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python 2 byte string that are not encoded in utf-8

I maintain an api that can gets text input from multiple languages. We would like to make the encoding of string to be in utf-8.
Most of the solutions that previous developers have tried involved using the encode and decode function willy nilly. It just leads to confusing unmaintainable code.
For simplicity I am just defining x here but lets imagine this can be sent to my api. This string is encoded in latin-1
x = '\xe9toile' # x is a byte string in python 2
x.encode('utf-8')
results in
*** UnicodeDecodeError: 'ascii' codec can't decode byte 0xe9 in position 0: ordinal not in range(128)
The only way that I know of to encode it to utf-8 is to first decode it as latin-1 then do the encoding.
x.decode('latin-1')
>>u'\xe9toile'
(x.decode('latin-1')).encode('utf-8')
>>'\xc3\xa9toile'
What if I did not know that the byte string was encoded in latin-1 how would I be able to encode it to utf-8 ?
What would I do if x was this chinese encoding that I don't know ?
x = '\u54c8\u54c8'
x is always a byte string.
Any help would be appreciated.

If x is a byte string then it doesn't make sense for you to encode it. Text encodings are a way to represent text as bytes. You first have to turn your bytes into text by decoding them and then encode that text into your target encoding.
What if I did not know that the byte string was encoded in latin-1 how would I be able to encode it to utf-8?
You can try to guess the encoding but you can't always be right:
>>> 'Vlh'.encode('cp037')
'\xe5\x93\x88'
>>> '哈'.encode('utf-8')
'\xe5\x93\x88'
This example is a little contrived but there's no way to know if the bytes '\xe5\x93\x88' represent 哈 or Vlh unless you know the original encoding.
The most sensible solution would be to just have your clients encode their text as UTF-8 and then you decode the bytes you receive as UTF-8.

why does pythons `s.encode('ascii', 'replace')` fails encoding

Why does using replace here:
s = s.encode('ascii', 'replace')
Give me this error?:
UnicodeDecodeError: 'ascii' codec can't decode byte 0xcb in position 6755: ordinal not in range(128)
Isn't the whole point of 'replace' or 'ignore' to not fail when it can't decode a byte. Am I not understanding this?
(sorry I can't provide the actual string, the corpus is very large)
In any case, how do I tell python to ignore or replace characters that aren't ascii?

Note that you're getting a UnicodeDecodeError, not a UnicodeEncodeError.
That's because s.encode() takes a unicode string as input, but in this case you're not giving it one; you're giving it a bytestring instead.
Thus, it's encoding the bytestring you're handing it to unicode before trying to decode it, and it's in that initial encode that the error occurs.
This three-way round-trip is silly, but if you really wanted to do it:
s_bytes = '\xcb' # standard Python 2 string, aka a Python 3 bytestring
s_unicode = s_bytes.decode('ascii', 'replace') # a unicode string now
s_ascii = s_unicode.encode('ascii', 'replace') # a bytestring again

How to allow encode('utf-8') twice without getting error in python?

I have a legacy code segment that always encode('utf-8') for me when I pass in an unicode string (directly from database), is there a way to change unicode string to other format to allow it to be encoded to 'utf-8' again without getting an error, since I am not allowed to change the legacy code segment.
I've tried decoding it first but it returns this error
UnicodeEncodeError: 'ascii' codec can't encode characters in position 0-1: ordinal not in range(128)
If I leave the unicode string as is it returns
UnicodeDecodeError: 'ascii' codec can't decode byte 0xe8 in position 986: ordinal not in range(128)
If I change the legacy code to not encode('utf-8') it works, but this is not a viable option
Edit:
Here is the code snippet
#!/usr/bin/env python2
# -*- coding: utf-8 -*-
if __name__ == "__main__":
# 1
a = u'贸易'
# 2
a = a.decode('utf-8')
# 3
a.encode('utf-8')
For some reason if I skip #2 I don't get the error that I mentioned above, I double check the type for the string, it seems like both is unicode, and both is the same character, but the code I am working on does not allow me to encode or decode to utf-8 , while the same character in some snippet allows me to do that.

Consider the following cases:
If you want a unicode string, and you already have a unicode string, you need do nothing.
If you want a bytestring, and you already have a bytestring, you need do nothing.
If you have a unicode string and want a bytestring, you encode it.
If you have a bytestring and want a unicode string, you decode it.
In none of these cases is it appropriate to encode or decode more than once.

In order for encode('utf-8') to make sense, the string must be a unicode string (or contain all-ASCII characters...). So, unless it's a unicode instance already, you have to decode it first from whatever encoding it's in to a unicode string, after which you can pass it into your legacy interface.
At no point does it make sense for anything to be double-encoded -- encoding takes a string and transforms it to a series of bytes; decoding takes a series of bytes and transforms them back into a string. The confusion only arises because Python 2 uses the str for both plain-ASCII strings and byte sequences.
>>> u'é'.encode('utf-8') # unicode string
'\xc3\xa9' # bytes, not unicode string
>>> '\xc3\xa9'.decode('utf-8')
u'\xe9' # unicode string
>>> u'\xe9' == u'é'
True

exceptions.UnicodeDecodeError - 'ascii' codec can't decode byte

I keep getting this error:
<type 'exceptions.UnicodeDecodeError'>: 'ascii' codec can't decode byte 0xe2 in position 0: ordinal not in range(128)
args = ('ascii', '\xe2\x9d\xb6 Senn =)', 0, 1, 'ordinal not in range(128)')
encoding = 'ascii'
end = 1
message = ''
object = '\xe2\x9d\xb6 Senn =)'
reason = 'ordinal not in range(128)'
start = 0
Using this code:
steamFriend = data['response']['players'][i]
n = steamUser(steamFriend['personaname'].encode("utf-8"), steamFriend['steamid'], steamFriend['avatarfull'], steamFriend['profileurl'], steamFriend['personastate'], False)
Some things to note here:
steamFriend is a JSON object
I get this error only sometimes, because the steamFriend['personaname'] contains some weird symbols (for example ❶), and I don't know how to parse this correctly so I don't get errors.
Any help is greatly appreciated.
Also, \xe2\x9d\xb6 Senn =) is supposed to represent ❶ Senn =), if that helps.

Without seeing the full code it is hard to tell, but it seems that steamUser expects ascii input. If that is the problem, you can solve it by:
streamFriend['personaname'].encode("ascii", errors="ignore")
or
streamFriend['personaname'].encode("ascii", errors="replace")
Obviously you will lose unicode characters in the process.

If the quoted error is occurring on the n=... line, the implication is that steamFriend['personaname'] is a byte string, not a Unicode string.
Consequently when you ask to .encode it, Python has to decode the string to Unicode in order to be able to encode it back to bytes. An implicit decoding happens using the default encoding, which is ASCII, so because the byte string does not contain only ASCII you get a failure.
Are you sure you didn't mean to do:
steamFriend['personaname'].decode("utf-8")
decoding the byte string '\xe2\x9d\xb6 Senn =)' using UTF-8 would give you the Unicode string u'\u2776 Senn =)', where U+2776=❶ so that would seem more like what you are after.
(Normally, however, JSON strings are explicitly Unicode, so it's not clear where you would have got the byte string from. How are you loading the JSON content?)

UnicodeEncodeError: 'ascii' codec can't encode character u'\xa3'

I have an Excel spreadsheet that I'm reading in that contains some £ signs.
When I try to read it in using the xlrd module, I get the following error:
x = table.cell_value(row, col)
x = x.decode("ISO-8859-1")
UnicodeEncodeError: 'ascii' codec can't encode character u'\xa3' in position 0: ordinal not in range(128)
If I rewrite this to x.encode('utf-8') it stops throwing an error, but unfortunately when I then write the data out somewhere else (as latin-1), the £ signs have all become garbled.
How can I fix this, and read the £ signs in correctly?
--- UPDATE ---
Some kind readers have suggested that I don't need to decode it at all, or that I can just encode it to Latin-1 when I need to. The problem with this is that I need to write the data to a CSV file eventually, and it seems to object to the raw strings.
If I don't encode or decode the data at all, then this happens (after I've added the string to an array called items):
for item in items:
#item = [x.encode('latin-1') for x in item]
cleancsv.writerow(item)
File "clean_up_barnet.py", line 104, in <module>
cleancsv.writerow(item)
UnicodeEncodeError: 'ascii' codec can't encode character u'\u2022' in position 43: ordinal not in range(128)
I get the same error even if I uncomment the Latin-1 line.

A very easy way around all the "'ascii' codec can't encode character…" issues with csvwriter is to instead use unicodecsv, a drop-in replacement for csvwriter.
Install unicodecsv with pip and then you can use it in the exact same way, eg:
import unicodecsv
file = open('users.csv', 'w')
w = unicodecsv.writer(file)
for user in User.objects.all().values_list('first_name', 'last_name', 'email', 'last_login'):
w.writerow(user)

For what it's worth: I'm the author of xlrd.
Does xlrd produce unicode?
Option 1: Read the Unicode section at the bottom of the first screenful of xlrd doc: This module presents all text strings as Python unicode objects.
Option 2: print type(text), repr(text)
You say """If I rewrite this to x.encode('utf-8') it stops throwing an error, but unfortunately when I then write the data out somewhere else (as latin-1), the £ signs have all become garbled.""" Of course if you write UTF-8-encoded text to a device that's expecting latin1, it will be garbled. What do did you expect?
You say in your edit: """I get the same error even if I uncomment the Latin-1 line""". This is very unlikely -- much more likely is that you got a slightly different error (mentioning the latin1 codec instead of the ascii codec) in a different source line (the uncommented latin1 line instead of the writerow line). Reading error messages carefully aids understanding.
Your problem here is that in general your data is NOT encodable in latin1; very little real-world data is. Your POUND SIGN is encodable in latin1, but that's not all your non-ASCII data. The problematic character is U+2022 BULLET which is not encodable in latin1.
It would have helped you get a better answer sooner if you had mentioned up front that you were working on Mac OS X ... the usual suspect for a CSV-suitable encoding is cp1252 (Windows), not mac-roman.

Your code snippet says x.decode, but you're getting an encode error -- meaning x is Unicode already, so, to "decode" it, it must be first turned into a string of bytes (and that's where the default codec ansi comes up and fails). In your text then you say "if I rewrite ot to x.encode"... which seems to imply that you do know x is Unicode.
So what it IS you're doing -- and what it is you mean to be doing -- encoding a unicode x to get a coded string of bytes, or decoding a string of bytes into a unicode object?
I find it unfortunate that you can call encode on a byte string, and decode on a unicode object, because I find it seems to lead users to nothing but confusion... but at least in this case you seem to manage to propagate the confusion (at least to me;-).
If, as it seems, x is unicode, then you never want to "decode" it -- you may want to encode it to get a byte string with a certain codec, e.g. latin-1, if that's what you need for some kind of I/O purposes (for your own internal program use I recommend sticking with unicode all the time -- only encode/decode if and when you absolutely need, or receive, coded byte strings for input / output purposes).

x = x.decode("ISO-8859-1")
UnicodeEncodeError: 'ascii' codec can't encode character u'\xa3' in position 0: ordinal not in range(128)
Look closely: You got a Unicode***Encode***Error calling the decode method.
The reason for this is that decode is intended to convert from a byte sequence (str) to a unicode object. But, as John said, xlrd already uses Unicode strings, so x is already a unicode object.
In this situation, Python 2.x assumes that you meant to decode a str object, so it "helpfully" creates one for you. But in order to convert a unicode to a str, it needs an encoding, and chooses ASCII because it's the lowest common denominator of character encodings. Your code effectively gets interpreted as
x = x.encode('ascii').decode("ISO-8859-1")
which fails because x contains a non-ASCII character.
Since x is already a unicode object, the decode is unnecessary. However, now you run into the problem that the Python 2.x csv module doesn't support Unicode. You have to convert your data to str objects.
for item in items:
item = [x.encode('latin-1') for x in item]
cleancsv.writerow(item)
This would be correct, except that you have the • character (U+2022 BULLET) in your data, and Latin-1 can't represent it. There are several ways around this problem:
Write x.encode('latin-1', 'ignore') to remove the bullet (or other non-Latin-1 characters).
Write x.encode('latin-1', 'replace') to replace the bullet with a question mark.
Replace the bullets with a Latin-1 character like * or ·.
Use a character encoding that does contain all the characters you need.
These days, UTF-8 is widely supported, so there is little reason to use any other encoding for text files.

xlrd works with Unicode, so the string you get back is a Unicode string. The £-sign has code point U+00A3, so the representation of said string should be u'\xa3'. This has been read in correctly; it is the string that you should be working with throughout your program.
When you write this (abstract, Unicode) string somewhere, you need to choose an encoding. At that point, you should .encode it into that encoding, say latin-1.
>>> book = xlrd.open_workbook( "test.xls" )
>>> sh = book.sheet_by_index( 0 )
>>> x = sh.cell_value( 0, 0 )
>>> x
u'\xa3'
>>> print x
£
# sample outputs (for e.g. writing to a file)
>>> x.encode( "latin-1" )
'\xa3'
>>> x.encode( "utf-8" )
'\xc2\xa3'
# garbage, because x is already Unicode
>>> x.decode( "ascii" )
Traceback (most recent call last):
File "<stdin>", line 1, in <module>
UnicodeEncodeError: 'ascii' codec can't encode character u'\xa3' in position 0:
ordinal not in range(128)
>>>

Working with xlrd, I have in a line ...xl_data.find(str(cell_value))... which gives the error:"'ascii' codec can't encode character u'\xdf' in position 3: ordinal not in range(128)". All suggestions in the forums have been useless for my german words. But changing into: ...xl_data.find(cell.value)... gives no error. So, I suppose using strings as arguments in certain commands with xldr has specific encoding problems.