Has Canada become Collateral Damage in the US-China Trade War?

Renaldo Weekes, Guest Contributor 

The trade tensions between the United States (US) and China have subsided for a while as each side has promised not to introduce new tariffs during a 90 day period starting from December 1, 2018, when US President Donald Trump and Chinese President Xi Jinping had a dinner at the G-20 summit in Argentina. Negotiations resume on January 7, 2019 and, so far, it seems that not much has changed as both have committed to their previous stances on the matter. However, the overall context of the negotiations has changed. Canada has arrested Huawei Technologies Co., Ltd’s Chief Financial Officer Meng Wanzhou at the US’ request. Shortly thereafter, China arrested two Canadian citizens, Michael Kovrig and Michael Spavor. Many see China’s actions as a tit-for-tat response to Meng’s arrest and wonder if Canada will now become collateral damage in a trade war between the US and China.

Why were Meng and the Canadian duo arrested?

Meng has been accused by the US of allegedly violating its sanctions on Iran by defrauding multiple US banks. On a layover in Canada, she was arrested by Canadian authorities on request from the US. She has since posted bail and is required to wear an ankle monitor and stay in her residence from 11 p.m. until 6 a.m. Kovrig and Spavor were arrested on suspicion of engaging in activities that were considered as breaching national security. The pair reportedly is subjected to three interrogations a day, must sleep with the lights, does not have access to legal representation and can only have consular visits once a month. Both Canada and China have denied that the arrests of the Canadian pair are related in any way to the arrest of Meng Wanzhou but Canada has said that the arrests were unfounded.

Did Meng’s arrest influence Kovrig and Spavor’s arrests?

Some may see it as a coincidence that Kovrig and Spavor, both Canadians, were arrested in China shortly after Meng, a Chinese heavy-weight, was arrested in Canada. As mentioned earlier, both countries have denied that the arrests are related. However, some persons, including former diplomats, are quite sure that the opposite is true. Reportedly, Chinese officials are concerned about Meng’s arrest. A Canadian parliamentary delegation, currently in China, has engaged in talks with Chinese officials about the pair of Canadians they arrested.  The officials demanded to know why Canada arrested Meng. It is public knowledge that Canada has detained Meng for bank fraud on the US’ request but it seems as though the Chinese believe there is more to the arrest than meets the eye. Fearing the worst, they may have retaliated by detaining two Canadians in order to keep Canada in check. It seems probable that Meng’s arrest had an impact China’s decision to arrest the Canadians.

Do the arrests have an effect on the trade war?

The trade war between the US and China has been quite contentious as each side continually laid tariffs on the other party’s goods until recently. When dealing with any high stakes negotiation such as this one, persons may wonder if external issues would impact the talks. This is especially the case in the current situation as the US has pointed out many problems it wants China to fix such as alleged forced transfer of intellectual property from foreign companies and restricted market access. There is also the issue of the disputed South China Sea where, as recently as today (Monday, January 7, 2018), China claimed that the US violated its domestic and international law by performing acts interpreted as provocation near the sea.

As it relates to the arrests, China’s actions may be ostensibly seen as its modus operandi whenever one of its citizens is arrested overseas, and not related to the trade war. In a previous tit-for-tat situation in 2014, Canadian aid workers Kevin and Julia Garratt were detained for the same national security reasons as the pair of Michaels shortly after Canada arrested Su Bin, a Chinese man wanted for industrial espionage in the US. Mrs. Garratt was released on bail while Mr. Garratt remained detained for more than two years until his eventual deportation, which occurred after Su Bin was extradited to the US and sentenced.

However, as mentioned earlier, Chinese officials seem to believe that Meng’s arrest was political. One may infer that the Chinese may not want the US to receive Meng as this may give additional leverage to the US in the trade talks. China’s paranoia may have been bolstered by comments President Trump made which insinuated that Meng’s arrest may assist in securing the “the largest trade deal ever made.” China may, therefore, seek to create its own leverage by punishing Canada, a US ally, in whatever way it can. China may refrain from committing any additional acts that directly affect the US but still continue current acts with which the US is concerned.

Canada’s situation

Canada is in a sticky situation. China will continue to punish Canada until it secures Meng’s release. Though it is a US ally, Canada’s citizens are the ones being used as pawns in China’s game so it will have to navigate this situation mostly on its own merit. This situation can be, theoretically, immediately remedied by Canada releasing Meng, rejecting the US’ extradition request. China may likely release the Canadians in return and refocus its attention solely on the US. However, this decision cannot be made lightly. Should Canada disregard all credible evidence of Meng’s crimes in order to appease China or will it repeat its 2014 decision of extradition? When weighing this decision against the well-being of your own citizens, it is not an easy decision to make. Canada must keep in mind that this is not a simple tit-for-tat situation for China as is usually the case but a piece on the battlefield. China cannot allow the US to gain what it sees as additional leverage. This ostensibly personal spat is being fought against the backdrop of the US-China trade war.

If Canada arrested Meng outside of the context of a trade war between the US and China, the situation probably would have been the same. The US would have still made the request to Canada as Meng’s arrest was predicated on her committing bank fraud with the intent of violating the US’ sanctions on Iran. China would have still arrested the two Canadians in retaliation since this is its established modus operandi. The weighing of Meng’s crimes versus its citizens’ well-being would still be an issue. As mentioned earlier, the US has a number of issues with China’s actions. Therefore, if not the trade war, Canada may have been collateral damage in some other dispute. It is safe to conclude that Canada is indeed collateral damage in the US-China trade war. However, the trade war is just the biggest of many disputes that have the potential to create more collateral damage.

Renaldo Weekes is a holder of a BSc. (Sociology and Law) who observes international affairs from his humble, small island home. He has keen interest in how countries try to maneuver across the international political and legal stage.

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