EconoMatters

The Huawei Crisis: Canada as a Proxy in US-China Relations

Canada will always be at risk of being used as a proxy as the U.S. manages internal and external conflicts.

Takeaways


  • The US is Canada’s dominant economic partner. This is a huge competitive advantage, but gives the US exceptional leverage.
  • Canada will always be at risk of being used as a proxy as the US manages internal and external conflicts.
  • Canada’s attachment to the rule of law has been used by the US in an economic proxy war with China.
  • The potential for misuse of Huawei technology by Chinese authorities remains an open question. But Canadians generally are very welcoming towards Huawei.

Canada is built on the rule of law. Our country’s judges are independent of the government. Our laws are made by parliament but are interpreted only by the courts.

Canada’s attachment to the rule of law has now been used by the United States in an economic proxy war with China. Canada, as the host of that proxy war, is — as is always the case in such wars — the only loser.

Canada has a longstanding extradition treaty with the United States. That treaty, however, has never before been used for political purposes.

Sadly, in pursuing Meng Wengzhou, the Trump administration abused that routine police agreement. The purpose was partly to intimidate Huawei, which it fears for security reasons, but more so to flex its muscles in its trade dispute with China.

This event augurs poorly for Canada’s long-term independence. Given our close integration with the United States, our legal system is permanently vulnerable to use and abuse by the United States – more so than is the case in our dealings with other countries.

A little context

To set this situation in context, it is important to note that no violations of U.S. sanctions against Iran have ever triggered the arrest of a company official. But, of course, the Meng Wengzhou matter was not about Iran.

By President Trump’s own assertion, demanding that Canada extradite Ms. Meng to the United States was a move to accelerate the broader trade dispute with China.

What is truly troubling from a Canadian perspective is that the United States used Canada’s strict adherence to legal agreements to draw us into that dispute.

The U.S. side knew that, once a formal extradition request was made, Canada had no choice but to honor it, unless our government wanted to complain loudly, given the threat of heightened trade measures the United States could impose.

Canadians welcoming towards Huawei

The potential for misuse of Huawei technology by the company or Chinese authorities remains very much an open question in the minds of security experts, but Canadians generally are very welcoming towards Huawei, whose hardware and software are in wide use here.

The company is a major supplier of consumer phones, for instance, and major telecoms are testing its 5G technology.

Canada, in other words, has no dispute with the company on any front, including sanctions on Iran. But when Meng Wenzhou landed here, the U.S. request had to proceed through the courts as they routinely do in extradition cases.

By the same token, her arrest (and her subsequent release on conditions) was a mechanical example of the rule of law in action, not a political act. The judge did what the law (the extradition treaty with the United States) required him to do.

Whether Ms. Meng should have known this and underestimated the Canadian respect for the rule of law rather than relationships, and ignored the government’s incapacity to intervene, is another question. Certainly the Chinese reaction indicates that officials in China do not understand how things work in the Canadian system.

The public reaction

The public reaction in Canada to the case has been mixed, with some expressing resentment at the United States for forcing Canada into a situation that strains our relationship with China, and many outraged by the Chinese retaliation in arresting Canadians,.

Now the legal process continues. We have no choice but to let things run their course. The Trudeau government cannot interfere with the courts.

It is very likely that the courts will dismiss the U.S. demand for Ms. Meng’s extradition, on the evidence that the request was politically inspired.

The process to resolve this matter may be slower than everyone would like, but that is the way things work here.

This whole episode is, apart from its impact on Canada’s nascent relationship with China, deeply troubling for what it says about the United States’s readiness to abuse its power in our asymmetric bilateral relationship.

A double-edged sword

The United States is Canada’s dominant economic partner. This is a huge competitive advantage for the Canadian economy, but brings great vulnerability, giving exceptional U.S. leverage.

We will always be at risk of being used as a proxy as the United States manages internal and external conflicts.

Along with our international partners, most particularly China, Canada has an intense interest in managing its economic relationships, to the extent possible, free from purely self-interested U.S. interference.

The only effective way to do this in the long term is to do so based on openness and a genuine commitment to the rule of law. Canada has made a good start in this direction by initiating the Comprehensive Economic and Trade Agreement (CETA) and acceding to the Comprehensive and Progressive Agreement for Trans-Pacific Partnership CPTPP.

China, which for its part has been content to play the U.S. game and is thereby also abusing Canada as a proxy, would benefit greatly if it takes this law-based approach.

Conclusion

Canada will need to be vigorous in continuing down this path of trade diversification based in law. As, for that matter, will all of America’s trading partners who are at risk of becoming proxies in its economic wars.

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About George Haynal

George Haynal is a Fellow of the Munk School of Global Affairs at the University of Toronto, and a former head of the Policy Planning Staff of the Canadian Ministry Of Foreign Affairs and International Trade.

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