September 19, 2019

Van Hollen Talks with CNBC’s Joe Kernen on Trade, Huawei, and the 8-K Trading Gap

Today, U.S. Senator Chris Van Hollen (D-Md.) spoke to CNBC’s Joe Kernen on trade, Huawei and protecting U.S. technology from China, and eliminating unfair corporate stock sales. Van Hollen and Kernen discussed two pieces of legislation the Senator is working on – 8-K Trading Gap Act and the Holding Foreign Companies Accountable Act. The Senator’s 8-K Trading Gap Act, which is being marked-up in the House Financial Services Committee today, would prevent executives and other corporate insiders from profiting off the gap between the occurrence of a significant event, such as bankruptcy or an acquisition, and its legally mandated disclosure to the Securities and Exchange Commission. The Holding Foreign Companies Accountable Act would address a long-standing issue with regard to China’s non-compliance with U.S. financial regulators by requiring foreign companies registered in the United States to meet Public Accounting Oversight Board standards.

Video of the Senator’s exchange is available here and a full transcript is below.

JOE KERNEN, CNBC: Joining us now for the view from the Senate, Maryland Senator Chris Van Hollen. Senator, we'll get to the bill that you recently wrote in just a minute. Let’s just start with this though, it's hard to figure out – the different sides of the aisle get could kind of hazy on trade. We’ve got Senator Schumer, you know, telling the President to stay tough. We’ve got others that don't like the tariffs or the trade war with China at all. Do you think something good could come out of this in the end? Was it the right thing to do?

On Huawei:

SENATOR CHRIS VAN HOLLEN: Well, look, I hope these talks in Washington go well. But our trade policy has been total chaos under this Administration. There are definitely some legitimate issues. For example, China has been stealing our technology. They've been essentially strong-arming U.S. companies to turn over sensitive technology. So, what we should be doing is working with our allies, our European allies especially, in a coordinated way. I support the effort to put Huawei on the control list. In fact… Senator Cotton and I are going to have a bipartisan amendment instructing the conferees, the people part of the National Defense Authorization bill, to make sure that we don't take them off without some kind of congressional review. On the other hand, I would say that the tariff war is hurting American consumers, American farmers, and American businesses, and that is the wrong way to focus. We should be focused on these national security technology issues.

KERNEN: We've worked with the allies for years. I don't know how long – I don't know when you would date the deleterious effects of dealing with China, with some of their tactics. Some people, it goes back 25, 30 years, since the WTO. So, we haven't seen a lot of progress, and everybody talks about dealing with our allies. Let me just ask you, if the method works – and if the tariffs that were put on eventually end up with an agreement where intellectual property is not stolen; where some of these goals are effective – would you then say it was the right move to have done the tariffs? Or under no circumstances would you ever concede that actually this was the right thing to do? Humor me and let’s say it works out – would you finally say something good about Trump?

On trade:

VAN HOLLEN: Look, if China accepted all the conditions the United States has demanded -- and especially with respect to ending the theft of our technology; setting a whole different set of rules for foreign corporations compared to the Chinese enterprises – which you know many of them are government-owned enterprises – that would of course require China to have a major shake-up in their approach on lots of these issues. Yes. And as I just told you, I agree with what this Administration has done with respect to Huawei. I thought that was the right move. In fact, what I worry about, is that they will trade off national security issues for concessions on trade. That is a very dangerous game to play, very dangerous.

KERNEN: Right. Although in the real world, we know how some of this stuff works. My only point was that the default position for everyone on your side – or people that oppose what Trump is doing – is that we need to work with our allies. All of them -- we've done nothing in 25 years – and the default position to just knee-jerk and come out with we need to work with our allies -- no one believes that's a viable. Nothing happened, it didn't work. Finally, something is being done.

VAN HOLLEN: Actually, that's not the case. We worked with a lot of our allies in the East Asia area to try to form trade agreements.

KERNEN: But we haven't gotten it -- it's been a long time coming.

VAN HOLLEN: So do you really think it's a good strategy – yeah but this Administration did the opposite. 

KERNEN: Well, I don’t know.

VAN HOLLEN: You think it's a good idea to put tariffs on Canada and claim that's a national security objective?

KERNEN: Well, we're not talking about Canada.

VAN HOLLEN: No, we are. We're talking about -- we are talking about our allies.

KERNEN: We are talking about China.

VAN HOLLEN: I know, but we're talking about working with our allies to counter China and putting tariffs on Canada and the Europeans doesn't make for a good –

KERNEN: Fair point. Maybe not. We weren't talking about China and those others. We were just talking about whether it's a good idea to try to hold China accountable for a lot of the egregious trade behaviors.

VAN HOLLEN:  Of course it is. Of course it is.


VAN HOLLEN:  And we're not an island. So the best way to hold China accountable is to have a much bigger bloc – the United States and the E.U. – in putting pressure on China. Instead we're fighting with the E.U. and China.

KERNEN: The E.U. has got some issues. They haven't always treated us as fairly either. What about the 8-K trading gap bill you introduced? This – there seems like there is a lot going on in the world. This probably makes sense, but what put it on your radar screen? And what's it in response to? A lot of CEO’s have been taking advantage of the ability to sell before bad news or something?

On the 8-K Trading Gap and De-listing Chinese Companies:

VAN HOLLEN: Well, it's been pretty well documented that some CEO’s, some executives, are taking advantage of insider trading. Jay Clayton, who you're going to have on later, said that doing this is sort of basic corporate hygiene. Under our rules right now, if a company has a material change that can affect the stock price, they file an 8-K. But there is a four-day period that lapses between the time the company makes an official determination that they're going to file an 8-K and the actual public disclosure of the 8-K. And we're simply saying when you’ve got that kind of inside information, you should not be trading on it. This is really a no-brainer. I think it does have bipartisan support. And I'm hoping we will move forward on it. I'll tell you another thing that seems to be common-sense, and this relates to China. You know, Chinese companies on American exchanges are the only companies in the world who don't have to comply with our accounting procedures. We've talked about that before. So there are some things that we need to do to sort of clean up and tighten these rules to make sure we're fair to American investors, retail investors.

KERNEN: We had that discussion earlier, Senator.

VAN HOLLEN: That’s right.

KERNEN: In fact, Jay Clayton is here. And I think, we may get some color on that -- on the Chinese companies not being subjected to the same requirements. So we appreciate your time.

VAN HOLLEN: Good to be here.

KERNEN: I'm still getting used to – you used to be a scrapper in the House. And I’d get used to that, and now maybe I need to be a little bit -- we have to treat these Senators –

BECKY QUICK, CNBC: More genteel?

KERNEN: More genteel.

VAN HOLLEN: I'm happy to be scrappy here.

KERNEN: It's like the House of Lords instead of House of Commons. Isn’t it sort of similar, I think?

VAN HOLLEN: It's good to be with you whether it’s the House or the Senate.

KERNEN: It's good to be with you.