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Down And Out In Brussels, E.U. Leaders Reject Theresa May's Bid To Renegotiate Her Deal; Breaking His Silence, What Donald Trump's Former Fixer Michael Cohen Is Now Saying About Hush Payments During The 2016 Elections; Moving Past Stereotypes, Cnn Speaks With The First Transgender Contender Of The Miss Universe Competition. Aired: 8-9a ET

Aired December 14, 2018 - 08:00   ET

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

KRISTIE LU STOUT, HOST, NEWS STREAM: I'm Kristie Lu Stout in Hong Kong and welcome to "News Stream." Down and out in Brussels, E.U. leaders reject

Theresa May's bid to renegotiate her deal. Breaking his silence, what Donald Trump's former fixer Michael Cohen is now saying about hush payments

during the 2016 elections. And moving past stereotypes, CNN speaks with the first transgender contender of the Miss Universe competition.

And we begin in Brussels where frustrations are coming to a head after tense Brexit talks at an E.U. summit. The British Prime Minister Theresa

may is expected to speak to the media at any moment. She is in an increasingly difficult situation after E.U. leaders ruled out any

renegotiation of the Brexit withdrawal deal on Thursday. You're looking at live scenes there from the podium there in Brussels. Once she gets up

there on the stage, we'll bring her speech to you live on air. Take a look at what happened earlier. This heated exchange between Theresa May and the

European Commission head, Jean-Claude Juncker earlier today.

Let's get reaction now and analysis from Europe. We have Anna Stewart in London, but first, Erin McLaughlin is in Brussels and Erin, is there any

sign at all that Theresa May can secure a deal in Brussels that would transform her situation at home?

ERIN MCLAUGHLIN, CORRESPONDENT, CNN: At this point, Kristie, absolutely not. It looks like Theresa May is going to return to London essentially

empty handed. I was speaking to a diplomat earlier today about that presentation she gave to the E.U. 27 leaders last night. He said that she

was very short on specifics. She presented a kind of game plan that would entail the E.U. 27 signing off on some sort of political declaration now.

That to be followed by something legally binding in January.

But in terms on of what that something is to help this Brexit deal get through Westminster, well that is an open question that she was unable to

answer. According to this diplomat, she was also unable to convince them that she would be able to get anything, any sort of reassurance plus that

deal through Parliament. So this diplomat telling me the leaders decided to issue essentially council conclusions that reiterates what we already

know. Unable, at this point, to help her out moving that needle there in London.

So as I said, Theresa May will return empty handed and at this point really seems like she's stuck, so to speak, between a rock and a hard place. It's

unclear where we go from here.

LU STOUT: Yes, It looks like she's going to return to the U.K. empty handed. We're going to figure out how she's going to spin this because

this will be another humiliation for the Prime Minister. She is set to speak any moment now. Yesterday, what a contrast - I mean, when she first

arrived in Brussels, Erin, we saw hugs, smiles between her and other E.U. leaders for the cameras in Brussels. But today, far more tense for the

British Prime Minister.

MCLAUGHLIN: Yes, that's right. We saw that exchange earlier this morning between Theresa May and the President of the European Commission, Jean-

Claude Juncker. It happened right before the summit began caught on cameras. We couldn't see what they were saying, but it was very clear that

that was a tense moment given what the President of the European Commission had to say last night, essentially calling her Brexit plans nebulous,

calling on her for more clarity and more detail, putting the onus on the U.K. to come up with a plan to get both the E.U. and the U.K. through this

process, to get her Brexit deal done, saying that it is up to the U.K.

At this point, we've heard that time and time again from E.U. leaders. The problem is Theresa May doesn't seem to know what she wants to do, doesn't

seem to have a clear path out of this impasse.

LU STOUT: all right, now, let's go to Anna Stewart who joins us from our London news room and, Anna, you're waiting for this press event to kick

off, so you can monitor what the Prime Minister has to say. You know, it looks pretty unlikely that she's going to secure those pledges in Brussels

so she could better sell the deal at home.

So what is she going to do next in the event that she returns home empty handed, what next?

ANNA STEWART, REPORTER, CNN: Well, as Erin was saying, she is likely to return empty handed and she really needed to bring home a victory here. We

didn't know how she was going to do it, considering she was going into this meeting knowing that the E.U. didn't want to reopen the withdrawal

agreement that they didn't want probably to give her any kind of binding assurance over this big problem with the back stop issue.

So yes, she's returning empty handed. It will be interesting to see what she says in this press conference, because I wanted to see how she's going

to spin it. Will she suggest that she's having a bit of a showdown with the E.U., appear as a very strong leader, fighting the UK's corner,

potentially ...

[08:05:10]

STEWART: ... that is one way she can try and get a bit more support at home. But she returns to the same situation. She has got a deal that will

not make it through Parliament, so does she do? Does she try and push that through, anyway? We were told this was going to happen next year. There

are calls from some opposition MPs at the moment to bring that forward to next week. But, of course, we have no confirmation of that.

She's in a very sticky position. And actually, all bets are off. The scenarios we're now looking at is does she try and get this through and

fail? Does her opposition mount a confidence vote against her in Parliament and try and oust this government? Are we looking at a second

referendum or a general election? There are so many options here on the table with, so many risks I caught with business and investors, and I have

to say, it's very, very worrying, particularly the British businesses looking ahead. There's just no certainty at all, Kristie.

LU STOUT: Yes, we don't know what's going to happen next. You laid out at the possible routes ahead. Could there could be another leadership

challenge, with one launched by the opposition party? Could there be a second referendum? Could there be a no deal Brexit? Is that getting

increasingly likely? And what would that mean?

STEWART: A no deal Brexit is looking increasing and likely, but so are, I would say, all of the other scenarios including of course, whether the U.K.

goes to the E.U. and ask to extend Article 50 and buy them more time. Although a lot of people say that the Prime Minister might be trying to run

downtime here up to that, and then force this vote through and say to Parliament.

Listen, it's going to be no deal issue or you're going to have to vote for this deal through. So, yes, it is looking more likely sort of plenty for

other scenarios. A no deal Brexit, Kristie does not look good. Some - if you look at the Bank of England's forecast, if you look at the Chancellor's

forecast and the economy, Brexit generally isn't good for the British economy, but a no deal Brexit looks at huge recession, unemployment - all

sorts of scary, scary numbers.

LU STOUT: Anna Stewart reporting live from London, Erin McLaughlin live from Brussels as we await Theresa May to speak in Brussels, we're still

waiting. When that happens, we'll bring it to you live. Than you to you, we will talk again soon.

Now, after a tense 48-hour manhunt that happened across Eastern France and Germany, the suspect in the deadly shooting at a Christmas market in

Strasbourg has been killed by police. Officers shot 24-year-old Cherif Chekatt after he opened fire on them when they tried to question him. That

shootout took place not far from the site of the original attack.

The prosecutor says seven people are now in custody in connection with the attack, including four of the suspect's family members. Strasbourg

residents paid their respects to the victims on Tuesday's bloodshed. They left flowers and cards in memory of the three people killed and more than a

dozen others wounded.

"He knows the truth. I know the truth. Others know the truth. The man doesn't tell the truth." That's what Michael Cohen said. That's what he

told ABC a short time ago about Donald Trump. The President's former lawyer spoke to "Good Morning, America," just days after he was sentenced

to three years in prison on nine criminal counts. Cohen says, then candidate Trump directed him to make illegal hush money payments right

before the 2016 election to two women who allege they had affairs with Mr. Trump. Take a listen.

(BEGIN VIDEO CLIP)

MICHAEL COHEN, FORMER DONALD TRUMP LAWYER: I will not be the villain of his story.

GEORGE STEPHANOPOULOS, HOST, ABC: He's saying very clearly that he never directed you to do anything wrong. Is that true?

COHEN: I don't think there's anybody that believes that. First of all, nothing at the Trump organization was ever done unless it was run through

Mr. Trump. He directed me, as I said in my allocution and I said this as well in the plea. He directed me to make the payments. He directed me to

become involved in these matters, including the one with McDougall, which was really between him and David Pecker and then David Pecker's counsel. I

just reviewed the documents in order to protect him. I gave loyalty to someone who truthfully does not deserve loyalty.

STEPHANOPOULOS: He was trying to hide what you were doing, correct?

COHEN: Correct.

STEPHANOPOULOS: And he knew it was wrong?

COHEN: Of course.

STEPHANOPOULOS: And he was doing that to help his election?

COHEN: You have to remember at what point in time that this matter came about, two weeks or so before the election, post the Billy Bush comments.

So, yes, he was very concerned about how this would affect the election.

STEPHANOPOULOS: To help his campaign.

COHEN: To help him and the campaign.

(END VIDEO CLIP)

LU STOUT: And President Donald Trump denies directing Cohen quote, "to do anything wrong," unquote. Now, let's get straight to the White House.

CNN's Abby Phillip is standing by and Abby, Michael Cohen has broken his silence. I mean, just how damming are his comments for the U.S. President?

ABBY PHILLIP, WHITE HOUSE CORRESPONDENT, CNN: Well, Kristie, the most important thing that Michael Cohen has said, since he pled guilty, and has

now been sentenced is that not only is he saying that President Trump directed him to make these payments, but he's saying that he gave

prosecutors proof ...

[08:1q0:10]

PHILLIP: ... documents, perhaps audio recordings that back up what he has to say. That is the principal problem for President Trump. But that being

said, President Trump still is denying that he had any role in what Michael Cohen was doing and suggested, in fact, that Cohen was being basically a

bad lawyer by going forward with this ploy without knowing that it was illegal. Listen to what he told Fox yesterday.

(BEGIN VIDEO CLIP)

DONALD TRUMP, PRESIDENT OF THE UNITED STATES: Let me tell you, I never directed him to do anything wrong. Whatever he did, he did on his own. He

is a lawyer, a lawyer who represents a client. He is supposed to do the right thing, that's why you pay them a lot of money et cetera et cetera.

He is a lawyer. He represents a client. I never directed him to do anything incorrect or wrong, and he understands that.

(END VIDEO CLIP)

PHILLIP: But it is not only Michael Cohen. He was saying that President Trump was directly involved in the schemes to pay these women hush money

payments for their silence in the election. Also, David Pecker, who is the head of AMI, which is the parent company of the "National Enquirer," a

tabloid that was very close to President Trump has engaged in agreement with prosecutors saying basically the same thing.

So President Trump has a huge problem on his hands as some serious campaign finance violation charges hang in the potential future. We don't know what

prosecutors are going to do with it, but it's clearly targeting President Trump who is at the center of these allegations.

LU STOUT: Yes, and on top of this, there is even more bad news for President Trump. Federal prosecutors are also investigating his 2017

inaugural committee for possible financial abuses, why?

PHILLIP: This is a huge story that developed just after Michael Cohen's drama played out in the courts. Now, this was reported by "The Wall Street

Journal" and also by the "New York Times." Two different elements of this. First, there is a preliminary investigation into the inaugural committee

which raised record breaking amounts of money, tens of millions of dollars for President Trump's inauguration. But there is almost no transparency

about where that money went and in many cases, where the money came from.

The "New York Times" is also reporting that Federal prosecutors are inquiring about whether foreign entities, foreign governments tried to

illegally funnel money through these committees, both the inaugural committee and a pro-Trump super PAC in order to influence the Trump

administration. These are really serious charges, but we should caution that it's still very early.

The investigation is in its early stages, and the inaugural committee says they have not been asked by investigators to produce any documents, they

have not be been asked for interviews. So this is developing in the early stages, but it is also related to Michael Cohen because some of the reason

for this investigation goes back to what documents and recordings investigators picked up when they raided Michael Cohen's office earlier

this year. That's one of the reasons President Trump was so worried about that raid when it happened. It opened up a Pandora's Box of problems for

him and his administration.

LU STOUT: Yes, so President Trump has been on defense. He's been distancing himself from Michael Cohen. He's been trying to steer the

narrative, whether it's on Fox or on Twitter to keep him in the clear, but is the shadow of wrongdoing just getting darker and darker for him?

PHILLIP: It certainly seems that way, Kristie. All of this is unfolding, but we haven't gotten to the big event which is whatever Robert Mueller and

the Special Counsel investigatory team has been working on for two years now. What is it that they have that they have been working on that they

might reveal in the coming months? President Trump is having a hard time really combatting these allegations.

He has made statements that have turned out to be false over and over again. And as we go into this third year of his presidency, he is frankly

without a lot of support. There is no infrastructure here in this White House to help him deal with, not only these investigations that are on the

criminal side, but also a new House of Representatives that will be controlled by Democrats.

President Trump has been trying to take the lead on Twitter himself, but there are a lot of questions about whether that is going to be enough to

keep his associates and perhaps also him out of some serious legal jeopardy in the coming years -- Kristie.

LU STOUT: Yes, absolutely. Abby Phillip reporting live from the White House. Abby, thank you.

And more movement in another controversy related to the 2016 U.S. presidential campaign. Russia is standing by alleged spy Maria Butina.

She pleaded guilty on Thursday to conspiring with a senior Russian official to infiltrate the Republican Party ahead of 2016 election, but the Foreign

Minister, Sergey Lavrov maintains she is innocent.

[15:15:06]

LU STOUT: You're watching "News Stream" and still ahead, a frightening message in hundreds of inboxes all around the world. Investigators across

the globe are searching for the culprit. Plus, a diplomatic spat is heating up. The U.S. and Canada meet as two Canadians are believed to be

detained by China.

All right, welcome back. You're watching "News Stream" and we're showing you live pictures from Brussels where we are still waiting for the British

Prime Minister Theresa May to go on to the stage, to address the audience in the world there about whether she was able to reach any sort of

additional pledges from E.U. leaders and to salvage her Brexit deal. Any update - and when she starts speaking, we will bring it to you live right

here on CNN.

Now, meanwhile investigators in four countries are trying to find the source of hundreds of e-mail bomb threats across the U.S., Canada, New

Zealand and Australia targets on Thursday including universities, court houses and newspapers. The e-mail demanded a $20,000.00 ransom be paid in

Bitcoin or hidden explosive device would be detonated. A number of buildings were evacuated and searched as a precaution, no explosives have

been found.

Now, this may have been a hoax, but it has certainly rattled a lot of nerves and caused a lot of business disruption. Samuel Burke joins us now

with the latest and Samuel, the investigation, we know that law enforcement officials all around the world, they are looking for the source of these e-

mail bomb threats. What's the latest on that?

SAMUEL BURKE, BUSINESS AND TECHNOLOGY CORRESPONDENT, CNN: Kristie, in some ways, this has all the trappings of an episode of "Black Mirror." That's

the series where something in the digital world has real palpable effects in the physical world. Exactly what we saw here. Even though we see no

physical evidence anywhere, what you're showing right on the screen there is the digital evidence of somebody sending e-mails or a group of people

sending e-mails demanding $20,000.00 in Bitcoin.

I'll just hold it there, Kristie as I think you're going to Theresa May.

LU STOUT: Okay, Samuel, I am going to have to interrupt. Theresa May is speaking now from Brussels. Let's listen in.

THERESA MAY, BRITISH PRIME MINISTER: ... my fellow leaders on the Brexit deal, and I was crystal clear about the assurances which are needed on the

backstop having heard the views of MPs in the House of Commons.

I reiterated that it is in the interests of the E.U., as well as the U.K. to get this over the line. A disorderly Brexit would be good for no one.

At 27 level, the E.U. have published a series of conclusions. The E.U. made clear that it is their firm determination to work speedily on a future

relationship or alternative arrangements which ensure no hard border by the 31st of December 2020, so that the backstop will not need to be triggered.

If the backstop was ever triggered, it would apply only temporarily and the E.U. would use its best endeavors to negotiate and conclude expeditiously a

subsequent agreement that would replace the backstop, that the E.U. stands ready to embark on preparations ...

[08:20:09]

MAY: ... so that negotiations on the future partnership can start as soon as possible. As formal conclusions, these commitments have legal status

and, therefore, should be welcomed. As I've always said, the guaranteed way of avoiding the backstop is to have the future partnership in place by

the time the implementation period is over.

The E.U. is very firmly committed to this cause. But MPs will require further assurances and I've discussed that this morning with my E.U.

partners, included Presidents Tusk, Juncker and others. I note that there has been reporting that the E.U. is not willing to consider any further

clarification.

The E.U. is clear, as I am, that if we are going to leave with a deal, this is it. But my discussions with colleagues today have shown that further

clarification and discussion following the council's conclusions is, in fact, possible. There is work still to do. And we will be holding talks

in coming days about how to obtain the further assurances that the U.K. parliament needs in order to be able to approve the deal.

I say again, it is in the overwhelming interest of all our people in the E.U. and the U.K. to get this done and as quickly as possible. Now, I'll

take a few questions. Nora.

UNIDENTIFIED FEMALE: Thank you, Prime Minister, first of all, you looked very angry when you were speaking to Jean-Claude Juncker earlier today.

What did you say to him and did he admit that he had called you nebulous? And secondly, the Summit conclusion suggests the E.U. is not willing to

budge, but you appear to be suggesting that they might. Can you tell us more about what they've said to you about their willingness to move?

Because if Parliament won't budge and the E.U. won't budge, is it time for you to budge?

MAY: Well, first of all, I had a robust discussion with Jean-Claude Juncker. I think that's the sort of discussion you are able to have when

you develop a working relationship and you work well together. And what came out of that was his clarity that actually he had been talking when he

used that particular phrase, he had been talking about a general level of debate. But indeed, I carry - you know, I've had further conversations

with him through the morning.

In relation to the question of the further assurances, as I say, there is work to be done. It is clear that clarification, we can look at this issue

of further clarification and that has been something I've been discussing with a number of E.U. leaders and with obviously, as I said, President Tusk

and President Juncker.

So in the coming days, of course, there is a timetable for us. We will be bringing a vote back to Parliament before the 21st of January. So we will

be working expeditiously over the coming days to seek those further assurances that I believe MPs will need. James.

UNIDENTIFIED MALE: Prime Minister, indeed, your problem here that your fellow leaders simply don't believe you can get this withdrawal agreement

through Parliament, whatever they say or do, so why should they move heaven and earth to help you?

MAY: No, what was very clear from the fellow leaders that I've spoken to is that they want to ensure that this deal can get over the line and they

want to work with the U.K. to ensure that that is what happens. As a very clear commitment to the deal with, to seeing this as the best way forward

and to working with us in order to achieve that. Now, is Ollie here from "The Times?" Yes.

OLIVER WRIGHT, JOURNALIST, THE TIMES: Oliver Wright, from "The Times." You say you got further reassurances today that the EU will look at a form

of document, but why was that struck from the summit conclusions last night then?

MAY: What I discussed with people there - first of all, let's be very clear about the Summit conclusions - about the 27 - the conclusions at 27.

Those take us forward. Those are welcome. This is the clearest statement we have had yet from the European Union that it is their intention for the

backstop never to be necessary, that it is their intention to ensure that if it were necessary, it was only temporary.

And it is their intention to work quickly with us - quickly once we've seen the deal being agreed that - in Parliamentary terms that they will then

work with us quickly to ensure that we start those negotiations for the future partnership.

The key to all of this, the crucial thing in this relationship is what our future partnership with the E.U. is going to be. That will be the

sustainable enduring relationship we have with the E.U. in the future when we're no longer a member. And that is very clear from the E.U. today and

from the conclusions that they gave last night. They want to get on with that. They want to get that partnership in place just as we do.

[08:25:09]

MAY: Is Lynn here from "The Sun?" I can't see - yes.

LYNN DAVIDSON, JOURNALIST, THE SUN: Lynn Davidson from "The Sun." Prime Minister, yes or no, would you be prepared to see Britain trade on WTO

rules from March next year when we leave the European Union?

MAY: We will be - well, as you know, we are making - government is making no deal preparations. We've stepped up those no deal preparations. We'll

be talking further about those no deal preparations. My position has been very clear. I believe it's better to leave with a deal, with a good deal,

and I believe the deal we have is a good deal. Now, I'll take a couple more. Jason.

JASON GROVES, JOURNALIST, DAILY MAIL: Thank you, Prime Minister. Jason Groves from the "Daily Mail." You look like you've had a fine week.

What's been worse, the --

MAY: Did something happen this week, Jason?

GROVES: Well, I've heard reports.

MAY: You shouldn't believe everything you've read in the newspapers.

GROVES: What has been more difficult? Has it been the malcontent at home or has it been the Euro bullies over here and have you ever felt like

throwing your phone in the bin, moving to a remote island and letting someone else sort this mess out?

MAY: Look, throughout all of this, I've been clear that there is a job to be done here and it's a job to be done because it's a job for delivering on

the vote of the British people in the referendum. I think that is absolutely important. I think it is our duty as a government and as a

parliament to do that. And I never said it was going to be easy. Negotiations like this are always tough, there are always difficult times,

and as you get close to the very end, then that can get even more difficult because you're absolutely sorting out the last details of something.

But this is what drives me to carry on doing this and making sure we deliver is that this is what's right for the British people and this is

what we're going to see out of this. It's not just us outside the E.U., but us able to take the advantages that gives us and building that brighter

future for Britain.

Now, I was going to take one from - is Isabelle here from Osterreich? Yes. Sorry, Austria has the Presidency currently, so I thought it was

appropriate to ask her.

ISABELLE DANIEL, JOURNALIST, OSTERREICH: Thank you. I am from the Austrian Press. I just wanted to ask you what was your impression about

the role of the Austrian presidency and Chancellor Kurz during this whole talks about to reach an agreement between the United Kingdom and the

European Union?

MAY: Well, Chancellor Kurz has been very helpful in the positive approach that he has taken to the negotiations of this deal, and to wanting to make

sure that both sides actually come out of this with a good deal. I think the Austrian President, he's managed the Austrian Presidency extremely

well. I think it's been a very good Presidency. I think we've seen this in the way he's been able to move forward on a number of the dossiers.

And so - and as I say, he's been very positive in the support that he has given to ensuring that we get a good deal, a good presidency. Thank you.

LU STOUT: All right, Prime Minister Theresa May there speaking live in Brussels trying to share what she's been able to achieve while meeting with

E.U. leaders there. Let's bring in Anna Stewart in London, we also have Erin McLaughlin standing back in Brussels. And Erin, to you first, it

seemed just then the Prime Minister suggested that she was able to secure pledges from E.U. leaders concerning the backstop. Is that right?

MCLAUGHLIN: Well, I think what struck me most in that press conference there, Kristie is the fact that she's still looking to the E.U. for help,

still looking to the E.U. for the clarifications, the assurances that she says she needs to get this deal across the line. She said she had

conversations with E.U. leaders to that effect this morning. She says that they are open to continue talks to help her, to provide those so-called

clarifications

It was interesting because the council conclusions that she referred to there in that press conference were actually absent a key section, the

diplomats told me that 27 decided to strike last night and that was a section that committed the E.U. to looking into the possibility of

providing those further assurances. But she's saying that this dialogue will continue. She's still looking to the E.U. for answers.

But what the E.U. seems to be saying is that Theresa May and her government is the one that needs to be providing those answers and at this point, the

answers are elusive.

LU STOUT: Let's go to Anna Stewart for the possible reaction there in London. And Anna, Theresa May said that these privileges have legal status

and should be welcome, but will they be welcomed by MPs in Parliament?

[08:30:06]

STEWART: I can't see what she said just now really appeasing her critics back here. If anything, she's kind of putting the ball back into the

E.U.'s court saying they're going to have further discussions. That is not what people have really been calling for, particularly her critics of which

there are many. Of course this week, a third of her own MPs within her own party voted to oust her. She isn't coming back with anything concrete

here. She is not coming back with the assurances that people wanted. And it's quite interesting what she said, though, that he that the E.U. would

be open to giving her more assurances, given the rhetoric that we had over the last 24 hours, that they will not reopen the withdrawal agreement and

as Erin was reporting earlier, that they actually toughened up the language in the conclusion that they gave out.

So it doesn't bring much home for her. It doesn't do much, but we'll see the fallout, I'm sure, down on Downing Street later today.

LU STOUT: Yes, Theresa May added that further talks are needed as she appear to be preparing to return home empty handed. Anna Stewart reporting

live for us from London, Erin McLaughlin reporting live for us from Brussels, a bit thank you to you both. You're watching "News Stream" and

we'll have more right after this short break. Keep it here.

I'm Kristi Lu Stout in Hong Kong and you are watching "News Stream." The British Prime Minister Theresa May just spoke to the media from Brussels

following Brexit talks with E.U. leaders. She spent Thursday trying to convince them to renegotiate parts of the Brexit deal that the U.K. and the

E.U. agreed to just last month. The E.U. Council President, Donald Tusk has ruled out any renegotiation of the deal.

In the coming hours, the U.S. Secretary of State, Mike Pompeo and the Secretary of Defense, James Mattis will meet with their Canadian

counterparts in Washington and yes, they will likely talk about the escalating diplomatic dispute between the U.S., Canada and China.

China says two Canadians -- Michael Kovrig and Michael Spavor -- are under investigation for activities that endanger China's national security.

Analysts say this could be retaliation for the arrest of Huawei's CFO earlier this month. Canada arrested Meng Wanzhou on behalf of the U.S.

which wants her extradited.

In an op-ed column, China's Ambassador to Canada slammed Ottawa for losing its sense of justice.

Linda Yueh joins us now from London. She is an economist and author of "The Great Economist." Linda, thank you so much for joining us. We have

got to parse this and try to understand the Huawei arrest. Why is the U.S. going after Huawei? Is it because Huawei breached sanctions or is there

something bigger here? It is perceived as an economic threat to the U.S.?

[08:35:00]

LINDA YUEH, ECONOMIST AND AUTHOR: I think the formal line is that Huawei seems to have, according to the Canadians and the Americans, breached the

Iran sanctions. But I suppose what you just mentioned there is that there's quite a lot of other targeting of tech companies in China.

So I think there's probably also a sense that it goes beyond just this - just the sanctions issue because after all, detaining Ren Zhengfei's

daughter in Canada, putting her under house arrest, I mean that's a pretty significant move.

So overall, I think, the United States is concerned about - and this is something that Huawei has in particular been finding it very difficult to

shake, this belief that they are part of the espionage system coming out of China.

But I think, Kristie, there's actually a bigger issue, which is there's a real competition now in terms of 5G technology between the U.S. and China.

And I think tech companies from China which are perceived to have an unfair advantage in terms of being state supported or state financed, and I think

that is causing quite a lot of tension vis-a-vis U.S. tech companies who don't have that kind of state support and, obviously, what America would

like to see is a level playing field. So I think that underpins it, as well.

LU STOUT: Yes, Huawei is seen as a big competitor and as a threat. In a Fox News interview, Donald Trump had this to say about China's economy.

(BEGIN VIDEO CLIP)

TRUMP: China's economy, if it's in trouble, it's only in trouble because of me. That's the only reason it's in trouble. Because I've placed

billions and billions - we've taken in $11 billion worth of taxes that I taxed China, $11 billion. We never made any money with China.

(END VIDEO CLIP)

LU STOUT: So, Linda, is China's economy really in trouble? And if so, should Trump be taking credit for it?

YUEH: Well, I think China's economy has challenges. And I don't think that the current trade tensions, a lot of which is President Trump's - are

President Trump's policies. I don't think it's entirely unrelated, but I don't think it's entirely because of the United States. We've known for a

long time that China has a big growth challenge as in, it's very successful in becoming middle income. But to become a prosperous country, which is

the aim of Chinese President Xi Jinping, China need to upgrade its technology and that is where U.S.-China trade tension really plays into it.

So, in other words, we've seen how China is still catching up in a number of areas. So they need access to U.S. technology.

LU STOUT: Do you see that China is facing growth challenges? And China desperately needs access, still, to U.S. technology. So is china in a

position where it can hit back at the U.S. hard after the Huawei arrest?

YUEH: I think you see some evidence that China had will respond, but I think if you look at essentially how China has been taking, viewing the

trade tension, they've been doing it in pretty much a quid pro quo way. So they don't escalate it, but they respond.

And overall, the belief that China - and I think this is a view shared by other countries, as well. It's better to talk and to open up markets than

it is to have trade wars or trade tensions. So where China has hit the U.S. in items of putting tariffs on select goods that affect members of

Congress, soybeans is a big example, but also tariffs on American-made cars, there are ways to add - inflict cost on the United States in terms of

the economy, certainly in the short-term. But it's in neither country's interest to do that.

So I think for the most part, China, we can view them as trying to diffuse the tension, but I think the real challenge is going to be, will they be

able to do so in the next few months or we could actually see a much more full blown trade war if they can't come to an agreement about opening up

markets.

I think they might be able to do that, but I don't think they'll make any headway on the technology issue. That's much more of a long-term

competitiveness issue.

LU STOUT: Yes, this issue is going to start well into next year. Linda Yueh, thank you so much for joining us.

YUEH: Thank you very much.

LU STOUT: Coming up, a world first at the Miss Universe Pageant and a win for acceptance and diversity. We fill you in on why this contestant is

representing more than just her country.

Miss Universe is supposed to be, among other things, peace and love, but the competition being held in Thailand is attracting controversy. Miss

USA, Sarah Rose Summers has apologized after an online backlash of a comment she made about the English language abilities of two contestants

that includes Miss Vietnam who Summers said is quote, "So cute and pretends to know so much English," unquote. Some online have called her xenophobic

and condescending, but not Miss Vietnam herself who responded in true Miss Universe spirit by saying that Miss USA didn't mean anything by it.

Now meanwhile, we have a world first for you from the same competition. This woman, Miss Spain is breaking stereotypes and educating people by

being the first transgender contender from Miss Universe and CNN got a chance to speak to Angela Ponce about how it feels.

(BEGIN VIDEO CLIP)

ANGELA PONCE, MISS SPAIN (Through a translator): What I feel by being the first transgender contestant of Miss Universe is a big sense of

responsibility. It gives me a lot of pride and personally, I'm very proud to have made it here.

I've been in the press, on TV, and I've put the conversation on the table. It was a topic that was not spoken about. What does it mean being a

transgender person? I think that mindsets are changing. Today, there are positive references. People speak about the LGBT community and the

transgender community. Before it was always underground and never spoken about. I think that people are more and more informed. All these

prejudices come from disinformation.

The first obstacle that I overcame was to be born into a world that wasn't prepared for transgender people. We don't have the same rights, but we

have the same obligations. At school, disinformation is what becomes prejudice, the bullying, the fact that you feel alone and excluded.

I always say that it's not that you feel like a woman. You already are a woman. A transgender is not a man or a boy who feels like a woman. She's

already a transgender person. There are no wrong bodies. There are people that need to get a sex change operation and there are people that don't.

There's a wide range of situations for transgender people who may have different needs. In my case, I needed to get the operation because I

needed to have that reallocation of gender, but that didn't make me a woman, I already was a woman.

It's not that I feel like a woman. That's my identity. My advice for all transgender girls and women bi-genders and for everyone is that we have to

be happy, feel free, go with the flow and have less privilege prejudice, have more love and be more tolerant of everything.

(END VIDEO CLIP)

LU STOUT: Now, she and her message both just so beautiful and Miss Spain has a chance to win in Bangkok on Sunday. And that is it for "News

Stream." "World Sport," Rhiannon Jones is next.

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