ddi throughout the federal government -- that put dei throughout the federal government. the next president could rescind. we need to codify that into law. host: the heritage foundation's mike gonzalez joining us. he serves as a senior fellow. it says you are jailed overnight and expelled by manuel noriega. for what reason? guest: i was there as a journalist and the hotel called me and said the police are looking for you. i called my editor and said what do i do? they said we will get you out. they arrested me and put me in prison at the airport where i spent the night than they put me on airport back to miami. it made my career. my it or thought i was hot stuff. from that point on i did not look back.

i spent 15 years overseas. a fun fact about me. host: mike gonzalez. thanks for your time. we will take you to a senate hearing that takes focus on the panama canal. they will look at the strategic importance and the impact on u.s. trade and national security. that hearing set to start momentarily. [captions copyright national cable satellite corp. 2025] [captioning performed by the national captioning institute, which is responsible for its caption content and accuracy. visit ncicap.org]

>> good morning. welcome to the senate committee on science, commerce, and transportation. we are here to examine a monument to american ingenuity. the panama canal. senator marino suggested we open the hearing by playing van halen and panama. we may not do that. between the american construction of the panama canal , the french effort to build a canal, and america's triumphant completion of that canal the major infrastructure projects across panama cost more than 35,000 lives. the final decade of work on the canal the united states spent nearly $400 million, the equivalent to more than $15 billion today. the panama canal proved a truly

invaluable asset, sparing both cargo ships and warships the long journey around south america. when president carter given away to panama urchins were puzzled, confused, and many outraged. with the passage of time, many have lost sight of the canals importance to national security and to the u.s. economy. not president trump. when he demanded fair treatment for american ships and goods, many in the media stopped. the panama canal was not just given away. president carter struck a bargain, he made a treaty. president trump is making a serious argument that treaty is being violated right now. this committee has jurisdiction under the senate rules over the panama canal and today we will examine evidence of potential

violations. president trump has highlighted two key issues. the danger of china exploiting or blocking passage through the canal. number two, the exorbitant cost for transit. chinese companies are building a bridge across the canal at a slow pace so as to take nearly a decade. chinese companies control container ports at either end. the partially completed bridge gives china the ability to block the canal without warning. the ports give china ready observation posts to time that action. this situation poses acute risks for u.s. national security. meanwhile baha'i fees for canal transit disproportionately affect america -- meanwhile the high fees for canal transit

disproportionately affect americans. u.s. naval vessels pay fees that apply only to warships. canal profits regularly exceed $3 billion. this money comes from american taxpayers and consumers in the form of higher costs for good. american tourists aboard cruises , particularly those in the caribbean are captive to any fees panama chooses to levy for canal transit and they have paid unfair prices for fuel bunkering and terminals in panama as a result of government granted monopoly. panama was government relies on these fees. nearly 1/10 of its budget is paid for with for now profits. as those fees cascade through the american economy, the chinese communist party advances its global economic contest against united states and takes a militaristic interest in the canal. while president trump has rightly focused on these key

issues there are additional problems. in the last two years the canal authority generated record revenue even while transits were depressed by drought conditions. the only comfort to delayed and overcharged ships as panama may invest in more freshwater reserves in the future. even as it takes advantage of the global maritime system, panama has emerged as a bad actor. panama has flagged dozens of vessels in the iranian coast fleet, which brought iran tens of billions of dollars in oil profits to fund terror across the world. in chinese companies that won contracts, often with unfair competition. china often engages in debt trap diplomacy to enable economic and political coercion. in panama it seems to have exploited corruption. we have four panelists with us

today. at ranking member cantwell's request we also invited the deputy minister of the panama canal to attend. she declined the invitation. the witness claimed her absence was due to a scheduling matter but i also recognize that defending the panama canal authority is an unenviable task. this committee may be applied to compel her testimony at a future hearing. it will not escape centers notice that a professor is appearing virtually. that will be a very unusual practice before this committee. the professor was ready to fly from israel to d.c. to appear in person but was unable to because too few american carriers have resumed direct flights to israel's while european airliners willing to flight israel, israel is americans

closest ally in the middle east and u.s. carriers are refusing to fly there. delta airlines announced it would finally restart direct flights to tel aviv in april and i hope united airlines and american airlines will quickly follow suit and resume direct flights to israel. turning back to the topic at hand i'm grateful to president trump for raising public awareness about the state of the panama can now and the threats to american interests. we cannot afford to let american shippers be extorted, we cannot turn a blind eye of panama exploits an asset of michael commercial and military importance and we cannot stay idled by -- we cannot stay idle while china is on the march in our hemisphere. i expect that hemisphere -- i turned to ranking member campbell for her opening statement. sen. kim: ball -- sen. cantwell:

access to the panama canal is essential. 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 one in four jobs are related directly or indirectly to trade. seattle-based ssa marine operated in an international terminal in panama is our largest u.s. logistics presence been panama with 3.9 million cargo containers and employing over 1000 people. washington's maritime economy supports 170,000 jobs and $45 billion in revenue and are u.s. maritime economy supports 21 million jobs in almost $3 trillion and america's gdp.

anything our committee can do to help grow our maritime economy i am offer. that is why -- i am all for. that is why it is important the committee focus not just on panama but on broader solutions to meet our maritime opportunities and challenges. this committee passed the ocean shipping reform act led by our colleagues to address shipping costs and stop carriers from practices that delete u.s. cargo or influence cost. this also gave our commissioners here today the ability to do better investigations. i look forward to hearing about their investigation on the panama canal and these cost issues. many member of this committee have worked on the infrastructure bill to do dock replacements in places like alaska, rail improvements, safety improvements, container expansion come and i know my colleagues who represent these maritime investments need a maritime workforce and continued

investment. many of our college so great ideas. senator kelly from the senate. the representatives from the house. they've been working with maritime stakeholders on these larger bills. mr. chairman, if this committee does not embrace the larger agenda it will get decided in the finance committee. i hope we can get some of these issues and show this committee is the committee for maritime jurisdiction. a build up requires a comprehensive strategy to rebuild america supply chain supremacy, sea lift capacity we need to defend our interests in the south china sea and the indo pacific come into revitalize our nation's ports and shipbuilding capacity. a revitalized maritime strategy will not only be good for our economy but critical for national security. at the same time we face cyber threats from our foreign adversaries and panama is a perfect example, which brings us

to the hearing today. i am concerned about chinese owned ports in panama and the proximity to the canal. i am also deeply concerned about the installation of equipment from chinese companies near the canal. this is why this committee work to get $3 billion at the end of the last congress. if we are trying to get them out of u.s. ports in areas we should not allow them in vessels in backdoors in places like panama. i would like to ask unanimous consent a letter from the recent u.s. ambassadors to panama who make the case for continued u.s. investment in infrastructure and cybersecurity. chair cruz: without objection. sen. cantwell: these ambassadors know better than anyone that america's ambassadors have built backdoors -- that america's enemies have built backdoors into technology and supply chains in software and hardware. whether it is a crane over the

port or a bridge we cannot tolerate huawei, tiktok, other artificial intelligence using a government backdoor. i am a big fan of the five technology interest in basic democracies forming a technology nato. nobody should be buying technology or equipment that has a government backdoor. these are complex issues and we need solutions. i will be requesting the department of defense provide a classified briefing to all members of our committee about four and seri threats to the panama canal, including these adjacent areas. i received an initial classified briefing from the u.s. southern command and have spoken to former u.s. southern command leaders 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, but the larger issue is we need to understand what other shortfalls of the current agreement that does not get at this upgraded technology concern. i would hope panama would be very cooperative in discussing these cybersecurity investments and what needs to be made. the panama can now is independent -- the panama canal is independent and the chinese government do not start the shipping rates, but the authority has been grappling with historic rainfalls, climate change, the solution is for us to work together as the army corps did before on solutions and making sure instability in water is not the cause of an increase in rates. mr. chairman, i also believe the

larger issue as you mentioned in your statement about belt and wrote initiatives by the chinese and their expansion needs to be met with an aggressive response by the united states. easy for me to say or maybe for texas when you're coming from a trade-dependent state. the issue is we did not have an ambassador for five years in panama. for all of my colleagues who hold up ambassadors, you should rethink your strategies. holding up ambassadors put us behind the eight ball. expanding exports to 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 senator cassidy and bennett, the americas act, is also a like-minded thing of latin america's that we can join together in sort of u.s.-mexico canada free trade agreement and i believe that a free-trade

agreement of the americas that link modernization of all of our fdas in latin america and the caribbean would help along with an aggressive strategy on saying no government backdoors on making the kind of invest boards -- investments the export impact -- making the kind of investments the export impact -- boost exports, lower consumer costs, most importantly protect our national security. thank you. chair cruz: thank you senator cantwell. our first witness is the chairman of the federal maritime commission. he was recently in panama on a fact-finding mission and can speak to concerning abutments i noted in my opening statement. you are recognized for five minutes. >> thank you two distinguished members of the committee. thank you for the opportunity to speak about the critical importance of the panama canal

to u.s. trade and global commerce. i bring a unique perspective as someone who is not only served as a maritime regulator but has lived and worked extensively in panama. i have transited the canal over 100 times. this provides me with a profound understanding of the canals significance and challenges. our long drought conditions last year forced changes, reducing transit slots, restricting vessel types and auctioning slots raising alarm about its resilience. the panama canal is managed by the panama canal authority, an independent agent of the panamanian government. it is a model of safe and reliable transit of vessels critical to the u.s. and global commerce. during my recent visit to panama i the opportunity to meet with leaders of the acp press the ongoing challenges facing the

canal. i saw their commitment to maintaining the canals efficiency and resilience. these conversations also highlighted the broader challenges posed by the panamanian government's maritime policies which complicate the acp's mission and raised concern about corruption and foreign influence. the broader maritime sector in panama, including the nation's ports, water rights, the world's largest ship registry all serve under the direct purview of the panamanian government. the sector has faced challenges including corruption scandals and foreign influence, particularly from brazil and china. these issues great friction with the acp, especially as it works to address long-term challenges such as securing adequate water supplies for the canal. although the acp operates independently come under u.s. law both the acp and the

government of panama's maritime sector are considered the same. this means any challenges in panama's maritime sector including corruption or foreign influence can have a direct or indirect impact on the operations and long-term stability of the canal. this legal perspective highlights the need for diligence and monitoring the acp's management and panama governments policies affecting maritime operations. since 2015 chinese companies have increased their presence and influence throughout panama. panama became a member of the belt and road initiative and ended its relations with taiwan. chinese companies have been able to pursue billions of dollars of develop meant contracts in panama, many of which were projects on adjacent to the panama canal. many were no-bid contracts, labor laws were laid -- labor laws were waived come in the

panamanian people are waiting to see how they are benefited. it is more concerned many of these companies are state owned and late to the people's liberation army. we must address the growing presence of china throughout the americas and panama city. american company should play a leading role in enhancing the canals infrastructure by supporting u.s. firms. we reduce reliance on chinese contractors and promote fair competition. confirming a u.s. in panama is critical to advancing our national economic interests. the fmc will continue to monitor the canals pricing practices and consider brought reviews of panama's maritime sector. the fmc has the authority to impose significant revenues, including fines and restrictions on panamanian vessels entering u.s. ports. the panama canal is vital to our economy.

75% of its traffic is bound for our ports. safeguarding the acp's independence in addressing the challenges posed by the broader government are essential to maintaining u.s. competitiveness in the global economy. i look forward to your questions. chair cruz: thank you. our next witness is commissioner daniel lafave of the federal maritime commission. he was also in panama with chairman sola. >> thank you so much chairman cruz and ranking member cantwell. in addition to chairman sola and myself of commissioners here from the federal maritime commission which underscores the importance of the issue to us. where than 110 years after its opening the panama canal remains vital to maintaining resilient supply chains for american importers and exporters. because the canal is essential a waterway bridge over mountainous terrain it does require supplies of freshwater.

panama has among the world's largest annual rainfall, nonetheless insufficient freshwater levels have occurred before in the canals history such as in the 1930's when dams built to address water shortages. in the last couple of years a trend of worsening droughts in the region has forced limits to the operations of the canal. starting in june 2023 the panama canal authority reduce the number of shifts allowed to transit the canal per day. the panama canal limitations in combination with the defective open -- with the fact aero closure of the suez canal to traffic has had impacts on traffic. in the first half of 2024 u.s. importers and exporters expressed upon a mock canal related concerns to the fmc including doubts about the future reliability of the canal and questions about how the panama canal authority would determine which ships transit

the canal. the fmc has transit -- has authority to take appropriate counteraction if it finds a foreign country has contributed to conditions unfavorable to shipping in the foreign trade. given the statutory mandate and condition with fmc's mission in commissioner sola looked into the issues affecting the put out. about what was being done to address these concerns and about whether aspects of the canals operations might result in conditions unfavorable to u.s. shipping that should be addressed under the commission's authority. we traveled to panama in july 2024 and met with the recently elected president and officials in his administration we also met with a panama can now authority as well as private sector stakeholders. we had candid discussions on

issues such as panama's plans to ameliorate the water issues, the bidding issues, and our concern the canal authority was bringing in far more revenue during the crisis than it had before it limits were forced by water shortages. both the government of panama at the canal authority did answer our questions substantively. the canal authority informed us they were already making changes to that allocation system. panama's 2024 rating season has for now alleviated the most acute water supply issues in normal transit volumes have been restored. that said, while the panamanian government and canal authority have with the advice of the u.s. army corps of engineers developed credible plans to mitigate future water shortages, they also warned it is likely at least one more period of reduced transit will occur before the plants can be fully implemented. the fomc has continued to monitor panama's progress on

this front. i have continuing concerns about the auction light slot allocation procedures. not as they are applied right now, but when another low fall rain period occurs. as we learn more about panama and the canal authority and how they would handle another drought and receive more input from american imports and exporters the commission remains position to take appropriate action if warranted. how the panama canal's operations affect american commerce is a high priority for the upper room c under my chairmanship and remains a high priority at the federal maritime commission and i am pleased it is a priority for this committee as well. chair cruz: thank you, commissioner. our next witness is a law professor who can explain panama street he obligations and the remedies the u.s. might seek for potential violations.

the professor is appearing virtually and you are recognized for your opening statement. >> chairman cruz, ranking member cantwell, i appreciate and regret the opportunity to testify before you remotely. i've been asked to discuss possible violations of the treaty concerning the permanent neutrality and operation of the panama canal between the two countries in 1977. i should say at the outset that determine whether a station -- whether a situation violates a treaty is a mixed question of law and fact pretending -- depending on the meeting of the treaty. i will speak about the meaning of the treaty. we shall see that under international law each party to the treaty is determined whether a violation has concerned -- has occurred.

in exchange the united states ceding control of the canal panama agreed to a special regime of neutrality. the essential feature is the canal must be open to all nations for transit. that is article two. and exclusive panamanian operation and the prohibition of any foreign military presence. article five provides that only panama shall operate the canal, testifying about the meeting of the treaty and the senate ratification hearings. the carter administration emphasize this prohibits for operation of the canal as well as the garrisoning of foreign troops. article five appears to be concerned about control by foreign sovereigns. panama signed a treaty with the people's republic of china, this would be a clear violation. what if panama contracted for port operations with the chinese state firm or a private firm

influenced or controlled by the chinese government? the suez canal company was itself a private firm in which the united kingdom was only a controlling shareholders. this was understood to represent british control over the canal. in other words, a company need not be owned by the government to be controlled by the government. the real question is the degree of two sure or defective control over a sovereign companies and scenarios range from companies in an authoritarian regime to purely private firms in an open society like the united states where there are many possible situations in the middle. the treaty is silent on the question on how much control is too much and this is one of the many questions committed to the judgment and discretion of each party. turning to foreign security forces, the presence of third country troops would manifestly

violate article five, but this does not mean anything short of a people's liberation army base flying a red flag is permissible. the presence of foreign security forces could violate the regime of neutrality even if they are not representative in open military formations. modern warfare has seen powers seek to evade legal imitations by disguising their actions in civilian garb. from russia's notorious little green men to hamas terrorists hiding in hospitals or disguised in journalist, bad actors seek to exploit the fact that international treaties focus on sovereign actors. many of china's man-made islands begin a civilian project before being militarized. this issue is discussed in senate ratification hearings. informal forces would be prohibited under the treaty. thus the civilian character of the chinese presence does not

mean it cannot represent a violation of the treaty if these companies and their employees involved chinese covert agents or other agencies of chinese security forces. this leads us to the final question, who determines whether neutrality is being threatened or compromised. unlike many other treaties that provide for third-party dispute resolution, neutrality treaty has no such provision and instead makes clear that each party determines for itself the existence of a violation. article four provides each party to separately authorized to maintain neutrality, making a separate obligation of each party. the senate's understanding accompanying ratification also made clear that article five allows each party to take unilateral action. senator jacob javits at the markup hearing said that while the world -- while the word unilateral is abrasive we can decide that neutrality is being

threatened and asked whatever means are necessary to keep the canal neutral and unilateral. i look forward to your questions. thank you -- chair cruz: thank you. our final witness and discuss the challenges faced by container lines moving goods to or from america through the panama canal. you are recognized for your opening statement. >> thank you chairman cruz, ranking member cantwell, and members of the committee. my name is joe kramek and i am president of the world shipping council. our membership consists of 90% of the worlds shipping tonnage. they operate on fixed schedules to provide our customers with regular service to ship their goods in throughout the world. our focus is on sustainable and secure international ocean transportation.

nothing could be more important to the u.s. economy and member lines who carry the trade that supports the u.s. economy than a sustainable and secure panama canal. as you have heard using the panama canal to transit between the atlantic and pacific saves time and money. a typical voyage from asia to the u.s. east coast to be made in 130 days using the canal while the day can take up to 40 days if they must take alternate routes. the big picture is this. one of the busiest trade lanes is the transpacific. the transpacific is cargo going to asia via the united states. focusing in, cargo from asia and bound for u.s. east coast ports always transits the panama canal. cargo being exported from u.s. and east coast ports, a large share of which are u.s. agricultural exports like soybeans, corn, cotton,

livestock and dairy almost always transit the panama canal. 75% of canal traffic originates in or is bound for the united states. examples include the port of houston ships exports, 14 billion in container trade to asia. new orleans exports 27 billion in trade to asia, not all of which is on container vessels. the port of new york and new jersey exported 16.5 billion in the port of savannah exported 13 billion to asia. our member lines are the largest users of the panama canal and we carry the bulk of this trait. global ocean trade is always facing challenges in the panama canal is no exception. we have talked about the drought in 2023 and the historic low water levels that it caused. a unique system that is a freshwater feed as contrasted to

an ocean to ocean system which the french tried and failed which is active in the suez canal. these low water levels reduced transits from 36 a day to as low as 22 per day. additionally the low water levels require the reduction in maximum allowable draft levels or the depth of the ship below the waterline which for our members reduce the amount of containers that can carry through the canal. this resulted in a 10% reduction in import volumes for u.s. golf and east coast ports with the port of houston experiencing a 26.7% reduction. looking forward, the volume of container trade into the united states remains a near record levels and continues to expand. train 24 numbers are just out at the impound trait to the 15%, which is second only to 17.5% inbound traffic we experienced

during the pandemic driven demand. just yesterday the port of houston reported record-breaking trade volumes with an 8% increase. wse member lines have transported goods to and from u.s. ports which represents 60% of all seaborne trade and contributed to trillion dollars in economic outputs to the united states, supported 6.4 million u.s. jobs and over 440 $2 million in wages and salaries. these goods are the clothes on your back, the shoes on your feet, and the phones in your hands. wsc members work with the committee. the record number of cargo our members continued to. demonstrates our commitment. we appreciate the committee's continued support and commitment to the liner shipping industry, the u.s. maritime industry, and i look forward to answering your

questions. thank you. chair cruz: we will now move to questioning. are you aware of allocations from some vessel operations of disparate treatment, such a sweetheart deals or favorable rebates by panama for canal transits? mr. sola: we have become aware through complaints by cruise lines who said they were not getting a refund of the canal tolls. when we looked into this we found an executive order that specifically says if a cruise line would stop at a certain port they could be refunded 100% of the fees. as far as ido that is the only instance -- as far as i know that is the only instance where that exists. mr. maffei: we continue to look into it. cruise ships is the one area where we have something that did that. chair cruz: some press coverage

says the panama canal is nominally independent even though it provides a large share of the panamanian government's revenue. chairman sola, can you describe how the fmc views the canal in the panamanian government? are they distinct entities or a single government apparatus? mr. sola: our law is clear and comes from the reading act of 1920 that there is only one entity. it addition to that our predecessor at the federal maritime commission was formed in 1916 in direct result of the panama canal. the very first chairman of that was the first administrator of the canal. we look at it as one entity. mr. maffei: i might just add it is like the georgia ports authority in the state of georgia. the georgia ports of party is clearly -- the georgia ports authority is fully independent

but ultimately georgia is responsible. chair cruz: panama was the first latin american country to join china's belt and road initiative and right now china is building a fourth bridge across the panama canal for part traffic and light rail. chairman sola, why should chinese construction of a bridge near panama city concerned the united states? mr. sola: we all saw the tragedy that happened at the francis scott key bridge incident and the devastation that happened to baltimore. we also saw what happened in the suez canal when we had a ship get stuck. it is not only the construction of the bridge by the removal of a bridge called the bridge of the americas built in 1961 and that would paralyze cargo traffic. chair cruz: panama also recently renewed the concessions for two container ports to a chinese company.

chinese companies are controlled by the communist party. how does china use control of those ports for economic gain? mr. sola: i am a regulator in the chinese ports you are referring to, let me put them in the scope, the one on the pacific is the same size as the port of houston and they do about 4 million containers a year. the one on the atlantic is the same as my hometown of miami. they do it by one million containers. where the port of houston generates $1 billion a year in miami does about $200 million the panama ports company paid zero for 20 years on that concession. it is hard to compete against zero. that is our economic concern we would have. chair cruz: anything to add on that? mr. maffei: i also think it is

important. i would point out you do not have to stop in either port. it is not like the ports control the entrance to the canal. however i think it is of concern. i would also point out that the panamanian government thinks it is of concern because they are conducting their own audit. we remain interested as well. chair cruz: kontorovich professor kontorovich i want to turn to the treaty. president trump has made important arguments that chinese control over canal infrastructure and exorbitant fees charged for canal transits are violations of neutrality treaty. i want to highlight three specific provisions. article four requires united states and panama to establish and maintain "a regime of neutrality." article five limits any foreign control by providing quote only the republic of panama shall operate the canal and maintain

military forces, defense sites, and military installations within its territory." an article 31 c requires that "tolls and other charges he just, reasonable, equity and consistent with the principles of international law." in your opinion could the facts discussed here because her violations of the neutrality treaty enforce right now between the united states and panama? prof. kontorovich: i think potentially they could. it is impossible to say definitively without knowing more, in particular about the degree of chinese control and involvement in these companies. it is important to note that these port operation companies that operate the ports, when they receive their first contract it was just a few months before hong kong was handed over to china. they received them as british companies a few months before

the handover. since then hong kong has incorporated -- has been incorporated into china and placed under a special national security regime and the independence of those companies have been greatly abridged, to say nothing of state owned companies involved elsewhere in the canal area which raises significantly greater questions. additionally i should point out the understanding between president carter and the panamanian leader which were attached to the treaty and form parts of the treaty provide the united states can defend of against any threat to the regime of neutrality and i understand that as providing some degree of preemptive authority to intervene. one need not wait until the canal is closed by some act of sabotage or aggression which would be devastating to the united states. there is some incipient ability to address potential violations. chair cruz: your final point

leads to my last question which is that if the united states determines panama is in violation of the treaty, what is the range of remedies united states would have for that treaty violation? prof. kontorovich: i think it may be shocking to people think here today, but when one goes over the ratification history and the debates and discussions in this body over the treaty it is clear the treaty was understood over giving both sides the right to use armed force to enforce the provisions of the treaty. it is not surprising when one understands the united states made an extra ordinary concession to panama by transferring this canal which the united states built and maintained and operated to panama gratis and in exchange it received a permanent limitation on panamanians sovereignty that

panama agreed the united states could enforce this regime of neutrality by force. armed force should never be the first recourse for any kind of international dispute and should not be arrived at rashly or before negotiations are exhausted. it is clear that the treaty counterpoints that as a remedy for violations. chair cruz: thank you very much. ranking member cantwell. sen. cantwell: thank you chairman. i think costs are critical. we are discussing costs. consumers pay more when shipping costs are higher, whether our farmers are trying to export products as we saw during covid or our products are getting left on the docks. importers are paying more if shipping costs are too high. when we look at these incidents we now see in our supply chain

and we had our own incident in seattle where the container ship lost power and was careening towards our big ferris wheel in the downtown right next to our terminal. luckily the passenger friendly vessels were able to push the tug from out of the direct path of severe devastation. now we mention the suez canal, we mention baltimore, we have our seattle experience, what do we need to do to make sure on the cost side that we are not -- that we are making the right investments from a security level to make sure these kinds of incidents that can do great harm to not happen. commissioner sola, since you are at u.s. southern command, what you think we need to do to renegotiate or have a conversation with the panamanians about the security level 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? 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. we should engage to get this right on the cost side and the security side. if i can just hear your comments on each of those? mr. kramek: even one incident is unacceptable. our members work from initially heart of the international maritime association and the u.s. and other entities to try to have the safest operations possible. accidents do occur. they are rare if you count the

number of port visits a year. what is unacceptable. continued investment in u.s. infrastructure and a review. we have a lot of old infrastructure as the tragic incident in baltimore illustrated. we have these bridges that need a look as to whether or not they need additional federate systems and the like -- additional fetterign systems and the like. our members continue to invest in the latest technology. we have over 600 new ships on order with some of the latest technology in the world. we are playing our role. sen. cantwell: and i want the u.s. to get a big portion of that. commissioner sola, what about a new u.s. southern command, u.s. government conversation with the canal authorities and the government about the security level we seek?

mr. sola: thank you very much. the airborne weighing i am wearing his decorative. i've not worn a uniform and 35 years. this is my personal experience. i believe the security of the canal has always been understood to be provided by the united states. panama models not have a military and i believe there is 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 do not believe it is in the treaty at all. sen. cantwell: so formalization of a cybersecurity agreement. you have accidents and then you have larger cybersecurity issues you have to be on top of. what i did not like about anybody that has a backdoor is i am for the united states advocating to not buy from people who have a government backdoor. what will you do?

at some point you will 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 the seachange is what everybody said. everybody thought this was hong kong and then it turned into china, we do not have an ambassador after that and when they made more aggressive postures, they are aggressive postures everywhere and that is why the united states is saying no government backdoor is in china and getting five other democracies to say the same thing and evangelize that every day will help us. what about getting the business or some of that back in a proximity under the audit? mr. maffei: the panama comptroller's office is investigating contracts at panamanian warts. we do not have jurisdiction over

panamanian boards -- overpay dominion ports per se. both of us heard many times that the panamanians would welcome u.s. companies coming in and doing a lot of this work. their bids are not competitive with the chinese bids. they are not that existed because the u.s. companies can make more money doing things other places. even if they were existed it is difficult to put into competitive bids when the chinese bids are subsidized by china. this is a problem and a problem in many areas of the world we could get into if you want. sen. cantwell: my time is expired but my major point is let's be a big maritime powerhouse, let's re-invite allies -- let's revitalize our supply chains, drive down costs for consumers comments appear what we need to secure. chair cruz: thank you senator

cantwell. commissioner maffei, you said the chinese bids were heavily subsidized by the chinese government. what with the chinese government incentive to be to subsidize those bids? mr. maffei: china has made no secret of its ambitious policy to gain influence imports throughout the globe. it runs a majority of 17 ports. that does not include this hong kong company. that is just direct chinese owned ports. it is been a part of their belt and road strategy, the maritime silk road for decades. they believe this influence, this investment in owning maritime ports is important to their economy. chair cruz: senator fischer? sen. fischer: i would like to follow up on the ports and where

we are on that. in 2021 hutchinson was awarded those two ports, port balboa and port cristobal in a no-bid award process. did you tell me, does the united states have any authority or recourse with the panama canal authority under our current agreement with panama to rebid those terminal concession contracts and perhaps mr. kontorovich, that is more your purview. mr. sola: both of those ports were redone for 25 years until 2047. they have to pay $7 million is what the rate is for the port of houston and the port of miami sized concessions. sen. fisher: can it can't be

rebid until after that date? mr. sola: i believe that is what the comptroller's office is auditing, both of those ports and that contract and that was done under the previous panamanian administration. a new administration came in and called for an audit for that immediately. sen. fisher: but you are talking about how to incentivize companies from the united states to participate in a bid process that does not seem to be reasonable and do you think the panamanians would welcome viable alternatives? are we in that position? mr. maffei: this is outside this though before the federal does. having looked at this issue carefully it is very important. senator cantwell just mentioned

xm bank programs. this is not been a huge priority of the united states to try to match these bids and create programs widely available to u.s. firms in order to put together more competitive bids and these companies where some of the domestic laws require you go to the lowest bidder sometimes. i think if you're looking for places to do u.s. policy to counter this i think you definitely want to look at whether the united states would be investing in infrastructure at important maritime locations all over the world. china certainly has done that and they've been doing it for 20 years and it is a cow that has long left the barn. sen. fisher: you mentioned

invested in infrastructure. i was at the panama canal in 2023 and i learned about the loss of freshwater with each ship movement through the canal. you talked about the drought in your opening comments. freshwater is vital to the workings with the canal. how effective do you think investment increasing that freshwater storage are? are they happening, are they viable? you touched on it in your opening comments. how do we see those investments happening so we can have operational stability? mr. maffei: it is a good question. there are several investments, there is water reclamation. the main player the u.s. army

corps of engineers has helped the panamanian authority development involves another basic expansion of bringing in more water and an elevation you could then use to continue the canal. there are issues with implementing that, not the least of which being indigenous people in those areas. not a huge number but certainly towns and things and negotiating that. it is viable. in that part of the world you can make more freshwater available to make the canal not be limited. it takes time and there'll be one more incident of severe limitations before that occurs then we get really likely. there could be more than that. sen. fisher: thank you, mr. chair. >> thank you chairman cruz and ranking member cantwell. at the heart of this hearing is a fundamental question about how

the u.s. will compete on the world stage and maintain our national security. these are the questions that will define the future of this country. for american families to see lower prices and better economic opportunities we have to meet this moment honestly and seriously and i am proud to have joint senators cantwell and blackburn to reintroduce the bipartisan promoting resilience supply chain act, legislation i led and authored in the house. this bill ensures we have a national strategy to address our broken supply chains, whether it is a bridge collapse, a major global conflict, or unions striking for their rights. interruptions and disruptions to our supply chains severely impact our economy. our bipartisan legislation tackles this issue by elevating supply chains like the disruptions at the panama canal to be proactive and strategic. it helps us understand how we

strengthen our ties with our friends and allies instead of pushing them into the arms of our competitors. i agree with ranking member cantwell that we should have a hearing on how we compete with countries like china. i have grave concerns about china's global infrastructure investments in any cyber threats to the u.s.. addressing these are our national security interests. with that i would like to shift to my first line of questioning for you, captain kramek. it is no secret the canal has had issues due to droughts nor is the increasingly frequent trout a new phenomenon. do you believe the canal authority did enough to anticipate the issues impacting the canal's operation? mr. kramek: thanks for your question. they did the best with the information they had. i do not know they anticipated a

trout of that magnitude. i would say going forward as commissioner maffei just discussed about the developing of a second reservoir and the u.s. army corps of engineers doing a feasibility review of that project as well as other projects that were mentioned, that seems to be a good path that seems to be a good path forward for the panama canal to 20 50 and beyond. sen. blunt rochester: it was recently started and time is of the essence. did you think the canal authority considered the obvious impacts from drought and its planning? >> we are going to break away for live coverage of the u.s. house briefly. you can continue watching on c-span.org or c-span now, the free video app. house lawmakers are holding a brief session, no votes are expected. speaker. th