President Trump and his Justice Department are on the verge of tightening their hold on Huawei Technologies Co. as Meng Wanzhou loses key defense in fight against extradition to the United States.
Meng Wanzhou, Chief Financial Officer Huawei Technologies Co., failed to persuade a Canadian judge to end extradition proceedings. She remains under house arrest Vancouver as she fights U.S. efforts to prosecute her on fraud charges.
In today’s ruling, the Supreme Court of British Columbia said that the case met the standard for “double criminality,” and thus, the extradition hearing will be allowed to continue. That decision represents a significant blow to Huawei, which had hoped to end the suit and bring Meng home back to China.
It’s a pivotal moment in the long-running saga over the fate of Meng and Huawei and could trigger a shooting war with China. Meng Wanzhou was arrested at Vancouver International Airport on December 1, 2018, at the request of U.S. authorities, who eventually indicted her and Huawei itself with a bevy of fraud charges.
The charges stemmed from an investigation by the U.S. Department of Justice looking into Huawei’s ties with a number of affiliates, including Skycom Tech Company Ltd, which is alleged to have sold telecommunications equipment to Iran in violation of U.S. sanctions.
Huawei uses American technology in its products, and under U.S. export laws, companies are forbidden from transferring that technology to countries under sanction. Huawei has previously denied that it controlled the companies and has vigorously defended itself in the case.
Meng has been afforded a luxurious house arrest in Vancouver for almost a year and a half pending deliberations of the Canadian courts. The case has seen intense scrutiny from China, the U.S., and Canadian authorities. It has become a symbol of the continuing trade fight between the U.S. and China, but now is threatening to unravel the relations of all three countries.
The decision made yesterday comes from a narrowly focused court hearing in January on a Canadian legal doctrine known as “double criminality,” which states that a subject needs to face criminal charges in both Canada and the receiving country for extradition to be approved. While courts generally handle all aspects of extradition at once, the judge, in this case, associate chief justice Heather Holmes, decided to split Meng’s extradition hearing into phases, given that without double criminality, the case would be automatically closed.
The decision on Meng, who is the daughter of Huawei’s founder and CEO, Ren Zhengfei, is just one of many different battles that Huawei has faced in recent months.
Over the weekend, Huawei faced a new blow to its prospects in Europe after the United Kingdom, which had been a lukewarm but a steady supporter of using Huawei’s equipment in its next-generation 5G networks. The U.K. announced that it was reversing its decision and would wean itself off of Huawei equipment over the coming years.
Meanwhile, the Trump administration has been focused like a laser on Huawei as it attempts to shift the balance of power in the United States’ trade relations with China. Two weeks ago, the Trump administration extended its technology export restrictions on Huawei, endangering the company’s ability to produce its chips and smartphones. TSMC, the world’s largest contract semiconductor fabs, said that it wasn’t accepting new orders from Huawei in light of the new restrictions. At the same time, TSMC announced a massive, $12 billion manufacturing facility in Arizona.
The Trump administration has made economic combat with Huawei a policy priority. The entire federal government, however, has not endorsed that strategy. Departments and agencies like the Department of Defense and the Pentagon have pushed back on the Huawei’s ban in a bid for ‘balance’worried that the restrictions on export licenses could ultimately have deleterious, second-order effects on American industrial competitiveness.
China has already made one of its most important missions to build its equipment using entirely domestic Chinese components, veering around U.S. export controls and breaking free of their confines. Assisting on that front is China’s government itself, which has put up billions of dollars in new funding to build up its domestic chip-making capabilities.
The Chinese may choose to respond with a final decision to extradite Huawei Technologies Chief Financial Officer Meng Wanzhou to the United States with mass arrests of U.S. and Canadian ex-pats living in China, including in Hong Kong. These ex-pats could wind up in Chinese re-orientation centers or may end up being imprisoned in one of China’s worst prisons, creating even bigger crises that could lead to the invasion and forced repatriation of Taiwan into China.
The Chinese could also rip a page from the Russian playbook and pull out all its IT tools to make sure Trump is defeated in November. As hard as Biden would have to respond to things as they are now between the three countries, Biden would be willing to negotiate without the childish behavior Trump has been leaning on the past 3 ½ years.