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Interview with Kevin Rudd; Co-Funder: Facebook Should Be Broken Up; Exploring India's Soliga Tribe; BBC Radio Presenter Fired over Racist Royal Family Tweet; Deadline Passes For Rise In U.S. Tariffs on Chinese Imports; Comey: No Doubt Trump Would Face Charges If Not President; U.S. Carrier Strike Group Has Reached the Red Sea; U.S. Seizes North Korean Cargo Ship After Alleged Sanctions Violations; South Korean President: North Korean Launch May Be Over Dissatisfaction With Failed Hanoi Summit. Aired 1-2a ET

Aired May 10, 2019 - 01:00   ET



[01:00:00] JOHN VAUSE, CNN INTERNATIONAL ANCHOR: Hello everybody. Thank you week with us. I'm John Vause, you're watching CNN NEWSROOM. Ahead this hour, let the trade war begin, with negotiators from the U.S. and China failing to reach a deal, Washington says hundreds of billions of dollars of Chinese exports will now be hit with the 25 percent tariff. Beijing has promised countermeasures.

Breaking up is hard to do especially when it's the biggest social media platform on the planet. The Harvard roommate that helped Mark Zuckerberg start Facebook says the time has come to break up the company and his old friend has way too much inputs.

And later this hour, this was the week when new parents Harry and Meghan broke their own rules refusing to follow in the footsteps of other Royals in ways both big and small.

There's no breakthrough despite months of negotiation. The United States and China looks set to escalate their trade war. A midnight deadline Washington time set by the U.S. President Donald Trump made U.S. tariffs on $200 billion of Chinese imports should now have risen from ten to 25 percent.

China's commerce ministry says it hopes the U.S. will meet China halfway in resolving this dispute. Talks between both sides broke up hours ago but it's not yet known if the new tariffs have actually been implemented. Both delegations will be meeting on Friday for another round of talks. If they cannot strike a deal, the U.S. President says he's prepared to oppose 25 percent tariffs on another $325 billion of Chinese goods, everything, electronics, toys, whole host of consumer products.


DONALD TRUMP, PRESIDENT OF THE UNITED STATES: I like the president a lot. He's a friend of mine, but I'm representing the USA, and he's representing China, and we're not going to be taken advantage of anymore. We're not going to pay China $500 billion a year. So we put very heavy tariffs on China as of Friday and we put them on also eight months ago.


VAUSE: Let's take a quick look at the Asian financial markets. We have the Nikkei down only slightly, the Hang Seng in Hong Kong, they're up by almost one percent, and Shanghai Composite up by almost one and a quarter of a percent. Go figure.

With us now from Hong Kong Andrew Sullivan, former Head of Sales Trading at Haitong International Securities. Andrew, thanks for coming in. What do think of these stock results across the region?

ANDREW SULLIVAN, FORMER HEAD OF SALES TRADING, HAITONG INTERNATIONAL SECURITIES: Well, I think there's still some caution. I mean, we saw earlier highs and we've seen some reticent coming through that. For Hong Kong, you've also got to remember that investors are going to be a little bit more cautious with the market closed on Monday.

But I think you know, the reality is that these talks are going to continue and that both sides really do want a deal. So if there is a spate it's hopefully going to be short-lived.

VAUSE: Yes, this thing -- this thing could all end of the blink of an eye. You could just be part of a Trump negotiating tactic or the other end of the spectrum we could be in for what a long-running and worsening trade war. I'm getting the sense that you're sort of the first category, this is just a negotiating tactic.

SULLIVAN: Well, I think it is a negotiating tactic. But you have to remember that both of them have a -- you know, they're both playing to domestic you know, domestic audiences. Trump is looking to be reelected, looking to show that he's in control and so is Xi. I mean, he's been doing a lot to show that China is taking its place on the world stage.

And of course he's got the backdrop of you know, the May 4th anniversary and of course we've got tenement square coming up. So he's very conscious of not being seen to kowtow to what he would take to be bullying from the U.S.

VAUSE: Many businesses have absorbed the cost of that ten percent tariff, but if you're looking at 25 percent tariff, it's a different story altogether right?

SULLIVAN: Yes. I mean, that's going to have a significant impact both on the U.S. it'll have probably slightly more impact on China, and it's also going to impact the global economy. So you know, nobody is going to get off lightly from this. And I think you know, at the end of the day, the consumer in the U.S. is the one that's probably going to feel most of the brunt of it.

VAUSE: And you mentioned this about you know, the domestic audience here. The U.S. President sees these trade talks almost like everything else through the prism of the 2020 election. A day ago he tweeted, the reason for the China pullback and attempted renegotiation of the trade deal is the sincere hope that they will be able to negotiate, in quotes, with Joe Biden, or one of these very weak Democrats, and thereby continue to rip off the United States, bah, blah, blah.

A day earlier at a campaign rally, he went after another Democrat. This is the candidate Pete Buttigieg. Here he is.


TRUMP: Buttigieg. They say edge, edge. He's got a great chances. They say, he'll be great. He'll be great. Representing us against President Xi of China, that'll be great. That'll be great. I want to be in that room. I want to watch that one.


VAUSE: He did practice how to pronounce his name, I'll give him that. Xi Jinping as you mentioned, he has his own domestic issues as well. But in terms of the election in the economy, is it a safe bet say we've seen pretty quick turnaround by Donald Trump. If he loses, any part of his base because they're the ones who will likely be hurt the most by these tariffs.

[01:05:08] SULLIVAN: Well, I think that's true. And I think you whilst a lot of people privately and even the American businesses are saying yes, what he's doing is good in standing up to China. And again this is something that's coming out of Europe as well.

But I think if this trade war goes on too long and you see a significant slowdown both in the global economy but more importantly in the American stock markets because you know, these tariffs are going to have impact on earnings potential, then Trump is going to be under a lot of pressure you know, to come back to the table and make a deal.

And that maybe not so good for his base. We've already seen that with the farmers. I mean, the problem is that you know, you look at soybeans now. You know, hitting lows. But China will find other sources to go to soybeans. And so some of these supply chains are going to be disrupted and then they were never going to get back to where they were.

VAUSE: Last question for you, because a lot of people talked about the fact that Trump made this move because he believes the U.S. economy is in a good position right now. It's strong and can handle this.

The question is, that may be true, but you know, China with its you know, communist system and there's no elections, they have a lot more capacity for absorbing pain, you know, economic pain compared to the American. So if you look at these two factors, who can withstand a trade war longer?

SULLIVAN: Well, China Is obviously always said that it's got a lot more levers that it can pull and that it can take the pain for longer. And that is probably true as you say, because it's a command economy. It's also trying to boost its own domestic consumption and that's been a theme of the Communist Party for the last sort of seven to ten years.

So it's looking to change its economy. And as we've seen Huawei, you know, it's got a lot more tentacles into some of the third world nations as possible export partners rather than just the U.S. And I think one of the things that this is going to show is that China is going to be a lot more proactive in diversifying its export base than it has historically.

VAUSE: One thing I remember by time in Beijing, they could be very inventive in ways of healing back. Andrew, good to see you. Thanks for coming in.

SULLIVAN: My pleasure.

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 all of these trade negotiations into 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, etcetera, 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 my 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, there would be a blonde 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 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 signal 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 is.

VAUSE: The (INAUDIBLE) 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 the this is what it's calling 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 block 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 a 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: Ron, thank you. We appreciate you being with us.

BROWNSTEIN: Thank you, John.

VAUSE: The USS Abraham Lincoln Strike Group is now in the Red Sea and early deployment to the region in response to what U.S. officials say were troubling actions by Iran. U.S. official says American forces in the region are now in range and under the protection of the Carrier Strike Group after a pass through the Suez Canal.

[01:15:10] Well, for the first time, the U.S. has seizure a North Korean ship for sanctions violations. U.S. Justice Department accuses North Korea of using the cargo vessel to export coal to China and other countries, in return for hard currency to fund its nuclear weapons program.

And the Justice Department says the cost of maintenance was paid through unwitting U.S. banks. Officials stressed that the ship's seizure had nothing to do with the stored talks between the U.S. president and North Korean leader, and they're not related to the North Korean missile launches on Thursday. Ivan Watson, live for CNN, this hour, in Hong Kong, totally coincidental, the timing here, one coming hours after the other. But the North Koreans, they could absorb the loss of one ship, when it comes to, you know, violating sanctions.

But what it does do, it seems, is that this sends a very clear message to the North Koreans, of Kim Jong-un, that the U.S. is aware where the ships might be, and they can be seized. And so, that now says how do the North Koreans respond to this?

IVAN WATSON, CNN SENIOR INTERNATIONAL CORRESPONDENT: That's a good question. But, you know, the U.S. Navy has been active in the East Sea, it's constantly, kind of, monitoring the alleged ship to ship transfers of fuel that North Korean ships are allegedly involved in, which would be in violation of United Nations Security Council resolutions.

The case of this one ship that was announced, the M.V. Wise Honest, which was a coal-carrying cargo ship, that is something that goes back about a year, when it was first seized by Indonesian Authorities, and then in April of 2018, and then a judge in the U.S. called for its seizure in the U.S. This has been a long process that's been underway.

The point, being, is that the sanctions are still in place over the North Korean economy. They're still hurting the North Korean economy, and we know that Kim Jong-un wants to get rid of those sanctions, and that simply isn't happening right now.

There has been talk of sending food aid to North Korea, and in fact, possibly, that's what the U.S. envoy to the Peninsula, Stephen Biegun, was going to be discussing with his South Korea counterparts, when he arrived this week, in Seoul, just at the time when North Korea fired two more short-ranged ballistic missiles.

So, how will the U.S. respond to those ballistic missile launches? Could it put the possibility of sending much needed food aid to North Korea, in jeopardy? That's the question we don't know the answer to, right now.

VAUSE: Although, we may -- we may have an answer directly to that question but we said they have an indication from Donald Trump, who spoke about this -- who specifically asked about this, on Thursday. And the line he came up with was very similar to that line we know from the Secretary of State Mike Pompeo, after the first round of missile talks.

(INAUDIBLE) it's OK, they were just short-range missiles.

WATSON: Yes, I mean, clearly, the Trump administration has downplayed the fact that North Korea fired missiles not once, but twice, in less than a week, bringing an end to that moratorium on missile launches. You know, North Korea hadn't fired anything since November of 2017.

And President Trump was using that as a metric of the success of his diplomatic initiative with Kim Jong-un, saying hey, they're not firing any missiles, so look how well it's doing. Well, that has ended. This may be short-ranged ballistic missiles. They may not have come within Japan's economic exclusion zone, or flown over Japanese territory, as we had the case in 2016 and 2017.

But, nonetheless, they are aggressive signals, but the U.S. has been playing them down. Japan's Defense Minister said that this latest short-range ballistic missile launch was in violation of United Nations Security Council resolutions.

The South Korean president said it's not a direct violation of bilateral Korean agreement between North and South Korea, but it is against the spirit of that agreement. Take a listen to more of what Kim Jong-un -- Moon Jae-in, the South Korean president, had to say.


MOON JAE-IN, PRESIDENT OF SOUTH KOREA (through translator): North Korea fired missiles that do not directly threaten the United States, Japan, or South Korea. So, they appeared to be careful not to break down the dialogue, but they expressed their opinion at the same time.


WATSON: So, Moon Jae-is saying that these missile launches are a way for North Korea to show its discontent at the failure of the summit between Trump and Kim, in Hanoi, last February, whether or not this tactic will serve North Korea in bringing President Trump back to the negotiating table, that's another question that we don't know the answer to.

VAUSE: There are a lot of questions out there that, I guess, at this point in time, that we don't know the answer to. A lot to find out as this story continues. We appreciate you being with us. Ivan Watson live in Hong Kong.

[01:20:02] Next up, on CNN NEWSROOM, Venezuela bracing for another weekend of anti-government protest, but the opposition-led movement appears to be losing some steam. Crackdown on the set, seems to be the reason why, details in a moment.


VAUSE: Venezuela's national assembly president, Juan Guaido, calling for a new round of anti-government protest this weekend. But, there seems to be waning enthusiasm in the continued protests which have done little to unseat President Nicolas Maduro.

Add to that, some members of the opposition control assembly have been stripped of their immunity and the assembly's vice president has been arrested, as CNN's Paula Newton reports, this government crackdown, also extends to protestors.


PAULA NEWTON, CNN INTERNATIONAL CORRESPONDENT: From hundreds of thousands of opposition protestors in the streets in January, to tens of thousands weeks later, to just hundreds now, this is the Maduro government's definition of success.

ALFREDO ROMERO, HUMAN RIGHTS EXECUTIVE PRODUCER, FORO PENAL VENEZOLANO: The most important capital that the government or that the regime, the Maduro's regime has, is repression, political repression. Actually, they are being, I have to say it. They have been very effective using political repression.

NEWTON: The world watched as a stark message was sent to protestors. Maduro's forces would not tolerate dissent. Human rights activists say they're being backed up by an unprecedented police crackdown.

Maria Eugenia Vargas says police would not stop harassing her son, detaining him, warning him to never take to the streets again.

Four times, they came for him, she says. And the last time they told me, we'll come here to kill him if we ever see any trouble again.

Fearing for his life, her son, Jorge, escaped Venezuela with just the shirt on his back, a few weeks ago, hoping for asylum in another country. Heartbroken, she only speaks to him by phone. In Venezuela, he was no longer safe.

The last time they had him, she tells me, I kept thinking, don't kill him. She says protestors aren't tired or helpless, but scared.

Stories like Jorge's have been common in neighborhoods like this. The repression has always been cunning, but in recent months, it's become ever more crude.

FAES, is an elite, well-armed, SWAT force have taken up residents in poor areas in recent weeks, peering down even on commuters, a reminder, they are watching.

[01:25:09] And President Nicolas Maduro has warned that civil unrest and traders will not, in his words, go unpunished, that justice will be served.

In the days following the failed opposition uprising, we saw national police investigators follow-up on his words, collecting evidence on protesters and damage.

ROMERO: They always recognize at some point --

NEWTON: And human rights group claim there is a revolving door of political prisoners who are tortured and interrogated at police and intelligence black sites.

ROMERO: Ask yourself, if you're a poor person, you protest and you're being taken to that place, of course, your neighbor, your friends, your family members will never protest again.

NEWTON: At risk now, Juan Guaido's operation freedom, with a fierce and growing crackdown in opposition leader may lack the people power he needs to overthrow Maduro.

Paula Newton, CNN, Caracas. VAUSE: Well, this program, you know, at its height, the ISIS state was the size of Britain, but then came the terror group's last stand in Eastern Syria. CNN's Ben Wedeman was there. Along with his team, he witnessed the exodus of tens of thousands of people amid a fierce battle to retake this tiny sliver of land, the last piece, of the once great ISIS caliphate.

You can watch Ben Wedeman's full report in the CNN Special, "THE FALL, THE FINAL DAYS OF THE CALIPHATE", starting Saturday, at 6:30 a.m. in London, 1:30 pm in Hong Kong. It's a special, you will only see here, on CNN, with Ben Wedeman.

Next up on CNN NEWSROOM, Australia's Former Prime Minister, Kevin Rudd, warns how the rest of the world will pay for any escalation in the U.S.-China trade war.


VAUSE: Welcome back, everybody, you're watching CNN NEWSROOM, I'm John Vause, with the headlines this hour.

American carrier strike group has reached the Red Sea, amid ongoing tensions with Iran. It was deployed in response to what the U.S. says is a possible threat. Defense official says the USS Abraham Lincoln passed through the Suez Canal, and is now in the position to defend American Forces in the area.

U.S. Justice Department says it sees a North Korean cargo ship that was used to violate sanctions. Officials say North Korea transported coal to China and other countries, and used the profits to fund its nuclear weapons and missile program. U.S. says the seizure has nothing to do with North Korea's latest missile test this past week.

A newer deadline for a trade deal with China has come and gone, U.S. tariffs on $200 billion of Chinese imports are scheduled to increase from 10 to 25 percent.


The U.S. has also threatened a 25 percent tariff on an additional $325 billion in consumer goods from China. Trade negotiators are set to meet again later on Friday.

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

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 a flu 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 U.S.A. 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.

[01:35:02] 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: Next up on CNN NEWSROOM Facebook's co-founder says the tech behemoths should be broken up. And as for his once-friend, the Harvard dormmate, (INAUDIBLE) he shared a room with. well, Mark Zuckerberg he says is just un-American.


VAUSE: Anti-trust laws in the United States came about to protect consumers from (INAUDIBLE) business practices like price fixing monopolies. More than a century ago those laws led to the dissolution of Standard Oil. That was the first case.

So it's kind of amazing right now that we have a statement from the co-founder of Facebook that Facebook is a threat to democracy and should be broken up.

Chris Hughes helped Mark Zuckerberg take Facebook from a Harvard dorm room to smartphones and computers almost everywhere around the world.

[01:39:55] But in an opinion piece in the "New York Times", he says Zuckerberg has unchecked power and influence far beyond that of anyone else in the private sector or in government, adding, "We are a nation with a tradition of reining in monopolies, no matter how well intentioned the leaders of these companies may be. Mark's power is unprecedented and un-American. It's time to break up Facebook."

Breaking up is hard to do.

Hemu Nigam is an Internet security analyst, founder and CEO of SSP Blue, is with us from Los Angeles. Good to see you -- Hemu. HEMU NIGAM, INTERNET SECURITY ANALYST: You, too -- John. Howa are you doing?

VAUSE: I'm ok. Probably Mark Zuckerberg is doing a lot better than me though.

Here's part of the plan thought that Hughes is actually outlining. He writes, "How would the break out work? Facebook would have a brief period to spin off the Instagram and WhatsApp businesses and the three will become the same companies -- most likely of being publicly traded. But time is of the essence. Facebook is working quickly to integrate the three which would make it harder for the FTC to split them up." Blah-blah-blah. Like he's the first one to suggests that.

You know, the problem, it still leaves Facebook as, you know, the core of Facebook as is. Given the gravity of the warning, he has made about Zuckerberg and empowered, un-American, this all just kind of rings a little hollow.

NIGAM: Well, absolutely -- John.

It does make a strong statement -- that something needs to be done. The real question is, is that the right thing to do. And I think what the real focus of all of this and should be really is why is this happening in the first place.

And I think personally that it has a lot to do with the structure of the business model in and of itself when it comes to online platforms which is not actually a Facebook per se problem but it is a platform problem.

VAUSE: Ok. Well based on that --


VAUSE: Sorry -- go on. Finish it.

NIGAM: That's actually designed by the more clicks you have, the more advertisements you can sow and the more you can make. But the only way to get more clicks from many people is to have content that they're interested in clicking on or watching or viewing or interacting with often times than not.

That content is bad content. It's illegal content, it's atrocious top content. And it's things like that, that people are consuming. And so if you allows that to occur, your business model in actually built on having that thing.

VAUSE: You just -- you are saying it plays to our worst sort of demons, if you like? Our worse instincts.

Facebook has responded to this op-ed by Hughes. It writes, "Facebook accepts that with success comes accountability. But you don't enforce accountability by calling for the break up or of a successful American company." Well, actually you do. That can happen to railways, to the phone companies -- The problem is, it's hard to nail down exactly what Facebook is. What it's physical form. What does it look like?

It's not like the railways or the phone companies and put them into baby bell (ph) -- it was all pretty straightforward. This isn't.

NIGAM. No, not at all, and in fact, even if you are trying to split things up, the question becomes, like you said a railway you know you're going to take this, you're going to put it over there. But here it's like how do you -- how do you just separate all those interconnected things which is really what the Internet.

How do you separated it out and say this over here can work independently of this over here because then if you do it and it doesn't work right, the consumer is the one who gets harmed because all of zone they gets harmed because all of a sudden they don't have their Instagram, they don't' have their Facebook, they don't have all the other features that they care about.

And even though people are complaining they do still care about that otherwise, there wouldn't be more than five billion people on the platform itself.

VAUSE: Ok as far as Zuckerberg goes Hughes damns him with faint praise. "Mark is a good, kind person but I'm angry that his focus on growth led him to sacrifice security and civility for clicks. So that's your point.

I'm disappointed in myself and the early Facebook team for not thinking more about how the News Feed algorithm could change our culture, influence elections and empower nationalist leaders. And I'm worried that Mark has surrounded himself with a team that reinforces his belief instead of challenging them."

So here's the point. What exaclly is Zuckerberg's hold over the board of directors and its dual class of stock ownership. Class A shares for ordinary investors, moms and dads. Then there's Class B with 10 votes each compared to the one vote for Class A. Zuckerberg has the majority class B.

By way of voting with Google probably back in 2004, co-founder Larry Page wrote to investors saying in the transition to the public ownership, we've set up a corporate structure that will bake it harder for outside parties to take over or influence Google. It seems fairly safe to assume Facebook has the idea (ph) it's the heart of the problem.

NIGAM: It's actually not just Facebook, not just Google. Snapchat does it is well. Lyft is not doing it. Lyft in fact, Lyft I believe the founders have 20 times the voting rights as the A shares, the all of us shares versus their the upper echelon of the company.

Facebook, I think Mark Zuckerberg has ten times the voting right. So that is an issues. And just so your viewers understand, this is not just a technology thing. I believe many not many but at least some Fortune 500 companies are also structured like this and it is allowed by law.

[01:45:02] VAUSE: Yes.

NIGAM: So in a sense -- and it was actually allowed for a good reason when it started and that is if you look at a company that has to grow, the visionary, the person who started it, the founders have this long term vision of what they want to do with that company, the short term investors -- why isn't my stock going up, I'm going to oust you. And that's the reason why this whole structure was put in place in the first place.

VAUSE: You know, all that -- the road to good intentions.

Let's just finish quickly with this op-ed. The powerful op-ed that Zuckerberg wrote back in March. You can see it in the "Washington Post". I believe we need a more active role for the government and regulation -- for regulators I suspect -- by updating the rules of the Internet we can preserve what's best about it. The freedom for people to express themselves and to entrepreneurs to build new things while also protecting society from broader harm."

You know why I think trying (ph) government regulations will have no impact on how Facebook does business, it's because Zuckerberg is all for it.

NIGAM: Well, I think if somebody is up for it, it doesn't mean they're bad-intentioned on it. What's really happening is here, There is already a regulation that exists that allows immunity for any platform and give them the ability to do nothing to get rid of the problem and to focus on identifying solutions that actually help and at the same time may harm a business model.

So I think well, you can say I want regulations but you know what happens in the halls of Washington D.C. inside the beltway as we often say, which is everyone is going to battle. This is going to take five to ten years to figure it out.

Look at privacy legislation. We've been trying this for 10 to 15 years now. There still doesn't exist centralized privacy legislation and everybody knows it took a great, hey let's get regulated but the question is by the time they figure it out five, ten years, maybe more. It doesn't matter.

VAUSE: It's still there. We're out of time -- Hemu.

And also with the hep of lawmakers actually talking about the Internet and how Facebook works but they don't. Good to see you, mate. Thank you.

NIGAM: You too.

VAUSE: Next up on CNN NEWSROOM who could insult a newborn. We'll find out when we come back.

[01:47:00] (COMMERCIAL BREAK) VAUSE: For centuries, India's Soliga tribe has lived in a forest nestled in the southern part of the country. Their traditions and culture deeply rooted within the lush greenery which surrounds them.

In our "Iconic India" series, we explore how that connection live son today.


UNIDENTIFIED FEMALE: Adorned in leaves from the forest the Soliga tribe of India perform a 2,000-year-old ceremony. This is a dance that reinforces the tribes deep connection, with nature and their deity, Gorukana, God of the forest.

ACHUGEGOWDA (through translator): For the Soliga tribes, the forest is their father and mother, it is the god that we worship.

UNIDENTIFIED FEMALE: For centuries, Achugegowda's ancestors lived off the land but when their hunting grounds were turned into wildlife parks, they lost their livelihood. Today, they manage to survive by selling products from the forest, from spices to crafting, honey making, to coffee farming.

ARSHIA BOSE: So this is Achugegowda's coffee plantation. There are some stories to suggest that he might be one of the first Soliga people in this region to actually start cultivating coffee.

UNIDENTIFIED FEMALE: Arshia Bose has been buying coffee from Achugegowda and other Soliga tribe members for four years. India is the seventh largest producer of coffee in the world.

With Karnataka producing the majority, this is coffee country.

[01:49:54] In the Biligirirangan Hills, the elevation, the sort of the fact that we are on a slope as well as the soil type is really good for the cultivation of coffee. We find the flavor of coffee to be really, really sort of full -- full flavored and quite fruity and quite peppery. It is quite earthy.

UNIDENTIFIED FEMALE: Working directly with buyers and cutting out the middleman, the farmers here are empowered but there is another effort that seeks to support the whole tribe.

HANUMAPPA SUDARSHIN: Gorukana is the song which the tribe will sing, Goru, goru, goru ko, gorukana -- the whole life is like a web. And we thought we would keep that name and also do it as part of that web. Ecotourism is also part of that web.

UNIDENTIFIED FEMALE: And flowing around 25 tribe members, this Gorukana Eco Wellness Retreat is more than just a tourist attraction. All proceeds from the retreat were invested into the communities, supporting the local school and hospital, providing a lifeline for the Soliga people for years to come.

(END VIDEOTAPE) VAUSE: Before Archie Harrison Mountbatten Windsor was even born, his parents Prince Harry and Meghan Markle, the Duke and Duchess of Sussex tightly controlled access to his story and presentation to the world, most likely in many ways, to shield him from this sort of thing -- racist tweets from the likes of BBC Radio 5 live presenter Danny Baker.

On Wednesday Baker tweeted a photo of a man and woman holding hands with a chimpanzee in a suit and top hat. The caption: "Royal baby leaves hospital". He deleted it, issued kind of an apology but not enough to save his job.

A BBC spokesman said "This was a serious error of judgment and goes against the values we as a station aim to embody. Danny is a brilliant broadcaster but will no longer be presenting a weekly show with us."

Sandro Monetti, entertainment journalist and former royal correspondent, with us now from Los Angeles. Oh you've got some of the music.

Ok. A little bit to talk about here to wrap up the week, but that tweet, Danny Baker, the radio presenter. This was his initial apology.

"Sorry my gag pic of the little fellow in the posh outfit has whipped some up. Never occurred to me because well, mind not diseased. Soon as those good enough to point out its possible connotations, got in touch, down it came and that's it. Now stand by for sweary football tweets."

It seems he was then told management wanted to see him or something like that.

Here's the other tweet. "Once again, sincere apologies for the stupid unthinking gag pic earlier. It was supposed to be a joke about royals versus circus animals in posh cloths -- blah, blah, blah. So rightly deleted. Royalty watching not forte.

He then, you know, well, he got fired. He then was quite deep in saying he was a victim of all sorts of silliness. Surely by now the I didn't not know it was offensive defense seems unbelievable.

SANDRO MONETTI, ENTERTAINMENT JOURNALIST: He works in the media. One of the major stories in the world has been about, amid all the congratulations to Meghan, giving birth to what is the first biracial baby in the history of the royal family has been so much abuse of a racist nature on social media.

So what does one of the BBC's prime broadcasters do? Go and add to this narrative. Utterly idiotic, utterly stupid, an end to a glorious broadcasting career but he had to go and the mealy mouth apology was just pathetic.

You know, it's really a landmark for the moment in our culture and it is just vile. You know, Ricky Gervais once said to me, Twitter is one big toilet wall. And so you get one of the most respected broadcasters just adding to it, this was an idiotic move.

Don't slam the door on your way out, Danny, you had to go.

VAUSE: Yes. Twitter-cide we call it.

On the bright side, though, what we are seeing is so unusual with the Duke and Duchess of Sussex. They are sort of writing their own playbook here. They're refusing to follow in the steps of other royals, notably William and Kate, in a lot of way. Firstly the official photographs of the couple and the queen and also, Meghan's mother, a non royal relative appearing in an official photo like this, (INAUDIBLE), she must be livid.

MONETTI: She must. You know, Meghan and Harry play the Instagram game so well, better than anyone else in the palace, because on the official royal family Web site, the parents of Archie were named as William and Kate, oops.

Someone has not been paying attention at the palace, whereas Sussex Royal has just take an off to 7.5 million followers on Instagram. I think this is fantastic and what I love about the young royals is how they are using this platform for a good. Yes, the eyes of the world are on them.

In the last few hours they have launched a crisis text helpline for people struggling with mental health issues. I can't think of any other major celebrity that makes mental health their topic. It certainly never been done in the royal family.

[01:55:02] VAUSE: Days after she gives birth.

MONETTI: Yes, exactly. Yes.

So you talk about tradition and a new way of doing things and we are talking about them so much, you know. "Game of Thrones" is about to go off the air and everyone is very sad, but don't worry because the intrigue and drama that surrounds the royals can keep us going.

VAUSE: Absolutely.

MONETTI: And this one will never be canceled.

VAUSE: Ok. Well, there is also no official royal title for Archie.

Here's CNN's Max Foster to explain why.


MAX FOSTER, CNN CORRESPONDENT: I think that suggests that they want Archie to grow up and develop his own career outside the royal fold, unburdened by titles. They also want to argue, I think, that they deserve some privacy for this little child because he's not got a title so therefore he won't take a royal role so he should be exempted from much of the media pressure that has plagued Harry, he would argue, but also his mother.


VAUSE: The other interesting thing, he was only given three names, Archie, which actually is a contraction which is the first time I think that has ever happened for a royal. So Archie Harrison Mountbatten. Normally the royal kids, they've got more names than a phone book.

MONETTI: Yes, they have. I mean you only need to look at the all the bets, we thought -- Arthur, Philipp, George, all the rest of them, but they are doing things their own way.

And it was interesting in that package there about out of the spotlight. The media is very different, of course, the royal family has had its run-ins with the press but now one of the great things about Instagram and Twitter is that the poster can control the story so they are getting in their first and it will be a decision for them, as the most high-profile parents in the world, how much exposure do they give to Archie going forward?

You know, will this be the world's most famous child, you know they say there will be no royal title, will it be @Archie coming at us soon or will he be in the background. It's going to be fascinating to watch this very modern media savvy couple and how they handle the fame, controlling themselves, of the most famous child in the world right now.

VAUSE: Absolutely. We're out of time Sandro but to that point, they have managed to pull off, you know, this birth and everything else, getting Meghan to the hospital and getting out of the hospital. It was like something out of a Jason Bourne movie.

They're probably get it up the tabloids right. It was good to see you.

MONETTI: Great to see you. Cheers.

VAUSE: And thank you for watching CNN NEWSROOM. I'm John Vause.

Please stay with us. The news continues right after a very short break.