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U.S. Department of State

Diplomacy in Action

U.S.-Panama Air Transport Agreement of May 16, 1997


May 16, 1997

   
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AIR TRANSPORT AGREEMENT BETWEEN THE GOVERNMENT OF THE UNITED STATES OF AMERICA AND THE GOVERNMENT OF THE REPUBLIC OF PANAMA

The Government of the United States of America and the Government of the Republic of Panama(hereinafter, "the Parties") ; Desiring to promote an international aviation systembased on competition among airlines in themarketplace with minimum government interference andregulation ; Desiring to facilitate the expansion of internationalair transport opportunities ; Desiring to make it possible for airlines to offerthe traveling and shipping public a variety ofservice options at the lowest prices that are notdiscriminatory and do not represent abuse of adominant position, and wishing to encourageindividual airlines to develop and implementinnovative and competitive prices ; Desiring to ensure the highest degree of safety andsecurity in international air transport andreaffirming their grave concern about acts or threatsagainst the security of aircraft, which jeopardizethe safety of persons or property, adversely affectthe operation of air transportation, and underminepublic confidence in the safety of civil aviation ; and Being Parties to the Convention on InternationalCivil Aviation, opened for signature at Chicago onDecember 7, 1944; Have agreed as follows : Article 1 Definitions For the purposes of this Agreement, unless otherwisestated, the term : 1. "Aeronautical authorities" means, in the case ofthe United States, the Department of Transportation,or its successor, and in the case of the Republic ofPanama, the Civil Aviation Directorate and any personor agency authorized to perform the functions exercised by the said Civil Aviation Directorate ; 2. "Agreement" means this Agreement, its Annexes,and any amendments thereto; 3. "Air transportation" means the public carriage byaircraft of passengers, baggage, cargo, and mail,separately or in combination, for remuneration orhire;
4 . "Convention" means the Convention on International Civil Aviation, opened for signature at Chicago on December 7, 1944, and includes : (a) any amendment that has entered into force under Article 94 (a) of the Convention and has beenratified by both Parties, and (b) any Annex or any amendment thereto adoptedunder Article 90 of the Convention, insofar as such Annex or amendment is at any given timeeffective for both Parties ; 5. "Designated airline" means an airline designated'and authorized in accordance with Article 3 of this Agreement; 6. "Full cost" means the cost of providing serviceplus a reasonable charge for administrative overhead ; 7. "International air transportation" means airtransportation that passes through the airspace overthe territory of more than one State ; 8. "Price" means any fare, rate or charge for thecarriage of passengers (and their baggage) and/orcargo (excluding mail) in air transportation chargedby airlines, including their agents, and theconditions governing the availability of such fare,rate or charge; 9. "Stop for non-traffic purposes" means a landingfor any purpose other than taking on or dischargingpassengers, baggage, cargo and/or mail in airtransportation; 10. "Territory" means the land areas under thesovereignty, jurisdiction, protection, or trusteeshipof a Party, and the territorial waters adjacentthereto; and 11 . "User charge" means a charge imposed on airlinesfor the provision of airport, air navigation, oraviation security facilities or services includingrelated services and facilities . Article 2 Grant of Rights 1. Each Party grants to the other Party thefollowing rights for the conduct of international airtransportation by the airlines of the other Party : a. the right to fly across its territory withoutlanding ;
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. the right to make stops in its territory for non-traffic purposes ; and c . the rights otherwise specified in this agreement . 2 . Nothing in this Article shall be deemed to confer on the airline or airlines of one Party the rights to take on board, in the territory of the other Party,passengers, their baggage, cargo, or mail carried for compensation and destined for another point in the territory of that other Party . Article 3 Designation and Authorization 1 . Each Party shall have the right to designate asmany airlines as it wishes to conduct internationalair transportation in accordance with this Agreementand to withdraw or alter such designations . Such designations shall be transmitted to the other Partyin writing through diplomatic channels, and shallidentify whether the airline is authorized to conductthe type of air transportation specified in Annex Ior in Annex II or both . 2. On receipt of such a designation, and ofapplications from the designated airline, in the formand manner prescribed for operating authorizationsand technical permissions, the other Party shallgrant appropriate authorizations and permissions withminimum procedural delay, provided : a. substantial ownership and effective controlof that airline are vested in the Partydesignating the airline, nationals of that Party,or both; b. the designated airline is qualified to meetthe conditions prescribed under the laws andregulations normally applied to the operation ofinternational air transportation by the Partyconsidering the application or applications ; and c. the Party designating the airline ismaintaining and administering the standards setforth in Article 6 (Safety) and Article 7(Aviation Security) . Article 4 Revocation of Authorization 1. Either Party may revoke, suspend or limit theoperating authorizations or technical permissions ofan airline designated by the other Party where : a. substantial ownership and effective controlof that airline are not vested in the other
Party, the Party's nationals, or both ; b . that airline has failed to comply with the laws and regulations referred to in Article 5 (Application of Laws) of this Agreement ; or c. the other Party is not maintaining andadministering the standards as set forth inArticle 6 (Safety) . 2. Unless immediate action is essential to preventfurther noncompliance with subparagraphs lb or lc ofthis Article, the rights established by this Articleshall be exercised only after consultation with theother Party . i 3. This Article does not limit the rights of eitherParty to withhold, revoke, limit or impose conditionson the operating authorization or technicalpermission of an airline or airlines of the otherParty in accordance with the provisions of Article 7(Aviation Security) . Article 5 Application of Laws 1. While entering, within, or leaving the territoryof one Party, its laws and regulations relating tothe operation and navigation of aircraft shall becomplied with by the other Party's airlines . 2. While entering, within, or leaving the territory ofone Party, its laws and regulations relating to theadmission to or departure from its territory ofpassengers, crew or cargo on aircraft (includingregulations relating to entry, clearance, aviation security, immigration, passports, customs and quarantineor, in the case of mail, postal regulations) shall becomplied with by, or on behalf of, such passengers, crewor cargo of the other Party's airlines . Article 6 Safety 1 . Each Party shall recognize as valid, for thepurpose of operating the air transportation providedfor in this Agreement, certificates of airworthiness,certificates of competency, and licenses issued orvalidated by the other Party and still in force,provided that the requirements for such certificatesor licenses at least equal the minimum standards thatmay be established pursuant to the Convention . Each Party may, however, refuse to recognize as valid forthe purpose of flight above its own territory,certificates of competency and licenses granted to orvalidated for its own nationals by the other Party . 2. Either Party may request consultations concerningthe safety standards maintained by the other Party
relating to aeronautical facilities, aircrews, aircraft, and operation of the designated airlines . If, following such consultations, one Party finds that the other Party does not effectively maintainand administer safety standards and requirements inthese areas that at least equal the minimum standardsthat may be established pursuant to the Convention,the other Party shall be notified of such findingsand the steps considered necessary to conform withthese minimum standards, and the other Party shalltake appropriate corrective action. Each Partyreserves the right to withhold, revoke, or limit theoperating authorization or technical permission of anairline or airlines designated by the other Party inthe event the other Party does not take suchappropriate corrective action within a reasonabletime. Article 7 Aviation Security 1. In accordance with their rights and obligationsunder international law, the Parties reaffirm that their obligation to each other to protect thesecurity of civil aviation against acts of unlawfulinterference forms an integral part of thisAgreement. Without limiting the generality of theirrights and obligations under international law, theParties shall in particular act in conformity withthe provisions of the Convention on Offenses andCertain Other Acts Committed on Board Aircraft, signed at Tokyo on September 14, 1963, the Conventionfor the Suppression of Unlawful Seizure of Aircraft,signed at The Hague on December 16, 1970, and theConvention for the Suppression of Unlawful Actsagainst the Safety of Civil Aviation, signed , at Montreal on September 23, 1971 . 2. The Parties shall provide upon request allnecessary assistance to each other to prevent acts ofunlawful seizure of civil aircraft and other unlawful acts against the safety of such aircraft, of theirpassengers and crew, and of airports and airnavigation facilities, and to address any otherthreat to the security of civil air navigation . 3. The Parties shall, in their mutual relations, actin conformity with the aviation security provisions established by the International Civil AviationOrganization and designated as Annexes to theConvention; they shall require that operators ofaircraft of their registry, operators of aircraft whohave their principal place of business or permanentresidence in their territory, and the operators ofairports in their territory act in conformity withsuch aviation security provisions . 4. Each Party agrees to observe the securityprovisions required by the other Party for entryinter, fnr departure from, and while within the
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of that other Party and to take adequate measures to protect aircraft and to inspect passengers, crew, and their baggage and carry-onitems, as well as cargo and aircraft stores, prior to and during boarding or loading . Each Party shall also give positive consideration to any request from the other Party for special security measures to meeta particular threat . 5. When an incident or threat of an incident ofunlawful seizure of aircraft or other unlawful acts against the safety of passengers, crew, aircraft,airports or air navigation facilities occurs, theParties shall assist each other by facilitatingcommunications and other appropriate measuresintended to terminate rapidly and safely suchincident or threat . 6. When a Party has reasonable grounds to believethat the other Party has departed from the aviationsecurity provisions of this Article, the aeronauticalauthorities of that Party may request immediateconsultations with the aeronautical authorities of the other Party. Failure to reach a satisfactoryagreement within 15 days from the date of suchrequest shall constitute grounds to withhold, revoke,limit, or impose conditions on the operatingauthorization and technical permissions of an airlineor airlines of that Party . When required by anemergency, a Party may take interim action prior tothe expiry of 15 days . Article 8 Commercial Opportunities 1. The airlines of each Party shall have the rightto establish offices in the territory of the otherParty for the promotion and sale of air transportation. 2. The designated airlines of each Party shall beentitled, in accordance with the laws and regulationsof the other Party relating to entry, residence, andemployment, to bring in and maintain in the territoryof the other Party managerial, sales, technical,operational, and other specialist staff required forthe provision of air transportation. 3. Each designated airline shall have the right toperform its own ground-handling in the territory ofthe other Party ("self-handling") or, at its option,select among competing agents for such services inwhole or in part. The rights shall be subject onlyto physical constraints resulting from considerationsof airport safety. Where such considerations preclude self-handling, ground services shall beavailable on an equal basis to all airlines ; chargesshall be based on the costs of services provided; and such services shall be comparable to the kind and
quality of services as if self-handling werepossible . 4 . Any airline of each Party may engage in the saleof air transportation in the territory of the otherParty directly and, at the airline's discretion,through its agents, except as may be specificallyprovided by the charter regulations of the country inwhich the charter originates that relate to theprotection of passenger funds, and passengercancellation and refund rights . Each airline shall have the right to sell such transportation, and anyperson shall be free to purchase such transportation,in the currency of that territory or in freelyconvertible currencies . 5. Each airline shall have the right to convert andremit to its country, on demand, local revenues inexcess of sums locally disbursed . Conversion and remittance shall be permitted promptly withoutrestrictions or taxation in respect thereof at therate of exchange applicable to current transactionsand remittance on the date the carrier makes the initial application for remittance . 6. The airlines of each Party shall be permitted topay for local expenses, including purchases of fuel,in the territory of the other Party in local currency. At their discretion, the airlines of each Party may pay for such expenses in the territory ofthe other Party in freely convertible currenciesaccording to local currency regulation . 7 . In operating or holding out the authorizedservices on the agreed routes, any designated airlineof one Party may enter into cooperative marketing arrangements such as blocked-space, code-sharing orleasing arrangements, with a) an airline or airlines of either Party; and b) an airline or airlines of a third country,provided that such third country authorizes orallows comparable arrangements between theairlines of the other Party and other airlines onservices to, from and via such third country ; provided that all airlines in such arrangements 1)hold the appropriate authority and 2) meet therequirements normally applied to such arrangements . Article 9 Customs Duties and Charges 1 . On arriving in the territory of one Party,aircraft operated in international air transportationby the designated airlines of the other Party, theirregular equipment, ground equipment, fuel,lubricants, consumable technical supplies . ~narA
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(including engines), aircraft stores (includingbut not limited to such items of food, beverages and liquor, tobacco and other products destined for sale to or use by passengers in limited quantities duringflight), and other items intended for or used solelyin connection with the operation or servicing of aircraft engaged in international air transportationshall be . exempt, on the basis of reciprocity, fromall import restrictions, property taxes and capitallevies, customs duties, excise taxes, and similar fees and charges that are (1) imposed by the nationalauthorities, and (2) not based on the cost ofservices provided, provided that such equipment andsupplies remain on board the aircraft . 2. There shall also be exempt, on the basis ofreciprocity, from the taxes, levies, duties, fees andcharges referred to in paragraph 1 of this Article,with the exception of charges based on the cost ofthe service provided : a. aircraft stores introduced into or suppliedin the territory of a Party and taken on board,within reasonable limits, for use on outboundaircraft of an airline of the other Party engagedin international air transportation, even whenthese stores are to be used on a part of thejourney performed over the territory of the Partyin which they are taken on board ; b. ground equipment and spare parts (includingengines) introduced into the territory of a Partyfor the servicing, maintenance, or repair ofaircraft of an airline of the other Party used ininternational air transportation ; c. fuel, lubricants and consumable technicalsupplies introduced into or supplied in theterritory of a Party for use in an ai-rcraft of anairline of .the other Party engaged ininternational air transportation, even when thesesupplies are to be used on a part of the journeyperformed over the territory of the Party inwhich they are taken on board; and d. promotional and advertising materialsintroduced into or supplied in the territory ofone Party and taken on board, within reasonablelimits, for use on outbound aircraft of an airline of the other Party engaged ininternational air transportation, even when thesestores are to be used on a part of the journeyperformed over the territory of the Party inwhich they are taken on board . 3. Equipment and supplies referred to in paragraphs1 and 2 of this Article may be required to be keptunder the supervision or control of the appropriateauthorities .
4 . The exemptions provided by this Article shallalso be available where the designated airlines ofone Party have contracted with another airline, whichsimilarly enjoys such exemptions from the otherParty, for the loan or transfer in the territory ofthe other Party of the items specified in paragraphs1 and 2 of this Article . Article 10 User Charges 1 . User charges that may be imposed by the competentcharging authorities or bodies of each Party on theairlines of the other Party shall be just,reasonable, not unjustly discriminatory, andequitably apportioned among categories of users . In any event, any such user charges shall be assessed onthe airlines of the other Party on terms not lessfavorable than the most favorable terms available to any other airline at the time the charges areassessed . 2. User charges imposed on the airlines of the otherParty may reflect, but-shall not exceed, the fullcost to the competent charging authorities or bodiesof providing the appropriate airport, airportenvironmental, air navigation, and aviation securityfacilities and services at the airport or within theairport system. Such full cost may include areasonable return on assets, after depreciation . Facilities and services for which charges are madeshall be provided on an efficient and economic basis . 3. Each Party shall encourage consultations betweenthe competent charging authorities or bodies in itsterritory and the airlines using the services andfacilities, and shall encourage the competentcharging authorities or bodies and the airlines toexchange such information as may be necessary topermit an accurate review of the reasonableness ofthe charges in accordance with the principles ofparagraphs (1) and (2) of this Article . Each Partyshall encourage the competent charging authorities to provide users with reasonable notice of any proposalfor changes in user charges to enable users toexpress their views before changes are made . 4. Neither party shall be held, in disputeresolution procedures pursuant to Article 14, to bein breach of a provision of this Article, unless (a)it fails to undertake a review of the charge orpractice that is the subject of complaint by theother Party within a reasonable amount of time; or (b) following such a review it fails to take allsteps within its power to remedy any charge orpractice that is inconsistent with this Article .
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11 Fair Competition 1 . Each Party shall allow a fair and equal opportunity for the designated airlines of both Parties to compete in providing the international air transportation governed by this Agreement . 2 . Each party shall allow each designated airline to determine the frequency and capacity of the international air transportation it offers based uponcommercial considerations in the marketplace . Consistent with this right, neither Party shall unilaterally limit the volume of traffic, frequency or regularity of service, or the aircraft type or types operated by the designated airlines of the other Party, except as may be required for customs,technical, operational, or environmental reasonsunder uniform conditions consistent with Article 15 of the Convention . 3. Neither Party shall impose on the other Party'sdesignated airlines a first-refusal requirement,uplift ratio, no-objection fee, or any otherrequirement with respect to capacity, frequency ortraffic that would be- inconsistent with the purposesof this Agreement . 4 . Neither Party shall require the filing ofschedules, programs for charter flights, oroperational plans by airlines of the other Party forapproval, except as may be required on a nondiscriminatory
basis to enforce the uniformconditions foreseen by paragraph 2 of this Article oras may be specifically authorized in an Annex to thisAgreement . If a Party requires filings forinformation purposes, it shall minimize theadministrative burdens of filing requirements andprocedures on air transportation intermediaries andon designated airlines of the other Party . Article 12 Pricing 1. Each Party shall allow prices for airtransportation to be established by each designatedairline based upon commercial considerations in themarketplace . Intervention by the Parties shall belimited to : a. prevention of unreasonably discriminatoryprices or practices ; b. protection of consumers from prices that areunreasonably high or restrictive due to the abuseof a dominant position; and c. protection of airlines from prices that are
artificially low due to direct or indirect governmental subsidy or support . 2 . Each Party may require notification to or filingwith its aeronautical authorities of prices to be charged to or from its territory by airlines of theother Party. Notification or filing by the airlinesof both Parties may be required no more than 30 daysbefore the proposed date of effectiveness . In individual cases, notification or filing may bepermitted on shorter notice than normally required . Neither Party shall require the notification orfiling by airlines of the other Party of pricescharged by charterers to the public, except as may berequired on a non-discriminatory basis forinformation purposes . 3. Neither Party shall take unilateral action toprevent the inauguration or continuation of a priceproposed to be charged or charged by (a) an airlineof either Party for international air transportationbetween the territories of the parties, or (b) anairline of one Party for international airtransportation between the territory of the otherParty and any other country, including in both casestransportation on an interline or intraline basis . If either Party believes that any such price isinconsistent with the considerations set forth in paragraph (1) of this Article, it shall requestconsultations and notify the other Party of thereasons for its dissatisfaction as soon as possible . These consultations shall be held not later than 30 days after receipt of the request, and the Partiesshall cooperate in securing information necessary forreasoned resolution of the issue . If the Parties reach agreement with respect to a price for which anotice of dissatisfaction has been given, each Partyshall use its best efforts to put that agreement intoeffect. Without such mutual agreement, the priceshall go into effect or continue in effect . Article 13 Consultations Either Party may, at any time, request consultationsrelating to this Agreement . Such consultations shall begin at the earliest possible date, but not laterthan 60 days from the date the other Party receivesthe request unless otherwise agreed . Article 14 Settlement of Disputes 1 . Any dispute arising under this agreement, exceptthose that may arise under paragraph 3 of Article 12(Pricing), that is not resolved by a first round offormal consultations may be referred by agreement of
P the Parties for decision to some person or body . If the Parties do not so agree, the dispute shall, at the request of either Party, be submitted to arbitration in accordance with the procedures set forth below . 2 . Arbitration shall be by a tribunal of three arbitrators to be constituted as follows : a . Within 30 days after the receipt of a requestfor arbitration, each Party shall name one arbitrator . Within 60 days after these two arbitrators have been named, they shall by agreement appoint a third arbitrator, who shall act as President of the arbitral tribunal ; b . If either Party fails to name an arbitrator, or if the third arbitrator is not appointed in accordance with subparagraph a of this paragraph,either Party may request the President of theCouncil of the International Civil Aviation Organization to appoint the necessary arbitratoror arbitrators within 30 days . If the President of the Council is of the same nationality as oneof the Parties, the most senior Vice President who is not disqualified on that ground shall makethe appointment . 3. Except as otherwise agreed, the arbitral tribunalshall determine the limits of its jurisdiction inaccordance with this Agreement and shall establishits own procedural rules . The tribunal, once formed,may recommend interim relief measures pending its final determination .-- At the direction of the tribunal or at the request of either of the Parties,a conference to determine the precise issues to bearbitrated and the specific procedures to be followedshall be held not later than 15 days after thetribunal is fully constituted . 4. Except as otherwise agreed or as directed by thetribunal, each Party shall submit a memorandum within45 days of the time the tribunal is fully constituted . Replies shall be due 60 days later . The tribunal shall hold a hearing at the request ofeither Party or on its own initiative within 15 days after replies are due . S. The tribunal shall attempt to render a writtendecision within 30 days after completion of thehearing or, if no hearing is held, after the dateboth replies are submitted . The decision of the majority of the tribunal shall prevail . 6. The Parties may submit requests for clarificationof the decision within 15 days after it is renderedand any clarification given shall be issued within 15days of such request .
7 . Each Party shall, to the degree consistent with its national law, give full effect to any decision or award of the arbitral tribunal . 8 . The expenses of the arbitral tribunal, includingthe fees and expenses of the arbitrators, shall be shared equally by the Parties . Any expenses incurredby the President of the Council of .the International Civil Aviation Organization in connection with the procedures of paragraph 2 .b. of this Article shall be considered to be part of the expenses of the arbitral tribunal . Article 15 Termination Eith1r Party may, at any tirge, give notice in writing to the other Party of its decision to terminate this Agreement . Such notice shall be sent simultaneously to the International Civil Aviation Organization . . This Agreement shall terminate at midnight (at the place of receipt of the notice to the other Party)immediately before the first anniversary of the date of receipt of the notice by the other Party, unless the notice is withdrawn by agreement of the Parties before the end of this period . Article 16 Registration with ICAO This Agreement and all amendments thereto shall be registered with the International Civil Aviation Organization . Article 17 Entry into Force This Agreement and its Annexes will enter into force upon an exchange of notes following the completion ofall necessary internal procedures by the Parties . Upon entry into force, this Agreement shall supersede the Air Transport Agreement between the United States and Panama, with annex, signed at Panama March 31, 1949, as amended .
IN WITNESS WHEREOF the undersigned, being duly authorized by their respective Governments, havesigned this Agreement . DONE AT Panama, this 8th day of May, 1997, in duplicate, in the English and Spanish languages, each text being equally authentic . FOR THE GOVERNMENT OF THE FOR THE GOVERNMENT UNITED STATES OF AFRICA OF THE REPUBLIC OF PANAMA . :Y WILLIAM 3 GHES1 EUSTACIO FABREGA LOPEZ Ambassador to Panama Director General of Civil Aviation
ANNEX I Scheduled Air Transportation Section 1 Routes Airlines of each Party designated under this Annex shall, in accordance with the terms of their designation, be entitled to perform scheduled international air transportation between points on .the following routes : A. Routes for the airline or airlines designated bythe Government of the United States of America : From points behind the United States of America viathe United States of America andiintermediate pointsto a point or points in the Republic of Panama andbeyond . B. Routes for the airline or airlines designated bythe Government of the Republic of Panama : From points behind the Republic of Panama via theRepublic of Panama and intermediate points to a pointor points in the United States and beyond . Section 2 Operational Flexibility Each designated airline may, on any or all flightsand at its option : 1 . Operate flights in either or both directions ; 2 . Combine different flight numbers within one aircraft operation ; 3. Serve behind, intermediate, and beyond points andpoints in the territories of the Parties on theroutes in any combination and in any order ; 4 . Omit stops at any point or points ; 5. Transfer traffic from any of its aircraft to anyof its other aircraft at any point on the routes ; and 6. Serve points behind any point in its territorywith or without change of aircraft or flightnumber and may hold out and advertise such'services to the public as through services; Without directional or geographic limitation andwithout loss of any right to carry traffic otherwisepermissible under this Agreement ; provided that theservice serves a point in the territory of the Partydesignating the airline .
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3 Change of Gauge On any segment or segments of the routes above, anydesignated airline may perform international air transportation without any limitation as to change, at any point on the route, in type or number ofaircraft operated ; provided that, in the outbounddirection, the transportation beyond such point is acontinuation of the transportation from the territoryof the Party that has designated the airline and, in the inbound direction, the transportation to theterritory of the Party that has designated theairline is a continuation of the transportation frombeyond such point . i Section 4 Intermodal Services Notwithstanding any other provision of thisAgreement, airlines and indirect providers of cargotransportation of both Parties shall be permitted,without restriction, to employ in connection withinternational air transportation any surfacetransportation for cargo to or from any points in theterritories of the Parties or in third countries, including transport to and from all airports withcustoms facilities, and including, where applicable,the right to transport cargo in bond under applicablelaws and regulations . Such cargo, whether moving bysurface or by air, shall have access to airportcustoms processing and facilities . Airlines mayelect to perform their own surface transportation orto provide it through arrangements with other surfacecarriers, including surface transportation operatedby other airlines and indirect providers of cargo air transportation . Such intermodal cargo services maybe offered at a single, through price for the air andsurface transportation combined, provided thatshippers are not misled as to the facts concerningsuch transportation .
ANNEX II t7 Charter Air Transportation Section 1 Airlines of each Party designated under this Annex shall, in accordance with the terms of their designation, have'the right to carry international charter traffic of passengers (and their accompanyingbaggage) and/or cargo (including, but not limited to,freight forwarder, split, and combination (passenger/cargo) charters) : Between any point or points in the territory ofthe Party that has designated the airline and anypoint or points in the territory of the otherParty; and Between any point or points in the territory ofthe other Party and any point or points in athird country or countries, provided that suchservice constitutes part of a continuousoperation, with the exception of cargo charters,with or without a change of aircraft, thatincludes service to the homeland for the purposeof carrying local traffic between the homelandand the territory of the other Party . In the performance of services covered by this Annex,airlines of each Party designated under this Annexshall also have the right : (1) to make stopovers atany points whether within or outside of the territoryof either Party; (2) to carry transit traffic throughthe other Party's territory ; (3) to combine on thesame aircraft traffic originating in one Party'sterritory, traffic originating in the other Party'sterritory, and traffic originating in thirdcountries ; and (4) to perform international airtransportation without any limitation as to change,at any point on the route, in type or number ofaircraft operated; provided that, in the outbounddirection, the transportation beyond such point is acontinuation of the transportation from the territoryof the Party that has designated the airline and inthe inbound direction, the transportation to theterritory of the Party that has designated theairline is a continuation of the transportation frombeyond such point . Each Party shall extend favorable consideration toapplications by airlines of the other Party to carry traffic not covered by this Annex on the basis ofcomity and reciprocity . Section 2 Any airline designated by either Party performinginternational charter air transportation originatingin the territory of either Party, whether on a one-way or round-trip basis, shall have the option ofcomplying with the charter laws, regulations, and
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either of its homeland or of the other Party . If a Party applies different rules, regulations, terms, conditions, or limitations to one or more of its airlines, or to airlines of different countries, each designated airline shall be subject to the least restrictive of such criteria . However, nothing contained in the above paragraphshall limit the rights of either Party to requireairlines designated under this Annex by either Partyto adhere to requirements relating to the protectionof passenger funds and passenger cancellation andrefund rights . Section 3 Except with respect to the consumer protection rulesreferred to in the preceding paragraph above, neitherParty shall require an airline designated under thisAnnex by the other Party, in respect of the carriageof traffic from the territory of that other Party orof a third country on a one-way or round-trip basis,to submit more than a declaration of conformity withthe applicable laws, regulations and rules referredto under section 2 of this Annex or of a waiver of these laws, regulations, or rules granted by theapplicable aeronautical authorities .
ANNEX III Principles of Non-Discrimination Within and Competition among Computer Reservations Systems Recognizing that Article 11 (Fair Competition) of the U.S.-PanamaAgreement guarantees the airlines of both Parties "a fair and equal opportunity. . . to compete . . .," Considering that one of the most important aspects of the ability of an airline to compete is its ability to inform the public of its services in a fair and impartial manner, and that, therefore, the quality of information about airline services available to travel agents who directly distribute such information to the traveling public and the abilityof an airline to offer those agents competitive computer reservations systems (CRSs) represent thefoundation for an airline's competitiveopportunities, and Considering that it is equally necessary to ensure that the interests of the consumers of air transportproducts are protected from any misuse of such information and its misleading presentation and thatairlines and travel agents have access to effectivelycompetitive computer reservations systems : 1. The Parties agree that CRSs will have integratedprimary displays for which : a. Information regarding international airservices, including the construction ofconnections on those services, shall be edited and displayed based on non-discriminatory andobjective criteria that are not influenced,directly or indirectly, by airline or marketidentity. Such criteria shall apply uniformly toall participating airlines . b. CRS data bases shall be as comprehensive aspossible . c. CRS vendors shall not delete informationsubmitted by participating airlines ; such information shall be accurate and transparent ; for example, code-shared and change-of-gaugeflights and flights with stops should be clearlyidentified as having those characteristics . d. All CRSs that are available to travel agentswho directly distribute information about airlineservices to the traveling public in eitherParty's territory shall not only be obligated to,but shall also be entitled to, operate inconformance with the CRS rules that apply in theterritory where the CRS is being operated . e. Travel agents shall be allowed to use any ofthe secondary displays available through the CRS
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long as the travel agent makes a specificrequest for that display . 2 . A Party shall require that each CRS vendor operating in its territory allow all airlines willing to pay any applicable non-discriminatory fee to participate in its CRS. A Party shall require that all distribution facilities that a system vendor provides shall be offered on a non-discriminatorybasis to participating airlines . A Party shall require that CRS vendors display, on a nondiscriminatory,
objective, carrier-neutral and market-neutral basis, the international air services of participating airlines in all markets in which they wish to sell those services . Upon request, a CRS vendor shall disclose details of its data base update and storage procedures, its criteria for editing and ranking information, the weight given to such criteria, and the criteria used for selection of connect points and inclusion of connecting flights . 3 . CRS vendors operating in the territory of one Party shall be entitled to bring in, maintain, and make freely available their CRSs to travel agencies or travel companies whose principal business is the distribution of travel-related products in theterritory of the other Party if the CRS complies withthese principles . 4. Neither Party shall, in its territory, impose orpermit to be imposed on the CRS vendors of the otherParty more stringent requirements with respect toaccess to and use of communication facilities, selection and use of technical CRS hardware and software, and the technical installation of CRS hardware, than those imposed on its own CRS vendors . 5. Neither Party shall, in its territory, impose orpermit to be imposed on the CRS vendors of the otherParty more restrictive requirements with respect toCRS displays (including edit and display parameters),operation, or sale than those imposed on its own CRSvendors . 6. CRSs in use in the territory of one Party thatcomply with these principles and other relevant nondiscriminatory
regulatory, technical, and securitystandards shall be entitled to effective and unimpaired access in the territory of the otherParty. One aspect of this is that a designatedairline shall participate in such a system as fullyin its homeland territory as it does in any systemoffered to travel agents in the territory of theother Party. Owners/operators of CRSs of one Partyshall have the same opportunity to own/operate CRSsthat conform to these principles within the territoryof the other Party as do owners/operators of that Party. Each Party shall ensure that its airlines andits CRS vendors do not discriminate against travel
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in their homeland territory because of theiruse or possession of a CRS also operated in theterritory of the other Party .
lTtI"t1li&LHUILLL-tAiaa.~-~.av.~ ~,a ~,, . REPUBLIC OF PANAMA ) PROVINCE OF PANAMA ) CITY OF PANAMA ) ss : EMBASSY OF THE ) UNITED STATES OF AMERICA ) I certify that the officials named below, whose true signatures are, respectively, subscribed to the annexed document, were, on the 8th day of May, 1997, empowered to act in the official capacity designated in the annexed document, to which faith and credit are due. William J. Hughes Eustacio Fabrega For the Government of the For the Government of the United States ofAmerica Republic of Panama Signature of Consular Officer Michael R Schiwmel Consul of the United States of America May 16, 1997 3 . "Air transportation" means the public carriage by aircraft of passengers, baggage, cargo, and mail,separately or in combination, for remuneration or hire;



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