Panama denies State Dept claims that US government vessels can now transit canal without fees

The Panama Canal Authority said in a statement late on Wednesday that it had not made any changes to charges or rights to cross the canal, after the US State Department said that US government vessels could transit the crossing without being subject to such fees.

"With total responsibility, the Panama Canal Authority, as it has indicated, is willing to establish dialogue with relevant US officials regarding the transit of wartime vessels from said country," the authority said.

"The government of Panama has agreed to no longer charge fees for US Government vessels to transit the Panama Canal," the department had said in a post on social media.

It said the agreement would save the US Government millions of dollars each year.

US Secretary of State Marco Rubio met with Panama's President Jose Raul Mulino on Sunday during a trip to Central America.

Panama has became a focal point of the Trump administration as President Donald Trump has accused the Central American country of charging excessive rates to use its passage.

"If the principles, both moral and legal, of this magnanimous gesture of giving are not followed, then we will demand that the Panama Canal be returned to us, in full, and without question," Trump said last month.

Mulino has dismissed Trump's threat that the US retake control of the canal, which it largely built. The US administered territory surrounding the passage for decades.

But the US and Panama signed a pair of accords in 1977 that paved the way for the canal's return to full Panamanian control. The United States handed it over in 1999 after a period of joint administration.

(Reporting by Jasper Ward and Elida Moreno; Editing by Kim Coghill and Noeleen Walder)