U.S. pur­sued Huawei CFO’s ar­rest de­spite risk to trade talks with Xi

Lodi News-Sentinel - - BUSINESS - By Jen­nifer Ep­stein

WASH­ING­TON — The Trump ad­min­is­tra­tion ar­ranged the ar­rest of Huawei Tech­nolo­gies Co.'s chief fi­nan­cial of­fi­cer aware of po­ten­tial blow­back in trade talks with Bei­jing but in­tent on show­ing re­solve to crack down on Chi­nese com­pa­nies ac­cused of vi­o­lat­ing U.S. law.

The ar­rest hap­pened about the same time that Pres­i­dent Don­ald Trump dined with Chi­nese Pres­i­dent Xi Jin­ping in Buenos Aires to dis­cuss the trade war be­tween the coun­tries.

White House na­tional se­cu­rity ad­viser John Bolton, who sat at the ta­ble with Trump and Xi, knew in ad­vance of the U.S. re­quest that Cana­dian au­thor­i­ties ar­rest Huawei CFO Wanzhou Meng, he told Na­tional Pub­lic Ra­dio Thurs­day. Af­ter Bolton's in­ter­view, a White House of­fi­cial said that Trump was not aware of the ar­rest in ad­vance, dis­tanc­ing the pres­i­dent from the provoca­tive move.

But plan­ning for the ar­rest was well un­der­way as Trump pre­pared for a din­ner that he said later re­sulted in "an in­cred­i­ble" deal with Xi — an agree­ment that may be in dan­ger of un­rav­el­ing af­ter Chi­nese of­fi­cials learned of Meng's cap­ture and pend­ing ex­tra­di­tion to the U.S.

The U.S.-or­ches­trated de­ten­tion of a lead­ing fig­ure in the Chi­nese tech­nol­ogy in­dus­try — Meng is the daugh­ter of Huawei founder Ren Zhengfei and a pos­si­ble heir to his com­pany — un­der­cuts a key goal for Xi in the U.S. talks: to show re­la­tions be­tween the U.S. and China re­turn­ing to a more nor­mal foot­ing. The Chi­nese pres­i­dent has sought to pre­vent the eco­nomic con­flict from spilling into other sen­si­tive ar­eas such as Taiwan or the dis­puted ship­ping lanes of the South China Sea.

Cana­dian au­thor­i­ties de­tained Meng as she was chang­ing planes in Van­cou­ver at the re­quest of the U.S., which al­leges that Huawei vi­o­lated U.S. sanc­tions on Iran. The same day, Trump and Xi were meet­ing for the first time in more than a year.

The tim­ing of the move against Meng was co­in­ci­den­tal, driven by an itin­er­ary that put her on Cana­dian soil on Satur­day, said a per­son fa­mil­iar with the mat­ter. Even so, the White House didn't de­lay or block the ac­tion.

Meng's ar­rest is part of an on­go­ing in­ves­ti­ga­tion by U.S. pros­e­cu­tors into whether Huawei vi­o­lated bank­ing laws as it sought to evade sanc­tions against Iran by rout­ing a series of trans­ac­tions through HSBC Hold­ings Plc, ac­cord­ing to a per­son briefed on the mat­ter.

The U.S. re­quest for Meng's ex­tra­di­tion stems from a Trump ad­min­is­tra­tion cam­paign to in­creas­ingly hold Chi­nese na­tion­als ac­count­able for com­mit­ting crimes, said a se­cond per­son fa­mil­iar with the mat­ter, who asked not to be iden­ti­fied speak­ing about the sen­si­tive is­sue.

Bolton, in ad­dress­ing the ar­rest in the NPR in­ter­view, stressed that the con­duct of Chi­nese com­pa­nies — and es­pe­cially tech­nol­ogy com­pa­nies — is a cen­tral is­sue in the trade dis­pute with the U.S. That in­cludes theft of U.S. in­tel­lec­tual prop­erty by Chi­nese ac­tors and forced tech­nol­ogy trans­fers from U.S. com­pa­nies to Chi­nese part­ners in joint ven­tures, he said.

"Huawei is one com­pany we've been con­cerned about," Bolton told NPR. "There are oth­ers as well. I think this is go­ing to be a ma­jor sub­ject of the ne­go­ti­a­tions that Pres­i­dent Trump and Pres­i­dent Xi Jin­ping agreed to in Buenos Aires."

Other ad­min­is­tra­tion of­fi­cials have also stressed the im­por­tance of pun­ish­ing trans­gres­sions of trade rules and U.S. law.

"We have to make sure there is en­force­ment on any so-called agree­ment. That is so im­por­tant," Na­tional Eco­nomic Coun­cil Di­rec­tor Larry Kud­low told re­porters at the White House on Tues­day, a day be­fore Meng's ar­rest was an­nounced. "China's dis­cussed these things with the U.S. many times down through the years and the re­sults have not been very good."

Huawei, China's largest maker of smart­phones and telecom­mu­ni­ca­tions equip­ment, has been swept up in con­cerns that prod­ucts made by Chi­nese tech­nol­ogy com­pa­nies are av­enues for sur­veil­lance by the coun­try's in­tel­li­gence agen­cies.

In April, the Fed­eral Com­mu­ni­ca­tions Com­mis­sion adopted a pro­posal to pro­hibit the use of uni­ver­sal ser­vice funds to pur­chase equip­ment or ser­vices from any com­pany iden­ti­fied as pos­ing a na­tional se­cu­rity risk to com­mu­ni­ca­tions net­works.

The agency is seek­ing com­ments through Fri­day on how that pro­posed rule fits with de­fense leg­is­la­tion signed in Au­gust that bars spend­ing on "loans or grants" and specif­i­cally tar­gets Huawei and ZTE Corp. In a fil­ing with the agency, Huawei said the de­fense bill shouldn't ap­ply to dis­burse­ments of the com­mu­ni­ca­tions sub­sidy.

So far, China has tem­pered its re­sponse to Meng's de­ten­tion.

While the gov­ern­ment promptly protested the ar­rest and de­manded her re­lease, the for­eign min­istry later said it was wait­ing for de­tails on her cap­ture. The min­istry also said the U.S. trade talks should con­tinue as a 90-day pause on new tar­iffs be­tween the U.S. and China en­ters its se­cond week.


Huawei Fi­nance Chief Meng Wanzhou has been ar­rested in Canada at the re­quest of the United States. Cana­dian au­thor­i­ties said late Wed­nes­day that Wanzhou had been ar­rested in Van­cou­ver and that the United States is seek­ing her ex­tra­di­tion.

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