WCA May 2011

From the americas

Statue of Liberty Image from BigStockPhoto.com Photographer: Marty

Trade

Facilitated by China, a rival to the Panama Canal may link the Atlantic and Pacific by rail across Colombia China is in talks with Colombia to build an alternative to the Panama Canal that would connect the South American country’s coasts by rail. As noted by the Financial Times (13 th February), a secondary effect of the “dry canal” initiative would be to spur Washington to push for Congressional approval of a stalled US-Colombia free-trade accord. If there is no movement on the pact this year the Colombians will likely seek other partners, so pressure for ratification is building in the United States. In an 11 th February interview in Bogotá, President Juan Manuel Santos of Colombia told the FT’s John Paul Rathbone and Naomi Mapstone that the proposal for the 137-mile rail link is “quite advanced” and that the feasibility studies made by the Chinese “all work out.” The line would run from the Pacific to a new city near Cartagena where imported Chinese goods are to be assembled for re-export throughout the Americas. Colombia-sourced raw materials would make the return journey to China. “I don’t want to create exaggerated expectations, but it makes a lot of sense,” Mr Santos told the reporters. “Asia is the new motor of the world economy.” Chinese and Colombian officials say talks are most advanced over an existing railway and expansion of the Pacific port of Buenaventura. That $7.6bn project, funded by the Chinese Development Bank and operated by China Railway Group, would move up to 40 million metric tons of cargo a year from Colombia’s economic heartland to the Pacific. Priority would be given to coal intended for China. Colombia is the world’s fifth-largest producer of coal, but most of it is exported via Atlantic ports even as demand is growing fastest across the Pacific. The FT reporters observed that the mooted rail link is the latest example of China’s increasingly pro-active lending to the developing world, as evidenced by Chinese banks having lent more to developing countries over the past two years than the World Bank. From documents seen by the FT, the project appears to be just one of a series of Chinese proposals that would boost transport links with Asia and improve Colombia’s creaking infrastructure – a priority of Mr Santos’s administration. ❖ Although Panama also has an 50-mile railway connecting both sides of the isthmus, currently the canal’s main competition is the rail link from California to the US eastern seaboard – fast, but expensive. A question worth considering is whether the proposed rail line would be a more attractive expedient than the canal, which is only a third as long and undergoing a $5.25 billion expansion to double its capacity. Even if it not cheaper or faster, the proposed rail link would be a striking example of China’s incursion into what the US once considered its backyard.

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Wire & Cable ASIA – May/June 2011