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Westlake Legal Group > Embargoes and Sanctions

U.S. Indicts Turkish Bank on Charges of Evading Iran Sanctions

Westlake Legal Group 15dc-turkeybank-facebookJumbo-v2 U.S. Indicts Turkish Bank on Charges of Evading Iran Sanctions United States Politics and Government United States International Relations Turkey Trump, Donald J Politics and Government Money Laundering Lobbying and Lobbyists Justice Department Iran Halkbank Erdogan, Recep Tayyip Embargoes and Sanctions

WASHINGTON — The Justice Department on Tuesday sharply escalated economic pressure on Turkey by filing fraud and money-laundering charges against the country’s second-largest state-owned bank, accusing it of helping Iran evade United States sanctions.

The charges against the institution, Halkbank, came as the administration sought ways to project that it was taking a tough line with Turkey after President Trump effectively signaled this month that the United States would not stand in the way of Turkey’s desire to send forces into northern Syria.

Mr. Trump’s willingness to allow the military action has thrown the region into chaos and ignited an intense bipartisan backlash against him at home. As the criticism has mounted, the White House has emphasized the steps it is taking to restrain Turkey’s offensive, including a round of sanctions announced on Monday.

President Recep Tayyip Erdogan of Turkey had repeatedly raised the Halkbank case with Mr. Trump over the past year, urging the United States not to take further action, saying that to do so would unfairly expose Turkey to severe financial risks. One of the bank’s top executives was convicted on related charges last year, and the Justice Department has been reviewing since then whether to pursue the case further as Turkish officials and lawyers pressed the government not to indict the bank.

The charges appeared to catch at least some advisers to Turkey’s government off guard. They were filed by prosecutors in the Southern District of New York, which has been investigating the bank’s role in what has been called the largest Iran sanctions violation in United States history, as billions of dollars’ worth of gold and cash were illegally transferred to Iran in exchange for oil and gas.

Justice Department officials said high-ranking government officials in Turkey “participated in and protected this scheme,” with some receiving bribes worth tens of millions of dollars and helping to hide the conspiracy from the scrutiny of regulators in the United States.

“This is one of the most serious Iran sanctions violations we have seen, and no business should profit from evading our laws or risking our national security,” said John C. Demers, the assistant attorney general for national security.

Lawyers and lobbyists representing the bank, including Brian D. Ballard, a friend of Mr. Trump’s and the vice chairman of his inauguration, have been trying for more than a year to persuade the Trump administration not to file charges against the bank, or at least to understand that doing so could threaten the economy of a NATO ally.

Turkish officials had directly made other appeals to Secretary of State Mike Pompeo and Treasury Secretary Steve Mnuchin. The lobbying campaign led some sanctions experts in Washington to question if the case might have been delayed or dropped.

After Mr. Trump came under intense criticism for choosing to stand aside as Turkey pursued its plan to assert control over a section of northern Syria, he began striking a tougher tone toward Mr. Erdogan, focusing in particular on the threat of harming Turkey’s economy if it put United States military personnel at risk or engaged in atrocities against Kurds in the region.

“I am fully prepared to swiftly destroy Turkey’s economy if Turkish leaders continue down this dangerous and destructive path,” Mr. Trump said in a statement Monday, shortly before signing an executive order to impose the first set of sanctions.

Representatives for the Turkish government — who in interviews early Tuesday did not give any hint that they knew the criminal charges were imminent — said late in the day that they suspected a link between the new prosecution of the bank and the invasion of Syria.

“The timing is beyond any reasonable coincidence,” said one individual who has been working with the bank, but spoke on the condition of anonymity to discuss the matter.

The Justice Department and the White House did not respond to questions about whether the decision was influenced by Turkey’s decision to send troops in Syria.

Mr. Ballard, along with Robert Wexler, a former House Democrat from Florida, and James P. Rubin, a State Department official during the Clinton administration, had each been working at times over the last two years to lobby on the matter, Justice Department filings show. They had reached out in 2018 to the office of Vice President Mike Pence and the State Department, among others.

Rudolph W. Giuliani, the former New York mayor and adviser to Mr. Trump, also was involved in the matter in 2016 and 2017, trying to secure the release of one suspect in the case, in a possible prisoner swap with a pastor whom Turkey was holding on espionage charges that the United States claimed were fabricated.

Andrew Hruska, a former federal prosecutor in New York now with the law firm King and Spalding, had also been working on the matter, communicating directly with the Justice and Treasury Departments, on behalf of the bank.

Mr. Erdogan brought the case up with President Trump in November 2018, and his son-in-law, Berat Albayrak, the country’s finance minister, following up a few days later with Mr. Mnuchin, pushing him to closely follow the case.

Lawyers for the bank did not dispute that money was illegally moved through Halkbank to Iran starting around 2012 and continuing through 2016.

But they argued that the moves were largely orchestrated by an Iranian-Turkish gold trader, named Reza Zarrab, who had hired Mr. Giuliani to try to secure his release.

Turkish officials argued that Mr. Zarrab, who then decided to plead guilty to charges and become a witness for the prosecution, had lied to American prosecutors. The Turkish officials said Mr. Zarrab accused the bank and government officials in Turkey of conspiring in the effort as part of an attempt to reduce any time he would spend in prison, after he was arrested by American authorities in 2016.

In January 2018, in part because of Mr. Zarrab’s testimony, a Halkbank executive named Mehmet Hakan Atilla was convicted of violating sanctions as part of the case. At his sentencing in May 2018, a federal judge said that while Mr. Atilla had “unquestionably furthered” the scheme, he was “somewhat of a cog in the wheel” and not “a mastermind.”

These assertions reflected claims made by federal prosecutors that the wrongdoing had reached high into the Turkish government.

But until Tuesday, there had been no public follow-up by the Justice Department, nor any action by the Treasury Department, which separately has the power to impose sanctions on the bank or impose a fine.

The bank was formally charged on Tuesday with conspiracy to defraud the United States, conspiracy to violate sanctions, bank fraud, conspiracy to commit bank fraud, money laundering and conspiracy to commit money laundering.

Representatives for the bank said that they feared the charges alone might lead other global banks to limit doing business with Halkbank, and if a multibillion-dollar penalty results, it could threaten the overall viability of the institution.

Real Estate, and Personal Injury Lawyers. Contact us at: https://westlakelegal.com 

U.S. Indicts Turkish Bank on Charges of Evading Iran Sanctions

Westlake Legal Group 15dc-turkeybank-facebookJumbo-v2 U.S. Indicts Turkish Bank on Charges of Evading Iran Sanctions United States Politics and Government United States International Relations Turkey Trump, Donald J Politics and Government Money Laundering Lobbying and Lobbyists Justice Department Iran Halkbank Erdogan, Recep Tayyip Embargoes and Sanctions

WASHINGTON — The Justice Department on Tuesday sharply escalated economic pressure on Turkey by filing fraud and money-laundering charges against the country’s second-largest state-owned bank, accusing it of helping Iran evade United States sanctions.

The charges against the institution, Halkbank, came as the administration sought ways to project that it was taking a tough line with Turkey after President Trump effectively signaled this month that the United States would not stand in the way of Turkey’s desire to send forces into northern Syria.

Mr. Trump’s willingness to allow the military action has thrown the region into chaos and ignited an intense bipartisan backlash against him at home. As the criticism has mounted, the White House has emphasized the steps it is taking to restrain Turkey’s offensive, including a round of sanctions announced on Monday.

President Recep Tayyip Erdogan of Turkey had repeatedly raised the Halkbank case with Mr. Trump over the past year, urging the United States not to take further action, saying that to do so would unfairly expose Turkey to severe financial risks. One of the bank’s top executives was convicted on related charges last year, and the Justice Department has been reviewing since then whether to pursue the case further as Turkish officials and lawyers pressed the government not to indict the bank.

The charges appeared to catch at least some advisers to Turkey’s government off guard. They were filed by prosecutors in the Southern District of New York, which has been investigating the bank’s role in what has been called the largest Iran sanctions violation in United States history, as billions of dollars’ worth of gold and cash were illegally transferred to Iran in exchange for oil and gas.

Justice Department officials said high-ranking government officials in Turkey “participated in and protected this scheme,” with some receiving bribes worth tens of millions of dollars and helping to hide the conspiracy from the scrutiny of regulators in the United States.

“This is one of the most serious Iran sanctions violations we have seen, and no business should profit from evading our laws or risking our national security,” said John C. Demers, the assistant attorney general for national security.

Lawyers and lobbyists representing the bank, including Brian D. Ballard, a friend of Mr. Trump’s and the vice chairman of his inauguration, have been trying for more than a year to persuade the Trump administration not to file charges against the bank, or at least to understand that doing so could threaten the economy of a NATO ally.

Turkish officials had directly made other appeals to Secretary of State Mike Pompeo and Treasury Secretary Steve Mnuchin. The lobbying campaign led some sanctions experts in Washington to question if the case might have been delayed or dropped.

After Mr. Trump came under intense criticism for choosing to stand aside as Turkey pursued its plan to assert control over a section of northern Syria, he began striking a tougher tone toward Mr. Erdogan, focusing in particular on the threat of harming Turkey’s economy if it put United States military personnel at risk or engaged in atrocities against Kurds in the region.

“I am fully prepared to swiftly destroy Turkey’s economy if Turkish leaders continue down this dangerous and destructive path,” Mr. Trump said in a statement Monday, shortly before signing an executive order to impose the first set of sanctions.

Representatives for the Turkish government — who in interviews early Tuesday did not give any hint that they knew the criminal charges were imminent — said late in the day that they suspected a link between the new prosecution of the bank and the invasion of Syria.

“The timing is beyond any reasonable coincidence,” said one individual who has been working with the bank, but spoke on the condition of anonymity to discuss the matter.

The Justice Department and the White House did not respond to questions about whether the decision was influenced by Turkey’s decision to send troops in Syria.

Mr. Ballard, along with Robert Wexler, a former House Democrat from Florida, and James P. Rubin, a State Department official during the Clinton administration, had each been working at times over the last two years to lobby on the matter, Justice Department filings show. They had reached out in 2018 to the office of Vice President Mike Pence and the State Department, among others.

Rudolph W. Giuliani, the former New York mayor and adviser to Mr. Trump, also was involved in the matter in 2016 and 2017, trying to secure the release of one suspect in the case, in a possible prisoner swap with a pastor whom Turkey was holding on espionage charges that the United States claimed were fabricated.

Andrew Hruska, a former federal prosecutor in New York now with the law firm King and Spalding, had also been working on the matter, communicating directly with the Justice and Treasury Departments, on behalf of the bank.

Mr. Erdogan brought the case up with President Trump in November 2018, and his son-in-law, Berat Albayrak, the country’s finance minister, following up a few days later with Mr. Mnuchin, pushing him to closely follow the case.

Lawyers for the bank did not dispute that money was illegally moved through Halkbank to Iran starting around 2012 and continuing through 2016.

But they argued that the moves were largely orchestrated by an Iranian-Turkish gold trader, named Reza Zarrab, who had hired Mr. Giuliani to try to secure his release.

Turkish officials argued that Mr. Zarrab, who then decided to plead guilty to charges and become a witness for the prosecution, had lied to American prosecutors. The Turkish officials said Mr. Zarrab accused the bank and government officials in Turkey of conspiring in the effort as part of an attempt to reduce any time he would spend in prison, after he was arrested by American authorities in 2016.

In January 2018, in part because of Mr. Zarrab’s testimony, a Halkbank executive named Mehmet Hakan Atilla was convicted of violating sanctions as part of the case. At his sentencing in May 2018, a federal judge said that while Mr. Atilla had “unquestionably furthered” the scheme, he was “somewhat of a cog in the wheel” and not “a mastermind.”

These assertions reflected claims made by federal prosecutors that the wrongdoing had reached high into the Turkish government.

But until Tuesday, there had been no public follow-up by the Justice Department, nor any action by the Treasury Department, which separately has the power to impose sanctions on the bank or impose a fine.

The bank was formally charged on Tuesday with conspiracy to defraud the United States, conspiracy to violate sanctions, bank fraud, conspiracy to commit bank fraud, money laundering and conspiracy to commit money laundering.

Representatives for the bank said that they feared the charges alone might lead other global banks to limit doing business with Halkbank, and if a multibillion-dollar penalty results, it could threaten the overall viability of the institution.

Real Estate, and Personal Injury Lawyers. Contact us at: https://westlakelegal.com 

Giuliani Pressed for Turkish Prisoner Swap in Oval Office Meeting

Westlake Legal Group merlin_128860991_515f45cd-79d9-4cb1-8039-df1c6a6e01e9-facebookJumbo Giuliani Pressed for Turkish Prisoner Swap in Oval Office Meeting Zarrab, Reza (1983- ) United States Politics and Government United States International Relations United States Turkey Trump, Donald J Trump-Ukraine Whistle-Blower Complaint and Impeachment Inquiry Tillerson, Rex W Sessions, Jefferson B III Russian Interference in 2016 US Elections and Ties to Trump Associates Nuclear Weapons Mukasey, Michael B Iran Giuliani, Rudolph W Erdogan, Recep Tayyip Embargoes and Sanctions Brafman, Benjamin Bharara, Preet Atilla, Mehmet Hakan

During a contentious Oval Office meeting with President Trump and Secretary of State Rex Tillerson in 2017, Rudolph W. Giuliani pressed for help in securing the release of a jailed client, an Iranian-Turkish gold trader, as part of a potential prisoner swap with Turkey.

The request by Mr. Giuliani provoked an immediate objection from Mr. Tillerson, who argued that it would be highly inappropriate to interfere in an open criminal case, according to two people briefed on the meeting.

The gold trader, Reza Zarrab, had been accused by federal prosecutors of playing a central role in an effort by a state-owned Turkish bank to funnel more than $10 billion worth of gold and cash to Iran, in defiance of United States sanctions designed to curb Iran’s nuclear program.

But at the White House meeting in early 2017, Mr. Giuliani and his longtime friend and colleague, former Attorney General Michael Mukasey, pushed back on Mr. Tillerson’s objections.

Rather than side with his secretary of state, Mr. Trump told them to work it out themselves, according to the two people briefed on the meeting. They spoke on the condition of anonymity because they were not authorized to discuss the matter.

In the end, no such prisoner swap took place. But the episode has opened a new chapter in Mr. Giuliani’s efforts to interject himself into the Trump administration’s diplomacy while at times representing clients with a direct interest in the outcome.

The Oval Office meeting occurred before Mr. Giuliani became Mr. Trump’s personal lawyer for the special counsel’s Russia investigation. In recent weeks, Mr. Giuliani’s campaign to press Ukrainian officials to investigate the son of one of Mr. Trump’s political rivals, former Vice President Joseph R. Biden Jr., has thrust him into the middle of the House impeachment inquiry. And on Wednesday, two of Mr. Giuliani’s associates in that campaign were arrested on charges of violating federal campaign finance laws.

Mr. Giuliani, in an interview on Thursday, defended his actions in the gold trader case, which were first reported on Wednesday by Bloomberg.

Mr. Giuliani, well known for his hawkish views on Iran, said he had been willing to represent Mr. Zarrab because the proposed prisoner swap would have secured the release of an American pastor who was being held in Turkey on terrorism-related charges the United States considered fabricated.

He likened his efforts — which also included apprising Jeff Sessions, then the attorney general, of what he wanted — to maneuvers during the Cold War to trade enemy spies for Americans detained overseas.

Mr. Giuliani questioned how his actions were any different. “It happened to be a good trade,” he said. “I expected to be a hero like in a Tom Hanks movie.”

But his involvement, as a private citizen and friend of the president in the months after Mr. Trump passed him over for the role of secretary of state, left some in the administration uncomfortable, given the strained and complicated relationship between the United States and Turkey.

Mr. Giuliani’s moves also ran counter to a long-running American effort to curb Iran’s nuclear program as the United States was trying to punish players, like Mr. Zarrab, who helped the regime evade sanctions.

The case, called the single largest evasion of Iranian sanctions in United States history, revolved around a scheme by the Turkish bank in 2012 and 2013 to send billions of dollars in gold and cash to Iran in exchange for oil and natural gas.

Mr. Zarrab, who has Turkish and Iranian citizenship, was arrested in Florida in March 2016 on a family trip to Disney World, and was accused of an illicit operation that relied on false documents and front companies to move the assets to Iran from the accounts of Halkbank, the second-largest state-owned lender in Turkey.

Getting him out of the United States was a high priority for Turkey’s president, Recep Tayyip Erdogan, because Mr. Zarrab had information that would later implicate senior bank officials, as well as Turkish government officials, in the scheme.

Indeed, after the prison swap failed, Mr. Zarrab became a key witness and testified that in 2012, Mr. Erdogan, then Turkey’s prime minister, had ordered that two Turkish banks be allowed to participate in the sanction-evasion scheme.

Mr. Giuliani said that he was brought into the effort by Mr. Muskasey, who had been hired by Mr. Zarrab’s lawyer, Benjamin Brafman.

The two men had been pressing their case with Mr. Trump in the Oval Office in early 2017 when Mr. Tillerson joined the conversation, according to the two people briefed on the meeting. Mr. Tillerson, who could not be reached for comment, was surprised to find Mr. Giuliani and Mr. Mukasey at what he thought would be a regular private meeting with the president, the people said.

Mr. Trump asked Mr. Giuliani to tell Mr. Tillerson what he wanted, which prompted Mr. Tillerson’s objections.

Mr. Mukasey’s spokesman did not return a request for comment.

Mr. Giuliani, in the interview on Thursday, disputed the account provided to The New York Times of his discussion with Mr. Tillerson about Mr. Zarrab — and the assertion that Mr. Tillerson replied that such a step was inappropriate. But Mr. Giuliani did not specify what aspects of the account he found inaccurate, saying he could not discuss the meeting because of attorney-client privilege.

“This is a completely malicious story coming from the consistent attack on me to try to destroy my credibility,” Mr. Giuliani said.

He added that at the time, “nobody ever complained” to him from the Trump administration about his role in the case.

Mr. Giuliani and Mr. Mukasey were persistent in the effort. Court filings show that they discussed the matter with State Department officials in Turkey before meeting with Mr. Erdogan himself, and that Mr. Sessions and Preet Bharara, then the United States attorney for the Southern District of New York, were informed “on a confidential basis.”

Mr. Giuliani argued in court filings that “none of the transactions in which Mr. Zarrab is alleged to have participated involved weapons or nuclear technology, or any other contraband, but rather involved consumer goods, and that Turkey is situated in a part of the world strategically critical to the United States.”

And Mr. Mukasey, in an April 2017 court filing, asserted that “senior U.S. officials have remained receptive to pursuing the possibility of an agreement.”

But officials at the United States attorney’s office in Manhattan remained opposed to the Zarrab trade, as did Mr. Tillerson. Mr. Giuliani, in the Thursday interview, said he wasn’t sure why the proposal fell apart.

What’s clear is that Mr. Zarrab pleaded guilty in October 2017 to the charges, and became a key witness in federal criminal cases prosecuted in New York that led to the conviction of Mehmet Hakan Atilla, an executive at Halkbank.

During Mr. Atilla’s criminal trial in late 2017, the judge overseeing the case criticized Mr. Giuliani’s role in trying to secure Mr. Zarrab’s freedom, noting that such a move might benefit Iran.

“Most respectfully, the Giuliani and Mukasey affidavits appear surprisingly disingenuous in failing to mention the central role of Iran in the indictment, and indeed, failing to mention Iran at all in their affidavits,” the judge, Richard M. Berman, said, citing statements in which the men suggested Mr. Zarrab’s release might help the United States.

Mr. Atilla was sentenced to 32 months in prison. But he was released early from jail in July and then returned to Turkey, where he was greeted at the airport like a hero in Istanbul by Turkey’s treasury and finance minister, Berat Albayrak, who is also Mr. Erdogan’s son-in-law. Mr. Zarrab’s whereabouts have not been disclosed by the United States government.

The American pastor, Andrew Brunson, was also released, without a trade involving Mr. Zarrab, in October 2018. The move was credited with an overall improvement in relations between Mr. Trump and Mr. Erdogan.

Real Estate, and Personal Injury Lawyers. Contact us at: https://westlakelegal.com 

China Trade Talks Restart as White House Explores Escalation Options

Westlake Legal Group merlin_159733326_365ee0f3-4455-4e35-ac0d-5d771ddbe5bc-facebookJumbo China Trade Talks Restart as White House Explores Escalation Options United States Politics and Government United States International Relations United States Economy Trump, Donald J Securities and Exchange Commission Regulation and Deregulation of Industry Pillsbury, Michael (1945- ) Kudlow, Lawrence A International Trade and World Market Embargoes and Sanctions Economic Conditions and Trends Customs (Tariff) China

WASHINGTON — American and Chinese officials met for the 13th round of trade negotiations on Thursday amid growing expectations of a limited deal that could ease tensions and address some of President Trump’s concerns about China’s economic practices.

“We had a very, very good negotiation with China,” Mr. Trump said on Thursday afternoon, adding that the two sides would continue discussions on Friday. “It’s going very well.”

But administration officials are separately weighing options that could inflict additional economic pain on Beijing as the United States continues looking for ways to force China to change longstanding rules that have put American companies at a disadvantage.

The ideas under consideration would move the White House’s negotiating tool of choice beyond tariffs toward limiting China’s access to American capital markets and imposing greater scrutiny on its companies, according to people familiar with the discussions.

Administration officials, including members of the National Security Council, have begun pressing the Securities and Exchange Commission to increase scrutiny of Chinese firms. They are also looking for ways to reduce the exposure of American retirement funds to certain Chinese companies.

Many of the efforts have been proceeding independently from the trade talks and are fueled by longer-term considerations of China’s economic and security threats. Some White House advisers now view the escalation options as an additional lever to force China to make the kinds of deep economic concessions that have so far proved elusive in the talks, which have dragged on for more than a year.

On Thursday, Treasury Secretary Steven Mnuchin and Robert Lighthizer, Mr. Trump’s top trade negotiator, greeted the Chinese vice premier, Liu He, on the steps of the Office of the United States Trade Representative. The meetings stretched into the afternoon, and at one point a black S.U.V. was seen delivering large brown bags from Clyde’s, a Washington restaurant, for a working lunch.

“Big day of negotiations with China,” Mr. Trump wrote on Twitter on Thursday morning. “They want to make a deal, but do I? I meet with the Vice Premier tomorrow at The White House.”

A U.S. Chamber of Commerce official briefed by both negotiating teams said that the United States and China could announce a limited trade agreement this week that would prevent Mr. Trump’s planned tariff increase from going into effect this month and set rules around how China manages its currency.

Myron Brilliant, the executive vice president and head of international affairs at the Chamber of Commerce, said that a more comprehensive pact could still be announced but that the scope of the deal would depend on what Chinese negotiators offered. The Trump administration could also contemplate removing the threat of additional tariffs that are scheduled to be imposed in December or roll back some of the tariffs it has already levied on more than $360 billion of Chinese goods based on what the Chinese negotiating team offers, he said.

There have been some recent signs of accommodation between the two countries in recent weeks. China has resumed purchases of American agricultural goods. And in what is likely to be viewed as a gesture of good will by the Chinese, the Trump administration plans to approve licenses soon that will allow some companies to sell nonsensitive goods to the Chinese telecom provider Huawei, which has been blacklisted from buying American products.

But China has resisted many of the administration’s demands to make more transformative changes to the way it runs its economy. Chinese officials appear unlikely to agree to the administration’s longstanding demands that Beijing limit its subsidies to Chinese firms, change its policies surrounding the treatment of data or make other structural changes, people familiar with the negotiations said.

The potential for such a limited agreement has fueled private deliberations within the White House on options for escalating economic pressure on China.

Officials have held meetings in recent weeks to consider options if the current round of negotiations fails to address the administration’s primary concerns. Mr. Trump’s top economic advisers have publicly played down the discussions, which have centered on tightening scrutiny of Chinese companies listed on American stock exchanges and limiting the direct exposure of government-run retirement funds to China.

Larry Kudlow, the director of the National Economic Council, acknowledged on Tuesday that the administration was looking for ways to protect Americans who were investing in Chinese companies.

“We’ve opened up a study group to take a look at it,” Mr. Kudlow said on the Fox Business Network.

But the options under consideration go further than that. According to a memo circulated within the White House and reviewed by The New York Times, the administration is studying a menu of actions that, if carried out, would most likely rattle the Chinese government.

The memo was drafted by Michael Pillsbury, a China scholar at the Hudson Institute and an outside adviser to the White House. It proposes holding Chinese companies and their employees criminally liable for financial disclosure violations, broadening the criteria that could get prominent Chinese companies blacklisted in the United States and blocking public and private pension funds and university endowments from certain Chinese investments.

Other options go beyond financial scrutiny of Chinese companies. The memo describes the possibility of fostering deeper ties between the United States and Taiwan and disrupting the flow of capital between Hong Kong and mainland China if it is determined that Hong Kong’s autonomy is not being respected.

It also lays out legislation in Congress, which Mr. Trump has yet to endorse, that would impose sanctions on China for activity in contested areas of the South China Sea and crack down on Chinese-funded Confucius Institutes at American universities.

Mr. Pillsbury declined to comment on his conversations with the White House but acknowledged that he had been analyzing such possibilities for a coming study on China strategy for the Hudson Institute.

“It appears that tariffs alone are not enough, but we also need to meet some of the Chinese demands to get the kind of deal the president wants,” Mr. Pillsbury said.

A White House spokesman declined to comment.

Mr. Trump’s tariffs have already pushed some companies to move their operations out of China. But the raft of new investment restrictions and export controls that the administration is mulling would further sever supply chains and discourage financial integration between the countries, potentially to the detriment of financial markets.

On Monday, the White House clamped down on Chinese firms it accused of human rights violations by adding eight companies and 20 government organizations to an entity list that will prevent them from buying American products. On Tuesday, the State Department announced visa restrictions for Chinese officials allegedly involved in the detention and abuse of Muslim minorities.

An array of initiatives related to American capital markets and investments made by retirement funds in Chinese entities are also under consideration.

The most advanced discussions have centered on the Thrift Savings Plan, the retirement plan for federal employees and the military. As of next year, that plan, which holds nearly $50 billion in assets, is expected to begin investing in an index fund that includes more Chinese and Russian companies, as part of an effort to diversify its exposure.

The index fund includes companies that the United States government has imposed sanctions on — including Hangzhou Hikvision Digital Technology, which was among the companies blacklisted on Monday. It also includes AviChina Industry & Technology, an affiliate of China’s major military aircraft and weapons manufacturer; ZTE, which was hit with sanctions for providing technology to North Korea and Iran; and several Russian companies that the Treasury Department’s Office of Foreign Assets Control has put under sanctions.

Officials have also been discussing efforts to close loopholes that give Chinese companies access to American capital markets with less stringent disclosure requirements than American firms or those from other countries.

Chinese law requires the records of companies based in China to be kept there, and restricts the kind of documentation that auditors can transfer out of the country. The rules mean that hundreds of Chinese firms, with a collective market capitalization of more than $1 trillion, have received looser oversight than companies in other jurisdictions, according to the Securities and Exchange Commission.

A bipartisan group of senators has introduced legislation that would force Chinese companies to comply with S.E.C. disclosure regulations or be delisted from American exchanges in three years. White House officials have debated throwing their support behind the bill, but several officials, including Mr. Kudlow and Mr. Mnuchin, have opposed delisting as a draconian option that could throw American stock markets into turmoil.

“Delisting is not on the table,” Mr. Kudlow told reporters on Monday. He said the administration was responding to complaints to the commission about a lack of transparency and compliance, “but we’re very early in our deliberations.”

Elizabeth Economy, the director for Asia studies at the Council on Foreign Relations, said that addressing the lack of compliance among Chinese companies was “overdue” but that a solution would ideally be negotiated between Chinese companies and the S.E.C.

“Nobody benefits from a mass delisting of Chinese companies on U.S. stock exchanges,” Ms. Economy said.

Real Estate, and Personal Injury Lawyers. Contact us at: https://westlakelegal.com 

China Trade Talks Restart and White House Weighs Escalation Options

Westlake Legal Group merlin_159733326_365ee0f3-4455-4e35-ac0d-5d771ddbe5bc-facebookJumbo China Trade Talks Restart and White House Weighs Escalation Options United States Politics and Government United States International Relations United States Economy Trump, Donald J Securities and Exchange Commission Regulation and Deregulation of Industry Pillsbury, Michael (1945- ) Kudlow, Lawrence A International Trade and World Market Embargoes and Sanctions Economic Conditions and Trends Customs (Tariff) China

WASHINGTON — Trump administration officials are weighing a range of options that could inflict additional economic pain on China as the United States continues looking for ways to force Beijing to change longstanding practices that have put American companies at a disadvantage.

The ideas under consideration would move the White House’s negotiating tool of choice beyond tariffs toward limiting China’s access to American capital markets and imposing greater scrutiny on its companies, according to people familiar with the discussions.

Administration officials, including members of the National Security Council, have begun pressing the Securities and Exchange Commission to tighten its checks on Chinese firms. They are also looking for ways to reduce the exposure of American retirement funds to certain Chinese companies.

Many of those efforts have been proceeding independently from the trade talks — which resumed again on Thursday — and are fueled by longer-term considerations of China’s economic and security threats. Some White House advisers now view those options as an additional lever to force China to make the kinds of deep economic concessions that have so far proved elusive in the talks, which have dragged on for more than a year.

Top-level officials from both countries began their 13th round of trade negotiations on Thursday. They are expected to discuss proposals for a somewhat limited trade deal that would address some of President Trump’s criticisms of China’s economic practices but still be acceptable to Beijing.

“Big day of negotiations with China,” Mr. Trump tweeted Thursday morning. “They want to make a deal, but do I? I meet with the Vice Premier tomorrow at The White House.”

Some administration officials have been hopeful that a deal will lock in more intellectual property protections for American companies and provide those firms with greater access to Chinese markets. They also want to avoid further tariffs on Chinese goods that have begun to weigh on American consumers.

If China makes sufficient concessions, some in the administration are willing to roll back a portion of the tariffs that Mr. Trump has placed on more than $360 billion of Chinese goods, people familiar with the discussions said. In what is likely to be viewed as a gesture of good will by the Chinese, the Trump administration plans to go ahead with approving licenses soon that will allow some companies to sell nonsensitive goods to the Chinese telecom provider Huawei, which has been blacklisted from buying American products.

But China has resisted many of the administration’s demands to make more transformative changes to the way it runs its economy. Chinese officials have come to Washington this week eager to settle on a narrow deal that would involve tariff reductions in exchange for a resumption of Chinese purchases of American food. They appear unlikely to agree to the administration’s longstanding demands that Beijing limit its subsidies to Chinese firms, change its policies surrounding the treatment of data or make other structural changes, people familiar with the negotiations said.

The potential for such a limited agreement has fueled private deliberations within the White House on options for escalating economic pressure on China.

Officials have held meetings in recent weeks to consider escalation options if the current round of negotiations fails to address the administration’s primary concerns. Mr. Trump’s top economic advisers have publicly played down the discussions, which have centered on tightening scrutiny of Chinese companies listed on American stock exchanges and limiting the direct exposure of government-run retirement funds to China.

Larry Kudlow, the director of the National Economic Council, acknowledged on Tuesday that the administration was looking for ways to protect Americans who were investing in Chinese companies.

“We’ve opened up a study group to take a look at it,” Mr. Kudlow said on the Fox Business Network.

But the options under consideration go further than that. According to a memo circulated within the White House and reviewed by The New York Times, the administration is studying a menu of actions that, if carried out, would most likely rattle the Chinese government.

The memo was drafted by Michael Pillsbury, a China scholar at the Hudson Institute and an outside adviser to the White House. It proposes holding Chinese companies and their employees criminally liable for financial disclosure violations, broadening the criteria that could get prominent Chinese companies blacklisted in the United States and blocking public and private pension funds and university endowments from certain Chinese investments.

Other options go beyond financial scrutiny of Chinese companies. The memo describes the possibility of fostering deeper ties between the United States and Taiwan and disrupting the flow of capital between Hong Kong and mainland China if it is determined that Hong Kong’s autonomy is not being respected.

It also lays out legislation in Congress, which Mr. Trump has yet to endorse, that would impose sanctions on China for activity in contested areas of the South China Sea and crack down on Chinese-funded Confucius Institutes at American universities.

Mr. Pillsbury declined to comment on his conversations with the White House but acknowledged that he had been analyzing such possibilities for a coming study on China strategy for the Hudson Institute.

“It appears that tariffs alone are not enough, but we also need to meet some of the Chinese demands to get the kind of deal the president wants,” Mr. Pillsbury said.

A White House spokesman declined to comment.

Mr. Trump’s tariffs have already pushed some companies to move their operations out of China. But the raft of new investment restrictions and export controls that the administration is mulling would further sever supply chains and discourage financial integration between the countries, potentially to the detriment of financial markets.

On Monday, the White House clamped down on Chinese firms it accused of human rights violations by adding eight companies and 20 government organizations to an entity list that will prevent them from buying American products. On Tuesday, the State Department announced visa restrictions for Chinese officials allegedly involved in the detention and abuse of Muslim minorities.

An array of initiatives related to American capital markets and investments made by retirement funds in Chinese entities are also under consideration.

The most advanced discussions have centered on the Thrift Savings Plan, the retirement plan for federal employees and the military. As of next year, that plan, which holds nearly $50 billion in assets, is expected to begin investing in an index fund that includes more Chinese and Russian companies, as part of an effort to diversify its exposure.

The index fund includes companies that the United States government has imposed sanctions on — including Hangzhou Hikvision Digital Technology, which was among the companies blacklisted on Monday. It also includes AviChina Industry & Technology, an affiliate of China’s major military aircraft and weapons manufacturer; ZTE, which was hit with sanctions for providing technology to North Korea and Iran; and several Russian companies that the Treasury Department’s Office of Foreign Assets Control has put under sanctions.

Officials have also been discussing efforts to close loopholes that give Chinese companies access to American capital markets with less stringent disclosure requirements than American firms or those from other countries.

Chinese law requires the records of companies based in China to be kept there, and restricts the kind of documentation that auditors can transfer out of the country. The rules mean that hundreds of Chinese firms, with a collective market capitalization of more than $1 trillion, have received looser oversight than companies in other jurisdictions, according to the Securities and Exchange Commission.

A bipartisan group of senators has introduced legislation that would force Chinese companies to comply with S.E.C. disclosure regulations or be delisted from American exchanges in three years. White House officials have debated throwing their support behind the bill, but several officials, including Mr. Kudlow and Treasury Secretary Steven Mnuchin, have opposed delisting as a draconian option that could throw American stock markets into turmoil.

“Delisting is not on the table,” Mr. Kudlow told reporters on Monday. He said the administration was responding to complaints to the commission about a lack of transparency and compliance, “but we’re very early in our deliberations.”

Elizabeth Economy, the director for Asia studies at the Council on Foreign Relations, said that addressing the lack of compliance among Chinese companies was “overdue” but that a solution would ideally be negotiated between Chinese companies and the S.E.C.

“Nobody benefits from a mass delisting of Chinese companies on U.S. stock exchanges,” Ms. Economy said.

Henrietta Treyz, the director of economic policy at Veda Partners, outlined the extensive array of economic weapons at Mr. Trump’s disposal for investors this year. She said she would not be surprised if the S.E.C. stepped up scrutiny of Chinese firms or if the United States imposed penalties on China’s electronic payments systems, such as Alipay, on national security grounds.

Such moves could be far more severe than the tariffs on $550 billion of Chinese imports that the United States will have imposed by the end of the year, leading to a decoupling not just of the American and Chinese economies but of the financial sector as well.

“Tariffs are just a tax, a cost of doing business, but those costs can be digested by passing costs on to consumers or squeezing margins or diversifying your end consumer,” Ms. Treyz said. “If you’re no longer allowed to ship or buy products from Huawei or other entity list companies, you’ve shut out an entire pipeline of access, not to mention lost 1.3 billion potential customers in China.”

Real Estate, and Personal Injury Lawyers. Contact us at: https://westlakelegal.com 

Trump Administration Weighs Economic Escalation Against China

Westlake Legal Group merlin_159733326_365ee0f3-4455-4e35-ac0d-5d771ddbe5bc-facebookJumbo Trump Administration Weighs Economic Escalation Against China United States Politics and Government United States International Relations United States Economy Trump, Donald J Securities and Exchange Commission Regulation and Deregulation of Industry Pillsbury, Michael (1945- ) Kudlow, Lawrence A International Trade and World Market Embargoes and Sanctions Economic Conditions and Trends Customs (Tariff) China

WASHINGTON — Trump administration officials are weighing a range of options that could inflict additional economic pain on China as the United States continues looking for ways to force Beijing to change longstanding practices that have put American companies at a disadvantage.

The ideas under consideration would move the White House’s negotiating tool of choice beyond tariffs toward limiting China’s access to American capital markets and imposing greater scrutiny on its companies, according to people familiar with the discussions.

Administration officials, including members of the National Security Council, have begun pressing the Securities and Exchange Commission to tighten its checks on Chinese firms. They are also looking for ways to reduce the exposure of American retirement funds to certain Chinese companies.

Many of those efforts have been proceeding independently from the trade talks — which resume again this week — and are fueled by longer-term considerations of China’s economic and security threats. Some White House advisers now view those options as an additional lever to force China to make the kinds of deep economic concessions that have so far proved elusive in the talks, which have dragged on for more than a year.

Top-level officials from both countries will convene on Thursday for their 13th round of trade negotiations. They are expected to discuss proposals for a somewhat limited trade deal that would address some of President Trump’s criticisms of China’s economic practices but still be acceptable to Beijing.

Some administration officials have been hopeful that a deal will lock in more intellectual property protections for American companies and provide those firms with greater access to Chinese markets. They also want to avoid further tariffs on Chinese goods that have begun to weigh on American consumers.

If China makes sufficient concessions, some in the administration are willing to roll back a portion of the tariffs that Mr. Trump has placed on more than $360 billion of Chinese goods, people familiar with the discussions said. They may also approve licenses that would allow some companies to sell nonsensitive goods to the Chinese telecom provider Huawei, which has been blacklisted from buying American products.

But China has resisted many of the administration’s demands to make more transformative changes to the way it runs its economy. Chinese officials have come to Washington this week eager to settle on a narrow deal that would involve tariff reductions in exchange for a resumption of Chinese purchases of American food. They appear unlikely to agree to the administration’s longstanding demands that Beijing limit its subsidies to Chinese firms, change its policies surrounding the treatment of data or make other structural changes, people familiar with the negotiations said.

The potential for such a limited agreement has fueled private deliberations within the White House on options for escalating economic pressure on China.

Officials have held meetings in recent weeks to consider escalation options if the current round of negotiations fails to address the administration’s primary concerns. Mr. Trump’s top economic advisers have publicly played down the discussions, which have centered on tightening scrutiny of Chinese companies listed on American stock exchanges and limiting the direct exposure of government-run retirement funds to China.

Larry Kudlow, the director of the National Economic Council, acknowledged on Tuesday that the administration was looking for ways to protect Americans who were investing in Chinese companies.

“We’ve opened up a study group to take a look at it,” Mr. Kudlow said on the Fox Business Network.

But the options under consideration go further than that. According to a memo circulated within the White House and reviewed by The New York Times, the administration is studying a menu of actions that, if carried out, would most likely rattle the Chinese government.

The memo was drafted by Michael Pillsbury, a China scholar at the Hudson Institute and an outside adviser to the White House. It proposes holding Chinese companies and their employees criminally liable for financial disclosure violations, broadening the criteria that could get prominent Chinese companies blacklisted in the United States and blocking public and private pension funds and university endowments from certain Chinese investments.

Other options go beyond financial scrutiny of Chinese companies. The memo describes the possibility of fostering deeper ties between the United States and Taiwan and disrupting the flow of capital between Hong Kong and mainland China if it is determined that Hong Kong’s autonomy is not being respected.

It also lays out legislation in Congress, which Mr. Trump has yet to endorse, that would impose sanctions on China for activity in contested areas of the South China Sea and crack down on Chinese-funded Confucius Institutes at American universities.

Mr. Pillsbury declined to comment on his conversations with the White House but acknowledged that he had been analyzing such possibilities for a coming study on China strategy for the Hudson Institute.

“It appears that tariffs alone are not enough, but we also need to meet some of the Chinese demands to get the kind of deal the president wants,” Mr. Pillsbury said.

A White House spokesman declined to comment.

Mr. Trump’s tariffs have already pushed some companies to move their operations out of China. But the raft of new investment restrictions and export controls that the administration is mulling would further sever supply chains and discourage financial integration between the countries, potentially to the detriment of financial markets.

On Monday, the White House clamped down on Chinese firms it accused of human rights violations by adding eight companies and 20 government organizations to an entity list that will prevent them from buying American products. On Tuesday, the State Department announced visa restrictions for Chinese officials allegedly involved in the detention and abuse of Muslim minorities.

An array of initiatives related to American capital markets and investments made by retirement funds in Chinese entities are also under consideration.

The most advanced discussions have centered on the Thrift Savings Plan, the retirement plan for federal employees and the military. As of next year, that plan, which holds nearly $50 billion in assets, is expected to begin investing in an index fund that includes more Chinese and Russian companies, as part of an effort to diversify its exposure.

The index fund includes companies that the United States government has imposed sanctions on — including Hangzhou Hikvision Digital Technology, which was among the companies blacklisted on Monday. It also includes AviChina Industry & Technology, an affiliate of China’s major military aircraft and weapons manufacturer; ZTE, which was hit with sanctions for providing technology to North Korea and Iran; and several Russian companies that the Treasury Department’s Office of Foreign Assets Control has put under sanctions.

Officials have also been discussing efforts to close loopholes that give Chinese companies access to American capital markets with less stringent disclosure requirements than American firms or those from other countries.

Chinese law requires the records of companies based in China to be kept there, and restricts the kind of documentation that auditors can transfer out of the country. The rules mean that hundreds of Chinese firms, with a collective market capitalization of more than $1 trillion, have received looser oversight than companies in other jurisdictions, according to the Securities and Exchange Commission.

A bipartisan group of senators has introduced legislation that would force Chinese companies to comply with S.E.C. disclosure regulations or be delisted from American exchanges in three years. White House officials have debated throwing their support behind the bill, but several officials, including Mr. Kudlow and Treasury Secretary Steven Mnuchin, have opposed delisting as a draconian option that could throw American stock markets into turmoil.

“Delisting is not on the table,” Mr. Kudlow told reporters on Monday. He said the administration was responding to complaints to the commission about a lack of transparency and compliance, “but we’re very early in our deliberations.”

Elizabeth Economy, the director for Asia studies at the Council on Foreign Relations, said that addressing the lack of compliance among Chinese companies was “overdue” but that a solution would ideally be negotiated between Chinese companies and the S.E.C.

“Nobody benefits from a mass delisting of Chinese companies on U.S. stock exchanges,” Ms. Economy said.

Henrietta Treyz, the director of economic policy at Veda Partners, outlined the extensive array of economic weapons at Mr. Trump’s disposal for investors this year. She said she would not be surprised if the S.E.C. stepped up scrutiny of Chinese firms or if the United States imposed penalties on China’s electronic payments systems, such as Alipay, on national security grounds.

Such moves could be far more severe than the tariffs on $550 billion of Chinese imports that the United States will have imposed by the end of the year, leading to a decoupling not just of the American and Chinese economies but of the financial sector as well.

“Tariffs are just a tax, a cost of doing business, but those costs can be digested by passing costs on to consumers or squeezing margins or diversifying your end consumer,” Ms. Treyz said. “If you’re no longer allowed to ship or buy products from Huawei or other entity list companies, you’ve shut out an entire pipeline of access, not to mention lost 1.3 billion potential customers in China.”

Real Estate, and Personal Injury Lawyers. Contact us at: https://westlakelegal.com 

As China Trade Talks Start, White House Weighs Escalation Options

Westlake Legal Group merlin_159733326_365ee0f3-4455-4e35-ac0d-5d771ddbe5bc-facebookJumbo As China Trade Talks Start, White House Weighs Escalation Options United States Politics and Government United States International Relations United States Economy Trump, Donald J Securities and Exchange Commission Regulation and Deregulation of Industry Pillsbury, Michael (1945- ) Kudlow, Lawrence A International Trade and World Market Embargoes and Sanctions Economic Conditions and Trends Customs (Tariff) China

WASHINGTON — Trump administration officials are weighing a range of options that could inflict additional economic pain on China as the United States continues looking for ways to force Beijing to change longstanding practices that have put American companies at a disadvantage.

The ideas under consideration would move the White House’s negotiating tool of choice beyond tariffs toward limiting China’s access to American capital markets and imposing greater scrutiny on its companies, according to people familiar with the discussions.

Administration officials, including members of the National Security Council, have begun pressing the Securities and Exchange Commission to tighten its checks on Chinese firms. They are also looking for ways to reduce the exposure of American retirement funds to certain Chinese companies.

Many of those efforts have been proceeding independently from the trade talks — which resume again this week — and are fueled by longer-term considerations of China’s economic and security threats. Some White House advisers now view those options as an additional lever to force China to make the kinds of deep economic concessions that have so far proved elusive in the talks, which have dragged on for more than a year.

Top-level officials from both countries will convene on Thursday for their 13th round of trade negotiations. They are expected to discuss proposals for a somewhat limited trade deal that would address some of President Trump’s criticisms of China’s economic practices but still be acceptable to Beijing.

Some administration officials have been hopeful that a deal will lock in more intellectual property protections for American companies and provide those firms with greater access to Chinese markets. They also want to avoid further tariffs on Chinese goods that have begun to weigh on American consumers.

If China makes sufficient concessions, some in the administration are willing to roll back a portion of the tariffs that Mr. Trump has placed on more than $360 billion of Chinese goods, people familiar with the discussions said. They may also approve licenses that would allow some companies to sell nonsensitive goods to the Chinese telecom provider Huawei, which has been blacklisted from buying American products.

But China has resisted many of the administration’s demands to make more transformative changes to the way it runs its economy. Chinese officials have come to Washington this week eager to settle on a narrow deal that would involve tariff reductions in exchange for a resumption of Chinese purchases of American food. They appear unlikely to agree to the administration’s longstanding demands that Beijing limit its subsidies to Chinese firms, change its policies surrounding the treatment of data or make other structural changes, people familiar with the negotiations said.

The potential for such a limited agreement has fueled private deliberations within the White House on options for escalating economic pressure on China.

Officials have held meetings in recent weeks to consider escalation options if the current round of negotiations fails to address the administration’s primary concerns. Mr. Trump’s top economic advisers have publicly played down the discussions, which have centered on tightening scrutiny of Chinese companies listed on American stock exchanges and limiting the direct exposure of government-run retirement funds to China.

Larry Kudlow, the director of the National Economic Council, acknowledged on Tuesday that the administration was looking for ways to protect Americans who were investing in Chinese companies.

“We’ve opened up a study group to take a look at it,” Mr. Kudlow said on the Fox Business Network.

But the options under consideration go further than that. According to a memo circulated within the White House and reviewed by The New York Times, the administration is studying a menu of actions that, if carried out, would most likely rattle the Chinese government.

The memo was drafted by Michael Pillsbury, a China scholar at the Hudson Institute and an outside adviser to the White House. It proposes holding Chinese companies and their employees criminally liable for financial disclosure violations, broadening the criteria that could get prominent Chinese companies blacklisted in the United States and blocking public and private pension funds and university endowments from certain Chinese investments.

Other options go beyond financial scrutiny of Chinese companies. The memo describes the possibility of fostering deeper ties between the United States and Taiwan and disrupting the flow of capital between Hong Kong and mainland China if it is determined that Hong Kong’s autonomy is not being respected.

It also lays out legislation in Congress, which Mr. Trump has yet to endorse, that would impose sanctions on China for activity in contested areas of the South China Sea and crack down on Chinese-funded Confucius Institutes at American universities.

Mr. Pillsbury declined to comment on his conversations with the White House but acknowledged that he had been analyzing such possibilities for a coming study on China strategy for the Hudson Institute.

“It appears that tariffs alone are not enough, but we also need to meet some of the Chinese demands to get the kind of deal the president wants,” Mr. Pillsbury said.

A White House spokesman declined to comment.

Mr. Trump’s tariffs have already pushed some companies to move their operations out of China. But the raft of new investment restrictions and export controls that the administration is mulling would further sever supply chains and discourage financial integration between the countries, potentially to the detriment of financial markets.

On Monday, the White House clamped down on Chinese firms it accused of human rights violations by adding eight companies and 20 government organizations to an entity list that will prevent them from buying American products. On Tuesday, the State Department announced visa restrictions for Chinese officials allegedly involved in the detention and abuse of Muslim minorities.

An array of initiatives related to American capital markets and investments made by retirement funds in Chinese entities are also under consideration.

The most advanced discussions have centered on the Thrift Savings Plan, the retirement plan for federal employees and the military. As of next year, that plan, which holds nearly $50 billion in assets, is expected to begin investing in an index fund that includes more Chinese and Russian companies, as part of an effort to diversify its exposure.

The index fund includes companies that the United States government has imposed sanctions on — including Hangzhou Hikvision Digital Technology, which was among the companies blacklisted on Monday. It also includes AviChina Industry & Technology, an affiliate of China’s major military aircraft and weapons manufacturer; ZTE, which was hit with sanctions for providing technology to North Korea and Iran; and several Russian companies that the Treasury Department’s Office of Foreign Assets Control has put under sanctions.

Officials have also been discussing efforts to close loopholes that give Chinese companies access to American capital markets with less stringent disclosure requirements than American firms or those from other countries.

Chinese law requires the records of companies based in China to be kept there, and restricts the kind of documentation that auditors can transfer out of the country. The rules mean that hundreds of Chinese firms, with a collective market capitalization of more than $1 trillion, have received looser oversight than companies in other jurisdictions, according to the Securities and Exchange Commission.

A bipartisan group of senators has introduced legislation that would force Chinese companies to comply with S.E.C. disclosure regulations or be delisted from American exchanges in three years. White House officials have debated throwing their support behind the bill, but several officials, including Mr. Kudlow and Treasury Secretary Steven Mnuchin, have opposed delisting as a draconian option that could throw American stock markets into turmoil.

“Delisting is not on the table,” Mr. Kudlow told reporters on Monday. He said the administration was responding to complaints to the commission about a lack of transparency and compliance, “but we’re very early in our deliberations.”

Elizabeth Economy, the director for Asia studies at the Council on Foreign Relations, said that addressing the lack of compliance among Chinese companies was “overdue” but that a solution would ideally be negotiated between Chinese companies and the S.E.C.

“Nobody benefits from a mass delisting of Chinese companies on U.S. stock exchanges,” Ms. Economy said.

Henrietta Treyz, the director of economic policy at Veda Partners, outlined the extensive array of economic weapons at Mr. Trump’s disposal for investors this year. She said she would not be surprised if the S.E.C. stepped up scrutiny of Chinese firms or if the United States imposed penalties on China’s electronic payments systems, such as Alipay, on national security grounds.

Such moves could be far more severe than the tariffs on $550 billion of Chinese imports that the United States will have imposed by the end of the year, leading to a decoupling not just of the American and Chinese economies but of the financial sector as well.

“Tariffs are just a tax, a cost of doing business, but those costs can be digested by passing costs on to consumers or squeezing margins or diversifying your end consumer,” Ms. Treyz said. “If you’re no longer allowed to ship or buy products from Huawei or other entity list companies, you’ve shut out an entire pipeline of access, not to mention lost 1.3 billion potential customers in China.”

Real Estate, and Personal Injury Lawyers. Contact us at: https://westlakelegal.com 

As U.S. Takes Aim at Chinese Tech Firms, Trump Signals a Strategy Shift

Westlake Legal Group 08blacklist1-facebookJumbo As U.S. Takes Aim at Chinese Tech Firms, Trump Signals a Strategy Shift United States Politics and Government United States International Relations Uighurs (Chinese Ethnic Group) Trump, Donald J Surveillance of Citizens by Government Megvii Technology Ltd Hangzhou Hikvision Digital Technology Co Ltd facial recognition software Embargoes and Sanctions Defense and Military Forces Computers and the Internet Computer Vision China

SHANGHAI — The world has largely sat by for nearly two years as China detained more than one million people, mostly Muslims and members of minority ethnic groups, in re-education camps to force them to embrace the Communist Party.

Now, the Trump administration has taken the first public step by a major world government toward punishing Beijing. In doing so, it is opening up a new front in the already worsening relationship between Washington and Beijing: human rights and the dystopian world of digital surveillance.

Trump administration officials on Monday placed eight Chinese companies and a number of police departments on a blacklist that forbids them to buy American-made technology like microchips, software and other vital components. The companies it targeted are at the vanguard of China’s surveillance and artificial intelligence ambitions, with many of them selling increasingly sophisticated systems used by governments to track people.

The White House cited their business in Xinjiang, a region of northwestern China that is home to a largely Muslim minority group known as the Uighurs. The United States government says more than one million ethnic Uighurs and other minorities have been locked in detention camps there.

The administration’s move suggests that President Trump is increasingly willing to listen to the advice of American officials focused on the strategic challenges posed by China and who are concerned about its human rights abuses, even if Mr. Trump himself never seems to pay much attention to those.

The new entrants to the blacklist were announced just days before trade talks were set to begin between American and Chinese officials, likely putting a chill over the negotiations.

More broadly, it signals the White House’s willingness to take aim at China’s technological dreams. China has plowed billions of dollars into companies developing advanced hardware and software to catch up with the United States. Some of the companies added to the list on Monday are among the world’s most valuable artificial-intelligence start-ups.

Much of that technology — including facial recognition and computer vision — can be used to track people. That includes smartphone tracking, voice-pattern identification and systems that track individuals across cities through powerful cameras. Washington officials have grown increasingly worried about China’s ambitions to export its systems elsewhere, including places known for human rights abuses.

“This is an important first step in making some of the companies that have benefited the most from the re-education system in Xinjiang feel the consequences of their actions,” said Darren Byler, an anthropologist at the University of Washington who studies the plight of the Uighurs.

He said the move signaled that abuse of minority groups in Xinjiang “is real and justifies a political and economic response.”

It is also a potentially groundbreaking use of a powerful tool that the American government typically uses against terrorists. The Chinese companies and police departments were placed on what is called an entity list, which forbids them to buy sensitive American exports unless Washington grants American companies specific permission to sell to them.

Use of the entity list over a human rights issue may be a first, said Julian Ku, a professor of constitutional and international law at Hofstra University.

“As far as I know, it was the first time Commerce explicitly cited human rights as a foreign policy interest of the U.S. for purposes of export controls,” he said, referring to the Department of Commerce, which manages the entity lists. “This is not an implausible reading of the regulations, but it is new and has potentially very broad applicability.”

Geng Shuang, a Chinese Foreign Ministry spokesman, said in a briefing on Tuesday that the White House was using human rights as an excuse to punish Chinese companies. Many of the companies offer a wide array of products outside of surveillance, including medical tools that diagnose tumors, automatic translation services and even social media filters that slim the waist.

“This goes against the basic principles of international relations, it interferes in China’s internal affairs and it goes against China’s national security,” he said, adding, “There is no human rights issue in Xinjiang.”

The immediate impact on the Chinese companies is likely to be minimal, since many have stockpiled essential supplies, but they could feel increasing pain if they stay on the blacklist for months or years.

Perhaps more important, it can put a cloud over the companies’ reputation, limiting their sales in the United States or elsewhere and keeping them from hiring the world’s best technology talent.

“The U.S. move today puts up a big roadblock on the road to internationalization,” said Matt Sheehan, a fellow at MacroPolo, the think tank of the Paulson Institute.

“Most global technology companies are setting up labs abroad, partnering with the best universities around the world and looking to recruit top talent from everywhere,” he said. “That all just got a lot harder now that they’re marked with the scarlet letter of the entity list.”

The move follows more than a year of internal debate over how to punish China for its persecution of Muslims in Xinjiang.

Senior officials on the National Security Council and in the State Department have pushed for the use of the entity list to target Chinese companies supplying surveillance technology to the security forces in Xinjiang. They have also urged Mr. Trump to approve Global Magnitsky Act sanctions that would penalize Chinese officials involved in the abuses and bar them from traveling to the United States.

But top American trade negotiators, including Treasury Secretary Steven Mnuchin, have cautioned against policies that would upset trade talks. Mr. Trump has said he wants to reach a trade deal with China.

Until now, other top officials, most notably Vice President Mike Pence and Secretary of State Mike Pompeo, have denounced China’s policies in Xinjiang but not enacted punitive measures. This month, American customs officials blocked products from a Chinese garment maker in Xinjiang, but they had held off on stronger action.

The Chinese companies on the list included major surveillance camera maker Hikvision and the well-funded artificial-intelligence start-ups SenseTime and Megvii.

SenseTime said it set “high ethical standards for AI technologies,” while Megvii said that it required “clients not to weaponize our technology or solutions or use them for illegal purposes.” It added that it had generated no revenue from within Xinjiang in the first half of 2019.

New York Times reporting showed that four of the companies on the list — Yitu, Hikvision, Megvii and SenseTime — helped build systems across China that sought to use facial recognition to automate the detection of Uighurs.

Government procurement documents, company marketing materials and official government releases tied all eight companies to various business operations and sales in Xinjiang. The many local Xinjiang police bureaus also on the list buy commercial American technology like Intel microchips and Microsoft Windows software, according to procurement documents.

Mr. Trump’s next step could be imposing sanctions on specific Chinese officials working in Xinjiang. Among the officials discussed is Chen Quanguo, a Politburo member who is the party chief in Xinjiang and an architect of the system of internment camps and surveillance.

The blacklist action is a sign that strategic China hawks have become even more influential in the administration in recent weeks.

Matthew Pottinger, the senior director for Asia and an architect of policies aimed at countering China, was promoted to deputy national security adviser last month. That came after Robert O’Brien, the administration’s top hostage negotiator, replaced John R. Bolton as national security adviser. Mr. O’Brien has written that China poses an enormous challenge to the United States.

“This Xinjiang package has been in the works now for months,” said Samm Sacks, a cybersecurity policy fellow at New America, a think tank. “So the fact that it comes out now just ahead of the next round of trade talks sends a signal from those in the administration who want no deal.”

“So far Beijing has been quite measured in its response to the U.S. government,” she said. “That probably is over.”

Paul Mozur reported from Shanghai, and Edward Wong from Hong Kong. Lin Qiqing contributed research from Shanghai.

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How Iran’s President Left Trump Hanging, and Macron in the Hall

The telephone line had been secretly set up. President Trump waited on the other end. All President Hassan Rouhani of Iran had to do was come out of his hotel suite and walk into a secure room where Mr. Trump’s voice would be piped in via speaker.

Mr. Rouhani and his aides were blindsided by the offer, presented to them by President Emmanuel Macron of France on an unannounced visit last Tuesday night to their quarters at the Millenium Hilton Hotel near the United Nations, where world leaders had converged for the annual General Assembly.

It was a mission lifted out of a Hollywood thriller. Mr. Macron has sought for months to broker a thaw in the standoff between the United States and Iran, which has threatened to escalate into a new Middle East war.

Accompanied by a small team of advisers, Mr. Macron awaited an answer outside the Iranian leader’s suite, according to three people with knowledge of the diplomatic gambit, which was first reported on Monday by The New Yorker. Messages were passed between them via Mr. Rouhani’s aides.

In the end, Mr. Rouhani refused even to come out of his room. Mr. Macron left empty-handed and Mr. Trump was left hanging.

With no guarantee that Mr. Trump would end the onerous sanctions he has imposed on Iran, Mr. Rouhani feared he would be trapped in an encounter that Mr. Trump could exploit as a headline-grabbing success, the people with knowledge of the episode said.

It also was clear that Mr. Rouhani might suffer a political backlash at home, where hard-liners were already fuming at the mere possibility that Mr. Rouhani would consider a dialogue with Mr. Trump.

For the Iranians, however, the incident underscored what they see as Mr. Trump’s eagerness, bordering on desperation, to connect directly to Iran’s leaders and defuse the spiraling hostility. For them, it was a validation that their strategy of escalating tensions in response to Mr. Trump’s “maximum pressure” campaign of sanctions was paying off.

“For Rouhani, talking to Trump is a liability,” said Ali Vaez, director of the Iran program at the International Crisis Group, a research organization on conflict resolution. Mr. Rouhani would not take such a risk, Mr. Vaez said, unless “he knew a reward would come out of it.”

Mr. Trump’s desire for a meeting or at least a phone call with Mr. Rouhani during the General Assembly reflected what some analysts called the American leader’s broader frustrations over international problems that keep piling up.

Those frustrations have only been compounded by the congressional impeachment inquiry over Mr. Trump’s phone call with Ukraine’s president in July, in which he pushed for an investigation into former Vice President Joseph R. Biden Jr., a leading Democratic challenger in the 2020 presidential election.

“Trump really wants a foreign policy win and can’t find one,” said Cliff Kupchan, chairman of the Eurasia Group, a political-risk consulting firm in Washington. “He thinks talks with Iran now may be his best shot.”

Mr. Kupchan said Mr. Trump “was especially desperate at the U.N.G.A. — he wanted to flip the news cycle from Ukraine and Biden to a dramatic meeting with Rouhani.”

The people who recounted Mr. Macron’s ill-fated visit to Mr. Rouhani’s hotel declined to be identified by name or nationality because they were not authorized to discuss it. The White House did not immediately respond to requests for comment. Officials from the foreign ministries of France and Iran declined to comment.

Mr. Macron’s visit followed Mr. Trump’s speech that day at the General Assembly, in which he repeated his standard denunciations of Iran but signaled the possibility of a reconciliation, reminding the world that some of America’s current friends are former enemies.

But on Wednesday, when it was Mr. Rouhani’s turn to address the General Assembly, he appeared to all but rule out a meeting with Mr. Trump as he castigated the United States for quitting the 2015 nuclear agreement. For Iran, Mr. Rouhani said, photo opportunities must come after, not before, progress has been achieved. He did not hint that Mr. Trump had tried unsuccessfully to talk with him by phone the night before.

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President Trump and his French counterpart, Emmanuel Macron, at the Group of 7 summit in Biarritz, France, in August.CreditErin Schaff/The New York Times

Richard Nephew, the former principal deputy coordinator for sanctions policy at the State Department and now a research scholar at Columbia University’s School of International and Public Affairs, said the Iranians had two reasons for keeping such an episode to themselves.

“They don’t see any upside internationally in them embarrassing Macron by showing the rebuff,” Mr. Nephew said. “They may want this channel in the future, so why undermine it?”

The second reason, he said, was that “Rouhani may be concerned about how his opponents in Tehran would use this regardless of him having said ‘no.’”

For the members of Iran’s hierarchy, which has largely defined itself by hostility to the United States government since the 1979 Islamic revolution, any hint of an easing in estranged relations comes with extraordinary political risk.

At the United Nations General Assembly in particular — the one place where Iranian and American officials could run into each other — Iran’s leaders have gone out of their way to avoid encounters.

In 2000, President Bill Clinton and Iran’s president at the time, Mohammad Khatami, had a near encounter at the General Assembly. Aides on both sides had orchestrated a hallway handshake that was meant to look impromptu, but Mr. Khatami had a change of heart at the last minute and hid in a bathroom until Mr. Clinton and his party had left the hallway, diplomats who knew about the incident have said.

In 2013, in the midst of the Iran nuclear deal negotiations, American and Iranian officials discussed the possibility of President Barack Obama and Mr. Rouhani shaking hands at the General Assembly.

Ultimately the two only shared a phone call — but even that was like a diplomatic thunderbolt, the first time leaders of the two countries had spoken since the Tehran hostage crisis more than three decades earlier. In Iran, hard-liners rebuked Mr. Rouhani for having spoken to Mr. Obama.

Later that year, Mr. Rouhani did not attend the funeral for the South African leader Nelson Mandela, partly over fear of getting cornered into seeing Mr. Obama. The Iranian newspaper Kayhan, a mouthpiece of Tehran’s hard-line faction, warned that the funeral would be a trap, leading to face-to-face contact “with the head of Great Satan’s government.”

Foreign Minister Mohammad Javad Zarif of Iran accidentally ran into Mr. Obama at the sidelines of the General Assembly in 2015 and the two shook hands. But when news of the handshake leaked, Mr. Zarif sought assurances from the White House that a photograph of the handshake, taken by one of Mr. Obama’s staff members, would not be released.

Mr. Macron’s misadventure at the Millennium Hotel was not the first time he had been entangled in awkwardness involving Mr. Trump’s effort to talk with the Iranians.

According to Aftab, a semiofficial Iranian news agency, Mr. Trump made a spontaneous attempt to meet Mr. Zarif in August at the Group of 7 summit in France hosted by Mr. Macron, who had invited Mr. Zarif to discuss a potential meeting with the Americans.

Iran’s condition for accepting the invitation was that there would be no chance encounters with the American delegation, the Aftab account said.

When Mr. Macron told Mr. Trump that he would be meeting Mr. Zarif, Aftab said, Mr. Trump surprisingly insisted that he join Mr. Macron, but the French president said he had promised the Iranians there would be no such contacts.

During his meeting with Mr. Zarif, Aftab said, Mr. Macron joked that he could call Mr. Trump to join them. Mr. Zarif declined.

The persistent efforts of European leaders to broker a meeting between Mr. Trump and Mr. Rouhani has engendered jokes among Iranians.

They say the effort to push the two leaders into a meeting reminds them of a wedding where cousins who are locked in a family dispute encounter each other, and elders push them to kiss and make up without resolving their issues.

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600 Meetings and a World of Conflict: What to Expect at the U.N. General Assembly

The annual United Nations General Assembly will unfold this week against a backdrop of crises — from the warming planet to economic uncertainty to flaring conflicts that threaten to further entangle the United States in the volatile Middle East.

Trade wars, migration, energy supplies, climate change and the eradication of poverty underpin the basic themes of the 193-member General Assembly agenda. But the actions of the Trump administration, which has sometimes expressed disdain for international institutions like the United Nations, have created a common denominator.

“All of the major topics that I think people will be talking about in the corridors are related to: What is U.S. policy?” said Jeffrey D. Feltman, a veteran American diplomat and former United Nations under secretary-general for political affairs.

Some leaders are not coming, notably Presidents Xi Jinping of China and Vladimir V. Putin of Russia, as well as Benjamin Netanyahu, the embattled prime minister of Israel. Also not expected is President Nicolás Maduro of Venezuela, regarded by the Trump administration and about 50 other governments as an illegitimate leader.

But one prominent figure, President Volodymyr Zelensky of Ukraine, will attend. The Ukrainian leader plans to meet with Mr. Trump amid growing concerns that Mr. Trump had pressured him over American domestic political issues.

Some of the biggest moments and confrontations could happen early in the week. Here is what to expect:

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Mr. Trump addressing the General Assembly last year.CreditTom Brenner for The New York Times

President Trump, whose penchant for bombast, scaremongering and diplomatic bombshells are well known, will be surrounded by like-minded company on Tuesday when the speeches begin.

Mr. Trump will be preceded by President Jair M. Bolsonaro of Brazil, sometimes called the mini-Trump, a polarizing figure at home who, like Mr. Trump, dismisses fears about climate change and ridicules critics on Twitter.

After Mr. Trump comes President Abdel Fattah el-Sisi of Egypt, the former general who has come to symbolize the repression of the Arab Spring revolutions — although his appearance was thrown into doubt this past weekend as protests erupted at home. Then comes President Recep Tayyip Erdogan of Turkey, an autocrat who has bullied critics and whose government is a leading jailer of journalists.

The president of Iran, Hassan Rouhani, is likely to say that Mr. Trump set off recent conflict by withdrawing from the 2015 nuclear agreement.CreditDave Sanders for The New York Times

Until recently, speculation abounded that Mr. Trump would make history by meeting with President Hassan Rouhani of Iran. But the Sept. 14 attack on oil facilities in Saudi Arabia, which American and Saudi officials blame on Iran, has made such a meeting unlikely at best.

American officials are expected to present what they have described as evidence that Iran carried out the attack with drones and cruise missiles. Iran has denied the accusation. Yemen’s Houthi rebels, who are supported by Iran in their fight against a Saudi-led coalition that has been bombing their country for more than four years, have claimed responsibility.

Mr. Rouhani speaks on Wednesday, and he will almost certainly assert that Mr. Trump ignited the cycle of conflict by withdrawing last year from the 2015 nuclear agreement with major powers and reimposing onerous sanctions that are crippling its economy.

The United States is trying to build a coalition to deter Iran, even if it is unclear what form such deterrence would take. The General Assembly gives the administration an opportunity to “continue to slow walk a military response in favor of more coalition-building and political and economic pressure,” said Aaron David Miller, a senior fellow at the Carnegie Endowment for International Peace.

The climate crisis is at the top of the General Assembly’s agenda. About 60 heads of state plan to speak at the Climate Action Summit on Monday, and officials aim to announce initiatives that include net-zero carbon emissions in buildings.

The United States has no such plans — Mr. Trump announced in 2017 that he was withdrawing the country from the Paris Agreement on climate change. But some state governors who have formed the United States Climate Alliance said they would attend the summit and meet with other delegations.

Treasury Secretary Steven Mnuchin was expected to meet with his Chinese counterparts on the sidelines, suggesting that the administration was seeking to create a more productive atmosphere for resumed trade negotiations after weeks of acrimony. The two governments recently paused their escalating tariff battle.

But some administration officials are pushing for Mr. Trump to address other issues considered sensitive by China, including the pro-democracy protests in Hong Kong, the repression of Tibetans and the detentions of more than one million Muslims, mostly ethnic Uighurs. One official said Mr. Trump should at least criticize China for trying to intimidate Uighur-American activists.

Mr. Trump has never spoken strongly about human rights, and he has openly expressed admiration for Mr. Xi and other authoritarian leaders. But lawmakers in both parties of Congress are pressuring Mr. Trump to act. Bills on the Uighurs, Tibet and Hong Kong are aimed at compelling Mr. Trump and the administration to take harder stands.

Prime Minister Shinzo Abe of Japan, left, and President Moon Jae-in of South Korea are not expected to meet with each other.CreditPool photo by Kim Kyung-Hoon

A protracted feud between Japan and South Korea, rooted in the legacy of Japan’s wartime occupation, has led to downgraded trade relations and the end of an intelligence-sharing agreement. Prime Minister Shinzo Abe of Japan and President Moon Jae-in of South Korea are not expected to meet with each other. Whether Mr. Trump can induce them into a three-way conversation remains unclear. And an objective shared by all three — North Korea’s nuclear disarmament — may see little or no progress.

While Mr. Moon is expected to urge Mr. Trump to renew his push for diplomacy with North Korea’s leader, Kim Jong-un, no senior North Korean official plans to attend the General Assembly.

Foreign ministers from 18 nations in the Western Hemisphere, including the United States, planned to meet on Monday to discuss what can be done regarding Mr. Maduro, who has presided over the biggest economic collapse in Venezuela’s history and a regional crisis caused by the exodus of millions of his people.

The push will focus on convincing the European Union to expand economic sanctions against Mr. Maduro’s loyalists, including freezing assets they have in Europe. The Europeans may also be pressed to penalize smugglers of Venezuelan gold into Europe.

Mr. Maduro, who claimed victory in disputed elections last fall, has retained power despite nine months of demands to resign by a stubborn opposition movement led by the president of Venezuela’s Parliament, Juan Guaidó. Negotiations between the Venezuelan rivals collapsed last week.

Mr. Trump and President Recep Tayyip Erdogan of Turkey have been at odds.CreditErin Schaff/The New York Times

Mr. Trump and President Erdogan are expected to meet on the sidelines, but the outcome is unclear at best. A range of difficult issues has pit their governments against each other.

The Trump administration is considering sanctions to punish Turkey, a fellow NATO member, for buying a Russian S-400 missile defense system instead of American-made Patriots. And Mr. Erdogan has expressed growing anger at the United States over their joint operations in the northern part of war-ravaged Syria that borders Turkey.

He says the Americans have failed to establish a safe zone large enough to keep Kurdish fighters out of Turkey, which regards them as terrorist insurgents. On Saturday, Mr. Erdogan warned that his forces would take “unilateral actions” along the border if the United States did not act by the end of the month.

Someone has to speak last in the list of national delegations addressing the General Assembly. This year, that place falls to Afghanistan, just a few weeks after the collapse of talks between the Taliban and the United States that were aimed at ending the 18-year-old war.

With national elections slated for next Saturday, President Ashraf Ghani was not expected to attend. Instead, Afghanistan’s delegation will be led by Hamdullah Mohib, Mr. Ashraf’s national security adviser.

Mr. Mohib infuriated the Trump administration in March, when he predicted the peace talks would not end in peace.

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