Huawei faces exclusion from planned Canada government network

Tue Oct 9, 2012 6:45pm EDT
 
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By Randall Palmer

OTTAWA (Reuters) - Canada indicated strongly on Tuesday it would exclude Chinese telecom equipment giant Huawei Technologies Co Ltd HWT.UL 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 (000063.SZ: Quote) (0763.HK: Quote), 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.   Continued...