Is the global maritime order breaking down?

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0:32Good 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. Big corporate mergers are set to become easier in the European Union, and bankers for Anthropic and OpenAI are lobbying credit rating agencies as they chase cheaper borrowing costs. I'm Josh Gabbard-Dwayon, and here's the news you need to start your day.

1:17More than a dozen of the world's largest maritime nations have warned that the rules of global shipping are collapsing. Attacks on ships in the Strait of Hormuz and the rise of shadow fleets that operate beyond Western oversight are threatening the guidelines that keep global trade flowing. That's according to the Consultative Shipping 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.

1:57This week, Chinese tech company Huawei is facing what could turn out to be one of the largest and most consequential U.S. 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 U.S.-China relations. For you to talk with me about it is the FT's Kay Wiggins. Hey, Kay. Hi. Okay, Kay, 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 this week.

2:39It's significant in a lot of ways. It's significant as a sort of massive Department of Justice U.S. 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 a slightly 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.

3:39How unusual is it to have a case that spans so many different kind of 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 amounted 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.

4:13That's a defense we see relatively often in these racketeering cases. It will be interesting to see what the jury makes of that. And Kate, why is this case actually being tried in the United States? And particularly in Brooklyn as well, which is interesting. It's in the US because it's a huge Department of Justice case that's 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 prosecutor's office there in the Eastern District of New York has a reputation for building these big, complicated international cases.

4:49So, for example, the long-running corruption case involving FIFA officials that we've written about, that's also 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 trial's going to impact US-China relations? It's very hard to tell, partly because Huawei, I mean, Huawei's been subject to various US restrictions for quite a long time now.

5:27And 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'll be interesting to see how much this does affect them. I mean, if 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.

6:08Because this case is due to go on for several months, like it will mean that this trial is happening in the background while a visit takes place. And so it's an interesting and potentially quite difficult backdrop for that meeting. Kay Wiggins is the FT's US legal correspondent. Thanks, Kay. Thank you.

6:28Anthropic 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 risk-averse investors like pension funds and insurers to lend to the tech companies. Both Anthropic and OpenAI are loss-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.

7:07Credit rating agencies say they haven't made a final decision yet, and there's no set date for OpenAI or Anthropics listings on the public markets.

7:21The European Union is planning its most radical shakeup 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 bloc's economy and stay competitive with global rivals such as China and the US. Here to tell us about the shift in EU policy is the FT's Barbara Moons in Brussels. Hi, Barbara. Hi, nice to be with you. Barbara, give me a bit of context here. What has the EU's approach 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.

8:03The shift that we are seeing now is that the bloc 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 Whelan, 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 bloc will assess mergers and acquisitions.

8:52Why is Brussels making these changes now? And what are they hoping will happen because of it? The bigger context is that the bloc is really struggling with its competitiveness, so trying to keep up with the U.S. and China. This follows the landmark report of Mario Draghi almost two years ago, where he gave a number of recipes to make sure that the bloc becomes more competitive. So the goal is really to potentially create bigger companies, bigger European champions in order to keep up with the U.S. and China. Are these changes focused on any sector in particular? Is AI the big target here? They're not sector specific.

9:32It 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 cover a lot is the relationship between the U.S. and the EU, particularly that sparring over tech and antitrust. Do these rule changes tell us anything about the relationship between the U.S. 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 U.S.

10:22tech companies with a number of investigations and a number of fines, for example, against Ix and against Google. But Whelan has been very clear that the EU will continue enforcing its digital rulebook, that it cannot do that less just because the U.S. 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 Ribera 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.

11:01You can read more on all these stories for free when you click the links in our show notes. This has been your daily FT News Briefing. Check back tomorrow for the latest business news.

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