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QUEST MEANS BUSINESS

Lyft Beats Uber In Announcing Its Market Debut; Tesla Finally Gets Where It Wants To Go, The Cheap Model 3; Huawei Will Be Arraigned In Two Weeks In A U.S. Fraud Case; This Week The Court Approved The AT&T-Warner Media Merger; VP Pence: U.S. will Continue Dialogue with North Korea; Salisbury, England Now Free of Nerve Agent Novichok; Russian Foreign Minister: U.S. May Use Military Force in Venezuela; Jay Inslee Launches U.S. Presidential Bid; U.S. Imposes Travel Restrictions on Maduro Affiliates; Optimism on U.S.-China Trade Talks Boosts Wall Street; U.S. Industry Leaders Push Trump Administration to End China's Rare Earth Minerals Monopoly; CNN Exposes Child Slavery on Ghana's Lake Volta; Panama's Flag Carrier Named the Most Punctual Airline. Aired 3-4p ET

Aired March 1, 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: Last hour of trade on the last day of the week and a fascinating one we've got for you here, 26,031. That

would mean if the Dow closes above that, it's the tenth successful week of gains, and if it doesn't, well, the slight record is broken.

We have a nice V-shape going on there which does suggest a bit of a rally towards the close. Wallgreens is the lowest on poor sales and worries.

Nike is at the top. The market as you can see, heavily in the green. We need to understand, though, what is exactly moving the markets.

Your IPO is arriving shortly after Lyft beats Uber in announcing its market debut. Staying with cars, Tesla finally gets where it wants to go, the

cheap Model 3. Elon Musk warns it will cause pain at the company. And it's a "Game of Throne" at our sister company, HBO. We'll explain what

this means for the future of streaming video and the relationship with AT&T. We are live at the world's financial capital, New York City on

Friday. It's March 1st. I'm Richard Quest. I mean business.

Good evening. A unicorn is about to enter the public eye. The ride hailing company, Lyft has filed for a long-awaited IPO on the NASDAQ. It

is looking to raise $100 million, although, that could change depending on demand. It is the first of what investors expect will be a wrath of IPOs

this year, of companies with billion-dollar valuations. Among them Uber, which is Lyft's main competitor. Paul La Monica, Guru La Monica, it's very

good to see you.

PAUL LA MONICA, REPORTER, CNN BUSINESS: Good to see you, sir.

QUEST: Only $100 million, only $100 million. I mean, the stock is supposed to be worth -- the company is supposed to be worth $15 billion to

$20 billion.

LA MONICA: This is just the placeholder, I think, value for now for just what they are going to raise from the offering. They very well could

decide if demand is strong to try and raise more money by selling more shares. We still have no idea what the price is going to be just yet.

QUEST: Right, because $100 million on that sort of level, but the share structure in itself. We'll get onto the why before Uber, but the share

structure an A and a B structure.

LA MONICA: Yes, it's yet another tech company that has the A shares and the B shares. It gives the founders and other executives more voting

rights. It's controversial, but I don't think it's going to change as long as companies are going public with that structure and are still rewarded by

Wall Street for it.

QUEST: So Lyft has gone. When would you expect it to come to market?

LA MONICA: It sounds as if they will probably do their road show within the next few weeks, and that we are looking at a mid/late March trading

date on the NASDAQ, somewhere in that potentially, maybe the week of March 18th.

QUEST: Right. Because I noticed in the prospectus the usual phrases about how they're reserving a certain number of shares for directors and for

those who have preferential access and also for those bankers, customers that always - manage to get first in the line.

LA MONICA: Exactly and what struck me here is you have three main underwriters, but there are 29 banks that were listed overall as

underwriters in the offerings. That's going to be potentially a lot of shares to go around.

QUEST: Right, and those are the shares that go even before anybody else before the market gets its hands on it.

LA MONICA: Right. That's at the IPO price.

QUEST: Right.

LA MONICA: So you don't have to worry about what happens in the aftermarket, if it surges, if it sinks, you're getting locked in at

whatever that IPO price is.

QUEST: Right. Now, so Lyft went before Uber, I think that was probably expected.

LA MONICA: Yes, there had been indications that this was going to be coming very soon. We know that Uber is looking at an IPO as well, but I

think now because Lyft is a pure play on the ridesharing market, particularly in the U.S., you don't have as much international exposure, it

is going to be interesting to see how well do they do, and even if they do well, it's hard to say what that means for Uber because Lyft may do well

because they're gaining share from Uber. They're a little bit less diverse. They are more of a peer play on ride sharing. Uber has the Uber

Eats business and other things that they're trying to do.

QUEST: At the end of the day, this is a one-horse story. I mean it's a one-car story. The market is putting a lot into this.

LA MONICA: Yes.

QUEST: And at the end of the day, the ability for the public to become fickle when that is the only thing you are doing makes this -- I wouldn't

say risky stock, but risky stock.

[15:05:06]

LA MONICA: Yes, I think it is risky. Obviously, they're trying to diversify Lyft and Uber for that matter by getting into bike sharing and

scooters. They know that there are -- particularly for younger people in urban areas that they may not necessarily need a car, but I think that, you

know, a big risk obviously for Lyft and Uber, we've seen it with Uber, reputational risk.

I mean, Uber has had a lot of high-profile problems that if obviously, I think helped them for what? I mean, I stopped using Uber, to be perfectly

honest, and I am now a Lyft customer mainly because of a lot of the problems Uber had. I just couldn't take it anymore.

QUEST: But the moment you travel, the ability -- I mean, one has to say, the ability to use the Uber app seamlessly everywhere from Sydney to Hong

Kong with some questions there -- to everywhere.

LA MONICA: I am not the jet-setter you are. I usually am going from New York to Philadelphia. I am okay.

QUEST: Lots of good -- much of a cultural change going from London to New York. Good to see you. Have a good weekend.

LA MONICA: Thank you, sir.

QUEST: Don't go too far.

LA MONICA: I will stick around.

QUEST: You have -- we're squeezing the assets today. That's all I'll reveal there. On Wall Street, the Dow has given back 230 points gain at

the open. We're at 107 now. It was a positive trade helping sentiment when we kind of expected U.S. manufacturing data halted the momentum. The

magic number is 26,031. If the Dow closes below that, it will be the first down week after ten straight gains -- or ten straight weeks in the gain.

You get what I mean. If it does it, it does it. If it doesn't, it doesn't. Business on the move.

And the "Business on the Move," first of all, Gap stocks rallying 18%. It is breaking into two separate companies. Old Navy and Gap will go their

own ways. They joined other brands that have fallen out of favor with millennials.

Meanwhile shares in Kraft Heinz has fallen. Oh, I do like macaroni and cheese. Now the company which is backed by Warren Buffett says it will be

late in filing its annual report with the SEC. Regulators are probing the books looking for accounting mistakes in procurement.

The French and Dutch governments have promised to work together after a diplomatic spat over Air France KLM. Finance Ministers from the two

countries met in Paris, a joint strategy is expected in June. They'll fly in harmony. And Tesla has finally debuted its long awaited Model 3,

costing $35,000.00. That price point comes after years of what Elon Musk called production hell as there were closed stores and laid off workers to

make that price sustainable.

Peter Valdez-Dapena is here. Good to see you, sir, along with Paul La Monica who is still here. On the Tesla, okay, it's really weird. Tesla is

down 7%.

PETER VALDEZ-DAPENA, SENIOR AUTO WRITER Yes.

QUEST: They've announced the car they've trumpeted is now going to be sold.

VALDEZ-DAPENA: Yes.

QUEST: What's wrong with this story?

VALDEZ-DAPENA: What's wrong with this story is suddenly people are seeing it and saying, "Wait a minute, maybe we didn't really want that," when they

see how much trouble Tesla is having to go through to try to make money with this $35,000.00 Tesla Model 3.

They're having to cut stores, go to an online only selling with a one-week 1,000-mile return guarantee on the cars. So --

QUEST: Why? Why? This is a car that everybody -- or Tesla developed and loves.

VALDEZ-DAPENA: Yes, it's got -- generally speaking don't ask "Consumer Reports," but most people seem to really enjoy it. It's a fun car to

drive. The problem is electric cars are expensive to make, and so that's the rub. That's the problem.

LA MONICA: Yes. I think also, I mean, as you well know, clearly Tesla is getting to the quote/unquote "cheaper electric car" part of the market a

lot later than GM and Nissan and others. There's a lot of competition, and I think it remains to be seen.

I mean, we know that people that are more affluent love their Model S and their Model X Crossovers, but will the average car buyer buy a $35,000.00

Model 3 even though that's the cheapest one?

QUEST: Doesn't that raise the question what is the premium for saying, "I've got a Tesla even though it's a Model 3 and it's $35,000.00," under

your breath versus, "I bought the GM," or "I bought the Ford."

VALDEZ-DAPENA: To be honest with you, I mean, Tesla has some of that luxury panache to it. Luxury brands like Mercedes have been pretty

successful going down into this $35,000.00 space with some of their cars like the Audi 83. Those cars sell very well.

[15:10:04]

VALDEZ-DAPENA: So a lot of people will want that panache. I think the difference is, the comfort level of walking into your Nissan or Chevy

dealer versus ordering a car online, I am really interested to see how that goes.

QUEST: Oh, so that's really -- I mean, but people do look at cars online?

VALDEZ-DAPENA: Oh, yes.

LA MONICA: There's a difference between looking and buying.

VALDEZ-DAPENA: Looking and buying and there are companies like Carvana that sell used cars online and they have a very similar business model.

QUEST: But if you have at least seen it once, somewhere --

VALDEZ-DAPENA: Right.

QUEST: And let's face it, the car you buy you never actually see until you get it, so we're really just talking about a chance to go and look at the

car before going home and mousing your way to the exact specifications.

LA MONICA: Yes, but don't you want to drive it, too? Have you ever bought a car without driving it, right?

VALDEZ-DAPENA: Me, I have not, but I am a little extreme in sense. I actually went to -- when I bought my wife's new car, I said, "No, that was

-- the thing just did around the block? That was not a test drive." What we need to see here is whether customers are ready to make this leap. I

can remember when I would have thought of buying shoes online without trying them first.

QUEST: What car do you drive?

VALDEZ-DAPENA: At my house, we have a Mazda 3.

QUEST: Ooh.

VALDEZ-DAPENA: Very nice.

QUEST: Yes, and you?

LA MONICA: My wife is a driver. I sadly have these issues that prevent me from driving.

QUEST: What does she drive?

LA MONICA: You already just mentioned it, we have an Audi A3. It makes us feel more affluent than we are.

QUEST: And me, well, I just take the bus. The subway. I haven't owned a car for the last 15 years. Good to see you, sir.

VALDEZ-DAPENA: Thank you.

QUEST: Actually, I'm probably the worst of all. I sort of will take a car -- good to see you, thank you.

LA MONICA: Thank you.

QUEST: Enjoy. Now, don't believe everything you hear. That is the message that is from Huawei in a full page ad in U.S. newspapers. The

company will be arraigned in two weeks in a U.S. fraud case. All of this pressure on the embattled giant could be good news for Huawei's

competitors.

For example, Cisco's CEO says he is confident he can beat Huawei in the 5G race. He told Samuel Burke, governments can't fully inspect complex

equipment, the sort that is in 5G infrastructure.

(BEGIN VIDEO CLIP)

CHUCK ROBBINS, CEO, CISCO: What we do is incredibly complex. In our products, we have hundreds of millions of lines of code, so for anybody to

actually think that they can go and inspect the code and then walk away and feel confident, I mean, that to me is not how this is going to work.

There's going to have to be a level of trust established.

And you know, but to think that you can actually inspect software is -- to me is a complicated thing to pull off. I mean, first of all, you have to

have the time and the capability to actually go in and review it all. Then you have to have the knowledge to understand what you're looking for. I

just think it's a tough one.

SAMUEL BURKE, BUSINESS AND TECHNOLOGY CORRESPONDENT, CNN: You don't think that governments really do that thoroughly.

ROBBINS: Well, first of all, I don't think that they have access to everybody's source code. So that's not something that is going to happen

naturally. I think what we have to do is we have got to focus on creating policies across countries, across governments where we actually set

standards for how we're going to operate, we set standards for security, we set standards for trust, we set standards for not building backdoors in our

products, and countries create on a global level a set of requirements that we all commit to standing up to, and when we do, then you move into an area

where I've committed to this, you can trust my solutions, and we can move forward together.

BURKE: Is Cisco ever asked for backdoors? We saw when the U.S. asked for a backdoor into an iPhone in the San Bernardino terrorist attack with

Apple, is Cisco ever asked?

ROBBINS: No. We don't have those conversations

(END VIDEO CLIP)

QUEST: After the break, the heads of HBO and our parent company, Turner are departing Warner Media's new executive, "Game of Thrones." Who will

replace these gentlemen at the top?

(COMMERCIAL BREAK)

QUEST: It is a corporate "Game of Thrones" in our very own parent company, AT&T's empire. And on this show, Warner is coming. This week the court

approved the AT&T-Warner Media merger. At least the Appeals Court didn't overturn the decision.

And in this new kingdom, Randall Stephenson sits atop of it all, CEO- Chairman of AT&T. John Stankey rules WarnerMedia. He is my boss, sort of. And no sooner had the appeal decision come out, then changes started to

happen. Two vacant thrones. David Leavy, the president of Turner, announced today he was leaving, and Richard Plepler, the CEO of HBO. Both

announced their departures within 24 hours -- 48 hours of the AT&T decision.

Now, John Stankey is expected to take these two fiefdoms as they had often been thought and unite them in to one. The new unit will emphasize

streaming. So with thrones to fill, threats lurk beyond the wall. For example, rival streaming armies of Disney are amassing even as we speak.

Amazon with a budget that is simply huge, and as for Netflix, an $11 billion war chest to fight with.

Armed with HBO is their main weapon, AT&T execs are planning to ramp up production at the crown jewel of the Warner fleet, which is of course, HBO.

CNN media analyst, Bill Carter joins me now. So, Clapper and Levy have gone. Was that foreseeable and more importantly, inevitable?

BILL CARTER, MEDIA ANALYST, CNN: Well, I don't know if it was entirely foreseeable. Actually I talked to Richard a few months ago, and I think he

was trying to figure out a way to stay there because, I think he is a loyal guy to HBO that's been his main place to work for his whole life or his

whole career, but I do think that the changes that AT&T was calling for were not compatible with his vision of HBO, which is a much more unique

place than something that's bolted into a gigantic armada that you're portraying here.

QUEST: Now, if we accept that AT&T did not spend $80 billion to destroy value, then -- and we also accept to an extent that they must have a vague

idea of what they're doing. Does it make sense to take what works -- come on, you know as well as I do -- two fiefdoms, the HBO silo and the Turner

silo and create them into one under some more unified structure?

CARTER: I think it makes sense if you think that the entire world is going to be about having a mass amount of product to offer in a streaming

company. HBO didn't ever have that approach. They could have put out more programs for a long, long time.

[15:20:10]

CARTER: They were extremely selective and they tried to be a very premium channel. They're doing away with that notion, and you know, in terms of

the upheaval that is going on in the television business, that might make sense, but you know, we all remember new Coke, don't we, Richard? I mean,

you can take a very valuable brand and if you mess with it, you're liable to lose its value. So it's a risk, it's definitely a risk, especially with

HBO.

It does not fit. HBO does not fit with the rest of what Turner Television was in terms of what the public thinks it is and what the entertainment

industry thinks it is. So they are kind of folding it into something and reducing its brand. I think the brand of HBO is not going to be the same

after this.

QUEST: Well, the jury is out on that, to the extent, but if you get the right person in the format of NBC of course is being spoken. If you get

the right person the top of this new combined entity sitting under John Stanke, Warner Brothers, obviously, the movie theaters of to the aside,

movie studio off to the side, surely it's workable.

CARTER: You're right. There could be the right person who can have a vision for both of them. It's a tall order. I think they're talking about

Robert Greenblatt, someone else I've known for a long, long time. Very talented and creative executive. It's a tall order.

I mean, HBO to me was separate from the television business. You know, that was their whole brand. We're not TV, we're HBO. And they really

created the premium content drama and comedy on television with "The Sopranos" and "Sex and the City" and all the other shows they did.

So keeping that going and also being this you know, massive appeal kind of a streaming service is possible. Netflix does it. Netflix has very high-

quality dramas, "The Crown," et cetera. And then it has really mass appeal shows. It is doable. It is a challenge. I think it will be very

interesting to see who can do it. I mean, if they can do it and compete, then they're going to be able to survive. But this is going to be a very

difficult world with all of these streaming services. How many do people buy? Is the big question.

QUEST: Bill, good to see you. One thought, Bill, you say, you remember new Coke, I've got news for you. You and I are probably the only people in

the studio who actually remember the whole new Coke debacle.

CARTER: It isn't even that long ago, Richard?

QUEST: No, it was not. But some may have read about it in school or in business school. Good to see you, Bill. We'll talk more about it in the

future.

CARTER: See you, Richard.

QUEST: It wasn't as bad as you it could have been, no, I'm not talking about new Coke. I really wasn't. Shares of the world's biggest

advertising company rose 5%. WPP actually won, the sales were likely to fall as much at two percent this year. Investors feared it could have been

worse. Anna Stewart is in London and staying late for us on Friday night.

So look, the shares in WPP fall about 40% after Sir Martin Sorrell resigns, amid some scandal, quite suddenly. So this is the first time we've seen

the ability of the co-management to run the company.

ANNA STEWART, REPORTER, CNN: Yes, and it's interesting to see the reaction today because the results don't on the face of it look particularly good.

Sales down last quarter, sales down on the full year. But they were at the upper end of expectations. It is still struggling and it was under Martin

Sorrell. It is still struggling against this new era of digital advertising, up against Facebook, Google.

It started in North America particularly where it has lost some big clients. That's going to weigh on the first half earnings, but things look

up in the second half and also some of the disposals they have made as part of this big restructuring plans since Sorrell left is bringing in a billion

dollars, so investors are pretty happy today, Richard.

QUEST: Right, but it also -- looking at the share price here along with the rest of the market took a sharp tumble in December. One questions,

with WPP, the constant question is whether the strategy is right.

STEWART: Yes. I mean it was interesting because we had a lot on restructuring in the turnaround plan and a lot of reassurance that that was

going to go ahead as planned, but also talking about what WPP does best and that is advertising.

And it was fantastic. There were some highlights of the year. They had Gillette, a very successful campaign, also very controversial, talked about

#MeToo, also it mentioned the Aeromexico -- do you remember that, a very political advert that tackled Donald Trump's Mexico wall and let me show

you the press conference.

In fact, you can see it right there because "QMB" made a surprise cameo appearance, and this is the success. These kinds of ads are very

controversial. They get everyone talking and end up getting lots of airtime on wonderful business news programs shows like yours, Richard, and

then I go on and talk about it and it's like a chicken and egg situation.

QUEST: Right. So, now we've got just a second or two, Brexit, as we were talking earlier, Brexit. The next ten days, two weeks are crucial for the

Prime Minister to once again try and get her policy, that deal through the Commons. What's the feeling in London?

STEWART: Well, I have to say this week has actually been really interesting in terms of Brexit because there's actually been movement.

[15:25:09]

STEWART: What was the best highlight for me was when the ERG, the hardline Brexiteers within Theresa May's party blinked first. They did not --

they're unlikely to want to delay to Brexit, which means they could come on board and vote for Theresa May's deal or at least abstain from the voting.

Theresa May for once could actually potentially get her deal through next week.

QUEST: I'll be in London with you to try and interpret it. Good to see you, and have a lovely weekend.

STEWART: Can't wait.

QUEST: Thank you. Stocks closed at the week high in Europe. Britain's WPP we've just been talking about gained 5% in the European rally and

Europe rose despite weak manufacturing data. Europe's own factory activity fell for the first time in more than five years.

The U.S. is taking new steps to drive President Maduro out of office. The latest on sanctions in Venezuela as we continue tonight.

(COMMERCIAL BREAK)

QUEST: Hello. I'm Richard Quest. There's a lot more "Quest Means Business" in a moment where the United States raises the pressure on

Venezuela's President, Nicolas Maduro and Jeffrey Sachs will tell us how to avoid a war in Venezuela.

And CNN exposes the ugly reality of modern day slavery in Ghana's fishing industry. The moment, some enslaved children became free. As you and I

continue together tonight, this is CNN, and on this network, the facts always come first.

Pakistan has made good on its pledge to turn over the engine pilot who was shot down and captured by Pakistani and Kashmir on Wednesday. The

Pakistani Prime Minister Imran Khan offered the pilot's release as a gesture of peace as a means to de-escalate the deadly spiking tensions

between the two nuclear armed neighbors.

The Vice President of the United States Mike Pence says the U.S. will continue dialogue with North Korea after talks were cut short at this

week's Summit. The White House has sent the Vice President and other top advisors to the Conservative Political Action Conference in Maryland.

[15:30:15]

The British town of Salisbury is now declared free of the deadly agent Novichok. After the poisonings of the former Russian double agent Sergei

Skripal and his daughter Yulia nearly a year ago. Nine sites, it did special decontamination with batches (ph), now declared the final location,

Skripal's house free from any ongoing risks.

Russia's Foreign Minister says his country is concerned that the U.S. might decide to use military force in Venezuela. Sergey Lavrov made the comments

after meeting Venezuela's vice president in Moscow. Russia is one of the strongest global supporters of the embattled Venezuelan President Nicolas

Maduro.

And Washington state's Governor Jay Inslee launched a bid for the Democratic presidential nomination on Friday at a crowded field that he

joins vying to challenge the Republican Donald Trump in 2020. It includes female U.S. senators, African-Americans, Hispanics and the young gay mayor.

And it's likely to grow before the primary season gets properly under way next year.

The U.S. is stepping up pressure on the government in Venezuela. The State Department's imposed new restrictions on U.S. visas for dozens of officials

who are aligned with Venezuela's President Nicolas Maduro. U.S. envoy on Venezuela Elliott Abrams explained the decision.

(BEGIN VIDEO CLIP)

ELLIOTT ABRAMS, U.S. SPECIAL REPRESENTATIVE FOR VENEZUELA: Maduro's supporters that abuse or violating the rights steal from the Venezuelan

people or undermine Venezuela's democracy, they're not welcome in the United States, neither are their family members.

(END VIDEO CLIP)

QUEST: The latest actions include against Mr. Maduro, U.S. have slapped sanctions on Venezuela's national oil company. The Vice President Mike

Pence has called for international crackdown on Mr. Maduro's assets. And the White House has even considered military action. Jeffrey Sachs is our

good friend and professor at Columbia University.

And Jeffrey believes the Trump administration miscalculated how much pressure it would take to topple the Maduro regime. Why is that, Jeffrey?

JEFFREY SACHS, PROFESSOR, COLUMBIA UNIVERSITY: They thought that by tightening the financial vice, the army would revolt and overthrow the

government. This did not happen. It will not happen and right now, there's basically a stalemate.

QUEST: But you'll agree that it is only the army that is keeping Maduro in power.

SACHS: Well, in the sense the U.S. was trying to make a regime-change like the U.S. often does, but there isn't going to be a regime change in that

U.S. mode. What is needed is a path to new national elections and also not to break this country with famine.

QUEST: Right, but you're calling for a lifting of sanctions.

SACHS: I'm calling for negotiated path where a government and the opposition realizing the catastrophe that the country is in, says, we need

elections and we need stability because the --

QUEST: How --

SACHS: Economy has completely collapsed.

QUEST: How can you say this when the opposition leader and self-appointed President Guaido tries to get aid in, the president says aid is not needed

when it is desperately and life-threateningly needed.

SACHS: Because the aid was a ploy that everyone watching knew well that it was an attempt to provoke a military rebellion, which did not work. Many

people watching it close up said, we're not surprised exactly, but I think the U.S. government was surprised that they were told, oh, this will be

enough, for this will flip the military. It was actually a rather naive operation.

QUEST: OK, but you're taking the view or it sounds that your view is more aligned to that of Sergey Lavrov of the -- and the Russian views concerning

Maduro which is to support the -- or at least to work towards the continuation of the Maduro government.

SACHS: The idea is to work to elections and to stop catastrophic collapse of the economy and a hyper inflation, and that's what everybody in the

neighborhood should want and almost all do want, which is a peaceful way out of this. And I do believe I've been part of such crisis to help them

get resolves peacefully where you say, here's where we need to go, and both sides, government and opposition agree, no military interventions, no

coups. We just get to free elections next year.

[15:35:00] QUEST: The concept of free elections is alien to the current government in Venezuela.

SACHS: It could be, and if it proves to be alien, then what I'm saying would not work certainly.

QUEST: But what makes you think it will work?

SACHS: Because there's a lot of discussion underway right now of government within the opposition, saying, as a country we need to find a

way out and nobody really wants a war there. And yet that was the prospect that some felt that Venezuela may be facing or was facing.

QUEST: Would you be in favor of non-prosecution guarantees of some sort or some sort of safety guarantees to Maduro and his chief henchmen who many

will -- in Venezuela will want to see in a court of law?

SACHS: I think what is crucial actually is a Venezuelan solution right now. What I'm saying depends on -- may not be possible, but on an

agreement between the government and an opposition that detest each other. But that can happen. It has happened in the past.

I was a part of such an arrangement in 1989 in the Democratic transition in Poland, and two sides that had battled each other in the streets, in

martial law, in opening up, found a way for a peaceful transition, and that, I believe, is in Venezuela's interest, and I think it's feasible.

QUEST: It was possible in Poland for a 1,001 other reasons that were happening in neighboring countries. The fall of the Soviet Union, at the

same time, the world taken by the EU all these years, it was then to bring Poland in. But I'm worrying --

SACHS: It's interesting. One of the things that made it possible was the Polish pope, Pope John --

QUEST: Yes --

SACHS: Paul the second. Now we have a pope of the Americas who has said, I'm ready to help this process also, Pope Francis. And so I think it's not

such a strange analogy actually.

QUEST: Jeffrey, finally, if it can't be done, what is the answer? If your plan is well meaning and possible, but some would say naive, but if it

can't be done, what is the answer other than sanctions and pushing until the army rebels?

SACHS: If this can't be done peacefully, there is no answer. What there will be is consequences that are dire and disastrous. So we hope that it

can be done.

QUEST: Good to see you, sir.

SACHS: Great, thank you very much --

QUEST: Thank you very much for joining us --

SACHS: Pleasure --

QUEST: On -- have a very good weekend.

SACHS: You too.

QUEST: We will return to the markets and in doing so to the trading post. Teetering on our weekly --

(COUGHING)

Excuse me, more than perhaps teetering. We are quite a bit, I'm not sure that number is completely accurate, we're just above that at the moment.

So let's not worry too much, I think some of them maybe frozen for the moment. But there's optimism on trade with reports that the U.S. talks

with China could be over in two weeks.

Today was the deadline. I think we can all agree green, give me your best! There we go. A role of -- a role of greens. Rare earth minerals are

essential to the making of everything from smartphones to cars. The U.S. is well aware of that. So there's ongoing trade route with China,

Washington specifically excluded rare earth from the tariffs list in 2018.

U.S. industry leaders are pushing the Trump administration to break China's monopoly. So joining me, Michael Silver is the Chairman and CEO of

American Elements. He wants to make -- good to see you, sir --

MICHAEL SILVER, CHAIRMAN & CHIEF EXECUTIVE OFFICER, AMERICAN ELEMENTS: Hi, Richard, good to see you.

QUEST: Good to see you. Now, you want to make all of this part of the administration's deal with Beijing. But here's the real issue. Rare earth

on -- as I was reading your briefing note, rare note -- rare earth on 96 percent in China.

SILVER: Correct.

QUEST: And the rest of the 4 percent in the rest of the world, China has an entity in?

SILVER: They now control that 4 percent --

QUEST: Right --

SILVER: Too.

QUEST: So they control everything to do with rare earth?

SILVER: Correct --

QUEST: Right, which is a bit like saying for the modern economy, it's like OPEC or Saudi Arabia controlling oil.

SILVER: In fact, Don Shelpin(ph) said that four years ago, "the Middle East has oil, we have rare earths."

QUEST: Right --

SILVER: So he knew it then.

QUEST: And there, rare earth, there's nothing the U.S. can really do.

SILVER: No, there's absolutely not, unless we continue down the road we did with the WTO because China has used them as a sword in the past.

They've created a price differential that the U.S., Japan and the EU challenged them on and China lost at the WTO on that issue.

QUEST: So what's your suggestion?

SILVER: My suggestion is that if we're going to have these bilateral discussions, and we're going to be talking about leaving the WTO at some

point, which Trump has claimed at times, and when you take into account the fact that with belt and road initiative, China may not need the WTO five,

six, seven, eight years from now.

[15:40:00] The moment that multilateral arrangement is gone, if we don't have a bilateral arrangement that says you must keep the same prices

globally as you charge in China, which is what they tried to do as a price differential, we're going to be in big trouble.

QUEST: Well, hang on a second. All you're really talking about with pricing is a mechanism, aren't you? You're trying to get a sort of a

commonality of price between domestic internal and external. That still will not solve the problem as China has done if it turns off the spigot.

SILVER: They've done that too.

QUEST: With Japan!

SILVER: They did it with Japan --

QUEST: Right --

SILVER: You know, yes, absolutely, they did it in 2010 over the Senkaku Island issue.

QUEST: So --

SILVER: Yes --

QUEST: I guess I'm trying to see if there's a permanent long-term solution to the fact that China will control the rare earth minerals which is really

the backbone of the IOT economy.

SILVER: There's an answer, which is to get it into the bilateral agreement that we're making with them today. Then we don't run the risk that if

either party leaves the WTO, then we lose that control. I could very easily see the United States leaving or China leaving, and then all of a

sudden they're treating -- if say, America left, then Europe would still be protected under the WTO.

Japan will be protected and they could literally cut off the U.S.

QUEST: But how -- or why would the U.S. be reluctant to put it into the --

SILVER: It just isn't being discussed right --

QUEST: But why not? Now, come on --

SILVER: Because it's not an issue to -- because of the WTO.

QUEST: There's a 1,001 things in the discussions, Bob Lighthizer --

SILVER: Yes --

QUEST: Will obviously -- he's obviously aware of the rare earth's minerals issue. The --

SILVER: It's not part of the discussion right now.

QUEST: And you want it to be.

SILVER: I -- yes, they're basically on two avenues. One is to reduce the trade imbalance --

QUEST: Yes --

SILVER: By getting them to buy more goods --

QUEST: Yes --

SILVER: And then this whole IP issue, right, about stealing our technology or forcing technology transfers. They're not focused on the raw materials

because at the moment it's not an issue, prices are globally balanced.

QUEST: Finally, ultimately, the rest of the world is just going to have to live with the fact that the thing that everybody wants is coming out of the

earth in China.

SILVER: Well, that -- but also it has -- did you know that more than 90 percent of the niobium in the world which is essential for steel comes out

of Brazil? They have a sovereign monopoly on niobium, cobalt in Africa, there's millions of examples. So it's a -- there's a bit of a possibility

of worst things happening, Richard.

QUEST: Good to see you, sir --

SILVER: Good to see you --

QUEST: Thank you --

SILVER: Yes, good to see you, thank you.

QUEST: As we continue tonight, child slavery is thriving right in front of everyone's eyes. The CNN freedom project expresses the horrific practice

in Ghana's fishing industry. That report is next, this is QUEST MEANS BUSINESS live from New York.

[15:45:00] (COMMERCIAL BREAK)

QUEST: The CNN freedom project is exposing the ugly reality of modern day slavery in Ghana. Thousands of children bought and sold as property forced

to work in the fishing industry. Nima Elbagir now tells us and some witnesses the moment when some children became free again.

(BEGIN VIDEOTAPE)

NIMA ELBAGIR, CNN CORRESPONDENT (voice-over): Scenes like this of boys playing, chasing dreams of football stardom happen millions of times a day

of them a lot. But for these children, just the chance to play on this dusty rock-strewn pitch is a dream realized, a prayer answered.

UNIDENTIFIED MALE (through translator): I thank my God who has touched the heart of these people who came to rescue me, and now I'm out of

slavery.

ELBAGIR: The village of life school in Kete Krachi, Ghana is a shelter for trafficked children, a place for only a tiny handful of the 20,000 believed

to be working as child slaves in the fishing industry on nearby Lake Volta. George Achibra(ph) helps run the shelter and school.

He says fishing in the Lake Volta by children from far away villages bring them to work as slaves. Wisdom was once one of those boys.

UNIDENTIFIED MALE (through translator): We worked tirelessly, and if you go for a smooth fish to satisfy your hunger, they beat you so badly, you

regret ever coming into the world.

ELBAGIR: In Ghana, the minimum age for workers is 15, but the law is rarely enforced, and the practice of buying children is widespread. The

U.S. State Department reports nearly a third of all the homes here contain a child who's been trafficked.

UNIDENTIFIED MALE: Yes, this is one of the boys we rescued a year ago. Junior was living with the parent, and he lost the father. Six-year-old

boy working on the lake.

ELBAGIR: Achibra says junior's mother was destitute while trying to care for eight children as a widow. She says she sold junior as a last resort,

the only boy in the family who could work.

UNIDENTIFIED FEMALE (through translator): Junior may be angry with me, but it was not my making, it was because of poverty that made me give him up.

ELBAGIR: Poverty accounts for the near endless supply of children working on the lake, so Achibra returns day after day looking for other boys like

Junior, finding them with disquieting ease.

GEORGE ACHIBRA, PROJECTS COORDINATOR, PACODEP: Looking at the ages of these children, how old are they? He says he doesn't know, he doesn't know

the ages of these children.

ELBAGIR: Achibra learns these boys stay in a nearby village called Manyipo(ph) with a master who has bought them and hasn't fed them in 24

hours. The next day, he arrives at the village with a police officer, they meet with the man who calls himself the master and negotiated the peaceful

release of these children.

ACHIBRA: Already, the master of these children was -- panicked yesterday, and today when we came, we came with some police officers, therefore it

made him very soft. So after talking for a while, he released them quietly.

ELBAGIR: These boys will later tell social workers how they were beaten. But as they waved cheerful good-bye to a village that beholds so much

misery, another man wades into the water offering evidence of desperate poverty here on Lake Volta or just how easily a child can change hands will

likely meet another (INAUDIBLE). Nima Elbagir, CNN.

(END VIDEOTAPE)

QUEST: "TROUBLED WATERS" at CNN freedom project exclusive documentary airs this weekend 10:30 p.m. in New York on Saturday 11:30 in the morning on

Hong Kong, and it is only on CNN. We'll be back.

[15:50:00] (COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

QUEST: When the sun shines, the stunning skyline looks spectacular. In fact, the whole place has a feeling of easiness about it.

(END VIDEO CLIP)

QUEST: A reporting from the magic of Panama, if you want to get there on time, Fly Copa; Panama's flagship airline is the most punctual in the

world. That's according to a new report from the travel list -- OAG, it's the first friendly Latin-American carrier. Pedro Heilbron is the Chief

Executive Copa Holdings. Good to see you.

Now, come on, Latin American -- just let's get all the stereotypes and tropes out. A Latin-American carrier being the most punctual.

PEDRO HEILBRON, CHIEF EXECUTIVE OFFICER, COPA HOLDINGS: I think the most interesting headline when the news came out was from -- I think it was from

a British publication that said, you know, the world's most punctual airline or the ten most punctual airlines, you will not believe who's

first. So yes, we're not known for that, but we're breaking that paradigm.

QUEST: So is this by accident or have you had an actual real push in policy to be on time?

HEILBRON: Well, you know, the three years before that, we were number two for three years in a row, then number four, the year before, and even

before the polls came out, we were always up there in the '90s --

QUEST: Why? What is it about it?

HEILBRON: So, I would say three things.

QUEST: Go on.

HEILBRON: So three things, number one, the most important -- our team, our employees are totally focused and obsessed with on-time flight and they'll

give the extra mile to achieve that. Number two is a single -- pretty much a single fleet of 737 aircraft, easy to turnaround, very reliable planes.

Number three, Panama has very good weather, no storms, no hurricanes. But number one, I mean the --

QUEST: Right --

HEILBRON: The employees is key.

QUEST: So I was in Panama for World of Wonder, and the role that your airline provides, it is only really just dipping its toe into the sort of

expansion that you could get because you're perfectly positioned for a good sixth freedom hub. Are you -- are you going to expand?

HEILBRON: Yes, I mean, Panama is one of those unique places in the world with a special geographic position. That's why we leverage, and we keep on

expanding, adding destinations. I mean, we're up to like 81 destinations in all of the Americas.

QUEST: You're only at a board and you're head of Starlines --

HEILBRON: Sure --

QUEST: Chairman of Starlines. Willie Walsh on this program last night, you know Willie of course --

HEILBRON: Sure --

[15:55:00] QUEST: Said that he thinks some airlines will fail because of the rising fuel prices. Those that haven't got their books in order,

obviously you're not one of those airlines. But are you fearful that the rising price will do its damage?

HEILBRON: It always does, and sometimes, I mean, we're one of the most efficient airlines in the world in terms of unit costs, and we have by far

the strongest balance sheet in Latin America. So when fuel is expensive, others get hurt.

QUEST: Doug Parker of American believes that airlines have made sufficient changes that the paradigm has shifted. The old -- the bad old days have

gone, capacity leading --

HEILBRON: Yes --

QUEST: Boom and bust, is he right as times are getting harder?

HEILBRON: He's totally right for the well managed, conservative, disciplined healthy airline. But there's always a bunch that don't follow

those rules and run into trouble, especially when fuel is high. So there will -- there will still be airlines that fail.

QUEST: Next time I'll see you in Panama.

HEILBRON: You bet, you're always welcome.

QUEST: Good Lord, look at the time, you've got a plane to catch --

HEILBRON: Yes --

QUEST: On time, good to see you, sir, thank you --

HEILBRON: Same here.

QUEST: We'll have our profitable moment after the break.

(COMMERCIAL BREAK)

QUEST: Tonight's profitable moment. Over the last few weeks, we have all watched of the disintegrating situation in Venezuela, wondering what's

going to happen next. In many cases, it seemed like a one-way street as to not if, but when the Maduro government was going to be pushed out of

office.

Tonight on this program, Jeffrey Sachs, a man of great enormous respect, he gave us a different view, pointing out that there's no inevitability of a

Maduro government being pushed out by force, and that the famine that's being there, well, the aid being offered was entirely politically-

motivated.

Maybe that's true, but of course, that still doesn't deny the pictures that we saw on this program of people coming back across with large amounts of

food. The idea that somehow maybe Maduro will not be pushed out from power, and that actually there needs to be a negotiated settlement is

something you have to take seriously when you hear it from people like Jeffrey Sachs whose views I admire so much.

It merely proves the point that it's never as clear-cut as you would think. One way or another, never as black and white as it would appear. I'm glad

we had Jeffrey Sachs tonight. And that's QUEST MEANS BUSINESS for tonight, I am Richard Quest in New York, whatever you're up to in the hours ahead, I

hope it is profitable.

(BELL RINGING)

We're down for the week, up for the day, the bell is ringing, the girls are going to hit the gavel.

END