President Chen Shui-bian (陳水扁) exchanged greetings and shook hands twice with US Sec-retary of State Colin Powell as he attended the state banquet arranged by Panamanian President Mireya Moskoso. This Chen-Powell meeting was made possible thanks to the Panamanian government's meticulous arrangements. This is the most rewarding part of Chen's trip to Panama.
Although Taiwan and Panama have maintained relatively stable relations, rumors of discord have surfaced every now and again.
Taiwan is at a disadvantage competing with China in Panama. In terms of economic statistics, China enjoys a far closer relationship with Panama than does Taiwan. China-Panama bilateral trade in 2001 reached US$1.241 billion, while the trade volume between Taiwan and Panama that same year was US$120 million.
China is the third-biggest user of the Panama Canal. Hutchison Whampoa, which operates the ports of Cristobal and Balboa at each end of the Panama Canal, enjoys close ties with China. The business fees the company pays annually are very important for the Panamanian government. Under these circumstances, Taiwanese diplomats have been under great pressure, especially after 1996 when China and Panama set up trade representative offices.
There was a breakthrough in August, however, when Taiwan and Panama signed a free-trade agreement (FTA), an important indicator of bilateral relations.
Every country has political and economic considerations when signing FTAs. Taiwan gave a great preferential deal to Panama's agricultural produce and even promised to offer an annual duty-free import quota of 5,000 tonnes of sugar. Panama could even make Taiwan its springboard to enter the Asian market.
For the Taiwanese govern-ment, however, the import value from Panama only totals US$4.8 million, accounting for a small proportion in the nation's foreign trade. Therefore, after the FTA takes effect, its impact on the Taiwanese market will be limited.
But this FTA won't just benefit Panama. The Taiwanese government also benefits from expanding businesses into American countries. Moreover, Taiwanese businesspeople investing in Panama enjoy the same treatment extended to Panamanian nationals. Panama also promised to open up its finance, land transportation, tourism, logistics and value-added telecommunications service industries.
In general, the FTA covers three main areas: trade liberalization, expedition and economic cooperation. If these can be implemented step by step, Taiwan-Panama relations will gradually develop into a more refined network. Our efforts made Panama's first Vice President Arturo Vallarino call off a trip to Beijing on Aug. 30 at the last minute. This symbolizes the fruit we have harvested from the long-term cultivation of diplomatic relations with Panama.
Chen's transit stop in the US en route to Panama implies a possibility that we can make use of the US factor. Although the US has formally returned the Panama Canal to Panama, the Panama Canal Treaty of 1977 stipulates that the US shall have primary responsibility to protect and defend the canal when facing any armed attack or other actions that threaten the security of the canal or of ships passing through it. It suggests the intervention of the US anytime in the name of security. Apart from that, Panama's deep dependence on US trade and investment has forced the country to heed the US' stance.
In the future, Taiwan should closely integrate its diplomatic efforts in the US with those in Panama and other Central American countries so as to bring its overall strength into full play.
Teng Chung-chian is a visiting scholar at the Sigur Center for Asian Studies at George Washington University and a professor of diplomacy at National Chengchi University.
Translated by Jackie Lin
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