U.S. urges Mexico not to buy Chinese scanners for the border

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

US officials feared that the scanners, which Mexico began buying from Beijing-based Nuctech, would give China access to a lot of information about goods entering the United States. The company, which makes equipment for sorting baggage and cargo, has strong ties to China’s communist government.

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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 equipment meets US standards for quality control,” Ambassador Ken Salazar wrote to Foreign Minister Marcelo Ebrard.

Salazar said the equipment “is not considered reliable with regard to data integrity and transmission.” He warned that it “could inhibit our shared commitment to facilitating trade” and “our efforts to stop the trafficking of precursor chemicals, synthetic drugs like fentanyl, methamphetamines and cash, as well as firearms and ammunition.”

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

“Obviously [the United States has its] our own concerns and reasoning, but from a Mexican point of view, these are processes that must be done in accordance with our own laws,” said a senior Mexican official who spoke on condition of anonymity because he was not authorized to discuss the matter publicly. It’s not as simple as saying that we don’t want a particular company to participate in the bidding process. We cannot 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 buy products from tech giant Huawei for its 5G systems. The Federal Communications Commission this month announced plans to ban sales of Huawei and ZTE products in the United States.

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

“We assess that Nuctech likely has a close and enduring relationship with the Chinese government to further 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 capability, which could create opportunities for exploration by the Chinese government.”

Nuctech did not respond to requests for comment. In an undated statement on its website “in response to recent media reports… to clear up misinformation published as fact”, Nuctech described itself as “a limited company with an open and versatile mix of shares; it is not controlled by the State”.

“Our customers are the sole owners of all data generated by Nuctech’s systems,” the company said. “Nuctech is 100% committed to the security of our customers and their data and any suggestion to the contrary is categorically false and designed to stifle competition in emerging markets.”

In the May 2 letter to Ebrard, which was not previously released, 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 depends on Mexico for products ranging from tomatoes and avocados to aircraft landing gear and state-of-the-art medical equipment.

Salazar’s letter on US Embassy letterhead is one of millions of documents leaked by hackers that attacked Mexico’s Secretary of Defense 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 shared with The Washington Post by the civil society organization Mexicans Against Corruption and independently verified 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 US-Mexico border cities of Mexicali, Sonoyta and Ciudad Juárez. In the letter, Salazar referred to other scanners being considered for the Felipe Ángeles airport in Mexico City, the Dos Bocas refinery in Paraíso and 11 seaports. Mexico is buying more scanners for checkpoints along its side of the US-Mexico border.

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Scanners are imposing rectangular structures used to search vehicles and containers for drugs, explosives and illicit goods.

US officials acknowledge that Mexico has purchased some equipment from Nuctech, but say the pending contract is much larger and more worrisome.

Washington has complained for decades about the lack of security infrastructure on the Mexican side of the border, which causes the seizure of drugs and other illicit goods to take place almost entirely on the US side after smuggling enters the country.

Recently, when the Mexican government expressed interest in installing modern scanning equipment on its border, US authorities immediately encouraged it to purchase technology from one of three US companies: Astrophysics, Leidos, or Rapiscan. The US Embassy in Mexico City organized visits by high-level Mexican security officials to US border checkpoints to showcase the effectiveness of US-made equipment. A Mexican army contingent visited this month; a navy visit is planned for next month.

But Mexican officials seem to lean towards China, saying the country’s scanners were more affordable. Salazar addressed the cost in his letter.

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

Nuctech has aggressively entered global markets, offering markedly lower prices than its competitors, to appeal to governments on tight budgets.

China has tried to nurture relationships with defense officials around the world, including in Mexico, to advance diplomatic and trade ties.

“Before Covid, they used to have military exchanges where they invited three or four military personnel to Beijing,” said Jorge Guajardo, a former Mexican ambassador to China. “They indoctrinate the one-China policy and introduce them to parallel suppliers.”

Of the Mexican interest in Nuctech scanners, he said, “My first bet is it’s costs and relationships.”

Nuctech 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 employees engaged in corruption in efforts to sell equipment.

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News of Mexico’s plan to offer contracts worth several hundred million dollars has been circulating in the US security industry for months.

“Mexicans plan 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 everybody.’

Several US security and detection companies have urged the US government to back off against Chinese contracts, in part to preserve their own market shares, but citing reliability and privacy concerns. Scanning systems typically require service and maintenance contracts that commit users to long-term relationships with companies. If Mexico chooses 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 for comment without the company’s approval.

US and Mexican security and customs agencies have tried to accelerate trade and avoid duplication of efforts by sharing information and digitizing images of border crossings. These joint inspection procedures have only been implemented at a few locations along the border, but companies in both countries want the time-saving measures to be expanded.

Those plans will be thwarted if Mexico chooses Chinese companies and the scan and inspection information collected from the Mexican government is directed to cloud servers in China, industry executives said, because US law does not allow government agencies to connect to systems. Nuctech. US companies with factories in Mexico will have immediate concerns about images and information going to China, an executive said.

“Does that give them visibility of anything they should have?” asked this executive. “You cannot take a holistic approach to trade and border inspections if one of the companies involved is Chinese.”

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

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