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David Olive: Canada should embrace Huawei, not ban it

David Olive: Canada should embrace Huawei, not ban it
Business
Ottawa is inching toward a decision on the involvement by China’s Huawei Technologies Co. Ltd. in Canada’s next-generation telecommunications networks. It’s a decision that will mark a turning point in Canada’s economic fortunes.

Huawei is the world leader in next-generation, or 5G, networks, which will form the backbone of the 21st-century economy.

In one of the toughest decisions any Canadian government has made, Ottawa will either ban Huawei from Canada’s emerging 5G networks, or it will allow Huawei to continue with the 5G advances it has been making in Canada for more than a decade.

Banning Huawei from 5G in Canada, as many Canadian national-security experts wish for, would be disruptive to the Canadian telecommunications system. The giant telecoms Bell Canada and Telus Corp. are Huawei’s biggest Canadian customers. Telus has said that a ban on Huawei would be an enormous setback.

Worse, a ban on Huawei would make Canada a laggard in the global race to achieve leadership in 5G, on which many other world-changing technologies depend. More on that later.

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But giving Huawei the green light in Canada brings its own set of problems. Chief among these is further damage to an already fragile relationship between Canada and the U.S.

In its decade-long campaign to contain Huawei’s ambitions, which predates the Trump administration, the U.S. continues to strong-arm Canada and its other allies to avoid using Huawei technology.

Australia and New Zealand have acquiesced to U.S. pressure, banning Huawei from their emerging 5G networks. And Europe has given its nodding approval to America’s anti-Huawei actions. It has a vested interest in doing so, given that among Huawei’s few top-tier competitors are Finland’s Nokia Corp. and Sweden’s L.M. Ericsson. Both firms trail Huawei in 5G proficiency and in cost, but are trying to close the gap.

This week, U.S. President Donald Trump reversed himself in granting a 90-day reprieve to U.S. firms he ordered on May 15 to cut off supplies of semiconductors to Huawei.

But a still-possible sustained ban on U.S. supplies to Huawei would cripple China’s largest company, which Trump is using as a bargaining chip to resolve acrimonious negotiations on a U.S.-China trade pact.

Saying yes to Huawei in Canada’s 5G networks could appear to legitimize China’s imprisonment on specious charges of two Canadian citizens early this year. China took that egregious step in retaliation for the U.S.-engineered arrest in Vancouver in December of Meng Wanzhou. Meng, 47, is chief financial officer of Huawei and heir apparent to her father, Huawei founder and CEO Ren Zhengfei.

For the Trudeau government, the use of human beings as bargaining chips is anathema. There is, however, ample precedent for exchanges of prisoners. And it’s difficult to see a favourable outcome for Huawei in Canada unless that diplomatic impasse is resolved.

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Finally, Huawei’s intimate involvement in Canada’s vital communications networks is a potential national-security threat. The U.S. alleges that Huawei has repeatedly spied for Beijing.

Because of 5G’s transformational impact, the stakes are high in a decision Ottawa has said it will make before the October election.

The fifth generation of networking, 5G, promises to be almost 100 times more powerful than current technology. As such, 5G will speed up and increase the capacity of the internet. It will also lay the foundation for other advanced technologies, ranging from driverless cars to smart cities.

Huawei has long been attracted to Canada as one of the world’s biggest hubs of artificial intelligence research (AI), largely concentrated in the GTA-Kitchener corridor, now one of the world’s top 10 high-tech centres. Canada is also a player in smart cities and the development of driverless, or autonomous, vehicles.

Huawei’s 11-year commitment to Canada also draws on the 114-year legacy of Nortel Networks Corp., which designed the fibre optics pipelines that are the backbone of the global internet.

Having survived the telecom meltdown of 2000 that destroyed Nortel, Huawei has since grown to become the world’s largest supplier of networking gear to global telecoms. It also eclipsed Apple Inc. last year as the second-largest vendor of smartphones, and aims to overtake market leader Samsung Electronics Co. of South Korea.

Trump’s abrupt reversal this week on Huawei came after Silicon Valley let him know that America’s semiconductor makers would suffer mightily from lost revenues in their business with Huawei.

A sustained embargo on Huawei would “have a negative impact on the 5G technology evolution around the world,” Cui Kai, a telecom analyst at the IDC consulting firm, told Bloomberg last week.

That in turn would stall advances in AI, an urban renaissance tied to safer and more energy efficient cities, safer transportation with autonomous vehicles, and the so-called Internet of Things (IoT), by which all electronic devices and appliances are connected and can be controlled remotely.

As it happens, Huawei has never been implicated in spying. The Huawei spectre is not proven but, as they say, existential. More to the point, given the paucity of 5G architects, a rapid development of global 5G simply isn’t possible without Huawei.

For Beijing, with its ambitions to become a global tech powerhouse, Canada is the only major advanced economy that can quickly become a showcase for Huawei’s best-in-class 5G prowess.

And for Canada, that 5G proficiency would boost Canada’s proficiency in AI, its nascent work in driverless vehicles, and its world-class strength in telecommunications.

Conditions would apply, of course. They would be similar to those China itself imposes on outside companies active in that country.

A careful embrace of Huawei is a once-in-a-lifetime chance to advance Canada’s technological strength. The benefits from such a partnership are obvious, while the downside factors are nebulous.

Realistically, the U.S. cannot contain China, nor is America best served in trying to do so. And Canada cannot afford to allow its industrial strategy to be yoked to that of a country whose interests are not always aligned with ours. That’s just common sense.
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