05/03/2018 BBC Business Live


05/03/2018

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and aluminium tariffs.

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Live from London, that's our top

story on Monday 5th March.

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Steely resolve from

President Trump on trade -

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and a new threat to tax imports

of EU cars - we go live

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to Brussels to hear the view

of the European Commissioner

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for Trade - Cecilia Malmstrom.

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Plus...

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What's next for Europe's fourth

largest economy after elections

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in Italy lead to a hung parliament?

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And what effect of all these

developments had on the financial

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markets? We will take a look at the

open in Europe.

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And whisky galore -

we get the inside track on how

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Scotch whisky has become record

breaking export for the UK.

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But if whisky has become

a successful export -

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then how much of that

is down to its name?

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Lobbyists in the US want

American firms to be able

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to sell their own versions

of Cornish pasties

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and Scotch Whiskey.

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Should regional foods

keep their protected status?

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Let us know...

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Just use the hashtag BBCBizLive.

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Hello and welcome to Business Live.

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The war of words over trade has

continued over the weekend,

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with US President Donald Trump

threatening to "apply

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a tax" on imports of cars

from the European Union.

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He tweeted...

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EU trade chiefs have reportedly been

considering slapping 25% tariffs

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on imports from the US -

including Levi jeans,

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Harley Davidson motorbikes

and Bourbon whisky.

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This all follows Mr Trump's decision

last week to slap duties of 25%

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on foreign steel imports and 10%

on foreign aluminium.

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Critics say if he goes ahead it

will force up costs for other US

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firms like carmakers.

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Meanwhile, China has warned

that it will not sit idly

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by if its economy is hurt.

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Cecilia Malmstrom is the EU

Trade Commissioner.

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Joining us live from Brussels. You

were listening to that. Can you tell

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us what your plans are for tariffs

on US imports?

Good morning. First

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of all, we need to say the final

decision is due to come at the end

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of this week. But we are preparing

because this has been in the air for

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quite some time. We think this will

be taxes on aluminium and steel, we

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think they would be erroneous. It is

motivated by internal security. We

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cannot see how the European Union

can be a threat to internal security

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in the US. So we will of course,

possibly with others, take this

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decision to the WTO. We are also

looking at different safeguard

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measures on our own steel and

aluminium. And we're looking at ways

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of retaliating, meaning we will

taxes or tariffs on US imports to

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the European Union. But we wait for

the final decision.

Can you be more

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specific about the process? You are

saying you will go through the World

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Trade Organisation and that could

take something like 18 months. Will

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you put tariffs on goods prior to

that anyway? Will you react more

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immediately than that?

I think we

will do three things at the same

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time. It is true that decisions at

the WTO take a long time, but we are

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convinced this is an erroneous

decision, it is against the WTO, and

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that is why we are talking to

different partners across the world

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who are also upset about this and we

will take the WTO. But the

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retaliation measures, we will not

wait for the WTO to make a decision.

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Can you be more specific about the

retaliation and safeguard measures?

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It has been reported we are looking

at 25% tariffs on US goods, things

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like Levi jeans, bourbon whiskey

will stop is that what you are

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talking about?

Those are things that

are figuring on the draft list. We

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will discuss it inside the College

of Commissioners on Wednesday

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morning. But they have to to be

completely legal, in compliance with

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the WTO. We are looking at the

correspondent of the economic loss

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that the steel and aluminium tariffs

from the US will do to the EU

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economy. That's why we need to

calibrate that safely in order to

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respond, to retaliate, but not

escalate this unnecessarily.

How far

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will this go, do you think, from the

point of view of the United States,

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the talk is very tough from the

likes of President Trump and Wilbur

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Ross, the commerce secretary. The

trade Secretary as well, they sound

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like they will not back down. How

far will the EU go?

We still hope

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they will back down and exclude the

EU. Lots of contacts are being taken

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at the highest level in the US. We

have spoken to them for many months.

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I have personally spoken to the US

trade relations and US commerce, and

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we have shown them statistics and

facts to show it's not in the

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interests of the US either. But it

looks like if they are determined

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not to exclude anyone, it's very

unfortunate. It will severely

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disturbed global markets and create

an atmosphere that is not

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constructive at all.

Thank you for

your time, European Union trade

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Commissioner. That's with the EU's

response. We will keep a close eye

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on this story as it develops this

week.

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Let's take a look at some of

the other stories making the news.

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The French insurance giant

AXA is set to buy XL

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Group for $15.3 billion.

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The Bermuda-based company

specialises in property

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and casualty insurance.

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The deal is expected to be completed

in the second half of this year.

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The accountancy firm PWC says that

reducing the gender pay gap

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could boost OECD nations

by $6 trillion.

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The report suggests that women

could play a greater role

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in the labour market

through increased skills

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and a reduction in joblessness.

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Italy appears to be heading

for a hung parliament,

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with exit polls suggesting that no

group has won a majority

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in the country's general election.

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But as ever, one of the most

pressing issues is the financial

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state of Europe's fourth largest

economy.

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That was on the minds of many who

went to the polls.

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Since the global financial

crisis hit a decade ago,

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Since the global financial

crisis hit a decade ago,

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the economy has struggled to keep up

with the rest of the Eurozone

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and suffered two big recessions.

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But things picked up last year

with growth of 1.6%.

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One of the biggest election

concerns for young voters

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has been unemployment.

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has been unemployment.

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It unexpectedly rose last week

to 11.1% as more people

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started looking for work.

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That's well above the Eurozone

average and amounts to nearly

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3 million people.

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Federico Santi, Europe

Analyst at Eurasia Group.

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Welcome to the programme. What's

your take on the results we have

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got, the Five Star Movement and the

League coming in stronger than

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people anticipated but this is a

real antiestablishment vote we have

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seen.

Definitely, the results were

unexpected but not entirely

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surprising. We have been flagging it

for some time, the risk of a

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populist government taking hold in

Italy has been fully borne out by

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the results. We are still waiting

for the definitive result. The one

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thing that is clear, there is no

clear majority. I think we are

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looking at lengthy and unpredictable

complex coalition talks, which is

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something we have grown used to in

Europe. But at this point the

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chances of a government being led by

a populist party are actually quite

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high.

The Five Star Movement is

relatively new, and it has taken

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many people by surprise. It's not

just young people voting, it's right

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across the board, from both sides of

the political spectrum.

It started

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as a protest movement, but by this

time it has fully transitioned into

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almost a mainstream party. They have

broadened their base of support

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beyond this disaffected, younger and

unemployed voters and they have done

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a good job of harnessing this

pervasive antiestablishment

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sentiment in the country.

The

question is, will they see change in

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the near future, or even in the

years ahead? It's difficult to say

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at this point with so many political

players in there, including the

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likes of Silvio Berlusconi, who came

back onto the scene.

The results

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were somewhat disappointing for

Berlusconi but his base was strong

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and I think he will be in the next

for the next government, which is

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quite surprising. Even before the

vote, we did not see anything good

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coming out of the election in the

economy and this is all the more so

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given the results we are seeing.

Do

you think the Five Star Movement

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gathered such support from different

age groups because so many young

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people have left Italy to find work

elsewhere. Perhaps their parents and

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grandparents are fed up and want

them to return.

Biker said, this is

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pervasive, the disaffection with

mainstream parties, who have had

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their worst performance in decades.

This is no coincidence. Italy is one

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of the countries hit hardest by the

financial crisis, the Eurozone

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crisis, and the immigration crisis

more recently. The country hasn't

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really grown in 15 years so this is

the unsurprising effect.

Thank you

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for your time and your analysis of

what happened in Italy over the

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weekend.

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China has set its 2018 growth

target at "around 6.5%",

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a faster expansion than any western

economy could dream of.

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But behind the strong growth figures

there are concerns China's economy

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is too reliant on borrowing,

while the country has also

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pledged to crack down

on financial risk taking.

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Stephen McDonell joins

us now from Beijing.

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On the face of it, there is a great

target, but underneath there are

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real concerns about spiralling debt

and how the economy can cope.

The

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first day of the NPC is always

marked by a lot of attention for the

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target GDP growth. That's because it

gives you an idea of how the

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government will try to pull various

levers to try to manage this

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enormous economy. The 6.5% target

this year is the same as last year.

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Last year the Chinese economy

achieved a 6.9% GDP growth. It shows

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they will continue to try to step

down the economy to achieve a longer

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lasting and more sustainable growth,

given the problems with things like

0:11:210:11:25

that, as you say. It will also pay

for an 8% increase in defence

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spending. And a 3% reduction in the

amount of energy expended for every

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unit of GDP. That's so China can

achieve its commitments to global

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warming targets. It means for every

bit of GDP that is achieved, more

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renewable energies and less fossil

fuel.

Thank you for that update.

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Let's take a look at the wider

financial markets.

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The Nikkei has fallen

for the fourth session in a row.

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Similar picture

for Hong Kong's hang seng

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and Australia's all ordinaries -

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comes after the Dow

closed down on Friday.

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Steelmakers, car manufacturers

and shipping companies seem to be

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worst hit amid fears that a global

trade row could break

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out.

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How is it looking so far in Europe,

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given the results of

the Italian election.

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The FTSE 100 is pretty flat at the

moment. It's struggling to stay in

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the black. But the Dax and the

French markets have both been

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negative today. We have the European

figures behind me.

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Joining us is Jessica Ground,

Global Head of Stewardship

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at Schroders.

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I was noting that in Germany, in

Frankfurt, the big losers were BMW

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shares down, and Volkswagen shares

also down, over concerns of a

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possible trade war that they could

be caught up in.

A bit more

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clarification of the weekend that

this could be extended to importing

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cars. People are just trying to

think about the unintended

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consequences, whether it's through

retaliation, as we have just been

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hearing about, and also how it

affects the whole supply chain. For

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example, the domestic oil industry

in the US is a huge consumer of

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steel and aluminium. Higher costs

there, will it hit people at the

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pumps?

How worried are you about

this? Listing to Cecilia earlier

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when she said, we are ready and

poised. We have thought through our

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retaliation. -- listening to

Cecilia.

It's interesting because

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George W Bush was the last person to

put tariffs on steel. But backed

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down when the WTO got involved. The

problem is, Donald Trump feels like

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a different personality and whether

or not he will be cowed isn't great.

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Retaliation is one thing, but in the

long-term, markets will be more in

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favour of more free trade and

economic activity.

Global trade

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seems to be the theme running

through financial markets at the

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moment. Also politics, we had the

result from Italy with another hung

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parliament. Interestingly, we have

the Dax on the board in negative,

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even though there was quite good

news as far as its government was

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concerned.

It's swings and

roundabouts. The currency as far as

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I understand it, the euro is feeling

better about Angela Merkel going

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into coalition and it feels more

significant than Italy, which we

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always knew was a more difficult

electoral result, certainly more

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colourful. The Dax is really

responding, that's where the auto

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manufacturers are and that's where a

lot of trade exposure is, so

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individual names are being hit.

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For now, thank you. She will return

later to talk Cornish pasties. And

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pies!

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Still to come - we get

the inside track on how Scotch

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whisky has become record

breaking export for the UK.

0:15:130:15:16

You're with Business

Live from BBC News.

0:15:160:15:20

Global demand, especially

from Europe, is helping UK

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manufacturers shrug off political

uncertainty at home.

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That's according to manufacturers'

organisation EEF, which has

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upgraded its 2018 growth

expectations from 1.4% to 2%.

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This means manufacturing could grow

faster than the rest of the economy.

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Lee Hopley, EEF's Chief Economist,

is here to tell us more.

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This comes after the effect of the

bad weather on the UK economy, do

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you think manufacturers will be hit

by that and supply chain issues?

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There will clearly be issues around

logistics challenges but I don't

0:16:100:16:13

think we expect that to have a

material impact on the trajectory of

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the sector over the course of the

next couple of quarters. We have

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seen a really strong 2017 and a lot

of momentum is carried into this

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year on the back of strengthening

global demand, and particularly

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prospects coming from European

customers.

So you have upgraded your

0:16:310:16:35

outlook for this year which is good

news but beyond that, what is your

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thinking? Because that is the

difficulty for manufacturers.

0:16:400:16:44

Without clarity on Brexit, it is

difficult to plan.

There's a lot of

0:16:440:16:51

uncertainty around our forecasts,

not least issues around global trade

0:16:510:16:55

and increased signs of protectionism

from the US for example, which could

0:16:550:16:59

play out in a negative way for UK

manufacturers. As we look beyond

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this year, we have to assume we do

have some clarity around the Brexit

0:17:040:17:09

outcomes towards the autumn of this

year as has been indicated by the

0:17:090:17:13

Government and that starts to lead

to more certainty, especially as we

0:17:130:17:21

work towards a transition period

that extends to 2020 and that is

0:17:210:17:26

critical for the sector at the

moment.

Thank you for your time.

0:17:260:17:36

Lots more stories on the BBC News

website. Trinity Mirror will be

0:17:360:17:44

changing its name to Reach. It

reaches millions of people everyday,

0:17:440:17:52

is why Reach is a great name for

them, it says. What's more on the

0:17:520:17:58

BBC News business live page.

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You're watching Business live -

our top story: China and Europe

0:18:040:18:07

have reacted to the White House

after it says no countries

0:18:070:18:10

will be exempt from steel

and aluminium tariffs.

0:18:100:18:19

A quick look at how

markets are faring...

0:18:390:18:41

Let's talk about liquid gold.

0:18:410:18:45

Scotch whisky broke a new export

record 2017, with overseas sales

0:18:450:18:50

hitting $6 billion, equal

to more than 1.2 billion

0:18:500:18:53

bottles.

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That's a lot to drink!

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Tomatin Distillery -

which was once Scotland's biggest

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whisky distiller by volume -

hopes to be a key player

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in that growing market.

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Since 1986, it's been owned

by a Japanese corporation

0:19:060:19:08

and has focused especially

on single malt.

0:19:080:19:11

Sales of that particular whisky

variety have increased by 83%

0:19:110:19:12

in the last five years

and are exported to 55

0:19:120:19:15

countries around the world.

0:19:150:19:21

Stephen Bremner is the Sales

Director at Tomatin.

0:19:210:19:25

Good to see you. Thanks for being on

the programme. Tell us more about

0:19:250:19:30

how you've made the most of this

growing appetite globally for Scotch

0:19:300:19:35

whiskey. It is very much a worldwide

phenomenon, isn't it?

It is indeed,

0:19:350:19:43

there is growing interest,

especially in malt whiskey and over

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the last few years that interest has

grown worldwide. Because of the rich

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history and provenance of Scotch

whiskey, more and more consumers are

0:19:540:19:58

buying into that so it's been, the

last few years have been very

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beneficial.

Is it part of this whole

craft trend? We have seen lots of

0:20:040:20:11

different founders and entrepreneurs

who have set up their own brand.

0:20:110:20:15

Have you tapped into that, the

desire for something original?

Yes,

0:20:150:20:21

I think consumers now, because there

is so much information available,

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they are very astute in what they

are buying. What they want to buy is

0:20:250:20:30

something of a very high quality.

Because of the regulations we have

0:20:300:20:34

in place for the production of

Scotch whiskey, consumers know that

0:20:340:20:38

they will get something that is

produced to a very high standard.

0:20:380:20:45

Interesting though, a story we are

looking at today is a US lobby

0:20:450:20:48

groups who say special protection on

certain products like Scotch

0:20:480:20:52

whiskey, like champagne, like the

Cornish pasty should be removed.

0:20:520:20:57

There shouldn't be this protection

is it worth. What do you think in

0:20:570:21:03

reaction to that? It must be

extremely important to your

0:21:030:21:06

business.

Yes, I don't agree with

that. Scotch whiskey has been

0:21:060:21:11

produced in Scotland for hundreds of

years and as I said previously, we

0:21:110:21:17

have very strict regulations in

place as to how Scotch whiskey is

0:21:170:21:21

produced so the idea that other

countries could then the dues are

0:21:210:21:27

whiskey and call it Scotch doesn't

really sit right at all.

You were

0:21:270:21:32

bought by a Japanese company in the

mid-80s which helped turn around the

0:21:320:21:36

fortunes of your company but some

would say that is selling out, isn't

0:21:360:21:41

it? It doesn't mean you are now

independent and really you are

0:21:410:21:47

selling Scotch whiskey.

We are owned

by a Japanese company but in terms

0:21:470:21:50

of the day-to-day running of the

business we are fairly autonomous.

0:21:500:21:55

In terms of the strategic direction

of the business, we are left to our

0:21:550:22:00

own devices. We very much see

ourselves as a Scottish company.

And

0:22:000:22:05

you were telling me earlier about

the time you were bailed out by the

0:22:050:22:10

Japanese company, 25 distilleries

went bust in Scotland and a lot of

0:22:100:22:14

that was to do with the US market,

big dip in the US market that the

0:22:140:22:21

time.

Historically the Scotch

whiskey industry was tied into the

0:22:210:22:24

American market so if there was a

slump in the American market there

0:22:240:22:28

tended to be the same situation

here.

But now you are more

0:22:280:22:33

diversified and there has been a

surge across Asia, because we have

0:22:330:22:38

talked about it on this programme,

the fact there is a massive appetite

0:22:380:22:42

for whiskey.

Yes, China is

definitely a growing market. There

0:22:420:22:49

is much more interest in malt

whiskey now, and because of the

0:22:490:22:54

growing middle-class there many more

people are interested in the

0:22:540:22:57

provenance of what they are

drinking, and because of the rich

0:22:570:23:01

history we have in Scotland is

people can really buy into you.

We

0:23:010:23:08

will be picking up on the theme of

that protected status in the moment

0:23:080:23:13

but first a quick reminder of how to

get in touch.

0:23:130:23:19

We have insight and analysis from

our team of editors around the

0:23:230:23:26

globe, and we want to hear from you

too. Get involved on the BBC

0:23:260:23:33

business live page. You can find us

on Twitter and Facebook. Business

0:23:330:23:44

live on television and online. What

you need to know, when you need to

0:23:440:23:48

know.

As promised Jessica has returned and

0:23:480:23:51

we will talk now about the story we

have been highlighting, the fact

0:23:510:23:58

that some goods have this protection

status so champagne, Scotch

0:23:580:24:02

Whisky...

Pork pies.

Cornish

pasties. Tell us about this US lobby

0:24:020:24:12

that wants to see a change.

Post

Brexit when we will be negotiating

0:24:120:24:17

more of our own arrangements, the US

lobby group has made the suggestion

0:24:170:24:21

we walk away from our protected

status. We are defensive about

0:24:210:24:29

wanting to keep pork pies and

Cornish pasties, on the other hand

0:24:290:24:32

there might be opportunities for us.

English Parmesan could be an

0:24:320:24:37

attractive product as well. Are

there areas we could innovate? These

0:24:370:24:43

will surface in the future as we

reassess our trading relationships

0:24:430:24:47

with everyone in the world.

I want

to show you this story, the world

0:24:470:24:52

pasty championships, it was the US

bakery that scooped the top award so

0:24:520:24:57

perhaps we are missing out.

And more

competition might force us to raise

0:24:570:25:02

our own game.

"I Think the monopoly

of product names like champagne is

0:25:020:25:10

pointless. Cornish pasties are

Cornish pasties wherever they are

0:25:100:25:15

made." And David says, they should

in my personal Tupperware box! There

0:25:150:25:26

is a fine line to be made. It's an

interesting one. I'm afraid we have

0:25:260:25:33

run out of time. Thank you for your

thoughts, it's always interesting to

0:25:330:25:37

hear what our viewers think.

0:25:370:25:41

That's it from Business live today.

0:25:410:25:45