Canada-China relations imperiled as U.S. indicts Huawei

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Prime Minister Justin Trudeau meets with President Xi Jinping at the Great Hall of the People in Beijing, China December 5, 2017. Photo: Adam Scotti/PMO

The U.S. campaign targeting Chinese telecom giant Huawei as a threat to national security around the world reached a new intensity January 28. U.S. Acting Attorney General Matthew Whitaker indicted Huawei Technologies, its chief financial officer, Meng Wanzhou, its main U.S. subsidiary, and Hong Kong-based Skycom on 13 charges including bank fraud, money laundering, obstruction of justice, and conspiracy.

At the U.S. Justice Department press conference in Washington, D.C., it was confirmed that a formal extradition order for Meng is being issued to Canada.

A hearing before the B.C. Supreme Court to assess the evidence in the extradition case is already slated for February 6. Meng, daughter of billionaire Ren Zhengfei, who founded Huawei, is now out on $10 million bail and living in Vancouver under close supervision. She was arrested at the Vancouver airport December 1, at the request of the U.S. under the terms of an extradition treaty normally used to apprehend murderers, rapists, kidnappers and other major criminals.

Canada has been arguing that it is simply following "the rule of law," in this case, dubious American law, which applies penalties -- including to third parties -- for violating U.S. sanctions imposed on Iran.

The Trudeau government feigns innocence that the third-party nature of the extradition order -- Huawai is deemed to have illegally foiled sanctions against Iran -- puts compliance with the U.S. extradition request on shaky ground. However, a few short decades ago, U.S. laws -- applied "extraterritorially" -- forbid Ford Canada from selling vehicles to Cuba, overriding Canadian attempts to foster trade with Cuba, to the great displeasure of the Canadian government.

Canada -- also deemed a national security threat to the U.S. under Section 232 of the Trade Expansion Act of 1962 -- with U.S. tariffs of 25 per cent on steel exports and 15 per cent on aluminium exports to prove it -- has become the object of Chinese ire for agreeing to play along with the U.S. in its attack on Huawei.

Not only have two Canadians been arrested on suspicion of committing espionage, China has threatened retribution to trade and commerce if Meng is not released and allowed to return home to China.

As the second-largest market for Canadian exports, maintaining normal trade relations with China is an imperative for any government. Current efforts to market Canada Goose outerwear, open Tim Hortons outlets, maintain important agricultural exports, or eventually (if environmental opposition is overcome) sell B.C. LNG or Alberta bitumen are imperilled by the extradition request.

This threat to normal Canadian commerce was well understood by former Canadian ambassador to China John McCallum who was fired January 26 by the prime minister in a single telephone call after McCallum explained to a Star Vancouver reporter why it would be better for Canada if the U.S. could be convinced not to pursue Meng.

McCallum had earlier walked back comments to Chinese-language media made in Markham, Ont., explaining why Meng had a good chance to be returned to China following the extradition hearing.

The Canadian prime minister has been contacting heads of friendly governments around the world asking them to intervene with China to help obtain the release of the two imprisoned Canadians, on grounds that Canada was simply observing the rule of law.

McCallum was judged to have impeded these efforts by politicizing the case when he suggested that Meng could be returned to China rather than be extradited to the U.S. if the American government agreed to act.

Despite Team Trudeau's claims, it is nigh impossible to argue that the U.S. actions against Huawei and its chief financial officer are anything but political once the background to the indictments are known.

U.S. officials had been blocking Huawei from entering the U.S. market since the Rand Corporation reported 15 years ago that China was a potential threat to the U.S. military. The Americans simply labelled Huawei a creature of the Chinese Communist party-state.

In 2014 the U.S. National Security Agency (NSA) conducted espionage -- codename "Shotgiant" -- at corporate offices of Huawei in Shenzhen, China. As shown in NSA documents revealed by Edward Snowdon, the U.S. was trying to link Huawei founder Ren Zhengfei to the People's Liberation Army as part of what was already an American decade-long campaign to discredit the emerging telecommunications giant.

Reports by Der Spiegel and The New York Times pointed out that the NSA was looking to steal software to give the U.S. a backdoor into Huawei technology used by countries like Iran, Afghanistan, Pakistan, and Iraq so as to complement already extensive NSA spying operations conducted in cyberspace around the world, including bugging the Berlin office of Angela Merkel.

Currently U.S. intelligence agencies have mounted a full-scale campaign to ensure that its allies ban Huawei from supplying the next internet-standard G5 switching equipment to its domestic telecommunications providers. Australia and New Zealand have complied, and some U.K. providers have been removing Huawei switching equipment.

In effect the Americans are saying that China will use Huawei to do what the NSA does in China and around the world: spy on companies and countries to gain commercial and military advantages. 

With seemingly no sense of the irony, the Americans propound fears of China mounting an operation on the Shortgiant model against U.S. and other security agencies.

Canada has knowingly gone along with the U.S. campaign against Huawei, enabling an act of economic warfare; two Canadian citizens, plus the future of Canadian-Chinese relations have been taken hostage as a result.

The full impact of the Trudeau government's subservience to U.S. authority will be seen and felt when Meng is handed over to face a U.S. trial and serve a prison term for alleged bank fraud, a sentence that no American banker faced after the widespread bank frauds of 2007-08.

Duncan Cameron is president emeritus of and writes a weekly column on politics and current affairs.

Photo: Adam Scotti/PMO

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