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U.S. Reaches Deal with China's ZTE; Trump Heads for G7 Showdown Over Trade Tensions; Interview with Senator Rob Portman; DOJ Inspector General Report Expected to Fault James Comey, Loretta Lynch; Aired 10- 10:30a ET

Aired June 7, 2018 - 10:00   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.


[10:00:00] CHRISTINE ROMANS, CNN CHIEF BUSINESS CORRESPONDENT: -- just hours ago between China and the U.S. with a big fine and American supervision. A billion dollar fine, $400 million in an escrow account as a deterrent, and an entirely new board of directors and new management within 30 days.

And then this, something I really have never seen before, an American chosen compliance team embedded in the Chinese company. Now the Commerce secretary is hailing this as the first time a major foreign company will have on the ground oversight to make sure it stays in compliance with U.S. export control rules and doesn't cheat. So why does it need a babysitter?

Well, Brianna, because ZTE violated U.S. sanctions, sold its products to Iran and North Korea, got caught and was fined, and then the company lied about punishing the violators. On top of that, you mentioned those national security concerns. Experts in the U.S. and Britain have warned ZTE phones are a national security threat. ZTE's majority shareholder is a Chinese state run company.

In April, the Pentagon banned sales of ZTE phones on U.S. military bases to protect against spying. Now this deal, this deal just announced, reverses a Commerce Department ban that would have essentially put this company out of business. And then you remember the president tweeted he was concerned about Chinese jobs being lost, so a big shift in the treatment of ZTE.

Now It's clear ZTE is an important piece of ongoing trade negotiations with China. The dispute out of the way, this particular ZTE dispute out of the way, it really clears the way for more discussion of China buying more American products to shrink the huge trade deficit, but it raises the question, has the White House exchanged a trade win here for national security?

You know, the Commerce secretary was on CNBC a few moments ago and he said there is a new marshal in town. This is the U.S. being tough on China, there is a new marshal in town, he's Donald J. Trump and he's a good shot. Chuck Schumer -- Senator Chuck Schumer responded, this deal with ZTE proves the president just shoots blanks. He says that ZTE doesn't deserve a second try, a second chance -- Brianna.

BRIANNA KEILAR, CNN ANCHOR: And a lot of Republicans joined Chuck Schumer in that sentiment, too. ROMANS: That's right.

KEILAR: Christine Romans, thank you so much.

ROMANS: You're welcome.

KEILAR: China, of course, has a complicated trade situation with the U.S. these days. But they're not the only ones. U.S. allies as well, some new U.S. tariffs hitting Europe, Canada, and Mexico, and that is sure to complicate this year's G7 summit, taking place starting tomorrow in Canada.

CNN's Kaitlan Collins is at the White House. This could be awkward, Kaitlan.

KAITLAN COLLINS, CNN WHITE HOUSE CORRESPONDENT: Awkward is a very gentle way to put it, Brianna. It's like making a decision that none of your friends agree with and then showing up to a party with them and having to defend that decision. That's what President Trump is going to be doing this weekend when he shows up to this summit, knowing that these leaders, he's antagonized for weeks, they've had very testy phone calls, and Canada feels especially scorned by these recent steel and aluminum tariffs that the president said he was imposing last week.

So that certainly is going to be quite an awkward meeting, sparks could certainly fly. Though the White House maintains that the president, this is just a family quarrel between the U.S. and their allies, and the president is just simply sticking by his guns here. And this is certainly an argument the president has made long before he ever ran for office. He does believe that the global trade scale is tilted against the United States.

But now he's going to have to go and make his argument in person face- to-face with these other world leaders that he's had very testy relationships with in recent weeks over not just this but this is certainly going to be the elephant in the room when the president shows up in Canada. So that is what we're going to be watching, how does the president deal with that, because he's not just getting pushback on these new trade moves from Republicans here in Washington, but also abroad, and how does he deal with that?

Now he's got all of that going on, he's focusing on that, but also he's welcoming the prime minister of Japan here at the White House today, someone who is hoping to make the argument that he can convince Trump to maintain a hard-line when he meets with the North Korean dictator in Singapore on Tuesday.

KEILAR: All right, Kaitlan Collins at the White House, thank you so much.

Joining me now to talk more about this, we have CNN political commentators Patti Solis Doyle, and also Doug Heye with us as well.

Let's talk first about this ZTE deal and just to put into context because, you know, a lot of people, ZT what? But this is a -- this is a huge Chinese telecom company. They make affordable cell phones, among other things, and they have violated U.S. sanctions. The Department of Defense actually said, hey, we're not going to let these products be sold on military bases because we're just not sure that China can't use them as a backdoor to basically have surveillance, to use them as part of a spying operation.

Is it -- is this the right company to be striking a deal with?

PATTI SOLIS DOYLE, CNN POLITICAL COMMENTATOR: Well, the question is why, right? I mean, the president has been advised against this by members of his own National Security team, by members of his own party on the Hill, by Democrats certainly.

[10:05:01] And the president's own rhetoric on the campaign against China was, you know, crazy. So the question is, why is he doing this and why is he doing this now? Is it to save Chinese jobs? I mean, is it because, you know, President Xi really sort of feted him when he went to visit and, you know, threw a parade for him or is it because of Ivanka Trump just got some new patents from China?

It just -- it doesn't make sense why he's doing this and why he's doing this now while he's actually punishing our allies, right? Right? I mean, China is an adversary. And right now he's punishing our allies, he's punishing Canada, he's punishing Mexico with these tariffs. So it just doesn't make sense politically for him or for our country.

KEILAR: What are the long-term impacts, Doug, of an environment where, you know, China gets this sweet deal, and then Mexico, Canada, EU, are facing tariffs from the U.S.?

DOUG HEYE, CNN POLITICAL COMMENTATOR: It's almost as if the poles are being reversed and the North Pole is now the South Pole and vice versa. I mean, this is also -- while Trump certainly was campaigned for 20 years now about being tough on trade deficits, being tough on China, what we're seeing is that our allies are actually having the toughest phone calls with Donald Trump. They're the ones who are leaking these phone calls with Donald Trump. Obviously Canada was one of our great foes in the war of 1812. We've now learned. And so --

KEILAR: Fact check.

HEYE: Not true. And look, I think the broad and long-term implications here is you go back to a central thing that the president said when he was campaigning and still says, he says the world is laughing at us. And what we know is that when we talk to our allies, they're not laughing at us, they're really concerned about the directions moving forward.

KEILAR: Now they're scratching their heads at the U.S. Right? David Gergen who's advised many administrations was just on and he said that he looks at this and he worries moving forward you're not going to see the U.S. essentially upholding -- is not going to have the company of these other countries that it's normally counted on as allies to move forward with, like, a united idea about what the world should look like and shared values. Do you worry about that when you look at this, Doug?

HEYE: Yes. Absolutely. Again, if you talk to our allies, they're very concerned, they have a million different questions. The uncertainty is one of their biggest problems. Forget the decisions that Donald Trump makes, which they may agree with, they may disagree with. The uncertainty is what causes them so much concern. And look at everything that you talked about just in this segment and the previous one. These are a whole lot of things that we didn't necessarily think that the Trump administration was going to be having to deal with, and we know every administration has things that come up by surprise, ZTE was on no one's radar screen as we were talking about. The "Access Hollywood" tape or Hillary's e-mails or anything else.

KEILAR: As Republicans are concerned about what the president is doing with allies on tariffs, you have Senator Bob Corker, he has unburdened, I will say, by re-election fight, right? But he's got a bill up, it's got bipartisan support. It would force the president to get congressional approval on things like tariffs. There is a minor problem. And Mitch McConnell explains this. Let's listen.

(BEGIN VIDEO CLIP)

SEN. MITCH MCCONNELL (R), MAJORITY LEADER: I don't think we need to be trying to rein in the president through legislation. Number one, it'd be an exercise in futility because he wouldn't sign it.

(END VIDEO CLIP)

KEILAR: Yes. There's is that, Patti.

HEYE: That's true.

(LAUGHTER)

SOLIS DOYLE: Right. Look, NBC News poll just came out this morning that says that by 25 points, you know, voters want a check on this president, right? That's why they are looking to see whether Republicans in the general are going to be -- have supported the president or have gone against him in certain areas, you know, that matter, like tariffs, like national security, like keeping the Mueller probe, you know, solid and there and safe.

And so I really think that it will behoove Republicans to, you know, stand their ground. Paul Ryan yesterday, you know, is an example, not a great example but he finally --

KEILAR: Pouring water on the whole idea of spygate.

SOLIS DOYLE: Right. Pouring water on the whole idea of spygate. You know, he finally grew a spine. And I think voters are paying very close attention as the NBC News polls this morning.

KEILAR: But is it Republicans? I mean, you mentioned Paul Ryan, he's not running for re-election. Is it Republicans who in their heart of hearts feel, Doug, that they should be in opposition to the president but they only feel free to do it when they don't have a political future on the line?

HEYE: Well, I think you've got two things. One, you know, I saw the same poll, it absolutely says that. But what we also know is Republican primary voters, those voters and members of Congress go back to and hear from every time there in their districts are almost unanimously behind this president.

KEILAR: Huge. Huge.

HEYE: That makes an impact.

KEILAR: A very good point.

HEYE: And so --

SOLIS DOYLE: We're talking about general.

HEYE: Sure.

SOLIS DOYLE: We're talking about actually winning.

HEYE: Sure. But you have to get there first.

SOLIS DOYLE: Correct.

HEYE: And that's the struggle that Republicans feel. Certainly what a lot of Republican members say privately is not what they say publicly. But that's also because they feel other pressures.

[10:10:05] They want to pass legislation. They want to have the president sign this legislation into law, and so if you're out there attacking the president, if you're being as bold and brave as so many in the media call on you to do, you're not passing your bill and ultimately that's the question they're asking, how they can best serve their constituents.

KEILAR: G-7, Patti, last question to you here. The "Washington Post" is reporting the president is frustrated to be going to the G-7. He's got this big summit with Kim Jong-un here in a few days. Can you -- can you blame him, though? I mean, if you have possibly one of the biggest tests of your professional life coming up, would you want to take a trip somewhere even if it is your actions that have upset your allies there?

SOLIS DOYLE: Well, no. I mean, of course he doesn't want to go. I mean, all these, you know, leaders are mad at him. And they don't particularly like the way he leads and President Trump has isolated America from its allies. It's not just the tariffs. It's the Paris Climate Accord, it's the Iran deal, it is, you know, all of these things that these leaders have worked together on for years and years and suddenly Trump came in and said not so much, no, thank you. So it's not going to be comfortable for him. It's going to be awkward. It's not going to be pleasant. You know, they're not going to fight to sit next to him or take a picture with him like, you know, most leaders do with the American president. So do I blame him? No. But he could work on his people skills with these leaders.

KEILAR: Patti and Doug, thank you so much to both of you. I really appreciate it.

HEYE: Thank you.

KEILAR: Republican Senator Rob Portman calls ZTE a national security issue. So will he or any other senators take action to stop this new deal between the Chinese tech company and the Trump administration? Can they? I'll be asking him next.

And it's set to be a scathing report out of the Justice Department's independent investigator. Former FBI and DOJ officials are going to face tough criticism over their handling of the Hillary Clinton e-mail probe.

Plus Samantha Bee back on television and confronting those controversial comments she made about Ivanka Trump. Did she put the issue to rest or not?

(COMMERCIAL BREAK)

[10:16:15] KEILAR: President Trump heads to Canada tomorrow for the G-7 summit where he will likely get a chilly reception from leaders now that he's hit several allies with steel and aluminum tariffs.

Joining me now is Republican Senator Rob Portman, he is from Ohio, and he's also a member of the Foreign Relations and the Finance Committees.

Thanks for being with us, Senator.

SEN. ROB PORTMAN (R), OHIO: Thank you, Brianna.

KEILAR: So representing Ohio, this is a state with considerable industrial interests, of course. You have warned that these tariffs could spiral out of control. You also see the goal of the president, you think that maybe the goal at least is well intentioned. But what do you see that goal being?

PORTMAN: I think you said it well, I think the goal in the case with Canada is to get an agreement on the North American Free Trade Agreement and I think, you know, frankly it could be helpful to say, you know, unless we get an agreement, we're going to have to put these tariffs in place. On the other hand, if both sides escalate and increase tariffs as seems to be happening, you could end up with two situations, one, no agreement in the end because both sides are in conflict, and you know, for Ohio consumers and for Ohio exporters, a bad deal.

Canada is our biggest trading partner in Ohio, it's our biggest trading partner nationally, by the way. We send about half of our exports to just two countries, Canada and Mexico. And by the way, as a country, we send more steel to Canada than they send to us, clearly but we send a little bit more, so Canada has not been viewed as one of those countries that's cheating or using unfair trade practices with regard to steel or aluminum. And so I think we need to be careful.

KEILAR: Is there a better way to try to get a better NAFTA deal than the way the president is doing it?

PORTMAN: Well, I think it's tough negotiations. Look, the Canadians have some protectionist policies in place, definitely should be addressed. One would be dairy, which is a concern around the country, but specifically in Ohio. They have other nontariff barriers in place. So there are things that we'd like to see changed and there are things they'd like to see changed on our side. And that's what the negotiation is about.

And I think you can say, you know, unless we can achieve this negotiated product here, which would be a final North American Free Trade Agreement, you know, that there will be negative consequences. But the problem with this approach is I think you're seeing an escalation that may result in both higher tariffs, which is bad for our exporters or farmers or service providers, our factory workers, but also bad for consumer because you're going to see tariffs or taxes going up on both sides.

KEILAR: I know being on the Foreign Relations Committee you have an eye trained on what's going on with North Korea. Listen to what the president's personal lawyer Rudy Giuliani said.

(BEGIN VIDEO CLIP)

RUDY GIULIANI, PRESIDENT TRUMP'S ATTORNEY: Well, somehow North Korea after he canceled the summit because they insulted the vice president, they insulted the -- his National Security adviser, and they also said they were going to go to nuclear war against us. They were going to defeat us in a nuclear war. We said, we're not going to have a summit under those circumstances. Well, Kim Jong-un got back on his hands and knees and begged for it.

(END VIDEO CLIP)

KEILAR: This isn't even Rudy Giuliani's wheel house of what he's supposed to be doing. Is this helpful? Is this unhelpful?

PORTMAN: I don't know that it has much impact one way or the other but I do think --

KEILAR: Really?

PORTMAN: Well, look, I think there is a lot being said on both sides if you look at the rhetoric from the North Koreans, similarly bombastic at times. But I think the point here is direct talks are a good idea. I have felt this most acutely since I worked so hard on trying to get this young man, Otto Warmbier, back from Korea and he end up coming back from North Korea in a vegetative state and had been for about 16 months. They refused to tell us because we had no direct diplomacy with him.

[10:20:02] So with regard to the nuclear program and other issues including human rights, we need to have direct negotiations, direct talks, they need to be frank, and they need to be productive and I hope this one will be. So I support the summit. And I think it's overdue.

KEILAR: You are unveiling a report from Senate Republicans, just to be clear, this is a majority report, but what it found was that following the Iran nuclear deal in 2015, the Obama administration tried to give Iran access to the U.S. financial system. They were converting millions of dollars worth of rials to euros and the easiest way to do that, the best way to do it is to go through the U.S. dollar because that's what the currency is tied to.

So they were trying to give them access to do that. And in the end, banks actually refused to do this and the Obama administration was not telling Congress they were doing this and certainly Republicans feel very much that the administration wasn't being honest with them.

What's the objective of your report here?

PORTMAN: By the way it's not just Republicans, the State Department itself at the time said that it was outside the scope of the agreement. So I think you have stated it very well objectively speaking, they misled Congress and misled the American people. And the Permanent Subcommittee on Investigations is an oversight body. So it's our job to expose those kinds of misleading statements and in this case misleading testimony, and the report also, of course, lays out legislative solutions.

One is transparency. In other words, in the future, whether it's another Iran agreement, which I hope we will have another one in the future, I hope we have a better one, whether it's an agreement with North Korea, which I hope we will end up with at some point following this summit, we need to be sure that Congress and the American people are told. In this case we were told that there was going to be no access to the U.S. financial system because as you recall, the primary sanctions stayed in place with regard to Iran. Only the secondary sanctions for other countries to do were opened up.

And while they were saying that there was no access to the financial system, they were actually providing a license, a specific license to Iran to be able to convert these rials in Oman to dollars and eventually to euros. So I think it's important to have that oversight.

KEILAR: As the administration leaves this deal, obviously Republicans don't like the deal. They're making the case certainly why leaving the deal was the right thing to do. But that said, how are you making the case for keeping Americans safe? Especially as we just heard here in recent days the ayatollah saying that they're going to enrich -- he's ordering an upgrade in uranium enrichment.

PORTMAN: Well, there are several problems that I've had with the agreement all along. And as you know, a majority of the United States Senate, a bipartisan majority, voted against the agreement. It wasn't adequate because you had to have a two-thirds vote under the rules that we had. Normally if it's a treaty, the other way around. You have to get a two-thirds vote to support it. But President Obama chose not to pursue a treaty, instead he did something by executive action, which gave President Trump the ability to change it obviously.

KEILAR: But can you -- but can you answer the question, Senator, about just at this point in time, I mean, this is where we are. What about keeping America safe, as you have the ayatollah ordering more enrichment?

PORTMAN: Well, again, the reason, many are supposing, is we didn't think it kept America safe. You know, it does have certain restrictions, but it does allow them to be able to enrich within the 15-year period, now within less, you know, 12-year period, so it frankly gives them a path to be able to not just enrich but move ahead with their nuclear weapons program, but it didn't do anything with regard to the other issue. And this is where I think there was a -- not just a grave mistake, but we have seen over the last few years what's happened.

So, look what's happening in Syria, look what's happening with Hezbollah, look what's happening with the number one state sponsored terrorist in the world, none of that was pushed back. In fact instead billions of dollars were given to the regime to support that. So it's further destabilized the region. Since the agreement, look what's happened in Yemen as an example. So, you know, we have put ourselves on a track where the Middle East has become more dangerous as a result of the agreement in my view.

It means of course that we need to have a new agreement and we need to get the Europeans and others to work with us on that. And that's what I support.

KEILAR: All right. Senator Portman, thank you so much.

PORTMAN: Thank you.

KEILAR: Major developments out of the Justice Department this morning. Why former leaders of the FBI and DOJ are expected to face tough criticism.

(COMMERCIAL BREAK)

[10:28:50] KEILAR: A highly anticipated report from the Justice Department's head investigator will likely mean tough new criticism for former FBI and DOJ officials. Sources telling CNN the report will sharply rebuke James Comey, the former FBI director, for his handling of the Hillary Clinton e-mail investigation. Also expected to criticize actions by Loretta Lynch, the attorney general, and Andrew McCabe, the number two then at the FBI.

CNN's Laura Jarrett breaking this news for us this morning.

Great reporting, Laura. Tell us what you've learned.

LAURA JARRETT, CNN JUSTICE REPORTER: Thanks, Brianna. Well, this long awaited report is still not been publicly released yet, but sources tell us it will be exhaustive and thorough, running over the course of nearly 500 pages. And here's what we expect. The role of James Comey, especially leading up to that July 2016 controversial announcement when he came out to the public without any Justice Department approval, he said that he was recommending no charges against Clinton, but he also said that he found her extremely careless. But the IG is also looking into, of course, that letter that he sent to lawmakers just days before the November 2016 election, informing them that he had essentially reopened the Clinton e-mail probe despite, again, Justice officials telling him that that would be against department protocol so close to the election.

Now Comey has said in the past he's open to a full airing on this. He doesn't think --