10/02/2014 World Business Report


10/02/2014

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severe disruption to road and rail transport. In a moment all of the

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action from Singapore. A referendum proposal has been proposed. Brussels

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views free movement as essential to participation in Europe 's single

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market. Exclusion could spell disaster for Switzerland 's booming

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economy. Over half their exports are sold in the EU. Swiss employers rely

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on highly qualified staff from across Europe. They believe they

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will lose out if they are no longer able to employ whoever they choose.

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Christian shorts from the bank in Switzerland. -- shall. How big a

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deal is this? How worried should Swiss businesses and banks be about

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this? Switzerland is in global and EU competition. If companies find it

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difficult to hire people from across the -- EU, highly skilled people, it

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will increase labour cost and the labour shortage and make them less

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competitive. Even if the relationship with the EU and the

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access to the market remains the same, it will make them less

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competitive and that is not good news for the economy. Switzerland 's

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economy is booming, isn't it? Why bring this in now. What are you

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worried about? It is booming because the constant influx of highly

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skilled foreigners from around the EU, many of them are close to the

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Swiss. The second largest group of foreigners are the Germans who speak

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the language of large part. Italians are also a big group that culturally

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close and the Portuguese. They have been making Switzerland competitive

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and have added skill and made the nation successful even during the

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crisis. With the influx now being potentially cut off, Swiss money

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will be weakened. This doesn't seem to be about the economy, but about

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people having a fear of globalisation, losing their

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identity. This is what is driving the decision. Nee would -- now we

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will have to see new commercial agreements and diplomatic agreements

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with the EU. This is going to be the really interesting thing.

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Switzerland now has time to renegotiate with the EU. The EU can

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cancel all of the other treaties, including the access to the single

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market and the judicial cooperation, all of these things

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which Switzerland needs. This is going to be the difficult part. The

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EU has to face are the renegotiation attempts, for example, from the UK.

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They may take a tough line with small Switzerland in order to then

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be able to argue with more powerful members like the UK that one rule

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for all players, with no exceptions. I am sure that we'll talk about this

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more in the coming months. Thank you. Before the world fell into

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recession in 2008 there was one area that let out a warning signal. It

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was the shipping industry. And the key measure that industry uses to

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track freight rates is the Baltic Dry Index. It sounds technical, but

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historically it's been seen as a great forecaster of global economic

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demand. So far this year it's lost half its value. Should we be

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worried? Jeannie Joye has been finding out. Commodities make the

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world go round. On the way that they get around is on bulk carrier ships

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like this. Shipping is the linchpin of the global economy. If there is a

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slowdown in shipping rates, it signals a storm had historically.

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The movement of raw materials is tracked here at the Baltic Exchange.

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It is measured by the Baltic dry index. It has had a rough ride this

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year. After declining the Baltic dry index recovered that in January this

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year it fell by more than 47%. China is in some ways the answer to every

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question. Just because the demand from China is so overwhelming and

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its impact on shipping. China had gone three period where they have

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stated their desire to go from an export economy to a consumption

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economy. It will see a reduction in GDP in the short term with a

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slowdown which worries many people. The shipping industry faces a

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serious problem. Overcapacity. We have seen an influx of massive ships

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on the water, the biggest ships ever built. That has seen a cascading

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effect in terms of the ships already they are, already being affected by

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too many ships on the water and are not enough demand for trade. So can

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the index return to precrisis levels? The head of the index in

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London is doubtful. I do not think so. It was a special set of

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circumstances that gave us those kinds of rates. Far too few ships,

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lots of cargo. I cannot imagine us going back there. Amidst the

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slowdown in the world 's second-biggest economy, and the

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oversupply of vessels, the shipping industry faces continued low freight

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rates and uncertainty ahead. The Singapore airshow opens on Tuesday,

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but there have already been quite a bit of activity ahead of the

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official opening. Our man in Singapore, Rico Hizon, joins me now

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with the latest pre-show action. Aviation leaders are gathering from

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all over the world to Singapore, hoping to do some major deals. This

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is Asia's biggest aerospace event. More than 1000 companies from 20

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countries will be here in the citystate to showcase their

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products. In the previous airshow in 2012, deals more than $30 billion

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worth were closed. The United States will have a big presence, it is the

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feature country this year. Earlier I spoke to the American ambassador to

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Singapore. It is crucial. We all know that Asia over the next 20

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years is going to do more business than the rest of the world combined

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in aviation. We have 163 companies here that represent some of the

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largest companies to small commercial services companies. If

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there is a need in aerospace, we have a company that fits that need

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right now. And US air maker Boeing says that strong passenger growth

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will be the driver of the manned in the Asia-Pacific region. They

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estimate that the original carriers will produce planes valued at over

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$2 trillion in the past in the next ten years. The European Union is

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expected to offer to lift tariffs on nearly all goods imported from the

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United States as part of negotiations towards the world's

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largest free-trade deal. The offer will come a week ahead of

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face-to-face talks between EU trade chief, Karel De Gucht, and his U.S.

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Counterpart, Michael Froman, in Washington. Japan posted its

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smallest current-account surplus for some years. There is a concern about

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economic growth. Data also showed that the current account balance for

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December went to the largest deficit on record as exporters failed to

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reap the benefits of the weak currency. A quick look at the

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markets now before I go. Quite a bit of corporate news coming

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out. British Gas is coming under new

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pressure after the energy secretary urged the regulator to look into the

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profits being made by the six companies that supply gas into our

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homes. Ed Davey has written to industry regulators asking them to

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consider all options, including their authority to break up

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companies exercising monopoly

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