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10 June 1998

Date: Wed, 10 Jun 1998 17:38:26 -0700 (PDT)
Subject: China Ocean Shipping Co. / Terminal Project Furor
To: jy@jya.com
From: nobody@shinobi.alias.net (Anonymous)


Associated Press, Wednesday, 10 June 1998; 4:23 p.m. EDT

Terminal Project Caught up in Furor

By Michael White, AP Business Writer

LONG BEACH, Calif. (AP) -- A Chinese shipping company that has been 
unloading shoes, clothes, toys and other goods at Long Beach harbor for 17 
years may find its expansion plans thwarted by allegations its new terminal 
could become a platform for espionage and the smuggling of arms and drugs.

The China Ocean Shipping Co. wants to lease a $200 million, 145-acre 
state-of-the-art terminal on the site of the Long Beach Naval Complex, 
which was closed in 1991 and is scheduled to be turned over to the city of 
Long Beach in a few weeks.

But the project has been caught up during the past year in the furor over 
illegal campaign donations from Asia and, more recently, whether the 
Clinton administration allowed a U.S. company to disclose missile 
technology to China.

Reps. Randy Cunningham and Duncan Hunter, Republicans from Southern 
California, contend that top-secret intelligence shows that the proposed 
Cosco terminal could become a center for spying and smuggling.

"I am not going to stand by and watch a potential enemy have access and 
control to a former naval security base," said Cunningham, a retired Navy 
pilot who spent part of his career teaching Chinese fighter tactics at the 
Navy's so-called Top Gun school.

"The hypocrisy of this is that the Chinese are so arrogant they feel they 
can do almost anything with the U.S. from the quid pro quos the 
administration has given them."

Howard Finkel, assistant vice president for marketing at Cosco's New Jersey 
headquarters, called the spying concerns ridiculous.

"We've been operating in this country in very good faith. We operate just 
like all the other (steamship) lines in the United States," he said. "This 
is not politics. We're just trying to do business."

Gus Hein, secretary of the Long Beach Harbor Commission, said of the 
allegations: "There is a lot of anti-China hysteria. There are a lot of 
irresponsible reports being bantered about by some legislators about spying 
and carrying illegal drugs."

Last year, Congress passed legislation that allows Long Beach to lease the 
property to Cosco if President Clinton signs a waiver saying that the 
terminal presents no threat to national security. Earlier this year, 
however, a House committee added an amendment to the defense authorization 
bill eliminating that option. If the Senate approves the amendment, the 
deal will be probably be dead.

The vote could take place as early as this week.

Long Beach officials are frustrated by the likelihood that, if Congress 
kills the project, Cosco will simply lease a new terminal being planned by 
the Port of Los Angeles only a few hundred yards from the Navy base.

Congress adopted the special security review for the Long Beach deal only. 
Lawmakers could try to apply similar security restrictions to the Los 
Angeles option, and Cunningham said he would intervene there, too.

None of the opponents has said specifically how a Cosco terminal would 
threaten national security. Long Beach officials say the construction plans 
call for a mostly open-air facility where sealed cargo containers would be 
removed from ships and loaded onto trucks for transport to inland 
warehouses.

The terminal would actually be operated by an American subcontractor, said 
Yvonne Avila, a spokeswoman for the port. Only about a dozen Cosco 
employees would be on hand, and most of them would be U.S. citizens.

Cosco carries 12 percent of the Chinese cargo that enters the United States 
each year. The rest is transported by other steamship companies.

At stake for Long Beach -- the nation's busiest harbor -- is $14 million to 
$18 million a year in lease payments from the new terminal, plus about 
1,000 permanent jobs. City officials consider the project a way to regain 
some of the 60,000 jobs that were lost in the post-Cold War downsizing of 
the aerospace and defense industries.

Cunningham said he is not trying to stop Cosco from operating at U.S. ports 
but does not want the company to have its own terminal.

"Do we need to engage them? Will I probably vote for most-favored-nation 
status? Yes, because China has changed in recent years," he said. "But at 
the same time, we've got to hold them at arm's length."


Copyright 1998 The Associated Press