Panama Cancels the Registration of 107 Vessels under Pressures from the Trump Administration
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06 Apr Panama Cancels the Registration of 107 Vessels under Pressures from the Trump Administration

Posted at 16:53h in Analysis by

By,

Jesús Daniel Romero, Co-Founder and Senior Fellow, MSI2

The Panama Maritime Authority (AMP) has recently canceled the registration of 107 vessels included in international sanction lists, with 18 others still in the process of cancellation.

This measure, which strengthens control over Panama’s merchant fleet, is part of a policy of compliance with international sanctions that Panama has intensified since 2019, when the administration of former President Donald Trump exerted strong pressure on the country to prevent its flag from being used in illicit operations.

Pressures from the Trump Administration and Its Impact on Panama

In 2019, the U.S. Department of the Treasury, through the Office of Foreign Assets Control (OFAC), tightened sanctions against Iran and other nations to cut off their sources of financing. As a result, Panama faced unprecedented pressure to sever its merchant fleet from any potential sanction evasion. In response, the AMP removed the registration of 136 ships associated with the National Iranian Oil Company (NIOC), sending a clear message of cooperation with U.S. policies (Office of Foreign Assets Control, 2019).

A New Framework for Maritime Supervision

To avoid delays in the implementation of these measures, in October 2024, the Panamanian government issued Executive Decree No. 512, which allows for the immediate cancellation of the registration and navigation license of vessels included in sanction lists from organizations such as OFAC, the European Union, and the UN. Thanks to this new legislation, Panama has been able to act more swiftly in the recent cancellation of 107 vessels’ registrations and in the process of removing 18 others, thus consolidating its commitment to comply with international regulations (Government of Panama, 2024).

Repercussions and Effects on the Global Maritime Industry, Especially for China

The decisions made by Panama have a significant impact on the global maritime industry. As one of the largest flag registries in the world, this measure strengthens global confidence in the legality of maritime trade. Panama ensures that its registry is not used to evade sanctions or engage in illicit activities, which directly affects fleets from countries that depend on these registries, such as China.

1. China’s Merchant Fleet

China, a key player in the global maritime industry, widely uses the Panamanian flag for its vessels, particularly those involved in the trade of sanctioned products such as Iranian or Venezuelan oil. The sanctions imposed on these countries directly affect China’s interests, which may force Chinese companies to consider changing their vessels’ registry to other countries if they are affected by Panama’s new regulations.

2. Trade Relations with Iran and Venezuela

China has been a strategic partner of Iran and Venezuela, countries that face international sanctions, and uses its ports and vessels to continue trading with them. Panama’s recent measures affect China’s trade routes with these countries, as vessels that previously operated under the Panamanian flag are now forced to change registration or seek less regulated alternatives, which could increase or complicate the transport of goods (Chen, 2021).

3. Impact on Global Trade

Panama is a key connection point in global trade routes, and sanctions imposed on its fleet could affect the efficiency of maritime transport. For China, which heavily relies on maritime transport to move export products, the sanctions could cause delays, changes in trade routes, and additional costs, altering the global trade dynamics (Liu, 2020).

Conclusion

The recent cancellation of 107 vessel registrations, as well as the potential removal of 18 others, marks a turning point in Panama’s maritime policy, largely driven by pressures from the Trump administration since 2019. This measure reinforces Panama’s cooperation with the U.S. and the international community, but it also raises questions about the long-term impact on the competitiveness and autonomy of its merchant registry.

Additionally, the measures taken significantly affect the global maritime industry, especially countries like China, which is directly impacted by sanctions related to the trade of sanctioned products. Will this mark the beginning of even stricter supervision over Panama’s fleet?

References

Chen, Z. (2021). China’s maritime strategy and the impact of international sanctions on shipping routes. Asian Maritime Review, 45(3), 112-125.

Government of Panama. (2024). Executive Decree No. 512: Regulation on the cancellation of maritime registrations in compliance with international sanctions. Official Gazette of Panama.

Liu, H. (2020). The global shipping industry and the role of Panama: A focus on China’s shipping sector. International Journal of Maritime Economics, 22(4), 30-45.

Office of Foreign Assets Control. (2019). Iran Sanctions. U.S. Department of the Treasury. Retrieved from https://www.treasury.gov/resource-center/sanctions/Programs/pages/iran.aspx

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