WASHINGTON, D.C. – At today’s Senate Commerce Committee hearing on the Panama Canal’s impact on U.S. trade and national security, Senate Republicans raised concerns about Panama’s management of the canal, citing allegations of corruption, including a no-bid port concession awarded to the Chinese firm Hutchison Ports PPC. The senators underscored longstanding concerns about China’s growing influence in Panama and argued that Panama is violating the Neutrality treaty signed when the U.S. turned over control of the canal.

Sen. Cruz: Raises Questions on Panama Violating Neutrality Treaty

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Chairman Ted Cruz: “President Trump has made important arguments. Both the Chinese control over canal infrastructure and exorbitant fees charged for canal transits are violations of the Neutrality Treaty [...] In your opinion as an expert in international law, could the facts discussed here be considered violations of the Neutrality Treaty in force right now between the U.S. and Panama?”

Professor Kontorovich: “[...]One need not wait until the canal is actually closed by some act of sabotage or aggression, which as we heard from the testimony, would be devastating to the United States, but there is some incipient ability to address potential violations.”

Chairman Ted Cruz: “And your final point there leads to my last question, which is, if the United States determines that Panama is in violation of the treaty [...] what is the range of remedies the United States would have for that treaty violation?”

Professor Kontorovich: “So I think it may be shocking to people to hear today, but when one goes over the ratification history and the debates and discussions in this body over this treaty, it was clear that the treaty was understood as giving both sides separately the right to resort to use armed force to enforce the provisions of the treaty [...] 

[...] Now, of course, armed force should never be the first recourse for any kind of international dispute and should not be arrived at sort of rashly or before negotiations and other kinds of good offices are exhausted, but it’s quite clear that the treaty contemplates that as a remedy for violation.”

Read Sen. Cruz’s full opening remarks HERE.

Sen. Sullivan: Sounds Alarm on Potential Bribery Over “Sweetheart Deal”

Sen. Sullivan: “[...] Two Chinese companies operate the two huge ports on both ends of the Panama Canal and the concession for these ports were extended in 2021 for a 25-year period without any bidding. Is that correct?[...] Okay, so it was a clearly a sweetheart deal [...]”

FMC Chairman Sola: “According to the press releases, the company paid back taxes of $150 million.”

Sen. Sullivan: “And the Panama Deputy Attorney General has now objected to that. That’s my understanding, is that correct?”

FMC Chairman Sola: “The comptroller of the country has asked for an audit of the company.”

Sen. Sullivan: “But someone objected to it when it was going on?”

FMC Chairman Sola: “A lot of people objected to it.”

Sen. Sullivan: “So, Chinese Communist Party officials are known to bribe other officials in countries all around the world. We know that. They do it all the time. No offense to Panama, but they don’t have the greatest reputation of having officials who aren’t on the take.”

Sen. Blackburn: Raises Concerns Over Chinese Fee Manipulation

Sen. Blackburn: “I am concerned that, given their control over much of that infrastructure around the canal, that they would attempt to force U.S. shippers, or our allies to bypass the dollar and use the digital yuan, as they are in other countries where they’re practicing debt diplomacy and where they’re expanding The Belt and Road Initiative[...]

[...] We are hearing that the toll structure disadvantages U.S. companies, that the Canal Authority has begun charging millions of dollars to skip the queue, and these fees put many bulk shippers in an adverse position. And these box shippers have a huge impact on ports along the lower Mississippi River. And you know these exorbitant fees are there unless you’re going to face delays at the canal and then the impact of hearing these Chinese companies would preference the yuan as opposed to the dollar.”

Sen. Schmitt: America is “Sleepwalking into a Carefully Laid Chinese Trap”

Sen. Schmitt: “[...] The canal must remain neutral. And the U.S. must ensure the CCP does not encroach on our vital economic and national security interests. In 2017, Senators Markey, Schatz, and Rubio urged President Trump to address China’s aggressive maritime actions. Their warnings apply today as China’s growing control over critical infrastructure, ports, and in strategic waterways, like the Panama Canal, pose an unacceptable threat. America is sleepwalking into a carefully laid Chinese trap, and fortunately, people like President Trump aren’t falling for it.”

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