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China Cuts Tariffs; Stocks Surge on Trade Truce; Trump's Border Wall Demand; New NAFTA Trade Deal; Support for Saudi Arabia; Second Summit with Kim. Aired 9:30-10a ET

Aired December 3, 2018 - 09:30   ET


[09:30:00] CHRISTINE ROMANS, CNN CHIEF BUSINESS CORRESPONDENT: This is a pause in the trade war. All of the tariffs are still on. And for 90 days they're going to talk. So that's significant. And that's what the markets are happy about, that it's not going to get worse in the next 90 days.

But in those 90 days, they have to fix, Jim, what are a few decades of complaints from the Americans. Forced technology transfer, when a company goes -- an American company goes to China, they're forced to hand over their cutting-edge technology if they want to do business there. Intellectual property theft, that has been a real problem for businesses for years. Non-tariff barriers, for example, having to register your company and do all kinds of oversight from the Chinese government of your company, or maybe there are delays at the port. Those are things that aren't necessarily a tariff but are hard for American companies. And cyber espionage --


ROMANS: Which goes on to this day, which is a huge complaint of the American government and American business.

SCIUTTO: And I always remind people, Chinese stealing of state secrets, that's not bad behavior, that is -- that is Chinese state policy.

ROMANS: It's the business model. It's the business model.

SCIUTTO: And it's not -- it's a business model. Not something that they'll walk away from quickly.

Alison, you're on the floor there. And we're seeing futures here. And there's the market opening now, up more than 400 points. What are you hearing there about how sustained this is expected to be, or is this more a sense of relief?

ALISON KOSIK, CNN BUSINESS CORRESPONDENT: You know what, Jim, you ask a very good question because as we see the Dow rally up 415 points in just the first minute of trading, there is a lot of skepticism on the floor because a lot of what Christine was talking about, we've got 90 days here to have some heavy negotiations about some heavy topics. About China stealing intellectual property from the U.S. about China forcing technology companies to hand over their technology. How do you come to a solution with those kinds of issues? There's a lot of skepticism that also that the president could wind up just changing his mind next week.

So today you see this relief. You see the Dow up 410 points. But then you've also got the reality of what could happen next week.

There's also the reality of how these tariffs are affecting companies because the tariffs that are already in place, they remain in place. And I'm also speaking to the steel and aluminum tariffs, which are raising costs for companies and something that was prominent in a lot of discussions in those earnings calls and the most recent earnings season.


SCIUTTO: Well, we know we're going to see -- you're going to stay on it. There on the floor, Alison Kosik, Christine Romans, here with me in the studio, thanks very much.

Joining me now is Max Baucus. He is the former U.S. ambassador to China. Also, of course, former U.S. senator.

Mr. Ambassador, Mr. Senator, thanks for taking the time this morning.


SCIUTTO: So on the first point, because you, in your time in Beijing, had many dealings with Chinese officials here. What struck me is that you have the Chinese and President Trump coming out of this meeting with two different descriptions as to what was agreed upon in the meeting. I just put this up on the screen for the sake of our viewers.

President Trump claiming success on a whole list of bullet points issues here, setting a 90 day deadline, China agreeing to start purchase of agricultural products, China open to approving what was a major telecoms deal, Qualcomm and the Chinese company NXP. But on all these issues, China did not make mention of those.

In your experience, if China doesn't come out of the meeting and make similar pronouncements, does that mean these things were actually agreed to?

BAUCUS: Well, we hope they were, but we don't know that they were. I'd like to have seen a single document signed by both presidents to help us understand what's in the agreement and what's not.

Frankly, I'm a little concerned, especially when both sides don't totally agree. Even when they do agree, it's my experience, when I served as ambassador, that often China especially does not come through with it, you know, come through with their agreement. It's very frustrating.

Now I hope that's not the case right now. There's even some lingering background aspiration that maybe we can begin a free trade agreement, U.S. and China. It don't think that's going to happen. It would be great if we could start those talk and negotiations. But I just -- there's a lot of talk and we'll see what the parties can process in the next 90 days.

SCIUTTO: Let me ask you this because you, of course, know from your time in Beijing, and also time as the U.S. senator, that the president is right here, China is guilty of a whole host of bad trade behavior here, from stealing U.S. secrets, from blocking U.S. companies from operating freely in China, that the president kind of swinging a big bat here on these issues.

From what you're hearing now, is China moving on these issue? Is China willing to negotiate, willing to give ground to the U.S. after these months of tough talk?

BAUCUS: I think China would like to give enough so that the -- it avoids a trade war, but not give in too much because it doesn't want to give in its --some advantages it now has.

I think that you're going to find that both countries are going to keep talking, they're going to see what they can agree to, but I think Trump is a bit restricted now because the American business community is telling him that this tool he's using, tariffs, is not the right tool to try to change Chinese behavior. And it's -- because it's hurting American business, it's hurting our economy. And I think that's one reason why Trump didn't push farther, to try to get a more significant agreement.

[09:35:22] To answer, frankly, to --

SCIUTTO: Do you see him backing down? Is that, in effect, is he backing down, the president here, because of that pushback from the U.S. business community?

BAUCUS: I think there is some pushback. I think he's backing down a little bit. I'm just trying to be honest and direct. Don't forget, his MO a bit is a lot of bluster and then backs off. You know, this new FTA -- excuse me, the new NAFTA agreement is not much different from the old NAFTA. He's not really followed through on the wall very much. And there's a lot of talk there. But I -- and I therefore think that he's start -- you're going to see more of that. A lot of talk but not a lot of action. I'm trying to be honest. I don't -- I'm not trying to be partisan here but I just call them as I see them. But I just -- I do think he's not going to get what he's talking about.

SCIUTTO: Ambassador Baucus, thank you for taking the time.

BAUCUS: You bet.

SCIUTTO: Well, time is running out to reach a spending deal here at home. Right now just five days remain. Will lawmakers agree to a delay, a temporary spending bill, or is the government headed for a shutdown?


[09:40:34: SCIUTTO: This morning, time running out on Capitol Hill for lawmakers to reach a spending deal and avoid a partial government shutdown. A delay in that vote now being considered. Joining me now is Democratic Congressman Gerry Connolly. He serves on

both the House Oversight and Foreign Affairs Committees.

Congressman, thank you for joining us this morning.

REP. GERRY CONNOLLY (D), VIRGINIA: Good to be with you again, Jim.

SCIUTTO: So first let's start on the spending bill. And, of course, the president's -- the money for the president's wall along the southern border is a key part of this. It strikes me that the president is basically daring Democrats to vote against him on this, on that funding. Will you vote against the president's demand for $5 billion?

CONNOLLY: I will not support $5 billion, and I don't believe any of us have an obligation to do that. He, after all, promised that he would build a wall and Mexico would pay for it, not the U.S. taxpayer. And I take him at his word.

SCIUTTO: So are you willing, if the president digs his heel in, and Republicans, to see the government shutdown, or at least a partial shutdown, over this issue?

CONNOLLY: I certainly don't favor a government shutdown. The president is the one who has actually said he favors a shutdown and called it a good thing because what we need, he said, was a good government shutdown. There is no such thing. A shutdown is a failure in terms of the function of government.

So, no, I don't favor a government shutdown, but neither do I favor a gun to my head to accept $5 billion for something he promised and then he promised Mexicans would pay for it.

SCIUTTO: The other threat, of course, from this president is now on the NAFTA trade deal that the president has renegotiated, sort of NAFTA 2.0. And the president has now, in effect, said he's taking the current NAFTA off the table to make Congress choose between his new -- newly negotiated deal and no deal at all, which, of course, would have enormous economic consequences. How do the Democrats react to that?

CONNOLLY: Well, you know, we're going to have to look at the fine print here, Jim. I mean my understanding, frankly, of what he's negotiated is it's more cosmetic than substantive. I mean there are a couple of areas like dairy and content, domestic content, especially in the automotive sector, that have been changed. But other than that, most of NAFTA is left alone.

So this is a typical Trump sort of saying NAFTA was the worst deal in the world and I brilliantly have come up with a brand new kind of agreement that's going to just make everybody happy. That's not really true at all. So we need to kind of move away from the political rhetoric, including his, and look at the substance in front of us. I think most of the changes are going to be marginal, but, again, we've got to look at, you know, working standards. We've got to --

SCIUTTO: Well, does that mean -- if those changes prove to be marginal, does that mean you vote for the deal? It sounds like you're inclined to vote for it

CONNOLLY: Yes. I would if the changes are pretty much consistent with the current agreement we have, NAFTA, I'd be willing to support that. But proof is in the pudding.

SCIUTTO: I want to ask you, because of your role on the Oversight Committee, the incoming chairman, as Democrats take control of Congress, they now will control these committees, has said that he will demand the president's tax returns. Do you support that?

CONNOLLY: I do. I believe everyone running for president ought to release their tax returns so the public can assess what potential conflicts of interest they have, what investments they've got and whether, frankly, you know, we think their financial condition warrants support.

Trump is one of the first candidates in living memory not to do that. Given the extent of his financial entanglements all over the world, I think it's more imperative than ever we see his tax returns under the statute the chairman of the Ways and Means Committee is entitled to do that. And I hope the incoming chairman, Richie Neil (ph), will exercise his authority.

SCIUTTO: I want to ask about an international issue. Again, to remind our viewers, you're on the Foreign Affairs Committee.

Even on the issue of the murder of Jamal Khashoggi, even as the intelligence, the CIA, appears to move closer to a confident assessment that the crown prince, Mohammad bin Salman, was aware of this, may have directed this murder, you continue to hear pushback from the president saying there is no direct link. We heard the secretary of state, Mike Pompeo, former director of the CIA until recently, say in an interview with CNN over the weekend again repeat that idea, there is no link. How do you explain that? How do you explain this president and his secretary of state appearing to differ again with the U.S. intelligence community on a key national security issue? Why? Why defend the Saudis here rather than go with what the intelligence community is telling him?

[09:45:11] CONNOLLY: Clearly President Trump and Secretary Pompeo have decided that other aspects of the Saudi relationship are so important that they preempt everything else. But in this particular case, a man was murdered and dismembered and it was premeditated. And our intelligence community and the Turkish intelligence community have consistently moved closer and closer to the crown prince as somebody who not only was aware of it, but, in fact, directed it, planned it.

We now know that there were multiple phone conversations between the crown prince and a key aide who oversaw the operation to murder Khashoggi in the consulate in Istanbul. I think all the evidence tells you something very tragic and very unpleasant to hear about the crown prince. I think Trump and Pompeo are providing cover. I think it's a very -- a ennoble thing to do. I think it's a very craven moment in the U.S. presidency, frankly. Certainly a murder ought to give us moral clarity and we ought to speak out about it and react to it in substantive ways. Unfortunately, Trump is not going to do that. And that hurts American leadership and moral standing on all kinds of issues around the world.

SCIUTTO: Congressman Connolly, thank you for joining us this morning.

CONNOLLY: My pleasure, Jim, thank you.

SCIUTTO: Well, President Trump has a message, a personal one, for the North Korean dictator, but he is asking South Korea to pass it along. He wants Kim Jong-un to know, believe it or not, I like you.


[09:51:13] SCIUTTO: He is the dictator of a brutal, bloody, and secretive regime. But President Trump still says he likes North Korea's leader. South Korea's president says that Trump asked him to pass along that very message to Kim Jong-un.

Meanwhile, Trump is talking about the timing of a second possible face-to-face summit with Kim.

Michelle Kosinski has the latest from the State Department.

Michelle, I wonder how State Department officials are justifying a second face-to-face when there's been no concrete action along the lines of what this administration demanded --


SCIUTTO: That irreversible, verifiable dismantling of North Korea's nuclear program.

KOSINSKI: Well, remember before the first summit, there were demands and there were lines seemingly drawn as to what the U.S. would like to see even before there could be a summit. But then those degraded down to the point that we knew that each side just wanted to have this summit to get that out there and see what came from it. And now we're not hearing similar demands leading up to a second summit.

The State Department and the White House keep talking about the fact that there is progress, but when you ask them what that progress is, they tend to focus on the fact that North Korea has not tested missiles, that there hasn't been provocation. That is a good thing, of course, but there's not been any real progress towards denuclearization.

So now comes word from the South Korean president that he is to relay a message from President Trump that, first of all, he likes North Korean Dictator Kim Jong-un, and, secondly, that he's willing to, quote, fulfill his wishes.

What does this mean exactly? At this point, neither the White House nor the State Department are saying. They don't like to comment on the situation here. But I think there's a good question in that if there is still constant contact between the U.S. and North Korea, as the State Department likes to say that there is, why is it even necessary to relay this kind of message through the South Korean president, that Trump likes Kim Jong-un? It's kind of reminiscent of a few months ago when Trump said during a rally that he and Kim Jong-un are in love.

So they can send all the messages and Elton John CDs that they want, but the fact is there hasn't been any noticeable progress in talks. And, in fact, you know, OK, two months ago Secretary of State Mike Pompeo was in North Korea saying that they were very close to establishing a date for the next summit between Trump and Kim Jong-un. A month later, though, he abruptly canceled a meeting that he was supposed to have with the North Koreans.

So where's the meeting and where's the progress towards denuclearization? Those are questions we are not getting answers to.

SCIUTTO: Yes. And all standards set by this administration, right, not by others as to be the standards for success.

Michelle Kosinski, thanks very much.

The prosecutor could wrap up as early as tomorrow. This in the murder trial of a man accused of plowing his car into a crowd of counter protesters at a white nationalist rally in Virginia last year. You remember that moment. Just shocking to see. Heather Heyer, she was killed, several others were injured. Prosecutors say they plan to introduce two memes that the suspect, pictured here, posted months before the deadly crash. They show a car running into a group of people. Defense is expected to argue that their client was scared and acted in self-defense.

In just minutes, President George H.W. Bush's family will gather in Houston for the 41st president's final flight to Washington. This starting a weeklong series of services honoring the late president. We're going to bring you all of it live.


[09:59:18] SCIUTTO: A wedding proposal gone wrong in New York's Times Square finally gets a storybook ending with some help from the New York Police Department and from social media. A man proposed to his girlfriend in Central Park, but watch this here. The ring was too big. So they were walking through Times Square, fell off her finger, down a sidewalk crate there. Look at him making every effort. The NYPD actually tweeted a video showing him dropping to the ground to try to rescue the ring to figure out who this couple was.

Fast forward to Saturday. Police found the ring and then put out an all-points Twitter bulletin to locate the eventually happy couple.


DET. JOSEPH BUCCHIGNANO, NYPD: Fortunately, it was actually kind of sitting up on top of all that stuff. So it really wasn't hard to find. It was still just a small object like that amidst all the garbage.


[10:00:03] SCIUTTO: NYPD to the rescue again. By Sunday the pair, John and Daniella, were located in their home.