VZCZCXRO1258
RR RUEHCN RUEHGH
DE RUEHGH #0122/01 0760758
ZNR UUUUU ZZH
R 170758Z MAR 09
FM AMCONSUL SHANGHAI
TO RUEHC/SECSTATE WASHDC 7735
INFO RUEHBJ/AMEMBASSY BEIJING 2609
RUEHCN/AMCONSUL CHENGDU 1828
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC
RUEFHLC/DEPT OF HOMELAND SECURITY WASHINGTON DC
RUEATRS/DEPT OF TREASURY WASHINGTON DC
RUEHGZ/AMCONSUL GUANGZHOU 0284
RUEHHK/AMCONSUL HONG KONG 1995
RHEHAAA/NSC WASHINGTON DC
RUEHSH/AMCONSUL SHENYANG 1819
RUEHIN/AIT TAIPEI 1616
RUEHKO/AMEMBASSY TOKYO 0589
RUEHGH/AMCONSUL SHANGHAI 8370

UNCLAS SECTION 01 OF 10 SHANGHAI 000122 
 
SENSITIVE 
SIPDIS 
 
STATE ALSO FOR EAP/CM, EEB/TRA, CA/VO, H 
STATE PASS TO CONSUMER PRODUCT SAFETY COMMISSION 
FOR RICH O'BRIEN 
BEIJING FOR CBP AND FDA 
HHS FOR FDA 
TREASURY FOR OASIA - DOHNER, HAARSAGER 
DHS FOR CBP 
USTR FOR CHINA OFFICE - TSTRATFORD, AWINTER, TWINELAND; IPR OFFICE - RBAE; AND 
OCG - TPOSNER 
NSC FOR LOI, SHRIER 
DOC FOR NATIONAL COORDINATOR FOR IPR ENFORCEMENT - WPAUGH 
DOC FOR ITA/MAC - SZYMANSKI, YOUNG 
LOC/COPYRIGHT OFFICE - STEPP 
USPTO FOR INT'L AFFAIRS - LBOLAND 
DOJ FOR CCIPS - TNEWBY 
FBI FOR LBRYANT 
DHS/ICE FOR IPR CENTER - DFAULCONER 
DHS/CBP FOR IPR RIGHTS BRANCH - GMACRAY 
USDOC FOR ITA DAS KASOFF, OCEA - SZYMANSKI 
USDOC ALSO FOR NITS 
 
E.O. 12958: N/A 
TAGS: ASEC CH CVIS ELTN ETRD EWWT KIPR PREL
SUBJECT: SHANGHAI AUTHORITIES ON TRANSPORTATION SECURITY, IPR AND 
PRODUCT SAFETY 
 
¶1. (SBU) Summary:  During a February 15-18 visit to Shanghai, a 
delegation of 11 U.S. Senate Finance Committee staff members and 
4 U.S. Customs and Border Protection (CBP) officials engaged 
representatives from Shanghai Customs, Shanghai Entry-Exit 
Inspection and Quarantine Bureau (CIQ), China Shipping Group and 
AmCham Shanghai on a wide range of trade-related issues. 
Shanghai Customs outlined its work to reduce clearance time, 
improve risk management, and fight intellectual property (IP) 
infringement.  CIQ officials reviewed the processes for ensuring 
inspection procedures conform to the standards of the importing 
country.  In conjunction with the CIQ meeting, the delegation 
also toured a factory with CIQ to see first hand how the agency 
carries out its inspection process prior to shipment.  In a 
separate meeting, U.S. business representatives said that they 
in principle welcome new U.S. security measures, but voiced 
concerns about implementation and encouraged CBP to more widely 
disseminate information about the measures.  Representatives 
from China Shipping Group (CSG), China's second largest shipping 
conglomerate said new U.S. security measures had created some 
problems, such as increased costs, but added they also provide 
benefits such as increased cooperation from CBP.  CSG also urged 
CBP to more widely disseminate information about new shipping 
security measures.  The delegation also toured the Consulate's 
Consular Section and discussed a range of issues, including the 
problems created by the long delay in Security Advisory Opinions 
(SAO).  End Summary. 
 
Shanghai Customs Boosts Efficiency through Risk Management 
--------------------------------------------- ------------- 
 
¶2. (SBU) Shanghai Customs Director for Supervision and Clearance 
Yang Danghong noted that since 1998, Shanghai Customs reduced 
the average clearance time for both imports and exports from 72 
to 48 hours.  Average clearance time for goods originating in 
the Shanghai bonded zone is now 2.5 hours.  To reduce the 
clearance time and facilitate trade, Shanghai Customs initiated 
E-Customs, E-GACC (General Administration of China Customs), and 
the E-Port systems.  The H200 System is an internet-based data 
management system, and the E-Port Initiative is a program that 
allows shippers to file customs data on-line.  In 2002, Shanghai 
Customs introduced the paperless system, which allows all data 
to be submitted and cleared electronically.  Shippers provide 
paper based documents for archiving purposes only after the 
goods arrive and are released.  Yang emphasized that the data 
points in the paperless system are the same as under the 
previous system.  As of 2007, shippers with a good record are no 
longer required to submit the paper documents; they only need to 
retain the documents for periodic auditing by Customs.  Shanghai 
Customs also implemented the "5 plus 2" system, meaning Customs 
offices operate five working days plus weekends at the Shanghai 
Shipping Center for ocean freight and Shanghai Pudong Airport 
for air freight. 
 
¶3. (SBU) When asked about targeting measures, Shanghai Customs 
Foreign Affairs Office Director Ding Ye replied that Shanghai 
Customs' risk management is similar to that of other countries - 
it is mainly driven by a risk score of both the exporter and the 
commodity involved.  Since Shanghai Customs is responsible for 
approximately a quarter of all of China's imports and exports, 
risk management is essential to the expeditious clearance 
 
SHANGHAI 00000122  002 OF 010 
 
 
process.  Every exporting entity is given a risk score based on 
its record of duty payment, trading volume, and safety and 
security related indicators.  Those companies that are deemed to 
have the highest degree of credibility are given faster 
clearance.  These companies must operate under certain standards 
and sign agreements that they will uphold all Shanghai Customs 
regulations.  For companies with bad records, the highest degree 
of scrutiny is given.  The same system applies to goods as well, 
which are divided into five categories.  The most "risky" 
shipments all require manual inspection.  Shanghai Customs Legal 
Affairs officer Xu Rongyi emphasized that Customs does not 
handle safety inspections of exported and imported products; it 
only clears the goods once CIQ approval is received.  CIQ 
determines which types of goods need quality inspection and 
lists them in a catalog, which Shanghai Customs uses to 
determine which shipments require inspections. 
 
Shanghai Customs Welcomes IP Cooperation from All Sources 
--------------------------------------------- ------------ 
 
¶4. (SBU) Regarding intellectual property (IP) protection, 
Shanghai Customs Intellectual Property Office Director Xu Feng 
said that Shanghai Customs attaches great importance to 
screening for IP infringement.  Most of the IP-related cases 
detected by Shanghai Customs involve the infringement of 
trademarks.  Over the past year, Shanghai Customs has focused a 
great deal of attention on protecting the logos from the 
Olympics and Shanghai's 2010 World Expo.  Shanghai Customs also 
works closely with other IP agencies to protect IPR, including 
the Administration of Industry and Commerce, the Copyright 
Bureau and the IP Administration.  Xu emphasized that Shanghai 
Customs welcomes collaboration with rights holders and welcomes 
information on infringement.  Xu also urged U.S. rights holders 
to register their trademarks with Customs to ensure their rights 
are adequately protected. 
 
¶5. (SBU) Shanghai Customs also uses its risk management system 
to target shipments with a high likelihood of IP infringement. 
On copyright issues, GACC works closely with the Motion Picture 
Association of America (MPAA) and the International Federation 
of Phonographic Industry (IFPI).  GACC has a memorandum of 
understanding (MOU) with MPAA to combat pirated optical disc 
products.  Shanghai Customs also partners with rights holders in 
training courses and other events to increase the IP awareness 
and capacity of its officers.  Although Shanghai Customs does 
not keep examples of all trademarks on file, it does publish 
booklets for line officers and provides access to a database of 
files on how to identify counterfeits.  Shanghai Customs does 
keep some samples of commonly pirated goods at the ports to help 
inspectors recognize pirated goods.  Xu also welcomed further 
cooperation from the United States on IP training for Customs 
officers. 
 
CSI Working Well, Megaports Still on Hold 
----------------------------------------- 
 
¶6. (SBU) Regarding the U.S. Container Security Initiative (CSI), 
Ding stated the program works well, and Shanghai Customs 
welcomes further cooperation on the program.  Thus far, Shanghai 
Customs has not discovered any problematic shipments as a result 
 
SHANGHAI 00000122  003 OF 010 
 
 
of CSI-initiated investigations.   When asked about continuation 
of the Megaports Initiative, which was halted in October due to 
"arms sales to Taiwan," Ding replied that the GACC in Beijing 
has not yet given the green light to resume work on this 
cooperative project. 
 
CIQ Works to Meet the Standards of the Importing Country 
--------------------------------------------- ----------- 
 
¶7.  (SBU) In a meeting with Shanghai CIQ officials, Deputy 
Director General Xu Chaozhe explained CIQ's role in protecting 
food and product safety in the import/export process.  CIQ was 
established in 1999 when three departments, the Import and 
Export Commodity, Animal Exit and Entry, and Health and Human 
Safety Bureaus merged.  Shanghai CIQ's main responsibility is to 
inspect products based on safety, health and environmental 
regulations.  General Administration of Quality Supervision, 
Inspection and Quarantine (AQSIQ) publishes a yearly catalog 
listing types of products that are subject to import/export 
inspection.  Although the catalog is updated on a yearly basis, 
AQSIQ has a mechanism to update new standards and guidelines for 
products as necessary.  Products are also occasionally added to 
or removed from the list during the year as necessary.  These 
changes are often made as AQSIQ receives information about 
Chinese products that encounter problems at overseas ports.  For 
those products that are listed in the catalog, each batch is 
inspected by random sampling - the higher the product risk, the 
higher percentage of random sampling.  Xu emphasized, however, 
that random sampling does not necessarily mean laboratory 
testing.  For imports, CIQ takes a certain percentage of the 
shipment for random sampling regardless of the country of 
origin.  However, if a certain country or certain company that 
exports to China is found to have more than the average amount 
of problems, CIQ increases its inspections on those products. 
 
World's Second Busiest Port Keeps Shanghai CIQ Busy 
--------------------------------------------- ------ 
 
¶8.  (SBU) According to Xu, in 2008 Shanghai ports handled over 
27 million TEU, making Shanghai the world's second busiest port. 
 As the largest import/export port in China, Shanghai CIQ plays 
a leadership role among other CIQ units in East China.  In 2008, 
CIQ Shanghai inspected 1.5 million batches of industrial 
products, 147,000 batches of animal and plant products, 690,000 
batches of wood and packing material, and 170,000 batches of 
fruit and cosmetics.  Shanghai CIQ oversaw the inspection of 
food and products in 2008 arriving and departing on over 24,000 
vessels and 156,000 aircraft.  Shanghai CIQ, which has over 
1,700 employees and 15 district branches, uses its own trained 
and licensed inspection staff for most inspections; however, it 
also has agreements in place with other CIQ units in East China 
to share testing services on products in which they specialize. 
The district branches carry out random inspections on exporting 
enterprise located in their respective jurisdictions.  In 
addition, they try to raise general awareness of food and 
product safety among exporting companies.  There are also four 
technical support teams each specializing in a specific area, 
such as animal and plant products, machinery, appliances, etc. 
Standards are set for each product that requires testing, but 
these standards can change from time to time.  According to Xu, 
 
SHANGHAI 00000122  004 OF 010 
 
 
CIQ units find approximately the same percentage of 
non-compliant goods in both imports and exports.  After CIQ 
issues a certificate of approval, it notifies Customs for 
clearance purposes. 
 
¶9.  (SBU) Regarding exported products, Xu explained that AQSIQ 
uses the importing country's standards for clearance.  For 
example, if a product is being exported to the United States and 
requires inspection by the United States, AQSIQ bases its 
inspection on U.S. safety standards.  For example, all-terrain 
vehicles (ATVs) were not originally on the mandatory inspection 
catalog; however AQSIQ placed ATVs on the mandatory inspection 
list after the United States recently set safety requirements on 
ATVs.  In general, Shanghai CIQ uses a risk management system to 
carry out all the inspections; it particularly targets the 
highest risk products.  Besides complying with the technical 
standards of the importing country, AQSIQ also sets its own 
"specialized" standards for certain categories of products.  It 
particularly emphasizes the safety of food exports, requiring 
all food exporting companies to register with Shanghai CIQ.  Xu 
noted that AQSIQ publishes all its standards through a variety 
of sources, such as the internet, and it actively works with 
producers to ensure they fully understand the requirements of 
the importing country.  CIQ also helps enterprises establish and 
manage quality control programs, particularly emphasizing 
quality control of raw materials used as inputs.  Shanghai CIQ 
also encourages producers to have their own testing labs and 
rely more on their own abilities to ensure products meet export 
requirements. 
 
CIQ Welcomes More Cooperation and Info on U.S. Standards 
--------------------------------------------- ----------- 
 
¶10.  (SBU) Xu acknowledged that different ports in China may 
have different procedures, which could cause variation in the 
interpretation of regulations by different CIQ units.  However, 
CIQs do not report to municipal authorities; they report to 
AQSIQ headquarters in Beijing, so technically all CIQs should 
have the same standards and procedures.  Xu emphasized that 
although Shanghai CIQ plays an essential role in monitoring the 
safety of imports and exports, the responsibility lays squarely 
with the importer/exporter and the producer.  Xu concluded by 
welcoming technical assistance and more collaboration between 
governments on food and safety issues.  He particularly welcomed 
more information about U.S. quality and safety requirements, 
saying CIQ can only meet those standards of which it is aware. 
He also encouraged an increase in visits from U.S. officials and 
agencies and looks forward to creating a more "positive 
attitude" towards Chinese-made products.  (Note:  Xu spoke 
highly about the recent cooperation with the U.S. Consumer 
Product Safety Commission and conference that was co-hosted by 
the two agencies.  End Note) 
 
An Up Close Look at the Inspection Process 
------------------------------------------ 
 
¶11. (SBU) To demonstrate first-hand how a manufacturer operates 
in compliance with CIQ inspection standards, CIQ arranged for 
the delegation to tour the Chung Hwa pencil factory, which 
produces 1.3 billion pencils a year, and meet Chung Hwa General 
 
SHANGHAI 00000122  005 OF 010 
 
 
Manager Shi Lihua.  About half of production is exported to 54 
countries and regions.  Because of its large amount of exports, 
Chung Hwa has a long-standing working relationship with CIQ. 
Following a tour of the printing and painting divisions of the 
pencil factory, the delegation was then shown the quality and 
safety inspection areas that tested lead quality, wood strength, 
and weight standards.  Shi said the Chung Hwa inspection team 
works closely with CIQ to ensure product safety, quality, and 
consistency under CIQ regulations. 
 
U.S. Companies Weigh In On Transportation Security Regs 
--------------------------------------------- ---------- 
 
¶12. (SBU) In a meeting with Shanghai AmCham and U.S.-China 
Business Council members, shipping and logistics company 
representatives supported U.S. shipping security measures but 
requested more outreach and information sharing on new 
regulations.  APL China Vice President William Chan voiced his 
support for 10+2, saying early notification requirements had a 
positive effect on carriers because they were receiving more 
timely information about their cargo.  He noted that shippers 
are generally providing the information in time.  Sometime 
shippers fail to report all the necessary information, but it is 
incumbent upon the carriers to be supportive of the shippers. 
On the issue of third party validations under the Customs Trade 
Partnership against Terrorism (C-TPAT), FedEx China Senior Vice 
President Eddie Chan said that he is seeing benefits from the 
program because clearance time is shorter and information is 
more reliable.  PWC Transportation Consultant Michael Jiang said 
that, generally speaking, it is not difficult to get the 
required information under C-TPAT from a U.S. subsidiary; 
however, non-US companies do not have a good understanding of 
the strict requirements under the program.  Goodyear Tire Asia 
Pacific General Manager for Global Sourcing Manoj Mehta added 
some companies may view it as a trade secret issue rather than a 
tracking issue. 
 
¶13. (SBU) Mehta said the biggest problem is that many companies 
do not know what information to provide and how to provide it. 
He added that Goodyear provides internal training on the U.S. 
security measures, but the manufacturers it sources from view 
the measures as a "real headache."  He urged U.S. CBP to be more 
proactive on providing information and training on 10+2 and 
other new security measures.  APL urged more consistent 
implementation among U.S. ports and that CBP provide ample 
training and transparency for manufacturers to understand the 
new legislation and implementing regulations. 
 
Against 100 Percent Screening 
----------------------------- 
 
¶14. (SBU) On U.S. one hundred percent screening requirements, 
Jiang maintained that China Customs does not have the capability 
to implement the requirement.  The Chinese attempted a similar 
hundred percent requirement for shipments entering China during 
the summer 2008 Beijing Olympics.  Due to high volumes and 
technology limitations, however, the inspection target was not 
physically possible.  APL's Chan agreed that 100 percent 
scanning is impossible and will greatly delay shipments if there 
is no high-tech solution available.  To illustrate this, he said 
 
SHANGHAI 00000122  006 OF 010 
 
 
that at Shanghai's Waigaoqiao Port it takes two minutes to scan 
a single container.  To scan the millions of TEU that pass 
through the port every year, it would take massive amounts of 
time, money and equipment. 
 
Carriers Should Not Be Responsible for IPR Problems 
--------------------------------------------- ------ 
 
¶15. (SBU) When asked for suggestions on how the U.S. 
customs-related legislation can better protect against the 
importation into the United States of counterfeit goods, APL's 
Chan emphasized that the carriers cannot be held responsible. 
Carriers simply do not have the means or expertise to detect and 
enforce.  He added that the only thing they can do is turn 
information on IP violations over to the authorities when it is 
found.  Shippers and importers should ultimately be held 
accountable for IPR violations - particularly the shippers since 
they are the ones that fill out the customs declarations.  Also, 
it is difficult for customs administrations on either side to 
fully screen for IP infringing goods because there is not 
sufficient manpower. 
 
Praise for China Customs, But Issues Remain 
------------------------------------------- 
 
¶16. (SBU) APL's Chan said he has seen significant improvement in 
China Customs' consultation process with businesses.  Shanghai 
Customs is particularly welcoming of industry input.  AmCham 
Shanghai has found Shanghai Customs to be very cooperative and 
currently has a project to help Shanghai Customs to address some 
of the issues they face.  They are also urging Shanghai Customs 
to adopt international standards in risk management procedures. 
Chan voiced frustration over inconsistencies in clearance 
procedures, valuation amounts and regulation interpretation 
between ports in China. 
 
Shipping Industry Grievances 
---------------------------------- 
 
¶17. (SBU) Of particular concern for all AmCham members is the 
unequal treatment for foreign companies doing business in China. 
 Samantha Chin, AIG Manager of Liability Insurance, pointed out 
that foreign companies are required by their own corporate 
regulations to carry insurance policies on shipments.  Extensive 
due diligence, including inspection and quality assurance is 
performed by the insurance companies to minimize product 
liability.  Unfortunately, these foreign firms are competing 
with local manufactures that cut corners and do not purchase 
insurance when shipping their products.  This not only 
compromises product reliability and safety, but it also puts the 
foreign companies at a disadvantage.  Chin urged the United 
States to help level the playing field by requiring all 
companies shipping to the United States to purchase insurance on 
the freight.  Fedex's Chan raised the issue of an amendment to 
the Chinese Postal Law, currently under consideration.  Under 
the proposed amendment, foreign carriers are barred from 
delivering "documents", defined as anything carrying 
information.  Hardest hit will be express carriers such as UPS 
and FedEx.  Since introduction of this proposed legislation in 
China, these firms have used every possible attempt to block 
 
SHANGHAI 00000122  007 OF 010 
 
 
passage of this discriminatory legislation. 
 
CSG - China's Second Largest Shipping Titan 
------------------------------------------- 
 
¶18. (SBU) China Shipping Group (CSG) President Li Shaode, Vice 
President Zhang Guofa, China Shipping Container Lines Co. (CSCL) 
Managing Director Huang Xiaowen, CSCL America Lines Division 
General Manager Chen Shuai and other China Shipping executives 
outlined their company's strategy and expressed their views on 
U.S. transportation safety measures for the visiting staffdel. 
China Shipping is a state-owned enterprise and China's second 
largest shipping conglomerate.  The company is based in Shanghai 
and is the holding company of three publicly listed companies: 
China Shipping Development, China Shipping Container Lines and 
China Shipping (Hainan) Haisheng.  The company has a total of 
440 ships, including container ships, oil tankers, bulk cargo 
ships, passenger ships and special cargo ships.  The container 
fleet has a capacity of 490 thousand TEUs.  Zhang explained that 
in 2008, CSG carried 8.58 million TEU of Chinese exports to the 
United States (6 percent of China's total export volume to the 
United States) and 2.08 TEU of U.S. exports to China (8 percent 
of total U.S. exports to China).  Currently CSG has seven weekly 
trans-Pacific shipments between the United States and China with 
a capacity of 14,000 TEUs.  Zhang noted that although container 
shipments had dropped sharply since the 2008 onset of the 
financial crisis, the company has confidence trade will rebound 
and is planning to increase its trans-Pacific capacity to 20,000 
TEUs per week. 
 
Large U.S. Footprint 
-------------------- 
 
¶19. (SBU) Zhang said that CSG has eight subsidiaries and has 
invested USD 20 million in the United States; the biggest CSG 
offices are in Los Angeles and Seattle.  In total it has 339 
employees in the United States, 320 of whom are local hires. 
CSG has signed agreements with the top one hundred largest 
importers in the United States, as well as a long-term contract 
with U.S. railway companies.  It is also committed to 
environmentally-friendly terminals.  Zhang noted that in 2006 
and 2007, the Port of Los Angeles-Long Beach gave CSG an 
"environmentally friendly" award for its high standards and 
compliance with environmental regulations. 
 
CSG Committed to Anti-terrorism Measures 
---------------------------------------- 
 
¶20. (SBU) According to Zhang, CSG is committed to cooperation 
with the United States on anti-terrorism measures and complies 
with all U.S. Customs and Border Protection (CBP) requirements 
to submit data in advance of the shipment's arrival.  When asked 
whether customs processing times were slower because of 
increased security measures, Huang explained that when the 
measures were initially implemented, processing times slowed 
because shippers and carriers were not accustomed to the 
requirements.  Delays are also caused because of the requirement 
to submit data so far in advance.  Huang estimated that over 
10,000 "local suppliers" use CSG to ship products to the United 
States, and it is often takes a long time to obtain background 
 
SHANGHAI 00000122  008 OF 010 
 
 
information on local "suppliers". 
 
¶21. (SBU) Zhang affirmed the company's commitment to the C-TPAT 
program.  CSG has a dedicated officer in the United States to 
coordinate with CBP.  CSCL America Lines Division General 
Manager Chen said that joining C-TPAT gave no particular 
advantage to CSG because most of its competitors had already 
joined.  He also noted that CSCL does not have any problem with 
the validation process.  Nor does the company have any problem 
with the background verification of personnel.  CSCL Managing 
Director Huang said that as a result of joining C-TPAT it is 
"easier to communicate with CBP" because it has appointed many 
officers to assist with the program.  Cooperation between China 
and U.S. Customs had improved because of the program.  In 
addition, if a problem arises regarding a shipper, it is now 
easier to get cooperation from both the Chinese and U.S. sides, 
which indirectly helps the carrier as a "middle man".  Chen 
suggested that although most carriers are well aware of the 
program, CBP can do better on outreach to customers so they can 
better cooperate and "realize the benefits of C-TPAT," Huang 
agreed, saying when CBP helps CSG's customers, that outreach 
helps CBP to carry out its USG-assigned responsibility. 
 
A Bumpy Start to the 10+2 Rule Implementation 
--------------------------------------------- 
 
¶22. (SBU) On the "10+2" rule, Chen expressed several 
difficulties about collecting accurate information from Chinese 
customers.  First, they do not know how to accurately describe 
the cargo on the manifest because of language barriers.  The 
Chinese customers are also largely unfamiliar with the 
requirement.  Second, it is sometimes difficult to provide 
accurate consignee information because the Chinese side is 
confused about U.S. geography, does not know the exact U.S. 
address, or the address changes at the last minute.  CSG also 
incurred increased costs because the company has to hire more 
staff to collect the information about the suppliers, as well as 
collect the data about the shipments.  Chen said the new 
regulation would also increase its shipping cost, which will 
eventually be shared by its customers. 
 
¶23. (SBU) Huang also reiterated the concern, saying "the 
carriers' cost has increased significantly due to the new 
regulation, and it's very hard to get information three days or 
more in advance."  He added some goods are already shipped out 
before the document is completed.  Zhang added that "if the 
goods are returned back to us, the increased cost will be shared 
by us."  Zhang asked if it is possible to grant China Shipping a 
longer "grace period" to become familiar with the new 
requirements.  He emphasized that it is important for U.S. CBP 
to get feedback from the carriers before they release new 
regulation. 
 
Not Responsible for Transporting Pirated Goods 
--------------------------------------------- - 
 
¶24.  (SBU) Regarding a question about the shipment of 
IP-infringing goods, Zhang explained that the company faces 
different challenges on IP than it does with security issues. 
It is virtually impossible for the carrier to know whether the 
 
SHANGHAI 00000122  009 OF 010 
 
 
goods it is carrying are pirated or not.  Zhang maintained that 
the responsibility to ferret out counterfeit goods lies squarely 
with each country's customs service.  Nevertheless, Zhang 
emphasized that CSG will cooperate one hundred percent with 
counterfeit goods investigations. 
 
¶25. (SBU) Zhang relayed two requests to the U.S. Government, 
saying that CSG hopes the Chinese and U.S. governments will 
cooperate closely to promote bilateral trade and the 
facilitation of the shipping business.  The reduction of U.S. 
Customs clearance costs would be particularly helpful.   In 
addition, CSG would like to see an easier way for its crew 
members to disembark in the United Sates for periods of rest. 
(Note:  In a side conversation Zhang explained that it is very 
difficult for crew members to obtain and maintain current U.S. 
visas when they are underway for lengthy periods.)  Zhang noted 
that CSG had signed an agreement with E.U. ports to allow its 
crews to disembark. 
 
Yangshan Port - Big Drop in Container Throughput 
--------------------------------------------- --- 
 
¶26. (SBU) During the staffdel's visit to Shanghai's Yangshan 
Deepwater Port, Shanghai Shengdong International Container 
Terminal General Manager Jiang Gongsheng said container 
throughput had dropped significantly since the fourth quarter of 
2008, as a result of weak trade activities.  In the first half 
of 2008, container throughput was 20,000 per week and currently, 
it only has 7,000 containers per week.  Jiang also pointed to 
the port and said "usually we would not see many empty spaces on 
the port, which should be filled with containers."  In addition, 
General Manager Jiang said shipments to the United States and 
the European Union have dropped more significantly than 
shipments to Southeast Asia, due to the more severe recessions 
in those regions.  He also noted that around 70 percent of the 
container throughput at the port is transshipments from other 
cities around the Yangtze River Delta. 
 
Meeting with U.S. Consulate's Consular Section 
--------------------------------------------- - 
 
¶27.  (SBU) During the staffdel's visit to the Consular Section 
of the United States Consulate General in Shanghai, Consular 
Officers outlined the work load and current issues in the 
American Citizen Services (ACS) and the Non-Immigrant Visa (NIV) 
Units.  The Shanghai Consular Section is one of the busiest in 
the world.  The Consular Section provides services for the 
27,000 Americans residing in the Shanghai consular district and 
approximately 50-60,000 Americans visiting the consular district 
on any given day, while the section saw an increase of 17 
percent in requests for American citizen services, the majority 
being notary and passport services.  The ACS Unit provides 
visitation services on a monthly basis to 19 American citizens 
currently incarcerated or detained in the Shanghai consular 
district.  In terms of visa services, the Shanghai Consular 
Section is the 12th busiest non-immigrant visa (NIV) issuing 
post in the world; in 2008, Shanghai Consular Officers 
adjudicated about 175,000 NIV applications.  The Shanghai 
consular district (Shanghai and the provinces of Jiangsu, 
Zhejiang, and Anhui - home to 208 million persons) has the 
 
SHANGHAI 00000122  010 OF 010 
 
 
highest visa issuance rate of all visa issuing posts in China. 
 
SAO Concerns Highlighted 
--------------------------- 
 
¶28.  (SBU) The Shanghai NIV section is also one of the world's 
busiest posts in numbers of Security Advisory Opinions (SAO) 
requests to Washington, particularly Visas Mantis cables 
regarding possible transfer of sensitive technology.  Recently, 
the average wait time for a response from working partners in 
Washington for an SAO request has been over 3 months, an 
increase over former wait times that were usually under 4 weeks. 
 This extra delay has caused cancellation of travel plans for 
many visa applicants traveling to the United States for 
academic, employment, training, research and purchasing 
purposes.  Consular Officers noted that the SAO response backlog 
in Washington has created a public relations issue for the 
Shanghai Consular Section and posed a discernible strain on 
U.S.-China bilateral relations.  After a brief question and 
answer session, mainly focusing on understanding SAO issues, the 
staff delegation members were then shown an insider's view of 
consular operations for the Information, NIV, and ACS Units on a 
typical high-volume day. 
 
¶29.  (SBU) The Consular Section Information Unit's Congressional 
correspondent introduced herself as the point of contact for 
congressional inquiries to the Shanghai Consular Section. 
Congressional inquiries should be emailed to 
consularshangh@state.gov.  The group saw live NIV processing, 
including data entry of the NIV applications, biometric 
(10-fingerprint) data collection, Consular Officers conducting 
visa interviews, and printing of a U.S. visa.  Last, the 
delegation walked through the ACS Unit, was shown typical notary 
and passport services, and was introduced to the ACS Unit 
Foreign Service National employees who are key resources in 
helping service American citizens in the Shanghai consular 
district. 
 
¶30.  (SBU) This report has been cleared by Senate Finance 
Committee International Trade Counsel Amber Cottle. 
CAMP