Canada bans Chinese Huawei and ZTE from 5G wireless networks

Prime Minister Justin Trudeau’s government has joined Canada’s closest intelligence allies in banning Huawei Technologies Co. from fifth-generation wireless networks.

The state-champion Chinese telecommunications company poses a threat to Canada’s national security, Industry Minister Francois-Philippe Champagne said Thursday, confirming an earlier Bloomberg News report. Equipment from ZTE Corp. will also be prohibited.

Companies that have already installed Huawei or ZTE equipment will have to remove them by the end of 2027, the Champagne department said in a statement. The Trudeau government had delayed the decision for more than three years as relations between Canada and China soured, and a ban would almost certainly stoke tensions.

The long-awaited announcement will be welcomed by President Joe Biden’s administration, which has sought to steer countries away from Huawei. US officials say its equipment could allow the Chinese government to interfere with 5G networks. Since 2019, the United States has imposed what may be the toughest sanctions it has ever imposed on a single company.

Relations between the two nations deteriorated dramatically after Canada arrested Huawei chief financial officer Meng Wanzhou following a US extradition request in December 2018. China jailed two Canadians, former diplomat Michael Spavor and entrepreneur Michael Kovrig, days after Meng’s arrest.

The high-stakes impasse was resolved last September after the United States reached a deferred prosecution agreement with Meng, allowing him to return to China and the two Canadians to return home.

But the feud left a grudge. Thursday’s announcement comes just three days after lawmakers voted to revive a special committee to study the country’s ties with China. On Wednesday, the Canadian government announced that China has lifted restrictions on canola imports.

However, the move shouldn’t cause big problems for companies like BCE Inc. and Telus Corp. who have used Huawei equipment. Fearing a possible ban, the two companies have already started excluding the state-champion Chinese company from their 5G developments.

Huawei has long played a key role in Canadian wireless networks. It won its first major North American project from BCE and Telus in 2008, a key contract that helped cement the Chinese supplier’s reputation as a global player capable of competing on quality. The deal paved the way for it to become a major supplier to Canada’s largest telecommunications companies over the next decade.

In the run-up to the ruling, Canada’s military leaders argued that the company posed too great a potential security risk to allow it in 5G networks. However, the country’s human and signals intelligence agencies were reportedly divided on how best to deal with Huawei.

Canada’s largest wireless service provider, Rogers Communications Inc., has teamed up with Huawei rival Telefonaktiebolaget LM Ericsson on 5G. The Toronto-based company’s vice president argued in 2019 that the Chinese giant posed too great a security risk to be allowed in future network equations.

5G technology could end up being 100 times faster than existing high-end networks, with data speeds reaching 10 gigabits per second. This would dramatically improve consumers’ ability to stream high-definition video and also help develop the so-called “Internet of Things” that can connect everything from home appliances to traffic lights.

In July 2021, Canadian telecommunications companies pledged to pay $8.9 billion to buy licenses for 5G airwaves at a record government auction. Rogers, which is trying to buy rival Shaw Communications Inc., led the way with a $3.3 billion spectrum purchase.

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