FedEx Files Lawsuit Against The Department of Commerce

Updated: 6/24/19

On Monday, courier company, FedEx, filed a lawsuit against the United States Department of Commerce, claiming that it has been “essentially deputize[d]” to enforce its trade blacklist. The lawsuit comes a month after Huawei mentioned it is reassessing its relationship with the delivery company after many packages that were meant for shipment within Asia were instead diverted and mismarked for the delivery to America. FedEx claimed the packages (which Huawei said did not contain any technology covered by the trade ban imposed against it by the Trump administration) had been misrouted accidentally.

FedEx Files Lawsuit Against The Department of Commerce

In a court filing, FedEx claimed that it has “developed a sophisticated proprietary risk-based compliance system” to follow the U.S. export laws by screening for senders or recipients on the list of entities believed to pose a national security risk. Huawei, which was not mentioned by name in either of FedEx’s announcements or its complaint against the U.S. government, was added to that list last month. However, FedEx stated that the U.S. government expects it to perform a “virtually impossible task, logistically, economically, and in many cases, legally” since it handles millions of packages each day, with most of them sealed by customers before being given to the company. Therefore, the company argues that the EAR violates its rights to due process under the Fifth Amendment.

 

China is considered as a crucial growth market for the FedEx company, but earlier this month its future there was placed into jeopardy after the Chinese government mentioned FedEx is being put under investigation for violating laws and regulations after the incident with Huawei’s packages. Last year, FedEx was forced to cut it’s 2019 earnings guidance. Chairman and CEO of FedEx, Frederick Smith, blamed “bad political choices” around the world, including Brexit, state-owned enterprises and China and U.S. tariffs, for hurting its business.

 

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