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Caught Between Feuding Giants, Canada Fears Consequences

OTTAWA — As the extradition case against a Chinese tech executive moves into its next phase in Canada’s courts, manufacturers, farmers, loggers and fishermen across Canada are looking on with apprehension.

The arrest by the Canadian authorities of Meng Wanzhou, the chief financial officer of the telecommunications giant Huawei, at the request of the United States government has angered China, and ratcheted up tensions between the United States and China while they are negotiating a trade truce.

Canada finds itself stuck in the middle of the dispute. The United States is its neighbor and ally, while China is a major and growing market for export-dependent Canada.

While neither the government of Canada nor any major industry has received even a hint that Canadian exports will be targeted by China in retaliation, just the prospect of such action is unnerving in Canada.

“The Chinese have a track record of retaliation in situations like this,” said Brian Kingston, the vice president of international policy at the Business Council of Canada, a corporate lobby group.

“Our response has to be that retaliation is pointless,” he said, “that this is not a Canada-China issue. We are responding to a U.S. request.”

That is the position of the Canadian government, too.

After China protested Ms. Meng’s detention and demanded her release, Prime Minister Justin Trudeau and officials in his government repeatedly said they had no choice under treaties with the United States but to arrest her.

They have also emphasized that Ms. Meng’s fate is a matter for Canada’s courts, not its politicians, to decide. The United States says Ms. Meng deceived financial institutions and caused them to violate sanctions against Iran.

Still, businesses are concerned.

For Canada’s 7,000 pig farmers, China has been a particularly valuable market. Parts like pig’s feet that are almost worthless in Canada are in high and growing demand there.

Gary Stordy, the director of government and corporate affairs for the Canadian Pork Council, said that there’s been no indication so far of China closing its doors.

But Mr. Stordy said pig farmers, like many agricultural producers, were aware that China has used health and safety rules as a retaliatory tool in the past.

After the Nobel Peace Prize was awarded in 2010 to Liu Xiaobo, a Chinese democracy advocate, the Chinese government cut off imports of Norwegian salmon, claiming they were diseased, which Norway denied.

China is also an important market for Canada’s lobster fisheries and for a wide array of its farm goods, including canola. The country’s forestry industry has focused its attention on increasing exports to China. And Chinese tourists are an increasingly significant source of visitors to Canada.

Boycotts are another potential concern. This year, Canada Goose, which ships Canadian-made parkas to China, announced plans for two stores in the country and a regional office.

Now some Chinese who are angered by Ms. Meng’s arrest have put out calls on social media for a boycott of the parkas, which are priced within reach of only the country’s wealthy elite.

The effectiveness of such online campaigns is unclear. Canada Goose did not respond to requests for comment.

David Mulroney, a former Canadian ambassador to China, said President Trump’s suggestion that he might seek to drop the American case against Ms. Meng in exchange for trade concessions from China risks fueling the view that she has been detained in a political process, not a judicial one.

“It’s tremendously unhelpful,” Mr. Mulroney said. “It plays into the Chinese argument that Canada is a vassal state and only carries water for the United States.”

When asked about the American president’s comments, Mr. Trudeau told reporters in Ottawa, “Regardless of what goes on in other countries, Canada is and will always remain a country with the rule of law.”

While China has warned Canada that it faces consequences for not releasing Ms. Meng, Mr. Mulroney said it was unlikely to take any significant economic actions, although he, like many in Canada, sees the detention of a former Canadian diplomat in Beijing as related.

Other experts suggested that Mr. Trudeau’s efforts to negotiate a free trade deal with China, which were already struggling, will be moribund for the foreseeable future.

Lynette Ong, a professor of political science and Asian studies at the University of Toronto, said the episode has severely eroded good will toward Canada in China.

“Canada has been the face of this conflict, we’re bearing the brunt of this conflict but we have no bargaining power,” she said. “It’s a terrible place.”

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