Trump comments upend U.S. approach to Huawei, China trade talks

Trump comments upend U.S. approach to Huawei, China trade talks

December 12th, 2018 by Associated Press in Business Around the Region

Huawei chief financial officer Meng Wanzhou, right, waves goodbye to visitors at her home in Vancouver on Wednesday, Dec. 12, 2018. A Canadian court on Tuesday released Meng on bail, confining her to Vancouver and its suburbs while she awaits possible extradition to the United States. The U.S. has accused Huawei, the biggest global supplier of network gear for phone and internet companies, of using a shell company to do business with Iran in violation of U.S. sanctions. (Jonathan Hayward/The Canadian Press via AP)

Photo by Jonathan Hayward

WASHINGTON (AP) — The United States and China have taken pains this week to emphasize that their trade talks are entirely separate from the U.S. case against a top Chinese technology executive. But with a few words, President Donald Trump obliterated the distinction, saying he'd wade into the case if it would help produce a trade agreement with China.

China has already detained a former Canadian diplomat in what appears to be retaliation for Canada's arrest of Meng Wanzhou, the chief financial officer of telecommunications giant Huawei. On Wednesday, Canadian Foreign Minister Chrystia Freeland expressed concern that another Canadian may have also been taken into custody.

A Canadian court on Tuesday released Meng on bail, confining her to Vancouver and its suburbs while she awaits possible extradition to the United States. The U.S. accuses Huawei, the biggest global supplier of network gear for phone and internet companies, of using a Hong Kong shell company to do business with Iran in violation of U.S. sanctions.

A policeman stands watch outside the Canadian Embassy in Beijing, Wednesday, Dec. 12, 2018. A Canadian court granted bail on Tuesday to a top Chinese executive arrested at the United States' request in a case that has set off a diplomatic furor among the three countries and complicated high-stakes U.S.-China trade talks. (AP Photo/Andy Wong)

A policeman stands watch outside the Canadian Embassy...

Photo by Andy Wong

But on Tuesday, Trump raised the possibility that a U.S.-China trade deal might be reason enough for him to intervene.

"If I think it's good for what will be certainly the largest trade deal ever made — which is a very important thing — what's good for national security — I would certainly intervene if I thought it was necessary," Trump told Reuters in an interview.

The comment suggests Meng could be a political pawn in negotiations and makes things more awkward for Canada, which arrested her on America's behalf during a Dec. 1 layover at the Vancouver airport.

Canadian Prime Minister Justin Trudeau bristled at Trump's assertion, saying: "Regardless of what goes on in other countries, Canada is, and will always remain, a country of the rule of law."

Freeland said it was "quite obvious" any foreign country requesting extradition should ensure "the process is not politicized."

In what appears to be retaliation against Canada for arresting Meng, Chinese authorities on Monday detained a former Canadian diplomat, Michael Kovrig, in Beijing.

On Wednesday, Freeland said she was worried that another Canadian had been detained in China.

"We are aware of a Canadian who got in touch with us because he was being asked questions by Chinese authorities. We have not made been able to make contact with him since he let us know about this," Freeland told a news conference. "We are working very hard to ascertain his whereabouts, and we have raised this case with the Chinese authorities. We are in touch with his family."

Canada has also asked China for extra security at its embassy because of protests and anti-Canadian sentiment and has advised foreign service staff to take precautions, a senior Canadian official told reporters.

Meng's arrest came the same day that Trump and Chinese President Xi Jinping agreed over dinner in Buenos Aires to a 90-day cease-fire in a trade war that has shaken global financial markets and raised worries about the impact on the world economy.

The truce was meant to buy time for more substantive talks over U.S. allegations that China steals U.S. technology and forces American companies to hand over trade secrets in exchange for access to the Chinese market.

U.S. officials have insisted the sanctions case against Meng had nothing to do with the ongoing trade talks. Top White House economic adviser Larry Kudlow told "Fox News Sunday" that "there's a trade lane ... and there is the law enforcement lane. They are different."

"Both Canadian and American officials have emphasized that the Meng arrest is separate from the trade talks," said Gregory Yaeger, special counsel at the Stroock law firm and a former Justice Department trial attorney.

"Trump's remarks could be interpreted as creating the appearance that the arrest also had political motivations. This could undermine the US's reputation as a country that follows the 'rule of law,' and could ultimately undermine both the Meng prosecution and the trade talks."

Still, there is precedent for Trump intervening on behalf of a Chinese company accused of violating U.S. sanctions.

Trump drew fire from Capitol Hill in June when he reached a deal that spared another Chinese telecommunications company, ZTE, from U.S. sanctions that probably would have put it out of business after it was accused of selling equipment to Iran and North Korea. U.S. regulators planned to bar it from receiving U.S. components that it depended on, effectively a corporate death sentence.

But Trump issued a reprieve, perhaps partly because U.S. tech companies, major suppliers to ZTE, would also have been scorched. ZTE agreed to pay a $1 billion fine, change its board and management, and let American regulators monitor its operations.

Speaking outside the White House Wednesday, Commerce Secretary Wilbur Ross urged reporters not to jump to the conclusion that Trump will actually intervene in Meng's case.

"Let's see what he actually decides," Ross said. "Let's see where we go from there."

Philip Levy, senior fellow at the Chicago Council on Global Affairs and an economic adviser in President George W. Bush's White House, noted that "there's a real value to keeping these things separate."

"Do we want China to seize an (American) executive when they want to get a concession on trade talks in the future?" he asked.