Unless Chinese telecom giant Huawei faces a complete US export ban, the arrest of a key company executive in Canada, who could be extradited to the United States and face criminal charges, is unlikely to seriously impact US-China trade negotiations after both countries agreed to halt the trade war, experts told Sputnik.
MOSCOW (Pakistan Point News / Sputnik - 07th December, 2018) Unless Chinese telecom giant Huawei faces a complete US export ban, the arrest of a key company executive in Canada, who could be extradited to the United States and face criminal charges, is unlikely to seriously impact US-China trade negotiations after both countries agreed to halt the trade war, experts told Sputnik.Meng Wanzhou, Huawei's chief finance officer (CFO), was arrested in Canada on December 1 and a bail hearing on Friday will decide if she will be extradited to the United States, Canada's Department of Justice told Sputnik through email on Thursday.
"Wanzhou Meng was arrested in Vancouver on the afternoon of December 1, 2018. She is sought for extradition by the United States, and a bail hearing has been set for Friday, December 7, 2018 at 10:00 a.m. (PST)," Ian McLeod, a spokesperson of the Department of Justice of Canada, said in the email.
The spokesperson added that his department cannot provide more details regarding the proceedings, because of a publication ban sought by Meng.
In response to reports of Meng's arrest in Canada, Huawei said in a statement on Thursday that she was detained by Canadian authorities when she was transferring flights in Canada and the United States seeks her extradition because she is expected to face unspecified charges in the Eastern District of New York.
"The company has been provided very little information regarding the charges and is not aware of any wrongdoing by Ms. Meng ... Huawei complies with all applicable laws and regulations where it operates, including applicable export control and sanction laws and regulations of the UN, US and EU," Huawei stressed in the statement.
Chinese embassy in Canada demanded Meng to be released and said Meng's arrest "seriously harmed" her human rights.
"At the request of the US side, the Canadian side arrested a Chinese citizen not violating any American or Canadian law. The Chinese side firmly opposes and strongly protests over such kind of actions which seriously harmed the human rights of the victim. The Chinese side has lodged stern representations with the US and Canadian side, and urged them to immediately correct the wrongdoing and restore the personal freedom of Ms. Meng Wanzhou," the Chinese embassy said in a statement on Thursday.
US media reports suggested charges against Meng could be linked to US investigations into Huawei's alleged violation of Iran related sanctions.
Meng was arrested on the same day when US President Donald Trump and Chinese President Xi Jinping met at a dinner meeting during the G20 summit, when the leaders agreed to halt bilateral trade tensions and seek to reach a comprehensive trade deal within 90 days.
NOT THREATENING HUAWEI'S SURVIVAL
Although Meng's arrest could carry the risks of disrupting the temporary "ceasefire" in the US-China trade war and complicating ongoing trade negotiations, Chinese authorities may not be willing to link these issues, political analysts argued.
"If Meng will indeed be extradited to the United States and receive serious legal punishment, I believe China will definitely try to retaliate against those two nations [Canada and the United States] on other issues. But Chinese leaders may not want to link Meng's case with the trade talks. Linking these two issues would not bring any benefit for China, as Beijing hopes to ease the economic pressure brought upon by the trade war," Ding Xueliang, director of the Institute for China's Overseas Interests, Shenzhen University, told Sputnik.
The expert added that even if China plans to retaliate because of Meng's case, it's unlikely for Beijing to respond through measures related to the trade talks.
Professor Ding suggested Chinese leaders would only face more pressure to make compromises in the trade talks, if penalties against Meng are extended to Huawei or the overall Chinese industry to be prohibited from importing key US technology.
"This case's impact depends on what kind of punishment Meng or Huawei faces in the end. If the punishment is only limited on Meng, without prohibiting Huawei of buying key US technology, it will make this case very different from the crisis ZTE experienced earlier this year. If the penalty is only limited to Meng facing jail time or Huawei has to pay a fine, I don't think Chinese leaders would make more concessions in the trade talks because of this case. The Chinese side has a clear distinction between punishment against an individual executive and the nation's priorities," he said.
Earlier this year, another Chinese telecom equipment provider ZTE faced export ban from the United States that prohibits the company from purchasing key US technology and products, which basically halted the company's business operations. Trump eventually helped ZTE avoid the export ban in May, after both nations reached a trade deal that failed to prevent trade frictions to escalate into a trade war in July.
The expert pointed out that Huawei as a company will not face the same kind of threat to its survival as ZTE did, if it's only one of its key executives like Meng to face punishment. On top of being Huawei's CFO, Meng is also the oldest daughter of the company's founder Ren Zhengfei, who is expected to hand over the company's leadership role to Meng early next year.
US National Security Adviser John Bolton said he knew in advance of the plan to arrest the top executive of Huawei, while Trump did not have advance knowledge of the planned bust, US media reported on Thursday.
Canadian Prime Minister Justin Trudeau said on Thursday that his government was not involved in Meng's arrest. "The appropriate authorities took the decisions in this case without any political involvement or interference," Trudeau told reporters in Montreal in televised remarks.
Despite speculations from some Chinese political analysts that Meng's arrest could be a politically motivated move from the Trump administration, Professor Ding from Shenzhen University argued that it's unlikely for the United States to build a case against Meng without substantial evidence.
"There is not enough evidence to suggest that the Trump administration orchestrated Meng's arrest to use it as a bargaining chip to seek more concessions from China in ongoing trade negotiations. At the same time, this case is also not a pure legal case that has nothing to do with the overall political environment. But one thing is clear. US authorities cannot demand someone to be arrested or released, without offering substantial evidence. They have to go through proper legal proceedings," he said.
The expert acknowledged that the US legal system's independence is not absolute, as Trump's ex-adviser Michael Flynn avoided jail time, after providing more sensitive information.
Meng could face bank fraud charges in the United States as part of a US investigation into whether Huawei used a Hong Kong-based bank to conduct illegal transactions involving Iran, the Reuters reported on Friday, citing unnamed sources.
Even if Meng's arrest would not halt efforts from both nations to work toward a trade deal within 90 days, it could give China more reasons to identify possible US companies to target, as part of a contingency plan to counter future US hostility against Chinese companies, political analysts suggested.
"During his dinner with Trump, Chinese president Xi expressed that he will keep an open attitude toward the previously unapproved Qualcomm-NXP deal. But after the recent case [with Huawei], can China continue to keep this open attitude? This deal received attention when ZTE was facing troubles in the United States. If this trend continues, both sides will continue to look for more companies to target as bargaining chips. Such scenarios will only bring more troubles in the future," Guan Zhisheng, an assistant professor of economics at Sun Yat-sen University in Guangzhou, told Sputnik.
The expert added that Meng's arrest could trigger concerns from Chinese business executives when they travel to countries that have extradition treaties with the United States.
"Under the [former US president Barack] Obama administration, the United States passed a series of laws that allow US law enforcement agencies to target individuals from any country, under various reasons such as counter-terrorism. Anyone could be targeted without advance notice. After this case, you have to be really careful, even when you travel to nations with extradition treaties with the United States, such as Canada or the United Kingdom," he said.
Professor Guan suggested it may have become necessary for the Chinese government to negotiate with other nations to ensure the safety of Chinese citizens and avoid any Chinese national being extradited to the United States unexpectedly.
