OTTAWA, Oct 10 (bdnews24.com/Reuters) - Canada indicated strongly on
Tuesday it would exclude Chinese telecom equipment giant Huawei
Technologies Co Ltd from helping to build a secure Canadian government
communications network because of possible security risks.
Meanwhile,
the European Commission has delayed a trade case against Huawei and
another Chinese telecom equipment maker, ZTE Corp, easing tensions
between the European Union and China, its second-biggest trading
partner.
Canada has invoked a national security exception to
let it discriminate, without violating international trade obligations,
against companies deemed as too risky to be involved in putting together
the network for carrying government phone calls, emails and data center
services, Canadian Prime Minister Stephen Harper's spokesman told a
news conference.
"The government's going to be choosing
carefully in the construction of this network, and it has invoked the
national security exception for the building of this network," Andrew
MacDougall, spokesman for the Conservative prime minister, said.
"I'll leave it to you if you think ... Huawei should be a part of a Canadian government security system," MacDougall said.
MacDougall
was speaking in reaction to a report on Monday from the U.S. House of
Representatives Intelligence Committee, which urged American firms to
stop doing business with Huawei and ZTE.
It warned that China
could use equipment made by the two companies to spy on certain
communications and threaten vital systems through computerized links.
CBC
television reported that the House committee chairman, Representative
Mike Rogers, is also urging Canadian companies not to do business with
Huawei.
Huawei and ZTE are the world's second- and fifth-largest makers of wireless telecoms gear.
EU
Trade Commissioner Karel De Gucht is gathering evidence in order to
launch an anti-dumping or anti-subsidy case. His efforts have been
hindered by the fact that no European producer, such as Ericsson and
Alcatel-Lucent, has complained. A formal complaint is normally a
prerequisite for an investigation.
'PROCUREMENT OPPORTUNITIES'
Huawei
has a thriving business in Canada. It won a contract in 2008 to build
telecommunications networks for domestic operators Telus Corp and BCE
Inc's Bell Canada, and it has even received a C$6.5 million ($6.6
million) grant from the province of Ontario towards a C$67 million
investment by Huawei in research and development.
"The national
security exception only applies to foreign companies," said Huawei
Technologies Canada Co Ltd spokesman Scott Bradley.
"Huawei is
fully incorporated in Canada, and operates as a subsidiary Canadian
company. This alone effectively enables us to bid on any potential
procurement opportunities," Bradley added.
Huawei has 130
engineers in its Ottawa research-and-development facility and has 300
employees in its Canadian head office in Markham, Ontario, the company
said. The company says it has so far procured C$400 million from
Canadian companies.
Its services may be in particular demand by
Canadian firms next year after an auction of valuable wireless spectrum
of 700 MHz frequencies, compatible with the new mobile broadband
technology known as long-term evolution (LTE), one of Huawei's fortes.
In
invoking the security exception for the government network, Canada has
not gone as far as Australia, which has barred Huawei from taking part
in contracts to build the government's $38 billion national broadband
network.
Bradley suggested the Australian decision was made for other reasons.
Bradley
said that Australia has made pretty clear that it is "trying to cozy up
to the United States right now in terms of their trade relationship,"
noting that Australia has also agreed to have 2,500 U.S. troops
stationed there.
David Skillicorn, Internet security expert at
Queen's University in Kingston, Ontario, said he supports the U.S.
recommendation not to deal with Huawei and said the Canadian government
should revisit its decision to let it operate in Canada.
"The
Harper government is putting Canadian telecommunications companies at
risk. We shouldn't be rolling out the red carpet for this company,"
Skillicorn said.
The negative publicity in Canada for Huawei
and for China in general may have ramifications for a $15.1 billion bid
by China's CNOOC Ltd for Canadian oil firm Nexen Inc.
The
Canadian government must decide if the takeover would be of net benefit
to Canada. Some politicians have said a Chinese state-owned firm should
not be allowed to scoop up a Canadian oil firm.
Canada's spy
agency Canadian Security and Intelligence Service has put out a report
saying investment in strategic sectors by some foreign state-owned firms
could threaten national security.
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