canal under article IV. Obviously, the use of armed forces is one of those means, yet it looks to me that article V says that the right to maintain_armed forces in the Canal Zone rests exclusively with Panama. Does not that indicate a limitation on us? Mr. HANSELL. No, sir. The provisions of article V are directed toward maintenance of military forces, defense sites, military installations within the Panamanian territory. Our exercise of rights under article IV would be in response to a given situation, but we will not presumably be maintaining military forces or defense sites except to whatever extent is necessary to assure maintenance of the neutrality regime. Senator PELL. But there might be a long-term threat or reason why we believe we should have some forces down there to maintain the canal neutrality. Would we have that right under article V? Mr. HANSELL. If it were necessary to maintain the neutrality regime there we would take the position that article IV would authorize that action. Senator PELL. If we determined it was necessary? ARTICLE VII, FLAGS PROVISION Senator PELL. I am not sure if I still am, but I used to be honorary vice chairman of the American Flag Foundation, and I have always been interested in the proper use and display of the American flag. I notice that under article VII of the basic treaty it says that the flag of the United States of America also may be displayed in other places on some occasions as agreed to by both parties. Does that mean that once this treaty is in force an American citizen might not have the right to put out his flag on the Fourth of July in the Canal Zone; that is, in the former territory that was the Canal Zone? Mr. HANSELL. I am afraid I do not know the precise answer to that question. I would expect and hope that there will not be any problem with respect to the individual display of the flag. Attorney General BELL. Is this article VII? Senator PELL. Yes, article VII. Mr. HANSELL. I must confess that I do not know. We will have to get the answer to that one to you. Senator PELL. I don't mean to keep asking questions that do not have answers, but if you would submit it for the record, we would like to have your view on that. Mr. HANSELL. We would be pleased to do that. Senator PELL. I think this could be of concern to us, to those of us who are interested in the proper use of the flag. [The information referred to follows:] DISPLAY OF AMERICAN FLAG UNDER TREATY PROVISIONS [Supplied by: Department of State] Under the new Treaty arrangement the display of flags by individuals will be governed by Panamanian law and practice. Although the new treaties do not address the matter of the display of flags by individuals, under current Panamanian practice, U.S. nationals resident in Panama may display the U.S. flag outside their place of residence on the 4th of July. SMITHSONIAN TROPICAL RESEARCH INSTITUTE ON BARRO COLORADO ISLAND Senator PELL. I would like to refer back to the question of environment. Panama is setting up the Panamanian Directorate Generate for Renewable Natural Resources or RENARE, as they call it, somewhat like our environmental agency. Will RENARE set up a park in the Pipeline Road area? If the Pipeline Road preserve is not actually set up with effective protection before the land is actually handed over on ratification of the treaty, it may be too late. Perhaps you could provide answers to us in writing. I have received a letter that raises these very proper envionmental questions. I understand there has already been a good deal of disturbance to the environment there, the extinction of certain rare birds and species of large mammals because Panama does not have the manpower to handle its resources as we have done in the Canal Zone. These may not seem very important, but to those of us who are interested in the environment, these problems are of great importance. I hope that they will get proper attention from you and also from the Bureau of Oceans, Environment, and Scientific Affairs, which I played a role in setting up. I would like to get some in depth answers to the questions posed by this letter. Mr. HANSELL. I will assure you that we will, Senator. Senator PELL. Thank you very much. When I say in depth, I also mean promptly. That is, within the next couple of weeks. Mr. HANSELL. A copy of that letter will be made available to us? Senator PELL. Yes; absolutely, and it is being inserted into the record at this point. [The information referred to follows:] UNIVERSITY OF CALIFORNIA, SANTA BARBARA, Re: The tropical forests of the Panama Canal Zone. Chairman, Arms Control, Oceans and International Environment Subcommittee, DEAR SENATOR PELL: Tropical rain forests, with their immense variety of plants and animals, have existed for at least 60 million years and have been the gene pool for the evolution of many present day temperate zone species. Now they are being destroyed so fast that the most optimistic forecasts predict total destruction by the year 2000. It is essential to establish many preserves to avoid the extinction of thousands of species, many of which are still unknown to science. Unfortunately, many of the countries concerned are neither interested in conservation nor in a financial position to set up adequately protected wildlife preserves. Until now there has been one bright spot in this bleak picture-the Panama Canal Zone. U.S. regulations have prohibited settling and forest cutting in much of the area so that a lot of relatively undisturbed forest remains. The Pipeline Road area on the east bank has become a Mecca for the world's birdwatchers and is, perhaps, the best easily accessible place in Central America for seeing tropical forest birds. The international nature tourism business is booming and an area such as this would be a major economic asset to the Republic of Panama if properly managed. The pressure on this land will be immense and immediate once it is handed over to the Republic of Panama. Already, species of large mammals and such birds as the macaw have been eradicated in the Canal Zone by illegal hunting and the situation is getting worse, despite the existence of a police unit whose sole function is to protect the environment of the Zone. And I am told there has even been illegal tree felling in the Madden Forest preserve. According to the draft Environment Impact Statement on the Treaty made available last week: (1) The Panamian [sic] Directorate General for Renewable Natural Resources (RENARE) wants to designate the Pipeline Road area as a park, and to incorporate the Madden Forest preserev in the Panamian [sic] park system. (It is possible that the Pipeline Road area will be leased to the U.S. military, which may postpone the problem of environmental destruction.) (2) The Smithsonian Tropical Research Institute on Barro Colorado Island will remain in existence. (3) There will be a joint U.S.-Panamian [sic] Environmental Commission to review implementation of the Treaty and make appropriate recommendations. I would like to make certain comments on these proposals: (a) While RENARE may want to set up a park in the Pipeline Road area, will this actually happen? (b) If the Pipeline Road preserve is not actually set up with effective protection before the land is handed over on ratification of the treaty it will be too late. A road is already there and the common experience in Central America is road equals settlers and food gatherers equals total destruction of the forest in a very short space of time. Reliance on this proposal for protection of the area would be, at best, a very risky step. (c) RENARE has a very limited budget and staff. It has set up parks in Panama but, as in the cloud forests of the Volcan de Chiriqui, is unable to prevent continued severe destruction. (d) A preserve will be effectively protected in countries like Panama only when the government is convinced it is in its immediate economic interest to do so. I am sure the Panamian [sic] Government would appreciate the benefits of the nature tourism trade that would follow from establishing adequate well protected preserves in this area, with its richness of wildlife. (e) Barro Colorado Island already suffers the effects of poachers, I am told. Further settlement of the mainland shores of Lake Gatun will exacerbate the problem and I find it hard to believe that there will not be serious damage to the island in the long run. An uninhabitated buffer zone on the surrounding shores may help. I hope your subcommittee will consider these urgent problems and work for the establishment of well protected preserves before the treaty is ratified. May I suggest that you contact Dr. Monty Lloyd, Dept. of Biology, University of Chicago, Ill., 60637. I am told he is the most concerned and knowledgeable person with regard to conservation problems in Panama. He has just spent a year studying the effects of the Bayano dam project east of the Canal Zone. Also the Rare Animal Relief Effort Inc (c/o The Audubon Society, 950 Third Avenue, New York, NY 10022) has had experience helping the Government of Costa Rica set up National Parks. Sincerely yours, JOHN HOPKINS, Ph. D. [See p. 228 for State Department information relating to environmental question.] Senator GRIFFIN. Do we have time for another question, Mr. Chairman? Senator PELL [presiding]. Certainly. SETTLEMENT OF DISPUTES Senator GRIFFIN. I am sorry to impose upon the time of our witnesses this morning, but I would like to ask this question. Article XIV refers to settlement of disputes. It reads, "In the event that any question should arise between the parties concerning the interpretation of this treaty or related agreements, they shall make every effort to resolve the matter through consultation in the appropriate committees established pursuant to this treaty and related agreements or if appropriate through diplomatic channels. In the event the parties are unable to resolve a particular matter through such means, they may, in appropriate cases, agree to submit the matter to conciliation, mediation, arbitration or such other procedure for the peaceful settlement of the dispute as they may mutually deem appro=priate." In other words, we don't have any real machinery for resolving disputes. It says the two parties will sit down and talk, and if they can agree upon something, that will be fine. I had called to my attention that in the 1967 treaties which were signed by the Republic of Panama and the United States but not ratified, there were specific provisions for the arbitration of disputes. If a dispute arose, each side would appoint an arbitrator and the two parties would then agree on a third, who could not be a national of either state. If they could not agree on a third arbitrator, either party could ask the International Court of Justice, or if the ICJ refused, then the president of the OAS would designate the necessary third party. I can see certain problems in agreeing to a system of arbitration with respect to some issues. On the other hand, there are many issues that might arise, and obviously are going to arise, where it seems to me that some form of arbitration would be most appropriate. For example, the question I raised about the interpretation of a particular section when it comes to reimbursement of costs. The absense of any meaningful machinery for the settlement of disputes is even emphasized when we realize that at the outset now, even before we ratify, there are public disagreements between Panama and the United States on very, very important provisions of this, and then I cannot but help to note, as a lawyer, that this may be the best language that the negotiators could get, but a lot of this language is awfully fuzzy and ambiguous and is certainly not the kind of language that a good lawyer would want if he could get better language. Would you please comment on my dissertation? Mr. HANSELL. The difficulty, of course, is committing oneself or committing the parties to a particular procedure for arbitration, and seeking to resolve the issues that would be deemed appropriate for submission. There just was not much desire on either party to commit to a compulsory dispute settlement program. The expectation and hope would be that any matters that require resolution will, in one fashion or another, as is often the case in international disputes, be resolved. ICJ AVAILABILITY Senator GRIFFIN. As I recall correct me if I am wrong-as far as the International Court of Justice is concerned, that is available only if both parties to a dispute want to take it there. Is that correct? Mr. HANSELL. That is true in effect, yes, Senator. Senator GRIFFIN. I just point to this particular situation as another disturbing aspect of the treaty. Maybe it is the best we could do, but at least it is far from adequate when you consider that the language is very fuzzy and ambiguous, and that we start out with serious disagreements of interpretation even before we vote on the ratification. Thank you, Mr. Chairman. Senator PELL. Senator Stone? 96-949-77-18 EXEMPTION FROM PANAMANIAN TAXES Senator STONE. Mr. Chairman, I will be brief. We are at the end of the allotted time. This question is addressed to Mr. Hansell. In your statement you refer to exemption from Panamanian taxes. Would you read from the appropriate agreement the appropriate phrase that you refer to in your statement? Mr. HANSELL. There are several provisions. I am not sure whether they are in the treaties or in the Implementing Agreements. Let me see if I can find these. This is from the Implementing Agreements. Do you have a set of the Implementing Agreements, Senator? Senator STONE. I just have the treaties. I don't have the agreements. Mr. HANSELL. Article XV of the agreement in implementation of article III of the Panama Canal Treaty, and we can give you a set of these Senator STONE. I think it was article XV, section 1 that raised an interesting question. I will read it to you. "By virtue of this agreement the Commission, its contractors and subcontractors are exempt from payment in the Republic of Panama of all taxes, fees, or other charges on their activities or properties." Then, in No. 2, referring to U.S. citizen employees and dependents, it says, "shall be exempt from any taxes, fees, or other charges on income received as a result of their work for the Commission. Similarly, they shall be exempt from payments of taxes, fees, or other charges on income derived from sources outside the Republic of Panama." Of course, when that was announced, the press reported the glee of the Zonians that they were now exempt from U.S. income tax. When Senator Glenn asked you, are there any words that you would like to see in the treaty, I was just asking myself, would you like to see the words, United States, in there somewhere? Mr. HANSELL. I am sorry to be a source of disappointment for the Panamanians, but obviously we are not entering into an agreement between the United States and Panama that would exempt U.S. citizens from U.S. tax. The purpose of this, of course, was to exempt them from Panamanian tax. Senator STONE. How would you clarify that in words of writing? Mr. HANSELL. I believe that is actually under way by the authorities in Panama. The Army, I think, is preparing some information for the zone residents on all aspects of this, including the tax aspect. Senator STONE. Wouldn't you think that we could put in the understanding that I suggested to you, the clarification of our interpretation which then, when ratified by the Congress, by the Senate, and deposited, would clarify that in a little more formal way than simple advices, since you don't want to put words back in the treaty through negotiation? Mr. HANSELL. The one comment I would have with respect to that, and this relates to a couple of other points, is that we are dealing now with an internal U.S. matter, not a matter between the United States and Panama. That is, we don't agree with Panama how we are going to tax our citizens. That is obviously an internal matter. I would hope we could find ways of dealing with internal matters other than as understandings. |