Is the global maritime order breaking down?

0:00Good morning from the Financial Times. Today is Tuesday, September 8th, and this is your FT News Briefing. The rules governing global shipping are starting to unravel, according to a group of maritime nations. Huawei goes on trial for corporate racketeering. This is a case that will have potentially huge implications for the US-China relationship. The corporate mergers are set to become easier in the European Union, and bankers for anthropic and open AI are lobbying credit rating agencies as they chase cheaper borrowing costs. I'm Josh Gabbard-Wayon, and here's the news you need to start your day. More than a dozen of the world's largest maritime nations have warned that the rules of global shipping are collapsing. The tax on ships in the Strait of Hormuz and the rise of shadow fleets that operate beyond western oversight are threatening the guidelines to keep global trade flowing, according to

1:04the Consultive Ship and Group, an association of 18 nations including the UK, Greece, Singapore, and Japan. A representative said that international trade was in the midst of a structural shift. This is the first time in its six-year history that the association has made a public intervention. This week, Chinese tech company Huawei is facing what could turn out to be one of the largest and most consequential US corporate criminal trials in recent years. Prosecutors are alleging that Huawei operated as a racketeering enterprise and stole intellectual property to get ahead of its competitors. The company makes everything from telecoms equipment to phones to AI chipsets, and the case could have big implications for US-China relations. You need to talk with me about it. Is the FT's K-Wiggins? Hey, K. Hi. Okay, K, so what makes this case so significant? Yeah, so this case has been in the works for a very long time and is finally coming to trial

2:08this week. It's significant in a lot of ways. It's significant as a massive department of justice, US prosecution of one of the most high-profile and important companies in China. This is a case that will have potentially huge implications for the US-China relationship because Huawei is a very important national champion in China. And what exactly are prosecutors arguing here? So they're basically outlining a pattern of alleged wrongdoing. For example, they say that a Huawei employee stole the arm of a robot from a competitor's lab by surreptitiously putting the robot's arm in a laptop bag. There's also some different category of stuff, which is about the way that the company spoke to bankers about its business in Iran, and saying that they allegedly misled banks about the way that they were doing business in Iran, which obviously was subject to US sanctions.

3:09How unusual is it to have a case that spans so many different types of corporate wrongdoing? Yeah, and that's what's interesting about this. So the prosecutors are trying to say that this various different types of wrongdoing are mounted to or were parts of a kind of racketeering enterprise. And one of the things that I would expect Huawei to argue is that they don't knit together like this, right? This is not one consistent pattern of behavior. This is like several different things that happened at different times by different people and sort of don't amount to running a racketeering enterprise. That's a defense we see relatively often in these racketeering cases. It will be interesting to see what the jury makes of that. Why is this case actually being tried in the United States? And particularly in Brooklyn as well, which is interesting. In Sydney, US, because it's a huge department of justice cases been going on. I mean, it was first unveiled in 2018. So during President Donald Trump's first term, it's happening in Brooklyn because the Federal Prosecutors' Office

4:12that in the Eastern District of New York has a reputation for building these big complicated international cases. So for example, the long run encryption case involving FIFA officials that we've written about, that's also in this brought by the same office. So this is like an office of prosecutors where they really sort of pride themselves on having developed this expertise in bringing these complicated international cases. Okay, it sounds like it's going to be really interesting to watch it unfold. I mean, you've been talking to lawyers and China watchers. What's your sense of how the trials going to impact US-China relations? It's very hard to tell partly because Huawei, I mean, who has always been subject to various US restrictions for quite a long time now and in that time since 2019 when it was put on the entity list. Huawei has sort of changed its business so that it is much less dependent on the US. And they're really expanding into things like electric vehicles and AI with the support of Beijing. It will be interesting to see how much this does affect them. I mean,

5:14if they are convicted and if there is a fine, it could make it more difficult for Huawei to do business with international banks, for example, the banks might have questions about working with the company. The bigger question of what it means for US-China relations is an interesting one, partly because we are expecting President Xi Jinping to be in Washington this month to meet Donald Trump. Because this case is due to go on for several months, it would mean that this trial is happening in the background while it takes place. So it's an interesting and potentially quite difficult backdrop for that meeting. Okay, Wiggins is the FT's US legal correspondent. Thanks, Kay. Thank you. Anthropic and OpenAI have borrowed a lot of money in their build out of artificial intelligence infrastructure. Now banks for the companies are pushing credit rating agencies to designate their debt as investment grade. The stamp of approval that would allow for more

6:15risk-averse investors like pension funds and insurers to lend to the tech companies. Both Anthropic and OpenAI are lost making and burning through cash, so an investment grade designation could allow them to access cheaper debt to fund their expansions. Morgan Stanley and Goldman Sachs have held talks with rating agencies on behalf of the AI giants. Credit rating agencies say they haven't made a final decision yet, and there's no set date for OpenAI or Anthropic listings on the public markets. The European Union is planning its most radical shake-up of rules around company mergers in decades. New guidelines, which are said to be published in the coming weeks, are part of efforts to boost the block's economy and stay competitive with global rivals such as China and the US. You know, tell us about the shift in EU policy is the FT's Barbara Moons in Brussels. Hi, Barbara. Hi, nice to meet you. Barbara, give me a bit of context here. What has the EU's

7:18approach to mergers and competition been like historically? Historically, the EU's focus has been very much in preserving competition, putting consumers first and so ensuring fair prices. The shift that we are seeing now is that the block wants to put more focus on other aspects, such as resilience, security of supply, and innovation taking into account the current geopolitical environment. Barbara, you spoke to Anthony Wielin, the EU's top civil servant working on competition. What did he say about the aims of these reforms? He said that while the EU, of course, will keep focusing on preserving competition, that they want to put more focus on positive effects of future mergers, that they will look more at what companies can do in the future to deliver better products, services, innovation, security of supply, and that they will take that more into account in the future when the block will assess mergers and acquisitions. Why is Brussels making these

8:23changes now? And what are they hoping will happen because of it? The bigger context is that the block is really struggling with its competitiveness, so trying to keep up with the US and China. This follows the landmark report of Maria Draghi almost two years ago, where he gave a number of recipes to make sure that the block becomes more competitive. So the goal is really to potentially create bigger companies, bigger European champions, in order to keep up with the US and China. Are these changes focused on any sector in particular? Is AI the big target here? They're not sector-specific. It is true that the EU wants to make sure that it also steps up on tech and on AI, especially on the application of AI, but that is not specifically mentioned in the guidelines. One of the key questions will be what some of the future cases will be that come forward and that will be kind of the test cases for these guidelines. One of the stories that you

9:24cover a lot is the relationship between the US and the EU, particularly that sparring over tech and antitrust. Do these rule changes tell us anything about the relationship between the US and the EU when it comes to tech? Indeed, there has been a lot of tension, especially since the second term of President Donald Trump, because he has really accused the EU of hitting out against US tech companies with a number of investigation and a number of fines, for example, against X and Google. But, Wheeling has been very clear that the EU will continue enforcing its digital rule book that it cannot do that less just because the US is putting political pressure and that's a line that is very much the same as some of his political bosses like Competition Commissioner Teresa Rivera and the European Commission President Ursula von der Leyen. Barbara Moons is an EU correspondent for the FT covering tech and competition policy. Barbara, thank you. Thanks, bye-bye.

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