SFI PILOT: HONG KONG EAGER FOR STATUS QUO

C O N F I D E N T I A L SECTION 01 OF 02 HONG KONG 001215

SIPDIS

STATE FOR EAP/CM; DHS FOR SFI DINUCCI

E.O. 12958: DECL: 06/25/2028
TAGS: ETRD EWWT HK
SUBJECT: SFI PILOT: HONG KONG EAGER FOR STATUS QUO

Classified By: E/P Chief Laurent Charbonnet, Reason 1.4 b


1. (C) Summary: Department of Homeland Security Secure
Freight Initiative (SFI) Director Richard DiNucci met with
Hong Kong Trade and Investment Department (HK TID) Deputy
Director General Ngai Wing Chit to reassure Hong Kong of the
U.S. Government's commitment to the Secure Freight Initiative
pilot project in Hong Kong and explain the challenges of
retaining the non-intrusive inspection (NII) equipment
currently in place at Modern Terminal. Ngai and his staff
are willing to allow routine maintenance and upgrades in the
SAIC equipment now in place, but expressed their strong
preference for no new systems to be installed before the
expiration of the current agreement in April 2009. End
Summary.


2. (C) SFI Director DiNucci, accompanied by DHS' Hans
Lieterman and Department of Energy's Bill Kilmartin, met with
TID Deputy Director General Ngai, Assistant DG Erica Ng and
HK TID, Customs and Transportation Bureau staff on June 11 to
discuss the status of the SFI pilot project in Hong Kong.
DiNucci informed HK TID that SAIC, the owner of the NII
system currently used in the SFI pilot at Port of Hong Kong's
Modern Terminal, is considering whether to remove the system
in order to sell it to another customer. (Note: The system
currently in place at Modern Terminal is no longer the most
current technology available. SAIC has been providing this
system in Hong Kong free of charge since the inception of the
pilot project in November 2004. The system has experienced
numerous technical problems, although an SAIC technician on
site was able to resolve most issues from January through
April 2008. Since the departure of the technician in April,
problems have recurred and the system has once again faced
prolonged outages. End Note.) DiNucci assured HK TID that
the U.S. government is committed to maintaining the current
pilot project and is actively consulting with SAIC to find a
way to keep the system in place and operational at Modern
Terminal without an interruption of service.


3. (C) DiNucci told Ngai that the SFI Assessment Report
originally scheduled to be released in April was delayed by
the desire to include views from shippers. The Report was
delivered to Congress in June and included Hong Kong's full
assessment of the pilot project. The Senate Committee on
Commerce, Science and Transportation would hold hearings on
the program June 12 which should provide some insights into
DHS's view of the program's future, said DiNucci. U.S.
Customs and Border Patrol (CBP) is endorsing a risk-based
targeting approach, he added. The next Assessment Report is
due in October 2008. (Note: At the hearing, CBP Deputy
Commissioner Jayson Ahern argued that significant obstacles
to 100% scanning, particularly the difficulty of scanning
transshipped cargo that does not enter the port via a road
gate, will make it difficult to achieve 100% scanning of all
U.S.-bound cargo by 2012 as Congressionally mandated. Ahern
advocated focusing resources on high-risk corridors. End
Note.)


4. (C) Ngai responded that HK TID and Customs also support a
risk-based approach that includes Hong Kong. HK TID wants to
keep the SFI pilot operating smoothly and would prefer to do
that with the equipment that is now in place. DiNucci
agreed, but noted that the current system may need some
upgrades and advanced maintenance to maximize its
effectiveness.


5. (C) Ngai offered that the Hong Kong government is
particularly concerned about the health risks to truck
drivers who could pass through the NII system as many as four
times per day. Hong Kong needs to be careful about upgrading
the equipment if that means exposure to higher doses of
radiation for drivers; the issue is even more sensitive with
elections for the Legislative Council scheduled for September
2008, he said. DiNucci reiterated the need for upgrades and
advanced maintenance to improve the effectiveness and
efficiency of the current system. DHS's Leiterman offered
that an upgrade would not require new equipment or a move to
an X-ray NII system, but would simply mean replacement of the
current gamma radiation source with a fresh gamma source in
order to improve effectiveness through the end of the current
pilot project in April 2009.


6. (C) Deputy DG Ngai welcomed this news and repeated the
Hong Kong government's preference for continuation of the
status quo for the full period of the pilot project. Safety

HONG KONG 00001215 002 OF 002


is Hong Kong's major concern; any additional information on
the safety of any proposed new equipment is welcome. He
allowed that discussions about replacement equipment and
other major system upgrades may be necessary before the end
of the project, but said HK TID would not be prepared to have
those discussions before October. Likewise, talks about
extending the scope of the pilot to transshipment would not
be welcomed by HK TID at this time.


7. (C) The meeting was attended by Department of Homeland
Security (DHS) SFI Director Richard DiNucci, DHS's Hans
Leiterman, Department of Energy's William Kilmartin, U.S.
Consulate General Customs and Border Protection (CBP) Richard
Powell, and Economic Unit Chief Jim Mullinax. Hong Kong
Government was represented by Trade and Industrial
Development (TID) Deputy Director General NGAI Wing Kit,
Assistant DG Erica NG, Trade Officer Doris CHAN, Custom's and
Excise Head of Command for Ports and Maritime, LI Chun fai,
and unidentified representatives from the Commerce and
Economic Development Bureau and Department of Transportation.

Cunningham