China accuses Canadian, Huawei to sue as spat escalates

NEW YORK: China’s government and its leading smartphone maker Huawei Technologies Ltd on Monday stepped up pressure on U.S. and Canadian governments in a dispute over market access that has ensnared Huawei’s CFO, who faces U.S. criminal charges.

China on Monday accused a detained Canadian man of stealing trade secrets passed on to him from another detained Canadian, while the telecom gear maker is also preparing a lawsuit against the U.S. government over a law that restricts its market access.

They were the latest escalation of an unprecedented crisis for Huawei, the world’s largest telecommunications equipment maker and no. 2 manufacturer of smartphones, as Washington calls on governments around the world to stop using its gear, particularly in 5G networks.

China accused detained Canadian citizen Michael Kovrig of stealing state secrets which were passed on to him from another detained Canadian, businessman Michael Spavor, in a move likely to increase tension between Ottawa and Beijing.

“We are obviously very concerned with this position that China has taken,” Canadian Prime Minister Justin Trudeau said about the accusations on Monday. “We’ve been engaging and standing up for the two Canadians who have been arbitrarily detained by China from the very beginning.”

Spavor, who worked with North Korea, and former diplomat Kovrig were picked up in December, shortly after Canada arrested Huawei Technologies Co Chief Financial Officer Meng Wanzhou, who faces extradition to the United States.

Lawyers for Meng are suing the Canadian government, its border agency and federal police, alleging their client was detained, searched and interrogated for three hours in violation of her constitutional rights.

Canada arrested Meng in Vancouver on Dec. 1 at the request of the United States, which has charged her with bank and wire fraud to violate American sanctions against Iran by doing business through a subsidiary it tried to hide.

HUAWEI TO SUE

In another escalation of the trans-Pacific dispute, Huawei plans to announce a lawsuit against the United States government on Thursday on grounds related to a defense bill, a source with knowledge of the matter told Reuters.

Huawei will challenge an addition to the U.S. National Defense Authorization Act (NDAA) signed last year, that controlled U.S. government contracts with Chinese companies and strengthened the role of the panel that reviews foreign investment proposals. Beijing has condemned the NDAA act as targeting China.

Trump last year signed the law that limits Huawei and ZTE Corp’s access to U.S. government and military contracts. This is part of an all-out U.S. effort on the two companies to close their access to not only the U.S. market, but also major telecoms markets around the world where next-generation, 5G, networks are being designed and built.

U.S. lawmakers earlier this year introduced bills that would ban the sale of U.S. chips or other components to Chinese telecommunications companies that violate U.S. sanctions or export control laws.