The canal has emerged as a flashpoint between the two nations, as US President Donald Trump has repeatedly insisted that the United States must retake the waterway key to global trade due to his claims of undue Chinese influence.
The Panama Canal serves as a vital trade route, connecting the Atlantic and Pacific Oceans and facilitating 40 per cent of US container traffic.
"We cannot allow any foreign power - particularly China - to hold that kind of potential control over it that they do," Rubio said. "That just can't continue."
In remarks to reporters, Mulino suggested a possible expansion of an existing agreement with the United States from last July that could pave the way for direct deportations of non-Panamanian migrants who cross the Darien Gap jungle on Panama's southern border with Colombia.
He insisted, however, that the US government would need to cover the cost.
Over the past few years, the area has seen a surge of US-bound migrants.
The Panamanian leader noted that such an expanded deal could potentially allow for the deportation of migrants from Venezuela, Colombia and Ecuador.
Mulino said talks on migration headed the agenda with the visiting US secretary of state. (EPA PHOTO)
"We spoke extensively about the problem of migration, with the understanding that Panama is a transit point," said Mulino, after his meeting with Rubio.
Mulino's talks with Rubio, Trump's top diplomatic envoy, mark a first stop for Rubio on a tour of several Central American nations as well as the Dominican Republic over the next few days.
