Panama Canal Expansion Will Affect U.S. Ag Exports

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On Sunday, voters in Panama voted in favor of a plan to expand and update the Panama Canal, with about 78% voting in favor and 22% against. The $5.25 billion plan would add a third set of locks that would allow larger container ships, cruise liners and tankers to pass through that currently can not fit into the 108-foot wide locks. The expansion should significantly affect U.S. exports, as American vessels are the canal’s top users. “There will be an impact on the pocketbook,” says U.S. Ambassador William Eaton. “The transit costs will be cheaper, and that will have an effect on the market.” “This is important to the U.S. It’s important to our economy,” Eaton says. Around half of U.S. corn exports travel through the canal, which currently handles around 4% of global trade. The canal’s administrator, Alberto Alemán Zubieta, points out the benefits the expansion will have for agricultural exports. “Now you will be able to bring agricultural products in a larger vessel,” he says. “Then you reduce the unit costs.” According to a spokesman for the Port of Los Angeles, about 30% of the vessels that dock there are too large for the Panama Canal. Construction is set to start in 2007, with an estimated construction time of about eight years. Taiwan has already offered to help with the project’s costs. The locks represent a fifth of Panama’s economy, employing 8,000 workers. Some opponents of the expansion remain vocal, warning of possible corruption, and many who voted in favor of the expansion are cautious as well. “The expansion is necessary, but we all have to watch closely, make sure there isn’t embezzlement and corruption,” says Igor Meneses, a 34-year-old voter from Panama City. “With that kind of money there’s a lot to steal.” The U.S. built the Panama Canal in 1914 and ran it until 1999, when it handed the canal’s operations over to Panama.

SOURCE: Don Winner @ Panama-guide.com

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Source: VIP Panama

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EIB offers Panama 500-mln-euro loan for canal expansion

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(Source: Xinhua) – The European Investment Bank (EIB) will offer Panama 500 million euros (650 million U.S. dollars) to finance the expansion of the Panama Canal, an European Commission official announced on Friday. The proposal was made during a technical evaluation of diverse cooperation projects between the European Union (EU) and Panama, said Tomas Abadia, EU business manager for Panama and Costa Rica. “The financial proposal was advanced by Spain’s Prime Minister Jose Luis Rodriguez Zapatero and it includes very low interest rates at very long terms,” Abadia said. Local media reports said EIB representatives are in contact with the Panama Canal Authority. Panama is aiming to build a third lane of locks to increase the canal’s capacity and allow larger ships to travel between the Pacific and the Caribbean. Panama expects the tolls revenue in 2008 to increase by some 340 million dollars compared with this year. (more)

The expansion of the inter-oceanic route will approximately cost 5.25 billion dollars with 75-percent self-financed by Panama. Expansion of the canal, which carries about 4 percent of world trade, will double the 80-km waterway’s capacity. The canal, which was opened in 1914 and generated 1.4 billion dollars in revenues last year, was built by the United States and handed over to Panama in 1999.

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