report included a letter of submittal from Secretary Vance to President Carter dated September 15, 1977, describing the negotiating history of the treaties and their basic provisions, a schedule of all of the documents related to the treaties, a summary of the terms of these treaties, as well as the text of the treaties themselves. The letter of submittal, schedule of documents, and summary appear below:

LETTER OF SUBMITTAL

In my view these Treaties will protect fully the United States' interests in the future operation and security of the Panama Canal. They will provide a basis for futher improvement of our relations with Panama and the other nations of the Hemisphere. Moreover, the Treaties protect not only the interests of the two signatories, but also the interest of world commerce in a Canal which functions efficiently and is permanently open to vessels of all countries on a nondiscriminatory basis.

It will be recalled that negotiations with Panama looking toward a new, mutually satisfactory relationship began in 1964. Following demonstrations in Panama in January of that year and a threemonth suspension of diplomatic relations, the two countries, with the cooperation of the Organization of American States, agreed on April 3, 1964, to a Joint Declaration in which they undertook to seek the prompt elimination of the causes of conflict between them without limitations or preconditions of any kind. On September 24 of the following year. President Johnson and President Robles of Panama announced agreement to negotiate a new treaty based on certain principles, including abrogation of the 1903 Convention, recognition of Panama's sovereignty over all its territory and provision for the possible construction of a sea-level canal. President Johnson reached the decision to negotiate with Panama after consulting with Presidents Truman and Eisenhower and other leaders of both major political parties.

Draft treaties were completed in 1967 but were not signed. In 1970 the Government of Panama formally rejected those treaties and proposed new negotiations. Additional negotiations in 1971 and 1972 failed to produce agreement. Negotiations resumed in late 1973. In February 1974, Secretary of State Kissinger initialed with Panama's Foreign Minister Tack a Joint Statement of Principles to guide the negotiations, which were similar in content to those established by Presidents Johnson and Robles as guidance for the 1965-1967 negotiations. This Administration endorsed these basic concepts earlier this year, and the Treaties which Ambassadors Bunker and Linowitz have negotiated and I am submitting to you reflect those principles.

Under the new Panama Canal Treaty, the United States will operate the Canal and have primary responsibility for its defense until December 31, 1999. The Treaty grants to the United States all of the rights necessary for the operation, maintenance and defense of the Canal, including the use of specific land and water areas necessary

for these purposes. United States operation and maintenance of the Canal will be carried out by the Panama Canal Commission, a new United States Government agency that will replace the present Panama Canal Company and Canal Zone Government.

Panama will participate increasingly in the operation and defense of the Canal during the duration of the Treaty, and will assume responsibility for the Canal upon expiration of the Treaty.

In addition, the Panama Canal Treaty establishes basic employment policies for the Panama Canal Commission, provides for payments to the Republic of Panama out of Canal operating revenues, provides for protection of the environment and commits the two countries to study the feasibility of constructing a sea-level canal in Panama and to deal with each other regarding construction of a new interoceanic canal.

The Treaty Concerning the Permanent Neutrality and Operation of the Panama Canal will enter into force simultaneously with the Panama Canal Treaty. This Treaty establishes a regime of permanent neutrality of the Canal to ensure that the Canal, both in time of peace and time of war, "shall remain secure and open to peaceful transit by the vessels of all nations on terms of entire equality."

The United States and Panama agree to maintain the regime of neutrality established in the Treaty notwithstanding the termination of any other treaties between the two countries. The Treaty does not limit in any way the measures the United States might take to ensure the maintenance of the neutrality regime. In recognition of the important contributions of the United States and Panama to the Canal, their vessels of war and auxiliary vessels shall be entitled to transit the Canal expeditiously.

The Neutrality Treaty provides for a Protocol, open to accession by all States, by which signatories would acknowledge, associate themselves with the objectives of and agree to observe and respect the regime of permanent neutrality established by that Treaty.

The terms of these Treaties are implemented and supplemented by a number of separate agreements and other instruments between the United States and Panama. Additionally, arrangements have been entered into concerning continuation by United States agencies of various activities in Panama not directly related to the Canal, and efforts to provide to Panama certain loans, guaranties and credits to assist with its economic development and to strengthen its capability to contribute to the defense of the Canal.

I. Documents Implementing the Panama Canal Treaty

Agreement in Implementation of Article III of the Panama Canal Treaty, with Annexes and Agreed Minute.

Agreement in Implementation of Article IV of the Panama Canal Treaty, with Annexes and Agreed Minute.

Maps of the Land and Water Areas for the Operation and Defense of the Panama Canal, Referred to in the Agreements in Implementation of Articles III and IV of the Panama Canal Treaty. Exchange of Notes Relating to Postal Services.

Exchange of Notes Relating to Use of Commissary and Post Exchange Facilities.

Letter Describing Application of the Wholesale Price Index Referred to in Paragraph 4(A) of Article XIII of the Panama Canal Treaty.

Letter Regarding Termination of Article XVIII of the United States Panama Air Transport Services Agreement.

II. Other Documents

Agreement on Certain Activities of the United States of America in the Republic of Panama.

Agreement Pursuant to Article VI of the Convention on Nature
Protection and Wildlife Preservation in the Western Hemisphere.
Note Regarding Economic and Military Cooperation.

Exchange of Notes Relating to Air Traffic Control Services.
Note Regarding the Establishment of the Panama Bureau of the
United States Foreign Broadcast Information Service.

Exchange of Notes Relating to the Gorgas Memorial Institute of
Tropical and Preventive Medicine, Incorporated, and to the Gorgas
Memorial Laboratory.

Exchange of Notes Relating to Scientific Activities in Panama of the Smithsonian Tropical Research Institute.

Exchange of Notes Relating to Custodianship of the Barro Colorado Native Monument by the Smithsonian Tropical Research Institute.

SUMMARY OF TERMS

Panama Canal Treaty

The Panama Canal Treaty terminates our prior treaty relationship with Panama concerning the Canal and establishes the framework for an entirely new relationship. It has the following major provisions:

(A) Termination of Prior Treaties. It terminates and supersedes the 1903, 1936, and the 1955 Treaties and all other treaties and agreements between the Republic of Panama and the United States of America concerning the Panama Canal. Article I(1).

(B) Duration. The Treaty enters into force simultaneously with the entry into force of the Treaty Concerning the Permanent Neutrality and Operation of the Panama Canal, six months from the date of exchange of instruments of ratification; it will terminate December 31, 1999. Article II.

(C) Operation of the Canal. Panama grants to the United States the rights to manage, operate, and maintain the Panama Canal and to provide for the movement of vessels. These rights include the rights: a) to use the specific lands and waters necessary for these purposes; b) to make improvements and alterations; c) to make and enforce all rules pertaining to the passage of vessels; d) to estab

lish and collect tolls; e) to regulate relations with employees; and f) to issue and enforce necessary regulations. Articles I(2) and III.

The specific installations and the land and water areas to be used for these purposes, more detailed provisions concerning United States operating rights, and the privileges and immunities of United States nationals to be employed in Panama for purposes of operation of the Canal are set forth in the Agreement in Implementation of Article III. This Agreement, which is analogous to our Status of Forces Agreements with countries throughout the world, concerns such matters as Land Use (Articles III-IV), Operation of the Ports of Balboa and Cristobal and the Panama Railroad (Article V), Housing (Article VI), Water Rights (Article VII), Social Security (Article VIII), Acquisition of Panamanian Supplies and Services (Article IX), Telecommunications (Article X), Contractors (Article XI), Taxation (Article XV) and Criminal Jurisdiction (Article XIX).

This Agreement includes annexes and detailed maps which delineate the lands and waters which the United States will have the right to use for these purposes.

(D) Panama Canal Commission. The United States will carry out its responsibilities for the management, operation and maintenance of the Canal through a new United States Government agency which will replace the Panama Canal Company and the Canal Zone Government. The new agency, to be called the Panama Canal Commission, will be supervised by a board of nine members, five to be United States nationals and four to be Panamanian nationals proposed by the Government of Panama for appointment by the United States. Until December 31, 1989, the Administrator will be a national of the United States and his deputy, a national of Panama. After that date, a Panamanian national shall be the Administrator, and the Deputy a citizen of the United States. The Panamanian members of the Board shall be removed upon the request of the Government of Panama or upon the initiative of the United States after obtaining the concurrence of the Government of Panama. The Panamanian Deputy Administrator and later the Panamanian Administrator may be removed by the United States. Article III (3). Panamanian nationals will participate increasingly at all other levels and areas of employment in the Panama Canal Commission. Article III (8).

The Treaty Annex includes an illustrative list of the activities which the Panama Canal Commission may perform. The Annex also enumerates activities to be discontinued.

The Panama Canal Commission will reimburse the Government of Panama the sum of $10 million per annum for costs incurred by the Government of Panama in providing various public services in the Canal operating area and in certain housing areas. Article III (5).

(E) Panama Canal Consultative Committee. Composed of an equal number of senior representatives of the United States and the Republic of Panama, will advise the two governments on policy matters affecting the Canal's operation. Article III (7).

(F) Protection and Defense. The United States will have the rights necessary to carry out its primary responsibility for the protection and defense of the Canal for the duration of the Treaty.

Article IV, paragraph 1 states: "The United States of America and the Republic of Panama commit themselves to protect and defend the Panama Canal. Each Party shall act, in accordance with its Constitutional processes, to meet the danger resulting from an armed attack or other actions which threaten the security of the Panama Canal or of ships transiting it."

Panama is to participate increasingly in Canal defense. Article I (3). United States base rights and the legal status of the United States armed forces in Panama are set forth in the Agreement in Implementation of Article IV, which is modeled after our Status of Forces Agreements throughout the world. This Agreement includes annexes and detailed maps that delineate the lands and water areas to be used for these purposes.

(G) Combined Board. To be comprised of an equal number of senior military representatives from the two countries, is to be established to facilitate planning and cooperation between the armed forces of both Parties. Article IV (3) and (4).

(H) Privileges and Immunities and Applicable Law. Panamanian law shall apply generally in the areas made available for the use of the United States under the Treaty. However, the agencies of the United States Government operating in the Republic of Panama pursuant to the Treaty shall be immune from Panamanian jurisdiction and their installations and archives shall be inviolable. Twenty officials of the Panama Canal Commission, and their dependents, will have the same privileges and immunities accorded to diplomatic agents and their dependents under international law. Article VIII.

Business or non-profit activities established in the Canal Zone prior to March 7, 1977, may continue their activities under the same terms and conditions for a 30-month transition period following entry into force of the Treaty. Thereafter they will be subject to the same treatment under Panamanian law as similar enterprises established in Panama, without discrimination. Private ownership of buildings or other improvements in the present Canal Zone shall be recognized by Panama. Should Panama at any time decide to sell the real estate upon which such improvements are located, the owners of the improvements will have a first option to purchase such real estate at reasonable prices. Nonprofit enterprises will be able to purchase the property on which their improvements are located at nominal cost in accordance with the prevailing practice in the Republic of Panama. Panama shall provide compensation at fair market value to persons required to discontinue their activities or vacate their property. Article IX (2)–(7).

(J) Transition Period. During the transition period of 30 months after the entry into force of the Treaty, the United States will have the primary right to exercise jurisdiction over United States citizen employees of the Canal Commission and their dependents and members of the United States forces and the civilian component and their dependents for offenses committed prior to entry into force of the Treaty and for offenses committed in certain areas, including all the areas made available for the use of the United States. During the transition period the United States will retain a police force.