VZCZCXYZ0001
PP RUEHWEB

DE RUEHHK #0333/01 0550655
ZNR UUUUU ZZH
P 240655Z FEB 09
FM AMCONSUL HONG KONG
TO RUEHC/SECSTATE WASHDC PRIORITY 6948
INFO RHMFIUU/DEPT OF HOMELAND SECURITY WASHINGTON DC PRIORITY

UNCLAS HONG KONG 000333 
 
SENSITIVE 
SIPDIS 
 
STATE FOR EAP/CM 
 
E.O. 12958: N/A 
TAGS: ETTC PGOV PREL HK
SUBJECT: CONGRESSIONAL STAFFERS HEAR FROM HKG ON SFI 
 
REF: 08 HONG KONG 2277 
 
¶1. (U) This is an action request. 
 
¶2. (SBU) Summary: Hong Kong Trade and Industry Department 
Deputy Director General Vivian Lau told a visiting U.S. 
Senate Staff Delegation (StaffDel) on February 19, that 
unless the Hong Kong Government (HKG) receives notification 
about the Secure Freight Initiative,s future direction, the 
current pilot at Hong Kong,s seaport would end as scheduled 
on April 30, 2009.  She emphasized that HKG may be willing to 
extend the program, but to do so it would need to provide the 
industry with strong and convincing argument as to the trade 
facilitation value and the safety to health of the equipment. 
 This process would require time, and unless the U.S. 
Government (USG) provided guidance and direction as to the 
future of SFI soon, the pilot program would end on April 30, 
¶2009.  End Summary. 
 
¶3. Action Request: Request Department/DHS provide direction 
as to the future of the Secure Freight Initiative (SFI) 
program and the implications for Hong Kong's pilot project. 
End Action Request. 
 
¶4. (SBU) Background: February 18-20, 2009, 11 staff members 
of the U. S. Senate Finance Committee visited Hong Kong.  The 
visit focused on discussions of trade facilitation, trade 
security, and customs enforcement with Hong Kong Government 
and private sector representatives.  The StaffDel met with 
the Hong Kong Intellectual Property Department, Hong Kong 
Customs Enforcement and Excise Department, Hong Kong Trade 
and Industry Department, and members of the American business 
community.  This cable reports their discussion with the Hong 
Kong Trade and Industry Department (HKTID) on the Secure 
Freight Initiative (SFI).  Septel will report other aspects 
of the trip.  End Background. 
 
¶5. (SBU) During a February 19 meeting with members of the 
HKTID, delegation leader International Trade Counsel Amber 
Cottle explained that the existing U.S. legislation mandating 
100 percent scanning would take effect in 2012, less than 
three years away.  HKTID Deputy Director General Vivian Lau 
responded that international consensus was growing that 100 
percent scanning would not be achievable or sustainable.  She 
noted that the World Customs Organization and the governments 
of Japan and the European Union had expressed this view.  Lau 
pointed out that even newly appointed DHS Secretary 
Napolitano had publicly questioned the utility of 100 percent 
scanning.  In particular, Lau questioned what options the USG 
would make available to countries that would not be able to 
comply, not because of unwillingness, but because of 
technical difficulties. 
 
¶6. (SBU) Lau emphasized that Hong Kong has been at the 
forefront of implementing trade security programs (e.g., CSI, 
SFI, export controls).  However, Lau said two main concerns 
would make it difficult for Hong Kong, a large and important 
logistics and shipping hub, to implement mandatory 100 
percent scanning: 
 
- Any implementation of 100 percent scanning would require 
consultations with the public and the shipping trade.  The 
HKG would face difficulties convincing the trade to continue 
or expand the SFI program given that questions regarding the 
trade facilitation value of SFI remain.  In particular, Lau 
remarked that cargo scanned at Hong Kong apparently was not 
receiving any expedited customs clearances at U.S. ports of 
debarkation.  She forecast opposition from the trade to such 
a program that demanded much, but offered little trade 
facilitation benefits. 
 
- As a large transshipment center where cargo operations take 
place in midstream as well as on land, it would be impossible 
for Hong Kong shipping lines to comply with the mandate 
unless cargo is offloaded onto land for the purpose of 
scanning, then reloaded onto U.S.-bound vessels, creating 
innefficiencies and causing delays in the process.  Note: 
Cargo barges from the Pearl River Delta (PRD) currently 
transfer their loads directly to container vessels at sea. 
End note. 
 
¶7. (SBU) Cottle told Lau that the U.S. law requiring 100 
percent scanning would not be going away, so trying to move 
toward this mandate would be beneficial to everyone.  For her 
part, Lau commended the StaffDel for their efforts to ensure 
a balance between national security and trade facilitation, 
citing that "it is an art."  However, she explicitly stated 
that unless the HKG receives notification about the SFI 
program,s future, the ongoing pilot would terminate on its 
expiration date of April 30, 2009.  She emphasized that the 
HKG might be willing to extend the program, but to do so it 
would need to provide the trade with strong and convincing 
argument as to the trade facilitation value and overcome 
concerns that the equipment was harmful to human health. 
This process would require time, thus necessitating guidance 
soon from the U.S. Government. 
 
¶8. (SBU) The StaffDel did not have a chance to clear this 
cable. 
DONOVAN