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​photo from South Korea Telecom/flickr

Countries Shy Away From Foreign Businesses Over National Security Fears

In June, Canada said it wouldn’t allow foreign companies to participate in a multibillion dollar project to overhaul its telecommunications systems over security concerns. The government invoked a national security exemption, usually used for military procurements, to bypass trade obligations and limit bids to Canadian companies with security clearances.

The decision made news again this week after the U.S. accused Chinese company Huawei Technologies, one of the world’s largest manufacturers of telecommunications equipment, of extracting intellectual property from American companies and working for China. In March, Australia banned Huawei from bidding on a project to build a nationwide broadband network over similar fears.

TheChinese government “heavily subsidizes” the company, The New York Times reports, but the company denies being an agent of the state.

Huawei is a subsidiary Canadian company so it would beallowed to bid on Canadian projects despite Canada’s exemption, a company spokesperson said. And the UKhas no problem doing business with the company.

In a statementreleased on its Web site, Huawei says despite multiple meetings, opening its facilities to U.S. officals, and releasing shareholder information, the U.S. “appears to have been committed to a predetermined outcome.”

“We have to suspect that the only purpose of such a report is to impede competition and obstruct Chinese ICT companies from entering the U.S. market,” the statement says.

A similar report is making waves in India. Asecret intelligence paper from 2007 obtained by India Today expresses concerns about investments in India’s aviation and telecom sectors by foreign companies. The report suggests creating limits on how much outsiders can invest.

At the time of the report a Chinese state-owned company held a 51 percent share in Great Wall Airlines, an airline that brings cargo into India. Saudi Telecom had acquired 25 percent of Maxi Communications, a company responsible for 74 percent of wireless communication operations in India through mobile phone company Aircel.

The concern is that foreign countries or organized crime groups could have too much influence on markets when they own significant parts of major companies operating in India. India’s parliament will review a new Foreign Direct Investment bill in November.