Trump to intervene with Huawei CFO’s arrest

The US President Donald Trump said that he is willing to intervene in the case of the detained Huawei CFO, Sabrina Meng Wanzhou if it would help secure a significant trade deal with China.

Background

Huawei is a Chinese tech company based in Shenzhen that sells smartphones and telecommunications equipment around the world. Earlier this year, it became the world's second-largest smartphone maker, behind Samsung. It sells more phones than Apple.

Huawei is under investigation for potential violations of US sanctions against Iran. US lawmakers have repeatedly accused the company of being a threat to US national security, arguing that its technology could be used for spying by the Chinese government.

Meng Wanzhou, the chief financial officer of Huawei, was detained in Vancouver at the request of US authorities. A spokesperson for Canada's Justice Department said that the United States wants to extradite Meng, and a bail hearing is set. According to a law enforcement official, the US Justice Department sought the arrest as part of an ongoing investigation.

Analysis

The US President Donald Trump recently said that he would intervene with the US Justice Department in the case against a Chinese telecommunications executive’s detainment if it would help secure a trade deal with Beijing.

In an interview with Reuters agency, he said he would undertake this action as he would do “whatever’s good for this country”. He also said: “If I think it’s good for what will be certainly the largest trade deal ever made, which is a very important thing, what’s good for national security, I would certainly intervene if I thought it was necessary”.

Meng Wanzhou’s arrest is part of an ongoing investigation by U.S. prosecutors into whether Huawei had violated banking laws as it sought to evade sanctions against Iran by routing a series of transactions through HSBC Holdings Plc.

China has been demanding for Meng’s release and calling the arrest a human rights violation. They have also threatened to inflame tensions with the US. In a statement, Huawei said it had complied with "all applicable laws and regulations where it operates, including applicable export control and sanction laws and regulations of the UN, US and EU."

In a letter to suppliers, the company said: "We believe it is unreasonable of the US government to use these sorts of approaches to exert pressure on a business entity. They are against the spirit of free economy and fair competition."

Chinese China's Foreign Ministry had earlier summoned US ambassador, Terry Branstand and Canadian ambassador, John McCallum to protest against the detention of Meng Wanzhou, describing the arrest as ‘lawless’ and ‘extremely vicious’. China’s vice minister of foreign affairs, Le Yucheng said China would like the US to revoke the arrest warrant and warned Canada of “serious consequences” if the release does not take place.

However, President Trump’s remarks of his intention to intervene were taken positively by the Chinese foreign ministry spokesman Lu Kang. He told reporters, “If the U.S. government wants to make a positive effort to promote the settlement of the issue, we welcome them”.

The US presidents’ remarks came on the same day China told the US that it would cut tariffs on imports of US cars from 40 per cent to 15 per cent. This was the first concrete sign of progress in trade talks since Mr Trump and Mr Xi met in Argentina.

Incidentally, a former Canadian diplomat, Michael Kovrig, was detained by a branch of China’s Ministry of State Security during a visit to Beijing. This arrest by China’s spy agency could further escalate the feud between the countries.

On Bloomberg television, Richard Fenning, chief executive officer of Control Risks said regarding both the detainments: “We could speculate endlessly as to whether these judicial issues are pure coincidence or whether they are tied into a political agenda”.

Counterpoint

James McGregor, China chairman of the consultancy APCO Worldwide expressed that, “These remarks by Trump are extremely dangerous and reckless as he could be fueling thoughts about arresting American executives in China as bargaining chips,”

Assessment

Our assessment is that President Trump’s comments could help in changing the direction of the trade war from confrontation to engagement. We believe that his remarks resonate the favourable agreements met between his Chinese counterpart at the recent G20 summit in Argentina. However, we think that the detainment of the Canadian diplomat could further halt the talks for a trade deal between the countries.

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