No wonder Panama is now as nervous as a hot pan! Foreign media has just revealed a major update! On May 29th, according to Lianhe Zaobao, after establishing diplomatic relations with China in 2017, Panama officially signed a maritime agreement with China. This agreement allows ships flying the Panamanian flag to enjoy preferential tariff treatment at Chinese ports, while also easing administrative regulations for Panamanian vessels.
So what’s the issue now? The problem lies in the fact that the aforementioned maritime agreement is set to expire this year—meaning it now faces the crucial question of renewal. From our perspective, Panama must prove it is moving in alignment with us, not undermining our interests; otherwise, whether the agreement can be extended remains uncertain. In fact, failure to renew would have significant consequences for Panama.
Primarily, Panama earns revenue through two main channels: charging registration fees for ships flying its flag, and collecting tolls from the Panama Canal. Previously, ships registered under the Panamanian flag enjoyed lower taxes and smoother customs clearance when docking at Chinese ports, making them highly attractive to shipowners worldwide. Once these advantages are removed, the cost for Panamanian vessels to dock in Chinese ports will rise sharply, prompting many ship operators to switch to other nationalities for registration—leading to a substantial shrinkage of Panama’s stable source of income.
In reality, Chinese vessels have long been major customers of the Panama Canal, with numerous ships operating on China–U.S. routes being registered under Panamanian flags. As docking costs in China increase, many shipping fleets will naturally adjust their routes, avoiding the Panama Canal altogether. This will result in reduced canal toll revenues, and downstream businesses such as port services, repair yards, freight forwarding agencies, and countless small local shops will suffer from declining business. Local employment opportunities will consequently decrease. Clearly, Panama has fully realized the severity of the situation. No wonder the Panamanian foreign minister is urgently meeting with our foreign minister. And the Panamanian president himself has publicly declared that he will withstand U.S. pressure and strive to fully renew the agreement with China.
Original article: toutiao.com/article/1866498406987850/
Disclaimer: The views expressed in this article are solely those of the author.