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Trump Announces Deal on China's ZTE; Source: Trump Thinks G-7 a Distraction from North Korean Nuclear Summit; Former Fox New Military Analyst Calls Network a "Propaganda Machine"; Kaepernick Exists NFL Lawsuit, Subpoenas for Trump, Pence, Others; U.S. Diplomats Evacuated After Sonic Attacks in China. Aired 11:30-12p ET

Aired June 7, 2018 - 11:30   ET

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


[11:30:00:] KATE BOLDUAN, CNN ANCHOR: Yes, you heard that right. This morning, the Trump administration is announcing it reached a deal, an agreement with Chinese telecom giant, ZTE, the same company the FBI, CIA and NSA warned about earlier this year. Top national security leaders warning ZTE cell phones are not safe and that the company can't be trusted.

This controversial deal with China comes amid reports of Trump, President Trump has little interest now in meeting with U.S. allies. The president leaving for the G-7 summit tomorrow. And "Washington Post" is reporting that the president has been privately griping about the trip and sees the meeting as a distraction ahead of his summit with North Korea.

CNN's White House correspondent, Kaitlan Collins, is live at the White House.

First to Christine Romans. She's here to break this down.

What is this deal?

CHRISTINE ROMANS, CNN CHIEF BUSINESS CORRESPONDENT: In this deal, this is a deal to keep the Chinese government controlled ZTE in business, reached hours ago between China and the U.S. with a big fine in American supervision. Here's the fine, $1 billion fine, $400 billion in escrow, a deterrent. The company has a new board of director, new management within 30 days, and an American chosen compliance team embedded in this Chinese company. The commerce secretary hailing this as the first time a major foreign company will have on the ground oversight to make sure it stays in compliance with U.S. export control rules and doesn't cheat.

Why does it need a baby-sitter? Because ZTE violated U.S. sanctions, selling its products to Iran and North Korea, caught, fined. Then the company lied about punishing those violators.

On top of that, security experts in the U.S. and Britain have warned that ZTE phones are a national security threat. ZTE's majority shareholder is the Chinese state-run company. In April, the Pentagon, remember, banned sales of ZTE phones on U.S. military bases to protect against spying. This deal reverses a Commerce Department ban that would have

essentially put it out of business, the president, remember, he tweeted he was concerned about Chinese jobs being lost. This is -- it is clear, the ZTE is an important piece of ongoing trade negotiations with China. This clears the way for more discussions of China buying more American products to shrink the huge trade deficit, the trade deficit the president hates. But it raises the question, Kate, has the White House exchanged a trade win on ZTE for a national security risk.

BOLDUAN: Fascinating. This is not something that many Republicans on Capitol Hill have been happy about.

(CROSSTALK)

BOLDUAN: Christine, thank you so much.

Kaitlan, let's get over to Kaitlan Collins at the White House now.

Kaitlan, this deal comes just before, as we mentioned, the president is heading to Canada for the G-7 summit and all this reporting that the president is not so happy about going. Is this -- it makes me wonder if this announcement is going to help.

KAITLAN COLLINS, CNN WHITE HOUSE CORRESPONDENT: Well, it certainly may not. The president is going to the summit after he made a decision that has enraged some leaders going to be there. That decision to impose those steel and aluminum tariffs on some of the United States allies. The president is going here, and he feels confident in these decisions, he has not backed off of them despite the criticism he's received. This is a president who famously does not like to conflict when he's face to face and sitting down with someone, and that's what is going to happen to him when he shows up in Canada. He's going to be sitting there with the prime minister, Justin Trudeau, who was especially scorned by the tariffs. Very testy phone calls with him and the French President Emmanuel Macron over the tariffs, over the recent trade moves. Among other things, these being the most recent they disagreed on. And this comes as the president is preparing for that summit in North Korea, something he thinks he should be more focused on than going to a summit like this, which we reported on, that he doesn't enjoy attending these summits with other world leaders. So he's got that to deal with there. He's going to be addressing that. Hs economic adviser, Larry Kudlow, said that this is simply a family quarrel and the president is sticking by his guns here. He's going to face the music when he goes back and sits face to face with these leaders. And he's not just getting pushback on the trade moves from here at home, from Republicans on Capitol Hill, but he's also going to experience it when he heads to Canada.

BOLDUAN: Could be a tough meet and greet.

Christine, thank you so much.

Kaitlan, thank you, as always.

Let's talk more about this. Joining me is former public policy director for Mitt Romney, Lanhee Chen, and CNN global economic analyst, Rana Foroohar.

Great to see both of you.

Lanhee, this ZTE deal, what's your reaction to it?

LANHEE CHEN, FORMER PUBLIC POLICY DIRECTOR FOR MITT ROMNEY: If the deal is as tough as advertised, I think it is a good thing. Let's not be naive about this, ZTE is a state-owned entity, a national security threat to the United States, when the intelligence chiefs were asked about this several months ago, they all said, you know, none of us would carry a phone by ZTE or Huawei Technologies. I would recommend you never buy a phone from ZTE, not a good idea.

(LAUGHTER)

We'll see what happens here.

But this is all part of a larger discussion around trade. If this is something that helps to ameliorate the trade discussion going forward, that's one thing. But we talk about national security threats and using the national security provisions in U.S. law as part of these discussions, they are properly applied to China, they are not properly applied to Canada, and Mexico, our neighbors to the north and the south, and our longtime ally. I would caution policymakers to be using these national security provisions in the right way.

[11:35:11] BOLDUAN: Let's remind folks what national security leaders have said about ZTE, Rana. This isn't lawmakers or critics of the president, this is real national security concerns from real national security leaders. Listen to this.

(BEGIN VIDEO CLIP)

CHRISTOPHER WREY, FBI DIRECTOR: We're deeply concerned about the risks of allowing any company or entity that is beholden to foreign governments that don't share our values to gain positions of power inside our telecommunications networks.

MIKE ROGERS, NSA DIRECTOR: You need to look long and hard at companies like this.

SEN. TOM COTTON, (R), ARKANSAS: Will you please raise your hand, if you use products or services from Huawei or ZTE?

None of you would. Raise your hand if you would recommend that private American citizens use Huawei or ZTE products or services?

None of you are raising your hand.

(END VIDEO CLIP)

BOLDUAN: That's not like 10 years ago. Rana, with this deal, is the danger past or, as Christine Romans, put it did the Trump administration trade national security for a trade deal?

RANA FOROOHAR, CNN GLOBAL ECONOMIC ANALYST: I think this is the first shot in what is going to be a very long battle, possibly a war with China over the high-tech industries of the future. The Trump administration flip-flopped as you know on ZTE, back and forth, and that sent a disturbing message to many in the U.S. and certainly some in China. I think that these state-owned companies do pose a legitimate concern that something I heard from a lot of business leaders.

What is interesting and what is tricky for the U.S. is that they are now very much a part of our supply chain. Many U.S. companies, many European companies do business with ZTE. In some cases, some countries, you have to do business and have to use their equipment because there's no other choice. So the Chinese have been very savvy at building up industries and I think now the big question is, how is the U.S. going to approach this longer strategic battle around who is going to set the standards in these important industries of the future and this is just the first step. I suspect there will be a lot more to come.

BOLDUAN: That sounds like an issue that we will not be able to conclude today, to reach a conclusion on. That seems quite weighty.

Lanhee, Donald Trump is griping quietly he doesn't want to go to the summit. Complaining that the meeting distracts him from the North Korean summit next week. Should this gathering of world leaders be a second-tier issue to the Trump/Kim sit-down?

CHEN: No. I think this is also very important. The G-7, these are some of our closer allies around the world, economic trading partners, it is not a composition of the -- of the size and the scale that it may have been, let's say, 10 or 15 years ago. It is still a very important gathering, particularly as we are in the middle of a dispute with our neighbors to the north and the south. It is clear that not as much progress has been made on the renegotiation of NAFTA as any side would like. And now the notion that will do these bilateral trade deals with both sides seems to me to be a little bit sort of suboptimal, might be the word for it. It's not the way that I think we should be doing these deals. This is a very important meeting at a very important time. And the Trump/Kim sit-down is very important next week. We should be focusing on this issue because this is much more proximate in terms of the impact in my mind on U.S. Jobs and the U.S. economy. So this is a meeting I hope the president is focused on in addition to what is going to happen in Singapore next week.

BOLDUAN: Rana, it sure seems like the president is playing nice with China, kicking dirt in the eyes of allies. Is there another way to look at it?

FOROOHAR: There sure is, Kate. If you're going to go into a trade war, it is a good idea to fight the folks that you have legitimate disputes with. The idea of Canada as a national security risk, I'll quote the trade minister who said yesterday, "seriously." This is the time when the administration could be coming together with Canada and European allies and saying, let's really take on China, let's take on, you know, the legitimate concerns out there about trading for actions, about an unequal playing field in a world, in which you got the Chinese, now a major part of the global economy, with a totally different system of state run capitalism. I see a lot of low hanging fruit just being left and just really bad timing. And I think it is very, very confusing. I'm sitting here in London, people are not happy, and they feel the trans-Atlantic alliance is very frayed right now.

BOLDUAN: I'm fascinated to see, since the criticism and worry about ZTE and moves there, kind of cross party lines, I'm interested to see if Congress --

FOROOHAR: Yes.

BOLDUAN: -- what Congress does to try to act to counter, reverse or tamp down the president's move here with ZTE.

Great to see you. Thanks so much.

FOROOHAR: Thanks.

CHEN: Thanks.

[11:39:54] BOLDUAN: Coming up for us, destructive propaganda, that's what a former FOX news military analyst is calling his former network's primetime host. And he's not stopping there. Wait until you hear what he has to say about President Trump and Vladimir Putin.

(COMMERCIAL BREAK)

BOLDUAN: Talk about flipping the script. A man once drew a paycheck from FOX News as an on-air military analyst, and now going to war against his former employer. Retired Army Colonel Ralph Peters, says the network has become a, quote, unquote, "propaganda machine" shilling for President Trump.

Peters spoke to Anderson Cooper last night, his first TV intervi3ew since leaving FOX.

(BEGIN VIDEO CLIP)

COL. RALPH PETERS, FORMER FOX NEWS MILITARY ANALYST: I think they're doing a great deal of damage still. We won't know how bad for years to come when we see the ultimate results. But with the rise of Donald Trump, FOX did become a destructive propaganda machine. And I don't do propaganda for anyone. I saw in my view FOX particularly the primetime hosts attacking our constitutional order, the rule of law, the Justice Department, the FBI, Robert Mueller, and, oh, by the way, the intelligence agencies, and they're doing it for ratings and profit.

I am convinced that Vladimir Putin has a grip on President Trump. When I first learned of the Steele dossier, it just rang true to me. That's how the Russians do things. Before he became a candidate for president, Donald Trump was the perfect target for Russian intelligence.

(END VIDEO CLIP)

[11:45:43] BOLDUAN: A lot there.

Brian Stelter is here, CNN senior media correspondent and host of "RELIABLE SOURCES."

Brian, these are strong words from Colonel Peters. What really is he saying here? The fact he's also speaking out after the fact, even is amazing.

BRIAN STELTER, CNN SENIOR MEDIA CORRSEPONDENT & CNN HOST, "RELIABLE SOURCES": Never seen anything like this. Coming out essentially as a whistle-blower, attacking his former network for hurting America. That's exactly what he's doing here. This is not some liberal Analyst. He was a staunch conservative on FOX News. He was very critical of President Obama. But also critical of Trump during the campaign and after Trump was elected, Peters felt there wasn't a place for him there anymore. He became convinced the network had become a propaganda machine. That's telling. That's where the term FOX's most aggressive critics use to describe FOX. Peters is going after Hannity and others who toe the Trump line and try to tear down the Mueller probe. Peters says the Mueller probe is more important than Watergate, most important investigation of his lifetime. He wants to know the truth about what Russia did and he feels that FOX is getting in the way.

BOLDUAN: What is FOX saying about him?

STELTER: FOX back in March, when he left, said that he's using his opinions as a weapon to get attention. FOX is standing by that statement from two months ago. But it is notable that Peters is out talk about this and trying to draw attention to what he says is damage FOX is doing.

BOLDUAN: This also just came in, kind of talking about in the break. Colin Kaepernick, former NFL quarterback, he's an existing lawsuit against the NFL. He's now -- his legal team is expected to seek a subpoena for President Trump, Vice President Pence, and other campaign officials relating to the quarterback's collusion case against the NFL. Wow.

STELTER: This is a result of the administration wading into the debate about the kneeling protests that Kaepernick began. Remember, after he started doing those protests, on the sidelines, he left the 49ers, became a free agent, no team signed him since, he's had this ongoing lawsuit claiming collusion by the NFL, what is new now is he says he wants to subpoena Trump, Pence and other administration officials to find out if they were involved somehow, if government officials were involved. The reason why he might have an opportunity here, according to Yahoo! When broke this news, is that they want to look into the administration's political involvement with the NFL, that's not necessarily an outlandish thought. We know several team owners talked directly with Trump. About these protests. There were phone calls between Trump and a number of NFL owners. So that raises a question of whether Trump also weighed in on Kaepernick. This might seem farfetched, but this is not the only case we see someone trying to subpoena the president, this is really interesting because Kaepernick has been essentially shut out of the NFL. He wants to know why. He wants to make this -- this has become a political matter because the president has used the kneeling protest to his advantage so he's going after it.

BOLDUAN: See where this goes.

Thanks, Brian. Great to see you.

STELTER: Thanks.

BOLDUAN: Coming up for us, a disturbing medical mystery moves to China. Some U.S. diplomats there now heading home for health screenings after concerns of reports of mysterious incidents similar to the Cuba sonic attacks. New details coming in. That's next.

(COMMERCIAL BREAK)

[11:53:23] BOLDUAN: First Cuba, now China. The State Department says there are a growing number of officials, employees, undergoing medical screenings after reporting mysterious acoustic incidents or sonic attacks. A number of them that have been taken out of China are now back in the United States receiving those screenings. If this sounds familiar, it should. These incidents strangely close to the accounts coming from State Department officials of similar sonic attacks in Cuba last year.

Senior diplomatic correspondent, Michelle Kosinski, is back.

Michelle, what is it with these strange attacks?

MICHELLE KOSINSKI, CNN SENIOR DIPLOMATIC CORRESPONDENT: I know. As long as the FBI has been investigating this, nobody has been able to pinpoint a cause of either the phenomenon these people experience or the symptoms. So last month the State Department announced that one more person, this time in China, had experienced what the people in Havana had experienced in 2016 and 2017. So when you look at the original cases, they've experienced things like weird, high-pitched noises, vibrations or ringing in their ears. Then they start getting things like headaches, mild hearing loss. There have been symptoms consistent with a mild brain injury, like a concussion. So that one person in China experienced similar.

Now the State Department is saying a number -- they're not saying exactly how many -- have also felt they've experienced something similar. So they've been taken out and flown back to the U.S. for more screening. So the State Department has gotten a team of doctors to go over there and try to investigate this.

[11:55:10] Again, there's been no explanation. For a while, the State Department was insistent that these were attacks. They were calling them acoustic attacks down in Cuba. But for the last two months or so, it seems like they've started referring to them as incidents instead of attacks, mainly because nobody has been able to figure out what's causing this. Things like ultrasound have been looked at, but some seem to be in the audible range of sound. There's one theory by doctors that maybe it's some kind of interference or malfunctioning with listening devices -- Kate? BOLDUAN: Well, still the mystery still continues. And still the

mystery from Cuba. It's still amazing.

Michelle, thank you. We'll continue to follow it.

We're going to give you a live look at the White House. Any moment, President Trump will be greeting Japanese Prime Minister Shinzo Abe. He'll be welcoming him to the White House. They will meet in the Oval Office. They will be taking questions later today in a bilateral press conference. Plenty of things to discuss, plenty of questions to ask. We'll cover it all for you.

We'll be back after a quick break.

(COMMERCIAL BREAK)