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Speaker 1: Welcome to the Bloomberg p m L Podcast. I'm Pim Fox.

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Speaker 1: Along with my co host Lisa Bramowitz. Each day we

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Speaker 1: bring you the most important, noteworthy, and useful interviews for

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Speaker 1: you and your money, whether you're at the grocery store

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Speaker 1: or the trading floor. Find the Bloomberg p m L

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Speaker 1: Podcast on Apple Podcasts, SoundCloud, and Bloomberg dot Com. The

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Speaker 1: United States loses about seventy billion dollars a year in

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Speaker 1: tax revenues due to the shifting of corporate taxes to

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Speaker 1: tax havens. Here to talk about this whole underworld of

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Speaker 1: secretly stashed money is Jake Bernstein. He's author and reporter

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Speaker 1: and journal it and uh the person who wrote the

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Speaker 1: book Secrecy World Inside the Panama Papers Investigation of Alyssa

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Speaker 1: money networks and the global Elite. He joins us here

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Speaker 1: in our eleven three Oh Studios. Jake, can you give

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Speaker 1: us a sense of just how big this secret world

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Speaker 1: is and who the players are that have stashed their

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Speaker 1: money in it? Lisa, I mean, it's only an estimate,

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Speaker 1: but there are trillions of dollars that throw that flow

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Speaker 1: through this underground economy. I mean, just to give you

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Speaker 1: a taste of it. The U. S. Treasury estimates that

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Speaker 1: three hundred billion dollars is laundered in the United States

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Speaker 1: every year. That's just in the United States. Um. And

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Speaker 1: to give you a taste of of what of what

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Speaker 1: the Panama Papers sort of reaped for tax authorities worldwide.

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Speaker 1: To date, they've recovered half a billion dollars in taxes

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Speaker 1: that were evaded as a result of the Panama Papers leak.

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Speaker 1: What did you learn in doing all of your investigations

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Speaker 1: for the book in terms of the motivation behind all

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Speaker 1: of this, Because there are a lot of ways that

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Speaker 1: you can hide your income, there are many ways in

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Speaker 1: which you can avoid paying taxes. What did you come

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Speaker 1: away with on a thematic basis? That's interesting question because

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Speaker 1: as one most like Fonseca lawyer, this is the Panamanian

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Speaker 1: law firm behind the Panama PAPERSUS. One lawyer said candidly

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Speaker 1: in a private email. He said, of our business is

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Speaker 1: to help our clients legally avoid taxes, and so I

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Speaker 1: think that's the major so impetus for people who use

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Speaker 1: this off shore system. But at the same time it's

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Speaker 1: also being used for criminals, money launders, drug traffickers, ponzi schemers,

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Speaker 1: all those kinds of things that we found in the

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Speaker 1: Panama papers. So how does this work? Ah? Well, I

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Speaker 1: mean there's there's different layers of sophistication, right, I mean,

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Speaker 1: the the simplest way is is you get an anonymous

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Speaker 1: shell company in Panama or the British Virgin Islands or

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Speaker 1: a place like that, and they use that to open

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Speaker 1: a bank account somewhere, maybe in Singapore, maybe in Cyprus,

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Speaker 1: someplace like that, and then you can do sort of business.

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Speaker 1: But true wealthy people are much more sophisticated. They do layering.

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Speaker 1: So you have an anonymous shell company, it'll have fake directors,

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Speaker 1: It'll be attached to a trust, which will be attached

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Speaker 1: to a foundation, and so there's different layers that makes

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Speaker 1: it almost impossible to figure out who's actually behind it.

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Speaker 1: Is there any guidance that you've seen from governments or

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Speaker 1: law enforcement officials in order to deal with this in

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Speaker 1: the future, because I can't imagine that everybody's just shut

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Speaker 1: down their entire system as you've described it. It's probably

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Speaker 1: morphed into something else, perhaps even more sophisticated. You're absolutely right.

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Speaker 1: I mean, this is one of the things that I

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Speaker 1: talked about in my book Secrecy World, and that you

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Speaker 1: can really see through the Panama papers is this is

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Speaker 1: a living organism almost. I mean it evolves over time

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Speaker 1: to to take advantage of different things. And you know,

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Speaker 1: one one avenue is shut off, it moves to another place.

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Speaker 1: So for example, if the b v I tightens up, uh,

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Speaker 1: you know, stuff moves to Singapore, moves to Dubai and

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Speaker 1: uh and it continues on. We talked about who the

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Speaker 1: people are behind this world. It's from rich people all

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Speaker 1: over the world, right, Um, But Russia has played a

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Speaker 1: sort of central role in this universe. Can you explain

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Speaker 1: why that is? Sure? I mean, part of it is

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Speaker 1: the fact that there is you know, the rule of

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Speaker 1: law as tenuous at best in Russia. So people are

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Speaker 1: are eager to to send their money out of the

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Speaker 1: country because they're afraid that someone might take it because

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Speaker 1: the judicial system is rigged, right, So there's major offshore

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Speaker 1: and there's been a lot of instability, you know, and

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Speaker 1: and and prices are fluctuated, and so that's part of

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Speaker 1: the motivation. Also, people want to park their cash someplace

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Speaker 1: where it's safe, oftentimes in real estate here in the

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Speaker 1: United States or in London places like that. But at

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Speaker 1: the same time, the oligarchs and UH and the power

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Speaker 1: centers around Vladimir Putin himself are very adept at using this.

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Speaker 1: A number of them have backgrounds in the KGB and

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Speaker 1: they have been working with the offshore system for decades.

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Speaker 1: They know how to use is it and how to

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Speaker 1: hide their activities? Really well, how prevalent is it among

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Speaker 1: the wealthiest individuals in the United States? I mean, I

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Speaker 1: know that there's been some talk of the current cabinet

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Speaker 1: of the US UH government that it's the wealthiest cabinet

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Speaker 1: ever in the history of of the country. Um, are

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Speaker 1: they tied in it all? Well? There was a second

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Speaker 1: leak after the Panama Papers, called the Paradise Papers, which

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Speaker 1: centered around a law firm in Bermuda called Appleby, and

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Speaker 1: there were more than thirty one thousand Americans found in

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Speaker 1: that league alone. So it's it's quite prevalent, and it

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Speaker 1: is being used by wealthy all over the world, including

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Speaker 1: the United States. The Paradise Papers UH revealed a number

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Speaker 1: of Democratic wealthy donors and Republican wealthy donors, and as

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Speaker 1: you say, a number of Trump cabinet members and donors,

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Speaker 1: including Wilbur Ross. The Secretary of Commerce. Is there an

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Speaker 1: industry uh that is out there actively pursuing this kind

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Speaker 1: of business? I mean yes, it's there's a whole infrastructure

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Speaker 1: behind the secrecy world. And it's bankers, it's lawyers, it's accountants,

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Speaker 1: it's trust managers. Um, it's it's thriving. They have meetings,

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Speaker 1: um and uh, and they're doing well that they do

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Speaker 1: not feel any I mean the more regulatory rules that

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Speaker 1: are overlaid on top of this just means more business

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Speaker 1: for them. That's where I was going with this. So,

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Speaker 1: as a result of increased attention to this very issue,

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Speaker 1: has this is this something that you can fight from

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Speaker 1: the regulatory side or is there a way to I

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Speaker 1: don't know whether there's a way to convince individuals who

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Speaker 1: do this kind of stuff to just stop doing it

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Speaker 1: because it's so complicated. What's so interesting is that what

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Speaker 1: the Panama paper showed was this firm, most Conseca, that

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Speaker 1: had this crazy business model, right. They wanted to be

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Speaker 1: the McDonald's of the off shore system, right, high volume,

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Speaker 1: low cost, and they want to make it available to

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Speaker 1: lots of people, particularly the New Wealth in the developing world.

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Speaker 1: Well that's starting to change now and the bar to

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Speaker 1: entry is getting higher. So really it's for people who

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Speaker 1: who are who are really rich, and you know, not

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Speaker 1: just the merely wealthy, but the uber wealthy, people who

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Speaker 1: have fifty million dollars and more. And these people do

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Speaker 1: not look at the nation state in the same way

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Speaker 1: that most of us do. Right. They have homes in

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Speaker 1: London and New York and in some place sunny, and

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Speaker 1: they have bank accounts in Switzerland and lots of different places,

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Speaker 1: and uh, and it's very hard to sort of appeal

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Speaker 1: to their conscience and say, oh, you know, you should

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Speaker 1: pay attention to the place where you were born or

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Speaker 1: where you make your money. So it's a challenge, but

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Speaker 1: I mean, it's going to require a population that gets

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Speaker 1: awoken to what's happening here. One thing that you said

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Speaker 1: when you walked in is it's sort of interesting how

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Speaker 1: central of a role the US plays in this secret world.

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Speaker 1: Can you just quickly give a sense of what you're

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Speaker 1: talking about? Sure? I mean, one of the people have

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Speaker 1: have have said, and I think it's probably true that

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Speaker 1: the the US is the largest tax haven in the world.

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Speaker 1: Now this strikes many people as crazy, right, They think

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Speaker 1: of tax havens as a sunny place with palm trees

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Speaker 1: and ocean breezes. But in fact, Delaware, Wyoming, Nevada are

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Speaker 1: pumping out tens of thousands, hundreds of thousands of these

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Speaker 1: anonymous shell companies all the time. I mean, the Delaware

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Speaker 1: Public Registry pulls in a billion dollars a year on

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Speaker 1: fees just associated with this business. It's great for them,

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Speaker 1: and the Secretaries of State, led by Delaware have made

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Speaker 1: sure that the rules have always been very favorable to

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Speaker 1: them for this, even though the State Department and Treasury

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Speaker 1: Department have complained bitterly that this system Delaware companies are

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Speaker 1: being used by Russian mafia and transnational gangs. Jacob Bernstein,

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Speaker 1: thank you very much. Author reporter his book Secrecy World

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Speaker 1: Inside the Panama Papers, investigation of elicit money, networks and

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Speaker 1: the global elite. Follow him on Twitter at Jake Underscore

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Speaker 1: Burns Sam Let's turn our attention out to the world

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Speaker 1: of gaming. Brian Edgar is our senior gaming and lodging

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Speaker 1: analysts for Bloomberg Intelligence, and he can be followed on

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Speaker 1: Twitter at Breaking Call and Brian, I understand that the

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Speaker 1: kind of epicenter of the world of gaming might be

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Speaker 1: shifting just slightly to upstate New York, cat slots, a

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Speaker 1: hundred and thirty table games, one point to billion dollars,

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Speaker 1: three hundred and thirty hotel rooms, a golf course, a

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Speaker 1: water park, and it's just five miles from uh Monticello

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Speaker 1: Raceway exactly. No, it's a big year for domestic gaming

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Speaker 1: outside Vegas, with anywhere from five to fifteen casinos opening up.

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Speaker 1: You mentioned the one of the cat's skills. That's a

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Speaker 1: big deal because Genting is a powerful company with a

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Speaker 1: lot of Asian properties. That property will be ninety miles

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Speaker 1: from New York City. There's a cross marketing opportunities. So

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Speaker 1: we are seeing this year a very big and consequential

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Speaker 1: build out of casinos in various states within the Northeast,

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Speaker 1: which is which is a very pronounced development. So what's

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Speaker 1: driving this because typically we think of Las Vegas. Uh,

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Speaker 1: it has the weather, right, I mean, if you've got

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Speaker 1: the snow, it's not exactly as encouraging. They have the

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Speaker 1: laws that allow it. What's driving the Northeast build out?

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Speaker 1: I think it's really tapping new markets there's high population density.

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Speaker 1: You've got the build out and development of the Western

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Speaker 1: New England market where MGM will be the Catskills market.

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Speaker 1: As you mentioned, uh Atlantic City had a monopoly in

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Speaker 1: the northeast up until the that's all changed and now

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Speaker 1: the northeast market is a ten billion dollar five state market,

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Speaker 1: the same size as Las Vegas. So it really it's

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Speaker 1: about where the people are and the opportunity to bring

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Speaker 1: those casinos closer to population centers. Is it likely that

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Speaker 1: this will encourage even more building and as a result

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Speaker 1: we're gonna end up with a glut of gaming opportunities. Well,

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Speaker 1: the one state I would point to where there is

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Speaker 1: an unusual a man of expansion is Pennsylvania. Pennsylvania just

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Speaker 1: in October authorized ten new uh mini casinos to be

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Speaker 1: built throughout the state. That's on top of twelve existing

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Speaker 1: racetrack and stand alone casino So Pennsylvania authorized for tax

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Speaker 1: revenue generation purposes a very large build out. It will

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Speaker 1: include slots and airports and and up to five video

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Speaker 1: gaming devices at truck stops. So Pennsylvania itself is making

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Speaker 1: a big rab for a big move towards expanding gaming

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Speaker 1: in that state. So yes, there's some cities where it's

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Speaker 1: very rapidly development. So what does this all mean for

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Speaker 1: Atlantic Avenue. I mean it has obviously gotten pretty run down.

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Speaker 1: Will it rebuild, will it try to compete, or will

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Speaker 1: this just sort of further deteriorate the outlook Atlantic City.

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Speaker 1: Despite its many problems, it went from twelve casinos to

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Speaker 1: seven after an extensive shakeout. At least now is starting

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Speaker 1: to grow. Same store growth in Atlantic City was up

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Speaker 1: seven percent last year. Um, Burgata uh is still the

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Speaker 1: dominant property owned by MGM that's in the market. Um,

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Speaker 1: we'll see I think we're what you're doing now is

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Speaker 1: this summer you'll see two new casinos in Atlantic City

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Speaker 1: opening up. You've got both the hard Rock Casino and

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Speaker 1: the and the Ocean Ocean Resort will grow the market

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Speaker 1: by almost The real test will be whether or not

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Speaker 1: you've get enough critical massive gaming attractions to bring in

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Speaker 1: enough people to offset the potential adverse effect, competitive effect

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Speaker 1: and other properties. So who's gonna be the big beneficiary?

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Speaker 1: What companies are the ones that really are going to

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Speaker 1: be able to take advantage of this build out? You know,

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Speaker 1: taking a step back and looking at the northeast horizon, generally,

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Speaker 1: MGM has got a big advantage because it has really

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Speaker 1: a corridor of casinos from National Harbor in Maryland to Burgota,

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Speaker 1: Atlantic City and as a September Springfield and Massachusetts. So

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Speaker 1: it really has got a walk on a corridor of

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Speaker 1: powerful properties with a big brand name in the northeast.

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Speaker 1: There are some losers as well, and I can talk

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Speaker 1: about those. Uh in Pennsylvania. Penn National is going to

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Speaker 1: face off against some potential new small casinos in that state.

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Speaker 1: And also penn has a racetrack casino in Massachusetts, Plain

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Speaker 1: Rich Park, which is going to get new competition both

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Speaker 1: from MGM and Springfield and from Tiverton in Rhode Island.

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Speaker 1: So I just sort of backing out a little bit.

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Speaker 1: I just want to get a sense of how gambling

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Speaker 1: revenues have been. I mean, it's been a pretty good economy.

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Speaker 1: Does that usually mean that people cample more? Do they

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Speaker 1: gamble less? Because they actually have jobs that can pay

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Speaker 1: their bills? The good economy helps. But at the same time,

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Speaker 1: we've had a lot more competition. So if I were

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Speaker 1: to characterize US gaming outside of Vegas, it's a slow growth,

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Speaker 1: mature industry, maybe anywhere from you know, minus two percent

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Speaker 1: to plus two percent same store growth. It's growing modestly.

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Speaker 1: It's a relatively mature industry. There are pockets of opportunity,

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Speaker 1: but compared to thirty years ago, Uh, the domestic gaming

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Speaker 1: scene outside Las Vegas in many parts of the country

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Speaker 1: is fairly well built out. Again with these pockets of

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Speaker 1: opportunity like Western New England, for example, online gaming and

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Speaker 1: he thought gaming is right now on an intrastate basis

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Speaker 1: limited uh to Nevada and New Jersey. There's talk about

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Speaker 1: placing and elsewhere. Uh, there's uh there's an online gaming

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Speaker 1: element to what's happening in Pennsylvania, which had this big,

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Speaker 1: massive expansion of gaming. So online gaming may continue to

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Speaker 1: develop state by state intrastate, but for now on a

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Speaker 1: federal interstate basis that's a bit more problematic. Brian Eger,

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Speaker 1: thank you so much for joining us. Brian Egger, senior

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Speaker 1: gaming and lodging analysts for Bloomberg Intelligence. Talking about the

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Speaker 1: gaming industry, there have been many stories about the various

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Speaker 1: method that Uber used that really uh went up to

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Speaker 1: the edges of the law. And there's a phenomenal article

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Speaker 1: on the Bloomberg today. Uber used secret tool for keeping

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Speaker 1: the authorities in the dark. That just builds on some

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Speaker 1: of what we have heard in the past. Joining us

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Speaker 1: now is one of the authors of that article, Olivia's Aleski.

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Speaker 1: She's a technology reporter for Bloomberg. Olivia, what is this

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Speaker 1: secret tool and how is Uber using it? Well, let

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Speaker 1: me give you some contacts. First, U in Uber really

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Speaker 1: started to get a lot of attention from the authorities. Uh.

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Speaker 1: These authorities, especially in the you believe that the company

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Speaker 1: was violating tax laws and labor laws and was really

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Speaker 1: UM sort of playing too hard and too fast in

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Speaker 1: their jurisdictions. So these authorities began raiding Uber's offices looking

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Speaker 1: for evidence. Uber didn't like this, and UM created a

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Speaker 1: tool that it called ripley Um to essentially shut down

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Speaker 1: its offices whenever there was a police rate and shut

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Speaker 1: down all the computers so that police could not collect evidence. Now,

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Speaker 1: this is a tool that I guess ripley is you

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Speaker 1: mentioned a riff on the character that's Sigourney an alien

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Speaker 1: In true Uber form that you know, they would come

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Speaker 1: up with these creative names for their various software programs.

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Speaker 1: We had gray Ball, and in Hell or god View,

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Speaker 1: and justin in Uber fashion, this one was called Ripley

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Speaker 1: after the main character an alien Um because she had

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Speaker 1: a line in the movie where she says, uh, let's

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Speaker 1: nuke the site from orbit. It's the only way to

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Speaker 1: be sure, meaning it's the only way to be sure

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Speaker 1: that the aliens won't come back and get us. Okay,

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Speaker 1: So run with that and maybe use the example of

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Speaker 1: what authorities in Montreal we're looking for and how Ripley works.

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Speaker 1: It's a remote control system. Yeah, let me walk you

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Speaker 1: through it. So essentially, in authorities from the Canadian Tax

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Speaker 1: Bureau showed up at Uber's headquarters in Montreal um seeking

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Speaker 1: tax documents, and essentially a manager in that office paged

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Speaker 1: system this Ripley system, and within a few minutes UM

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Speaker 1: the headquarters in San Francisco shut down all the computers

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Speaker 1: and some phones in Montreal and made these Canadian authorities

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Speaker 1: very frustrated because they went to open you know, they

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Speaker 1: went to uh talk to employees and ask them for records,

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Speaker 1: and those employees couldn't even open their computers because they

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Speaker 1: had been locked out. Is this legal? So that's a

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Speaker 1: very good question. We have had trouble getting an answer

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Speaker 1: on that because there's a real patchwork of different laws abroad,

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Speaker 1: and some people have said it's it's an obstruction of justice.

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Speaker 1: Some people have said it is legal as long as

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Speaker 1: it's done in the right way, and you have to

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Speaker 1: have uh, you know, there are all sorts of various

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Speaker 1: complicated conversations, but you know, that'll be for somebody else

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Speaker 1: to determine. What we do understand is that employees at

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Speaker 1: Uber felt very uncomfortable with it, and um that there

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Speaker 1: were a lot of discussions about, you know, how to

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Speaker 1: keep this quiet, how to keep it secret. So they

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Speaker 1: were obviously concerned about something olivia physically. How did they

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Speaker 1: engage this tool? In other words, how did they find

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Speaker 1: out that there was going to be some kind of

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Speaker 1: investigation and automatically shut down all of the computers? Well,

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Speaker 1: I think, you know, I don't want to go into

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Speaker 1: whether or not they knew the police were coming or

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Speaker 1: the authorities were coming, because that can be seen as

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Speaker 1: a violation of Foreign corpt Practices Act. And we just

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Speaker 1: don't know if they did that. UM. We do understand

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Speaker 1: that they were expecting raids in in their offices all

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Speaker 1: over the world because they knew they were a target

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Speaker 1: because they were disruptive. UM. So they designed the system

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Speaker 1: to work in any office abroad. UM. And essentially the

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Speaker 1: employee in the office, the manager or some boy who

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Speaker 1: had been trained to use it, would page a number

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Speaker 1: on their phone UM. It would route through this program Twilio,

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Speaker 1: and then it would go to headquarters UM where they

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Speaker 1: it would initiate a program to just log everybody off

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Speaker 1: the computers or UM. Eventually they developed a program where

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Speaker 1: they could keep the computers on, but they could hide

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Speaker 1: information UM that perhaps the authorities were collecting. Olivia, what

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Speaker 1: have you heard from either Joe Sullivan or Sally you

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Speaker 1: These were both the heads of the departments, the security

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Speaker 1: and legal departments, respectively at UBER when this has taken place. Yeah,

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Speaker 1: we haven't heard back from them. UM. Both of them

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Speaker 1: did not respond to our requests for comment. UM Uber's

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Speaker 1: UM communications department has been very active in managing this

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Speaker 1: story with us. We've been on the phone with them

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Speaker 1: many times the past week, and I'm really trying to

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Speaker 1: understand the program. And they feel very much that that

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Speaker 1: this was in their rights and that they UM you know, essentially,

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Speaker 1: they feel that they were doing what was in the

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Speaker 1: best interests of their customers, which was to protect data,

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Speaker 1: and that these authorities in other countries were on fishing expeditions.

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Speaker 1: They feel that they were the warrants that they were

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Speaker 1: collecting information for were too broad and so that they

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Speaker 1: had the right to um request, you know, to lock

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Speaker 1: everything down and say come back to us with something

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Speaker 1: that's more specific. Olivia, real quick, do you know of

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Speaker 1: any other company out there that has done something similar

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Speaker 1: to this? So it's interesting. That was another point that

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Speaker 1: Uber brought up. They said, everybody does this. You know

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Speaker 1: that this is common, that everybody has a lockdown button,

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Speaker 1: and you know, you should even look at Bloomberg they

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Speaker 1: may have this. What we found is lots of companies

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Speaker 1: have a way to shut down computers for an unexpected

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Speaker 1: visitor and you know, maybe there's um, a competitor breaks in,

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Speaker 1: or there's a situation where um, you know, there's even

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Speaker 1: a terrorist attack and they need to keep their information

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Speaker 1: all locked up. But we have not found a situation

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Speaker 1: where it was used so frequently, um you know, dozens

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Speaker 1: of times, and where it um was pervasive in offices

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Speaker 1: around the world. We've got to leave it there. Olivia Zeleski,

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Speaker 1: technology reporter for Bloomberg. Thanks very much. Trade talks they

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Speaker 1: are heating up again this year, and yesterday there is

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Speaker 1: news that Canada believes that there is a much greater

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Speaker 1: likelihood that the US will exit the NAFTA, the North

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Speaker 1: American Free Trade Agreement in the upcoming months. Here to

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Speaker 1: talk about that is Caitlin and Webber, government analysts covering

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Speaker 1: US trade policy for Bloomberg Intelligence. Since she comes to

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Speaker 1: us from our Bloomberg studio in Washington, d C. Caitlin,

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Speaker 1: can you just lay out what we found out yesterday

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Speaker 1: and if there really is a much greater likelihood at

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Speaker 1: this point that the US will withdraw from NAFTA. Yeah, So,

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Speaker 1: yesterday news broke that Canada, um, you know, really actually

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Speaker 1: came out and and sort of is reflecting a lot

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Speaker 1: of the pessimism we're hearing from a lot of the

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Speaker 1: company's industries that rely on NAFTA. There's been a lot

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Speaker 1: of sort of doom and gloom around the NAPTA talks

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Speaker 1: so far. Um, we're on the sixth round and there's

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Speaker 1: been no chapters closed so far, and typically you see

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Speaker 1: that after a couple of rounds. Um, So I think

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Speaker 1: Canada coming out yesterday and saying, um, you know, even

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Speaker 1: though they sort of walked that back a bit later,

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Speaker 1: that there's an increasing likelihood the Trump administration may attempt

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Speaker 1: to withdraw from the deal. UM. You know, I think

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Speaker 1: that is a growing sort of recognition of increasing reality. Caitlyn,

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Speaker 1: I keep thinking that we're gonna end up sending you

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Speaker 1: to Detroit to cover this story because NAFTA and the

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Speaker 1: automobile industry they are linked. And I'm wondering if you

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Speaker 1: could tell us what are some of the issues that

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Speaker 1: contentious demands that the US has when it comes to

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Speaker 1: automotive content. Yeah, so the Trump administration has really said

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Speaker 1: that the auto the auto industry is why they came

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Speaker 1: to the table. Really, that's their number one issue that

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Speaker 1: they want to see a lot of change on and

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Speaker 1: that really centers around content rules. So currently too, in

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Speaker 1: order to qualify for duty free status under the deal,

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Speaker 1: UM a vehicle has to be a little over half

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Speaker 1: UM NAFTA UM content in order to qualify for getting

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Speaker 1: tariffs reduced. Now, the Trump administration wants to significantly increase that,

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Speaker 1: including solely US value. Canada and Mexico for their parts,

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Speaker 1: say that proposal is a non starter and to this

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Speaker 1: point haven't even tabled um sort of counter counters to

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Speaker 1: that yet. So yeah, the content rule is really, um

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Speaker 1: the biggest issue there. The Trump administration wants thanks that

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Speaker 1: by making that more stringent, they'll be able to cut

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Speaker 1: down on what they see as cheaper parts coming in

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Speaker 1: from Asia from other places, as um, getting into cars

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Speaker 1: and qualifying for napt TO benefits that really shouldn't Caitlin.

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Speaker 1: The response from the stock market was pretty decisive. GM shares,

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Speaker 1: for example, declining nearly two point four percent on the

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Speaker 1: news and escalating to clients with Canada's sort of reflection

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Speaker 1: of the pessimism that you're hearing from a lot of companies.

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Speaker 1: I'm just wondering, do you think that there will be

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Speaker 1: any recognition from people in the Trump administration or whoever

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Speaker 1: is negotiating the NAFTA arrangement that this could potentially be

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Speaker 1: detrimental to the companies should the naftogram, should the US

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Speaker 1: pull out. Yeah. Absolutely, I think that they're very conscious

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Speaker 1: of that. I think that that you know, that in particular,

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Speaker 1: will be the number one thing that if the Trump

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Speaker 1: administration does, um, you know, agree to continue negotiating even

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Speaker 1: after this sixth round, it's because of of a stepped

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Speaker 1: up lobbying effort from the US Chamber of Commerce from companies.

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Speaker 1: Donald Trump is obviously, um you know, very interested in

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Speaker 1: the stock market and um, you know, taking credit for

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Speaker 1: UM for gains there and so anything you know, tying

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Speaker 1: potential UM losses there to to naft uncertainty I think

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Speaker 1: will be very very powerful and influential. Indeed, well, Caitlin,

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Speaker 1: we know that the manufacture of light vehicles in Canada

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Speaker 1: and in Mexico is linked to their UH, their sale

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Speaker 1: in the United States, but also it's a it's a

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Speaker 1: global market. UM. Is there any understanding that if indeed

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Speaker 1: they force the automakers to produce cars in the United States,

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Speaker 1: that's going to hurt those companies in their global ambitions

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Speaker 1: as well. Yeah, absolutely, because you know, if the US

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Speaker 1: does exit from NAFTA, not only would US tariffs go up,

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Speaker 1: but but tariffs in Canada and Mexico would would as well,

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Speaker 1: and the tariffs there are much higher, and those are

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Speaker 1: very important markets for US automakers, UM. You know, and

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Speaker 1: there's also increasingly talk about US automakers when they're coming

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Speaker 1: up with their contingency plans for what to do if

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Speaker 1: NAFTA goes away, thinking about UM manufacturing more in Asia.

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Speaker 1: So you know, it's it's very uncertain whether or not

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Speaker 1: the Trump administration, may you know, achieve their goal of

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Speaker 1: increasing US manufacturing if they do sort of uh tinker

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Speaker 1: with this deal so much that um it shifts these

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Speaker 1: supply chains that have really become integrated across the North

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Speaker 1: American economy. Caitlin, can you give us a sense of

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Speaker 1: which industries would be most affected. So we've talked a

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Speaker 1: lot about automakers, and you know, they're probably number one. UM.

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Speaker 1: Number two would be the US energy sector. While there

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Speaker 1: there isn't a concern there as much about terrorists being

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Speaker 1: reimposed because tariffs are are normally um, you know, much

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Speaker 1: lower on energy products. The concern there is that Mexico

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Speaker 1: in particular has become a very important market for US

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Speaker 1: natural gas and oil exporters, and so if the US

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Speaker 1: exited from NAFTA, we would really likely see a contraction

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Speaker 1: in the Mexico economy. So always the list demand there

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Speaker 1: for electricity, for oil. Um. There's also a number of um,

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Speaker 1: pretty thorny kind of red tape that would that NAPTA

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Speaker 1: does away with now in terms of gas exports and

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Speaker 1: other things that um you know, if the deal went away,

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Speaker 1: that it would just make it much much more difficult

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Speaker 1: for that industry to to do um you know, to

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Speaker 1: do business to do their do their exports um. And

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Speaker 1: then I think the third I would mention retailers you

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Speaker 1: know obviously um rely heavily on the duty free benefits

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Speaker 1: under NAPTA, which are fully UM in place this time,

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Speaker 1: and so um you know, retailers and also transportation companies UM,

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Speaker 1: rail companies, UM, you know, trucking companies that do a

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Speaker 1: lot of business bringing those consumer products back and forth.

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Speaker 1: I want to thank you very much for being with us.

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Speaker 1: Caitlin Weber is a government analyst for US trade policy

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Speaker 1: for Bloomberg Intelligence, speaking about the North American Free Trade

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Speaker 1: Agreement to Canada, then preparing new talks related to naphta's provisions, focusing,

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Speaker 1: as Catalin said, on perhaps the automobile sector. Uh. In fact,

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Speaker 1: the Canadian Foreign Minister, Christie you Freeland was speaking to

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Speaker 1: reporters outside a cabinet meeting today saying that the country

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Speaker 1: Canada would bring new ideas for unconventional US proposals, but

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Speaker 1: she didn't actually give any details. Thanks for listening to

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Speaker 1: the Bloomberg P and L podcast. You can subscribe and

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00:28:20,600 --> 00:28:24,560
Speaker 1: listen to interviews at Apple Podcasts, SoundCloud, or whatever podcast

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00:28:24,640 --> 00:28:28,120
Speaker 1: platform you prefer. I'm Pim Fox I'm on Twitter at

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Speaker 1: pim Fox. I'm on Twitter at Lisa Abramo. It's one

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00:28:31,880 --> 00:28:34,600
Speaker 1: before the podcast. You can always catch us worldwide on

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Speaker 1: Bloomberg Radio