The Government of the Republic of China and the Government of
the Republic of Palau (hereinafter referred to as the Contracti-
ng Parties):
Being willing to abide by the Convention on International Civil
Aviation, opened for signature at Chicago on the Seventh day of
December1944;
Desiring to conclude an Agreement, supplementary to the said Co-
nvention for the purpose of establishing scheduled air services
between their respective territories;
Desiring to secure the highest degree of safety and security in
international air transport;
Have agreed as follows:

ARTICLE 1
Definitions

1.For the purpose of this Agreement unless the context otherwise
requires:
a) The term "the Convention" means the Convention on Internatio-
nal Civil Aviation, opened for signature at Chicago, on the
seventh day of December 1944, and includes any Annex adopted
under Article 90 of that Convention and any amendments of the
Annexes or Convention under Article 90 and 94 thereof in so
far as they become effective for both Contracting Parties;
b) the term "Aeronautical Authorities" means in the case of the
Republic of Palau, the Minister of Commerce and Trade or any
person or body authorized to perform the functions exercised
by the Minister of Commerce and Trade with respect to aviati-
on or similar functions and specifically include administrat-
or of civil aviation; and in the case of the Government of
the Republic of China, the Minister of Transportation and Co-
mmunications or any person or body authorized to perform the
functions exercised by the Minister of Transportation and Co-
mmunications or similar functions;
c) the term "designated airline" means an airline which has been
designated and authorized in accordance with Article 3 of th-
is Agreement;
d) the term "territory" in relation to a State has the meaning
assigned to it in Article 2 of the Convention;
e) the term "air service," "international air services," "airli-
ne" and "stop for nontraffic purposes" have the meaning resp-
ectively assigned to them in Article 96 of the Convention;
f) the term "this Agreement" includes the Annex hereto and any
amendments to it or to the Agreement; and
g) the term "tariff" means the prices to be paid for the carria-
ge of passengers, baggage and cargo and the conditions under
which these prices apply, including commission charges and
other additional remuneration for agency or sale of transpor-
tation documents but excluding remuneration and conditions
for carriage of mail.

2.The Annex to this Agreement forms an integral part of the Agr-
eement, and all references to the Agreement shall be deemed to
include reference to the Annex except where otherwise provided
.

ARTICLE 2
Grant of Rights

1.Each Contracting Party grants to the other Contracting Party
the rights specified in this Agreement to enable its designat-
ed airlines to establish and operate international air servic-
es on the routes specified in the Annex hereto (hereinafter
called the "agreed services" and the "specified routes").
2.Subject to the provisions of this Agreement, the designated
airlines of each Contracting Party shall enjoy the following
rights:
a) the right to fly without landing across the territory of the
other Contracting Party;
b) the right to make stops in that territory for nontraffic pur-
poses; and
c) the right to make stops in the territory of the other Contra-
cting Party while operating an agreed service on a specified
route at points specified for that route in the Annex, for
the purposes of putting down and taking on board internation-
al traffic in passengers, mail and cargo.
3.Nothing in paragraph (2) of this Article shall be deemed to
confer on a designated airline of one Contracting Party the
right to take on board, with or without remuneration, in the
territory of the other Contracting Party passengers, baggage
and cargo including mail destined for another point in the te-
rritory of the other Contracting Party.
4.If in the event of special and unusual circumstances, a desig-
nated airline of one Contracting Party is unable to operate on
its normal routine, the other Contracting Party shall use its
best efforts to facilitate the continued operation of such se-
rvice through appropriate temporary rearrangement of routes.

ARTICLE 3
Designation and Authorization
1.Each Contracting Party shall have the right to designate in
writing to the other Contracting Party multiple airlines, each
of which shall be a designated airline, for the purpose of op-
erating the agreed services on the specified routes and to wi-
thdraw or alter such designation in writing to the other Cont-
racting party.
2.On receipt of the designation described in Paragraph 1 of this
Article, the other contracting Party shall, subject to the pr-
ovisions of Paragraph (3) and (4) of this Article, without any
unreasonable delay, grant to the designated airline the appro-
priate operating authorization.
3.The aeronautical authorities of one Contacting Party may requ-
ire an airline designated by the other Contracting Party to
satisfy them that it is qualified to fulfill the conditions
prescribed under the laws and regulations normally applied by
them in conformity with the provisions of the Convention, to
the operation of international air services.
4.Each Contracting Party shall have the right to refuse the gra-
nt of operation authorization referred to in Paragraph (2) of
this Article, or to impose such conditions as it may deem nec-
essary on the exercise by a designated airline of the rights
specified in Article 2 of this Agreement, in any case where:
a) it is not satisfied that substantial ownership and effective
control of that airline are vested in the Contracting Party
designating the airline or in its nationals; or
b) a designated airline fails to comply with the national laws
and regulations referred to in paragraph (3) of this Article.
5.When an airline has been so designated and authorized, it may
at any time begin to operate the agreed services, provided th-
at a tariff established in accordance with the provisions of
Article 7 of this Agreement is in force and an agreement in
accordance with the provisions of Article 6 of the present Ag-
reement has been reached in respect of that service.

ARTICLE 4
Suspension or Revocation of Operating Authorization
1.Each Contracting Party shall have the right to revoke the ope-
rating authorization or to suspend the exercise of the rights
specified in Article 2 of this Agreement by the airline desig-
nated by the other Contracting party, or to impose such condi-
tions as it may deem necessary on the exercise of these rights
:
a) in any case where it is not satisfied that substantial owner-
ship and effective control of that airline are vested in the
Contracting Party designating the airline or in nationals of
such Contracting Party, or
b) in the case of failure by that airline to comply with the la-
ws or regulations of the Contracting Party granting these ri-
ghts, or
c) in case the airline otherwise fails to operate in accordance
with conditions prescribed under the Agreement.
2.Unless immediate revocation, suspension or imposition of the
conditions mentioned in Paragraph (1) of this Article is esse-
ntial to prevent further infringements of laws or regulations
or the conditions or the conditions prescribed under the Agr-
eement, such rights shall be exercised only after consultatio-
ns with the other Contracting Party. In such a case consulta-
tions shall begin within a period of sixty (60) days from the
date request is made by either Contracting Party for consulta-
tions.

ARTICLE 5
Application of Laws
1.The laws and regulations of one Contracting Party governing
entry into and departure from its territory of aircraft engag-
ed in international air navigation or flights of such aircraft
over that territory shall apply to the designated airline of
the other Contracting Party.
2.The laws and regulations of one Contracting Party governing
entry into, sojourn in, and departure from its territory of
passengers, crew, or mail, such as formalities regarding entry
, exit, emigration and immigration, as well as customs and sa-
nitary measures shall apply to passengers, crew, cargo or mail
carried by the aircraft of the designated airline of the other
Contracting Party while they are within the said territory.
3.Each Contracting Party undertakes not to grant any preferences
to its own airline with regard to the designated airline of
the other Contracting Party in the application of the laws and
regulations provided for by this Article.

ARTICLE 6
Principles Governing Operation of Agreed Services
1.There shall be fair and equal opportunity for the designated
airline of each Contracting Party to operate the agreed servi-
ces on the specified routes between and beyond their respecti-
ve territories.
2.In operating the agreed services, the designated airline of
each Contracting Party shall take into account the interests
of the designated airline of the other Contracting Party so as
not to affect unduly the services which the later provides on
the whole or part of the same routes.
3.The agreed services provided by the designated airlines of the
Contracting Parties shall bear a close relationship to the re-
quirements of the public for transportation on the specified
routes and shall have as their primary objectives the provisi-
on at a reasonable load factor of capacity adequate for the
current and reasonably anticipated requirements of passengers
and cargo including mail originating from or destined for the
territory of the Contacting Party which has designated the ai-
rline
4.The aeronautical authorities of the Contracting Parties shall
from time to time jointly determine the practical application
of the principles contained in the foregoing Paragraphs of th-
is Article for the operation of the agreed services by the de-
signated airlines.
5.Any increases in the capacity to be provided or frequency of
services to be operated by the designated airlines of either
Contracting Party shall be agreed between the aeronautical au-
thorities of both Contracting Parties on the basis of the est-
imated requirements of traffic between territories of the two
Parties and any other traffic to be jointly agreed and determ-
ined. Pending such agreement or settlement, the capacity and
frequency entitlements already in force shall prevail.
6.The capacity to be provided, the frequency of services to be
operated and the nature of air services that is transiting th-
rough or terminating in the territory of either Contracting
Party pursuant to this Article shall be specified in the Annex
to this Agreement.

ARTICLE 7
Transport Tariffs
1.The tariffs on any agreed service shall be established at rea-
sonable levels, due regard being paid to all relevant factors
including cost of operation, reasonable profit and the tariffs
of other airlines for any part of the specified route. These
tariffs shall be fixed in accordance with the provisions of
this Article.
2.Agreement on the tariffs shall, if both designated airlines
are members of the International Air Transport Association, be
reached whenever possible through the rate-making machinery of
that Association. When this is not possible, tariffs in resp-
ect of each of the specified routes shall be agreed upon betw-
een the designated airlines concerned. In any case the tarif-
fs shall be subject to the approval of the aeronautical autho-
rities of both Contracting Parties.
3.If the designated airlines concerned cannot agree on the tari-
ffs, or if the aeronautical authorities of either Contracting
Party do not approve the tariffs submitted to them in accorda-
nce with the provisions of Paragraph (2) of this Article, the
aeronautical authorities of the Contracting Parties shall end-
eavor to reach agreement on those tariffs.
4.If agreement under paragraph (3) of this Article cannot be re-
ached, the dispute shall be settled in accordance with the pr-
ovisions of Article 18 of this Agreement.
5.No new or amended tariffs shall come into effect unless they
are approved by the aeronautical authorities of both Contract-
ing Parties or are determined by a tribunal of arbitrators un-
der Article 18 of Agreement. Pending determination of the ta-
riffs in accordance with the provisions of this Article, the
tariffs already in force shall apply.

ARTICLE 8
Exemption from Customs Duties and Other Charges
1.Aircraft operated on the agreed international air services by
the designated airline of each Contracting Party, their regul-
ar equipment, supplies of fuel, lubricants, consumable techni-
cal supplies, spare parts and aircraft stores (including but
not limited to such items as food, beverages and tobacco), on
board such aircraft, shall be exempted from all customs duties
, national excise taxes and other similar duties or taxes not
based on the costs of services provided, on arrival in the te-
rritory of the other Contracting Party, provided such equipme-
nt and supplies remain on board the aircraft.
2.There shall also be exempt from the same duties, taxes, fees
and charges, referred to in Paragraph (1) of this Article with
the exception of charges based on the costs of services provi-
ded:
a) aircraft stores introduced into or supplied in the territory
of a Contracting Party and taken on board within reasonable
limits, for use on board aircraft engaged in an international
air service of a designated airline of the other Contracting
Party;
b) spare parts including engines introduced into the territory
of a Contracting Party for the maintenance or repair of airc-
raft used in the agreed service by the designated airline of
the other Contracting Party ; and
c) fuel, lubricants and consumable technical supplies introduced
into or supplied in the territory of a Contracting Party for
use in an aircraft engaged in the agreed air service by the
designated airline of the other Contracting Party, even when
these supplies are to be used on a part of the journey perfo-
rmed over the territory of the Contracting Party in which th-
ey are taken on board.
3.Equipment and supplies referred to in Paragraph (1) and (2) of
this Article may be unloaded in the territory of the other Co-
ntracting Party only with the approval of the customs authori-
ties of that Contracting Party. Such equipment and supplies
may be placed under the supervision or control of the appropr-
iate authorities until they are re-exported or otherwise disp-
osed of in accordance with customs regulations.
4.In so far as no duties or other charges are imposed on goods
mentioned in Paragraph 1 to 3 of this Article, such goods sha-
ll not be subject to any economic prohibitions or restrictions
on importation, exportation and transit that may otherwise be
applicable unless such prohibition or restriction applies to
all airlines including the national airlines in respect to ce-
rtain items mentioned Paragraph 1 to 3 of this Article.
5.The treatment specified in this Article shall be in addition
to and without prejudice to that which each Contracting Party
is under obligation to accord under Article 24 of the Convent-
ion.

ARTICLE 9
Recognition of Certificates and Licenses (Safety)
1.Certificates of airworthiness, certificates of competency and
licenses issued or rendered valid by one of the Contracting
Parties shall, during the period of their validity be recogni-
zed as valid by the other Contracting Party, provided that the
requirements for such certificates and/or licenses are at lea-
st equal to the minimum standards which may be established pu-
rsuant to the Convention on International Civil Aviation done
at Chicago in 1944.
2.Each Contracting Party reserves its rights, however, not to
recognize as valid, for the purpose of flights in its own ter-
ritory, certificates of competency and licenses granted to its
own nationals or rendered valid for them by the other Contrac-
ting Party.

ARTICLE 10
Direct Transit
Passengers, baggage and cargo in direct transit across the terr-
itory of one Contracting Party and not leaving the area of the
airport reserved for such purpose shall only be subject to a ve-
ry simplified control. Baggage and cargo in direct transit sha-
ll be exempt from customs duties and other similar taxes.

ARTICLE 11
Aviation Security
1.Consistent with their rights and obligations under internatio-
nal law, the Contracting Parties reaffirm that their obligati-
on to each other to protect the security of civil aviation ag-
ainst acts of unlawful interference forms an integral part of
this Agreement. Without limiting the generality of their rig-
hts and obligations under international law, the Contracting
Parties shall in particular act in conformity with the provis-
ions of the Convention on Offenses and Certain Other Acts Com-
mitted on Board Aircraft, signed at Tokyo on 14 September 1963
, the Convention for the Suppression of Unlawful Seizure of
Aircraft, signed at the Hague on 16 December 1970 and the Con-
vention for the Suppression of Unlawful Acts Against the Safe-
ty of Civil Aviation signed at Montreal on 23 September 1971.
2.The Contracting Parties shall provide upon request all necess-
ary assistance to each other to prevent acts of unlawful seiz-
ure of civil aircraft and other unlawful acts against the saf-
ety of such aircraft, their passengers and crew, airports and
air navigation facilities, and any other threat to the securi-
ty of civil aviation.
3.The Contracting Parties shall, in their mutual relations, act
in conformity with the aviation security provisions establish-
ed by the International Civil Aviation Organization and desig-
nated as Annexes to the Convention on International Civil Avi-
ation to the extent that such security provisions are applica-
ble to the Parties; they shall require that operators of airc-
raft registered as such on their respective registries of ope-
rators who have their principal place of business or permanent
residence in their territory and the operators of airports in
their territory act in conformity with such aviation security
provisions.
4.Each Contracting Party agrees that such operators of aircraft
may be required to observe the aviation security provisions
referred to in Paragraph 3 above required by the other Contra-
cting Party for entry into, departure from, or while within
the territory of that other Contracting Party.
5.Each Contracting Party shall ensure that adequate measures are
effectively applied within its territory to protect the aircr-
aft and to inspect passengers, crew, carried on items, baggage
, cargo and aircraft stores prior to and during boarding or
loading. Each Contracting Party shall also give positive con-
sideration to any request from the other Contracting Party for
reasonable special security measures to meet a particular thr-
eat.
6.When an incident or threat of an incident of unlawful seizure
of civil aircraft or other unlawful acts against the safety of
such aircraft, their passengers and crews, airports or air na-
vigation facilities occurs, the Contracting Parties shall ass-
ist each other by facilitating communications and other appro-
priate measures intended to terminate rapidly and safely such
incident or threat thereof.
7.Accordingly, each Contracting Party shall advise the other Co-
ntracting Party of any difference between its national regula-
tions and practices and the aforementioned aviation security
provisions. Either Contracting Party may request immediate
consultations with the other Contracting Party at any time to
discuss any such difference.

ARTICLE 12
Transfer of Earnings
Each contracting Party will grant to the designated airline of
the other Contracting party the right to transfer (in any freely
convertible currency nominated by the airline of the other Cont-
racting Party) the excess of receipt over expenditure earned by
that airline in the territory of the first Contracting Party in
connection with the carriage of passengers, baggage, mail and
cargo in accordance with the foreign exchange regulation in for-
ce (if any) at the official bank rate of exchange. If such tra-
nsfers are regulated by a special agreement between the Contrac-
ting Parties, this special agreement shall apply.

ARTICLE 13
Representation, Ticketing Sales Promotion
Subject to the laws and regulations of the other Contracting Pa-
rty, the designated airline of each Contracting Party shall have
an equal opportunity:
a) to enter and reside for the duration of employment in the ot-
her Contracting party, or to bring in and maintain in the te-
rritory of the other Contracting Party those of their own ma-
nagerial and other specialist staff who are required for the
provision of air services; and
b) to issue all kinds of documents of carriage and to advertise
and to promote sales in the territory of the other Contracti-
ng Party, to engage in the sale of air transportation in that
territory directly or at the airline's discretion through its
agents. Each airline shall have the right to sell such tran-
sportation in the currency of that territory or in freely co-
nvertible currencies of other countries.

ARTICLE 14
Timetable Submission
As long in advance as practicable, but not less than thirty days
before the introduction of an agreed service or any modification
thereof, or within thirty days after receipt of a request from
the aeronautical authorities, the designated airline of one Con-
tracting Party shall provide to the aeronautical authorities of
the other Contracting Party information regarding the nature of
service, timetable, types of aircraft including the capacity pr-
ovided on each of the specified routes and any further informat-
ion as may be required to satisfy the aeronautical authorities
of the other Contracting Party that the requirements of this Ag-
reement are being duly observed.

ARTICLE 15
Statistics
The aeronautical authority of either Contracting Party shall su-
pply to the aeronautical authority of other Contracting Party
upon their request such periodic or other statements of statist-
ics as may be reasonably required for the purpose of reviewing
the capacity provided on the agreed services by the designated
airline of the Contracting Party referred to first in the Artic-
le. Such statements shall include all information required to
determine the amount of traffic carried by that airline on the
agreed services and origins and destinations of such traffic.

ARTICLE 16
User Charges
1.Neither Contracting party shall impose or permit to be imposed
on the designated airline of the other Contracting Party user
charges higher than those imposed on its own designated airli-
ne operating similar international air services.
2.Each Contracting Party shall use its best efforts to ensure
that charges imposed or permitted to be imposed on the design-
ated airline of the other Contracting Party are just and reas-
onable.

ARTICLE 17
Consultations and Amendment
1.In order to ensure close collaboration in the performance of
this Agreement the aeronautical authorities of the Contracting
Parties shall consult on request of either of those authoriti-
es.
2.If either of the Contracting Parties considers it desirable to
amend any provision of the present Agreement including the An-
nex, it may request consultation with the other Contracting
Party. Such consultation, which may be between aeronautical
authorities and which may be through discussion or by corresp-
ondence, shall begin within a period of sixty (60) days from
the date of receipt of the request. Any amendment so negotia-
ted shall not come into force until they have been incorporat-
ed into an agreement concluded by way of an exchange of notes
through the diplomatic channel.
3.If a multilateral convention concerning air transport comes
into force on request of both Contracting Parties, this Agree-
ment shall be amended so as to conform with provisions of that
convention.

ARTICLE 18
Settlement of Disputes
1.If any dispute arises between the Contracting Parties relating
to the interpretation or application of this Agreement, the
Contracting Parties shall in the first place endeavor to sett-
le it by negotiation.
2.If the Contracting Parties fail to reach a settlement by nego-
tiation, the dispute may at the request of either Contracting
Party be submitted for decision to a tribunal of three arbitr-
ators, one to be nominated by each Contracting Party and the
third to be appointed by the two so nominated. Each of the
Contracting Parties shall nominate an arbitrator within a per-
iod of sixty (60) days from the date of receipt by either Con-
tracting Party from the other of a notice through diplomatic
channels requesting arbitration of the dispute and the third
arbitrator shall be appointed within a further period of sixty
(60) days.
3.If either of the Contracting Parties fails to nominate an arb-
itrator within the period specified , of if third arbitrator
is not appointed within the period specified, the President of
the Council of the International Civil Aviation Organization
may be requested by either Contracting Party to appoint an ar-
bitrator or arbitrators as the case requires. In any case,
the third arbitrator shall be national of a third State and
shall act as President of the arbitral tribunal.
4.The Contracting Parties shall undertake to comply with any de-
cision given under Paragraph (2) of this Article.

ARTICLE 19
Termination
Either Contracting Party may at any time give written notice th-
rough appropriate channels to the other Contracting Party of its
decision to terminate this Agreement. Such notice may be simul-
taneously communicated to the International Civil Aviation Orga-
nization by the Contracting Party giving notice, This Agreement
shall terminate twelve (12) months after the date of receipt of
the notice by the other Contracting Party, unless the notice is
withdrawn by agreement before the expiry of this period.

ARTICLE 20
Registration with ICAO
This Agreement and any amendments thereto may be registered by
either Party with the International Civil Aviation Organization.

ARTICLE 21
Entry into force
This Agreement shall enter into force on the date of signature.

IN WITNESS WHEREOF, the undersigned, being duly authorized ther-
eto by their respective government, has signed this Agreement.
Done, in duplicate in the English language, at Taipei on this
Second day of December of 1999.

FOR THE GOVERNMENT OF
THE REBPULIC OF CHINA
Lin Fong-Cheng
Minister of Transportation and
Communications

FOR THE GOVERNMENT OF
THE REPUBLIC OF PALAU
Okada Techitong
Minister of Commerce and trade

ANNEX
To the Agreement between the Government of the Republic of China
and the Government of the Republic of Palau Relating to Air Ser-
vices signed on December 2, 1999:

1.Operating Airlines
Notwithstanding the provisions set out in Paragraph 4 a) of
Article 3 and Paragraph 1 a) of Article 4, both sides agree to
broaden airline ownership and control criteria when circumsta-
nces require, and to authorize market access for a designated
air carrier which:
a) has its principal place of business and permanent residence
in the territory of designating Contracting Party, and
b) has and maintains a strong link to the designating Contracti-
ng Party.

2.Routing
The airlines designated to provide the air services in accord-
ance with the aforesaid Agreement shall be entitled to operate
on the following commercial air routes with full traffic righ-
ts:
a) Route for the airlines designated by the Government of the
Republic of Palau:
Points in the Republic of Palau - two intermediate points -
points in the Republic of China - two beyond points and vice
versa.
b) Route for the airlines designated by the government of the
Republic of China:
Points in the Republic of China - two intermediate points -
points in the Republic of Palau-two beyond points and vice
versa.
c) The designated airlines of either Party may, on any or all
flight(s), omit and point or points on the route specified
above, provided that the point of origin or destination is in
that Party.

3.Frequencies and Capacity
On the routes specified in Paragraph 2 above, the designated
airlines of either Party shall be allowed to operate up to fo-
ur (4) weekly round trip services with any type of aircraft
with immediate effect.
Further increase in frequency shall be subject to the consult-
ation and agreement between both Parties as an amendment to
this Annex.