Chinese telecom giant Huawei Technologies Co Ltd is deemed a security threat to Canada’s national security to the point that it is barred from joining the country’s critical government communications infrastructure.
On the other hand, the European Commission has decided to temporarily stop a trade case against Huawei and ZTE, creating a more favorable atmosphere between China and the European Union.
Canada’s move was based on a national security exception to allow it to choose which companies to work with in building its secure network. Citing the exception, Canada wishes to discriminate against companies like Huawei and ZTE as it tries to put together a network carrying important government communications including emails, phone calls, and data centers. The move was confirmed by a spokesman of Canadian Prime Minister Stephen Harper.
“The government’s going to be choosing carefully in the construction of this network, and it has invoked the national security exception for the building of this network,” the prime minister spokesman Andrew MacDougall, said.
The announcement was a reaction to the announcement of the United States House of Representatives Intelligence Committee urging American companies not to do business with Huawei and ZTE. The panel said that China can spy on some communications and threaten vital systems remotely if the U.S. will use the equipment of the two firms.
Canadian companies are also encouraged to do away with Huawei and ZTE for security reasons.
Meanwhile, European Union Trade Commissioner Karel De Gucht is trying to collect evidence against the two firms so he can initiate an anti-subsidy or anti-dumping case. His efforts have been unsuccessful so far as no European company has filed any complaint so far. A formal complaint is needed to launch an investigation.
Huawei has found some success in Canada so far. It was able to secure a bid in 2008 to build a telecommunications network for Bell Canada and Telus Corp, and has even received a $6.6 million grant from the region of Ontario for research and development.
Huawei has 130 engineers working in its Ottawa facility and about 300 employees in its Canadian headquarters in Markham, Ontario. The company also revealed that it has so far procured a total of C$400 million from companies in the country.
“The national security exception only applies to foreign companies,” according to Huawei Technologies Canada Co Ltd spokesman Scott Bradley. “Huawei is fully incorporated in Canada, and operates as a subsidiary Canadian company. This alone effectively enables us to bid on any potential procurement opportunities.”
Canada is doing a similar move to Australia’s exclusion of Huawei as it builds up its $38 billion national broadband network.
An internet security expert at Queen’s University in Ontario, David Skillicorn, said that the stance of the United States not to allow Huawei to operate in the country is commendable, and that the Canadian government should do the same.
“The Harper government is putting Canadian telecommunications companies at risk. We shouldn’t be rolling out the red carpet for this company,” he said.
Canada’s recent rejection of Huawei may impact the $15.1 billion bid by China to scoop up Canadian oil firm Nexen Inc.
Canada’s intelligence agency has released a report citing that the investments of some foreign firms can pose a threat to the country’s national security.