Reuters, “Toyota wants German bank help extended to leasing“:

FRANKFURT, Nov 13 (Reuters) - The German government should extend its rescue package for financial institutions holding banking licences to those that lease vehicles, the head of Toyota Motor Corp’s German banking unit said…”The bailout hardly helps the auto industry,” said Peter Pollhammer, deputy head of the German association for consumer lending that represents carmakers’ banking arms.

AFP, “Ford asks German government for help“:

BERLIN: US automaker Ford has asked Berlin for aid but the government is divided on how to help Germany’s key but troubled industrial sector. After General Motors’ German subsidiary Opel, a second US group implanted in Germany has thus turned to Chancellor Angela Merkel for aid. …”We sent a letter on the same day as Opel,” a Ford spokesman told the Sueddeutsche Zeiting newspaper yesterday. Both auto makers have pressed the government for tax measures that would boost the sale of new cars, but neither has received a reponse for the time being, the report said.

Ward’s Auto (subscription), “Oz Government Says Won’t Turn Back on Auto Industry“:

We’re there to stand shoulder-to-shoulder with the industry because it’s absolutely at the backbone of Australian manufacturing,” says Industry Minister Kim Carr.

The National Post (Canada), editorial, “If a bailout is necessary, make sure it works“:

[In] an ideal world, we would oppose the bailout packages for automakers purportedly coming soon from Ottawa and Washington. Did taxpayers approve labour contracts with unionized workers that make it uneconomic for the North American Big Three manufacturers to make cars? Did ordinary Canadians fail to retool auto plants to produce the smaller, more fuel efficient vehicles consumers are demanding? The answers, of course, are no. So why then should taxpayers save the backsides of those who did?

The trouble is, we do not live in an ideal world. To create the conditions that would encourage market-driven corporate governance reforms would take years of political and voter education. Politicians, workers and taxpayers would have to be shown how the short-term economic pain caused by permitting large companies to go under is actually beneficial to long-term corporate and individual success. Laws governing director and investor responsibilities would have to be redrafted. And citizens would have to be disabused of the myth they hold about the effectiveness of government regulators to prevent catastrophes. The Sarbanes-Oxley legislation — considered the most comprehensive regulations in history on corporate transparency and stock trading — introduced in the United States after the collapse of Enron, Worldcom and others, did little to prevent the current crisis while at the same time adding billions to the cost of doing business in North America.

But such a change of legislation and of mindset would take a generation. In the mean time, the auto industry accounts for just under 10% of our entire economy. According to Statistics Canada, near 20¢ of every retail dollar is spent on new cars. That’s more than on food, clothing, vacations and electronics. Well over half a million Canadians are employed by car manufacturers, parts makers, dealerships and service stations.

Read the whole thing.

The U.S.-Colombia Free Trade Agreement apparently came up in the meeting between President-Elect Obama and President Bush, and now the political chatterers are arguing about who’s spinning what. ¡Tonterías!

The real, fundamental issue is whether Congress should approve the agreement. Reacting to this week’s discussions, editorialists again make the case for the economic and foreign policy benefits of passing the U.S.-Colombia Free Trade Agreement.

Washington Post, “Pass the Pact“:

The main economic effect of the trade agreement would be to enable U.S. producers — automakers included — to export to Colombia tariff-free. This would simply level the playing field, because 90 percent of Colombian goods already arrive in the United States tariff-free under temporary trade preferences that Congress recently renewed. With U.S. goods exports to Colombia totaling over $8 billion per year, the pact offers a nifty dose of stimulus for U.S. businesses and workers. While America stalls, Europe moves: The European Commission announced yesterday that it wants to start free-trade talks with Bogota. Why would Democrats need any deals or inducements to pass a measure that would promote U.S. foreign policy interests and create American jobs?

Los Angeles Times, “Seal the deal on Colombian trade pact“:

Resistance to the pact by labor unions and human rights organizations, both here and in Colombia, remains stiff. And with an incoming Democratic administration, the deal faces significant new obstacles. But the gamesmanship between Democrats and Republicans, unions and rights groups should not obscure one fact: The agreement is good for Colombia and good for the United States.

The pact would balance and normalize a trade relationship that is now one-way. Colombia has almost unfettered access to U.S. markets — 91% of its goods enter duty free — but U.S. products face tariffs of up to 35%. Each Caterpillar truck sold in Colombia, for example, is taxed more than $200,000. This is a hindrance to prosperity for both countries. Currently, about 9,000 U.S. businesses export to Colombia, and were this deal passed, that number would skyrocket.

Diario Las Americas, “Colombia Deserves the Ratification of the Free Trade Agreement“:

It is very difficult to understand how it is possible that the U.S. Congress and its Democratic majority have maintained a strong resistance against ratifying the Free Trade Agreement with Colombia. And it is difficult to understand this position from the fundamental point of view that Colombia, as a country and as a government, is an ally of the American government and people. The pretext that there are human rights violations in Colombia and that there is not enough protection for the lives of the trade unionists cannot stand an analysis in view of what has been happening in that country for the last several years with a President who observes an exemplary democratic conduct.

Wall Street Journal, “Obama’s Lame Duck Opportunity“:

Mr. Obama ran with union backing but has given conflicting signals about his trade priorities. He says he wants to unilaterally rewrite Nafta if Mexico and Canada decline to go along, yet he says he’s not a protectionist. Mr. Obama has also said that “now is a good time for us to set politics aside for a while and think practically about what will actually work to move the economy forward . . .” With the global economy in recession, and investors staging a capital strike, an Obama nod to approving the Colombian FTA would send a signal of reassurance around the world.

From The Washington Post:

LONDON, Nov. 10 — Prime Minister Gordon Brown on Monday warned that trade protectionism would worsen the global financial crisis, a remark widely perceived as aimed at U.S. President-elect Barack Obama.

In a speech lauding the “global power of nations working together,” Brown called for “rejection of beggar-thy-neighbor protectionism that has been a feature in transforming past crises into deep recessions.”

You can read the prime minister’s speech here.

Rahm Emanuel walking the darkened streets of Chicago is the lead photo of the weekend Frankfurter Allgemeine Zeitung, the major business-oriented general circulation newspaper in Germany. (Think Wall Street Journal once Murdoch gets done broadening its appeal.) Caption:

The face of the new government: Rahm Emanuel is a triathelete, but he’ll also have to prove his political conditioning as the designated chief of staff for a President Barack Obama. In the future he won’t only be moving in the darkened corners of Chicago but also in the White House, trying to control the “machine.” Emanuel has a reputation as an enforcer, which may not necessarily please his future underlings. But his first message to political opponents was one of reconciliation; he spoke of “unity.”

The German editors were surely aware of the historical resonance of putting a successful Jewish political figure on the front page of its newspaper along with the words “reconciliation” and “unity,” just as the Germans marked the 70th anniversary of Kristallnacht.

The headline of the accompanying article, by the way, was “The Enforcer.”

The Wall Street Journal’s John Fund wrote approvingly of Emanuel’s appointment in “Political Diary,” suggesting he would resist the push to have a new Obama Administration let Congressional Democrats set the political agenda, a move that crippled the Clinton Administration in 1993.

The subsequent lurch to the left did incalculable damage to his presidency.

That may be one reason why Mr. Obama has chosen Rahm Emanuel, a respected member of the Congressional leadership, to become his new White House Chief of Staff. Mr. Emanuel has a reputation as a tough partisan, but he has also exhibited impatience with left-wing members of his party who have overly ambitious ideological agendas. A likely first assignment for Mr. Emanuel will be reminding House Speaker Nancy Pelosi and Senate Majority Leader Harry Reid that, after only two years of Democratic control, Congress already has a lower approval rating than even President Bush’s.

To the extent Mr. Obama becomes a successful president, it will be because he remains his own man and trusts the brilliant political instincts that have gotten him this far, this fast.

As a member of Congress, Rep. Emanuel voted consistently with the Democratic position on key issues identified by the NAM (that is, usually but not exclusively against the NAM). But there’s still much for the business community to like in his voting record, including his support for free trade agreements with Peru, Chile and Singapore. He also showed himself willing to buck the trial lawyers, voting for the Class Action Fairness Act and limits on frivolous lawsuits against the food industry. (See “Rahm Emanuel, tort reformer” at Point of Law.com).

Larry Kudlow surveys the names being mentioned as top economic officials in an Obama administration. Interesting speculation about economic direction and reassuring markets, even more interesting after another rough day on Wall Street.

Some talk of card check, cap-and-trade, etc…

From Reuters, “WTO’s Lamy presses US manufacturers on Doha deal“:

WASHINGTON (Reuters) - World Trade Organization Director General Pascal Lamy urged U.S. manufacturers demanding deeper tariff cuts in world trade talks on Friday to consider the billions of dollars of savings that would come from proposals already on the table.

“We understand how important it is to have U.S. companies favorably disposed to the Doha round, and the director general made his case,” Keith Rockwell, a spokesman for the Geneva-based World Trade Organization, told Reuters.

Reuters’ diligent Doug Palmer reports that Lamy met with the NAM, making the case that the tariff concessions already on the table are substantial — the equivalent of an annual tax cut of $7 billion to $8 billion on U.s. exports. The NAM’s Frank Vargo outlined manufacturers’ objections, according to Reuters:

In too many cases, U.S. exporters would get no new market access because the bound tariff cuts are not deep enough to affect the applied tariff, said Frank Vargo, vice president at the National Association of Manufacturers.

“The new market access we get from the formula is inadequate. It’s got to be bolstered by good participation in sectorals,” Vargo said, even after Lamy presented figures showing 86 percent of India’s applied tariffs would be cut by an average of 14 percent under the proposed formula.

For more on the NAM’s position on the Doha round, please see Vargo’s commentary from the last round of WTO negotiations in Geneva — and the NAM’s position papers on the WTO negotiations.

WTO Director General Pascal Lamy’s speech on the financial crisis and trade (see here and here) provides the opportunity to cite a case of how the Smoot-Hawley tariffs did damage to one specific segment of the economy, in this case, egg producers. Lamy provides the big picture, and Don Boudreaux at Cafe Hayek focuses in, a post from June 17, 2007:

Protectionism doesn’t achieve even its own nonsense goal of increasing  exports.  A revealing, specific example involves eggs.  Smoot-Hawley raised the tariff on egg imports into the U.S. from eight cents to ten cents per dozen.  This higher tariff caused eggs imports from Canada to fall by 40 percent.  In response, Canadian authorities increased the tariff on U.S. eggs exported to Canada; this tariff went from three cents per dozen to ten cents per dozen.  The result was that American eggs exports to Canada fell by 98 percent – from 11 million annually just before Smoot-Hawley to a mere 200,000.   (I found this tidbit in Jeffry Friedan’s 2006 book Globalization.)

Tariffs on imports to the United States caused related exports from the United States to plunge 98 percent! Astonishing. Instructive.

WTO Director General Pascal Lamy’s speech Wednesday at the University of California Berkeley is an outstanding survey of the value of global trade, even more valuable when the financial crisis is shaking global economies and public confidence. Facts, figures, history and the proper emphasis on multilateral trade negotiations (with only a passing nod to the shibboleth of global climate regulation, a guaranteed economy-killer):

From “Restoring citizens’ confidence in trade requires sound domestic policies“:

Among the most disastrous political decisions taken in the wake of the Crash of 1929 was the passage of the Smoot-Hawley Act, signed into law on June 17, 1930. The idea of this ill-conceived legislation was to protect US farmers - a notion popular in many WTO member governments to this day. As farmers pressed to have greater protection from imports, many other industries joined the queue of lobbyists and as they often do, these lobbyists succeeded in gaining protection for their industries. Duties of more than 60% were slapped on 3,200 imported products, lifting overall average tariffs by about 20%. If the idea was to curb imports, Smoot-Hawley was a fantastic success - by 1933 imports had fallen from $4.4 billion to $1.3 billion while exports fell 69% over that same period to $1.6 billion. But there was an unintended consequence to Smoot-Hawley - its contribution to an economic depression. Smoot-Hawley touched off a domino effect of retaliation and counter-retaliation among trading partners which provoked a severe contraction of international trade, depressed growth and rising unemployment around the industrial world. From 1930 to 1932 the unemployment rate soared from 8.7% to 23.6% and remained at more than 14% for the remainder of the decade.

How did the collapse of trade contribute to this? One reason is that contrary to the conventional wisdom, imports are good for you. A great many Americans were then and are today employed in sectors linked to imports. Parts needed for manufacturing became dearer if they could be found at all. The soaring jobless rate was also a product of the response from other countries which were anything but pleased to be the target of trade sanctions. Predictably, these countries retaliated. US exports to Europe, for instance, declined from $2.3 billion in 1929 to $784 million in 1932. Globally trade contracted by 60% between 1929 and 1932.

If there’s anything good to be found in the financial crisis, it’s that it encourages a study of history, a study that study destroys the arguments for protectionism when economies fall into recession or depression.

Reuters, “Hopes fading for Doha breakthrough: Canadian aide“:

WASHINGTON (Reuters) - Prospects are dimming for a breakthrough in world trade talks before President George W. Bush leaves office in January, but a meeting of world leaders next month might be able to restore some momentum, a Canadian trade official said on Thursday.

“It’s all moving a little too slowly,” said Don Stephenson, a Canadian assistant deputy trade minister who stepped down in August as chairman of the manufactured goods negotiations in the World Trade Organization talks. “The hope is frankly beginning to fade.”

WTO Director Pascal Lamy has been in Washington Thursday and today, exploring possibilities. In a speech Wednesday at Berkeley, he restated the compelling case for a completed Doha round.

We know the benefits that will accrue from a successful Doha Round. We understand as well the opportunity costs of no deal. Failure to conclude the Round will not mean the demise of the WTO. We will still administer rules agreed over 60 years of negotiations. We will still adjudicate commercial disputes among members. We will still engage in monitoring and surveillance of government trade policies to ensure the most transparent trading system possible. But be in no doubt that such an outcome would hurt the credibility of our organization and the multilateral negotiating process that we oversee. Governments have said they will seek recourse to their trade problems through the dispute settlement system if they cannot negotiate rule changes. In my view, rule making through the judiciary rather than the legislature, as it were, is something which would not be sustainable.

Governments will also turn to regional or bilateral agreements rather than continue along the admittedly more difficult multilateral path. Such agreements have their place. I, myself, have negotiated a few of them in a previous life. But they are no substitute for a Doha deal. There are 430 regional and bilateral agreements in place today, 300 of these have been struck in the last eight years, and I can assure you that not one of them addresses the problem of excessive, trade-distorting farm subsidies. Not one of them will reduce the fisheries subsidies that threaten to empty our oceans. None will lead to the creation of global rules to facilitate trade or open globally trade in services.

Canada negotiates a trade deal with the European Union. China signs a free trade agreement with Singapore. Australia says the ASEAN-Australia-New Zealand Free Trade Agreement negotiations are its most comprehensive trade talks ever.

The EU and South Korea are also talking, the Asian Wall Street Journal observed today in an editorial, “Trading Partners.”

On the sidelines of a Europe-Asia summit this weekend, President Lee Myung-bak and European leaders Nicolas Sarkozy and Jose Manuel Barroso affirmed their commitment to finalizing a free-trade agreement this year. Negotiators still face hurdles on issues like country-of-origin rules and car imports, but both sides are optimistic about reaching a deal.

The EU is already Korea’s second-largest export destination after China, and in overall terms the EU and U.S. are almost neck-and-neck. EU-Korea trade in goods was valued at 64 billion euros ($80 billion) last year, compared to $82 billion in U.S.-Korea trade.

The irony is that Europeans started negotiating with the Koreans in May 2007 not least because the EU was afraid of losing out as Korea signed a trade pact with America. Yet that U.S. agreement is stalled in Congress as Democrats bow to their union supporters.

We’ve made the same point before (here). The United States can choose to abandon tariff-lowering negotiations unilaterally if it wants, but other countries will continue to negotiate and close deals that leave U.S. companies, manufacturers and farmers increasingly uncompetitive.