Huawei and 5G present Liberals with a complex tech challenge

Even as it delivers its pre-election budget this week, the Justin Trudeau government has serious corporate issues on its plate: the SNC-Lavalin matter that won’t disappear no matter how it tries, the Trans Mountain pipeline that won’t find a buyer no matter how it tries, to name a plus-sized couple.

But none offers nearly the economic and ethical dilemma of whither Huawei, the world’s largest telecommunications equipment manufacturer, as it plans to help Canada into the 5G era of smart cities and the internet of things.

The excitement is correctly palpable about 5G as the fuel for faster, stronger, preferably more secure tech – but so are the suspicions in some quarters that Huawei is a state-directed provider posing cyberespionage threats and free-market distortions Canada ought to repel.

The current, protracted review of the file by the Trudeau government would become its costliest if Huawei is banned, not only in the billions of dollars it will face in industrial assistance and corporate litigation, but also perhaps in damage to its crucial near-term nation-to-nation relationship with the world’s fastest growing economy.

Time was Canada could turn to the United States to propel technological change. But 5G is ostensibly the manufacturing domain of two European firms, Ericsson and Nokia, and two Chinese companies, ZTE and the mightiest of them all, Huawei.

The Canadian telecom giants are partnered differently: Rogers with Ericsson and both BCE and Telus with Huawei. Quite properly, they are owed clarity quickly on this issue; every day without it amplifies the fear Canada will be left behind or pay a severe price for participating.

We have had Huawei’s 3G and 4G technology coursing through our radio access networks for years, and indeed it has been a strong and positive corporate presence in investing generously in university research here.

But the concerns about 5G involve its pervasive nature. We will open the door to a much greater internet, and one think-tank likened it to the risk of the builder of your home deciding to burgle it, knowing everything intimate about it.

If Huawei is permitted to stay, industry and the public need reassurance that security concerns are manageable. Our navigation via 5G inevitably will involve all providers, not just one that could theoretically seal us off, and so this supply chain will only be as strong as its weakest link.

If Huawei is airbrushed out of the Canadian picture, industry will need compensation to unravel the Gordian knot of incumbent tech, or else the cost will be passed along to the public – either way, of course, we pay. And Huawei is bound to enact a foreign investor protection agreement Stephen Harper’s government created.

Locally, as we know all too well, we are much in the muck about this.

The forced Vancouver residency of Meng Wanzhou – Huawei’s chief financial officer arrested here in December and battling extradition to the United States to face and fight a 13-count indictment on bank and wire fraud, violating sanctions against Iran and obstructing justice – has been a force multiplier of Canada’s problems.

Even if Canada was only really following an extradition treaty with America in apprehending Meng, it has been publicly scorned and threatened and punished by China.

America, Germany, Australia and New Zealand have moved to exclude the company. The United Kingdom has so far said it could muddle through, limiting procurement from Huawei in a hybrid supply chain, but the government has not formally decided.

No matter the outcome, the Public Safety Canada review will unleash litigious corporations or repercussive countries. What will be telling will be whether Trudeau listens to his intelligence agencies, if he redeploys his SNC-Lavalin job-protection mantra, how he persuades the public he is pursuing its best interests, and what it reveals about his intentions with our two largest trading partners.

As he heads into an election, this couldn’t have been the decision nor the job nor the campaign Trudeau expected or idealized. Do not envy the man. •

Kirk LaPointe is editor-in-chief of Business in Vancouver and vice-president, editorial, of Glacier Media.

Business in Vancouver is hosting an event March 28 in its BIV Talks series titled The 5G Dilemma. For details, go to biv.com/events