Meng case resolution removes giant thorn in Canada’s trade relationship with China

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No matter the political and popular outrage over Meng Wanzhou’s extradition case – both in Canada and in China – Canadian companies simply could not afford to sever ties with what may be the biggest world economy.

After his case was resolved on Friday, experts on Canada’s trade ties with China said it would likely elicit a sigh of relief from companies doing business with China.

However, a final resolution, they said, would require a deal that would free Canadians Michael Spavor and Michael Kovrig, who had languished in Chinese jails for a short time after Meng’s arrest in late 2018. Late Friday night, Prime Minister Justin Trudeau announced the two were on their way home.

Despite the fact that business between the two countries continued during all three cases, the larger dispute blocked the development of new trade and trade relations.

Unfreeze cold trade relations

“For a long time, I felt that there was no possible progress in the relationship as long as Meng Wanzhou was in Vancouver,” said Gordon Houlden, longtime China observer and former director of the China Institute of the ‘University of Alberta. interview Friday, before the announcement of the release of Spavor and Kovrig. “And there is no room for improvement as long as Michael Spavor and Michael Kovrig are detained in China.”
The two Michaels, as they have been known, were arrested in China shortly after Meng, a senior executive at Chinese telecommunications giant Huawei and daughter of the company’s founder, was arrested at Vancouver Airport on charges of bank fraud. related to US sanctions. against Iran.
Michael Kovrig, left, and Michael Spavor, right, were arrested in China shortly after Meng Wanzhou’s arrest in Vancouver. They are now on their way home. (The Canadian Press, The Associated Press)

The arrest of the two Michaels for alleged espionage has been widely viewed as hostage diplomacy in retaliation for the house arrest of Meng, considered a high-profile aristocrat of the Chinese business establishment. China has repeatedly insisted that the Meng affair was a political maneuver by the United States, with the help of an accomplice Canada.

Trade experts note that the dispute has made doing business with China much more difficult. Prior to the Meng affair, Canada and China had relatively good trade relations despite pressure from the United States to join them in banning the use of Chinese technology, including Huawei’s 5G telecommunications systems. .

This pressure was seen by some experts as part of the rise of the US government. cold war technology which seeks to strengthen support for American companies at the expense of their Chinese competitors, which members of Congress, later supported by the FBI, accused of industrial espionage.

Good relationships abused?

Canada’s relationship with Huawei has been complicated by the fact that the company has such a presence here, with operations led by many former employees of the late Canadian rival Nortel.

Canada has a strong extradition law with the United States to prevent those accused of crimes from escaping justice across the border. Some observers suspect that the former US administration led by Donald Trump exploited this strong relationship to weaken Canada’s ties with China.
“It depends on your cynicism,” said Houlden, who has worked in China and is well connected to Washington, DC. “Some would say by spiking Canada-China relations, what the Meng Wanzhou extradition case certainly did, it may have served the strategic interests of the United States as well. “
Chinese company Huawei has close ties to Canada, in part because it hired many workers from former Canadian telecom Nortel. (Fred Dufour / AFP / Getty Images)

Despite the fact that business between Canada and China continued to grow during the worst of the political conflict, experts say the trade relationship has been damaged in several ways. For example, some Canadian executives were afraid to go to China.

There have been deals that have not been made and Chinese companies have become reluctant to invest in Canada. And while the trade in agricultural products has seen only slight interruptions, high-tech collaboration has become very difficult.

From lost contracts to irritants

Along with lost investment and larger trade deals, the dispute with China has been a constant irritant for many Canadian companies. Take, for example, the recent fines imposed on coat maker Canada Goose for mislabelling, an issue that could have been addressed in a more friendly manner.

In Canada, 64 percent of GDP is generated by trade. This compares to 37% for China and only 24% for the United States.

“We are heavily dependent on trade, and cut ourselves off from what is almost the biggest economy on the planet – it depends on how you count it, maybe it already is, but it certainly will be under little – is a very high cost for a country like Canada, Houlden said.
Coat maker Canada Goose was recently fined by China for allegedly misleading consumers about the materials it uses. The company claims that a technical error on a partner website was causing confusion about its product materials, and the error was quickly corrected. (Aaron Vincent Elkaim / The Canadian Press)

In some ways, the deferred prosecution deal in the United States that led to Meng’s release after pleading not guilty, may strengthen China’s argument that everything was political to begin with.

This does not weaken the Canadian argument that once the extradition process began in good faith, Canadian courts and the Canadian government were bound to respect the rule of law. It remains a Canadian force.

Houlden said that once Meng and the Michaels are free, Canada could begin to mend its trade and trade relations with China. It seems the time has come. Although Houlden has suggested that other irritants will likely persist.

In many ways, the damage has already been done. A gap has grown between Canadian businesses and the huge Asian economy.

“It doesn’t mean the relationship is going back to what it was,” Houlden said.

Follow Don on Twitter @don_pittis



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