>> DAGEN: KEVIN, THANK YOU.
HERE WITH US NOW, FORMER POLICY
DIRECTOR FOR MITT ROMNEY, SENIOR
ADVISOR TO MARCO RUBIO AND
REFELLOW AT THE HOOVER
INSTITUTION, LONNIE SHEN.
DO YOU THINK THE SUMMIT IS IN
JEOPARDY OR IS THIS GAMESMANSHIP
WE COULD EXPECT?
>> I THINK THIS IS SOMETHING WE
SHOULD HAVE EXPECTED.
ONE THING HAS BECOME CLEAR.
THE NORTH KOREANS ARE AN
UNSTABLE PARTNER TO BE HAVING
THESE DISCUSSIONS WITH.
I'M NOT SAYING WE SHOULDN'T HAVE
THE DISCUSSION WAS THEM.
BUT ANYBODY WHO THOUGHT THAT KIM
JONG UN WOULD BE HE PREDICTABLE
OR THRUST WORTHY, THEY NEED TO
TAKE A SECOND LOOK.
THIS IS A GUY WHO OVER THE YEARS
HAS MADE PROMISES AND NOT KEPT
THEM.
SO I THINK WE HAVE TO BE TOTALLY
AWARE.
WE HAVE TO BE EYES WIDE OPEN.
BUT I DO THINK THAT THE
DISCUSSIONS ARE ONGOING AND I
THINK JUNE 12th IN SINGAPORE
IS STILL LIKELY TO HAPPEN BUT
HE'S TRYING TO REGAIN THE UPPER
HAND HERE MANY THIS IS A
NEGOTIATION TACTIC, DAGEN.
>> JAMES FREEMAN HERE.
I WANTED TO GET YOUR TAKE ON
TRADE.
I DON'T SEE A LOT OF REASON FOR
OPTIMISM.
YOU LOOK AT THE CHINESE
NEGOTIATIONS, I'M NOT SEEING US
GET ANY IMPROVEMENT IN THE WAY
THEY TREAT OUR TECHNOLOGY
COMPANIES.
I'M LOOKING AT NAFTA AND IT'S A
LOT OF TALK ABOUT THE GOVERNMENT
TELLING COMPANIES WHERE THEY CAN
BUILD STUFF AND HOW MUCH THEY
CAN PAY.
IS THERE ANY HOPE HERE THAT
THESE VARIOUS NEGOTIATIONS
ACTUALLY LEAD TO MORE OPEN
MARKETS?
>> WELL, JAMES, THAT'S THE
QUESTION, RIGHT.
WE CANNOT HAVE THIS NEGOTIATION
WITH CHINA FOR THE GOAL OF A
SHORT-TERM RESOLUTION OF TRADE
DEFICIT ISSUES.
THIS HAS GOT TO BE A LONGER TERM
DISCUSSION ABOUT WHAT THE
CHINESE HAVE TO DO TO OPEN UP
THEIR ECONOMY AND FUNDAMENTALLY
TO HAVE A DIFFERENT MODEL.
LOOK, IF WE DON'T ADDRESS THE
PIRACY OF U.S. INTELLECTUAL
PROPERTY AS PART OF THE DEAL,
THIS IS A BIG PROBLEM.
THIS NEGOTIATION CANNOT BE ABOUT
THE SHORT-TERM.
WE'VE GOT IN WASHINGTON THIS
WEEK LEO HU WHO IS ONE OF THE
TOP CHINESE ECONOMIC OFFICIALS.
HE'S HERE TO CONTINUE
NEGOTIATION WAS THE TRUMP
ADMINISTRATION.
I HOPE THEY CONTINUE TO PRESS
FOR SYSTEMIC REFORM AS OPPOSED
TO A SHORT-TERM SUGAR HIGH WHEN
IT COMES TO OUR TRADE SITUATION
WITH CHINA.
>> IT'S LINDSEY BELL HERE.
I HAVE A QUESTION ON THE ZTE
TRANSACTION.
DO YOU THINK THAT THAT'S REALLY
A FAIR TRADE?
WE'RE LETTING THEM GET BACK INTO
BUSINESS HERE, BRINGING THEIR
BUSINESS BACK INTO THE U.S.
BUT IN EXCHANGE FOR AGRICULTURAL
RELIEF.
IS THAT FAIR?
>> WELL, THE BIG ISSUE WITH ZTE,
THIS IS SOMETHING MARCO RUBIO
HAS SPOKEN ABOUT A LOT, LOOK,
ZTE IS A COMPANY THAT DOES
BUSINESS IN CHINA.
THE PROBLEM REALLY IS THAT THEY
HAVE TECHNOLOGY THAT COULD
POTENTIALLY BE VERY PROBLEMATIC
FOR THE U.S.
IF THEY ARE ALLOWED TO GET THEIR
TECHNOLOGY HERE INTO THE UNITED
STATES, THEY'RE GOING TO BE ABLE
TO POTENTIALLY INFILTRATE
INFRASTRUCTURE HERE IN THE U.S.,
INFILTRATE NATIONAL SECURITY
CONCERNS.
SO ZTE IS MORE THAN ABOUT JUST
DEALING WITH A COMPANY AS PART
OF THIS TRADE NEGOTIATION.
IT'S BIGGER THAN THAT.
THEY REALLY DO POSE A NATIONAL
SECURITY RISK.
I THINK WE HAVE TO BE CAREFUL
WHEN WE TALK ABOUT ZTE AND TALK
ABOUT CONCESSIONS JUCH JUST TO J
ABOUT CONCESSIONS JUCH JUST TO S
ABOUT CONCESSIONS JUCH JUST TO T
ABOUT CONCESSIONS JUCH JUST TO O
ABOUT CONCESSIONS JUCH JUST TO H
ABOUT CONCESSIONS JUCH JUST TO L
ABOUT CONCESSIONS JUCH JUST TO P
THE CHINESE OUT.
THAT YOU I FIND VERY WORRY
THAT YOU I FIND VERY WORRISOME.
>> DAGEN: IT'S LOOK LIKE SUCH A
NATIONAL SECURITY RISK, THIS
HANDOUT TO ZTE.
IT'S OWNED BY THE CHINESE
GOVERNMENT.
IT'S OWNED BY A GROUP OF
COMPANIES, SOME ARE DEFENSE
COMPANIES, THAT IT OPENS UP THE
DOOR.
THERE ARE WORDS USED BY HE'S
ESPIONAGE RELATED TO ZTE.
THE PHONES AREN'T EVEN SOLD ON
MILITARY BASES.
GENERAL JACK KEANE SAID HE WAS
STUNNED TO HEAR THIS.
IT JUST SEEMS LIKE SUCH A BAD
IDEA.
WHAT DO WE GET IN RETURN FOR IT?
WE LITERALLY GO BACK TO WHERE WE
WERE, THE STATUS QUO ON
AGRICULTURAL TARIFFS BY CHINA
FROM WHERE WE WERE EVEN IN
FEBRUARY.
SO WHO'S IDEA IS THIS?
>> THIS IS THE THING.
THE SUGGESTION THAT WE WOULD
BENEFIT FROM THIS I DO THINK IS
HIGHLY PROBLEMATIC.
THE ISSUE WITH ZTE, THERE WAS A
HEARING RECENTLY ON CAPITOL HILL
WHERE ALL OF THE INTELLIGENCE
CHIEFS WERE THERE AND SENATOR
TOM COTTON, MY OLD FRIEND, ASKED
THIS QUESTION.
HE SAID WOULD ANY OF YOU EVER
PURCHASE OR OWN A ZTE PRODUCT?
AND NOBODY RAISED THEIR HAND.
ZTE IS IN THE BUSINESS
FUNDAMENTALLY OF ESPIONAGE.
I THINK WE HAVE TO BE CAREFUL
HERE.
THE CONCESSIONS WE GET ON
AGRICULTURE AREN'T EVEN THAT
GREAT POTENTIALLY.
WE HAVE TO TAKE A GOOD LOOK IN
THE MIRROR HERE AND SAY WHAT IS
OUR GOAL COMING OUT OF THE
NEGOTIATIONS WITH THE CHINESE.
THE GOAL IS LET'S GET THEM TO
BEHAVE IN A DIFFERENT WAY.
IF THEY WANT TO BE OPEN MARKETS
FOLKS, IF THEY WANT TO HAVE THIS
DISCUSSION, GREAT.
BUT THEY NEED TO BE COMMITTED TO
PROTECTING U.S. INTELLECTUAL
PROPERTY.
>> DAGEN: YOU MENTIONED THAT
PRESIDENT TRUMP LIKE NO OTHER
PRESIDENT IN RECENT HISTORY HAS
REALLY STEPPED UP AND HONORED
HIS CAMPAIGN PROMISES, MOST
RECENTLY, IT WAS ANNOUNCED LAST
YEAR BUT MOVING THE EMBASSY TO
JERUSALEM.
>> THAT'S WHAT MAKES ME SO
NERVOUS ON TRADE AND
IMMIGRATION.
I DON'T SEE THE UPSIDE HERE.
I THOUGHT THE ADMINISTRATION WAS
MOVING TOWARD FOCUSING ON
CHINESE INTELLECTUAL PROPERTY
THEFT, OPENING THEIR MARKET TO
OUR COMPANIES, NOT MAKING OUR
COMPANIES SHARE OUR TECHNOLOGY
OR TRADE SECRETS, DO JOINT
VENTURES.
BUT LONNIE, I'M NOT SEEING THAT
ANYWHERE IN THESE NEGOTIATIONS.
MAYBE I GUESS THESE MEETINGS
WITH LOU THIS WEEK WILL CHANGE
THINGS.
SO FAR, THAT SEEMS TO BE
COMPLETELY UNADDRESSED FROM WHAT
I CAN TELL.
>> RIGHT.
UNTIL THIS IS ONE OF THOSE
THINGS WHERE THERE ARE
DISCUSSIONS GOING ON, WE DON'T
KNOW ABOUT THEM, I DO THINK,
JAMES, AT THIS STAGE IT IS A
LITTLE BIT EARLY FOR US TO JUDGE
WHERE THESE THINGS ARE HEADED IN
THE FINAL ANALYSIS.
I'M HOPEFUL THAT THERE ARE
PEOPLE IN THIS ADMINISTRATION
WHO UNDERSTAND THE NEED FOR US
TO HAVE REAL REFORM IF WE'RE
GOING TO HAVE THIS DISCUSSION
WITH CHINA.
I DO THINK THERE ARE PEOPLE IN
THIS ADMINISTRATION WHO ARE
COMMITTED TO THAT POINT OF VIEW.
WHAT WE CANNOT HAVE IS WE CANNOT
HAVE SHORT-TERM-ISM IN THIS
DISCUSSION JUST FOR THE PURPOSE
OF IMPROVING THE TRADE DEFICIT
POTENTIALLY WITH CHINA IN THE
SHORT RUN.
>> DAGEN: FAIR ENOUGH.
THIS IS PART OF THE NEGOTIATION.
I LOST MY MIND OVER SOME OF THE
STUPID IDEAS THAT WERE FLOATED
ABOUT THE TAX REFORM.
I WOULD COME ON THIS PROGRAM AND
JUST RANT AND RAVE ABOUT IT AND
MOST OF THEM DIDN'T WIND UP IN
THE FINAL TAX LAW.
SO I WILL CONCEDE THAT.
DO YOU HAVE A QUESTION?
>> THIS
>> IHIS
>> I'MS
>> I'M LOOKING AT DEALING WITH
CHINA, I'M VERY CONCERNED THAT
WE DON'T END UP JUST COSTING
CONSUMERS MORE, THAT WE DON'T
END UP OPENING THESE MARKETS AND
THAT ALL WE END UP DOING IS
PUTTING MORE AND MORE UPWARD
PRICE PRESSURE ON THE THINGS
THAT WE IMPORT, WHICH MAKES
CONSUMERS HAVE TO PAY MORE OUT
OF THEIR POCKET.
HOW DO WE AVOID DOING THAT?
I KNOW THAT TRUMP IS VERY GOOD
AT THROWING THESE THREATS OUT
THERE BUT HOW DO WE END UP NOT
HARMING OURSELVES?
>> WELL, I THINK THAT'S A GREAT
QUESTION.
THIS HAS ALWAYS BEEN THE REASON
WHY I'VE BEEN A FREE TRADER, WHY
I THINK OPEN MARKETS ARE THE
RIGHT ANSWER FOR A GROWING AND
PROSPEROUS ECONOMY HERE IN
AMERICA.
BECAUSE FUNDAMENTALLY, THE
REASON WHY WE ENGAGE IN FREE
TRADE IS BECAUSE IT HELPS US TO
WANT AT A PRICE POINT CONSUMERS
CAN AFFORD.
THERE IS AN ARGUMENT TO BE MADE
THAT DOMESTIC MARKETS SHOULD BE
PROTECTED TO A CERTAIN DEGREE.
BUT WE'VE GOT TO BE CAREFUL
ABOUT THAT.
IF YOU TAKE IT TOO FAR, ARE YOU
GOING TO SEE UPWARD PRICE
PRESSURE.
I THINK CONSUMERS ARE GOING TO
DEMAND CHANGE IN THAT SITUATION.
THE QUESTION IS HOW MUCH MORE
ARE WE WILLING TO PAY, THAT'S
THE QUESTION.
>> DAGEN: LONNIE, FREE TRADE,
VOTE FOR TRUMP WAS NOT HIS
SLOGAN.