13/02/2017 World Business Report


13/02/2017

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US President Donald Trump and Canada's Prime Minister,

:00:00.:00:18.

Justin Trudeau, hold different views about many things,

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but can they agree on trade when they meet later today?

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And Japan's economy grew again, thanks to trade, but could rising US

:00:30.:00:32.

protectionism damage its slow recovery?

:00:33.:00:39.

In a moment, the chief executive of International Airlines Group,

:00:40.:00:45.

Willie Walsh, tells us about Brexit and Donald Trump.

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Another day, another world leader arriving to meet President Trump

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Today it is the turn of Canada's Prime Minister,

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He differs widely in opinion from his host on a variety

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of issues, including immigration, free trade and foreign policy.

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So just how important is Canada's relationship with the United States?

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Their countries share one of the biggest trading relationships

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In 2015, $662.7 billion worth of goods and services flowed

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That works in the United States' favour at the moment,

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to the tune of $12.1 billion, because whilst Canada sells more

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goods to the US than the other way round, America more than makes up

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for it when it comes to the services sector.

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75% of all Canadian exports go to the United States,

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so good relations will be important to businesses across Canada.

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The value of US-Canada relations has seen massive growth since 1994,

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when the North America Free Trade Agreement,

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signed by President Clinton, came into force.

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But during his campaign Mr Tump claimed Nafta was the worst trade

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deal in the history of this country, and shortly after taking over

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at the White House, he said he would meet the leaders of Canada

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The we are also meeting with the Prime Minister of Canada, and we

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will be meeting with the president of Mexico, who I know, and we are

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going to start negotiations having to do with Nafta. Anybody ever hear

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of Nafta? I ran a campaign somewhat based on Nafta. But we are going to

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start renegotiating Nafta, on immigration, and on security at the

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border. And Mexico has been terrific, actually, the Rydzek. --

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terrific. With me is US political

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commentator Kate Andrews. And just in Trudeau has been highly

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critical of many of Mr Trump's policies so far, yet securing a

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trade deal or continuing with the current deal is crucial for Canada,

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isn't it? He will be walking a fine line, but the difference is that

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just in Trudeau has been very vocal, you are right, about his opposition

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to many of Mr Trump's policies, especially on immigration front. We

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haven't seen him roll any of those back, we have seen him talking about

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Canadian jobs, he was talking about trade deals, he clearly does not

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want to go in and have tough conversations about immigration. He

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will try and focus on the economy, all the way. And part of that is

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about spending. And actually the Trump administration wants Canada,

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as well as other NATO members, to spend a lot more on defence

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spending. Is that likely to be quite an issue for Canada, politically?

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Well, Canada and Justin Trudeau have said they were up their spending but

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it is a small increase, .01%, or something like that. When it comes

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to those who are involved in NATO, Canada is certainly not putting up

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the amount they will are supposed to be posting annually. Will this be

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the main issue? Probably not, when it comes to alliances we always talk

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about the US and the UK and that special relationship at the real

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special relationship in trade is between Canada and the United

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States, tourists going back and forth daily, millions of visitors to

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each other's countries a year, and Donald Trump will not want to make

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an enemy here. He will be pleased that they are offering more

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spending, even as a symbolic gesture. Some decisions Mr Trump has

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made have already been beneficial for Canada, such as restarting that

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Keystone XL oil pipeline. I think they will differ when it comes to

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environmental policies but Trudeau will recognise that Trump is

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investing as much as he is in Canada. Even if that is not

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intentional, it will have a trickle-down effect. Donald Trump

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has been very quiet about negotiations between Canada and the

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US when it comes to Nafta. Most likely it would not have a huge

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influence on Canada, and if I were Trudeau I would be trying to get a

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grip on where Mr Trump is pointing his finger south, and that is where

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the real implications for trade are going to come from, not because

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Donald Trump is directly trying to cut off trade with Canada but

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because his relationships with other world leaders could certainly impact

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on Canada. Thank you very much for your time.

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Time for a new series now about the big challenges facing

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Late last year, British Airways owner International Airline Group

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was forced to cut its profits forecast, due to a weaker pound

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So is economic uncertainty surrounding Brexit something that

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keeps IAG's chief executive Willie Walsh awake at night?

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He has been speaking to our business correspondent Theo Leggett,

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who asked him what he would like to see from Brexit negotiations?

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Well, it affects everybody in Europe. So it is not an issue that

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will be isolated to the United Kingdom. It will affect everybody in

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Europe. And that is why I say it is in the interests of everyone in

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Europe, and it is something that I imagine all politicians would be

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conscious of. There are 900 million consumers who have benefited from

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the regime that is in place, and that needs to be maintained. And I

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believe it will be maintained. You say you are confident that those

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negotiations will go as you want, that you will get what you want. If

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that doesn't happen, what is the worst case scenario? I don't think

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there is a worst-case scenario. We deal with aviation regulation on a

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global basis and I think people are fixated on the UK and Europe

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obviously in the context of Brexit, but many countries we fly to have

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restrictive regimes in place and we have had to put structures in place

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to deal with that. We are confident that, whatever the outcome, if there

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is a more restrictive regime, we will be able to adapt our structures

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and operating procedures to continue to operate. It won't be as

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efficient, it probably won't have the same consumer benefits, I don't

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think there is a doomsday scenario that would cause any concern. Of

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course, uncertainty at the moment isn't just confined to the UK or

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even Europe. There is a new Administration in the White House.

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What Donald Trump and his people have done already has surprised many

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people. They have been a ban on travel from seven different

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countries, for example. How much of concern is that for you? It is

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something that causes concern for individuals. From an industry point

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of view, again, we are able to adapt. We have seen these measures

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in the past, they come in unannounced and it takes us a bit of

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time to adjust. We adjust and then we move on. When you look at

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aviation between the US and Europe or the US and the UK, it is

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definitely something that has worked very well. The US industry, the UK

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industry, the European industry, I think we are all aligned. We want to

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see the current open skies regime continue. We don't want to see new

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barriers put in place. Japan's economy grew for a fourth

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straight quarter in the final three months of last year,

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thanks to strong exports, but there are concerns that rising

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protectionism in the United States could mean that a sustainable

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recovery is some way off. Sharanjit Leyl is in

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Singapore for us. Hello there. So the weaker yen

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boosting exports? That's precisely it. And of course, you talked about

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protectionist rhetoric. That has been quelled somewhat, at least the

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concerns have been quelled somewhat, after the weekend meeting between

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President Trump and Japanese Prime Minister Shinzo Abe in Washington,

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where we saw President Trump steer clear from any rejectionist

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rhetoric, and indeed, as you say, those exports getting a huge boost

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from the weaker yen, and that is really what has helped Japan's

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economy in the last quarter. The weaker yen has always listed

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exporters' profits, being repatriated back from overseas from

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markets like the US which benefit from the US dollar, and that is the

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kind of protectionist rhetoric we have heard from President Trump in

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the past, especially when he has been on his campaign trail. He says

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Japan uses its monetary policy to verbally intervened to weaken the

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yen, to boost its exports, at the cost, huge cost, for the US and

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American trade. In fact, Japan had the second largest trade surplus

:09:36.:09:40.

with the US last year after China, and in terms of its own growth,

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private consumption, which accounts for some 60% of Japan's GDP, it

:09:46.:09:51.

barely grew at all. In fact, it was flat. There is a lot of concern

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about Japan's overreliance on exports for its growth in the

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future. Let's have a look at how the markets have been faring. Uplift for

:10:03.:10:06.

the Nikkei, the Hang Seng in positive territory, slightly down in

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Bombay. The dollar versus the yen, you can see the impact on that

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meeting of prime Minister Shinzo Abe and Donald Trump when they met at

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the weekend. So the weaker yen helping boost Japan's exports. That

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is all from me for now.

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