China To Finance Rival to the Panama Canal

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Why, you ask, would the Beijing Communist Chinese government want to finance a US$7.6 billion alternate route that geographically parallels and could economically rival the Panama Canal?

Because they can; and they are.

Colombian President Juan Manuel Santos has announced that Bogotá and Beijing are negotiating a deal to build a multi-billion-dollar railway connecting Colombia’s Caribbean and Pacific coasts. In an obvious swipe at the U.S. Santos said: “Asia is the new motor of the world economy.”

Chinese officials confirm they have agreed to invest in the $7.6 billion project, which would run about 140 miles (220 km) from Colombia’s northern Caribbean region, on the Atlantic side near Cartagena, to an as-yet undecided site on its western Pacific Ocean coast, mainly as a route to transport Colombia’s abundant coal to energy hungry China.

Yes, Panama is a leading world tax haven, but at the heart of the nation’s economy is the famous Panama Canal, now undergoing a US$6 billion expansion. It doesn’t need any rivals stealing its transcontinental shipping business.

Bad Treatment for Allies

But both Panama and its southern neighbor, Colombia, despite their past willing support for U.S. policies, have been pushed around by President Obama and Democrats beholden to U.S. labor unions.

Both friendly countries have been waiting none too patiently for the U.S. Senate to ratify free trade agreements (FTAs) signed with the United States – way back in 2006.

Panama has been so desperate for FTA approval that recently it surrendered to U.S. demands that it end its historic strict bank secrecy by signing a tax information exchange agreement with the U.S.

The two FTAs have languished ever since 2006 in the Harry Reid’s Democrat-controlled Senate because of questionable objections from American labor unions who claim both countries treat their unions and workers unfairly. Union opponents also mutter about “environmental concerns” and Panama’s alleged harboring of U.S. tax cheats.

In the meantime American businesses, especially farmers, have lost market share in Colombia to competitors from Brazil and Argentina. Other countries, including Canada, are increasing business there, too. Their trade advantages would be removed if U.S. tariffs on products like wheat and beef were erased under the pending FTAs.

America’s Backyard No More

South America has long been seen as “America’s backyard” – but not anymore.

With the U.S. mired in Iraq and Afghanistan, nations in Latin America have felt neglected by Washington. Not surprisingly, Venezuela’s far left elected dictator, Hugo Chavez, has unstintingly supported Beijing’s Latin overtures.

Last year Chinese foreign investment in Latin America exceeded US$15 billion. In addition China has become a new export market for Latin America. Well over $50 billion of Latin American products, chiefly iron and copper ores, soya, and crude oil, will go to China this year as well.

Same Old Song

An Obama administration official expects that the FTAs will be sent to the Senate for ratification by June – but they have been promising that without action for two years.

Suddenly this week Obama’s boys seem to have been shaken out of their FTA union-induced torpor.

A U.S. interagency delegation is in Colombia this week supposedly to assess labor progress. Senate Finance Committee Chairman Max Baucus (D-MT) also is in Colombia, in part to push the FTA. His committee has jurisdiction over international trade and he hails from a farm state. All that activity coincides this week with a trip led by the U.S. Chamber of Commerce to drum up support for the deal.

While President Barack Obama has given priority to a trade deal with South Korea and plans to submit it for congressional approval within weeks, Republicans and business groups are demanding that the FTAs with Colombia and Panama be sent up at the same time.

I Pick Panama

The vision of that potential Chinese-Colombian transcontinental railroad seems to have worked wonders in Washington.

And as one who knows Panama, I advise no worries about the future of its famous Canal or its booming economy. By the way, Panama has had its own successful transcontinental railway since 1855 – and it’s still in very good operating condition. Plan to ride it when you visit the isthmus.

Reprinted with permission from the Sovereign Society.

Robert E. Bauman is a former Member of the United States House of Representatives from Maryland, (1973–1981). He is also a former federal official and state legislator; Member, Washington, DC Bar; Graduate of the Georgetown University Law Center (1964) and the School of Foreign Service (1959), Washington, DC. Robert currently serves as legal counsel for the Sovereign Society.

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