By: Aidan Carney
Until the early 1900s, cargo traveling between the East and West Coasts of the United States, as well as cargo transported to the U.S. from Asia, traveled around Cape Horn, Chile. Recognizing the arduous journey around South America and the opportunity to cut journey times, President Theodore Roosevelt oversaw the actualization of the Canal’s construction. In 1903, an agreement was entered into which provided the United States with the 10-mile wide strip of land for the canal in exchange for a one-time $10 million payment and an annual annuity of $250,000 to Panama. Nearly eleven years after the United States entered into this deal, the Panama Canal opened officially on August 15, 1914. Though the significance of the Canal was initially overlooked because of World War I, the popularity of the Canal has since skyrocketed.
Until 1977, the United States controlled the Canal. However, President Jimmy Carter entered into two treaties, known as the Torrijos-Carter Treaties, with the Panamanian government to eventually handover complete control of the Canal to Panama. The Canal was jointly operated by Panama and the United States until 1999 when Panama gained full control.
Today, the Panama Canal is a fifty-one-mile artificial waterway, located just outside the Central American mega-city of Panama City, that connects the Pacific Ocean with the Caribbean Sea and the Atlantic Ocean. The Canal handles approximately $270 billion in cargo annually. President Donald Trump has recently announced that the United States will regain control of the Panama Canal. Apart from the claim that the Canal is currently being controlled and overseen by China, President Trump cites the Panamanian government violating several provisions of the Agreement that the United States and Panama entered into. Specifically, President Trump points to excessive fees that American cargo ships are charged to pass through the Canal. The Torrijos-Carter Treaties do emphasize neutrality for any vessel traveling through the Canal. Article II of the Treaty Concerning the Permanent Neutrality and Operation of the Panama Canal section within the Agreement provides that the Panamanian government shall “secure and open to peaceful transit by the vessels of all nations on terms of entire equality, so that there will be no discrimination against any nation, or its citizens or subjects, concerning the conditions or charges of transit, or for any other reason.”
The Canal operates in a manner such that ships organize into a line to travel through the canal. Given that the vessels go through a system of locks and other mechanisms (including altering the height of the water to pass ships through certain check-points), there are oftentimes delays and overflows of vessels attempting to pass. Recently, there has been reports that transportation companies are paying fees to bypass other ships to cut down on shipping times. This has caused ships to pay exorbitant amounts of funds to meet delivery expectations or remain somewhat “stranded” in the waterways leading up to the Canal for several days.
Under a plain-meaning reading of the above-mentioned Treaty Article, one would be led to assume that the “skip-the-line” fees to expedite transportation of goods through the Canal would violate the obligations the Panamanian entered into under the Agreement. However, does the Panamanian government actually violate the Torrijos-Carter Treaties by accepting these surcharges? Were the validity of the skip-the-line fees denied, the Canal Authority and the Panamanian government may argue that these surcharges are not discriminatory and promote equality in that any vessel has the opportunity to pay these fees. The relevant Article states that this discrimination concerns the “conditions or charges of transit.” While some truth exists as to the argument that there is no discrimination as anyone can pay it, this argument is likely not to be accepted as the most-funded transport companies would capitalize at the expense of those companies that cannot afford to pay the surcharge.
If it was determined that the Torrijos-Carter Treaties were violated, does that permit the U.S. to take complete ownership of the Canal? The Treaties provide under United States Senate Modifications (a)(1) for the United States to exercise its rights to assure that the Canal “shall remain open, neutral, secure, and accessible.” The United States may argue that this right grants the American government to occupy the Canal until its use becomes “neutral.”
While the relationship between the two countries has long been relatively strong, this conflict is a recent development between the American and Panamanian governments. President Trump has suggested that the United States is “going to take it back, or something very powerful is going to happen.” However, on February 2nd, U.S. Secretary of State Marco Rubio visited the Canal with Panama Canal Authority Administrator Ricuarte Vásquez and also spoke with Panamanian President José Raúl Mulino. These meetings suggest a peaceful approach to the resolution of this conflict. For now, the fate of the Canal is to be determined as U.S. and Panamanian officials meet.
