Canada's worst-case China scenario: A CFO arrest, trade disruption, and Trump's amnesia

In March, Richardson International and Viterra’s export permits for China were pulled due to claims of hazardous pests in the samples. In my opinion, it appears that this is a clear shot across the bow for the Canadian government to rectify the Huawei extradition situation or face more trade consequences.

The Canola Council of Canada’s official statement is, “China is an important market for Canada’s canola industry, approximately 40% of our exports of canola and canola products go to China. News about blocked exports hurts the whole value chain. Demand for high quality oil and protein remains strong in China, and Canada remains a reliable and sustainable supplier of food for China. We look forward to the company involved resolving the current issue. We are aware of challenges our exporters have faced shipping to China – these are concerning as they create instability and add costs. While diplomatic frictions are concerning, there is no clear evidence that current challenges are linked to these frictions.”

Let’s stop being naive and polite. Canadian agriculture is now in the retaliatory crosshairs for China, and by the texts, emails and tweets I have received canola growers want the issue to get fixed immediately. Really, U.S. President Donald Trump put us here.

While China has been negotiating a trade deal with the U.S., China has been retaliating against the extradition-based arrest of Huawei CFO Meng Wanzhou by targeting Canada and not the U.S., which originally requested the arrest. Canada is clearly the easier target at this time but at this point Canada has held firm with the U.S.

Clearly Canada is on weaker economic footing than the U.S. and is potentially much more susceptible to Chinese pressure tactics than the U.S. at this given time.  Some experts believe that China is pressuring Canada during the U.S. trade talks to remind the Americans of China’s purchasing power and retaliatory capabilities. Unlawfully detaining Canadians is different than if it were Americans although that didn’t seem to help journalist Jamal Khashoggi find justice.

Last month a Canadian court ruled an extradition trial will proceed and, in response, Meng is suing Canada for illegally detaining her for political reasons.

One can speculate that squeezing canola industry’s neck is not the last noose to tighten on Trudeau’s political neck. There is more where this came from and the industry knows it.

Although the Americans have said that the Huawei arrest is separate from trade talks everyone knows that this is is not true. Recently on AgriTalk, I asked if Huawei would be a part of a U.S./China deal and Pro Farmer’s Jim Wiesemeyer speculated that yes, it would be. This situation is an epic collision of China, the U.S. and Canada trying to protect their interests.

As Prime Minister Justin Trudeau deals with a massive scandal regarding the SNC Lavalin mess and consequently throwing two women out of caucus, how would Huawei CFO Meng being released go over in Liberal circles? Although Trump dropping the extradition request as part of a larger China trade deal could solve the canola export issue for Canada, it would implicate this “rule of law” Prime Minister in an international kidnapping caper.

As President Trump closes in on an end-of-the-month trade deal summit with Chinese President Xi, Canada continues to hope we will be bailed out of this American created mess by Trump himself.  If the U.S. finds its trade deal without closing the Huawei case, Canada and its canola growers could find a chilly financial 2019 year that rivals Polar Vortex temperatures.

For canola’s sake, let’s hope that Trump doesn’t develop amnesia.

Back in December after China detained two Canadians, I recorded this video and unfortunately it is proving to be more reality that speculation. 

3 thoughts on “Canada’s worst-case China scenario: A CFO arrest, trade disruption, and Trump’s amnesia

  1. How native this writer’s think! even America dropped the case and Meng get released, Canada will still take the hit unless she was released before that by Canada’s own decision! China won’t let this case make a bad example for future . if the America arrest Meng in the US, China certainly will retaliate on Americans not Canada. its a fight between China and the US, but if a countries volunteered to act like America’s deputy, China certainly will make them examples to warn other to follow! so in this case , Canada better make decision before the US does, and if the US drop the case, the only thing Canada will take would be punishment by seeing those two Canadians arrested in China sentenced for life and the drug trafficker would be executed too. and forget about canola, soy bean or anything else, China don’t care write off any trade relations with Canada. its just a drop in ocean for China’s trade market! from all articles from Canada politicians i can see no single strategist in Canada at all!

  2. Good morning. I am guessing that you knew that you were highly likely to be correct on this issue. I’m also guessing that you are hating that you are as accurate as you are. Great piece Shaun. I sure wish that you were more wrong on this however.

  3. If China accounts for 40% of our Canola market what if our goverment found a new market for our Canola, the in word with me Trudeau is the
    Environment and green house gasses put some of our hard earned money he has taken as a tax grab aka the carbon tax, build bio diesel
    Plants to run freight trucks and agricultural on in the summer, this would reduce our carbon foot print provide jobs, this is just an idea but we need people in our government that have ideas!!

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