After the Trump-Kim Failure

The president was right to walk rather than accept a bad deal, but look out ahead.

President Trump was right to walk away from his summit with Kim Jong-un rather than accept a bad nuclear agreement, but the outcome underscores that he was bamboozled last year at his first summit with Kim. Whatever genius Trump sees in the mirror, “the art of the deal” is not his thing.

At this meeting, Kim apparently sought a full end to sanctions on North Korea in exchange for closing only some nuclear sites. That was not a good deal, and Trump was right to walk rather than accept it.

“Basically they wanted the sanctions lifted in their entirety, but we couldn’t do that,” Trump said, adding: “Sometimes you have to walk.”

President Reagan famously marched out of a 1986 summit in Reykjavik, Iceland, rather than accept an arms control agreement with Russia that he regarded as flawed. A year later the Russians returned with better terms and a deal was made — and we can all hope that something similar will happen this time.

Still, there are significant risks ahead. The most important is that North Korea may return to testing nuclear weapons and ballistic missiles, for that would mark a huge escalation of tensions and renewed concerns about brinkmanship and war.

Unfortunately, North Korea is an otherwise unimportant country that gets attention only when it behaves provocatively. So its leaders have learned that their best leverage is to fire missiles, detonate warheads, or start up nuclear complexes.

While Trump was right to walk in this case, he also seems to have played his hand poorly in the run-up to the summit. In particular, he signaled that he eagerly wanted a deal and that “fantastic success” was likely, all of which probably led Kim to raise demands in the belief that Trump would fold.

With normal presidents, summit deals are largely agreed upon ahead of time. As one veteran diplomat put it, presidents pull rabbits out of hats, after diplomats have worked diligently ahead of time to stuff the rabbits into the hats. But Trump has never had much patience for that meticulous diplomatic process, instead placing excessive faith in breakthroughs arising from personal relationships — and his faith was clearly misplaced this time.

The North Korean side had refused to hash out the summit outcome in advance with the highly regarded U.S. special envoy, Stephen Biegun, presumably because Kim thought that he could outfox Trump in person in Hanoi the way he had in Singapore nine months ago.

The collapse of the latest talks also underscores how misguided Trump was at that earlier meeting. He didn’t understand that Kim uses “denuclearization” to mean something different than the meaning in the United States, and he gave Kim the enormous gift of legitimacy that comes with a summit, without getting anything comparable in return.

The collapse of the latest talks also underscores how misguided Trump was at that earlier meeting. He didn’t understand that Kim uses “denuclearization” to mean something different than the meaning in the United States, and he gave Kim the enormous gift of legitimacy that comes with a summit, without getting anything comparable in return.

It is also distasteful to see Trump praising Kim and referring to him as “my friend” and a “great leader,” and, last year, asserting that Kim had sent him “beautiful letters” and that “we fell in love.” It’s perfectly appropriate to engage with ruthless dictators, but fawning over them is a betrayal of our values.

U.S. Rejects New European Dirty-Money Blacklist

List of 23 jurisdictions also includes Panama and Puerto Rico

The EU list includes Saudi Arabia and Panama, but it also U.S. territories such as the U.S. Virgin Islands and Puerto Rico, placing them alongside the likes of Iran, Syria and North Korea.

Banks in the EU will be required to use increased due diligence on financial operations involving customers and financial institutions from the blacklisted countries.

.. The U.S. Treasury Department said it “has significant concerns about the substance of the list,” saying its development was flawed. It said it didn’t expect U.S financial institutions to take the European Commission’s list into account as they carry out anti-money-laundering compliance.

.. The U.S. Treasury said the European Commission didn’t include sufficiently in-depth reviews, only gave affected jurisdictions a cursory basis for the determination, told the jurisdictions they were going to be included only days before the announcement and didn’t give them meaningful opportunity to challenge their inclusion.

.. Policy makers on both sides of the Atlantic need to acknowledge that nobody is doing enough to combat money laundering, said Clark Gascoigne, the deputy director of the Financial Accountability and Corporate Transparency Coalition, a consortium of research and advocacy groups.

U.S. Can Destroy Huawei

Catch-up is how economists explain the success of China and other fast-growing developing economies. Not having to invent the wheel, the microchip or the theory of continuous improvement is a distinct advantage over having to invent them.

This is not a small part of the Huawei story. Its rise in 32 years to be the world’s largest telecom-equipment manufacturer and the second largest maker of smartphones is a story of catch-up—of learning from the West, but also stealing from the West. Or to put it more politely, Huawei has taken advantage of the fact that Beijing is not interested in enforcing the intellectual-property rights of foreigners under Chinese law.

An early Huawei router design was shown to have been filched from Cisco, right down to copying the typos in the instruction manual. This week a U.S. criminal indictment piggybacking on a successful private lawsuit by T-Mobile shows persuasively that Huawei stole the design of a robot, known as Tappy, for testing the durability of cell phones.

Nobody in his right mind thinks these episodes are exceptions. Nobody even needed these episodes to suspect that Huawei’s spectacular success has not been the product entirely of its own ingenuity and hard work (though these have been considerable). U.S. and other Western companies also vigorously “learn” from each other right up to the limit prescribed by our patent laws. In China, there is no limit. Stealing is regarded as a national development strategy and patriotic duty. The U.S. indictment alleges that Huawei even offered bonuses to employees who successfully purloined a competitor’s trade secrets.

This might seem clever, but it points to a problem for China’s own development—and not only because it antagonizes trade partners. China wants higher-order technology and investment from the West. It won’t come if trade secrets aren’t honored and enforced. China’s own firms cannot develop to their potential, at home or globally, if their own intellectual property isn’t secure even as they are distrusted abroad as agents of Chinese spying.

Which brings us to the growing tranche of U.S. legal actions directed at Huawei. We might prefer that prosecution of its chief financial officer, Meng Wanzhou, now awaiting extradition from Canada, were over something other than violating U.S. sanctions on Iran. But the U.S. is nonetheless positioning itself to destroy China’s shiniest success story, as it almost did ZTE until Donald Trump relented in a last-minute olive branch to Xi Jinping.

If Ms. Meng is extradited and convicted, she can be given a stiff prison sentence. The U.S can impose heavy fines on her company for sanctions-busting as well as for unrelated technology convictions. The long arm of U.S. law can seize Huawei assets and threaten key employees—including founder and CEO Ren Zhengfei—with arrest if they set foot outside China. Washington can turn up the pressure on other nations to exclude Huawei equipment from their networks. Perhaps most damaging, it can stanch Huawei’s access to still-vital U.S. building-block technologies.

In U.S. Trade Representative Robert Lighthizer, Mr. Trump has a general who probably would be happy to command such a war. Mr. Xi’s government might respond by stirring up patriotic froth in China’s media. Beijing might start seizing U.S. businesspeople as hostages, as it already has done Canadian businesspeople in apparent response to the Meng extradition fight. If so, look out below.

The Trump administration tends to exaggerate how much U.S. prosperity and security depend on getting tough over China’s trade practices. Our national strength is overwhelmingly made at home.

On the other hand, if China wants to go down this road, it might as well unfurl a banner declaring itself North Korea writ huge—a country that intends to thumb its nose at international norms, a pirate nation living by blackmail and theft. Six years ago this column was spanked by foreign-policy types for saying a tad too bluntly that stealing was an activity that “unites the private and public selves of Chinese officials.” But it’s true. For the sake of its own development, China needs to start separating business from the state, and holding its companies to some cognizable standard of lawfulness.

So here’s a question: Do you trust both sides to manage this conflict? Washington should be able to mete out technology sanctions, arguably necessary to protect U.S. security and military advantage, without throwing the entire economic relationship out the window. It can uphold our laws and prosecute Huawei for clear violations without trying to bury China’s entire output of exported iPhones, coat hangers and flat-screen TVs in tariffs.

For its part, getting into a full-scale economic war over practices that Beijing knows are indefensible and need to change would be an exceedingly poor decision by China’s maximum leader, Mr. Xi. Unfortunately, poor decisions have been a métier, off and on, of China’s Communist Party over the past 70 years.

We should not kid ourselves about the risks. Not all risks can or should be avoided, however.