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Quest Means Business
Spanish Prime Minister Demands Clarity from Catalan President; Trudeau Visits Trump Amid NAFTA Negotiations; Legal Questions Swirl Around Harvey Weinstein; U.S. Lobby Group Warn of "Poison Pill Proposals": Why We Allow Tech Companies into Our Lives;
Aired October 11, 2017 - 16:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
[16:00:00] RICHARD QUEST, CNN HOST: All right. Closing bell ringing on Wall Street. Dow Jones at a record again, of .2 of 1 percent. Nasdaq also
at a record high. We'll bring you that in the trading post. Otherwise, sir, do the honors. I declare that to be a firm gavel on Wednesday,
October the 11th.
Walking away from Catalonia the president tells CNN, he want talks with Madrid, as businesses are abandoning the Spanish region.
Walking away from NAFTA, President Trump is threatening to leave the deal, as a new round of negotiations begin, the President's been meeting the
Canadian Prime Minister.
And walking away from Weinstein. The film company's partners consider cancelling their various deals.
I'm Richard Quest, live in the world's financial capital, New York City, where, of course, I mean business.
Good evening. Tonight, five days that will decide the future of Catalonia and indeed the cohesion of Spain. The country's Prime Minister Mariano
Rajoy has given the Catalonian president until Monday to clarify if he's declared independence or not. With the IMF already warning contagion, his
answers whether this crisis is settled by dialogue or something more dramatic.
Both sides are now playing the waiting game. Let me show you exactly how this plays out. If you take Spain, Madrid in the center, Barcelona on the
eastern coast. Madrid and Catalonia are retreating behind their respective red lines, a negotiating strategy. And they're waiting to see if either of
the other side crosses the red line.
So, let's take the Madrid side first. If you look at Madrid, the Prime Minister Rajoy has refused to hold talks unless the independence claim is
dropped. And he's warning that Catalonia will do great damage to itself and to business if it goes ahead with its independence. Today he said the
crisis has already done more to hurt Catalan tourism than terror attacks in Barcelona. It's significantly -- Mariano Rajoy, the Prime Minister,
bearing in mind what the Catalan President did yesterday, the prime minister says the next move is up to Catalonia.
(BEGIN VIDEO CLIP)
MARIANO RAJOY, SPANISH PRIME MINISTER (through translator): It is the answer that Mr. Puigdemont will give to this issue that will mark the
future of what's going to happen next. It is within his power to go back to legality, and to institutional normality or to continue with an
instability period without perhaps losing Catalonia. We are living one of the worst moments in the recent history of democracy.
(END VIDEO CLIP)
QUEST: Now, in his back pocket the prime minister always has the nuclear option of Article 155 of, the Spanish constitution that would allow him to
basically impose direct rule once again on Catalonia. If he were to do that, well, on the other side, you have the red line from the Catalan
President, who is insisting on talks without preconditions. Catalonia's economy does give him some leverage. It makes up about 20 percent of
Spanish GDP and pays much more into the tax system of Madrid and Spain than it does get back from the country. In an exclusive interview with CNN, the
Catalan President said it was time for proper talks.
(BEGIN VIDEO CLIP)
CARLES PUIGDEMONT, CATALAN PRESIDENT (through translator): I believe that today we find ourselves in a moment of most importance. That we have no
prior conditions to sit down and talk. Except that we must dialogue, and we must dialogue within adequate conditions. Maybe it could help dialogue
if two people from the Catalan government and two people from the Spanish government simply agreed on one simple thing. Appointing a mediator, for
instance. But we cannot ignore the fact that talks apathetical discussions need to come from recognizing reality.
And that is what we need to talk about. The relationship Catalonia, Spain, it does not work and there is majority of Catalan people that want to make
Catalonia an independent state. And want to do that in agreement with the Spanish state. But we need to do that without conditions. We need to sit
down and really talk.
(END VIDEO CLIP)
[16:05:00] QUEST: Spanish investors are treating this entire incident with a certain amount of trepidation and caution. Let's just take today. The
evidence for this is the way Spanish stocks rebound, from Tuesday's losses, and outperformed the rest of Europe. But really, at 1.3 percent gain in
the IBEX has to be seen the fall of the previous day, and almost certain knowledge that if there was to be detrimental move tomorrow, that market
would turn down. The cost of buying Spanish debt, which rises bond to its lowest level of the month so far. Again, the ten-year bond, this would
have to be seen in the context of an independence declaration or a worsening situation that would send the bond higher, almost certainly.
Atika Shubert is live for us in Barcelona tonight. This level of uncertainty, Atika, these five days that the Prime Minister has given the
Catalonia President. It's very tense.
ATIKA SHUBERT, CNN SENIOR INTERNATIONAL CORRESPONDENT: absolutely. I mean, he's really turning the screws on Catalan President Puigdemont. I
mean basically by asking him to clarify whether or not it was a declaration of independence. He's really trying to split, as well, the independence
movement. Remember, it is fractured parliament here and Puigdemont is really sitting on a coalition of many different interests.
If he says for example, that no, it was only a symbolic declaration, then he could find that he doesn't have the support from those much more
hardline separatists. If he says, you know -- if he says it is declaration of independence, well, that would be upping the stakes dramatically, a give
Rajoy a reason -- the Prime Minister a reason to come in and take over the regional government. So, he is really turning the screws on the Catalan
President. How he's going to respond in the next few days is what we're watching for.
QUEST: OK. The idea of mediation, the idea of talks, would be what? Talks about greater autonomy? I mean, listening to that interview, with
Nic Robertson, where he talks about, you know, we have a right to independence. Well, even if you have temporary talks, talks to what?
SHUBERT: You know, the independence movement here goes back hundreds of years really, it has deep historical roots. But the most recent change
here happened in 2006, when there was autonomy statute that Catalan had passed, and that was accepted by the Spanish government. Then in 2010, the
constitutional, court struck that down. And ever since independence then the independence movement has been re-sparked. It was basically revived
under that.
So, if there were any talks to take place, it would be about this autonomy statute. What kind of an autonomy would Catalonia need? What more would
they need? Financial independence. What else do they want? And so, I think that's what the talks in itself would be about. But, you know, these
-- this idea that there will be no preconditions is something that the Prime Minister says is absolutely a no go. He Will not have any dialogue,
he says, until it's clear that there has not been a declaration of independence.
QUEST: Atika Shubert in Barcelona. Atika, thank you. Let's talk to Professor Luis Cabral of the International Business, NYU Stern. Good to
see you Professor.
LUIS CABRAL, PROFESSOR, INTERNATIONAL BUSINESS, NYU STERN: Good to see you.
QUEST: Thank you.
CABRAL: Thank you.
QUEST: Where is the pressure coming from here? There's the political pressure in one since, but how significant is the business pressure?
Whether it's the Caixa Bank moving out, the other banks, the other companies taking advantage. Where does commerce come into it?
CABRAL: The biggest pressure is the large banks and large corporations that are headquartered in Barcelona, and that are thinking very seriously
about moving to Madrid. Because if there is independence or even if there is a situation of uncertainty continues the way it is now, it's not good
business to be in Barcelona for them. And that can have a huge negative impact on the Catalonia economy. In fact, that's already been happening
for a number of years, by the way, because of the language laws in Catalonia. So, this would only accelerate that movement.
QUEST: One assumes that the Catalonian government does not wish to commit financial suicide, or at least economic suicide. Now, similar arguments
with Scotland. If they vote for independence, they leave the European Union.
CABRAL: That's true. And as of now, it's not clear what would happen to Catalonia if there were to become independent. You would need all of the
European Union countries to vote in favor of them becoming members of the European Union. And it's far from obvious that would be the case.
QUEST: Well, Spain certainly wouldn't and the United Kingdom wouldn't.
CABRAL: Probably not.
QUEST: Assuming the U.K. is still there, of course.
CABRAL: That is correct. And so, that's part of the potential cost of independence. Now, of course, it's not very credible to say that we will
never talk to you again. And I think some sort of a deal agreement, possibly even membership, would eventually be achieved, in my opinion.
[16:10:00] QUEST: But what do they want -- I mean, you heard me ask Atika Shubert this. When Catalonia suspends its declaration of independence, and
there's more talks or mediation, the two are diametrically opposed. The Prime Minister cannot give ground -- he said this tonight. You know,
you've got five days to make it clear that you're not declaring independence.
CABRAL: Yes. I'm not sure that they were expecting Rajoy to be as strict and strong as he's Ben right now. Perhaps what they were thinking about --
who knows what they were thinking about. It is perhaps they could renegotiate the independent -- the autonomy statute and the shadow of
possible independence. And they're just realizing that doesn't work. That's not working. At least Rajoy is playing hardball, and it seems to me
that Catalonia is going to lose this battle.
QUEST: Right. And just to brief us -- for those who doesn't follow this as closely as yourself -- the Spanish opposition at the national level is
also in favor of the Rajoy position. I mean, they may not want such a hardline position but Rajoy is speaking largely for the entire Spanish body
politic.
CABRAL: That is correct. And for a significant fraction of Catalonia.
QUEST: Do we actually know?
CABRAL: We don't have the exact numbers my idea is that it's probably split down the middle, very close to 50/50.
QUEST: Which is a very dangerous area to go into some call for independence, claiming you have a mandate when 50 percent of the people
actually don't want anything to do with it.
CABRAL: Exactly. So, there is a majority of people a referendum voted in favor of independence. But the turnout was quite low. And so, there's
probably about 50 percent of Catalonians who are against independence. At least in the way that's being prosed right now. And so, it's a difficult -
- and the president -- the leader of Catalonia, in my opinion, is between a rock and a hard place, because the more extremist Catalonians are pushing
very hard for independence. But on the other hand, it just realized it would be tough for him if he were to go ahead with independence right now.
QUEST: Good to see you, professor. Thank you very much indeed. Much appreciated. Thank you very much.
Spain's economy minister will be joining me live on tomorrow night's program. Luis de Guindos will be with us at the annual meeting of the lMF
in Washington. You can see that interview, as well as my debate on the global economy with the IMF managing director, Christine Lagarde. It is
QUEST MEANS BUSINESS, tomorrow at this time, live from Washington.
So, we need too immediately to our new trading post, and all three -- let me find -- here we go. All three of the markets have closed at record.
That means it's the 48th record of the year for the Dow. The 44th for the S&P. And crucially, it is the 56th for the Nasdaq. One of the reasons --
not only just the news generally -- but one of the reasons for these three records, the Fed minutes said that there needed to be some patience with
raising rates. The minutes just came out.
Delta Airlines despite the incidents of hurricanes and other delays, Delta Airlines had earnings better than expected. So, put this together, and
you've got records on the Dow over 20 -- I mean, 23,000 is looking extremely touchable and within grasp on the S&P 500 and on the Nasdaq.
You've got nearly 50 records on the Dow. And no wonder Donald Trump, the president, has described the market movements as unprecedented. And the
signs of fear in the market at the moment, absolutely nothing there. But remain at 84 on the CNN Money fear and greed index, which is one of extreme
greed. As you can see, green just about all around the set as we have got Paul La Monica. All three are records. And not just that, good records.
The momentum is there. There're not eking out these records. They seem to want to head there.
PAUL R. LA MONICA, CNNMONEY CORRESPONDENT: Yes, these are solid gains. And I think we've talked about this on the show. Pretty much since the
beginning of the year. I think a lot of it, despite the President taking credit for it, is in spite of what's going on in Washington. Corporate
earnings have been good. You noted Delta. We had Blackrock reporting some good results. And hopefully Will get decent ones from the big thanks later
this week. But consumers still spending, corporations still spending. I'm just not so sure this is about politics, because, again, as my colleague
Matt Eagan pointed out, we had a lot of records under President Obama, too. It's not a unique phenomenon --
QUEST: Oh, but 48 in a year. It's not a -- I mean, we'll need to find out. Maybe you could get CNNMoney to see if this is a record so far in
terms of number of records
LA MONICA: A record of records.
QUEST: A record of records. Thank you. A record of records. The IMF meets. They've warmed about inequality.
[16:15:00] Schauble has warned about bubbles and imbalances that exist out there, as a result of liquidity. The Fed today suggesting that patience
might be required from the September meeting. Does that put off a rate rise to next year?
LA MONICA: I doubt it. I think that the Fed will probably try and sneak in one more rate hike in December, as long as earnings remain pretty strong
and the market is doing well. And, of course, they're looking at inflation, which is starting to creep up a little bit, because of wage
growth. We had a very nice jobs report last week with regards to what the wage growth number was, even though we lost jobs last month. We did get
nearly 3 percentage wage growth. And the Fed, I think, is watching that very closely.
QUEST: Now, Coach has become tapestry. And we think that it might have something to do with this. Have a listen.
(BEGIN VIDEO CLIP)
CAROL KING, SONGWRITER, RECORDING ARTIST: Now my tapestry is unraveling. He's come to take me back. He's come to take me back.
(END VIDEO CLIP)
QUEST: Carol King.
LA MONICA: Yes, very, very nice. Very well-played. I seriously doubt that that was the motivation. I did speak to someone at Coach. As they
now -- they now call it --
QUEST: Don't ruin the day.
LA MONICA: -- they now call it tapestry -- they did acknowledge -- it's a bit of a cutesy name that plays off the whole notion of weaving several
brands into one. Putting that all aside, this is really similar to what we had with Alphabet and Google. There is nothing that people go to that is
Alphabet per se. You still go to Google. You go to YouTube. In the same way here with Coach, the Coach brand name -- if you like to buy handbag and
wallets from Coach, it's still going to be called Coach. They're still going to have Kate Spade, and Sarah Wiseman, the other two brand they
recently acquired. And I think that's what this signals. Maybe Coach wants to do another deal. And having an umbrella sort of name to house all
of these different brands, that seems to what they're looking to do.
QUEST: I seem to have left my wallet. Could you lend m, a bit of money -- Paul thank you very much indeed.
LA MONICA: Thank you.
QUEST: Extraordinary. More developments as show business -- the world of show business turns against Harvey Weinstein. And the allegations are
piling up. Now the Manhattan District Attorney is defending his decision not to charge Weinstein with sex crimes. You're going to hear from him
next. It's QUEST MEANS BUSINESS.
(COMMERCIAL BREAK)
QUEST: Straight to Washington, where the Canadian Prime Minister, Justin Trudeau, is speaking to reporters after meeting with the U.S. President.
JUSTIN TRUDEAU, CANADIAN PRIME MINISTER: We know that the success of any society depends on the full socioeconomic participation of women, because
women succeed, we all succeed. And whether it's flexible hours, parental leave, affordable child care, diversity training, equal pay, or any other
number of initiatives. It's incumbent of us across the public and private spheres to be proud agents for change.
[16:20:08] Following that theme, this morning I had a productive round table with WomenOne, where we discussed the current barriers to global
gender equality and marked the international day of the girl. I also met with the committee on ways and means, and we had a great conversation about
the importance of the Canada/U.S. partnership. And I just wrapped up a very good meeting with President Trump, where we talked about trade,
security and economic growth. As we know, the fourth round of NAFTA negotiations is under way here in Washington. And the President and I
reiterated our commitment to in good tired faith to give this deal a much- needed upgrade. NAFTA has benefited millions of people and can benefit millions more. We're pleased to have the opportunity to modernize this
trade agreement for the current economy, a modernization that acknowledges the importance of gender, the environment and indigenous and labor rights.
We know that there are millions of jobs on both sides of the Canada/U.S. border that rely on trade and investment. In fact, Canada is among the top
export markets for the majority of U.S. states. And so, it's imperative that we get a fair deal for Canadians, Americans and Mexicans alike.
That's what our teams at all orders of government are working hard towards.
QUEST: Justin Trudeau, talking there on NAFTA. He describes NAFTA as an upgrade to NAFTA, to modernize it. We'll get more details on that in the
hours ahead. Also talking about women and the whole gender question. Harvey Weinstein comes into all of this, of course. Harvey Weinstein, the
Hollywood producer, is on his way to rehab. His wife of ten years has left him. The company -- the Weinstein Company is facing an uncertain future.
The claims of sexual misconduct just keep coming. More women are accusing the Hollywood producer of rape. We must stress, Harvey Weinstein denies
those claims. The indications are the allegations haven't finished. Amazon is reviewing its projects with the Weinstein Company. This week his
name was removed from the credits of its shows like "Project Runway." The Weinstein Company board has expressed shock and dismay at new allegations
of extreme sexual misconduct and assault.
An earlier than Manhattan District Attorney explained his decision not to press charges in the past.
(BEGIN VIDEO CLIP)
CY VANCE, MANHATTAN DISTRICT ATTORNEY: I understand that folks -- folks are outraged by his behavior. I understand that there are many other
allegations that have surfaced, but I our case, we really did what I think the law obligates us to do. Focus on the evidence and the facts that we
have. and then I relied on the true professionals to help guide to the decision, which is not always going to be the popular decision. That's the
nature of being a prosecutor.
(END VIDEO CLIP)
QUEST: In the past few minutes, the Academy of Motion Picture and Arts -- basically the Oscars -- say they will hold a special meeting on Saturday
about the Weinstein allegations. We have Erin Gloria Ryan is here. Senior editor for "The Daily Beast" and a CNN contributor. In an op-ed for "The
Daily Beast" she defended victims who are reluctant to come forward. It's not surprising they're reluctant to come forward, is it? They are promised
anonymity, or they are promised safe harbor, but the reality is most of them know that until it becomes a cause celeb like this, they could be
alone, and they could be victimized.
ERIN GLORIA RYAN, SENIOR EDITOR, THE DAILY BEAST: Right. I think any time you're a woman who comes forward with this sort of allegation, you've got
someone as powerful as Harvey Weinstein, you're basically setting off an atomic bomb with yourself at the center -- which I wrote in the piece for
"The Daily Beast." It's so risky, and it's so unlikely that you're going to come out of it unscathed by your own career.
QUEST: What is the answer in that situation? Because you're talking about a real politic situation, where an individual goes up against a famous or
powerful person. How does a company adapt then to allow for that?
RYAN: I think that brings up a very interesting point. Because Weinstein couldn't have done this without all the people that were enabling him along
the way. There were people who were more powerful than the actresses he is he was allegedly victimizing who knew about this. Who didn't say anything.
There were ostensibly film executives who heard about this who didn't do anything. There's an entertainment press that in their thirst for access
was willing two just, you know, just push their morals aside in order to keep these buried.
QUEST: Do you think people knew how bad it was or how egregious it was?
RYAN: I don't want to speculate on whether everybody knew every detail of it. I think this is the first time we've seen all these, kind of stomach-
churning details in one place. I think the fact that people had indicators that there might be something that bad there and didn't speak up is pretty
damning to the culture of entertainment as a whole.
[16:25:00] QUEST: But are we in danger -- and I'm choosing my words carefully and I'm treading delicately. Are we in danger of turning Harvey
Weinstein into the devil incarnate with all the coverage, and everybody heaping more opprobrium on top of him? When the real story is not
Weinstein per se. It is how it was able to perpetuate.
RYAN: I think it definitely is that. I think it's also the way that this -- this isn't just him. And this isn't just this industry. When I was
listening to that tape yesterday, there's a tape that the New York Police Department got in a sting in 2015. I was listening to that yesterday.
He's trying to coerce a woman into his hotel room. I related to that tape so much. Not because Weinstein ever targeted me. But because me and every
single woman I know has had a man try to treat us that way in our lives.
It's something endemic to American culture. It's something that's endemic to different industries. Media, tech, trucking, service. This is a
conversation we should be having nationally. It should be not just about Weinstein. Because getting him out of there is not going to fix the
problem. But we should be doing is teaching men about consent. And what we should be doing is teaching men in a position to stand up they need to.
QUEST: So let me ask you, and I ask this as somebody who's got three sisters and been around this issue most of me adult life -- most of my
life. What then does need to be done. To happen, to have that conversation, to make them? Because these allegations, in some shape or
form, sexual harassment has been known about by men for a very long time.
RYAN: Yes. I think that the important thing is for men to take a couple minutes and be alone and silent with themselves today and consider whether
or not they've ever enabled this sort of behavior. And how they can personally not enable it in the future.
QUEST: Very grateful you came and talked to us. Thank you so much indeed.
We'll continue tonight. NAFTA negotiations on round. We just heard the Canadian Prime Minister describe it as an upgrade to NAFTA. The talks are
resuming, and Justin Trudeau turns on the charm at the White House.
(COMMERCIAL BREAK)
QUEST: Hello, I'm Richard Quest. There's a lot more QUEST MEANS BUSINESS in a moment. When the U.S. Chamber of Commerce is warning President
Trump's position on NAFTA is full of poison pills. And we give Apple, Google, Amazon and Facebook, an all-access pass into our lives. A
marketing professor says there is a reason for that.
As we continue tonight this is CNN, and on this network, the news always comes first.
Spanish Prime Minister Rajoy is rejecting Catalonia's call for negotiating independence from Spain, the prime minister has given the Catalan President
Carles Puigdemont until Monday to clarify whether his vision has declared independence or not.
[16:30:00] If the answer is yes, and Puigdemont refuses to reconsider by the following Thursday, Prime Minister Rajoy says Madrid could then impose
direct rule.
Firefighters in California are having a tough time, as they battle massive fires, winds are expected to pick up in the area. That could threaten to
spread the blaze. So far, there's no rain in the forecast. At least 21 people have been killed. Hundreds more people are missing. Early
estimates suggest property value damage is more than $65 billion.
Multiple sources close to the White House tell CNN that President Trump is expected to appoint Kirstjen Nielsen as the new U.S. Secretary of Homeland
Security. The 45-year-old Nielsen would fill the vacancy left by John Kelly who is now the chief of staff. She currently works now as a deputy
to Kelly.
President Trump says he is stronger and tougher on North Korea than his secretary of state. Earlier Pyongyang's foreign minister says President
Trump in his words lit the wick of war in his speech at the United Nations General Assembly. Mr. Trump put North Korea's leader on notice in that
address, referring to Kim Jong-un as rocket man, in saying that the country would not survive an American attack.
Britain's Finance Minister Philip Hammond says that although the U.K. economy is fundamentally robust, Brexit is causing a cloud of certainty,
which needs to be cleared. Hammond told lawmakers the U.K. should prepare for the worst if no Brexit deal is reached with the E.U.
(BEGIN VIDEO CLIP)
PHILIP HAMMOND, FINANCE MINISTER, GREAT BRITAIN: We also have to consider the possibility of a bad-tempered breakdown in negotiations, where we have
noncooperation. Worst-case scenario, even a situation where people are not necessarily acting in their own economic self-interest. So, we need to
prepare for a wide range of scenarios.
(END VIDEO CLIP)
QUEST: The top U.S. business lobby group is warning that NAFTA negotiations are at risk of complete collapse as the latest round of talks
actually get underway.
The Canadian Prime Minister, Justin Trudeau who you heard a moment ago was at the White House meeting the president, who you heard, has repeatedly
threatened to leave NAFTA. President Trump said whatever happens, a new deal has to be fair to all sides.
(BEGIN VIDEO CLIP)
DONALD TRUMP, PRESIDENT OF THE UNITED STATES: It's possible we won't be able to make a deal, and it's possible that we will. We have a great
personal relationship, and we have a relationship now is two countries that is as close as ever. But we will see if we can do the changes that we
need. We have to protect our workers and in all fairness the prime minister was to protect Canada and his people also/
(END VIDEO CLIP)
QUEST: On the eve of the talks that are about to start, U.S. Chamber of Commerce, chief executive Tom Donahue has criticized the Trump
administration for putting what it calls poison pill proposals into the negotiations. What are these poison pill various different things? OK.
Here you have, of course, the NAFTA area, Canada, the United States and Mexico. And the NAFTA negotiation in round 4, you can hear the poison
pills are rattling around the medicine cabinet. The first one is the rules of origin, determining how much of product must be manufactured in north
America to remain duty-free. For example, the car industry, most at risk, 62 percent if the current rule.
Trump wants that to be higher and he wants within the rules of origin specificity so that it's not just one country. It specifies how much has
to come from the United States, which, of course, would defeat the whole object of having the single market.
Then you have a sunset clause, the U.S. wants NAFTA to expire every five years
until all three countries agree to whatever changes are necessary. However, business says what's the point of having a NAFTA treaty if every
five years -- I mean let's face it, businesses are making 10, 15, 20-year decisions, not five-year momentary decisions.
So, they say that is not going to work.
And finally, dispute resolution. U.S. wants to ditch the neutral arbitration mechanism. Put it all together, and you have poison pills that
could scupper, because the others will not agree. The Mexicans and Canadians will not agree to these fairly dramatic situations.
At any rate to put this into perspective, Paula Newton who was up in Ottawa with the Canadian position, Clare Sebastian is following the U.S. position.
We'll start with you, Paula, Ms. Newton, because your prime minister is in the United States at the moment. Is Canada prepared for failure of these
talks in the same way that President Trump seemingly is?
[16:35:00] PAULA NEWTON, CNN CORRESPONDENT: Absolutely, and I know speaking to the Canadian officials behind the scenes that they do not put
it past the president to eventually, because he needs those campaign wins, most political wins, Richard, to do what he says might do which is
terminate the deal.
But this is what the Canadians are doing. Before that meeting with Trump, Justin Trudeau was on Capitol Hill talking to a very powerful committee
there, the committee that is stacked with Republicans to know how important Canada is in terms of a trading relationship for their states. And they
are saying, look. Number one, Canada is the U.S.'s largest customer, more trade, the by more than the U.K., China, Japan combined. In number two,
even if the president signs an executive order, ending NAFTA, it is Congress that has the final say as to whether that happens. There might be
some constitutional dispute about that. We'll wait and see. But right now, Congress is saying, we do hold sway here.
CLARE SEBASTIAN, CNN MONEY CORRESPONDENT: Well, that is because he's renegotiating NAFTA at the moment, Richard. Remember on the campaign trail
and in fact multiple times including this week President Trump has threatened to rip the whole thing up just do away with it. In that he can
do unilaterally. It's called article 2205 and NAFTA, he's allowed to just make that decision, that would trigger a six-month process where he could
rescind the decision during that six months but he can do it.
QUEST: But Clare there is no movement as yet, seemingly they are negotiating, but these poison pills are destined to scupper because they
are perceived to be not in good faith.
SEBASTIAN: Absolutely. Those of us with untrained eyes in the area of trade deals, there is -- doesn't seem to be any way that the three sides
can agree on this. Mexico is deeply alarmed by the whole rules of origin thing the U.S. could apply one rule to themselves, one to something else.
Canada is alarmed of getting rid of dispute settlements.
QUEST: Pause there. Stay with me, Paula. Justin Trudeau is answering questions. Let's have a listen.
JUSTIN Trudeau, Prime Minister, Canada: How good NAFTA has been for millions of citizens of Canada, of the United States and indeed for Mexico.
I know there are opportunities to significantly improve these trade deals in ways that will benefit citizens right across United States and Canada as
well
And I truly believe that we can work together in a meaningful way to bring those benefits to our citizens. Negotiations are difficult. Unpredictable
at times but I truly believe that the presidents focused on creating benefits for his citizens, for the middle class the way we are. And that
positive trade deals, modernized trade deals, we will get that done. So that is something that I continue to focus on. The conversations we've had
with the way and means committee, the conversations I've had with governors across the country., the conversations I've had with various leaders of
industry have all emphasized that they see the direct benefits that NAFTA has brought to their communities, to their economies, and can continue to
bring in the future. so --
QUEST: So, Paula Newton in Ottawa. Does he believe that? I mean, you said to me he's preparing to leave. Or, no, he's recognizing that that
could be an option. Nuclear option.
[16:40:00] NEWTON: It is. But it will be Donald Trump's to trigger or their decision to walk away from the table. They need to prepare for those
talks to break down. You heard him now that isn't much different from what he said from the last few months. What is important is what happened in
the last couple hours. He took the measure of the president and tried to determine exactly how serious he is, not about terminating NAFTA, but how
serious he is about going back to those poison pills. What determines a win for Donald Trump?
And that's what the prime minister was trying to find out, and we'll know in the next little while whether he got to that end, and will instruct his
negotiators accordingly.
QUEST: Paula and Clare, thank you.
Four giants of technology, and they have one goal. In a moment, the inside story to the race to become the world's first trillion-dollar company.
(COMMERCIAL BREAK)
QUEST: Google has had to admit there is a bug in its new home mini speaker. Tech bloggers discovered the smart speaker secretly recorded just
about everything it hears Google issued a software update to turn off the function. The device expected to go on sale next week.
As for Google, Amazon, Facebook and Apple, they seem to dominate headlines and our very lives. Take the last 48 hour for example. This is a list of
headlines. Google admits its new smart speaker was eavesdropping. Amazon exploring ways to deliver items inside your home. Zuckerberg apologizes
for Puerto Rico VR stunt.
Apple strikes deal with Spielberg's Amblin.
As Professor Scott Galloway of marketing at NYU Stern, the author of, "The Hidden DNA of Amazon, Apple, Facebook And Google."
Why are they so successful? Is it because they have basically come up with something that we find that we actually need? Admittedly, we didn't know
about it before but that is because it had not been invented.
SCOTT GALLOWAY, PROFESSOR AND AUTHOR, NYU STERN: Yes, it runs deeper than that, Richard. Google is our modern man' god. As we become wealthier,
more educated, we're less dependent on a super being, but still he huge questions. Used to pray to the gods, will my kid be all right. Now
symptoms in treatment of croup typed into the Google query box. When the six questions have never been asked before that are presented to Google in
the history of mankind. No coach, Rabbi, priest has that sort of credibility, Google is our modern God.
Facebook taps into our need to love and love others through pictures that reinforce relationships. Amazon is our consumptive gut. More for less is
always a strategy that works. An Apple appeals to our reproductive organs, Apple is a new symbol of wealth, power, innovation and says you have better
genes to potential mates.
QUEST: OK, but at the end of the day, they are doing a good job, they are doing what they say they will do. You can't fault them. And in this
digital age of the Internet economy, they are serving a purpose.
GALLOWAY: They do a great job. And I don't fault them. I think the question is, should we as a society ask questions around, do we no longer
worship at the altar of kindness and character but innovation and hold these companies to different standard than we hold other companies?
Your firm, this firm, wasn't weaponized by Russia. You have checks and balances in place that cost you a lot of money and reduce your bottom line.
Yet we have decided to Google and Facebook aren't subject to the same responsibilities as other media companies.
QUEST: Is the possibility on that point, on the weaponization, for example, the weaponization of Facebook, which -- you're concerned about.
[16:45:00] That really, it's happened much faster. it may have taken 40 years for this company to have got size, heft and a certain amount of
influence and power.
But the speed with which these are, we haven't had time to put in place the necessary safeguards.
GALLOWAY: The technology and innovation has outpaced the public policy or ability to realm with it. A lot of people believe that Facebook is not
even sure they know what they fully have right now.
QUEST: Let's look at the graphs of share prices which I now is not exactly a barometer of anything other than people's wealth. But if you look at,
say, for example, any of them, Apple, Amazon, Google -- here's Apple. Facebook -- I beg your pardon. Look at that. Pretty much solid that
afterwards everybody said, oh lord, this has gone badly.
GALLOWAY: So, the combined market capitalization of these four companies is equivalent to the GDP of India. Amazon which is paid 1.4 billion in
corporate income tax whereas Walmart has paid 64 billion since the great recession, it Amazon has added the value of Walmart to its market in the
last 24 months. We have never seen companies this powerful.
QUEST: So, if you accept, and you have at the beginning of this, that they're serving a purpose, they're doing it extremely well.
GALLOWAY: Yes.
QUEST: And there's a need or we've discovered a need for what they want. Are you suggesting regulation to impose those forms of safeguards, checks
and balances that a Time Warner has? Or are you looking at something like antitrust, break them up?
GALLOWAY: I'm suggesting we hold them to the same standards we hold other companies and we begin to ask hard questions -- I think we suffer from a
gross idolatry of innovation and youth that has created two-class system, one for all corporations and one for them.
Antitrust, I don't know, if I were on the board of Amazon, I would spin the AWS prophylactically, because I think that Facebook and Russia situation is
the tipping point, and we're starting to see that the worm has turned. Whether or not antitrust I don' know. You know where the war is going to
break out against big tech, Richard, it's going to break out in Europe who registers all of the downside, the job destruction, tax avoidance of the
big tech companies, but registers very little of the upside. The war is going to break out against big tech in Europe.
QUEST: Are you on Facebook?
GALLOWAY: I am.
QUEST: Do you use Amazon?
GALLOWAY: I love all of them, I think they are fantastic.
QUEST: but with a but dot, dot, dot.
GALLOWAY: Well, this is the big question. What is always good for the consumer always good for society? And I think that's the fundamental
question.
QUEST: Glad you came in to talk about.
GALLOWAY: Thanks so much, Richard.
QUEST: Thank you, thank you.
As we continue tonight, tech companies are also disrupting our daily food chains. The Traders series now as we meet one company which is
capitalizing on our appetite for convenience.
(BEGIN VIDEOTAPE)
UNIDENTIFIED MALE: A pang of hunger in Egypt starts a chain reaction which crosses continents. Cairo restaurant Al Dia prepares the dish.
And in under 30 minutes it is ready to eat. But the delivery of this meal to the customer in Cairo relies on a billion-dollar company based in Berlin
5000 km away.
PIETER-JAN VANDEPITTE, COO, DELIVERY HERO: Delivery Hero is a company active in online food ordering, we actually grew into a global company with
activities in more than 40 countries. And we operate almost like what I called a little bit the United Nations of food delivery with strong
entrepreneurs in the countries.
UNIDENTIFIED MALE: Customers can order from thousands of restaurants using the companies app. Founded in 2011 Delivery Hero is hoping to stay ahead
of newcomers such as Uber Eats and Amazon.
VANDEPITTE: In 2016, we had close to 200 million orders. And we keep on growing.
UNIDENTIFIED MALE: The trade-enomics of food delivery is heating up. The global food market is worth $9 trillion. Out of which the food delivery
sector is worth 99 billion. In terms of the total food market pie, that represents a mere one percent slice.
Such huge potential for growth has seen a frenzy of mergers and acquisitions activity in the last three years as companies invest billions
to gobble up small arrivals. Customers are hungry for convenience.
A click and swipe of a app will soon traditional phone calls as the most convenient way to order.
In Cairo, the Delivery Hero brand management team collaborate with the original service.
To stay ahead of the competition, Delivery Hero exports expertise in tech and marketing to their regional companies.
VANDEPITTE: It is very important to understand the local ecosystem, and to really develop the right product and technology for the local customer.
[16:50:00] Geolocation is a fundamental part that we need to solve by understanding the local needs. And I give you an example of Saudi Arabia,
we don't have street names. You don't have street numbers. So, by having technology to support the delivery boy, the delivery girl, to bring the
food to the customer, we contribute to creating an amazing take away experience.
(END VIDEOTAPE)
QUEST: As part of our ongoing commitment to fighting modern day slavery, Australian billionaire Andrew Forrest tells me why every business needs a
social license. You will hear him after the break.
(COMMERCIAL BREAK)
QUEST: Every chief executive has to run their business with a fine moral code. That is the view of Andrew Forrest, the Australian billionaire who
has turned his attention from mining to fighting modern-day slavery. He says it's the job of every chief exec to help navigate away, from such
dangers as these.
You will be familiar with them from freedom project, human trafficking, slave labor, sex workers, inherited debt. When he joined me in the c suite
I asked Andrew Forest why the time has now come for executive moral leadership.
(BEGIN VIDEOTAPE)
ANDREW FOREST, FOUNDER, FORTESCUE METALS GROUP: I think every CEO in the world has to run their businesses with their own moral code and they must
have a fine moral code.
If they don't have a fine moral code, they're not going to be sustainable, Richard. That will be found out by consumers. That will be found out by
the law. You need to have a right to do business. You need a social license to operate these days. Ten years ago, you didn't.
QUEST: You just said, you need a social license to operate, so you are accepting that there needs to be a social component, a social
responsibility, in the social leadership for a CEO.
FORREST: Yes, Richard. That's absolutely correct. I fundamentally believe that business and particularly chief executives in business, must
set standards they would like to see across society. Society backs their business. They can only produce a profit and loss statement and a decent
balance sheet because of society. They are responsible to society to act morally.
QUEST: So, let's take for example, in Australia, the marriage equality battle at the moment, where one of your fellow Australians firmly came out
in favor. Others have come out against. It raises and I am genuinely not trying to take you down into a tricky area. But it raises the question of
which issues that one goes for. I can understand modern-day slavery but let's take the marriage equality.
FORREST: No, no, Richard, you go for issues under your control. You're not a politician, you're not a person who has to ponder on everything.
[16:55:00] What you control, like your labor supply chains, you should be ready to stand in moral judgment of the quality of labor and freedom of
those laborers.
Now, if you are saying, which your view on marriage, sex, or whatever it is, I don't have a view on it, I can't control it. I'm not going to. But
if you say to me what about your 3500 suppliers, how do you know there is not slavery in those supply chains?
I would have to say to you, Richard, I don't but I'm looking and I am trying.
QUEST: On the question of modern day slavery, the ability to quantify -- we all know it is going on. We all know it is at a horrific level. But
the ability to provide verifiable statistics. How significant is that?
FORREST: I think it is very, very significant, I found out yesterday how significant that was, when the ILO and walk free index published a common
number, not only were we shared on the table by your own Ivanka Trump who was committing the United States to fight slavery around the world. But
the other end of the table introducing us for the Secretary-General of the United Nations, the Prime Minister of Britain, in lined up by the side was
state leaders from all over the world. And their committing to slavery. And why are they committing? Because you now can measure in their
countries.
QUEST: They are committing but I've got a word for you, results.
FORREST: Thanks, Richard.
QUEST: I will say it again, results, they have gotten now actually do something. Results.
FORREST: And that is why we need CNN to hold them to account, that's why your role in your support against moderate slavery is critical because your
analysis drives results. Transparency, measurement and media drives results.
QUEST: We'll hold you to account.
FORREST: Oh, you do, sir.
QUEST: Good to see you.
FORREST: Good to see you, Richard.
QUEST: Spirited debate in the C-suite. We'll have a Profitable Moment after the break. This is CNN.
(COMMERCIAL BREAK)
QUEST: Tonight's Profitable Moment. It's worth looking ahead to tomorrow night's QUEST MEANS BUSINESS which comes from the IMF, International
Monetary Fund's annual meetings.
Tomorrow night we will have the debate it will be between Christine Lagarde, the French finance minister, the Indonesians, the Canadian finance
minister. And hear what they say on the issues of austerity, what they say about inequality, how they believe that the bubbles and inequalities and
imbalances in the economies at the moment could be dealt with in the future.
QUEST MEANS BUSINESS from the IMF live tomorrow night.
Otherwise, that is QUEST MEANS BUSINESS for tonight from New York. I'm Richard Quest. Whatever you're up to in the hours ahead, I hope it's
profitable. I'll see you in Washington tomorrow!
END
