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Russia Banned from Winter Olympics; U.K. Government Under Pressure Over Brexit Plans; Supreme Court Hears Landmark Gay Rights Case; Air Travel Group Says Smart Luggage Could Explode on Planes;

Aired December 5, 2017 - 16:00   ET


[16:00:00] RICHARD QUEST, CNN HOST: The closing bell ringing on Wall Street bringing the misery to a close. The Dow is off, having been up a

bit and then down a bit. A true roller coaster as the market continues to work out what exactly what the direction could be at the moment. One --

oh, for goodness sake man. Look at the way he's hitting that thing. Soon you'll have it. The gavel will break. Trading is over. The Dow off a

half a percent. Off 111 points. Today is Tuesday, it's December the 5th.

Tonight, frozen out. Russia banned from next year's Winter Olympics. Britain's Brexit plans are stuck at the Irish border. Now Westminster

wants answers. And the wedding cake that wasn't baked. A baker's refusal to serve their customers now going all the way to the Supreme Court.

I'm Richard Quest. Live from the world's financial capital New York City where, yes, I mean business.

Good evening. It's a simple fact. Russia is banned from the 2018 Winter Olympic Games. An unprecedented move by the IOC. Its punishment for what

the IOC says is widespread state-sponsored doping. Russians who can prove that they are clean will be allowed to compete. But not under the Russian

flag. In neutral uniforms. And without the Russian flag or anthem. They will be athletes and Russian origin. World Sports, Don Riddell, is in

Atlanta. Matthew Chance is in Moscow. And we'll be with you Matthew in one second for reaction. Don the doping scandal has been around for some

time. We've seen action taken before. Why did they decide to take action for this Winter Olympic Games?

DON RIDDELL, CNN WORLD SPORT: Well, Richard, you're referring to what the IOC did or didn't do for the summer games in Rio last summer, which was

essentially to fudge it. They managed to keep a third of the Russian team outside of Rio. But two-thirds of those Russian athletes did still go and

compete. And the IOC faced an absolute backlash of criticism for that decision.

What has happened between then and now is that I think the IOC is a little older and a little wiser. But they also have conducted further

investigations. They have now more evidence about what the Russians were up to in Sochi in 2014 and before that. And they felt ultimately compelled

that they had to make such a damning verdict of the Russian Olympic program. And to do something pretty unprecedented. And it is just

extraordinary to think that in 2014 the Russians spent $50 billion putting on this event. They topped the medal table in a blaze of glory. But now

they're not going to be there. No flag, no anthem, no nothing next year.

QUEST: Stay exactly where you are. Don, will come back to some more analysis in one second after I've gone to Matthew in Moscow. Well I mean,

the Russians have always denied they did this. They have always said it's unfair on the individual athletes. Now there is a full-throttle, full-

scale ban. What will they do?

MATTHEW CHANCE, CNN SENIOR INTERNATIONAL CORRESPONDENT: That's a great question. Because the debate in Russia being had in the media and amongst

politicians right now is whether this is so much of a humiliation. The idea of competing in the Olympics without the Russian flag, without the

Russian anthem, just being described in that sort of weird way as sort of Olympic athletes from Russia is something that is dividing this country.

There are calls for a full boycott by Russia of the Olympic games.

And certainly, I've spoken to senior Russian officials in this country right at the top of the hierarchy and they have told me that if this ban

went badly -- I spoke to them a day or so ago -- they would consider their future cooperation with the Olympic movement. At the same time there is

another school of thought that is like well you know, maybe we just ride this out. Remember these athletes have worked very hard to get where they

are to compete in the highest level. They shouldn't be denied that opportunity.

QUEST: How many athletes, Don Riddell are we talking about that might be eligible to be regarded clean enough to be Olympic athletes from Russia?

[16:05:00] RIDDELL: Well we just don't know. I mean in 2010 in Vancouver 177 Russian athletes went when they hosted three years ago it was more than

230. So, I guess that's the maximum amount of athletes that might be competing. But we just don't know how many are going to be able to

basically meet the requirements. And demonstrate that they're clean enough to be able to compete. But as Matthew says we might be talking about zero

Russian athletes.

QUEST: Matthew, putting aside to one -- for a second this idea of the fairness or unfairness of those athletes who were going to -- who won't be

allowed to compete. I mean, a boycott is somewhat pyric in the sense that they're not going anywhere officially. So, what are you boycotting if your

athletes aren't supposed to go and those that can may not be that many in the first place?

CHANCE: Look I mean I guess this has taken a political dimension on. The Russians have always said that this is collective punishment. Vladimir

Putin just last month said that sport was now being used as an instrument in geopolitics to make Russia look bad. He even went so far as to say that

the allegations of doping against some of the athletes were being fabricated by the United States as a means of sort of reeking revenge on

Russia for what he described as the imagined Russian interference in imagined Russian interference in the U.S. political process. And so, look

there may well be political consequences after this.

QUEST: Don final question to you. If I say 1980 and 1984 you know exactly what I mean. Russia boycotted -- well first the U.S. boycotted Russia over

Afghanistan. Then the Russians boycotted Los Angeles. Are we back to that level?

RIDDELL: Well, I don't know. I'm not hearing any conversations about that yet. We do live in a very different world today, Richard. But I mean I

guess we will have to see. I mean certainly Russia globally have a lot of power and influence. Certainly, in the world of sports, they do, as well.

So, if they choose I guess they could exert some of that power and influence and bring a couple other countries along with them on a boycott.

But will have to wait and see.

The one thing we haven't mentioned, Richard, briefly is of course, whilst this is humiliating for Russia and Russian sport, just four months after

this they get to host the football World Cup. The 32 best football teams in the world are all going to Russia. Now when Professor Richard McLaren's

report came out -- the report which has premeditated the IOC's decision today -- he did discover that a number of football players were caught up

in all of this. And Vitaly Mutko, who was the former sports minister in Russia -- and who is now the deputy prime minister and head of the Russian

football federation -- will of course be at the very center of the FIFA World Cup. And yet today he was named and shamed by the IOC president,

Thomas Bach, and it was made very clear he will not be at all welcome in Pyeongchang next year.

QUEST: We'll talk more about that as that side develops. Gentlemen thank you.

We turn to the Brexit negotiations now. Theresa May is facing very heavy criticism as she struggles to get agreement about the Irish border back on

track. Sterling extended Monday's losses as the fault lines between the EU the British government and -- I was going to say coalition partner, but

it's not. It's confidence and supply, the DUP exposed. And in London the opposition's top lawmaker on Brexit said the government needed a reality



KEIR STARMER, SHADOW U.K. SECRETARY FOR EXISTING EU: Yesterday the rubber hit the road. Fantasy met brutal reality. Labour is clear that there

needs a U.K. wide response to Brexit. So, the question for the government today is this. Will the Prime Minister now rethink her reckless red lines

and put options such as a customs union and single market back on the table for the greater good? Because if the price of the Prime Minister's

approach is the breakup of the union and reopening of bitter divides in Northern Ireland then the price is too high.


QUEST: Bianca Nobilo it is our political reporter in London, she joins me now. Bianca, this is the Northern Ireland issue front and center has taken

on a seriousness and a depth that really, we should have seen coming but didn't.

BIANCA NOBILO, CNN PRODUCER: Yes. And everybody was so focused on that Brexit bill. This issue of Ireland almost crept up on us. And now it is

the roadblock to negotiations progressing. It has got very serious in the head of the DUP, Arlene Foster, we found out today only discovered what the

actual text of the draft Brexit deal was yesterday. She said she had been pushing for it for five weeks.

[16:10:00] But haven't seen it from the U.K. government. And that was the reason that the talks fell apart as they did

QUEST: OK. So, the talks fall apart at the moment. It is -- we'll talk to Quentin Peel in just a moment about how -- what sort of political

solution there may be. But wasn't this inevitable because they are trying to do the three-card trick? They're trying to, as I said to last night,

juggle with knives?

NOBILO: They are and in fact this Ireland question is allowing the Welsh First Minister, Scotland, London, the opposition to push the Prime Minister

now for a softer Brexit. For possibly remaining in the single market in the customs union. It strikes me at the moment, Richard, this is almost

like a Schrodinger's deal. The fact that it on moment we're leaving the customs union --

QUEST: Hang on. Hang on, Bianca.


QUEST: How can there be customs union and single market at the same time as not having full freedom of movement under the four pillars?

NOBILO: There can't be. And that's why I call it. This idea until we know the final details of the Brexit arrangement at the moment the

government is trying to make the public think we can have an arrangement so Schrodinger's deal. This idea that until we know the final details of the

Brexit arrangement -- at the moment the governments trying to make the public think that we can have an arrangement that somewhat like a customs

union, somewhat like a single market. But also, they've committed to leaving the customs union and the single market. So, it's a very confusing

position to take. And ministers have been calling for an arrangement which is as close to that as possible. But how that can be achieved we just

don't know.

QUEST: Bianca thank you. You talked about -- Bianca talked about the arrangements -- or the Irish Prime Minister says the ball is firmly in

Britain's court. Leo Varadkar says the priorities are protecting the good Friday agreement, and the common travel area with the U.K. and Ireland.

Now this is what the border looks like at the moment when you go between the two. Just a warning sign that speed limits are in miles per hour and

not kilometers. Check points came down after the good Friday agreement. And that agreement and the memories of the violence make any arrangement

extremely tricky.

This is the idea of what we're talking about. You have the United Kingdom here. You have northern Ireland. And then of course you have the south.

The first proposal is to keep things exactly as they are. Michel Barnier insists that customs controls are essential to protect the single market.

And why? Because goods can come from Northern Ireland go through into the south over a free border and then round and across into Europe. Or of

course it can go the other way around and make their way back into the United Kingdom.

Second, you have the idea of a frictionless border enforced by technology. That, frankly is a huge logistical challenge, and one people aren't quite

sure would actually work. And then you have the idea that you align north and south potentially setting up this border. Look at this border that

would wind its way round. Now that would create this new border that I'm walking across along the north -- sorry the Irish Sea. The DUP says, well

that effectively will be cutting Northern Ireland off from the rest of the United Kingdom and therefore would be a destruction of the integrity of the

two sides.

Finally, a hard border. There you see it. The hard border. That would be back to the days of say pre-1998. It violates the spirit of the Good

Friday agreement. It's difficult to set up. And it would harm businesses on both sides who have been used to doing frictionless travel. So, that's

the way it looks. Joining me now to talk about it is Quentin Peel with the Europe Program at Chatham House. Are they trying to do the impossible that

which cannot be done?

QUENTIN PEEL, ASSOCIATE FELLOW, CHATHAM HOUSE: Well it certainly that which is incredibly difficult to do. I think it may be nearly impossible.

I've always argued that ever since the referendum that the Achilles' heel of the entire Brexit process was Ireland. Because suddenly, you've got a

border right across the island of Ireland which is a border between the European Union and a country outside the European Union. And it's

incredibly difficult to see how you can resolve that without Britain stain in the customs union. And that's one of Theresa May's red lines. So

that's the impossible.

QUEST: Well, everybody saying that. But here's a way round. There is a way around if you think about it. The Europeans say that well, all Theresa

May has to do is accept customs union, single market and all that goes with it, she's the one who has to do it. But by the same token, Europe could

accept an element of customs union, single market but without freedom movement of labor -- of labor or people. So, they're being just as

stubborn on their pillars as the other side is.

[16:15:00] PEEL: Well certainly the argument on the European side is you cannot have a genuine single market without the four freedoms, labor,

capital, services and goods. So, you know it's -- they see that as an integral part of that single market.

QUEST: What about if the Brits just said, OK fine. As far as we are concerned there is no border for goods. Ireland if you want to set a

border on the other side that's fine. But as far as we are concerned we'll let them in. We'll let them out. We are only going to check people.

We're going to do it unilaterally.

PEEL: Well the problem is this. This entire process has been triggered by Britain. Not by Ireland or any other member state in the European Union.

It is Britain that says they want to leave. So, the rest of the European Union are looking to Britain to say OK, but come up with solutions then

that won't cause chaos. And the real worry for the Irish is it's not just about trade and it's not just about people. It is above all else about the

peace process. And to have any form of border even a purely digital technological border would invite -- it would be a target for hard liners

who think any border is wrong.

QUEST: But as long as the first clause of the Good Friday agreement subsists that bit that says there can be a poll which if the north votes

there would be unification of Ireland. Surely as long as that remains then the spirit of the agreement of a united Ireland if they want it, remains


PEEL: Well the absolute key to the Good Friday agreement was that it was a balance for the nationalists, the Republicans in the North of Ireland. The

idea that everybody was part of the European Union and there didn't need to be a border puts the old fight for a reunified Ireland on the back burner.

On the other hand, for the unionists, what you've just cited was absolutely fundamental. And it was a balance.

QUEST: OK. But Quinten is not the worst possible outcome this ridiculous regulatory alignment? In other words, a fudge to get over this particular

hurdle that -- the pie crust promise. That falls apart the first time you pick it up and actually have to make it work.

PEEL: Well I think it can't work, which is why I actually am still convinced this entire Brexit process is incredibly destructive. But having

said that, if they're going to have Brexit they've got to make something like that work.

QUEST: Good to see you, Quentin. Thank you. I appreciate it. We'll be talking again about it I have no doubt as we continue tonight on QUEST

MEANS BUSINESS. Stocks in Europe fell. The major indices were all in the red. It's follows from a late selloff on the U.S. banking shares. Slipped

optimism. Look at London -- look at the whole markets in London.

When we come back in just a moment, a baker says he's expressing free speech on religion. A same-sex couple says is discrimination if the

Supreme Court case of no wedding cake.


[16:20:00] QUEST: The case of the baker who refused to make a wedding cake for same-sex couple has been heard by the U.S. Supreme Court. Citing his

faith, the baker says he was within his religious freedom rights. The couple in the state of Colorado is arguing it amounts to discrimination.

Ariane de Vogue is in Washington, our Supreme Court correspondent. OK. So, it is a complicated case but with a really simple rationale underneath

it all isn't it? One side says we've -- you're doing business. The other -- you've got to take all your customers. The other side says first


ARIANE DE VOGUE, CNN U.S. SUPREME COURT REPORTER: Well I don't think they would say it's not complicated. I mean, it really comes down to one

justice and that's Justice Anthony Kennedy. And he seemed torn today. He's that swing justice on this -- in between the liberals and the

conservatives. And you're right, Jack Philips, the baker, he said, this is a free speech case. My cakes they're my artistic expression and the

government can't force me to convey a message that goes against my religious beliefs. And in court the liberal Justices, Elena Kagan, Sonia

Sotomayor and Justice Kennedy, who's not liberal, really had questions about that.

They said, well, who else gets a carveout then? A jewelry maker, a hairstylist, a makeup artist? But Justice Kennedy also worried the dignity

of same-sex couples. He said well look, will sign shops suddenly pop up saying, we don't make cakes for gay weddings? He called dad an affront to

gay marriage. So, that's one side, right?

But then Kennedy argued the other side and that had to do with religion. And he was really worried about hostility that Colorado might have shown to

Jack Philips. And he said something at one point as if he was writing the opinion. And he said, it seems to me that the state in its position here

has been neither tolerant nor respectful of Mr. Phillips' religious beliefs. And that sums up the problem in case with these two sides.

QUEST: But this is also -- I mean as I was -- in my weekend reading on this case this was about the fact that he makes the cakes and he decorates

them by hand. He was prepared to sell them a cake -- a ready-made cake -- and he was prepared to let them buy a cake. He just wasn't prepared to

make a cake. So, I suppose -- look I know I'm dancing on the head of a pin here. It's not like he was saying they can't come into the shop and buy

something is it?

DE VOGUE: Well he -- really where he drew the line -- he said, look this couple can buy anything in my store. But I can't make a custom cake for

same-sex marriage. Out of my religious objections. It's that what I object to. So, while the other side said, oh look, you're discriminating

against same-sex couples. He said I'm not discriminating. I just don't want to give my endorsement to something that I don't believe in. It goes

against my religious beliefs. So that's where he was drawing the line.

QUEST: It's -- we almost -- we don't ' -- know -- we don't know the decision obviously. But if everybody goes on party lines -- by that I mean

liberals go left and conservatives go right. This really -- this case really does show how essential and how crucial the Supreme Court -- the

next Justice of the Supreme Court choice is going to be doesn't it?

DE VOGUE: It really does highlight. Because it doesn't always work out this way. But right now, the conservatives on the court have been

nominated by conservative Republican presidents and the liberals have been nominated by Democrats. It's not always like that. We have had justices

in the past who gave surprising votes. But right now, that's how it is. And you can bet Trump -- President Trump is paying a lot of attention to

judges for cases like this. He sees it this way. Whereas the judges say, look we're not politicians and they really reject that sort of dichotomy.

QUEST: Good to see you, thank you. When do we expect a decision? In a word, sometime -- springtime?

[16:25:00] DE VOGUE: I would think. The end of the term is usually by the end of June. I would expect it sometime then. But we could get it before.

But I doubt it.

QUEST: Thank you. Good to see you. Thank you.

DE VOGUE: Thank you.

QUEST: Mixed day on Wall Street -- actually, they had slightly underselling it. The Dow fell. Just look at the way the market went up

and then it went down, and up and down and by the time it closed nearly at the low points of the day, off 109 points. All the major indices were

lower. The S&P was down. The tech stocks rebounded. So, a rotation that started yesterday has now continued -- I mean it's difficult. The markets

were very uncertain.

Google says by next year it will have more than 10 000 employees working to root out offensive videos on YouTube. Samuel Burke is in London. What are

they looking for?

SAMUEL BURKE, CNN TECH TECHNOLOGY AND BUSINESS CORRESPONDENT: They are looking for extremist content Richard. And for content that could be

specifically targeting children here. But for me what's so interesting about all of this is none of it is new, Richard. This is something that

you and I have been talking about for years now literally. It's something that plenty of parents have seen on YouTube. What changed here, what

caused this action over at YouTube wasn't because of the users. It was because of the commercial forces at hand here. You had lots of outlets

like Marriott Hotels, as he had airways pulling their ads because it had finally gotten so bad that they -- even they were feeling the pressure.

YouTube finally cracked under the pressure of its advertisers not its users.

QUEST: All right, so it's cracked. How useful will these 10,000 monitors be?

BURKE: Well if we just put up a list on the screen here. You'll see they're actually taking tangible action in this case. You have the 10,000

human moderators. Imagine that, human beings getting jobs. Keep in mind, they already have thousands of workers. This is actually just going to be

a total of 10,000 when everything is said and done. But they'll also be using computers, don't forget that.

Curtailing the common section even turning them off, which is something that places like CNN have done. Do we really need all those comments? And

stricter placement of ads. Again, so this is them bending over backward to make their advertisers happy.

QUEST: What will bring it to the moderators' attention? Will it be a complaint, a button like a help button or a panic button that somebody can

push? Or will it be the algorithms that will see something, realize it's near the line and therefore refer it up?

BURKE: It will be all of that. But it won't be relying on the users so much. They have been leaning on our backs for far too long. And it won't

be relying on the computers as much. All these tech companies for years have been telling us the computers can take care of it. The users will

flag it up to us and we can find it that way. And they have finally realized -- not just YouTube -- also keep in mind this 10,000 number,

Facebook also going to have a total of 10,000 human beings doing these jobs. They have just realized that human beings have to work in concert

with computers and machine learning, so they can all function together. Yes, the algorithm will flag it up. But they also have to have human

eyeballs. The computers want to replace us, Richard. But we're not going to go away quite so fast no matter how hard they try to get rid of us.

QUEST: Some of us. Thank you. Samuel Burke.

Brexit means Brexit. Was once the beat of the Brexiteer's drum now they're saying leave means leave. As the British Prime Minister faces mounting

pressure from within her own party. It's QUEST MEANS BUSINESS live from New York.


[16:30:52] QUEST: Hello, I'm Richard Quest. There is more QUEST MEANS BUSINESS in just a moment. I'll be speaking to a co-chair of a group who

wants Theresa May to be much tougher with Brussels when it comes to Brexit. And smart luggage is catching on. The head of IATA tells me he is worried

about it catching fire. Before that, this is CNN and we always have the facts first.

Sources say President Trump is expected to recognize Jerusalem as Israel's capital as soon as Wednesday. And to move the U.S. embassy there in short

order. They say he told Arab leaders during phone calls Tuesday. Some Palestinians are calling for three days of rage to begin on Wednesday in


The IOC international Olympic committee has banned Russia from next year's Winter Olympics. The organization says Russia manipulated the anti-doping

system on a staggering scale. Clean Russian athletes will be invited to compete under the Olympic flag.

Lawmaker John Conyers resigned his seat amid multiple accusations of sexual harassment. He announced his retirement on a radio show Tuesday morning.

In the same breath he endorsed his son to replace him in Congress. Conyers was Congress' longest-serving member.

The supreme court in Spain has withdrawn the European arrest warrant for the ousted president of Catalonia and four other Catalan politicians. They

fled to Belgium after Spain clamped down on their independence bid. A Spanish judge said the warrant could complicate the investigation.

Returning to our top story, the British government's Brexit plans came under attack from both sides in the House of Commons. The conservative MP

Jacob Rees-Mogg warning the Brexit secretary of his own party not to dilute the deal.


MP JACOB REES-MOGG, U.K., CONSERVATIVE: Is it not essential that the red lines on maintaining the United Kingdom and on regulatory divergence whence

the benefits of leaving come are indelible red lines.


QUEST: Jacob Rees-Mogg is one of several members of Theresa May's party who urged Britain to take a much tougher stance in the Brexit talks. He's

backing a group called "Leave Means Leave. " Parodying off the phrase Brexit means Brexit.

Last week leave means leave wrote to Theresa May, saying Britain should make no payments to the EU until its agreements were met. This is what he

wants. No EU payments until trade plans agreed. That includes plans for reciprocal free trade without tariffs by March of next year. Single market

customs union.

And the key to it all if there is no progress by the end of this month the government should suspend all talks and trade with EU and WTO rules. John

Longworth is co-chairman of Leave Means Leave, he is also former head of the British Chambers of Commerce and joins me now.

I read the Leave Means Leave letter with those demands. John, as I read them I sort of wondered whether Leave Means Leave had lost touch with

reality in that there is no way the EU is going to agree to them.

JOHN LONGWORTH, CO-CHAIRMAN OF LEAVE MEANS LEAVE: Well, the EU doesn't have to agree to them. These things can be done entirely unilaterally by

the U.K. government if in fact the European Union is not prepared to come to the table and agree to a trade arrangement. Of course, the EU has

promised a trade agreement. If they don't do it within a reasonable time scale, they are being deliberately obstructive.

[16:35:00] By the way the letter was signed by 30 senior politicians, economists and senior business people, very wealthy entrepreneurs.

QUEST: Right. But there is no way the EU is going to grant tariff-free trade if the U.K. does not accept the four pillars of freedom of movement,

capital, labor, goods.

LONGWORTH: Well why not? They've just done a deal with Canada which is still going through the process of course which is for a free trade deal

that covers 98 percent of goods, tariff-free. So why not with the U.K.? The fact of the matter is of course, it doesn't really matter for the U.K.

if in fact we don't agree with the free trade arrangement. This was the mistake of the government from the very beginning, measuring set on the

basis of this.

Because of we go to WTO rules, we will be trading on the basis we trade with most of the rest of the world.

QUEST: There would clearly be a disadvantage going to WTO rules, bear with me have a listen to what the head of the WTO has said if that eventuality

of the U.K. reverting to WTO trading.


ROBERTO AZEVEDO, DIRECTOR-GENERAL, WTO: We all know that today the relationship -- the trade relationship between the U.K. and the EU is very

privileged. They are part of the single market. Clearly you know losing those preferences and losing these privileged terms. It will have an



QUEST: It will have an impact. And studies show it will have a serious impact. Bearing in mind, yes, most parts of the world do trade on some

aspect of WTO rules, but they also have free trade agreements for their nearest neighbors.

LONGWORTH: Well the vast amount of trade in the world takes place under the WTO rules, and the United States and China and India all trade with the

EU on large scales using WTO rules. They're not members of the single market. Nor are they members of the EU. And the fact is that 97 percent

of the -- 87 percent of the U.K. economy is not associated with trade with the EU.

And will boost the 87 percent of our economy if we break free of the restrictions that the EU placed upon us. We can do with external tariffs

we can spend huge amounts of money we put into the EU each year on investing in business and tax cuts. We can boost the economy by taking

back our fisheries, carbon cultural policy and so on. So, the U.K. will be far better often fact if we leave the European Union.

QUEST: The problem for most people when they hear these arguments is you have a -- and I agree with you that your letter has some extremely eminent

people who have signed it. And the other side can put up a letter with extremely eminent people who have signed an opposition argument.

And the rest of the general public in the U.K. and elsewhere in Europe are left thinking what is the reality here?

LONGWORTH: Well, there isn't another side. 85 percent of MPs voted for article 50. The last election three quarters of the constituencies in

England and two-thirds of the constituencies in the United Kingdom voted for Brexit. The truth of the matter is that the U.K. is going to leave the

European Union. The question is what is the best possible deal that we can achieve?

QUEST: What do you -- we must talk about Northern Ireland and the Irish border. Obviously leave means leave. Once they have an open free border

between the two the common travel area. I assume. I'm putting words in your mouth. But I assume you want it to be an open and free border. But

if the Irish -- or if the EU says well that's going to also involve freedom of movement of labor what do you do then? Back to a hard border?

LONGWORTH: Well there is no question of free movement of labor. We've already said as the United Kingdom that we are going to leave a single

market in the customs union. There will be a work permit system like most countries in the world operating including the USA where people will be

allowed to come and work in the United Kingdom if they have a work permit.

QUEST: Will you let --

LONGWORTH: Freely, as a do around the world.

QUEST: Will you allow Irish citizens the common travel area to work as it currently is so that members of the Irish Republic can live and work in the

United Kingdom as they can at the moment?

LONGWORTH: Well what should happen after Brexit is that skilled workers will be given work permits and unskilled workers will have a block on them.

Because actually an unlimited supply of cheap labor to the United Kingdom has caused a reduction in productivity and a lowering of the training of

indigenous workers. It's not been good for the U.K. economy.

And actually, while the U.K. would want to continue to have this association with Ireland we've had since the 1920s where Irish citizens can

come to the U.K. freely and vote that may, in fact not be able to happen.

[16:40:00] If the European Union continues to be obstructed to these negotiations. And no country in the world, no sovereign country would cede

part of its nation to another country. And that's what we're being asked to do.

QUEST: We will talk more about it, Sir. Thank you for this evening, coming in. It's late in London I appreciate you taking the time to come.

We'll talk more about it.

Thank you.

When we come back, smart luggage is expected to be a popular gift this Christmas. The chief of IATA tells me he's concerned the risks the baggage

could explode into flames during the flight.


QUEST: The director general of IATA says it could push for a no-fly zone over the Korean Peninsula following reports from Cathay Pacific flight who

claimed to see the recent North Korea ballistic missile reentering the earth's atmosphere. The regime in Pyongyang launching missiles without

warning, I asked Alexandre de Juniac what civil aviation can do to circumnavigate the threat.


ALEXANDRE DE JUNIAC, DIRECTOR GENERAL AND CEO, IATA: What we do is, in this situation we are -- we are working with our members to see if we have

to design a kind of no-fly zone or protection perimeter around the zone in which we have concerns or there are signals that you could have a missile.

That's -- you have no-fly zone in other parts of the world that we have that was designed. So, it's not the first case and we work on this type

issues and these types of measures. When you look at aircraft flying over the area you will see that the North Korean air space is almost empty.

It's not by chance.


QUEST: Director General de Juniac also expressed concern, about smart luggage. Smart luggage doesn't merely hold your accoutrements. It has

electric locks GPS to track your belongings. And in some cases, it also will charge phones and iPads and the like. Because it has lithium

batteries within it. Now this one doesn't.

We brought this one because this is an example of acceptable smart luggage. But most U.S. Airlines are set to limit their use of those that actually

have lithium batteries within it. Just think about it. You could have not only lithium batteries in laptops, iPads, telephones, but now imagine

hundreds of bags in the hold of the aircraft, all charging, things with lithium batteries. Potentially a nightmare. So, I asked Alexandre de

Juniac how much this worries him?


[16:45:00] ALEXANDRE DE JUNIAC, DIRECTOR GENERAL AND CEO, IATA: We are concerned because you know the problem with smart luggage everyone must

know that, is to put -- to have lithium battery charging in the aircraft and especially in the belly. And we know -- we have already implemented

you know safety measures to prevent lithium battery to be transported in the cargo bellies in the condition that could be dangerous.

Because we have a risk of -- you have a risk of fire. And of explosion. So, we think that this smart luggage should be maintained to strict control

by owners to avoid problems to occur in the bellies due to the fact that they are charging batteries in the bellies which could cause fire or could

cause explosion. And we are very concerned with this issue.

QUEST: Can you see a time when you may have to ban smart luggage?

ALEXANDRE DE JUNIAC, DIRECTOR GENERAL AND CEO, IATA: The ban is perhaps a big word. And we don't like you know this type of word. But you know a

kind of protective measures there are strict protective measures about the usage of this smart luggage. I think is the appropriate measure. It's

typically the type of measure we discuss with the safety agency, the FAA, the various agencies all over the world to see what is the appropriate

measure regarding this smart luggage that also are meeting you know passenger requests to be able to charge their various devices.

But we have to find the right compromise to ensure safety and at the same time you know, to have an efficient and effective measure.

QUEST: Turning now to IATA's outlook. You look back at this year a good profitability and for next year similarly. But these are the good days,

aren't they? An oil is starting to rise again. The price of fuel is going up. And I'm wondering, have we now seen the best of the sustainable

recovery for aviation and really the going is going to get tough now?

ALEXANDRE DE JUNIAC, DIRECTOR GENERAL AND CEO, IATA: What we say is that 2018 should again be a good year for aviation. But the peak year has been

2016. So now it's slightly below what we have seen in the past two years. But it is still a good year ahead of us. We are a bit worried about two or

three elements that could reduce the profitability of airlines.

First are some geopolitical events that could you know threaten the planet. It could be a protectionist trend that we see here and there popping up.

And you know aiming at closing borders which is always a disaster for the industry and disaster for the economy. Or even some security issues That

might happen. It's always an issue that is hovering above the industry. Even if we are taking all the measures to protect our aircraft, our

passengers, our crew. So -- and there is also a concern about rising in some costs you know, infrastructure, oil or labor costs are rising in some

parts of the world and it could reduce our margins.


QUEST: Let's stay with aviation. Japan Airlines is investing millions of dollars in a U.S. startup that's targeting a new age of supersonic air

travel. Boom Technology wants to build an airline by the middle of the next decade capable of more than twice the speed of sound. It would be a

business type jet. Maybe just a bit bigger, 55 seats or so. You're going to hear from the chief executive about how he intends to handle the

controversial noise of a sonic boom synonymous with Concord.


BLAKE SCHOLL, FOUNDER AND CEO, BOOM TECHNOLOGY: A smaller aircraft turns out to be significantly quieter. There are details in the aerodynamic

design to make the boom sound softer. I think the issue is overstated. It's not going to be louder than other noises we have in our routine

environment. Now you're right. Japan to the United States is a flight that's mostly over water. So, the boom is a nonissue even if it were loud,

but it won't be.

QUEST: The other big issue of course was that of the environmental effects. Now Concord, god love it, it was a magnificent aircraft. I was

on the last flight of Concord from New York. It was an extraordinary achievement. But it was environmentally unfriendly. New technology since

how have you solved that issue?

SCHOLL: Right. Well we have to remember that Concord was designed 50 years ago on paper without computers. With slide rules and wind tunnels.

[16:50:00] And today we've had a half century of progress in basic aerospace technology. More efficient engines that are also quieter. We

have new ways of optimizing aerodynamics.

If you take all those technologies together. We have new materials and engines that are also quieter. We have new ways of optimizing

aerodynamics. If you take all those technologies together, it lets you build a new generation aircraft that's significantly more fuel efficient

than Concord was. And that's what allows the ticket prices to come down, and that's what allows the environmental impact both from a noise

perspective and from an emissions perspective to be much better than Concord.


QUEST: I've always said that there will never be another commercial supersonic plane in my lifetime. I hope I'm wrong. But there we have it

with the boom.

As the days tick by in storm-ravaged Puerto Rico it's looking increasingly unlikely the government will meet his promise of restoring power by



QUEST: Nearly three months after hurricane Maria, right now Puerto Rico can only generate 68 percent of the electricity it could before the storm.

And it was pretty pathetic before then. The governor had promised 95 percent of Christmas. It's unclear how much power is actually making it

from the grid into the homes. Leyla Santiago has reported extensively on the island and joins me now. Thank you for being here.


QUEST: Look what is the problem? Why can't they just rebuild it, get the electricity up again and running? What's the problem?

SANTIAGO: You're echoing the sentiment of a lot of Puerto Ricans right now. There is a lot of frustration. Because of that. What is the

problem? This is a system vulnerable before Maria was even formed in the ocean. And now you're taking an already vulnerable weak infrastructure

adding to it disaster, right? Where do you go?

QUEST: OK. But this is an opportunity to rebuild it and rebuild it fast so it's good.

SANTIAGO: Sure. And I think that's what everyone wants. But there is also frustration in the sense that we are more than two months out. We're

nearly three months out, and people don't have power. You had the first cruise line come in to drop off tourists into old San Juan last week.

I was there. I watched it. There was excitement among vendors. And hotels didn't have power. Businesses couldn't use credit card machines.

So, there's -- there's this sense of urgency to get power on to make sure people are taken care of but then it's get it done quickly and also take

care of what you're saying.

QUEST: So how far is this -- I mean is there an element -- I'm just going to go straight in for this. Is there an element that the island is being

punished in some way by the U.S. government or the Trump administration?

SANTIAGO: I'm not sure that I have heard that. I certainly think that there is a sense of feeling like they have been left behind, feeling that,

you know when the general left, when the Army left, although they did leave many resources there. And FEMA is still there. You don't see the

helicopters the way you used to, you don't see the emergency response the way you used to. So, there is a sense of we have been left behind.

[16:55:00] QUEST: But there's no way Miami would be three months without power. There's no way voting Los Angeles would be three months without

power or New York City.

SANTIAGO: But that's a big difference isn't it? You can't vote on the island. U.S. citizens, but you can vote if you're in Florida. If you're

in New York which is the exodus that we are saying. More than 200,000 people have left the island and could very well have that impact in New

York and Florida were many of them are going.

But on the island of Puerto Rico 3.5 -- nearly 3.5 million citizens you can't vote on the island for president. You can vote in the primaries, but

you cannot vote for president.

QUEST: Confession time, I have not given my donation to your go fund me.

SANTIAGO: It is going very well, very exciting, we have raised more than $38,000 to my dear effort. It is an effort for my hometown that I love and

adore, I will be going in there. Hopefully the goal is in early January to make a delivery. And hopefully with a donation from the Richard Quest.

QUEST: I seem to have left my wallet in my desk but --

SANTIAGO: I have heard this before.

QUEST: I promise.



SANTIAGO: Thank you.

QUEST: She's -- it's one thing to promise to her while she's on the other end of a satellite in Puerto Rico. Or Mexico City. But she's sitting --

SANTIAGO: Right here. I'm here. And you've said it on TV you heard him.

QUEST: Profitable Moment. Don't touch the bell.


QUEST: Tonight's Profitable Moment. As I alluded to earlier when I was on the last flight of Concord I absolutely thought that we would never see

supersonic commercial travel again in my lifetime. And now Boom has come along and says hopefully by the middle of next decade they will have a 55-

seater that will be able to go supersonic and JAL has put money into it.

I hope they are right. When Concord stopped it was the first time in aviation history there had been a retrograde step where technological

development had not been advanced. Maybe supersonic travel will come back.

And that's QUEST MEANS BUSINESS for tonight. I'm Richard Quest in New York. Whatever you're up to in the hours ahead I hope it's profitable.