Huawei ar­rest leaves Canada stuck be­tween ‘two ele­phants’

Feds stress case is sep­a­rate ju­di­cial is­sue as ten­sions be­tween U.S., China wear on

Calgary Herald - - FP CALGARY - NAOMI POW­ELL

TORONTO Canada’s trade re­la­tion­ship with China will carry on de­spite the cur­rent “dif­fi­cult mo­ment” it faces due to the ar­rest of a top Huawei Tech­nolo­gies Inc. ex­ec­u­tive in Van­cou­ver, says In­ter­na­tional Trade Di­ver­si­fi­ca­tion Min­is­ter Jim Carr.

“Let’s re­mem­ber that this re­la­tion­ship didn’t start yes­ter­day,” Carr told re­porters fol­low­ing an ap­pear­ance at the Toronto Global Fo­rum.

“We will con­tinue to have re­la­tions and do busi­ness with China for a long, long time. This is a dif­fi­cult mo­ment but we will en­dure dif­fi­cult mo­ments.”

Prime Min­is­ter Justin Trudeau Wednes­day re­stated his po­si­tion that Canada was act­ing in ac­cor­dance with the law in seiz­ing Huawei chief fi­nan­cial of­fi­cer Meng Wanzhou at the re­quest of the United States. Amer­i­can au­thor­i­ties al­lege Wanzhou tried to by­pass U.S. trade sanc­tions on Iran and mis­led banks about her ac­tions.

In sep­a­rate com­ments at the Toronto fo­rum, Fi­nance Min­is­ter Bill Morneau drove that point home again, tak­ing pains to em­pha­size that the Meng case as an sep­a­rate ju­di­cial mat­ter out­side the realm of po­lit­i­cal in­flu­ence.

“We will con­tinue to en­sure our ju­di­ciary sys­tem is in­de­pen­dent from govern­ment,” Morneau said. “My goal and cer­tainly the goal of our govern­ment is to make sure that we con­tinue to pro­vide op­por­tu­ni­ties for Cana­di­ans through trade. That in­cludes a trade re­la­tion­ship with China.”

Canada’s ex­tra­di­tion treaty with the U.S. left au­thor­i­ties with lit­tle choice but to de­tain Meng, said Guy Saint-Jac­ques, a for­mer am­bas­sador of Canada to China and a se­nior fel­low with the China In­sti­tute at the Univer­sity of Al­berta.

But ef­forts to ad­vance this ar­gu­ment with Bei­jing have likely al­ready been weak­ened by U.S. Pres­i­dent Don­ald Trump, he added.

In an in­ter­view with Reuters, Trump said he could step into the case against Meng if it would help him forge a trade deal with China.

“Trump’s com­ments are un­for­tu­nate in my view be­cause they un­der­mine the rule of law, and be­cause they will sug­gest to Bei­jing that this is all po­lit­i­cal and if they put enough pres­sure on us we’ll cave in,” said Saint-Jac­ques.

Days af­ter Bei­jing warned Canada of se­vere con­se­quences for Meng ’s ar­rest, China de­tained Michael Kovrig, a for­mer Cana­dian diplo­mat on leave from the for­eign ser­vice, in the Chi­nese cap­i­tal.

For­eign Min­is­ter Chrys­tia Free­land has de­clined to say di­rectly whether she be­lieves that case is con­nected to Meng ’s, but she did call the fact that he is an em­ployee of her de­part­ment “rel­e­vant.”

Bei­jing has so far been care­ful in manag­ing do­mes­tic de­bate over the episode, with state me­dia is­su­ing strong warn­ings to the U.S. and Canada over Meng’s treat­ment, but not con­nect­ing the ar­rest to trade is­sues.

Af­ter months of ac­ri­mo­nious re­la­tions, Wash­ing­ton and Bei­jing have de­clared a 90-day truce in a trade war that has seen US$360 bil­lion in tar­iffs ex­changed be­tween the eco­nomic su­per­pow­ers.

“De­spite the rel­a­tive calm, this episode will al­most cer­tainly get much worse be­fore it gets bet­ter,” the risk con­sul­tancy Eura­sia Group said in a note.

“Meng and the broader fate of Huawei present mul­ti­ple trip wires for the re­la­tion­ship in com­ing months. Many of these are ju­di­cial and law en­force­ment ac­tions that Trump and Xi have lim­ited abil­ity to con­trol.”

As ten­sions be­tween the U.S. and China wear on, Canada could be­come “col­lat­eral dam­age in a bat­tle be­tween two ele­phants,” said Saint-Jac­ques.

The trade war truce be­tween Bei­jing and Wash­ing­ton “means China can’t kick the U.S. be­cause it is des­per­ate to use the 90 day pe­riod to solve its eco­nomic prob­lems,” he said.

“So they turn around and we are the guys kicked in­stead. So our bi­lat­eral re­la­tion­ship with China will be dam­aged and we will pay con­se­quences for some­thing we had noth­ing to do with.”

Those con­se­quences could in­clude trade re­stric­tions and other eco­nomic mea­sures, he said.

“I cer­tainly wouldn’t ex­clude fur­ther mea­sures on the com­mer­cial front like con­tracts be­ing can­celled and Cana­dian food ex­ports be­ing re­fused on ar­rival in China,” he said.

“They are ex­perts at send­ing this kind of mes­sage.”

We will con­tinue to have re­la­tions and do busi­ness with China for a long, long time. This is a dif­fi­cult mo­ment but we will en­dure dif­fi­cult mo­ments. JIM CARR, Min­is­ter of In­ter­na­tional Trade Di­ver­si­fi­ca­tion

ANDY WONG/AP

A po­lice of­fi­cer guards the Cana­dian Em­bassy in Bei­jing on Wednes­day. There are fears Canada could be­come “col­lat­eral dam­age” in the trade war be­tween Bei­jing and the U.S. The truce is seen to make Canada vul­ner­a­ble to China’s re­tal­i­a­tion af­ter the ar­rest of a Huawei ex­ec­u­tive.

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