FedEx Sues U.S. Commerce Department Over Export Controls In Huawei Dispute

Jun 25, 2019
Originally published on June 26, 2019 7:25 am

FedEx has been caught in the crossfire in the conflict between the Trump administration and China's Huawei Technologies. Now, the giant shipper is suing the U.S. Commerce Department to block the agency from enforcing export regulations against FedEx.

"FedEx is a transportation company, not a law enforcement agency," the company said in a statement announcing the lawsuit on Monday.

The lawsuit, which also names Commerce Secretary Wilbur Ross, does not mention Huawei, the world's largest supplier of telecom equipment. But FedEx has become embroiled in the dispute between the U.S. and China over trade and Huawei, and China is reportedly investigating FedEx over misdelivered Huawei packages.

The Trump administration has been pushing other countries to drop Huawei as a supplier of key networking equipment, including the next-generation 5G wireless phone system. The U.S. says it believes Huawei could use its technology to spy on behalf of the Chinese government, a charge that Huawei has repeatedly denied.

In its lawsuit, FedEx says U.S. export 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." FedEx says it receives about 15 million packages per day for shipment and its system spans more than 220 countries and territories.

"To comply with the Export Controls," the lawsuit says, "FedEx screens the names and addresses of its shippers and the designated recipients prior to delivering any package in order to identify whether the sender and/or recipient are an entity or person" on the Commerce Department's "entity list" of persons that could pose risks to U.S. national security or foreign policy interests.

In a statement to NPR on Tuesday, the Commerce Department said: "We have not yet reviewed the complaint, but nevertheless look forward to defending Commerce's role in protecting U.S. national security."

FedEx says it faces substantial penalties — criminal penalties of up to $1 million and civil penalties of $300,000 per violation. That puts FedEx "between a rock and a hard place — absent the availability of review, FedEx must either forgo lawful activity because of its well-founded fear of prosecution, or willfully violate the Export Controls, thereby subjecting itself to criminal prosecution and punishment," the suit says. It also says that "requiring FedEx to indiscriminately inspect every package abroad could place" the company in violation of privacy laws.

The suit adds that the export controls require "considerably more screening than possible from common carriers like FedEx." Matthew O'Connor, a spokesman for UPS, told NPR on Tuesday that UPS "continues to follow government directives in the markets where the company operates. UPS will not join the lawsuit filed by FedEx."

On May 15, the Commerce Department placed Huawei on the entity list, saying there was a "reasonable basis to conclude" that the Chinese company "is engaged in activities that are contrary to U.S. national security or foreign policy interest." That essentially prevents the transfer of American technology to Huawei without a special license.

Google said it would stop supporting Android devices for phones made by Huawei, the world's second-largest supplier of smartphones, because the Chinese company was on Commerce's list.

Then on May 20, the Commerce Department issued a 90-day delay to give companies doing business with Huawei time to make "other arrangements."

On June 1, FedEx said its relationships with Huawei and all of FedEx's customers in China "are important to us. FedEx holds itself to a very high standard of service. FedEx will fully cooperate with any regulatory investigation into how we serve our customers."

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