New Round of US-China Trade War, Who Loses?

Penulis: Safrezi Fitra

Editor: Safrezi Fitra

18/12/2018, 04.54 WIB

The arrest of Huawei CFO in Canada has complicated US-China relations and threatened a ceasefire agreement related to the trade war.

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The US-China trade war had eased. Starting the beginning of December, the two countries agreed to a “ceasefire” for the next three months. In the midst of the agreement, the US made the situation worse by asking Canada to detain a top Chinese tech executive. As a result, some US products and investments in China are at stake.

On 1 December 2018, the US President Donald Trump and Chinese leader Xi Jinping met at the G20 Conference in Buenos Aires. In the meeting, the two countries agreed to ease tensions arising from the trade war.

The US wants China to further open the door to its domestic market and stop policies that are deemed as technological copyright theft. China promises to meet these two demands as long as the US does not increase import tariffs for the remainder of its commodities.

Trump said the Chinese government began to buy soy milk from the US in large quantities after reaching the agreement in Argentina. Purchases previously stopped as China imposed an increase in import tariffs on US commodities in response to an increase in import tariffs on its goods, which the US had previously imposed.

The Chinese government also announced cuts in import tariffs for cars and spare parts made in the US as of 1 January 2019. When the trade war heated up in the middle of this year, China raised tariffs on imports of cars and spare parts from the US by 25 percent. This step was a response to the tariffs on Chinese goods that enter the US, where the total was US$ 50 billion.

However, the agreement is at stake. On the same day as the ceasefire declaration of the US-China trade war, Finance Director and successor to Huawei’s throne, Meng Wanzhou, was detained in Canada. The arrest was made at the request of a court in New York.

Meng is accused of misleading multinational banks about Huawei’s company operating in Iran. This makes those banks at great risk of violating US sanctions.

The US also asked the Canadian government to extradite Meng in order to undergo a trial in a US court. Based on the court documents, she can be subject to severe punishments. If Meng is extradited to the US, she may face a maximum prison sentence of 30 years on charges of misleading financial institutions.

China, through its Vice Foreign Minister Le Yucheng, has warned the Canadian Ambassador in Beijing about the consequences if Canada does not release Meng or even choose to extradite Meng to the US.

A few days after Meng was detained, China also arrested two Canadian citizens. They are Michael Kovrig and Michael Spavor. Kovrig is a diplomat who currently works at Global Affairs Canada, while Sparov is an entrepreneur who founded a number of nongovernmental organisations.

Canada eventually backed down. The Canadian court released Meng on a US$10-million security. However, Meng is still waiting for a hearing related to her request not to be extradited to the US.

The Verge reported that she must stay in British Columbia, Canada, and be monitored by a court officer. Meng is only allowed to leave the house in the morning until the afternoon. She must also hand over her passport, wear a tracking bracelet on her feet, and must be monitored by the RCMP.

USA Cina
The US President Donald Trump, US Secretary of State Mike Pompeo, US national security adviser John Bolton and Chinese President Xi Jinping attended a dinner after the G20 leaders’ meeting in Buenos Aires, Argentina, Saturday (12/1). (ANTARA FOTO/REUTERS/Kevin Lamarque/File Foto)

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