25/01/2017 World Business Report


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25/01/2017

The latest business news with informed analysis from the world's financial centres.


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Now for the latest financial news with Sally

:00:00.:00:00.

Mexico's economy and foreign Ministers brace for talks with US

:00:07.:00:27.

trade officials as President Trump tells car makers they must build

:00:28.:00:30.

A warning from Lego that more must be done in China to stop

:00:31.:00:35.

counterfeiters as its own master builder struggles to tell a fake

:00:36.:00:39.

Japan enjoying lower or ill prices with a trade surplus for six years.

:00:40.:01:07.

Mexico's Economy Foreign ministers are due to meet top US officials

:01:08.:01:11.

later today as they brace for the renegotiation of NAFTA -

:01:12.:01:14.

the North American Free Trade Agreement.

:01:15.:01:16.

President Trump is pushing to bring more manufacturing jobs back

:01:17.:01:18.

He's already met with the heads of Ford, General Motors

:01:19.:01:25.

and Fiat-Chrysler - telling them they must make more

:01:26.:01:28.

Taking a look at this graph - you can see its exports to the US

:01:29.:01:40.

have surged since Nafta came into force in 1994.

:01:41.:01:43.

Mexico now sells more than $270 billion worth of goods

:01:44.:01:46.

It's thought talks between Mexico and the US will focus on so-called

:01:47.:01:51.

'Rules of Origin' - which limits the proportion

:01:52.:01:53.

of a product which comes from outside North America.

:01:54.:01:59.

If limits were tightened, it could boost manufacturing

:02:00.:02:01.

But can this be achieved in production lines with incredibly

:02:02.:02:06.

complicated supply chains like the car industry?

:02:07.:02:09.

With me is Anna-Marie Baisden, Head of Autos at BMI Research

:02:10.:02:23.

Good morning. Bosses of the three carmakers in talks yesterday and

:02:24.:02:36.

lots of information coming out. Give us your take on how negotiations are

:02:37.:02:42.

going? What we heard was largely to be expected. It was very generic,

:02:43.:02:48.

looking forward to working with the Administration and really we could

:02:49.:02:52.

not expect too much in terms of commitment because they have very

:02:53.:02:56.

little to go on themselves in terms of what these trade policies might

:02:57.:03:03.

be. We have had some change of mind where they talked about keeping jobs

:03:04.:03:08.

in the US and doing less in Texaco for top any us saying it is

:03:09.:03:13.

windowdressing, it is not a big shift in policy. Not at all. It was

:03:14.:03:19.

mostly the timing of the announcement. Most of these were

:03:20.:03:26.

already in the planning of stop it was more a story of not as much

:03:27.:03:32.

demand for these cars. They are still moving production focus to

:03:33.:03:35.

Mexico just not with the extra capacity. These rules of origin is

:03:36.:03:43.

going to be critical. 62% of a car has to be originating from North

:03:44.:03:50.

America. That could be upped to 80% or more. With the car industry, it

:03:51.:03:57.

is difficult to establish with components moving across the border

:03:58.:04:04.

many times. This will be one of the most complex elements. Components

:04:05.:04:08.

will cross the border several times and you also have the US component

:04:09.:04:15.

manufacturers supplying to Mexico which could also get hurt if you

:04:16.:04:22.

start increasing tariffs to and from Mexico. You can see US businesses

:04:23.:04:27.

being heard. How will it play out. President Trump once more jobs in

:04:28.:04:36.

America but it is easier said than done in a critical and complicated

:04:37.:04:40.

industry. These big three carmakers not alone in Goa were either

:04:41.:04:47.

bankrupt or on the brink of it? Absolutely. They were making cars

:04:48.:04:52.

that were not selling very well so you could see a situation where if

:04:53.:04:56.

they are forced to open new plans, they could start edging back to

:04:57.:05:02.

overcapacity. The small cars produced in Mexico are ready in

:05:03.:05:10.

declining sales in America. Do you want them to be producing things

:05:11.:05:14.

that are not selling in. I am sure we will be getting news and tweet

:05:15.:05:21.

from Washington as the day progresses following the talks

:05:22.:05:23.

between Mexico and the US officials. Lego - the Danish-owned toy company

:05:24.:05:26.

has told the BBC that authorities in China need to do more

:05:27.:05:31.

to tackle fake goods - after the man in charge of Lego's

:05:32.:05:34.

huge new factory in China failed to spot a fake piece

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from the real thing. Lego is currently involved in legal

:05:39.:05:44.

action against one Chinese manufacturer it claims

:05:45.:05:47.

is ripping off its products. Here's our Shanghai

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Correspondent Robin Brant Billions and billions of these

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little elastic bricks have been sold the world over and out Lego is

:06:04.:06:09.

betting big on China. What started out with handcart bricks in Denmark

:06:10.:06:16.

in 1949 is now a $100 million state-of-the-art operation near

:06:17.:06:21.

Shanghai but they are not the only ones doing it. Is this Lego? Copies

:06:22.:06:30.

like these and fakes and counterfeit our prolific in China. Lego is

:06:31.:06:35.

currently suing the firm producing this copycat. How is the user to

:06:36.:06:40.

spot the different? We asked the experts.

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If you have to ask me to guess I would say this one, maybe. Which one

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do you think is a real? You think this one is real. Correct. The truth

:07:00.:07:06.

is, they look and feel almost identical. So good even the boss of

:07:07.:07:12.

the new factory cannot tell. Have a look at that for me. What do you

:07:13.:07:19.

think of that? It looks like a mini figure to me. What do you think of

:07:20.:07:31.

him? Which one is yours? Have a guess. I would say this is housed

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and this is not. This is Lego. That is not Lego. It is trying to be

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Lego. Lego is not the only foreign firm investing big in China but

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having trouble with local copycats. Land Rover is made here. These

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assault particularly well but the British firm has been powerless to

:08:02.:08:08.

stop this, cut away, this is similar on the inside and very, very similar

:08:09.:08:13.

on the outside but a lot cheaper. This is the copycat that caught

:08:14.:08:20.

people out. You can buy these on Aly Baba. The twin maker is still

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pursuing manufacturers in the courts because even the boss cannot tell

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the difference. I have so many of those in my house

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and I shall they are all genuine, but who knows!

:08:42.:08:42.

Let's head to Asia - Japan has posted its first annual

:08:43.:08:46.

trade surplus since the Fukushima disaster.

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Rico Hizon is in Singapore - Rico how did Japan pull it off?

:08:48.:08:51.

The numbers in Japan are surely in January. Surely! That is good news.

:08:52.:09:06.

Yes, and it has been a long way. A combination of soaring exports and

:09:07.:09:10.

lower energy prices and the depreciation of the yen. They fell

:09:11.:09:17.

by nearly 16% due to the falling cost of crude oil and liquefied

:09:18.:09:22.

national gas which left Japan in an almost $36 billion debt. The 2011

:09:23.:09:32.

Fukushima disaster sent the import bill soaring as it turned to pricey

:09:33.:09:37.

fossil fuel alternatives and exports rose in December for the first time

:09:38.:09:44.

in more than a year. This could be a good year once again for the

:09:45.:09:49.

Japanese economy. Let's keep the fingers crossed that this could be

:09:50.:09:55.

sustained. Let's quickly show you markets. Markets across Asia having

:09:56.:10:04.

a real boom. Japan boosted by the news about the trade surplus.

:10:05.:10:14.

MPs have stepped up demands for the government to publish

:10:15.:10:17.

its plan for Brexit in a formal policy document.

:10:18.:10:20.

The demands for a white paper, including from some Conservatives,

:10:21.:10:23.

follow yesterday's Supreme Court ruling.

:10:24.:10:25.

Theresa May must give parliament a vote before triggering Article 50,

:10:26.:10:29.

the formal process for leaving to the EU.

:10:30.:10:31.

It's thought legislation could be introduced as early as tomorrow.

:10:32.:10:34.

Here's our political correspondent Tom Bateman.

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After the judge is ruled only Parliament could start except, today

:10:42.:10:50.

a warning from MPs not to try to derail the plan. -- Brexit. Article

:10:51.:10:56.

50 is at the start of the process and it must be put before MPs and

:10:57.:11:01.

laws. What lies ahead? The government says the legislation

:11:02.:11:05.

paving the way for Brexit will be tabled within days and voted on by

:11:06.:11:11.

both houses of parliament. Theresa May wants Article 50 triggered by

:11:12.:11:14.

the end of March then Britain has two years to leave the EU. There can

:11:15.:11:22.

be no going back. The point of no return was passed in June of last

:11:23.:11:25.

year. Labour said they will not block Article 50 but one to amend

:11:26.:11:31.

the bill, giving MPs more control. If necessary, there will be

:11:32.:11:35.

hand-to-hand combat. We need to make sure we get the best deal on behalf

:11:36.:11:39.

the country and she cannot say she acts on behalf the country. Theresa

:11:40.:11:45.

May also faces opposition and some of her side. For now, at least

:11:46.:11:51.

ministers believe they are on track to get Brexit triggered by the

:11:52.:11:53.

spring. Coming up at six o'clock

:11:54.:11:53.

on Breakfast - Dan Walker and Louise Minchin will have

:11:54.:11:56.

all the day's news, They'll also have more on a delayed

:11:57.:11:59.

upgrade to the radio system, used by the emergency

:12:00.:12:03.

services in England, Scotland and Wales, that may cost

:12:04.:12:05.

taxpayers ?475 million The top stories this hour: American

:12:06.:12:07.

media say President Trump will sign an order tightening security along

:12:08.:12:26.

the Mexican border on Wednesday. He is also said to be seeking

:12:27.:12:29.

tougher visa regulations for citizens from seven

:12:30.:12:31.

Middle Eastern and African, Mr Trump tweeted that it would be

:12:32.:12:33.

a big day for national security. The Israeli government has approved

:12:34.:12:43.

plans to build 2,500 more homes on occupied Palestinian

:12:44.:12:46.

land in the West Bank. It is the second such announcement

:12:47.:12:48.

since President Trump took office. Palestinian officials say it

:12:49.:12:54.

will fuel extremism and make any Several MPs from the governing

:12:55.:12:56.

Conservative Party have supported calls from the Opposition

:12:57.:13:01.

for the British Government to formally set out its negotiating

:13:02.:13:03.

position on leaving Ministers are preparing to bring

:13:04.:13:06.

forward draft legislation, following a ruling in

:13:07.:13:10.

the Supreme Court on Tuesday that Parliament needs to vote in favour

:13:11.:13:13.

before the Government can trigger The French President,

:13:14.:13:16.

Francois Hollande, has been meeting leaders of Colombia's

:13:17.:13:23.

largest rebel movement, the Farc, at a rural camp

:13:24.:13:25.

in the west of the country. Mr Hollande, accompanied

:13:26.:13:28.

by President Juan Manuel Santos, offered financial support

:13:29.:13:30.

for de-mining programmes The Telegraph leads with yesterday's

:13:31.:13:32.

historic UK Supreme Court ruling. Only through Parliament can there be

:13:33.:13:57.

a vote on whether the Government can The judgement means the Government

:13:58.:14:00.

cannot begin talks with the EU until MPs and peers

:14:01.:14:10.

give their backing. The Guardian says US

:14:11.:14:14.

President Donald Trump has infuriated environmentalists

:14:15.:14:20.

by signing executive orders that support two controversial

:14:21.:14:21.

oil pipelines. The new Republican President

:14:22.:14:26.

backed the Keystone XL The Arab News reports that Israel

:14:27.:14:28.

has approved the construction of 2,500 settler homes

:14:29.:14:32.

in the occupied West Bank. Prime Minister Benjamin Netanyahu

:14:33.:14:35.

said they had agreed to the move The Independent says close to ?8

:14:36.:14:38.

billion was wiped of the market value of BT, after the UK

:14:39.:14:45.

telecommunications giant said accounting errors in its Italian

:14:46.:14:47.

business are far greater The Guardian business pages say

:14:48.:14:49.

Citigroup is deliberating over which new EU financial

:14:50.:14:56.

centre will relocate The banking giant is in discussion

:14:57.:14:58.

with Ireland, France, Italy, Spain, Germany

:14:59.:15:04.

and the Netherlands. Pretty much the whole of the EU, it

:15:05.:15:11.

seems, write? -- right? And finally, hit Hollywood film

:15:12.:15:18.

musical La La Land has scored Only two other films,

:15:19.:15:22.

Titanic and All about Eve, Joining us is Cornelia Meyer,

:15:23.:15:25.

who is CEO of MRL Corporation, Good morning to you. Morning. Have

:15:26.:15:38.

you seen the La La Land? No. I am not a big movie-goer. This whole

:15:39.:15:45.

Brexit thing, and the Supreme Court ruling, apart from what it means for

:15:46.:15:49.

Brexit, it is also very momentous in terms of saying who has real power

:15:50.:15:53.

in the United Kingdom, and Parliament was told you will be able

:15:54.:16:00.

to vote. Yes, but I think the Supreme Court was quite clear they

:16:01.:16:03.

can't overturn the verdict of the people. It is a matter of process.

:16:04.:16:13.

It is Parliament needs to give its blessing to triggering Article 50.

:16:14.:16:16.

So there is another review of Article 50, but it was not a ruling

:16:17.:16:22.

that said, OK, you can now sort of negate the will of the people, who

:16:23.:16:27.

sadly wanted to leave the EU. The issue, though, is about the law,

:16:28.:16:33.

isn't it? The fact that a lot of EU law is law in the country, domestic

:16:34.:16:37.

law. On the point is that ministers cannot change the law that has been

:16:38.:16:41.

approved in the UK Parliament without the approval, without an act

:16:42.:16:46.

of Parliament. So that was the actual issue, wasn't it? It was an

:16:47.:16:51.

eight issue of law. It was an issue of law and process. The government

:16:52.:16:55.

has said they will make the EU laws our own laws and deal with it later

:16:56.:17:00.

on. What I find interesting is how... One of the things is also,

:17:01.:17:05.

they said Parliament should get a say. They said the government didn't

:17:06.:17:11.

have to go to the devolved powers. So they didn't have to go to

:17:12.:17:15.

Scotland and Wales, and so on, to get the go-ahead to trigger Article

:17:16.:17:21.

50. That was very important as well. Here we come to the fallout. We have

:17:22.:17:27.

Nicola Sturgeon from Scotland, Tim Farron from the Lib Dems and Jeremy

:17:28.:17:32.

Corbyn from the Labour Party and how they will be able to potentially

:17:33.:17:36.

affect how the government goes about negotiating Brexit. Because they

:17:37.:17:42.

have their own ideas. They have their own ideas, and it is good we

:17:43.:17:46.

are a democracy and good we are discussing it out, but we had a

:17:47.:17:53.

referendum. And I was a firm remainer, we had a referendum and

:17:54.:17:57.

said leave. We probably have to leave, and it is a bit disconcerting

:17:58.:18:03.

when certain parts say let's have another referendum. Referenda are

:18:04.:18:06.

not things you can do and do until you get what you want. They are not

:18:07.:18:11.

asking for another referendum, but a route to stay in the single market,

:18:12.:18:16.

do you see what I mean? It is how we leave, but the Lib Dems asked for a

:18:17.:18:20.

second referendum. Some of them even asked for a second referendum. Says

:18:21.:18:25.

a lady from Switzerland, where they have referenda every other day! That

:18:26.:18:29.

is a different story. That is part of the problem, because we don't do

:18:30.:18:33.

referenda here so often. That is why we had to go back to the Supreme

:18:34.:18:38.

Court to get a ruling on how do we now deal with a referendum? OK,

:18:39.:18:43.

Donald Trump. Do you want to take this? We know what the story is, the

:18:44.:18:46.

controversial pipelines. Barack Obama didn't want them, Donald Trump

:18:47.:18:52.

wants them, and also coal and that sort of thing. I think those two

:18:53.:18:57.

pipelines I would not be against those two pipelines. Let's not

:18:58.:19:03.

forget, Barack Obama only nixed the Keystone XL pipeline just before the

:19:04.:19:09.

Paris agreement, so he had a better position. What I am worried about

:19:10.:19:14.

is, some of the things he wants to do may not necessarily be bad

:19:15.:19:17.

things, but the way he goes about it, the way he rams everything

:19:18.:19:22.

through, I have one, and now I can do whatever I want. I am very

:19:23.:19:26.

fearful of a huge backlash against the oil industry and against other

:19:27.:19:32.

energy industries, you know, in the next three to four years, because it

:19:33.:19:38.

is just round down. When you swing the pendulum too much to one side,

:19:39.:19:41.

it usually swings back quite violently. That sort of where I

:19:42.:19:47.

would stand on this. Arab News. Israel approves 2500 new settlement

:19:48.:19:52.

homes in the occupied West Bank. That is their headline, talking

:19:53.:19:55.

about the announcement from Benjamin Netanyahu yesterday. Give us your

:19:56.:20:00.

take on this. It is to do with President Trump. It is to do with

:20:01.:20:04.

President Trump, who is clearly one of the most pro- Israel presidents

:20:05.:20:08.

there ever were. Two of his advisers, his son-in-law and Steve

:20:09.:20:13.

Bannon, are very much pro- Israel, pro- settlement. It is also, as your

:20:14.:20:19.

correspondent said, to do with internal politics in Israel. What it

:20:20.:20:23.

means, it is very bad for everybody who believes in a two state

:20:24.:20:27.

solution, this is very bad for a two state solution. Because it infringes

:20:28.:20:32.

on what is Palestinian territory. And the question is, how do you get

:20:33.:20:39.

to a lasting peace? Most people see a two state solution, including the

:20:40.:20:43.

Secretary General of the UN, C at two state solution as the way to get

:20:44.:20:47.

there. And if that is the objective, this is very bad news. A couple of

:20:48.:20:54.

days before this BT wiping off a brilliant pounds of its share value,

:20:55.:20:59.

I heard that BT broadband's prices are going up. As a BT customer I

:21:00.:21:05.

thought, well, that is the market, but I wonder if it knew it was about

:21:06.:21:10.

to become public? Probably not, but what this shows is that you really

:21:11.:21:15.

need to have, as a company, you need to get your account is clear. And

:21:16.:21:19.

when you have bad news you need to make sure you understand that the

:21:20.:21:22.

bad news is, and you communicated immediately to the market. Because

:21:23.:21:28.

this drip, drip, and then we were wrong, that totally goes against

:21:29.:21:31.

investor confidence. And having 20%... It was a shocking

:21:32.:21:37.

announcement, and the market reacted accordingly. 20% of the market

:21:38.:21:42.

value. And it was, because they first said it was 145 million, and

:21:43.:21:48.

then it was sort of four times more. So I think that is... That shows

:21:49.:21:54.

that when you have bad news, it is very important that you first get

:21:55.:21:57.

your together, and that you communicate effectively. Shall we

:21:58.:22:07.

move on to... You want to look at films? We have to talk about

:22:08.:22:13.

Citigroup, and then the Oscar nominations. Quickly on Citigroup,

:22:14.:22:17.

it will be very interesting to see how Citigroup and other banks,

:22:18.:22:28.

fearful of the passporting rights within the EU, my favourite is

:22:29.:22:35.

Dublin. The Frankfurt people think Frank that is so good but the

:22:36.:22:39.

trouble with Frankfurt and Paris is that the Labour laws are so

:22:40.:22:41.

difficult. Once you have hired someone it is very hard to fire them

:22:42.:22:46.

again and if you have a trading room you need to be able to immediately

:22:47.:22:50.

hire our lot of people and then immediately let go of them.

:22:51.:22:52.

Financial markets are fickle, and your headcount has to reflect that.

:22:53.:22:58.

So Dublin is probably the easiest to do those sorts of things. Do you

:22:59.:23:04.

like musicals? Yes, I do like musicals. Did you ever see Titanic?

:23:05.:23:11.

I did when it came to the small screen. And La La Land has equalled

:23:12.:23:19.

the number of nominations of Titanic and All About Eve. I did enjoy it,

:23:20.:23:25.

but because it has had so much publicity and has all these awards,

:23:26.:23:28.

I expected to be completely wowed, and I wasn't. At as you said, when

:23:29.:23:33.

we had a quick chat before, Hollywood loves Hollywood. It is

:23:34.:23:37.

about Hollywood, so of course they love it. Thank you very much indeed.

:23:38.:23:42.

The film I would choose to take you to is Predator versus Aliens on a

:23:43.:23:45.

massive screen. See you soon. Wednesday will start quite windy

:23:46.:23:54.

across northern and western parts

:23:55.:23:59.