If North Korea Talks Are Not Fruitful, ‘I Will Respectfully Leave,’ Trump Says


Still, Mr. Trump conspicuously declined to make their release a precondition of his meeting with Mr. Kim. He also did not demand any new concessions from North Korea beforehand, underscoring how determined he is to make history by convening with the leader of a country he threatened with war a few months ago.

In preparing for the planned event, Mr. Trump’s decision to dispatch his C.I.A. director reflected the president’s trust in and comfort with Mr. Pompeo, as well as how diplomats were sidelined in brokering what could be a landmark encounter.

“Meeting went very smoothly and a good relationship was formed,” Mr. Trump said in an early morning Twitter post before he went golfing with Mr. Abe. “Details of Summit are being worked out now. Denuclearization will be a great thing for World, but also for North Korea!”

Mr. Pompeo is still awaiting confirmation to his new post, and faces a challenging vote in the Senate Foreign Relations Committee, where several Democrats have come out against him. The White House and Republicans seized on Mr. Pompeo’s trip as another reason for the Senate to confirm him, while Democrats said he had misled them by failing to disclose his mission, even in private conversations.

But the visit underlines the confidence that Mr. Trump has developed in Mr. Pompeo, a former Tea Party congressman who has emerged as one of the president’s closest advisers — a stark contrast to Rex W. Tillerson, whom Mr. Trump fired as secretary of state days after he accepted Mr. Kim’s invitation to meet.

It also underlines Mr. Trump’s unorthodox approach to one of the riskiest diplomatic gambits of his presidency. However trusted by the president, Mr. Pompeo is hardly a traditional emissary. He is not yet the nation’s chief diplomat but a lame duck as the nation’s spymaster.

Mr. Pompeo met with Mr. Kim on Easter Sunday, a senior official said, bringing along several aides from the C.I.A. — but nobody from the State Department or the White House.

Some former administration officials expressed surprise that he returned from Pyongyang with no visible concessions, like the release of the three Americans detained in North Korea. Mr. Pompeo raised the issue, another official said, adding that the White House would continue to push for their release.

In 2014, James R. Clapper, then the director of national intelligence, traveled secretly to North Korea to negotiate the release of two Americans, Kenneth Bae and Matthew Todd Miller. Three Korean-Americans — Kim Dong-chul, Kim Sang-duk and Kim Hak-song — are currently being held on charges of espionage and committing hostile acts toward the North Korean state.

The administration also has not agreed on a date for the meeting between Mr. Trump and Mr. Kim, which officials said pointed to problems in settling on a site for the encounter. On Tuesday, Mr. Trump told reporters that the White House was looking at five potential locations.

The White House has begun narrowing the list of options, a senior official said, eliminating sites like Pyongyang and the Demilitarized Zone between North and South Korea, which could pose an optics problem for Mr. Trump. Meeting somewhere in the United States remains a possibility, though that could raise similar issues for Mr. Kim.

Photo

President Trump with Prime Minister Shinzo Abe of Japan on Wednesday at Mar-a-Lago, Fla. The president continued to express optimism about sitting down with the leader of North Korea.

Credit
Doug Mills/The New York Times

The administration is studying several third countries — Singapore and Vietnam, in Asia; Sweden and Switzerland, in Europe — though all are far from North Korea, posing a challenge to Mr. Kim’s fleet of rickety aircraft. Mongolia, which is closer to the North, is a long shot, the official said.

Without a site, however, the White House has been unable to announce a date, though officials are sticking to Mr. Trump’s recent declaration that the meeting will be in late May or early June.

On Tuesday, Mr. Trump added to the mystery surrounding the visit by appearing to confirm that he had been in direct contact with Mr. Kim himself. He later clarified that while the talks were at “the highest levels,” he would “leave it a little bit short of that.”

Mr. Pompeo’s involvement with North Korea predated Mr. Trump’s decision to meet Mr. Kim, several officials said. He has been dealing with North Korean representatives through a channel that runs between the C.I.A. and its North Korean counterpart, the Reconnaissance General Bureau.

He also has been in close touch with the director of South Korea’s National Intelligence Service, Suh Hoon, who American officials said brokered Mr. Kim’s invitation to Mr. Trump.

While a meeting between the leaders would be one of the boldest diplomatic gambles in recent years, it was orchestrated largely by the intelligence services of the three countries.

Officials said Mr. Suh laid the groundwork for Mr. Kim’s invitation in negotiations and a subsequent meeting in Pyongyang with Kim Yong-chol, a powerful general who leads inter-Korean relations and used to run North Korea’s intelligence service.

Mr. Suh was one of two South Korean envoys who visited the White House to brief Mr. Trump on their meeting with Kim Jong-un in Pyongyang — which led to the president’s impromptu decision to accept Mr. Kim’s invitation.

For Mr. Pompeo, who now has an office at the State Department, the choice to use the intelligence channel was mostly a convenience — allowing him to be involved in the planning as he awaited his move to the department.

Still, some officials expressed concern that the C.I.A. had taken the lead in orchestrating a leader-to-leader meeting — work that would normally fall to the State Department. The intelligence officials on the North Korean side, they said, are shadowy figures, not least Kim Yong-chol himself, who is accused of masterminding a torpedo attack that sank a South Korean Navy ship in 2010, killing 46 sailors.

The State Department’s role in North Korea dwindled after Mr. Trump publicly split with Mr. Tillerson over his efforts to open a diplomatic channel to the North, initially to obtain the release of the three Americans but also to set the stage for a broader negotiation.

In October, while Mr. Tillerson was in Beijing, Mr. Trump tweeted, “I told Rex Tillerson, our wonderful Secretary of State, that he is wasting his time trying to negotiate with Little Rocket Man…”

The State Department recently lost its chief North Korea negotiator, Joseph Yun, who retired from the Foreign Service, in part because of his frustration with his agency’s diminished role.

The timing of Mr. Tillerson’s departure, officials said, was not coincidental. Mr. Trump wanted to have Mr. Pompeo in place to oversee an opening to North Korea. But Mr. Pompeo has expressed extremely hawkish views about North Korea, suggesting over the summer that the United States should push for regime change.

“It would be a great thing to denuclearize the peninsula, to get those weapons off of that, but the thing that is most dangerous about it is the character who holds the control over them today,” Mr. Pompeo said at the Aspen Security Forum. “So from the administration’s perspective, the most important thing we can do is separate those two.”

Last week, Mr. Pompeo insisted to the Senate Foreign Relations Committee that he had never advocated such change.

“Just to be clear, my role as a diplomat is to make sure that we never get to a place where we have to confront the difficult situation in Korea that this country has been headed for now for a couple of decades,” he added.

Continue reading the main story

If North Korea Talks Are Not Fruitful, ‘I Will Respectfully Leave,’ Trump Says


Still, Mr. Trump conspicuously declined to make their release a precondition of his meeting with Mr. Kim. He also did not demand any new concessions from North Korea beforehand, underscoring how determined he is to make history by convening with the leader of a country he threatened with war a few months ago.

In preparing for the planned event, Mr. Trump’s decision to dispatch his C.I.A. director reflected the president’s trust in and comfort with Mr. Pompeo, as well as how diplomats were sidelined in brokering what could be a landmark encounter.

“Meeting went very smoothly and a good relationship was formed,” Mr. Trump said in an early morning Twitter post before he went golfing with Mr. Abe. “Details of Summit are being worked out now. Denuclearization will be a great thing for World, but also for North Korea!”

Mr. Pompeo is still awaiting confirmation to his new post, and faces a challenging vote in the Senate Foreign Relations Committee, where several Democrats have come out against him. The White House and Republicans seized on Mr. Pompeo’s trip as another reason for the Senate to confirm him, while Democrats said he had misled them by failing to disclose his mission, even in private conversations.

But the visit underlines the confidence that Mr. Trump has developed in Mr. Pompeo, a former Tea Party congressman who has emerged as one of the president’s closest advisers — a stark contrast to Rex W. Tillerson, whom Mr. Trump fired as secretary of state days after he accepted Mr. Kim’s invitation to meet.

It also underlines Mr. Trump’s unorthodox approach to one of the riskiest diplomatic gambits of his presidency. However trusted by the president, Mr. Pompeo is hardly a traditional emissary. He is not yet the nation’s chief diplomat but a lame duck as the nation’s spymaster.

Mr. Pompeo met with Mr. Kim on Easter Sunday, a senior official said, bringing along several aides from the C.I.A. — but nobody from the State Department or the White House.

Some former administration officials expressed surprise that he returned from Pyongyang with no visible concessions, like the release of the three Americans detained in North Korea. Mr. Pompeo raised the issue, another official said, adding that the White House would continue to push for their release.

In 2014, James R. Clapper, then the director of national intelligence, traveled secretly to North Korea to negotiate the release of two Americans, Kenneth Bae and Matthew Todd Miller. Three Korean-Americans — Kim Dong-chul, Kim Sang-duk and Kim Hak-song — are currently being held on charges of espionage and committing hostile acts toward the North Korean state.

The administration also has not agreed on a date for the meeting between Mr. Trump and Mr. Kim, which officials said pointed to problems in settling on a site for the encounter. On Tuesday, Mr. Trump told reporters that the White House was looking at five potential locations.

The White House has begun narrowing the list of options, a senior official said, eliminating sites like Pyongyang and the Demilitarized Zone between North and South Korea, which could pose an optics problem for Mr. Trump. Meeting somewhere in the United States remains a possibility, though that could raise similar issues for Mr. Kim.

Photo

President Trump with Prime Minister Shinzo Abe of Japan on Wednesday at Mar-a-Lago, Fla. The president continued to express optimism about sitting down with the leader of North Korea.

Credit
Doug Mills/The New York Times

The administration is studying several third countries — Singapore and Vietnam, in Asia; Sweden and Switzerland, in Europe — though all are far from North Korea, posing a challenge to Mr. Kim’s fleet of rickety aircraft. Mongolia, which is closer to the North, is a long shot, the official said.

Without a site, however, the White House has been unable to announce a date, though officials are sticking to Mr. Trump’s recent declaration that the meeting will be in late May or early June.

On Tuesday, Mr. Trump added to the mystery surrounding the visit by appearing to confirm that he had been in direct contact with Mr. Kim himself. He later clarified that while the talks were at “the highest levels,” he would “leave it a little bit short of that.”

Mr. Pompeo’s involvement with North Korea predated Mr. Trump’s decision to meet Mr. Kim, several officials said. He has been dealing with North Korean representatives through a channel that runs between the C.I.A. and its North Korean counterpart, the Reconnaissance General Bureau.

He also has been in close touch with the director of South Korea’s National Intelligence Service, Suh Hoon, who American officials said brokered Mr. Kim’s invitation to Mr. Trump.

While a meeting between the leaders would be one of the boldest diplomatic gambles in recent years, it was orchestrated largely by the intelligence services of the three countries.

Officials said Mr. Suh laid the groundwork for Mr. Kim’s invitation in negotiations and a subsequent meeting in Pyongyang with Kim Yong-chol, a powerful general who leads inter-Korean relations and used to run North Korea’s intelligence service.

Mr. Suh was one of two South Korean envoys who visited the White House to brief Mr. Trump on their meeting with Kim Jong-un in Pyongyang — which led to the president’s impromptu decision to accept Mr. Kim’s invitation.

For Mr. Pompeo, who now has an office at the State Department, the choice to use the intelligence channel was mostly a convenience — allowing him to be involved in the planning as he awaited his move to the department.

Still, some officials expressed concern that the C.I.A. had taken the lead in orchestrating a leader-to-leader meeting — work that would normally fall to the State Department. The intelligence officials on the North Korean side, they said, are shadowy figures, not least Kim Yong-chol himself, who is accused of masterminding a torpedo attack that sank a South Korean Navy ship in 2010, killing 46 sailors.

The State Department’s role in North Korea dwindled after Mr. Trump publicly split with Mr. Tillerson over his efforts to open a diplomatic channel to the North, initially to obtain the release of the three Americans but also to set the stage for a broader negotiation.

In October, while Mr. Tillerson was in Beijing, Mr. Trump tweeted, “I told Rex Tillerson, our wonderful Secretary of State, that he is wasting his time trying to negotiate with Little Rocket Man…”

The State Department recently lost its chief North Korea negotiator, Joseph Yun, who retired from the Foreign Service, in part because of his frustration with his agency’s diminished role.

The timing of Mr. Tillerson’s departure, officials said, was not coincidental. Mr. Trump wanted to have Mr. Pompeo in place to oversee an opening to North Korea. But Mr. Pompeo has expressed extremely hawkish views about North Korea, suggesting over the summer that the United States should push for regime change.

“It would be a great thing to denuclearize the peninsula, to get those weapons off of that, but the thing that is most dangerous about it is the character who holds the control over them today,” Mr. Pompeo said at the Aspen Security Forum. “So from the administration’s perspective, the most important thing we can do is separate those two.”

Last week, Mr. Pompeo insisted to the Senate Foreign Relations Committee that he had never advocated such change.

“Just to be clear, my role as a diplomat is to make sure that we never get to a place where we have to confront the difficult situation in Korea that this country has been headed for now for a couple of decades,” he added.

Continue reading the main story

Japan’s Prime Minister Pins North Korea and Trade Hopes on Trump’s Whims


Mr. Abe hoped to secure Mr. Trump’s commitment on two issues: curtailing the North’s nuclear and ballistic weapons programs, and facilitating the return of Japanese citizens abducted by North Korea in the 1970s and ’80s.

On Wednesday in Tokyo, critics were skeptical that Mr. Trump would give Japan much consideration once he got into a room with Mr. Kim.

“The possibility of the U.S. thinking about Japan is zero,” said Terry Ito, a commentator on Nippon Television, from Tokyo.

There was a sense in Tokyo on Tuesday that Japan has been sidelined as Mr. Trump cultivates relationships elsewhere in Asia. Though sitting next to Mr. Abe at Mar-a-Lago, Mr. Trump spent nearly as much time effusively praising China’s president, Xi Jinping, as “incredibly generous” and “a very special person to me” as he did discussing Japan.

Mr. Trump is “certainly not approaching this summit from the perspective of ‘Japan is one of our most important allies and how do I keep this relationship strong,’” said Mintaro Oba, a former State Department diplomat and now a speechwriter in Washington.

Photo

Shigeo Iizuka, center, the brother of a Japanese citizen abducted by North Korea, has implored Mr. Abe, right, for help with returning such victims. Mr. Abe has asked Mr. Trump to bring up the abductions in an upcoming meeting with Kim Jong-un, North Korea’s leader.

Credit
Pool photo by Toru Hanai

It might also be a sign that Mr. Trump tends to lump countries in the region together. In a tweet posted Tuesday night, Mr. Trump signaled he was no longer interested in rejoining the Trans-Pacific Partnership, a multicountry trade deal strongly supported by Japan.

Mr. Trump wrote: “While Japan and South Korea would like us to go back into TPP, I don’t like the deal for the United States.” But South Korea is not currently a party to the agreement.

Mr. Trump’s reversal on the trade deal, less than a week after he suggested the United States could enter the pact, reinforced the view that he sees Japan’s interests as expendable.

The leaders’ meeting in Florida comes at a time when Mr. Abe needs a political bounce, as domestic scandals have driven approval ratings for his cabinet down as low as 27 percent, according to one poll. Mr. Abe is now even less popular than Mr. Trump.

As a world leader who has consistently maintained a strong personal relationship with Mr. Trump, Mr. Abe arrived at Mar-a-Lago with the burden of high expectations.

“The consequence of Prime Minister Abe looking so effective with President Trump in previous summits,” said Mr. Oba, the speechwriter, “is that he has a higher level from which to fall.”

Mr. Abe, however, managed one small victory: A verbal commitment from Mr. Trump that he would bring up the issue of Japanese citizens abducted by North Korean spies during his meeting with Mr. Kim.

The kidnappings resonate strongly with the Japanese public and Mr. Abe has made it one of his personal priorities to seek the return of the abductees.

Analysts said that Mr. Abe would most likely proclaim Mr. Trump’s commitment as a victory when he returned home, but the strategy could backfire.

“Mr. Abe will probably exaggerate his success on the abduction issue when he comes back to Japan,” said Takashi Kawakami, a national security expert at Takushoku University in Tokyo. “But it’s not enough.”

On Wednesday in Tokyo, Shigeo Iizuka, a brother of Yaeko Taguchi, one of the abducted Japanese citizens, said he wanted concrete results.

Photo

A cargo terminal in Tokyo on Wednesday. Mr. Trump on Tuesday walked back earlier comments about supporting an international trade deal that Japan has joined.

Credit
Kimimasa Mayama/EPA, via Shutterstock

“I want him to get a definite promise to return the Japanese citizens as well as bringing it up at the table,” Mr. Iizuka told reporters about his hopes for Mr. Trump’s meeting with Mr. Kim. “This is the first and last chance of a lifetime, and I don’t want him to miss this chance.”

In addition to the abductees, Japan is also counting on Mr. Trump for security guarantees. One of Tokyo’s fears is that Mr. Trump might agree to a freeze in North Korea’s weapons program that would leave the country with shorter range missiles that could still reach Japan and South Korea.

For now, Japan has been left out of North Korea’s recent charm offensive.

“North Korea is now talking to the South Koreans, talking to the Chinese, and talking to the Americans, but seems to be trying to isolate Japan,” said Narushige Michishita, director of the Security and International Studies Program at the National Graduate Institute for Policy Studies in Tokyo. “So that’s another negative element or factor” for Mr. Abe.

Analysts said Mr. Trump would very likely view a commitment to bring up the abductees with Mr. Kim as a gift to Japan that warranted something in return.

With Wednesday’s talks likely to focus on trade, and Mr. Trump already indicating he was no longer interested in returning to the multilateral TPP, analysts said Mr. Abe might be forced to engage in two-way discussions as South Korea has already done.

“I fear that Japan may be pushed toward getting into talks about a bilateral agreement,” said Jun Saito, a senior research fellow at the Japan Center for Economic Research. “Mr. Abe might think that it’s better to get into some kind of negotiation rather than losing Japan’s status in regional politics.”

Mr. Abe already expended considerable domestic capital to persuade farmers — traditional supporters of his Liberal Democratic Party — to accept more foreign agricultural products as part of the TPP.

Pushing for more concessions from Japan in a bilateral deal with the United States could put Mr. Abe in an even more politically sensitive position.

“Capitulation to Trump here, I would think, would sign his political death warrant,” said Jeffrey Wilson, the head of research at the Perth USAsia Center at the University of Western Australia.

Mr. Abe’s biggest headaches still remain back in Tokyo, where he is fighting off allegations that he helped friends at two educational institutions gain preferential treatment from the government. Several leaks of tampered files and previously missing documents have deepened the scandals. Additional allegations of sexual harassment by a top official in the Ministry of Finance are also tarring the prime minister’s leadership.

In rounds of golf and meetings on Wednesday in Palm Beach, Mr. Abe is likely try to showcase his friendship with Mr. Trump in the hopes that it will remind voters back home that he is still the best man for the job.

“As for his strong leadership in diplomacy, I think people appreciate that,” said Ichiro Fujisaki, a former Japanese ambassador to Washington. “But people also think that no one is above the law.”

Continue reading the main story

DealBook Briefing: Will Trump Keep the World Guessing on Trade?


More from Mark Bergen and Ben Brody of Bloomberg:

Two years ago, Google altered its offerings in a way that makes it more vulnerable to data-sharing scrutiny. Advertisers using its DoubleClick system to target and measure ads could start anonymously combining web-tracking data (from “cookies” that follow users online) with potent Google information including search queries, location history, phone numbers and credit card information. Until then, Google had steadfastly kept that data separate.

Another thought on Google’s weaknesses, from our colleague Mike Isaac:

Photo

Elsewhere in privacy: Facebook has previewed how its privacy policies are changing to comply with European regulations. Those same rules have emboldened the company to resume face-scanning photographs in Europe — if consumers opt in. Eduardo Porter argues that Facebook is creepy, but still potentially good for you.

Photo


Credit
John Taggart for The New York Times

How will the Supreme Court rule in the state sales tax case?

Justices appeared split yesterday over whether U.S. states could force online retailers to collect sales tax somewhere they had no physical presence.

Justice Sonia Sotomayor said that Congress, rather than the Supreme Court, should settle the matter. But Chief Justice John Roberts said “it would be very strange for us to tell Congress it ought to do something in any particular area.”

The stakes: The case in question, South Dakota v. Wayfair, could upend a decades-old status quo in online retail — and bring states some much-needed revenue.

Elsewhere in taxes: Morgan Stanley analysts say they are uncertain whether the Republican tax overhaul will extend the boom in U.S. business. The chairman of the Council of Economic Advisers asserts that the changes will benefit American workers the most. President Trump filed for a six-month extension for preparing his income taxes. And if you think your taxes are complicated, be glad (on one level) that you’re not Meghan Markle.

The political flyaround

• Starbucks will close its more than 8,000 U.S. stores for a day of anti-bias training on May 29, after outrage over the arrest of two African-American men at a Philadelphia store. It’s a positive example for corporate America, Breakingviews says.

• David Hogg, a survivor of the Parkland, Fla. school shooting, called for a boycott of BlackRock and Vanguard because of their holdings in gun makers like Sturm Ruger. (Yahoo Finance)

• How President Trump decided to overrule Nikki Haley on additional sanctions on Russia over Syria. (NYT)

• The C.I.A.’s chief, Mike Pompeo, secretly visited Kim Jong-un a week ago to help prepare for a meeting with Mr. Trump. (WaPo)

• Mitch McConnell said he wouldn’t let a bill meant to protect Robert Mueller go to the Senate floor. (CNN)

• Fox News admitted that it was surprised by Sean Hannity’s having been a client of Michael Cohen, but gave him “full support.” Here’s what Mr. Hannity has said about Mr. Cohen since the April 9 F.B.I. raids on the lawyer’s office and hotel room.

• What Elon Musk (who, granted, can’t run for president) can tell us about future presidential candidates. (WaPo)

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Alexander Nix

Credit
Pedro Nunes/Reuters

Behind Cambridge Analytica’s cryptocurrency plans

Even before it emerged as a target of international scorn, the consulting firm sought to develop a virtual currency and raise money through an initial coin offering, the NYT reports. (The project, which was led by the former C.E.O. Alexander Nix, appears to be on hold.)

More from Nathaniel Popper and Nicholas Confessore of the NYT:

The goal of Cambridge Analytica’s own coin offering? Raise money that would pay for the creation of a system to help people store and sell their online personal data to advertisers, Brittany Kaiser, a former Cambridge Analytica employee, said in an interview. The idea was to protect information from more or less what the firm did when it obtained the personal data of up to 87 million Facebook users.

Extra credit: Cambridge Analytica helped Dragon Coin, a virtual currency for gamblers linked to a notorious Macau gangster whose street name was “Broken Tooth.”

The tech flyaround

• The Supreme Court will not decide whether federal prosecutors can force Microsoft to turn over digital data stored outside the U.S. (NYT)

• Harbor, a blockchain platform for creating securities based on real-world assets, raised $28 million in a round led by Founders Fund. AppOnboard, which helps design interactive demos, has raised $15 million.

• Some 50 of Kickstarter’s 120 staff members have left since its co-founder Perry Chen returned as C.E.O. in July, including seven of his predecessor’s eight executives. (BuzzFeed)

• IBM posted a second consecutive quarter of higher revenue after nearly six years of decline, an indication that Ginni Rometty’s turnaround may be taking hold. (WSJ)

• The cryptocurrency exchange Kraken has stopped trading services for Japanese residents after regulators there stepped up oversight. (WSJ)

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Credit
Thos Robinson/Getty Images For New York Times

Did Goldman’s trading business perform too well?

The Wall Street firm’s first-quarter earnings raise a familiar dilemma. As Goldman moves to diversify its operations beyond high-risk trading — one notable example is its Marcus online bank — the strength of its trading shop in the first quarter threatens to overshadow those efforts, Peter Eavis writes.

Stock and bond markets are unpredictable, even in good times, so the helpful trading conditions this quarter may not last. What can Goldman’s senior executives offer to persuade investors that the bank far more than a trading house? More explanations, perhaps — and time.

In tax-related news: The U.S.’s four biggest banks benefited from the Republican tax cuts — to the tune of $2.5 billion.

Photo

Bill Ackman, left, and Carl Icahn

Credit
Hiroko Masuike/The New York Times, Heidi Gutman/CNBC

The deals flyaround

• Bill Ackman said that Newell Brands had “made a deal with the devil,” after it agreed terms with Carl Icahn to avoid a proxy fight with Starboard Value. Meanwhile, Mr. Icahn is said to have taken a stake in VMware.

• Toys “R” Us rejected a bid for some of its U.S. and Canadian stores by the C.E.O. of MGA Entertainment. (FT)

• G.E. is said to be working on selling its industrial gas engine business for more than $3 billion. (Bloomberg)

• Martin Sorrell’s departure from WPP will make it harder for creative entrepreneurs to sell out and get rich, John Gapper writes. (FT)

• Steven Cohen has backed a start-up that defends stock-pickers (like him) from high-frequency traders. (WSJ)

• How the funded equity collar, a complex financial product, has grown in popularity with acquisitive groups like SoftBank and HNA Group. (FT)

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The bank, not the trader.

Credit
Mike Segar/Reuters

Revolving door

• Morgan Stanley — well, Morgan Adam Stanley — has left Morgan Stanley. (Bloomberg)

Mignon Clyburn, an outspoken longtime Democratic commissioner on the F.C.C., will step down. (Axios)

• Two more Nike executives, Vikrant Singh and Daniel Tawiah, have been forced out as it overhauls its management ranks after a workplace misconduct review. (WSJ)

Photo


Credit
Matt Edge for The New York Times

Quote of the day

“I’m proud of what we achieved at Yahoo. That said, we had a quickly decaying legacy business. All we really managed to do was offset the declines.”

— Marissa Mayer, in the latest Corner Office column

The speed read

• Merchandise, a traditional way to express fandom, has been amped up for the social media age. (NYT)

• The chairman of the state-controlled China Huarong Asset Management is facing a graft investigation. (Bloomberg)

• KPMG South Africa is flying in troubleshooters and hurriedly meeting with clients after becoming embroiled in three scandals. (Bloomberg)

• Elaine Wynn, the largest shareholder in Wynn Resorts, has demanded that the company restructure its board and improve oversight while regulators investigate how it handled misconduct allegations against Steve Wynn, its ex-C.E.O. and her ex-husband. (WSJ)

We’d love your feedback. Please email thoughts and suggestions to bizday@nytimes.com.

Continue reading the main story

As Scandal-Tarred Abe Meets Trump, ‘the Situation Is Getting Dangerous’


But over the last few weeks, leaks of tampered files and previously missing documents are raising sharper questions about whether Mr. Abe helped friends at two educational institutions gain preferential treatment from the government. Mr. Abe has insisted he was not involved in either case and has suggested that bureaucrats may have acted independently.

The drip-drip of revelations has poked holes in Mr. Abe’s credibility as he prepares to meet Mr. Trump, who is himself consumed by his own scandals.

“There has been a lot of new evidence that has come to light that there has been some kind of cover-up,” Kristi Govella, assistant professor of Asian studies at the University of Hawaii at Manoa, said of the inquiry surrounding Mr. Abe. “As time goes on, the disjuncture between what he’s saying and the facts that are coming to light with the scandals just really increase public distrust and feelings that his leadership is no longer what the country needs.”

Until now Mr. Abe has proved relatively invincible in the face of calls by opposition parties to explain himself. Last spring, the scandals embroiled the prime minister in multiple rounds of questioning in Parliament, but the public grew weary of the arcane details of the cases, while both the opposition and the news media failed to produce definitive evidence that Mr. Abe had exerted improper influence.

But last month, the Finance Ministry said an internal investigation found that bureaucrats had tampered with official documents related to the sale of public land to an ultraconservative education group, known as Moritomo Gakuen, at a steeply discounted price. Mr. Abe’s wife, Akie, served as a onetime honorary principal of a planned elementary school that Moritomo wanted to build on the disputed land.

In one of the most damaging findings, the ministry said that officials had scrubbed Mrs. Abe’s name and alleged remarks encouraging the deal from the documents when they were first submitted to Parliament, known in Japan as the Diet. Then this month Mitsuru Ota, a senior official at the Finance Ministry, told Parliament that a bureaucrat had urged a lawyer for Moritomo to lie about how much it would cost to remove garbage from the public land in order to justify the sale at a discounted price.

Photo

Over the weekend, thousands of protesters gathered in front of Parliament calling for Mr. Abe to step down, while polls emerged showing that approval ratings for his cabinet had dropped to 37 percent.

Credit
Kazuhiro Nogi/Agence France-Presse — Getty Images

Last week, the newspaper The Asahi Shimbun reported the existence of a memo in a separate scandal showing that Mr. Abe had talked over a meal to a friend seeking to set up a veterinary school in a special economic zone in southwestern Japan. The memo also suggested that a secretary for Mr. Abe had helped the friend set up the veterinary school.

None of the leaks have yet proven Mr. Abe’s involvement.

“There’s still nothing to say that Abe ordered the cover-up” or pushed for his friend’s veterinary school deal, said Tobias Harris, a Japan analyst at Teneo Intelligence, a political risk consultancy based in New York. “But between the Finance Ministry falsifying documents submitted to the Diet and the bureaucracy making up documents, those are things that are not just going to be accepted passively by the public.”

Mr. Abe “is running out of time, and there doesn’t really seem to be a way out of this,” Mr. Harris said.

For the five years that Mr. Abe has been in power, he has benefited from a weak opposition and public weariness over the revolving door at the prime minister’s office that preceded his election in 2012. And as Japan has faced increasing threats from China and North Korea, he has been able to persuade voters that he is the best leader to keep Japan secure. The economy has been gradually improving, too.

With the scandals gaining traction, however, that formula is weakening. “For the last five years we have had some consensus that Japan needs a strong leader and we have to sustain that strong leader,” said Ryo Sahashi, a professor of international politics at Kanagawa University. “But I think that consensus is now eroded.”

If Mr. Abe is able to hold on to power, it may be public fatigue that helps him. Norimasa Araki, 76, a retired trading company employee who was having lunch near Shimbashi Station in central Tokyo on Monday, said that the scandals were “not worth paying attention to.”

“The problems are trivial,” he added.

Still, there is no question that Mr. Abe has been politically weakened even if he secures a third term as leader of the Liberal Democratic Party in September.

Mr. Sahashi said it would be much more difficult for Mr. Abe to push through some of his most cherished agendas, including revising the country’s pacifist Constitution.

As Mr. Abe flies to Florida for his sixth meeting with Mr. Trump since the American election, he will be looking to make sure Japan’s security is not inadvertently compromised in any Trump-Kim discussions.

Mr. Abe is also likely to urge Mr. Trump to rejoin the Trans-Pacific Partnership, the regional trade deal that Mr. Trump pulled out of during his first week in office and last week said he would reconsider.

“A big handshake with a U.S. president about trade liberalization is a chance for Prime Minister Abe to reclaim his ground as a reformer to the Japanese public,” said Takuji Okubo, managing director and chief economist at Japan Macro Advisors. “It is a good opportunity for Prime Minister Abe to show the public that he is a strong leader in foreign policy.”

Even if he can claim some kind of victory in his meeting with Mr. Trump, it is unclear whether it will help him. “Even now the vultures are starting to circle,” Ms. Govella said. “People are trying to figure out what comes next after Abe.”

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The Week Ahead: AT&T and Time Warner Chiefs to Testify, and New China Tariffs Brew


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Randall Stephenson, chief executive of AT&T, left, and Jeffrey Bewkes, chief executive of Time Warner, in 2016. Both men are expected to testify in support of the proposed merger of their two companies, which has been challenged by the Justice Department.

Credit
Patrick T. Fallon/Bloomberg

Here’s what to expect in the week ahead:

CABLE TELEVISION

AT&T and Time Warner C.E.O.s will take the stand.

As the Justice Department’s suit to block AT&T’s merger with Time Warner enters its fifth week, the top executives of both companies will take the stand in federal court. Jeff Bewkes, the chief executive of Time Warner, will go first, followed by Randall Stephenson, the chief executive of AT&T. They are both expected to testify early in the week. The executives will vigorously defend the $85 billion merger, which they say will create a stronger competitor to ascendant streaming video services. The Justice Department is expected to pose tough questions to the executives on how the combined companies could try to raise prices on rival cable and satellite firms — increases that would trickle down to consumers. Cecilia Kang

FINANCE

The I.M.F. and the World Bank discuss the economy.

World leaders will travel to Washington, D.C., for the spring meetings of the International Monetary Fund and the World Bank, which run from Monday through Sunday. The organizations are likely to repeat their message of recent months, cautioning governments to make tough reforms to increase their economic productivity now, while global growth remains strong. They have also urged countries to avoid trade protectionism. Ana Swanson

ECONOMY

Bad weather may have cooled sales in March.

The Census Bureau is scheduled to release data on Monday on retail sales in March, providing another marker of the economy’s health and stability. Cold weather across much of the country may have led to a decline in discretionary shopping in March. Sales fell slightly in February, a typically quiet time for shoppers after the holiday rush. Michael Corkery

BANKING

More big banks will report first-quarter earnings.

Bank earnings reports continue next week, with Bank of America reporting first quarter results on Monday, followed by Goldman Sachs on Tuesday and Morgan Stanley on Wednesday. Each could see a boost from recent stock market volatility, but a breakout performance on loan or deposit growth would be a surprise. Emily Flitter

RETAIL

High court hears arguments on taxing online retailers.

Internet retailers will face a reckoning at the Supreme Court on Tuesday, when the justices hear arguments about whether to reconsider a 1992 ruling that helped spur the rise of online shopping. That decision barred states from forcing companies to collect sales taxes if they do not have a local physical presence. Some justices have signaled that they are ready to overrule the decision, which costs states billions in tax revenues and puts brick-and-mortar stores at a competitive disadvantage. Adam Liptak

TRADE

President Trump and Prime Minister Abe meet at Mar-a-Lago.

President Trump will host Prime Minister Shinzo Abe of Japan for two days at Mr. Trump’s Florida estate starting Tuesday. While Mr. Abe has spoken with Mr. Trump more than any other foreign leader, the president’s decision not to exclude Japan from tariffs on steel and aluminum has strained their relationship. Both American and Japanese officials expect Mr. Abe to confront the president on trade, which may include a conversation about Mr. Trump’s recent announcement that he would consider rejoining the Trans-Pacific Partnership. Also on the table are Mr. Trump’s plans to meet with North Korea’s leader, Kim Jong-un, a decision that stunned Mr. Abe. Will Dudding

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Trump Wants Back Into the TPP. Not So Fast, Say Members.


“We’ve got a deal” already, said Steven Ciobo, Australia’s trade minister, who added, “I can’t see that all being thrown open to appease the United States.”

[Read about President Trump’s reversal on the Trans-Pacific Partnership, which came at a gathering of politicians from farm states that stand to lose from any trade war with China.]

An early test of the potential for the United States to rejoin could come as soon as next week, when Shinzo Abe, Japan’s prime minister and an ardent champion of the pact, is to meet with Mr. Trump at his Mar-a-Lago resort in Palm Beach, Fla.

Mr. Trump’s renewed interest in the pact depends on whether the United States could strike a better deal than President Barack Obama did, Mr. Trump said in a Thursday night tweet. Still, negotiations with a group of longtime trading partners could hold appeal at a time of increasing tensions with China.

Mr. Trump faces a growing domestic backlash from corporations, farmers and others over fears that he is igniting a trade war with China, the United States’ largest single trading partner. Mr. Trump has warned that he could levy tariffs on $150 billion in Chinese goods, prompting Beijing to threaten retaliatory measures aimed at American soybeans, airplanes and other products.

Negotiating a new pact could take years. Still, rekindling negotiations could make it hard for China to play off the United States against its allies by promising to shift business from one to another if a trade war breaks out. It could be a way to assuage American farmers and businesses hurt by Chinese tariffs by assuring robust markets for American products in countries that signed onto the deal, like Japan, Australia and South Korea. It would give the pact a great deal more heft and help position it as an economic counterweight to China, which increasingly dominates the Asia-Pacific region.

More broadly, it signals to the region that the United States is not giving up on trade, despite Mr. Trump’s sometimes harsh words. Even as officials in other countries expressed skepticism on Friday, they said they would like to hear what Washington has to offer. “Japan would like to listen to the U.S.’s view,” said Mr. Suga, the Japanese official.

What Is TPP? Behind the Trade Deal That Died

On his first full workday in office, President Trump delivered on a campaign promise by abandoning the enormous trade deal that had became a flashpoint in American politics.


The barriers to a new pact are considerable. Many current members of the pact feel they already gave considerable ground to the United States to strike the original deal, particularly in sensitive areas like protections for pharmaceutical companies.

For its part, the Trump administration worries that the partnership will become a zero-tariff backdoor for Chinese goods into the American market. It worries that companies that have moved much of their supply chains to China could make components there, ship them to a member of the T.P.P. for assembly, then sell them in the United States tariff-free. It wants to toughen requirements for how much of the product is made within the T.P.P. country, which could make the goods less competitive.

Their worries focus largely on Vietnam, a member of the current version of the T.P.P. It has a large population, and a few big American companies, like Intel, have already invested heavily in setting up factories there that make products practically from scratch. But many other companies that are exporting goods from Vietnam rely heavily on imports from China. Vietnam’s huge garment industry, for example, relies greatly on fabric and accessories imported from China, according to garment manufacturing executives.

Vietnamese officials did not respond to requests for comment on Friday. Frederick Burke, managing partner for Vietnam at the American law firm Baker McKenzie, said that the Vietnamese government is “very aware of and focused on the issue of circumvention” in trade.

Renegotiating the Trans-Pacific Partnership, or TPP, may not be quick. Mr. Trump’s trade negotiators already have their hands full this spring trying to complete changes to the North American Free Trade Agreement. They need to decide whether to extend temporary exemptions from the president’s new tariffs on imported steel and aluminum. Above all, they are locked in a series of increasingly acrimonious trade spats with China.

China is making its own outreach efforts in the meantime. Wang Yi, its foreign minister, will travel to Tokyo on Sunday. China has played up free trade talks with Japan and with South Korea, which is not a member of the Trans-Pacific Partnership.

Sheila A. Smith, a Japan expert at the Council on Foreign Relations in Washington, said the Trump administration may have realized that it does not have the leverage it thought to renegotiate a new trade deal with Japan, and that embracing the regional pact may be the best fallback.

The Trump administration “could walk right back in with the exact same deal from last year that they walked out of, and claim victory,” said Ms. Smith, who noted that the government of Mr. Abe “has been continuously and quietly encouraging the U.S. administration to take another look” at the pact.

One lingering question would be how China would react. The pact’s rules were designed in part to challenge China by encouraging members to loosen state support of their economies and relax trade rules — steps Beijing would have to take if it hoped to someday join the pact and enjoy its lower trade barriers.

China is not likely to be troubled by a United States move to join the Trans-Pacific Partnership as long as the Trump administration is doing so for strictly trade reasons, said He Weiwen, a former Commerce Ministry official and trade specialist who is now a senior fellow at the influential Center for China and Globalization in Beijing.

But the Chinese government is likely to be dismayed if the United States is reconsidering it as part of any revival of the Obama administration’s geopolitical pivot to Asia, or as part of any attempt to isolate China, Mr. He cautioned.

“That’s what we should be careful about,” he said.

Some current members of the pact greeted Mr. Trump’s comments on Thursday warmly. A spokeswoman for Singapore’s Ministry of Trade and Industry said it welcomed the American interest. “The TPP was designed to be an inclusive agreement, which is open to like-minded countries willing and able to meet its high standards,” the spokeswoman said.

Still, even American allies suggest a long road ahead if Mr. Trump moves forward.

“If the United States genuinely did wish to re-enter, that would trigger another process of engagement and negotiation,” Jacinda Ardern, the prime minister of New Zealand, said on television, adding that she still planned to go forward with the deal as-is. “It’s not just a matter of slotting into an existing deal.”

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Misreading Trump: Ally Japan Is Spurned on Tariff Exemptions


To be sure, Mr. Abe is not the first American ally to be so spurned. Theresa May of Britain, Justin Trudeau of Canada and Angela Merkel of Germany have all had turns at being Mr. Trump’s slighted friend.

Japan could yet win an exemption from the new tariffs. Mr. Trump’s announcement offered a path for countries left off the initial list to “discuss with the United States alternative ways to address the threatened impairment of the national security caused by imports of steel articles.” This week, Japan’s trade minister, Hiroshige Seko, told reporters there was a “high chance” that some of its steel and aluminum products would be exempted.

But for anyone who has been paying attention, there have been hints all along that in matters of trade, Tokyo should regard Mr. Trump as much “frenemy” as friend.

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Share prices dropped on the Tokyo Stock Exchange on Friday in response to revived trade war fears.

Credit
Kazuhiro Nogi/Agence France-Presse — Getty Images

During the presidential campaign, he seemed to harbor three-decades-old perceptions of Japan, chastising it for “crushing” the United States in trade, invoking the specter of the 1980s and the height of the trade wars between the two countries. After he was elected, he threatened to impose a “big border tax” on Toyota if it built a new auto plant in Mexico.

In niggling comments during a visit to Tokyo last fall, Mr. Trump told Japanese executives to “try building your cars in the United States instead of shipping them over,” ignoring the fact that Japanese carmakers build nearly four million vehicles in plants in the United States annually, more than twice the number the industry ships from Japan.

On Friday, Mr. Seko, the trade minister, said it was “extremely regrettable” Japan had not immediately been exempted from the steel and aluminum tariffs.

Still, analysts said Japanese officials probably realized it was only a matter of time before Mr. Trump took action on trade.

“They knew that this was a president who had pretty well-established views when it came to how he thought about Japan and the economic relationship with the U.S.,” said Tobias Harris, a vice president and Japan analyst at Teneo Intelligence, a political risk consultancy based in New York.

What’s more, tensions between Japan and the United States are hardly unique to Mr. Trump’s administration.

“If you look back far enough, periods of friction amidst close security cooperation goes back to the early 1970s and is more the rule than the exception,” Mr. Harris said. “I just don’t believe that official Japan convinced themselves that because of the rapport between the two leaders, that they were going to escape scrutiny.”

Analysts said Mr. Trump had left Japan off the exemption list as a negotiating tactic to try to force it into bilateral free-trade talks.

“He wants something like some concessions from Japan regarding the auto market or maybe agriculture,” said Shujiro Urata, dean and professor in the Graduate School of Asia-Pacific Studies at Waseda University in Tokyo. “So in order to get these concessions, this could be a very effective strategy.”

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A Toyota display at the North American International Auto Show in Detroit in January. Mr. Trump’s criticism of Japanese carmakers has ignored the fact they build millions of vehicles in the United States each year.

Credit
Carlos Osorio/Associated Press

When announcing $60 billion in tariffs against China on Thursday, Mr. Trump directed a sugarcoated barb against Japan and Mr. Abe.

“I’ll talk to Prime Minister Abe of Japan and others — great guy, friend of mine — and there will be a little smile on their face,” Mr. Trump said. “And the smile is, ‘I can’t believe we’ve been able to take advantage of the United States for so long.’ So those days are over.”

Analysts said that Mr. Trump was clearly playing to his domestic audience.

“He has to promote this to his supporters in the United States,” said Kazuhiro Maeshima, professor of politics at Sophia University. “In the history between Japan and the United States over the past 30 years, Japan has been seen as an archenemy in the trade wars, so the voters’ image of Japan is bad. The reality is that China dominates the trade deficit, but the reality and image are different.”

In any case, the tariffs are unlikely to hurt Japan’s economy that much. The country’s steel exports to the United States represent just 5 percent of its total steel exports, and it produces very little aluminum.

“The real serious problem for the world is China’s excessive production,” said Masahiko Hosokawa, a professor at Chubu University and a former director of the American division of Japan’s Trade Ministry.

“Unless the problem of China’s excessive steel production is resolved, the products will only flood into Asian markets if the U.S. stops importing them,” Mr. Hosokawa said. “The products that are supposed to go to the U.S. will flood the Asian market and steel prices will continue to decline.”

Mr. Trump’s actions feed concern in Asia about Chinese dominance. Because he is “unpredictable and kind of capricious,” Mr. Urata said, more countries will perceive the United States as “a very difficult country to work with that we cannot trust and rely on,” leaving a void that China will increasingly fill.

In the immediate term, Japan’s hand is weakened by the fact that Mr. Abe is embroiled in a scandal involving allegations that he influenced a sweetheart land deal for a crony.

That will make it more difficult for Mr. Abe to negotiate with Mr. Trump from a position of strength, or to persuade Japanese businesses to consider any trade concessions. “Mr. Abe’s power to persuade businesses and to talk with the U.S. is much weaker than it was even two months ago,” Mr. Maeshima said.

Then again, Mr. Trump could reverse course at any moment.

Under the tariff laws, the United States “could exempt Japan tomorrow, or they could decide ‘no, no, no, Europe and Canada, we’re actually going to apply this law to you,’” said Chad Bown, a senior fellow at the Peterson Institute for International Economics in Washington. “It gives tremendous discretion to the president to do whatever he wants.”

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