Huawei CFO Meng Wanzhou as she appears on the company’s English-language corporate webpage

Trump Administration Seems To Be Making A Habit Of Bringing Chinese Nationals To The U.S. And Prosecuting Them For Corporate Crimes

At The Request Of U.S. Law Enforcement, Canada Arrests High Ranking Officer Of The Biggest Telecom Manufacturer In The World

Huawei CFO Meng Wanzhou, who is also known as Sabrina Meng, was arrested while changing planes in Vancouver. The U.S. is seeking extradition. A hearing is scheduled for tomorrow. Officials there won’t say what the charges are, but sources tell Canada’s Globe and Mail they have to do with “violating U.S. sanctions in relation to Iran”. The Chinese government protested the arrest as a human rights violation.

Two months ago, the U.S. Justice Department successfully extradited a Chinese security official they’d first helped lure to Belgium. He was allegedly trying to steal secrets involved in the manufacture of commercial aircraft.

While the F.B.I. has long asserted China is a world leader in corporate espionage, and its disregard of intellectual property rights are central to ongoing trade talks, bringing Chinese citizens to the U.S. for prosecution seems to be a relatively new thing. Especially someone as high profile as Ms. Meng, who is also the daughter of the company’s founder.

Why would a Chinese business person operating outside the U.S., and probably not violating China’s laws, be subject to U.S. laws? In Ms. Meng’s case, it’s because U.S. law as written in relation to the Iran embargo, states any company that does business in the U.S. can’t do business in Iran. If it does, it’s automatically in violation of U.S. law.

Which then raises another question: why go to all the trouble of arresting somebody, putting a third country (in this case Canada) at risk, when the U.S. could just ban Huawei from doing business in the U.S. as the result of their alleged actions? Answer: the U.S. might do that too. Congress has been pressing for expanded bans of both Huawei and ZTE on the grounds that they are both not good corporate citizens, and their devices could be used for spying. But Trump cut a deal with ZTE allowing them back in with increased oversight. Even though most U.S. government contractors are banned from using equipment from either.

Will this new arrest have any impact on trade talks between China and the U.S.? No way of knowing quite yet. President Trump went out of his way to assert lots of progress is being made even as he Tweets:

China’s Commerce Ministry issued a brief statement, which we translated, and it’s characteristically vague, saying (via Google Translate):

“China will start from implementing specific issues that have reached consensus, and the sooner the better.”

Bloomberg meanwhile reports that China is beginning to prepare “to restart imports of U.S. soybeans and liquefied natural gas”.

As we’ve mentioned before, our reason for being somewhat optimistic about the prospect for talks is for one simple reason: U.S. Trade Representative Robert Lighthizer has effectively taken over the task of negotiating with China from Treasury Secretary Steve Mnuchin. While we don’t always agree with Lighthizer’s priorities and politics, with China we think he’s spot on, and he is one of the few of the “best people” Trump has hired who is really, actually the best.