25/01/2017 BBC Business Live


25/01/2017

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This is Business Live from BBC News with Rachel Horne and Sally Bundock.

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As President Trump tells car makers to build more vehicles in the USA,

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Mexico tries to keep the border open for business.

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Live from London, that's our top story on Wednesday, 25th January.

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Mexico's foreign and economy ministers head to Washington,

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but will it be the realities of modern manufacturing that make

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Also in the programme, the lowdown on Lego.

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It's one of the world's most successful toys,

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but with China rife with copycats, can the boss tell the difference?

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The European markets are open and they are up. Investors are looking

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optimistic. We'll be getting the inside track

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on private jets from the man fled Madagascar's civil war as a child,

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but soared on to sell planes And, as always, we'd love

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to hear from you about any Now Mexico seems to be the most

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important foreign country when it comes to Donald Trump's in-tray,

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now that he is US President. And in a few hours' time,

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Mexico's economy and foreign ministers are set to meet some

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of his top trade officials in Washington as they try to keep

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border open for trade. And the Mexicans appear to have

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conceeded that to do that. There will have to be changes

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to the Nafta trade deal NOw President Trump is pushing

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to bring more manufacturing He's already met with the heads

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of Ford, General Motors and Fiat-Chrysler, telling them

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they must make more Now the US is a key

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market for Mexico. Taking a look at this graph,

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you can see its exports to the US have surged since Nafta came

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into force in 1994. Mexico now sells more

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than $270 billion worth of goods Now it's thought talks

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between Mexico and the US will focus on so-called Rules of Origin,

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which limits the proportion of a product which comes

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from outside North America. Now if limits were

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tightened, it could boost But can this be achieved

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in production lines with incredibly complicated supply chains

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like the car industry? Dr Jagjit Singh Srai

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is head of the Centre for International Manufacturing

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at the University of Cambridge. Good to see you this morning. Good

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morning. Rachel outlining some of the key issues and there is a lot to

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discuss with regards to Mexico and the United States. The car industry

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seems to be the centre of it all, doesn't it? Most trade between both

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sides are within that industry? Absolutely, manufacturing and the

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automotive sector are closely linked and Mexico and the US are closely

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interlinked. You will probably know that automotive supply chains is not

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just where you assemble the car. That criss-crosses across borders.

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Bits of car, components, cross over the border several times before the

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final car is finished. It is a really complicated process when you

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look at the supply chain. So how simple is it for President Trump

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just to say, "Right, tariffs are slapped on here. We want nor jobs in

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the US." It is a very complicated picture. Firstly, we have automotive

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component manufacturers in the US supplying to Mexican car assembly

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plants and indeed, some reports say perhaps 30%, 40% of the cars coming

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into the US, from Mexico, have that US component. So they can be very

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much impacted if Mexican manufacturing facilities have to

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scale back due to the tariffs. If he is successful, President Trump, in

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his aim, ie perhaps putting tariffs on, he has not said anything about

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that since he became president, I might add, but there are reports

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today in the New York Times that there will be an executive order on

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the wall going on, the Mexican currency is falling today on that

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speculation and he has talked to the car-makers yesterday. If he is

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successful, what will the impact be for both Mexico and the United

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States and consumers as well? Well, if I pick up Mexico. The

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manufacturing facilities that have targeted the US market predominantly

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will have a significant trauma. They will have to scale back production.

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Some of it may not be economical going forward. So I think that's a

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pretty serious situation for those plants. There will be other Mexican

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plants however who have a global market agenda and Mexico has free

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trade agreements with dozens of countries and they perhaps will be

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less impacted. Going back to the US, those component manufacturers

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supplying those Mexican factories may actually have a significant

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negative impact and if I wrap up with consumers, all these changes

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will increase the cost of doing business. The automotive sector

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doesn't have margins that can accommodate those increased costs so

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we can look forward to prices going up. All right, thank you for your

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time this morning. Of course, when we get any news out of the meetings

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going on today between Mexico ministers and Donald Trump's team,

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we will fill you in. Cisco Systems says it has agreed

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to buy business software company The deal is another push by Cisco

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which is one of the world's biggest maker of computer networking

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hardware to expand its Legacy technology players

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like Cisco have been trying to shift their strategy to stay

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ahead of technology developments that could threaten

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their core businesses. Shares in the Japanese airbag maker

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Takata surged 18% on Wednesday after the troubled firm denied it

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would enter into a lengthy The company shares reached

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the maximum daily increase after a week in which they lost more

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than half their value. The company has been plagued

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by a massive global recall of its airbags which have seen it

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pay a $1 billion fine Rio Tinto is selling most

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of its coal assets in Australia It's a deal worth up

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to $2.45 billion, and it is part of the mining giant's divestments

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designed to boost its bottom line. The agreement is subject

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to regulatory approval. When you talk Japan, you talk

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economy and you think gloom, but today we have got good news. They

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posted their first annual trade surplus since the nuclear disaster.

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The first time which is great news for the Japanese economy. It is

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because of cheaper oil prices which brought down the import costs, but

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this news does come at a sensitive time because US President Donald

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Trump, he has been criticising Japan about Japan's trade advantage

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against his country. Especially the car industry which makes up about

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40% of Japan's exports. Mr Trump has been accusing Tokyo of putting up

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non tariff barriers to American companies which Japanese officials

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have been denying and saying, "Look at jobs and investments that

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Japanese companies have created in the United States." But it is an

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uncomfortable reminder of a trade war the two countries had decades

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ago. Thank you very much for your time.

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Japan's Nikkei up. Their first trade surplus in six years. The Dow Jones

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not doing too badly. We will be quizzing Tom Stephenson and why

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they're doing well in a moment. Europe, the markets have been open

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40 minutes. 2017 really, it is all about delivery. We saw the market

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rallies after Trump's election. The markets are waiting to see if he

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will follow through in his campaign promises how Brexit will be

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delivered, but companies continue to report their results.

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Samira Hussain has the details about what's out on Wall Street Today.

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Lots of earnings to talk about today. AT will be reporting. It is

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on the verge of closing its deal to acquire Time Warner for $85 billion,

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but the US President, Donald Trump's opposition and regulatory approval

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poses a threat to the deal. We can expect that investors will be asking

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about updates. Boeing will also be reporting earnings. You will

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remember the company got some attention from the then

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president-elect Donald Trump criticising the high cost of

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replacing Air Force One, that's the plane used by American presidents.

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And finally, we'll be hearing from E-commerce site, eBay. It attracted

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more shoppers in the holiday season. EBay has revamped its platform to

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offer for products and new brands, all in the hopes of attracting

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shoppers away from its rival, Amazon.

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Joining us is Tom Stevenson who is Investment Director

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So give us your take on what's going on, the Nasdaq hitting record closes

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again on Tuesday. Loads of earnings coming out. Samira just rattled

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through some of today's news. Your thoughts? The markets have been

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strong since the American election. It has been on hope for next year.

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2017 is going to be the year when Donald Trump delivers or doesn't

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deliver and that's what markets are looking at out for now and that's

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why really they've paused for breath now. They've paused for breath at a

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new high. The earnings have been fairly good as well on the whole,

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haven't they? That's helped too? The earnings have been OK, but they have

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to be pretty good because the US market is one of the most highly

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valued markets in the world. It's more expensive than most other

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markets so unless earnings come through then I think there is a bit

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of scope for delivery. So this earnings season is really important.

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Now, let's talk about Japan. We saw there from Mariko, the Nikkei is up,

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what's going on there? Yes. So, Japan has had two impacts really.

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One has been oil. The cheaper oil has really helped because ever since

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Fukushima it has been importing oil, but the exports particularly to the

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US. This is pertinent given what Donald Trump has been saying about

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the motor industry. So I think Japan has been off investors radars for a

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long time. I think this is good news. It's good news for the market

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because the Japanese market is not that expensive. So if we get more of

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this good news and if the dollar strengthens and the yen weakens it

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could be a good outlook for the Japanese market. All right. Fingers

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crossed for them. Tom will be back in five minutes. More work to do on

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this show for Tom! Still to come, from civil

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war to civil aviation, we'll meet the man whose incredible

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rise means he now sells private planes to some

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of the world's richest people. You're with Business Live from BBC

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News. Women are experiencing widespread

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discrimination when it comes to dress codes at work,

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according to a parliamentary report. MPs heard from hundreds

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of women who have reported that the dress codes

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they were subject to were sexist. They began an inquiry

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after a receptionist was sent home Here's our business

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correspondent Emma Simpson. Sometimes there's no choice and it's

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not always attractive. But what about being ordered

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to wear high heels? When Nicola Thorp arrived

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for her first day at work, she was told by her employment

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agency she must wear shoes When she refused, she was

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sent home without pay. What they state is it gives them

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a more professional look. Now I'm not entirely sure why adding

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two or four inches to my height makes me more professional

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or makes me walk in I don't think it affects

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how I come across. You can see me now, this is exactly

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what I would be wearing and if it's just a matter of a couple of inches,

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I can stand tall She then started a petition

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which led to an inquiry by MPs, who now want action

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from the Government. We've come up with

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three recommendations. Firstly, that the Equalities Act

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of 2010 obviously isn't quite Secondly, we want to raise awareness

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that wearing high heels or make-up may be a health and safety issue

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in the workplace. Thirdly, we are going to hopefully

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if it doesn't work, then we will be At this company, receptionists can

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wear what they like. In its evidence, the Government said

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the existing law was clear, and that the dress code imposed

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on Nicola was unlawful. But the MPs are calling

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on the Government to do more to make the law more effective in protecting

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employees from Lots of you have had lots to say.

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That's on our website. Also many other stories as well. Tesco shares

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down 1% today in London. You may well remember the accountancy

:15:15.:15:19.

scandal in 2014. The financial Times says the supermarket chain could be

:15:20.:15:23.

facing a second legal claim as a consequence of that. That is on the

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website. Rio Tinto doing well today in London.

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Our top story: As President Trump tells carmakers to build more

:15:37.:15:40.

vehicles in the USA, Mexican leaders head to Washington

:15:41.:15:42.

as they try to keep the border open for business and concede that might

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mean altering the Nafta free trade deal.

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A quick look at how the markets are faring.

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They are all higher for now. It has been quite a week this week. Up and

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down. Today a combination of earnings and a good session in Asia

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and the US helping. And now let's get the inside track

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on how the world's top We're talking corporate

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jets and private planes. They can be the fastest way to get

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between back to back meetings But the market is

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difficult for some. Jet inventory is rising,

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as manufacturers churn out And once it has been bought,

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the value of a jet falls rapidly. But aircraft broker Jetcraft

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says that the resale market is still strong,

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with large, ultra long range aircraft particularly popular among

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business jet buyers. These types of large cabin jets

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can link nearly any two Joining us now is Jahid Fazal-Karim,

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co-owner and chairman Good morning. Good morning. Before

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we talk about your business and what it does right now, let's talk about

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your story. We have been explaining to viewers that UX -- escape civil

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war at the age of eight in Madagascar. What happened next? I

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will give you the short story because it could be quite long. In

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1974, there was an uprising in Madagascar. I am of Indian origin.

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The local population were going after Indians. My father decided to

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pack his bags and we just left. We left to the neighbouring island. We

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are a French citizens. We escaped a big uprising in Madagascar. I left

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to go to school abroad. I love aviation, I love aeroplanes. That is

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what brought me to what I did today. You were dead set on that as a

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career, weren't you? Aged 18 you worked -- you moved to France and

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got on with your career, working in the big corporate sector for quite a

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while. And then this company, that is a big shift? Yeah, it is a big

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shift. I worked for two big companies, Airbus and Bombardier.

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Most of the people I worked with and for are still big friends. The

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owners of Bombardier are still friends. At the age of 308I was

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running sales and marketing at Bombardier. I come from a family of

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entrepreneur to. I had to do something. I was at a crossroads, of

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going down the corporate path or going on my own. It was the right

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time for me to leave. I quit my job and left. Quite a big risk? Yeah, it

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was. But if you are an entrepreneur, you don't think about risk, you

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think about reward. It is the way you are required. For me, it was

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about trying to set up a business, looking for gaps in the industry.

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You obviously found this gap. Who are your clients? What soda prices

:19:21.:19:27.

are they paying for these planes? My clients are from everywhere. That is

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what makes my company unique when you compare Jetcraft to others who

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do what we do. The world is global now. Our clients are global. They

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are from everywhere. They are diverse. They can be big

:19:42.:19:47.

corporations, they can be high-end individuals, rich people who

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inherited a fortune. You have to cater for all these people. They are

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all around the world. We sell in Africa, Asia, Latin America, the US.

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I had to create a structure that would cater for all these people. If

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you are a Chinese person and you want to buy a private jet, you want

:20:04.:20:07.

to talk to somebody who speaks your language. We established the

:20:08.:20:13.

structure. 50% of sales in the US. After that it is Europe and Asia.

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Are you a business that is not affected by the global economy? It

:20:21.:20:26.

costs millions to buy one of these. The super-rich are not affected by a

:20:27.:20:32.

global slowdown. Or are you really impacted when the global economy

:20:33.:20:37.

heads south? You are impacted. You have to be impacted. Our business is

:20:38.:20:44.

well correlated with global economy. If you feel confident and you know

:20:45.:20:48.

that business is doing well and you have a good future outlook, you make

:20:49.:20:54.

investments. With billionaire Donald Trump in office, is that good for

:20:55.:21:00.

you? For our business, Trump is not bad. Everybody has their political

:21:01.:21:05.

views. As a business, he is a Republican, you will reduce taxes.

:21:06.:21:11.

He will make the rich richer. And fortunately for us, these are our

:21:12.:21:15.

clients. Corporations will get wealthier in the US. We will sell

:21:16.:21:20.

more planes. Thank you for coming in. It has been fascinating.

:21:21.:21:22.

They are tiny little figures that have made a Danish toy firm

:21:23.:21:25.

iconic across the world, but could you tell the difference

:21:26.:21:28.

between a real Lego figure and a copy cat?

:21:29.:21:30.

It's a question we asked the man in charge of making them

:21:31.:21:33.

Have a little look at that for me. What do you think of that? It looks

:21:34.:22:24.

like a mini figure to me. What do you think of him? Two men? Which one

:22:25.:22:37.

is yours? Have a guess. I would say this is Lego. This is not. OK, this

:22:38.:22:47.

is Lego. It is not real. It is trying to be Lego. That is my

:22:48.:22:54.

assessment of it. It has a branding similar to yours.

:22:55.:23:03.

Tom is back. I do feel really sorry. I feel like we put him in a corner.

:23:04.:23:14.

I think you did, yes! It's very difficult. Now the whole world has

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seen that. Let's talk about the stories in the papers. Dubai airport

:23:19.:23:23.

records 83.6 million passengers last year. Many more are going through

:23:24.:23:33.

Dubai. It is a thoroughfare. That was 7% up on 2015. The forecast for

:23:34.:23:40.

this year is 89 million. That is a similar growth rate. It is going

:23:41.:23:44.

from strength to strength. It is in the right place. It is at the

:23:45.:23:50.

crossroads of East West traffic, passenger traffic and cargo traffic.

:23:51.:23:56.

Year about expansion in Dubai and other places in the world, runways

:23:57.:24:01.

and airports being built. We are still grappling over a third runway,

:24:02.:24:06.

possibly at Heathrow? Yes, it is a completely different mentality to

:24:07.:24:10.

building infrastructure. I was in Dubai a few months ago. Driving down

:24:11.:24:14.

the road between Dubai and Abu Dhabi, my driver said, this is the

:24:15.:24:19.

new airport. Seven runways. They have a massive airport and they are

:24:20.:24:25.

building an even more massive airport. And here we are still

:24:26.:24:28.

agonising about a third runway at Heathrow. Let's talk about Donald

:24:29.:24:34.

Trump. He signed yet more executive orders yesterday. This is about oil

:24:35.:24:40.

pipelines. Give us some background? This is controversial. It is quite

:24:41.:24:43.

an insight into Donald Trump's thinking. It shows that he is much

:24:44.:24:49.

more interested about growing the economy than the environment,

:24:50.:24:52.

because these pipelines are extremely controversial. They run

:24:53.:25:03.

under native lands. There is a lot of controversy about building them.

:25:04.:25:06.

The second interesting aspect is that he said they will be only built

:25:07.:25:11.

if they use American steel in the pipeline. This is a real indication

:25:12.:25:16.

of what he means by putting America first. This story is in the

:25:17.:25:20.

Washington post and many other papers. The Guardian was noting that

:25:21.:25:26.

they would need 28,000 people to make this one pipeline work. But

:25:27.:25:31.

only 50 long-term jobs. The vast majority are very short-term jobs.

:25:32.:25:38.

It is 28,000 that Donald Trump out -- can say he has created in a

:25:39.:25:42.

sense? Absolutely. He is talking about building infrastructure, to

:25:43.:25:47.

allow the growth in the future. Thank you for coming in. That is it

:25:48.:25:51.

from business life today. There will be more throughout the day. --

:25:52.:25:56.

Business Live. See you tomorrow. Hello there. Huge contrast across

:25:57.:26:12.

the UK this morning. We have got mild and windy conditions in the

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north and west. It is cold and frosty across the

:26:17.:26:17.