U.S. DELEGATION BRIEFS HKG ON PROPOSED HONG KONG

C O N F I D E N T I A L SECTION 01 OF 03 HONG KONG 004473

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SENSITIVE
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STATE FOR EAP/CM
STATE FOR EAP/TRA/OTP DAYTON/MILLER
STATE FOR ISN LEHRMAN/INGRAM
STATE FOR EAP/EX CHRISTENSEN
DOE NNSA FOR HUIZENGA/FINK/MUSTIN
DHS CBP FOR FUJIMURA/HORTON/WHITE

E.O. 12958: DECL: 11/15/2026
TAGS: ECON EWWT HK PREL
SUBJECT: U.S. DELEGATION BRIEFS HKG ON PROPOSED HONG KONG
PARTICIPATION IN PHASE I OF ICSN


Classified By: Deputy Principal Officer Marlene Sakaue, reasons
1.4 b and d.


1. (C) Summary: Officials from the U.S. Departments of
Homeland Security and Energy met with Hong Kong Government
officials November 6 to explore Hong Kong's participation
in the International Container Security Network (ICSN).
Dave Huizenga, Deputy Assistant Secretary, International
Material Protection, Department of Energy and Todd Horton,
Chief, Assessments Division, Container Security Initiative,
Customs and Border Protection, Department of Homeland
Security, asked the HKG to participate in a "limited
capacity under Phase I" of the ICSN. Huizenga stated that
the HKG would have to commit to electronically transmitting
data for all U.S.-bound containers passing through Modern
Terminal's system and resolving all system alarms if the
USG is to designate HKG/Modern Terminal as a "limited
capacity Phase I" participant. Explaining that DHS
Secretary Chertoff planned to make an announcement on

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November 27 regarding the Port Security Act and foreign
ports' participation in the ICSN, Huizenga proposed that
the two sides work on language, acceptable to the HKG, that
Chertoff might use in making his announcement. Commerce,
Industry and Technology Bureau Deputy Secretary and Head of
the HKG delegation Christopher Wong stressed that he viewed
this meeting as a fact finding session. He stated that he
had neither the authority to agree on Hong Kong's behalf to
participate in the ICSN, nor to agree to language that
Chertoff might use in his November 27 announcement. Wong
said that his delegation would report the contents of the
meeting to higher levels and the HKG would conduct a
detailed assessment in light of the information shared at
this briefing. Noting that Chertoff's announcement was
scheduled for November 27, Wong asked if the USG would
consider announcing that "the HKG is positively considering
the ICSN program, but has not yet confirmed its
participation," if the HKG could not confirm its
participation by November 27. End Summary.


2. (C) Commerce, Industry and Technology Bureau Deputy
Secretary and Head of the HKG delegation Christopher Wong

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thanked Huizenga and members of the U.S. delegation for
traveling to Hong Kong to brief the HKG on the newly passed
U.S. Port Security Act of 2006 and to discuss Hong Kong's
role in the International Container Scanning Network
(ICSN). Wong stated that the HKG considered this meeting a
"fact finding" session, so that the HKG could conduct a
detailed assessment of the ICSN program and to make a
decision on HKG's participation.


3. (C) Over the course of nearly three hours, Huizenga
presented the key points of the ICSN, stressing the
partnership between DHS and DOE; both Departments want to
be responsive to U.S. Congress' intent in the Port Security
Legislation of 2006. Huizenga explained that the Port
Security Act requires DHS and DOE to designate three
foreign ports as ICSN pilots within 90 days of passage of
the Act, which was signed into law on October 13. The
designated pilot ports must, within a year, perform
radiation scanning and x-ray imaging for 100% of U.S.-bound
containers and data from those scans must be passed
electronically to U.S. personnel. The USG recognizes the
efforts of Hong Kong's Modern Terminal and Hutchison
International Terminal in deploying private sector
developed integrated container scanning and imaging
systems; however, the volume of containers transiting Hong
Kong's Port makes it unrealistic to try to equip Hong Kong
to scan 100% of U.S.-bound containers within the next
year. Therefore, the USG was not seeking HKG's agreement
to be designated as a ICSN Phase I pilot port. Still, the
USG wants to recognize the progress that Hong Kong is
making in developing and deploying an integrated scanning
system and wants to partner with the HKG to continue
efforts to develop an integrated system. Huizenga said
that Hong Kong could participate in a "limited capacity
under Phase I," which would acknowledge Hong Kong's efforts
to utilize an integrated scanning system, but would not
require Hong Kong to meet the requirement to scan 100% of
U.S.-bound containers, as will be the case for the three
ports designated as ICSN Phase I pilot ports.


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4. (C) Huizenga explained that the USG would like to work
with Hong Kong's Modern Terminal, as it has an integrated
scanning system in place. Huizenga stated that the HKG
would have to commit to electronically transmitting data
for all U.S.-bound containers passing through Modern
Terminal's system and resolving all system alarms in order
for the USG to designate HKG/Modern Terminal as a "Limited
Capacity Phase I" participant.


5. (C) Huizenga also highlighted two operational-level
problems that currently require resolution at Modern
Terminals integrated scanning site: 1) The radiation
scanning equipment is currently sitting on a concrete roadway
that has granite aggregate that emits high levels of
background radiation. This radiation affects the radiation
equipment and the roadway would have to be replaced with a
non-radiation emitting roadway; 2) Communications between
Modern Terminal's integrated scanning system and U.S. CSI
personnel both at the Port and in the United States would
have to be improved to allow for electronic transfer of
scanning data. Additionally, the data transfer software
would have to be revised to permit the segregation of
U.S.-bound container data from data of containers not bound
for the United States.


6. (C) Huizenga told the HKG officials that DHS Secretary
Chertoff plans to make an announcement on November 27
regarding the implementation of the Port Security Act and
participation of foreign ports in Phase I of the ICSN. He
stated that Chertoff would like to announce Hong Kong's
participation in the ICSN rollout. He proposed that the
two sides work on language that Chertoff might use in
making his announcement.


7. (C) The HKG officials engaged the U.S. delegation in
detailed discussions of the ICSN program and Hong Kong's
participation. On November 3, in preparation for the
November 6 meeting, the HKG had submitted a list of 17
written questions to the U.S. delegation. The HKG also
asked a series of oral questions. The questions, which
Huizenga and Horton addressed in detail during the November
6 discussion, dealt with core issues such as:
-Differences between the MegaPorts initiative and the ICSN
program.
-USG and HKG responsibilities under the ICSN program.
-Utilization of private sector vs. USG-provided equipment.
-Requirements/procedures for resolving alarms.
-Resource requirements including funding and personnel.
-Models/options for expansion of Hong Kong participation in
the ICSN program.


8. (C) In the course of the discussion, several issues
emerged as concerns for the HKG officials:
-The requirement to provide data on 100% of U.S.-bound
containers, which the HKG officials characterized as the
wholesale sharing of data, which entailed a new dimension
that the HKG must carefully consider.
-The requirement to resolve all alarms.
-The safety of the scanning equipment, specifically for
truck drivers passing through Non-Intrusive Imaging scanners.
-The possibility of replacing the current equipment
deployed at Modern Terminal with USG-provided equipment.
-Preferential treatment ("Green Lane") for containers
scanned in Hong Kong when they arrive in the United States.
-The possibility that one terminal operator, Modern
Terminal, would acquire preferential treatment over Hong
Kong's non-ICSN participants.
-The shift from participating in a voluntary effort to
develop and deploy an integrated scanning system to a
program that called for the HKG to meet USG stipulated
requirements.
-How to scan containers in mid-stream operations
(containers that are transferred directly from one ship to
another without going ashore).


9. (C) Huizenga explained that, should the HKG agree to
participate in a "limited capacity under Phase I" of the
ICSN program, the two sides would have to draft/finalize an
Agreement, containing the HKG's commitment to share data on
all U.S.-bound containers and to resolve all alarms. There
was flexibility with regard to the form of such an

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agreement: a MegaPorts-style Memorandum of Understanding
would not be necessary. For example, the two sides could
prepare an addendum on the existing U.S. - Hong Kong CSI
Agreement. Were Hong Kong's participation in the ICSN
program to evolve, with the USG providing equipment of
substantial value, however, the two governments would have
to come to a more formal, detailed agreement.


10. (C) Deputy Secretary Wong thanked the U.S. delegation
for the detailed briefing. Wong stated that he did not
have the authority to agree on Hong Kong's behalf to
participate in the ICSN, nor was he in the position to
agree to language that Chertoff could use in his November
27 announcement. Wong said that the inter-Bureau Hong Kong
delegation would report the results of the meeting to
higher levels and conduct a detailed assessment in light of
the information shared at the briefing. Noting that
Chertoff's announcement was scheduled for November 27, Wong
asked if the USG would consider announcing that "the HKG is
positively considering the ICSN program, but has not yet
confirmed its participation," if the HKG could not confirm
its participation by November 27. Wong promised to review
the matter and respond to the USG.


11. (SBU) Delegation Lists:


A. Hong Kong Delegation:
-Christopher Wong - Deputy Secretary for Commerce, Industry
and Technology
-David Leung - Principal Assistant Secretary for Commerce,
Industry and Technology
-Fung Kwok Ming - Chief Assistant Secretary (Ports Maritime
and Logistics),Economic Development and Labor Bureau.
-Ko Chi Lok - Assistant Commissioner (Boundary and Ports)
Customs and Excise Department
-Li Chun Fai - Senior Superintendent (Ports and Maritime
Command) Customs and Excise Department
-Erica Ng - Assistant Director General (Americas),Trade
and Industry Department
-Amy Wong - Principal Assistant Secretary for Security,
Security Bureau
-Noel Tsang - Assistant Secretary for Commerce, Industry



B. U.S. Delegation:
-Dave Huizenga - Deputy Assistant Secretary, International
Material Protection, Department of Energy.
-Todd Horton - Chief Assessments Division, Container
Security Initiative, Customs and Bureau Protection,
Department of Homeland Security.
-Marlene Sakaue - Deputy Principal Officer, U.S. Consulate
General Hong Kong
-Mike Fink - MegaPorts Project Manager for Asia, Department
of Energy
-Craig Reilly - Economic Officer, U.S. Consulate General
Hong Kong
-Richie Powell - Senior CBP Representative, U.S. Consulate
General Hong Kong
-Matt Myers - ICSN IT Specialist, Customs and Border
Protection, Department of Homeland Security


12. This report cleared by the U.S. Head of Delegation
DOE DAS Huizenga. DHS delegates did not have the opportunity
to clear this report.
Cunningham