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). 
 
¶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