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Deadline Passes for Rise in U.S. Tariffs on Chinese Imports; Comey: No Doubt Trump Would Face Charges if Not President; China Denies Torture and Says Camps Are Training Centers; Trump: North Korean Leader Not 'Ready to Negotiate'; Prince Harry Launches Countdown for Next Invictus Games. Aired 12-1a ET

Aired May 10, 2019 - 00:00   ET




JOHN VAUSE, CNN ANCHOR (voice-over): No deal means new tariffs. At the stroke of midnight in Washington a tariff on Chinese imports is set to take effect.

(INAUDIBLE) on North Korea's latest missile test.

Plus explosive allegations from the former FBI director James Comey, accusing Donald Trump of potentially being compromised by Russia during an interview with CNN.

Hello and welcome to our viewers all around the world. I'm John Vause and you're watching CNN NEWSROOM.


VAUSE: Barring a last-minute change, the battle between the U.S. and China over a new trade deal dramatically escalated this hour. A deadline has come and gone, which would see U.S. tariffs increase from 10 percent to 25 percent.

Talks between both sides ended hours ago but it's not yet known if the new tariffs kicked in. Both meet Friday for another round of negotiations. If they still can't strike a deal, Donald Trump is prepared to propose 25 percent tariffs on an additional $325 billion of Chinese goods, including electronics, toys, shoes and a whole range of other consumer products.

Live now to Beijing, Steven Jiang is there for us this hour.

Officials have made it very clear that if the Trump administration goes ahead with new tariffs, and there's no reason to believe they would not, there will be retaliatory measures.

So what then are we looking at?

STEVEN JIANG, CNN SENIOR PRODUCER, BEIJING BUREAU: So far we have not heard much in terms of counter measures. I think this is strategic ambiguity, probably. Talks will continue into Friday as they continue their negotiations in Washington.

But in terms of these counter measures, the Chinese have a few different options. They could impose counter tariffs on U.S. imports but probably not dollar per dollar because the Chinese import less from the U.S. than the other way around. That was part of the reason the trade war broke out in the first place.

The Chinese could make life very difficult for American businesses here, for example sending fire inspectors or delaying customs clearances or the issuance of business licenses.

Now the Chinese media has been preparing the public for this scenario of an escalation in this trade war. They have been touting the strength and resilience of the Chinese economy in the last couple of days.

Their tone has become a bit more nationalistic with commentators pointing out that the Chinese are no stranger to a scenario of fighting with their enemies while negotiating with them, with some stories evoking memories of the U.S. military conflict during the Korean War.

VAUSE: At this point, with these two sides, anything can happen. Thank you, Steven.


VAUSE: For more now on where relations stand between Washington and Beijing and what it means for the rest of the world, former Australian Prime Minister Kevin Rudd is with us this hour.

Mr. Rudd, we should note you also have a new role, president of the Asia Society Policy Institute.

You also have a unique perspective. Before you were prime minister, you spent time in China, in Beijing as a diplomat. I always thought you spoke fluent Mandarin, certainly better than mine. But great to have you with us.

KEVIN RUDD, PRESIDENT, ASIA SOCIETY POLICY INSTITUTE: It is good to be with you. VAUSE: Well, they say war is said to be a failure of diplomacy. If this is, in fact, the start of a trade war between China and the United States, it would seem there are a lot of failures which led to this point.

RUDD: The mood I pick up here in Beijing is that China has a high degree of national resolve about this. The official press is full of stories about the resilience of the national economy. Their attitude to the visit to Washington by Vice Premier Liu He for these trade talks is one where he goes with an open mind to negotiate a good outcome.

But he also carries a sword in his sleeve, that is, he is not about to be ambushed. And therefore, China has a capacity also to walk away from these talks. So, it is high stakes poker but that is the way President Trump likes to play it as, well it seems. VAUSE: In the past 20 years or so there has been this sort of predictable consistency with regards to U.S.-China trade. The more the Chinese made, the more the Americans would buy. Every couple of years Washington would complain about unfair trade practices, Beijing would announce a few reforms. When no one was looking everything would go back to the way it was, for the most part.


VAUSE: You know, there was an agreement out there, it needed to change.

But is this Trump tariff approach, is this the right approach?

Or is it like swatting flies with a sledgehammer?

RUDD: Well, tariffs are a lousy economic policy and I say that as a former prime minister from the center left. And it's a lousy economic policy because it hurts working people everywhere because it increases prices on goods which working families need to purchase.

And secondly, it depresses overall trade growth and economic growth as a result and has a bad impact on jobs.

But President Trump is not an economist, he is a politician. And what he sought to do is to use tariffs as a political instrument to grab Beijing's attention.

Peter Mandelson is a Labour Party politician in the British parliament. He's also president of an international think tank called Policy Network. He talked about the concerns many have around the world with this Trump approach to trade. Listen to this.


PETER MANDELSON, BRITISH MP: All of us in the rest of the world have to understand that when two great elephants in the room, like the United States and China, you know, start fighting, all the rest of us are in danger of being trampled underfoot.

In Europe, we share much of that analysis. We share much of that diagnosis about Chinese policies, but we don't agree with and don't support the very confrontational and the unilateral measures that President Trump is now envisaging.


VAUSE: There has already been a significant cost to American business, to American consumers, despite what President Trump says, but what is the fallout for the rest of the world here? you know, spectators on the sidelines as these two economies slug it out.

RUDD: There is a long term damage here to the global economy.. Remember so much of growth for the world in the last couple of decades has been led by trade growth. It has always exceeded by a factor of two or three the speed of economic growth. Now we are having trade growth running at about half the speed of economic growth. And so the impact of this creeping protectionism, this creeping unilateralism and this rolling assault on the multilateral rules-based trading system, we are beginning to see that in the real numbers.

VAUSE: And the USA has never had a president like Donald Trump. And I think it's fair to say that China hasn't had a leader like Xi Jinping, you know, since Chairman Mao, at least in terms of political power.

On Thursday before the trade talks resumed, Trump was asked if a deal was possible. This was his answer.


DONALD TRUMP, PRESIDENT OF THE UNITED STATES: I have no idea what is going to happen. I did get last night a very beautiful letter from President Xi. Let's work together. Let's see if we can get something done.


VAUSE: You know, despite that personal friendship that the President often talks about with Xi Jinping, it seems overall the China-U.S. relationship is heading into uncharted waters here. You know, strategic competitors, to rivals, to adversaries. You know, what is next?

RUDD: Well, the bottom line is both of these political leaders have got domestic politics to handle as well. Domestic politics is not just a Trump challenge. He is obviously appealing to his political base by various of the strategies and tactics that he is adopting and sounding tough on trade, sounding tough on China.

And as it were, threatening tariffs at one minute to midnight, pulling something out of the classic Trump negotiating book. All of this is to make Trump look hairy-chested with his domestic political audience.

The problem is, it assumes that Xi Jinping on the other side of this equation doesn't have his own party politics to contend with as well. And there are no votes in the politburo for being seen to be weak and backing down to the United States.

And therefore, the message in the official Chinese media has been quite clear in recent days which is China's economy is resilient. China is not desperate for a deal. And if tariffs were imposed by the United States in a very short period of time then China would retaliate. So, Xi Jinping has got to manage his domestic politics as well.

For the longer term, can we craft an effective U.S.-China relationship? The big question which none of us know the answer to is if and when there is a trade deal what does Donald Trump then do with the rest of the U.S.-China relationship beyond trade and to the general economy, in national security and foreign policy and human rights, et cetera?

Will he, as it were, protect the relationships and keep it on a more stable course or will he allow the neo-cons within his administration to unfold a much more aggressive strategy towards China? That is what we don't know. And frankly, these are going to be very difficult and trying times ahead on the broader relationship.

VAUSE: Kevin Rudd, thank you so much for being with us. We really appreciate it.

RUDD: Good to be with you.



VAUSE: Well, the consequences of any long-running trade war between the U.S. and China are not especially complicated. For American consumers, the cost of goods from China will go up, a tariff is a tax paid initially by importers. They may choose to pass all that increased costs the full 25 percent on to consumers or at least a significant part of it.

When a ten percent tariff was supposed last year, many businesses took a hit to their bottom line and did not increase prices. China, the same is true for American goods. But with those higher prices, both countries end up buying less from each other.

One of the car industry says it sold 100,000 fewer cars to China last year compared to a year earlier. Overall, fewer exports means fewer jobs, meaning slow economic growth and on and on it goes. And the Americans will likely feel the pain the most are the ones who live in Trump country.

For more of this, CNN Senior Political Analyst and Senior Editor for The Atlantic Ron Brownstein joins us from Los Angeles. You know, Ron, the president --


VAUSE: Good to see you too, Ron.

The president has framed --


VAUSE: -- all of these trade negotiations into a large degree in the context of the 2020 election. He's a tough dealmaker. He's prepared to walk away. And by doing that, has he backed himself into a corner, he needs a really great deal for the U.S. not just any deal, or does he get a deal and just say it's great regardless of the terms.

BROWNSTEIN: Well, I think if he gets a deal, he'll say it's great no matter what it is. I think we know that from you know, his reaction to other deals along the way. But he has sort of backed himself into a corner. I mean, I think he is given the Chinese a great deal of leverage in

structuring the eventual deal but by going so far out on the limb of claiming that he is going to produce something.

You know, there has not been a lot of cost in Trump country politically to Republicans. The farmers who have been hurt by his trade wars, by and large, stuck with Republican candidates in the 2018 election.

But there are a lot of people kind of living in those areas who said they were willing to give him the rope but they do want to see results before 2020.

So could he rely on the same outcome in 2020 if you just have this conflict, tariffs, reduced soybean exports, et cetera, we don't know, but it is obviously a risk.

VAUSE: You know, Donald Trump has a very bizarre understanding of how tariff work within an economy. Listen to what he said here. Listen to this.


TRUMP: I said, try looking at all of the tariffs that China has been paying us for the last eight months, billions and billions of dollars.

So now what we're doing is we're raising it to 25 percent on Friday so it'll be $250 billion at 25 percent and it'll be $325 billion at 25 percent. We're going to be taking in more money than we've ever taken in.


VAUSE: The U.S. isn't taking money in from anyone except from American importers and American consumers.

BROWNSTEIN: Right. American consumers are paying the tariff. I mean, William McKinley might have delivered you know, those are those remarks in kind of the 19th century.

Well, you know, what's really striking about this again, politically to me, is that the parts of the country that voted for Trump, Trump country tend to produce goods. They tend to produce things, manufacturing, agriculture, energy.

Many of those can be hurt on exports but by and large support a tough trade policy up to a point. The Democrats are now the party of the big metro areas in America that a more service-oriented and all -- that is where our trade surpluses are as you know, in our exports of services of business consulting in software and trade and tourism and things like that.

And yet the Democrats by and large have been largely silent about this to the extent there's been criticism. It's just been a little bit from some of the farm state Republicans. We really have not seen Democrats kind of raising the alarms about the implications of this kind of trade war even though they are now the party of the parts of America that have the biggest trade surpluses.

And in fact, if you look at polling, Democratic voters are now more free-trade oriented than Republican voters.

VAUSE: Most interesting though is that you know, Donald Trump says that you know, these are -- these are the issues which his voters care about. They don't care about anything to do with the Russia investigation, they don't care about Robert Mueller. And to that, former FBI director James Comey, he appeared on CNN a few hours ago.

It's been two years since he was fired by Trump. He actually made this sort of explosive claim that he believes it's possible Russia has something on Trump and then this is what he said when he was asked about obstruction of justice in light of the redacted version of the Mueller Report.


ANDERSON COOPER, CNN ANCHOR: So in your opinion, there was corrupt intent at least in several of those episodes.

JAMES COMEY, FORMER DIRECTOR, FBI: It sure looks that way from the reports, factional recitation.

COOPER: If -- you know, they're now what, it's I think it's up to 800 former federal prosecutors who worked in both Republican and Democratic administrations who have signed a statement saying that Mueller's findings would have produced obstruction charges against President Trump if he weren't president. Do you agree?

COMEY: Yes. I agree.

COOPER: No doubt.

COMEY: No doubt.


VAUSE: You put all this together, Ron, at any other time during any other presidency, it would be a barn burner. Now it just comes as not much of a surprise.

BROWNSTEIN: Well, because we are at a moment, John, I think that is testing the ability of our system to impose accountability or even meaningful oversight over or president if only --


BROWNSTEIN: -- one party is willing to participate.

I mean, in essence, you have this kind of unified Republican locking arms around the president and saying, nothing to see here. Let's move on.

And not only in terms of the Mueller report but in terms of supporting tacitly or explicitly his increasing stonewalling of any kind of congressional oversight on a wide range of issues, you know, from security clearances at the White House to adding a citizenship question to the census.

And our system, I think, is struggling to -- whether there can be any kind of accountability, especially with the Justice Department guidance that you cannot indict a sitting president.

Now the Democrats, it's likely Nancy Pelosi signaled today they're going to, in all likelihood, bundle together a bunch of these various, what are going to be contempt citations over non-compliance with subpoenas, bring them to the floor together and then go to the courts behind all of those.

And then we are once again, are the courts capable of rising above partisanship to uphold the historic ability of Congress to compel the federal -- the executive branch to submit to oversight?

We don't know.

You know, it may depend on what John Roberts feels on the day that it comes to the Supreme Court, because there may be four solid Republican appointed justices willing to side with the president on questions like this.

VAUSE: The feeling is that, you know, the Democrats are playing Monopoly with a hyena and the hyena just ate the board and you know, it just put the Democrats. And the Democrats have said, oh, that -- you're not playing by the rules. That's not allowed.

You know, it's got to that point essentially, where this is what it's -- calling it constitutional crisis when you know, the executive branch refuses to you know, comply by Congress and then it goes to the courts, then what?

BROWNSTEIN: Right. Look, certainly I think it's pretty clear that Nancy Pelosi wants to go to the courts before she allows the impeachment genie any further out of the bottle.

And you know, they claim -- I've talked to Democrats, who say they have learned lessons from the battle between the Republican House and Eric Holder over contempt citation during the Obama administration, that they believe that they can move this through the courts more quickly.

But ultimately, at the end of the line of any kind of court challenge, is the reality that there is now a five-member conservative bloc on the Supreme Court, appointed by Republican justices, who've been willing to vote as a bloc on five-four decisions on an awful lot of questions that have to do with the balance of power between the two parties.

So is, you know, is that route viable?

We're going to see. And I think the longer it goes on and the more systematic the stonewalling for the president, the more difficult that's going to be for her to hold back, I think, the Democrats who want to consider -- which for no other reason than, on many fronts, that may improve their legal position in the courts in terms of demanding information.

VAUSE: You mentioned this rock solid support by Republicans in Congress of the president. That has been proved for the most part. There's one issue which seems to have sparked an internal war and that is over the Senate Intelligence Committee, that issued a subpoena to Donald Trump Jr. That's coming from the Republican-controlled Senate, from the Republican chairman of that committee, Burr.

This is what Donald Trump had to say on Thursday about his son being subpoenaed.


TRUMP: I was very surprised. I saw him saying there was no collusion two or three weeks ago. My son is a very good person, works very hard. The last thing he needs is Washington D.C. The Mueller report came out and that's the Bible. The Mueller report came out and it said he did nothing wrong.


VAUSE: The Mueller report did not say that. Don Jr. was not (INAUDIBLE) for questioning.

But this is causing problems here for the Republicans. This is a Republican controlled committee and basically one of the options being considered by the Donald Trump Junior team is to simply ignore the subpoena.

Can you just ignore subpoenas from the Senate?

BROWNSTEIN: Historically the answer is no, obviously. The Intelligence Committee in the Senate has been a throwback to an era when the Senate was a bipartisan institution.

But to me, the larger frame is how many other congressional Republicans, from Kevin McCarthy to John Cornyn to Lindsey Graham to Ted Cruz have suggested Don Jr. should ignore the subpoena and are actively working to saw away further at the congressional authority and capacity to demand oversight.

That is just extraordinary. I know that Mitch McConnell in the lunch today defended the chairman and the subpoena. But the fact that so many Republicans are publicly denouncing this at a time when they're silent or acquiescing in the administration's systematic stonewalling of the House subpoenas and requests for testimony and documents, I think, is extraordinary.

One thing that I've learned in Washington is that once a weapon gets taken out of the holster, it doesn't get put back in. And that thought that the next Democratic president --

[00:20:00] BROWNSTEIN: isn't going to see all of this as precedent when a Republican Congress comes asking for information, is beyond incomprehensible.

And Republicans, I think, are climbing out on a limb they will regret as time goes on and this becomes the new norm.

VAUSE: And then the president after that and after that. It just --

BROWNSTEIN: And after that and after that.

VAUSE: Ron, thank you. We appreciate you being with us.

BROWNSTEIN: Thank you, John.


VAUSE: We'll take a short break. When we come back, families say their relatives are being held in China, all part of a crackdown on Muslims.




VAUSE: A CNN investigation into what could be the biggest human rights violation in the world goes to Almaty, Kazakhstan. In this predominantly Muslim country, many share the similar story of being taken out of the country into neighboring China, where they were held in detention camps. Some say they were tortured. China denies all of this. We get the news now from CNN's Matt Rivers.


MATT RIVERS, CNN CORRESPONDENT: A tiny room in Almaty, Kazakhstan packed wall to wall with desperate people. They all have one thing in common.

So, if you ask how many of these people have relatives that are being held by China and unable to leave for at last six months? How about for a year?

That is everybody.

This woman says she has not seen her daughter in a year and a half. This 8-year old says she wants to tell her parents she misses them. Everyone here has family members they say are being held in detention camps not, in Kazakhstan, but in a country that sits on its eastern border, China.

Kazakhs, who are mostly Muslim have traveled back and forth across that border for decades. Some even live in China and are Chinese citizens. So that is why so many Kazakhs had been caught up in what critics say is China's ongoing crackdown on Islam. Over the past few years in the western Chinese region of Xinjiang, the U.S. government says up to 2 million people, nearly all Muslim have been placed in detention camps. CNN got a rare look at some of these camps on a recent trip to Xinjiang. Inside, detainees had said, torture and political indoctrination is routine. Critics say the camps are part of Beijing's attempt to eliminate Islam in China, but to speak to those who have been inside, you have to leave Xinjiang and Almaty, Kazakhstan, is the best place to go. Just 200 miles from the Chinese border Almaty, is home to many ex-detainees like Karat Samarhan (ph).

UNIDENTIFIED MALE (through translator): Now, I hate China so much.

RIVERS: Samarhan is a Kazakhstan citizen, but grew up in Xinjiang. On a trip to China in 2017, he says he was detained and put in a camp where he was often forced to stand for 12 hours at a time, hands and feet shackled, chanting, "Long live Xi Jinping for China's president."

He says he even tried to commit suicide after four months he was led out and allowed to return to Almaty. China's foreign affairs ministry told us they are unaware of his case. Samarhan says his own government in Kazakhstan wants him quiet.

UNIDENTIFIED MALE (through translator): The state isn't helping us. It is trying to silence us, because we are so in discord between both countries. I'm living in fear.

RIVERS: The Chinese government denies allegations of political indoctrination and torture. They call the camps quote, vocational training centers designed not to eliminate Islam, but Islamic extremists, but we found a former camp employee who says that is a lie.

UNIDENTIFIED FEMALE (through translator): It's not true at all, because I saw it with my own eyes.

RIVERS: Sayragul Sauytbay says she taught the Chinese language to camp detainees in 2017. Forced to work there by Chinese authorities, she eventually fled and has since accused the Chinese government of torturing camp detainees, something China denies.

She is now applying for political asylum in Kazakhstan, but as a Chinese citizen she fears she could be deported.

SAYRAGUL SAUYTBAY, EX-CAMP EMPLOYEE: One day someone knocked on the door and that person told my son that China was going to get your mother back soon. You will be orphans.

RIVERS: And yet Kazakhstan's government in charge of a predominantly Muslim country has not publicly condemned Beijing nor called for the camps to close. And some say that's because of money.

So China actually built a lot of this highway that we are driving on right now, it's part of the billions and billions of dollars they invested in Kazakhstan through their built-in road initiative. China is one of Kazakhstan's largest trading partners and critics say Kazakhstan's government can't afford to criticize Beijing.

We asked the Kazakhstan government if China had bought its silence on the issue of detention camps. It did not reply.

But no matter the answer, people like these back at the tiny charity in Almaty have no confidence that the Kazakh government will convinced China to release their relatives from the camps. So, they turned to others.

It was kind of heartbreaking, because what these people just said is that they think we, CNN can get their relatives out of the camps. As if it's that simple. And now, even the small charity that helps them has become a target. Just hours after we shot this video, Serikzhan Bilash, the group's founder, was arrested by Kazakh police and charged with inciting ethnic hatred. He remains in prison.

The tape on the newly locked office door says, quote, "Closed by order of police" -- Matt Rivers, CNN, Almaty, Kazakhstan.


VAUSE: ISIS has claimed responsibility for an attack in Baghdad that killed eight people Thursday. They were murdered in a busy public market in the east of the capital. Operations command says the suicide bomber set off his explosives as he was being surrounded by Iraqi security forces.

At the peak of its power, the ISIS state was the size of Britain and then came the fall. And CNN was there when the terror group lost its last stronghold in Eastern Syria, a fierce battle to end the ISIS caliphate. And Ben Wedeman and his team recorded every last moment.


BEN WEDEMAN, CNN SR. INTERNATIONAL CORRESPONDENT: We were going to go forward to an area closer to where the ISIS encampment is. But because of this fighting, apparently a battle has broken out, a new one.

We were actually on our way to go to a part of the ISIS camp on the edge of Baghouz that had been liberated by the Syrian Democratic Forces.

We can hear a lot of gunfire here. The SDF was taking a couple journalists at a time in and, ironically, we were the last ones to go in and all hell broke loose.


VAUSE: It's incredible reporting featured in a CNN special. "The Fall: Final Days of the Caliphate" Saturday at 6:30 am in London and 1:30 pm in Hong Kong. Something you'll see only here on CNN.

After two years, the North Koreans are testing missiles and the U.S. president is trying to figure out how best to deal with the leader he once called Little Rocket Man but now calls his best friend. That's ahead.


JOHN VAUSE, CNN INTERNATIONAL ANCHOR: Welcome back, everybody. I'm John Vause with an update on our top news this hour.

[00:32:28] Just 30 minutes ago, a self-imposed U.S. deadline passed, and U.S. tariffs on $200 billion of Chinese imports are scheduled to increase from 10 to 25 percent.

The president, Donald Trump, has threatened 25 percent tariffs on an additional $325 billion in consumer goods, also coming from China. To try to avoid all this, trade negotiators will meet again on Friday.

And the U.S. president says he's very surprised the Republican-led Senate Intelligence Committee has subpoenaed his son, Don Jr. The president claims the Mueller report completely exonerates his son. It does not. But the president would not say if he plans to fight the subpoena.

And one of Facebook's co-founders, Chris Hughes, claims Facebook has become too powerful and could be violating U.S. anti-trust laws. In a "New York Times" opinion piece, Hughes says regulators should break up the company, because it's now a monopoly. Facebook says it's committed to accountability but says the government should not interfere with the company's success.

Well, Donald Trump downplaying the possibility of a diplomatic breakthrough with North Korea. Pyongyang fired off two suspected short-range missiles on Thursday, the second weapons test in less than a week. Despite tweeting last week that he's confident a denuclearization deal will happen with the North, Mr. Trump now says he does not think Kim Jong-un is ready to negotiate.

South Korea's president believes the launch could be an attempt to push the U.S. back into negotiations. And Mr. Trump says the U.S. relationship with North Korea continues. Just continues.

CNN senior international correspondent Ivan Watson in Hong Kong. OK. You know, we've heard this line twice now about these missile tests. It first came from the secretary of state, Mike Pompeo, and now from the president. The line is, "Nothing to worry about here. They're only short-range missiles."

Not exactly what regional allies like Turkey and Seoul would like to hear.

IVAN WATSON, CNN SENIOR INTERNATIONAL CORRESPONDENT: No, and Tokyo, the defense minister has just called this a violation of United Nations Security Council resolutions. The launch of two short-range ballistic missiles that went from the northwest of North Korea up to an altitude of around 50 kilometers and then splashing in the East Sea off the east coast of North Korea.

So it didn't land in the economic exclusion zone of Japan, as missiles used to in 2016 or 2017, or fly over Japanese territory, to the great alarm of Tokyo, in previous years. But this was definitely a signal.

And sure enough, North Korean state media put out images of the North Korean leader, Kim Jong-un, overseeing the missile launch and, in fact, ordering the launch to take place.

[00:35:02] So Pyongyang is definitely sending a message here. That is what the South Korean president is saying. That North Korea is showing its displeasure, as he put it, over the failure of the Hanoi summit between Kim Jong-un and President Trump in February in Hanoi and is signaling that displeasure.

The North Koreans have been saying this in rhetoric in past weeks. In one instance calling for the U.S. secretary of state, Mike Pompeo, to be pulled out of the negotiations with North Korea. They have avoided directly criticizing President Trump thus far.

But with two launches now taking place, two missile launches in less than a week, this is North Korea carefully calibrating its message, showing to the U.S. and its allies that it can make trouble if they don't sit down and talk -- John.

VAUSE: OK. So, I mean, this missile test was a message from Kim Jong-un. Just hours later, it seems the U.S., by pure coincidence, replied. And it came with the seizure of a North Korean cargo ship for sanctions violations. So what are the details there, and how are North Koreans likely to respond to this?

WATSON: Well, I think this is the U.S. showing that its economic vice around North Korea does continue to tighten.

The story of this ship, it's a North Korean cargo ship that carried coal, the M/V Wise Honest. It goes back, actually, about a year to when the Indonesians seized it in April of 2017. Several months later a U.S. judge ordered that it should be seized.

The announcement coming from a New York district attorney that it had been actually seized on its way to western Samoa, a U.S. territory. Perhaps that is directly timed to this missile launch. That seems a bit farfetched to me.

But it's showing that the U.S. is conducting a parallel strategy. On the one hand, President Trump making a big show of his direct diplomacy with Kim Jong-un. On the other hand, the U.S. isn't taking its boot off of North Korea's economic neck, with United Nations sanctions that are crippling the North Korean economy.

VAUSE: That's fine.

WATSON: This dual-track approach.

VAUSE: Thirty-three minutes in.

WATSON: John, so that's kind of what I think we're seeing here right now. I don't know if it's directly linked to these missile launches, but it shows that these two countries that have engaged in groundbreaking diplomacy are also showing that they can rattle the sabers in other ways at the same time -- John.

VAUSE: Yes. Absolutely, Ivan. It does seem to be a ramping up of these relations, which were heading in such a very different direction just a few months ago. Clearly, it's now going another way, which is not how, you know, the region or the U.S. president had hoped.

We appreciate you being with us. CNN's Ivan Watson, live here in Hong Kong.

Iran lashing out at the European Union a day after being hit with a new round of U.S. sanctions. Iran's foreign minister criticized the E.U. for expressing regret about the sanctions, saying the Europeans are being bullied by the Americans.

He also called on Europe to keep its end in the 2015 nuclear deal and to normalize economic relations. Tehran has threatened to roll back commitments to the deal if signatories don't help aleve [SIC] some of the pressure coming from sanctions.

The E.U. says it rejects any ultimatums being made by Tehran.

Shortly coming up, Prince Harry spreading the love just days after welcoming his newborn son. The beaming new dad already back to work, launching a countdown for one of his most beloved events. We'll tell you about that in a moment.


[00:40:44] VAUSE: Well, just days after becoming a day, the Duke of Sussex traveled to the Netherlands on Thursday to launch the countdown for the next Invictus Games. As CNN's Anna Stewart reports, it's a project close to his heart.


ANNA STEWART, CNN INTERNATIONAL CORRESPONDENT (voice-over): No rest for this royal. Prince Harry was back to work Thursday with a quick trip to the Hague.

(on camera) Tearing himself away from Master Archie after just three and a bit days cannot have been easy; but in many ways this is one of Prince Harry's professional babies. He created the Invictus Games in 2014 for a cause that he is really passionate about: the welfare of servicemen and women. (voice-over): The prince spent a decade in the army as Captain Wales,

taking in two tours of Afghanistan. When he left, he saw a way he could continue to make a difference.

PRINCE HARRY, UNITED KINGDOM: I've seen firsthand the transformative power of sports in helping people physically and psychologically recover, and knew that the Invictus Games would change lives, capture hearts and inspire a generation. The Invictus generation.

STEWART: And the prince himself inspires many in his visits.

BENITO, AIR FORCE VETERAN AND INVICTUS GAMES ATHLETE: Prince Harry took a lot of time for us, actually. He was very interested in my story and also what my goals are for next year and the sport that I'm competing in.

STEWART: There have been four Invictus Games so far: London, Orlando, Toronto and Sydney. Athletes representing the Netherlands have competed in each one.

The fifth Invictus Games will take place here in Zuiderpark in the Hague, exactly one year from now. And in true Dutch style, his Royal Highness took to a bike to see how the preparations were going.

PRINCE HARRY: We chose you for a reason. And it wasn't just because I like the color orange. Thank you all for guarding the Invictus spirit, and see you in 2020.

STEWART: Princess Margriet of The Netherlands joined the launch event, proud to be a part of it.

PRINCESS MARGRIET, THE NETHERLANDS: It's very important for the people involved and, I think, for better respect and understanding.

STEWART: And while Master Archie may be hundreds of miles away, he wasn't far from everyone's thoughts, receiving a special Invictus, onesie although he may need a bigger one soon.

UNIDENTIFIED FEMALE: Your Highness, will Master Archie be coming next year?

PRINCE HARRY: I have no idea.

UNIDENTIFIED FEMALE: Prince Harry, could I please have a selfie?

STEWART: They'll have to check on Archie's diary. There's no doubt, though, a visit from the royal family's littlest would make for an extra special Invictus games in 2020.

Anna Stewart, CNN, The Hague.


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