FedEx sues US Commerce Department over export restrictions that affect Huawei

Posted at 11:39 PM, Jun 24, 2019
and last updated 2019-06-25 10:52:45-04

US delivery company FedEx has filed a lawsuit against the US government, arguing that it should not be required to enforce federal government export bans.

The move comes after FedEx mishandled a couple of deliveries for Huawei, and failed to deliver a Huawei smartphone shipped from Britain to the United States.

Huawei is the world’s largest telecommunications equipment maker and No. 2 smartphone brand. The Trump administration added Huawei to a trade blacklist last month, barring US companies from selling or exporting technology and components to the Chinese tech firm without first obtaining a US government license.

The restrictions have disrupted Huawei’s global supply chain, and left companies like Alphabet-owned Google, Micron and Qualcomm scrambling to figure out what they can and cannot sell to Huawei.

FedEx said in a statement Monday that the US Export Administration Regulations “violate common carriers’ rights” by making delivery companies liable for shipments that may violate US restrictions. “FedEx is a transportation company, not a law enforcement agency,” the statement said.

The regulations “essentially deputize FedEx to police the contents of the millions of packages it ships daily even though doing so is a virtually impossible task, logistically, economically, and in many cases, legally,” the company said in its lawsuit.

“We have not yet reviewed the complaint, but nevertheless look forward to defending Commerce’s role in protecting US national security,” a Commerce Department spokesperson said Tuesday.

FedEx under fire in China

Beijing launched an investigation into FedEx earlier this month, after Huawei said the delivery company diverted to the United States two packages intended for the company’s offices in China.

“FedEx, as a large multinational corporation, should offer the public a reasonable explanation. And they should also take responsibility for their actions,” China’s Ministry of Foreign Affairs spokesperson Geng Shuang said Monday, in reference to Huawei’s dispute with FedEx.

On Friday, PCMag reported that FedEx “refused” to deliver a Huawei smartphone sent by one of its UK writers to the magazine’s New York office. It was returned to sender, with a label attached saying “parcel returned by FedEx, due to US government issue” with Huawei and the Chinese government, according to PCMag.

“The package in question was mistakenly returned to the shipper, and we apologize for this operational error,” FedEx spokesperson Maury Donahue said in a statement to CNN Business.

She added that the company is trying to minimize disruptions to customers as “we adjust operations to comply with a dynamic US regulatory environment.”

Asked about the botched deliveries in an interview with Fox News on Monday, FedEx CEO Fred Smith said “Huawei is just emblematic of this problem.”

FedEx contacted the Department of Commerce and told them that “the increasing use of restrictions on exports and imports by the Commerce Department in various geopolitical and trade disputes creates just an impossible burden on FedEx and common carriers,” Smith said.