Huawei arrest leaves Canada stuck between ‘two elephants’
Feds stress case is separate judicial issue as tensions between U.S., China wear on
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
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.