TNAG-1233-FCO40-1546-Future-of-Hong-Kong-1983 — Page 82

1

CONFIDENT IAL

AMERICAN VIEWS ON HONG KONG: THE PRECEDENT OF THE PANAMA CANAL ZONE

1.

The two treaties on the Panama Canal (ie the Panama Canal Treaty and the Treaty concerning the Permanent Neutrality and Operation of the Panama Canal), were signed by Panama and the USA on 7 September 1977, were ratified by both countries on 16 June 1978 and came into effect on 1 October 1979. Prior to ratification a referendum was held in Panama (in October 1977) which resulted in a two-to-one vote in favour of the treaties.

2.

The main provisions of the treaties were as follows:

a.

b.

c.

d.

e.

f.

g.

h.

Earlier agreements which had placed the Canal Zone under US sovereignty virtually in perpetuity were terminated and Panamanian sovereignty was recognised; the entire territory came under the flag of Panama which henceforward occupied "the position of honour", while the US flag could also be flown at certain places.

The USA was granted rights to manage, operate and maintain the Canal while remaining responsible for its defence until the end of 1999, when these rights pass to Panama.

Panama assumed responsibilities for customs, immigration courts and licensing in the former Canal Zone (now called the Canal Area).

During the period of the Canal Treaty (up to end 1999) US installations established in accordance with that Treaty are "inviolable" and "agencies and instrumentalities" of the US Government operating pursuant to the Treaty are immune from Panamanian jurisdiction.

A transition period of 30 months was agreed, during which US criminal jurisdiction continued to apply to US citizen employees of the Panama Canal Commission and their dependants in respect of offences committed within areas and installations used by the USA as well as offences committed before the treaty came into force; during the same period the US police force was retained. However, Panama immediately assumed jurisdiction over civil cases.

Property rights "as recognised by the USA" were maintained (for the duration of the treaty, ie up to the end of 1999) in respect of buildings in the Canal Area.

An increasing number of Panamanian nationals is to be employed by the Panama Canal Commission. (This was

established as a US Government agency with a Board consisting of five Americans and four Panamanians).

Revenues payable to Panama were greatly increased.

i. The permanent neutrality of the Canal is "guaranteed".

CONFIDENT IAL

13.