…it’s worth noting that the Huawei drama is far from over. On Thursday, the company pleaded not guilty in US District Court in Seattle on fraud, conspiracy and other charges, according to the DoJ. Tomorrow, the world will learn whether Canada intends to officially move ahead with extradition hearings against Meng Wanzhou.
That’s from a Thursday post in which we suggested that regardless of whether US officials are indeed nearly finished cobbling together a 150-page “final” trade agreement for Donald Trump and Xi Jinping to sign at a prospective summit in Mar-a-Lago, tensions between Washington and Beijing are likely to persist indefinitely.
Importantly – and I was going to save this for the outro, but I think I’ll mention it at the outset instead – Trump’s trade war with China has arguably had the effect of making bipolarity a wholly dangerous dynamic, whereas that needn’t have been the case otherwise. Unipolarity and hegemony can serve to stabilize the world when things have gone disastrously wrong and, critically, as long as the hegemon can be relied upon to adopt a sane foreign policy and avoid weaponizing economic prowess where it isn’t necessary. Unfortunately, it’s become readily apparent that the US cannot always be trusted, and while Trump has undoubtedly exacerbated that, America made a series of egregious foreign policy blunders (e.g., the Iraq invasion) prior to this administration that cast considerable doubt on the relative merits of a global system where, at the end of the day, one country makes all the final decisions.
Given that, a state of affairs where the US and China maintained amicable relations but nevertheless served as a check on one another could have marked a change for the better. What isn’t desirable, though, is a bipolar world where the two powers are at each other’s throats and all other nations are forced to choose a side. Mike Pence made it abundantly clear at APEC last year that that is the world in which we now live.
Critically, China ca. 2019 isn’t the Soviet Union. America can’t just sit back and wait on things to go off the rails over there. Sure, there are good arguments in favor of the contention that China is long overdue for a financial bust thanks to absurd leverage, but anyone hoping for an existential crisis that deep-sixes the existing political system and thereby restores the US as the undisputed global hegemon shouldn’t hold their breath.
This is why it’s not entirely advisable for the Trump administration to tilt at windmills at a time when the trade war has already fostered worries about an “economic cold war.”
Huawei is a windmill – and a big one at that.
Not to put too fine a point on it, but Trump needs to abandon efforts to ostracize the company and he damn sure needs to intervene in the case of the above-mentioned Meng Wanzhou, because if he doesn’t, things could spin out of control.
Meng’s detention – which, you’ll recall, coincided with Trump’s dinner in Argentina with Xi back in December – is a serious flashpoint and has already precipitated an absurd diplomatic row between Ottawa and Beijing.
Her trials and tribulations (and you can take “trials” figuratively and literally) were a continual source of angst for markets late last year and arguably caused an S&P futures crash on December 5.
Well, on Friday, Canada’s Department of Justice green lighted an extradition hearing for Meng, setting in motion a process that, largely due to how rich she is, will take forever. Here’s an excerpt from the official press release:
March 1, 2019 – Ottawa, Ontario, Canada – Department of Justice
Canada is a country governed by the rule of law. Extradition in Canada is guided by the Extradition Act, international treaties and the Canadian Charter of Rights and Freedoms, which enshrines constitutional principles of fairness and due process.
Today, Department of Justice Canada officials issued an Authority to Proceed, formally commencing an extradition process in the case of Ms. Meng Wanzhou.
The decision follows a thorough and diligent review of the evidence in this case. The Department is satisfied that the requirements set out by the Extradition Act for the issuance of an Authority to Proceed have been met and there is sufficient evidence to be put before an extradition judge for decision.
If somebody – Trump or Trudeau – doesn’t step in to put the brakes on this, it’s likely to entail Beijing becoming angrier and angrier over time to the detriment of relations between the US and China. It will also imperil the lives of three Canadians currently held in China on trumped up charges (one of them faces death).
As you might imagine, China is not amused with Friday’s decision, although it was expected. Here is the sharply worded statement from the Chinese Embassy:
The Chinese side is utterly dissatisfied with and firmly opposes the issuance of Authority to Proceed by the Department of Justice Canada on the case of Meng Wanzhou. This is not a merely judicial case, but a political persecution against a Chinese high-tech enterprise. The subsequent developments have proved this. The so-called “rule of law” and “judicial independence” asserted by Canada can not cover up the mistakes made by the Canadian side on the case of Meng Wanzhou.
Judging from the obvious political interference presented on this case, if Canada really abides by the principle of rule of law and judiciary independence, the Canadian side should refuse the extradition request of the United States and immediately release Ms. Meng Wanzhou in accordance with the relevant provisions of the Extradition Act of Canada. The final result of the Canadian court to handle this case will be a touchstone for testing whether Canada adheres to the judicial independence or not. We will wait and see.
Yes, China will “wait and see”. Like the Fed, they’re going to take a “patient” approach to this.
But the US seems intent on testing that patience in the interest of pursuing a far-reaching campaign against Huawei. Late last month, the US charged Huawei with bank fraud, wire fraud, violating sanctions and IP theft. As you’re no doubt aware, Washington is hell-bent on effectively blackballing the company on a global scale.
“Our client maintains that she is innocent of any wrongdoing and that the US prosecution and extradition constitutes an abuse of the processes of law”, Meng’s lawyer said Friday, in a statement.
It’s hard to imagine a scenario where Xi doesn’t attempt to make the finalization of a trade deal with Trump contingent on some kind of leniency for Meng. Whether or not the public will ever know exactly how that discussion plays out behind the scenes is doubtful, but if this isn’t resolved, it has the potential to create a permanent rift between Washington and Beijing at a critical juncture for the world.