Business
Canada bans Huawei and ZTE from 5G networks over security concerns
The Government of Canada announced its intention to ban the use of Huawei and ZTE telecommunications equipment and services across the country’s 5G and 4G networks.
The statement explains that after a thorough review from Canada’s independent security agencies, the two Chinese tech companies have been deemed too great of a security risk to be allowed in the country’s telecommunication network.
“Today, the Government of Canada is ensuring the long-term safety of our telecommunications infrastructure. As part of that, the government intends to prohibit the inclusion of Huawei and ZTE products and services in Canada’s telecommunications systems,” reads the announcement.
“The Government of Canada has serious concerns about suppliers such as Huawei and ZTE who could be compelled to comply with extrajudicial directions from foreign governments in ways that would conflict with Canadian laws or would be detrimental to Canadian interests,” the policy statement further explains.
As a result of this decision, telecommunications service providers in Canada will no longer be permitted to use equipment or services from the two firms. Existing Huawei and ZTE equipment should be removed from their networks.
More specifically, existing 5G equipment from Huawei and ZTE will have to be removed by June 28, 2024, while 4G equipment was given until December 31, 2027. In addition, the procurement of new equipment and services from the two firms must be ceased by September 1, 2022.
Aligning with allies
This move follows similar decisions from the United States, the U.K., Australia, New Zealand, and Japan, all Canada’s close allies.
In Europe, Germany, France, Belgium, Denmark, and Sweden, have previously expressed concerns over the security of telecom equipment coming from Huawei and ZTE, and they are all considering similar bans.
These countries, and most notably the U.S., have accused Huawei and ZTE of intellectual property and research and development theft, backdoors in telecom equipment, spying, and violating U.S. sanctions on Iran.
The Chinese firms have denied all of the above. However, they have failed to overturn the political decisions against them, resulting in a sudden and dramatic drop in revenue from network infrastructure projects.
Complex political ballet
The rollout of 5G networks in Canada started in February 2019, involving Huawei at the time as one of the strategic technological partners.
When the U.S. unsealed a “trade secrets theft” indictment in August 2019 against Huawei’s CFO, Meng Wanzhou (who is also the daughter of the company’s founder and CEO), it became clear that continuing business with the Chinese firm would be complicated for Canada.
By September 2020, Canada adjusted regulations to remove compensation provisions to telecommunication providers in the case of federal government equipment bans, which were projected to cost around $760,000,000.
However, the ban on Huawei and ZTE couldn’t be implemented at the time due to political complications arising from the presence of Meng in the country.
Meng was arrested at Vancouver’s international airport in December 2018, creating a rift between Canada and China. Simultaneously, an extradition request from the U.S. Department of Justice made things even more complicated.
After multiple rounds of negotiations, the parties reached a resolution on September 24, 2021, that allowed Huawei’s CFO to return to China after spending 1,000 days under house arrest in Vancouver.
This eventually opened the way for the plan that Canada clearly wanted to implement and had openly discussed so many times in the recent past. As a result of this development, the relationships between the two countries are expected to swamp again.