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QUEST MEANS BUSINESS
U.S., Brazil and Others Recognize Guaido as Venezuelan President; Maduro Gives Fiery, Defiant Speech from Presidential Palace; Trump and Pelosi Duel Over State of the Union; Footballer Emiliano Sala Sent Audio Message to Family Before Plane Went Missing; Coca-Cola Pushes for a Waste- Free World; International Labor Organization Demand for Workers' Rights Around the World; Trump Addresses the American People as Pelosi Cancels State of the Union Address; The Dow Is Up, The Other Indices Are Lower; Japan's Prime Minister Is Calling For An Overhaul Of Global Trading Rules; The Hemming And Hawing Over Brexit In The U.K. Has Prompted Another Company To Back Away From London. Aired: 3-4p ET
Aired January 23, 2019 - 15:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
RICHARD QUEST, HOST, QUEST MEANS BUSINESS: We are in the last hour of trade on Wall Street. The Dow is up, the other indices are lower. Tonight
on the program, China tries to reassure the world about its growth, whilst the U.S. warns that growth in the first quarter might be zero. Also on the
program, an exclusive interview with the Prime Minister of Spain. He talks about his policy, his government's policy, towards Gibraltar in a no-deal
We're live from the World Economic Forum in Davos. I'm Richard Quest with Sidney Snowbot flashing different colors. Well, tonight, together, we mean
Good evening, tonight from a freezing Davos, the U.S. government shutdown, corporate earnings, trade developments - they're all battling for influence
over the markets. And only moments ago, President Trump said the trade negotiations are going well. We'll have all --
(BEGIN VIDEO CLIP)
DONALD TRUMP, PRESIDENT OF THE UNITED STATES: China very much wants to make a deal. We'll see what happens. I like where we are right now. We're
doing great as an economy. They're not doing very well because of the tariffs, but as you know, fairly soon that the deal I made with them will
come off, the tariffs will be substantially increased on China. They're paying billions of dollars to the United States Treasury, first time we've
ever done that, first time we've ever had money coming the other way from China. It's always been a one-way street. But I have a very good
relationship with President Xi and we will see what happens. But we're doing very well in our negotiation with China. One way or the other, it
doesn't matter, one way or the other, we're going to do well.
(END VIDEO CLIP)
QUEST: Now, first, the effects on Wall Street. Take a look at the Dow Jones and we can see just how the day progressed. It was cheerful at the
morning and then it disappeared and then actually ran negative early afternoon and then it got cheeriness again in the afternoon. And it's
difficult to find the reasons why other than rumor, counter rumor, gossip and strong earnings from Proctor & Gamble, IBM, and United Technologies.
It's IBM perhaps that's propping up the market. I know we don't say that very often, but IBM is up 8 percent on its good results.
The S&P and the NASDAQ choppy there. Materials and energy stocks are showing the worst of the day. When you have those two down and you have
the Dow up, although small losses by the S&P, so we won't make too much of it, but it does imply that there's only one or two Dow stocks that's
actually propelling it ahead.
Investors are watching for any signs of progress in the trade talks. China's Vice President took to the stage here to defend the global trading
system and in doing so, took some swipes at the Trump administration. Wang Qishan spoke out against bullying and self-claimed supremacy, a reference
to Trump's America first policies and he said the U.S. and China need each other.
(BEGIN VIDEO CLIP)
WANG QISHAN, CHINESE VICE PRESIDENT (Through a translator): For the Chinese and U.S. economies, I believe they are in a state of mutually
indispensable. This is a reality. Either side can't do without the other side, so the conclusion is that there has to be mutual benefit and win/win.
Cooperation serves both interests while confrontation harms the interest of both sides. This is a basic judgment.
(END VIDEO CLIP)
QUEST: Joining me now, Ambassador Michael Froman who served as the U.S. Trade Representative. Good to see you, sir.
MICHAEL FROMAN, FORMER U.S. TRADE REPRESENTATIVE: Great to see you.
QUEST: The comments from the Chinese delegation today, from the Vice President, what did you make of them?
FROMAN: Well, I think he was primarily trying to reassure the audience here the status of growth in China, despite the numbers that we're seeing,
and also, of course, to isolate the United States and point the fingers at the United States for being responsible for the current state of affairs.
QUEST: He was - he got a good listening to here, didn't he? He was well received, even though there was an element of hypocrisy talking about
inequality when your own country's inequality is growing faster than anybody else's.
FROMAN: I think he was well received, but, of course, it's - comments alone against Chinese policies are on a wide range of areas, I don't think
are going to necessarily change people's perception. The Trump administration is focused on a number of Chinese practices that have been
of concern to administrations for years, and many of them are legitimate, but that's why it's so important that these talks make progress.
QUEST: The President of the U.S. just then said that if the progress isn't made, then it would be back to tariffs as normal or full tariffs and even
more. Do you fear that?
FROMAN: Well, I do because tariffs are easy to put on and difficult to take off. We have a 25 percent tariff on trucks in the United States -
pick-up trucks - because of the chicken war of 1963 with the European Union. The European Union kept out our chickens and we put a 25 percent
tariffs on trucks and it remains there today.
QUEST: Have you ever - in your job when you were USTR, didn't you ever just say to the Europeans, "This is just silly, I'll take off this, you
take off that," easily done, sign on the dotted line?
FROMAN: Well, look, I think the --
QUEST: I'm curious, though, what was it like? Did you ever get to where you could just do that?
FROMAN: We talked about eliminating tariffs on a lot of products, but when you have tariffs in place, you begin to develop constituencies that like
the tariffs, that want to keep them in place and that becomes then a very big political issue and a difficult negotiating issue.
QUEST: So U.S. steel, for example and the U.S. steel industry that is very profitable now, arguably, artificially because of the tariffs?
FROMAN: I think they're benefitting from the current tariff situation and I think they'll probably want those tariffs to stay on for as long as
QUEST: Do you fear that this trade war, my words, not yours, do you fear this trade war with China is going to get worse?
FROMAN: I think we're in for a prolonged period of scratchiness. I'm hopeful that the administration and the Chinese leadership will be able to
reach agreement and there's really two different kinds of agreements. One on them buying more of our exports and the other really on dealing with the
QUEST: Which is really more important.
FROMAN: They are.
QUEST: Right, going for a blue.
FROMAN: All right.
QUEST: All right, you can go anywhere on that, you can write your own, you can join in somebody else's.
FROMAN: I'm going to circle division.
QUEST: This is a powerful one. People like this.
FROMAN: It is because I think we're seeing political division which is paralyzing governments from taking action. We are also seeing division,
there's a lot of talk here about digitalization and gaps between those who have digital capabilities and those who don't and all the private sector
need to fix that.
QUEST: Good to see you, sir. As always, and thank you for being so generous with your time on "Quest Means Business."
FROMAN: Thanks for having me.
QUEST: We very much appreciate it. Thank you. Japan's Prime Minister is calling for an overhaul of global trading rules. Shinzo Abe is trying to
prevent a repeat of last year when President Trump threatened to slap tariffs on Japanese cars. The Prime Minister told leaders here the WTO is
not keeping up especially when it comes to government subsidies. That, he said, has eroded confidence in free trade.
(BEGIN VIDEO CLIP)
SHINZO ABE, PRIME MINISTER OF JAPAN: I call on all of you, ladies and gentlemen, to rebuild trust toward the system for international trade.
(END VIDEO CLIP)
QUEST: if you look at the "World of Worries," we have the trade war, we've got warnings about growth and we've got worries about pessimism. Lots of
people are saying we're too pessimistic. Geopolitics from the Ambassador, division from the ambassador, divisiveness and indifference, all of these
issues could create or could trigger a downturn, so who is right?
Get out your phones, tablets or computers, go to cnn.com and cast your vote. Think of it as your own version of the "World of Worries." Are CEOs
and world leaders too pessimistic, about right, or too optimistic? cnn.com/join.
John Defterios is with me to talk about this. John, good to see you, sir.
JOHN DEFTERIOS, EMERGING MARKETS EDITOR, CNN: Thank you.
QUEST: So this prospect and this pessimism that is here, yesterday, I felt it. Everyone was very pessimistic. Today, I felt everyone was saying, we
are too pessimistic - enough, enough pessimism.
DEFTERIOS: No, in fact, I agree with our viewers. Too optimistic, 64 percent. I say this because if you rewind the clock ten years ago ahead of
the financial crisis, we were here and covering it and nobody indicated we were going to have a crash like that, the shock to the external system
So I think, confrontation is a key word right now. Donald Trump is saying we're proceeding with the trade talks and they're going very, very well.
What could happen here, Richard, as we get to March and the two sides have to put their guns away and say this is not good for anybody because of the
tariffs and the slowdown in China and what it means to the U.S. economy at the same time.
QUEST: But here, John, here, the bankers I've spoken to in the halls, they say "What is it with you guys? All this pessimism." Yes, there is a
slowdown underway, but it is not an Armageddon.
DEFTERIOS: No, it is not an Armageddon. Three and a half percent growth is not bad. We like to think global growth of 4 percent is where we should
be, right, so it's slower than expected but what if we have an external shock? What if they don't have a trade resolution and we're carrying that
level of public debt in the western economies right now and in the emerging markets.
DEFTERIOS: Richard, what are the tools that the essential bankers have to fight it? That's the biggest risk.
QUEST: What are you hearing? What are they saying here?
DEFTERIOS: Well, it was interesting after the speech we heard from the Vice President of China, I talked to a CEO from Asia, one from Europe, and
one from the Middle East, and they said look, "I'm glad he's taking a hard line, a firm line with Trump so they don't get bullied," because it's a
rising economy that's going to double in ten years if they can maintain a growth of 6 percent to 6.5 percent.
QUEST: So do you spot a division, not necessarily a division necessarily within societies, but putting it crudely, China is winning friends?
DEFTERIOS: Absolutely is winning friends.
QUEST: Or buying friends.
DEFTERIOS: And particularly - I wouldn't say buying friends, but I seat in the Middle East, normally, Richard. They've tilted to the East, right,
they have partnerships with India and China. India is growing faster than China right now. If they can maintain this growth I'm talking about, the
GDP will double in 12 years. That's where the growth is. Let's be honest. They're playing a pretty tough game though, right now.
QUEST: John --
DEFTERIOS: Oh, when is it?
QUEST: Not yet.
DEFTERIOS: It's none of those.
DEFTERIOS: It's none of those. I'm going to keep you guessing.
QUEST: I shall be so lucky. Good to see you.
DEFTERIOS: Whose show is this anyway?
QUEST: I'm glad you asked. As we continue tonight, three European leaders and three visions of the union's future. You'll hear the Germans, the
Italians and my exclusive interview with the Spanish Prime Minister next. Where did he go on the board?
QUEST: It looks beautiful. It is cold. It's about minus 10 Celsius. You can work that out in Fahrenheit yourself, but it is a stunning setting for
the World Economic Forum. Here today, Spain's Prime Minister says he's confident his country can find a solution with the United Kingdom over
Gibraltar. It comes amid reports Spain is trying to force the E.U. to recognize its claim to Gibraltar in the event of a no-deal Brexit.
Pedro Sanchez joined me earlier. It's an exclusive interview when he says he's not creating a new dispute. He is trying to solve the problem.
(BEGIN VIDEO TAPE)
PEDRO SANCHEZ, SPANISH PRIME MINISTER: I think we always have this dispute with the U.K. government, but we have a very constructive approach. I
think that we need to give opportunities not only for the people that lives in Gibraltar, but also in the surrounding.
SANCHEZ: And we already reached agreement with the British government in order to manage this transition period. So I'm confident that we will find
a solution, a constructive solution with the U.K.
QUEST: Right, but this is about if there's a no-deal situation and you are requiring --
SANCHEZ: There's no-deal.
QUEST: And you're requiring all E.U. legislation to recognize Spain's legitimacy over Gibraltar.
SANCHEZ: Not - the legitimacy will be the law, the relation between the Gibraltar and the European Union and this is something that, of course, is,
I believe, in the interest of Gibraltar, a government to do through the Spanish government.
QUEST: But you are going to get the E.U. to recognize your claim in a way that you've not been able to as long as the U.K. was a member of the E.U.?
SANCHEZ: Well, what I think is that we need to think about the people that lives in Gibraltar and in the surroundings. I think that we need to give
them an opportunity, that we need to re-establish a new relation between the Gibraltar and Spain and of course, with the U.K. So I'm not creating
any new dispute with the U.K. government. What I want is to solve this problem, a historical problem, and I think that we're very close to doing
QUEST: Let's look on the question of migration, the issue of migration. Spain has been more accommodating than its neighbors in this sense. You
take - and you've had a much greater demand, you are now the front line in this.
SANCHEZ: We'll always be the front line with all the European Mediterranean countries. I think it's very important to have a very deep
and strong relation with Morocco, which is a very important country, in order to manage the flows.
QUEST: But as other countries refused boats? Italy, for example, refused to - are you worried that you will become the default destination?
SANCHEZ: Well, what I think is that migration is a common challenge that we're facing not only the Mediterranean countries, but all the European
QUEST: You want more money. You've said that there's not enough money being put forward by the E.U. for this?
SANCHEZ: What I think is that we need to strengthen our ties with the countries of origin and countries of transit. That means that we need to
create structural ties and structural relations between the European Union and Morocco.
QUEST: Do you fear that this is going to get out of control next year or this summer? Do you fear that you're going to be left in the default
position carrying the responsibility here of burden sharing?
SANCHEZ: I see a lot of empathy from the European Union Commission and from the member states of the European Union, so I think that we are going
to manage this situation in Spain and elsewhere.
QUEST: Choose a color.
SANCHEZ: Of course, red.
QUEST: Everyone says, "Of course, red." Look. All right, you know how this works. You can sign on to somebody else or you can write in your own
somewhere in the spaces that is left.
SANCHEZ: Okay. I would say digital skills.
QUEST: That you say is being the biggest worry? Biggest potential problem that you need to work on?
SANCHEZ: Because it means opportunities. It means education. It means productivity, competitiveness, and prosperity.
(END VIDEO TAPE)
QUEST: Let's continue that thinking of what the future looks like. We saw two competing visions as leaders from two of the largest Eurozone economies
made their pitch to Davos today. Angela Merkel of Germany was here and she defended globalization even as she faces an economic slowdown at home. She
was quickly followed by Giuseppe Conte of Italy, who says his populist government shows Europe's future direction.
Together, they painted today two very different pictures of the state of the European Union.
(BEGIN VIDEO CLIP)
ANGELA MERKEL, GERMAN CHANCELLOR (Through a translator): We have seen that we can only make progress if we abandon this way of thinking that we can go
GIUSEPPE CONTE, PRIME MINISTER OF ITALY: The European public opinion has considered for years the European project as the tool to tackle these
challenges, but now it is questioning its validity and credibility.
MERKEL (Through a translator): If you ask the people in our countries, the belief in a stable, international, financial system has, indeed, been
CONTE: This is the Europe we Italians dream of. A Europe of the people, by the people, for the people.
(END VIDEO CLIP)
QUEST: And "Ode to joy" underneath it all. Well, it's ten years since we launched "Quest Means Business" right here in Davos. In many ways the same
issues are still plaguing Europe -- growth, bureaucracy, integration. A decade ago, the European Commission President or then President was Jose
Manuel Barroso. He told me then, Europe needed to stick together.
(BEGIN VIDEO CLIP)
QUEST: President Obama has been elected, taken office and the plan is before Congress and it's about to be passed. In Europe, you're still
talking about implementing it. Where is the urgency, Mr. President?
JOSE MANUEL BARROSO, FORMER PRESIDENT OF THE EUROPEAN COMMISSION: One thing we have to understand, we are all together in this. We are all in
the same boat and we have to find global solutions and the solution has to be open economies but, of course, with the proper regulation.
(END VIDEO CLIP)
QUEST: Open economies. Back then, Alex Stubb was Finland's Minister of Foreign Affairs. He went on to become Prime Minister of the country. He
is now Vice President of the European Investment Bank. Ten years on since then, crisis. We were in the heart of it then. We're clearly not in a
crisis now, but the problems sometimes just seem to be the same.
ALEX STUBB, VICE PRESIDENT, EUROPEAN INVESTMENT BANK: Yes, definitely. I mean, last year when we stood here I said Europe is back. Now, I say
Europe is back to normal. But to be honest from 2008 to 2016, it was full- on crisis mode. It was crisis management from the Eurozone to migration and what not. So it's a slightly edgy time right now and to be honest, I
think 2019 is going to be important for Europe?
QUEST: In what in sense? I mean, besides Brexit - but the obvious is Brexit.
STUBB: Well, Brexit is the thing and then of course, we have European Parliament elections and a number of national elections, nominations and
these kinds of things. And also, there is a geopolitical fight going on right now and Europe is being squeezed between the United States and China.
QUEST: Okay, and the United States is not doing much to help itself with the Europeans. Is there still a transatlantic bias in Europe?
STUBB: Definitely. I mean most of us are very pro-transatlantic and I don't think we should throw the baby out with a bath water. We have a long
history, we share common values as well. When times are difficult with President Donald Trump, I would say that we need to focus on something
concrete and I think, probably digital, artificial intelligence, these kind of things we can work together with the Americans.
QUEST: Okay, but just look at - I mean, Europe are the masters of fudge and moving around problems, rather than dealing with them. Angela Merkel
goes next year or the year after. You've got the right wing in Italy. Spain has a new government. You've got problems in France that are
extremely serious, and you've got Brexit. And then you end up being the new Commission President.
STUBB: Yes, and I think, probably what we need to do is to stop thinking about the European as a utopia, some kind of an illusion or perfection.
It's completely imperfect.
QUEST: You were the one - you were one of those extolling that very virtue.
QUEST: Maybe not in those words.
STUBB: No, I'm very pro-European, but we always have to understand that the E.U. will be less than a nation state more than an international
organization. It will never be perfect. It will always go in three phases.
First there's a crisis and then there's chaos and finally, there's a suboptimal solution. So let's live with it.
QUEST: Right. Where are we in the Brexit situation? We've certainly had the crisis.
STUBB: Yes, I think we're in chaos.
QUEST: We're in the chaos?
STUBB: Yes, no, I definitely think so. I mean, we are in a situation where the population rejected membership in the European Union and the
Parliament rejected the new treaty and the new agreement.
QUEST: Maybe that's because Europe didn't give enough?
STUBB: No, maybe it's because Brexit is utter stupidity. It is, in the modern world, one of the craziest things that a nation state can do, it's
like pulling the plug. Basically, it's like leaving the internet. You can always do it, but it's much, much better to try to influence it.
QUEST: Choose your color?
STUBB: I'll go for blue.
QUEST: All right. You're making me do all the work here.
STUBB: You're getting paid for it.
STUBB: You know what --
QUEST: I'll get my own back for that one. Are you going to circle or are you going to add?
STUBB: I think I'm going to think about Richard Quest in an ice bath in Finland, which is going to be the biggest --
QUEST: That's what we are going to be doing.
STUBB: No, I would actually go for pessimism. I think there's way too much about - I can guarantee you that 2019, the world will be in a much
better place than it was in 2018.
QUEST: What do you want your next job to be?
STUBB: I would like to do a Stubb Means Business on CNN, is that okay?
QUEST: I was going to say, you don't want to be Prime Minister, you can't do that anymore. And I'll let you present the program. Good idea. Thank
you. As we continue tonight. The hemming and hawing over Brexit in the U.K. has prompted another company to back away from London.
Sony Europe is moving its headquarters to the Netherlands claimed uncertainty around Brexit. Yesterday, Dyson moved to Singapore. Dyson - or
QUEST: Dyson says Brexit is not to blame for that. I asked Carolyn Fairbairn, the Director General of the CBI if a no-deal Brexit could be
taken off the table. She says, she is still traveling in hope that a compromise could be foundd.
(BEGIN VIDEO TAPE)
CAROLYN FAIRBAIRN, DIRECTOR GENERAL, CBI: We think it could be taken off the table for the 29th of March. It needs to come off the table for the
65-day horizon that we have got, because the fact is that businesses cannot be prepared for that. They simply cannot be. And the damage to our
economy would be so profound that politicians, there needs to be compromise and that is what business is saying.
QUEST: What would you say to those - we've had them on our program, people who say it won't be that bad? Businesses can handle a managed no-deal?
FAIRBAIRN: I just think they need to go out and talk to real businesses around the country. We have just on a survey of businesses across the
country about what this feels like, the impact on the northeast would be up to seven billion pounds in 20 years' time. These are massive impacts.
They just need to go out and hear what business is really saying and the impact on jobs.
QUEST: What about James Dyson moving his headquarters from the U.K. to Singapore? He says it's not an anti-Britain move. Do you accept that?
FAIRBAIRN: Well, I think what it shows is just how very mobile many businesses are in this day and age. And what we are seeing is businesses
weighing up the benefits of different locations and this is why we have to sort this out.
QUEST: Do you accept that Brexit should happen as a result of the referendum? Regardless of the mechanisms, do you accept the vote of the
British people two years ago?
FAIRBAIRN: Businesses have been absolutely clear from the day after the referendum that they respect that result. This is about how we leave and
we need to leave with a deal that protects frictionless trade, access for our services and access to people. Those are the principles and we've been
consistent from the beginning.
QUEST: And the mechanisms of whether we stay in the Customs Union or we have a free trade deal - I mean, I am not so much worried about the two-
year transitional period, I am thinking at the end of that.
FAIRBAIRN: Yes, I mean, there are some outcomes that are not good. I mean, a Canada-style free trade agreement puts barriers in the way of our
trade that would not much better than WTO rules. Something like the deal the Prime Minister has on the table, business can live with. And we've
been really clear about that.
We are still traveling in hope and I admit that hope may run out very shortly, but traveling in hope that compromise can be found and no deal
taken off the table so that we can return to the things that matter.
QUEST: Choose your color.
FAIRBAIRN: I'm going to choose a color and I'm going to go for - I'm going to go for division. And big ideas. We need big ideas.
QUEST: Well, you don't see that every day on the board.
FAIRBAIRN: There we are.
QUEST: Good to see you.
FAIRBAIRN: Thank you very much, indeed.
QUEST: Thank you.
(END VIDEO CLIP)
QUEST: Divisions and big ideas from the CBI. The U.S. delegation isn't here. That trip was canceled as a consequence of the government shutdown.
Now, the (inaudible) is warning, the shutdown could hit the economy harder than previously thought. After the break.
QUEST, HOST, QUEST MEANS BUSINESS: Hello, I'm Richard Quest, there is more QUEST MEANS BUSINESS in just a moment. When U.S. government remains shut
down over the situation on the southern border. I will speak to the central bank chief across the northern border, the Bank of Canada, any
feeling of any effects there.
The Chief Executive of Coca-Cola tells me about his push for a waste-free world. Before we get to that, this is Cnn, and on this network, the facts
always come first. A stunning day in Venezuela's history. The leader of parliament has declared himself acting president as massive crowds of
supporters filled the streets.
These are live pictures that you're seeing from Caracas. They are demanding that Nicolas Maduro step aside. The U.S. has immediately
recognized Juan Guaido as the leading of the countries to follow suit, including Brazil, Colombia, Argentina and Peru. They recognize him as the
Right now, President Maduro is giving a fiery and defiant speech from the presidential palace as you can see, he says he's breaking diplomatic with
the United States and giving U.S. personnel 72 hours to leave Venezuela.
U.S. House Speaker Nancy Pelosi says Donald Trump cannot come to Congress to deliver his State of the Union speech next week. Pelosi sent a letter
to the president saying she would not allow the speech to happen while the government is shut down.
Earlier, President Trump sent her a letter, saying the State of the Union is important to the country. The family of the missing Argentinean
footballer Emiliano Sala confirmed that he sent an audio message to friends while aboard the plane that would soon go missing.
He describes being tired and at one point said it looked like the plane was going to fall down to pieces. But his voice didn't sound alarmed. Today,
the authorities are set to search in the English Channel and now have become a recovery operation.
As we just told you, the U.S. Speaker Nancy Pelosi says Donald Trump cannot come to Congress to deliver his State of the Union speech next week. U.S.
government shutdown is in day 33, no end in sight, and economic damage is looking worse than previously feared.
We've been telling you about the effects of government workers forced to turn to food banks. President Trump's State of the Union in the House
chambers has been canceled, and the FBI investigations are on hold. All sorts of things are being delayed.
All in all, acts upon Cnn, the Chair of the White House Council of Economic Advisors admitted economic growth may flat line.
(BEGIN VIDEO CLIP)
POPPY HARLOW, CNN: Could we get --
KEVIN HASSETT, CHAIRMAN, WHITE HOUSE COUNCIL OF ECONOMIC ADVISORS: All right --
HARLOW: Zero growth? I just want to nail this down --
HASSETT: Yes --
HARLOW: For the --
HASSETT: We could --
HARLOW: We could, OK --
HASSETT: Yes --
HARLOW: Wow --
HASSETT: We could, yes --
HARLOW: All right --
HASSETT: If it extended --
HARLOW: Wow --
HASSETT: For the whole quarter -- if it extended for the whole quarter and given the facts that the first quarter tends to be low because of residual
seasonality, then you could end up --
HARLOW: Yes --
HASSETT: With a number very close to zero in the first quarter. But then again, the second --
HARLOW: The president --
HASSETT: Quarter number would be humongous if the government reopens.
(END VIDEO CLIP)
QUEST: The shutdown is adding to fears about growth and the trade war. A reminder, we want to hear from you, go to cnn.com and cast your vote. Are
CEOs and world leaders too pessimistic, too optimistic or just about right? That's at cnn.com-slash-join.
The governor of the Bank of Canada says he's watching carefully for developments in global trade, housing and oil prices.
[15:35:00] The very facts that will help him decide when to raise interest rates. Stephen Poloz joins me now. Governor, thank you, it's cold and
we're grateful you've waited --
STEPHEN POLOZ, GOVERNOR, BANK OF CANADA: Pleasure to be here --
QUEST: Thank you very much. Just let's get this out of the way quickly. The slowdown in the U.S. is having an effect there. Would you expect it to
have any spill-over effects into Canada?
POLOZ: Well, from the shutdown, maybe some spillovers, but they'll be temporary. And I think when the shutdown is over, we'll get a bounce back
and so we're not really counting that as a macro effect.
QUEST: Right, what are the macro effects that you're most concerned about? Because the slowdown in China, everybody here is talking about it and said
-- and I'm seeing two distinct views, those that say it's bad and could get worse and those who say there's too much pessimism from the first group.
POLOZ: Sure, well, let's go to the root cause though, of any slowdown globally including in China and that's the trade war. So what we need to
do is resolve that. We need to trade peace, not trade war. If we escalate that thing, that's going to be very negative for the world
If we resolve it, it will be a big source of new left for the global economy, especially for China.
QUEST: There doesn't seem any moment as yet that it's just going to be solved, but, of course, it could be. I mean -- but if we take, for
example, the negotiations of the new NAFTA, the USMCA which were told to us to the very last second when it did look like it was going to go over the
POLOZ: Yes, and so there's a very similar example where the markets were assuming that it was to be torn up and that we should be taking a very
negative view of it. And we said at the time, there's two sides to this. It could get resolved in which case it's a positive for investment and, of
course, it could get torn up, in which case it's a negative, and well, it wasn't torn up, it was signed.
QUEST: Are you getting -- starting to get worried that it might get torn up if it doesn't pass Congress? After all, what is -- the president has
said, the president said you approve my deal or I will serve the six-month withdrawal from NAFTA.
POLOZ: Well, that's what he says, so that you would need to abrogate NAFTA. And what -- that would not be a welcomed development, but of
course, then we would need to have the ratification of the new deal, which is almost the same as NAFTA, just some slight --
QUEST: Oh! How do you just spoke a truth that dare not speak its name, that the new USMCA is not that much different from NAFTA?
POLOZ: It's got some improvements, but it's --
QUEST: Right --
POLOZ: There's small ones.
QUEST: Need to quickly ask you about monetary policy. The Fed is taking its foot off the gas until it sees more evidence. ECB is stopping QE. Are
you concerned -- I was going to say afraid -- are you concerned that if this slowdown happens, that central bankers may be called upon again to do
the heavy lifting?
POLOZ: Well, of course, that's possible. I would think that if we have a slowdown in this context, it would be a modest one, and monetary policy
might be the ideal tool to do something about it.
QUEST: But have you got room to do it?
POLOZ: Well, we do have room to do it, of course, but I don't think that's the issue. I think the moderation that we're seeing is one that we've been
expecting. The U.S. economy has to slow to a more sustainable pace, and we're seeing a moderation in China too, which is also to a sustainable
pace. So in that sense, the pessimism is overdone.
QUEST: Choose your -- choose your color.
POLOZ: I'll choose Canadian red.
QUEST: Canadian red.
POLOZ: Yes --
QUEST: Red is very popular.
QUEST: All right, you either ring or add?
POLOZ: Well, I'm going to -- I'm going to ring my big issue right there, which is the trade war. We need trade peace, not trade war.
QUEST: Governor, it's very good to see you, thank you, good to see you, thanks --
POLOZ: It's a pleasure --
QUEST: Have a good Davos.
POLOZ: Thanks very much --
QUEST: Thanks very much. There is one interesting thing to look at, here at Davos, look at this strange sign that we saw on the Davos cannabis, the
Canada cannabis house was actually seen on the promenade. We'll show you what that looks like in a little bit, a moment or two.
Because cannabis, of course, is legal in Canada. It's only partially legal in parts of the United States. The investment between the two, I never
thought I would see that at Davos. When we come back, Coca-Cola wants its bottles back. Next, the chief executive tells me about his vision for a
[15:40:00] (COMMERCIAL BREAK)
QUEST: Coca-Cola. Welcome back. The Chief Executive of Coca-Cola says he wants all his packaging back. There's nothing wrong with it. It's just
there's far too much of it being dumped. Coke says it's pushing for a waste-free world.
James Quincey told me it's become a major priority in a market that's become increasingly volatile.
(BEGIN VIDEO CLIP)
JAMES QUINCEY, CHIEF EXECUTIVE OFFICER, THE COCA-COLA COMPANY: I'm hearing a lot of noise on all fronts actually. I think there's more uncertainty
and more volatility, there's been for a number of years. It's not like we're facing a new headwind, there's less tailwind perhaps, but there's not
a new massive recession --
QUEST: In the -- in the slowdowns, one has always thought of Cola as being recession proof. In the sense you're one of those barometers like biscuits
in a recession. People always buy it. In that sense, when you look at your sales numbers, do you see a slight dip or do you -- are they holding
QUINCEY: When macro economy is -- when the economies slow down, we tend to see a slight slowdown --
QUEST: Yes --
QUINCEY: But it's not a big swing --
QUEST: Right --
QUINCEY: Like durable goods is. So you know, in the end, we go look, we're going to go through the cycle, they'll focus on what we can control
and the things we can do and we'll manage through the ups and downs.
QUEST: You've been trying to get rid of waste for ages. So what's new?
QUINCEY: What's new? Well, this time last year, we set ourselves a very clear ambition. We wanted to -- you know, we've made progress, we were up
well over half of collecting all our bottles back. We set ourselves a target, we want to get all the packages back, 100 percent to the packages
by 2030, and we want to use half of them again in our own bottles.
QUEST: OK, but is this an individual thing or is a philosophical? In other words, when I throw away my bottle of coke zero, plastic or glass or
plastic, and I throw it away in my -- into the recycling bin, and it goes off into the building. You don't physically get that bottle back.
QUINCEY: Yes, I do. It depends on the country, but yes, I do. I buy back huge bales of those bottles, and then I take them to one of my facilities,
I basically chop them up, melt them and make new food grade bottles again. So the -- it's all about creating value for the bottle.
We then create a circular economy. You don't have to give it back to me, but if you put it in the recycling bin, eventually, one of those waste
management companies will put them all together and sell them to me, and I'll use them. It absolutely can be solved. And I think there's a lot of
energy around bringing governments, retailers and manufacturers together to get it done.
QUEST: So what's your next target? So when we speak next year on this subject, what will you be hoping to tell me?
QUINCEY: I am not even hoping, I am absolutely going to come and tell you we made progress. Because if we don't make progress every year, we're not
going to achieve our goal. And we've got a lot of projects with governments around up and running with our peer manufacturers to really
make progress this year.
QUEST: All right, the other area where of course one has to make progress, and I know you have strategies, is the amount of sugar.
[15:45:00] QUINCEY: Yes.
QUEST: It is simply extraordinary the amount of sugar in both -- in a full throttle of beverage of yours or your competitors?
QUINCEY: Well, I mean, some people, you know, they're very active, they have a coke and it's part of a diet that's fine. But in the end, we're
absolutely committed to helping people manage or moderate or reduce their sugar consumptions.
So we've invested a lot in R and D, we've invested a lot in innovation, Coke Zero, sugar tastes even better. You just threw away your Coke Zero
Sugar bottle, there's no calories in that. And those are growing, Coke Zero had its fastest year of growth last year, diet coke in the U.S.
started to turn around last year.
QUEST: Why do you have both?
QUINCEY: We have both --
QUEST: I spent most of my life trying to work out.
What's the difference between Coke Zero and Diet Coke?
QUINCEY: Well, Coke Zero tastes more closer to coke. We've had more time to perfect the formula of Coke Zero. Whereas Diet Coke was the original
diet drink and it stayed as it was many years of --
QUEST: Are you going to get rid of it?
QUEST: You going to get rid of it?
QUEST: I think you will.
QUINCEY: No, I think I would have to go at the same time that I got rid of Diet Coke --
QUEST: Careful. Choose your color, sir.
QUINCEY: I think there's only one color I can choose --
QUEST: And yes, go on -- oh.
QUINCEY: Red for Coca-Cola.
QUEST: Yes --
QUINCEY: I could have gone with Coke Zero with some black, but then I'll leave that for you.
QUEST: No, but I thought you might go for green for, you know, renewable or blue for blue skies. OK --
QUINCEY: Or oceans.
QUEST: Or oceans, yes, but you were -- OK, what are you going to do?
QUINCEY: Look, you know what? I'm tempted to just put a circle around the whole thing.
QUEST: Feel free.
QUINCEY: But I'm actually --
QUEST: Feel free --
QUINCEY: Going to write in here.
QUEST: Twenty first century social compact. What do you mean by that?
QUINCEY: I think that all of those issues speak to some fracturing of the 20th century social compact which created an explosive emergence of the
middle class in U.S., in Europe, in China and lots of other places in the world.
And what drove and created that is being broken off in pieces. All of those -- all of those other points represent a fracture line in the model
from the 20th century, and we need to recreate something that people can believe in.
QUEST: Is it -- OK, is it possible?
QUINCEY: It's not going to be easy. It has to be doable. It has to be done. It is possible, but I think it will take time, it will layer in
pieces that can be solved in the short term and it will have to bring pieces to the long term.
QUEST: And do you see part of your role and responsibilities as CEO to engage on that?
(END VIDEO CLIP)
QUEST: CEO of Coca-Cola. I have no idea whether Sydney Snowbot(ph) prefers a coke, a Diet Coke or a Coke Zero, but I do know why we decided
this year to have a snowbot. It's all about how many jobs will be taken over in the fourth industrial revolution.
Will Sydney(ph) take my job? We'll be talking to the Guy Ryder of the ILO about this industrial revolution and the workers who will lose out.
[15:50:00] (COMMERCIAL BREAK)
The guarantee of workers' rights, a right to learning, safe and a healthy workplace. Some of the key things the International Labor Organization,
the ILO, part of the United Nations have been demanding, have been demanding for some time. In doing so in the face of new technology,
climate change and an aging population, Guy Ryder is the director general of the ILO, joins me now.
Let me apologize, we are awaiting to see if President Trump is about to speak. If I do need to interrupt you --
GUY RYDER, DIRECTOR-GENERAL, INTERNATIONAL LABOR ORGANIZATION: Of course - -
QUEST: I ask for your forgiveness.
RYDER: Of course.
QUEST: We talk about Sydney Snowbot(ph) out there, in fact, heartily, but the reality is, the -- for the first time I think people are seriously
talking here about what is going to happen and how to handle it. Even though they've been warned, now they're starting to think about it.
RYDER: I think you're right. I mean, the reason that we are looking at the future of work in the way that we are, is because we sense this feeling
that people are very disoriented, people are very insecure, people are very uncertain about their future. Not ten years, not 20 years down the road,
but the next year and the year after that.
QUEST: Who is going --
RYDER: And technology is the big deal.
QUEST: Who is going to be affected most? I mean, you know, I can't exactly imagine your job going out of the window, and my job might morph into a
machine doing it, but at some point, somebody has got to read the news.
RYDER: Sure, look, I think, there's an enormous, Richard, world out there, and I think we all know it's those routine skills, it's those things that
should easily be automatable, but they're going to suffer. And there's perhaps the most dangerous thing of all, the people who will be less well
placed to recycle into new jobs are the ones that are likely to be the hardest hit.
QUEST: Right, so how -- you know, from your experience, how are companies -- I mean, work forces are worried, are companies taking advantage of that?
In current paying negotiations and terms and conditions negotiations?
RYDER: Look, I think we're in a situation which is not new, and is not only to do with this issue. Wages are stuck, wages are stagnant, they've
been stagnant falling well behind growth, falling well behind productivity for a very long time. That's not only to do with --
QUEST: If they have --
RYDER: Employers taking advantage.
QUEST: They have started to go up in --
RYDER: Apex --
QUEST: Oh, do forgive me. We need to join Donald Trump who has been speaking at the White House.
DONALD TRUMP, PRESIDENT OF THE UNITED STATES: Tools to work with, naming, we have to have a wall. We have to have a barricade of some kind, a steel
barricade, it's already designed. We're building a lot of wall as we speak, a tremendous amount, and we're renovating a lot of the other wall,
otherwise, by the way, with what's coming up because of the strong economy that we have -- we haven't had an economy like this I guess in over 50
Would you say that's a correct statement?
UNIDENTIFIED MALE: Yes sir.
TRUMP: And because of the strong economy, everyone is pouring up, and we're stopping them, but it's a lot of work. We have an incredible people
at the border, and you have to thank all of the border patrol agents and the ICE agents. I see in Long Island, they don't want ICE, the radical
Democrats don't want ICE there because they're too good.
They're doing too good a job. And I always talk about Long Island, that's one of the real hot-beds for the MS-13 gangs. And I just see this morning
where the really radical Democrats don't want them there because they don't want to do anything to disturb MS-13.
You know, when you think about it, MS-13 is about the most violent gang, they say one of the most violent anywhere in the world, and they have done
-- we're sending them out by the thousands out of our country. So we think it's too bad. But I would say this, that the State of the Union speech has
been canceled by Nancy Pelosi because she doesn't want to hear the truth.
She doesn't want the American public to hear what's going on, and she's afraid of the truth. And the super left Democrats, the radical Democrats,
what's going on in that party is shocking. I know many people that were Democrats and they're switching over right now, and they're switching over
So I hope they know what they're doing for their party, so far they haven't. If you know, I won the Senate, meaning we won the Senate all
together, but we get no credit for that. They don't talk about that, they talk about the House. I didn't have any chance to -- other than a couple
of people like from Kentucky where I went and campaigned for Andy Barr and for some others, they ended up winning their races, but I couldn't campaign
too much. Too many people.
[15:55:00] But we did a great job with the Senate, and people don't want to talk about it. I will say that the American people want to hear the
truth, they have to hear the truth, and the truth is all about -- and said I think and I hope well, we were planning on doing a really very important
speech in front of the House and the Senate, the Supreme Court and everybody else that's there, it's called the State of the Union, it's in
We're supposed to be doing it and now Nancy Pelosi, or Nancy, as I call her, she doesn't want to hear the truth and she doesn't want to hear more
importantly the American people to hear the truth, so we just found out that she's canceled it. And I think that's a great blotch on the
incredible country that we all love.
It's a great, horrible mark. I don't believe it's ever happened before, and it's always good to be part of history, but this is a very negative
part of history. This is where people are afraid to open up and say what's going on. So it's a very negative part of history.
I'd like to start today, we're talking about shutdown, we're talking about some conservative values. These are the great conservative leaders of our
country, and they have very strong views and we'll be doing that after the press leaves. But they're very strong views on the shutdown.
And it's not that we have a choice. I don't think we have a choice. We have to make our country safe. We have done such an incredible job with
such poor tools. We have catch and release -- where you catch somebody and then you have to release that person into our country. We have --
QUEST: Donald Trump there at the White House. We will take a short break and there will be a profitable moment before the top of the hour. Donald
Trump speaking at the White House.
TRUMP: You take a look at the visa lottery. When there's a lottery --
QUEST: Tonight's profitable moment, Guy Ryder, before we heard Donald Trump, the sheer number of issues on the agenda is something quite
remarkable. But probably there is no single issue bigger than what happens in terms of the future industrial relations, the future of the labor
market, the future basically of how we will all earn and spend our money.
And that is QUEST MEANS BUSINESS for tonight. It's very cold out here in Davos. One of the coldest so far of this WEF. But as always, whatever
you're up to in the hours ahead, I hope it's profitable. The day is over, the bell is ringing.