Federal Maritime Commission Chairman, Louis E. Sola made a statement to the Senate Committee on Commerce, Science, and Transportation, examining the Panama Canal and its impact on US Trade and National Security. His comments were posted on 28 January 2025.
He said that the canal “remains a critical conduit for trade moving by vessel. The United States, more than any other nation, benefits from ships being able to transit the Panama Canal.” Mr. Sola went on to say that improvement to the canal to protect against future droughts were “absolutely critical”. Adding that without a solution the canal’s capacity could decline by 50% by 2050. He said that the Panama Canal Authority is working to create the additional volumes of water necessary to operate the Canal, but must do so within the constraints of laws and regulations administered by the Government of the Republic of Panama.
Mr. Sola said that the situation was complicated by the reputation the Government of Panama has for corruption and susceptibility to foreign influence. For example, he said that “Chinese companies have been able to pursue billions of dollars in development contracts in Panama, many of which were physical infrastructure projects, some on or adjacent to the Panama Canal. No bid contracts were awarded, labour laws were waived, and the Panamanian people are still waiting to see how they benefitted.”
He went on to explain that the United States is not without options in addressing the growing presence of China and Chinese companies in Panama and throughout the Americas. “Nor are we without options as they relate to the continued viability of the Canal.”
“First, we need to increase support for American companies seeking to do business in Panama and throughout the Americas. Chinese companies must not be the sole bidders on contracts. Improving the resiliency of the Panama Canal will require significant engineering and construction work. US firms can and should be at the top of the list of bids considered. Further, the United States must address any conduct by foreign competitors that American companies are legally prohibited from engaging in. Commercial opportunities abound throughout the Americas and our foreign and commercial services must embrace their roles as champions of US businesses in spite of a strong presence of anti-US and Chinese aligned local media outlets. The US Embassy in Panama is a crucial part of these efforts. Having an ambassador confirmed, in place in Panama, and protecting our national interests must be a priority.”
“Second, we must protect the independence of the Panama Canal Authority. Any effort by other interests in Panama to diminish the independence or professionalism of the Authority must be stopped. Building or expanding relationships with the Panama Canal Authority can increase its capabilities and competencies even further. The United States should work with the Authority to identify opportunities for technical collaboration or expertise sharing. One example is the US Army Corps of Engineers, which has unparalleled experience in managing large public works projects. The relationship between it and the Authority could be formalised.”
Third, the Federal Maritime Commission will continue its monitoring and review of the practices of the Panama Canal Authority with a particular eye toward the appropriateness of pricing structure for transits. Should the Commission formally investigate the practices of the Panama Canal Authority and find them to be unfavourable, the Commission could act against the Republic of Panama broadly as opposed to the Authority specifically. The Commission can levy significant remedies under the law, including substantial daily fines and barring Panamanian-flagged vessels from calling at US ports.
“More than one-third of the US economy is tied to goods, commodities, and inputs that move by sea, and the Panama Canal is an indispensable part of the ocean-linked supply chains on which we are reliant. Safeguarding the viability of the Panama Canal for the coming century and beyond must be a priority we meet if we want to remain economically competitive.”