Arrest of Chinese telecom exec puts trade truce in jeopardy

close

Video

Arrest of Chinese telecom exec puts trade truce in jeopardy

Gordon Chang weighs in on the future of the trade negotiations between the United States and China after the United Nations ordered arrest of Chinese telecom Chief Financial Officer Meng Wanzhou.

This is a rush transcript from "Journal Editorial Report," December 8, 2018. This copy may not be in its final form and may be updated.

PAUL GIGOT, HOST: Welcome to the "Journal Editorial Report," I'm Paul Gigot. Two new court filings by special counsel Robert Mueller and another in the Southern District of New York giving us a glimpse into the cases against former Trump attorney, Michael Cohen and former campaign chair Paul Manafort, but do these sentencing memos submitted Friday give us any indication of where the Russia probe is headed and whether it spells trouble for President Trump.

Let's ask Wall Street Journal columnist, Kim Strassel who has been following this story from the start. Welcome Kim, so let's take this from the top in order and talk about the Cohen memos on the Russia probe first.  Any new information there that is of note?

KIMBERLEY STRASSEL, COLUMNIST, WALL STREET JOURNAL: Well, not really in terms of the Russia probe as you mentioned. There were actually two court filings, Paul, one from the Southern District that largely dealt with the main crimes that Cohen had agreed that he had done, so these are things like tax evasion, misrepresentation to financial institutions, campaign finance violations recommending a very - pretty harsh sentence for him.

Then there was a shorter memo from the special counsel that goes to Russia and we didn't really learn anything. It sought to detail the ways in which he had cooperated with the special counsel's office. The only thing new there was that there had been some contact between Cohen and a Russian, an unnamed Russian individual in 2015, but even the Special Counsel document has to acknowledge that that meeting never went anywhere.

GIGOT: Yes, it says this is the meeting where some Russian approached Cohen and suggested synergy on a government level between Russia and the Trump campaign, but again Cohen- the memo admits that Cohen didn't take the meeting. I mean, so between Trump --

STRASSEL: Didn't follow up on it.

GIGOT: Yes, it suggested a meeting between Trump and Putin and that never took place, so that's really not an earth-shattering bit of information here.

STRASSEL: Well, no, especially not - remember, we waited the whole week, all of Trump critics had said this was going to be a momentous day that we were going to learn suddenly about all this collusion. There certainly doesn't seem to be anything in these memos and these documents that would suggest that's the case.

GIGOT: Well, there's one other thing the memo mentions, the Cohen memo that says, "Cohen provided information concerning certain discreet Russian related matters core to the investigation from the regular contact that Cohen had with Trump campaign officials."

There's again no details now that could suggest that there's some more information to be revealed, but again not in this memo.

STRASSEL: No, we're going to have to continue to wait as we've been doing now for months and months for the special counsel to finally put out a report, to find out what other areas, if any he has been investigating.

GIGOT: All right, let's turn to the Manafort sentencing memo and mainly it concerns Manafort's alleged lies after his plea deal and there is a suggestion and these relate mainly to Manafort's businesses in Ukraine, the things that he's pleaded guilty to, but there is a reference to a Ukrainian business partner of his named, Konstantin Kilimnik - anything new there because of course, Ukraine and Russia are right next door and that's been suggested they could be related.

STRASSEL: Yes, no, so again on the Manafort memo, the big speculation was what did he lie about? Did he lie to Bob Mueller about questions regarding his own underlying crimes or something to do with Russian collusion?

It looks from this document that it's all about his own underlying crimes, so his lobbying, money-laundering. Konstantin Kilimnik is a longtime business associate of Paul Manafort, he is Ukrainian-Russian. He was charged back in the summer with witness tampering and the suggestion that somehow he and Manafort attempted to get to certain witnesses and have them cover for them.

This all seems to go to those questions, what conversations he may or may not have had with Kilimnik on that regard. A lot of it is redacted, so we don't know exactly the details, but even the White House has come out and said that from what it understands, all of this goes to Paul Manafort's own underlying crimes.

GIGOT: Okay, let's move to the Southern District that Robert Mueller passed off that part of the negotiation involving campaign finance violations to the Southern District and that involves the payments to Stormy Daniels and another woman who alleged to have affairs with Donald Trump and the campaign Cohen paid them to keep quiet.

Now the document says that Cohen acted in coordination and at the direction of Donald Trump and Democrats are saying that's a crime and Donald Trump is now involved in a conspiracy to violate campaign finance laws.

What's new - we knew that from the plea deal though, didn't we? So this isn't new either.

STRASSEL: Well, no. It's not necessarily new. I think it's startling for some people to see it in there in a court document naming individual one - that individual one is the President claiming in a Federal document that you know, he was - he knew about this, had discussions about this. Now, look the Justice Department isn't going to go after him because of longtime guidelines that suggest you cannot indict a sitting President.

The question as you mentioned are Democrats. What are they going to do this is this? Is this what they need to now officially start impeachment proceedings as soon as they take over in the House? And I think that is the importance of this.

GIGOT: Well, what they're going to do I think and let's step back a bit, they're going to take and they're going to call up Michael Cohen, no question about it, he is going to be a witness, maybe witness one in the new Congress and they're going to make an issue of this campaign finance violation, alleged violation and we'll decide is it something that politically they can get away with to impeach Donald Trump.

So something that started with Russian collusion, could it really end with impeachment of Michael - of Donald Trump for paying off somebody not to talk about a sexual affair? We're going to have to watch and see if they can do that politically. Thanks for being here, Kim.

When we come back, a wild week on Wall Street as worries over China trade trigger a stock sell-off, so there's more market volatility ahead.

A wild week on Wall Street with a stock sell-off largely fueled by uncertainty over U.S.-China relations. The market rallied Monday on news of a 90-day trade truce with Beijing, but those gains evaporated Tuesday and continued to decline throughout the week as President Trump waded into the debate at one point calling himself a "tariffs man," so where do China trade talks stand? And can we expect more market volatility as negotiations continue.

Let's ask "Wall Street Journal" columnist and deputy editor Dan Henninger; columnist Mary Anastacia O'Grady; and assistant editorial page editor, James Freeman.

So Mary, we're going to get a trade deal with China or not? And is that the reason for the market's volatility?

MARY ANASTACIA O'GRADY, COLUMNIST, WALL STREET JOURNAL: Well, I think it is and first of all, I think it's sort of silly to think that President Trump had dinner with Xi and came away with everything solved and the administration tried to put a very positive spin on it, but we don't even have the framework yet.

What we have is a promise to work on the framework within the next 90 days and there are some other good signals from China. They have a series of government agencies that are basically have announced punishments for companies that steal intellectual property, so yes, it may happen.

But I think that the market understands that this is a long term process.  They're going to buy some more fruits and vegetables and you know, that they're going to buy produce and soybeans ...

GIGOT: And more than that, they are going to buy natural gas, too, Mary.  They're going to buy a lot of goods.

O'GRAD: They're going to buy some things, maybe many of the things they were already buying before all of this started, but this is a big steep hill to climb and so it's going take time.

DANIEL HENNINGER, COLUMNIST AND DEPUTY DIRECTOR, WALL STREET JOURNAL:  Well, I'm glad to hear the market understands that because there is a lot to understand here and get your arms around especially the fact that all of it runs off a President Trump and the one thing that Donald Trump complains about our trade deficits, we have a $376 billion trade deficit with China.  He wants that smaller, if not disappearing.

On the other hand, it's clear that there are many other things going on in this negotiation, such as the theft of intellectual property, the fact that businesses have to have Chinese partners and so forth. The structure of the American economy and then suddenly, this week you have the arrest of the Chief Financial Officer for the Chinese telecom company, Huawei by the Canadians at our request elevating this to a national security issue. It's no longer just the trade rep and Robert Lighthizer that's involved here, it's the whole national security apparatus that is involved in this negotiation with China.

How the market absorbs all of that is a good question, they're struggling.

GIGOT: Well and how James, how China reacts to that arrest because I was in Washington this week, I talked to Larry Kudlow, I talked to the Treasury Secretary Steve Mnuchin, heard John Bolton and their consistent message was that they heard in the talks and leading up to the dinner with Xi, a new seriousness of China, more interest in details, actually putting specific proposals which they wouldn't share with us, but putting those on the table. But then we get this jolt from Huawei, how will the Chinese react?

JAMES FREEMAN, ASSISTANT EDITORIAL PAGE EDITOR, WALL STREET JOURNAL: Well, I think the one nice message that's come out in the week since that dinner is the Chinese are finally acknowledging intellectual property theft is a problem. How good will their solution be? How far will they go, we'll see, but it seems that if they are accepting that they have to behave like a normal country and following the rule of law, they would also respect that we have laws that if Huawei is violating them they will be prosecuted.  That really shouldn't be a trade issue.

The more we learn about the Huawei issue, the more you see a pretty clear bipartisan concern, not a Trump concern exclusively, a bipartisan concern that this is a bad actor or at least a threat.

GIGOT: On that score, Mary, it's fascinating to watch our friends in the mainstream media do this reporting of this because they seem to be cheering not Trump to get a deal, but for something to fail. I mean they seem to say, a sellout, he hasn't really gotten anything for it.

I mean, it's an odd kind of turn of events because before they were criticizing Trump for trying to him to work hard on China.

O'GRADY: Well, I think that's true, there's a bias against President Trump, but he's created a lot of the problem by, as Dan say, put all this emphasis initially on the trade deficit, which is just preposterous. It doesn't matter and it's a distraction.

The main thing is this intellectual property issue and as James says, it's a bipartisan issue, that's what we have to work on, but again it's not going to be solved anytime soon. This is going to be a very long road and in the interim, we risk those higher tariffs. I think that's the market is worried about.

GIGOT: Tariff man, Dan?

HENNINGER: "I am the tariff man," so said Donald Trump. Yes, he loves tariffs, his grit - his most pain favorite President was William McKinley who was a member of the House Representatives in the 1890s, imposed the McKinley Tariff.

So the Chinese are dealing with a 19th Century economic model in Donald Trump, but the threat is real, 25% tariffs, they have 90 days to work this out and I think the markets and the economy is worried that you could get into a chronic tariff situation going into 2019, which would suppress economic activity.

GIGOT: But I think the Chinese have to understand, maybe beginning to understand that there is a consensus that these Chinese predatory behavior is a problem and it's not going to go away just if Donald Trump goes away in two years briefly, Mary?

O'GRADY: Well that's precisely the point and I think one of the things that will help is that inside China, she's rode to a more aggressive nationalism, it is not popular across the board and there are reformers in China that prefer the way that China was going when it joined the WTO.  They'll also be pressuring him.

GIGOT: All right, when we come back, despite a temporary trade truce with Beijing, the arrest of a Chinese tech executive threatens to throw U.S.- China relations further into turmoil. Gordon Chang on the charges against Huawei's, Meng Wanzhou, next.

The arrest of a Chinese tech company executive threatening to throw U.S.- China relations further into turmoil, Meng Wanzhou, the CFO of the telecom giant, Huawei was arrested last weekend in Canada at the request of the United States for allegedly violating sanctions against Iran.

It's a move likely to escalate tensions between Washington and Beijing as delicate trade negotiations continue. Columnist Gordon Chang is author of the book, "The Coming Collapse of China." Welcome. Good to see you.

GORDON CHANG: Thank you so much.

GIGOT: So let's talk about the arrest. What signal is the United States trying to send do you think?

CHANG: I don't know if it's a signal. First of all, the United States has got to defend and enforce its own laws and we haven't done that for a long time with regard to China, especially with regard to the Iran and North Korea sanctions.

So there's a certain amount of this was coincidence. I don't think that they planned this for Saturday night when Trump and Xi Jinping were meeting in Buenos Aires, but you know, you've got to remember that China poses a multi-faceted challenge to the United States.

We don't have the luxury of dealing with just one problem at a time and so therefore, you know these things are going to happen and they're going to happen because the United States has decided not to be oblivious about a lot of these challenges.

GIGOT: And the Chinese, how are they likely to react to this? Take it in stride as you suggest saying this is just one issue and the broader relationship or will they walk away from the trade talks?

CHANG: I don't think that they'll walk away from the trade talks because the Chinese understand that they need access to the U.S. market. You know, last year China's merchandise trade surplus against the United States was 88.9% of their overall merchandise trade surplus. That's an extraordinary reliance on us. So they've got to talk to us.

Now they're going to be extremely upset and we can see this from official state media and also from the nationalistic "Global Times" which is connected to the Communist Party. They're really upset.

GIGOT: Well, it's interesting because the Huawei executives when we deal with them they say, "Look, we're a private company. We have nothing to do with the government," and that's the same message they try to send to American intelligence officials, foreign intelligence officials because they're trying to sell around the world to telecom networks and companies and 5G all over the world. In your mind, can you separate Huawei from the government?

CHANG: Well, Huawei is technically private. It's not a state-owned enterprise, but the connection and the coordination between Huawei and the Communist Party is close. Also the coordination with the People's Liberation Army, which is part of the Communist Party is close.

You know Huawei grew extraordinarily fast. It's now become the biggest telecom equipment manufacturer in its segment. This didn't happen on its own. It happened for a lot of reasons, but the most important one was because of its connection and support from Beijing.

GIGOT: Do you agree that Western intelligence agencies should block its ability to operate in say U.S. UK and so on?

CHANG: Well, certainly especially on the Five Eyes countries, the intelligence sharing consortium. Four of the Five Eyes have now blocked 5G Huawei equipment. Canada is the only one that has sort of not made a decision yet.

GIGOT: But their intelligence director gave a speech this week warning about penetration by state-sponsored companies into 5G.

CHANG: Well, CSIS their intelligence agency, certainly does not want Huawei in Canada's 5G networks. Remember 5G will connect everything, so if --

GIGOT: Your toaster.

CHANG: Your toaster, so Chinese in Beijing will know when you use your toaster, when you drive your car and all sorts of other things, so this is the Internet of Things. This connects everything.

GIGOT: All right, let's move to the trade negotiations more broadly. How do you feel about the way things have developed so far coming out? Because as I said, I talked in the other block, I talked to the U.S. officials, they said they saw a new seriousness on the part of if Xi himself, but also Liu He and the whole staff team.

CHANG: Yes, I think the Chinese are extremely worried. There's a sense in Beijing that Xi Jinping, the Chinese ruler took on the U.S. prematurely that China certainly does not hold the high cards as a lot of people once were saying.

And there's a political dimension to this. You know Xi Jinping has deinstitutionalized the Communist Party threw all these rules on succession and everything else out the window during his six years.

GIGOT: You mean, he's restored something of a cult of personality.

CHANG: Restored a cult of personality, got rid of the rules in which, you know, President Trump faces an election you know, every four years or an American President does, Xi Jinping now faces an election every day because he has become responsible for everything.

Last year that was great because things were going well for China. He could take all the credit. This year when things are not going so well for Beijing, he gets all the blame. There's nobody else that he can blame because he's taking responsibility and authority from everybody else.

GIGOT: So what you're saying is he has a real incentive, Xi has and the Chinese have to do a deal because if they don't, you're going to start to see and I would argue - this is my point that they would - you start to see businesses move supply chains out of China. That's already happening.

CHANG: It's already happening.

GIGOT: But it is likely to accelerate if there's a real trade breakdown.

CHANG: Yes, and a lot of people were looking at Saturday's dinner to decide whether they should keep their supply chains in China for this year.  Remember big box stores like Walmart make many of their commitments; actually, almost all of their commitments in this first quarter for the year and that means that you know, they'll probably stay because they might think there's a truce.

I don't think though, long term we can have an enduring agreement. We've had so many deals break down with Xi Jinping, it's just not likely that they'll be able to come to a terms that they would be willing to accept and we would be willing to it.

GIGOT: But can you even get them briefly just a short - get a truce here for a couple of years?

CHANG: Yes, we could do that, but it'll break down.

GIGOT: Okay, all right. Thank you, Gordon Chang. Appreciate it. Thanks for coming in.

Still ahead, job growth slows in November, but the U.S. labor market continues to show signs of strength. We'll take a closer look at the numbers and new reports that the Federal Reserve could slow interest rate increases next year.

Job growth slowing somewhat last month with the U.S. economy adding 155,000 jobs in November. Friday's closely watched report from the Labor Department coming amid steep swings on Wall Street, rising recession fears and as Fed officials reportedly consider, a new wait and see approach that could slow the pace of interest rate increases in the new year.

We're back with Dan Henninger, Mary Anastacia O'Grady and James Freeman, so Dan first let me ask you a question on a separate issue. Bill Barr, the President of the United States says he's going nominate the former Attorney General to be his next Attorney General. What do you think?

HENNINGER: I think it's a good choice. He was Attorney General during George H.W. Bush's presidency, started refuting the idea that Donald Trump doesn't like Bush values because Bill Barr represents them -- integrity, sense of public duty. One of the things you've got to understand about Bill Barr is he's a great believer in presidential authority.

De defended President Bush's invasion of Panama at the time, he imagined if Donald Trump did something like that and in the coming year, Donald Trump, I think is going to need an Attorney General who understands presidential authority.

I might add as well that while he was in the Attorney General's office, he had someone working for him named Patrick Cipollone. He is now White House counsel and he has worked for Bill Barr, and I think the fact that the White House counsel now knows the Attorney General is going to be very important for the kind of legal pressure this President is going to come under in the next 14 months.

GIGOT: Fascinating. Okay, James, how worried should we be about slowing economic growth in the roiling markets?

FREEMAN: I'm not too worried, maybe no surprises, but I think --

GIGOT: Mr. Complacent, Mr. Sunshine.

FREEMAN: Well, look, it was a - it was a solid not great jobs report. You could - maybe you would have liked obviously more job creation and there were some revisions from the previous months, but still this year, overall, average hiring better than last year. So wages are up. A lot of good news in there.

But if you're the Fed and you're basically saying we're going to watch the economy closely, this is not an outstanding report. It's a good one, you've got slowing global growth. Based on their policies, I think it's reasonable that they would slow down.

GIGOT: But to average growth and jobs over the last three months, 170,000 - that's down from 200,000 ...

FREEMAN: Yes, not as good as the first half.

GIGOT: ... in the first half and now wages up 3.1%, but still not exactly booming. I mean, I think this is a little cause for concern, Mary.

O'GRADY: Well, Paul I've made a list of things to worry about.

GIGOT: Uh-oh.

HENNINGER: This is great.

O'GRADY: The yin and the yang.

GIGOT: I've got to negotiate between these guys. I may as well --

FREEMAN: She's more pessimistic because I'm only part Irish.

O'GRADY: You have trade which we, you know, we know all the problems in trade that are on the horizon. You have labor shortages in this country and a dysfunctional immigration system. You have the Fed and you have money tightening elsewhere in the world. You have slowing global growth.  You have Brexit. You have the U.S. fiscal deficit. You have --

GIGOT: Slowing China, slowing China.

O'GRADY: You have gridlock in Washington and you have the only thing that the Republicans and the Democrats can agree on which is spending more money on infrastructure.

Now, none of those things are good for business investment and business investment is going to be at the core of whether this economy keeps going.  It's a long in the tooth. I'm not saying that there's anything terrible in the next six months, but the market looks out further than that and I think there are reasons to be able to make this story.

GIGOT: I just want to zero in on one key point, which I think Mary made is business investment and the trade uncertainty impact on business investment. You can see it in all the reports, you hear it from the CEOs and their quarterly earnings statements that trade is causing them to hold back, much as Barack Obama's regulation onslaught caused them to hold back.

HENNINGER: Well, let me turn the tables here, Paul and ask you a question.  You are a Federal Reserve expert, if you are the head of the Federal Reserve, Jerome Powell living in the world Mary has just described, what do you do with interest rates?

GIGOT: I don't - I do not raise interest rates in December. I put it on pause and I say we can do it later and you continue to withdraw the balance sheet and keep moving on that ground, which is its own form of tightening, but you don't raise interest rates because there's too much uncertainty right now.

You can always do it again next year, but wait, we've got the world screaming for dollar. Dollar is very strong. Don't shrink the amount of dollars in the global economy.

O'GRADY: But it's not - sorry --

HENNINGER: Well, the analysis that one reads is that the interest rate is baked in in December and then next year, they may take the foot off the pedal.

GIGOT: That's what I think they'll do, but if I were them, I might - I would really debate very hard whether to stop in December.

O'GRADY: Well, not to get too wonky here, but the - you know, the yield curve is what people are sort of freaking out about because they say that once you get a flat and then an inverted yield curve, it predicts a recession. But you know, it only was really inverted in the five-year because people had been, you know, loading up on the five-year - I'm sorry, shorting the five-year as a way to play the interest rate change.

And now, all of a sudden, they went in the other direction and I think that's why you had the yields go down.

GIGOT: Yes, the yield curve is in my argument, so there's a sign of little inflation and enough uncertainty to raise rates.

All right, still ahead -- to not raise rates. Still ahead, the Senate and the Saudis following a CIA briefing on the murder of Washington Post columnist, Jamal Khashoggi, lawmakers say there's little doubt that the Crown Prince played a role, so how will they respond.

(BEGIN VIDEO CLIP)

MIKE POMPEO, U.S. SECRETARY OF STATE: I do you believe I've read every piece of intelligence that has come in in the last few hours. I think I've read it all. There is no direct reporting connecting the Crown Prince to the order of the murder of Jamal Khashoggi.

(END VIDEO CLIP)

GIGOT: That was Secretary of State, Mike Pompeo last week denying evidence of a direct connection between Saudi Crown, Prince Mohammed bin Salman and the murder of "Washington Post" columnist, Jamal Khashoggi, but after a closed-door briefing, Tuesday by CIA Director. Gina Haspel, lawmakers on both sides of the aisle are pushing back on that assertion teeing up a debate next week over just how Congress should respond to the journalist's killing.

Tennessee senator, Bob Corker was in Tuesday's briefing. He's the chair of the Foreign Relations Committee. Welcome, Senator. Good to see you. So let me ask you before we turn to foreign policy about Bill Barr. The President says he's going to nominate Bill Barr, a former Attorney General to be the next Attorney General. What do you think of that choice?

SEN. BOB CORKER, R-TENN.: Well first it's good to be with you. Look, I don't know much about him. What I do know is it seems he's being received fairly well and seems to have been a professional, but I'll know more about him next week.

GIGOT: Okay, all right, thank you, Senator. So you were in that briefing with Gina Haspel and what do you think? Did Mohammed Bin Salman know about or order the murder of Khashoggi?

CORKER: Paul just as sure as I'm talking to you here right now, he did.  It was the most precise specific presentation I have ever received from intelligence officials and he would be convicted in 30 minutes in front of a jury. There's no question that he ordered it, that he monitored it and that he followed up after the fact in my mind and it could have been that I heard the clip about Pompeo and Mattis. It could have been that that maybe, maybe additional information came in that they had not seen by the time we had the briefing.

But listen, there's just no question. I don't think anybody left the briefing with any doubt about his direct involvement.

GIGOT: Yes, well that's the puzzle then. Why would the administration be saying "no smoking gun" evidence? It's puzzling.

CORKER: Yes it's it and it's a mistake, Paul, because you know Washington well and so what you have now is you have people on both sides of the aisle trying to figure out a way to push back because it's just not true and to say that you know, if you buy enough arms from us and if you lavish praise on me, you can go around killing journalists and it's no problem.

And so you've got - you've got Congress now figuring out a way to push back and as you know, I'd strongly prefer the administration just deal with this in the appropriate way. I think sometimes that legislating is, it's a blunt object and sometimes misses the mark, so anyway, next week, I do think Congress is going to try to address this.

GIGOT: Well, and that and the way you do it is important as you suggest, so the vehicle you've got there is something called Lee Sanders which would trigger the War Powers Resolution which would say in 30 days, you've got to withdraw - the U.S. has to withdraw any troops that are helping the war in the Saudis with the war in Yemen, but for me for example, I think the War Powers Resolution is illegal.

And also wouldn't that be a measure that would undercut the President's ability to conduct foreign policy pretty dramatically?

CORKER: Yes, so there's actually three efforts underway, Paul that is one my guess is that we will move to that, that there's at least 51 votes as you know, it's a simple majority that causes us to move that. I will not support that. I will not support moving to it and then it's my guess is, I will move to make all amendments germane.

I think that will pass and so we'll probably just vote up or down on that.  The actual result of that in my opinion, Paul, is it's going to have zero effect - zero effect on actual policies, but it sets a precedent.

And so many of us want to make sure if you're going to use this, you can only deal with germane issues, but secondly, are just concerned like you are about what this sets for the future. Think about how many countries in Northern Africa we have the same kinds of operations underway, so there's a second effort, it's called Menendez-Young, it's something I hope we will take up in the committee itself, it does not deal with war powers.

I'd like to see some refinement before I could support it, but it will affect policy and then there's a third piece which is just a resolution that hopefully will come before the Senate where we strongly push back on the Crown Prince and strongly condemn his actions as it relates to the journalist. I'm working with Mitch McConnell to come up with something that hopefully can pass overwhelmingly in the Senate.

GIGOT: And that would be a statement of the Senate's concern that we believe that MBS played a role in this and that the United States should do what? What should the U.S. do? What would be the sense of the thing that we do?

CORKER: Yes, so in that particular case, you know, we've already put forth the Magnitsky Act. Senator Menendez and I sent a letter to the President basically now, he has to determine within 120 days that was like 15 or 20 days ago, but he has to determine in 120 days whether the Crown Prince was responsible and then hopefully, there would be some types of repercussions.

So that's a direct issue. You know, the condemnation honestly, Paul, it does not affect policy. It just condemns the action, so the one that does affect policy is Young-Menendez and again I hope I can get some changes there, but that one if it actually pass, which is difficult as you know, we're at the end of the year, but next year ...

GIGOT: Right.

CORKER:  ... but next year is going to come around, the same issue is going to be here, it would affect policy.

GIGOT: We're affected by saying stopping arms sales, how specifically?

CORKER: Yes, right now, the way they have it is a two-year ban on all arms sales, so if we could - so, yes, and let me just say this, Paul, as a practical matter, there's not going to be any arms sales to Saudi Arabia for some time. I mean, you know as chairman of the committee, I can block sales, but so can the Ranking Member Menendez and so - and Engle will do so on the House side, so as a practical matter, there's not going to be any arm sale.

So what I'd like to do is limit it to offensive only, shorter period of time, gives us a time to assess what actions are taking place, still give them the ability to buy those types of weaponry that protect them, okay, you know protect incoming missiles and it does a few other things that that again affect policy.

But that would be a statement that is somewhat measured. Again, as a practicality, there will be no arm sales to Saudi Arabia for some time because there are people that have the ability to block them that will block them not just because of what the journalist -- the killing of the journalist, but also people's concerns about what's happening in Yemen.

So I hope this peace process works that's underway right now. I wish the administration would just come out and strongly condemn. Think about what we did with Turkey. We had a pastor that was in prison and we rightly so to marsh the heck out of Erdogan, they're a NATO ally, why would we not do the same with somewhat of an ally, Saudi Arabia.

GIGOT: All right, Senator, it's going to be fascinating to watch. Thanks for coming on. We'll watch the debate. Appreciate it.

CORKER: Thank you.

GIGOT: When we come back, the global carbon tax revolt. Protests continue in Paris this week even after French President Emmanuel Macron pulls the plug on a planned fuel tax hike. What he and other world leaders are learning from the public reaction to their anti-fossil fuel policies, next.

In a stunning turnaround, French President Emmanuel Macron announced this week that he will abandon plans for a controversial fuel tax. The move comes as widespread and sometimes violent protests continue in France spurred in part by the price increases that were scheduled to take effect on January 1st.

The tax hike was part of the French government's plan to wean French consumers off fossil fuels. So Dan, the thing that is striking to me about this is Emmanuel Macron did not run on higher fuel taxes, yet he thought the need to impose them in the name of climate change and these started with rural protests from people who rely on gasoline to get to work and then go buy groceries.

HENNINGER: Yes, it is an amazing event and I think it really is a blow to the credibility of the, shall we call it the climate movement, not just in France, but everywhere because the press constantly runs these fear- mongering stories about the future of the climate, okay, so Emmanuel Macron actually decided to do something about it. The idea is you have to pay to mitigate climate.

So he imposes a tax on gasoline fuel in France and the French people who drive their cars all the time, we know that fuel is already really expensive in Europe, save themselves wait a minute, we're going to pay higher taxes to what? Prevent hurricanes or the polar ice caps or something like that? This strikes the average person as nuts.

And so that has always been kind of the dilemma at the center of a lot of this climate change proposal when they get to the point where they're proposing economic policies on people, would there ever be push back?  Guess what? There is push back.

GIGOT: And we should say Mary, with the violence, it is unacceptable in these protests and a lot of anarchists and others are taking advantage of this, but this idea of the a revolt against the carbon taxes, we're seeing it in democracies all around the world. You've watched in Canada.

O'GRADY: Right, in Canada, Trudeau was going to put on a tax on 30% of your emissions and he had to walk that back earlier this year because basically what's happened is there's been an investment strike, a capital strike. People are just - the taxes are too high and that was one of the penalties that people didn't want to go to Canada anymore because of that increased in taxes.

GIGOT: But at the provincial level, it's happening, too?

O'GRADY: Right, at the provincial level, I think, it explains a change in management in Ontario recently. There's an expectation that the right party will win in Alberta this year. Sorry in 2019 and also, there - you know, for example in Saskatchewan, they're taking the Federal fuel - this this carbon tax to the courts and saying, "Look, you're not allowed to collect this money. We can collect it provincially."

So one of the problems is that, this isn't as much about the tax itself as it is, I mean, as about fighting carbon as it is about getting more revenues for the government.

GIGOT: And Kim in Washington State, this November there was a referendum, second time in Washington State in recent years that went down to overwhelming defeat to impose a carbon tax. I remember Tony Abbott, former Prime Minister of Australia repealed their carbon tax and yet, you know some of our friends and even in theory, you know, if you think about it from a free-market point of view, a carbon tax would be the most efficient way of trying to actually slow down carbon emissions and reduce the use of carbon fuels, but that seems to be something that the public really isn't buying. Why do you think that is?

STRASSEL: Well, it's because Paul, yes, intellectually from a very wonky point of view, it may be an efficient means of raising revenue, but no one buys that you are actually going to get rid of other taxes if you institute a carbon tax and so they see it as an additional form of taxation on top of what we already have in terms of some tough energy taxes here especially the gasoline tax et cetera. No one wants to go there.

There's also not a belief that the money that would be raised from such a carbon tax would actually be put into any kind of renewable energy or investment strategy for a smarter climate. They know it's going to get redistributed and be a new pot for the Washington spenders to put into their own priorities, so no, they're not buying it and look, I would just point out as you mentioned at the beginning of the show.

Macron imposed this. If you look around the world and what Mary was just talking about, to the extent that a carbon tax has ever been on a ballot or politicians who are making it their top priority have been on a ballot.  It's been voted down. This is just something that voters are not in favor of.

GIGOT: Mary, briefly, there's a disconnect between elites on this. Their obsession with climate change and doing something now and average voters who just don't trust the elites.

O'GRADY: Yes, and average voters knowing that if China doesn't do anything about, you know, global warming --

GIGOT: Or India or Indonesia or Africa --

O'GRDAY: Why should we have to pay? But you know, there's another problem here which is that the elites are I think misreading the economic cost of this so-called global change because if you look at it going out to the end of this century, it's not as high a cost as they make it seem.

GIGOT: We have to take one more break, when we come back hits and misses of the week.

Time now for hits and misses of the week, Kim, first you.

STRASSEL: Paul, a hit to the Republican Senate for confirming Kathy Kraninger, Trump's picked ahead the Consumer Financial Protection Bureau.  Fifty to forty nine. The CFPB has been under acting management by OMB Director Mick Mulvaney. Ms. Kraninger works for him. She shares his view.  This is a rogue agency that needs more transparency and smarter rules for protecting consumers. This of course provoked an all-out rebellion by progressives against her, but the Republicans stood tall. This is going to be good for the economy overall.

GIGOT: James?

FREEMAN: Paul, this is a hit to Florida Governor Rick Scott for suspending and replacing Broward County Elections Supervisor Brenda Snipes, the serial violator of election laws, lost ballots, miscounted ballots, destroyed ballots, deadlines. Amazingly, she's fighting to regain her job, but good for the governor for hanging tough.

GIGOT: Mary?

O'GRADY: Paul, a hit for Japanese Prime Minister Shinzo Abe who is confronting the problem of an aging population and a labor shortage with a new immigration law in Japan. There, the Lower House has passed legislation that will offer unskilled workers or low-skilled workers visas and this is a step in the right direction for Japan.

GIGOT: Dan?

HENNINGER: Paul, this is a hit for the Bush family. This week's funeral - there are many words for them, but one that stands out is graciousness.  They graciously invited President Trump and Melania to the funeral despite the clear rancor between the families. President Trump in turn sent the presidential plane to bring the casket from Houston, spoke well of the Trump's - of the Bushes, excuse me. These are the kind of small gestures that add up to a civilized society and we saw them on display this week in Washington.

GIGOT: All right, thank you, all. And remember if you have your own hit or miss, be sure to tweet it to us @JERonFN. See you. That's it for this week's show. Thanks to my panel. Thanks to all of you for watching. I'm Paul Gigot, hope to see you right here next week.

Content and Programming Copyright 2018 Fox News Network, LLC. ALL RIGHTS RESERVED. Copyright 2018 CQ-Roll Call, Inc. All materials herein are protected by United States copyright law and may not be reproduced, distributed, transmitted, displayed, published or broadcast without the prior written permission of CQ-Roll Call. You may not alter or remove any trademark, copyright or other notice from copies of the content.