Canada to Ban 5G Equipment From China’s Huawei, ZTE

Washington pressed Canadian officials for years to prohibit Huawei and ZTE equipment for fear of its potential use as a backdoor for espionage by the Chinese government. The U.S. has warned allies it would limit intelligence sharing with countries that use Huawei equipment.

Huawei and other Chinese equipment makers say they aren’t beholden to the Chinese government and don’t use their gear to spy.

Canadian officials said Thursday equipment from Huawei and ZTE is banned from the country’s telecommunications network because of the threat it poses to national security. The country’s telecommunications companies that currently use Huawei equipment—most notably BCE Inc. and Telus Corp.—must remove it no later than 2027, and won’t be compensated, the government said.

U.S. sanctions against Huawei prompted the U.K. in 2020 to ban its telecom companies from purchasing Huawei equipment for their 5G networks. The U.K. gave the carriers until 2027 to strip out existing Huawei gear from 5G networks.

The decision “is very much in line with what our allies have been doing in order to protect a critical piece of infrastructure,” said

François-Philippe Champagne,

Canada’s innovation minister, who has responsibility over telecommunications policy. He didn’t directly answer questions about why a decision took so long, and what pressure Canada faced from allies to ban Chinese equipment.

“This is about making the right decision,” Mr. Champagne said, adding the security review completed its work Thursday. “This has never been a race.”

China’s embassy in Ottawa and China’s Commerce Ministry didn’t immediately respond to requests for comment about the ban on Huawei and ZTE.

BCE and Telus didn’t immediately respond to questions about Huawei equipment on their networks. BCE announced in 2020 that it had selected Sweden’s

Ericsson

AB to supply 5G equipment. That same year Telus announced Ericsson and Finland’s

Nokia Corp.

would supply equipment for its 5G network. Since then, the two telecom companies have been stripping Huawei equipment from their network, people familiar with the matter said.

A State Department representative said the U.S. welcomed Canada’s ban of equipment from Huawei and ZTE. “The United States supports efforts to ensure countries, companies, and citizens can trust their wireless networks and their operators.” America’s chief envoy in Canada, David Cohen, said at his Senate confirmation hearings last year that one of his priorities was to ensure Canadian policies on China “reflect its words in terms of the treatment of China, and that we do improve the collaboration and coordination between our two countries in taking on the existential threat.”

Three members of the Five Eyes intelligence alliance—the U.S., Australia and U.K.—previously issued formal bans on Huawei equipment. New Zealand doesn’t have one, although in 2018 it rejected a bid by a domestic wireless carrier to use Huawei equipment in its network.

Canada started a formal review of Huawei’s role in 5G in the fall of 2018, and at the time senior security officials told lawmakers that they were confident the country’s had safeguards in place to deal with cybersecurity risks.

Shortly afterward, Canada found itself caught in the crosshairs of a U.S.-China dispute with two of its citizens detained in China for nearly three years. The citizens,

Michael Kovrig

and

Michael Spavor,

returned home to Canada in September. Canadian Prime Minister

Justin Trudeau

said the detentions were in retaliation for Canada’s role in the arrest of Huawei’s chief financial officer,

Meng Wanzhou,

at the behest of U.S. authorities.

The U.S. Justice Department agreed in September to allow Ms. Meng to leave Canada—where she faced an extradition hearing—for her home in China, after she admitted to some wrongdoing in exchange for prosecutors deferring and later dropping wire and bank fraud charges.

The Canadian government repeatedly delayed any decision regarding Huawei’s role in the domestic 5G network while Messrs. Kovrig and Spavor remained in Chinese custody. Canadian officials have said there was no link between the fate of Messrs. Kovrig and Spavor, and the lack of findings from its 5G security review.

The prolonged delay “was absolutely shaped by the Michaels’ detention—to suggest otherwise is political spin,” said Jonathan Berkshire-Miller, a senior fellow and director of the Indo-Pacific program at the Macdonald-Laurier Institute, an Ottawa think tank.

Huawei has operated for more than a decade in Canada, running a research and development division and selling telecommunications equipment largely to BCE and Telus, the country’s two largest carriers.

The Chinese company was the largest supplier of 5G radio and base station equipment and software to the two Canadian carriers for years, but sales tapered off in 2020 amid mounting political pressure over China’s imprisonment of Messrs. Kovrig and Spavor.

Huawei’s equipment sales in Canada have dropped sharply, but it continues to sell software upgrades to Bell and Telus, a person familiar with the matter said. The company continues to operate a research arm in Canada, with more than 1,500 employees.

Write to Paul Vieira at [email protected] and Jacquie McNish at [email protected]