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Quest Means Business
French President Emmanuel Macron Tries to Arrange a U.S. Summit with Iran; Indonesia Plans New Capital City; President Trump Defends Whiplash Negotiation Tactics Against China. Aired 3-4p ET
Aired August 26, 2019 - 15:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
RICHARD QUEST, CNN INTERNATIONAL HOST, QUEST MEANS BUSINESS: An hour to go before the closing bell, and off the best of the day, but still a good
strong section on the Dow. We can argue about whether this is actually real or just a bounce or whatever.
But it is still up 220 odd points, a gain of more than three quarters of a percent. Other markets and indices are similarly up.
These are the markets and these are the reasons why. Back to the table: President Trump says China wants to strike a trade deal. The President is
defending his negotiating strategy.
Taxing the tech. The French and the United States have got a compromise of sorts on the controversial digital tax.
And the Amazon continues to burn. Brazilian businesses are worrying about boycotts.
Tonight, we are live from London on Monday, it is August the 26th. I am Richard Quest, and of course, I mean business.
Good evening, tonight, the winds of the trade war changing by the hour with the G7 meeting in France as a backdrop, the U.S. and China exchange terror
threats. Donald Trump called President Xi both an enemy and a brilliant man. Now, he says Beijing has called and negotiations are back on. It's a
swirl of confusing signals. And the markets really don't know quite what to make of it.
Having seen such major falls last week, investors are choosing to stay optimistic about the prospect of these new talks. But these gains are -- I
mean, they real as far as the sense is, they would disappear as fast as the scotch mist if there was another unfortunate tweet.
So let's go through the day. We begin at the G7 where the developments from U.S.-China trade to a possible meeting between the U.S. and Iran. Jim
Bittermann is at the Summit.
Let's -- I realized the Iran aspect is significant, but for the moment, was any progress made on the trade front, do you think?
JIM BITTERMANN, CNN SENIOR INTERNATIONAL CORRESPONDENT: Well, I think a lot of confusion was sowed on the trade front by Donald Trump himself,
because he said as part of his strategy is to blow hot and cold, and he definitely did that in the space of about 48 hours here, about whether he
was going to impose even larger tariffs on China or whether he was going to get along, and that the Chinese wanted to come to the table.
The last was that the Chinese wanted to come to the table, he said there was a phone call. There's been no confirmation of that phone call from the
Chinese side. In any case, it did look somewhat positive, and that may have given the markets a little bit of a boost. But it's really unclear
where things stand at this moment -- Richard.
QUEST: All right, now that French and U.S. negotiators also reached a deal on France's digital tax. The idea is that tax that hit American companies
like Google and Amazon, Donald Trump had threatened to tax wine. So what's the compromise that they've come up with?
BITTERMANN: Well, it's kind of kicking the can down the road or across the street a little bit because basically, what they've done -- this was the
Finance Minister of France who sat down with Mr. Mnuchin from the United States at his country place not far from Biarritz here the other night, and
the two of them talked and thrashed this out, apparently, where the French would refund the tax that they have been collecting since the first of
January.
They refund that, at some point down the line when a new tax scheme has been created for these high tech giants. Basically, the French argument is
that they're not paying a fair share of taxes by clever tax avoidance. They're paying about nine percent on their profits, and the regular
European companies are paying somewhere around 23 or 24 percent.
So they imposed this tax of three percent. They started collecting it in January -- the first of January. They will refund what they've collected
eventually, if the OECD which is where they've kicked the can to, the organization of economic cooperation there, but if they can come up with
some kind of generalized tax plan to address the sort of disparities that these high tech giants have created.
QUEST: Jim, you're a student of Summits, dare I suggest that actually, the presence of Donald Trump has caused a complete breakdown of the normal
formulae for the Summit, but actually that's been better. And although this is not Rambouillet in 1975 in the first G6 this is -- or G5, as it
was, this is not that far off, it's getting better.
[15:05:16] BITTERMANN: Well, it certainly wasn't exciting. I have to say that because we had a couple of curveballs, as did the Americans with the
curveballs thrown at us.
The French, were able to pull this rabbit out of the hat by getting the Iranian Foreign Minister to come here. And so that had us all on Twitter
for about 24 hours. And yes, I think it did create some excitement.
However, this whole idea of no agreement, where you know, there really wasn't anything for these leaders that to agree on, we knew that coming in.
Emmanuel Macron knew it because he said there wasn't going to be a final communique.
They did, in fact, put out a one page sheet, very thin rule, to be sure. But anyway, they put a one page sheet with some of the things they did
agree on. Among the things that are not on there, the fires in the Amazon and climate change -- both left off this one page sheet.
So there's not much that they really did agree on, but they got together. There have been some things set in motion, for example, Iran, for example,
perhaps a negotiation with China. There are these things that have been set in motion, but are they going to come to anything? Were there any
concrete details? Not really -- Richard.
QUEST: Jim, good to see you, sir, in France. Thank you. Now, after a few turbulent days, the market is taking up fresh direction from Donald Trump's
claim that the U.S. and China are to return to the negotiating table. He says Beijing has no choice other than to make a deal.
(BEGIN VIDEO CLIP)
DONALD TRUMP (R), PRESIDENT OF THE UNITED STATES: The Vice Chairman of China came out that he wants to see a deal made. He wants it to be made
under calm conditions, using the word "calm." I agree with him on that. And China has taken a very hard hit over the last number of months, so I
believe they want to do a deal. The tariffs have hit them very hard.
(END VIDEO CLIP)
QUEST: All right, and the rhetoric is causing the yuan to move sharply lower against the U.S. dollar. China allows its currency to fall to combat
the impact of the trade war. It's a sign the Chinese are feeling the pain.
Of course, arguably, interestingly, because it would also make the exports cheaper, which could alter the effectiveness of the tariffs. David Dollar
is in Washington, a Senior Fellow at the Brookings Institution's China Center. And we have -- I mean, we will deal with the currency machinations
in just a moment, and the reality of who is hurting.
But on this idea of the market, the investors seem to be more optimistic. This is a false optimism, bearing in mind the way this has gone over the
last few days.
DAVID DOLLAR, SENIOR FELLOW, BROOKINGS INSTITUTION'S CHINA CENTER: Right, I think what you're seeing today is a relatively small bounce. You know,
the big news was, at the end of last week, you saw a pretty sharp drop in the market, because you had retaliation from China, and then President
Trump upped the ante.
So I think the market is really afraid that this will just keep escalating and getting more serious. And then you had a little bit of common language
over the weekend, and you get a little bit of bounce back today. But we're still down over the last week or the last four weeks.
QUEST: You don't believe, do you, that these tariffs, in their entirety are going away anytime soon?
DOLLAR: No, because it's good for the two sides to get together and talk. But they're really very far apart in terms of the substance.
The Chinese want the U.S. to withdraw all of these tariffs. I think it's going to be hard for President Trump to do that. China is willing to make
some concessions, but they're not going to completely change their system.
So I don't see that there's an agreement, where President Trump can withdraw all the tariffs. So it's likely will have continuing stalemate
and some occasional discussions, that's certainly a positive thing. If things do not escalate, that'll be relatively positive.
The truth is the tariffs have not hurt either economy that much so far. It's really escalation that the market is worrying about.
QUEST: Now, if you listen to what Donald Trump said, he was asked about the White House strategy with China. And he said he's just being himself.
Have a listen.
(BEGIN VIDEO CLIP)
TRUMP: Sorry. It's the way I negotiate. It's the way I negotiate. It's done very well for me over the years, and it's doing even better for the
country.
QUESTION: Could you talk a little bit about --
TRUMP: And I do think that -- look, here's the story. I have people say, "Oh, just make a deal, make a deal." They don't have the guts, and they
don't have the wisdom to know that you can't continue to go on where a country is taking $500 billion -- not million -- $500 billion with a B.
(END VIDEO CLIP)
QUEST: So, David Dollar. How much pain will the Chinese endure? Bearing in mind -- well tell me, there are tensions within China that Xi has to
acknowledge?
[15:10:13] DOLLAR: Right. President Xi Jinping certainly faces domestic political pressures as well. He has got politics on his side as well. I
would say the tariffs so far are not having a very big effect on the Chinese economy.
The Chinese economy was already slowing down because of their own domestic policies, and frankly, because of certain domestic mistakes. So they have
some challenges.
The tariff war certainly does not help. But you know, their exports are basically flat for the year in dollars, and then you were just showing that
exchange rate number, the currency has depreciated, not a lot. It has depreciated about five percent over the last year, but that means measured
in local currency, their exports are up five percent.
That's not great for China, but that's certainly not recession. So I think, on the U.S. side, we tend to exaggerate how much damage this is
causing for China.
QUEST: Good to see you, sir. Thank you. David Dollar joining me there. As we continue tonight, as one and a half football fields the fire has
destroyed every minute, CNN is exploring the scale of Amazon's devastation as world leaders pledge their help.
(COMMERCIAL BREAK)
QUEST: The French President, Emmanuel Macron has announced $20 million in aid for the Amazon rainforest as fires continue to ravage the region.
Brazil is the home to a majority of the Amazon. It has had more than 80,000 fires so far this year. The question remains whether the country's
President will even accept them. Jair Bolsonaro has been involved in a nasty spat with President Macron claiming the French leader did not respect
Brazil's sovereignty, but it is a crisis that should top the G7 agenda.
Nick Paton Walsh joins us live from Porto Velho in Brazil. Nick, you have traveled the world and seen many sites in service of the corporation.
Where does what you witnessed in the burning of the Amazon rain forest rank?
NICK PATON WALSH, CNN SENIOR INTERNATIONAL CORRESPONDENT: In scale, it is certainly the worst. I mean, the impact on humankind globally. You don't
see it up front because it's part of a process where our ecology is slowly destroyed.
But it certainly is the worst damage I've and it actually beats Tacloban in the Philippines, certainly, in terms of the scale of it, beat anything we
saw in the fight against ISIS, but that's sort of a side issue to the response we've seen today in Brazil to this pitiful, sum frankly of $20
million being offered by the seven richest nations on Earth.
[15:15:17] PATON WALSH: President Jair Bolsonaro has said, frankly, and it would be described as a bit of a rant against the media, which he posted to
his official Twitter accounts about 45 minutes ago. He essentially said that it wasn't really down to Macron to put forward a text like that
sounding like he wasn't about to even accept that $20 million.
In fact, his supporters on social media are saying how the rain has come to save the Amazon. We had a brief sprinkle of that about half an hour ago.
But the pictures you're about to see show the scale of the task ahead that even nature may struggle to put out these flames.
(BEGIN VIDEOTAPE)
PATON WALSH (voice over): There's little below but ghosts, and even they seem to be given up on. These are the newest fires in the worst hit state
in the Amazon. We didn't see below us any of the 43,000 troops Brazil's President has pledged to the fight.
In fact, in some places, it's so bad, you can't even see how bad it is. That will suit just fine those who'd rather ignore the world's most urgent
environmental crisis.
No matter how high you are, you can't escape the smoke. We even closed our air vents inside the plane to stop it. The sun made this green paradise
over millennia, but now barely peeks through the smoke of its destruction.
WALSH (on camera): Well, these apocalyptic sights are kind of like the warnings about what might happen if the world doesn't do something about
the climate crisis that you keep hearing, But, instead, it's right below us, right here and right now.
UNIDENTIFIED MALE: (INAUDIBLE).
WALSH (on camera): Understand.
WALSH (voice over): What's startling is how much of this immense jungle people have managed to destroy in so short a time.
WALSH (on camera): Unbelievable.
WALSH (voice over): They had help. Fires they lit and that happened naturally in the dry heat, but usually peak later in the year.
ROSANNA VILLAR, GREENPEACE BRAZIL SPOKESWOMAN: This is not just a forest burning. This is almost a cemetery, because all you can see is dead.
Amazon, it's extremely fundamental for the water system, for all over the continent. So if we cut off the forest, in some years we're not going to
have rain on the south of the country.
WALSH (voice over): We find another area where the damage is fresher and easier to see. Raging in straight lines, swallowing everything left on the
plane. And when you look at this, you learn something about yourself. Do you see a crisis impacting every fifth breath you take and killing the
future, or do you see what man must do to nature to enrich himself and live better?
The answer means little below where the fire burns our heritage and suffocates our future regardless of how we feel about it.
(END VIDEOTAPE)
PATON WALSH: Now, there is an urgent task at hand, make no mistake about it, Brazil has sent 43,000 troops to try and deal with these flames. As
you saw there, they spring up -- those fires -- were originating that morning mostly. This is constantly changing.
And there's sort of an information war really happening here. There are people in Brazil saying this isn't as bad as NASA and scientists suggest,
and then there's much of the external community now at the G7 offering that very small sum of money, giving a lot of rhetoric because they know it's
very popular with their voters.
But do we actually see a change in the international community's behavior? Do we see a change perhaps in the White House as a result of this? It
doesn't look like it. Donald Trump wouldn't be drawn on what he thought about climate change in his last press conference there.
The world really seems to be keen to pay lip service to this have small amounts of money. But here inside Brazil, it is a deeply politicized
issue, and one where possibly President Bolsonaro is using this external pressure to harness the support of his base.
Many people here seeing the Amazon perhaps as a form of enriching themselves. There is a lot of land here. Land means money. Agriculture
means money, and that many say is the reason why a lot of these fires are started by them -- Richard.
QUEST: Nick Paton Walsh. Thank you, sir. The Iranian President Hassan Rouhani says he won't hesitate to meet President Trump, if it serves his
country. Mr. Rouhani made those comments after his Foreign Minister Javad Zarif made a surprise visit to the G7.
He met the French President, for his part, Donald Trump said today, he is open to meeting Iranians in the future after President Macron raised hopes
of a new Iran deal.
(BEGIN VIDEO CLIP)
EMMANUEL MACRON, FRENCH PRESIDENT (through translator): I think there's been a true change. This morning, President Rouhani showed himself to be
open to this meeting happening, and President Trump has been saying for weeks that he is demanding he's been tough. He has put forward sanctions
but I'm ready to have a meeting to make a deal.
(END VIDEO CLIP)
QUEST: You think 00 John Defterios is with me. Do you think a meeting will happen?
JOHN DEFTERIOS, CNN BUSINESS EMERGING MARKETS EDITOR: Well, I tell you what? It's right ahead of the UN General Assembly. So there's an
opportunity there.
[15:20:07] DEFTERIOS: But we have to call it like it is, Richard. This was really an audacious move by President Macron. Could it have gone
horribly wrong here, Javad Zarif there gave very little warning to the U.S. President, Donald Trump and the European leaders, very little warning at
all. He had the meeting and then basically said, "I think there's potential for us to move on."
But also to look at it on the other side of this, an attempted reboot by Iran itself. It is suffering horribly from the sanctions right now. So
the fact that Zarif went, took the chance, Rouhani had to defend him back in Iran because the hardliners are saying, "Why are we giving the G7 the
chance to go forward right now?"
And perhaps an opportunity by Macron here to take the mantle from Angela Merkel after she steps down. I mean, this is an attempt to regroup the G7
as well.
QUEST: Grandstanding.
DEFTERIOS: Grandstanding, Richard --
QUEST: Hang on, hang on.
DEFTERIOS: There is going to have to be a handover at some point.
QUEST: No, no, there is, but he took a risk. It could have blown up spectacularly in his face. You're not supposed to do that at the G7 unless
you're the President of the United States. But you know what I mean.
DEFTERIOS: Unless you think the G7 is perhaps dead, then I think that's what Macron was betting on. It's quite interesting here because he was
born just two years before the Iranian Revolution. So this was a big bold act by a young leader here.
Angela Merkel, I think to your point wasn't forewarned and gave the most sober assessment of this meeting, saying that it is a very delicate
situation. It is going to be an arduous task to try to reboot it and they have this opportunity at the UN.
QUEST: So we've got a situation where the issue is Iran's compliance with the JCPOA Agreement, and the U.S. are saying that they are not and that
they are continuing to their bad old ways. The Iranians saying they are. The U.S. is now out of that agreement.
DEFTERIOS: Yes, the U.S. is out of that agreement. You raise a very good point here because the Iranians were complaining to the Europeans, "You say
you want to stay with it agreement, you haven't done anything for me yet." So at least at this stage, Emmanuel Macron can say, "Look, I brought you
back to the bargaining table." It is now up to President Rouhani who says he is open on behalf of the country to sit down with Donald Trump.
And also Richard, we have to take a step back. Donald Trump didn't blow this out of the water. He said that the Iranians have to be good players.
What does that mean? They have to back off the influence in Lebanon, back off the influences Syria and kind of tow the line of their ally, Israel.
That is a big ask for Iran to go forward.
But at least they're talking because right now the Europeans had nothing to offer beforehand.
QUEST: You are putting a much more optimistic spin on this.
DEFTERIOS: Yes, I heard Jim Bittermann's comments as well. I'm not a big fan of the G7 nor of the G20. They've been incredibly ineffective going
back 10 years at the global financial crisis. That's when the G20 was useful.
The G7 didn't have a communique, but I think Macron has been rather clever here lowering expectations, bringing some new faces to the table like Boris
Johnson, and saying, "Look, we've put climate change back on the agenda. Iran is back in the agenda." And we told Donald Trump the trade was not a
fantastic idea. At least, that's what Boris Johnson offered. It's better than what we expected going into Biarritz. How is that?
QUEST: Good to see you, sir.
DEFTERIOS: Good to see you.
QUEST: Thank you. Talking of Boris Johnson, the British Prime Minister said a future trade deal between the U.K. and the U.S. should allow for
exports of these.
Look at these fine specimens. They all Melton Mowbray pork pies. Now it's important to know about a Melton Mowbray pork pie, it can only come from
the vicinity of Melton Mowbray. Don't you laugh, John Defterios.
DEFTERIOS: I thought it was your dinner.
QUEST: No, it's a prop. It's a Melton Mowbray pork pie. They can only come from Melton Mowbray, which is a bit like French champagne can only
come from France -- but you get the idea, anyway. Later.
Anyway, Mr. Johnson says the East Midlands pies are shipped to Iceland and Thailand, but now to the U.S. because of trade restrictions. Number 10 has
backed up the claims citing the pie maker Walker and Son as an exporter, however, Walker and Son say they don't export the pies anywhere and haven't
for years, which begs the question who is getting these pork pies?
Well, the pork pie spat came amid Mr. Johnson's first appearance at the G7 where he remained adamant about his thoughts on trade. CNN's Anna Stewart
with more.
(BEGIN VIDEOTAPE)
ANNA STEWART, CNN REPORTER (voice over): He may not be the smoothest political operator. The Britain's Prime Minister certainly knows how to
put a smile on the face of his counterparts, receiving a particularly warm welcome from U.S. President Donald Trump.
(BEGIN VIDEO CLIP)
TRUMP: You know who this is? Does everybody know? He is going to be a fantastic Prime Minister -- fantastic.
(END VIDEO CLIP)
STEWART (voice over): The President says he will do and I quote, "A very big trade deal with the U.K." A win for Johnson and yet the Prime Minister
still plucked up the courage to rebuke the President over his trade, albeit gently.
(BEGIN VIDEO CLIP)
BORIS JOHNSON, BRITISH PRIME MINISTER: It's fantastic to see that. But just to register the faint, sheep-like note of our view on the trade war.
We're in favor of the trade peace on the whole and dialing it down if we can."
(END VIDEO CLIP)
STEWART: Then there was the other Donald to deal with, E.U. Council President Donald Tusk, who kicked off the Summit with a dire a warning for
the Prime Minister.
(BEGIN VIDEO CLIP)
DONALD TUSK, PRESIDENT EUROPEAN UNION COUNCIL: And I still hope that Prime Minister Johnson would not like to go down in history as Mr. No Deal.
(END VIDEO CLIP)
STEWART (voice over): Johnson managed to turn that frown upside down.
JOHNSON: But so far, in this G7, I think it would be fair to say, Donald, you and I have spent most of the conversations in completely glutinous
agreement on most of the issues that have been raised.
(END VIDEO CLIP)
[15:25:41] STEWART (voice over): Outside that busy meeting schedule. The Prime Minister even found time for a dip.
(BEGIN VIDEO CLIP)
JOHNSON: Let me give you a metaphor. I swam around that rock this morning, okay? Now from here, that huge rock there -- from here you cannot
tell that there is a gigantic hole in that rock. There is a way through.
I want to point to the E.U. --
QUESTION: Did you go through?
JOHNSON: I point to the E.U. --
QUESTION: There's a hole.
JOHNSON: There a way through, but you can't find the way through if you just sit on the beach.
(END VIDEO CLIP)
STEWART (on camera): All jokes aside, the optics around Boris Johnson's first Summit as Prime Minister are important. He will return to Downing
Street with assurances from the leaders of the United States, Canada, Japan, amongst others about a future trading relationship after Brexit.
But he also returns having scored highly on his charm offensive, displaying a natural aptitude for showmanship that actually put the U.K. front and
center of the G7 Summit.
STEWART (voice over): And highlighting the difference with his reserved predecessor, Theresa May, who earned the moniker, May-bot for her wooden
performances. Little wonder, the Prime Minister has a spring in his step.
Anna Stewart, CNN, London.
(END VIDEOTAPE)
QUEST: Many investors hate uncertainty and the White House's chaotic approach to trade talks is giving plenty of exactly that. Donald Trump
says, "Sorry, it's the way I negotiate."
(COMMERCIAL BREAK)
[15:30:00] QUEST,: Hello, I'm Richard Quest, there's more QUEST MEANS BUSINESS in just a moment. President Trump hits on trade once again, now,
he says China sincerely wants to make a deal and plans for an amusement park in Saudi Arabia raises questions about the international companies
doing business in the kingdom. As you and I continue tonight, this is CNN, and here the facts always come first.
French President Emmanuel Macron is trying to get the presidents of the U.S. and Iran to sit down and resolve their nuclear dispute. Mr. Macron
made the suggestion to Donald Trump at the G7, the U.S. president and Hassan Rouhani say they're open to a meeting.
President Trump is continuing to talk up the possibility of the U.S.-China trade deal. He says he's even more encouraged following remarks by the
Chinese Vice Premier Liu He. Liu said China wants to resolve the dispute with the United States to calm negotiations.
Indonesia's plans to build a new city to replace its capital, current capital Jakarta which sits on swampy ground, and parts of it are literally
sinking. Jakarta is congested and prone to flooding, the new capital will be built over the course of a decade on the east side of Borneo.
Take a look at stocks, they are on the rise. Investors are holding out that a trade deal is still possible. The past 72 hours have been
dizzying for the U.S. and China relations. Donald Trump has flip-flopped on trade and tariffs all weekend long, ramping up tensions and then cooling
them down.
(BEGIN VIDEO CLIP)
DONALD TRUMP, PRESIDENT OF THE UNITED STATES: I have no choice because we're not going to lose close to a trillion dollars a year to China, and
China understands that.
UNIDENTIFIED FEMALE: Are you going to declare a national emergency on China?
TRUMP: Well, I have the right to if I want. I could declare a national emergency.
UNIDENTIFIED FEMALE: Are you having second thoughts on escalating trade war with China?
TRUMP: Yes, for sure, why not?
UNIDENTIFIED FEMALE: Second thoughts, yes --
TRUMP: Might as well --
UNIDENTIFIED FEMALE: Yes --
TRUMP: Might as well -- China called last night with top trade people and said let's get back to the table so we'll be getting back to the table.
Very good call, very productive calls. They mean business. They want to be able to make a deal.
I can't make a 50-50 deal. This has to be a deal that's better for us, and if it's not better, let's not do business together. Sorry, it's the way I
negotiate.
(END VIDEO CLIP)
QUEST: If that's the way the president negotiates and causing consternation for investors. William Foster is Moody's vice president lead
U.S. analyst. He is in New York. Sir, really straightforward, simple question. What is it that the markets don't like about the way Donald
Trump is conducting his negotiations?
WILLIAM FOSTER, VICE PRESIDENT & LEAD U.S. ANALYST, MOODY'S: Well, markets don't like uncertainty and confusion, and that is what's -- obviously, we
had quite a lot of that over the weekend. Until there is some kind of clarity on potential resolution of a trade deal, a path forward that's
clear, and somewhat predictable.
I think investors are going to continue to be on the back foot and potentially caught off guard, given that the tit for tat that we're
seeing between the U.S. and China and they don't like that.
QUEST: And it's not just on tariffs, is it? Taxes, as well. Nobody has any certainty where the U.S. or the president, I should say, is going to
fall on any policy because there doesn't seem to be any recognized process for making those decisions or at least orthodox process.
FOSTER: Well, there's -- yes, there's a whole lot of uncertainty across the board, I would say, with the economy, the fiscal policy, you know, for
its taxes. I mean, one good thing that, yes, in the U.S., there was a budget deal that was reached for two years along with the debt ceiling that
was lifted.
So, that's on the domestic front, a good stabilization that we have moving forward. But much of the uncertainty has to do with external environment,
any lack of clearing taxes really has to do with a response to the uncertainty in the markets and the potential for continuing slowdown in the
U.S. economy and concerned about a recession because that would be a fiscal stimulus that would offset that.
But of course, then we have the Fed as well that's trying to deal with this on the monetary policy, I don't think so. Just creates a whole lot of
uncertainty across the board.
QUEST: Right, and in that uncertainty, what do you do? Do you sell or do you just do nothing?
FOSTER: Well, we're on the business of providing advice on selling and buying, but obviously, moving forward, you know, people need to be patient,
I guess, if they believe that ultimately a deal will be reached or if it's in the best interest of both parties. We believe that ultimately, the U.S.
is not going go into recession that the economy will grow by about 2.3 percent this year and around 1.7 percent next year.
[15:35:00] But the risks are rising of further slow-down and potentially, you know, if things are across the board and the worst-case scenario, had
the hardened stance, we have 25 percent tariffs across the board on all imports from China and potentially worse auto tariffs in the U.S. --
QUEST: Right --
FOSTER: That will be more difficult position for investors, would fundamentally think that the U.S. will continue to grow and eventually
they'll work through this issue.
QUEST: Could the president create the self-fulfilling policy prophecy from the Fed that he wishes -- if he makes it so difficult, I mean, Powell said
we can deal with most things with monetary policy, but not trade international trade policy, monetary policy is not equipped for that.
But if the U.S. economy is starting to go down the tubes or at least slowing down dramatically, then the Fed will have to cut.
FOSTER: Well, that's right, I mean, the Fed did -- has been very clear that they'll do whatever they need to do to extend the expansion and the
biggest risks right now is external and trade policy in particular, so, yes, they ultimately don't need to cut to offset the -- the weight that's
been put on the global economy and the U.S. economy from all this uncertainty around trade policy.
How much they'll need to cut is really an open question, but certainly they'll need to be accommodative, as they said.
QUEST: Right now, taking what Bullock and others said in their Jackson Hole speeches that monetary policy is clearly in a new realm than it was.
Do you believe that a percent of interest rates if you cut two or three more times you take them down to 1 percent on the official rate. It makes
-- do you believe that makes any difference in terms of whether or not it juices up the economy to any extent.
FOSTER: Well, it would certainly provide some kind of stimulus in terms of access to liquidity and cheaper borrowing costs. But this really isn't
fundamentally an issue about the cost of capital, so, you know, ultimately, there's some kind of diminishing returns, let's say over time for how much
more and more interest rates will be able to contribute if the down-side risks really have to do with uncertainty around business planning and
supply-chain management and much bigger picture issues and interest rates - -
QUEST: Right --
FOSTER: Can ultimately deal with.
QUEST: William Foster, good to see you, sir, as always, I appreciate you taking time --
FOSTER: No problem --
QUEST: To talk to us, thank you. Now, you'll recall that Johnson & Johnson, the pharmaceutical and household company in Oklahoma is being sued
and now a judge is deciding on the result for the whole J&J responsible for the opioid epidemic that destroyed thousands of lives. We covered the
trial when it was taking place. The verdict is expected in the next hour, CNN's Alexandra Field is at the courthouse.
ALEXANDRA FIELD, CNN CORRESPONDENT: Richard, the verdict here in Oklahoma could have implications nationwide. There are dozens of states looking to
sue pharmaceutical companies for their role in the opioid crisis. But Oklahoma is the first state to take to trial a major pharmaceutical
company.
They allege that Johnson & Johnson and its subsidiary Janssen fueled the opioid crisis in this state with its sales in marketing of two prescription
drugs. They say the companies created a public nuisance that cost the state billions of dollars and devastated thousands of lives.
Now, they're seeking more than $17 billion from the pharmaceutical company, money that would go toward treatment and preventative services here in
Oklahoma. For its part, Johnson & Johnson has argued in court that there was no wrongdoing, that they complied with the law and that they're being
turned into a scapegoat for what is a much wider social problem.
Certainly, though, all eyes will be on the verdict that will be delivered shortly, that's also because a big federal case is pending, that's set to
start at trial in the Fall. That's the case that involves allegations from some 2,000 cities, communities and municipalities, all of them saying that
Big Pharma should be held responsible for its role in the crisis. Richard?
QUEST: Now, companies in Brazil are under pressure as international criticism comes thick and fast over the Amazonian crisis. The
representative of a Brazilian business group says it's not all warranted.
[15:40:00] (COMMERCIAL BREAK)
QUEST: Earlier in the program, we showed you the devastating fires in the Amazon, and just how dreadful they are. Nick Paton Walsh gave us graphic
descriptions, you saw it for yourself. And now Brazilian businesses are fearing international backlashes from the crisis and. The farmers and the
loggers have been blamed for part of the Rainforest deforestation.
France and Island say they would block a trade deal during the EU and the trading bloc America saw a crucial deal, took years to negotiate in which
Brazil is part over this crisis. International Chamber of Commerce in Brazil says "don't tar us all with the same brush." Gabriella Dorlhiac;
the head of policy at the ICC in Brazil, she joins me now from Sao Paulo.
I understand that not everybody -- you know, there's no collective guilt for this, but it doesn't appear as if business has been putting the
necessary pressure on the authorities to do something about it or am I wrong?
GABRIELLA DORLHIAC, HEAD OF POLICY, INTERNATIONAL CHAMBER OF COMMERCE, BRAZIL: Good afternoon, Richard, thank you so much for having us. I think
actually, the first concern for business now is to have the situation contained. I think there is a lot of reflection that needs to come
afterwards, but the priority for Brazilian business is right now to make sure the situations contained that the fires are put out and that they are
-- the resources needed are available.
QUEST: Right, but we know that this isn't a question of though, correct regulations. There are very strict logging and agricultural provisions in
the Brazilian laws. This is about fines being paid, correct fines being levied and companies paying a price when they break the law, and you will
agree because you are there that the story in Brazil at the moment is how people are doing these fires with impunity.
DORLHIAC: Well, I think first of all is to keep in mind that this is illegal loggers, land grabbers, companies that are willing to break the
law. They're not a majority of the Brazilian private sector, so, I think it's important to keep that in mind to differentiate. Obviously, maybe the
fiscalization needs to be improved.
As you said, more fines need to be issued. But I think for the Brazilian private sector, they want the international community to understand that
what is happening in the Amazon which is an absolute tragedy is -- does not reflect what the Brazilian private sector does day-to-day here in Brazil.
QUEST: Are you finding that your companies are saying to you, we are worried about how our reputation is being tarnished in this way.
[15:45:00] DORLHIAC: Absolutely. We've had a lot of conversations with companies that 'A', want to understand, well, how can we improve this after
we fully understand where the breakdown was at this fiscalization or whatever it is, and, B, how do we make sure that international community
and investors know that we do do our jobs.
We do comply with very strict environmental policies. This does not -- this is not us. So, there is certainly a concern here.
QUEST: I suppose I might beg to disagree when you've actually got the fires there. I mean, you say this is not us, and to the extent that this
is not the big companies where there are HQs in Sao Paulo. But what pressure are those companies putting on government to do something about
enforcing the laws.
DORLHIAC: I think there's been a lot of outcry in Brazil certainly to say, look, the government needs to do its job, and that the private sector will
not stand by while the fires and perhaps other illegal activities go on. And we are talking --
QUEST: All right --
DORLHIAC: To government, we are speaking out publicly.
QUEST: Good to see you, thank you. Thank you for taking time and talking to us, we'll talk more about this and we'll talk more about --
DORLHIAC: Thank you --
QUEST: What's happening in the Brazilian economy --
DORLHIAC: Thank you --
QUEST: More widely in the future. Information and for more to find out about how you can help, cnn.com-slash-impact has loads of suggestions and
ideas. Amsterdam is taking its first step towards becoming a truly zero emissions capital as it has announced plans to ban all gas and diesel
vehicles from its street by 2030.
The goal will be reached in a series of steps beginning next year. John Defterios has more in this edition of the "GLOBAL ENERGY CHALLENGE".
(BEGIN VIDEOTAPE)
JOHN DEFTERIOS, CNN EMERGING MARKETS EDITOR: Amsterdam, the city of bicycles and canals is on a journey to becoming a clean transport city. In
the next decade, the capital of the Netherlands plans to reduce emissions to zero. For the mayoral office, phase one starts now.
MAYOR SHARON DIJKSMA, AMSTERDAM, NETHERLANDS: At this moment, we have nine places in our city, not even qualifying for the European regulation on air
quality. We want to be a healthy city by 2030, and this means a revolution in the way which we organize our mobility.
DEFTERIOS: The future is electric. To achieve this involves breaking new grounds. Close to 1,000 charging points are being installed on the
streets, clean energy business, Vattenfall is playing the key infrastructure role.
PIETER VAN OMMEREN, HEAD OF MOBILITY, VATTENFALL: It makes a 100,000 of electric cars in the city, and they all want to charge at the same time,
then everything will break down. That's what we want to prevent from happening.
So, that's why we invented the flex power project. So, if there is a high demand for energy in a certain area on a certain street, we reduce the
charging speed of the charging pulse in that specific area. If there is a surplus of renewable energy, like it's a very sunny day, then we can
increase the charging speeds. We're the first actually in the world rolling out this on a large scale.
DEFTERIOS: Many taxi and chauffeur services have gone electric, but at a starting price of $25,000, most private car owners cannot afford to make
the switch, eventually, they will have to. One family has the solution, car-share between households.
ALISSA GRIFFIOEN, PRESIDENT, OOSTERDOK: So, I think it was my dad who came up with the idea. We do everything by bike, and we only use the car for
like once or twice a month.
DEFTERIOS: Their monthly costs have dropped from $600 to $200, renting this coveted parking spot helps save, too. Overall, the plan to reduce
emissions to zero by 2030 hinges on a further shift in the auto industry?
DIJKSMA: We need second-hand electric vehicle cars, so, we try to organize discussion with the automotive industry, for instance the lease companies,
how we can organize that if their cars are being sold can be cheaper and available for other people who want to buy an electric vehicle.
DEFTERIOS: John Defterios, CNN, Amsterdam.
(END VIDEOTAPE)
[15:50:00] (COMMERCIAL BREAK)
QUEST: A brand new city being built in Saudi Arabia has now unveiled plans for a Six Flags theme park on Monday. Qiddiya is set to become the new
entertainment capital that's currently being built just outside Riyadh. The city is one part of Saudi Arabia's plan for life after oil. But this
is something rather different.
In the unveiling of this idea and this concept, it was only ten months after international condemnation of the kingdom over the killing of the
journalist Jamal Khashoggi. The CEO of the Qiddiya Investment Company Michael Reininger joins me now from Riyadh. It is good to see you, sir.
This concept --what's the idea -- I mean, is it basically Six Flags in Saudi or a Disney-wanna be in Saudi.
MICHAEL REININGER, CHIEF EXECUTIVE OFFICER, QIDDIYA INVESTMENT COMPANY: Well, it's definitely Six Flags in Saudi, and it's really the part of a
much bigger project that's known as Qiddiya. And the way to think about it, probably at best is that Qiddiya is going to be a new city that's being
constructed on the outskirts of Riyadh, we're about 30 minutes from the center of the capital city on about 80,000 acres of land, that's sort of
national park quality land that sits here, very close to this major population base.
But it's a city that's being built with a dedicated focus around, providing entertainment and sports and arts, opportunities both --
QUEST: Right --
REININGER: Lifestyle opportunities and professional pathway opportunities for the Saudi citizenry.
QUEST: Right, it's huge, it's twice the size of one of the Disney parks, the actual footprint of this, so it's absolutely vast. But who is going to
go there? Who is going to be your target visitor?
REININGER: So, our primary customer is the domestic Saudi market. There's 30-million odd people that are here in the kingdom today, about two-thirds
of those people are under 35 years of age, and that's our marketplace square in the middle.
We don't have to look any harder than to watch their spending habits and their behaviors today to know that there's something that's pretty
universal about this audience, which is they share the same desire for opportunities in these kinds of things like entertainment and sports that
most people around the world do.
And every year they spend billions of U.S. dollars in search of those opportunities. They just haven't been able to find them here in the
kingdom so far, so they've been leaving the kingdom and taking with them that economic power and dropping it in other economies. And so part of
this is going to be to repatriate that right here in the kingdom.
QUEST: Should Dubai and the UAE be worried? After all, you're building many similar -- I know everybody is good friends, everybody is my brother.
But should they be worried at the potential loss as people stay at home?
[15:55:00] REININGER: Well, there's some portion of the business that's going today to the UAE, to their projects that are built in Abu Dhabi in
Dubai, that comes from Saudi certainly, and our goal is to keep those people here, and so to the extent that we take a little bit of their market
share in that regard, that's really part of what we're trying to do.
Those markets are built on a lot more international visitation than what we're targeting here for Qiddiya though.
QUEST: All right, funny, let me just ask you, obviously, you are aware of the reputation of Saudi, you are obviously aware of the damage from the
Khashoggi debacle and murder. Do you -- do you -- do you see any problems with other western companies doing business with you?
REININGER: So, we're in discussions with people from various markets around the world right now. Today, we announced the actual designs of our
Six Flags Qiddiya Park which is a partnership that we've constructed some 18 months ago with the American company Six Flags.
But we also have concurrent discussions right now with companies based in Asia as well as --
QUEST: Right --
REININGER: Others in the United States and North America, and even some in Europe. Definitely slowed some of the conversations for a while, but this
is -- what we're doing here is really looking forward to a long-term future based on an existing marketplace that we think is pretty powerful, and I
think people have recognition about that.
QUEST: Good to see you, sir, thank you, can't afford to be there, but thank you very much. Now, the markets and as we leave you before a
profitable moment, up 231, not the best of the day, but still a really nice session overall.
The market up by some 1 percent, and it is all over the question of what next with China. Profitable moment after the break.
(COMMERCIAL BREAK)
QUEST: Keep this really brief. Tonight's profitable moment, thank God, there was no communique at the end of the G7. I have plowed through more
of those than is honest or decent, and one good thing to have come out from Donald Trump and Emmanuel Macron is the decision to get rid of that catch-
all, put everything in including the kitchen sink communique that said nothing, but we analyzed to the end degree to see who liked who and who was
in agreement.
Thank goodness it's gone, let's make sure it stays away for good. And that's QUEST MEANS BUSINESS for tonight, I am Richard Quest in London,
whatever you're up to in the hours ahead, I hope it is profitable.
(BELL RINGING)
Good day on the Dow, the bell is ringing, the day is done.
END
END
