Report: Canada Seeks U.S. Help as China Retaliates Economically for Huawei Arrest

China expands ban on Canadian canola imports to second firm
AFP/FRED DUFOUR

CBC News reported on Sunday that Canada is frustrated with the United States for not doing enough to resolve tensions between Ottawa and Beijing – tensions which escalated into an economic showdown after Canada detained Chinese tech mogul Meng Wanzhou of the Huawei telecom corporation for extradition to the U.S. on charges of fraud and violating sanctions.

China’s initial response to the Meng arrest was to grab a few Canadians and throw them in jail on flimsy charges, but the dispute soon escalated into a serious trade battle. Last week, China followed through on a threat to block imports of Canadian canola and suspended export permits for two Canadian pork exporters.

China bought about 40 percent of Canada’s canola exports until the ban went into effect, shutting down almost $3 billion in trade. Canadian farmers said the timing of the ban was particularly harsh because they are preparing to plant the next crop and are now uncertain of how much canola they should grow. The government has promised subsidies to reduce the financial impact of the Chinese ban, but nervous farm industry representatives said that was only a short-term “Band-Aid” for the problem.

Canadian farmers have reported difficulty shipping other crops to China, such as peas and soybeans. Impediments suddenly appearing in the wake of Meng Wanzhou’s arrest ranged from prolonged inspections to errors in paperwork.

Even the huge canola ban is not explicitly presented as political retaliation by Beijing – it claims the entire crop of Canadian canola was rejected because it was contaminated with pests. The Chinese have ignored invitations from Canada to send a team of scientists to inspect the canola shipments for pests.

Since China is refusing to entertain Canadian trade delegations, the administration of Prime Minister Justin Trudeau launched what CBC described as a “full-court press in Washington” to enlist American help. The results were lamented as “meager” thus far:

“It’s a very challenging situation. When we raise it with the Americans they just say, ‘Dealing with the Chinese is tough,'” said a Canadian government source.

“It’s also not clear who we should be targeting since you never know who is up and who is down in the administration at any given point,” said the source, who requested anonymity given the sensitivity of the matter.

Among those the Canadians approached are Secretary of State Mike Pompeo, Agriculture Secretary Sonny Perdue, U.S. Trade Representative Robert Lighthizer and Republican Sen. Jim Risch, chairman of the Foreign Relations Committee.

While the Trump administration has expressed concern over China’s canola ban, it has reportedly been unwilling to fold Canada’s problem into U.S. trade negotiations with China. Canadian government sources told the CBC this is partly due to personal animosity between President Trump and Prime Minister Trudeau, and partly a result of U.S. trade tensions with Canada.

Some Canadian officials implied Trump is unwilling to get deeply involved in the struggle over Meng Wanzhou’s arrest because he wants to preserve the option of dropping charges against her as part of a grand trade bargain with China.

Canadian analysts explained China has all the leverage when it comes to trade disputes with Canada, so meaningful retaliation is virtually impossible. The Chinese see the Canadian economy as too small to pose a serious threat, and they tend to believe they can find alternative sources for any imported goods they choose to ban. If Canada escalates the dispute to serious sanctions that would cause significant financial damage to Chinese interests, the Chinese would retaliate in kind.

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