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APPENDIX C

TREATY OF MUTUAL UNDERSTANDING AND

COOPERATION

Treaty, with memorandum of understandings reached; signed at Panamá,

January 25, 1955; ratification advised by the Senate of the United States of America, July 29, 1955; ratified by the President of the United States of America, August 17, 1955; ratified by Panama, August 15, 1955; ratifications eachanged at Washington, August 23, 1955; proclaimed by the President of the United States of America, August 26, 1955; entered into force, August 23, 1955.

BY THE PRESIDENT OF THE UNITED STATES OF AMERICA

A PROCLAMATION WHEREAS & Treaty of Mutual Understanding and Cooperation between the United States of America and the Republic of Panama, together with a related Memorandum of Understandings Reached, was signed at Panamá on January 25, 1955;

WHEREAS the texts of the said Treaty and related Memorandum of Understandings Reached, in the English and Spanish languages, are word for word as follows:

TREATY OF MUTUAL UNDERSTANDING AND COOPERATION BETWEEN

THE UNITED STATES OF AMERICA AND THE REPUBLIC OF PANAMA

The President of the United States of America and the President of the Republic of Panama, desirous of concluding a treaty further to demonstrate the mutual understanding and cooperation of the two countries and to strengthen the bonds of understanding and friendship between their respective peoples, have appointed for that purpose as their respective Plenipotentiaries: The President of the United States of America:

Selden Chapin, Ambassador Extraordinary and Plenipotentiary of the United States of America to the Republic of

Panama,
The President of the Republic of Panama:

Octavio Fábrega, Minister of Foreign Relations of the Republic

of Panama, who, having communicated to one another their respective full powers, found in good and due form, and recognizing that neither the provisions of the Convention signed November 18, 1903, nor the General Treaty signed March 2, 1936, nor the present Treaty may be modified except by mutual consent, agree upon the following articles:

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ARTICLE I

Beginning with the first_annuity payable after the exchange of ratifications of the present Treaty, the payments under Article XIV of the Convention for the Construction of a Ship Canal between the United States of America and the Republic of Panama, signed November 18, 1903, as amended by Article VII of the General Treaty of Friendship and Cooperation, signed March 2, 1936, shall 'be One Million Nine Hundred Thirty. Thousand and no/100 Balboas (B/1,930,000) as defined by the agreement embodied in the exchange of notes of March 2, 1936, between the Secretary of State of the United States of America and the Members of the Panamanian Treaty Commission. The United State of America may discharge its obligation with respect to any such payment in any coin or currency, provided the amount so paid is the equivalent of One Million Nine Hundred Thirty Thousand and no/100 Balboas (B/1,930,000) as so defined.

On the date of the first payment under the present Treaty, the provisions of this Article shall supersede the provisions of Article VII of the General Treaty signed March 2, 1936.

Notwithstanding the provisions of this Article, the High Contracting Parties recognize the absence of any obligation on the part of either Party to alter the amount of the annuity.

ARTICLE II

(1) Notwithstanding the provisions of Article X of the Convention signed November 18, 1903, between the United States of America and the Republic of Panama, the United States of America agrees that the Republic of Panama may, subject to the provisions of paragraphs (2) and (3) of this article, impose taxes upon the income (including income from sources within the Canal Zone) of all persons who are employed in the service of the Canal, the railroad, or auxiliary works, whether resident within or outside the Canal Zone, except

(a) members of the Armed Forces of the United States of America.

(b) citizens of the United States of America, including those who have dual nationality, and

(c) other individuals who are not citizens of the Republic of Panama and who reside within the Canal Zone. (2) It is understood that any tax levied pursuant to paragraph (1) of this Article shall be imposed on a non-discriminatory basis and shall in no case be imposed at a rate higher or more burdensome than that applicable to income of citizens of the Republic of Panama generally

(3) The Republic of Panama agrees not to impose taxes on pensions, annuities, relief payments, or other similar payments, or payments by way of compensation for injuries or death occurring in connection with, or incident to, service on the Canal, the railroad, or auxiliary works paid to or for the benefit of members of the Armed Forces or citizens of the United States of America or the lawful beneficiaries of such members or citizens who reside in territory under the jurisdiction of the Republic of Panama.

The provisions of this Article shall be operative for the taxable years beginning on or after the first day of January following the year in which the present Treaty enters into force.

ARTICLE III

Subject to the provisions of the succeeding paragraphs of this Article, the United States of America agrees that the monopoly granted in perpetuity by the Republic of Panama to the United States for the construction, maintenance and operation of any system of communication by means of canal or railroad across its territory between the Caribbean Sea and the Pacific Ocean, by Article V of the Convention signed November 18, 1903, shall be abrogated as of the effective date of this Treaty in so far as it pertains to the construction, maintenance and operation of any system of trans-Isthmian communication by railroad within the territory under the jurisdiction of the Republic of Panama.

Subject to the provisions of the succeeding paragraphs of this Article, the United States further agrees that the exclusive right to establish roads across the Isthmus of Panama acquired by the United States as a result of a concessionary contract granted to the Panama Railroad Company shall be abrogated as of the date of the entry into force of this Treaty, in so far as the right pertains to the establishment of roads within the territory under the jurisdiction of the Republic of Panama.

In view of the vital interest of both countries in the effective protection of the Canal, the High Contracting Parties further agree that such abrogation is subject to the understanding that no system of inter-oceanic communication within the territory under the jurisdiction of the Republic of Panama by means of railroad or highway may be financed, constructed, maintained, or operated directly or indirectly by a third country or nationals thereof, unless in the opinion of both High Contracting Parties such financing, construction, maintenance, or operation would not affect the security of the Canal.

The High Contracting Parties also agree that such abrogation as is contemplated by this Article shall in no wise affect the maintenance and operation of the present Panama Railroad in the Canal Zone and in territory subject to the jurisdiction of the Republic of Panama.

ARTICLE IV

The second paragraph of Article VII of the Convention signed November 18, 1903, having to do with the issuance of, compliance with, and enforcement of, sanitary ordinances in the Cities of Pananıá and Colón, shall be abrogated in its entirety as of the date of entry into force of this Treaty.

ARTICLE V

The United States of America agrees that, subject to the enactment of legislation by the Congress, there shall be conveyed to the Republic of Panama free of cost all the right, title and interest held by the United States of America or its agencies in and to certain lands and improvements in territory under the jurisdiction of the Republic of Panama when and as determined by the United States to be no longer needed for the operation, maintenance, sanitation or protection of the Panama Canal or of its auxiliary works, or for other authorized purposes of the United States in the Republic of Panama. The lands and improvements referred to in the preceding sentence and the determinations by the United States of America respecting the same,

subject to the enactment of legislation by the Congress, are designated and set forth in Item 2 of the Memorandum of Understandings Reached which bears the same date as this Treaty. The United States of America also agrees that, subject to the enactment of legislation by the Congress, there shall be conveyed to the Republic of Panama free of cost all its right, title and interest to the land and improvements in the area known as PAITILLA POINT and that effective with such conveyance the United States of America shall relinquish all the rights, power and authority granted to it in such area under the Convention signed November 18, 1903. The Republic of Panama agrees to save the Government of the United States harmless from any and all claims which may arise incident to the conveyance of the area known as PAITILLA POINT to the Republic of Panama.

ARTICLE VI

Article V of the Boundary Convention, signed September 2, 1914, between the United States of America and the Republic of Panama, shall be replaced by the following provisions:

"It is agreed that the permanent boundary line between the City of Colón (including the Harbor of Colón, as defined in Article VI of the Boundary Convention of 1914, and other waters adjacent to the shores of Colón, and the Canal Zone shall be as follows:

Beginning at an unmarked point called "E”, located on the northeasterly boundary of the Colón Corridor (at its Colón extremity), the geodetic position of which, referred to the Panamá-Colón datum of the Canal Zone triangulation system, is in latitude 9° 21' N. plus 0.00 feet (0.000 meters) and longitude 79° 54' W. plus 356.09 feet (108.536 meters). Thence from said initial point by metes and bounds:

Due East, 2662.83 feet (811.632 meters), along North latitude 9° 21' plus 0.00 feet (0.000 meters); to an unmarked point in Folks River, called “F”, located at longitude 79° 53' W. plus 3700.00 feet (1127.762 meters);

N. 36° 36' 30" E., 2616.00 feet (797.358 meters), to an unmarked point in Manzanillo Bay, called “G”;

N. 22° 41' 30" W., 1192.00 feet (363.322 meters), to an unmarked point in Manzanillo Bay, called “H”;

N. 560 49'00" W., 777.00 feet (236.830 meters), to an unmarked point in Manzanillo Bay, called “I”;

N. 296 51' 00" W., 2793.00 feet (851.308 meters), to an unmarked point in Manzanillo Bay, called “J;

N. 50° 56'00" W., 3292.00 feet (1003.404 meters), to an unmarked point in Limon Bay, called “K”;

S. 56° 06' 11" W., 4258.85 feet (1298.100 meters), to an unmarked point in Limon Bay, called "L”, which is located on

the northerly boundary of the Harbor of Colón. Thence following the boundary of the Harbor of Colón, as described in Article VI of the Boundary Convention signed September 2, 1914, to monument “D, as follows:

N. 78° 30' 30" W., 2104.73 feet (641.523 meters), on a line to the light house on Toro Point, to an unmarked point in Limon Bay, called “M”, located 330 meters or 1082.67 feet easterly and at right angles from the centerline of the Panama Canal;

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S. 00° 14' 50" W., 3074.46 feet (937.097 meters), parallel to and 330 meters or 1082.67 feet easterly from the centerline of the Panama Canal, to an unmarked point in Limon Bay, called “N”;

S. 78° 30' 30'' E., 3952.97 feet (1204.868 meters), to monument “D”, which is a concrete monument, located on the easterly shore

of Limon Bay. Thence following the boundary between the City of Colon and the Canal Zone, as described in Article V of the Boundary Convention signed September 2, 1914, to monument “B” as follows:

S. 78° 30' 30'' E., 258.65 feet (78.837 meters) through monuments Nos. 28 and 27 which are brass plugs in pavement, to monument “D”, which is a concrete monument, the distances being 159.96 feet (48.756 meters), 28.26 feet (8.614 meters), and 70.43 feet (21.467 meters), successively, from beginning of the course;

N. 74° 17' 35" E., 533.60 feet (162.642 meters), along the centerline of Eleventh Street, through monuments Nos. 26, 25, 24 and 23, which are brass plugs in the pavement, to “C”, which is an unmarked point beneath the clock pedestal on the centerline of Bolivar Avenue, the distances being 95.16 feet (29.005 meters), 91.02 feet (27.743 meters), 166.71 feet (50.813 meters), 158.66 feet (48.360 meters) and 22.05 feet (6.721 meters), successively, from beginning of the course;

S. 15° 58' 00" E., 965.59 feet (294.312 meters), along the centerline of Bolivar Avenue, through monuments Nos. 22, 21, 20 and 19, which are brass plugs in the pavement, to monument “B”, which is a brass plug, the distances being 14.35 feet (4.374 meters), 143.13 feet (43.626 meters), 238.77 feet (72.777 meters), 326.77 feet (99.600 meters) and 242.57 feet (73,935 meters), successively from beginning of the course. (Monument “B” is the point of beginning referred to in Article I of the Convention between the United States of America and the Republic of Panama regarding the Colón Corridor and certain other Corridors

through the Canal Zone, signed at Panamá on May 24, 1950.) Thence following the boundary between the City of Colón and the Canal Zone, to monument "A", as described in Article I of the Corridor Convention referred to in the next-preceding paragraph:

S. 15° 57' 40" E., 117.10 feet (35.692 meters) along the centerline of Bolivar Avenue to Monurnent No. A-8, which is a brass plug located at the intersection with the centerline of 14th Street projected westerly, in North latitude 9° 21' plus 1356.18 feet (413.364 meters) and West longitude 79° 54' plus 1862.57 feet (567.712 meters);

N. 73° 59' 35"' E., 172.12 feet (52.462 meters) along the centerline of 14th Street to Monument No. A-7, which is a brass plug located at the intersection with the line of the west curb of Boundary Street projected northerly in North latitude 9° 21' plus 1403.64 feet (427.830 meters) and West longitude 79° 54' plus 1697.12 feet (517.283 meters);

Southerly along the westerly curb of Boundary Street and its prolongation to Monument No. A-4, which is a brass plug located at the intersection of two curves, in North latitude 9° 21' plus 833.47 feet (254.042 meters) and West longitude 79° 54' plus 980.94 feet (298.991 meters) (this last mentioned course passes

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