Canada-China relations have once again risen to the forefront of Canadian news. It began with the arrest of Meng Wanzhou, Huawei’s Chief Financial Officer, who is now awaiting extradition to the US, as of January 24th, 2020. Relations were further complicated by the subsequent arrest of two Canadian citizens in China. Bilateral ties then hit a new low when Canada recalled its ambassador from Beijing. Another major issue for Canada is deciding the extent of Huawei’s involvement in Canada’s 5G network, as the company is offering the cheapest 5G rates relative to other internet providers. The following details three options available to the Canadian government in the case of Meng Wanzhou and their respective implications on trade, intelligence and Canada-China relations in general. The intelligence implications are crucial given Canada’s participation in the Five Eyes Alliance.
Option 1: Meng handed over to the US for trial
Canada risks the loss of Chinese business and investment in Canada by cooperating with Meng’s extradition to the U.S. Subsequent Chinese foreign and trade policies may then have a detrimental impact on Canada. Canadians in China face the risk of being imprisoned unjustly or even executed, under the Chinese legal system. Allowing Canadians on foreign soil to be harmed by another country would place the government in a bad light.
- Trade Implications:
The loss of Chinese business and investment in Canada would produce negative economic impacts across Canada. Canadian companies with Chinese branches would need to move their operations out of China, relocating to other countries within the area, such as Pakistan. The Canadian government may freeze Chinese assets in Canada, or even expropriate said assets. Similarly, China may seize Canadian assets in China. The Saskatchewan Canola industry and Quebec’s pork industry would be heavily hit by an import ban of Canadian goods into China.Quebec may issue a request to the federal government, seeking a possible re-entrance in the Chinese pork market or begin the search of a new pork market. Huawei may be inclined by the Chinese government to cease operations in Canada, which may negatively impact employment. A recent media report noted that the removal of Huawei from the Canadian broadband network could result in the loss of around a billion Canadian dollars.
- Intelligence Implications:
Canadian organizations and businesses may become prime cyber attack targets from adversaries in China, through broadband servers. This may happen irrespective of Huawei’s removal from all Canadian internet networks, in a similar manner to how Nortel was hacked. This may conversely result in improved relations between Canada and other members of the Five Eyes Alliance.
Option 2: Meng Returned to China
Releasing Meng back to China would be a violation of US-Canada extradition treaties. American courts have charged her, and expect Canada to handover Meng for allegedly committing fraud. Also, Canada can possibly secure the release of the two Canadians imprisoned in China.
- Trade Implications:
Presently over 80% of Canada’s trade is with its southern neighbor.The release of Meng to China would throw a spanner in Canada’s ratification of the US Mexico Canada Agreement (USMCA) agreement dubbed “the new NAFTA”.Despite the NAFTA agreement, the United States has previously acted unilaterally to impose tariffs on Canadian products or complained about unfair trade practices. This has mainly impacted the softwood lumber business, though a recent case stemmed from a Boeing complaint and involved Bombardier Aerospace. This was based on the notion that NAFTA was supposedly a bad trade agreement for the US.
- Intelligence Implications:
Since Canada is a founding member of the Five Eyes Alliance on intelligence, releasing Meng to China may come at the cost of being barred from shared intelligence.The other member countries could view that sharing intelligence with Canada may present security risks, due to the existence of Huawei in Canada’s 5G network.. This being on the basis that other Five Eye Alliance members could potentially view Canada as complying with China, and consequently being unable to challenge it. Most Five Eye Alliance members, except Canada and Britain have banned Huawei from competing in the 5G network due to its deep connections with the Chinese government. Britain however, has limited Huawei’s engagement in broadband networks to 3 and 4G networks.
Option 3: Roundtable with the US and China to discuss Meng’s case
Canada could hold a roundtable with the US and China on the matter. This roundtable may provide an opportunity for the US Department of Justice to bring forth the case against Meng. In doing so, a compromise between the three parties can be reached, perhaps entailing a hefty fine, no jail time and a ban on Meng entering the US or Canada. The roundtable may help assert Canada’s power as mediator by resolving issues through dialogue and compromises. Canadian Arctic sovereignty is less likely to be challenged by either the US or China.
- Trade Implications:
Trade implications of the roundtable may seem doubtful, given the nature of the roundtable. As such, trade may increase as Canadian companies and industries possibly expand operations in China and Chinese affiliated countries such as Pakistan, resulting in an increase in market sales and demand for particularly both the canola and pork industries in Canada. The removal of certain Western sanctions on notable Chinese and NATO partner countries could be included in the roundtable to secure a deal between Ottawa, Washington DC and Beijing. Huawei could then be encouraged to increase its 5G rates in Canada to be more in line with a national average. This would lessen the effect of Huawei’s removal from only the 5G network in Canada, if required. Canada may also be interested in perhaps investing alongside the Chinese in developing innovative environmentally friendly technologies so as to mitigate the effects of climate change.
- Intelligence Implications:
The intelligence implications of the roundtable are less negative than positive for Canada, the US and China. In terms of Canada’s benefit, Canada continues to receive vital intelligence through the Five Eyes Alliance. It can also allow for the smoother processing of broadband data, through 5G networks. Huawei may also be granted opportunities to expand within the Canadian broadband network, despite implementing security measures to minimize cyber related risks. In fact, the roundtable could even open up new opportunities for greater cooperation between Beijing, Washington and Ottawa on intelligence matters.
Conclusion:
Therefore, based on the three options above and their respective implications, taking the third option may seem the most beneficial. This being that the third option causes the least possible harm to Canada and allows for the situation to be diffused calmly and diplomatically. The three countries may also be able to collaborate on climate change technologies such as China’s diamond producing smog tower. China may also be able to advise both Canada and the US on how to implement floating solar panels on a large scale, such as their placement throughout the majority of Canadian lakes. Canada can also encourage China to improve its human rights system, in effect laying the groundwork for the creation of an independent Chinese judiciary. Canada can also call for China to reduce the number of Chinese Gulags set up, predominantly in the far Western region of Xinjiang for Uighur Muslims. Canadian organizations can even work alongside Chinese entities in the economic and regional development of foreign countries such as Pakistan or even countries in Africa.
Featured Image: This Chinese dragon is made of gold-plated ceramic with a gold commemorative plate affixed with red silk tassels. It is one of a pair that was donated to the Queensland Museum in 2007 by Peter Beattie, a former Premier of Queensland. The Chinese Community of Queensland presented the dragon to him in recognition of his clear stance against racism and for embracing the multicultural nature of Queensland society. . (Queensland Museaum) cc. via https://commons.wikimedia.org/wiki/File:Chinese_Dragon_QM-r.jpg
Disclaimer: Any views or opinions expressed in articles are solely those of the authors and do not necessarily represent the views of the NATO Association of Canada.
