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Donald Tusk Says He Wants To Break The Impasse That Has Fallen Over The Brexit Negotiations; Wall Street Is Doing Some Self-Reflecting Change; Monday Is When Donald Trump Impose Tariffs On $200 Billion Worth Of Chinese Goods; Comcast Will Go Head To Head With Fox For An Auction For The Control Of British Broadcaster, Sky; Death Toll Rises to 126 in Tanzania Ferry Tragedy; Rod Rosenstein: NYT Report on Wearing Wire to Record Conversations with President Trump is Inaccurate; Republicans to Offer Ford Hearing on Wednesday; Theresa May Demands Counterproposal from EU, Warns Talks with EU Leaders are at an Impasse; Three Infants Stabbed at a NYC Day Care Center; China Warns U.S. to Revoke Sanctions; President Trump to Address UN General Assembly Next Week; EU Tech Firms Respond to Brussels Scrutiny; Think Tank Chief Creates Brexit Board Game. Aired: 3-4p ET

Aired September 21, 2018 - 15:00   ET


RICHARD QUEST, HOST, QUEST MEANS BUSINESS: Look at the way the day has been trading. The market opened sharply higher. It stays higher but

dwindles toward the closing bell, but still at a record. Volumes are soaring, as traders are dealing with a historic market shakeup.

The drivers of the day include rising oil prices, helping to drive the Dow to fresh record highs. And sterling slides as Theresa May demands respect

from Europe. It is Friday. It is September the 21st. I'm Richard Quest in London and I mean business.

Good evening. We begin tonight with Brexit, of course, and the fact that Donald Tusk says he wants to break the impasse that has fallen over the

Brexit negotiations. It is a late development and the EU Council President insisted a compromise is possible. But Tusk's comments on the impasse

followed Theresa May's warning that the talks had stalled. The British Prime Minister, in a stern address, called on European leaders to put up a

plan of their own, which is yet to be seen. The Prime Minister's statement and her warning, that Britain is ready to leave the union would push the

pound lower.

Now, when it was finally up, it was 1.5%. One percent of the fall, by the way, happened while the Prime Minister was speaking and it became ever more

pessimistic. So the pound has given back the gains that it's seen over recent days. But are the disagreements, what are they now fundamentally

about? They are all about integrity, which common trade area, or which country, will have to be split?

On the one hand, it is the UK, which could be split from Northern Ireland and the rest of UK, bearing in mind of course, what would happen if the

proposal went forward to have customs union for the north, or a European single market. Theresa May warned the negotiations must be conducted with



THERESA MAY, PRIME MINISTER OF BRITAIN: As I told the EU leaders, neither side should demand the unacceptable of the other. We cannot accept

anything that threatens the integrity of our union. Just as they cannot accept anything that threatens the integrity of theirs. We cannot accept

anything that does not respect the result of the referendum. Just as they cannot accept anything that is not in the interest of their citizens.

Throughout this process, I have treated the EU with nothing but respect. The UK expects the same. A good relationship at the end of this process

depends on it.


QUEST: A few hours ago, Donald Tusk offered an olive branch of sorts. In a statement he said, EU leaders had never wanted to dismiss the Chequers

deal out of hand in Saltsburg. He said, "For the good of the negotiations, and out of respect for the efforts of PM May, we will treat

the Chequers plan as a step in the right direction. However, while understanding the logic of the negotiations, I remain convinced that a

compromise, good for all, is still possible."

Bianca Nobilo is following the developments. Theresa May certainly, one of the sternest, and I wouldn't say harsh, but determined statement she's


BIANCO NOBILO, CORRESPONDENT, CNN: Resolute. I say that and she's speaking to have Brexiteers as she is rebuking Tusk and Macron. For that,

Richard, it's fairly in bad taste and when we look at what Donald Tusk put on his Instagram yesterday where he said, "Piece of cake, Prime Minister.

Sorry, no cherries." That's the respect that she's asking for. She's directing that at him. And I think that's part of the reason that Donald

Tusk responded in the way that he did today.

QUEST: But his response tonight besides the platitude at the end, really says no more than we looked at Brexit - we looked at Chequers, we

considered it and we decided at the committee that it was best just to say it was the best - it was a good way forward.

NOBILO: Well, it's a careless statement because if you read it, the subtext says it all along, they knew it wasn't going to work but they were

making nice sounds about it, but they were keen to the negotiations to go forward, but he maintains that they were surprised by how uncompromising

the Prime Minister was in Saltsburg, which just makes us question the competence of the UK negotiating side. Why didn't they expect this to

happen? They got it totally wrong. This is a huge miscalculation.

QUEST: And I had just reading an article that goes to the number of times the EU, since Chequers has made it clear this will not be acceptable.

Varnier has said it on several occasions. Tusk has made the same comment. And yet, it does seems to become as a surprise that the EU was not prepared

to negotiate from it.


NOBILO: And that's another thing Tusk said, but he is surprised that it's come as a surprise. But Theresa May outlined in that speech today that

they can't accept in the UK this idea of siphoning off Northern Ireland and she understands that the EU has their position. Essentially, the EU is

saying, you can't have a piece of our market. The UK is saying, you can't have a piece of our country. That's where we are.

QUEST: And that's won't change because I cannot see any obvious - not that I am brighter to work out this sort of stuff, but I can't see any way that

you can square this circle. You can fudge it.

NOBILO: You can fudge it. There is no solution that's being put on the table and usually in these scenarios, even if the leaders involved haven't

accepted the solution themselves. There are people on the fringes making noises about ideas that could solve the issue. Well, there's none of that.

There is silence on this issue, nobody knows how to solve it. It is the issue. The sticking point in these negotiations and how can they move

forward without solving it?

QUEST: Finally, on a Friday night thought, it was always going to be the sticking point. Even before they've began, the question of maintaining the

integrity of the union, through the single markets and customs union versus Britain not crashing with no deal.

NOBILO: That's true. I think the only way they could do it, you mentioned a fudge. Well, at the moment, between the East and the West, there are

some checks on plants and agriculture. And north and south, there are checks between things like - over cigarettes and diesel. So the EU is

trying to say, let's just dial this down. There are already some checks made, there will be some more checks ...

QUEST: Right, but even if there were those checks, Bianca, they are technical checks. They have VAT checks. To just have those sort of checks

would be giving Britain single market access for goods, which is exactly what they say would breach the integrity of the union.

NOBILO: And what the Brexit Secretary Dominic Raab is saying in response to that is we're offering something that no other country that wants access

to a single market is offering. We are offering to sign up to that common rulebook. Nobody else is offering you that. And he is saying that's the

UK's compromise. And also that there is a similar arrangement with Ukraine that perhaps they should look to for inspiration.

QUEST: And then?

NOBILO: Take a look at that.

QUEST: What? Ukraine?

NOBILO: Yes. The relationship that they have with the EU.

QUEST: Right, November - November the 18th. See you in Brussels, I think it is.

NOBILO: Yes. You bet.

QUEST: Thank you. Theresa May made her play with the Chequers plan, now she's facing a host of opponents in a likely game of checkers. They're all

making their own moves. Now first, the EU, Donald Tusk decides and insists Theresa May needs to shift her stance on trade, then the second opponent,

the Brexiteers, they said the plan is as dead as a dodo because Euroskeptics in her own party in Parliament won't accept it, and the third

- the third opponent, remainders. They're all calling for a second referendum. Theresa May has said no.

And the last player, the Democratic Unionist Party, the DUP which opposes any move that splits Northern Ireland from the rest of the UK. Theresa May

can't play too hard against them. Frankly, they're propping up her government. What all sides need to avoid is flipping over the board and

going home.

Joining me on the phone now from Germany is Norbert Rottgen who the chairs the Bundestag Foreign Affairs Committee. He is a close ally of Angela

Merkel. Good day. Good to talk to you today, sir. The situation this evening, very much seems to have deteriorated, or just about into name

calling, but certainly this impasse that everyone recognizes.

NORBERT ROTTGEN, CHAIRMAN, BUNDESTAG FOREIGN AFFAIRS COMMITTEE: Yes, you're right. I think - hello, it is my pleasure to have this conversation

with you. I think - I was confused, to be honest, by the outcome of the meeting. What I had expected was that it is appreciated that Britain made

the move in the right direction. So I had expected the wording of Donald Tusk from today, but it went differently. It was an out of hand rejection

of the Chequers plan. And the mood got really bad in this meeting. And I think it has a little derailed this meeting. And now, we have to fix what

has been broken at this meeting.

QUEST: So, really, we can go - I mean, all of us can pass this a million ways. But it is really what the Prime Minister said, isn't it? Are we

going to have a solution that creates border of sorts and hives off Northern Ireland, which breaks up the UK, or the single market has a breach

into that? Which has the integrity damaged? Are you prepared to allow the integrity of the single market to somehow be compromised?


ROTTGEN: Honestly, I do not really understand what is the integrity of the single market in comparison to the single market? I do know what the

single market is, but I haven't understood so far what the additional integrity of the market is. So I think this is a political argument. It's

not really a legal argument.

I think it is quite clear, the border issue has to be resolved. There is one logical, legally feasible way to do this. This would mean that there

is a - that there will come into existence a customs union between Britain and the European Union, which will grant frictionless movement of goods.

This is a possibility compatible to the European market and it is in the interest of the European countries and particularly of Germany.

QUEST: That's very much towards the - that's very much towards the point of the Prime Minister. Let me ask you, sir, the Prime Minister, Theresa

May, is going to need friends in Europe. Is Angela Merkel, is it you feeling that the German Chancellor is prepared to move, to get a deal, and

to some extent, I guess one would say, help the British, help Theresa May out here?

ROTTGEN: On the one side, Germany is really determined to have a good deal with Britain, to have a very good, intense relationship with Britain after

Brexit. We want to have a relationship as close as possible and we are desperate to work for that. On the other side, of course, it can't be the

game who is a friend of Theresa May, and who is ready for that reason to make concessions?

So we have to do something which is really viable. And for that, I think to have a feasible approach to that would be, to appreciate that Britain

has moved. And secondly, to say that these are right steps in the right direction, as Donald Tusk has done and said today. But then we have to

say, there are still some incoherence, of course, in the Chequers plan, and we have to negotiate about these incoherence, and then we will make and

will achieve a good solution and a viable agreement between Britain and the European Union. I think this is very much the position of Germany.

QUEST: Good to talk to you tonight, sir. Thank you for taking the time. We will talk out later.

ROTTGEN: It was my pleasure. Thank you.

QUEST: Thank you, sir. Have a good weekend. As we continue tonight, after the break, get the popcorn ready. It is not a film premiere, nor is

it a big football match. This is something far more exciting. It's the finale of the ultimate fight for the broadcaster, Sky and it's gotten down

to a rare process, an auction. Oh, I love a good auction.


QUEST: And so to the markets and the issue and talking point of labels. Now when you think about labels, they affect the way we see ourselves, and

crucially, how others see us. Put a label on something, and you've identified it in one category or another.

So today, Wall Street is doing some self-reflecting change, which is neither easy nor cheap. It is reallocating the stock classifications on

the S&P. Billions of dollars worth of exchange traded funds will be shifted. So for example, Amazon is the only FANG stock not to be changed.

Facebook, Twitter, and Alphabet will join the expanded telecoms group, which is now being renamed, communications services, now with the company

AT&T and Verizon.

The changes reflects how these companies have evolved. In the last hour of trade, the Dow and the S&P are extending their run. The NASDAQ is lagging

behind somewhat. Traders are relieved that the US-China tariff battle hasn't gone as bad as feared. Dan Deming is with me, the managing director

of KKN Financial who joins me from the Chicago CME.

Dan, we'll get to the nitty-gritty of today's market, but this in a second - but this rebalancing of the S&P. I mean, at the end of the day, they are

the same stocks in different categories. It is not as if anything has left the index or moved into the index or been revalued with the index. So what

is the significance?

DAN DEMING, MANAGING DIRECTOR, KKN FINANCIAL: Yes, I mean, the significance really is the fact that you have a lot of these sectors now.

The allocation models that are out there, the indexes that are out there track these allocation models. So you're going to have to - you're going

to see a shift in these allocation models moving through the end of today and into Monday and throughout the next couple of weeks.

So really, the dynamic there is that you've got active managers out there that are going to have to shift their exposure to the market. You have

certain sectors in the market that are going to shift the dynamics. So effectively, when you look at the consumer sector, you know, that's a new

sector that is going to have to be priced into the market.

QUEST: Should we be bullish and/or continue to be bullish into next week on this market? Yesterday was somewhat extraordinary. Today, it's been

following on. So, the back end of the week, we're down today, but we're not down by much. And there does seem to be - there seems to be fuel in

the engine. Would you agree?

DEMING: Yes, I mean, certainly, the way this market has responded so far, you'd have to say it looks pretty good going into next week. We do have a

lot of news items next week, highlighted by the Fed, also some inflation numbers coming out, but ultimately, you're still seeing these major

averages holding at or near all-time highs. Even with rates going higher, so it does parlay itself into next week, looking like a week, last week of

September, it could be another strong week for the market.

QUEST: We all saw a quadruple witching day, which is where the options, futures, contracts expire. That has just taken the S&P 500 negative for

the day.

DEMING: Slightly.

QUEST: With a witching, we get a lot of volatility, but is it significant?

DEMING: In the last several years, the quadruple witching hasn't been so significant because a lot of that activity has already been balanced in the

marketplace as we move to the close. So I mean, it could parlay itself into something more significant today, but ultimately, the way the market

is responding right now, the fact that we haven't gone through strikes, we haven't seen a big move on expiration day would also indicate that probably

we're not going to see too much volatility coming from this triple witching today.

QUEST: And there is always the ever-present spectra of the trade tariffs that you were talking about. The reality is, yes, numerically, even at

$200 billion, on a $20 trillion economy, it is somewhat negligible, but of course, the market does worry with the issue of confidence and the people

effect that that creates.

DEMING: Absolutely. I mean, it's still in the back of minds of traders on the floor and I think to some degree, a bit surprising that it hasn't had

more of an impact. But the expectations going into the announcement earlier this week were much higher than what the market actually received.

I think that's why we saw this relief rally and a continuation of that rally. But that theme can change. And of course, we do know that Trump

does like to tweet on Sunday night, so if something comes out over the weekend into Monday ...


DEMING: ... with the shifting of the sectors, coupled with the fact that we might get news coming out of the tariff situation that that could

certainly play into next week's action.

QUEST: Good to see you, sir. Have a good weekend. I appreciate it.

DEMING: Thank you. You, too.

DEMING: And certainly on Monday, when Donald Trump impose tariffs on $200 billion worth of Chinese goods. Now, like what Walmart is saying, those

tariffs will hurt American consumers. Gary Shapiro is the Chief Executive and President of the Consumer Technology Association. Gary, thank you.

But it's interesting to note that there was a exemption for Bluetooth devices in the regulations or the new tariffs. But what you're - and there

are certain things like iPhones that were exempted. But you're saying that doesn't go far enough as it relates to consumer items.

GARY SHAPIRO, CHIEF EXECUTIVE AND PRESIDENT, CONSUMER TECHNOLOGY ASSOCIATION: Well, certainly, we appreciate that the administration took

out certain products, certain consumer products, Bluetooth product, smart watches, wearable devices, and a few other things look, But look, we're

talking $200 billion worth of products and a lot of the products are products - are components, circuit boards, which go into consumer products.

There's products which we need for 5G to be competitive with China. This is just devastating, honestly.

At 10% with an automatic 25% increase January 1, it goes in effect on Monday. The horror stories I'm hearing, the people that are starting to

lay off people, the boats that are at sea with all of a sudden, a new tariff on their products. This is very serious and that's why there were

several hundred witnesses from the business world testifying against this. In fact, in the business world in the US, it is difficult to find anyone

who thinks this is a good idea or any economist that thinks it is a good idea.

QUEST: I'll put it to you though that the increased tariff, and I say this somewhat advisedly, is only 10%. I mean, this is a lot of fuss over 10%.

SHAPIRO: Well, first of all, the existing couple of tranches out there of tariffs and there is the $200 billion here and a threat for another $269

billion if China will retaliate, and they have said, they will. It is an automatic increase to 25%. It doesn't look like there is any real

discussions going on with China and there are news reports coming out of the United States today that what really the President and his USTR want is

a fundamentally different approach with China, where the US is producing everything that China now produces. It is a view of the world which is

technologically difficult to accomplish. And also, probably not in the interest of the United States.

QUEST: I mean, that is the key point, isn't it? Reading Bob Woodward's book, "Fear," he talks about how the President has a view of manufacturing

America that is simply not realistic, nor should it be in a service-based economy.

SHAPIRO: Well, it is only service-based. The truth is, the enemy really is not China, although we do have major differences. They have been unfair

in the - the President has a great point in that. The reality is it's automation. Even if we get factories producing products back in the US, a

lot of it will be automated. It'll be high-tech and it is a very, very long horizon - time horizon to get there.

To have a 10% or 25% increase on all products from China is devastating to the US economy. That's why just about every economist doesn't support it.

And there is a historical analogy that is very important here. Smoot/Hawley passed by Congress in 1930, it was opposed by over a thousand

economists. It turned out to be the worst piece of legislation on the economy that Congress has ever passed.

It is widely viewed by everyone to be a mistake. And Congress, after that, was very careful because it's their job to do tariffs under the

Constitution. They were very careful to give any authority to the President. And they've done so in only very selective examples, such as

national security. What they chose to go at China with was not national security, but something called 301, to find an investigation that China had

done some bad things with our intellectual property.

That was fine for the first couple of sets of things. But this is pure retaliation. This is a tariff war and the question we have to ask i, does

the President of the United States have unlimited authority to create basically a global trade war based on retaliation similar to the 1930s?

QUEST: Good to see you, sir. We will talk more about it if and when the next round of trade tariffs comes into effect. Thank you.

SHAPIRO: Thank you.

QUEST: After months of wrangling, Comcast will go head to head with Fox for an auction for the control of British broadcaster, Sky. Anna Stewart

is with me. This is rather exciting. The last time this happened was in 2007.

ANNA STEWART, CORRESPONDENT, CNN: And we haven't had a big one for decades. This is really exciting. Three rounds over 24 hours. Then we'll

have a winner.

QUEST: How does it kick off?


STEWART: So round one, the bidder, who currently has got the lowest bid, which is Fox, they e-mail the third-party officer with their bid. Second

round - I heard that - second round, we have Comcast. They then get a chance to up their bid. They'll know what Fox has bid at this stage, then,

if they've done that, we go to round three.

QUEST: Thank you. That's round three. What happens there?

STEWART: Well, that's where it gets interesting. That is a sealed bid. So both parties at that stage put their bid forward on the table or via e-

mail these days, and then we decide - well, we find out who the winner is in terms of price. The takeover panel will announce it. But that does not

mean necessarily that the winner in terms of price will be the winner at the end of the day.

QUEST: Hang on, why not?

STEWART: Because let's say that they're both very similar. Eventually, it will have to go to the Sky board and the Sky shareholders to decide which

they prefer. And it might not just be a simple case of one is a few pence more than the other.

QUEST: So - but I mean, assuming the Comcast bid is numerically higher, but only by a smidge, and you're saying it is still possible that they

could go to the other lot?

STEWART: If it was only slightly higher, well, the issue is Fox has 39% of Sky shares already. So it would be a lot easier to get it through the

shareholders in terms of the voting approval process.

QUEST: Looking forward to it.

STEWART: Oh, my goodness. I'll have popcorn. I am here all Saturday. You should join me, Richard.

QUEST: Enjoy.

STEWART: I will.

QUEST: Send pictures. Tweet pictures. As we continue tonight, revert the sanctions or bear the consequences. More on China's response to the latest

round of US sanctions in just a moment.

Hello, I'm Richard Quest. There's more "Quest Means Business" in just a moment when I'll be speaking to the CFR President Richard Haas, as US

relations with China take another downturn. I've got a short term weekend activity with a new board game for you to try.


Just make sure you brush up on your article 51st, never backwards. You are watching Cnn, and on this network, the facts always come first. Government

officials say at least 126 people had died on a capsized ferry on Thursday in Tanzania. The boat was traveling to an island on Lake Victoria when it

turned over.

Rescue teams have saved eight people and they're continuing to search for survivors. Now, estimate that 400 people were aboard the overloaded boat.

The U.S. Deputy Attorney General Rod Rosenstein is dismissing and calling inaccurate. The reports in the "New York Times" have discussed that he

discussed wearing a wire to record conversations with President Trump.

Rosenstein also says there's no basis to invoke the 25th Amendment to remove the president from office. Sources say memoirs on the matter have

been turned over to the special counsel Robert Mueller. And sources say the Senate Judiciary Committee may try to offer Christine Blasey Ford a

hearing on Wednesday in which case she will testify before the Supreme Court nominee Brett Kavanaugh.

Ford is accused of -- accused -- Ford is accusing Kavanaugh of Sexually assaulting her when they were both in high school. The president of the

European Council says he believes compromise is possible after Theresa May warned negotiations are at an impasse. In a defiant statement, the British

Prime Minister called on European leaders who rejected her Brexit plan to put up one of their own which has not happened yet.

Three young children have been stabbed at a day care center in New York City, an employer at the center stabbed the children and two more adults in

the middle of the night before trying to kill herself. The victims are all in stable condition, the police say the motive for the attack is unclear.

Theresa May says she's prepared for no deal Brexit if the EU won't consider her Brexit plan or put up one of its own. The Shadow Brexit Secretary in

opposing party to Theresa May says the onus is on the PM to avoid an economic catastrophe.


KEIR STARMER, SHADOW SECRETARY OF STATE FOR EXITING THE EUROPEAN UNION: We should never accept that no deal is inevitable, no deal would be

catastrophic for our economy, plunging it into real crisis and for many other areas. So we cannot accept no deal.

And really, the next four weeks should be all about how just the Prime Minister avoid that. She can only avoid that by being more realistic.


QUEST: Jill Rutter served as communications director at the U.K. Treasury. She is now Program Director at the Institute for Government. Good to see



QUEST: How bad is it tonight?

RUTTER: I think it's quite different. I mean, in one sense, nothing has changed, we still wait for some agreement on the -- what happens in Ireland

to get to the withdraw agreement. Withdraw agreement is important because the withdraw agreement opens the way to that 21 months transition before we

finally leave the European Union.

And it's clear it's much easier to be ready if we only had to be ready by December 2020 than it is to be ready by March 2019.

QUEST: The prospect of leaving in 2019 without an agreement or without a deal in place, how prepared is Britain for that?

RUTTER: Oh, we think not very, we did an assessment earlier this week which we published in this year for government which basically was a sea of

red for those view that it used to seeing those red and the green. Just -- the government only just started putting out its technical preparedness

notices --

QUEST: But give me an example of the sort of things we're talking about. I mean, quite often, we mention passports and immigration and aviation, but

your job and your -- the work of the institute has looked a lot deeper. So what are the sort of things that would overnight be problematic?

RUTTER: So one of the questions for example, there was report out by the U.K.'s National Audit Office, that's the sort of body that looks at how

government is doing it. Went in really deeply to the state of preparations and after the department I worked -- in the Department of Environment, Food

and Rural Affairs, that's really affected by Brexit.

Because about 80 percent of our laws on environment, food, agriculture all come from Brussels. So it's really massive, we'll be affected by the

change. And they were looking for example at how businesses from here could export food after Brexit. That depends on a whole bunch of

agreements that at the moment we're a party to because we're a member of the EU.

If there's a no deal Brexit and an acrimonious no-deal Brexit, then all those agreements fall away. So what they're saying is officials have had

to prioritize, they think they could get about 15 of the 153 agreements that we're party to as part of the EU in place by March 2019.

[15:35:00] Covering 90 percent of exports, of our exports that gets -- that means 10 percent would be uncovered. So that's a bit of a mess, and

that's probably relatively optimistic that it seems everything is going quite well.

QUEST: But if you decide to have a Brexit bill, the grand -- the Great Reform Bill that would import EU law into the U.K.'s domestic law. Will

that not help?

RUTTER: So it helps, we've done that, that bill is now on the statute book. There's a whole world to -- of secondary legislation, which is

actually what you need to really transfer that --

QUEST: But that comes with it.

RUTTER: No, it's -- the government I think introduced about 40 pieces of secondary legislation, needs to introduce around 800 pieces of secondary

legislation between now and February next year to have the statute book ready. But actually, that's part of the story, that gives people certainty

about what rules we're applying here.

It doesn't mean that the EU is going to recognize those rules. So that's the sort of interesting part. And the EU has made pretty clear in a

serious of notices they put out in January that just because we're applying the same rules doesn't mean that our agencies are still accredited in the

EU and things like that.

QUEST: Is it an option to extend the deadline under article 50 which is possible?

RUTTER: It is possible, remember though, the second stance in which you can extend the deadline. If the Prime Minister goes to the EU and says we

want to extend, they can agree that there has to be unanimity on that agreement.

There are some discussions now that should produce something else and might be able to do that unilaterally, which is just revoke the article 50 later

and say actually --

QUEST: Well, that's a whole --

RUTTER: That trigger not --

QUEST: That's a whole --


There's a whole question of whether you could actually -- you could revoke article 50 which is a subject that we should talk about on another

occasion. Thank you very much indeed.

RUTTER: You're welcome.

QUEST: Good to see you, thank you very much indeed. Tensions between China and the United States are rising after Washington imposed sanctions

against the Chinese military for buying Russian weapons. Now that China and Russia are biting back with a sharp warning, either revoke the

sanctions or bear the consequences.

Richard Haass is the president of the Council on Foreign Relations. He joins us now live from New York. Just to remind you, when I read this,

this is a strange one to some extent, because it begs the question, I mean, what did the U.S. think China was going to say when they did.

To -- arguably, as part of the -- Chinese are concerned, they're -- the U.S. is interfering in matters that they've got no concern of theirs.

Where do you stand on this?

RICHARD HAASS, PRESIDENT, COUNCIL ON FOREIGN RELATIONS: It is odd. You've just had these larger, and I think they still maybe going on Chinese-

Russian exercises. Normally have problems with countries like Turkey that are buying Russian equipment, at the same time, they're buying American


We don't want things compromised, but it's not as though we have, shall we say a close military supply relationship with China. So I'm a bit

perplexed, I will join you in that.

QUEST: And in the greatest scheme of the rising tensions on trade tariffs, is this sort of a tangential soar that's going to pour salt into the wound

to mix the matter for us. I mean, in other words it has no direct effect. But relations between the U.S. and China are so bad, they're really just

getting worse.

HAASS: This seems peripheral, I agree. You've got a fundamental U.S.- Chinese confrontation over several things, most importantly over the trade imbalance and even more than the numbers over Chinese theft of intellectual

property requirements to technology be transferred over state subsidies.

Essentially, I think it's a pretty wide spread consensus in the United States now that China has exploited or gained its time in the World Trade

Organization in way that were never intended. Now, where there's a debate is over how to push back with tariffs or other tools.

This seems peripheral. The other big concern is over obviously China's push, whether in the South China Sea with the Belt and Road Initiative,

more broadly or more assertive Chinese foreign policy.

QUEST: Let's say we may turn tonight to Brexit, you've obviously followed the development of the day, you've got Salzburg, shambles of a summit,

you've got Theresa May's stern statement and you've got Donald Tusk tonight.

Richard, is the foreign policy world concerned about the ramifications and fallout for Brexit or is this just now starting to become something that

everybody accepts the U.K. will suffer more than anybody else?

HAASS: I think there's a view that if it goes ahead, the U.K. suffers more than everybody else, but if the U.K. suffers, so too does Europe and so too

does the United States. The U.K. has been obviously a central part of European security and the Anglo-American relationship at least until

recently was our most important.

[15:40:00] So nobody sees any strategic or economic good becoming of this. You know, it's seen as a distraction at best, on the other hand, we've got

an awful lot of other things to worry about. But I think there's still hope against hope amongst the foreign policy crowds such as myself, then

maybe there's a second referendum or some other mechanism by which Brexit doesn't happen.

QUEST: We've got the United Nations GA, the General Assembly starting during which or at least during the month the president will also hopefully

-- the U.S. president is -- chair a committee meeting in person. Whenever I watch the GA, I always wonder what's the purpose of all these leaders

trekking to New York to give their speeches.

Do you think it still has purpose?

HAASS: The GA, the former sessions, the speeches, no, those are essentially there for home consumption, what is to signal a message to

mother country, but that's not negotiation, that's the public theater of the UN. Yes, there's also -- is a side meetings as you know, also it's a


But again, I think what basically you're going to see from President Trump is publicly trumpeting American sovereignty, the importance of America

first, that's for domestic consumption. And you'll see a very strong anti- Iranian message which is obviously consistent with the economic pressure the U.S. is putting on Iran both directly and indirectly.

QUEST: But you're not seeing as I understand it, you're not seeing a different message being portrayed at home than and a different message

being portrayed overseas. In other words, nice overseas, nasty at home. A good cop, bad cop. From the president, we seem to have been getting both.

I mean, not you -- it's all one way, it's all in one direction, it's all attacking nasty.

HAASS: Well, you know, I think you know, what people who are critical of it would say is that you're seeing bad cop, bad cop. You're seeing a very

confrontational approach between the United States and the world. And again, the emphasis will be on the Iranians who are seeing us carrying out

something of an imperial foreign policy in the Middle East.

And again, I think this will play pretty well in America because the president is going to emphasize when he goes to the UN that we're not going

to allow the UN of multilateralism or broadly to interfere with what we see as our vital national issues. I don't know if you saw last night, Richard,

the president was giving one of his rallies and he said I was elected as president of the United States, I'm not president of the globe.

So he was really clear, and that's his -- that's his message.

QUEST: Richard, finally, you just raised that -- as one of the leading voices in foreign policy, how do you view the president of the United

States saying that?

HAASS: I think it's short-sighted, it's truly he was -- he's not president of the globe, but he seems to underestimate the degree to which American

leadership in the world can affect the world which in turn will affect us. He wants to make America great again -- I don't see how he succeeds if the

world unravels on his watch.

And that seems to me what's missing from his foreign policy, an appreciation of what goes on out there, how that will affect what goes on

here at home. And until he connects those dots, I don't think -- you know, to use his language, I don't think he can make America great again.

QUEST: Richard, have a great weekend, I'd love to have you right back here --

HAASS: Thank you.

QUEST: Now, as we continue tonight, adapt or die, tech firms are facing more scrutiny than ever before in Europe. After the break, how one Italian

start-up is rising to the challenge.


QUEST: The European Commission has ramped up its scrutiny of big technology companies, and they are having to move with the times. Italy's

highest valued tech company is start-up FacilityLive, its chief executive has been working with the EU on tax and policies and can see plenty of


Gianpiero Lotito, good to see you, sir.


QUEST: What is it that tech wants from the EU, and what is it that the EU is not prepared to give you?

LOTITO: There's an imbalance from the market in this year, because California, the U.S. company of the first company has different rules from

the European company, and this creates this imbalance, so it's very difficult to become competitive and to create tech giants in Europe --

QUEST: But what are they asking you to do that your competitors in the far East or in the U.S. don't have. What restrictions do you face?

LOTITO: More of the restriction, there's a less neutrality because Europe is most neutral environment in front of the companies. So the other

governments help the company and consider strategic the digital industry.

QUEST: A lot of noise is made by Donald Tusk and Jean-Claude Juncker about the importance of information technology, a new digital economy. You're

basically saying they do a good talk, but no walk.

LOTITO: No, they are -- they are working now a lot because in the last one year, eighteen months, there are many regulations that are going on. And

probably, I think that the European Commission will consider also how to help them more of the tech giants in Europe to establish the first digital

industry in Europe that is missing now.

QUEST: It often seems that the competition commissioner is held bent on attacking certainly U.S. tech. For, whether it'd be Google or Amazon, in

the past it has been Microsoft, Apple got clobbered over taxation. Is tech getting treated unfairly do you think generally by the Commission?

Do they fail to understand the significance of tech?

LOTITO: Maybe the problem is not that they're unfair. The problem is that to have the same condition to compete because they --

QUEST: But they obviously said the U.S. rules is -- as too wrong -- much the wrong word if I said followed them. They obviously think the U.S. is a

land of largesse and open season.

LOTITO: Yes, but for me, the problem is here, it's not there. Because if we are at the possibility to grow fast and to consider the digitalized

industry as a strategic industry as the Europe made in the past for aerospace and other, we can then -- we left the possibility to have the

first four, five tech giants that will make the traction for all the environment in Europe as Apple, Microsoft in the '80s.

For example, or the giant Alibaba for example in China, we miss now the possibility to grow up fast in Europe.

QUEST: Very interesting sir, thank you very much indeed --

LOTITO: Thank you.

QUEST: Thank you for coming in.

LOTITO: Thank you.

QUEST: When we come back after the break, I've got a board game for you, it's brand new, and it's all about Brexit. The question is can you get a

deal without going bust?


QUEST: We've talked a lot about Chequers with regards to Brexit, the Prime Ministerial residence that is rather than the board game. The talks

themselves might be better resembling a game of Snakes and Ladders and there's plenty of risks involved.

Now, one Brexit academic has conferred to creating his own Brexit board game. He's Lee Rotherham; the creator and director of Red Cell Think Tank.

He's with me now. Good to see you sir, how does it work?

LEE ROTHERHAM, DIRECTOR, RED CELL THINK TANK: The blue -- it's intended to simulate the real world. It's divided into three parts, so the very top,

you've got the negotiation part, we are trying to get the points down, the middle part, you've got politics and the parliamentary side of things, and

the bottom, woe beside you if you get into that, that's the possibility of another referendum.

QUEST: These are the cards that will tell me --

ROTHERHAM: These are the cards.

QUEST: I get 20 points for single market membership, so I'm building points, is that right?

ROTHERHAM: The only deal is that, you start out with a faction --

QUEST: Right --

ROTHERHAM: Which has to be generated --

QUEST: One --

ROTHERHAM: So take that one for instance and I'll take this one --

QUEST: Right --

ROTHERHAM: So let's for the sake of the viewers show what we've got.

QUEST: I've got no targets deal, you see this EU slowly becoming a super state, get the U.K. out of the EU fast.

ROTHERHAM: So that's when Jacob Resmock(ph) --

QUEST: Right --

ROTHERHAM: Got a concept --

QUEST: So this is what I have --

ROTHERHAM: So your objective are the points score on that card --

QUEST: Right, so I'm aiming for Brexit --

ROTHERHAM: You're aiming for really low score and I am going for the other end of the table because I basically wanted to stay so cautiously in the

EU, so I'm aiming for a full 50 points. So I want a big score at the top here again and again.

QUEST: Why did you do this?

ROTHERHAM: Three reasons. First though, I bought games, so it was a little bit of self-interest, secondly, it's a tremendously difficult

subject and covers such a vast scope of government, and I wanted to try and make it a little bit more accessible.

QUEST: And these are the sort of things -- all players pass on two random cards, the person will never have the government reshuffle.


QUEST: High profile debate in parliament, have a vote there on which side gets the bonus from the cover edge.

ROTHERHAM: Exactly. So as I say, there are three separate games going on here, you're trying to get the deal which is what -- which is closest to

the deal card which your faction wants. You having the arguments in parliament about whether or not, that's going to stand or fall and then

there's the prospect of having a battle royale in another referendum or not.

QUEST: Are you a Brexiteer or a remainer?

ROTHERHAM: I am very much a Brexiteer, in fact, I was part of the whole vote leave campaign. I've tried to be a --

QUEST: I've got to say, so you fix it --

ROTHERHAM: New often balance --


No, on the contrary, if you look at the cards you'll see a wide range of possibilities and how it can work out.

[15:55:00] So anybody can win this. The only time you lose is if there are a new cards on the table, it would be absolute end, that's when you've

got an absolute collapse in the talks and planes don't take off, ski instructors can't teach overseas.

You have medicines which can't cross the border and you have a complete North Korean level of negotiations.

QUEST: Does that have to be --

ROTHERHAM: Everybody owns this -- yes, the first time I road-tested it, we had somebody who was so far away from their points that they ruined the

game for everybody else by completely self-destructing everything.

QUEST: And can --

ROTHERHAM: I hope that doesn't happen in real life --

QUEST: Tonight -- you know, I was about to say tonight, we seem to be -- the word is impasse according to the Prime Minister --


QUEST: Which means of course stalemate.

ROTHERHAM: It does, but as we know for me, your parts fix the pass and impasse always precedes a pass.

QUEST: Which means --

ROTHERHAM: The journey way --

QUEST: The passage, yes, as credibility dented, remove all expert cards, sir --

ROTHERHAM: I think I should go then.


QUEST: Good to see you --

ROTHERHAM: Thank you very much --

QUEST: Thank you very much indeed. I'm looking forward to having you around at some point. We'll take a profitable moment after the break.


QUEST: Tonight's profitable moment. It was a fascinating day today. Theresa May statement was different than anything we've heard before.

There was a hint of hurt, a hint of offense and certainly, a dose of anger. She basically made it clear what we've really always known, this is going

to come down to a split between one of two sides.

Whose integrity will be compromised? Will it be the integrity of the United Kingdom creating a border down the Irish sea, but hiving off Northern

Island into some sort of Customs Union with the south or will it be the integrity of the EU that is compromised by allowing Britain some sort of

privilege access for goods into the union, thus breaching the single market.

It is fascinating because this was exactly the problem that was always going to come to rear its ugly head. From day one, we knew that there was

going to be this issue. But guess what? It's arrived and there's no easy solution to sorting it out. I don't want to be pessimistic on a Friday

night and leave you with that thought.

But frankly, anyone who has looked at it has basically said there is no easy or obvious answer, and that is not going to change. And that's QUEST

MEANS BUSINESS for tonight, I am Richard Quest in London. Whatever you're up to in the hours ahead, I hope it's profitable.