Canada's trade chief says ties with China will survive Huawei furore

Canada's Trade Minister Jim Carr sought to play down a developing rift between China and Canada in an interview at his Ottawa office. PHOTO: AFP

VANCOUVER (BLOOMBERG) - Ties between China and Canada are strong enough to withstand the arrest of a senior Huawei Technologies executive, Canada's Trade Minister says.

Jim Carr sought to play down a developing rift between the two countries in an interview at his Ottawa office. A bail hearing for Meng Wanzhou, the Chinese tech giant's chief financial officer and daughter of its founder, resumed hearing arguments later Monday on Canada's Pacific coast.

"In sophisticated trading relationships, there will be difficult moments - but we're confident that the relationship is so important, and at so many levels, that it will continue," Carr said.

The Meng case is straining ties. China summoned Canada's ambassador in Beijing to explain the arrest over the weekend, and on Monday (Dec 10) the foreign ministry accused Trudeau's government of violating an agreement to speedily inform the Chinese consulate of the tech executive's arrest. Some experts have also warned about potential retaliation.

"We are a nation that lives by the rule of law, and that's clear," Carr said, defending Canada's decision to act on a US request for Meng's arrest. "We have a treaty. There's been no political involvement on this file and the justice system is doing what it's supposed to do."

Canadian Prime Minister Justin Trudeau's government is hoping to deepen ties with the Asian powerhouse as his country looks to diversify trade beyond the US under Donald Trump.

Carr and other key ministers visited China last month, as the countries pivoted toward more bite-sized trade deals after Trudeau's push for a sprawling accord came up short one year ago.

Meng was arrested in Vancouver on Dec 1 while on a 12-hour layover. She is charged with conspiracy to defraud banks, with the US alleging Huawei used an unofficial subsidiary to do business in Iran in contravention of sanctions.

Trudeau's government has downplayed its role in the arrest, saying it had a few days' notice but that it didn't intervene. It emphasises the judiciary is independent in Canada and maintains there was no political interference.

That hasn't placated Chinese complaints. China's state media called her arrest a "despicable rogue's approach" by Washington and warned that Canada, too, could face "severe consequences".

That makes the northern nation a potential casualty in the brewing US-China trade war, though American officials are seeking to insulate trade talks from the dispute over Meng's arrest. Her detention could have ripple effects, including on reform efforts at the World Trade Organization.

Carr, who hosted a meeting without the US or China on strengthening the global trade group, said Canada would continue to push for change at the WTO.

"There is a consensus wherever I have travelled, and with whomever I have spoken, that the Canadian initiative is positive, that it has the right representation around the table," he said.

Trudeau signed a new trade deal with the US and Mexico late last month, but it still needs to be ratified by lawmakers.

Trump has threatened to give notice of withdrawal from the existing three-country deal - essentially forcing Congress to choose between the new version or nothing at all. All that leaves Trudeau with lingering uncertainty on trade with Canada's neighbor and biggest partner.

The new deal also includes what is essentially a China clause, which gives countries certain powers if one of the others signs a trade deal with a non-market economy. Carr said he was asked about it in China.

"Yes, all the time - and we were able in short order to make the argument that this will not affect our relationship with China," he said. "They seem to be satisfied that it was business as usual."

Since Meng's arrest, there have been warnings that influential Canadians should avoid travel to China in case of retaliation. But Dominic Barton, chairman of Vancouver-based Teck Resources, said on Monday he would have no reservations about going.

"There remains lots of business to be done together," Barton told BNN Bloomberg television, when asked about the Huawei case. "That's what I think we should keep focused on - just having the broader relationships and not having everything be pivoted on this."

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