US urges Mexico not to buy Chinese border scanners

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TIJUANA, Mexico — As the Biden administration overhauled security technology at the U.S.-Mexico border this year, officials learned of an unexpected national security threat developing across the Rio Grande. The Mexican government was preparing to purchase hundreds of millions of dollars worth of Chinese scanning equipment for its own checkpoints.

US officials feared the scanners, which Mexico had begun buying from Beijing-based Nuctech, would give China access to a wealth of information about goods entering the United States. The company, which makes baggage and cargo screening equipment, has close ties to the Chinese communist government.

In May, the US ambassador to Mexico wrote a letter to Mexico’s foreign minister, urging the country not to pursue the technology.

“No Chinese scanning device meets United States standards for quality control,” Ambassador Ken Salazar wrote to Secretary of State Marcelo Ebrard.

Salazar said the equipment “is not considered reliable in terms of data integrity and transmission.” He warned that this could adversely affect “our collective commitment to trade facilitation” and “our efforts to disrupt traffic in chemical precursors, synthetic drugs such as fentanyl, methamphetamines and cash, as well as firearms and ordnance.”

Read the letter from US Ambassador Ken Salazar to Mexican Foreign Minister Marcelo Ebrard

Mexican officials say they are aware of the uneasiness in the US and see value in using equipment compatible with technology used in the United States, but they are following their own country’s procurement procedures.

“Apparently [the United States has its] own concerns and arguments, but from a Mexican perspective, these are processes that must be conducted under our own laws,” said a senior Mexican official, who spoke on condition of anonymity as he was not authorized to discuss the matter publicly. “It is not so easy to say that we do not want a certain company to participate in the tender process. We cannot simply disqualify a company based on country of origin.”

The United States has warned for years that China could use security and telecommunications equipment made by its companies to gather intelligence from the United States. Washington has urged allies not to buy products from tech giant Huawei for their 5G systems. The Federal Communications Commission this month announced plans to ban the sale of Huawei and ZTE products in the United States.

The Department of Homeland Security highlighted its concerns about Nuctech in a 2020 report.

“We understand that Nuctech is likely to have a close and ongoing 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, likely has “deficiencies in detection capabilities that could create opportunities for exploitation by the Chinese government.”

Read the DHS Brief published by Nuctech on “Persistent Risks and Threats”.

Nuctech did not respond to requests for comment. In an undated statement on its website, “in response to recent media reports … to clarify that misinformation is being reported as fact,” Nuctech described itself as “a public company with an open and eclectic mix of ownership; it is not government 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 security of our customers and their data, and any suggestions to the contrary are categorically false and designed to stifle competition in emerging markets.”

In the May 2 letter to Ebrard, previously unreported, Salazar wrote that bilateral cooperation between the United States and Mexico “could be jeopardized by the use of unreliable equipment.”

Cross-border trade between the United States and Mexico exceeds $1 billion a day. The US economy relies on Mexico for products ranging from tomatoes and avocados to aircraft landing gear and cutting-edge medical equipment.

Salazar’s letter on US Embassy letterhead is one of millions of documents leaked by hackers who attacked Mexico’s Defense Secretariat this month. Internal Mexican government documents show that the country had already started buying Nuctech scanners before Salazar sent his letter.

The documents in this report were provided to the Washington Post by the civil society organization Mexicans Against Corruption and have been independently verified by The Post.

An internal memo in April shows that Mexico Customs transported nine Nuctech scanners to airports, seaports and border checkpoints, including three to the US-Mexico border cities of Mexicali, Sonoyta and Ciudad Juárez. In the letter, Salazar referenced additional scanners being considered for Mexico City’s Felipe Ángeles Airport, Paraiso’s Dos Bocas Refinery and 11 seaports. Mexico is buying more scanners for checkpoints along the US-Mexico border.

The scanners are towering rectangular frames used to search vehicles and shipping containers for drugs, explosives and illegal goods.

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US officials acknowledge that Mexico bought some Nuctech equipment but say the pending contract is much larger 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 drug and other illicit goods seizures are almost exclusively done on the US side once the contraband has reached the country.

When the Mexican government recently expressed interest in installing modern scanning equipment at its border, US officials immediately encouraged it to buy technology from one of three American companies: Astrophysics, Leidos or Rapiscan. The US Embassy in Mexico City organized visits to US border checkpoints for senior Mexican security officials to show them the effectiveness of American equipment. A contingent from the Mexican Army visited this month; A naval visit is planned for next month.

But Mexican officials appeared to be leaning towards China, saying the country’s scanners are more affordable. Salazar addressed the cost in his letter.

“When evaluating security equipment for its purchase, it is fundamental to look beyond the lowest price,” he wrote.

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Nuctech has aggressively entered global markets by offering prices significantly lower than its competitors to appeal to governments with tight budgets.

China has tried to cultivate ties with defense officials around the world, including in Mexico, to advance diplomatic and commercial ties.

“Before Covid, they had military exchanges where they invited three or four military officials to Beijing,” said Jorge Guajardo, a former Mexican ambassador to China. “They indoctrinate the one-China policy and introduce it to vendors along the way.”

Speaking of Mexico’s interest in the Nuctech scanners, he said, “My first bet is that it’s a cost and a relationship issue.”

Nuctech was reportedly once headed 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 involved in corruption in the sale of equipment.

For months, news has been circulating in the US security industry about Mexico’s plan to bid for hundreds of millions of dollars in contracts.

“Mexicans are planning to buy a large number of systems,” said an American executive who was briefed on the negotiations and spoke on condition of anonymity, citing diplomatic sensitivity. “And they told US officials, ‘We’re talking to everyone.'”

Several US security and detection companies have called on the US government to resist the Chinese contracts, in part to retain their own market share but citing reliability and privacy concerns. The scanning systems typically require service and maintenance contracts that lock users into long-term relationships with the companies. If Mexico decides to work with the Chinese company, “it would be very bad for US trade and security,” said another executive, who spoke on condition of anonymity without commenting on the company’s consent.

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US and Mexican security and customs agencies have tried to expedite trade and avoid duplication by sharing information and scanning images of border checkpoints. These joint inspection procedures have only been carried out in a few places along the border, but companies in both countries want to expand the time-saving measures.

Those plans will hit the wall when Mexico handpicks Chinese companies and the scanning and inspection information collected by the Mexican government is forwarded to cloud servers in China, industry leaders said, since U.S. law doesn’t allow government agencies to deal with Nuctech to connect systems. American companies with manufacturing facilities in Mexico will have immediate concerns about the images and information going to China, an executive said.

“Does that give them insight into everything they should have?” asked this executive. “You can’t approach trade and border controls holistically when one of the companies involved is Chinese.”

Miroff reported from Washington. Alejandra Ibarra Chaoul in Mexico City and Lily Kuo and Vic Chiang in Taipei, Taiwan contributed to this report.

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