Cantwell Calls for Revitalized US Maritime Strategy to Secure Panama Canal from Foreign Adversaries, Increase Trade and Lower Costs for Americans

WASHINGTON, D.C. –  Following today’s Commerce Committee hearing on the Panama Canal (Jan. 28) U.S. Sen. Maria Cantwell (D-Wash.), Ranking Member of the Senate Committee on Commerce, Science, and Transportation, reiterated the need for continued U.S.-Panama cooperation to increase investments in port infrastructure and cybersecurity measures that will strengthen national security, increase trade and lower costs for consumers. The senator will request Defense officials to brief Committee members on foreign threats to the Panama Canal and plans to lead a delegation to visit the Canal’s operations.

“The Panama Canal is vital to America’s supply chains, lowering costs of consumer goods and our national security,” Sen. Cantwell said following the hearing. “It’s critical that the United States and Panama work cooperatively on new cyber security measures to close backdoors to foreign adversaries.  The United States and Panama should also work together to boost port and Canal infrastructure to lower costs, and ensure reliability of the Canal. To that end, I am requesting the Department of Defense and the Coast Guard provide a classified briefing so that all committee members are fully informed about foreign adversary threats to the Canal, including adjacent areas. I also plan to lead a delegation to visit the Panama Canal Authority this Spring to see operations first-hand. I support more U.S. trade and investment in Latin America and want a new Free Trade Agreement of the Americas. And I hope the Committee will work on a maritime strategy.”

Ranking Member Cantwell’s Opening Statement at the Hearing as Delivered: VIDEO

Access to the Panama Canal is essential to maintaining America’s supply chains, lowering inflation and the costs of consumer goods, and ensuring our national security.

With about 72% of the goods transiting the Canal coming to or from U.S. markets, a stable waterway is vital for states like mine where 1 in [3] jobs are related directly or indirectly to trade.

Seattle-based SSA Marine operated the Manzanillo International Terminal in Colon, Panama, for the last 30 years is our largest US logistic presence in Panama with 19 massive cranes, 3.5 million cargo containers, and employing over 1,000 people.

In fact, Washington’s maritime economy supports 170,000 jobs and $45 billion in annual revenue.

And our U.S. maritime economy supports over 21 million jobs. And almost $3 trillion in America’s GDP. 

So, anything that our Committee can do to help grow our maritime economy, I’m all for.

That is why it’s so important that this Committee not just to focus on Panama, but on broader solutions to meet our U.S. maritime opportunities and challenges.

This Committee passed the Ocean Shipping Reform Act led by our colleagues, Senator Klobuchar and Senator Thune, to address shipping costs and stop carriers from practices that delayed U.S. cargo and increased costs. This law also gave the FMC, our two Commissioners who are here today, the ability to do better investigations. So I look forward to hearing about their investigation on the Panama Canal and these cost issues.

And many members of this Committee have worked on the infrastructure billto do dock replacements in places like Alaska, rail improvements, pier infrastructure, safety improvements, and container yard expansions. And I know that my colleagues who represent these maritime investments need a maritime workforce and continued investment. 

Many of our colleagues, Mr. Chairman, have great ideas. Senators Kelly and Young from the Senate, along with Representatives Garamendi and Kelly from the House, and they have been working with maritime stakeholders on these larger bills.

But Mr. Chairman, if this Committee doesn’t embrace this larger agenda, it’s going to get decided in the Finance Committee. So I hope that we can get some of these issues and show that this Committee is the Committee for maritime jurisdiction.

A bill that provides a comprehensive strategy to rebuild America’s supply chain supremacy, the sea lift capacity that we need to defend our interests in the South China Sea and the Indo-Pacific region, and to revitalize our nation’s ports and ship building capacity.

A revitalized U.S. Maritime strategy would not only be good for our economy but critical for our national security. 

At the same time, we face cyber threats from our foreign adversaries—and Panama is a perfect example.

Which bring us to the today’s hearing.

I am concerned about the Chinese-owned ports in Panama and their proximity to the Canal.

I am also deeply concerned about the installation of Chinese equipment from Huawei and other Chinese companies near the Canal.

This is why this Committee successfully worked to get $3 billion in rip and replace at the end of last Congress. So if we’re trying to get them out of U.S. ports and areas, we certainly shouldn’t allow them in ports and vessels and backdoors in places like Panama.

Mr. Chairman, I would like to ask for Unanimous Consent to enter into the record a letter from the two most recent U.S. Ambassadors to Panama who make the case for continued U.S. investment in infrastructure and cybersecurity.

These ambassadors know better than anyone that America’s adversaries have built backdoors into communications technology in our supply chains – both software and hardware. Whether it’s a crane over the port or a bridge, we cannot tolerate Huawei, TikTok, Artificial Intelligence, or other adversaries using a government backdoor.

Mr. Chairman, I’m a very big fan of the five biggest technology interests in basic democracies forming a “Technology NATO.” We should be saying to the world, nobody should be buying technology or equipment that has a government backdoor.

These are complex issues and we need solutions.

I will be requesting that the Department of Defense provide a classified briefing to all members of our Committee about foreign adversary threats to the Panama Canal, including these adjacent areas.

I received an initial classified briefing from U.S. Southern Command and have spoken to former U.S. Southern Command leader, General Laura Richardson, on these issues. 

I also plan to go as a Delegation, or by myself to Panama, and visit the Panama Canal Authority. I invite other members to do so, hopefully this spring.

Any successful strategy also has to not just focus on cybersecurity and cooperation, and we’ll ask some of our witnesses here today, but the larger issue is we need to understand what are the shortfalls of the current agreement that doesn’t get at this upgraded technology concern. I would hope that Panama would be very cooperative in discussing these cybersecurity investments and what needs to be made.

As we all know, the Panama Canal is an authority independent, the Chinese government doesn’t [set]…the shipping rates, but the authority has been grappling with historic rainfalls, climate change, and a solution I believe is for us to work together, as the Army Corps did before on solutions and making sure that instability in water is not the cause of increase in rates. We need to work on these solutions.  

But Mr. Chairman, I also believe that the larger issue here, as you mentioned in your statement about Belt and Road initiatives by the Chinese and their expansion, needs to be met with an aggressive response by the United States. I firmly believe in trade. 

But again, easy for me to say, or maybe from Texas, when you’re coming from a very trade-dependent state.

But the issue is, we didn’t have [a Senate-confirmed] ambassador there for five years in Panama. For all my colleagues who hold up ambassadors, you should rethink your strategies when you do this. Because holding up ambassadors and not dealing with these issues put us behind the eight ball. 

Expanding exports to the 95% of the world’s consumers, and roughly 3.5 billion people, I believe is a good idea.

I hope we can have a more aggressive strategy in Latin America.

I think the proposals by Senators Cassidy and Bennet, the Americas Act, is also a like-minded…[coalition] of Latin American countries so that we could join together in sort of a US-Mexico-Canada Free Trade Agreement.

And I also believe that a Free Trade Agreement of the Americas that links modernization and all our FTAs in Latin America and Caribbean would help along with an aggressive strategy of saying no government backdoors and making the kind of investments that the Export-Import Bank can do to counter China.

Mr. Chairman, thank you for organizing this important hearing, such investments ensure resilient supply chains, boost exports, lower consumer costs, and most importantly, protect our national security.

Ranking Member Cantwell’s Q&A Segment: VIDEO

CANTWELL: Mr. Kramek, I think costs are critical. When you think about it, we're here discussing costs. Why? Because consumers pay more when shipping costs are higher. Whether our farmers who are trying to export their products, as we saw during COVID, our products are getting left on the docks, and importers are paying more if shipping costs are too high.

So when we look at these incidents that we now see in our supply chain, and we had our own incident in Seattle where a container ship lost power and was careening towards our big Ferris Wheel in the downtown, right next to our ferry terminal. Luckily, some passenger ferry vessels were able to push the tug from, you know, out of the direct path of severe devastation. So now we mentioned the Suez Canal. We mentioned Baltimore. We have our own Seattle experience.

What do we need to do to make sure, on the cost side, that we're making the right investments from a security level to make sure that these kinds of incidents that can do great harm do not happen?

And Commissioner Sola, since you were at US Southern Command. What do you think we need to do to renegotiate or to have a conversation with the Panamanians about the security level that we think needs to exist in Panama with this close proximity?

And Mr. Maffei, will the audit lead to a discussion with Panama about those contracts? As I've said in my opening statement, I believe we should be very aggressive about U.S. involvement here and in Latin America. I think Panama represents one of the biggest U.S. supporters in that region, but we should engage to get this right, both on the cost side and on the security side. So if I could just hear your comments on each of those.

MR. KRAMEK: Thank you, Senator Cantwell. Well certainly even one incident is unacceptable from a safety perspective that you're citing. Our members work tremendously hard with the International Maritime Organization, the U.S. Coast Guard, and other entities to try to have the safest operations possible. But accidents do occur. They are rare if you count the number of some 7,000 port visits a year. But again, one is unacceptable. So continued investment, obviously, in U.S. infrastructure and a review. We have a lot of old infrastructure, as the tragic incident in Baltimore illustrated, unfortunately. We have these bridges that, you know, need a hard look to whether or not they need additional fendering systems and the like. And investments in our ports and infrastructure can be helpful along those lines as well. And for our members, I can assure you that they continue to invest in the latest technology. We have over 600 new ships on order with some of the latest technology in the world. So we are playing our role.

CANTWELL: I want the U.S. to get a big portion of that. That's why we need to reinvigorate.

Commissioner Sola, what about just a new US Southern Command and U.S. government conversation with the canal authorities and the government about the security level that we seek?

COMMISSIONER SOLA: Thank you very much, Senator. First of all, the airborne wing that I'm wearing today is decorative. I have not worn a uniform in 35 years. So this is my personal experience here. I believe that the security of the Canal has always been understood to be provided by the United States. Panama does not have a military, and I always believe that there has been a close relationship with Southern Command that we would provide that. And it would be nice to see if we had a formalization of that in one way or another because I don't believe that it's in the treaty at all.

CANTWELL: Okay, so formalization of maybe a cyber security agreement. See, I'm thinking this is, you have accidents, and then you have larger cyber security issues that you just have to be on top of. And what I don't like about anybody that has a backdoor is, I'm for the United States advocating don't buy it from people who have a government backdoor. Don't do it. Because what are you going to do? At some point in time, you're going to regret that.

Commissioner Maffei, what about this audit? And could we push Panama on these issues of looking at closer U.S. infrastructure instead? Particularly since, you know, the sea change here is like what everybody said, everybody thought this was Hong Kong. Then it turned into China. We didn't have an ambassador. After that, next thing you know, they've made more aggressive postures. They're making aggressive postures everywhere. That's why the United States saying no government backdoors in technology, and getting five other technology nations and democracies to say the same thing and evangelize that every day is going to help us. And so is the investment.

But what about getting the stevedoring business, or some of that back into proximity under the audit?

COMMISSIONER MAFFEI: Well, it is the Panama Controllers Office, and they are investigating, you know, contracts at Panamanian ports. And we don't have any jurisdiction over Panamanian ports per se. But your broader point, I think, is very, very important. While we were down there, both of us heard, I think several times, that the Panamanians—the ones we talked to anyway—would welcome U.S. companies coming in and doing a lot of this work. Frankly, they're bids are not competitive with the Chinese bids. Frankly, they're not that existent, because the U.S. companies can make more money doing things other places. But even if they were existing, it is difficult to put competitive bids when the Chinese bids are so heavily subsidized by China. So you're absolutely right. This is a problem, and it's a problem in many, many other areas of the world that we can get into if you want in subsequent questions.

CANTWELL: My time is expired, but I think my major point is, let's be a big maritime powerhouse. Let's revitalize our supply chains, drive down costs for consumers, and secure what we need to secure. Thank you, Mr. Chairman.