In a surprise joint statement released on Monday evening Panama said that Panama and China were recognising each other and would be establishing ambassadorial-level relations the same day. Meanwhile Panama severed ties with Taiwan.
In Panama, President Juan Carlos Varela said in a televised address that “[the opening of diplomatic relations with China] represents the correct path for our country.” Panama’s government said in a statement that it recognised there was only one China, with Taiwan belonging to the Asian giant, and that it was severing ties with Taipei.
It came as a surprise since the negotiations had been kept in secret (something quite unusual in Panama) although President Varela had mentioned during his political campaign in 2014 the possibility of switching diplomatic recognition.
China is the second largest customer of the Panama Canal whose expansion was inaugurated a year ago with the transit of the 9,472 teu Cosco Shipping Panama vessel.
But for the maritime sector and the Panamanian Ship Registry the decision offers undoubted opportunities.
Already several Chinese companies are present in the country and many had been awarded juicy contracts. The first one was in 2011 when China Communication Construction Company [CCCC] in partnership with US-based Louis Berger Group was awarded the design contract for the third bridge over the Panama Canal.
China Landbridge Group, a privately owned company based in the northern Chinese port of Rizhao has started construction of the 2m TEUs Panama Colon Container Port capable of servicing neo-panamax vessels, in Isla Margarita on the Atlantic side of the waterway.
Five Chinese companies are also competing for the prequalification of the construction of the Metro third line in Panama.
For the Panama Ship Registry the decision is of utmost importance as it will allow the signing of a Bilateral Agreement in the matter of merchant marine so that Panama can enjoy the most favoured nation status that would allow Panamanian flag vessels to enjoy the advantages and lower port costs applicable to other States which have similar agreements with China. Such an agreement would promote the competitiveness of the Panamanian Ship Registry, because the operational costs of docking in the Chinese ports of the Panamanian fleet are adjusted to the needs of the market.
In addition, the new relations will open the door to agreements for the transfer of knowledge and technical control of the documentation of ships and crew onboard Panamanian vessels.
From now on, Panama will be able to flag vessels of that country or related to shipping companies of that country, directly in the main maritime cities of the People’s Republic of China, including the registration services of naval mortgages and property titles and with full diplomatic relations Panama will be qualified to establish technical offices in China for the control of maritime safety and navigation of its vessels.
“It is a new challenge for the Panama Maritime Authority and the Ship Registry but we are ready for it since we know it will strengthen our Register as we plan to establish co-operation agreements with the maritime authorities of China, including agreements on maritime transport,” Panama Minister of Maritime Affairs Jorge Barakat said.
“ China being the second world economy, our [Panama] ‘s opportunities to participate with companies in the maritime trade of that country will have a direct relationship in the management of shipbuilding, ports, ship repair, inspections and technology, among others,” commented Fernando Solorzano, head of the Ship Registry.
On the technological front the opportunities are immense and “we will be able to jointly work on the classification, technical documentation, seafarers’ certification, shipboard working conditions, electronic certification, technology, training and training, which will be of great value for the Register,” he added.