Risk & Compliance

FedEx Sues U.S. Government Over Export Rules After Huawei Dispute

The lawsuit comes after Huawei demanded to know why the shipping company didn’t deliver a package to the United States.
FedEx Sues U.S. Government Over Export Rules After Huawei Dispute

FedEx filed a lawsuit against the U.S. government on Monday, arguing that it should not be required to enforce the recent 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 London to the United States, stating there was a U.S. government issue.

A month ago, the Trump Administration added Huawei to a massive trade blacklist of 1,100 companies, starting what analysts are calling “a technology cold war” with Huawei, which is the world’s largest telecommunications equipment maker and the number two smartphone brand.

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FedEx said in a statement that the U.S. Export Administration Regulations “as currently constructed and implemented, place an unreasonable burden on FedEx to police the millions of shipments that transit our network every day. FedEx is a transportation company, not a law enforcement agency.”

FedEx argues that Americans expect privacy from their shipping companies. The delivery company adds that the regulations as they currently stand “essentially deputize[s] 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 increasing use of restrictions on exports and imports by the Commerce Department in various geopolitical and trade disputes creates an impossible burden on FedEx and common carriers,” FedEx chairman and CEO Fred Smith said on Monday.

“We don’t think these regulations are based in law, and we hope the Commerce Department will come up with a solution that eliminates our requirement to be the policemen of these shipments and other U.S. common carriers as well,” Smith said.

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

U.S. companies are banned from selling software or computer chips to Huawei, leaving the company’s product without access to popular apps like Google maps and Instagram. That makes the company’s smartphones less attractive to international consumers.

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

Ren Zhengfei, the founder and CEO of Huawei, predicts that his company will survive the current geopolitical climate. Despite the CEO’s optimism, analysts say that this is a massive setback for the company and that if the ban continues Huawei’s business will be massively threatened.

“What we didn’t foresee was that the U.S. strategic determination to attack us would be so great, and could be so unwavering,” Zhengfei told CNN Business. “We also didn’t foresee that the U.S. would strategically attack us on so many fronts. However, I don’t think this would stop us from moving forward.”