The report continues to state that Canada has “delayed the decision,” in an effort to avoid provoking or “stoking tensions” between Canada and China. Relations between these two countries have continued to deteriorate in recent years, as evidenced by the arrest of Huawei’s Chief Financial Officer back in 2018. In return, China responded by imprisoning former diplomat Michael Spavor and entrepreneur Michael Kovrig. Shortly after the report was published, Marco Mendicino, Canadian Minister of Public Safety, and François-Philippe Champagne Minister of Innovation, Science and Economic Development Canada held a press conference confirming the decision. But these officials also have confirmed that ZTE is being included in the trade ban over the same cybersecurity concerns. The following statement was provided during the press conference:
Huawei has been formally banned by the US government for little over three years due to worries about the company’s network equipment. Following growing trade tensions between the United States and China, it appears that Canada has decided to join the party. According to Bloomberg, Canadian Prime Minister Justin Trudeau is close to making a final decision that would see our northern neighbours impose a trade ban on Huawei. The consequences would be comparable to what Huawei and its consumers experienced in 2019, although with a less impact.
We are announcing our intention to prohibit the inclusion of Huawei and ZTE products and services in Canada’s telecommunication systems as follows a full review by our security agencies and in consultation with our closest allies. Let me be very clear, we will always protect the safety and security of Canadians and we’ll take any actions necessary to safeguard our telecommunication infrastructure. Telecommunication companies in Canada will not be permitted to include it in their networks, products or services that put our national security at risk. Providers who already have this equipment installed will be required to cease its use, and remove it under the plans we are announcing today.
We can expect to see an end result similar to that of what happened here in the U.S. Without drawing too many conclusions, it would be pretty safe to surmise that the sale of 5G-enabled Huawei phones would no longer be permitted. This would be yet another blow to Huawei which has seen a rapid decline in sales across the globe, including in Canada. Back in 2018, Huawei claimed it saw a sales revenue of around $428 million, which could be considered a high point. At that time, Huawei had only been selling phones in Canada since 2016 and was coming up on the launch of the Huawei P30.
When questions were posed in regards to why it took Canada three years to make this decision, the following answer was provided by Champagne: I would say that this has never been a race. This is about making the right decision. This is about providing a framework to protect our infrastructure and I would say in a 5G world in the internet of things at a time where we rely more and more in our daily lives from their network. This is the right decision. Tensions between the two countries continued to rise until the U.S. stepped in with a “deferred-prosecution deal with Meng.” But it now appears that the relationship between Canada and China can no longer be resolved, with Huawei stuck in the middle.