FedEx sues US over enforcement of export law

China Daily: US Edition |

A FedEx delivery worker carries a package for a delivery in Wilmette, Illinois, . [Photo/Agencies]

As FedEx Corp faces pressure after mishandling packages involving China's Huawei Technologies Co Ltd, the American company has turned around and sued the US government, claiming that it is "a transportation company, not a law enforcement agency".

FedEx filed suit Monday in US District Court in Washington DC, seeking to enjoin the US Department of Commerce from enforcing prohibitions contained in the Export Administration Regulations (EAR).

"FedEx believes that the EAR violate common carriers' rights to due process under the Fifth Amendment of the US Constitution as they unreasonably hold common carriers strictly liable for shipments that may violate the EAR without requiring evidence that the carriers had knowledge of any violations," FedEx said in a statement.

"This puts an impossible burden on a common carrier such as FedEx to know the origin and technological make-up of contents of all the shipments it handles and whether they comply with the EAR."

Last month, FedEx rerouted four packages bound for Huawei headquarters in Shenzhen, Guangdong province, to the US, claiming "inadvertent misrouting".

The incident led to a regulatory investigation by the Chinese government "on suspicion of undermining the legitimate rights and interests of Chinese clients".

Over the weekend, FedEx returned a New York-bound package containing a Huawei smartphone, a P30 Pro, to the sender at PCMag's office in London.

According to fortune.com, FedEx returned the phone with a note saying the shipment was voided due to a "US government issue with Huawei and China government".

FedEx's filing Monday said that the Commerce Department restrictions "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".

Commerce Secretary Wilbur Ross, along with the department's Bureau of Industry and Security, and Nazak Nikakhtar, Commerce's assistant secretary for industry and analysis, were named co-defendants in FedEx's lawsuit.

On , the US placed Huawei and 68 affiliates on an "Entity List" that restricted companies from providing Huawei and its affiliates with technology originating in the US without government approval. On , however, the Commerce Department said there would be a 90-day grace period before the Huawei restrictions went into effect.

The lawsuit did not mention the Huawei incidents specifically.

A spokesman for the Commerce Department told The Wall Street Journal that it hadn't yet reviewed FedEx's complaint, but would defend its role in national security.

FedEx's main rival, United Parcel Service Inc, said on Tuesday it would not be a party to the lawsuit.

On , Huawei CFO Meng Wangzhou, daughter of Huawei founder Ren Zhengfei, was arrested at the Vancouver International Aiport in Canada on US request. That incident has led to a chill in bilateral relations between Canada and China.

The US has accused Huawei of violating sanctions against Iran, a country with which it is currently involved in an escalating political dispute.

Huawei has said that the US sanctions could cost it billions of dollars in revenue. Numerous American semiconductor companies also stand to lose substantial business with Huawei over the restrictions.

Huawei is the world's largest telecommunications equipment maker and a leader in developing next generation (5G) mobile communications technology. Critics of the US restrictions say the moves are being made to prevent Huawei from establishing a dominant position in mobile networks.

FedEx, which claimed in its lawsuit that it "strongly supports the objectives of US export control laws", said it has invested heavily in its internal export control compliance program. But the company said that the export regulations "as currently constructed and implemented, place an unreasonable burden on FedEx to police the millions of shipments that transit our network every day".

The company, based in Memphis, Tennessee, also said it "will continue to defend our rights as a US-based global company".

"FedEx likes to say that it has played a due part in China's rise ever since it entered the Chinese market in 1984, and it values its business here and its relationship with Huawei and other Chinese customers," China Daily Global wrote in an editorial Tuesday. "And given the huge market potential that China provides that is no doubt true".

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