The arrest of Huawei’s chief financial officer in Vancouver could severely complicate Canada’s relationship with China, according to a former ambassador.

David Mulroney, distinguished senior fellow at the University of Toronto’s Munk School of Global Affairs and former Canadian Ambassador to China says the arrest could result in a “deep freeze” between Canada and a country it could very much use to diversify its international trade relations.

“Right now, I think we’re going to be into a deep freeze for some time,” Mulroney told BNN Bloomberg in an interview on Thursday.

“China tends to treat us – and we allow ourselves to be treated – as if doing a trade deal with Canada is a favour they bestow on us, when, in reality, they want access to the Canadian market,” he added. “They want to invest in Canada. It’s a business deal, but they deliver it through high-level meetings and access to their leaders. That’s going to probably be put on hold for some time.”

News surfaced late Wednesday that Huawei’s CFO, Wanzhou Meng was arrested on Dec. 1 in Vancouver and is sought for extradition to the U.S. for potential violations of the country’s sanctions on Iran.

Mulroney said the blurring between state- and private-run enterprise within the Chinese economy presents a risk that Canada must learn to deal with, if it hopes to strengthen trade ties.

“It’s a new kind of relationship with a partner that’s both a source of real opportunity and a source of real threat,” he said. “So, it’s risk mitigation and balancing the good parts with the bad parts.”

The U.S., on the other hand, could be primed to take its trade battle with China to a new level, as opposed to the slap on the wrist previous Chinese infractions within its borders have received.

“They got tough with Huawei’s kind of smaller brother ZTE technologies and ZTE was twice called on the carpet and twice fined,” Mulroney said. “That almost makes it look like national security is really a matter of getting a ticket, paying it and going on. The Chinese are happy to do this.”

“This could be a completely new approach to things.”