IN THIS EDITION: Meng Wanzhou decision draws international scrutiny, what could the decision mean for Canadian agriculture, Australia and Mexico approach US-China relations differently.

Meng Wanzhou Trial

Tensions in the Canadian-China relationship intensified with the B.C. Supreme Court Associate Chief Court Justice Heather Holmes’ decision that Meng Wanzhou’s actions did constitute double criminality; the fraud that Meng Wanzhou is alleged to have committed in the United States is also considered a crime in Canada.

When Wanzhou was originally arrested in Canada, the Huawei executive was alleged to have lied to HSBC about the nature of financial transactions and used the bank to conduct business with Iran. Under U.S. sanctions, no U.S.-based financial institutions can be used for transactions with Iran. Wanzhou’s legal team filed an appeal to the extradition order based on the fraud allegations with the argument that Canada did not impose sanctions against Iran, so the alleged conduct would not be considered a crime. In order to enforce an extradition upon an individual, the alleged crime must also be a crime in the extraditing country, in this case Canada.

In explaining the decision, the judge determined that while the sanctions were not enforced in Canada, if a Canadian citizen had lied to a U.S. bank to avoid Iran sanctions, the citizen would have committed fraud under Canadian law.

The case will come before Canadian courts again on June 15 as the court hears another appeal from Wanzhou’s legal team. This appeal argues that Meng Wanzhou’s arrest violated her rights and was politically motivated, based on President Donald Trump’s comments that he would effectively use Wanzhou as a bargaining chip.

When asked in an interview if China would take reprisal actions against Canada if the court did not find in Wanzhou’s favor, China’s Foreign Ministry Spokesperson Zhao Lijian said he did not answer hypotheticals. Others have speculated that China could not risk retaliation with COVID-19 increasing tensions between China and other nations around the world. The Canadian business community is waiting to see what any potential fallout will bring and which sectors may be hit.

Impacts of decision on Canadian agriculture

Farmers are concerned about retribution for the decision. Comparisons show that overall beef exports to China are down 51% from 2019. In terms of crop exports to China for January to April last year – before Chinese import restrictions were put in place – to January to April this year:

• Pea exports have increased from 462,000 to 759,000 tonnes

• Canola has dropped from 1.52 million tonnes to 893,000

• Wheat went up from 1.15 million to 1.51 million tonnes

• Barley dropped from 2.54 million to 1.43 million tonnes

One area which may be affected by the Wanzhou decision is that of canola. After a year of blocked Canadian canola imports to China and an approximate $1 billion loss in revenue according to the Canola Council of Canada, Canadians are ready for a solution. Following Wanzhou’s hearing, however, there is concern that the canola feud will continue. Experts say that Canada needs to reframe trade expectations to encourage less dependency on consistent trade with China.

Australia and Mexico handle the US-China relationship

Canada is not the only country caught in the tensions between the U.S. and China, but others have approached it differently.

Mexico is making use of its ability under section 32.10 of the new NAFTA to obtain information about China-U.S. trade negotiations. The section allows country signatories (U.S., Canada or Mexico) to obtain “as much information as possible” from another country signatory when that country engages in free-trade negotiations with a country not party to the new NAFTA. Mexico has indicated the country will ask for detailed information into the China-U.S. negotiations while Canada has not.

Australia has found itself caught between the U.S. and China as well. China is Australia’s largest trading partner, but it negotiates these relations differently than Canada. Australia has banned Huawei while Canada has still not announced a formal decision either way – we had reviewed the concerns of Five Eye nations, Australia, Canada, U.S., France and the U.K. in a previous brief. Australia has been hit with an 80% tariff on barley, following a previous ban on exports from four Australian abattoirs (35% of beef exports), in response to Australia’s calls for investigations into China’s response to the COVID-19 pandemic. As noted in the last China brief, Canada has treaded very carefully in terms of COVID-19 and China.

Hong Kong tensions

China faces additional scrutiny as it plans to impose new national security laws in Hong Kong. Australia, the U.K., the U.S., and Canada have released a joint statement of opposition regarding China’s attempt to dissolve the “one country, two systems” framework. Canada stresses the importance of protecting the rights and liberties of the people of Hong Kong, despite Chinese threats over the Meng Wanzhou decision, which were promised under the UN-registered Sino-British Joint Declaration. The declaration transferred oversight of the region from the U.K. to the Chinese government while ensuring Hong Kong’s autonomy and continuation of its economy and social systems. Nearly 300,000 Canadian citizens currently live in Hong Kong and Canada received 46 asylum claims from Hong Kong citizens between January 1 and March 31, 2020.

In response to China’s dissolution of the framework, the United States announced that they would revoke Special Trade Status for Hong Kong. China has instructed two state farms to halt imports of all soybean and pork products from the United States in retaliation, however three shipments of soybeans were sent to China from the US following those reports.

Anti-Asian Sentiment on the Rise in Canada

The COVID-19 pandemic has been a point of tension within the China-Canada relationship. The international backlash against China includes racial sentiments and hate crimes towards Asian and other minority communities within Canada. From hateful graffiti on the Chinese Consulate in Calgary to physical assault in Vancouver. The Chinese Vice-Consul in Calgary condemned the graffiti attack, saying it “violates the Vienna Convention on Diplomatic Relations and the Vienna Convention on Consular Relations.”

In our previous deep-dive into the impacts of COVID-19, we looked at the importance of Chinese international students to the Canadian post-secondary system. With COVID-19 travel impacts, it was unclear whether or not international students would be able to return to the country for the 2020-2021 academic year. It appears that Chinese students do intend to return, but these domestic racist attacks have some students concerned. A coalition of Chinese-Canadian citizens groups, with funding from the Canadian government, created a website for the Asian community to track and report attacks to help end COVID-19 related racism.

Everything Else:

• Marc-Andre Blanchard, Canada’s Permanent Representative to the UN, responded to questions about the impact of the current tensions between China and Canada on Canada’s ability to secure a seat on the UN Security Council. Mr. Blanchard sees Canada in a good position and noted that, while China-Canada tensions may factor into decisions, countries have their own reasons for how they vote and this issue is just one of many factors to consider.

• Canadian Border Services launched an investigation into whether hot-rolled heavy steel plate imports are being dumped and sold at low prices in Canada, negatively impacting Canadian industry. The plates under investigation come from Taiwan, Germany, South Korea, Malaysia and Turkey.

• The Cullen Commission on money laundering in B.C. began its hearings with Criminologist Stephen Schneider explaining how transnational money service businesses helped launder Chinese money through Metro Vancouver. Mr. Schneider estimates billions to trillions of dollars were laundered to avoid China’s $50,000 US cap on money leaving the country.

– Stephany Laverty, policy analyst and Taylor Blaisdell, intern

The China Brief is a compilation of stories and links related to China and its relationship with Canada’s West. The opinions expressed in the links are those of the articles’ authors and don’t necessarily reflect the views of the Canada West Foundation and our affiliates.