Being caught between two superpowers is an uncomfortable place to be. But that is where Canada finds itself with its arrest in Vancouver of Meng Wanzhou, chief financial officer of China's telecoms giant Huawei and daughter of the company's founder. Meng was arrested at the request of the United States, which is seeking her extradition to face charges of fraud linked to information she provided to U.S. companies about Huawei's sales to Iran, now under U.S. sanctions.
In arresting Meng, Canada was fulfilling its legal obligations under the terms of its extradition agreement with the U.S. China, of course, does not see it this way. Reacting with predictable anger, China has accused Canada of violating Meng's human rights and serving as an instrument of U.S. President Donald Trump's confrontational policy toward China. Beijing has demanded Meng's immediate release, and has made ominous but vague threats about Canada facing "consequences" if it does not comply.
There is no doubt that China will respond strongly to what it sees as an attack on Huawei, a flagship company that symbolizes China's innovation, global reach and international prestige. China's reaction will not only be aimed at putting pressure on Canada to release Meng, but also retaliating against what it sees as Canada's support for the U.S. agenda on Huawei and on China.
Retaliatory measures could include canceling bilateral meetings and high-level visits, sudden regulatory "problems" with Canadian exports (especially agricultural products), and pressing Chinese businesses to cancel orders with Canadian companies. Any informal discussions on a possible free trade agreement will probably be suspended. China might also try to use Canada's bid for election to the United Nations Security Council in 2021 and desire to join the East Asia Summit as leverage.
These pressure tactics will be familiar to most countries in Asia and elsewhere that deal with China. Many have felt the impact of China's power to exert coordinated pressure -- particularly economic pressure -- to achieve political ends. Canada's ability to resist such pressure may be seen as an indicator of the limits of China's strength.
Pressure from China may prove to be futile in Meng's case. Canada is in no position to interfere with an independent judicial process and release her, just as it could not deny the U.S. request under its extradition agreement.
Since either China or the U.S. will be unhappy with the final decision on Meng's extradition, Canada's best defense is to scrupulously follow an objective legal process that is divorced from political influence. It is called the rule of law and China could do with more of it.
Once the extradition decision is made, Canada's relations with China are likely to improve again because the case will either have become another Sino-American problem or because Meng is back in China.
As a price for returning to positive relations, China may demand that Canada allow Huawei to participate in Canada's future 5G market. It would be in Canada's best interests not to succumb to such pressure. Ottawa should seriously consider the security concerns about Huawei expressed by its closest intelligence partners -- the U.S., the U.K, Australia and New Zealand -- in the so-called Five Eyes alliance. If anything, this case could further undermine Huawei's 5G chances in Canada.
The Meng case has implications that go beyond Canada's relations with both China and the U.S. The Sino-American trade conflict is continuing along with Washington's aggressive pursuit of Huawei or other Chinese companies suspected of illegal or unsavory practices. Given the strong and growing presence of both Huawei and China in the Asia-Pacific region, other Asian countries could well find themselves facing similar cases.
Canada's ability to navigate the Meng case and resist pressure from China rests on the strength, independence and transparency of its legal system. Countries with weaker institutions, faced with similar challenges, may find it harder to resist this kind of pressure. In such circumstances, whatever the strength of the legal case, China wins and the rule of law loses.
Philip Calvert, a former Canadian diplomat, is a senior fellow at the China Institute, University of Alberta, and a senior research Fellow at the Centre for Asia-Pacific Initiatives at the University of Victoria, Canada.