05/03/2018 BBC Business Live

and aluminium tariffs.

Live from London, that's our top

story on Monday 5th March.

Steely resolve from

President Trump on trade -

and a new threat to tax imports

of EU cars - we go live

to Brussels to hear the view

of the European Commissioner

for Trade - Cecilia Malmstrom.

Plus...

What's next for Europe's fourth

largest economy after elections

in Italy lead to a hung parliament?

And what effect of all these

developments had on the financial

markets? We will take a look at the

open in Europe.

And whisky galore -

we get the inside track on how

Scotch whisky has become record

breaking export for the UK.

But if whisky has become

a successful export -

then how much of that

is down to its name?

Lobbyists in the US want

American firms to be able

to sell their own versions

of Cornish pasties

and Scotch Whiskey.

Should regional foods

keep their protected status?

Let us know...

Just use the hashtag BBCBizLive.

Hello and welcome to Business Live.

The war of words over trade has

continued over the weekend,

with US President Donald Trump

threatening to "apply

a tax" on imports of cars

from the European Union.

He tweeted...

EU trade chiefs have reportedly been

considering slapping 25% tariffs

on imports from the US -

including Levi jeans,

Harley Davidson motorbikes

and Bourbon whisky.

This all follows Mr Trump's decision

last week to slap duties of 25%

on foreign steel imports and 10%

on foreign aluminium.

Critics say if he goes ahead it

will force up costs for other US

firms like carmakers.

Meanwhile, China has warned

that it will not sit idly

by if its economy is hurt.

Cecilia Malmstrom is the EU

Trade Commissioner.

Joining us live from Brussels. You

were listening to that. Can you tell

us what your plans are for tariffs

on US imports?

Good morning. First

of all, we need to say the final

decision is due to come at the end

of this week. But we are preparing

because this has been in the air for

quite some time. We think this will

be taxes on aluminium and steel, we

think they would be erroneous. It is

motivated by internal security. We

cannot see how the European Union

can be a threat to internal security

in the US. So we will of course,

possibly with others, take this

decision to the WTO. We are also

looking at different safeguard

measures on our own steel and

aluminium. And we're looking at ways

of retaliating, meaning we will

taxes or tariffs on US imports to

the European Union. But we wait for

the final decision.

Can you be more

specific about the process? You are

saying you will go through the World

Trade Organisation and that could

take something like 18 months. Will

you put tariffs on goods prior to

that anyway? Will you react more

immediately than that?

I think we

will do three things at the same

time. It is true that decisions at

the WTO take a long time, but we are

convinced this is an erroneous

decision, it is against the WTO, and

that is why we are talking to

different partners across the world

who are also upset about this and we

will take the WTO. But the

retaliation measures, we will not

wait for the WTO to make a decision.

Can you be more specific about the

retaliation and safeguard measures?

It has been reported we are looking

at 25% tariffs on US goods, things

like Levi jeans, bourbon whiskey

will stop is that what you are

talking about?

Those are things that

are figuring on the draft list. We

will discuss it inside the College

of Commissioners on Wednesday

morning. But they have to to be

completely legal, in compliance with

the WTO. We are looking at the

correspondent of the economic loss

that the steel and aluminium tariffs

from the US will do to the EU

economy. That's why we need to

calibrate that safely in order to

respond, to retaliate, but not

escalate this unnecessarily.

How far

will this go, do you think, from the

point of view of the United States,

the talk is very tough from the

likes of President Trump and Wilbur

Ross, the commerce secretary. The

trade Secretary as well, they sound

like they will not back down. How

far will the EU go?

We still hope

they will back down and exclude the

EU. Lots of contacts are being taken

at the highest level in the US. We

have spoken to them for many months.

I have personally spoken to the US

trade relations and US commerce, and

we have shown them statistics and

facts to show it's not in the

interests of the US either. But it

looks like if they are determined

not to exclude anyone, it's very

unfortunate. It will severely

disturbed global markets and create

an atmosphere that is not

constructive at all.

Thank you for

your time, European Union trade

Commissioner. That's with the EU's

response. We will keep a close eye

on this story as it develops this

week.

Let's take a look at some of

the other stories making the news.

The French insurance giant

AXA is set to buy XL

Group for $15.3 billion.

The Bermuda-based company

specialises in property

and casualty insurance.

The deal is expected to be completed

in the second half of this year.

The accountancy firm PWC says that

reducing the gender pay gap

could boost OECD nations

by $6 trillion.

The report suggests that women

could play a greater role

in the labour market

through increased skills

and a reduction in joblessness.

Italy appears to be heading

for a hung parliament,

with exit polls suggesting that no

group has won a majority

in the country's general election.

But as ever, one of the most

pressing issues is the financial

state of Europe's fourth largest

economy.

That was on the minds of many who

went to the polls.

Since the global financial

crisis hit a decade ago,

Since the global financial

crisis hit a decade ago,

the economy has struggled to keep up

with the rest of the Eurozone

and suffered two big recessions.

But things picked up last year

with growth of 1.6%.

One of the biggest election

concerns for young voters

has been unemployment.

has been unemployment.

It unexpectedly rose last week

to 11.1% as more people

started looking for work.

That's well above the Eurozone

average and amounts to nearly

3 million people.

Federico Santi, Europe

Analyst at Eurasia Group.

Welcome to the programme. What's

your take on the results we have

got, the Five Star Movement and the

League coming in stronger than

people anticipated but this is a

real antiestablishment vote we have

seen.

Definitely, the results were

unexpected but not entirely

surprising. We have been flagging it

for some time, the risk of a

populist government taking hold in

Italy has been fully borne out by

the results. We are still waiting

for the definitive result. The one

thing that is clear, there is no

clear majority. I think we are

looking at lengthy and unpredictable

complex coalition talks, which is

something we have grown used to in

Europe. But at this point the

chances of a government being led by

a populist party are actually quite

high.

The Five Star Movement is

relatively new, and it has taken

many people by surprise. It's not

just young people voting, it's right

across the board, from both sides of

the political spectrum.

It started

as a protest movement, but by this

time it has fully transitioned into

almost a mainstream party. They have

broadened their base of support

beyond this disaffected, younger and

unemployed voters and they have done

a good job of harnessing this

pervasive antiestablishment

sentiment in the country.

The

question is, will they see change in

the near future, or even in the

years ahead? It's difficult to say

at this point with so many political

players in there, including the

likes of Silvio Berlusconi, who came

back onto the scene.

The results

were somewhat disappointing for

Berlusconi but his base was strong

and I think he will be in the next

for the next government, which is

quite surprising. Even before the

vote, we did not see anything good

coming out of the election in the

economy and this is all the more so

given the results we are seeing.

Do

you think the Five Star Movement

gathered such support from different

age groups because so many young

people have left Italy to find work

elsewhere. Perhaps their parents and

grandparents are fed up and want

them to return.

Biker said, this is

pervasive, the disaffection with

mainstream parties, who have had

their worst performance in decades.

This is no coincidence. Italy is one

of the countries hit hardest by the

financial crisis, the Eurozone

crisis, and the immigration crisis

more recently. The country hasn't

really grown in 15 years so this is

the unsurprising effect.

Thank you

for your time and your analysis of

what happened in Italy over the

weekend.

China has set its 2018 growth

target at "around 6.5%",

a faster expansion than any western

economy could dream of.

But behind the strong growth figures

there are concerns China's economy

is too reliant on borrowing,

while the country has also

pledged to crack down

on financial risk taking.

Stephen McDonell joins

us now from Beijing.

On the face of it, there is a great

target, but underneath there are

real concerns about spiralling debt

and how the economy can cope.

The

first day of the NPC is always

marked by a lot of attention for the

target GDP growth. That's because it

gives you an idea of how the

government will try to pull various

levers to try to manage this

enormous economy. The 6.5% target

this year is the same as last year.

Last year the Chinese economy

achieved a 6.9% GDP growth. It shows

they will continue to try to step

down the economy to achieve a longer

lasting and more sustainable growth,

given the problems with things like

that, as you say. It will also pay

for an 8% increase in defence

spending. And a 3% reduction in the

amount of energy expended for every

unit of GDP. That's so China can

achieve its commitments to global

warming targets. It means for every

bit of GDP that is achieved, more

renewable energies and less fossil

fuel.

Thank you for that update.

Let's take a look at the wider

financial markets.

The Nikkei has fallen

for the fourth session in a row.

Similar picture

for Hong Kong's hang seng

and Australia's all ordinaries -

comes after the Dow

closed down on Friday.

Steelmakers, car manufacturers

and shipping companies seem to be

worst hit amid fears that a global

trade row could break

out.

How is it looking so far in Europe,

given the results of

the Italian election.

The FTSE 100 is pretty flat at the

moment. It's struggling to stay in

the black. But the Dax and the

French markets have both been

negative today. We have the European

figures behind me.

Joining us is Jessica Ground,

Global Head of Stewardship

at Schroders.

I was noting that in Germany, in

Frankfurt, the big losers were BMW

shares down, and Volkswagen shares

also down, over concerns of a

possible trade war that they could

be caught up in.

A bit more

clarification of the weekend that

this could be extended to importing

cars. People are just trying to

think about the unintended

consequences, whether it's through

retaliation, as we have just been

hearing about, and also how it

affects the whole supply chain. For

example, the domestic oil industry

in the US is a huge consumer of

steel and aluminium. Higher costs

there, will it hit people at the

pumps?

How worried are you about

this? Listing to Cecilia earlier

when she said, we are ready and

poised. We have thought through our

retaliation. -- listening to

Cecilia.

It's interesting because

George W Bush was the last person to

put tariffs on steel. But backed

down when the WTO got involved. The

problem is, Donald Trump feels like

a different personality and whether

or not he will be cowed isn't great.

Retaliation is one thing, but in the

long-term, markets will be more in

favour of more free trade and

economic activity.

Global trade

seems to be the theme running

through financial markets at the

moment. Also politics, we had the

result from Italy with another hung

parliament. Interestingly, we have

the Dax on the board in negative,

even though there was quite good

news as far as its government was

concerned.

It's swings and

roundabouts. The currency as far as

I understand it, the euro is feeling

better about Angela Merkel going

into coalition and it feels more

significant than Italy, which we

always knew was a more difficult

electoral result, certainly more

colourful. The Dax is really

responding, that's where the auto

manufacturers are and that's where a

lot of trade exposure is, so

individual names are being hit.

For now, thank you. She will return

later to talk Cornish pasties. And

pies!

Still to come - we get

the inside track on how Scotch

whisky has become record

breaking export for the UK.

You're with Business

Live from BBC News.

Global demand, especially

from Europe, is helping UK

manufacturers shrug off political

uncertainty at home.

That's according to manufacturers'

organisation EEF, which has

upgraded its 2018 growth

expectations from 1.4% to 2%.

This means manufacturing could grow

faster than the rest of the economy.

Lee Hopley, EEF's Chief Economist,

is here to tell us more.

This comes after the effect of the

bad weather on the UK economy, do

you think manufacturers will be hit

by that and supply chain issues?

There will clearly be issues around

logistics challenges but I don't

think we expect that to have a

material impact on the trajectory of

the sector over the course of the

next couple of quarters. We have

seen a really strong 2017 and a lot

of momentum is carried into this

year on the back of strengthening

global demand, and particularly

prospects coming from European

customers.

So you have upgraded your

outlook for this year which is good

news but beyond that, what is your

thinking? Because that is the

difficulty for manufacturers.

Without clarity on Brexit, it is

difficult to plan.

There's a lot of

uncertainty around our forecasts,

not least issues around global trade

and increased signs of protectionism

from the US for example, which could

play out in a negative way for UK

manufacturers. As we look beyond

this year, we have to assume we do

have some clarity around the Brexit

outcomes towards the autumn of this

year as has been indicated by the

Government and that starts to lead

to more certainty, especially as we

work towards a transition period

that extends to 2020 and that is

critical for the sector at the

moment.

Thank you for your time.

Lots more stories on the BBC News

website. Trinity Mirror will be

changing its name to Reach. It

reaches millions of people everyday,

is why Reach is a great name for

them, it says. What's more on the

BBC News business live page.

You're watching Business live -

our top story: China and Europe

have reacted to the White House

after it says no countries

will be exempt from steel

and aluminium tariffs.

A quick look at how

markets are faring...

Let's talk about liquid gold.

Scotch whisky broke a new export

record 2017, with overseas sales

hitting $6 billion, equal

to more than 1.2 billion

bottles.

That's a lot to drink!

Tomatin Distillery -

which was once Scotland's biggest

whisky distiller by volume -

hopes to be a key player

in that growing market.

Since 1986, it's been owned

by a Japanese corporation

and has focused especially

on single malt.

Sales of that particular whisky

variety have increased by 83%

in the last five years

and are exported to 55

countries around the world.

Stephen Bremner is the Sales

Director at Tomatin.

Good to see you. Thanks for being on

the programme. Tell us more about

how you've made the most of this

growing appetite globally for Scotch

whiskey. It is very much a worldwide

phenomenon, isn't it?

It is indeed,

there is growing interest,

especially in malt whiskey and over

the last few years that interest has

grown worldwide. Because of the rich

history and provenance of Scotch

whiskey, more and more consumers are

buying into that so it's been, the

last few years have been very

beneficial.

Is it part of this whole

craft trend? We have seen lots of

different founders and entrepreneurs

who have set up their own brand.

Have you tapped into that, the

desire for something original?

Yes,

I think consumers now, because there

is so much information available,

they are very astute in what they

are buying. What they want to buy is

something of a very high quality.

Because of the regulations we have

in place for the production of

Scotch whiskey, consumers know that

they will get something that is

produced to a very high standard.

Interesting though, a story we are

looking at today is a US lobby

groups who say special protection on

certain products like Scotch

whiskey, like champagne, like the

Cornish pasty should be removed.

There shouldn't be this protection

is it worth. What do you think in

reaction to that? It must be

extremely important to your

business.

Yes, I don't agree with

that. Scotch whiskey has been

produced in Scotland for hundreds of

years and as I said previously, we

have very strict regulations in

place as to how Scotch whiskey is

produced so the idea that other

countries could then the dues are

whiskey and call it Scotch doesn't

really sit right at all.

You were

bought by a Japanese company in the

mid-80s which helped turn around the

fortunes of your company but some

would say that is selling out, isn't

it? It doesn't mean you are now

independent and really you are

selling Scotch whiskey.

We are owned

by a Japanese company but in terms

of the day-to-day running of the

business we are fairly autonomous.

In terms of the strategic direction

of the business, we are left to our

own devices. We very much see

ourselves as a Scottish company.

And

you were telling me earlier about

the time you were bailed out by the

Japanese company, 25 distilleries

went bust in Scotland and a lot of

that was to do with the US market,

big dip in the US market that the

time.

Historically the Scotch

whiskey industry was tied into the

American market so if there was a

slump in the American market there

tended to be the same situation

here.

But now you are more

diversified and there has been a

surge across Asia, because we have

talked about it on this programme,

the fact there is a massive appetite

for whiskey.

Yes, China is

definitely a growing market. There

is much more interest in malt

whiskey now, and because of the

growing middle-class there many more

people are interested in the

provenance of what they are

drinking, and because of the rich

history we have in Scotland is

people can really buy into you.

We

will be picking up on the theme of

that protected status in the moment

but first a quick reminder of how to

get in touch.

We have insight and analysis from

our team of editors around the

globe, and we want to hear from you

too. Get involved on the BBC

business live page. You can find us

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live on television and online. What

you need to know, when you need to

know.

As promised Jessica has returned and

we will talk now about the story we

have been highlighting, the fact

that some goods have this protection

status so champagne, Scotch

Whisky...

Pork pies.

Cornish

pasties. Tell us about this US lobby

that wants to see a change.

Post

Brexit when we will be negotiating

more of our own arrangements, the US

lobby group has made the suggestion

we walk away from our protected

status. We are defensive about

wanting to keep pork pies and

Cornish pasties, on the other hand

there might be opportunities for us.

English Parmesan could be an

attractive product as well. Are

there areas we could innovate? These

will surface in the future as we

reassess our trading relationships

with everyone in the world.

I want

to show you this story, the world

pasty championships, it was the US

bakery that scooped the top award so

perhaps we are missing out.

And more

competition might force us to raise

our own game.

"I Think the monopoly

of product names like champagne is

pointless. Cornish pasties are

Cornish pasties wherever they are

made." And David says, they should

in my personal Tupperware box! There

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

interesting one. I'm afraid we have

run out of time. Thank you for your

thoughts, it's always interesting to

hear what our viewers think.

That's it from Business live today.