PANAMA CITY, PANAMA -- Panama’s July 14 seizure of a North Korean-flagged freighter carrying undeclared military cargo came just days after South Korea announced its intention to explore a free trade agreement with the Central American nation.
“We are promoting the investment of Korean companies in Panama to reinforce trade,” said Cho Byoung-lip, South Korean ambassador to Panama. “In this sense, the signing of an FTA between the two countries will serve as a catalyst for the promotion of trade and investment.”
In Panama, the relationship with the two Koreas couldn’t be more different.
As Panama continued to search the freighter Chong Chon Gong this week for military equipment that Cuba said was being sent to North Korea for repair but was buried under sacks of sugar, relations with South Korea were on an upward track.
Seoul said it appreciated Panama’s seizure of the freighter and its suspicious cargo. “If the shipment turns out to be in breach of U.N. resolutions, we expect the U.N. Security Council’s sanctions committee to take relevant steps expeditiously,’’ said a South Korean foreign ministry official last week.
Panama doesn’t maintain diplomatic ties with the Democratic People’s Republic of Korea, the formal name of North Korea.
But diplomatic relations with South Korea go back more than 50 years and Panama has intensively courted South Korea (the Republic of Korea) since 2009 as part of President Ricardo Martinelli’s aggressive policy of opening Panama to global business.
The Asian nation has responded by increasing political, economic and cultural commitments. In 2011, it invested $76.4 million in Panama and increased investments to $105.6 million in 2012.
More than 17 South Korean multinationals already operate in Panama — including Samsung, LG, the Korea Exchange Bank, Kia Motors, Hyundai, Daewoo and Hankook — using Panama and its free trade zone in Colón as a hub for their regional activity.
Hyundai leads car sales in the Panamanian market.
Korean imports between 2002 and 2012 grew from $63.5 million to more than $356 million as Panamanian exports to Korea expanded from just $49,920 to nearly $25 million, according to the Panama Ministry of Commerce and Trade.
Panama’s main exports to South Korea include scrap metal, shrimp and roasted coffee, and it is pushing to diversify into other exports such as beef. Panama imports automobiles, construction-grade iron and steel, bus and truck tires, heavy machinery and the valves that will regulate the chambers of the expanded Panama Canal.
A South Korean consortium led by state-run Korea Resources Corp. also has a 20 percent stake in a 30-year concession to exploit the $6.2 billion Cobre Panama project, one of the world’s largest undeveloped copper mines, located 75 miles west of Panama City.
Panama, one of the few nations to maintain a two-China policy, has a one Korea policy.
“Panama is a traditional political ally of Korea,” Cho said. “With respect to the matters of the Korean Peninsula, Panama has supported the position of South Korea, and both nations showed close cooperation during the third nuclear test last February,” he added, referring to North Korea’s underground nuclear test — the largest to date.
In 2010, South Korea and Panama celebrated 50 years of mutual prosperity and peace with the visit of former South Korean President Lee Myung-bak, the first meeting of heads of state from both nations since diplomatic relations were established in 1962.