Why Panama establishes diplomatic ties with the People's Republic of China?

Posted on 2017-06-20

After knowing Panama's decision to break diplomatic relations with Taiwan to establish these links with the People's Republic of China , beyond the commercials that it has maintained until now, questions arise: Why did it? What could be expected in the future?

For Panamanian foreign minister Jorge Eduardo Ritter, "the conclusion of this international dispute was inevitable." "Since the" diplomatic truce "was broken, it was foreseeable that the position of the People's Republic of China would eventually prevail."

For this reason, Ritter does not rule out that other countries follow this path.

That is the same line of thought of former Republic of China (Taiwan) Chen Chien-jen , who in an interview with CNA (Taiwan's national news agency) said that China's decision to attract Panama originated from the Beijing's dissatisfaction with the policy of President Tsai Ing-wen of Taiwan.

Chen referred to the ties between the two sides of the Taiwan Strait, since since the president took office in May 2016, Tsai has not been willing to accept the "1992 Consensus . " That it is a "tacit agreement" according to which both sides admit the existence of "a China", but giving its own interpretation of what this means.

"According to Chen, the suspension of official contacts between Taiwan and China is the cause of all these problems, and warned that similar cases could continue to emerge if the [Taiwan] government fails to take appropriate action after the breakup of diplomatic ties Part of Panama, "CNA said .

Alberto Alemán Zubieta , former administrator of the Panama Canal, described Panama's decision as "very accurate", "correct" .

It should be remembered that the People's Republic of China is the second largest economy in the world , one of the most populated and the second user of the Panama Canal , recalled Alemán Zubieta.

According to the International Monetary Fund ( IMF ) forecasts indicate that China's growth will be 6.6% in 2017. The  GDP of China is 11,391 trillion , according to the international organization.

According to the World Bank , China's population exceeds 1.371 million, according to data for the year 2015.

And the records of the Panama Canal Authority (fiscal year 2016) show that China is the second main user of the Canal , after the United States. By cargo flow, the northern country represents 67% of the total cargo that passes through the waterway, while the Asian country 18.9% .

Definitely, "you have to have diplomatic relations with the second power of the world" and not only commercials, added Alemán Zubieta.

The ex-administrator also indicated as an important factor that Chinaentered the contest of nations as part of the World Trade Organization ( WTO ). In fact, it became the 143rd Member of the WTO on 11 December 2001.

He also recalled that China is a member of the United Nations Security Council . In fact, it is one of the five permanent members of that council: China, France, the Russian Federation, the United Kingdom of Great Britain and Northern Ireland and the United States.

Now, continued Alemán Zubieta, "this is not a disrespect to Taiwan" and "do not deny the friendship or support that Taiwan gave at the time."

What has to be considered in this issue is that the problem of the Chinese will be up to them to solve it. Meanwhile, "Panama's decision was the right one," he added.

What to expect?  

According to Alemán Zubieta, Panama must maintain trade relations with Taiwan. 

So far, the Taiwanese government has announced that it will not engage in "economic competition with mainland China" in diplomatic terms. He also announced the withdrawal of his diplomatic staff and suspension of support to Panama, but he did not comment on the trade issue.

On this subject, the president of the Chamber of Commerce, Industries and Agriculture of Panama (Cciap), Galindo De Obarrio , said that now "the possibility of negotiating a commercial agreement with a country of more than 1,300 million people opens, increasing Exports and imports, in addition, will attract new investments in Panama, especially in the technological and logistical field, to mention a few . "

We must not forget, according to Galindo, that China is the first supplier of the Colon Free Zone and has increased its interest in investing in Latin America.

According to those consulted, expectations are favorable regarding Panama's relationship with the People's Republic of China. From now on, "it is assumed that trade relations with the People's Republic of China will improve," says former Foreign Minister Ritter. However, he warns that in counterpart "diplomatic as commercial with Taiwan will disappear . "

After what happened, says Ritter, it must be clear that "the decision of Panama does not admit reproaches. Another thing is the way it was done. 

Interesting Facts: Panama-China

Panama Chamber of Commerce, Industries and Agriculture records indicate that during the year 2016, Panama exported US $ 50.9 million to China , which represented a 22.9% increase over the previous year.

Among these exports, the main products were copper waste and scrap; Waste and scrap of aluminum; crustaceans; Wood in the rough and longitudinally profiled; Coffee, peel, husk and coffee substitutes, among others.

In the same period, imports to Panama were made in the order of US $ 1.183 million , according to data from the business union.

Source: Capital Financiero 

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