PORT SECURITY: STRENGTHENING THE FIRST LINE OF

C O N F I D E N T I A L SECTION 01 OF 03 HONG KONG 002650

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NOFORN
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DEPT FOR EAP GDAVIES AND ISN/NC FRECORD
NSC FOR ROOD AND WILDER
ENERGY/NNSA FOR JPAUL/DHUIZENGA
DHS FOR DEPUTY SECRETARY JACKSON
CBP FOR WRBASHAM/JAHERN/DKTHOMPSON

E.O. 12958: DECL: 06/27/2031
TAGS: PTER PREL PGOV ECON EWWT HK CH
SUBJECT: PORT SECURITY: STRENGTHENING THE FIRST LINE OF
DEFENSE IN HONG KONG

REF: A. A) HONG KONG 588

B. B) HONG KONG 1467

C. C) HONG KONG 1470

D. D) HONG KONG 1468

E. E) HONG KONG 2373

Classified By: Consul General James B. Cunningham. Reasons: 1.4 (b,d).

Summary
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1. (C) We have the opportunity in Hong Kong to establish the
world standard the U.S. seeks for port and container
security. U.S. views will have decisive impact on Hong
Kong,s future direction, and on the region as well. The May
28-29 visit of DOE Assistant Deputy Administrator Huizenga's
interagency team (Ref E) built on Secretary Chertoff,s visit
(reftels B, C and D). In the course of his discussions on
Megaports and radiation screening, Huizenga confirmed that
the U.S. in principle wants a container screening
architecture that combines private sector-provided imaging
and radiation detection. If that is the U.S. intention, we
should move now to take the discussion to the next level. If
we can flesh out this vision, and elaborate a concept of
operations, even as technical refinements are being developed
and tested, we can address the concerns of Hong Kong
partners in government and industry who are disposed to work
with us to make this architecture a functioning reality. In
sum, if we want to use Hong Kong to set the world standard
for cargo inspection, the U.S. needs a coordinated and clear
message of what we intend, and how the parts fit together.
With that message, we can engage the HKG and the terminal
operators to bring them on board. End summary.


2. (C) The container screening architecture established in
Hong Kong should have global repercussions, given the
importance of Hong Kong for shipping to the U.S. (and Europe)
and the global footprint of Hong Kong's port terminal
operators. Their facilities handle at some point 37 percent
of worldwide cargo. In 2005, Hong Kong's port shipped more
cargo to the U.S. than any other port in the world. Hong
Kong-headquartered Hutchison's facilities around the world
alone handle 45 percent of all U.S. cargo at some point
before entry into the U.S. Since the Hong Kong port security
architecture will likely become the standard for mainland
ports as well, at least in Southern China, its impact on
shipping to the U.S. will be further magnified. We
understand that Hong Kong is the only port that is testing
anything like the private-industry Integrated Container
Inspection System (ICIS),which combines radiological and
x-ray scanning, cargo tagging, and maintenance of electronic
files on every screened container. Li Ka-Shing made clear in
his meeting with Secretary Chertoff (Ref C) that Hutchison is
firmly behind the ICIS concept, if that's how the U.S.
decides to go.


3. (C) Following the Huizenga visit, the Hong Kong Government
(HKG) wants more information about the details of the U.S.
model before we nail down something with private industry.
That is, the HKG does not want to be presented with a fait
accompli, since implementation will undoubtedly have resource
and other implications. However, this desire for
consultation in advance of a final decision should not be
mistaken for a lack of interest, or for opposition.


4. (C) The HKG wants both to enhance security and to maintain
the leading role of its port as long as possible, in the face
of intense competition from mainland facilities in Shenzhen
and Shanghai. The Government is concerned that container
security measures not obstruct port operations, create

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competitive disadvantages, or create a large additional
workload for Hong Kong Customs. They want more clarity on
Hong Kong and U.S. responsibilities under a new
CSI/ICIS/Megaports architecture. They would hope to see a
commercial advantage for the ports whose terminal operators
participate in U.S.-mandated screening, but the key thing is
that they not be disadvantaged. Chief Executive Donald Tsang
stressed to me the need not to disrupt in-stream transfers
from ship to ship, e.g., by requiring all containers to touch
land (in fact, we are told that almost no containers get
loaded onto a U.S.-bound vessel without going through the
terminal portal on land.) The Government, the terminal
operators and the shippers all hope that containers that pass
through robust radiological screening and imaging could be
"green laned" when they reach the U.S.


5. (C) For their part, terminal operators in Hong Kong and
the region have made clear, including in a May 30 letter to
Secretary Chertoff, that they are willing to cooperate but

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are still looking for a firm signal from the U.S. on the
concept it intends to pursue, and on U.S. commitment. The
Huizenga team meeting with regional terminal operators made
the point that the operators will not use security as a
competitive factor, and that they all want to use the same
standard. Terminal operators here are confident that
virtually 100 percent x-ray scanning and radiation screening
of traffic bound for the U.S. (as well as other traffic
entering their terminals) is possible. They too need
reassurance about what will be done with the information
obtained at their expense. The operators would like to
enhance the security of the global maritime transportation
system, not just traffic going to the U.S. This raises an
issue with Hong Kong Customs, which is concerned about the
personnel needed to inspect alarms generated by traffic not
destined for the U.S. as well as U.S.-bound containers. This
is an issue for both Megaports screening and ICIS-type
imaging and screening.


6. (C) The terminal operators, in their May 30 letter, asked
for "confirmation from the USG that our integrated scanning
approach is a proper next step and that the screening data
will be used by government to increase container security.
If the approach to integrate radiation detection with cargo
imaging adds value to the targeting process, we need the U.S.
government to give us an acknowledgement on that point and we
will commit to deploying the technology on a port-wide
basis." They urge working together "to develop mutually
agreed operating procedures and protocols." That is, the
operators already support the imaging concept, and are also
willing to integrate radiological screening into the overall
system here -- if that is what the U.S. proposes, and if the
U.S. commits to developing the operational details and
protocols with the operators and the Hong Kong government.


7. (C) The Hong Kong Government is looking to us for guidance
as to how we see this effort moving forward globally. We
must tell them what we believe is required, tell them we are
moving ahead, and bring the operators on board to stimulate
HKG approval. Hong Kong is already lagging progress on
Megaports elsewhere. It can jump ahead of the pack with an
integrated Megaports/ICIS type operation linked to CSI.


8. (C) We recommend we be given points for presentation to
the HK Government, which could be used as a basis as well for
responding to the HK Container Terminal Operators May 30
letter.


9. (C) The message should urge support for an integrated
cargo screening architecture that combines CSI, radiological
monitoring and private industry x-ray scanning, with the

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resulting images sent to the U.S. CSI team. We need to
clarify the operational concept for use of the data with Hong
Kong customs, the relationship of Megaports DOE-provided
monitors to the architecture, and the impact of screening of
non-U.S. bound traffic. We should assure the HKG that the
general concept has strong support throughout the USG,
including in the Congress, and that all the agencies involved
are working together to solve integration and implementation
issues. The points should address the HKG's concerns about
resource implications of such a system, including the role of
spectroscopic monitors in evaluating alarms. They should
present our preliminary thoughts on how the data will be
analyzed and shared with the HKG, i.e., if it will be done by
an augmented CSI team or by U.S.-based analysts.


10. (C) The Huizenga visit clarified that there are technical
problems with radiation screening (whether done by ICIS or
Megaports monitors),but similar problems have been resolved
elsewhere in Asia. We understand a technical team is headed
here in late June to explore the solution to the background
radiation problem and the establishment of a data link to
CSI. We should assume that the technical problems with
radiation monitors will be resolved here, as they have been
elsewhere. Doing so here over the next 3-4 months should not
delay elaboration of the conceptual framework and discussion
of it with Hong Kong authorities.

CUNNINGHAM
Cunningham