U.S. Firms Want in on Canal Expansion
PANAMA CITY – The United States expects the Panama Canal expansion project to proceed “transparently” and that U.S. firms will participate in the effort on an equal basis with those of other countries, the U.S. ambassador to Panama said here on Monday, following Panama’s vote Sunday to expand the canal.
U.S. Ambassador William Eaton also expressed confidence that Panamanians’ overwhelming approval of the expansion referendum will reactivate the stalled talks on a bilateral free-trade pact between the two countries.
“We’re confident that the tendering process will be fair and transparent,” the ambassador said, adding that “the interest of U.S. firms includes all the sectors that will participate in the expansion of the canal.”
Asked if now there will be more room to seek a resumption of the trade-pact negotiations between Panama and the United States, Eaton said: “Certainly.”
The talks on the trade accord have been blocked since January by disagreements over food-safety norms, and the chapter regarding government procurement.
Eaton said that several meetings would take place this week in Washington, D.C. with an eye toward resolving some of the sticking points.
“I will meet with officials from the Department of Commerce to try and finalize matters regarding the (free-trade treaty) and also probably Panamanian officials will try to meet with U.S. government officials,” he said. “I feel very optimistic that we can conclude a (free-trade pact) with Panama soon.
It’s a treaty that has benefits for both countries.” Eaton said that his country is the main user of the international waterway, adding that “at least 78% of the trade through the canal comes from the United States or is going to the United States.”
Regarding the referendum, Eaton downplayed the relatively low-voter turnout, saying “the important thing is that the Panamanian people have made their decision in favor of the expansion. Those who didn’t vote either had no interest or probably were confident the ‘yes’ decision” would prevail.
According to voting information released Monday, with 98% of the votes counted, the expansion was approved by 78% of the voters. Less than 44% of the country’s 2.1 million eligible voters cast ballots.
The proposed $5.25 billion expansion would allow the canal to accommodate what are known as post-Panamax vessels, whose carrying capacity is twice that of ships in the Panamax class – currently the largest capable of using the waterway.
About 5% of world trade passes through the Panama Canal. The canal authority said expansion work would begin next year and end in 2014, when the canal will have been in operation for a century.
Of the total cost, the authority will seek foreign financing for $2.3 billion, according to the proposal.
The board forecasts that the entire cost of the expansion, including paying off the foreign debt, will be covered by an increase in tolls. It says the project will create some 7,000 jobs directly, and more indirectly.
It also predicts a six-fold increase in tolls by the year 2020. Currently the transit fees bring in a little more than $1 billion a year.
This will be the first expansion of the canal, which was built by the United States between 1904 and 1914 and administered by the U.S. government until it was handed over to Panama on Dec. 31, 1999.
The canal’s transfer to Panama came in compliance with a 1977 treaty concluded by Omar Torrijos – Panama’s strongman from 1968-1981 – and then U.S. President Jimmy Carter.