FedEx suing Department of Commerce over burden of enforcing Huawei blacklisting

Following a series of incidents in which packages were misrouted, and under increasing scrutiny from the Chinese government, FedEx is seeking relief.

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FedEx is seeking relief from being "essentially deputize[d]" by the Department of Commerce, following President Trump's effective blacklisting of smartphone and telecom equipment manufacturer Huawei in May. The placement of Huawei and its subsidiaries on the "Entities List," which severely limits any business interactions American companies can have with the Chinese phone giant, has caused a number of logistical problems for FedEx.

Days after the blacklisting, Huawei told Reuters that FedEx diverted two packages from Japan addressed to Huawei's Chinese offices to facilities in the United States, and held other packages sent from Vietnam to Huawei offices elsewhere in Asia, without authorization. 

FedEx found itself again in the center of controversy following an incident in which a (used) Huawei P30 was sent from a UK writer to the US office of PCMag.com, with it being marked "Return to Sender" due to "US government issue with Huawei and China government," a label on the parcel indicated.

Notably, this incident concerns a used, review sample phone sent between two people who do not work for Huawei, making the circumstances for claiming a violation of the blacklisting tenuous, at best. FedEx called it an "operational error" in a statement to Reuters, with that outlet also noting that "fears that China would blacklist FedEx as a result sent its shares down 2.7 percent on Monday."

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"FedEx believes that the [Export Administration Regulations] violate common carriers' rights to due process… as they unreasonably hold common carriers strictly liable for shipments that may violate the EAR without requiring evidence that the carriers had knowledge of any violations," the company indicated in a statement. "This puts an impossible burden on a common carrier such as FedEx to know the origin and technological make-up of contents of all the shipments it handles and whether they comply with the EAR."

The statement continues, "We have invested heavily in our internal export control compliance program. However, we believe 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. FedEx is a transportation company, not a law enforcement agency."

Huawei's problems continue to grow

Huawei announced last week that it shipped 100 million smartphones in 2019 by May 30, which is a pace unlikely to continue if couriers refuse to ship packages as a result of blacklisting. Their laptop division is cancelling component orders amid rumors of exiting the PC OEM market entirely, while internet tech retailer Newegg is dumping the AMD Ryzen-powered Matebook D for $500, presently.

Last week, Huawei's CEO Ren Zhengfei hosted the live-streamed panel discussion "A Coffee with Ren," a half-business, half-philosophical discourse about the company and technology in general—largely avoiding discussion of the latest developments.

Also see

Huawei Research & Development Centre in Canada

Image: Paul McKinnon / Getty Images

By James Sanders

James Sanders is a staff technology writer for TechRepublic. He covers future technology, including quantum computing, AI/ML, and 5G, as well as cloud, security, open source, mobility, and the impact of globalization on the industry, with a focus on ...