Canada’s Ambassador to the United States announced this week that the U.S. Department of Justice will soon file official extradition papers for Huawei Executive Meng Wanzhou. The Chinese national was arrested in Canada in early December and is currently on bail awaiting further court proceedings.

The arrest of Meng caused a global political storm last year, with China threatening that the U.S. and Canada would face severe consequences

The United States Has One Week to File Huawei Executive Extradition Papers

Meng was arrested in Canada on December 1, at the request of the U.S. Department of Justice. Under an existing agreement, the U.S. has until January 30 to formalize its extradition request.

It is expected that the Department of Justice will base its request on accusations that Meng engaged in Iran sanctions violations as the CFO of Huawei.

After a formal request is received, the Canadian courts will have 30 days to approve or deny the extradition. The court’s ruling must also be approved by the Canadian Minister of Justice. The U.S. will need to provide reasonable evidence to support its claims against Meng.

Potential to Derail Ongoing China Trade Talks

Huawei is the world’s largest telecommunications company. Although privately owned, the company has strong cultural ties to the Chinese government and is seen as a flagship brand of the Chinese economy. Officials in China have condemned the arrest.

China’s Foreign Ministry released a statement on Tuesday saying that proceedings were “not a regular judicial case.” Spokeswoman Hua Chunying said in a briefing that Canada has made a “serious mistake,” and that “Canada and the United States arbitrarily abused their bilateral extradition treaty to seriously infringe upon a Chinese citizen’s security and legal rights.”

While answering questions after the briefing, Hua said that “China will, of course, respond to U.S. actions.”

There are now fears that the ongoing legal battle could disrupt trade talks between the U.S. and China. Talks have up until this point been positive, with both sides reporting that core issues were being addressed during negotiations.

Stock Market Trade Fears Could Resurface

Several financial publications cited the Huawei Executive Meng extradition case as a contributing factor in the 300-point Dow Jones slide on Tuesday.

Trade tensions and related stories weighed heavily on investor sentiment last year. This latest development could become a thorn in the side of what has been a relatively strong market in 2019.