Canada Kicks Out Huawei, U.S. Weighs Further Sanctions on Hikvision, China Invests in Undermining Sanctions

On Thursday, the Canadian government announced that it will ban Chinese companies Huawei and ZTE from its 5G networks. The move comes as the Biden administration debates imposing further sanctions on Hikvision, a Chinese surveillance camera company, for supplying and operating equipment in Xinjiang mass detention camps. Both of these developments bring renewed attention to the role of Chinese technology companies in problematic surveillance activities and the role of sanctions in combating their alleged abuses. Catharine Tunney and Richard Raycraft from the Canadian Broadcasting Corporation reported on the motivations for Canada’s ban and the timeline for its enforcement

The federal government has banned Huawei from working on Canada’s fifth-generation networks over security concerns — a decision critics say was long overdue.

[…] The government is also banning ZTE, another Chinese state-backed telecommunications firm. A government policy statement posted online says [Canadian] companies will have until June 28, 2024, to remove or terminate 5G equipment from Huawei and ZTE.

They’ll also have to remove or terminate any existing 4G equipment provided by the companies by Dec. 31, 2027. The policy statement says the government expects companies to stop purchasing new 4G or 5G equipment from the companies by September of this year.

“This is the right decision and we are pleased to announce it today because it will secure our network for generations to come,” Innovation, Science and Industry Minister François-Philippe Champagne told a news conference Thursday. [Source]

Canadian opposition parties have criticized Prime Minister Justin Trudeau for waiting too long to implement the ban, given that Canadian intelligence publicly warned about the threat to Canada’s 5G networks back in 2018. Trudeau announced the ban one day after China decided to lift a three-year import ban on Canadian canola seeds. The canola-seed ban may be difficult for China to reinstate, since its lifting may have been connected to the global shortage of food staples resulting from the Russian invasion of Ukraine. Canada’s ban on Huawei and ZTE also comes eight months after Huawei CFO Meng Wangzhou, entangled in extradition proceedings in Canada over fraud and sanctions violations, was returned to China, effectively in exchange for the release of Michael Spavor and Michael Kovrig, two Canadian citizens arbitrarily held in China for over 1,000 days. The prolonged delay in enacting the Huawei and ZTE ban “was absolutely shaped by the Michaels’ detention—to suggest otherwise is political spin,” said Jonathan Berkshire-Miller, director of the Indo-Pacific program at the Macdonald-Laurier Institute, an Ottawa think tank.

Canada now joins the other “Five Eyes” countries—the U.S., U.K., Australia, and New Zealand—in placing various restrictions on Huawei’s presence in their respective 5G networks. The U.S. in particular has accumulated a long list of sanctions and other restrictive measures against Huawei. In 2019, the U.S. added Huawei to the “Entity List,” a commerce department list prohibiting American companies from exporting or transferring specified technology to certain foreign individuals, entities, or governments. In 2020, it further sanctioned Huawei by expanding the restrictions to products made overseas with U.S. technology, and adding dozens of Huawei affiliates to the blacklist. Beyond Huawei’s threat to foreign telecommunications networks, The Washington Post found that Huawei has developed AI facial-recognition software that could be used to identify Uyghur individuals and send an alert to Chinese government authorities, and has also supplied surveillance equipment to detention centers in Xinjiang.

Meanwhile, the U.S. government is currently laying the groundwork to impose sanctions against Hikvision, according to the Financial Times. The sanctions would likely be administered through the Treasury Department’s Specially Designated Nationals (SDN) list that prohibits American companies and citizens from conducting financial transactions with those listed and freezes their U.S. assets. Following the Financial Times’ report, Hikvision shares fell by 10 percent. Sanctions could also put Hikvision customers in over 180 countries at risk of collateral damage, and profoundly escalate U.S.-China tech tensions. In The Wire, Katrina Northrop summarized the seismic ripple these sanctions would have on Hikvision and the global surveillance industry

Hikvision would be the first major Chinese tech company put on the SDN list – even Huawei, the Chinese telecommunications giant, has not been subject to this designation. While the list is usually reserved for companies engaged in drug trafficking, proliferation of weapons of mass destruction or terrorism, Hikvision is under pressure due to its alleged involvement in the Chinese state’s human rights abuses in Xinjiang. 

Such a move, if implemented, would roil the global security industry, potentially forcing providers to shift suppliers and customers to ditch Hikvision for other, more expensive products. It would also signal the U.S. government’s willingness to expand the arsenal of economic weapons it uses to push back against China’s human rights abuses — all at a time when decoupling between the American and Chinese economies is gathering pace, particularly in the technology sector. 

“SDN listing is a big deal because it is essentially kicking this company off the global financial infrastructure,” says Emily Kilcrease, a fellow at the Center for a New American Security and former USTR official. “That is a pretty escalatory step, and would be a significant shift in sanctions policy.” [Source]

Jon Bateman, a senior fellow at the Carnegie Endowment, provided a long twitter thread on how putting Hikvision on the SDN list could set a dangerous precedent and escalate into a full-blown tech war:

Hikvision has already been singled out for sanctions several times by the U.S. government. In 2019, it was placed on the “Entity List” and locked out from federal procurement, and last year it was put on the Pentagon’s “Chinese military-industrial complex companies” list, authorizing the president to impose new sanctions. Hikvision’s notoriety as a prime target for sanctions stems from its well-documented role in supplying equipment to the Chinese military and to Xinjiang mass detention camps. A recent white paper by surveillance industry firm IPVM described the numerous ways that Hikvision has been involved in human rights abuses in Xinjiang:

Hikvision’s is a major provider of surveillance technology in Xinjiang, and its operations have expanded considerably since 2017 in tandem with high demand for surveillance by government authorities. This includes several large, ongoing projects in regions with high Uyghur populations, deployment of surveillance systems in mosques and concentration camps, and a People’s Armed Police (PAP) camp research center in the provincial capital, Urumqi.

[…] In 2017, Hikvision entered into 5 ‘private-public partnerships’ with Xinjiang public security authorities based on the ‘Design-Build-Finance-OperateTransfer’ (DBFOT) model, meaning Hikvision not only supplies and constructs the projects, but is contracted to directly operate them for a period of several years. The projects, worth a combined total of ~$275 M USD (1.86 B RMB), include mass surveillance and face recognition installations across Xinjiang.

[…] Several of Hikvision’s aforementioned private-public projects specify surveillance and face recognition cameras in mosques. In the Moyu County project alone, Hikvision agreed to build and operate installations at all 967 mosques in the County thru 2035. Mosque  surveillance is also included in the Pishan County, and Yutian County projects.

[…] Hikvision’s private-public partnerships detail how the company agreed to install and directly operate surveillance systems for concentration camps in the Pishan, Moyu, and YuTian county projects. Hikvision’s cameras have also repeatedly appeared in investigations of Xinjiang concentration camps.

[…] Ovalbek Turdakun, a witness from the camps, said Hikvision cameras acted as virtual prison guards in his cell. He and his 22 cellmates were monitored 24/7, with a speaker attached to the cameras used to enforce rules such as preventing inmates from conversing with each other. Inmates were even required to ask guards through the surveillance cameras for permission to use the toilet. Consistent with this account, a recent book explains how cameras “allowed 1-3 guards to manage an entire floor of the camps, so thousands of people.” [Source]

Having long been aware of the threat of sanctions for its policies in Xinjiang, the Chinese government has taken an interest in critiquing the general use of sanctions and undermining their institutional foundation within the UN. A recent press release by UN Watch revealed that in 2021 the Chinese government contributed US$200,000 to Alena Douhan, the UN Special Rapporteur on “the negative impact of unilateral coercive measures.” This contribution was the largest given by any country to any special rapporteur that year, and the larger of two contributions by China, indicating the value of Douhan’s mission to the Chinese government. The UN Watch press release described how Douhan not only received an enormous sum from China, but also legitimized China’s policies in Xinjiang by then participating in government-sponsored propaganda events:

A professor at the Lukashenko-controlled Belarus State University, Douhan was appointed in March 2020 to a position—initiated by Iran on behalf of the Non-Aligned Movement—that defines Western sanctions against rogue regimes as violations of human rights.

According to disclosures buried in an 83-page UN filing, Douhan last year received $200,000 from China — at the same time as she lent the imprimatur of her UNHRC mandate for the most extreme forms of Chinese disinformation, including a regime-sponsored propaganda virtual event with the banner, “Xinjiang is a Wonderful Land.”

Douhan headlined China’s September 8, 2021 online program, lending UN legitimacy to propaganda videos and speeches from Chinese government officials aimed at covering up the regime’s herding of 1 million Uyghurs into camps by falsely portraying Xinjiang as a utopia.

[…] The program also screened videos claiming that “Xinjiang’s policies conform to international labor and human rights standards, and support the will of all ethnic groups to live a better life.” [Source]

 

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