FMC Chair Concerned China is Weaponizing Inspections of Panama-Flag Ships
The new chairman of the Federal Maritime Commission, Laura DiBella, issued a personal statement reiterating her concerns over China’s campaign of Port State inspections and detentions against vessels flagged in Panama. She expressed concern about “China’s weaponization of port state control inspections,” saying it is in the purview of the FMC to investigate the issue.
The issue surfaced earlier this spring with reports of a dramatic increase in the number of detentions of Panama-flagged vessels in Chinese ports. Panama called on China to act responsibly, while others also sided with Panama in its ongoing struggles with China. DiBella, in a statement in March, highlighted the surge in detentions, saying the inspections were being carried out under informal directives and appeared intended to punish Panama after CK Hutchison’s concession to operate the port terminals at the Panama Canal was voided and the properties were seized.
DiBella writes that the laws the FMC administers empower it to investigate whether regulations or practices of foreign governments result in conditions unfavorable to shipping in the foreign trade of the United States. She says the FMC has within its power the implementation of remedial measures.
“Panama-flagged ships carry a meaningful share of U.S. trade, and unwarranted, retaliatory vessel detentions could result in significant commercial and strategic consequences to U.S. shipping. Moreover, the world cannot simply normalize these ongoing detentions – this would create a highly negative precedent for the global supply chain, and preventing that from happening is a priority,” says DiBella.
China, for its part, recently responded to the allegations, denying it was targeting Panama-flagged ships. It did not deny an increase but said it was due to the ships having been involved in incidents with fishing vessels.
A new analysis by Lloyd’s Intelligence says the surge in detentions has peaked and dropped dramatically. However, it reports a ripple effect after three months, with a dramatic increase in the number of vessels switching from the Pama register to other flags. It notes that Chinese owners were the largest group of shipowners re-registering ships, saying they were switching to the Bahamas and the Marshall Islands.
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Panama’s Supreme Court had voided the concession, which had been in place since 1997 for the two ports and sparked the retaliation by China and multi-million-dollar arbitration claims by CK Hutchison. China also summoned both Maersk and MSC Mediterranean Shipping Company for consultations after the two companies’ terminal operators took over the ports in Panama from CK Hutchison.
China accused the United States of creating the issues in its geopolitical rivalry. Last week, Donald Trump repeated his claims that China wants to control the Panama Canal and vowed never to let it happen.
