FedEx sues US government over diverted shipments intended for Huawei, apologises to Chinese telecom giant

A lawsuit filed by FedEx against U.S. government over export rules follows a dispute over diverted shipments that were intended for Huawei Techlogies, Chinese telecommunications-equipment giant. lawsuit challenges changes to export rules designed to keep techlogy out of hands of entities or people that U.S. government considers potential risks to national security.

In May, U.S. government ded Huawei to a list of entities and people barred from receiving U.S. techlogy without a special license from Commerce Department. Shortly after that, Huawei complained about FedEx diverting several company shipments. FedEx apologized to Huawei for missed deliveries, which it said were accidental. However, China anunced that it was investigating FedEx over matter.

delivery company complains that rules “essentially deputize FedEx to police contents of millions of packs it ships daily even though doing so is a virtually impossible task.”

FedEx Corp. sued Commerce Department and Commerce Secretary Wilbur Ross in federal district court in Washington on Monday. It asked court to block government from enforcing export controls against it. Commerce Department said in a statement that it has t reviewed complaint but looks forward to “defending our role in protecting U.S. national security.”

FedEx Chairman and CEO Fred Smith said lawsuit was broer than “ Huawei issue ... which was three packs out of 15 million packs a day.”

“ Huawei packs were only peripherally involved in this lawsuit that we filed, and in fact it goes back many, many years,” Smith said Tuesday on a conference call to discuss company’s quarterly results with analysts. He said final straw was Friday, when Commerce Department ded five more entities covered by same rules.

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On Sunday, Huawei dispute flared again when Chinese company complained on Twitter about FedEx blocking shipment of a Huawei phone from United Kingdom to U.S. Smith called it a mistake by a junior employee.

“We are expected to be policemen for se export and import controls, and re are about 1,100 entities w on this list,” Smith told Fox News. If company makes a mistake on any shipment, he said, it can be fined $250,000 per piece without having a trial or due process of law.

In its lawsuit, FedEx said most packs are sealed when customers drop m off, making it impossible for company to kw contents. FedEx said it compares names and dresses of shippers and recipients against government’s watch list of restricted groups and people.

FedEx wants a so-called safe harbor — a provision that would protect it from being penalized if it didn’t kw that a particular shipment would violate export rules. Meanwhile, tension between U.S. and China over tre, tariffs and export rules continues to rise. Huawei filed a lawsuit in federal court in Texas to challenge constitutionality of a law that bars government and its contractors from using Huawei equipment.

FedEx has run afoul of export controls before. Last year, company agreed to pay $500,000 to settle government allegations that it violated rules with some shipments to flagged entities in France and Pakistan. Memphis, Tennessee-based FedEx released its latest financial results Tuesday reflecting weakness in its core express business.

company also indicated its profit in coming year would be squeezed by slower global ecomic growth and a move to drop an Amazon delivery contract. FedEx shares were down for a second straight day. y lost $4.92, or 3.1%, to close at $155.98 after falling 2.7% on Monday.

(Except heline, changes were me to original AP story by Republic World staff)