‘Who’s going to make the first move?’: Canada not alone in the Huawei dilemma

Nations around the world seek direction on whether to allow the Chinese company’s equipment into 5G networks

Even before police arrested Huawei Inc. CFO Meng Wanzhou in Vancouver on an extradition request from the United States last December, Canada faced a complicated decision regarding whether to allow the Chinese telecommunications giant into its next generation telecom infrastructure.

But while the diplomatic storm kicked up by Meng’s detention has added another degree of complexity to Canada’s predicament, we’re not the only ones grappling with the Gordian knot of national security, global alliance and competitive market issues that Huawei presents.

“Other countries want to know what Canada is doing, and I can tell you that first hand,” said Stephanie Carvin, a former national security analyst who is now an assistant professor at Carleton University’s Norman Paterson School of International Affairs. “I have had many conversations with other countries that want to know what Canada is doing. They’re looking at us, and I think we’re looking at them.”

Among the “Five Eyes” intelligence sharing countries, Australia and New Zealand have opted for a ban on Huawei. The United Kingdom is weighing their options, and the situation in the United States is complicated. Outside of the alliance, countries such as Germany, France and the Netherlands appear to still be weighing a decision, while India, South Korea, Malaysia and Russia have all allowed Huawei’s gear to be used in 5G networks.

There’s no firm deadline for a decision on whether to allow Huawei equipment into the Canadian telecom system, but Rogers, Bell and Telus will be spending billions of dollars to upgrade their networks to 5G in the coming years.

All three companies have some Huawei equipment in their existing networks, but Rogers has a deal to use Swedish manufacturer Ericsson for their 5G kit. Telus has the most exposure to Huawei, to the point that chief executive Darren Entwistle said in February a ban would lead to a “material, non-recurring, incremental” increase in the cost of implementing 5G.

The promise of 5G is dramatically faster wireless connections, with the ability to carry more data at lower latency, which means a shorter delay from when you request the data to when your device receives it.

Proponents frame the transition to 5G as a “race” saying that countries who build this infrastructure first will have an economic advantage in terms of building the next-generation companies that take advantage of the step-change in capabilities.

But newly appointed Public Safety Minister Bill Blair is giving no clear indications about when he might make a decision on whether to allow Huawei equipment in Canada’s 5G system.

“We will ensure that our networks are kept secure and will take the appropriate decisions in due course,” said Scott Bardsley, spokesman for Blair, in an emailed statement.

The United States is by far the loudest voice warning allies that Huawei represents a national security threat: Officials say that if countries use Huawei gear to build out 5G telecom networks, it could give the Chinese government a backdoor to access all manner of sensitive information.

“When Huawei becomes the backbone of the internet for any liberal democracy it’s not just that you‘re going to lose your sensitive security information to the Chinese, all of your citizens are going to have their most private data exploited — medical records, banking records, social media,” U.S. National Security Advisor Robert O’Brien said at the Halifax International Security Forum in November.

“So once you open the door, once you bring the Trojan Horse into the city instead of burning it on the beach, once it’s in the city it’s going to be very difficult to avoid the consequences.”

But even as it urges allies to burn the horse, the United States itself hasn’t actually banned Huawei. Earlier this year the government announced a ban, but it never went into effect. Just days before O’Brien’s comments in Halifax, the U.S. Department of Commerce announced another 90-day extension to allow companies to continue doing business with Huawei at least until early 2020.

While Canada and other allies weigh these issues, the pressure is mounting. Carvin said in Europe this summer she saw Huawei signs that looked more like election campaign ads urging people to support the company.

“We’re all kind of looking at each other, waiting to see who’s going to make the first move, in the absence of U.S. leadership,” Carvin said.

Alykhan Velshi, head of corporate affairs for Huawei Canada, was eager to emphasize the research and development work that the company does here.

The company already spends hundreds of millions of dollars annually on R&D in Canada, and Velshi said that a transition has actually already been underway for months, with Huawei shifting its spending out of the United States and towards Canada in response to trade tensions and American hostility.

On the other hand, this week in Australia — a country that has banned Huawei from its 5G network infrastructure — Huawei said that around 1,500 people will lose their jobs as a result of the ban. The company also suggested that it would be especially litigious in Australia in response to attacks on its reputation, according to a report in the Financial Times.

One main reason Huawei remains such a thorny problem is that the security issues are difficult to nail down, according to Christopher Parsons, a researcher at the University of Toronto Citizen Lab focused on technology and security issues

Parsons was one of several experts who spoke to the Financial Post for this story who pointed out that no backdoor into the company’s equipment has ever been found, despite testing by the Canadian government and allies.

And Huawei gear is much cheaper.

“We know Huawei sells products, quite often, for 20-40 per cent below the rate that their competitors can sell at,” he said. “We know that Huawei has access to a large line of credit that it can in turn extend out to companies that may want to purchase Huawei equipment at reasonable interest rates.”

Carvin said if the United States said clearly that it would stop sharing intelligence with allies who use Huawei gear because it might leak to the Chinese, that would simplify Canada’s decision.

But without a firm position from the United States, Carvin said all these issues could drag on for a while.

“We are with the vast majority of countries struggling with this issue, and I think Canadians should take a little bit of comfort in that.… But the more uncomfortable fact is, why are we not able to get our act together collectively and talk to each other?” she said.

“U.S. leadership is one thing, but we’re going to have to start figuring out how to do this, if the U.S. can’t be a reliable ally here.”

• Email: jmcleod@nationalpost.com | Twitter: jamespmcleod