Canada Puts Huawei 5G Decision on Back Burner With Allies Split

(Bloomberg) -- The Canadian government believes there’s now less urgency to make a decision on whether to ban Huawei Technologies Co. from 5G telecommunications systems -- and that ruling could now come after the October federal election, officials familiar with the matter say.

Prime Minister Justin Trudeau’s government believes it’s facing less pressure from telecommunications firms than before to make a decision, the officials said, speaking on condition of anonymity because they weren’t authorized to discuss the matter.

Canada had expected to move more quickly, though its Five Eyes allies remain divided. Three of the countries -- Canada, the U.K. and New Zealand -- are deliberating what to do about Huawei while a fourth, the U.S., wants allies to restrict the firm. The fifth, Australia, has already banned Huawei from 5G. Split decisions could lead the allies to claw back cooperation in certain areas.

As of January, Canada was still said to be months away from a decision, though some officials expected it before the election. The timing is now up in the air. Public Safety Minister Ralph Goodale said in April the government was working on technical issues but was pushing to get to a decision, in part “to ensure that Canadians enjoy the full benefits of this important new technology.”

‘Due Course’

The government is “carefully assessing the security challenges and potential threats involved in future 5G technology, while recognizing the potential this technology holds for Canadians,” Scott Bardsley, a spokesman for Goodale, said Wednesday in an email. “We will be taking appropriate decisions in due course to ensure that our networks are kept safe for Canadians.”

Many analysts expect Canada to ban Huawei, though the country’s decision is fraught with political tension after its arrest of Huawei Chief Financial Officer Meng Wanzhou, who is facing extradition to the U.S. and appeared in court Wednesday. Since Meng’s arrest, China has seized two Canadians, blocked Canadian crop exports and sentenced two other Canadians to death on drug charges.

“I continue to think a ban is the way to go,” Richard Fadden, a former national security adviser to Trudeau, said by email Wednesday. He cited two reasons -- technology would soon advance beyond any defensive measures put in place, and Canada shouldn’t brush aside the concerns of the U.S., a close partner. “We should not become the weak link in the defensive chain against Huawei.”

A Huawei ban could risk further straining ties, as China demands Meng’s release. The China standoff is not the driving force on the timing of any Huawei decision, one of the officials said. Fadden said he thinks the government should make a decision. “We need to bite the bullet,” he said. “But from a broader policy perspective, I can imagine the government looking at this in the context of our overall dealings with China and wanted to hold off.”

New Zealand has taken steps to block the telecoms company, though its prime minister says no final decision has been made. The U.K. is said to be leaning toward restrictions instead of a full ban, while Prime Minister Theresa May also forced out a cabinet minister over a leak about Huawei. U.S. President Donald Trump has threatened an executive order targeting Huawei, but said it could be part of a trade deal with China.

Last month, the chief of one of the agencies involved in Canada’s security review indicated it was nearing completion. “We’re finishing up the review now and we’re waiting for the decision,” Scott Jones, head of the Canadian Center for Cyber Security, said in an April 24 interview in Glasgow. He downplayed a question about whether the U.S. was pressuring Canada. “We’ve been really concentrating on providing the advice to our government,” he said.

Canada’s Communications Security Establishment -- which includes the center that Jones leads -- said in a statement Wednesday that the “review of emerging 5G technology is still underway.”

Telus Corp. and BCE Inc.’s Bell Canada would be most heavily affected by a Huawei ban. Rogers Communications Inc. uses Ericsson AB of Sweden and wouldn’t be affected. Telus has warned of the potential fallout and cost of a ban.

Huawei, Telus and Bell didn’t immediately respond to requests for comment on Wednesday. A Rogers spokeswoman said the company was moving ahead with its 5G plan.

A Canadian election is scheduled for October, and Trudeau’s Liberals trail the Conservative Party in polls. Conservative Leader Andrew Scheer -- who took aim at China in a foreign policy speech this week -- would move to block Huawei from participating in Canada’s 5G networks, the Toronto Star newspaper reported on Wednesday.

--With assistance from Kitty Donaldson.

To contact the reporter on this story: Josh Wingrove in Ottawa at jwingrove4@bloomberg.net

To contact the editors responsible for this story: Theophilos Argitis at targitis@bloomberg.net, Chris Fournier, Stephen Wicary

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