[House Report 106-803]
[From the U.S. Government Publishing Office]
106th Congress Rept. 106-803
HOUSE OF REPRESENTATIVES
2d Session Part 1
======================================================================
UNITED STATES-PANAMA PARTNERSHIP ACT OF 2000
_______
July 27, 2000.--Ordered to be printed
_______
Mr. Gilman, from the Committee on International Relations, submitted
the following
R E P O R T
together with
MINORITY VIEWS
[To accompany H. Res. 3673]
[Including cost estimate of the Congressional Budget Office]
The Committee on International Relations, to whom was
referred the bill (H.R. 3673) to provide certain benefits to
Panama if Panama agrees to permit the United States to maintain
a presence there sufficient to carry out counternarcotics and
related missions, having considered the same, report favorably
thereon without amendment and recommend that the bill do pass.
Background and Purpose
In accordance with the Panama Canal Treaties of 1977, the
United States terminated its military presence in Panama at the
end of 1999, and Panama assumed full control of the Panama
Canal and all former U.S. military installations.
The loss of U.S. access to facilities in Panama, especially
Howard Air Force Base, has had a devastating effect on the
ability of the United States to protect its interests in Latin
America and the Caribbean. Counternarcotics operations have
been particularly hard hit. With regard to aerial interdiction
operations, the Commander-in-Chief of the United States
Southern Command, General Charles Wilhelm, stated in a letter
dated June 8, 2000, that until the facilities at Howard Air
Force Base are replaced, ``we estimate that our capability will
continue to be approximately a third of what it was in
Panama.''
The following chart, prepared by the General Accounting
Office for a December, 1999 report to Congress illustrates
graphically the effect on counternarcotics operations of the
closure of Howard Air Force Base in mid-1999:
A 1977 protocol to the Treaties provides that the United
States and Panama may agree to a U.S. presence in Panama after
1999. For three years, U.S. and Panamanian negotiators sought
to reach just such an agreement. On September 24, 1998,
however, it was announced that these negotiations had failed
and that the U.S. military would withdraw from Panama as
scheduled.
This was a regrettable turn of events for both of our
countries. The United States and Panama both benefitted in many
ways from the U.S. presence in Panama. For the United States,
that presence provided a forward platform from which to combat
narcotrafficking and interdict the flow of drugs, which
threatens all countries in this hemisphere. These benefits to
the United States cannot be duplicated at the so-called
``forward operating locations'' that the Administration has
sought with limited success to set up in several countries in
Latin America and the Caribbean.
For Panama, the U.S. presence added an estimated $300
million per year to the local economy, fostered economic growth
by contributing to a stable investment climate, and helped
deter narcoterrorism from spilling over into Panama.
In retrospect, the United States should have responded more
favorably to Panama's proposal in 1995 to negotiate an
extension of our traditional presence in exchange for a package
of benefits to be mutually agreed upon. In the wake of the
Clinton Administration's decision to reject that proposal, the
effort to establish a Multinational Counternarcotics Center
failed to gain broad support across Panama's political
spectrum.
H.R. 3673 returns to, and builds upon, the concept proposed
by Panama in 1995 of permitting a U.S. presence in Panama
beyond 1999 in exchange for a package of benefits. The
legislation also accepts the idea first proposed by Panama of
permitting counternarcotics operations from Panama to take
place under multinational auspices.
The purpose of H.R. 3673 is to give the President
authorities that he can use to seek an agreement with Panama to
permit the United States to maintain a presence there
sufficient to carry out counternarcotics and related missions.
H.R. 3673 offers Panama the opportunity to join Canada and
Mexico in forging a new, more mature, mutually beneficial
relationship with the United States. In exchange, the
legislation asks Panama to remain our partner in the war on
drugs by agreeing to host a U.S. presence, alone or in
conjunction with other friendly countries, sufficient to carry
out counternarcotics and related missions.
H.R. 3673 is merely a grant of authority to the President.
It seeks to provide him with tools that he can use to negotiate
an agreement with Panama regarding a matter of vital concern to
both countries. The President will be free to use or not use
the tools provided by H.R. 3673. If the President chooses to
use them, Panama will be free to accept or reject any proposal
the President makes.
The Committee hopes that Panama will accept the invitation
extended by H.R. 3673 to reinvigorate the special relationship
between our two peoples.
Committee Action
H.R. 3673 was introduced on February 16, 2000, by Mr.
Gilman. It was referred to the Committee on International
Relations, and in addition to the Committee on Ways and Means,
for a period to be subsequently determined by the Speaker, in
each case for consideration of suchprovisions as fall within
the jurisdiction of the Committee concerned.
On July 28, 1999, the Committee held a hearing on ``Post-
1999 U.S. Security and Counter-Drug Interests in Panama.''
Testimony was received from Ambassador Thomas E. McNamara,
formerly the Clinton Administration's chief negotiator with
Panama in the negotiations aimed at reaching an agreement
regarding a post-1999 U.S. presence in Panama, and General
George Joulwan, former Commander-in-Chief of the United States
Southern Command in Panama.
In addition, the Committee has held numerous staff
briefings with Administration officials and others regarding
the negotiations with Panama and efforts to replace Howard Air
Force Base and other U.S. facilities in Panama. Several members
of the Committee have traveled to Panama to explore these
issues first-hand, as have members of the Committee staff.
Markup of the Bill
The Committee on International Relations marked up H.R.
3673 on June 29, 2000. The Full Committee considered the bill
and agreed by voice vote to a motion to favorably report the
bill to the House of Representatives, a quorum being present.
No amendments were offered during the Committee markup.
record votes on amendments and motion to report
Clause (3)(b) of rule XIII of the Rules of the House of
Representatives requires that the results of each record vote
on an amendment or motion to report, together with the names of
those voting for or against, be printed in the committee
report. No record votes were taken during the consideration of
H.R. 3673.
Other Matters
committee oversight findings
In compliance with clause 3(c)(1) of rule XIII of the Rules
of the House of Representatives, the Committee reports the
findings and recommendations of the Committee, based on
oversight activities under clause 2(b)(1) of rule X of the
Rules of the House of Representatives, are incorporated in the
descriptive portions of this report.
committee on government reform findings
Clause 3(c)(4) of rule XIII of the Rules of the House of
Representatives requires each committee report to contain a
summary of the oversight findings and recommendations made by
the Government Reform Committee pursuant to clause (4)(c)(2) of
rule X of those Rules. The Committee on International Relations
has received no such findings or recommendations from the
Committee on Government Reform.
advisory committee statement
No advisory committees within the meaning of section 5(b)
of the Federal Advisory Committee Act are created by this
legislation.
applicability to the legislative branch
The Committee finds that the legislation does not relate to
the terms and conditions of employment or access to public
services or accommodations within the meaning of section
102(b)(3) of the Congressional Accountability Act.
constitutional authority statement
In compliance with clause 3(d)(1) of rule XIII of the Rules
of the House of Representatives, the Committee cites the
following specific powers granted to the Congress in the
Constitution as authority for enactment of H.R. 3673 as
reported by the Committee: Article I, section 8, clause 1
(relating to providing for the common defense and general
welfare of the United States); Article I, section 8, clause 3
(relating to the regulation of commerce with foreign nations);
and Article I, section 8, clause 18 (relating to making all
laws necessary and proper for carrying into execution powers
vested by the Constitution in the Government of the United
States or in any Department or Officer thereof).
preemption clarification
Section 423 of the Congressional Budget Act of 1974
requires the report of any committee on a bill or joint
resolution to include a committee statement on the extent to
which the bill or joint resolution is intended to preempt state
or local law. The Committee states that H.R. 3673 is not
intended to preempt any state or local law.
new budget authority and tax expenditures, congressional budget office
cost estimate, and federal mandates statements
Clause 3(c)(2) of rule XIII of the Rules of the House of
Representatives requires each committee report that accompanies
a measure providing new budget authority, new spending
authority, or new credit authority or changing revenues or tax
expenditures to contain a cost estimate, as required by section
308(a)(1) of the Congressional Budget Act of 1974, as amended,
and, when practicable with respect to estimates of new budget
authority, a comparison of the estimated funding level for the
relevant program (or programs) to the appropriate levels under
current law.
Clause 3(d) of rule XIII of the Rules of the House of
Representatives requires committees to include their own cost
estimates in certain committee reports, which include, when
practicable, a comparison of the total estimated funding level
for the relevant program (or programs) with the appropriate
levels under current law.
Clause 3(c)(3) of rule XIII of the Rules of the House of
Representatives requires thereport of any committee on a
measure which has been approved by the Committee to include a cost
estimate prepared by the Director of the Congressional Budget Office,
pursuant to section 403 of the Congressional Budget Act of 1974, if the
cost estimate is timely submitted.
Section 423 of the Congressional Budget Act requires the
report of any committee on a bill or joint resolution that
includes any Federal mandate to include specific information
about such mandates. The Committee states that H.R. 3673 does
not include any Federal mandate.
The Committee adopts the cost estimate of the Congressional
Budget Office as its own submission of any new required
information with respect to H.R. 3673 on new budget authority,
new spending authority, new credit authority, or an increase or
decrease in the national debt. It also adopts the estimate of
Federal mandates prepared by the Director of the Congressional
Budget Office pursuant to section 423 of the Unfunded Mandates
Reform Act. The estimate and report which has been received is
set out below.
U.S. Congress,
Congressional Budget Office,
Washington, DC, July 13, 2000.
Hon. Benjamin A. Gilman,
Chairman, Committee on International Relations,
House of Representatives, Washington, DC.
Dear Mr. Chairman: The Congressional Budget Office has
prepared the enclosed cost estimate for H.R. 3673, the United
States-Panama Partnership Act of 2000.
If you wish further details on this estimate, we will be
pleased to provide them. The CBO staff contacts are Joseph C.
Whitehill (for federal spending), and Hester Grippando (for
federal receipts).
Sincerely,
Barry B. Anderson
(For Dan L. Crippen, Director).
Enclosure.
H.R. 3673--United States-Panama Partnership Act of 2000
Summary: H.R. 3673 would authorize certain financial
benefits for Panama upon the certification by the President
that the governments of the United States and Panama have
reached an agreement that would permit the United States to
maintain a presence at certain facilities in Panama for a
period of at least 15 years. The benefits would include
preferential tariff treatment for certain Panamanian imports,
which would reduce governmental receipts by $1 million to $2
million a year, up to $2 million in scholarships for Panamanian
students, and two small grants. No negotiations for U.S. access
to Panamanian facilities are currently underway. CBO does not
expect an agreement in the next five years, and we therefore
estimate that the bill would have no cost during that period.
CBO has no basis for estimating when or if an agreement might
occur after then. Because the bill could affect governmental
receipts, the bill would be subject to pay-as-you-go
procedures.
H.R. 3673 contains no intergovernmental or private-sector
mandates as defined in the Unfunded Mandates Reform Act (UMRA)
and would not affect the budgets of state, local, or tribal
governments.
Estimated cost to the Federal Government: According to
information from the State Department, no negotiations between
Panama and the United States are underway and none are likely
in the near future. Therefore, CBO estimates that the bill
would have no budgetary impact over the 2000-2005 period. If
the bill were enacted and if Panama would agree to a U.S.
presence, then the bill could affect both receipts and spending
subject to appropriation.
Revenues
H.R. 3673 would provide trade preferences for certain
imports from Panama, including textiles, apparel, luggage and
handbags, certain leather goods, footwear, tuna, petroleum,
watches, and watch parts. Most of the provisions in the bill
affecting customs receipts were enacted in the Trade and
Development act of 2000 (Public Law 106-200).
One major exception is a provision that would offer ``in-
preference-level tariff treatment'' to certain textile and
apparel articles that do not originate in Panama. The tariff
treatment accorded to those goods would be equivalent to the
tariff treatment of similar goods from Mexico. Imports of
textile and apparel goods under this provision would be limited
to approximately 11 million square meter equivalents in a
calendar year. Based on recent data on import collections, CBO
estimates that if this provision were to take effect,
governmental receipts would be reduced by approximately $1
million a year through 2008, while the provisions of Public Law
106-200 are in effect. After 2008, when Public Law 106-200
expires, the potential cost of the bill would rise to $2
million a year.
Spending subject to appropriation
For each year an agreement is in force, H.R. 3673 would
authorize up to $2 million for scholarships for Panamanian
students. Thus, spending for scholarships would increase by
that amount, assuming the appropriation of the authorized
amounts.
The bill also would direct the Trade and Development Agency
(TDA) to consider making grants for the planning of a new
bridge across the Panama Canal and for a sewage-treatment plant
in Panama City. TDA has already extended a grant to study the
feasibility of a second canal bridge and is considering
extending grants for water and sewage projects in Panama using
available resources. CBO therefore estimates that H.R. 3673
would not affect spending by TDA.
The bill would require several reports, including one on
the extent to which Panama complies with U.S. trade laws. CBO
estimates that the costs of preparing those reports would be
insignificant.
Pay-as-you-go considerations: The Balanced Budget and
Emergency Deficit Control Act sets up pay-as-you-go procedures
for legislation affecting direct spending or receipts. While
H.R. 3673 could affect receipts, CBO does not anticipate any
loss of receipts over the 2000-2005 period.
Intergovernmental and private-sector impact: H.R. 3673
contains no intergovernmental or private-sector mandates as
defined in UMRA and would not affect the budgets of state,
local, or tribal governments.
Estimate prepared by: Federal Costs: Joseph C. Whitehill.
Federal Revenues: Hester Grippando. Impact on State, Local, and
Tribal Governments: Leo Lex. Impact on the Private Sector:
Lauren Marks.
Estimate approved by: Robert A. Sunshine, Assistant
Director for Budget Analysis. G. Thomas Woodward, Assistant
Director for Tax Analysis.
Section-by-Section Analysis
Section 1. Short title
Provides that the Act may be cited as the ``United States-
Panama Partnership Act of 2000''.
Section 2. Findings
Contains congressional findings regarding the history and
purpose of the U.S. presence in Panama, negotiations to extend
that presence beyond 1999, and the strong shared interest that
the United States and Panama continue to have in maintaining a
U.S. presence in Panama.
Section 3. Certification and report regarding agreement to maintain a
United States presence in Panama
Authorizes the President to submit a certification and
report to the Committee on International Relations of the House
of Representatives and the Committee on Foreign Relations of
the Senate at any time after the date of enactment. The
certification would affirm that the United States and the
Government of Panama have reached an agreement permitting the
United States, for a period of not less than 15 years, to
maintain a presence, alone or in conjunction with other
friendly countries, sufficient to carry out necessary
counternarcotics, search and rescue, logistical, training, and
related missions at Howard Air Force Base, Fort Kobbe, Rodman
Naval Station, and Fort Sherman, under terms and conditions
substantially similar to those applied to the United States
presence at those facilities during the period beginning on
October 1, 1979 and ending on December 31, 1999. The report
would contain, among other matters, the text of the agreement
and a detailed description of the terms and conditions which
will apply to the U.S. presence permitted under the agreement.
To the degree necessary, the report may be submitted in
classified form.
Section 4. Benefits
Subsection (a) provides that if the President submits the
certification and report under section 3, then various benefits
described in subsections (b), (c), (d), (e), (f), (g), and (h)
will be extended to Panama.
Subsection (b) directs the Director of the Trade and
Development Agency to consider a grant or grants to assist the
design, financial planning, training, and other preparatory
steps for the construction of a new bridge across the Panama
Canal, and requires the Director of the Trade and Development
Agency to submit a report to the Committee on International
Relations of the House of Representatives and the Committee on
Foreign Relations of the Senate, not later than one year after
the date of submission of the certification and report under
section 3, regarding the steps taken pursuant to this
subsection.
Subsection (c) directs the Director of the Trade and
Development Agency to consider a grant or grants to assist the
design, financial planning, training, and other preparatory
steps for the construction of a new sewage treatment plant for
Panama City, and requires the Director of the Trade and
Development Agency to submit a report to the Committee on
International Relations of the House of Representatives and the
Committee on Foreign Relations of the Senate, not later than
one year after the date of submission of the certification and
report under section 3, regarding the steps taken pursuant to
this subsection.
Subsection (d) directs the Administrator of the Agency for
International Development to ensure that up to $2 million of
the funds made available each year to the Cooperative
Association of States for Scholarships program are made
available for deserving students from Panama to study in the
United States, and requires the Administrator of the Agency for
International Development to submit a report to the Committee
on International Relations of the House of Representatives and
the Committee on Foreign Relations of the Senate, not later
than one year after the date of submission of the certification
and report under section 3, regarding the steps taken pursuant
to this subsection.
Subsections (e), (f), (g), and (h) contain provisions
within the jurisdiction of the Committee on Ways and Means
relating to a trade benefit that shall be available to Panama
if the President submits the certification and report under
section 3.
Section 5. Applicability of benefits
Contains a provision within the jurisdiction of the
Committee on Ways and Means relating to the availability of the
trade benefit provided under section 4.
Section 6. Conforming amendment
Contains a conforming amendment to the Caribbean Basin
Economic Recovery Act within the jurisdiction of the Committee
on Ways and Means.
Changes in Exiting Law Made by the Bill, as Reported
In compliance with clause 3(e) of rule XIII of the Rules of
the House of Representatives, changes in existing law made by
the bill, as reported, are shown as follows (new matter is
printed in italic and existing law in which no change is
proposed is shown in roman):
SECTION 213 OF THE CARIBBEAN BASIN ECONOMIC RECOVERY ACT
SEC. 213. ELIGIBLE ARTICLES.
(a)(1) Unless otherwise excluded from eligibility by this
title, and subject to section 423 of the Tax Reform Act of
1986, and except as provided in section 4 of the United States-
Panama Partnership Act of 2000, and except as provided in
subsection (b)(2) and (3), the duty-free treatment provided
under this title shall apply to any article which is the
growth, product, or manufacture of a beneficiary country if--
(A) * * *
* * * * * * *
MINORITY VIEWS
We oppose H.R. 3673, the United States-Panama Partnership
Act, as ordered reported by the Committee on International
Relations. We share concern about the situation in Panama and
would support a presence there under the right circumstances.
This bill, on the other hand, moves the situation in the
opposite direction.
The bill amounts to no more than a statement by the authors
that they are tough on drugs and want to regain U.S. influence
in Panama. The bill will do little to practically affect either
U.S. counter-narcotics objectives or help create an atmosphere
under which Panamanians would consider a U.S. presence. It is
poorly timed, threatens to inhibit rather than assist in
achieving the goal of a U.S. presence in Panama, sets a
dangerous precedent on trading favors for basing rights,
includes significant hidden costs, and is unnecessary given
progress on other U.S. sites in the region. The Panamanians
have said clearly that they are not interested in the kind of
presence this bill envisions. If it were to become law, this
legislation would hurt bilateral relations with Panama and set
back the objectives it intends to advance.
h.r. 3673 is poorly timed
In December 1997, United States and Panamanian negotiators
reached tentative agreement on a formula that would have
allowed a continued US presence in Panama after the treaty-
imposed December 31, 1999 deadline. That agreement was
comprehensive and would have allowed a U.S. presence on
counter-narcotics and a host of other issues that had been
determined to be critical to U.S. national security. It was, in
short, an arrangement that many of us were ready to support.
Prior to initialing this agreement, however, the Panamanian
negotiators walked away from the deal. It was their assessment
that the political climate in Panama was not conducive to
finalizing an arrangement allowing a U.S. presence to remain.
An influential group of political elites opposed the agreement
based on nationalist concerns, and the conditions that they
were set to impose on a continued U.S. presence called for too
many compromises and raised security concerns for U.S.
personnel. A presence in that climate and under those
conditions was not in the United States national interest.
That climate has not significantly changed, and this bill
threatens to worsen it. The chief negotiator for the United
States, testifying before the House International Relations
Committee last summer, made clear that pushing for a full U.S.
presence was counter-productive. He said, ``Having failed to
reach an agreement, I strongly recommend that both countries
adopt a cooling-off period of several years.'' He went on to
say, ``I would say that if the Panamanians came to us, then
that would be one set of circumstances. But for us to take an
initiative at this juncture I think would simply open wounds in
Panama.''
The Panamanians have not approached the U.S. about an
expanded presence. On the contrary, they have continued to make
it clear that they are not interested in a U.S. military
presence. In order to convince the Panamanians that they need a
U.S. presence, the bill fashions severalbenefits for Panama.
The chief benefit, NAFTA parity, threatens to exacerbate a problem
between our two countries, a situation that is described further below.
One of the three other benefits--a Trade and Development Agency study
of a new sewage treatment plant in Panama City--is already being
undertaken. The bill offers limited benefits and will delay the day
that Panamanians approach us about re-opening talks.
This bill also stands to threaten the little progress we
have been able to make with the Panamanians. The U.S. and
Panama are negotiating a very minimal ``Visiting Forces
Agreement'' and it is the belief of our negotiators of this
agreement that moving this bill for a wider presence would in
fact hamper those discussions. If we cannot get agreement on a
minimal agreement now, we are sure to dirty the waters for a
wider agreement even after a cooling off period of several
years. This bill may threaten our ability to ever reach
agreement with the Panamanians over a U.S. military presence
there.
H.R. 3673 sets a dangerous precedent and includes hidden costs
The bill, in offering a costly trade agreement for a deal
on a U.S. presence in Panama, sets a risky precedent for U.S.
military presence in basing agreements across the globe. As we
drive up the price for Panama, other host countries for U.S.
military personnel elsewhere in the world look on. They too
will hold out for a sweetheart deal in exchange for basing
agreements.
But these are not the only costs that this bill carries
with it. Over the course of the last decade the U.S. military
has been preparing the turnover of former U.S. assets in
Panama. Construction that would have otherwise been required
was canceled and military construction funds dedicated to other
priorities. Re-establishing a U.S. military presence in Panama
will bring with it significant military construction costs--by
some estimates more than $100 million--costs that have not yet
been budgeted for.
There are also significant diplomatic costs associated with
this bill. If it appears that we are not honoring our
commitments to the Canal Treaties of 1977, we will face
increased skepticism and decreased cooperation throughout the
rest of the Hemisphere.
H.R. 3673 is not needed
The military construction funds for alternative sites--in
Aruba/Curacao, Ecuador and El Salvador--have been budgeted for
and are ready to be put to use. The Administration has
negotiated forward operating locations in Aruba, Ecuador and El
Salvador and with the recently passed military construction
funds those sites will be up and running--and giving us, at
full implementation, 130% of the aerial counter-narcotics
coverage we were able to generate out of Panama.
These alternative sites have the added benefit of
diversifying U.S. counter-narcotics operations in the region.
Rather than being solely dependent on the political
machinations of Panama, these three forward operating locations
give us greater coverage and more cooperation from our friends
in the region. These arrangements are already negotiated and
ready to be implemented. Movingforward on just Panama, on the
other hand, further delays critical action in the region and comes at a
far greater political cost in the region. The existing arrangements are
the way to address our concerns for counter-narcotics operations in the
region, not through the well-intentioned but misguided H.R. 3673, a
costly and unnecessary gamble that will risk present and future
cooperation with Panama and slow down our operations in the region.
Concerns on Trade
Understanding that the trade sections of this bill do not
fall within the jurisdiction of our Committee, we nonetheless
want to underscore our concerns on how this trade agreement
affects two major concerns as they relate to Panama. One, the
bill contains no safeguards for U.S. workers who will be
affected by the agreement. Two, the bill runs the risk of
exacerbating a problem that the U.S. has had with Panama since
the passage of the Caribbean Basin Initiative in the early
1980s. Panama, in comparison with its Central American
neighbors, has a relatively small textile industry--the main
beneficiary of the trade benefits in H.R. 3673--and has, in the
past, re-exported to the United States textiles assembled in
China, labeling them as Panamanian products. Transshipment of
Chinese goods through Panama into the United States is
consistently an issue of contention between Panama and the
United States. This bill not only does not address this problem
but stands to exacerbate it.
H.R. 3673 will not fulfill its intended goal. It
complicates efforts to cooperate with the Panamanians and will
exacerbate problems on trade. For these reasons we oppose the
bill.
Sam Gejdenson.
Donald M. Payne.
Alcee L. Hastings.
Joseph Hoeffel.
Steven R. Rothman.
Joseph Crowley.
Bill Delahunt.
Jim Davis.
Robert Wexler.
Gary Ackerman.
Earl Pomeroy.
Eni Faleomavaega.
Tom Lantos.