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Quest Means Business
U.S., China Sign Phase One Trade Deal; U.S. House Approves Impeachment Managers and Sends Articles of Impeachment to Senate; Russian Government Resigns in Potential Putin Power Play. Aired 3-4p ET
Aired January 15, 2020 - 15:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
[15:00:19]
RICHARD QUEST, CNN INTERNATIONAL HOST, QUEST MEANS BUSINESS: As we head to the closing bell, one hour to go, and Dow as you can see went up, stays
there -- it's all about trade, and we are now at a record. In fact the major indices, two of them, the Dow and the S&P are at a record. NASDAQ is
still, not even there yet, but it is a strong day at the moment. The markets are higher. And these are the reasons why.
A landmark in U.S.-China trade war negotiations. President Trump and Chinese Vice Premier signed a Phase 1 deal.
History is made in Washington. The House Representatives voted yes to send Impeachment Articles against Donald Trump to the Senate.
And a reshuffle in Russia. The Prime Minister resigns along with the entire Cabinet. This needs much more explanation, which we will give you over the
course of the next hour.
We are live in the world's financial capital, New York City. It is a spectacular day, weather-wise as you can see and on the market. It is
Wednesday. It is January the 15th. I am Richard Quest, and of course, I mean business.
Good evening. Tonight, we begin with a longer way detente in the U.S.-China trade war. Two years of negotiations, delay and doubt, and China and the
United States have signed a partial trade agreement. This is it. It is Phase 1. It is 96 pages long, although, in fact, most of it are appendices
and annexes about various products.
President Trump said the U.S. wouldn't lift most tariffs on China until Phase 2 is agreed. Negotiations for that will start soon.
(BEGIN VIDEO CLIP)
DONALD TRUMP (R), PRESIDENT OF THE UNITED STATES: We're going to be starting Phase 2. As soon as this kicks in, we'll be starting Phase 2.
We're leaving tariffs on which people were shocked, but this is great. But I will agree to take those tariffs off if we are able to do Phase 2.
(END VIDEO CLIP)
QUEST: Jeremy Diamond is at the White House. Lots to talk about and understand here. It was a -- it was a bit strange and a bizarre
performance. I mean, there goes the President with the Chinese delegation over his right shoulder and he goes around the entire room recognizing
everybody saying hello to his old mates, as if they weren't there.
JEREMY DIAMOND, CNN WHITE HOUSE CORRESPONDENT: Yes, it was a very Trumpian performance. Of course, the President certainly seems to be enjoying the
moment and he was relishing the idea of calling out on all of these various business people from you know, Fortune 500 companies and at one point
telling the representative from JPMorgan Chase, won't you just say, thank you, Mr. President for the great economy.
This is certainly how the President was casting this today as a move that will help bolster the economy, something that he sees as a victory long
coming, of course, as you mentioned, you know, this has been two years of negotiations between Washington and Beijing. And during that time, you've
seen the President erect tariffs after tariff on imports coming in from China and that has of course rattled the markets, caused a significant
amount of economic uncertainty.
And now the question being asked today is whether or not that was all worth it? And President Trump certainly seems to think that it was. He cast this
as a momentous step. He said he was righting the wrongs of the past. But of course questions do still remain, Richard, about whether or not this is
going to be an enforceable deal, whether China will follow through on its commitments to buy $200 billion worth of us goods and services over two
years, and whether or not it will follow through on those intellectual property and forced technology transfer provisions, which are, of course,
central to this Phase 1 agreement.
QUEST: Jeremy, thank you. Jeremy is at the White House with that side of it. Now, the text of the deal that I've got here before hadn't been
released until today. Step into world trade war room with me, and we'll get some discussion about this.
As we go, let's just look. Here you have -- it's interesting, the signing ceremony itself. Normally with a Vice Premier, it would be the USTR Robert
Lighthizer who would be signing, so it's very unusual to have a President of a country signing a trade agreement with somebody who is not technically
their equal.
But obviously, this was an indication that President Trump wanted to prove just what an achievement this deal was. And now you see the economic team
falling in behind.
Join me over here at the grocery store, and you'll see what we're talking about. So China committed to buying $200 billion worth in U.S. agricultural
goods -- soybeans, which they haven't been buying as much.
[15:05:10]
QUEST: You have poultry, eggs, pork and the like. There's also manufactured goods, energies and crucially, services. Services about
agreements on intellectual property and the forced technology transfers. So you've got all the service sector, which in many ways was the difficult
part that they really wanted to get to.
Now, as we were saying, the U.S. will not cut the tariffs completely. Only in half, on $120 billion in Chinese goods. That leaves about $300 billion
still tariffs, so many tariffs remain in place.
What we need to understand is whether this is a mercantilist deal that just ticks some boxes, or is it truly root and branch? Clare Sebastian is here
to talk about this. You've got your copy of the deal, soon to be annotated. What do you make?
CLARE SEBASTIAN, CNN BUSINESS CORRESPONDENT: Well, look, there's a lot of concrete steps in there from China. I think more than perhaps some had
anticipated, although it's similar to what we've heard from China in the past.
There's agreements to step up intellectual property enforcement. They are essentially saying they're going to stop forced technology transfer.
They're going to open up their market to financial services companies. They have struggled in the past.
Where it gets a bit murky, Richard, is an enforcement. Now this is crucial, because none of it matters at all, unless you can prove that they're going
to live up to their promises.
And there's a big chapter at the end that I've actually bookmarked some of that. And the way it works is it's bilateral. There's no neutral third
party, which is going to come in and adjudicate. This is something the experts have raised questions about.
What happens is they elevate the dispute through certain committees and then there's some interesting lines about what happens if they can't
resolve the dispute.
Basically, one side can retaliate.
QUEST: Right, but as -- I mean, it's making the right noises.
SEBASTIAN: Right.
QUEST: For instance, technology transfer, any transfer should be voluntary and reflect mutual agreement. Trade Secrets: The party shall provide for
effective measures to prevent the use of misappropriated trade secrets. So on all the controversial stuff, the right wording is there.
SEBASTIAN: Not all the controversial stuff, Richard. There is some big elements that are missing here that they still have to tackle in Phase 2.
Subsidies to state owned enterprises. The whole China 2025 industrial policy that's at the heart of this dispute -- that really isn't tackled at
all and that's going to be really difficult.
Actually, it may take more than the U.S. to tackle the issues of this --
QUEST: So if so much -- if so much has been agreed and Phase 1 is so good --
SEBASTIAN: Why the tariffs?
QUEST: Exactly. Why have $300 billion worth of tariffs remaining?
SEBASTIAN: Because Phase 2 hasn't been done yet. This is the U.S.'s leverage. They have these tariffs in place. They've barely rolled back any
of them, Richard. It is really just the September tariffs that they've cut in half to seven and a half percent and that hasn't taken effect yet. That
presumably will happen in the 30 days from now when the agreement takes effect.
The rest are still in place, and there is no timeline yet for Phase 2. We don't know when it's going to happen, and until then we will continue to
live in this world of elevated tariffs on both sides, by the way.
QUEST: Great to see you. Thank you very much indeed.
SEBASTIAN: Yes.
QUEST: Now, the deal, as we've got here only addresses some of the grievances that the U.S. has raised about the way China does business. The
next trade battleground will be on issues like Chinese subsidies to its companies, as Clare was suggesting.
Steve Mnuchin says further progress could come gradually. A Phase 2-A, 2-B and even 2-C. Tariffs could remain on Chinese goods for months.
Speaking to CNN earlier, the Treasury Secretary said today's deal was positive for U.S. consumers.
(BEGIN VIDEO CLIP)
QUESTION: Sir, given the fact that those tariffs are still in place, how will the average American feel the impact of Phase 1?
STEVE MNUCHIN, U.S. TREASURY SECRETARY: I don't think that the tariffs will have any significant impact on any one individual. We've managed these
tariffs so that mostly all of the consumer goods are not impacted. And I think quite frankly, the average consumer will see a stronger economy in
2020 as a result of this deal and USMCA.
(END VIDEO CLIP)
QUEST: Now, our guest is Kevin Rudd who was in the room when the deal was signed today. Kevin Rudd is the former Prime Minister of Australia, current
head of the Asia Society Policy Institute. He joins me from Washington.
Kevin, good to have you. Thank you, sir. Busy day one way and the other. This deal, I mean, are the critics being too unfair when we talk about
what's not in the deal rather than what is.
KEVIN RUDD, FORMER PRIME MINISTER OF AUSTRALIA: Well, politics in my experience, Richard is the art of the doable and what Bob Lighthizer, the
U.S. Trade Representative and Liu He, his Chinese counterpart, within the parameters they've been given is deliver, I think, a reasonable outcome.
The hard stuff as one of your commentators said before, namely subsidy by the Chinese state to Chinese firms operating in the global marketplace and
domestically, now that's been pushed off into the future.
[15:10:07]
RUDD: But on the core things in this agreement, I would give it a reasonable mark, five or six out of 10. And that in terms of where we were
before, isn't all that bad.
QUEST: But Kevin, five or six out of 10. Is that a grade and a price worth paying for what we've been through and the uncertainty of the global
economy with these tariffs? A blunter way of putting it is, did we need to have these tariffs to get this?
RUDD: Well, the loss to global economic activities for the trade war has been calculated as something in the vicinity of probably the size of the
GDP of Switzerland. Friends of mine from the IMF passed that number on to me recently. I'm sure it's not an official statement from them, but it's a
calculation of what we've lost to global growth.
So therefore, there's that on the one hand versus what measures President Trump deemed to be necessary to bring China to the negotiating table
through tariffs to get them to focus on intellectual property protection, forced technology transfer, access in agriculture, access in financial
services, and finally on currency market manipulation.
Against all of that, I still give it five or six out of ten.
QUEST: Right. But forgive the phrase, you know, you are a warhorse when it comes to dealing with trade agreements. You know, these things inside, out
and backwards. You've negotiated them yourselves. Are you concerned at the lack of enforceable measures and structures to deal with problems if the
technology transfer promises are not kept or the trade secrets or whatever?
RUDD: Well, Richard, people are right to point the fact that President Trump is a master salesman, and I saw it in the White House this morning
where he was selling this thing not as a five or six out of ten agreement, but a 12 out of 10 agreement.
But on your key question, which is enforcement against the five areas I just mentioned before -- intellectual property force technology transfer,
agricultural access, financial services access, plus currency market manipulation -- what I focused particularly on was the new language around
IP - Intellectual Property.
Two provisions stuck me in the eyeballs. One is the agreement to criminalize this activity in China. That is new in my judgment, and two,
the burden of proof in any as it were, procedure now goes to the offending party. That is the one who is accused of actually breaching IP.
Now these are two substantive changes, but it's still a Chinese system to determine whether in fact, IP theft has occurred or not. But to be fair to
Bob Lighthizer and the American team, these are two new provisions. On the rest, they go back to bilateral arbitral mechanisms and so we may be seeing
more friction in the implementation.
Phase 2, final point on this, Richard is the language about Phase 2 negotiations is chalk and cheese in Beijing and Washington. In Beijing,
it's sometime in the future when we finally implemented Phase 1. What the President said this morning is we're going to do it next week. No problem.
QUEST: And Kevin, it would be remiss of me not to give you the chance to comment on what's happening in your home country of Australia with the
bushfires, the tremendous work being done by the volunteer firefighters and the awfulness of the suffering of some people who have lost everything.
It's pretty awful, isn't it?
RUDD: Yes, I just came back from home the night before last. I've been home for several weeks during the midst of all this. There is a genuine
feeling of national shock in Australia.
I mean, I grew up in a farm, Richard, I know what fires are about. Big ones would maybe come every decade. But this is across four states. It covers an
area the size of Belgium and the Netherlands combined. In terms of stuff wiped out, probably half a billion animals destroyed, killed. Untold impact
on the biosphere. And what's the message for our country? Well, probably two.
One is, we've got to radically enhance what we do in terms of bush firefighting capabilities in the future. But the second is, this sort of
core message for Australian Conservative government is that this is produced by climate change, longer droughts, more intense droughts,
particularly in Southeastern, Southern and Southwestern Australia. The science was telling this a decade ago, unless the world acts including
Australia on bringing down greenhouse gas emissions, countries which have Mediterranean climates like Southern Australia are going to face much the
same.
QUEST: Kevin, promise me, you'll come back again and we'll talk more about climate change and its effects on global economies. It's an issue we need
to get to grips with.
RUDD: I'm delighted to, Richard. Thank you for having me on the program.
[15:15:07]
QUEST: Thank you. Thank you as always. Good. Now, the U.S. House of Representatives has just voted to send the Articles of Impeachment against
President Trump to the Senate. The votes were cast almost entirely along party lines, all Democrats except one voted in favor. The House Speaker
Nancy Pelosi had held back for four weeks from sending the matter to the Senate.
Phil Mattingly joins me from Capitol Hill. All right. So there is going to be -- I don't mean this in a disparaging way -- but there's going to be a
bit of fealty this afternoon, isn't there? Now, these documents physically have to be carried to the other chamber?
PHIL MATTINGLY, CNN U.S. CONGRESSIONAL CORRESPONDENT: Yes, that's exactly right. So basically, what you're going to see in a couple of hours is the
Speaker will sign off on the Articles of Impeachment and then the seven managers, House Managers who will essentially prosecute the case in the
United Senate on the Senate floor will physically bring the two Articles of Impeachment, they will be placed in a blue folder we are told and walk them
across the Capitol from the House floor, which is on the second floor of the U.S. Capitol building over to the Senate floor, which is on the other
side of the second floor in the U.S. Capitol building, and present them to the Senate.
Richard, this is something as you noted, we've been waiting for now for several weeks. It's finally here. And now it's the Senate's turn to take
its shot at only the third impeachment trial of the United States President and the history of the country.
QUEST: It is surreal. You have the President doing a tour de force this morning, thanking everybody down to the dog for their help in getting this
China trade completely seemingly oblivious, probably a good act. But at the same time, the third President in the United States history is about to go
on trial in the Senate.
MATTINGLY: Yes, it is a fascinating split screen, but it to some degree. And when you look back at historical precedent, obviously, there isn't much
since this is the third. Today was a good example of the President doing what a lot of advisers, I'm told have told him now for the better part of
the last several months which is model what you do in the White House off of what President Bill Clinton did in 1999, which is continue to show that
you're doing the work of the office. Don't be focused and entirely kind of consumed by impeachment.
Now, if you look at the President's Twitter feed, it doesn't appear that he is ever following that advice. But today was a good example of him actually
doing that with the announcement of the trade deal.
QUEST: Good to see you, sir. Phil Mattingly. Thank you. Plenty more to talk about as the week goes on.
President Putin's ultimate power move. When I heard that the entire Russian government had resigned, I wasn't quite sure what to make of it. Was this a
split? Or was this a way to stay in charge after the Putin presidency is over in a few years?
Also tonight, for you, leading economists say the climate emergency overshadows all other risks we face in the next decade. You just heard
Kevin Rudd saying exactly that in QUEST MEANS BUSINESS.
(COMMERCIAL BREAK)
[15:20:27]
QUEST: The Russian President, Vladimir Putin caught the Russian people and everybody else, seemingly including his own Ministers off guard. The Prime
Minister Dmitry Medvedev, speaking alongside Mr. Putin announced the resignation of the entire government making way for constitutional overhaul
that the President had unveiled only hours earlier.
A proposal to shift power from the presidency to the Parliament. Fredrik Pleitgen is in Moscow. All right, what's the heart of this? What actually
happens? All right, let me rephrase me the question, what actually happens that allows Putin to continue to pull the levers of power?
FREDERIK PLEITGEN, CNN SENIOR INTERNATIONAL CORRESPONDENT: Well, potentially what will happen and would potentially allow him to continue to
pull the levers of power, Richard, is that a lot of the -- as you mentioned, some of the power that the President now has would move to
Parliament.
So essentially, the President wouldn't appoint the Prime Minister, but Parliament would appoint the Prime Minister, and that Prime Minister would
then answer, at least in part to Parliament, but he would also designate his own Cabinet. So you'd have a much stronger Prime Minister and a much
weaker President, obviously, in a phase, Richard, where Vladimir Putin is not going to be the President anymore, because in 2024, his fourth term in
office ends, that means he would have to step down, which means some believe that he is trying to find a new role for himself.
Could he be the next Prime Minister? It's certainly something that people are thinking might happen. Could there be some other overarching role? But
what's clear, Richard is that the next President of Russia who is not going to be Vladimir Putin is going to be a lot weaker than the current President
of Russia.
QUEST: So to make constitutional changes, now, if I think about the United States, and the sheer difficulty of getting the majorities in the Houses of
Congress, and then the majority of the states to a certain fit, what does he do in Russia? Just write a note, stamp it and send it on to everybody?
PLEITGEN: Well, essentially, that's part of what he's doing. First of all, he's going to have a decree that he is going to put out which is going to
name a new Prime Minister, who is currently the head of the Russian Tax Service whose name is Mikhail Mishustin. And if you've never heard that
name, you and the Russian people or most of the Russian people are pretty much in the same boat. No one has -- or almost no one has ever heard of him
before.
But as far as those constitutional changes are concerned, there was talk of a referendum which is not necessarily something that Vladimir Putin has to
do. But he says that it is something that he'd like to see. It's unclear whether or not that's actually going to happen.
As far as Parliament is concerned, I mean, both the Houses of Parliament here, the Duma and the Federation Council are both pretty much loyal to
Vladimir Putin. So if he really wants those amendments to go through, those amendments are going to go through and the Constitution will be changed --
Richard.
QUEST: Right. Good to see you. Thank you. I think, I actually did meet Mr. Mishustin once at a conference on tax. Well, I think I guess that would be
somewhat different now, once he is the Prime Minister. We will talk more about this, Fred, thank you.
Now, to the markets and the news of the U.S.-China trade deal sent U.S. stocks higher. New you intraday high. I think it's highly likely that will
close over 29,000 although maybe -- I don't know.
The White House economic adviser, Larry Kudlow says more tax cuts will be unveiled later this year. Investors are also digesting a slew of fourth
quarter earnings. Joining me with this is Paul La Monica. Who have we got - - who has earned and what?
PAUL LA MONICA, CNN BUSINESS REPORTER: Yes, so Target warning that Holiday sales would be worse than expected, was a big surprise for the market this
morning because Target has been one of the best retailers of the past couple of years under CEO Brian Cornell. They've really gained ground
against not just Walmart, but also Amazon, but the company is saying that sales of electronics and toys were worse than expected. Those are obviously
two big gift categories for the holidays. So a bit of a surprise there.
QUEST: Even Goldman Sachs, the revenue beat estimates but this legal bill.
LA MONICA: Yes.
QUEST: Now this legal business is related to what? 1MDB?
LA MONICA: Exactly. They didn't say that specifically in the earnings report. But obviously Goldman Sachs is taking legal provisions to get ready
for the likely fines or settlements that they will face regarding the 1MDB Malaysian scandal, so more than a billion dollars in legal expenses that
really hurt their profits, but the company is still doing well because of trading revenue and that's why the stock on last check was actually little
bit higher despite the fact that earnings beat forecast.
[15:25:02]
QUEST: Bank of America is down, even though profits beat expectations. I mean, is it sort of a halfway house between Chase stomping ahead, and Wells
Fargo somewhere down on the floor?
LA MONICA: Yes, Wells Fargo continues to be probably below the floor at this point, you know, below even the basement. But I think Bank of America,
it was a pretty solid quarter and definitely led by again trading revenue and also some consumer businesses.
But the net margins were a little bit underwhelming. So like you pointed out, I mean, BoA isn't doing poorly, but JPMorgan Chase is really the class
of the industry right now. They didn't do as well as them,
QUEST: Why? What is JP Morgan Chase doing? What's Jamie Dimon doing that Moynihan and the others can't?
LA MONICA: Yes, I think well, Dimon obviously is one of the most widely respected CEOs in the banking industry, and he has a pretty good bench of
executives so that when Dimon eventually steps down, probably sometime in the next five years, he has got good talent there to replace him.
But JPMorgan Chase just has continuously been able to gain ground on the investment banking side and attract more retail banking dollars.
QUEST: Good point. Thank you, sir.
LA MONICA: Thank you.
QUEST: American taxpayers has spent a billion dollars bailing out the farmers caught in the U.S.-China trade war. A soybean farmer will join me
after the break to give their verdict -- of his verdict on Phase 1 trade deal next.
(COMMERCIAL BREAK)
QUEST: Hello, I'm Richard Quest. There is more QUEST MEANS BUSINESS in just a moment. We're going to head to Indiana where soybean farmers are
reacting to the U.S.-China trade deal.
And the World Economic Forum says climate change is the biggest risk to the global economy. We will talk to its President for that.
This is CNN and here on this network, the facts, they always come first.
President Trump and China's Vice Premier have signed Phase 1 of a trade deal between the two countries. Beijing has pledged to more than double its
purchases from U.S. farmers.
[15:30:00]
QUEST: Vice Premier have signed phase one of a trade deal between the two countries. Beijing has pledged to build and double its purchases from U.S.
farmers. And Mr. Trump says the initial deal delivers economic justice and security. Chinese President Xi Jinping said in a letter, that it shows the
U.S. and China can resolve their differences with dialogue.
On Capitol Hill, U.S. House of Representatives has voted to approve the impeachment managers chosen by the house Speaker Nancy Pelosi, and is now
sending the two articles of impeachment to the Senate for President Trump's trial. It paves the way for the trial to begin next week, which is expected
to start on Tuesday.
The Russian Prime Minister Dmitry Medvedev has resigned along with the country's entire cabinet. The move comes amid constitutional reforms
proposed by President Putin that eventually strengthen the post of the Prime Minister to limit, bar President Putin from seeking re-election in
2024. The speculation he hopes to hold on to power by once again becoming Prime Minister in four years' time.
In the Philippines, the national police have begun ordering in order to keep people from returning to Taal Island, and the country's second most
active volcano has been spewing thick ash since Sunday. The alert level remains at 4, it means an explosive eruption is possible. Some residents
though have returned to the area to rescue animals or check on their homes.
To our top story tonight, after nearly two years of tensions and tariffs, the United States and China have reached an initial trade agreement. U.S.
President's calling it a momentous step. President Xi says it's good for China, the U.S. and the whole world. So, let's see what Ambassador Carla
Hill thinks of it, she was the U.S. Trade Representative from '89 to '93, negotiated NAFTA, the North American Free Trade Agreement, she joins me
from Washington.
What is this phase one in your view? Is it that momentous deal or is it a good stepping stone to something bigger?
CARLA HILL, FORMER U.S. TRADE REPRESENTATIVE: Well, I hope it's a stepping stone to something bigger, but it does accomplish some things that we
wanted to accomplish. And one of the things that you can applaud is that it reduces the uncertainty going forward that has plagued so many sectors of
our economy.
QUEST: Let's listen to what President Bush said back in September -- I'm sorry, President Trump, of course, I'm getting my administrations confused.
Let's listen to what President Trump said back in September.
(BEGIN VIDEO CLIP)
DONALD TRUMP, PRESIDENT OF THE UNITED STATES: We're looking for a complete deal. I'm not looking for a partial deal. China has been starting to buy
our agricultural products. If you noticed over the last week and actually some very big purchases, but that's not what I'm looking for. We're looking
for the big deal.
(END VIDEO CLIP)
QUEST: Well, is this -- Carla, is phase one the big deal?
HILL: No, I think that the president articulated that he wants to accomplish more. But I would applaud the fact that there are some clarity
with respect to intellectual property, and that there are -- there certainly has been positive in terms of having China open up its market,
for example, to the financial market. So there's -- and there is a dispute settlement mechanism in case there's any transgression. So all in all, I
think step one is a good first step toward a larger agreement.
QUEST: And what needs to be in that larger agreement. Earlier, we were hearing that there was potentially this question of government subsidies to
domestic or other companies.
HILL: Well, the United States, Japan and the European Union have been working on reform of subsidies that the WTO, the World Trade Organization
could implement because you have state-owned enterprises that are getting lower taxes, free land, and getting funneled credit that their competitors
in the private sector do not get.
And so to clarify that, what can they do? I mean, we're looking for competitive neutrality. If China wants to have state-owned enterprises,
that's one thing. But they must compete with the private sector on a fair and even basis.
QUEST: But the -- this is such a good first step. Why then not roll back more of the tariffs? In terms of the total tariff-ed area, basically all
the president has done is removed half the tariffs from the last increase. Most of the tariffs are still in place.
[15:35:00]
HILL: Well, you're correct, the 250 billion remains. The increase that they were going to do on 120 from -- they've reduced from 15 percent down
to 7.5, and he is suspended or not applied those tariffs that he was going to apply on December 15th.
But that still means that we have $250 billion worth of tariffs out there, and if you happen to be hit with them, you're trying to get a widget from
China, and there's a tariff on it, you're going to be unhappy. If you're in a sector where the tariff is suspended or not applied, you're going to
smile. So we'll see how fast they can move forward and so we can just get rid of these tariffs and have free and open markets.
QUEST: All right, so the more difficult if you like political question really becomes was it worth it? I mean, the agreement's good and the
agreements move forward, but could this agreement have been reached without these tariffs and without the dislocation of trade?
HILL: My own view, where I recommending to the president would be to have joined hands with the European Union, Japan, Canada, South Korea. And as a
group, it would represent more than 50 percent of global GDP, and said we need to have these changes. We want you to stay in the World Trade
Organization, but it's a club for those who believe in the market.
And I think that we would have gotten a faster, more complete and an agreement that was applauded. But we are where we are. Let's not criticize
what we didn't do. Let's try to build on what we did do.
QUEST: Ambassador, it's always good to see you, ma'am, thank you for joining us. I appreciate it.
HILL: It's a pleasure.
QUEST: Thank you. Now, under phase one deal, these are soy beans by the way, under phase one, Beijing is promising to double its purchases from
American farmers next year. Some have questioned whether U.S. farmers can actually meet the higher demand, 50 odd billion or so. President Trump
insists that they can.
(BEGIN VIDEO CLIP)
TRUMP: China was doing $16 billion with the farmers, and they stopped, why not, you know, they're in negotiation. So our people agreed to 20, and I
said no, make it 50. What difference does it make? Make it 50. They say, sir, our farmers can't produce that much. I said I love our farmers, let
them tell me they can't do it. And I said, tell them to go out and buy a larger tractor.
(END VIDEO CLIP)
QUEST: The American Soy Bean Association says that while it applauds the administration's deal, it has lingering the needs about the existing
tariffs on soybeans which of course, I hopefully have a bag here. Joe Steinkamp is the member of the ASA's board of directors, he joins me now
from Indiana. And by the look of it, you're joining me from one of your barns where no doubt these soybeans are being kept along with the
agricultural machinery. What do you make of the deal? Will it take the pressure off you?
JOE STEINKAMP, DIRECTOR, AMERICAN SOYBEAN ASSOCIATION: The pressure is always on farmers because we have politics to put up with and we have
weather to put up with. But we can't deny we're very excited about the deal being started because every third row of soybeans was going to China prior
to the -- prior to the tariff war that went on.
So, now that the tariff war is over, we're hoping to get back to that level of production and maybe even exceed these levels because one, U.S. farmers
can produce the beans to exceed what we were doing before.
QUEST: But you see, you've just said, you're really only going back to where you were. I mean, you've been badly hit by what happened, very badly
hit.
STEINKAMP: Correct.
QUEST: But -- go ahead.
STEINKAMP: But we're excited about them going back to where we were, because we were -- we were moving along in a positive method, and then
during -- since the trade war started, we've increased our market share in other parts of the world. So if we can get it back to where we were, and
continue to maintain the market-share we picked up in the rest of the world, we're a positive, and agreement had in there about biotech approval
process in China being more open and predictable and having a 24-month time frame.
So, if we can get our new products that we're developing here in the United States to market and get them to accept them, and then that will help --
QUEST: Right --
STEINKAMP: And increase our production even more.
QUEST: So finally, sir, how badly -- I mean, how badly were you hit during this trade war that you are now enjoying some relief as a result, hopefully
of when you can get your soybeans back into the market?
STEINKAMP: Well, our soybeans, we want to go back into the market, but today, the Chicago Board of Trade traded down soybeans 13 cents. So we
didn't get the positive response or bump from the market that we had hoped for today. And so maybe as the details come out tomorrow, maybe we'll get
that positive bump. But at the same time, all of my soybean farming neighbors and I have all been pulling in our purse strings and decreasing -
-
QUEST: Right --
[15:40:00]
STEINKAMP: Capital purchases, and so we're excited about the opportunity.
QUEST: Good to --
STEINKAMP: But at the same time, we're still worried that the tariffs are on.
QUEST: Good to see you, sir, and thank you for joining us. It's nice to -- you know, to see you and good luck with the harvest and the crop this year.
Thank you. Now, we will have more --
STEINKAMP: Thank you --
QUEST: QUEST MEANS BUSINESS in just a moment.
(COMMERCIAL BREAK)
QUEST: Call to earth is a call to action for the environment to share solutions to critical issues like global warming, deforestation and of
course, plastic waste. It's a long-term priority for all of us here at CNN, and we're going to work with you to drive awareness and inspire change
so we can engineer a sustainable future.
Now, QUEST MEANS BUSINESS we take this very seriously and we're showcasing some remarkable people who are already answering the call to earth. For
instance, today's story takes us to Sri Lanka's hill country where the ecologists and Angeli Watson is working to protect forested land, corridors
for one of the most vulnerable big cats on the planet, the Sri Lankan leopard.
(BEGIN VIDEOTAPE)
ANGELI WATSON, ECOLOGIST: Fabulous, astonishing animals. Leopards, they're simple, they are smart and they just do their thing. My name is Angeli
Watson, I'm ecologist by training, and my focus species right now is on the Sri Lankan leopard. My husband and I, we realized the sort of overarching
necessity to try to understand how the leopard featured here on this island.
The leopard is the top predator. So it plays a key role here in Sri Lanka. When you study the leopard, find out where it's moving, how it's using the
landscape, by default, you're also protecting all of the other species that are living in that area. So right now, we estimate that there are about 750
to a thousand adult leopards on the island. The immediate threat to the leopard here is how our land is being utilized.
[15:45:00]
Over a 100 years ago, mountain jungles were cleared and tea was brought in. We lost so much habitat, we know we've also lost numbers of leopards. The
thing is, that's history now, right? So we can't go back and change it. What we could do though is try to then look at these movement patterns of
these leopards, ensuring that we don't have populations getting isolated throughout the island.
We put down remote cameras in a certain method, so that we can capture the amount of leopards that are moving through that landscape. The camera
releases an infrared beam, and then when something moves through and breaks the beam, an image is captured. One of the things we do is also talk to
people.
There's a fear factor when it comes to leopards, so one of the things we are trying to do is to remove that fear factor. They deserve to be able to
survive, but more importantly, I think by ensuring we continue to have leopards on this island, we're also ensuring that we continue to survive.
We sit at a junction right now.
We as a nation can choose to go either way. We stand somewhere where we can make a decision, collectively, to do the right thing, and not make the
mistake of developing so fast and so quickly, and destroying what we have, and then suddenly sitting there scratching our head, thinking oh, what
happened? We need to do it now. The urgency is now, otherwise, what will happen is we will lose everything.
(END VIDEOTAPE)
QUEST: All right, of course, we'll continue showcasing inspirational stories like this as part of the new initiative here at CNN. Let us know
what you're doing to answer the call, the hash tag call to earth. We'll be back in a moment.
(COMMERCIAL BREAK)
QUEST: The World Economic Forum says climate change will shake the global economy over the next decade. A new report threatens, it says, relating the
environment fill in all the top spots for the first time in the report's history. Extreme weather, the failure of governments and businesses to step
up, and disasters, both natural and man-made are on the list.
Also the looming water crisis and data theft feature into the list. But it's obviously environmental issues and water crisis. The forum is warning
about social instability and cyber attack.
[15:50:00]
Borge Brende is the president of the WEF and joins me from London. We'll all be in Davos next week where this is going to be one of the key issues,
but you know, I've been going there a long time, and I wonder what more do you expect people to do at the forum when we know the risks.
BORGE BRENDE, PRESIDENT, WORLD ECONOMIC FORUM: A lot more because what we're doing today is not sufficient, the last decade is the warmest one,
the hottest on the record, and it's just not sustainable that the path that we're on. We're always focusing on the cost of action. But we have to turn
this around is really about the cost of inaction. And the cost of inaction far exceeds the cost of action.
QUEST: OK, it's existential, we understand that. Help me then to understand, why do you think governments won't commit and companies are
being slower than they should be if we are facing an existential crisis?
BRENDE: I think the fractured world that we're living in also make it harder to agree on the necessary implementation of the Paris Agreement. And
as we also saw earlier the situation by diversity that is also very serious. We're losing maybe between 200 to 2,000 species every year. In
many ways, there are library of species is on fire, and that's why we also have to put a prize on those emissions.
QUEST: Right, but everyone is dancing around this. The U.S. President has just pulled the United States out of Paris. He doesn't believe in climate
change. Large members of -- large numbers of members of the administration do not believe in climate change. Isn't that a problem for you?
BRENDE: The U.S. as the world's largest economy means a lot in this. But we're also seeing that a lot of technology when it comes to fighting
climate change is coming out of the U.S., and there are some positive steps being taken. Ten years ago, solar was 10 times as costly as today because
of technological breakthroughs, solar panels are no competitive with fossil fuels in many places --
QUEST: Right --
BRENDE: In the world. So at least, we need the U.S. to be part of this technological revolution.
QUEST: Finally, sir, you'll be well familiar with the arguments of course, that do several thousand people need to schlep up a Swiss mountain at great
expense to discuss this issue?
BRENDE: There is lack of dialogue in the world today, and bringing the leading business people together with governments and civil society to
really agree on how to walk the talk, I think is very important. We need less confrontations, and in Davos, we will also mobilize the business
sector that really can change this for implementing necessary steps to fight climate change.
So, I think this is a great opportunity, our 50th anniversary. We'll make it into a do shop and not a talk shop.
QUEST: All right, but if you look at this, and now, I understand these are extremely complicated issues, complex because they're economic and they,
you know, you can't certainly close down factories and power stations, jobs will be lost as the implications. I understand all that, sir, I get it. But
when Greta can get more attention than anybody else by simply sitting outside, say simply, the Swedish parliament saying do something. Doesn't
that tell you more about the CEOs than anything else?
BRENDE: I think that Greta is a strong story. She has had a lot of impact, but also on the CEOs and business. Many companies today understand that
they need to change. We're moving from capitalism to talentism, and who wants to work in a company that doesn't take climate change seriously? I
think this is also changing the attitude among many companies and many companies are now pushing their governments to do more, and that's what we
want.
QUEST: I look forward to seeing you sir, up the mountain next week --
BRENDE: Nice place, welcome, Richard.
QUEST: Yes, well, you know, like yourself, if you've got a few Davos' under the belt. Do you know something --
BRENDE: I know.
QUEST: Do you know something? In all the years I've been going to Davos, I've never skied for pleasure. I've never actually got --
BRENDE: Wow --
QUEST: Up the mountain to ski for pleasure because by the time you go, it's time to leave. Anyway, have you skied?
[15:55:00]
BRENDE: Yes, neither I. So maybe we should -- no, I haven't done in Davos, but as a true Norwegian, I've skied already --
QUEST: Oh, no!
BRENDE: Many times this year.
QUEST: No, we are not going to ski together, as a true Norwegian, I will be shamed off the mountain by comparison. Good to see you, sir.
BRENDE: No, I -- thank you, thank you.
QUEST: Good to see you, good Lord. Now, the last few minutes of trade on Wall Street, this is the way the day is going. We've given back some of the
gains, we probably will hold 29,000, but the gains have sort of whittled away even though phase one was signed. Look at this, we are up, but you've
got some -- you've got United Health Care up obviously on the back of some announcements.
You've got this sort of movement, but you've got some big losses at the bottom as well from some key numbers as well. Those are the markets, I
promise you, a profitable moment after the break.
(COMMERCIAL BREAK)
QUEST: Tonight's profitable moment, the economic and trade agreement just signed today, it's fascinating stuff. For instance, with regard to extended
shelf life milk, China will allow ESL milk produced in the United States to be imported and sold as pasteurized milk in China. Well, there you are.
It's that sort of level of detail on one hand along with big macro thoughts about trade secrets, counterfeiting, intellectual property theft, the
shifting of the burden of those who claim it that make this deal so important.
But it's only relevant and only successful if the disputes mechanism holds water, the Chinese live up to it, otherwise it will be tit-for-tat. And
anyway, those tariffs are still there. Most of the tariffs have not been removed. My own view probably thought is perhaps President Trump likes
tariffs. He wants to keep them there as long as possible.
All he's done is taken away the little bits. Phase 2A, 2B, 2C, phase 3, whatever, that's the big stuff about government subsidies. But as long --
it will take months if not years to negotiate. But as long as those tariffs remain in place, well, then everybody continues to suffer. So keep an eye
on this agreement and what comes next.
And that is QUEST MEANS BUSINESS for tonight, I am Richard Quest in New York. Whenever you're up to in the hours ahead, I hope it is profitable. We
have some records, we're closing over 29,000, yes!
(BELL RINGING)
END
