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rH.N.S.C. No. 104-13]



Y4.SE2/1 A: 995-96/13



(H.N.S.C Ho. 104-13): Annual Author...

ANNUAL AUTHORIZATION OF THE
PANAMA CANAL COMMISSION AND THE
ANNUAL AUTHORIZATION FOR THE
UNITED STATES MARITIME ADMINIS-
TRATION



HEARING

BEFORE THE



SPECIAL OVERSIGHT PANEL ON THE MERCHANT
MARINE



COMMITTEE ON NATIONAL SECURITY
HOUSE OF REPRESENTATIVES

ONE HUNDRED FOURTH CONGRESS

FIRST SESSION



HEARING HELD
MARCH 28 AND APRIL 6, 1995










Oct



3}



%



U.S. GOVERNMENT PRINTING OFFICE
WASHINGTON : 1996



For sale by the U.S. Government Printing Office
Superintendent of Documents, Congressional Sales Office, Washington, DC 20402
ISBN 0-16-053542-5



TH.N.S.C. No. 104-13]

Y4.SE2/1 A: 995-96/13



(H.K.S.C No. 104-13): Annual Author...

ANNUAL AUTHORIZATION OF THE
PANAMA CANAL COMMISSION AND THE
ANNUAL AUTHORIZATION FOR THE
UNITED STATES MARITIME ADMINIS-
TRATION



HEARING

BEFORE THE



SPECIAL OVERSIGHT PANEL ON THE MERCHANT
MARINE



COMMITTEE ON NATIONAL SECURITY
HOUSE OF REPRESENTATIVES

ONE HUNDRED FOURTH CONGRESS
FIRST SESSION



HEARING HELD
MARCH 28 AND APRIL 6, 1995




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^Q



U.S. GOVERNMENT PRINTING OFFICE
WASHINGTON : 1996



For sale by the U.S. Government Printing Office
Superintendent of Documents, Congressional Sales Office, Washington, DC 20402
ISBN 0-16-053542-5



SPECIAL OVERSIGHT PANEL ON THE MERCHANT MARINE

HERBERT H. BATEMAN, Virginia, Chairman
RANDY "DUKE" CUNNINGHAM, California GENE TAYLOR, Mississippi
HUNTER DUNCAN, California OWEN PICKETT, Virginia

CURT WELDON, Pennsylvania NEIL ABERCROMBIE, Hawaii

JIM SAXTON, New Jersey JANE HARMAN, California

JOE SCARBOROUGH, Florida PATRICK J. KENNEDY, Rhode Island

JAMES B. LONGLEY, Jr., Maine WILLIAM J. JEFFERSON, Louisiana

TILLIE K FOWLER, Florida

Hugh N. Johnston, Jr., Counsel
MARCELLA A. WILDING Staff Assistant

01)



CONTENTS



CHRONOLOGICAL LIST OF HEARINGS



Page

Tuesday, March 28, Annual Authorization of the Panama Canal Commission
and the Annual Authorization for the United States Maritime Administra-
tion 1

Wednesday, April 6, Administration's Maritime Security Program 183

STATEMENTS PRESENTED BY MEMBERS OF CONGRESS

Bateman, Hon. Herbert H., a Representative from Virginia, Chairman, Over-
sight Panel on the Merchant Marine 1, 183

Taylor, Hon. Gene, a Representative from Mississippi, Ranking Minority

Member, Special Oversight Panel on the Merchant Marine 2

Prepared statement 3

PRINCIPAL WITNESSES WHO APPEARED IN PERSON OR SUBMITTED
WRITTEN STATEMENTS

Bern, Joel E., President, Marine Engineers' Beneficial Association:

Statement 235

Crangle, Executive, Director, Congressional and Legislative Affairs, American
Maritime Officers:
Statement 235

Guardia, Gilberto F., Administrator, Panama Canal Commission:

Statement 21

Prepared statement 24

Harman, Hon. Jane, a Representative from California: Prepared statement 213

Herberger, Adm. Albert H., Maritime Administrator:

Statement 91

Prepared statement 95

Johnsen, Erik F., President and CEO, Central Gulf Lines, Inc.:

Statement 203

Lillie, John M., President, CEO and Chairman, American President Compa-
nies, Limited:
Statement 202

Patterson, Anne, Deputy Assistant Secretary for Central America, Depart-
ment of State:

Statement 65

Prepared statement 67

Quast, Adm. Philip M., Commander of the Military Sea Lift Command:

Statement 114

Prepared statement 117

Reeder, Hon. Joe R., Chairman, Board of Directors, Panama Canal Commis-
sion; accompanied by Michael Rhode, Jr., Assistant to the Chairman and
Secretary, Panama Canal Commission:

Statement 5

Prepared statement 8

Sacco, Michael, President, Seafarers International Union of North America:

Statement 221

Prepared statement 224

(HI)



IV

Page

Smith, Frederick C, Principal Deputy Assistant Secretary of Defense, Inter-
national Security Affairs, Department of Defense; accompanied by Brig.
Gen. John R. Walsh, Assistant Deputy for Political Military Affairs, Joint
Staff, J-5:

Statement 77

Prepared statement 79

Snow, John W., Chairman and CEO, CSX Corporation:

Statement 186

Verdon, William P., Senior Vice President and General Counsel, Crowley
Maritime Corporation:
Statement 202

DOCUMENTS SUBMITTED FOR THE RECORD

Inventory of Installations 55

Joint Statement of American President Lines, LTD; Central Gulf Lines, Inc.;
Crowley Maritime Corporation; CSX Corporation/Sea- Land Service, Inc.;
Farrell Lines, Inc.; Lykes Bros. Steamship Co., Inc.; Matson Navigation
Company, Inc.; Totem Resources Corporation; and Waterman Steamship

Corporation 190

Letter to Hon. Herbert H. Bateman, from Michael Rhode, Jr., Secretary,

Panama Canal Commission: Additional documents 60

Letter to Hon. Herbert H. Bateman, from Erik Stromberg, President, Amer-
ican Association of Port Authorities 184

Outlook for the U.S. Shipbuilding and Repair Industry 1995 141

Public Opinion Poll Regarding the UJS. Military Bases 52



ANNUAL AUTHORIZATION OF THE PANAMA CANAL COM-
MISSION AND THE ANNUAL AUTHORIZATION FOR THE
UNITED STATES MARITIME ADMINISTRATION



House of Representatives,
Committee on National Security,
Special Oversight Panel on the Merchant Marine,

Washington, DC, Tuesday, March 28, 1995.
The subcommittee met, pursuant to call, at 2 p.m., in room 2216,
Rayburn House Office Building, Hon. Herbert H. Bateman (chair-
man of the panel) presiding.

OPENING STATEMENT OF HON. HERBERT H. BATEMAN, A REP-
RESENTATIVE FROM VIRGINIA, CHAIRMAN, SPECIAL OVER-
SIGHT PANEL ON THE MERCHANT MARINE

Mr. Bateman. The panel will come to order and we will proceed
with our hearing. In today's hearing, we cover two very important
topics, the annual authorization of the Panama Canal Commission
and the annual authorization for the U.S. Maritime Administra-
tion.

As many of you know, the National Security Committee assumed
responsibility over these two agencies with the House rules change
on January 4, 1995. As you may be aware, we have a distinguished
list of panelists who will be here today. I would like to thank each
of them for appearing before us.

I would first want to extend a very personal welcome to the Hon-
orable Gilberto Guardia, the Administrator of the Panama Canal
Commission and of course to Secretary Joe R. Reeder who is Chair-
man of the Board of Directors of the Commission.

Mr. Guardia, I trust that your visit to the Nation's Capital will
be a very pleasant and a satisfactory one. I don't anticipate any-
thing will happen this afternoon that would make it less than
pleasant.

The canal, the future of the canal and the relations of the United
States with Panama are timely and important issues. It was for
that reason that I asked the key representatives from the State De-
partment and the Pentagon to appear before the panel today.

The issues raised in the written testimony which I have reviewed
offer this panel an excellent starting point to begin what I expect
will be a lengthy examination. I believe membership interest in the
subject will be high.

Finally, I would like to welcome Admiral Herberger, the Admin-
istrator of the Maritime Administration and Admiral Quast, the
commander of the Military Sealift Command.

The organization of neither would exist without the other. It is
for that reason that I have asked them if they would appear to-

(l)



2

gether. Maritime reform is something that has occupied the Con-
gress for several years. I hope we will have more than just hear-
ings to show for our efforts at the end of this Congress.

I will continue this inquiry on the Maritime Security Program on
Thursday of next week, April 6, at which time we will hear from
representatives of the affected industries within the maritime com-
munity.

I would now call on the ranking member of the panel, the Honor-
able Gene Taylor of Mississippi for any remarks he may choose to
make.

STATEMENT OF HON. GENE TAYLOR, A REPRESENTATIVE
FROM MISSISSIPPI, RANKING MINORITY MEMBER, SPECIAL
OVERSIGHT PANEL ON THE MERCHANT MARINE

Mr. Taylor. Mr. Chairman, if you don't mind, I will submit my
opening statement for the record. I also want to thank our guests
who traveled a long way to be with us today. We look forward to
hearing from them.

I would hope that at some point during today's hearings with re-
gard to the Panama Canal we could discuss, or at least begin to
talk about, the possibility of continued United States military pres-
ence in Panama should it be the wishes of the Panamanian people
and this Congress to do so.

I thank you very much. I will just submit my remarks for the
record.

[The prepared statement of Mr. Taylor follows:]



Stataent of Congressman Gene Taylor

Ranking Meaner, Special oversight

Panel on tha Mar chant Marina

Bearing

Tuesday, March 28, 1995



I WOULD LIKE TO THANK OUR CHAIRMAN, HERBERT BATEMAN, MY FELLOW
MEMBERS OF THE PANEL, AND OUR DISTINGUISHED WITNESSES FOR
PARTICIPATING IN TODAY'S HEARING ON THE FY 96 AUTHORIZATIONS FOR
THE PANAMA CANAL COMMISSION AND THE MARITIME ADMINISTRATION.

I AM EXTREMELY PROUD TO HAVE THE OPPORTUNITY TO SERVE ALONG
SIDE CHAIRMAN BATEMAN ON THIS PANEL. MR. BATEMAN HAS BEEN A STRONG
SUPPORTER OF THE U.S. MARITIME INDUSTRY AND HAS DISTINGUISHED
HIMSELF IN CONGRESS AS A CHAMPION OF OUR NATION'S SHIPBUILDING
INDUSTRY. I LOOK FORWARD TO SERVING WITH YOU, MR. CHAIRMAN, AS WELL
AS THE OTHER MEMBERS OF THE PANEL WHO I'M SURE THAT I'LL AGREE WITH
ON 99 PERCENT OF THE ISSUES THAT WE ADDRESS.

IT IS MY UNDERSTANDING THAT WE WILL BE ADDRESSING THE FISCAL
YEAR 1996 BUDGET REQUEST FOR THE PANAMA CANAL COMMISSION FIRST. I
AM PLEASED THAT ONE OF THE ISSUES THAT WE WILL DISCUSS AT TODAY'S
HEARING WILL BE THE MATTER OF U.S. MILITARY PRESENCE IN PANAMA
AFTER DECEMBER 31, 1999.



DURING THE MARAD PORTION THIS HEARING, I WISH TO EXPRESS MY
STRONG SUPPORT TO THE TITLE XI LOAN GUARANTEE PROGRAM. TITLE XI
IS OUR NATION'S ONLY SHIPYARD PROGRAM WHICH IS MODESTLY FUNDED ($85
MILLION LEFT IN UNOBLIGATED APPROPRIATED FUNDS) . OUR FOREIGN
COMPETITORS CURRENTLY HAVE SUBSIDY PROGRAMS THAT TOTAL $8 BILLION.

I WILL DISCUSS THESE ISSUES IN GREATER DEPTH AT THE PROPER
TIME LATER ON. AGAIN, THANK YOU MR. CHAIRMAN. I YIELD BACK THE
BALANCE OF MY TIME.



Mr. BATEMAN. It will be accepted for the record.

At this point, it is my pleasure to welcome and to further thank
the Chairman of the Panama Canal Commission, the Honorable
Joe Reeder, who is the Under Secretary of the Army. Thank you
so much for being with us.

Mr. Reeder. Thank you, Mr. Chairman.

Mr. Bateman. You may proceed.

STATEMENT OF HON. JOE R. REEDER, CHAIRMAN, BOARD OF
DIRECTORS, PANAMA CANAL COMMISSION; ACCOMPANDED
BY MICHAEL RHODE, JR., ASSISTANT TO THE CHAIRMAN
AND SECRETARY, PANAMA CANAL COMMISSION

Mr. Reeder. Thank you, Mr. Chairman.

Both Mr. Guardia, the Administrator, and I look forward to pre-
senting our testimony to you and to the panel today. Seated with
us on my right is the Secretary of the Commission, Mr. Michael
Rhode, Jr.

On Mr. Guardia's left, the Commission's Chief Financial Officer,
Mr. Norbert Kraegel. I would like to begin, Mr. Chairman, by ex-
tending a warm welcome to you and to the other members of the
panel, Congressmen Longley and Taylor. We look very much for-
ward to your visit in late April.

I hope to be down there and overlap with you at least 1 day on
that when we have our quarterly board meeting. We also look for-
ward to a productive relationship with you, your staff, and the
panel as the Commission continues to carry out its two most impor-
tant missions. First, the safe efficient operation of the canal. Sec-
ond, its smooth and orderly transfer to the Government of Panama
at noon, December 31, 1999.

The Panama Canal Commission or PCC, continues its prepara-
tion of transfer of the canal to Panamanian control in less than 5
years. While Mr. Guardia will address transition issues and the
progress of the Republic of Panama, I would like to simply high-
light examples of significant progress on this front.

Of course our immediate purpose in coming before you is to
present our plans and programs for the next fiscal year and to help
secure our regular authority to operate during that fiscal year.
There is another piece of proposed legislation I would like to briefly
touch on which has a longer focus.

This proposed legislation entitled "The Panama Canal Amend-
ments Act of 1995" has been years in development and seeks to
make changes we believe will facilitate a successful and seamless
transfer of the canal in 1999.

Of course, the United States and almost all trading nations will
continue to have a strong interest in a healthy efficient Panama
Canal operation. The proposal was transmitted to the House of
Representatives on March 9 and referred to the National Security
Committee. We hope that it will be introduced shortly.

The main features of the proposal would be to convert the Com-
mission from a revolving fund agency to a wholly owned Govern-
ment corporation, and to revamp the Board of Directors to a more
dynamic, empowered corporate form.

The reason for the legislation is to have the Commission in a
form advantageous for Panama to retain. This would decrease the



6

turbulence and uncertainty which could be caused by dramatic
changes in the agency right at the juncture or point of transfer.

The new constitutional title enacted by the Republic of Panama
provides authority for Panama to create a Panama Canal agency
which is semiautonomous and has private sector features. We see
this as a good development and would like to ensure that we have
an efficiently operating corporation in place well before December
31, 1999, which could continue operating under Panamanian law.

The legislation has strong support from the Departments of De-
fense and State, from the Commission itself, the Panama Canal
Commission, and of course from the White House. I believe it im-
portant for the long-term interest of the canal, as well as those of
the United States for this legislation to be enacted in this session
of Congress.

We will appreciate your consideration in support of this, Mr.
Chairman. In 1994, the Panama Canal completed its 15th year of
successful operation under the treaty and celebrated its 80th anni-
versary of service to world shipping.

A key element of the canal's optimal service to customers is the
high priority we give to the waterway's maintenance and mod-
ernization programs. To keep pace with the ever changing demands
of world trade, the Commission has invested over $1.5 billion since
1979 to maintain, improve, and modernize the canal facilities.

The canal also operates efficiently as a result of its strong em-
phasis on employee training. Employee programs are designed to
attract, and equally important if not more important, to retain a
top quality labor force in the local Panamanian market, and to in-
crease the number of Panamanians in key management and profes-
sional positions.

The Panamanians now comprise in excess of 89 percent of the ca-
nal's permanent work force. More than half of our professionals
and managers now are Panamanians.

In Washington's current environment of downsizing and stream-
lining under the guidance of Vice President Gore's National Per-
formance Review, I am also pleased to report that many of the
NPR objectives are a top priority for the canal organization.

To survive in the marketplace, the Commission must provide
safe, efficient and cost competitive service to achieve a high level
of customer satisfaction and maintain the loyalty and business of
its customers.

As such, the Commission, for decades, has strived to achieve the
cost reduction, streamlining and customer service goals which un-
derpin the NPR. Fiscal year 1994 was a turn around year for the
Commission as Mr. Guardia's testimony will explain.

Because of the canal's strong performance in 1994, the Commis-
sion made contingency profit payment of $1.1 million to the Repub-
lic of Panama in accordance with the treaty of 1977. Both canal
traffic and toll revenue continue to perform strongly in this fiscal
year.

We believe additional growth will continue in fiscal year 1996.
Mr. Guardia will address the Commission's fiscal year 1996 budget
in some detail. Let me add that programs he covers are essential
to ensure continued customer satisfaction, proper systems mainte-



nance, a break even budget, and detailed transition planning and
execution. They are consistent with the President's program.

In closing, I would like to recognize the loyalty and commitment
of the entire employee work force. This work force constitutes the
heart of this great 80-year-old enterprise. It continues to perform
as professionals in providing quality transit service to vessels of all
nations.

Their commitment to teamwork remains the most important
asset to the future and success of the canal. Thank you, Mr. Chair-
man.

[The prepared statement of Mr. Reeder follows:]



8

FISCAL YEAR 1996

BUDGET PROGRAMS

STATEMENT OF THE CHAIRMAN

OF THE BOARD OF DIRECTORS

PANAMA CANAL COMMISSION

BEFORE THE

NATIONAL SECURITY COMMITTEE

SPECIAL OVERSIGHT PANEL ON THE MERCHANT MARINE

U.S. HOUSE OF REPRESENTATIVES

MARCH 28, 1995
2:00 P.M. RAYBURN HOUSE OFFICE BUILDING



Chairman's Optmlng StaUmuM-1996 Budget



9
INTRODUCTION

MR. CHAIRMAN, MEMBERS OF THE MERCHANT MARINE PANEL, I AM
JOE R. REEDER. I SERVE AS CHAIRMAN OF THE BOARD OF THE
PANAMA CANAL COMMISSION, AND AS UNDER SECRETARY OF THE
ARMY. I HAVE BEEN A BOARD MEMBER SINCE JANUARY, 1994 AND
WAS ELECTED CHAIRMAN BY MY FELLOW BOARD MEMBERS LAST
OCTOBER. MR. GILBERTO GUARDIA, THE COMMISSION'S

ADMINISTRATOR, IS ALSO SUBMITTING TESTIMONY TO THE
COMMITTEE. WE ARE ABLY ASSISTED BY MR. MICHAEL RHODE,
SECRETARY OF THE COMMISSION, AND MR. NORBERT KRAEGEL, THE
COMMISSION'S CHIEF FINANCIAL OFFICER.

I WOULD LIKE TO EXTEND A WARM WELCOME TO YOU, MR.
CHAIRMAN, MR. VICE-CHAIRMAN, AND THE MEMBERS OF THIS
PANEL. WE LOOK FORWARD TO A PRODUCTIVE RELATIONSHIP WITH
YOU AND YOUR STAFF AS THE COMMISSION CONTINUES TO CARRY
OUT ITS TWO MOST IMPORTANT MISSIONS: THE SAFE, EFFICIENT
OPERATION OF THE CANAL, AND ITS SMOOTH AND ORDERLY



Chairman's Opening Statement- 1 996 Budget



10

TRANSFER TO THE GOVERNMENT OF PANAMA AT NOON, DECEMBER
31, 1999, AS REQUIRED BY THE PANAMA CANAL TREATY.

TRANSITION ISSUES

THE PANAMA CANAL COMMISSION CONTINUES ITS PREPARATION TO
TRANSFER THE CANAL TO PANAMANIAN CONTROL IN LESS THAN
FIVE YEARS. THE ADMINISTRATOR WILL ADDRESS TRANSITION
ISSUES AND THE PROGRESS OF THE REPUBLIC OF PANAMA. I WOULD
LIKE TO SIMPLY HIGHLIGHT EXAMPLES OF SIGNIFICANT PROGRESS
ON THIS FRONT.

OF COURSE, OUR IMMEDIATE PURPOSE IN COMING BEFORE YOU IS TO
PRESENT OUR PLANS AND PROGRAMS FOR THE NEXT FISCAL YEAR,
AND TO HELP SECURE OUR REGULAR AUTHORITY TO OPERATE IN
THAT NEXT FISCAL YEAR. BUT THERE IS ANOTHER PIECE OF
PROPOSED LEGISLATION I WOULD LIKE TO BRIEFLY TOUCH ON WHICH
HAS A LONGER FOCUS.



Chairman's Opening Statement 1996 Budget



11

THIS PROPOSED LEGISLATION, ENTITLED "THE PANAMA CANAL
AMENDMENTS ACT OF 1995," HAS BEEN YEARS IN DEVELOPMENT
AND SEEKS TO MAKE CHANGES WHICH WE BELIEVE WILL FACILITATE
A SUCCESSFUL AND SEAMLESS TRANSFER OF THE CANAL IN 1999.
OF COURSE, THE U.S. AND ALMOST ALL TRADING NATIONS WILL
CONTINUE TO HAVE A STRONG INTEREST IN A HEALTHY, EFFICIENT
PANAMA CANAL OPERATION.

THIS LEGISLATION WAS DEVELOPED TO COMPLY WITH A PROVISION
IN OUR 1993 AUTHORIZATION BILL, WHICH MANDATED A STUDY TO
DETERMINE WHAT CHANGES, IF ANY, TO THE COMMISSION WOULD
BETTER FACILITATE THE SMOOTH TRANSFER TO PANAMANIAN
CONTROL. THE LEGISLATION HAS STRONG SUPPORT FROM THE
DEPARTMENTS OF DEFENSE AND STATE, THE PANAMA CANAL
COMMISSION, AND OF COURSE THE WHITE HOUSE.

THE PROPOSAL WAS TRANSMITTED TO THE HOUSE OF
REPRESENTATIVES ON MARCH 9, AND REFERRED TO THE NATIONAL
SECURITY COMMITTEE. WE HOPE THAT IT WILL BE INTRODUCED
SHORTLY. THE MAIN FEATURES OF THE PROPOSAL WOULD BE TO

Oainmu'i Opening StaUmtM-1996 Budget Pmge *



12

CONVERT THE COMMISSION FROM A REVOLVING FUND AGENCY TO
A WHOLLY-OWNED GOVERNMENT CORPORATION, AND TO REVAMP
THE BOARD OF DIRECTORS TO A MORE DYNAMIC, EMPOWERED
CORPORATE FORM.

THE REASON FOR THE LEGISLATION IS TO HAVE THE COMMISSION IN
A FORM ADVANTAGEOUS FOR PANAMA TO RETAIN. THIS WOULD
DECREASE THE TURBULENCE AND UNCERTAINTY WHICH COULD BE
CAUSED BY DRAMATIC CHANGES IN THE AGENCY RIGHT AT THE
POINT OF TRANSFER.

THE NEW CONSTITUTIONAL TITLE ENACTED BY THE REPUBLIC OF
PANAMA PROVIDES THE AUTHORITY FOR PANAMA TO CREATE A
PANAMA CANAL AGENCY WHICH IS SEMI-AUTONOMOUS AND HAS
PRIVATE-SECTOR FEATURES. WE SEE THIS AS A GOOD
DEVELOPMENT, AND WOULD LIKE TO ENSURE THAT WE HAVE AN
EFFICIENTLY OPERATING CORPORATION IN PLACE WELL BEFORE
DECEMBER 31, 1999, WHICH COULD CONTINUE OPERATING UNDER
PANAMANIAN LAW.



Chairman's Opt King State mem- 1996 Budget



13

I BELIEVE IT IS IMPORTANT FOR THE LONG-TERM INTERESTS OF THE
CANAL, AS WELL AS THOSE OF THE UNITED STATES, FOR THIS
LEGISLATION TO BE ENACTED IN THIS SESSION OF CONGRESS, AND
WE WILL APPRECIATE YOUR CONSIDERATION AND SUPPORT OF IT.

I KNOW THAT MR. GUARDIA WILL ADDRESS THE PANEL ON THE
RECENT SIGNIFICANT STEPS PANAMA HAS TAKEN IN ITS TRANSITION
PLANNING, SO I WILL LEAVE THAT SUBJECT IN HIS VERY CAPABLE
HANDS.

BOARD ACTIVITIES

AMONG BOARD ACTIVITIES IN 1994, TWO NEW U.S. BOARD
MEMBERS, MR. ALBERT NAHMAD AND MR. CLIFFORD O'HARA, WERE
CONFIRMED BY THE SENATE AND APPOINTED BY THE PRESIDENT.
BOTH ATTENDED THEIR FIRST BOARD MEETING LAST OCTOBER.
THEY REPLACE MR. ROBERT MCMILLAN, WHO BECAME A MEMBER OF
THE BOARD IN 1989, AND MR. WILLIAM CARL, WHO SERVED ON THE
BOARD FOR TWO YEARS. HAVING SERVED AS A CHARTER BOARD
MEMBER FROM 1980 TO 1982, MR. O'HARA IS FAMILIAR WITH THE



14

COMMISSION OPERATION, AND HE IS AN EXPERT ON SHIPPING AND
PORTS. AS CHIEF EXECUTIVE OFFICER OF A SUCCESSFUL
NATIONWIDE MANUFACTURING DISTRIBUTORSHIP, MR. NAHMAD
BRINGS TO THE BOARD A WEALTH OF VALUABLE BUSINESS
EXPERTISE.

THE PANAMANIAN PRESIDENT HAS NOMINATED FOUR NEW MEMBERS
TO REPLACE THE FOUR CURRENT PANAMANIAN BOARD MEMBERS,
ALL OF WHOM HAVE PROVIDED INVALUABLE SERVICE TO THE BOARD
FOR FOUR TO ELEVEN YEARS. THESE NOMINEES, WHO ARE
AWAITING U.S. PRESIDENTIAL APPOINTMENT, ATTENDED THE
COMMISSION'S RECENT JANUARY MEETING AS OBSERVERS. THEIR
ATTENDANCE PROVIDED A FAVORABLE OVERLAP OF EXPERIENCE
WITH THE CURRENT PANAMANIAN REPRESENTATIVES. WE EXPECT
THEM TO SHARE THEIR PREDECESSORS' DEDICATION TO ENSURING
A SUCCESSFUL TRANSITION AND ASSUMING CONTROL OF THE
CANAL ENTERPRISE, WHICH IS WIDELY REGARDED AS ONE OF THE
MOST IMPORTANT ECONOMIC ACTIVITIES IN THE REPUBLIC OF
PANAMA.



Chairman's Opening SiaUnunl-1996 Budget



15

LAST AUGUST, THE BOARD APPROVED AND FORWARDED TO
PRESIDENT CLINTON A RECOMMENDATION TO APPROVE THE
ADOPTION OF A WORLDWIDE STANDARD OF TONNAGE
MEASUREMENT FOR THE ASSESSMENT OF TOLLS. THE PANAMA
CANAL UNIVERSAL MEASUREMENT SYSTEM WAS APPROVED BY THE
PRESIDENT, AND TOOK EFFECT ON OCTOBER 1. THE SYSTEM IS
WORKING VERY SMOOTHLY. CANAL CUSTOMERS WILL BENEFIT
FROM THE MORE STREAMLINED MEASUREMENT PROCESS USING
COMPUTER GENERATED SKIN-TO-SKIN MEASUREMENTS, THUS
REMOVING SUBJECTIVE JUDGMENT FROM THE TONNAGE
CALCULATION.

OPERATING ENVIRONMENT

IN 1994, THE PANAMA CANAL COMPLETED ITS 15TH YEAR OF
SUCCESSFUL OPERATION UNDER THE PANAMA CANAL TREATY AND
CELEBRATED ITS 80TH ANNIVERSARY OF SERVICE TO WORLD
SHIPPING. THE BEST EVIDENCE OF THE CANAL'S EXCELLENT
OPERATING CONDITION LIES IN ITS TRAFFIC LEVELS, WHICH IN 1994



16

REVERSED A TWO-YEAR DECLINE IN BOTH COMMERCIAL CARGO AND
PANAMA CANAL NET TONS TRANSITING THE CANAL.

A KEY ELEMENT OF THE CANAL'S OPTIMAL SERVICE TO CUSTOMERS
IS THE HIGH PRIORITY WE GIVE TO THE WATERWAY'S MAINTENANCE
AND MODERNIZATION PROGRAMS. TO KEEP PACE WITH THE EVER-
CHANGING DEMANDS OF WORLD TRADE, THE COMMISSION HAS
INVESTED OVER $1.5 BILLION DOLLARS SINCE 1979 TO MAINTAIN,
IMPROVE AND MODERNIZE THE CANAL.

THE CANAL ALSO OPERATES EFFICIENTLY AS A RESULT OF ITS
STRONG EMPHASIS ON EMPLOYEE TRAINING. BECAUSE A PRIMARY
COMMISSION MISSION IS TO ENSURE THE SMOOTH AND ORDERLY
TRANSFER OF THE CANAL TO PANAMA, EMPLOYEE PROGRAMS ARE
DESIGNED TO ATTRACT AND RETAIN A TOP QUALITY LABOR FORCE
FROM THE LOCAL MARKET, AS WELL AS INCREASE THE NUMBER OF
PANAMANIANS IN KEY MANAGEMENT AND PROFESSIONAL
POSITIONS. PANAMANIANS NOW COMPRISE OVER 89 PERCENT OF
THE CANAL'S PERMANENT WORK FORCE OF OVER 7,400 EMPLOYEES.



Chairman's Opening SuuemeM-1996 Budget



17

MORE THAN HALF OF OUR PROFESSIONALS AND MANAGERS NOW
ARE PANAMANIAN.

IN WASHINGTON'S CURRENT ENVIRONMENT OF DOWNSIZING AND


1 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19

Online Libraryzat00Annual authorization of the Panama Canal Commission and the annual authorization for the United States Maritime Administration : hearing before the Special Oversight Panel on the Merchant Marine of the Committee on National Security, House of Representatives, One Hundred Fourth Congress, first sessi → online text (page 1 of 19)