Stuck between China and US, Canada finds itself ‘alone in the world’

Just a few years ago, it would have been unthinkable that the United States would not back Canada in a geopolitical standoff.

But that was before the coming of President Trump. Since his inauguration, Canadians have found Washington to be an antagonist as often as an ally, in instances ranging from NAFTA renegotiations to insults directed at their prime minister, Justin Trudeau. And in cases when Canada would normally have received the support of its southern neighbor – a diplomatic tiff with Saudi Arabia, for instance – it stood alone.

In reaction, Ottawa has been seeking a place in this shifting international landscape, in part bolstered by economic and political ties with China to reduce its dependence on the US.

The events of the past two weeks show just how difficult that will be.

The arrest of Chinese telecom Huawei’s chief financial officer at the international airport in Vancouver, British Columbia, on Dec. 1 has sparked conflict between Canada and China – one that escalated this week with the detention of two Canadians in China. But perhaps more problematic for Ottawa, it has been placed in the middle of a much bigger battle between China and the US.

Canada casts itself as the secondary player in the arrest of Meng Wanzhou, with no choice but to respond to the US Justice Department's request under a long-standing extradition treaty. Yet the fallout presents tough primary choices ahead, both political and economic, as Ottawa positions itself between two superpowers it can’t count on.

“I think it's a wake-up call,” says Guy Saint-Jacques, a former Canadian ambassador to China. “Canadian public opinion will take note of this whole situation and it will be more difficult for the government to pursue its engagement strategy with China.”

Big trouble in China

Ms. Meng's arrest has made global headlines, in no small part because many view it as the coming of proxy wars in trade and technology between China and the US that will impact all players – especially those most dependent on the two powers.

The Canadian government has sought to downplay the politics surrounding the matter. Facing pointed threats from China for the arrest of the executive of the Chinese telecommunications giant, Canadian officials have emphasized this is a purely judicial matter. The US is seeking the extradition of Ms. Meng, who they accuse of fraud related to US sanctions on Iran.

But China is furious, while Mr. Trump waded into the matter this week, ratcheting up political tensions and exemplifying to many Canadians how little they can count on their long-time ally.

The Canadian government has been seeking to negotiate a free trade deal with China, particularly as the US under Trump has imposed tariffs and challenged the status quo in the US-Canadian trade relationship. Those efforts had been hampered, most recently with the new North America free trade deal, known as USMCA, that place restrictions on pacts made with “non-market” economies.

A diplomatic spat with Beijing was the last thing Canada wanted. But China responded harshly, detaining Michael Kovrig, a former Canadian diplomat in Beijing and currently with the International Crisis Group, and businessman Michael Spavor, who facilitates trips to North Korea. On Thursday, China said both are accused of undermining China’s national security, though it's perceived in Canada as retribution. Their detentions could shake the Canadian public's trust in a deeper Sino-Canadian relationship.

Philip Calvert, a former Canadian diplomat and senior fellow at the China Institute at the University of Alberta, says the incident doesn’t change Canada's views on diversification from the US. But it could add impetus to put more emphasis on other markets beside China, such as the European Union or other Asian countries.

It could also impact the expansion of Huawei and 5G technology into Canada. Huawei enjoys a significant presence in Canada, symbolized by its sponsorship of the most Canadian of pastimes, “Hockey Night in Canada.” Ottawa has yet to decide on allowing Huawei to participate in Canada's 5G network when it launches, unlike the majority of Canada's' co-members in the “Five Eyes” intelligence partnership, which have barred Huawei equipment due to national security concerns.

“This situation is unlikely to make the Canadian government more sympathetic to Huawei,” Dr. Calvert says.

This is not the first time that Canada and China have found themselves in a diplomatic crisis. In 2014, the Canadian government arrested a Chinese citizen accused of hacking and extradited him to the US. Two Canadian aid workers, the Garratts, were then detained a week later in China and accused of spying, a case also perceived as retribution.

Canada’s international trade diversification minister, Jim Carr, responded to Mr. Kovrig's arrest earlier this week, seeking to downplay risk to the commercial relationship. “We have a sophisticated, complicated relationship with China that dates back decades and I'm sure will endure,” he told the local press. “There are business leaders in China now, there are more who plan to go.”

But the road is far from clear, says Mr. Saint-Jacques. “It’s like hitting a patch of black ice, and your car is turning around, and you don't know when you will end up in the ditch."

Stuck in the middle

Canada’s relationship with the US might be even more damaged. Trump weighed into the crisis this week, saying he’d intervene in the Meng case if it served US interests in free trade – fueling perceptions that it is a political, not judicial, matter, and greatly complicating Canada's position.

In fact, some point to the incident as further evidence that Canada must move out from under the thumb of the US. It was expected that China would come to a vigorous defense of Huawei, its flagship company and a symbol of its global reach and prowess, much the way Apple is to America.

Historically Canada and the US have been two of the closest allies in the world. But Lynette Ong, a China expert at the University of Toronto, says economic lockstep with the US is not compatible with the current era.

“Canada doesn’t have much bargaining power vis-à-vis China. But Canada is really the face of this conflict, Canada is making the arrest … while the US is acting as if it is in the background of the conflict,” she says. “In a way, this is going to be Canada’s future. This is only the beginning of coming economic conflicts between two major powers.”

It’s yet another example of a lonelier world for Canada, says Stephanie Carvin, an assistant professor of international relations at Carleton University in Ottawa. She says it shares parallels with a spat between Ottawa and Riyadh this summer, after Canada accused Saudi Arabia of human rights violations and no allies, including the US, came to its defense. This time the fight is with China, but once again Canada doesn’t know where to turn.

“Canada has been worried about becoming victim to a contest between a Trump-run America and an assertive China. And here we are in a proxy war,” she says. “In a lot of ways, Canada has never been more alone in the world.”