U.S. urges Mexico not to buy Chinese scanners for the border
TIJUANA, Mexico - As the Biden administration revamped security technology at the U.S.-Mexico border this year, officials learned of an unexpected national security threat developing on the other side of the Rio Grande. The Mexican government was preparing to purchase hundreds of millions of dollars of Chinese scanning equipment for its own checkpoints.
U.S. officials worried that the scanners, which Mexico had begun to purchase from Beijing-based Nuctech, would give China access to troves of information about goods entering the United States. The company, which manufactures equipment to screen luggage and cargo, has strong ties to China's communist government.
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In May, the U.S. ambassador to Mexico wrote a letter to Mexico's foreign minister urging the country not to pursue the technology.
"No Chinese scanning equipment meets the United States' standards for quality control," Ambassador Ken Salazar wrote to Foreign Minister Marcelo Ebrard.
Salazar said the equipment "is not considered reliable in regard to data integrity and transmission." He warned it "could inhibit our shared commitment to facilitate commerce" and "our efforts to interrupt traffic of chemical precursors, synthetic drugs such as fentanyl, methamphetamines and cash, as well as firearms and ordnance."
Mexican officials say they are aware of the U.S. unease and see value in using equipment that is compatible with technology used in the United States, but they are following their own country's procurement procedures.
"Obviously [the United States has its] own concerns and reasoning, but from a Mexican perspective these are processes that have to be done according to our own laws," said a senior Mexican official who spoke on the condition of anonymity because he was not authorized to discuss the matter publicly. "It's not as simple as saying we don't want a certain company to participate in the tender process. We can't simply disqualify a company based on country of origin."
The United States has warned for years that China could use the security and telecommunications equipment produced by its companies to gather information from the United States. Washington has urged allies not to purchase products from tech giant Huawei for their 5G systems. The Federal Communications Commission this month announced plans to ban sales of Huawei and ZTE products in the United States.
The Department of Homeland Security highlighted its concerns about Nuctech in a 2020 report.
"We assess that Nuctech very likely has a close and enduring relationship with the Chinese Government to advance Nuctech's business interests and develop screening and detection systems on behalf of the Chinese Government," the department wrote. Its equipment, the department said, is likely to have "deficiencies in detection capabilities, which may create opportunities for exploitation by the Chinese Government."
Nuctech did not respond to requests for comment. In an undated statement on its website "in response to recent media stories . . . to clarify misinformation being published as fact," Nuctech described itself as "a joint stock company with an open and versatile shareholding mix; it is not state controlled."
"Our customers are the sole owners of all data generated by Nuctech's systems," the company said. "Nuctech is 100 percent committed to the safety and security of our customers and their data and any suggestions to the contrary is categorically false and designed to stifle emerging market competition."
In the May 2 letter to Ebrard, which has not previously been reported, Salazar wrote that bilateral cooperation between the United States and Mexico "could be put at risk by the use of unreliable equipment."
Cross-border trade between the United States and Mexico exceeds $1 billion a day. The U.S. economy relies on Mexico for products that range from tomatoes and avocados to aircraft landing gear and state-of-the-art medical equipment.
Salazar's letter on U.S. Embassy letterhead is one of millions of documents leaked by hackers who targeted Mexico's secretariat of defense this month. Internal Mexican government documents show that the country had already begun purchasing Nuctech scanners before Salazar sent his letter.
Documents in this report were shared with The Washington Post by the civil society organization Mexicans Against Corruption and verified independently by The Post.
An internal memo from April shows that Mexico's customs agency transported nine Nuctech scanners to airports, seaports and border checkpoints, including three to the U.S.-Mexico border cities of Mexicali, Sonoyta and Ciudad Juárez. In the letter, Salazar referred to additional scanners being considered for the Felipe Ángeles airport in Mexico City, the Dos Bocas refinery in Paraiso and 11 seaports. Mexico is purchasing more scanners for checkpoints along its side of the U.S.-Mexico border.
The scanners are towering rectangular frames used to search vehicles and shipping containers for drugs, explosives and illicit merchandise.
U.S. officials acknowledge that Mexico has purchased some Nuctech equipment but say the pending contract is much bigger and more concerning.
Washington has complained for decades about the lack of security infrastructure on the Mexican side of the border, which has meant that the seizure of drugs and other illicit goods takes place almost entirely on the U.S. side, after the contraband has entered the country.
Recently, when the Mexican government expressed interest in installing modern scanning equipment on its border, U.S. officials immediately encouraged it to purchase technology from one of three American companies: Astrophysics, Leidos or Rapiscan. The U.S. Embassy in Mexico City organized visits for high-level Mexican security officials to U.S. border checkpoints to show them the effectiveness of American-made equipment. A Mexican army contingent visited this month; a navy visit is planned for next month.
But Mexican officials have appeared to lean toward China, saying that country's scanners were more affordable. Salazar addressed cost in his letter.
"When evaluating security equipment for its acquisition, it is fundamental to see beyond the lowest price," he wrote.
Nuctech has moved aggressively into global markets by offering prices that are sharply lower than those of its competitors, to appeal to governments with tight budgets.
China has tried to nurture relationships with defense officials around the world, including in Mexico, to advance diplomatic and commercial ties.
"Before covid, they used to have military exchanges in which they would invite three or four military officials to Beijing," said Jorge Guajardo, a former Mexican ambassador to China. "They indoctrinate on the one-China policy and introduce them to vendors on the side."
Of the Mexican interest in the Nuctech scanners, he said, "My first bet is that it's costs and it's relationships."
Nuctech reportedly was once led by Hu Haifeng, the son of former Chinese president Hu Jintao. The governments of Taiwan and Namibia have found in separate cases that Nuctech officials engaged in corruption in efforts to sell equipment.
News of Mexico's plan to offer contracts worth several hundred million dollars has circulated within the U.S. security industry for months.
"The Mexicans plan to buy a large number of systems," said one American executive who has been briefed on the negotiations and spoke on the condition of anonymity, citing the diplomatic sensitivity. "And they told U.S. officials, 'We're talking to everyone.'"
Several U.S. security and detection companies have urged the U.S. government to push back against the Chinese contracts, in part to preserve their own market shares but citing concerns about reliability and privacy. The scanning systems typically require service and maintenance contracts that commit users to long-term relationships with the companies. If Mexico opts to work with the Chinese company, "it would be very bad for U.S. commerce and security," said another executive, who spoke on the condition of anonymity to comment without company approval.
The U.S. and Mexican security and customs agencies have tried to speed commerce and avoid duplicating efforts by sharing information and scanning images from border checkpoints. Those joint inspection procedures have been implemented at only a few locations along the border, but businesses in both countries want the timesaving measures expanded.
Those plans will hit a wall if Mexico picks Chinese companies and the scanning and inspection information gathered from the Mexican government is directed to cloud servers in China, the industry executives said, because U.S. law does not allow government agencies to connect to Nuctech systems. American companies with manufacturing plants in Mexico will have immediate concerns about the imagery and information going to China, one executive said.
"Does that give them visibility into anything they should have?" that executive asked. "You can't adopt a holistic approach to trade and inspections at the border if one of the companies involved is Chinese."
Miroff reported from Washington. The Washington Post's Alejandra Ibarra Chaoul in Mexico City and Lily Kuo and Vic Chiang in Taipei, Taiwan, contributed to this report.
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