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Carlos Ghosn in extended detention, the trade war with China, those pesky “national security” threat import cars and more await you in The Morning Shift for Wednesday, Nov. 21, 2018.

1st Gear: Ten Days

After being arrested on Monday after a months-long internal investigation at Nissan, Carlos Ghosn and board member Greg Kelly will be held for 10 days.

The decision comes from the Tokyo District Court, according to Kyodo News and Reuters. This will give prosecutors a chance to question Ghosn without a lawyer, reports the Wall Street Journal. He is being held at the main Tokyo detention center, which is located in the northeast section of the city.

From the story:

After authorities make an arrest in Japan, they can interrogate the suspect for two or three days without court approval. To extend the detention for 10 days, they must seek court approval, which was granted in Mr. Ghosn’s case Wednesday. They can then seek an additional 10-day extension, after which they must release the suspect unless charges are filed.

Detainees are allowed to receive visits from a lawyer, but the lawyer isn’t permitted to be present during interrogations, which often take up most of the day.

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As of this writing, he hasn’t been formally charged with a crime. Lebanese officials, however, “expressed concerns over the motives” over Ghosn’s arrest, reports the Daily Star. The Foreign Minister tapped its envoy to Japan and asked it to contact and meet up with the chairman.

Also, and interestingly, he is extremely out at Nissan but Renault is saying “not so fast.” Via The Guardian:

Renault defied its partner firm, Nissan, and the French government on Tuesday night as its board decided to retain Carlos Ghosn as its chairman and chief executive in spite of his shock arrest by Japanese prosecutors.

Renault’s board promoted Thierry Bolloré to deputy chief executive to head the company, but said the appointment was only made on a “temporary basis” in Ghosn’s absence.

Ghosn, the head of the Renault, Nissan and Mitsubishi car manufacturing alliance, is chairman and chief executive of Renault. He is also chairman of Nissan and Mitsubishi.

The actions of Renault’s board stand in stark contrast to those of its partners in the alliance, both of which quickly said they would remove Ghosn from their boards after Nissan said he had understated his income on financial statements.

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Ghosn was arrested in Japan on Monday after allegations of under-reporting his income and personal use of company funds came to light from an internal whistleblower report. He supposedly under-reported almost 5 billion yen, or approximately $88.6 million, starting in 2011.

2nd Gear: Cyber Attacks From China Are Getting Worse

The trade war between the U.S and China is ongoing. But a new report from the U.S. accuses China of carrying on a state-backed intellectual property and technology theft endeavor.

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A new, 53-page report from U.S. Trade Representative Robert Lighthizer says that China has kept up a series of cyber attacks on American companies that are both supported by the country and getting worse, according to Bloomberg. From the story:

“China fundamentally has not altered its acts, policies, and practices related to technology transfer, intellectual property, and innovation, and indeed appears to have taken further unreasonable actions in recent months,” the report said.

As an example, it cited an October 2018 report by experts from the U.S. Naval War College and Tel Aviv University that found that China Telecom may be engaging in a “malicious” campaign to “hijack Internet traffic and direct it through Mainland Chinese servers for possible collection and analysis.”

According to the updated USTR report, Beijing had made only incremental changes to its restrictions on foreign investment in certain sectors in China since the U.S. first released an original March report used to justify the tariffs on $250 billion in Chinese imports imposed by the Trump administration.

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This report, deemed “hawkish,” was released ahead of the upcoming G20 summit in Argentina. It seems that the U.S. believes that the report will offer it an opportunity to negotiate trade deals with China.

China, in turn, says that it “firmly protects” IP rights.

We’ll see how everything turns out.

3rd Gear: Talk, Talk, Talk

The trade war is hitting automakers hard. And now, three CEOs of different German carmakers have reportedly been invited to meet with Donald Trump so they can try to negotiate a new trade agreement.

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Unnamed sources familiar with the issue told Bloomberg that there are tentative plans for the President to meet with the heads of BMW, Daimler and Volkswagen after Thanksgiving to discuss trade. The three are first meeting with the German government in Berlin before consulting with Trump officials.

From the story:

For the U.S. president, the talks could be a way to push the European Union toward a broader trade deal. Discussions between Washington and Brussels have bogged down recently as the U.S. threatens tariffs on auto imports and the EU warns of imposing a digital services tax that could hit technology companies from Apple Inc. to Amazon.com Inc.

VW, Daimler and BMW executives are discussing the possible meeting at the White House, but any initiative would be closely coordinated with the German government and EU officials in charge of the trade negotiations, according to people familiar with the matter.

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This is all following the belief that import cars are a threat to “national security” and that a tariff is the best way to protect American interests. Nevermind that a huge number of import cars are actually built here!

Anyway, we’ll see if they wind up meeting and, if they do, what they decide.

4th Gear: What Everyone Else Is Saying About the Ghosn Thing

Ghosn’s arrest has seriously affected the other companies he is currently heading up. It seems like everyone was completely blindsided by this and now they’re scrambling. What to do with Ghosn? What to do with Renault? What about the Alliance??? Here’s a run-through.

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Mitsubishi put out a statement this week in response to the arrest. It has recommended to its board of directors to remove him from his position as Chairman and Representative Director quickly. The company also said that it’s conducting its own internal investigation to see whether Ghosn engaged in any misconduct while at Mitsubishi.

Japan thinks that, despite the Ghosn trouble, Nissan, Renault and Mitsubishi should try and keep up a “stable alliance,” according to Reuters.

Meanwhile, France and Japan are both “keen” to keep up the alliance between Renault and Nissan. The French Finance Minister Bruno Le Maire said, according to a separate Reuters story,

“At this stage, we do not have any evidence to support the accusations against Mr Carlos Ghosn I would like to emphasize the Renault board’s request that Nissan share all the evidence available to it.”

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I mean, it’s kind of obvious why France is very pro-Alliance. As Mike Ballaban pointed out yesterday,

France, the country, has a 15 percent stake in Renault, in case you were not aware. That means that France, the country, also has a massive stake in what happens to the Renault-Nissan Alliance, seeing as how it strongly favors Renault, and thus, the French state. And because of that, France would very much like to see this whole Renault-Nissan thing continue, if for nothing else that it gives France a very big say on what goes on at a major Japanese automaker.

Innocent until proven guilty, say the French. And it’s also probably fiercely looking out for its own interests, too.

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5th Gear: Hailing a Ride in a BMW

Next month, BMW is launching a ride-hailing service in China, reports Reuters. It will be the first global carmaker to get a license to do so in the Chinese market.

Didi Chuxing, a Chinese company, currently holds 90 percent of all bookings, a consulting firm told the outlet. Altogether, China’s ride-hailing market is worth $23 billion.

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From the story:

BMW Mobility Service Ltd, a fully-owned subsidiary of the BMW Group, obtained its ride-hailing license in Chengdu, the capital of Sichuan province in China’s southwest, BMW said.

China is where the money’s at. For now, at least.

Reverse: Famous Tunnel

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Neutral: This Is Probably Just the Beginning, Right?

Ghosn and Kelly can’t be the only ones involved, right? There’s gotta be other people. Do you think this is the beginning of something long, drawn-out and ugly?