China in Panama: FTA Update, Tourism and Cruise News

You’re in the right place if you want to get the latest developments in Panama-China relations.

On the tourism front, Panama’s tour operators are landing in China. As of mid-August, 64 companies authorized by Panama’s Tourism Authority (ATP) launched services for Chinese tourists visiting Panama. This follows on the heels of the announcement by China’s Ministry of Culture and Tourism (note to self: nice that they combine the two, right?), which confirmed that Panama’s now been added to the “Approved Tourist Destinations” list.

So, Chinese and Panamanian tour companies have started working together to design tour packages and itineraries. Given that hotel infrastructure, visas for Chinese visitors, and Air China’s direct flights to Panama are all in place already (as well as all the historic sights, nature and everything else they’d experience while here), it should all be ready, set, go, right? Not so fast: since the ATP expects a vastly different market to cater to, it has been holding trainings on how to meet Chinese visitors’ specific needs. That said, since China has already authorized a whopping 4,445 Chinese tour operators to start negotiations with their Panamanian counterparts, we better get ready to welcome them. Want to start by learning how to pronounce 你好? Nǐ hǎo!

With China’s help, Panama’s Amador cruise port is also making progress. With one third of the project complete, the consortium formed of China Harbour Engineering Company and Belgium’s Jan de Nul has dredged the navigation canal and terminal, and is now working on getting the surrounding land ready for further development. Able to accommodate two mega cruise ships at a time, the full-service Amador terminal and port was planned to entice large cruise ships crossing the Canal to dock in Panama City and stay to explore. More ambitiously, it will also be Panama’s first true home port, so it can serve as a departure port for cruises to the Caribbean and Pacific, via the Panama Canal. It should be up and running in time for peak cruise tourism season in October 2019.

And, in case you missed the biggest news in our previous newsletter, the first round of free trade talks between China and Panama were held in July, just a year after re-establishing diplomatic relations. And what a year it’s been. The second round of talks is scheduled to take place in Beijing soon, so let’s take stock of how a free trade deal could look to benefit both countries.

A deal would obviously open up Panama’s seafood, banana and cane sugar exports to the massive Chinese market, especially as China’s appetite for food imports grows. But the real benefits would come via the Colon Free Trade Zone (FTZ), which, given its proximity to the Atlantic entrance of the Panama Canal, is a major regional export hub. While China has always been the #1 supplier of goods to the zone, an FTA would diversify Chinese products entering the zone, giving businesses in the FTZ a prominent place to enter European and Latin American markets.

More broadly, the FTA would cement Panama’s role as a global logistics hub. As more Chinese businesses invest in Panama once the FTA redefines re-exports (dominated by alcoholic beverages, pharmaceuticals, electronics and wireless telecom devices), the range of Chinese products will increase, which, in turn will benefit services more broadly, giving a solid boost to Panama’s already strong financial services industry.

On the Chinese front, China has already signed FTAs with Mexico, Peru and Chile, as it looked to satisfy its own demand for energy and commodities. The China-Panama trade deal would help China cement its presence in the region. Funny how a seemingly small fish like Panama could help the globe’s Goliath.