Identifier
Created
Classification
Origin
06HONGKONG2373
2006-06-08 09:04:00
CONFIDENTIAL//NOFORN
Consulate Hong Kong
Cable title:  

MEGAPORTS - BILATERAL MEETING ADVANCES

Tags:  ENRG PTER PREL PGOV ECON EWWT HK CH 
pdf how-to read a cable
VZCZCXYZ0003
PP RUEHWEB

DE RUEHHK #2373/01 1590904
ZNY CCCCC ZZH
P 080904Z JUN 06
FM AMCONSUL HONG KONG
TO RUEHKO/AMEMBASSY TOKYO PRIORITY 4105
RUEHC/SECSTATE WASHDC PRIORITY 7154
RHMFISS/DEPT OF HOMELAND SECURITY WASHINGTON DC PRIORITY
RHMFISS/DEPT OF ENERGY WASHINGTON DC PRIORITY
RULSDMK/DEPT OF TRANSPORTATION WASHDC PRIORITY
RHEHNSC/NSC WASHDC PRIORITY
C O N F I D E N T I A L HONG KONG 002373 

SIPDIS

NOFORN
SIPDIS

DEPT FOR EAP GDAVIES AND WCOMLEY
EAP/CM RGOLDBERG/RFORDEN/KBENNETT EB/TRA DHAYWOOD, ISN/ECC
KCROUCH/JWORDEN, OES CDIAMOND, INL DGORDNER, S/CT SKONTOS
NSC FOR WILDER
ICE FOR JMYERS, JCLARK, DBROWN
CBP/INA FOR CONTAINER SECURITY DIVISION
TOKYO FOR ENERGY ATTACHE JMILLER
ENERGY/NNSA FOR DHUIZENGA, JGERRARD, WKILMARTIN

E.O. 12958: DECL: 06/08/2030
TAGS: ENRG PTER PREL PGOV ECON EWWT HK CH
SUBJECT: MEGAPORTS - BILATERAL MEETING ADVANCES
RADIOLOGICAL MONITORING

REF: A. HONG KONG 588

B. HONG KONG 979

Classified By: Economic Political Chief Simon Schuchat.
Reasons: 1.4 (b,d).

C O N F I D E N T I A L HONG KONG 002373

SIPDIS

NOFORN
SIPDIS

DEPT FOR EAP GDAVIES AND WCOMLEY
EAP/CM RGOLDBERG/RFORDEN/KBENNETT EB/TRA DHAYWOOD, ISN/ECC
KCROUCH/JWORDEN, OES CDIAMOND, INL DGORDNER, S/CT SKONTOS
NSC FOR WILDER
ICE FOR JMYERS, JCLARK, DBROWN
CBP/INA FOR CONTAINER SECURITY DIVISION
TOKYO FOR ENERGY ATTACHE JMILLER
ENERGY/NNSA FOR DHUIZENGA, JGERRARD, WKILMARTIN

E.O. 12958: DECL: 06/08/2030
TAGS: ENRG PTER PREL PGOV ECON EWWT HK CH
SUBJECT: MEGAPORTS - BILATERAL MEETING ADVANCES
RADIOLOGICAL MONITORING

REF: A. HONG KONG 588

B. HONG KONG 979

Classified By: Economic Political Chief Simon Schuchat.
Reasons: 1.4 (b,d).


1. (C) SUMMARY. On May 28-29, National Nuclear Security
Administration (NNSA) Assistant Deputy Administrator David
Huizenga led an inter-agency delegation (Departments of
Energy, Homeland Security, and State) to Hong Kong to discuss
next steps in the USG's proposed implementation of the
Megaports Initiative. Huizenga laid out an end-state vision
of a fully operational radiation detection system for
containerized cargo moving through Hong Kong, enhanced by
container imaging information and the provision of
information on U.S.-bound containers to U.S. Container
Security Initiative (CSI) officials. Hong Kong Government
(HKG) officials said that they were considering Megaports
among a number of options for responding to the need for
improved container security. The HKG also asked for more
time to finalize its plan for improving security at the Port
of Hong Kong. During the meeting with Huizenga, HKG
officials asked questions about program costs, potential
impacts on port operations, and the effectiveness of the
program. During separate meetings, Hong Kong and South
China terminal operators expressed a willingness to support
any specific container security initiatives presented by the
United States. However, they queried Huizenga about the
benefits of the Megaports program and how they would be able
to maintain competitiveness with other ports in South China,

as well as recoup the costs of installing the technology and
reviewing the cargo scans. End summary.

-------------- --------------
Hong Kong Government Has Yet to Endorse Megaports Initiative
-------------- --------------


2. (C) In a meeting on May 29, HKG Commerce, Industry and
Technology Bureau Principal Assistant Secretary David Leung
told an inter-agency delegation, led by National Nuclear
Security Administration (NNSA) Assistant Deputy Administrator
David Huizenga, that the HKG was still deliberating on the
U.S. Department of Energy's proposed Memorandum of
Understanding on the Megaports initiative. Without providing
specifics, Leung said that the HKG was considering a number
of government and private sector-led programs for the
prevention of illicit trafficking of nuclear and other
radioactive materials. He urged the USG not to limit the
HKG's options by moving ahead with a government-private
partnership with the Port of Hong Kong before the Government
of Hong Kong determines what measures it will institute to
screen cargo for nuclear and radiological material. Leung
also asked questions about the projected cost of the
Megaports project, and requested that Huizenga's delegation
provide a cost estimate. Huizenga advised that costs vary
from port-to-port, but that the Megaports Program budgets
approximately USD $15 million per seaport.


3. (C) HKG Commerce, Industry and Technology Bureau Deputy
Secretary Mary S.C. Chow questioned Huizenga's delegation

SIPDIS
about overall development of the Megaports initiative
globally and the potential impact of Megaports on port
operations. Huizenga responded that the USG is very serious
about cooperating with governments around the world to
implement Megaports to enhance global container port
security. Megaports is currently operational in the ports of
Rotterdam, the Netherlands; Piraeus, Greece; Freeport,
Bahamas; Colombo, Sri Lanka; Algeciras, Spain; and Singapore.
Megaports projects are under development in the ports of
Laem Chabang, Thailand; Haifa, Israel; Manila, the
Philippines; Antwerp, Belgium; Salalah, Oman; Puerto Cortes,
Honduras; and Dubai, United Arab Emirates.


4. (C) Huizenga emphasized that the U.S. Government would
work closely with Hong Kong Customs and terminal operators to
ensure that Megaports was seamlessly incorporated into the
Port,s terminal operations to minimize delays. Huizenga
also highlighted new radiation portal monitor technology that


may soon be available that would improve the overall
operability of Megaports systems. Alarm rates at the Port of
Rotterdam were also discussed. DOE/NNSA had arranged for HKG
officials to visit the Port of Rotterdam the week before
Huizenaga,s visit. In commenting on the visit to Rotterdam,
the HKG relayed that the Dutch advised Hong Kong that primary
alarm rates averaged approximately 2.8 percent, and that the
volume of alarms and ensuing secondary inspections was
manageable, and that the impact on the port,s operations was
also manageable. U.S. Customs and Border Protection (CBP)
Interdiction and Security (Technology) Office Director Todd
Hoffman speculated that compared to Rotterdam, Hong Kong
would likely have relatively few alarms for radioactive
materials since the Port of Hong Kong exports mainly finished
goods.


5. (C) Chow expressed concern over whether the U.S. planned
to screen transshipped cargo that moved ship to ship.
Huizenga acknowledged that it was difficult to perform
radiological scans of this type of cargo, and said that the
USG's priority was to scan cargo that arrived through the
"gate" of the port irrespective of its destination, or was
offloaded from river barges onto the docks before being
reloaded on container vessels, especially those containers
bound for the U.S. According to Hong Kong Customs, only 19
percent of Hong Kong's container cargo is transshipped from
ship to ship, and the majority of that is for intra-Asian
trade; therefore, the opportunity for U.S. bound cargo to
pass through Hong Kong uninspected for radiological material
was slim. In addition, according to CBP Program Manager
Patrick Simmons, the USG is also expanding radiological
screening of inbound cargo, with a goal of screening 98
percent of inbound cargo at U.S. ports by the end of 2007.

-------------- --------------
Inconclusive First-Round Test Results for the Integrated
Container Inspection System (ICIS) in Hong Kong
-------------- --------------


6. (C) The Megaports radiological monitoring equipment can be
incorporated into an Integrated Container Inspection System
(ICIS),which also includes X-ray imaging and container and
vehicle identification. Modern Terminals and Hong Kong
International Terminals (HIT) have tested ICIS, developed by
Science Applications International Corp (SAIC),for almost
two years. Although the systems function smoothly in
gathering data, they have produced inconclusive results as a
result of the high levels of naturally occurring background
radiation at the port, according to Hoffman. Background
radiation is approximately five times the levels found in the
US due to the presence of radioactive thorium sand in the
concrete. (This is a problem that the Megaports Initiative
has encountered and mitigated elsewhere in Asia.)


7. (C) Hoffman said that, to improve the accuracy of the ICIS
radiological detection equipment, SAIC should decrease the
lane width and shields the lane from background radiation. A
new data set would help to confirm that the ICIS system could
work effectively in Hong Kong. The second operational test
will also be used to evaluate whether Container Security
Initiative,s (CSI) U.S.-based officials could assist in
resolving container alarms to reduce the resource burden on
Hong Kong Customs.


8. (C) During the meeting with the HKG, CSI Evaluations and
Assessments Chief Todd Horton said that CSI hoped to receive
the HKG's approval for a pilot proposal to allow radiation
and imaging data from ICIS on U.S.-bound cargo to be
transmitted back to the United States for review. Horton
explained that this would significantly reduce the resource
requirements on Hong Kong Customs because U.S. Customs
officials could provide initial assessments of suspect
containers, and only refer unresolvable cases to Hong Kong
Customs for secondary inspections. Horton estimated that
secondary inspections would require about 5 to 30 minutes.
Leung responded that because the Integrated Container
Inspection System currently under testing at the Port of Hong
Kong is a commercial partnership and has no government


involvement, the HKG would leave the decision at this stage
on whether to send data back to the U.S. to the terminal
operators. Leung also urged the USG not to limit the HKG's
options by moving ahead and advising the Hong Kong terminal
operators of USG support for the ICIS concept before the
Government of Hong Kong determines what measures it will
institute to screen cargo for nuclear and radiological
material.


9. (C) At a subsequent meeting with the Consul General,
Hoffman said that CBP planned to use the next 90 days to
optimize the ICIS technology at the Hong Kong port terminals
so that a new test could confirm the effectiveness of the
radiological screening device. Both Hoffman and Huizenga
expected to have a new set of results in about 120 days.

-------------- --------------
Hong Kong and South China Terminal Operators Pledge to
Support Specific USG Container Security Initiatives
-------------- --------------


10. (U) On the afternoon of May 29, the Huizenga delegation
met at Modern Terminals with representatives from Hutchison
Port Holdings, Modern Terminals, Yantian Terminals, Shekou
Terminals, DP World, and Asia Container Terminals. For the
port operators, Yantian Terminals Director and General
Manager Kenneth Tse led the discussion. Modern Terminals
Logistics General Manager Jessie Chung and also contributed.


11. (C) Tse summarized the port operators' key points as
follows:

-- Hong Kong and Southern China terminal operators would not
use container security measures to gain a competitive
advantage over one another (i.e., they all wanted to use the
same system).

-- The port operators placed a high importance on port
security, and would support any specific initiatives that the
USG proposed. However, given that the USG has only done a
"pilot" so far with inconclusive results, the port operators
and the Hong Kong Shippers Council had yet to hear a strong
message from the USG about its desire to proceed with either
the Megaports or ICIS initiative.

-- Once the USG has optimized its technology for the local
conditions and reached agreement on a final plan with the
HKG, the terminal operators estimated that it would take
about 6 months to acquire and install the technology.

-- Tse noted the importance of positive incentives and asked
the USG delegation whether any the installation of
radiological portals would result in any benefits, such as a
so-called green lane into U.S. ports.

-- Hutchison Port Holdings Americas Senior Vice President
Gary Gilbert emphasized that terminal operators would have to
ensure that they could recoup their costs by installing
radiological equipment. He asked whether the USG had any
ideas about how to ensure that shippers compensated the port
operators for installing and maintaining any new security
package. He also advised that all South China terminal
operators would install the same equipment and charge the
same security fee downstream to ensure a level playing field
and recoup security investment costs.

-- Finally, Tse expressed a willingness to provide the USG
with whatever container information was necessary to complete
the testing of the Megaports concept in HK.


12. (C) Huizenga emphasized repeatedly that the USG placed a
high importance on implementing Megaports. Huizenga
committed to following up with SAIC to tailor the ICIS
technology to include radiation shielding. Huizenga
emphasized that Hong Kong's compliance would make it a world
leader and role model in container port security.

--------------


Participants
--------------


13. (U) Participants in the meetings are listed below.

From the HKG (on the morning of May 29):

Mary Chow, Commerce, Industry, and Technology Bureau (CITB)
Deputy Secretary
David Leung, CITB Principal Assistant Secretary
Vivien Li, CITB Assistant Secretary
Manda Chan, Principal Assistant Secretary for Security
K.M. Fung, Economic Development and Labour Bureau (EDLB)
Principal
Assistant Secretary

K. Chow, Customs and Excise Department Assistant Commissioner
for
Boundary and Ports
C.F. Li, Customs Senior Superintendent at the Ports and
Maritime
Command
Kenneth Chu, Senior Customs Inspector
Billy K.S. Au, Trade and Industry Department Principal Trade
Officer

From the USG:

David Huizenga, Assistant Deputy Administrator, DOE/NNSA
Jeff Miller, DOE Energy Attache to Japan
Michael Fink, Megaports Initiative, NNSA/DOE
Daniel Hartnett, Foreign Affairs Specialist, NNSA/DOE
Andrew Grant, Acting Deputy Director, WMD Terrorism Office,
Department of State
Todd Hoffman, Director, Interdiction and Security Office of
Field Operations, U.S. Customs and Border Patrol (CBP)
Todd Horton. Chief of Evaluations and Assessments, Container
Security Initiative, CBP
Patrick Simmons, CBP Program Manager
Scott Purvis, Department of Homeland Security (DHS) Systems
Architect
Lauren Zucker, Policy Analyst, DHS
Jacob Aguilar, CBP Officer
Charles Massey, MARSEC Group Partner and DOE Contractor
Thomas Howe, Immigration and Customs Enforcement Attache
Joseph Klaus, CSI Team Leader
Political Officer Dusty Clayton

From the Container Terminal Operators (on the afternoon of
May 29):

Kenneth Tse, Director and General Manager, Yantian
International Container Terminals (a member of the Hutchison
Port Holdings (HPH) Group)
Jessie Chung, General Manager Logistics, Modern Terminals
(MTL)
Gary Gilbert, Senior Vice President for the Americas, HPH
Ben Kong, Hong Kong Customer Service Manager, DP World
Alice Ho, Chief Financial Officer, Shekou Container Terminals
Ltd
Gloria Lo, CSI Service Development Manager, HPH
Jessica Ng, Commercial Manager,
George Chu, Senior Manager, CSI Service Strategy, HPH
John Kok, General Manager, CSI, HPH
Ken Chou, General Manager Commercial Development, HPH
Paul Ho, Safety and Security Manager, Hong Kong International
Terminals (a member of HPH)
Lawrence Shum, Company Secretary for Yantian International
Container Terminals
Gloria Choy, Operations and Engineering Director, Asia
Container Terminals Ltd
Libra Ng, Logistics Manager, MTL
Ivy Yip, Assistant Logistics Manager, MTL

From SAIC (on May 28 for an ICIS tours at HIT and MTL for USG
participants):

Terry Gibson, Vice President, Business Development (also
attended meeting on afternoon of May 29 with port operators)



Keith Saunders, Business Development Manager
Adrian Stoian, R&D Project Manager


14. (U) This cable has been reviewed by the Department of
Homeland Security and the Department of Energy.


Cunningham