoed a U.N. Security Council resolution
referring to a new Panama Canal treaty which would
"quarantee full respect for Panama's effective sovereignty
over all of its territory," on grounds that the treaty
negotiations were a bilateral matter. (Of the 15 Security
Council members, 13 voted in favor of the resolution, and
one abstained).
06/29/71 -- The United States and Panama resumed negotiations on new
canal treaties.
12/01/70 -- The Atlantic-Pacific Interoceanic Canal Study Commission,
in its final report, recommended construction of a
CRS-11
IB74138 UPDATE-01/02/76
sea-level canal in Panama and urged the U.S. Government
to negotiate a treaty with Panama concerning the existing
canal and sea-level canal providing for their operation and
defense "in an equitable and mutually acceptable
relationship between the United States and Panama."
09/01/70 -- The Panamanian government notified the United States that
the three draft Panama Canal treaties of 1967 were
unacceptable as a basis for resuming treaty negotiations.
08/20/70 -- The United States announced the termination of an agreement
with Panama permitting it free and exclusive use of the
Rio Hato region for military training. (Rio Hato was the
only area in Panama outside the Canal Zone being used by
U.S. troops).
10/11/68 -- Colonel Omar Torrijos, head of the Panamanian National
Guard, led a military coup which overthrew President
Arnulfo Arias, and assumed leadership of the nation.
06/26/67 -- President Johnson and Panamanian President Robles announced
that agreement had been reached on the "form and content"
of three new canal treaties, governing administration of
the existing canal, the defense and neutrality of the
existing canal, and the possible construction of a
sea-level canal.
09/24/65 -- President Lyndon Johnson and Panamanian President Marco A.
Robles issued a joint statement announcing that three new
Panama Canal treaties would be negotiated and outlining
certain principles to be included in the new treaties.
(United States and Panamanian negotiators began talks
concerning the terms for a new Panama Canal treaty in
January 1965.)
09/22/64 -- The President signed P.L. 88-609 authorizing the
establishment of the Atlantic-Pacific Interoceanic Canal
Study Commission to investigate the feasibility of a more
suitable site for the construction of a sea-level canal.
(Commission members were appointed on April 18, 1965).
04/03/64 -- The Organization of American States published a joint
declaration of the Governments of Panama and the United
States in which they agreed to reestablish diplomatic
relations and to designate Special Ambassadors to seek
the prompt elimination of the causes of conflict between
the two countries. (Diplomatic relations were established
and the ambassadors appointed on April 4. 1964.)
02/04/64 -- The OAS Council voted to invoke the Inter-American Treaty
of Reciprocal Assistance (Rio Treaty) in the dispute
between the United States and Panama (the first time that
the regional defense machinery had been utilized in a
dispute involving the United States).
01/29/64 -- The Panamanian Government called upon the Council of the
Organization of American States to take up its charges of
aggression against the United States as a result of the
CRS-12
IB74138 UPDATE-01/02/76
Canal Zone flaq riots.
01/10/64 -- Panama suspended relations with the United States,
charged the United States with aggression at the United
Nations, and filed a complaint with the Inter-American
Peace Committee of the Organization of American States.
following rioting over the display of the U.S. flag.
(Relations were officially broken on January 17, 1964).
01/10/63 -- United States and Panamanian conferees announced
agreement concerning the flaq issue in the Canal Zone to
the effect that the Panamanian flag would be flown in the
Zone at all points where the U.S. flag is flown by civilian
authorities.
06/13/62 -- President Kennedy and visiting Panamanian President
Roberto Chiari issued a joint communique stating that
representatives of the two nations would be named to
discuss points of dissatisfaction concerning the Panama
Canal and Canal Zone within the perimeters of the existing
canal treaties. (Talks began in July 1962 and ended in
July 1963).
11/16/61 -- The Panamanian National Assembly unanimously adopted a
resolution calling for the abrogation of canal treaties
with the United States and the negotiation of a new treaty
to include affirmation of Panamanian sovereignty over the
Canal Zone and a fixed date for the turnover of the canal
to Panama.
09/08/61 -- Panamanian President Roberto Chiari, in a letter to
President Kennedy, requested a revision of the Panama Canal
treaty. (President Chiari formally announced his
government's desire to negotiate a new canal treaty on
September 11, 1961).
02/02/60 -- The House of Representatives passed H. Con. Res. 459,
expressing the sense of Congress that any variance in the
traditional interpretation of the Panama Canal treaties,
especially with respect to territorial sovereignty, should
be made only by treaty.
11/28/59 -- Rioting broke out as Panamanian demonstrators attempting
second time to enter the Canal Zone to implant the
Panamanian flaq were turned back by Panamanian and
U.S. forces.
11/24/59 -- Deputy Undersecretary of State Livingstone Merchant, on
an official mission to Panama. declared that the United
States "recognizes that titular sovereignty over the Canal
Zone remains in the Government of Panama.'
11/03/59 -- The Governor of the Canal Zone called for U.S. Armed
Forces to quell a riot resulting from Panamanian
demonstrators attempting to implant the Panamanian flag
within the Zone.
09/25/59 -- The Government of Panama formally requested that the
CRS-13
IB74138 UPDATE-01/02/76
Panamanian flag be flown in the Canal Zone.
01/25/55 -- The United States and Panama signed the Treaty of Mutual
Understanding and Cooperation which revised, redefined or
renounced certain rights of the United States and Panama
provided in the basic 1903 canal treaty and the 1936
treaty, and increased the annual annuity to Panama to
$1,930,000.
03/02/36
-- The United States and Panama signed the General Treaty of
Friendship and Cooperation which revised, redefined or
renounced certain rights of the United States and Panama
provided in the original 1903 canal treaty, and increased
the annual annuity to Panama to $430,000.
03/01/22 -- The United States and Colombia exchanged ratifications of
the Thomson-Urrutia Treaty (signed on April 6. 1914)
whereby Colombia recognized the exclusive U.S. title to
the Panama Canal.
08/15/14 -- The Panama Canal was opened to navigation.
04/18/06 -- Secretary of War William H. Taft, in testimony before the
Senate Committee on Interoceanic Canals, stated:
"(Article III of the Panama Canal treaty) is peculiar in
not conferring sovereignty directly upon the United States,
but in giving to the United States the powers which it
would have if it were sovereign. This gives rise to the
obvious implication that a mere titular sovereignty is
reserved in the Panamanian Government.
02/23/04 -- The U.S. Senate approved the Hay-Bunau-Varilla Treaty.
(The treaty was officially proclaimed by President
Roosevelt on February 26, 1903.)
01/20/04 -- Secretary of State John Hay, in a letter to Senator
Spooner concerning the Panama Canal treaty, wrote: "we
shall have a treaty vastly advantageous to the United
States, and, we must confess not so advantageous to
Panama
You and I know too well how many points there
are in this treaty to which a Panamanian patriot could
object."
12/02/03 -- The provisional government of Panama ratified the Hay-
Bunau-Varilla Treaty.
11/18/03 -- The United States and Panama signed the Convention for the
Construction of a Ship Canal (Hay-Bunau-Varilla Treaty)
granting the United States full rights and authority
"in perpetuity" over a specified zone of land in Panamanian
territory for the construction, operation and protection of
a ship canal.
11/06/03 -- The United States recognized the new Republic of Panama,
which had declared its independence from Colombia three
days earlier.
08/12/03 -- The Colombian Senate unanimously rejected the Hay-Herran
CRS-14
IB74138 UPDATE-01/02/76
Treaty.
01/22/03 -- The United States and Colombia signed the Hay-Herran
Treaty granting the United States a 100-year lease
(with option for renewal) on a specified zone of land
across the Isthmus of Panama, with the exclusive right to
construct, operate, and protect a ship canal.
(
06/02/02 -- The U.S. Congress enacted the Spooner Act authorizing the
President to acquire the assets of the former French canal
company and to acquire a specified strip of land and
additional rights and territory from Colombia for the
construction and operation of a ship canal.
(
11/18/01 -- The United States and Great Britain signed the Hay-
Pauncefote Treaty granting the United States the
exclusive right to construct, regulate, and manage a ship
canal across Central America.
00/00/99 -- In 1899 the U.S. Congress passed a law directing the
President to name a commission to examine all practical
routes for the construction of a ship canal across Central
America.
00/00/98 -- In 1898 President McKinley, in a message to Congress,
stated that a maritime highway across the Central American
(
isthmus and its control by the United States was
indispensable to U.S. commerical interests and territorial
expansion.
05/18/78 -- In 1878 a French interoceanic canal company procured a
concession from the Government of Colombia to build a
maritime canal through its territory. (The French canal
enterprise collapsed in 1889).
12/12/46 -- In 1846 the United States and New Granada (Colombia) signed
the Treaty of Peace. Amity, Navigation, and Commerce
quaranteeing the rights of sovereignty and property
possessed by Colombia over the Isthmus of Panama and the
neutrality of the Isthmus, and guaranteeing to the United
States free right of way or transit across the Isthmus.
03/02/39 -- In 1839 the House passed a resolution requesting the
President to negotiate with other interested nations
concerning the construction of a ship canal across the
Isthmus of Panama. This followed by four years a similar
Senate action.
05/18/26 -- In 1826 Secretary of State Henry Clay proposed that
delegates from the United States and the newly
independent South American republics meeting at the
Congress of Panama consider a joint undertaking to
construct a canal across the Central American isthmus.
CRS-15
IB74138 UPDATE-01/02/76
ADDITIONAL REFERENCE SOURCES
A gathering storm over that other canal. New York times, Jan. 6,
1974: 12-13, 53-54, 56, 58.
Newsp.
A Latin American Vietnam. Foreign Service journal, V. 51, Jan. 1974:
15-17.
LRS74-824
Bunker. Ellsworth. Panama and the United States: a design for
partnership. Speech before the Center for Inter-American
Relations at New York City, Mar. 19, 1974. Dept. of State
bulletin, V. 70, Apr. 29, 1974: 453-457.
Constitution of Panama, 1972. Washington, Organization of American
States, 1974. 45 p.
LRS74-3796
Cox, Robert G. Choices for Partnership or Bloodshed in Panama.
In Commission on United States-Latin American Relations. The
Americans in a changing world. New York, Quadrangle, 1975,
p. 132-155.
Forty-fifth annual report of the work and operation fiscal year 1973.
Communication from President transmitting the 45th annual report...
pursuant to 22 U.S.C. 278a, together with a report on the
research activities of the Gorgas Memorial Institute-Middle
America Research Unit, and the Comptroller General's examination
of the financial statements of the Institute for fiscal years 1972
and 1973. Washington, U.S. Govt. Print. Off., 1974. 60 p.
LRS74-3146
Georgetown University. Center for Strategic Studies. Panama: canal
issues and treaty talks. Washington, Georgetown Univ. The
Center for Strategic Studies, Mar. 1967 (Special Report Series:
No. 3) 89 p.
Hammarskjold Forums. The Panama canal; background of the sixth
Hammarskjold forum. New York, May 28, 1964 [by] Richard R.
Baxter and Doris Carroll. Dobbs Ferry, N.Y., Published for the
Association of the Bar of the City of New York by Oceana
Publications, 1965. 118 p.
Langley. Lester D. U.S.-Panamanian relations since 1941. Journal of
inter-American studies and world affairs, V. 12, July 1970:
339-366.
Lucier, James P. Panama Canal: focus of power politics.
Strategic review, V. 2, spring 1974: 34-43.
Panama. NACLA's Latin America and empire report, V. 8, Sept. 1974: 1-16.
LRS74-25752
Parama's struggle for independence. Current history, V. 66, Jan. 1974:
CRS-16
IB74138 UPDATE-01/02/76
19-22, 38.
LRS74-98
Panama: the proposed transfer of the Canal and Canal Zone by treaty.
Georgia journal of international & comparative law, V. 5,
winter 1975: 195-215.
LRS75-7648
Rising public sector investment in Panama spurs many new projects.
IMF survey, V. 4, Feb. 3, 1975: 45-47.
LRS75-895
Rosenfeld, Stephen S. The Panama negotiations--a close run thing.
Foreign affairs, V. 54, Oct. 1975: 1-13.
Should U.S. yield control of the Panama Canal? Congressional
quarterly weekly report, V. 32. Mar. 2, 1974: 584-581.
LRS74-2734
U.S. Atlantic-Pacific Interoceanic Canal Study Commission.
Interoceanic canal studies, 1970. Final report of the Atlantic-
Pacific Interoceanic Canal Study Commission to the President,
Dec. 1. 1970, as required by P.L. 88-609, 88th Congress.
(Washington, U.S. Govt. Print. Off., 1971. 1 V. (various
pagings)
U.S. Dept. of State. Bureau of Public Affairs. Office of
Media Services, U.S., Panama agree on principles for canal
negotiations; (together with) Background and status of the
Panama Canal treaty negotiations. (Washington) U.S.,
Department of State, News Release, Feb. 7. 1974. 7 p.
U.S. Library of Congress. Congressional Research Service.
Negotiation of new Panama Canal treaties: background and pros
and cons [by] Virginia M. Hagen. [Washington] Nov. 23, 1971.
30 P.
Multilith 71-250 F
PRESIDENTIAL STATEMENT IN DALLAS
I think it is premature to come to any conclusion as to what might be
the final resolution of the longstanding differences between the
United States and Panama. Three previous Presidents have had
representatives negotiating on this very controversial issue. I can
simply say and say it very emphatically, that the United States will
never give up its defense rights to the Panama Canal and will never
give up its operational rights as far as Panama is concerned. Since
there is no resolution today, I don't think I should prejudge any
detailed final settlement in the conflict or controversy. I can assure
everybody in the United States that we will protect defense and
operational responsibilities as far as the Panama Canal is concerned.
PRESS CONTERENCE NO. 28
of the
PRESIDENT OF THE UNITED STATES
At 12:02 P.M. EST
March 13, 1970
Saturday
At Guilford College
Greensboro, North Carolina
TORD
QUESTION: Mr. President, my question is this.
you sec the United States relinquishing control of the
Canal in the next four years, and, if so, under what
tumptances?
THE PRESIDENT: Three Presidents have been negotiating
since 1965 with the Government of Panama to resolve the dispute
that arose following the very sad and tragic incident that
happened at that time where some 30 people were killed,
including, as I recall, approximately 10 Americans.
These negotiations have gone on for about 10-plus
years.
I can assure you of this. The United States, as long
as I am President, will do nothing to give up the control of the
operations of the Canal, and will do nothing to give up the
military protection of the Canal, and that is what the exports in
our Government are most concerned about. And whatever is
agreed to, if anything, will be submitted openly to the United
States Congress for consideration.
OFFICE or THE WHITE HOUSE PRESS SECRETARY
(Peoria, Illinois)
THE WHITE HOUSE
REMARKS OF THE PRESIDENT
AND
QUESTION AND ANSWER SESSION
AT THE
EVERETT McKINLEY DIRKSEN FORUM
BRADLEY UNIVERSITY
QUESTION: Mr. President, I am pastor of a church
here in Peoria. From time to time we get reports, printed
sometimes, to the effect that Mr. Kissinger and the State
Department have already made promises and commitments
regarding the Panama Canal to a Government which is something
less than friendly to us, and, furthermore, it has been
suggested that the constitutional clause which forbids any
United States property to be sold without approval of the
Congress, that that will be circumvented by retaining title
to it but nevertheless technically not selling it, but in
reality giving all the controls and direction and jurisdiction
to the Panama Government which only the owner of the property
should have.
I would like you, Mr. President, to comment on that
if you would.
THE PRESIDENT: First, let me say that whatever
is done, if it reaches that point, will be fully submitted
to the United States Congress, both the House as well as the
Senate. If property is sold -- and I am not saying it is --
or is transferred, it would have to be approved by both
the House and the Senate and, of course, if it is a treaty, it
would have to be approved by the Senate alone, so you can
rest assured that whatever is done, if anything is done,
will be submitted in its entirety and completely open and
above board.
Now the situation is that since 1964 when they had
a series of riots in the Panama area, the Canal Zone and the
Government of Panama, some 30 people were killed in these
riots, including a significant number of Americans. Those
circumstances precipitated negotiations that have been
carried on by three Presidents. Those negotiations are going
on today between the Government of Panama and the United States.
I can only assure you -- because the negotiations
have not been completed -- that the United States, as far
as I am concerned, will never give up its national defense
interests, nor give up its interests in the operation of the
Panama Canal. And whatever is negotiated -- and nothing has
been concluded -- will be submitted in its entirety to the
Congress of the United States.
MORE
GOP Reception - San Antonio Civic Center April 9, 1976
QUESTION: Mr. President, please do not give away the Panama Canal.
(Laughter)
THE PRESIDENT: Sir, I don't think you have to worry about that.
(Laughter) The United States, as far as I am concerned, will never
give up its defense responsibilities and capability. It will never give
up the rights of navigation and so forth. You just don't have to worry.
QUESTION: Thank you very much.
CONGRESSMAN GENE SNYDER
April 13, 1976
2330 Rayburn House Office Building
FOR IMMEDIATE RELEASE
Washington D.C. 20515
Contact: Nicholas Nonnenmacher
(202) 225-2099
President Ford personally has issued written instructions to the State
Department to negotiate away the Canal Zone and the Panama Canal itself, Co.,-
gressman Gene Snyder today asserted.
Snyder said that during secret testimony before the Panama Canal Subcom-
mittee on April 8th, it was unanimously agreed that he could make public his
line of questioning of Ambassador Ellsworth Bunker, Chief U.S. Negotiator with
Panama, and his aides. (pages 30, 34 and 112 of April 8 transcript.)
Following is a brief excerpt from the record:
Ambassador Bunker. Mr. Congressman, we are proceeding to negotiate
under guidelines established by the President, both by President
Nixon and President Ford.
Mr. Snyder. I do not think that is responsive to my question.
I want to know what directive or directives the State Department
has received from President Ford to do this?
Ambassador Bunker. We have been directed to proceed with the nego-
tiations on the basis of the guidelines --
Mr. Snyder. To give it up? To give up the Canal Zone over a period
of time?
Ambassador Bunker. To give up the Canal Zone after a period of
time, that is correct.
Mr. Snyder. And the Canal over a longer period of time?
Ambasssador Bunker. Longer period of time.
Mr. Snyder. Longer period of time. And what are the directives?
Are they written memorandums?
Ambassador Bunker. The directives are in written memorandum.
Mr. Snyder. Signed by the President?
Ambassador Bunker. Signed by the President.
Mr. Snyder. Under what date?
Ambassador Bunker. Varying -- various dates.
Snyder declared:
"I am shocked that Mr. Ford as President, now is not only going along
with, but is actually directing an even more shocking settlement than the one
he opposed as House Minority Leader (President Johnson's draft treaty with
Panama) The situation in the Caribbean is far worse today than when Mr. Ford
voiced his strenuous opposition in 1967.
The soft underbelly of the United States from Texas to Florida, the East
Coast, and, in fact, the whole country east of the Mississippi, is threatened
by nuclear armed Soviet U-boats that berth in Cuban submarine pens less than
100 miles from our border. Some 12,000 to 15,000 Cuban troops have received
actual combat training under fire in Angola."
STATEMENT OF THE HONORABLE GENE SNYDER, MEMBER OF CONGRESS
FOURTH DISTRICT OF KENTUCKY, APRIL 13, 1976 on
THE FUTURE OF THE CANAL ZONE AND THE PANAMA CANAL
It is incumbent upon President Ford to immediately try to explain to the
American people the validity of whatever reasons he has for directing the De-
partment of State to surrender the Canal Zone and the Panama Canal to a for-
eign power in the relatively near future.
I make this statement on the basis of State Department testimony before
the Panama Canal Subcommittee of the House Merchant Marine and Fisheries Com-
mittee last Thursday, April 8th. The bulk of that testimony was in closed
session, with Mrs. Leonor K. Sullivan, the full Committee Chairman, presiding.
The Subcommittee, however, agreed unanimously that my line of questions and
the answers to them would be on the record unless the Department witnesses
specifically wanted them off. No such request was forthcoming from those wit-
nesses regarding what I state here or any other question of mine.
Those of us in Congress opposed to this giveaway which has absolutely no
Congressional mandate, long have been critical of the State Department for its
intention. We have, however, not been at all clear as to the President's ul-
timate thinking or decision when a treaty would be drawn.
As of last Thursday, there is no more question. Ambassador Ellsworth
Bunker, Chief U.S. Negotiator with the Republic of Panama, in answer to my
direct questions, flatly declared that President Ford has directed the Sec-
retary of State and the negotiators to come up with a treaty with the Republic
of Panama by which we will give up the Canal Zone entirely after a period of
time, and the Canal over a longer period of time. My further questions dis-
closed that the directions are in writing, over President Ford's signature.
Later, the Subcommittee requested that it be supplied the documents.
The following brief exchange is quoted directly from the record:
Mr. Snyder. On whose specific authorization is the State
Department pursuing its stated goal of yielding the Canal
and the Zone to the Republic of Panama?
Ambassador Bunker. Negotiations are being carried out on
the authorization of the President.
Mr. Snyder. Madam Chairman, at this point I would like to
ask unanimous consent to include all of the newspaper article
from the Chicago Tribune of July 8, 1967. I will not read it
all, but its story is headlined "New treaty perils canal: Ford.
The item is sub-titled "Terms found shocking by GOP leader."
And the headline on the carry-over story on another page:
"Canal treaty terms to shock U.S. public Representative Ford
"
warns.
Now, the article is consistent with the headlines if not
more $0.
In my opinion a comparison of the proposed 1967 treaty as
printed in the Chicago Tribune on July 15, 1967, and the ei ht
points Secretary Kissinger agreed to February 7, 1974, con-
vinces me that the current proposal envisions a more complete
2
surrender of the Zone than did the 1967 draft.
In view of then Congressman Ford's very vehement oppo-
sition to President Johnson's treaty, what directive or
directives has the Department of State received from Presi-
dent Ford saying he desires you to negotiate turning over
to Panama the Canal, or supporting the Department seeking
this end purpose, within some period of time?
Ambassador Bunker. Mr. Congressman, we are proceeding to
negotiate under guidelines established by the President, both
by President Nixon and President Ford.
Mr. Snyder. I do not think that is responsive to my question.
I want to know what directive or directives the State De-
partment has received from President Ford to do this?
Ambassador Bunker. We have been directed to proceed with
the negotiations on the basis of the guidelines--
Mr. Snyder. To give it up? To give up the Canal Zone over
a period of time?
Ambassador Bunker. To give up the Canal Zone after a period
of time, that is correct.
Mr. Snyder. And the Canal over a longer period of time?
Ambassador Bunker. Longer period of time.
Mr. Snyder. Longer period of time.
And what are the directives? Are they written memo-
randums?
Ambassador Bunker. The directives are in written memorandum.
Mr. Snyder. Signed by the President?
Ambassador Bunker. Signed by the President.
Mr. Snyder. Under what date?
Ambassador Bunker. Varying -- various dates.
The time periods involved in this giveaway are not way off in the future.
The press in this country and in Panama has already reported that we would
abolish the Canal Zone government probably some six months after treaty rati-
fication, and give up all jurisdiciton over the Zone within three years. The
surrender of the Canal and its operation would take place probably during a
twenty five to fifty year period, a term still not agreed upon by the nego-
tiators.
I' am shocked that Mr. Ford as President, now is not only going along with,
but is actually directing an even more shocking settlement than the one he
opposed as House Minority Leader. In that same 1967 news story, Mr. Ford was
further quoted in these words:
With Cuba under control of the Soviet Union via Castro and
increased communist subversion in Latin America, a communist
threat to the canal is a real danger.
Any action on our
part to meet a threat involving the national security of the
United States should not be ham-strung by the need for time-
consuming consultation with a government that might be reluc-
tant to cooperate in the defense, or possibly be in opposition
to our best interests.
3
The situation in the Caribbean is far worse today than when Mr. Ford
made those remarks in 1967. The soft underbelly of the United States from
Texas to Florida, the East Coast, and, in fact, the whole country east of the
Mississippi, is threatened by nuclear armed Soviet U-boats that berth in Cuban
submarine pens less than 100 miles from our border.
Some 12,000 to 15,000 Cuban troops have received actual combat training
under fire in Angola.
Cuban schools of subversion have trained thousands of students from every
Latin American country and our own, in guerrilla and sabotage techniques, as
well as in all aspects of Marxist-Leninist philosophy, agitation and propagan-
da.
Panamanian dictator, General Omar Torrijos, who recently exiled nearly
a dozen top Panamanian business leaders whose opposition he feared, has been
playing footsie with Castro for several years. Castro promised Torrijos when
he visited Havana in January, to give him every help to gain control of the
Canal Zone. Torrijos himself has boasted repeatedly he would lead an assault
on the Zone, if necessary, to gain that control, if we did not surrender it.
In my opinion, the President has the immediate responsibility to make a
clean breast of his intentions regarding the Canal Zone. The Nation has the
right to know the full truth.
Our citizen-taxpayers to date have invested some $7 billion in the out-
right purchase of this unincorporated territory of the United States: in the
excavation of the canal linking the Caribbean and the Pacific; and in the
civil and military installations vital for its continued operation, mainte-
nance and defense. And all of this has benefited, not only ourselves, but
Panama and the entire world for some 62 years.
There is nothing to prevent Torrijos, should he gain control of the
Canal Zone, from inviting the Soviet Union in to protect it.
There is no way in the world he could defend it -- or his own country,
for that matter -- against a Cuban conquest, even without Moscow supporting
Castro in such an attack.
In either event, Soviet submarines, missiles and bombers would soon be
in place, capable of striking at our heartland from another outpost, which,
unless the American people force Mr. Ford to reverse his position, will soon
4
be within our enemy's grasp instead of remaining our own.
Neither Ambassador Bunker nor his aides were able to substantiate in
the slightest degree the claim they have been making around the country in
public speeches that a phrase in Article III of the 1936 treaty of friendship
with Panama refers to the Canal Zone as "territory of the Republic of Panama
under the jurisdiction of the United States." They have cited this to support
their argument that we do not have sovereignty over the Zone. Deputy Nego-
tiator Morey Bell did so in a letter to me last December.
Under my insistent questioning seeking substantiation, the claim -- which
the American Law Division of the Library of Congress had already reported to
me was refuted by Article XI of the same treaty -- was merely repeated.
I feel obligated by my office to further demand that President Ford pub-
licly substantiate this State Department claim -- which I consider to be ab-
solutely without legal grounds, and totally false -- or order the Department
publicly to immediately retract the claim and to desist from using it.
To my knowledge, President Ford has not made the claim of which I speak.
He may not even realize the State Department is making it in order to promote
the Canal Zone giveaway among the American people.
He is now on notice, however, and has the duty to thoroughly explore the
matter. The Supreme Court has declared the Canal Zone belongs to the United
States, specifically stating it had been ceded to us by Panama in a duly rati-
fied treaty.
The President and the State Department have a right to argue their case
on its merits.
To lie to the American people is nothing less than malfeasance in office.
The President cannot allow this serious business of the Canal Zone's fu-
ture to be decided without the support of the American people whose very se-
curity is involved.
Neither can he allow falsehoods to play a role in trying to secure that
support in spite of their better judgment.
I hope Mr. Ford will publicly come to grips with this entire question
in the very near future.
April 14, 1976
PANAMA CANAL
&:
Did the President instruct the State Department to negotiate
a new treaty with Panama which would give up the Canal and
our authority in the Zone?
A:
Let me make clear that Presidential instructions to the State
Department relate to negotiations which have been carried on
since 1964 with Panama. These negotiations are aimed at
achieving a new treaty relationship with Panama relating to
the Canal. That treaty, which would continue in force for a
substantial period of time, would maintain US control of the
Canal's operation and defense. Negotiations which the President
has authorized relate only to the effort currently underway to
negotiate a modernized treaty relationship that will protect US
basic long-term interests in the efficient operation and security
of the Panama Canal. Those negotiations are still in progress
and important issues remain to be discussed and agreed upon.
It is therefore not possible or useful at this stage to predict the
final form of such an agreement or when and if such an arrangement
may be possible. However, the President has repeatedly stressed
that he will not approve or support any agreement that does not
protect vital US interests in the operation and defense of the Canal.
BRIEF SUMMARY OF REAGAN
NEWS CONFERENCE
Austin, Texas
April 14, 1976
He strongly criticized the Ford Administration's handling of the Panama
Canal negotiations. Reagan quoted the President as telling an audience in
Dallas last weekend that the United States would never surrender all of its
control of the Canal Zone.
"Now testimony at closed hearings shows the Administration is negotiating to
give up some rights to the canal and in the long run to surrender it, " Reagan
said.
He said that historically leaders such as Hitler, who tried to dominate the
world, have considered the PanamaCanal a strategic passage.
Reagan said continued American control of the Canal is vital to the defense
of the Western Hemisphere. He described the President of Panama as a
"Communist-leaning dictator" and said the Ford Administration is planning to
turn over the Canal to such a dictator.
THE PANAMA CANAL
A "Give Away" or a "Throw Away"?
Presidential Candidate Ronald Reagan has stated that the United States
should break off the negotiations with Panama and tell General Torrijos:
"We bought it, we paid for it, we built it, and we intend to keep it. 11
Reagan says the Canal Zone is sovereign U.S. territory every bit the
same as Alaska.
Unfortunately, Governor Reagan's words SO distort the facts and ignore
the reality of the situation regarding the Panama Canal that his state-
ments may do more to endanger America's ability to use the Canal than
any imagined "give away" through the current negotiations.
What are the facts?
Negotiations between the United States and Panama to replace the 1903
Canal Treaty have been pursued by three successive American presidents.
The purpose of these negotiations is to protect our use of the Canal over
the long term and our national security interests, not to diminish them.
The issue before us is not between continuing the present treaty and nego-
tiating a new one, but rather between successful negotiations and the
consequences of no new treaty. Absence of a new treaty would mean
confrontations with the people of Panama supported by Latin America
and the rest of the world--including major users of the Canal like Japan.
A new treaty is needed because:
A cooperative arrangement with Panama is the only way the United
States can safeguard its long term interests in an open, efficient and secure
Canal.
Panama wants a new treaty. Without a new treaty, we will have
a confrontation with a Panamanian government backed by a united people
and the unequivocal support of all Latin American nations.
If the current opportunity is lost to achieve a treaty that satisfies
the legitimate interests of both Panama and the United States, we can
expect both a deterioration of our relations throughout the hemisphere
and real dangers to the continuous operation of the Canal.
-2-
The current Panamanian government, which has been in power for
eight years, is committed to a new treaty. It is prepared to offer terms
which recognize our interest in the Canal's operation and defense. If
this effort does not succeed, we can be sure the terms available next
time will be less favorable.
A delay in negotiations risks increasing Panamanian frustration
and a recurrence of the riots and confrontations that occurred in 1957
and those in 1964, in which over 20 Panamanians and 4 American soldiers
died.
Furthermore, Governor Reagan's view that the Canal Zone is sovereign
U.S. territory is totally wrong. Legal interpretations do vary, but there
are clear limitations on U.S. jurisdiction. For example, not just any
American can live in the Canal Zone and children born in there are not
automatically U.S. citizens. But more importantly, Governor Reagan
misses the point. The real issue is not our legal position in Panama,
but how to find the best way to assure protection of our fundamental
interest in the Canal. It is the rights granted and the relationship
created by a 72-year-old treaty which now seriously offend the
Panamanian people. If the relationship is not redefined and moder-
nized, our jurisdiction over the Canal Zone may not prove to be the
best means of protecting our greater interest in an open and secure
Canal.
Despite these realities, Governor Reagan would handle the Canal issue
by refusing to negotiate with Panama, by insulting its leaders, and
offending our friends throughout Latin America. A breakoff of nego-
tiations could lead to a closure of the Canal and serious damage to our
relations with Latin America, the opposite of what he says he wants.
He doesn't mention it, but his stance carries with it the commitment
FORD
of large U.S. military forces to protect the Canal and the possibilit
of their being used in a prolonged anti-guerrilla, anti-terrorist
campaign. It thus appears to be based on a willingness to protect
our interests through military occupation.
A refusal to negotiate in good faith simply risks throwing away our ability
to safeguard our real interests in the Panama Canal.
In contrast, President Ford is seeking a treaty which will create a
mature relationship making the U.S. and Panama partners in the
operation of the Canal and which protects the essential interests of
the United States for the long term. The President has no intention
of proposing to the Congress any agreement that would not protect our
vital interests. Any treaty reached will be submitted to the full consti-
tutional process, including Senate approval.
April 15, 1976
MEMORANDUM FOR:
FRED SLIGHT
FROM:
JOY MANSON In
SUBJECT:
Panama Canal
Mr. James E. Smith, a professor in the Department of History,
Carney State College, Carney, Nebraska 68847, called in this
morning with an analogy that may be useful in Texas with
regard to the Panama Canal.
In reading the actual treaty with Panama, Mr. Smith notes that
the U.S. specifically is entitled only to use the agreed-upon
land for the construction, operation and maintenance of the Canal,
and he draws a distinction between these specific "rights" and
the purchasing "rights" the U.S. has in Alaska (where the land
is ours to do with as we wish).
Mr. Smith said one thing Texans are very familiar with are
Mineral Rights -- whereby an owner of valuable land may lease
it to an oil company for drilling, digging purposes but the
owner technically still maintains ownership of said land.
Describing the Panama Canal Treaty as a "Mineral Rights lease"
is Mr. Smith's recommendation to clarify the specificity of
the rights inherent in the Panama Treaty. Smith further suggested
that a follow-up analogy might include that "as the control of the
Canal is by the United States, so is the control of the leased
oil land by the oil company -- and I may employ your son in the
operation of the Canal as an oil company may employ your son to
operate the pumps."
THE WHITE HOUSE
WASHINGTON
April 15, 1976
MR PRESIDENT:
Reply to Leonor Sullivan's Letter
Concerning the Panama Canal
Company
In addition to the staffing mentioned in Brent Scowcroft's
memorandum on the above subject, this memorandum
was staffed to Messrs. Buchen, Cannon and Seidman. .
All approved and Phil Buchen added the following
comments:
"Although we note that it may appear
unusual to have an Assistant Secretary
answer on behalf of the Secretary of the
Army while the President answers directly,
Counsel's Office int erposes no objection."
Jim Connor
\
Trudy -
into
Thanks
359
Katen
Mr. DuBois may come in to review this
file.
Send copy of letters from Congress to
Mr. DuBoix (3/31)
----
(Joseph Jacobs was
messenger) He still might come to review
the inhouse mem
GBF
THE WHITE HOUSE
WASHINGTON
March 23, 1976
Dear Madam Chairman:
This is in further reply to your December letter
to me regarding the measurement rule amendments
proposed by the Panama Canal Company and the
Secretary of the Army.
I have, carefully reviewed the issúes and decided
to approve the proposed amendments with the
exception of the so-called "on-deck cargo"
amendment.
Sincerely,
Ford
The Honorable Leonor K. Sullivan
Chairman
Committee on Merchant Marine
and Fisheries
House of Representatives
Washington, D.C. 20515
GERALD
THE WHITE HOUSE
WASHINGTON
March 23, 1976
Dear Mr. Chairman:
This is in further reply to your December letter
to me regarding the measurement rule amendments
proposed by the Panama Canal Company and the
Secretary of the Army.
I have carefully reviewed the issues and decided
to approve the proposed amendments with the ex-
ception of the so-called "on-deck cargo" amendment.
Sincerely,
Herald R. Ford
The Honorable Warren G. Magnuson
Chairman
Committee on Commerce
United States Senate
Washington, D.C. 20510
EXECUTIVE OFFICE OF THE PRESIDENT
OFFICE OF MANAGEMENT AND BUDGET
WASHINGTON, D.C. 20503
FEB 24 1976
ACTION
MEMORANDUM FOR:
THE PRESIDENT
FROM:
James T. Lynn
SUBJECT:
Panama Canal Tolls Rules Changes
Issue
Should approval be given to the Panama Canal Company to
modify cargo measurement rules which determine toll
assessments for ships transiting the Panama Canal?
Background
You have been requested to approve seven substantive changes
in tonnage measurement rules governing tolls for vessels
transiting the Panama Canal. The proposed changes were
adopted by the Board of Directors of the Panama Canal Company
and have been forwarded by the Secretary of the Army in his
capacity as "stockholder" of the Company (Tab A). Below is
a brief discussion of the issues, along with recommendations.
A more detailed discussion of the issue is attached (Tab B).
The purpose of the changes, according to the Company, is to
redistribute costs more equitably among Canal users. Cost
redistribution would be accomplished by altering the
definitions of space availability on board vessels for
carrying freight and passengers. The last systematic review
of tonnage measurement rules was conducted in 1937. In
addition to redistributing costs, the changes would increase
total revenue from tolls, as shown below:
(dollars in millions)
General
Container
Cargo
All
Ship
Ship
other
Total
All-Flags Tolls
+4.6
+3.1
+4.6
+12.3
% Increase
+28%
+10%
+6%
+9%
U.S.-Flag Tolls
+1.7
+0.4
+0.2
+ 2.3
% Increase
+37%
+12%
+4%
+17%
2
The disproportionately large tolls increase for containerships
(modern vessels which carry pre-boxed cargo) is primarily a
result of one rules change--the "on-deck cargo" amendment.
This amendment would require the measurement, and toll
assessment, of all on-deck cargo. Currently this cargo is
exempt from measurement. Of the total annual $12.3 million
tolls revenue increase, $6.0 million is attributable to the
on-deck cargo amendment, mostly relating to containership
operations.
The financial health of the Panama Canal Company has been weak
in recent years largely as a consequence of rising costs and
declining traffic. If approved, the revenues gained by the
measurement rule amendments would help alleviate, but would
not eliminate, a projected 1976-1977 operating deficit. In
fact, either with or without the proposed amendments, a
general toll increase will be needed in the coming year.
A large toll increase is certain to be strongly opposed by
the maritime industry--as are the proposed amendments.
Without additional revenues, however, the Company will be
forced to request U.S. Government assistance.
Options
#1. Approve all seven amendments in their entirety.
#2. Approve all but the on-deck cargo amendment.
#3. Disapprove all seven amendments.
Discussion of the Proposed Amendments
The existing Panama Canal toll assessments are based on
commonly-accepted, international principles of ship "earning
capacity.' Earning capacity is measured by the volume of
below-deck space (gross tonnage), with deductions for space,
such as the engine room, which is not available for
revenue-producing carriage (net tonnage). The actual
utilization of ship space is not considered in determining
tolls charged for a particular transit. A primary reason
for this approach is to avoid the costly delays that would
be involved in measuring the volume, weight or value of
cargo actually carried on each transit. Under the existing
measurement system, a particular ship only needs to be
measured once instead of each transit.
Six of the seven proposed amendments seek to remove minor
anomalies in the existing measurement system. Four of the
changes would increase and two would decrease toll assessments.
3
Generally, the amendments would abolish "double counting"
of space and/or refine measurement standards in accord with
modern ship design. They would change capacity measurement
rules for the following spaces: fuel tanks, hatchways,
water tanks, public rooms on passenger ships, and selected
shop and store rooms. These six changes are all consistent
with the established principle of basing tolls on the
measurement of earning capacity. Few specific objections
have been filed to these proposed amendments.
The seventh amendment constitutes a major change in the
approach to assessing tolls. In addition to the traditional
method of establishing tolls for below-deck carrying capacity,
it would charge tolls for cargo actually carried on the ship
deck during each transit. This means that if a ship were
only partially loaded below deck, and carried on-deck cargo,
it would be charged for its full below-deck capacity as well
as for its actual on-deck cargo. By comparison, a ship
carrying the same tonnage, all below deck, would have to pay
only for its below-deck capacity, even though it may have a
capability of carrying on-deck cargo.
This proposed change would be a departure from the traditional
principle of basing tolls only on carrying capacity. It also
would establish different standards for below-deck and on-deck
cargo carriage.
The effect of this change would be to penalize ships which
carry on-deck cargo but which do not or can not fully utilize
below-deck space. Containerships, in particular, would be
impacted by the change. Containerships are designed to
carry significant on-deck loads, but they are not able to
fully utilize below-deck space because the rectangular
containers cannot use curved hull space on the sides, front
and back, and because space between and around containers
is needed for purposes of loading and unloading. Consequently,
with the current method of establishing tolls, containerships
on the average pay more per cargo ton actually carried than
do other ships. Recent data show that containerships pay
tolls averaging $2.12 per cargo ton, compared with about $1.15
per ton for general cargo ships.
Few would disagree with the Canal Company's position that, in
theory, on-deck cargo carriage should be subject to toll
assessment. The Company's proposal, however, does not seem
to be an equitable means of assessing such tolls, particularly
when applied to containerships. It may be necessary to
establish an entirely new method of assessing tolls for
containerships, rather than simply modifying a measurement
system which did not anticipate containership technology.
4
Recommendation
Option #2 is recommended. We believe that the six relatively
minor amendments are sensible and would not be inequitable.
The on-deck cargo amendment, however, represents a major
departure from traditional measurement practices, and it
appears that it would create greater inequities than it
would remove. It is recommended that the issue of how to
assess tolls for on-deck cargo be studied further.
Positions of Interested Parties
Maritime interests have expressed across-the-board objections
to the proposed amendments. Their concern, however, is
primarily focused on the on-deck cargo amendment. Two major
U.S. shipping company associations--the American Institute
of Merchant Shipping and the American Maritime Association--
have privately indicated that if the on-deck cargo amendment
were dropped (option #2), their opposition to the remaining
amendments would be minimal.
Although the Congress has no statutory role relative to the
establishment of Panama Canal tolls, the maritime interests
have generated strong support in both the House and Senate.
In the House, Mrs. Sullivan (Chairman of the Merchant Marine
and Fisheries Committee) and Mr. Metcalfe (Chairman of the
Panama Canal Subcommittee), as well as 29 other members,
have cosigned a letter to you asking that Presidential action
be delayed until the House has had the opportunity to review
the measurement rules. Senators Magnuson (Chairman of the
Commerce Committee) and Long (Chairman of the Merchant Marine
Subcommittee) have likewise requested that you delay action
(letters at Tab C). Insofar as congressional opposition to
the amendments is generated by the maritime interests, we
expect that rejection of the on-deck cargo amendment would
also minimize congressional concerns.
The following agencies have expressed no objection to the
proposed amendments: Justice, Treasury, Federal Maritime
Commission, National Security Council, and Council of
International Economic Policy. Although both Commerce and
Transportation have recommended that the amendments be
delayed or disapproved pending further analysis, both report
that option #2 largely mitigates their concerns. State
advises that the amendments have no effect on the sensitive
treaty negotiations over the status of the Panama Canal.
Although State indicates that Greece, Norway, Spain, Japan,
Italy and Sweden have made oral representations to the
Department critical of the changes, State does not oppose
their approval.
5
The Panama Canal Company and the Secretary of Army stand by
their recommendation, option #1. However, they report that
option #2 is preferable to option #3.
Decision
-- Option #1: Approve all seven amendments
-- Option #2 (Recommended) : Approve all but the
on-deck cargo amendment
-- Option #3: Disapprove all amendments
-- See me
Action
To carry out option #2, it is necessary for you to sign the
attached resolution approving all but the on-deck cargo
amendment. Additionally, we recommend that you sign the
attached letters to the chairmen of the House and Senate
authorizing committees explaining your decision, and to
the Secretary of the Army requesting additional review of
the tonnage measurement system and indicating the necessity
for the Panama Canal Company to take action to restrain
costs. These signature documents are at Tab D.
Attachments
SECRETARY OF THE ARMY
WASHINGTON
December 12, 1975
The President
The White House
Washington, D. C. 20500
Dear Mr. President:
In my capacity as "stockholder" of the Panama Canal
Company under authority delegated to me by Executive Order
11305 of September 12, 1966, I am forwarding for your
approval a Resolution adopted by the Board of Directors of
the Panama Canal Company on November 17, 1975, amending the
rules of measurement of vessels for the Panama Canal.
The action by the Board of Directors is based on Sections
411 and 412 of Title 2 of the Canal Zone Code under which the
Panama Canal Company is authorized to prescribe rules of
measurement for determining the earning capacity of vessels
using the Canal. Section 412 provides that changes in the
measurement rules shall be subject to and take effect upon
the approval of the President of the United States. Section
411 requires six months' notice of the changes in the measure-
ment rules. This notice was published in the FEDERAL REGISTER
on July 31, 1975, so that the earliest date on which the new
rules could become effective is January 30, 1976.
Following publication of the notice in the FEDERAL
REGISTER, the Panama Canal Company invited written comments
from the public and held a public hearing in accordance with
applicable regulations. After consideration of all relevant
matter presented in the written comments received and presented
at the hearing, the Board of Directors adopted the proposed
amendments of the measurement rules, subject to your approval.
The inclosures to this letter set out in detail the
background of the proposed changes in the rules and the pro-
ceedings by the Board of Directors leading up to the adoption
of the amendments
Your approval of the proposed changes in the measurement
rules is recommended, effective January 30, 1976.
Respectfully yours,
Inclosures
Martin R. Hoffmann
as
ATTACHMENT
FORD
GERALD
DISCUSSION OF PANAMA CANAL TOLLS RULES CHANGES
Background
The attached letter from the Secretary of the Army requests
Presidential approval of proposed changes in rules governing
tolls for ships transiting the Panama Canal. The proposal
was adopted by the Board of Directors of the Panama Canal
Company on November 17 and was forwarded to the President
by the Secretary of the Army, in his capacity as "stockholder"
of the Company, on December 12. The rules changes require
Presidential approval and can be put into effect on or after
January 30, 1976, a minimum statutory 6 months after notice
of the proposal was published in the Federal Register.
Since the beginning of Panama Canal operations in 1914, tolls
have been based on ship "earning capacity." The measure of
ship earning capacity has been the space available (net
tonnage) for carrying freight and passengers. The Panama
Canal Company argues that the measurement rules which
determine ship earning capacity should now be altered because:
(a) the last systematic review was conducted in 1937; (b) ship
configuration and technology have dramatically changed in the
past 38 years; and (c) the operating costs of the Canal are no
longer equitably distributed to reflect the earning capacity
of vessels using the Canal. Consequently, the Company has
proposed seven substantive changes to the measurement rules,
requiring thirty amendments to the Code of Federal Regulations.
The Company has. found that the proposed rules "better reflect
the earning capacity of vessels than the present rules, are
nondiscriminatory, just and equitable.'
OMB is the coordinating agency for Panama Canal Company toll
proposals. We have solicited the views of the following
agencies on the proposal: State, Commerce, Transportation,
Justice, Treasury, Agriculture, Federal Maritime Commission,
National Security Council, and Council of International
Economic Policy Mevalso have received unsolicited comments
from members of Congress and the maritime industry (shipping
companies, unions and port authorities) These views will be
discussed below, as well as other issues pertaining to the
proposal.
Panama Canal Company Financial Condition and Canal Toll Issues
The Panama Canal Company is a wholly-owned Government corporation
whose primary purpose is maintaining and operating the inter-
oceanic Canal. From the Canal's tolls and other charges, the
2
Company is expected to be self-sustaining. Additionally, the
Company is expected to reimburse the U.S. Treasury for:
(a) uncovered costs accrued by the Canal Zone Government;
(b) interest payments relating to original Canal construction
costs borne by the U.S. Government; and (c) annuity payments
made by the U.S. to the Republic of Panama pursuant to the
Treaty of 1903, as amended in 1936.
For the past five years, the Panama Canal Company has
experienced rapidly rising costs and declining traffic. For
example, between 1970-1975, the number of transits declined
from 15,500 to 14,700, while operating costs climbed from
$172 million to $261 million. As a result, the first toll
increase since the Canal's 1914 opening was instituted in
July 1974 (+20% in toll rates). Despite the toll increase,
the Company's financial condition has continued to deteriorate
as a result of: (a) continuing cost-of-doing-business increases;
and (b) traffic downturns in the wake of worldwide economic
recession, the diversionary impact of the opening of the Suez
Canal, and the dampening effect of the 1974 toll increase.
Whereas the Company had planned to handle 40 ships daily in
FY 1976, an average of only 36 daily have been transiting the
Canal to date. The net effect of the financial downturn is
that the Company has sustained losses in the past two year
and is expected to continue to run losses in 1976 and 1977
as shown below (millions of dollars):
est.
est.
1974 deficit
1975 deficit
1976 deficit
1977 deficit
$-11.8
$-6.4
$-18.0*
$-38.0*
*assumes no toll changes, measurement rules amendments,
or other remedial actions.
If approved, the measurement rules amendments would help
alleviate, but would not eliminate, projected Company deficits
in 1976 and 1977. The amendments would increase the measurements
of vessel net tonnage, leading to higher annual toll assessments
on the order of $12-13 million (further discussed below). The
Company argues, however, that it is incorrect to equate the
proposed amendments with a toll increase rather, the purpose
of the amendments is to redistribute the operating costs of the
Panama Canal more equitably. In the Company framework of
thinking, the processes of establishing tolls and changing
measurement rules, although related, are separate. Any positive
revenue effects resulting from the proposed amendments would be
accounted for in computing the need for future toll rate changes
(i.e., future toll increases would be reduced by the amount of
additional revenues gained by the proposed amendments).
3
In fact, either with or without the proposed rules changes,
the Panama Canal Company is now indicating that a substantial
general toll increase will be required in the next 12 months
to meet the anticipated deficits. This would be the second
general toll increase in three years. Required toll rate in-
creases are shown below. The figures presume the imposition
of moderate cost-cutting measures and the continued operation
of the Company on a self-sustaining basis.
($ in millions)
Measurement
Measurement
Rules
Rules Not
Approved
Approved
Additional revenue required
to meet FY 1977 deficit
$26
$38
Future required toll increase
+17%
+28%
Additional revenue required
to meet FY 1977 deficit as
well as recoup FY 1976
deficit over five years
$28
$42
Future required toll increase
+19%
30%
The Company has pointed out that its statutory authorities
provide several alternative means for handling long term
deficits. It can: (a) defer payment to the U.S. Treasury
of interest and/or the net cost of the Canal Zone Government
to the extent the required amounts are not earned; (b) request
Congressional authority to waive entirely payment of the net
cost of the Canal Zone Government; (c) request a separate
appropriation for the Company to meet losses; or (d) use
available borrowing authority up to a maximum of $40 million.
Company officials are increasingly talking about the necessity
of employing these fallback authorities. For example, in a
January meeting, the Company's Board of Directors authorized
Company staff to explore the desirability of using one or
more of the authorities in the context of the future 1978
budget request. Utilization of the above authorities would
be highly undesirable from a budgetary point of view in that
they would entail U.S. Government subsidization of potentially
sizable Company deficits.
Of course; the future required toll increase can be reduced
by the extent to which the Company undertakes reductions in
services, employee benefits, and planned capital construction
projects. The President of the Company cum Governor of the
Canal Zone Government has already taken measures to cut
spending, but has shied away from major reductions which would
lead to strong opposition from Panama Canal employee groups,
(e.g., elimination of a 15% tropical pay differential).
4
Impact of the Proposed Measurement Rules Amendments
Of the seven substantive amendments, five will increase total
measurement tons, leading to higher toll assessments, and two
will lower total assessments. The net effects of the amend-
ments on tolls are shown below:
Company Estimates of Annual Tolls Impact of Rules Amendments1/
($ in thousands)
Ship Type
Measurement Rule
General
Container
All
Amendments
Cargo
Ship
Passenger
Other2/Total
Amendments which Increase
Measurement tons:
Deck Cargo
+578
+4,332
+9
+1,038
+5,957
Fuel
+2,290
+356
+117
+2,965
+5,728
Hatch Exemption
+209
+101
+5
+477
+792
Public Rooms
--
--
+423
--
+423
Water tanks
+198
+1
+3
+290
+492
Amendments which Decrease
Measurement tons:
Boatswain's Stores
-118
-213
-7
-641
-979
Engr. Shops
-11
-8
-1
-45
-65
All Flags Tolls Increase
+3,146
+4,569
+550
+4,083
+12,348
% Increase
+10%
+28%
+28%
+4%
+98
U.S. Flag Tolls Increase
+410
+1,708
+59
+156
+2,333
% Increase
+12%
+37%
+16%
+3%
+179
1/
Shipping companies generally believe that the Company's
estimates of tolls impact are understated
2/
Includes dry bulk carriers, tankers, specialized product
carriers.
Maritime Industry Views
Shipping companies, unions, port authorities and selected
industries (e.g., lumber companies) have filed objections with
the Panama Canal Company regarding the proposed amendments. The
most commonly-cited objections to the amendments have been the
following:
--the amendments constitute a "de facto" toll increase, the
impact of which has not been satisfactorily evaluated.
5
the amendments particularly impact containerships and
hence are "discriminatory. Furthermore, because the
U.S.-flag fleet has more containerships than do
foreign-flag fleets, U.S. shipping companies sustain
a proportionally greater financial injury.
the amendments do not improve the accuracy of the
measurement of ship cargo capacity, and hence are not
more equitable.
the amendments' impact on tolls will have negative side
effects; it will:
further reduce Canal traffic and therefore dampen
positive revenue effects of the amendments.
increase ocean freight rates and contribute to
inflation.
lead to the abandonment of some shipping services
and divert cargo passing through North Atlantic
U.S. ports to cross-continental rail or truck
transportation (leading to possible environmental
degradation).
the amendments, and the perceived toll increases they
cause, beg the issue of the Company's ability to cut
costs and thereby obviate the need for additional
revenue.
The Company published the amendments in the Federal Register
in July 1975, received written replies, opened the issue to
hearings, and in November the Company's Board of Directors
approved the original recommendations. The maritime industry
is highly irritated over the fact that the Board approved the
amendments without change, seemingly having ignored the
industry's many objections.
Despite the wide range of objections filed with the Company, the
maritime industry is principally concerned with only one amend-
ment the "on-deck cargo" amendment. This amendment would
have the effect of measuring all on-deck cargo transiting the
Canal, and assessing tolls accordingly. Currently on-deck
cargo is excluded from measurement and toll assessment.
Measurement by the Company of deck loads of 102 containerships
transiting the Canal showed that the net tonnage (and therefore
tolls) for these ships as a result of the application of the
deck cargo rule would increase by 28% in the aggregate, although
the net tonnage of U.S.-flag vessels in the group would increase
by 37%. As shown in the table in the previous section, the
on-deck cargo rule accounts for about half of the annual
estimated rules toll increase of $12 million.
6
Two major U.S. shipping company associations-- the American
Institute of Merchant Shipping (AIMS) and the American
Maritime Association (AMA) have privately indicated to us
that if the on-deck cargo rule were dropped from the package
of amendments, the opposition of their member companies to
the remainder of the amendments would be minimal.
Congressional Views
Although the Congress has no statutory role relative to the
establishment of Panama Canal Company tolls, the maritime
industry has generated strong support for its position in both
the House and Senate. In the House, Mrs. Sullivan (Chairman
of the Merchant Marine and Fisheries Committee) and Mr. Metcalfe
(Chairman of the Panama Canal Subcommittee), as well as 29
other members of the House, have cosigned a letter to the
President asking that no action be taken on the pending measure-
ment rules amendments until the House has had the opportunity
to review the measurement formulas in detail at future hearings
(letter attached). Likewise in the Senate, Senators Magnuson
(Chairman of the Commerce Committee) and Long (Chairman of
the Merchant Marine Subcommittee) have "join[ed] with Members
of the House of Representatives who have expressed their
interests in this to you and request that no action be taken
on these proposed changes until adequate Congressional review
of this important subject has been undertaken."
Mrs. Sullivan and Mr. Metcalfe have also requested a "full
investigation" of the financial situation of the Panama Canal
Company by the GAO, and have sent an extensive list of questions
on the anticipated impact of the proposed measurement rules
to the Company. However, hearings have not yet been scheduled
in either House or Senate. Company staff report that little
congressional action could be expected if the President were
to delay action on the amendments--that the primary purpose
of congressional intervention is to obstruct Company action
which would be injurious to the U.S. merchant marine.
Agency Views
The following agencies have expressed no objection to the proposed
amendments: Justice, Treasury, Federal Maritine Commission,
Agriculture, National Security Council, and Council of Inter-
National Economic Policy. Agencies which have expressed: concerns
are as follows:
7
Commerce. The Commerce Department opposes the proposed
amendments and recommends that Presidential approval
"be delayed until a thorough assessment of the problems
which are raised by these proposals can be completed. "
Commerce reiterates most of the objections raised
by the maritime industry, along with the following
additional points:
The amendments deviate from the concepts established
in 1937 by a Presidentially-appointed committee. The
amendments should be evaluated by a body of the same
level before approval.
The amendments adversely impact U.S.-flag containerships,
the most competitive element of the U.S.-flag fleet.
In the long term, the amendments could result in an
increased need for Federal assistance to the U.S.
merchant fleet.
The on-deck cargo amendment is not precisely defined
and administration may be difficult.
Transportation. DOT recommends that "additional analysis
would be desirable before
issuance of the regulations"
based on the following:
If diversion of cargo from ocean carriage to cross-
continential land carriage were to result from the
amendment, there could be benefits to the U.S. railroad
industry but disbenefits to the U.S. shipping industry.
This should be assessed.
The Senate may ratify the 1969 International Convention
on Tonnage Measurement of Ships, which would establish
new parameters for measuring shipping tonnages.
Although the law would not enter into force until at
least two years later, and although the Company would
not be legally required to alter its measurement
system, "it might seem reasonable for the
Company
to consider developing a system employing the same
parameters as those used in the Tonnage Convention.
"
State. The State Department advises that the amendments
have no effect on the sensitive U.S. treaty negotiations
with the Republic of Panama over the status of the Panama
Canal. State further reports that foreign shipping
interests have objected to the amendments and the govern-
ments of Greece, Norway, Spain, Japan, Italy and Sweden
have made representations to the Department of State
critical of the changes. State concludes that the
"complaints should be carefully considered and treated
appropriately in any final decision. "
8
Discussion of the Merits and Demerits of the Proposed Amendments
The rules of measurement currently employed by the Panama
Canal Company are based on the principle that canal tolls are
to be assessed on the "earning capacity" of vessels. Earning
capacity of vessels is defined as space available for
carriage of cargo and passengers. In the most general terms,
this determination is made by measuring the volume of the
space enclosed by the entire vessel (gross tonnage) and
deducting from this total, that space, such as the engine
room, which is not available for the carriage of cargo or
passengers (net tonnage). The assumption is that every net
cubic foot of below-deck space can be potentially used. A
ship's net capacity, therefore, is currently the sole basis
for toll assessments. Net capacity does not consider such
factors as volume, weight, or value of cargoes carried
(utilization of capacity). Because the system entails
measuring the ship instead of the cargo, ships only need
to be measured once, instead of transit-by-transit, and
administration of the system is thereby facilitated.
The Panama Canal vessel measurement system, like almost all
other vessel measurement systems, is derived from principles
originally laid down in nineteenth century England by George
Moorsom. Moorsom established the principle of measuring vessels
net capacities as determined by all enclosed (below-deck)
spaces as measured in cubic feet, divided by 100, SO that one
ton represents 100 cubic feet of space. Almost all vessel
measurement systems start with the Moorsom method for
determining gross tonnage. However, differences often result
from the application of differing exemptions and deductions
in arriving at net tonnage figures. Panama Canal and Suez
Canal systems are similar and produce similar net tonnages.
Six Minor Amendments
Of the seven substantive measurement rule amendments proposed
by the Panama Canal Company, six are relatively non-controver-
sial. These six would alter, in a minor way, existing
exemptions and deductions for the following spaces: fuel
tanks, hatchways, water tanks, public rooms on passenger
vessels, boatswain's stores, and engineer's shops. The first
four would have the effect of increasing tonnage measurements.
The last two would have the effect of decreasing tonnage
measurements. These are further described below:
Amendments which increase measurement tons:
Fuel. The amendment would substitute actual
measurement of fuel spaces for the existing
rule by which the deduction for fuel is normally
computed at 75% of the measured space of the
engine room.
9
Hatch Exemption. The amendment would eliminate
the current exclusion of the cubical contents of
hatchways. In modern shin design, hatch covers
fit over the top of hatchways and the space under
the hatch cover is available for cargo.
Water Tanks. The amendment would eliminate the
current exclusion of the measurement of water
tanks used for fresh water for ship use. This
would achieve consistency with the treatment of
other like spaces that are not allowed as
measurement deductions.
Public Rooms. The amendment would eliminate the
current exclusion of the measurements of public
rooms (e.g., dining rooms, lounges, barber shops,
swimming pools). This is based on the premise
that public rooms are spaces available for the
use of the passengers and hence a consistent
application of the earning capacity concept
precludes deduction of these spaces.
Amendments which decrease measurement tons;
Boatswain's Stores. The amendment would permit
exclusion of measurements for boatswain's stores
on the premise that space used for this purpose
is unavailable for stowage of cargo, passenger
use, or other directly related purposes.
Engineers' Shops. This amendment would allow
deductions of measurements for engineers' shop
space over the current arbitrary deduction
ceiling of 50 tons. Actual measurements of
engineers' shops would determine the applicable
deduction.
The intent of these six amendments is to avoid "double counting"
of selected ship spaces and/or refine measurement standards in
accord with changed ship design. None of the above six
proposed amendments have been strongly opposed by the maritime
industry as a whole. However, passenger vessel operators are
upset over the "public rooms" amendment which would increase
their toll assessments by about $550 thousand annually (+288)
U.S. -flag vessel operators account for only $59 thousand of
the total.
The On-Deck Cargo Amendment
Currently, on-deck cargo (e.g., containerized cargo, stores,
livestock) is excluded from measurement and toll assessment.
The seventh amendment proposed by the Panama Canal Company
10
would require the measurement of all on-deck cargo for every
vessel transit. The proposed amendment describes this as
follows:
"The deck space occupied by the goods thus carried
shall be determined at the time of the application
of the vessel for passage through the canal and
shall be deemed to be the space limited by the
area occupied by the goods and by straight lines
enclosing a rectangular space sufficient to
include the goods.
The on-deck cargo amendment has generated a great deal of heat
on the part of the maritime industry (e.g., the amendment is
alleged to be "arbitrary and capricious" and "discriminatory"
against both containership operators and the U.S.-flag fleet).
Containerships are the primary carriers of on-deck cargo.
By this amendment, if a containershin operator transited the
Canal with no on-deck containers on one occasion, 50 on
another, and 100 on another, he would be charged differently
on each occasion. The Panama Canal Company believes the
amendment is desirable because there is "no doubt that the
use of the deck for deckloads adds to the space of the vessel
available for carrying cargo, and hence is a valuable component
of earning capacity of the vessel required to be measured.'
Few would disagree with the proposition that, in theory,
on-deck cargo carriage should be subject to toll assessment.
However, the Company's proposal for assessing on-deck cargo
poses serious problems, principally because it is inconsistent
with other Company cargo measurement rules. The inconsistency
results from the fact that the on-deck cargo amendment requires
measurement and toll assessment for all cargo actually carried
on deck. Utilization of on-deck space, therefore, would be
the basis for toll assessment. However, as previously
explained, the existing Panama Canal ship measurement system
for below-deck space is based on the principle of net ship
capacity, assuming no wasted space resulting from the type of
cargo carried or manner of carriage and irrespective of the
amount of cargo actually carried on a given transit.
The result of the inconsistency is a toll assessment system
which appears to be prejudicial to containership operators.
Much of the below-deck space is lost in containerships
because rectangular container cells cannot fully utilize
the curved spaces against the hull of the vessel and because
spaces must be left between containers. As partial compen-
sation for this lost space, containerships carry containers
on deck. In effect, the containership operator has chosen
11
to offset the somewhat reduced carrying capacity of the vessel
with greater efficiency in cargo handling. In this light,
the proposed amendment does not account for "lost space" on
containerships and thereby constitutes a serious deviation
from the concept of measurement which requires tolls to be
assessed against vessels' actual cargo carrying capacities.
Approval of the on-deck cargo amendment would penalize this
form of cargo carriage. It would require continued toll
assessment for all below-deck space, whether or not utilized,
and would superimpose a tolls burden for on-deck cargo
carriage. In fact, it appears that containership operators
are already relatively "over assessed. FY 1975 data indicate
that, when recomputed on a dollar-per-ton-carried basis,
containership operators were assessed $2.12 per ton compared
with $1.15 for general cargo ship operators.
Based on the above, it may be appropriate for the Panama
Canal Company to reevaluate the tonnage measurement system
to determine if it is prejudicial to certain classes of
carriers, and, if so, to recommend remedial actions.
Options
#1. Approve all seven amendments in their entirety.
#2. Approve all but the on-deck cargo amendment. Request the
Company to reevaluate on-deck cargo measurement rules in
the context of the overall equities/inequities of the
existing measurement system.
#3. Disapprove all seven amendments. Request the Company to
further study alleged prejudicial aspects of the existing
measurement system.
Discussion of Options
Option #1
Pro
The amendments, in the aggregate, improve the tonnage
measurement standards which have been in force for
the past 38 years in terms of accuracy and equity.
-- The amendments add revenues to the Company (until a
toll increase is put into effect) in a period in
which the Company's financial situation is seriously
deteriorated.
12
Insofar as the Company is able to collect additional
revenues now, the magnitude of the future general
toll increase could be reduced. The smaller the
general toll increase, the less strenuous will be
the opposition to it.
Con
-- The appropriateness of the on-deck cargo amendment is
not clear. It is inconsistent with the existing
measurement system and appears prejudicial to
containership operators who would suffer a heavy
toll burden (+37%).
Approval of the amendments may give the false
impression of curing the Company's financial woes,
whereas only a general toll increase can generate
sufficient revenues to make the Company self-sustaining.
Approval of the amendments runs counter to expressed
maritime industry and congressional requests to the
President. This could lead to congressional action
to restrict Administration authority relative to
the Canal (e.g., make all toll proposals subject to
congressional review). This, in turn, could endanger
the more important future general toll increase.
Option #2
Pro
-- It retains most of the amendments, thereby improving
the overall cargo measurement system.
Insofar as there are justifiable grievances against
the on-deck cargo amendment and/or the cargo measure-
ment system as a whole, the issues could be further
studied by the Company.
Disapproval of the on-deck cargo amendment would
almost entirely diffuse U.S. maritime industry
dissatisfaction with the amendments package.
It allows Congress to hold hearings on the on-deck
cargo issue, per congressional requests to the
President. Congressional action to circumscribe
Administration authorities would be unlikely.
13
Con
Insofar as approximately $6 million in revenues will
be forfeited if the amendment is not approved, the
deficit situation of the Company will worsen by a
like amount and the amount of the general toll
increase will have to be raised accordingly to
accommodate the loss. The higher the toll increase,
the more likely will be strenuous industry opposition
to it.
Option #3
Pro
It would completely negate maritime industry and
congressional criticisms.
Insofar as the industry and the Congress will have
been mollified on this issue, it may lessen tensions
relative to the announcement of a future toll increase
(although the magnitude of the increase will certainly
be an issue of contention).
Con
-- The measurement rule anomalies of the current system
will be maintained indefinitely.
-- It may make it more difficult to approve future Canal
toll proposals by leading the industry and Congress
to think that vigorous opposition to such proposals
will lead to their rejection by the President.
Insofar as approximately $12 million in revenues will
be forfeited if the amendment is not approved, the
deficit situation of the Company will worsen by a
like amount and the amount of the general toll increase
will have to be raised accordingly to accommodate
the loss.
WARREN O. MAGNUSON, WASH CHAIRMAN
JOHN o. PASTORE, R.I.
JAMES B. PEARSON, KANS.
VANCE MARTKE, IND.
RCBERT P. GRIFFIN, MICH.
PHILIP A. HART. MICH.
HOWARD H. BAKER. JR., TENN.
LOWARD v. CANNON, NEV.
TED STEVENS, ALASKA
RUSSELL B. LONG, LA.
J. CLENN BEALL, JR., MO.
United States Senate
FRANK E. MOSS, UTAH
LOWELL P. WEICKER, JR., CONN.
ERNEST F. HOL LINGS, S.C.
JAMES L. BUCKLEY, N.Y.
DANIEL K. INDUYE, HAWAII
COMMITTEE ON COMMERCE
JOHN V. TUNNEY, CALIF.
ADLAI E. STEVENSON, ILL.
WASHINGTON, D.C. 20510
WENDELL H. FORD, KY.
JOHN A. DURKIN, N.H.
MICHAEL PERTSCHUK. CHIEF COUNSEL
S. LYNN SUTCLIFFE, GENERAL COUNSEL
ARTHUR PANKOPF. JR., MINORITY COUNSEL
December 19, 1975
The Honorable Gerald A. Ford
President of the United States
The White House
Washington, D. C. 20500
?
Dear Mr. President:
Great concern has been expressed to us over the anticipated
consequences on U. S.-flag ocean carriers, particularly container-
ship operators and forest product shippers, resulting from the
proposed changes in the rules for measuring vessels transiting
the Panama Canal.
The Panama Canal Company's proposal will actually result in
the third increase in Canal toll charges in less than 18 months.
Despite a large number of written and oral statements presented
to the company concerning the proposed changes which were published
in the Federal Register on July 31, 1975, the measurement rules
changes have been submitted for your action without modification.
There appears to be a substantial number of very serious
questions regarding statutory requirements and treaty provisions
as well as significant economic and transportation issues involved
in these proposals.
We join with Members of the House of Representatives who
have expressed their interests in this to you and request that
no action be taken on these proposed changes until adequate
Congressional review of this important subject has been under-
taken.
Sincerely yours,
Warren Insurancen
WARREN G. MAGNUSON, U.S.S.
Nee
RUSSELL B. LONG, U.S.S.
K, MS. JOHN RULLIVAN, MO., CHAIRMAN
THOMAS L. MERLEY. or o
PHILIP E. MUFFE. MICH.
CHIEF CLERK
JOHN D. DINGELL. MICH
CHARLES A. MOTHER, own
FRANCES STILL
THOMAS N. DOWNING. VA.
PAUL H. MCCLOSKEY, JM., CALIF.
PAUL o. nogring. FLA.
OLNE SHYDER. KY,
U.S. Mouse of Representatives
MINORITY COUNSEL
JOHN M. MURPHY, N.Y.
EDWIN b. FORSYTHE N.J.
WALTER B. JONES. N.C.
PICMAE 8. (PETE) DUTONT, DEL
Committee on
RICHARD N. SHAROOD
POSTRT L. LEGGETT, CALIF.
DAVID C. TREEN, LA.
MAHIO BIAGGI. N.T.
JOEL PRITCHAND, WASH.
Merchant Stlarine and Fisheries
CLENN M. ANDERSON, CALIF.
DON TOUNG. ALASKA
I (KIKA) DE LAGARIA, TEX.
ROBERT r. BAUMAN, MO.
NALPH H. METCALE ILL.
NORMAN F. LENT. N.Y.
Room 1334, Longworth Douse Office Unilding
JOHN M. BREAUX, 1A.
MATTHEW J. RINALDO. N.J.
FRED D. MOONEY. PA.
DAVID r. EMERT, MAINE
PAUL B. SARBANES, MD.
Washington, D.C. 20515
00 GINN, GA.
DLRRY E. STUDDS, MAS3,
DAVID R. BOWEN, MISS.
December 8, 1975
JOSHUA EILBERO. PA.
RON DE LUGO. V.I.
CARROLL HUDBARD, JR., KY.
DON BONKER, WASH.
LES AUCOIN, OREG.
NORMAN E. D'AMOURS, N.H.
JERRY M. PATTERSON. CALIF,
LEO ZEFEHETTI. N.Y.
JAMES L OBERSTAR, MINN.
The President
The White House
Washington, D. C.
Dear Mr. President:
We have been advised that the Board of Directors
and Stockholder of the Panama Canal Company have
transmitted for your approval certain changes to their
Rules for Measurement of Vessels. Since historically
it has been the responsibility of the President of the
United States to gauge the effect of changes in Panama
Canal rules on the national transportation policy of
the United States, we wish to communicate to you some
of our concerns which we feel you should be cognizant
of in making your decision on this matter. The pur-
pose of this letter is to request that you sign the
proposed rules only after a thorough review of the
national economic consequences of these changes and
upon the advice of those agencies in the Executive
Branch who can best speak to the effect of the proposed
rules on this Nation's commerce.
We are increasingly concerned with the financial
well-being of the Canal. In July of 1974, a 19.7 per-
cent toll rate increase was approved, the first since
the opening of the Canal. We should note that no toll
increase was required during these many years since the
constantly escalating number of vessel transits and
increasing vessel size generated sufficient revenue to
keep ahead of constantly rising Canal Company costs:
The President
Page Two
December 8, 1975
The need for the 1974 general increase in the toll
rate was premised upon certain accounting changes made
by the Company, decreasing vessel transits, and increasing
operating and overhead costs. We were assured it was
necessary if the Company were to continue in a "break-even"
status, as is required by statute. The additional
financial burden placed on America's commerce was estimated
to be many millions of dollars annually. It is noted
that the current proposed rules change would result in an
additional 37 percent assessment for deck cargo on con-
tainerships. Our carriers simply cannot afford these
added operating costs, and the current proposed rules
could be much more detrimental to U. S. commerce than the
1974 increase.
The proposed rules in question represent another
de facto toll rate increase, although the burden would
be largely borne by certain types of vessels, notably
U.S.-flag containerships. While only eight percent of
the annual transits of the Canal are made by yessels of
U.S.-flag registry, approximately 37 percent of the con-
tainerships which transit the Canal are .S.-flag vessels.
The average containership which transits the Canal today
pays about $19,000 in tolls. Under the proposed measure-
ment rules, it would pay approximately $26,000. Since
the Company has not yet prepared and released its fiscal
year 1975 report, except for traffic statistics, it is
not now possible to assess either the increased revenue
resulting from the 1974 toll increase or the necessity
for these proposed rules. We do know that vessel transits
and cargo tonnage are continuing to decline, and that
Company costs are continuing to rise. We believe that
steps can and must be taken to reverse these trends.
At the time of the tolls increase last year, the
Committee did not take any action since we felt the in-
crease was reasonable inasmuch as it was the first and
only increase since the Canal has been in existence.
The present proposal to change the Canal Company's Rules
for Measurement of Vessels presents a different picture,
however. Among other things, it will affect the competi-
tive balance between the continental railroads and the
water carrier Canal users, and the burden will fall most
heavily on several U.S.-flag container and passenger ship
operators. In addition, if this change is approved, we
The President
Page Three
December 8, 1975
note the Canal Company's continuing emphasis on the
alleged need for increased revenues, which suggests that
the Company may propose another tolls increase in the
near future.
We anticipate that the Committee and its Panama
Canal Subcommittee will be reviewing the toll and tonnage
measurement formulas in some detail at future hearings.
We will be particularly interested in evaluating the
adverse impact of the proposed rules on the well-being of
the U. S. merchant marine and American commercial inter-
ests. We will keep you advised of our progress and plans,
and again ask that no action be taken at this time on
the pending measurement rules change.
Sincerely,
Lemor TV. Succivan
Leonor K. (Mrs. John B.) Sullivan
Chairman
Reeph H.Miterlys
Ralph H. Metcalfe
Ill Biogs Chairman Subcommittee Juln on m Panama murphy Canal
Jas Parthund
Paul Sarbaner Edin Dytho
W altriB Joses Forus n Dawney
The President
Page Four
December 8, 1975
hw & Befutte
2 de
DavidR. Bewen
John Buanx
Joshua Ecberg
Be Sinn
Canoll Hubbard Matter J. Revalls
alone Treen Jan ha Gugo
DadF.Eney
ton Boaver
Dear Now
Norman F. Lent
resarcime
DEMOCRATS
DEMOCRATS
Signed
Did not Sign
Leonor K. Sullivan, MO
Thomas L. Ashley, OH
John D. Dingell, MI
Robert L. Leggett, CA
Thomas N, Downing, VA
Gerry E. Studds, MA
Paul G. Rogers, FL
Jerry M. Patterson, CA
John M. Murphy, NY
Walter B. Jones, NC
Mario Biaggi, NY
Glenn M. Anderson, CA
E (Kika) de la Garza, TX
Ralph H. Metcalfe, IL
John B. Breaux, LA
Fred B. Rooney, PA
Paul S. Sarbanes, MD
Bo Ginn, GA
David R. Bowen, MS
Joshua Eilberg, PA
Ron de Lugo,
Carroll Hubbard, Jr., KY
Don Bonker, WA
Les AuCoin, OR
Norman E. D'Amours, NH
Leo C. Zeferetti, NY
James L. Oberstar, MN
REPUBLICANS
REPUBLICANS
Signed
Did not Sign
Paul N. McCloskey, Jr., CA
Philip E. Ruppe, MI
Edwin B. Forsythe, NJ
Charles A. Mosher, OH
David C. Treen, LA
M. G. Snyder, KY
Joel Pritchard, WA
Pierre S. du Pont IV, DE
Don Young, AL
Robert E. Bauman, MD
Norman F. Lent, NY
Matthew J. Rinaldo, NJ
David F. Emery, ME
RESOLUTION
WHEREAS, pursuant to the authority of sections 411 and 412 of
Title 2 of the Canal Zone Code, (76A Stat. 27), at a special meeting
on July 28, 1975, the Board of Directors of the Panama Canal Company
proposed certain amendments to the rules for measurement of vessels
for the Panama Canal for the purpose of more accurately reflecting
the earning capacity of vessels using the Canal; and
WHEREAS, at the special meeting of the Board of Directors on
July 28, 1975, pursuant to the provisions of the applicable regulations
of the Panama Canal Company, five members of the Board of Directors
were designated as a panel to conduct a public hearing on the proposed
changes in the measurement rules; and
WHEREAS, notice of the proposed amendments was published in the
Federal Register on July 31, 1975, (40 FR 32140) and a correction was
published in the Federal Register on August 11, 1975, (40 FR 34619); and
WHEREAS, the notice of the proposed amendments of the measure-
ment rules invited interested parties to participate in the rulemaking pro-
cess through submission of written data, views or arguments, and sub-
mission of supplementary data, views or arguments at a public hearing
to be held in Washington, D. C on October 6, 1975; and
WHEREAS, in accordance with the notice and the provisions of the
Company's regulations governing procedures for rulemaking, interested
parties did submit written data, views and arguments and, at the public
hearing on October 6, 1975, submitted supplementary data, views and
arguments in reference to the proposed amendments of the measurement
rules; and
WHEREAS, the panel designated by the Board of Directors to con-
duct the hearing has submitted its report, including the written data
submitted by interested parties and a full transcript of the hearing, with
copies of documents submitted at the hearing and thereafter within the
time fixed by the panel, and the recommendations of the panel with
respect to the proposed amendments of the measurement rules; and
WHEREAS, all relevant matters presented have been considered by
the Board of Directors; and
WHEREAS, the Board of Directors, having given careful consideration
to the assessment of the environmental impact of the proposed amendments
of the measurement rules, has determined that such amendments would not
significantly affect the quality of the human environment;
NOW, THEREFORE BE IT RESOLVED, That, in accordance with sections
411 and 412 of Title 2 of the Canal Zone Code, (76A Stat. 27) the rules
of measurement of vessels for the Panama Canal prescribed by the President
by Proclamation 2248 of August 25, 1937, be amended upon approval by the
President, but not earlier than six months from July 31, 1975, the date of
2
publication of notice of the proposed change in the Federal Register,
by amendment of Part 135 of Title 35 of the Code of Federal Regulations
as follows:
PART 135 -- RULES FOR MEASUREMENT
OF VESSELS
$ 135.82 [Amended]
by multiplying together the length,
1. In § 135.82 the references to § 135.86
breadth and depth of said rectangular
are amended to read $ 135.85.
space or spaces and dividing the prod-
$ 135.83 [Amended]
uct by 100 or 2.83, according as the meas-
urements are taken in feet or meters.
2. In the last line of $ 135.83 the ref-
Nothing in this section shall in any
erence to $ 135.88 is amended to read
manner affect the provisions of §§ 135.-
$ 135.85.
41-42; 135.61-63; or 135.81-88.
3. Section 135.85 is revised to read as.
§ 135.142 [Amended]
follows:
6. In § 135.142 the reference to 135.-
171-135.182 is amended to read §§ 135.-
§ 135.85 Certain spaces between inner
171-135.183.
and outer plating of double bottom.
§ 135.175 [Amended]
Space or spaces between the inner and
outer plating of the double bottom of a
7. In § 135.175 the last sentence is
vessel shall be exempted from measure-
amended by adding the words "or fuel"
ment, except when used, designated or
between the words "cargo" and "the
intended for carrying cargo or fuel; but
tonnage."
the tonnage of such spaces within the
8. Following $ 135.182 a new § 135.183
double bottom as are or may be used for
is added, reading as follows:
carrying cargo or fuel shall be deter-
§ 135.183 Hatchways.
mined and included in the gross tonnage.
The cubical contents of hatchways
The tonnage of double bottom tanks
shall be obtained by multiplying the
available for cargo or fuel may be
length and breadth together and the
obtained by multiplying the liquid-ca-
product by the mean depth taken from
pacity weight by the proper conversion
the top of beam to the underside of the
factor to get tons of 100 cubic feet.
hatch cover.
§ 135.86 [Revoked]
§ 135.211 [Amended]
4. Section 135.86 is revoked.
9. In § 135.211 the reference in the
5. Following § 135.112 a new $ 135.113,
fourth line to 5 135.132 is amended to
preceded by the undesignated center
read $ 135.183.
heading "DECK CARGO," is added, reading
as follows:
§ 135.271 [Amended]
DECK CARGO
10. In $ 135.271 the reference in the
$ 135.113 Deck cargo.
second line to $ 135.286 is amended to
read § 135.285.
If any ship carries stores, timber,
livestock, containers, or other cargo in
$ 135.273 [Amended]
any space upon an open deck not perma-
11. In $ 135.273 the reference in the
nently covered or in spaces exempted
last line to $ 135.286 is amended to read
under paragraphs (a) and (b) of § 135.-
$ 135.285.
82, all tolls and other charges payable
12. In § 135.274. paragraph (c) is
on the vessel's net tonnage shall be pay-
amended to read as follows:
able upon the vessel's net tonnage (as
defined below in §§ 135.271-287 and
$ 135.274 Spaces for stowage of stores
§§ 135.321-327) increased by the ton-
or cargo, not deducted.
nage of the space occupied at the time
at which the tolls or other charges be-
(c) On supply ships, stores, supplies
come payable by the goods carried upon
of all kinds, distilling machinery and
deck and not permanently covered or
distilled water, machines, tools and ma-
closed-in. The deck space occupied by
terial for repair work, mines and mining
the goods thus carried shall be deter-
materials, torpedoes, arms, and ammuni-
mined at the time of the application of
tion.
the vessel for passage through the canal
13. Section 135.231 is revised to read
and shall be deemed to be the space lim-
as follows:
ited by the area occupied by the goods
and by straight lines enclosing 2 rectan-
gular space sufficient to include the
goods. The tonnage of the space occu-
pied by the goods shall be ascertained
3
§ 135.281 Spaces used for boatswain's
§ 135.327 Propelling power deductions,
stores, deducted.
how made.
Spaces used exclusively for boatswain's
The deductions made for propelling
stores, including paint and lamp rooms,
power provided for in $5 135.323-135.325
shall be deducted. The deduction of
shall be made by adding to the space
spaces under this section shall be rea-
occupied by the engine room as defined
sonable in extent.
in !! 135.352-135.354 and 135.332, the
14. Section 135.282 13 revised to read
spaces available for fuel as defined in
as follows:
§§ 135.390 and 135.391.
§ 135.232 Spaces used for engineer's
21. The undesignated center heading
shops, deducted.
preceding $ 135.351 is amended to read
Spaces used exclusively for engineer's
as follows:
shops shall be deducted. The deduction
SPACE OCCUPIED BY ENGINE ROOM
of spaces under this section shall be rea-
sonable in extent.
§ 135.351 [Revoked]
15. In § 135.285 the heading of the sec-
22. Section 135.351 is revoked.
tion and paragraph (a) are revised to
23. In $ 135,352 the last four sentences
read as follows:
are revised to read as follows:
§ 135.285 Water ballast spaces, de-
§ 135.352 What understood by space
ducted.
occupied by engine rooms.
(a) Water ballast spaces, other than
When 2 portion of the space
spaces in the vessel's double bottom, shall
within the boundary of the engine or
be deducted if they are adapted and used
boiler room is occupied by a tank or
only for water ballast, have for entrance
tanks for the storage of fresh water,
only ordinary circular or oval manholes
lubricating oil, or fuel, including settling
whose greatest diameter does not exceed
tanks, the space considered to be within
30 inches, and are not available for the
the engine room shall be reduced by the
carriage of cargo, stores, or fuel. Spaces
space taken up by such tanks. Installa-
that would otherwise qualify as water
tions not strictly required for the work-
ballast except that they are also used
ing of the engines or boilers are not to
for fuel for the vessel's own use shall be
be included in the engine room measure-
regarded as part of the vessel's fuel space
ment no matter where situated but given
as defined in § 135.390.
separate deductions when they qualify
under §§ 135.271-135.285 and are listed
S 135.286 [Revoked]
under the appropriate item on page 2 of
the Panama Canal Certificate.
16. Section 135.286 is revoked.
24. In $ 135.353 the last sentence is
17. Section 135.287 is revised to read
revised to read as follows:
as follows:
$ 135.287 Marking and use of deducted
§ 135.353 Manner of ascertaining cubi-
cal content of spaces occupied by en-
spaces.
gine room.
Each of the spaces enumerated in
Add such contents, as well as
$5 135.275-135.285, unless otherwise spe-
those of the space occupied by the shaft
cifically stated, shall be subject to such
trunk and by any donkey engine and
conditions and requirements as to mark-
boiler located within the boundary of the
ing or designation and use or purpose
engine room or of the light and air cas-
as are contained in the navigation or reg-
ing above the engine room and used in
istry laws of the several countries, but
connection with the main machinery for
no space shall be deducted unless the use
to which it is to be exclusively devoted
propelling the ship, to the cubical con-
has been appropriately designated by of-
tents of the space below the crown of the
ficial marking. In no case, however, shall
engine room; divide the sum by 100 or
an arbitrary maximum limit be fixed to
by 2.33, according as the measurements
the aggregate deduction made under
are taken in feet or meters, and the re-
§§ 135.271-135.285.
sult shall be deemed to be the space
§ 135.322 [Amended]
occupied by the engine room for pur-
poses of calculating the deduction for
18. In $ 135.322 the reference to § 135.-
propelling power.
286 in the heading and in the second line
25. Section 135.354 is revised to read
of the section is amended to read is 135
as follows:
235.
§ 135.354 Manner of ascertaining cubi-
§ 135.324 [Amended]
cal content of spaces occupied by en-
19. In § 135.324 the reference to
gine room; where engines and boilers
§§ 135.331-135.333 is amended to read
are in separate compartments.
§§ 135.252-135.354 135.382.
If in any ship in which the space for
20. Section 135.327 is revised to read
propelling power is to be measured the
as follows:
engines and boilers are in separate com-
partments, the contents of each com-
partment shall be measured separately
4
in like manner, according to the above
S 135.412 [Amended]
method; and the sum of the tonnage of
the spaces included in the several com-
20. In s 135.412 the words and figures
partments shall be deemed to be the
in the second. third, and fourth lines
space occupied by the engine room for
"other than fuel spaces deducted under
purposes of calculating the deduction
§§ 135.351-135.354" are revoked.
for propelling power.
30. Section 135.511 is revised to read
as follows:
§ 135.381 [Revoked]
§ 135.511 Administration of rules.
26. Section 135.381 and the undesig-
nated center heading preceding that sec-
The rules of measurement provided in
tion reading "PROPELLING POWER DEDUC-
this part shall be administered by the
TION FOR VESSELS WITH FIXED BUNKERS,
President of the Panama Canal Com-
OR HAVING FUEL-On COMPARTMENTS
pany.
THAT CANNOT BE USED TO STOW CARGO OR
[FR Doc.75-31475 Filed 11-20-75;8:45 am]
STORES" are revoked.
§ 135.383 [Revoked]
27. Section 135.383 is revoked.
28. Two new sections numbered
§§ 135.390 and 135.391, preceded by an
undesignated center heading "SPACES
AVAILABLE FOR CARRIAGE OF FUEL" are
added, reading as follows:
SPACES AVAILABLE FOR CARRIAGE OF FUEL
$ 135.390 Spaces available for the car-
riage of fuel.
The spaces available for the carriage
of fuel will include the actual volume of
tanks or fixed compartments for the
storage of lubricating oil or fuel, includ-
ing settling tanks, which cannot be used
to stow cargo or stores and which have
been certified Ly official marking to be
spaces for the vessel's own fuel. Dual
purpose fuel tanks whose only other use
is for the carriage of water ballast will
be included in the fuel deduction pro-
vided they have been included in the
gross tonnage and qualify in all other
respects for a deduction.
§ 135.391 Manner of ascertaining cubi-
cal contents of spaces available for
the carriage of fuel.
The cubical contents of the above-
named spaces available for the carriage
of fuel shall be ascertained in accordance
with the following provisions: For each
fuel tank or compartment. measure the
mean length. Ascertain the area of three
transverse sections of the ship (as set
forth in §§ 135.141 or 135.143-135.241 for
the calculation of the gross tonnage) to
the deck which covers the tank or com-
partment. One of these three sections
must pass through the middle of the
aforesaid length, and the two others
through the two extremeties. Add to the
sum of the two extreme sections four
times the middle one, and multiply the
sum thus obtained by the third of the
distance between the two section. This
product, divided by 100 if the measure-
ments are taken in English feet, or by
2.83 if they are taken in meters, gives
the tonnage of the spaced measured.
When they cannot be readily measured,
the tonnage of tanks may also be ob-
tained by using liquid capacity times the
conversion factor with one-sixth off for
frames in case of peak tanks and one-
twelfth off in case of wings or deep tanks.
5
BE IT FURTHER RESOLVED, That the Secretary of the Panama Canal
Company cause notice of the adoption of the amendments of the mea-
surement rules to be published in the Federal Register in the form pre-
scribed by applicable laws and regulations.
BE IT FURTHER RESOLVED, That upon publication of the said notice
of amendment of the measurement rules in the Federal Register, the
Stockholder of the Panama Canal Company transmit the amendments of
said rules to the President for his approval.
Approved except for Section 135.113 which would provide for
the inclusion in net tonnage of the space occupied
by deck cargo:
Date:
6
THE WHITE HOUSE
WASHINGTON
Dear Mr. Secretary:
Pursuant to Section 411 of Title 2 of the Canal Zone Code, I have
reviewed the request of yourself and the Panama Canal Company regarding
rules of measurement of vessels transiting the Panama Canal.
I have approved the proposed amendments with the exception of 35 CFR
135.113, the provision for the inclusion in net tonnage of space
occupied by on-deck cargo. In principle, I concur that on-deck
cargo should be subject to toll assessment, like below-deck cargo.
I am concerned, however, that this proposed amendment may tend to
discriminate against containership operators. I note, for example,
that 1975 data show that toll assessments per ton carried were $2.12
for containerships compared with $1.15 for general cargo ships. The
on-deck cargo amendment would dramatically increase containership
toll assessments and therefore increase this disparity. I encourage
you and the Company to further review the tonnage measurement
system to determine if it is prejudicial to certain classes of
carriers and, if so, to recommend remedial measures.
I am also greatly concerned over the Panama Canal Company's financial
condition, generated by rapidly rising costs and declining vessel
transits. Recognizing that the Panama Canal Company and Canal Zone
Government are actively seeking to restrain cost increases, I
nevertheless request that your office and the Company determine
where further reductions can be taken. These reductions are necessary
to retain the Company's strict self-sustaining financial status and to
minimize any general toll increase which may be needed. Your review
should encompass both capital construction and operating expenses of
the Panama Canal Company and the Canal Zone Government.
Respectfully,
Honorable Martin R. Hoffman
Secretary of the Army
Washington, D. C. 20310
THE WHITE HOUSE
WASHINGTON
Dear Mrs. Sullivan:
This is in further reply to your December letter to me regarding the
measurement rule amendments proposed by the Panama Canal Company
and the Secretary of the Army.
I have carefully reviewed the issues. For the reasons cited in my
letter to the Secretary of the Army (copy attached), I have approved
the proposed amendments with the exception of the so-called "on-deck
cargo" amendment. As you know, this is the most important of the
amendments proposed for my approval.
As you will note, I have encouraged the Secretary of the Army and
the Panama Canal Company to review further the tonnage measurement
system to determine if it is prejudicial to certain classes of
carriers, and if so, to recommend remedial action. This action
also will provide your committee the opportunity to review issues
pertaining to the Company's toll structure and financial status,
as the committee finds appropriate.
Respectfully,
Honorable Leonor K. Sullivan
Chairman
Merchant Marine and Fisheries
House of Representatives
Washington, D. C. 20515
Attachment
CC: Honorable Ralph H. Metcalfe
THE WHITE HOUSE
WASHINGTON
Dear Mr. Chairman:
This is in further reply to your December letter to me regarding the
measurement rule amendments proposed by the Panama Canal Company and
the Secretary of the Army.
I have carefully reviewed the issues. For the reasons cited in my
letter to the Secretary of the Army (copy attached), I have approved
the proposed amendments with the exception of the so-called "on-deck
cargo" amendment. As you know, this is the most important of the
amendments proposed for my approval.
As you will note, I have encouraged the Secretary of the Army and the
Panama Canal Company to review further the tonnage measurement system
to determine if it is prejudicial to certain classes of carriers,
and if so, to recommend remedial action. This action also will
provide your committee the opportunity to review issues pertaining
to the Company's toll structure and financial status, as the
committee finds appropriate.
Respectfully,
Honorable Warren G. Magnuson
Chairman
Committee on Commerce
United States Senate
Washington, D. C. 20510
Attachment
CC: Russell B. Long
THE WHITE HOUSE
WASHINGTON
Date April 16,1976
TO:
THE PRESIDENT
FROM: John G. Carlson
Per your request
April 16, 1976
INTERVIEW OF AQUILINO BOYD
FOREIGN MINISTER OF PANAMA
ON THE
CBS MORNING NEWS
7:41 A.M. EST
QUESTION: Dr. Boyd, you heard what Ronald Reagan
has to say. What do you have to say?
MR. BOYD: I think that without trying to mingle
into the political campaign of the United States, since
this is a very important issue for my country, I must say
that Mr. Reagan is willfully deceiving the people of the
United States.
One clear proof of this is that if you are born
in the Canal zone, you don't become automatically a citizen
of the United States. The United States only bought rights
for specific purposes in Panama, for the construction,
maintenance and protection of the Panama Canal. Panama has
never given up sovereignty. What we are now doing is
negotiating within a reasonable time of duration for the
reversal to Panama of the jurisdictional rights that we
granted to the United States in the treaty that was approved
in 1903.
QUESTION: What effect is the appearance of this
issue as a major campaign issue going to have on the conclusion
of the treaty?
MR. BOYD: Well, I think that that all depends on
the outcome of the political campaign in the United States.
I think that Dr. Kissinger and Ambassador Bunker are conducting
the negotiations according to a framework established in the
so-called eight-point tactics in your agreement that was
going to serve as a guideline for this negotiations.
The basic points are the obligation of the 1903
treaty and the perpetuity clause, which must be changed for
a'fixed period of time of duration for a new treaty.
Page 2
QUESTION: In other words, the Canal and the zone
must, at the end of the expiration of the treaty, revert to
Panama.
MR. BOYD: Definitely. We consider the Canal
zone of Panama is an anachronism that can now take top
place in the modern world. You have witnessed the decoloni-
zation of the whole continent of Africa, and this is an enclave
that has all the characteristics of a colony, a Government
within a Government that divides my country in two, and
according to a charter of the United States, with which you
are well familiarized, this is an obstruction to the unity
and to the territorial integrity of my country. I am very
hopeful of the outcome of this negotiation.
QUESTION: But I think one of the problems in the
United States is that a great many people feel if the U.S.
lost control of the zone the U.S. Navy, for instance, might
not be able to transit the Canal whenever it chose to. How
could you guarantee that?
MR. BOYD: Well, there are many ways to guarantee
that the United States Government will always have free
passage at reasonable ports like all other nations of the
world without any type of discrimination. I think that
through the United Nations, through the Organization of
American States, we can secure the American people on the use
of the Canal that Panama intends to have the neutral status
on the Canal that should be respected by all countries in the
world.
QUESTION: The White House says that if the new
treaty is not signed, or if it is delayed, that there may very
well be riots again in Panama.
MR. BOYD: I am afraid this is a very explosive
situation that we are having in Panama, and people like Ronald
Reagan, in a very irresponsible manner, are inflaming patience
in my country. I think that we have to diffuse this explosive
situation but by negotiation, by negotiating within the next
12 months, the new Canal treaty that would be fair for both
countries.
I think the backbone of the negotiations is to find
a reasonable period of time of duration for the treaty. We
think that the actual Government is in a position and the
leader of the Government, General Torrijos, already has stated
that a period that will go until the end of the year will be
acceptable by Panama.
Page 3
That means that the United States will hold control
for the operation and the defense of the Canal until the turn
of the century. When you witnessed yesterday the signing
between Greece and the United States of a treaty for a four-
year military base, that is going to cost $700 billion for
United States taxpayers.
When you witness the signing of the treaty last
month with Turkey for $1 billion, when you witnessed in
February of this year the signing with Spain of a treaty
that will cost one thousand two hundred million dollars to
the taxpayer, is money, In Panama, the Canal has been a
Federal agency that has subsidized the Merchant Marine of
this country.
QUESTION: I am afraid we have run out of time.
Forgive me, we must end this.
END
(AT 7:49 A.M. EST)