China signed a pact yesterday to prohibit the use of lead paint on toys exported to the U.S.  A big concession, yes?  No.

Chinese law is already stricter than ours on lead paint.  So yesterday's deal was like signing a pact saying the law of gravity will govern the land.

Trade problems with China are not unknown in places other than the US. For instance, take the case of the pirated BMW.

Long known for engineering excellence, the BMW is an upscale automotive product of a European carmaker.

But the piracy doesn't stop with the BMW X5. Daimler Chrysler took it's own hit when the Chinese copied one of their products, the Smart mini car, too.

We now have carjackers from Shijiazhuang.

At any rate, European car makers may have invited the piracy by first building their own plants in China, where risky business can be portrayed as any business.

In China, intellectual property rights are best summed up as "we stole it, now it's ours".


 

True free trade means no trade distortion.  Trade distortion comes from cheating.  Cheating includes currency manipulation, border adjustable taxes, government subsidies, government controlled foreign investment in our company, cheap unsafe goods sales, and many other tactics.

Henry Paulson is against true free trade.  He favors protecting cheaters.  Here is the core of his messaging.

“There was a concern that given what’s going on in the global economy and the emerging protectionist sentiment in many parts of the world,” he said, “how dangerous it is to take a unilateral punitive action that could lead to a trade war or that would be unsettling to the markets.”

The context of this quote is to oppose pending bills intended to neutralize China's currency manipulation.  Let China's currency float free, and we're ok.  If they take government action to devalue it for 12 years, we should take government action to neutralize their government action. 

Our economy cannot survive, intact, the huge effects of these unfair trade strategies more than a few years.  The trend lines are striking.  We need some sanity.

The title of this entry is the title of a new interim Cabinet-level report to the President of the United States.  Bush ordered eight cabinet officials, in July, to study the safety of food imports. Their report is 28 pages (PDF link) of vague happy talk.

Remember my ongoing criticism that trade policy trumps everything else, instead of serving other more important interests?  Here is the guiding principle in the report.

The report outlines an approach that can build upon existing efforts to improve the safety of imported products, while facilitating trade. ...

The federal government cannot and should not attempt to physically inspect every product entering the United States. Doing so would not only bring international trade to a standstill, but would also distract limited resources from those imported goods that pose the greatest risk.

We must facilitate trade with improved food safety.  We can't inspect stuff.  Slowing trade is unacceptable, even if a few kids or pets die. 

We recommend working with the importing community to develop approaches that consider risks over the life cycle of an imported product, and that focus actions and resources to minimize the likelihood of unsafe products reaching U.S. consumers.

These are the players they need to coordinate with:

The scale and complexity of the import network is vast, with over 825,000 importers bringing shipments into the U.S. in FY 2006 through more than 300 seaports, land border crossings, postal facilities, and other ports-of-entry. Approximately 80 percent of these shipments are by one-time or infrequent (2-10 times) importers. 

Government agencies can't even get their computer systems harmonized.  They cannot believe that collaboration with Canadian, Chinese, Mexican, Japanese and European governments and private companies will produce an acceptable safety shield.  This is rhetoric.  Period.  It won't happen.  Nice words shielding the principle that trade (or rather cheap imports) must win... always... without restriction and without any bumps in the road.

Here are the recommendations:

Supporting this model are six building blocks: 1) Advance a common vision, 2) Increase accountability, enforcement and deterrence, 3) Focus on risks over the life cycle of an imported product, 4) Build interoperable systems, 5) Foster a culture of collaboration, and 6) Promote technological innovation and new science.

What does that mean?  Nothing.