Published: Wed, June 26, 2019
Markets | By Erika Turner

FedEx sues United States government over Chinese export rules

FedEx sues United States government over Chinese export rules

The company is suing the U.S. Commerce Department to block enforcement of tougher restrictions on exports and imports, saying the curbs force it "to police the contents" of millions of packages.

In a complaint filed Monday, the company said current Export Administration Regulations violate its Fifth Amendment rights because it forces FedEx to risk legal issues while doing its job. The company is held responsible for inadvertently shipping products that violated the Trump administration ban on exports to selected Chinese companies. State news agency Xinhua previously said the investigation into FedEx misrouting Huawei packages should not be regarded as retaliation.

FedEx is taking legal action against the U.S. authorities because it believes that current export/import regulations place "an impossible burden" on common carriers.

FedEx in September said that package deliveries between the US and China represent 2% of total sales, which would be about $1.3 billion based on 2018 revenue. The latest on that front involves a returned Huawei P30 phone sent by PC Mag from the United Kingdom and headed to the U.S. until it was returned by FedEx.

"UPS transports packages for customers around the world, when they are not restricted by government policies or laws".

In the suit, FedEx described "a sophisticated proprietary risk-based compliance system to perform such screening", but said this technology can still not determine, for example, the amount of US originated content in an electronic product shipping from Asia to the U.S.

Iran executes 'US spy' who worked for defence ministry
Worries about a confrontation between Iran and the United States have mounted despite Trump saying that he has no appetite to go to war with Iran.

Most recently, the folks at PCMag discovered another effect of the ban when trying to ship a Huawei phone from the United Kingdom to the U.S. Here's what happened.

Lack of a safe harbor provision, the lawsuit states, gives FedEx two choices: continuing to operate under threat of USA enforcement action, or ceasing operations and risking legal action from customers and foreign governments. Last month, Chinese authorities said they would investigate FedEx for misdirecting packages sent by Huawei.

FedEx CEO Fred Smith told USA broadcaster Fox News that "Huawei is just emblematic of this problem", referring to what he described as the "confusing situations" that can emerge when employees sought to comply with the restrictions. FedEx CEO Fred Smith told Fox Business these penalties can reach up to $250,000 per package.

In an interview, FedEx CEO Fred Smith said that "they can not be the policeman for the Department of Commerce".

Smith also discussed China seeking an explanation on two Huawei Technologies shipments that FedEx employees returned, which he described as an error made by a 30-year employee. The United States and China have been engaged in a trade fight for almost a year on issues such as tariffs, subsidies, technology, regulations and cyber security.

Like this: