A day after a congressional report branded the two companies security threats in the United States, the telecommunications equipment makers Huawei Technologies and ZTE found themselves unwelcome elsewhere in North America.
Canada, where Huawei has landed large network supply deals with domestic operators Telus and Bell Canada, indicated that the company would be excluded from participating in the development of major government communications infrastructure because of security concerns, a Reuters report said.
Andrew MacDougall, the spokesman for the Canadian Prime Minister Stephen Harper, 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."
Huawei and ZTE, the world's second and fifth-biggest telecommunications equipment suppliers, caught a break in Europe, though. The European Commission has delayed a trade case against the two firms, according to Reuters.
In Canada, the government invoked an exception that allows it to discriminate without violating international trade obligations against companies considered risky to use in helping build a new network designed for secure government phone calls, e-mails and data centre services. However, Scott Sykes, a vice-president at Huawei, said that this National Security Exemption only applies to foreign companies.
"Huawei is fully incorporated in Canada, and operates as a subsidiary Canadian company. This alone effectively enables us to bid on any potential procurement opportunities," Sykes said.
Canada's scrutiny of suppliers for its government telecommunications infrastructure project is an apparent reaction to findings released by the US House of Representatives' Intelligence Committee about its investigation of the privately held Huawei and the Hong Kong-listed ZTE. The report urged US companies to avoid doing business with the two companies, or risk being the target of Chinese cyber-espionage. Panel chairman Mike Rogers told CBC News that Canada was also at risk.
A spokesman for China's Foreign Ministry said relations with Canada continue to be positive. "I hope the two sides will continue efforts to jointly promote the pragmatic co-operation between the two countries in the fields of economy, trade, investment and others," the spokesman said.
Ottawa and Beijing signed a bilateral trade agreement last month. The Canadian government is reviewing CNOOC's US$15.1 billion takeover offer for the Calgary-based oil and gas producer Nexen.