When the Panama Canal expansion is finally finished next year, the canal will have two new features: the ability to serve ships that can carry up to three times as many containers as it can currently handle, and the ability to serve liquified natural gas carriers, which it currently cannot handle at all. It is not entirely clear what effects this will have on world trade, but Panama’s hope is that, in spite of a recent shipbuilding trend toward vessels so large they will exceed even the acceptable “post-Panamax” canal dimensions, the expansion will still help to make it cheaper for the consumers and commodities of the Atlantic world to access the industrial economies of the Asia-Pacific.

There has indeed already been a great deal of analysis as to how the canal expansion might influence the United States, China, and Japan. While such attention is hardly unwarranted — these three nations alone account for almost half of the global economy — it has nevertheless managed to overlook a number of smaller countries that could be impacted the most by the canal. In this article we will attempt a quick overview of ten of these countries (in no particular order), identifying five which may be among the greatest beneficiaries of the canal expansion, and five which may have the most to fear from it. So, let’s get started:

The Winners: 

South Korea, Taiwan, Trinidad, Colombia, and El Salvador 

South Korea and Taiwan 

Looking at liquified natural gas (LNG) markets may be the key to understanding which economies will benefit most from the expanded canal over the medium-term, since: a) LNG cannot today pass through the canal at all, but will be able to post-expansion; b) natural gas prices in 2015 have often been around 5-10 times higher in East Asia than in North America, and close to twice as high in Japan as in the European Union; and c) the shale boom has unlocked gigantic supplies of natural gas near the Gulf of Mexico around states like Texas and Louisiana, where there are already a large number of LNG import facilities that could be converted into export facilities. The existence of these facilities is significant, as it is considerably cheaper and faster to retrofit an existing plant than it is to build an LNG export terminal from scratch.

The US, to be sure, currently has the greatest number of LNG export projects in the world being planned, with the vast majority of these located along its Gulf coast, not so far away from Panama. Even though only one of these American projects, Louisiana’s Sabine Pass, is expected to be finished prior to 2019, the early 2020’s could see many more come to fruition.

Similarly, in Canada, which is the world’s fourth largest natural gas producer, the only existing LNG facility in the country is also located on the Atlantic coast, in New Brunswick. This too may soon be repurposed for exports. It will be particularly likely to happen if the New Brunswick government decides to give the go-ahead for the development of shale resources in the province, as it has been discussing of late, or if the British Colombian government decides that constructing LNG export facilities alongside its pristine Pacific rainforests is too expensive and environmentally risky, which would leave New Brunswick’s as the only LNG terminal in the country.

A typical assumption has been that Japan will be the primary beneficiary of this situation, since Japan has accounted for around 40% of the world’s LNG imports in recent years, far more than any other country has. There are, however, caveats to this assumption, which are often pointed out. These include the fact that Japan’s LNG imports could quickly fall by a large amount if it decides to bring its nuclear power plants, which were shut off following the Fukushima disaster in 2011, back online; the fact that the Chinese government could drive up Asian LNG prices over the next decade if it tries to switch over its energy sector from coal to natural gas at a breakneck speed; or the fact the US could choose to block its domestic natural gas exports (just as it has already made exporting American oil overseas illegal) in order to help keep gas cheap for its own consumers.

While these caveats are noteworthy, there is an even more important point that is more often overlooked: namely, that Japan imports so much LNG primarily because its economy is so enormous; it is actually not nearly as dependent on LNG imports as it appears, once you adjust for GDP size. A similar thing is true of China, which has also become a significant LNG importer in recent years. Per dollar of GDP, the economies of Japan and China are not very dependent on LNG when compared to their neighbors South Korea and Taiwan. Adjusting for GDP size, South Korea and Taiwan are about 1.8 and 1.4 times more dependent on LNG imports than Japan is, and 15 and 12 times more dependent on LNG imports than China is.