FedEx sues U.S. government over requirement to screen packages from China

FedEx said it is “a transportation company, not a law enforcement agency.”
FedEx said the new rules place an “impossible burden” on the carrier.
FedEx said the new rules place an “impossible burden” on the carrier.Christopher Lee / Bloomberg via Getty Images file

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/ Source: CNBC.com
By Elijah Shama, CNBC

FedEx has sued the Department of Commerce to block it from enforcing regulations requiring it to screen and block packages coming into the U.S. that may pose a threat to national security — placing the shipping company directly in the crosshairs of the Trump administration’s battle with Chinese tech company Huawei.

FedEx claims the Export Administration Regulations “violate common carriers’ rights to due process under the fifth amendment,” according to a statement released Monday. FedEx says the rules place an “impossible burden” on the carrier.

Shares of FedEx and rival delivery company United Parcel Service both fell by about 2 percent in morning trading Tuesday.

FedEx filed the lawsuit Monday after Huawei demanded to know why the shipping company failed to deliver a device destined for the tech magazine PCMag, and also reported that FedEx also said on June 21 that the company refused to ship a package that contained a Huawei phone.

The Commerce Department on June 21 added five Chinese organizations involved in super-computing with military-grade technology to a so-called entity list. U.S. companies are prohibited from selling technology to anyone on the list without government approval. Huawei was added to the list in May amid rising trade tensions between the two nations.

FedEx in its statement said that it is “a transportation company, not a law enforcement agency.” The company claims that “the EAR, as currently constructed and implemented, place an unreasonable burden on FedEx to police the millions of shipments that transit our network every day.”

Commerce Secretary Wilbur Ross disputed FedEx’s claims in an interview with Fox News on Monday, saying “the regulation states that common carriers cannot knowingly ship items in contravention of the entity list or other export control authorities. It does not require a common carrier to be a policeman or to know what’s in every package.”

FedEx didn’t immediately return requests for comment.