Ar­rest of China ex­ec­u­tive boosts trade war wor­ries

The News Tribune - - Business - BY ED­WARD WONG New York Times

WASH­ING­TON

As Pres­i­dent Don­ald Trump was ar­rang­ing a trade truce with Pres­i­dent Xi Jin­ping of China in Buenos Aires, Ar­gentina, over din­ner Satur­day night, his ad­min­is­tra­tion was co­or­di­nat­ing the ar­rest of a top Chi­nese tech­nol­ogy ex­ec­u­tive who was fly­ing through Canada.

White House of­fi­cials, in­clud­ing John Bolton, the na­tional se­cu­rity ad­viser who at­tended the din­ner with Trump and Xi, knew of the im­pend­ing ar­rest. So did a lead­ing Se­nate Repub­li­can and Demo­crat. But it is un­clear whether Trump knew of the ar­rest. And Xi was ap­par­ently never told at the din­ner.

The de­ten­tion is a boon to ad­min­is­tra­tion of­fi­cials try­ing to limit the global spread of Chi­nese tech­nol­ogy, es­pe­cially equip­ment that poses se­cu­rity risks, and to en­force sanc­tions with Iran. But the move threat­ens to up­end sen­si­tive talks to re­solve a trade war be­tween the world’s two largest economies.

Global mar­kets fell Thurs­day amid in­ten­si­fied con­cerns about an emerg­ing cold war be­tween the United States and China, a sign that the 90-day trade truce an­nounced by

Trump and Xi would not quickly pro­duce an end to the trade war.

The ar­rest of Meng Wanzhou, chief fi­nan­cial of­fi­cer of Huawei and daugh­ter of its bil­lion­aire founder, was the cul­mi­na­tion of a month­s­long in­ves­ti­ga­tion by a Brook­lyn of­fice of the Jus­tice Depart­ment into whether the flag­ship Chi­nese com­pany had vi­o­lated Iran sanc­tions, U.S. of­fi­cials said. She was de­tained Satur­day while in tran­sit in Van­cou­ver, B.C., at the re­quest of the United States, which now wants her ex­tra­dited.

Bolton told NPR in an in­ter­view Thurs­day that he knew in ad­vance that Meng’s ar­rest was com­ing. He said such no­ti­fi­ca­tions from the Jus­tice Depart­ment “hap­pen with some fre­quency,” and “we cer­tainly don’t in­form the pres­i­dent on ev­ery one of them.”

The Jus­tice Depart­ment typ­i­cally briefs the White House in ad­vance of ac­tions in cases that are go­ing to garner na­tional at­ten­tion or im­pact the pub­lic in­ter­est. Be­fore Meng was ar­rested, Jus­tice Depart­ment of­fi­cials no­ti­fied the White House of­fice of le­gal coun­sel, ac­cord­ing to an ad­min­is­tra­tion of­fi­cial.

The depart­ment also no­ti­fied the chair­man of the Se­nate In­tel­li­gence Com­mit­tee, Richard Burr, R-N.C., and its rank­ing Demo­crat, Mark Warner of Vir­ginia, ac­cord­ing to a com­mit­tee staff mem­ber.

Xi was ap­par­ently never told of the in­tent to ar­rest Meng at the din­ner with Trump, where Bolton was present. The ar­rest came as a sur­prise to the Chi­nese gov­ern­ment, which is call­ing for her im­me­di­ate re­lease and has ac­cused the United States and Canada of hu­man-rights vi­o­la­tions.

“To de­tain some­one with­out giv­ing clear rea­son is an ob­vi­ous vi­o­la­tion of hu­man rights,” Geng Shuang, a spokesman for China’s For­eign Min­istry, said at a news con­fer­ence Thurs­day.

While Meng’s ar­rest is a warn­ing to other na­tions about the ad­min­is­tra­tion’s in­tol­er­ance of eco­nomic sanc­tion vi­o­la­tions and its se­cu­rity con­cerns about do­ing busi­ness with Chi­nese tech­nol­ogy com­pa­nies, it fur­ther com­pli­cates ef­forts to re­solve the United States’ trade war with China.

Trump has pri­or­i­tized both curb­ing China’s rise as a tech­no­log­i­cal pow­er­house and en­forc­ing eco­nomic sanc­tions on Iran. At the same time, he has in­creas­ingly linked trade mat­ters with na­tional se­cu­rity – im­pos­ing new re­stric­tions on Chi­nese in­vest­ment in the United States and hit­ting China with tar­iffs on $250 bil­lion worth of Chi­nese goods, in­clud­ing many prod­ucts that the ad­min­is­tra­tion views as crit­i­cal to U.S. na­tional se­cu­rity, like nu­clear re­ac­tor parts and semi­con­duc­tors.

Trump ar­gues that tougher sanc­tions will force Iran to aban­don its nu­clear weapons pro­gram, and in May he said the United States was with­draw­ing from a multi­na­tional agree­ment forged by Pres­i­dent Barack Obama.

The Jus­tice Depart­ment has not re­vealed ex­actly what Huawei was do­ing to run afoul of the sanc­tions. Chi­nese com­pa­nies reg­u­larly do busi­ness in Iran, and much of that trade com­plies with sanc­tions reg­u­la­tions. But the

Trump ad­min­is­tra­tion pre­vi­ously pun­ished an­other Chi­nese tele­com firm, ZTE, for vi­o­lat­ing U.S. sanc­tions against Iran and North Korea. The ques­tion over Huawei ap­pears to be whether it vi­o­lated sanc­tions by selling tech­nol­ogy from the United States to Iran or in some other man­ner.

“In the past we have dealt with these cases by in­ter­rupt­ing the le­gal process to avoid of­fend­ing the Chi­nese Com­mu­nist Party,” said Robert Spald­ing, a re­tired Air Force gen­eral who was on the Na­tional Se­cu­rity Coun­cil un­til Jan­uary.

China con­tin­ues to be the big­gest buyer of Ira­nian oil, while the United States aims to lower Iran’s oil ex­ports to zero. When it im­posed a round of strict sanc­tions on Iran last month, the United States had to grant China and a hand­ful of other na­tions waivers to con­tinue buy­ing oil for six months.

Huawei and Meng are at the top of China’s cor­po­rate world, thrust­ing diplo­matic and pol­icy is­sues in the mix along with law en­force­ment pri­or­i­ties as the Trump ad­min­is­tra­tion weighs its next moves.

The ar­rest means the trade talks will al­most cer­tainly be­come more dif­fi­cult. China could can­cel up­com­ing rounds of the talks; in Septem­ber, China can­celed talks after Trump an­nounced new tar­iffs.

NG HAN GUAN AP

An in­vestor re­acts Thurs­day near boards dis­play­ing stock mar­ket prices in Bei­jing, China. Asian stock prices skid­ded after the ar­rest of a se­nior of­fi­cial at Chi­nese tele­com equip­ment maker Huawei that could de­rail trade talk progress.

Meng Wanzhou

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