Panama change may be felt here Canal transfer might hurt U.S.' East ports

Shipping

September 23, 1998|By Robert Little | Robert Little,SUN STAFF

The handover of the Panama Canal to the Panamanian government next year could mean higher shipping costs and decreased access to Asian markets for East Coast ports, including Baltimore, a member of the federal commission

appointed to study the canal said yesterday.

C. Thomas Burke, appointed by President Bush to the Panama Canal Study Commission in 1990, said American inaction in Panama has helped foreign interests in China and Korea build alliances with the Panamanians. As a result, he predicted, when the canal changes hands on Dec. 31, 1999, it will be managed by a government beholden to nations with icy relationships in the West.

"If we're not careful, we could be turning over the canal to a country that could possibly be an enemy of the United States," Burke said in a speech before the Baltimore Propeller Club, a group of local maritime industry executives. "I didn't want to bring you an encouraging speech here, I wanted to alarm you -- I want you to be frightened by this."

American business interests are largely avoiding Panama because of the expected American military withdrawal there, Burke said.

New investment in the country has come from the Bank of China and businesses in Taiwan and Korea.

Burke said he fears those foreign interests will pressure Panama to use the canal as a money-making operation, raising the tolls indiscriminately. He also warned that the Panamanian government could offer better rates to its political allies and restrict use by Western vessels.

"We in the shipping industry are going to have to fend for ourselves to see that the canal is properly managed and maintained," he said.

U.S. officials, however, say Burke's fears are unfounded, noting that the Panamanian government has repeatedly promised to be fair and reasonable in operating the canal.

Michael Bragale, transition programs planner for the Panama Canal Commission in Washington, said Panama will run the canal as a corporation, and that increasing rates or limiting access wouldn't make financial sense.

"Panama is not going to just raise rates on what is the largest economic driver in the country," Bragale said.

"It's not going to price itself out of that market."

The Panama Canal, used by 13,000 commercial vessels a year, collected $493.6 million in tolls in 1997. It is an important trade link for the port of Baltimore, which is trying to build a market niche handling automobile cargo, much of it shipped from Japan through the canal.

Raising the tolls -- which are assessed by weight and already top $40,000 for large vessels -- can have an impact on the shipping trade, where profit margins are tight and cargo lines are sailing ships as wide and heavy as possible.

When the canal raised toll rates in 1997, commercial traffic dropped 3.6 percent.

Pub Date: 9/23/98

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