Just weeks ago, Justin Trudeau’s government was quietly executing a turn in its approach to China, putting the idea of a free-trade agreement on the back burner and trying to come up with a second version of its China strategy.
In the reboot, free-trade talks would come down the road – after the 2019 election, at the very least. Four cabinet ministers travelled to China about a month ago, shifting the focus to helping business win contracts, clearing away some specific trade hurdles and possibly forging agreements on certain industries.
But all that has been ripped to shreds by Chinese anger over the arrest of Huawei executive Meng Wanzhou at the request of U.S. authorities to want to see her extradited there.
Now, it’s time for the Trudeau China policy, take three: hunkering down and trying to stickhandle out of a corner.
Chinese authorities have arrested two Canadians on mysterious charges. Business repercussions are probably coming, too.
Don’t expect government-to-government talks on agriculture to speed along now. Chinese companies might hear whispers telling them to put deals with Canadian firms on hold. When it wants to, China finds trade obstacles, such as a quality issue with Canadian canola.
Trade Minister Jim Carr argues things will work out over the long run.
“This is a relationship of long standing, because it’s in the interests of both nations. That is what will drive the continuing relationship between our two countries,” he said in an interview with The Globe and Mail last week. “There will be bumps on the road inevitably. And we have to adapt to them.”
But what about now? Will there be a sudden impact on Canadian business with China now? “I don’t know,” Mr. Carr said.
“We’re in a position where we will wait to see what China might or might not do. Meanwhile, our objective as a government is to continue to build the relationships that we have been nurturing for years.”
That’s optimism. Beijing has chosen intimidation tactics that clobber any lingering notion of China as a benign business partner. And that will hem in Mr. Trudeau’s choices – and probably force him to be colder, not warmer, to China.
Things might get worse soon. Canada is expected to make a decision within months on whether to ban Huawei equipment from next-generation 5G networks – and if it does so, that might intensify Chinese anger.
The arrest of Ms. Meng is related to an investigation about Huawei’s misrepresentation in alleged violation of Iran sanctions that dates back as far as 2009, according to the court filings of Crown lawyers at the executive’s bail hearing.
But it comes amid a U.S.-led effort to pressure Western countries to ban Huawei equipment from new 5G networks, on suspicions that the Chinese company’s equipment might serve as a window for Chinese spying.
That pressure is particularly intense on members of the Five Eyes network of intelligence-sharing countries – the United States, Britain, Australia, New Zealand and Canada. The United States and Australia have effectively banned Huawei from 5G; New Zealand has just barred one telecom firm, Spark, from building with Huawei equipment. Britain and Canada are considering their moves.
Mr. Trudeau is not only under pressure from the United States to follow suit; if he doesn’t, he risks being blamed by Canadians for caving in to Chinese bully tactics.
There will be a deep temptation to delay the Huawei decision for months, in the hope Chinese furor over Ms. Meng’s case will die down. But Ms. Meng’s extradition case could drag on for years, keeping Canada-China relations in the deep freeze – unless a judge quashes her extradition.
Some in the business community hope Justice Minister Jody Wilson-Raybould will find a way to refuse the U.S. request to extradite Ms. Meng – perhaps by citing U.S. President Donald Trump’s foolish remark that he’d intervene in her case if it helps trade talks with China, as evidence the case is politicized. But again, Mr. Trudeau’s government can’t risk being seen caving to Beijing’s pressure.
That leaves Mr. Trudeau, who initially tried to push for a free-trade deal with Beijing, being forced down a road that kills his Plan B, too.
Mr. Trudeau’s third China policy is one where the options are few. The big opening he once hoped for has shrunk to a tiny gap between Chinese anger and Canadian skepticism, and there aren’t many ways to steer ambitious plans through it.
Campbell Clark