FedEx Sues Commerce Department Over Restrictions on Huawei -- Update
25 June 2019 - 12:16PM
Dow Jones News
By Charlie McGee
FedEx Corp., after botching some deliveries for Huawei
Technologies Co., filed a lawsuit Monday to stop the U.S.
government from requiring the package giant to enforce a crackdown
on the Chinese telecommunications-gear maker.
The lawsuit, filed in a federal court in Washington, D.C.,
claims the U.S. Commerce Department's latest restrictions are
essentially forcing FedEx to police millions of packages it ships
daily to ensure prohibited items aren't being exported to Huawei.
It is a task, FedEx claims, that is legally and logistically
impossible.
"FedEx is a transportation company, not a law-enforcement
agency," the company said in a statement.
A spokesman for the Commerce Department said it hadn't yet
reviewed FedEx's complaint.
The Commerce Department, citing national-security concerns, said
in May it was adding Huawei and its affiliates to its "entity
list," preventing companies from supplying U.S.-origin technology
to Huawei without U.S.-government approval.
Huawei has warned the U.S. restrictions could knock as much as
$30 billion from its revenue this year and next. Several U.S.
suppliers, including chip maker Broadcom Inc., have warned of a hit
to their own sales from the escalating trade dispute.
Monday's 19-page complaint doesn't name Huawei, but FedEx has
been caught up in the larger dispute between the U.S. and China.
Last month, FedEx apologized after it misrouted some of Huawei's
packages, including two that were sent to its global hub in Memphis
instead of China.
Huawei publicly complained and Chinese officials said they were
opening an investigation into FedEx. The Journal reported the
parcels were misrouted after FedEx changed its internal systems to
comply with the Commerce Department's new restrictions.
FedEx apologized again last week after a Huawei smartphone being
shipped by a journalist in the U.K. to the U.S. was returned to its
sender.
In its lawsuit, FedEx claims that as a common carrier -- much
like the U.S. Postal Service or a telecommunications company -- it
is generally not liable for the contents of messages or
shipments.
The suit says FedEx screens the names of shippers and recipients
to ensure they aren't on the entity list. Even if it opened each
package, FedEx argues in its suit, it wouldn't be able to make
technical determinations about whether contents violated the U.S.
restrictions.
Steve Gaut, a spokesman for United Parcel Service Inc., said UPS
hasn't experienced any extraordinary circumstances regarding its
operations.
"We have not had any particular issues with shipping for Huawei
or any of our other customers, and we would not be supportive of
joining such a lawsuit or making such claims," Mr. Gaut said.
The Trump administration, amid a broader trade dispute with
China, has mounted a global campaign against Huawei, the world's
biggest telecom-gear supplier, which some U.S. officials believe is
beholden to the Chinese government. Huawei says its gear isn't a
security risk and it operates independently of the Beijing
government.
China's Commerce Ministry said in response that it was setting
up an "unreliable entity list" -- a blacklist of foreign companies,
organizations and individuals that break contracts, harm Chinese
companies for noncommercial reasons or damage national security
interests.
China has been a key market for both FedEx and UPS, which carry
components and finished goods into and out of the country's
manufacturing hubs. FedEx will likely face questions about the
standoff when it reports quarterly results Tuesday evening.
(END) Dow Jones Newswires
June 24, 2019 22:01 ET (02:01 GMT)
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