Independent journal on economy and transport policy
03:37 GMT+1
This page has been automatically translated by Original news
TRADE
Panama Canal, the FMC confirms that it has the powers to counter any practices considered harmful to U.S. businesses
Sola: the Commission could act against the Republic of Panama rather than specifically against the Authority of the Channel. By 2050 - it has emphasized - the ability of the channel could decrease up to 50%
Washington
January 29, 2025
In these early days of Donald Trump's presidency we are questioning whether the mire of possession expressed by the US president on territories considered strategic for the USA are still out of the electoral campaign or true intentions of the new Washington administration. Regarding the American will of control on the Panama Canal several times manifested by Trump, an indication on the intentions of the White House towards the Central American nation and its strategic waterway can be found in the audience of Louis E. It was held yesterday at the Commission for Trade, Science and Transport of the American Senate. Sola is the new president of the Federal Maritime Commission (FMC), the U.S. federal agency responsible for regulating the U.S. international shipping system, a role he was given on January 20 by Donal Trump, who in 2019 appointed him as commissioner of the same FMC. Yesterday's hearing included Daniel B. Maffei, who was replaced by Sola at the chairmanship of the FMC, who had been conferred by former president Joe Biden in 2021, and who is currently commissioner of the FMC.
The two interventions to the Senate Commission are useful to see whether and how the FMC's attitude towards Panama and its channel has changed. From the statements of Sola and Maffei seems to perceive a line of continuity between the mandates of the two presidents of the Federal Maritime Commission.
In his audition, Sola recalled that "for most of the ultra-centennial history of the channel, the United States were responsible for managing the infrastructure, but this responsibility changed in 1999 when the channel control was transferred to the Republic of Panama. In the last 25 years, the channel - it has found the new president of the FMC - has been administered very skillfully by the Panama Canal Authority, a government agency independent from the government of Panama. In 2024 - Sola has remembered - the drought conditions have had repercussions on the operations of the channel, forcing the Authority to reduce the total number of available transit slots, to prohibit to some classes of ships to transit and to impose that the ships were more read for reasons of fishing. In some cases, the available transit slots were auctioned at the highest bidder. In response to the concerns expressed by many different sources on how the channel was managed, last August the then President Maffei and I went to Panama to meet the government, the Authority and managers of the enterprises to learn more about how drought was affecting the operations of the channel and what measures the Authority was adopting to make the channel more resilient to drought".
"The leaders of the Panama Canal Authority - it has continued Sola - seemed to be marked to the maximum transparency in discussing the management of the channel and the options to make the way of water more resilient to the drought conditions. These improvements are absolutely essential. Without a solution, projections suggest that by 2050 the channel capacity could decrease by up to 50%, which would have devastating consequences for global trade and US trade. The Authority is working to create additional volumes of water necessary to manage the channel, but must do so within the limits of the laws and regulations administered by the Government of the Republic of Panama. This report has sometimes caused friction. The Republic of Panama is responsible for the administration of ports, water rights and the naval register of that nation. The reality is that an agency, the Panama Canal Authority, administers the channel and is responsible for its continuous operation, but many of the initiatives necessary to achieve this are under the control of the government of Panama. To further complicate this fractionation of authority - said the new president of FMC - is the reputation of the government of Panama as to corruption and dependence on foreign influence. Transparency International - it has specified Sola - places Panama at 108° place on 180 countries evaluated and the Administration for International Trade of the US Department of Commerce notes that "corruption is the biggest challenge of Panama". There are multiple examples of systemic corruption found in how the Panamanian government does business. Officers were sanctioned. The Panamanian register included Iranian-owned ships involved in sanctions. The presidential administrations that preceded that of the current president Mulino - continued Sola referring to the increasing presence of Chinese interests in Panama - were particularly receptive to the Chinese proposals and, since 2015, the People's Republic of China in Panama had only to push slightly a door that was already open. In the following years, Panama became a member of the Belt and Road Initiative and truncated its diplomatic relations with the Republic of China (Taiwan). Chinese companies were able to get billions of dollars in development contracts in Panama, many of which were physical infrastructure projects, some on the Panama Canal or adjacent to it. No competition has been made to assign contracts, labor laws have been elusive and the Panamanian people are still waiting to see how they benefited."
"The United States - he added Sola, and here it seems to listen to the words of different speeches pronounced by Donald Trump, but also by his predecessor Biden - are not devoid of options to address the growing presence of China and Chinese companies in Panama and all the Americas. Nor are we devoid of options regarding the continuous operation of the channel. First of all, we need to increase support for American companies looking to do business in Panama and all the Americas. Chinese companies must not be the only tenderers for contracts. Improve resilience of the Panama Canal will require considerable engineering and construction work. US companies can and must be at the top of the list of offers considered. In addition, the United States must counter any conduct by foreign competitors that American companies cannot legally use. Commercial opportunities abound in all the Americas and our foreign and commercial services must embrace their role as champions of US companies despite a strong presence of local anti-US press and aligned with China. The US embassy in Panama is a crucial part of these efforts. Having a confirmed ambassador in Panama, and protecting our national interests must be a priority."
"Secondly - the president of the FMC has asserted - we must safeguard the independence of the Panama Canal Authority. Any attempt by other interests in Panama to reduce the independence or professionalism of the Authority must be stopped. Building or expanding relations with the Panama Canal Authority can further increase its capabilities and expertise. The United States should cooperate with the Authority to identify opportunities for technical collaboration or sharing expertise. One example is the U.S. Army Corps of Engineers which has an unparalleled experience in managing major public works projects. The relationship between this and the Authority could be formalized. Another opportunity to grow relationships is to promote closer and more frequent consultations between channel users, or their representatives, and the management of the Authority. Such exchanges would be productive, in particular if they identified and alleviated the worrying problems before they become problematic issues".
"In third place - it has concluded Sola - the Federal Maritime Commission will continue to monitor and review the practices of the Panama Canal Authority with an eye on the congruence of the structure of the tariffs for transits. The Commission will also consider the extension of its ongoing examination of the Authority to include other maritime and supply chain activities operating in Panama. The powers conferred on the Commission pursuant to Section 19 of the Merchant Marine Act of 1920 to address the conditions affecting maritime transport in foreign trade (46 U.S. Code Chapter 421) empower the Commission to deal with the laws or practices of foreign governments which are harmful to U.S. marine transport. More explicitly, if the Commission formally investigates the practices of the Panama Canal Authority and finds them unfavourable, the Commission may act broadly against the Republic of Panama rather than specifically against the Authority. Under the law, the Commission may impose significant countermeasures, including large daily fines and the ban on Panamanian flag vessels to dock in the ports of the United States.'
In his speech, referring to the most recent events that have had an impact on the channels of Panama and Suez, two of the critical infrastructures of the world system of marine transport, the former president of FMC Daniel Maffei and current commissioner of the federal agency has found that "the reduced capacity of the channel of Panama, in combination with the fact closure of the Suez channel due to the attacks of the Houthi in the Red Sea, has had serious consequences for the oceanic trade, that more times. U.S. importers and exporters expressed concerns about the Panama Canal to the commissioners and FMC staff, including doubts about the future reliability of the channel and questions about how the Panama Canal Authority was determining which ships could transit through the channel and when. The FMC - it has agreed Maffei - has the statutory authority according to law relative to foreign practices in the field of the marine transport to investigate and potentially adopt the appropriate countermeasures if it discovers that a foreign country, through its laws or regulations, has contributed to "unfavorable conditions to the marine transport in the trade with abroad". Given this statutory mandate and in line with the mission of the FMC, then Commissioner Sola and I started to analyze more thoroughly the causes of the problems the channel was facing».
Maffei has listed meetings with representatives of the Panamanian institutions, starting from the new president José Mulino, and with the leadership of the Panama Canal Authority and with representatives of the private sector: "we had - it has explained - open discussions on key issues like the plans of Panama to improve the challenges related to the water level, the procedures of contest used to assign the transits during the periods of restrictions and our concern that the Authority of the Channel was collecting much more money for transit during the crisis than before the water shortage of 2023-24. Both the Government of Panama and the Authority of the Canal responded promptly to our questions. The Authority of the Channel informed us that they were already making changes to the allocation system. Fortunately, now the rainy season of 2024 in Panama has alleviated for the moment the most serious problems of water supply of the channel and restored the normal transit volumes. That said, while the Panamanian government and the Canal Authority have, with the advice of the U.S. Army Corps of Engineers, developed credible plans to mitigate future water shortages, have also warned that it is likely that at least another reduced transit period will occur before these plans can be fully implemented". "While we learn more about how Panama and the Channel Authority would manage another drought crisis and receive more input from American importers and exporters - concluded Maffei - the Commission remains ready to take any appropriate action if justified".
- Via Raffaele Paolucci 17r/19r - 16129 Genoa - ITALY
phone: +39.010.2462122, fax: +39.010.2516768, e-mail
VAT number: 03532950106
Press Reg.: nr 33/96 Genoa Court
Editor in chief: Bruno Bellio No part may be reproduced without the express permission of the publisher