The Research Of Panama And China Trade Cooperation

Panama and Mainland China have developed and currently maintain good commercial relations. The reality has shown that most of the countries of Latin America have increased the trade cooperation with China after the establishment of diplomatic relations. Panama and China have a long trading history, and both countries maintain Representative Offices that are in charge of trade promotion. However, due to political reasons, they have not establish trade cooperation agreements. Panama and Mainland China do not have diplomatic relations, as Panama at the moment maintains diplomatic relations with Taiwan. This surely impacts the process of integration and trade cooperation agreements.The purpose of this research is to find alternatives for further cooperation between the two countries while the situation of the diplomatic relations between both countries is resolved.The methodology is based on empirical research, as well as review of Laws, trade agreements signed by Panama and China with third countries, public documents, interviews and trade statistics, which provide solid data to support the arguments. Thus, all the documents reviewed provide the legal support to the alternatives suggested.The introduction is a review of Panama and China current trade landscape in order to research deeper on where their relations stand and how they can be improved. The first chapter provides a background of Panama and China trade relations and how they have improved. The second chapter is the discussion of the topic and points out some alternatives and challenges of Panama and China trade cooperation, as well as the analysis of a country in the same situation as Panama, and finally, the conclusions.The research evidences the difficulties is managing agreements when diplomatic relations do not exist between two countries. Most of the countries have been shifting relations from Taiwan to Mainland China because of what they can get. This situation has cooled down as the relations have improved between Mainland China and Taiwan. The majority of the countries that still manage to have diplomatic relations with Taiwan are considered as less developed, since this relationship is based on what they can receive from Taiwan.In sum, the Panama-China relations are based on Foreign Investment, without the umbrella of agreements. Partnerships have flourished in a slow path but have shown significant potential, taking into consideration the past experience of countries of the region that have experienced the presence of Chinese investment and joint ventures on the development of different strategies that are part of cooperation agreement and development plans.Diplomatic relations is a fundamental step to enhance cooperation between Panama and China, but meanwhile there are other areas where both countries can develop synergy and cooperation. The signature of trade agreements without diplomatic relationships is not a common practice.Although Panama enjoys good trade relations with Mainland China, their commercial offices are in charge of trade and commerce but have not negotiated or promote something between them. The difficulty that this issue presents is understandable but there are still mechanisms to promote and increase the cooperation.Basically the trade between China and Panama is derived from the Panama Canal and the Colon Free Trade Zone. Panama is a receptor of Chinese exports and acts as a distribution center. The Chinese imports from the Colon Free Trade Zone occupies the first place approximately USD 15 billion, the freight that pass through the Panama Canal is 46,402,385 billion, this comes from China or going to China. The trade relation also has presence in the domestic market as enterprises like Bank of China, Huawei, ZTE, Sinopec among other are already established. Panama's legislation, plus the geographical position and banking system, are attractive for enterprises to settle in the country their regional offices.In addition to the economic relations, Panama and China also have cultural and educational exchanges. Panama has introduced flexible visa requirements for Chinese citizens, and eliminated the visa for diplomatic passport holders according to Law Decree 248 of 2009 and Law Decree 325 of 2012 respectively. Measures like this have only been approved with countries after establishing diplomatic relations. However, China enjoys this benefit.In conclusion, Panama can create a great synergy with China in matters of trade and services, both countries are not competitors and this situation facilitates the collaboration between them. While the diplomatic relations issue is solved, both countries can work with informal agreements or MOUs. Another alternative is to use the FTA that both countries maintain with Taiwan, as a in their commercial strategies, making Taiwan the first stop before investing in Mainland China to receive the benefits under this agreements. This, of course, if the rules of origin are satisfied.China has much more to offer and could help Panama to strengthen sectors such as renewable energy, e-commerce and technology, China also has a lot to win from this relation. Also the Commercial Offices can work as vehicles to facilitate agreements between institutions that will impulse more collaboration and draw the path to formal agreements.The exploration and cooperation in other areas beyond trade in goods, integrating not just Panama but also Latin America, in a healthier and diversified trade, could start this path with China and Panama.