Sen. Ted Cruz (R-TX), the chairman of the Senate Commerce, Science, and Transportation Committee, discussed a scenario in which China could disrupt U.S. trade by blocking off the canal. 

“Chinese companies are right now building a bridge across the canal at a slow pace so as to take nearly a decade. And Chinese companies control container ports at either end. The partially-completed bridge gives China the ability to block the canal without warning and the ports give China ready observation posts to time that action,” Cruz said during his opening remarks. “This situation, I believe, poses acute risks to U.S. national security.”

The Texas senator also raised concerns about what he called “high fees for canal transit” that “disproportionately affect Americans.” 

“U.S. cargo accounts for nearly three-quarters of canal transits. U.S. Navy vessels pay additional fees that apply only to warships. Canal profits regularly exceed $3 billion this money comes from both American taxpayers and consumers in the form of higher cost for good,” Cruz added.

Sen. Maria Cantwell (D-WA), the ranking member of the panel, also expressed concern about Chinese-owned ports and “their proximity to the canal.” Ports on both ends of the canal are owned by Hutchinson, a Hong Kong-based company that they fear could be subject to Chinese influence. 

“I am concerned about Chinese-owned ports in Panama and their proximity to the canal,” she said during her opening statement. “I’m also deeply concerned about the installation of Chinese equipment from Huawei and Chinese companies near the canal.”

The hearing before the committee comes as President Donald Trump has vowed that the United States would take back the Panama Canal, accusing the country of charging America “exorbitant rates” to use it and appearing to hint at Chinese influence over the waterway. Trump has not been clear on how he intends to reclaim the canal, nor did the hearing give any clarity.

The head of the Federal Maritime Commission testified that American companies need to be pursuing development contracts in Panama in order to take back influence.

“Chinese companies have been able to pursue billions of dollars in development contracts in Panama, many of which were projects directly on or adjacent to the Panama Canal. Many were no-bid contracts,” said Louis E. Sola, Federal Maritime Commission chairman.

“We need to increase support for American companies seeking to do business in Panama and throughout the Americas. Chinese companies must not be the sole bidders on contracts,” he said in his testimony.

Panama had denied claims of Chinese influence, with President José Raúl Mulino stating that “there is no presence of any nation in the world that interferes with our administration,” according to the Associated Press.

The Panama Canal connects the Pacific and Atlantic through Panama. In 1905, Panama granted the U.S. rights to build and administer the canal. It was the single most expensive construction project in U.S. history at the time, costing approximately $375,000,000, or $15 billion today. 

It was operated entirely by the U.S. government from its opening in 1914 until 1977. Negotiations and treaty stipulations negotiated under President Jimmy Carter slowly ceded control to the Panamanian government until 1999.

More than 40% of U.S. container traffic, valued at roughly $270 billion annually, transits the Panama Canal, a point Joseph Kramek, president and CEO of the World Shipping Council, highlighted in his testimony. 

“Cargo coming from Asia and bound for the U.S. Gulf and East Coast ports always transits the Panama Canal. Similarly, cargo being exported from U.S. East Coast ports, a large share of which are U.S. agricultural exports, like soybeans, corn, cotton, livestock, and dairy, also almost always transits the Panama Canal,” Kramek said. “The result is that 75% of canal traffic originates in or is bound for the United States.”

The hearing comes as Secretary of State Marco Rubio plans to visit Panama as part of a trip to Latin America next week, part of his first trip in his new role. He also plans to visit Guatemala, El Salvador, Costa Rica and the Dominican Republic, according to the State Department.