Panama and China Move to Renew Bilateral Shipping Pact

By De Puy & Asociados

Panama's Ministry of Foreign Affairs announced on July 20 that the two governments had reached a consensus following high-level meetings held in Beijing on July 16 and 17. The talks focused on renewing the bilateral Maritime Transport Agreement, which dates back to 2017 and governs how Panamanian-flagged vessels are treated when calling at Chinese ports, covering port access, cargo operations, customs procedures, berthing, fees, and the recognition of vessel and crew documentation. According to the ministry's statement, both sides will now move forward with the formal renewal procedures before the current agreement expires later this year.

The renewal talks took place against a backdrop of strained maritime relations between the two countries. Tensions rose after a Panamanian court ruling declared unconstitutional the concession held by Panama Ports Company, a subsidiary of Hong Kong-based conglomerate CK Hutchison, which had operated the Balboa and Cristóbal terminals located at opposite ends of the Panama Canal. Panama had subsequently raised concerns with Chinese authorities over a marked increase in inspections and detentions of Panamanian-flagged vessels at Chinese ports. Local media reports cited by multiple outlets indicated that nearly 500 Panamanian-flagged ships were detained for inspection over the course of 2026.

Panama's acting Foreign Minister, Carlos Hoyos, stated on July 20 that detention figures had since returned to what he described as the historical level, signaling a normalization in the inspection rate applied to Panamanian vessels. Chinese Foreign Ministry spokesperson Lin Jian, addressing the matter separately, said Beijing remained committed to developing its relations with Panama. Panama Ports Company has separately initiated arbitration proceedings over the cancellation of its concession, reportedly seeking compensation in the range of two billion dollars, a process expected to extend over several years.

The Maritime Transport Agreement holds particular significance for Panama's shipping registry, the largest in the world by number of vessels. Thousands of ships sail under the Panamanian flag regardless of their owners' country of origin, and a considerable share of them operate routinely in Chinese ports, making preferential tariff treatment and streamlined administrative procedures central to the registry's competitiveness. China, for its part, remains a major user of the Panama Canal, underscoring the mutual economic stakes tied to the agreement's continuity.

The broader dispute over port operations along the Panama Canal has also intersected with statements from the United States government regarding the waterway's oversight, though the canal itself continues to be administered by the Panama Canal Authority, an autonomous Panamanian institution separate from the national government.