Canada banning Chinese telecom giant Huawei, ZTE from 5G networks

Canada is banning China's Huawei Technologies and ZTE, another Chinese company, from participating in the country’s 5G wireless networks, citing national security concerns.

Telecommunication companies in Canada will not be permitted to include any products or services from these telecommunications companies in their networks. Providers who already have this equipment installed will be required to cease its use, and remove it.

Minister of Innovation, Science and Industry Francois-Philippe Champagne and Public Safety Minister Marco Mendicino made the announcement about prohibiting these “high-risk vendors,” in Ottawa on Thursday.

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Specifically, the federal government says it intends to see the Canadian telecommunications industry:

• Cease procurement of new 4G or 5G equipment and services from Huawei and ZTE by September 2022;
• Terminate the use of any new or existing 5G equipment and services from Huawei and ZTE by June 2024; and
• End the use of any new or existing 4G equipment and services from Huawei and ZTE by December 2027.

The federal government says it will be tabling legislation "in the very short term" that will make amendments to the Telecommunications Act that they say will shore up Canada's telecommunication system against national security risks in the finance, telecommunications, energy and transport sectors.

"This new legislation will establish a framework to better protect the systems vital to our national security and give the government a new tool to respond to emerging cyber threats," Mendicino said.

Among the reasons cited in the government's "policy statement" accompanying the announcement are:

• 5G is set to usher in massively enhanced data capacity that will see billons of devices connected and will "serve as the basis upon which other technologies, our digital economy, and our critical infrastructure, will depend," so Canada needs to ensure it's security;
• The government "has serious concerns" about Huawei and ZTE being "compelled to comply with extrajudicial directions from foreign governments in ways that would conflict with Canadian laws," or counter to Canadian interests; and
• Given the nature of international supply chain dynamics, and allies' "similar concerns" Canada feels that it would become "increasingly difficult for Canada to maintain a high level of assurance testing for certain network equipment from a number of potential suppliers."

The federal government has long faced pressure to ban the Chinese telecom giant from participating in the development of Canada's fifth-generation telecommunications infrastructure.

The Liberals have promised for years an announcement on the issue was coming, citing the need to follow the proper processes, after launching a broader security review of 5G wireless technology in 2018.

On Thursday, Mendicino said that this examination "was carried out meticulously, responsibly, and with all the due diligence that was required in order to protect our national security."

The transition to 5G is set to bring higher speeds and improved interconnectivity. However, according to the federal government, with this comes the concern that "an exploitation of vulnerabilities by malicious actors will be more difficult to safeguard against, and that incidents will have a broader impact than in previous generations of wireless technology."

"In the 21st century, cyber security is national security. From cyber attacks, to electronic espionage, to ransomware, the threats to Canadians are greater than ever, and we will protect them,” Mendicino said.

"It is against this backdrop that we have to be sure that we safeguard Canada's telecommunications system. 5G networks are being installed across the country, and this innovation represents a major opportunity for competition and growth. Yet, with this opportunity also comes risks," the public safety minister continued.

Champagne said that, going forward, the government could evolve its policy to include other companies deemed a risk.

"Because if you think about the internet of things, if you think about autonomous vehicles, we all know that the distributed nature of the points that are going to be connecting to the network, we need to protect our network," he said.

In an interview on CTV News Channel's Power Play, Huawei Canada's Alykhan Velshi said that the company is "obviously disappointed" by the move, but said the "so-called" ban "only really targets one small and declining aspect of our business in Canada."

Velshi said the tech giant will parse closely the coming legislation to ensure it's compliant with the Canada-China foreign investment protection agreement, but that in the short-term at least, Huawei will still play a role in Canada's telecommunications network.

"And yes, even its 5G network, because of the software that we’re currently in the process of deploying with our telecommunications partners, with the knowledge of the government.”

Reacting to the news, Conservatives who have long called for Huawei to be banned decried the Liberal's "lack of action" as "an international embarrassment," suggesting that the delay has cost millions of dollars, though some major wireless providers have already pivoted away from working with Huawei.

"Either the Liberal government is going to be asked for compensation from these companies, or costs will be passed on to consumers. In either case, Justin Trudeau is forcing Canadians to bear the cost of his inaction and failure," said the party's public safety critic MP Raquel Dancho and industry critic MP Gerard Deltell in a statement.

The New Democrats also said the move was long overdue, and are calling for a "real explanation" about why it took so long.

"This delay to ban Huawei has cost Canadian consumers. The national security and privacy rights of Canadians was put at risk without good reason … During this time, the domestic telecom market has also been severely impacted as they were left in the dark about the future of 5G in Canada," said NDP MP and industry critic Brian Masse in a statement.

WHY DID REVIEW TAKE YEARS?

Observers had suspected the major policy decision was delayed in part due to China’s detention of Michael Spavor and Michael Kovrig, which was largely seen as retaliation for the arrest of Huawei executive Meng Wanzhou in Canada.

Spavor and Kovrig were released in September 2021 after the extradition against Meng was dropped. At that time, Prime Minister Justin Trudeau said he’d be sharing Canada’s decision on what to do with Huawei “in the coming weeks.”

Canada has been the last holdout member of the Five Eyes intelligence alliance, with Australia, New Zealand, the United Kingdom, and the United States already all deciding to either ban or restrict Huawei from partaking in the implementation of their 5G networks.

Champagne told reporters that the federal government's decision also included consultation with allies. Asked whether Canada is now bracing for Chinese retaliation, the industry minister said that the right decision has been made.

Though, former CSIS director Ward Elcock told CTV News Channel’s Power Play on Thursday he suspects China will retaliate in some way.

“It’s likely that there will be some sort of retaliation. What that will be is pretty hard to guess but it could come in almost any form,” he said, pointing to moments in the past when China has punished Canada by imposing trade restrictions.

The announcement comes on the heels of China’s lifting of a three-year ban on canola exports from two Canadian companies that had been in place since March 2019 and was also seen as a retaliatory move over Meng’s arrest, something China denied.

In a statement issued Wednesday evening responding to that decision, International Trade Minister Mary Ng and Agriculture Minister Marie-Claude Bibeau said the government would continue to work to defend the interests of Canadian farmers, businesses, and exporters "at home, and in markets abroad, including China."

With files from CTV News’ Joyce Napier and Sarah Turnbull