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Huawei looms large over U.S.-China trade talks

WATCH (Jan. 23): Trump says China wants to make a deal, tariffs to come in place soon

WASHINGTON — A Canadian reader of U.S. news reports about last week’s trade talks with China could be forgiven for wondering: what the heck happened to Huawei?

READ MORE: Donald Trump to meet Xi Jinping to hammer out a trade deal, U.S. president says

After all, the week began with the U.S. Department of Justice unsealing two damning indictments against the Chinese tech giant, including one that names chief financial officer and telecom scion Meng Wanzhou, whose arrest in Vancouver two months ago dragged Canada into an escalating battle of ideologies between the two largest economies in the world.

WATCHTrump optimistic on trade deal with China

Trump optimistic on trade deal with China
Trump optimistic on trade deal with China

And yet two days later, as President Donald Trump and Vice Premier Liu He sat across from each other in the Oval Office after two days of high-level, high-stakes trade talks, the eyebrow-raising U.S. allegations of fraud, conspiracy and obstruction of justice against one of the world’s fastest-growing telecommunications firms elicited barely a mention.

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READ MORE: Cost of trade war in billions for both U.S. and China in 2018

“We haven’t discussed that yet,” Trump said Thursday when asked if Huawei had come up during the talks. “It will be, but it hasn’t been discussed yet.

“That, actually — as big as it might seem — is very small compared to the overall deal.”

Geopolitical observers and trade analysts alike aren’t buying it.

WATCH: U.S., China launch high level trade talks

U.S., China launch high level trade talks
U.S., China launch high level trade talks

When Trump talks trade, America’s transactional, deal-hungry president tends to be less focused on bigger-picture issues than the messages he can sell to his supporters. Thursday’s Oval Office exercise, for instance, was all about radiating mutual goodwill — like when Liu disclosed, seemingly to the surprise of Trump’s aides, that China would buy five million tons of American soybeans.

READ MORE: With security concerns and criminal charges – should Canada allow Huawei to operate in Canada?

“Wow,” said Trump, visibly impressed. “That’s a lot of soybeans.”

Not really; China used to buy six times that every year from the U.S., which produced about 138 million tons of soybeans in 2018. Tariffs changed all that. But the president is in dire need of a political win in short order on trade with China, which he won’t get by talking publicly about what’s really going on — a broader, multi-pronged, long-term American effort to blunt its economic, geopolitical and military might.

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WATCH: China demands Canada ‘immediately release’ Huawei CFO

China demands Canada to ‘immediately release’ Huawei CFO
China demands Canada to ‘immediately release’ Huawei CFO

“There’s a lot of tension within the U.S. administration about China policy,” said David Dollar, a senior fellow in foreign policy, global economy and development at the Brookings Institution’s John L. Thornton China Center in Washington.

READ MORE: U.S. hits Huawei and CFO Meng with 23 criminal charges. Here’s what you need to know

“One school of thought is, ‘This is a Communist dictatorship, it’s a potential threat to the U.S., we can’t get along with this country’ — ‘decouple’ is the word they use. To the extent they’re gaining ascendancy, then you don’t want a trade deal. You just want to slap on big tariffs, you want to penalize Chinese companies, Chinese citizens, and reduce the economic relationship.

WATCH: Trudeau says China trying to interfere with Canada’s judiciary by asking for release of Huawei CFO

Trudeau says China trying to interfere with Canada’s judiciary by asking for release of Huawei CFO
Trudeau says China trying to interfere with Canada’s judiciary by asking for release of Huawei CFO

“Then there are other members of the administration who — I think correctly — understand there’s a lot of benefit in U.S.-China economic exchange, and they would like to improve the terms of that and in some sense deal with these security issues, but ringfence them so that other economic exchange can go on.”

Canada shares that latter approach, a delicate high-wire act made all the more awkward by the swirling diplomatic updrafts of Meng’s Dec. 1 arrest and former ambassador John McCallum’s public assessments of her chances in court.

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READ MORE: Feds ink $40M research deal on 5G technology with Nokia — Huawei’s competitor

It would be “naive in the extreme” to think that the Huawei controversy can be divorced from the U.S.-China trade discussion, said Wesley Wark, a University of Ottawa professor who specializes in matters of national security and foreign relations.

“Huawei has been made exhibit No. 1 in a China-U.S. trade war and struggle for technological supremacy, and the criminal indictments are just kind of on the ground floor,” he said.

WATCH: Chinese executive at centre of multi-national legal battle makes court appearance

Chinese executive at centre of multi-national legal battle makes court appearance
Chinese executive at centre of multi-national legal battle makes court appearance

China is determined to diminish U.S. influence and extend its own economic, political and military reach around the world with “a distinctly Chinese fusion of strongman autocracy and a form of Western-style capitalism,” Dan Coats, the U.S. director of national intelligence, warned last week in a briefing with the Senate intelligence committee.

Trump’s trade and economic emissaries will resume talks in Beijing later this month, and the president himself will sit down with counterpart Xi Jinping before March 1, when U.S. tariffs on some $200-billion worth of Chinese goods are scheduled to jump to 25 per cent. It will be during those presidential talks where Huawei returns to the agenda, observers say.

READ MORE: With 5G, data could reach you in as little as a millisecond, 50 times faster than 4G

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Trump used the all-caps word “comprehensive” in a string of tweets last week about his high hopes for a trade deal with China — a sentiment he repeated Sunday in an interview with CBS’s Face the Nation.

“No two leaders of this country and China have ever been closer than I am with President Xi,” the president said. “We have a good chance to make a deal … and if there is a deal, it’s going to be a real deal. It’s not going to be a stopgap.”

That means Huawei and help with North Korea more than it does more soybeans, said Dan Ujczo, a trade lawyer and Canada-U.S. specialist with Dickinson Wright in Columbus, Ohio.

WATCH: Pressure mounting to exclude Huawei from 5G

Pressure mounting to exclude Huawei from 5G
Pressure mounting to exclude Huawei from 5G

“Huawei is what it’s all about at the end of the day,” Ujczo said. “That’s what comprehensive means. The meeting between the two leaders — trade will just be one of the three major components, with Huawei being probably at the top of the list and North Korea right after.”

Trade, Huawei and the world’s broader concerns about China’s at-all-costs global ambitions are closely intertwined components of the U.S. strategy, said Wark. Whether that strategy will work is another question.

“I think it’s a very aggressive American policy that has to be rooted in an assumption that it’s possible to change Chinese behaviour through force. That critical assumption — that you can force, in a relatively short time frame, a change in Chinese behaviour through these tactics — that’s the critical thing that we should be speculating about: is this a good policy?

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“Many people would argue it doesn’t have a chance in hell. But lots of voices need to weigh in on that one.”

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