Despite his frothy name, François-Philippe Champagne did not bring any sparkle for Chinese vendors waiting to hear if they would be allowed to sell products in Canada. The Canadian minister of innovation, science and industry had only disappointing news for Huawei and ZTE earlier today. From now on, neither will be allowed to serve Canadian operators.
After a "thorough review" by Canadian security watchdogs, authorities have decided "to prohibit the inclusion of Huawei and ZTE products and services in Canada's telecommunications systems," bubbled Champagne in an official statement. "As a result, telecommunications companies that operate in Canada would no longer be permitted to make use of designated equipment or services provided by Huawei or ZTE." Operators will ultimately have to remove any Chinese products they have already deployed.
Nobody will be shocked. A Western backlash against Huawei and ZTE began when Donald Trump was in office, and it has continued to gather momentum. Canadian authorities have drawn on familiar arguments to justify their move – mainly that Huawei and ZTE could be forced by China's government to include spyware or booby traps in their products. Because 5G could be used in critical infrastructure, the consequences might be devastating. And so on.
In truth, the latest prohibitions are more about geopolitics than strict security concerns. Invited to participate in global markets, Chinese companies have subsequently been accused of stealing intellectual property, undercutting Western rivals (including Nortel, a Canadian vendor no longer still in business) by accessing generous state subsidies and selling products to sanctioned regimes in Iran, North Korea and (more recently) Russia.
Western-style democracies rightly worry about the technological enrichment of a country that continues to threaten Taiwan, which still produces most of the world's most advanced semiconductors. Rounding off the list of gripes, China has not properly opened its own huge market to Western companies, throwing mere scraps of business to Ericsson and Nokia.
Why now when a UK ban was announced way back in 2020? Probably because of the Meng Wanzhou affair. Huawei's chief financial officer had been detained in Canada since late 2018, while the US sought her extradition on charges of fraud. In retaliation, China arrested Michael Spavor and Michael Kovrig, two Canadians working in China, and accused them of being spies. What was effectively a prisoner exchange did not happen until late last year. Moving against Huawei and ZTE before then could have upset it.
But Canadian operators had already been cutting Huawei out of lucrative 5G deals. In June 2020, Bell Canada unveiled Ericsson as a 5G supplier, having previously bought 4G equipment from Huawei. Asked at the time if it would consider Huawei for 5G, a spokesperson for the operator said: "Huawei has been a reliable and innovator partner in the past and we would consider working with them in 5G if the federal government allows their participation."
Rival Telus, another Huawei customer before 2020, made a similar announcement, citing Ericsson and Nokia as 5G suppliers but not mentioning Huawei. Ibrahim Gedeon, the Telus chief technology officer, declined to comment back then when approached by Light Reading. But he would have appreciated the risks of continuing to use Huawei.
Canada now appears to be moving a lot more aggressively than the UK to rid itself of Chinese equipment. While the British government has set a deadline of end-2027 for the complete removal of Huawei's 5G products, Canada wants them gone by June 28, 2024, (although operators will be able to retain Chinese 4G products until end-2027). Operators must also stop buying either 4G or 5G products by September 1 this year. And fixed-line restrictions are coming, warned the government.
Huawei's Canadian office has reportedly been grumbling about the unfairness of it all, insisting (as it always does) that authorities have never produced any hard evidence of the security threat. It may be able to mitigate some of the revenue impact through additional business in Russia, which Ericsson and Nokia have quit in protest at the invasion of Ukraine and to comply with US sanctions.
Ericsson and Nokia will be trying not to look too cheerful about the latest Canadian turn of events. Börje Ekholm, Ericsson's CEO, lashed out when Sweden announced its own restrictions on Huawei and ZTE. Insisting he was a believer in free trade, he would also have been nervous about Chinese countermeasures. Even with its tiny share of the Chinese market, Ericsson did $1 billion worth of business there last year. So far, Ekholm has had little to say about the goings-on in Canada.
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- Biden finalizes Trump's ban against Huawei and ZTE
- What we've learnt from the release of Huawei's CFO
— Iain Morris, International Editor, Light Reading