Huawei's latest attempt to enter U.S. worries lawmakers — but Canada doesn't share its concern

How 2 allies have responded to concerns the Chinese phone maker is a national security threat

 Jan 19, 2018

For the past decade, Chinese tech company Huawei has found no shortage of success in Canada. Its equipment is used in telecommunications infrastructure run by the country's major carriers, and some have sold Huawei's phones.

The company has struck up partnerships with Canadian universities, and say it is investing more than half a billion dollars in researching next generation cellular networks here.

But in the U.S., there have long been worries that the company could be used as vehicle for Chinese spying, and its attempts to gain a foothold in the U.S. market have been stymied at nearly every opportunity.

The latest slight for Huawei: AT&T was expected to sell Huawei's new flagship smartphones, the Mate 10 and Mate 10 Pro, later this year. But the partnership was scuttled at the last minute. Reuters, citing unnamed sources, reported that lawmakers had lobbied federal regulators to oppose the plan, and as a result AT&T abandoned the deal. Publicly, national security concerns were to blame.

'There are no secrets. There can't be any secrets.'— Scott Bradley, Huawei Canada

Those concerns are not without precedent. China has been accused on numerous occasions of launching cyberattacks for the purpose of corporate espionage. In 2014 the U.S. government charged members of the Chinese military with hacking into American corporations, and a former Nortel employee believes the country's spies hid within the former Canadian telecommunications giant's networks for years.

But in the case of Huawei, without concrete public evidence of spying, some observers believe the latest accusations may be less about national security, and more about the U.S. protecting its own interests — both in the face of worsening trade relations between the two powers, and China's aspirations to be a world leader in high-tech industries like robotics and AI — with the U.S. taking whatever opportunities it has to push back.

Huawei has long denied that it has ties to the Chinese government and has repeatedly pushed back against allegations that it poses a threat to national security. (Qilai Shen/Bloomberg via Getty Images)

"National security is often a stalking horse or an excuse for what maybe are trade or competitive issues," said Lawrence Surtees, a vice president at market intelligence firm IDC, who leads its research on the Canadian telecom industry.

He noted that the U.S. has used the same excuse in the past to prevent foreign powers from obtaining advanced Western technology. And given that two of America's closest partners — Canada and the U.K. — have given Huawei a greenlight to sell telecom equipment and phones, it's hard to know how serious any national security claims truly are.

Nevertheless: "I think the reality is often more complicated than either-or," said Surtees. "And, in this case, both are possibly true."

'There are no secrets'

U.S. lawmakers have "long been concerned about Chinese espionage in general, and Huawei's role in that espionage in particular," according to a letter to regulators obtained by the New York Times this month. Those concerns are perhaps best embodied by a Congressional report from 2012, which warned U.S. companies against using equipment made by Chinese telecom equipment makers such as Huawei and ZTE.

Although no evidence of spying was found, suspicions have lingered all the same.

Just this week, U.S. lawmakers introduced a new bill proposing that phones made by both Huawei and ZTE be banned from use by U.S. government agencies, while suggesting that companies who want to do business with the government in the future cut their own Huawei ties.

For its part, Huawei has long denied that it has ties to the Chinese government — the company was founded by a former military engineer— and has repeatedly pushed back against allegations that it poses a threat to national security.

"We work openly and transparently with the government of Canada. There are no secrets. There can't be any secrets," said Scott Bradley, Huawei Canada's vice-president of corporate affairs. "I would think our track record of being here for ten years in Canada speaks for itself."

Despite the fallout with AT&T, Huawei has no plans to sell its latest phones in Canada. But two high-end phones released early last year, the P10 and P10+, are currently sold through Bell and Rogers. This Mate 10 Pro is available in the U.K. (David Becker/Getty Images)

Both Public Safety and Innovation Canada directed questions to Communications Security Establishment (CSE), the country's electronic spy agency agency. While CSE provides security advice and guidance to Canadian companies, it is is "unable to comment on specific companies, products or providers,"  wrote spokesperson Ryan Foreman in an email.

Bell spokesperson Marc Choma provided a one-line statement, writing "Huawei is a long time Bell partner and one of a wide range of wireless infrastructure and device providers we work with."

Rogers, Telus, and Freedom Mobile did not respond to a request for comment.

'You can't always say no'

Where there have been concerns, two of the U.S.' closest partners seem to have found ways to manage them.

"I think most people involved in technology think that there are ways you can actually work with Huawei — or any such company — and not have massive security concerns," said Ian Bremmer, founder of the political consultancy firm the Eurasia group.

To address the UK's concerns, Huawei created the arms-length Huawei Cybersecurity Evaluation Center in 2010, where technicians with top government security clearance scrutinize the company's hardware and software for vulnerabilities or backdoors. The center is overseen by a board that includes members of Britain's signals intelligence agency GCHQ and British telecom providers, and its performance and independence from Huawei are subject to an annual external audit.

The oversight board's most recent report, published last year, concluded that "any risks to UK national security from Huawei's involvement in the UK's critical networks have been sufficiently mitigated."

Despite lacking the support of a major carrier, Huawei is still planning to sell its latest phones, the Mate 10 and Mate 10 Pro, direct to consumers in the U.S. through its website. (David Paul Morris/Bloomberg via Getty Images)

And in Canada, technology lawyer Imran Ahmad suggested there may be a similar logic behind the company basing some of its research and development operations here, rather than entirely overseas, where it would be harder to hold Huawei to account if necessary.

"I think it's a sign that if it's being done here, there's some Canadian standards which are going to be applied in terms of best practices," said Ahmad, a partner at the firm Miller Thomson.

Not only has the company been allowed to sell its products and services in Canada, but since 2008 it has created a number of research and development hubs and forged multiple academic partnerships — ostensibly, giving the government the ability to keep a closer eye on the company's activities when it feels the need, while still staying on good diplomatic terms.

"Sometimes with China you have to pick your battles," says Stephanie Carvin — an assistant professor of international affairs at Carleton University and a former national security analyst with the government of Canada — who notes that Prime Minister Justin Trudeau is trying to improve ties with China, and would be unlikely to publicly reproach Huawei if the government does have concerns.

"It's a major global force. It's seeing itself increasingly as having a global role. Canada is going to have to deal with China regardless. And you can't always say no all the time."