The Taiwanese diplomatic delegation lowered the flag of its embassy in Panama after the diplomatic relations between both countries were severed when Panama announced new ties with China, and held a private farewell ceremony.
Held on the rooftop of the building in the capital's financial district where the embassy is located, Wednesday's event was not open to the media and was attended only by the diplomatic delegation and several Taiwanese citizens based in Panama, reports Efe news.
The Taiwanese government, which described Panama's decision as an unfair act, said on Tuesday that it will withdraw all staff from its embassy as well as its technical mission in Panama and will suspend all assistance and bilateral cooperation programs, although the dates have not been specified.
Varela said that a responsible President could not keep turning his back on China, as the Asian giant is the second most important user of the Panama Canal as well as the top supplier of the Colon Free Trade Zone (ZLC), the largest in the hemisphere.
An hour after Varela's announcement, Panama and China's foreign ministers, Isabel de Saint Malo and Wang Yi, signed a joint communique on establishing new diplomatic relations in Beijing and agreed to start working on the first bilateral agreements in sectors such as tourism, agriculture, maritime affairs and education.
The Chamber of Commerce, Industries and Agriculture of Panama (CCIAP), which represents more than 1,600 companies from 15 economic sectors, said on Tuesday that it hopes that a common strategy will be developed with Taiwan to stabilise trade and investment relations in the future.
The CCIAP was also confident that the establishment of diplomatic ties between Panama and China will bring "benefits" to the country in terms of trade and investment in areas such as technology and logistics.
Panama's breakdown of relations with Taiwan leaves the Asian nation with only 20 diplomatic allies in the world, 11 of which are in Latin America.
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