Huawei arrest risks 'deep freeze' between Canada and China: Former ambassador

Gladys Abbott
December 7, 2018

In latest, Canadian law enforcement has arrested Huawei CFO Wanzhou Meng from Vancouver while she was changing her flights. Chinese Commerce Ministry spokesman Gao Feng said China was confident it could reach a deal during the 90 days that Trump agreed to suspend a scheduled increase in U.S. import taxes on $US200 billion of Chinese products.

While few details of the arrest have yet been released, the Canadian Justice Department has confirmed that Meng was sought for extradition by the US.

Sources told Reuters in April that us authorities have been investigating Huawei, the world's largest telecoms equipment maker, since at least 2016 for allegedly shipping USA -origin products to Iran and other countries in violation of us export and sanctions laws. The ban was sought by Meng, who has a bail hearing Friday, he said.

Chinese foreign-ministry spokesman Geng Shuang told reporters Thursday that his government wants Canadian officials to reveal their reasoning.

Although China is likely to "understand" that Canada is under pressure from the USA, the Chinese will have "special concerns that the arrest took place on Canadian soil", said Paul Evans, at the University of British Columbia's Institute of Asian Research.

Huawei, one of the world's biggest suppliers of network gear used by phone and internet companies, has been the subject of deepening security concerns within the USA government and the governments of countries like Australia and New Zealand.

Reuters reported that the USA has been investigating the tech giant for using the global banking system in an effort to evade Washington's sanctions targeting Iran.

The company is one of the largest telecommunications equipment and services providers in the world, recently passing Apple to become the second-biggest smartphone maker after Samsung.

The move by the U.S.is related to concerns that Beijing could be using Huawei's technology to spy on Americans. "We oppose the imposition of unilateral sanctions by certain country outside the framework of the Security Council".

Huawei, the biggest global supplier of network gear used by phone and internet companies, has been the target of deepening US security concerns.

On Thursday, the Canadian prime minister, Justin Trudeau, said Meng's arrest was not political.

As the daughter of Huawei founder Ren Zhengfei, Meng is effectively business royalty in China.

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Last month, New Zealand blocked a mobile phone company from using Huawei equipment, saying it posed a "significant network security risk".

Surprising as the move was, US officials have made little secret of their dissatisfaction with Huawei. She is the chief financial officer of Huawei Technologies, a huge telecommunications company. Best Buy has even halted sales of Huawei devices completely in the U.S.

He foresees a crisis in relations between the three countries if she is extradited and said any talk of free trade agreement between Canada and China would be over.

Washington also regards Beijing's ambitious long-term development plan, "Made in China 2025", as a scheme to dominate such fields as robotics and electric vehicles by unfairly subsidising Chinese companies and discriminating against foreign competitors.

Huawei's smaller rival, ZTE (ZTCOF), provides an example of how the U.S. government could go further.

The company had been investigated by USA intelligence, who deemed it a national security threat.

In the view of the United States and many outside analysts, China has embarked on an aggressive drive to overtake America's dominance in technology and global economic leadership.

Wang Heng, a Chinese business law professor at the University of New South Wales in Australia, told the Hong Kong-based newspaper that the US could use Meng to put pressure on Beijing if it doesn't meet Trump's deadline to hammer out a resolution in the trade dispute.

Earlier this year, the United States banned American firms from selling parts and software to ZTE, which then paid $1 billion this summer as part of a deal to get the ban lifted.

David Buik, from trading site Core Spreads, said: 'The arrest of Meng, who's also the daughter of Huawei's founder, has rocked Asia-Pacific markets and triggered fresh jitters in Europe and the US.

The case that adds to technology tensions with Washington and threatens to complicate trade talks.

US Senator Ben Sasse praised the action and said that it was "for breaking US sanctions against Iran".

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