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Quest Means Business
Summit Of The Century; The G-7 Fallout Washes Over Europe; From Free Trade To Fair Trade To Full Trade; German Automakers in More Trouble Over Emissions; One Professor Wants You To Print Your Own Yes Pills; Dennis Rodman: Hope Trump-Kim Summit is a Success; Spain to Offer Safe Harbor to Humanitarian Ship; U.S. Unveils New Russia Sanctions Over Cyber Attacks; Singapore PM Warns Against a U.S. Go-it Alone Policy; Trump Calls for Elimination of Trade Barriers in G7; U.S. Steel Plant Adds Jobs After Tariffs; Trump: Kim Jong-un Meeting is All About Attitude; Sadiq Khan: I Won't Apologize for Calling Out Trump. Aired: 4-5p ET
Aired June 11, 2018 - 16:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
RICHARD QUEST, HOST, QUEST MEANS BUSINESS: Choppy session on Wall Street. Dow Jones Industrials eking out a small gain overall. The bell has rung.
One, two -- we only had two there. Trading is now over on an extraordinary week. It is Monday, it's the 11th of June.
Tonight, time to make a deal. The Summit of the Century and it begins only hours from now. The G-7 fallout washes over Europe. The MG of the IMF,
Christine Lagarde says, "The clouds have grown darker."
And from free trade to fair trade to full trade. Donald Trump has a new word of the day. I'm Richard Quest, tonight, live in London where of
course, I mean business.
Good evening, striking scenes in Singapore as we begin the final countdown to the summit between Kim Jong-un and Donald Trump. So, look at this
picture, the North Korean dictator smiling, waving as he took a Monday evening stroll with Singapore's Foreign Minister and bear in mind,
Singapore arguably one of the most capitalist bastions of free trade and open markets anywhere in the world.
The two men even stopped to take a selfie. It's a remarkable moment given that Kim Jong-un's public persona is awfully carefully controlled by North
Korea's public admin machine, although bear in mind, we are seeing it, but that the North Koreans aren't seeing anything like it, at the same time
with (inaudible).
Here is what we know right now about plans for Tuesday's summit. After greeting each other before the cameras, the two men will begin one-on-one
meetings. They're accompanied only by their translators. Then, top advisers will join them for an expanded meeting in a working lunch.
President Trump will address reporters on Tuesday before flying back to the United States.
Could it go longer? Absolutely. Could it go considerably shorter? Without a doubt, with their historic meeting hours away, our senior
international correspondent, Ivan Watson is sweltering in Singapore. It's going to be a hot day today, not only meteorologically, but politically and
geopolitically.
So, Ivan, hours away, what's expected?
IVAN WATSON, SENIOR INTERNATIONAL CORRESPONDENT, CNN: Well, we are going to have a face-to-face meeting between the two leaders, again with --
accompanied only by their translators and you talked about that stroll that Kim Jong-un took.
He visited the Marina Bay Sands Hotel, that kind of iconic structure over my shoulder over there. he was accompanied not by the Prime Minister of
Singapore, but by the Foreign Minister and the Education Minister. Foreign Minister Vivian Balakrishnan, he posted what looks like perhaps the first
ever selfie taken by Kim Jong-un on Twitter and it was striking to see him smiling, waving to onlookers who were cheering and welcoming him.
It's very striking considering that this a dictator with a dismal human rights record, accused of executing his own uncle, of ordering the
assassination of his half-brother in Kuala Lumpur Airport with VX nerve agent, though the North Koreans deny that, but that was as recently as last
year, and here you have a leader who until a few months ago, had never left North Korea on a foreign trip as leader of North Korea, for close to six
years and now, walking around and king of taking in the sights here in Singapore hours before this face-to-face meeting with the US President,
Richard?
QUEST: We're going to be talking later in the program on this idea of first impressions. Donald Trump says he will know within a minute whether
or not this meeting is going to work out. He has also said that if it doesn't, if it is not going anywhere, he will have no problem in bringing
the meetings to a short end. But, nobody really believes that is going to happen, do they?
We seem to have lost -- well, we haven't lost the picture first, we've got Ivan back. Do we have him back? Nope. Ivan is still frozen in Singapore.
Donald Trump prepares to meet one of the world most brutal dictators, the President continues to rile against American allies and their trade
policies.
Now, Mr. Trump's closest economic advisers -- ironically saved their harshest words for America's closest neighbor, Canada.
(BEGIN VIDEO CLIP)
PETER NAVARRO, DIRECTOR OF TRADE AND INDUSTRIAL POLICY OF THE UNITED STATES: There is a special place in hell for any foreign leader that
engages in bad faith diplomacy with President Donald J. Trump and then, tries to stab...
[16:05:16]
NAVARRO: ... him in the back on the way out the door. President Trump did the courtesy to Justin Trudeau to travel up to Quebec for that summit. He
did him a favor and he was even willing to sign that socialist communique...
LARRY KUDLOW, DIRECTOR OF THE NATIONAL ECONOMIC COUNCIL OF THE UNITED STATES: He really kind of stabbed this in the back. He really actually,
you know what, he did a great disservice to the whole G-7. We were very close to making a deal with Canada on NAFTA bilaterally perhaps and then we
leave and Trudeau posts this stuff, more political stunt for domestic consumption.
(END VIDEO CLIP)
QUEST: The dust haven't even settled before political leaders were not slow in coming forward about the President's position.
(BEGIN VIDEO CLIP)
HEIKO MAAS, GERMAN MINISTER OF FOREIGN AFFAIRS: (Through an interpreter). It's actually not a real surprise. We have seen this with the climate
agreement or the Iran deal. In a matter of seconds, he can destroy trust with 280 Twitter characters, to build that up again will take much longer.
THERESA MAY, PRIME MINISTER OF UNITED KINGDOM: At this summit, we express deep disappointment at the unjustified decision of the United States to
apply tariffs to steel and aluminum imports.
The loss of trade through tariffs undermines competition, reduces productivity, removes the incentive to innovate and ultimately makes
everyone poorer.
JUSTIN TRUDEAU, PRIME MINISTER OF CANADA: (Through an interpreter). Our citizens expect us to find a solution to those differences. We managed to
demonstrate to the US President that his unacceptable actions are hurting his own citizens.
(END VIDEO CLIP)
QUEST: Daniel Kurtz-Phelan is executive editor of "Foreign Affairs Magazine" and he joins me from New York. Let's get -- come on, let's take
the gloves off here. They are all grown men and women, and you know as well as I do that within six months, they'd have -- if not exactly kissed
and made up, they've got to get on and do business with each other.
So, Daniel, any lasting damage?
DANIEL KURTZ-PHELAN, EXECUTIVE EDITOR, FOREIGN AFFAIRS MAGAZINE: So what is so extraordinary about the events of the past few days that each one of
these leaders in the G-7 has invested a lot of time and a lot of their own political capital in trying to find some way of managing their relationship
with the US President and all of those strategies have come to naught.
So, you do see a moment of real reevaluation of what each of these capitalists to do to rely on the United States and the internationalists
that they have built. There is a real moment of reconsideration in each of these countries.
QUEST: Yes, but what damage is done as a result because, all right, the US is still 25 percent or 30 percent of the global economy. It is still the
largest trading partner individually for these countries. It's still crucial.
You know, at the end of the day, when the US decides it will talk to them again, they go out and listen. They are not going to turn their back on
him.
KURTZ-PHELAN: So, that's right. I think each one of these leaders does know that ultimately, he or she cannot walk away from the United States,
but you will see a couple of different developments that will have more subtle, if longer term damage.
For one, the fact that they are going to get to some kind of a combination through a tit for tat implementation of tariffs rather than the settled
mechanisms for working these things out through the international trading system does have an economic cost in terms of uncertainty around
investment, in terms of US leadership of that system.
And then, second, you are seeing in each one of these capitalists, a reconsideration of long-term strategy, so that's not something that is
going to be visible immediately, but you will in time see that.
QUEST: All right, but what does that mean? Because you can revise strategy all you like, but it's the United States and it's your closest
trading partner, except within the EU obviously, the G-7 will still exist.
I guess, what I am trying to force you down the road of is a moment of real politics which is they've got no choice. He can be as rude as he
likes and don't do whatever he wants, they have to put up with it.
KURTZ-PHELAN: That's right. So, in the short term, not a single one of these governments is going to walk away from the United States, but in the
long term, they will start investing more in other trading relationships and other geopolitical relationships. They will reconsider some of their
security equipments and security dependence and again, that's not something we are going to see probably even under Donald Trump's presidency, but over
the course of five or ten years that does have real cause for US leadership in the world.
QUEST: Larry Kudlow, the economic adviser made these comments. Have a listen.
(BEGIN VIDEO CLIP)
KUDLOW: He is not going to permit any show of weakness on the trip to negotiate with North Korea, nor should he...
JAKE TAPPER, HOST, STATE OF THE UNION: So, this was about North Korea?
KUDLOW: Of course, it was in a large part...
TAPPER: Because Trudeau said that as Trump was going to Singapore...
KUDLOW: You know, one thing leads to another...
TAPPER: Oh, I see, okay.
KUDLOW: They are all related. Kim must not see American weakness.
(END VIDEO CLIP)
QUEST: Do you buy that?
KURTZ-PHELAN: So, I think that the -- this is an example in which President Trump and the rest of the world may have slightly different
definitions of what constitutes strength and what...
[16:10:15]
KURTZ-PHELAN: ... constitutes weakness. What really represents American strength in the world is an America that stands shoulder to shoulder with
allies. With Trump coming out of a G-7 which he has really damaged some of these relationships, the week where America that Trump had come out of the
G-7 and really had a show of unity with these other partners in terms of US leverage, US leadership, the US ability to re-implement sanctions if the
Singapore summit does not go well.
All of that is going to be a little harder to do given what happened in Canada over the weekend, so this is an example where what Donald Trump
thinks that his strength is not really what he needs going to the summit.
QUEST: Good to see you, sir. Thank you. As President Trump trades those insults with other G-7 leaders, he dropped in a radical proposal. Free
trade, zero tariffs for all -- and what this tells you about, the President's emotional state later in the show, a body expert reveals the
little moves that can give your game away.
You know it is bad when the other leaders don't hide their displeasure, in this case, over Donald Trump's G-7 volte-face.
Germany's Foreign Minister went as far as to say, "You can destroy trust with 280 Twitter characters." The IMF's Christine Lagarde didn't name
President Trump in her remarks, but she left us in no doubt about the warning of the deteriorating confidence that was now taking place in the
global economy.
(BEGIN VIDEO CLIP)
CHRISTINE LAGARDE, MANAGING DIRECTOR, INTERNATIONAL MONETARY FUND: I started by saying that the sun is still shining, not just in Berlin, but on
the global economy, and our forecast for growth for the moment is not modified at 3.9 percent this year and 3.9 percent next year.
But the clouds on the horizon that we have signaled about six months ago are getting darker by the day, and I was going to say, by the weekend.
(END VIDEO CLIP)
QUEST: Atika Shubert is in Berlin, grim morning from the Managing Director, but we also had the head of the WTO -- the World Trade
Organization a while back, but why were they all there? I mean, was it as a result of the G-7?
ATIKA SHUBERT, SENIOR INTERNATIONAL CORRESPONDENT, CNN: No, this was a long timed meeting. In fact, they met here in Berlin last year off the
back of the G-20 Summit. So, it is not as though this was a direct reaction from the G-7. However, it was a convenient time for everyone to
get together, compare notes and put out statements.
You heard that gloomy outlook from Christine Lagarde, but also, the head of the World Trade Organization said, "Look, it is not enough for the US to
complain about trade, it has to offer some solutions." Take a listen to what he said.
(BEGIN VIDEO CLIP)
ROBERTO AZEVEDO, HEAD OF WORLD TRADE ORGANIZATION: We do not see the US leading initiatives or leading negotiations in the way that they were
before...
[16:15:16]
AZEVEDO: ... and they have been not constructive with regards to the appellate body in the WTO, so compromising the dispute settlement mechanism
as well, so I think we have a number of areas where we could improve. They have been complaining about the system, they say that they want to improve
the system, but we would expect a more constructive approach on their part, also suggesting solutions.
(END VIDEO CLIP)
SHUBERT: Now, Chancellor Merkel of course was also there, but she seemed less angry than some of the other leaders that attended the G-7, more
resigned. She is obviously disappointed in what happened. She said in a TV interview last night that she wasn't surprised either. She says that
Germany is trying to build a good relationship with the United States, but it's simply not one that Germany can rely on at this point, Richard.
QUEST: What do they do next? I mean, that's really -- you may have heard my interview earlier in the program. I mean, they can huff and puff all
they want, but they need the United States politically, they need it geo- strategically and they need it economically. So, what can they do other than roll their eyes and make offensive comments to journalists, off the
record.
SHUBERT: Yes, it's a good question because Chancellor Merkel has tried over and over again to explain to President Trump, "Look, this is the way
trade works. It's win-win for both of us if we can follow these agreed upon rules," but it just doesn't seem to be working. He seems to be much
more of a -- I think the words that have been used, transactional President, so then it comes to each country, the EU saying, "Okay, what can
we give you us?" But that's not what Germany wants to do because it has a lot of concerns for example, about its automobile industry.
It's already being lined up -- German luxury cars is something that President Trump has already said he wants to slap a tax on, so Germany
doesn't want to go down the route of having to pick and choose which tariffs -- which taxes to slap on what. It wants to stick to these rules
and that's why it is so important for Merkel to meet with the heads of the IMF, the WTO and so forth.
But the question is, when the President of the world's largest economy, I think it controls something like 25 percent of the world's economy decides
it is going to rip up the rule book, what then?
QUEST: Atika Shubert who is in Berlin talking about cars and a good moment to move us on. Thank you, Atika. Among Donald Trump's often repeated
complaints with Berlin and the German economy, the number of German cars on US roads.
Now, the President said it is a headache that the German automakers could do without, as they seem to have their hands full with ongoing emissions
scandal.
The German government on Monday ordered Daimler to recall 774,000 vehicles after summoning the Chief Exec to discuss irregularities in emissions, and
same idea, same issue, prosecutors added Audi's Chief Executive, Rupert Stadler to a list of fraud suspects after searching his apartment.
Audi is part of Volkswagen, which will be well familiar with how they have been haunted with the problems and their billions of billions that they
have had to spend.
Clare Sebastian joins me now with this. So, is this a case, Clare that they were all up to it?
CLARE SEBASTIAN, CORRESPONDENT, CNN: Well, I think that question becomes ever more relevant for when we go down this road, Richard. Certainly, what
we see with the whole dieselgate scandal -- the Volkswagen scandal is that there is more and more scrutiny on top management.
We saw just last month in the US, the former CEO, Martin Winterkorn who was the one who stepped down just days after that scandal broke within days in
the US, now we see Germany also cracking down hard the CEO of Audi particularly significant because he is an active member of Volkswagen Board
of Management, so I think what you're seeing here with both of these issues is that Germany is feeling the political pressure from what has been
happening in the US to crack down much harder on these car companies.
Car companies that are crucial for their economy and politically important as well. Don't forget, state of lowest tax in the Owens Park of
Volkswagen, so this is really a big deal in Germany.
QUEST: So, when we think about what happened with Volkswagen, the tens of billions that it costs them, although one can question the reputational
damage bearing in mind, they are still -- they are once again, the largest car maker in the world, but then you add in Daimler and you add in Audi,
and I missed this business.
And the ramifications will be what?
SEBASTIAN: Well, I think we're already starting to see the tide of public opinion turning particularly in Europe against diesel -- a German court
earlier this year, Richard, passed a ruling that meant that German cities could ban all diversions of diesel cars...
[16:20:16]
SEBASTIAN: ... we have already seen that happen in Hamburg. So, I think certainly the tide is shifting against diesel, but I think you know, there
is a lot more that perhaps can still be uncovered at these companies. I said they are looking more at top management and while of course in terms
of the business, you're right, Volkswagen has recovered pretty much all of the losses in its share prices.
We have seen record sales and record earnings recently. Reputational damage can be an insidious thing for a company like this, so I think you
know, they are now on the third Chief Executive, this since the scandal broke.
There are questions tonight about whether they were quick enough to clean house in the wake of this, and I think that puts more scrutiny on other car
companies like Daimler.
QUEST: Clare Sebastian who is in New York, thank you. And now we (inaudible) across the European markets, you know the market, one company
did not fair well, it was Rolls Royce. This is the aero company, not the car company, where the shares closed slightly lower after Rolls said their
new type of engine was hit by a compressor problem.
You'll be aware that Rolls Royce engines are already causing problems for 787 Boeings among their seven customers.
Now, turning on Wall Street, the Dow was up just six points. The S&P and the NASDAQ posted tiny gains as well as everyone is looking into the summit
on North Korea and the Federal Reserve meeting on Tuesday and Wednesday.
Earlier, on the "Quest Express," Peter Tuchman joined me from the floor of the stock exchange. I was really curious why the G-7 Summit wasn't or was
it moving the needle?
(BEGIN VIDEO CLIP)
PETER TUCHMAN, TRADER NYSE ENTREPRENEUR: I think that somewhat of the only few things that has actually put a crack in this market over the last 18
months has been the discussion with China and with our allies about trade wars and sanctions, and I mean, trade wars and tariffs and whatnot; for
some reason, I don't get it.
I don't think that what is coming out of Washington is no surety. We saw that happen originally with the tariffs and the trade talk that Mr. Trump
threw out a big net and then he pulled it back with every country being able to negotiate their own deal and whatnot.
I don't know, the market doesn't seem to be engaging that. The market seems to be focusing on an upward trajectory. Things seem solid. Oil
seems to be rebounding of their 64.5 to 65 low and the tech stocks are leading the market once again. I think there is money being put to work
here.
They seem to think there is still value in this market.
(END VIDEO CLIP)
QUEST: So, that's Peter Tuchman. We also have a day's briefing on the business headlines. You can update yourselves with 90 seconds update. Try
our daily briefing podcast. It is updated twice a day, before and after the bell rings on Wall Street or ask ALexa or your Google Home Device to
play it for you every week day. In fact, I think tomorrow, we'll actually tell you exactly Google or Alexa Play will tell you what to actually ask
for.
Here in the UK, new reports as artificial intelligence has saved the National Housing Service billions of dollars a year. All of this week, we
are going to show you some of the ways that technology is taking almost every industry to new frontiers.
Tonight, one professor wants you to print your own yes pills.
(BEGIN VIDEO CLIP)
LEE CRONIN, PROFESSOR, UNIVERSITY OF GLASGOW: I want to see a Chemistry Spotify where you could download the recipe for the drug you needed to make
it on demand.
UNIDENTIFIED MALE: In the Chemistry Department of the University of Glasgow, Professor Lee Cronin is developing a new way to record and
manufacture medicine. While still in its infancy, his vision is for a database which will give certified pharmacists access to any and every
remedy ever made.
CRONIN: Drugs have been manufactured for the last say hundred years, and only a fraction of those have been manufactured are still available today
because there's only a finite number of facilities.
If we could digitize that then we can have access to any drug on demand, a bit like the back library of Rolling Stones or the Beatles or books that
are on print that we can reinstate those whenever we need them at zero cost.
UNIDENTIFIED MALE: The concept is this, take paracetamol, also known as acetaminophen. In chemical terms, it looks like this, that gets recorded
in the Cloud as a code, downloaded, processed through a so-called chem- puter or a 3D printer and out comes the pill.
CRONIN: This is our universal chem-puter that takes a code from the Cloud and does the chemistry here with these pumps and valves and this robot,
then takes the chemicals in the back and mixes them together in just the right way, controls all the temperatures to make the medicine.
So, we are taking a digital code in a laboratory, we can then play that code and make the drug.
UNIDENTIFIED MALE: The container for each medicine is 3D printed allowing Cronin to create the design test tube while all the chemicals can be
precisely mixed to produce the pill.
CRONIN: This is a finished example here where we would start at one end and the drug gets produced here. Take AZT, AZT is a very important drug
for people of HIV, how many places in the world is AZT...
[16:25:12]
CRONIN: ... made? If we could make that available in these type of devices for instances, logistically, that would mean that it would assure
access to the millions of people that require this material.
Whereas you have one big facility in one place in the world that makes the world's supply, we can basically (inaudible) that with Cloud anywhere.
UNIDENTIFIED MALE: It's not an easy pill to swallow. In a world where large scale pharmaceutical companies and copyrights dominate the drug
market, there are also tight regulations for safety and security to prevent abuse and trafficking.
CRONIN: Nonprofits are really interested in improving the effectiveness of existing drugs because we can use 3D printer devices to go beyond the
tableau. I think, digitization will give us access to many more drugs and that will prevent overuse of a small number of drugs that used to treat
everything, so I am hopeful that in the future, as more drugs are digitized, that actually the patient experience will improve dramatically
simply because we have more ways to treat illness in a more personal way.
(END VIDEO CLIP)
QUEST: Fascinating. As we continue tonight, President Trump has pulled out of trade deals he doesn't like. Now, he has a radical proposal of his
own. No barriers and no subsidies in seven of the world's biggest economies. And what's wrong with this picture, we'll explain in a moment.
Hello, I'm Richard Quest, more "Quest Means Business" in just a moment. When a major steel mill is back on its feet in America's heartland, the
workers tell us who they thank for this. Donald Trump says he will know within seconds if Kim Jong-un is serious. A body language expert will be
with us to tell us if that's even possible and before all of that, this is CNN and on this network, the facts always come first.
So, it is early morning in Singapore, just a matter of hours before President Donald Trump will sit down with the North Korean leader for a
historic meeting in Singapore. The two are set to kick off with a handshake and then, there will be a one-on-one meeting with only
translators.
North Korea's state medias reporting that they are discussing denuclearization. Meanwhile, the former US basketball star, Dennis Rodman
has also arrived in Singapore saying he deserves to be there. Rodman who has met with Kim Jong-un several times in North Korea says he hopes to see
some of the success and is happy to be part of it.
There is no word on whether Rodman and the North Korean leader plan to meet on this occasion.
Spain has decided to offer safe harbor to a humanitarian ship with more than 600 migrants on board. Many (inaudible) frontier says the Aquarius is
still awaiting instructions and does not have enough food or water to reach Spain, she was stranded between Malta and Sicily after Italy refused
permission for it to dock.
[16:30:00]
The U.S. is putting new sanctions on Russia in response to cyber attacks. The Treasury Department is citing three individuals and five entities that
says they all have ties with Russia's main intelligence service. They're accused of destabilizing cyber activities across the globe.
A suicide bomber has killed 12 people and wounded dozens in Kabul, the explosion happened outside the government office in the Afghan capital. A
spokesman said women and children are among the victims.
Ahead of the Singapore Summit, the country's Prime Minister says America's influence will only suffer if it goes alone on trade. Singapore is a
maiden trading hub in the region. Lee Hsien Loong told Christiane Amanpour it's weaker stand in isolation.
(BEGIN VIDEO CLIP)
LEE HSIEN LOONG, PRIME MINISTER, SINGAPORE: Well, America is spending more than they're producing. Why are you able to do that? Because you're the
most powerful country in the world and everybody else wants to hold U.S. dollars.
So it gives you an expensive exorbitant privilege as somebody called it. You have to look at it at a more fundamental level, why is America running
an overall imbalance and it's not just -- and it's not mainly because of trade restrictions, that's one problem.
But there's another layer to this which is that China entered the WTO in 2001, unless they negotiated in the years before that. At the time when it
was 4-plus percent of the world's GDP. Today, it's 15 percent of the world's GDP. So it's what was agreed then with a quite a small player is
now in effect with a very big player.
(END VIDEO CLIP)
QUEST: Now, before President Trump turned his anger on G7 rivals, he made a radical proposal that would transform global trade. Remember, the
president has genuinely called for fair trade and pulled out of deals that he says are unfair to the United States.
Mr. Trump says if trade is not reciprocal, then he calls it fool trade. That means trade that results in large deficits, high barriers on specific
industries and a failure to fund NATO, all of which he says is happening at the moment.
So last weekend at the G7, he proposed the mother of all reciprocal agreements, free trade among the G7 nations.
(BEGIN VIDEO CLIP)
DONALD TRUMP, PRESIDENT OF THE UNITED STATES: Ultimately, that's what you want. You want a tariff free, you want no barriers and you want no
subsidies because you have some cases where countries are subsidizing industries and that's not fair.
So you go tariff free, you go barrier free, you go subsidy free, that's the way you learn at the Wharton School of Finance. I mean, that would be the
ultimate thing. Now whether or not that works, but I did suggest that and people were I guess, they're going to go back to the drawing board and
check it out, right?
(END VIDEO CLIP)
QUEST: So suggesting to the G7, tariff free, subsidy free, barrier free trade of the seven economies that he's talking about because they're only
half of the world's total output.
The barriers are already relatively low, roughly 2.5 to -- 1.5 to 2.5 percent across all types of products. Specific industries attract higher
penalties, like dairy or like trucks. Canada actually has the lowest average tariff of the group below 1 percent.
So when Donald Trump says fair trade, barrier free, tariff free, we needed to understand what's wrong with that proposal? It sounds just about
perfect. Sir Simon Fraser says President Trump's proposal is just simplistic and Mr. Simon has years of experience negotiating on trade.
Is the Permanent Secretary of the U.K.'s Foreign Office and of the Diplomatic Service and Chief of Staff of the EU Trade. Sir Simon is now
Managing Partner of Flint Global. When it comes to all of this, it was quite clear it don't ignore the details, the details matter.
(BEGIN VIDEO CLIP)
SIMON FRASER, PERMANENT SECRETARY, U.K. FOREIGN SERVICE & CHIE OF STAFF, EU TRADE: It's a nice idea and principle. But let's say for example, certain
elements of industry and agriculture in the U.S., whether it's tobacco producers or the manufacturers of liked trucks, they benefit from
relatively high tariffs protected by the U.S. government and indeed so the sugar manufacturers. And there are similar cases in the EU.
[16:35:00] Now, I don't think it's wrong that we should come to the table and try to negotiate these things through and reduce tariffs on all sides.
But simply say in one sentence, let's deliver the whole thing down to zero tariffs on both sides, it's not really a practical politics.
QUEST: You're saying it's simplistic in its ease and it's -- we're being suckered in by believing it.
FRASER: I think it's simplistic to believe that it can be done just overnight like that. I think that also --
QUEST: Isn't that Donald Trump's --
FRASER: You've got to look at the politics of the way it's been presented as an idea as well.
QUEST: But isn't that Donald Trump's genius in the sense. He does -- he's not a politician and usually you like dealing with politicians and try to
get to deal with things, well, as he says, no come on, we don't need all this, we don't need this, we can just say zero tariffs and execute it.
FRASER: He's in the world of politics. I'm not saying that it's not good to come to the table with bold ideas. He has his politics, after all, he
is playing to his political base in the U.S., other people have politics too, that's politics in the European Union and in other countries.
So by all means, bold ideas. But in the world of politics, they have to be worked through carefully.
QUEST: So where is he going wrong here?
FRASER: Well, I don't think he's going wrong in the idea of coming with the aspiration of liberalizing trade. I think he's going wrong in the
demeanor with which he makes this proposal to his G7 colleagues at the same time as imposing tariffs on steel and aluminum and extra tariff, all those
sanctions on those who want to trade with Iran, that's one thing.
Secondly, I think it's presented to simplicity, and thirdly, I think we need to look at the impact of this geopolitically in terms of trade and
politics on the rest of the world.
QUEST: Take me inside the process if you would. You're a Permanent Secretary of the Foreign Service --
FRASER: Yes --
QUEST: You have been at the center of the internal memoranda and the discussions and the negotiations on very complex issues. How different is
what everyone is dealing with the Donald Trump?
FRASER: Well, I think it's different because he doesn't follow the conventional --
QUEST: Right, but how did --
(CROSSTALK)
Talk me through --
FRASER: No --
QUEST: As a senior civil servant, how difficult that is, because you know how to fox off a tangle provided the other person is doing the same thing.
FRASER: No, I'll talk it through with you from --
QUEST: Yes --
FRASER: A set of a trade negotiator --
QUEST: Right --
FRASER: Because I've negotiated with the U.S. on trade about the European Union for many years. And there's a very complex negotiating process
between teams on each side in which negotiation positions are established and trade offs are reached between different things.
And I have to say actually, most of the initiative for trade liberalization politically in that period came from the EU side as well as in the U.S.
side. Now, what Donald Trump is doing is he's trying to ride over that and impose a big vision of the outcome and I don't think that's necessarily a
bad thing.
But in the end, it will have to be worked through, through a negotiating process because you know, there are legal issues at stake -- here, you have
to draw up treaties and agree documents.
QUEST: But let's talk about on a more simple side where there's not a legal side or treaties and documents. The G7 communique --
FRASER: Yes --
QUEST: As a very senior civil servant dealing in foreign -- dealing in foreign policy issues, how difficult -- I mean, if you had been in right
off and you just got a phone call saying, by the way, the president is just saying he's not signing it after all because he says the prime minister --
leaders don't behave like that nor they do.
FRASER: I think -- I think people would have been shocked. I think they were shocked by what he said about Russia coming back into the G7, I think
they were shocked by the way he put this idea of the tariff free trade on the table and I think they were shocked by the fact that he arrived late
and left early without doubt.
And having agreed to text(ph) that he would have been shocked when he decided not after all to append his signature to it. So that is really a
big change to the way that these things are done. And I think what we've got to be careful about is that he doesn't unpick a very carefully
constructive system of corporation between democracies actually built over years which has value, even if it doesn't work perfectly.
QUEST: That's exactly what he wants to unpick though. I sometimes wonder if you're -- with respect, if you're --
FRASER: Yes --
QUEST: Missing the point.
FRASER: Well, though, I'm -- if that's what he wants to do, I'm disagreeing with him. What I'm saying is, yes, let's review the way the
international institutions work because they're not working for everybody that's manifest.
But let's not throw the baby out with the bath water because we've learnt that the best way to run the world is to have a degree set of rules
incorporate within them. And if you're going to go to a world which is just arm wrestling between major economic powers, I don't think that's a
good recipe for the future of humanity.
(END VIDEO CLIP)
QUEST: Arm wrestling between world powers as the leaders of the G7 fire back at President Trump. Steel furnaces in the U.S. are firing up, the
workers say they're not sure President Trump deserves all the credit.
[16:40:00] (COMMERCIAL BREAK)
QUEST: Still a rollout of the Granite City works in Illinois, he wants more. Five hundred workers have been getting blast furnace B back online.
The production starts this week. U.S. Steel management says the Trump administration's decision to impose tariffs on steel helped to make their
decision.
They're so confident they're adding another 300 jobs to get the blast furnace A working again as well. So 800 jobs in all, it's a major
milestone for the town and its steel workers. Cnn's Martin Savidge now tells us the communities, you know, isn't completely sure who deserves the
credit for this bonus.
(BEGIN VIDEOTAPE)
MARTIN SAVIDGE, CNN (voice-over): In Granite City, Illinois, this sign says it all. The U.S. Steel plant back in business and folks couldn't be
happier. How does it feel to be back at work?
UNIDENTIFIED MALE: Real good.
SAVIDGE: Real good. What's it like to be back at work?
UNIDENTIFIED FEMALE: It's absolutely awesome.
SAVIDGE: In President Trump's growing trade war, Granite City is a winner, but it wasn't always. In 2015, U.S. Steel shut down the mill, blaming
depressed steel prices and unfairly traded imports. Almost overnight, close to 2,000 people lost their jobs.
UNIDENTIFIED MALE: Was devastating. Every store you went in, every restaurant you went in, people were saying, have you heard anything? Are
they doing anything?
UNIDENTIFIED MALE: Daily, somebody was coming in, reaching out for some type of help to either try to save, you know, house or car, pay some bills.
SAVIDGE: Many believe that's why in 2016, Granite City and Madison County, traditionally Democratic-leaning voted 54 percent for Donald Trump. A vote
that paid off this past March when Trump ordered a 25 percent tariff on imported steel.
TRUMP: We just want fairness.
SAVIDGE: That same month, U.S. Steel announced it was firing Granite City back up, praising Trump. The president's strong leadership is needed to
begin to level the playing the field so companies like ours can compete.
And just Tuesday, U.S. Steel announced it was earning more capacity in jobs in Granite City. By October, the plant should be fully operational,
providing 1,500 jobs paying on average $55,000 a year.
When I asked if Trump gets all the credit, things get a bit awkward.
UNIDENTIFIED MALE: The President of the United States certainly would say he gets the credit. Is Donald Trump wrong?
UNIDENTIFIED MALE: I would say that he gets some of the credit, but I'm not going to look past all the hard work that our International United
Steel workers has done.
SAVIDGE (on camera): If I were to ask you, who gets the credit for this turnaround, what do you say?
UNIDENTIFIED MALE: I would say that it's a combination of people --
SAVIDGE (voice-over): It's not the only debate. Industry experts say Trump's actions are making steel more expensive, steel prices are up almost
38 percent this year, and more than 13 percent since March, that hurts U.S. automakers and heavy equipment manufacturers.
[16:45:00] And an angry Europe is threatening retaliatory tariffs on U.S. products like Harley-Davidson motorbikes, Bourbon, even the Levi's Jeans
which could bring economic hardship to other towns in Wisconsin, Tennessee and California.
UNIDENTIFIED MALE: Europe community benefits this at every cross you might have, there could be others that don't. Yes, and I hope they don't have to
go through what we did.
SAVIDGE (on camera): There's no question that the start of this plant is really good news here. As former concern about a trade war and the
negative impact it can have elsewhere, many people here think that's been overstated and above the cost or increase cost of steel.
Union leaders here say it led about a $100 for the cost of each new car, which they don't think it's too much to pay for solid, middle class wages,
not most important on just the families, but they say the entire town. Martin Savidge, Cnn, Granite City, Illinois.
(END VIDEOTAPE)
QUEST: Now, you know, first impressions lasts forever as the old saying goes. So if I stand like this or I look like this or what President Trump
says he will know within a minute when the new summit at Singapore when he meets -- the president says he's prepared to use his gut instincts to size
up the North Korean leader -- body language? We'll find out with our own body language expert of who is giving what away.
(COMMERCIAL BREAK)
QUEST: Donald Trump trusts in his gut will be one of his biggest gambles when he comes face-to-face with Kim Jong-un in just about 4 hours from now.
North Korea is known for delay obfuscation and losery promises of disarmament. At the G7, the president said it was all about attitude.
(BEGIN VIDEO CLIP)
TRUMP: I think within the first minute, I'll know --
UNIDENTIFIED FEMALE: Wow --
TRUMP: Just my touch, my feel, that's what I do.
(END VIDEO CLIP)
QUEST: In the first minute, I'll know, by the touch, the feel, that's what I do. Dr. Jack Brown knows all about first impressions, an expert in body
language and emotional intelligence in watching the president closely. He joins me now from Las Vegas.
Before we get into the body language, is the president -- no, is anybody right, that on his first impressions and the lasting impressions that you
can make a judgment within seconds.
JACK BROWN, BODY LANGUAGE EXPERT: He won't be able to make a judgment whether Kim Jong-un will agree with him on this nuclear disarmament. But
yes, there's a lot you can tell in the first few seconds of meeting anyone -- Donald Trump is not particularly astute with that because his empathy is
quite low.
He's not as skilled as he claims to be with that -- assessing someone else's body language. More like a bull in China shop --
[16:50:00] QUEST: What could he be looking -- right, but what will he be looking for? What's all these signs that he will look for as supposed on
both ways because Kim obviously would have been receiving advice in the same.
So you know, I mean --
BROWN: Well --
QUEST: Arms crossed, I'm looking forward, what are the signs?
BROWN: There're so many -- there are so much more media for Kim Jong-un, so he has the advantage here, because there's so little media on Kim Jong-
un. But general signs of anxiety, facial touching.
Kim Jong-un tends to smile nervously a lot and he does that well, and he'll probably try and use that to disarm Donald Trump with. But facial touching
is the big one, just the way and the manner in which they shake hands. Of course, Donald Trump always tries the strong arm in more ways than one in
that fashion.
QUEST: The picture that we saw at the G7, you're really familiar with it, Donald Trump's arm's cross, Angela Merkel standing in front of him with all
the other leaders, pushing hard, trying to make the point.
That photograph which we've seen, and what did it tell you?
BROWN: Well, it showed emotional dissidents of Donald Trump. You know, there was part of him that was alpha, the part of him that was very beta,
he had his feet uncrossed -- his legs uncrossed, his feet flat on the ground, but his arms were crossed and his face, he had feelings of contempt
and arrogance.
You noticed that his forehead was up like this and not in the center because he has Botox. But if you look at the sides of his forehead, his
forehead was up, but his lids -- eyelids were down, kind of like this. That sends signals of arrogance and contempt.
So that part was alpha, but yet he was sitting back away, and so there's a lot of dissidents there. Not surprisingly, a few hours later that he
withdrew from the agreement -- during the agreement, yes.
QUEST: OK, back to tomorrow morning's meeting, just 4 hours from now. Would you be worried about what the president says that he is going to make
a judgment or he can make a judgment or he's qualified to make a judgment in the first minute or to prove we're fair handed on this.
Come on, he has got this meeting where presidents before him failed. So maybe we should just trust Donald Trump's guts.
BROWN: Well, I think he's like a bull in a China shop. He's not a -- he's not finessing it, I give him credit for having the meeting, I -- but I put
a little -- very little faith in his ability to detect any kind of subtlety in what Kim Jong-un might be thinking.
QUEST: Good to see you doctor, please, come back again, and if you're in New York, come and join me on this -- at this, so that we can actually
really get to (INAUDIBLE) non-verbal communication, really important, thank you sir.
BROWN: I'd love to, Richard, thank you.
QUEST: Talking to reach on the mass -- Sadiq Khan is -- never minces words when it comes to President Trump. CnnMoney's Samuel Burke caught up with
him today and asked him about his feelings -- now, the U.S. leaders coming to visit the U.K.
(BEGIN VIDEO CLIP)
MAYOR SADIQ KHAN, LONDON, BRITAIN: One of the things about when you have a special relationship is you've got to be honest, and so having a best mate,
you stand shoulder-to-shoulder with your best mate at times of adversity, but also when you think your best mate is wrong, you call them out.
And I'm not going to apologize for calling out President Trump when I think he is wrong. But I think he doesn't articulate or represent the views that
we know are represented by the great country of America and we wait and see what happens when he comes to London.
I mean, personally, I won't be taking part in protests, I think it's wrong for the mayor of London to be on the streets protesting against President
Trump. But I'm not going to shy away from making my views known quite clearly about what I think about some of the policies President Trump is
pushing.
SAMUEL BURKE, CNN BUSINESS & TECHNOLOGY NEWS CORRESPONDENT: What I hear from so many tech CEOs is that they still have just as little clarity now
as they did the day after the referendum about Brexit.
Do you think there's any reason for a tech CEO to see this course being reversed?
KHAN: The amount of investment in London in the tech sector continue to grow. We have big announcements from Google, from Apple, from SnapChat,
from Amazon and many others coming to London. And I want clarity too for my government.
I want clarity about what will happen once we've left the European Union, and the truth be told, the Prime Minister doesn't know the answer herself
because she's got internal problems with her government. But the underlying strengths of our city are still there.
BURKE: The decision about Uber carrying on in London looms. Do you think they've changed their behavior or is there more that you need to see from
them?
KHAN: It's a good example of us being quite clear. The rules are there for everyone, everyone should play by the rules no matter how big or how
small. And I supported the decision to say no to a new license. It's also saying no to tech, it's also saying no to disruptive technologies, it's
also saying no to innovation, say no to rule breakers.
[16:55:00] And the good news is the global CEO of Uber, the one that took over recently, I think what he's been saying bodes well for them realizing
they can't behave in an arrogant manner. They can't behave in a way that breaks the rules, and you know, he's been somebody who's been talking with
humility about the need for Uber to change.
Let's wait and see what happens with the court case and let's wait and see what happens with Uber's future. But I think it's really important that
everyone knows around the world, London is the place to come to for innovation, for tech, for disruptive technology and play by the rules.
(END VIDEO CLIP)
QUEST: Play by the rules in the area of technology. We have our profitable moment after the break.
(COMMERCIAL BREAK)
QUEST: Tonight's profitable moment, we must make sure we get together this time tomorrow for a discussion on economics and business. Because not only
will we have the Singapore Summit to digest and the G7, but by this time, we'll know whether the judge or how the judge in the AT&T-Time Warner case
is ruled.
While the media is watching Singapore, the media landscape will be completely turned over depending on what the judge rules. Will AT&T be
allowed to buy Time Warner; parent company of this network?
What restrictions may be put in place? Is the anti-trust regulatory environment going to shift one way or the other? The decision is due to
come out exactly as we go on air tomorrow night. So we'll be here to make you -- help you understand what it means and of course the market and the
Singapore summit and the trade talks and the G7 aftermath.
It's a very busy day, make sure we're together. Because that's QUEST MEANS BUSINESS for tonight, I am Richard Quest in London. Whatever you're up to
in the hours ahead, I hope it's profitable.
Tomorrow -- now -- meet.
END
