Japan and Brazil are manipulating their currencies in response to China’s tactics, rather than taking the countervailing duty approach of the recent House passed bill HR 2387.

Japan and Brazil have taken measures recently to devalue their currencies, or at least prevent them from appreciating further against the Chinese currency, the renminbi.

The House passed bill would allow countervailing duties against any country that manipulates currency, not just China.  A good approach to neutralize the export subsidy advantage they try to achieve through cheating.

There is reference, in that linked article, to the fact that the U.S., under Reagan, has acted before against currency manipulation.

Of course, many countries have manipulated their currencies before — the United States reached a political accord with Japan in the Reagan administration to do exactly that, in an effort to reduce a yawning trade deficit.

The paragraph says there was an “effort to reduce” the trade deficit.  It does not say that the effort succeeded.  We balanced trade again by around 1990.  Very direct and substantial cause and effect.

That forced/negotiated revaluation was 90% as to the Japanese yen.  90%.  A big number.

Europe is more worried about the U.S./China trade imbalance than is our own government.

The
dollar is falling.  Old, but continuing news. You can’t keep a
strong dollar with record trade deficits.  This is not
complex.  It is simple.

The European members of the Group of Seven (G-7) leading
industrial nations are debating whether to publicly acknowledge
concerns about the weak dollar.  A Wall Street Journal article,
"G-7 Debates Whether to Discuss Dollar," has this, but I can’t link to
the subscription-only piece. Notable quotes from the piece follow after "read more."

"It is true that all Europeans are worried about the strong euro,
but it is unlikely that we will see any mention of it in the G7
statement," one of the people close to the situation said.

By contrast, there appears to be early consensus that the Chinese yuan will receive a mention in the G-7 communique, they said.

European Union Monetary Affairs Commissioner Joaquin Almunia said:

"We are preoccupied with the value of the dollar… One can’t
expect us to remain passive when it comes to paying for the imbalances"
of trade between the U.S. and China.

But our government is holding the driving wheel steady, as we approach the cliff:

U.S. Treasury Secretary "Henry Paulson is a strong
supporter of market fundamentals and believes currency levels should be
set by markets," one of the people said. "Therefore the U.S. is likely
to resist any calls to put the fall in the dollar in the G-7 final
communique, unless the fall becomes so disorderly that it triggers
inflation risks for the U.S. economy."

I like market fundamentals, too, Henry.  Let us, then, get rid of
Chinese and Japanese currency manipulation.  Deal or no deal?

China and other Southeast Asian countries agreed to increase product standards. 
Good.  Less people will die.  That’s what the headline of the
linked article says.  But what does "increase" mean?  And
what is a "product standard?" 

The announcement came from a multilateral meeting of Southeast Asian
countries.  Why do they need multilateral meetings to do
this?  They should do it on their own.  Indeed China is
famous for saying "its an internal matter" when asked to do something.

Very
specific words get very squishy meanings among government folks,
especially when you are translating Mandarin Chinese to English.

“The ministers agreed to urge relevant government agencies to
properly deal with product quality-related cases by strengthening
consultations with the view to protecting the safety and health of
consumers while not impeding bilateral trade and economic cooperation,”
it said. (emphasis mine).

"Urge."  Southeast Asian governments are either communist or capitalist dictatorships.  They don’t "urge" anything.

They
will "urge" their agencies to "strengthen consultations." 
OK.  What consultations and why?  "With a view" to protecting
safety.   BUT "not impeding bilateral trade." 
Ahh.  Don’t interfere with trade, even if a bit of antifreeze
chemicals are in a few shiploads of toothpaste. 

And their heart really does not seem to be in it.  Consider this comment, in the same article.

China’s commerce minister, Bo Xilai, defended the quality of
Chinese goods, saying 99 percent of his country’s exports to the United
States and Japan passed quality controls and adhered to global quality
standards. 

Hmmm.  Recall that "99%" is about the percentage of Chinese imports that our FDA does NOT inspect. 

Do
you know anybody that speaks many words but says nothing?  That
seems to be what happened in the multi-lateral government
meeting.  But it hit the New York Times, with a headline ("China agrees to raise product standards") that is misleading.

In Monday’s Wall Street Journal (subscription
required) suggests that Japan
feels increasingly isolated by a trade agreement recently penned with Korea. As the article
points out, Fast Track is dead, but Japan’s
aging population has it staring down the double-barrel of expensive retirement
programs and expensive food, grown on small farms that average only 3.7 acres
compared to 494 acres here in the US.

Even though Congress might choose to reject parts of the
Korean agreement, removal of tariffs on Korean made cars would place
Japan at a disadvantage in the 6.8 trillion yen Japan to US car market.
But cars are only part of the massive trade that takes place between here and Asia.

A free trade agreement with Japan would have broader
consequences than cars. So far, Japan
has shunned corporate ownership of farms. With more pressure to compete on
multiple fronts, Japan may
be forced to alter its stance on agriculture and become more competitive with America
by allowing larger corporate farms.

Funny, they’ve been whipping the socks off of US car makers
for years, now they suddenly want to emulate USDA by putting an end to small
farms. Mind you, that’s the same USDA that has been sending money to some of
the deepest agricultural pockets in the nation. If big is so much more
efficient, why then does USDA and Congress feel they need to subsidize big?

One wonders, when looking at the current situation in the
oil markets, what would happen if the world had two or three thousand oil
companies drilling for and refining crude oil?

Efficiency of corporations comes not necessarily from production,
but from their ability to sell themselves and buy the votes they need to win
concessions.

Concentration of resources is always to be avoided, in wars, in
peace, and in trade.

An Asian Tag Team may be working against US efforts to turn
the tide on Chinese imports. What’s good for China,
it seems, is good for Japan.
By allowing the Yen to serve as proxy for the Yuan, Japanese exports to China
rise while helping to keep the Yuan cheap in dollar terms.

And what is good for America? Why a rising dollar of
course. The bounding buck is a sign that interest rates may not rise in
response to a failing economy, a sure sign that Asian imports will continue
unabated.

But is that really good for America?

Beijing, not Chinese business,
but Chinese government, is planning to invest part of its trade surplus largesse
in one of America’s
premier buy-out funds, Blackstone, to the tune of three billion dollars. Don’t
worry, there’s more where that came from, China holds over $1.3 trillion in
surplus dollars.  But that’s not all your
trade dollar buys, because China
is also about to begin space exploration in a big way. Having already proved its technological prowess by destroying a satellite in earth orbit, Chinese influence is
seen as being enhanced not only by having nuclear weapons, but by inhabiting
the high ground of outer space.

Heard enough yet? Well this last article should put the
icing on the cake, as Microsoft is seeking to partner with the premier pirate
of proprietary technology. Yes, Microsoft is even offering to help China translate
many of its Windows programs into Chinese with jointly designed, open source
software.

Meanwhile, China
jawbones while Washington
listens.