Panama launches free trade talks with China after ending Taiwan recognition

Panama launches free trade talks with China after ending Taiwan recognition

Panamanian and Chinese officials will launch the first round of trade negotiations in Panama City today with the aim of

Panama’s President Juan Carlos Varela shakes hands with China’s President Xi Jinping during a signing ceremony in Beijing

Photo: Reuters/Jason Lee

Panamanian and Chinese officials will launch the first round of trade negotiations in Panama City today with the aim of eventually inking a free trade agreement. The talks come one year after Panama switched diplomatic recognition China to Taiwan.

China is Panama’s second largest source of imports, the second biggest user of the Panama Canal and the largest supplier of goods to the Colon free trade zone. For Panama, Beijing would significantly increase exports in aluminium scrap, coffee, crustaceans and wood as well as further Chinese investment in the country through projects like the Panama cruise ship port, worth $165 million.

The template for China is clear—switch allegiances and you will be rewarded; key examples include Costa Rica and Dominican Republic. The threat of a Nicaraguan canal backed by Chinese investment is likely to have forced the issue for Panama. That rival canal’s future is now uncertain. Expect further economic sweeteners to other countries in the region, like Haiti, Honduras and Paraguay.

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