US Senators Urge Canada to Ban Huawei Report

Iain Morris
News Analysis
Iain Morris, International Editor

Canada has come under US pressure to sever its connections with Chinese equipment giant Huawei during the rollout of next-generation 5G mobile networks, according to press reports.

US senators Marco Rubio and Mark Warner have leaned on Canadian Prime Minister Justin Trudeau in a letter that describes Huawei Technologies Co. Ltd. as a security risk and says the use of its equipment may compromise intelligence sharing between the US and Canada, according to The Globe and Mail, which managed to obtain a copy of that letter.

The update follows the publication of a report by Bloomberg alleging China managed to infiltrate US networks by implanting tiny chips in servers used by major US companies and government bodies. Although Huawei was not implicated in that report, both it and smaller Chinese rival ZTE Corp. (Shenzhen: 000063; Hong Kong: 0763) have been excluded from deals with major US operators because of similar security concerns. (See Huawei, ZTE Charm Offensive Just Got Harder.)

Those security concerns align with the increasingly tough US stance against China, which has included the imposition of tariffs on Chinese imports worth billions of dollars annually. (See Trump Admin Reboots $50B China Tech Tariffs.)

However, both Huawei and ZTE have also faced a backlash in other parts of the world. Australia, most notably, recently banned the companies from participating in 5G tenders because of its own concerns that Chinese authorities could use Huawei and ZTE equipment to snoop on Australia's government and citizens. The Canada letter lends support to the view that Australia came under pressure from the US to block the Chinese vendors. (See Australia Excludes Huawei, ZTE From 5G Rollouts.)

Japan is said to be considering whether to restrict the role of Huawei and ZTE in its telecom networks, while the UK recently aired security concerns about Huawei equipment. Huawei has also missed out on 5G business with South Korea's SK Telecom (Nasdaq: SKM), although a source close to the matter told Light Reading this was not unexpected because Huawei has not previously supplied 4G equipment to SK Telecom. (See No 5G Deal: Huawei Misses Out at SKT and Huawei Poses Security Threat, Says UK Watchdog.)

In their letter to Trudeau, the full contents of which can be seen on The Globe and Mail website, Rubio and Warner write: "There is ample evidence to suggest that no major Chinese company is independent of the Chinese government and Communist Party -- and Huawei, which China's government and military tout as a 'national champion' is no exception."

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The US senators go on to warn Trudeau that use of Huawei's equipment could threaten the so-called "Five Eyes" partnership under which the US, the UK Canada, Australia and New Zealand agree to share confidential and sensitive information to thwart espionage. A Huawei deal could threaten the telecom relationship between Canada and the US, they add.

"The strong alignment between the US and Canada in spectrum management has meant that American and Canadian carriers in many cases share complementary spectrum holdings, jointly benefiting from economies of scale for equipment designed for regionally harmonized frequencies," they write. "The entry of suppliers such as Huawei into the Canadian market could seriously jeopardize this dynamic, depriving both Canadian and American operators of the scale needed to rapidly build out 5G networks."

The dispatch of that letter comes after Canada was recently reported to have indicated it would not ban Huawei on security grounds because it believed its own cyber expertise was a sufficient safeguard.

In August, Trudeau was reported by The Globe and Mail to have said that Canada had not taken a final decision about Huawei and will make that "based on the facts."

Iain Morris, International Editor, Light Reading

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