Return to Transcripts main page
Quest Means Business
U.S. House Judiciary Committee Releases Impeachment Report; Protests Spread Across India Over New Citizenship Law; Australian Fires Cause Health Emergency in Sydney. Aired 3:30-4p ET
Aired December 16, 2019 - 15:30 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
[15:00:15]
RICHARD QUEST, CNN INTERNATIONAL HOST, QUEST MEANS BUSINESS: An hour to go before the closing bell and the story is clear to see. We are straight up
and the market has stayed up throughout the course of the session, a good gain. We've got records on the major bosses, and those are the markets,
and these are the reasons why.
Stocks around the world are hitting record highs. It's a breakthrough in trade and Brexit that's fueling market optimism.
A moment of reckoning for the 737 MAX. Boeing looks set to curb the planes production.
And Hallmark writes an apology after it criticized taking down an ad featuring a same sex couple.
We all are in the world's financial capital, a gray day. Cool and gray and snowy. I am Richard Quest. It is Monday, December the 16th. I am Richard
Quest, and of course, I mean business.
Good evening. Tonight, a wave of optimism sweeps across global markets. The trade breakthrough between the U.S. and China boosting the Dow, the
NASDAQ and S&P all to record intraday highs. The Boris bounce continues in London on the heels of the Prime Minister's decisive victory and sent the
FTSE 100 rising to a four-month high. Matt Egan is with me. Good to see you, sir.
Why? Why is the market up?
MATT EGAN, CNN BUSINESS SENIOR WRITER: Well, what a difference a year makes? A year ago, we were sitting here talking about the worst December
in U.S. stock market history since the Great Depression. And that's because there were these three big fears: Recession, overly aggressive Fed,
and the trade war. And all three have gotten better.
The trade war isn't over, but tariffs are finally for the first time, they're going down. Thanks to this preliminary trade agreement. The Fed
has obviously gone from really hawkish to really dovish, and there's a recession right now, they look overblown. Manufacturing is certainly in a
downturn, but the spillover has been pretty limited.
QUEST: Okay, but let's just take those reasons. So the trade tensions, they have abated. Phase 1 is coming. But we don't really know what it is.
We've not seen any wording on Phase 1.
EGAN: But we do know that more shots are not being fired in the trade war and that is a positive. But to your point, there's certainly some
fuzziness around the details.
Basically, what's happened is the U.S. was supposed to impose more tariffs on Sunday and it's not, and China has agreed to whole buy a whole bunch
more products from the United States, some of which it wanted to buy anyway.
QUEST: Okay.
EGAN: But there is some fuzziness over precisely what they've agreed to.
QUEST: So, now let's look at the Brexit aspect. So we -- the market likes the idea of certainty, and for the next year, because there will be a
transitional period, there'll be no change in the relationship. But is the market being too optimistic about this?
EGAN: Probably, because there's going to be bumps along the way, whether we're talking about Brexit or trade. But there does feel like there's a
little bit more certainty right now.
I was intrigued by -- the Business Roundtable put out this quarterly CEO survey of U.S. executives and for seven straight quarters, their economic
outlook had gone down.
We've seen CEO confidence around the world take a big hit. So, the fact that Brexit has a little bit more clarity and the trade war is maybe
getting a little bit better, those are all positives.
QUEST: I don't want to be a downer on the day that the Dow seems is going to hit a record, but we come back to a longer standing issue. If we go
back to last year, everyone was talking about how the Dow is set from -- or the market for a massive fall. Too much leverage, too much borrowing. And
companies are just out of all proportion. Have those fears gone away? No, they haven't.
EGAN: The fears have actually -- yes, the fears have gone away. The problem has not, right? The companies still have a ton of debt, and that
is still a long term issue, and it will amplify the next recession whenever it strikes, but the difference is that the Fed went from hiking -- supposed
to hike three times, maybe four times this year, it cut three times. The balance sheet went from shrinking to now it's growing really, really
massively. And so that has made borrowing conditions easier.
QUEST: We'll talk more about it. Thank you, sir.
EGAN: Thank you, Richard.
QUEST: A raft of positive headlines. Investors, feeling particularly festive. After all, it is only a week before Christmas. Have you got all
of your Christmas shopping done now?
So for instance, the U.S. Trade Representative Lighthizer says that Phase 1 has been totally done on the trade front, although it's not been officially
signed yet.
In the U.K., Boris Johnson's victory is bringing much needed clarity and the promise to get Brexit done by the end of January, almost erasing
uncertainty.
[15:05:10]
QUEST: And the Chinese economy is not as weak as investors feared. Industrial output and retail sales, both climbing higher over in November.
So we do end this -- well, as you can see -- with a sparkling series of marketing highs.
Tim Quinlan is the Senior Economist at Wells Fargo, and joins me now. And are we right to be optimistic? I mean, optimism at this time of year is
always welcome, but are we right to be so cheery?
TIM QUINLAN, SENIOR ECONOMIST, WELLS FARGO: Well, I think there's some reason to be upbeat about the fact that this is the longest uninterrupted
expansion on record, and if you go where we were saying in August of last year, when the yield curve was inverted and leading economic index was
down, the ISN was in negative territory.
People were kind of you know, getting ready for the bottom to fall out and, you know, with three rate cuts down, a little bit of steepness having
returned to the yield curve. Well, due to the de-escalation in the trade front, you can make a case that prospects are looking a little bit better.
QUEST: But if you go deeper into the -- you know, I accept those points. But one of the other big worries has been the fundamental soundness at the
moment of debt, the way in which consumers are leveraged, corporations are leveraged.
And I realized it's not a crisis on this Monday in December, but the big issue is people like you are worried about it.
QUINLAN: Sure. So it depends which part you're most concerned about. If you want to talk household debt, all of the growth in household debt in
this cycle has come from two categories, auto loans which are up about 60 percent and student loans, which are about 140 percent.
So I think that's certainly a worrying dynamic and people will say, oh, well you know, the overall household debt as a share of GDP is down. And
well, that's true of all the growth coming from these two sectors and the fact that these younger households are now having a much more difficult
time staying current with that debt. I think that's a big concern. I think that's a fair point.
QUEST: We don't want to necessarily, you know, presage an event that's not going to happen, or be too gloomy about it. But there are still some of it
out there. The Ray Dalio's of this world who do say, they feel uncomfortable about the state of the U.S. over the global economy. Are
they right to be uncomfortable?
QUINLAN: Well, I mean, I can simultaneously be forecasting continued expansion for the next couple of years and still not necessarily be
terribly comfortable about it.
I mean, by any reckoning, we're closer to the end of this thing than we are to the start of it, and, you know, if when you point to areas of
vulnerability, like, you know, debt, we talked about it in households, it's even worse in the government sector at least earlier in this expansion. We
were on our way toward balanced fiscal budgets.
You know, we've kind of given up on balanced fiscal budget now with almost a trillion dollars in the budget deficit. I think it's harder to make the
case. There's reasons to be uncomfortable.
QUEST: Right. Now, let's just talk about that budget deficit aspect. Because what's the significance of it? A trillion dollars? I mean, I
noticed, of course, if you look at it as a percentage of GDP, we are up towards five to six percent. That's way higher than anything that will be
seen, you know, as being respectable within the E.U.
QUINLAN: Well, it's high relative to all the other advanced economies in the world. And it's also high relative to the U.S.'s own history. If you
look back over the last 40 years and say, when else has the United States economy been running four and a half percent? Five percent deficits? It
is at the height of recessions in earlier periods. So I think that that's a -- it's a well-founded point that you're making.
QUEST: Finally, and I noticed on the FTSE. FTSE is at a record or headed up that way. It's up two and a quarter percent. A stonkingly good session
on the back of the election last week. Are we fooling ourselves about Brexit? Is this -- I mean, there's a transitional period, as you know,
immediately after the date itself, but the risks on trade still remain.
QUINLAN: Every conversation I've had about Brexit in the last four years talks about this cliff moment that we're about to get to. And every time
we get there, we build more land on the cliff.
You know, there's -- hope springs eternal with prospects for what's going to happen and I'm delighted to see the FTSE up and delighted to see record
highs across the U.S. But if you're asking whether or not there's a degree of skepticism around the euphoria priced in, in financial markets with the
reality on the ground? I think you can make a case that there's some discrepancy between them.
QUEST: Tim, it's good to see you, sir. And whatever the markets are doing, have a Happy Christmas and a good New Year.
QUINLAN: Thanks very much.
QUEST: Good to see you as always. We'll have much more of you in 2020. Thank you.
Boeing is facing a moment of reckoning. The MAX fiasco now look set to get deeper as Boeing probably has to stop production of the plane pending
resolution. And it is QUEST MEANS BUSINESS. We are alive in New York.
(COMMERCIAL BREAK)
QUEST: The Dow would be up a great deal more today if it wasn't for Boeing, whose stock is falling on reports that it might curb a whole
production of the 773 MAX. Down four percent, extraordinary for Boeing. We've hardly ever seen that sort of level of fall even at the worst moments
of the Boeing story and the MAX story.
Sources say a decision could be announced after Wall Street closes less than an hour from now. The plane has been grounded worldwide since March
after two crashes claimed the lives of 346 people. Clare is with me. Four percent -- I mean, this is a very steep fall for a company that has
weathered huge announcements and problems.
CLARE SEBASTIAN, CNN BUSINESS CORRESPONDENT: But that's because, Richard, this is just about the worst case scenario for them is having to
potentially pause or even slow down production even more. This is something that throughout the course of this year, throughout this nine
month grounding, Boeing has been at great pains to try to avoid.
They did have to slow production in April from 52 planes to 43 planes a month and that had not only a material impact on Boeing and some of their
suppliers, but it hadn't material impact according to estimates on U.S. GDP as a whole, JPMorgan says it might have shaved between one and two tenths
of a percentage point of U.S. GDP as a whole. So this is a huge deal.
QUEST: So we're looking at photographs there. We're looking at pictures of 737 MAXs being parked around the world. Now if you think about it,
they've been making them at the rate of on average, what? Forty to forty five a month for the last eight nine months. So it's building up quite a
lot.
But why is it so damaging if they stopped production? They have these to deliver and if they deliver these they'll be, you know, they'll be okay.
SEBASTIAN: Because the suppliers have been working off the idea that they have about four and a half thousand in a backlog, so they have been
continuing to make parts. Spirit AeroSystems which makes the fuselage, their stock is down quite sharply as well today. They've already had
introduced a cost cutting regime. They've introduced a hiring freeze.
So this has already started to ripple through the production -- the supply chain, and if they pause production, then the question remains, when can
they restart it and it is extremely difficult to restart, Richard, once you stop.
QUEST: It's difficult to restart a line and there's going to be a lot of work that needs to be done to get those planes on the ground that have been
grounded back in the air.
[15:15:16]
SEBASTIAN: Yes.
QUEST: Boeing, for the first time seems to be withering here a bit.
SEBASTIAN: Again, this is something they have desperately trying to avoid. But I talked to analysts today, one from Bank of America who says that they
think that at this point, protecting the supply chain may be a lower priority for them. Boeing maybe looking after --
QUEST: Protecting against what?
SEBASTIAN: Well, against these kinds of disruptions, against having to, you know, furlough workers or cut costs against the material impact on
these companies. They think that at this point, slowing or stopping production could allow them to divert more resources to the software
effects, to helping with the kind of quality issues that the F.A.A. is looking into now that it looks like almost certainly this grounding is
going to extend into 2020.
QUEST: Yes, I was going to ask you when is the latest thinking on this?
SEBASTIAN: Well, so the F.A.A. last week said that they think there are 10 or 11 milestones that they still need to complete. We don't know, of
course, how many that is, but you know, there's still quite a bit of work to be done.
Then you have the U.S. airlines who have pushed out the start of flights with the MAX until at least March, in the case of American Airlines, it's
actually April because of course, it's not just the F.A.A., Richard, it is the global regulators. There's no guarantee that the global regulators
will follow the F.A.A. and then each individual --
QUEST: Or --
SEBASTIAN: Right. Exactly.
QUEST: Good to see you, Clare. Thank you very much indeed. Good to see you.
Now, Boeing's stock has been rising and falling with the fate of the 737 MAX and the Chief Executive Dennis Muilenburg's public comments. All
right, so here we have the stock since year-to-date.
Now, let's look at the high points. Let's actually look at the high points, the stock you have. One back in March. That's when the plane is -
- that's when it's at its height, if you like. The crashes have just happened. But then you have the fall in the stock price right the way down
immediately after that.
Move on to early June, and you get a case of Muilenburg expects the return this year, the price rises again in September. And that's also on the back
of the prospect of it being given permission to fly once again. And again, each time there are these moments when we're told that the plane might fly
again, only to be dashed sharply, and shortly thereafter.
But perhaps the most extraordinary thing about the share price is the way considering all the problems, it actually has held up reasonably well into
a narrow range. Bearing in mind, remember, that's the area before the accident.
Now, Boeing builds 42 planes per month. Now, they can't deliver those planes to the airlines. They can't collect payment. And the F.A.A. Chief
says, he told Boeing the plane would not fly this year.
(BEGIN VIDEO CLIP)
STEVE DICKSON, F.A.A. ADMINISTRATOR: How many times have you heard me say that we're not on any timeline? We're going to follow every step of the
process, however long that takes.
There are about 10 or 11 milestones left to complete.
I understand that a company, a manufacturer, in this case, has a project plan with milestones and is devoting resources towards moving things
forward. But again, I made it very clear that Boeing's plan is not the F.A.A.'s plan.
(END VIDEO CLIP)
QUEST: Natalie Kitroeff covers Boeing for "The New York Times." She is with me now. Good to see you. Thank you. If we take Boeing, we seem to
move into a new phase into this crisis. How would you describe it?
NATALIE KITROEFF, ECONOMY REPORTER, "THE NEW YORK TIMES": Well, I mean, you know, we are really at the worst case scenario for the company. And
we've gotten to a point where the relationship with the F.A.A. has begun to fray and you've seen F.A.A. Chief, Steve Dickson, say to Mr. Muilenburg,
this plane is not flying by 2020.
Now that is a direct response to the company continuing to promise, as you've said that this plane will fly by the end of the year. He is saying,
not so fast, that timeline is not reasonable.
QUEST: What still needs to be done? Because the fix has been put in place. It's sort of being tested. It's been tested in the sim. They've
done a few test flights. I mean, we were on test flies with it. So what's holding it up?
KITROEFF: Well, there are a number of tests that remain to be done. But most importantly, the F.A.A. needs to determine pilot training for this
plane and that's what Boeing is looking at right now. Will the F.A.A. requires simulator training for this plane?
Now, keep in mind, the F.A.A. can lift the grounding, but this plane is not cleared to fly commercially until the F.A.A. determines what pilots will
need to do in order to be trained on the MAX.
Now, that is a big outstanding item and Boeing earlier this year pushed to be able to deliver the plane before that was completed and the F.A.A. said,
hold your horses. That's not happening.
QUEST: Until now, the Boeing share price has held up to a large extent, because Boeing is more than the MAX. The 787, the 777X, all of the other
projects, the military, the defense, the space, but I venture to suggest there are real problems now in some of these other projects.
[15:20:22]
QUEST: Like the 777X which has had to be delayed. Qantas chose the 350 over the 777 for Project Sunrise. So the desire, the stench has gotten
worse.
KITROEFF: Well, I mean, you have seen Boeing commercial and on the military side dealing with a number of problems that go beyond the MAX.
You have the tanker program which has been plagued by problems of foreign objects inside of these planes. The 777X has had engine issues.
You are seeing a confluence of issues and obstacles mounting for the company. That's part of the reason, by the way that if this shutdown of
the line happens, they will not need to furlough because they need bodies in other parts of this company right now.
QUEST: Why are they going to furlough? Or why are they going to shut down production? Is it simply because they've got no room to plot the planes
anymore?
KITROEFF: Well, they're pumping out planes at a rate of 42. Right? Okay, these planes are coming out. You were running out of storage space. But
it's not just that. You can't deliver the planes.
The F.A.A. recently said it is going to be the one that determines the certificate of airworthiness for each one of the airplanes - that slows
down the rate at which Boeing can get these planes out customers. So at a certain point, you're making planes and there's no clear destination or
timeline for that destination and place.
QUEST: Humor me, if you will, for this question. Are we in any shape or form looking at an existential crisis for Boeing?
KITROEFF: So, I think Boeing views this as the most significant crisis that the company has faced in its history. Now, as you said Boeing is way
more than the 737 MAX and most outside observers believe this plane is going to fly.
So do we believe the company is at risk? No way. This is the biggest manufacturing exporter in the country.
QUEST: Which is why we're only seeing a four percent drop in the market, not a 15 percent.
KITROEFF: That's right. People -- you know, the market is looking at this company and still confident despite everything.
QUEST: Please, come back again and help us understand it. Very grateful.
KITROEFF: Thank you.
QUEST: Thank you. The North American trade deal, the new on the USMCA hit a last minute snag. Mexico is accusing the U.S. of adding measures it
never agreed to, in a moment.
(COMMERCIAL BREAK)
QUEST: There are emergency talks in Washington over the new trade deal between Mexico, Canada and the United States, the USMCA. Mexico has
expressed outrage after it says it was blindsided by a provision to allow U.S. diplomats to oversee labor standards in the country. Top negotiators
called the provision an affront to Mexico's sovereignty.
In a moment, we will be talking to Matt Rivers who will be joining me from Mexico City to talk about this.
[15:25:03]
QUEST: Take a look at the markets how they've been trading at the moment because we do have quite an extraordinary day at the moment with strong
gains. We are at records across the markets at the moment: The Dow, the NASDAQ and the S&P 500.
Back to Matt Rivers, who joins me from Mexico City, Matt, well, hang on, I need to understand this. How -- what did they sign last week? I mean, did
Mexico sign an agreement that had a term in it that they're now saying, hang on, we didn't realize it was there.
MATT RIVERS, CNN INTERNATIONAL CORRESPONDENT: So basically, what happened, Richard, and you're right to ask this question, because it has been a
confusing couple of days.
So last week, the deal that was signed by representatives from Canada, Mexico and the United States had in it a provision that called for an
independent entity to monitor new labor laws that have been created here in Mexico as a result of this trade deal.
Now, what happened is that the text of that language was different than the House Bill in the United States that was introduced on Friday. In that
bill, on Friday, there was specific language, Richard, that called for the implementation of up to five labor attaches that would be required to
enforce these labor laws right here in Mexico, basically five American boots on the ground here in Mexico that would have to do that.
Mexico said, hold on, that wasn't in the original agreement. We wouldn't agree to that, because that's a violation of our sovereignty. And that's
what brought us to where we are today. That's why those emergency meetings took place today in Washington.
QUEST: But the bill -- the document that they signed didn't have those five in it, correct?
RIVERS: Not explicitly laid out. No.
QUEST: All right. How did this mess take place? I mean, how does -- how do you get to a situation where after signing the agreement twice, one of
the parties is still saying, we don't know what this is all about.
RIVERS: Yes, I mean, it's a good question. And what the U.S. Trade Representative is now saying is that that language was basically put into
that bill, you know, as a way to make sure that U.S. House Democrats and their demands were met in terms of trying to enforce this agreement.
But what the USTR is saying, at this point, Richard, they released a letter to their counterparts in Mexico and they say that these personnel will not
be labor inspectors and will abide by all relevant Mexican laws, and it goes on to say that verifications about labor rights will be conducted by
independent panelists, not by the labor attaches. And that's the key point here.
Basically, what USTR is saying is, look, this was just a misunderstanding. What's in the bill right now is that not actually what you guys here in
Mexico are afraid of and a Mexican government official who went there, the chief negotiator for Mexico is now saying, look, everything is okay. This
is good enough for us.
QUEST: All right, finally, is it your feeling this is a storm in a teacup or something more?
RIVERS; I think this is just a storm in a teacup. I think this was Mexico saying hold on. We've got domestic politics here. We do not want to be
seen as giving in to U.S. interventionism, to have American groups -- boots on the ground here coming into Mexican factories. That's why they put up
the strong response that they did. The USTR basically saying hold on. That's not what we meant. This is all good. And now all parties it seems
are back on track in this USMCA which looked to be ready to just sail through into law and all three countries, Richard, it does appear to be
back on track.
QUEST: All right. Matt, good to see you, sir. Thank you, Matt Rivers in Mexico City.
In London, Boris Johnson is wishing markets a Merry BrexMas, you might say. The U.K. markets are rallying as a Conservative majority enters Westminster
with a clear mandate.
(COMMERCIAL BREAK)
[15:30:00]
RICHARD QUEST, HOST, QUEST MEANS BUSINESS: I'm Richard Quest, hello, there's more QUEST MEANS --
(CLEARS THROAT)
Excuse me, QUEST MEANS BUSINESS in a moment. We're taking a look at the Boris bump, the general election propels U.K. stocks, their biggest one day
jump in many months. "Hallmark" is apologizing for pulling ads featuring a same-sex couples. I'll be joined by the company behind the ad. This is
CNN, and on this network, the facts always come first.
In the days before a historic vote on the U.S. House floor, the Judiciary Committee has released a report to accompany the articles of impeachment
against President Trump. The report is more than 650 pages long, and explains the decision to charge him with abuse of power and obstruction of
Congress.
In India, protests have erupted for a fifth straight day on Monday. It's a day after demonstrators clash with police at university campuses. They are
protesting and angry over a new citizenship law while it fast-tracks citizenship for several religious groups from Afghanistan, Bangladesh and
Pakistan. The law excludes Muslims.
Doctors in Sydney in Australia say the city is facing a public health emergency from the smoke from nearby bush fires. High temperatures are
being blamed for fires burning over large parts of the country. Forecasters are warning to expect several days of exceptional heat.
New Zealand's Prime Minister Jacinda Ardern led a national minute of silence to mark the one week anniversary of the White Island volcano
eruption in which at least 16 people died, two people remain missing and are feared dead, and 14 are in New Zealand hospitals recovering.
Police are investigating a multi-million dollar jewelry robbery at London here with the Formula One heiress Tamara Ecclestone. No arrests have been
made, and the reports say the police -- the thieves broke into saves in Ecclestone's bedroom, she wasn't at home at the time.
The new members of the British parliament are returning to London after a historic election. Strong Conservative majority, 80 seats for Boris
Johnson, who now as Prime Minister says a quick Brexit will take place. And investors like what they see, a dose of certainty. The FTSE 100 closed
up 2.25 percent. Anna Stewart is in London, fresh from success at the CNN election center on Thursday night.
Congratulations there, Anna, now back to work. Back to -- so let's go through this. Queen's speech later this week, Brexit bill before
parliament when I suppose -- of course, are they going to bring back the old one, after the first reading or have to start again?
ANNA STEWART, CNN REPORTER: I think they start again because this is a whole new parliament and a load of new MPs who have never sat in the
Commons before.
[15:35:00]
So, Friday, we expect the first reading and the second reading, and really, this bill, this new Boris Johnson Brexit bill should sail through now that
he has this incredible majority of 80 in the House of Commons.
QUEST: All right --
STEWART: Richard?
QUEST: So that's -- and then Brexit would take place because all of the enabling legislation would be put through. The markets like what they see,
but here is the problem -- here's my conundrum. The markets are known not to like all investors or particularly business leaders, apparently, don't
like Brexit because it could damage as a result of leaving the single market. So, why is the FTSE up so ebulliently as a result?
STEWART: Well, I think for investors, particularly in equity, it's just a sense of relief here. Firstly, the Brexit will be delivered, they know how
it's going to look, supposedly, and also you've got to remember that they've got the relief from not having a Jeremy Corbyn-led government,
they're still reeling from that, I think.
Curiously, we're not seeing such a pop on the pound, it is a bit higher, $1.33, but not as high as you might expect if you were taking all the risks
off the table, and that's because it isn't. And I was speaking to analysts today, and they say first of all, they want to see the economics improved
behind the situation, they want to see business investment pick up. But also, Richard, I hate to tell you this, but the Brexit risks are not off
the table.
QUEST: You're referring to the possibility of a no deal at the end of next year.
STEWART: That is still concerning investors because currently, the transition ends at the end of next year as you say --
QUEST: Right --
STEWART: And then they need to start the new trading relationship. But can two sides really agree, and is that enough time? It's an incredibly
tight time frame to do a whole ambitious trade deal. Now, if Boris Johnson needs an extension, he needs to ask for that by July, so that time frame
gets even tighter. And what he said in the past is that he will not request one.
QUEST: Anna, thank you. I would describe it perhaps as doable, but unlikely to be done. We'll talk about this, we'll know that many more
times. The Brexit bill is expected to be put before the British lawmakers this Friday, and it will pass through parliament in time for the U.K. to
formally leave the EU at the end of January. The British Prime Minister Boris Johnson is already looking beyond Brexit to a potential trade deal
with the U.S.
Downing Street confirmed that Mr. Johnson spoke to President Trump on the phone to discuss a potential free trade deal between the two countries.
Chris Southworth is the Secretary-General of the International Chamber of Commerce in the U.K., he joins me now from London. Good to see you, sir.
All right, let's just grab this nettle firmly. It's -- I mean, as I just said, you know, the EU trade deal -- because you're starting from a level-
playing field, is doable, but it is unlikely to be able to be done by the end of next year.
CHRIS SOUTHWORTH, SECRETARY-GENERAL, INTERNATIONAL CHAMBER OF COMMERCE, UNITED KINGDOM: Yes, I think that's right. You know, just because the two
entities are close to each other, doesn't mean it's not going to be a difficult battle. There's going to be some really difficult choices to
make for everybody.
But you know, on the EU side, it's not going to want to have a big G-7 economy openly on the cutting, and on the U.K. side, it's got to make a
choice, to, you know, diverge away from the EU in order to be competitive, and that's going to be, you know, it's going to give people tough choices,
consumers, businesses and wider -- the wider society.
QUEST: OK, and then you've got the U.S. where the issue there of course is how to put this together -- I mean, how to frame a trade deal with the U.S.
that wouldn't scupper any EU trade deal.
SOUTHWORTH: Yes, and the big issue with the -- any U.S. deal is public services and food standards. And that's all about what the public at large
feel about either giving up standards or allowing what they would perceive U.S. companies running national health services, and that's -- those are
powerful issues. They sank the --
QUEST: Right --
SOUTHWORTH: Trans-Atlantic Trade Investment Partnership in two or three weeks. And if they're allowed to -- and they came into the election too,
so were highly politicized. So, if it's allowed to balloon in the same way, then it puts any deal at risk.
QUEST: I assume you want frictionless trade or trade as close as frictionless with the EU as you can get. In reality, what do you think is
the best the U.K. can hope for?
SOUTHWORTH: Well, I think what's -- what is a positive is you know, three years of total paralysis, and now we've got certainty on what -- you know,
how we're going to leave the EU, in terms of Brexit, but also what direction of travel we're going in terms of a free trade agreement. And
that's a positive for business, but it does mean hard borders, it means costs and it means extra red tape.
And it's a big question, too, around how the government is going to compensate for all of that new costs coming in by taking it away elsewhere.
QUEST: In my weekend reading, I was reading articles about, you know, we mustn't -- the U.K. mustn't make the same mistakes in the trade
negotiations that it made in the Brexit negotiations. Where the EU very much ran rings around the British negotiators. How can they avoid doing
that next time?
[15:40:00]
SOUTHWORTH: Well, I think they're dealing with -- well, first of all, they're dealing with a government with a clear mandate and a government
with a clear majority, and a Prime Minister who is more than prepared to play hardball. So, I think that's quite a different prospect --
QUEST: Right --
SOUTHWORTH: For the EU. But the EU will also want to pull together strength and integration and stand its ground. The EU itself is turning
much more muscular in its approach to trade, so it's going to be interesting to see how the U.K. contend with that because it clearly got a
lot less leverage on its own than within the EU. So, it's up again, it's a big powerful player, you know, in global trade.
QUEST: Finally, Chris, a more philosophical question here because is it your feeling in Britain that the country has spoken? I mean, there's no --
even those remainers who sort of didn't want it to happen, now are saying no, there have been two effective votes on this, the U.K. has voted each
time in some shape or form to leave, it's over?
SOUTHWORTH: Yes, I think so. I mean, there is no going back from here. This was a very clear Brexit election and a very clear result. So, I think
now, it's all about making it work, and for the U.K. to really hit the gas to, you know, to be successful. It's a resilient economy, a creative
economy with a lot to offer.
So it will -- it really sort of go for it, and try and put that argument to bed. Having said that, there are internal issues, there is a much more
polarized situation with Scotland, for one --
QUEST: Oh, yes.
SOUTHWORTH: So, that puts the union at risk as well. But Brexit, I think is over for the next 20, 30 years now. It's about saying, you know,
defining the U.K., you know, as an independent economy outside Europe and what role that means on global trade as a whole.
QUEST: We'll talk more about that, sir, we will certainly need your help to navigate the waters as the U.K. leaves. I very much appreciate it.
SOUTHWORTH: My pleasure.
QUEST: Goldman Sachs is taking action to protect the Arctic from several new policies to promote sustainability -- in a moment.
(COMMERCIAL BREAK)
[15:45:00]
QUEST: Goldman Sachs has announced it will not finance new oil projects in the Arctic. It's one of a number of ranges to its -- changes to its
environmental policies. The bank will also roll out funding for thermal, coal mines and projects that degrade a natural habitat. Goldman is one of
a number of companies now working to shrink its environmental impact.
SSAB in Sweden is attempting to use hydrogen instead of coal to power its steel plants, and it could reduce the country's carbon emissions by 10
percent. CNN's Anna Stewart whom you've just been hearing, she's been very busy. Now, she has more as part of CNN's "GLOBAL ENERGY CHALLENGE".
(BEGIN VIDEOTAPE)
STEWART (voice-over): Lulea, the town's serene snowy landscape has earned a reputation of Sweden's answer to lamp land. But far from Santa's
workshop, this is the land of steel. Outside, it may be well below freezing, but in the furnace, a whopping 1,400 degrees Celsius.
UNIDENTIFIED FEMALE: We're here to see one of the most efficient furnaces in the world, it is the biggest one in SSAB, but we've chosen to do -- so
on the price (INAUDIBLE) carbon dioxide emissions.
STEWART: The steel and iron sector is responsible for 24 percent of the world's industrial CO2 emissions, and that SSAB; one of Europe's leading
steel producers, there's no sign of demand slowing.
UNIDENTIFIED MALE: The world population is growing. And urbanization will continue, steel demand, that's a whole will grow quite significantly in the
future. Even though that we are very good at the current technology that is used worldwide, we are still the largest CO2 emission company in Sweden.
STEWART: But here in Lulea, SSAB thinks it's close to a significant breakthrough for the industry.
UNIDENTIFIED MALE: Hydrogen can be used to reduce iron ore, to make iron and then steel. But it's never been made possible to use on an industrial
scale, to show to the rest of the world that it is possible to get away from the dependency on coal to make steel.
STEWART: Teaming up with the renewable giant Vattenfall and iron ore producer LKAB, SSAB's hybrid project is building a pilot plant, the world's
first fossil fuel free steel.
UNIDENTIFIED MALE: HYBRIT products stands for hydrogen breakthrough ore- making technology.
MIKAEL NORDLANDER, HEAD OF INDUSTRY DECARBONIZATION, VATTENFAIL: Over time, we've seen that power systems will be carbonized and electricity turn
into hydrogen, but we need to refine the process to make it cost efficiency, to make the transition of this industry desirable rather than
necessary.
STEWART: The world's first fossil fuel free steel products and not due to hit the market until 2026. But in this small white Winter wonderland, it
already feels like a green revolution is under way. Anna Stewart, CNN.
(END VIDEOTAPE)
QUEST: The "Hallmark Channel" is well and truly in the spotlight after it pulled a commercial and faced a backlash. It reinstated the commercial,
and now, it's even more of a backlash. After the break.
(COMMERCIAL BREAK)
[15:50:00]
QUEST: QUEST MEANS BUSINESS, the "Hallmark Channel" is under fire for pulling this ad and thus, featuring same-sex couples. And one of the
commercials from the online wedding registry company Zola, it showed enough shot between two women. "Hallmark" was pressured to pull the ad by a
Conservative group called One Million Moms.
Which later research shows they may not even have a couple of 100,000 moms, never mind a million. "Hallmark" has reversed -- sorry, yes, "Hallmark"
has reversed its decision. The company -- my post said its parent company Crown media had been agonizing over the decision to pull the ad, and that
simply put, they believe this was the wrong decision.
Zola said it will be in touch with "Hallmark" regarding a potential return to advertising. Its chief marketing officer Mike Chi joins me. Good to
see you --
MIKE CHI, CHIEF MARKETING OFFICER, ZOLA: Hi, how you are?
QUEST: Mike. Why are you thinking about going back other than as a negotiating ploy to get a better deal from them?
CHI: Sure. It's not a negotiating ploy. Our goal at Zola is -- as you said, we are an online planning and registry company, the easiest place to
plan and register for your wedding. And we believe that we are a place for all couples, and so we want to reach couples in lots of different
forms, and we were excited to advertise on the "Hallmark Channel" to reach a diverse set of couples. And so, we're very disappointed by their
decision, and are excited that they reversed it.
QUEST: Did you reach out? I mean, when they said you can't run these same- sex commercials, did you doubt, was there a debate within the company whether to continue with the others?
CHI: There wasn't a second of debate. So, they had -- we ran six commercials with them. They pulled four of them, and they offered to
continue to run two. Now, the difference was that the two they continued to run did not feature same-sex couples.
QUEST: When they -- when they pulled them, what did they say?
CHI: They only informed us they wouldn't run those four commercials. When we followed up with them, we followed up several times, they said that they
did not want to run any advertisements that were deemed controversial. And so for us, we don't consider our ad to be controversial, we just consider
it to be representative of people who are getting married today.
QUEST: "Hallmark" really hasn't changed its mind really to an extent. The statement from "Crown Media" says we agonized --
CHI: Sure --
QUEST: Over this decision and have decided we were wrong. You don't agonize over when something is the right thing to do.
CHI: Sure --
QUEST: They haven't changed their views.
CHI: So I wouldn't presume to know what their decision-making process is. But we have -- they have reached out to us and apologized, and we will
speak with them again. And what -- we have not decided whether or not we will run advertisements on "Hallmark" again, and the reason for that is, we
do want to be sure, number one, that they're not just running these four ads, that they do not -- that they have reversed the policy and will not
discriminate against other advertisers who have -- yes, who have inclusive advertising.
QUEST: What percentage -- I imagine it's growing, but what percentage is this same-sex marriage or same-sex couples relationship of your business
now?
CHI: So --
QUEST: Do you know?
CHI: Sure, I don't know the answer to that --
QUEST: Yes --
CHI: But actually we intentionally -- we don't track that information. We've helped over a million couples get married on Zola, and we've spoken
to many of them, and that's something we really do often, and we know they come from a very diverse set of backgrounds and orientations, we're really
proud to be a place where anyone can get married or support their wedding, and so we know many of them are from all backgrounds.
QUEST: How would you, in a word or two -- I mean, as a chief -- as a marketing officer, it's very difficult now, isn't it? Because there are so
many constituencies that you have to be aware of.
CHI: Sure.
QUEST: You have to be concerned with. The potential as "Hallmark" has discovered, to completely ruin your business --
CHI: Yes --
QUEST: Or at least put yourself is much greater now.
CHI: Yes, absolutely. And I think that --
QUEST: It could happen to you in some other form. Are you aware of that?
CHI: Sure. So what -- you know, what I said earlier is that this didn't involve debate for our company because we're clear on where our core values
are, whether it's on this issue or a whole other set of issues.
[15:55:00]
I think that, that is important more now than ever to be clear on where you stand as a company. I'm proud to work for Zola and we were clear on this
issue.
QUEST: Let's just say to -- but finally --
CHI: Sure --
QUEST: You've got to be ready on your issues and be confident about them.
CHI: Yes.
QUEST: Even though they may be controversial.
CHI: I think that that's correct, and you need to solicit a varied set of points of view. So, I think that when you're making a decision, you might
not have the perfect group of people to represent all of these constituencies. But what you can do is talk to advocacy groups --
QUEST: Right --
CHI: Speak to people, so you're making an informed decision.
QUEST: Good to see you, sir.
CHI: Thank you very much.
QUEST: Thank you very much. We will take a quick look at the Dow. We've given back some of the gains, off just about 30 or 40 points. United
Healthcare at the top, Boeing not surprisingly, loss is extending. It's down 4.25 percent. We'll have our profitable moment after the break.
(COMMERCIAL BREAK)
QUEST: Tonight's profitable moment, the case of Boeing seems to have taken on a much more serious tone if you like. Until now, we've always said
Boeing stock prices held up because it's got the 787 Dreamliner, 777, a whole lot of other things as well, space military. But now, there's a view
that all of these -- while they've still got them, the company might be structurally flawed.
The ability to get the Max back in the air is proving much more difficult and challenging than they had first thought. The FAA and the regulators
and all around the world are being more difficult and being more demanding. Boeing is going to have to stop production probably after 737, and has led
to some real questions about whether the company is lost.
And lost by that I mean in terms of direction. It needs stronger leadership, it needs new leadership. Well, we already know some have gone,
but do more need to be fired or to leave. The answer is, we don't know yet. But certainly, if the day is anything to go by, Boeing is in more
trouble than we thought.
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.
The day is done.
JAKE TAPPER, HOST, THE LEAD: Democrats in the Judiciary Committee suggesting today that the president's crimes are punishable by prison time.
THE LEAD starts right now.
END
