FedEx Pushes Back On Trump Administration's Efforts To Target Telecom Giant Huawei

Jun 25, 2019
Originally published on June 26, 2019 7:26 am

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FedEx is pushing back against the Trump administration's efforts to target a Chinese telecom. The government says Huawei Technologies is a threat to national security. It added Huawei last month to a list of companies that Americans are not supposed to do business with. Well, FedEx says those rules are nearly impossible to comply with. It's suing the Commerce Department. NPR's Jim Zarroli has more.

JIM ZARROLI, BYLINE: The Trump administration has been pushing other countries to stop using Huawei as a supplier of telecom equipment. It says Huawei can use the equipment for spying on the government's behalf, which China strongly denies. And in May, as the trade war between China and the U.S. was heating up, the Commerce Department barred American companies from doing business with Huawei altogether. For FedEx Chairman Fred Smith, who was interviewed on Fox News yesterday, that was going too far.

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FRED SMITH: And it just reached the point that it's no longer tolerable from our standpoint.

ZARROLI: Smith says the new restrictions essentially have turned FedEx into a law enforcement agency. The company already has to screen the names of the people using FedEx to ship products as well as the people they ship to. It does this because federal law bars them from doing business with anyone who threatens national security. But FedEx says the administration is going further. It wants FedEx to check every package it ships to make sure they contain no banned items. And FedEx ships a lot of packages.

BETH DAVIS-SRAMEK: They ship 15 million packages a day, so that is astronomical in terms of being responsible for what's in the content of those packages or being liable for that.

ZARROLI: Beth Davis-Sramek teaches supply chain management at Auburn University.

DAVIS-SRAMEK: Then they literally would have to inspect every package, every box, every delivery. And with the amount of movement globally, that would be impossible.

ZARROLI: And FedEx says there's another problem. Even if FedEx looked inside every package it ships, its employees can't always tell what's restricted and what isn't. They may not have enough information to know whether a particular item is banned or not. They'd sometimes be forced to make highly technical assessments about whether the item is subject to export controls. And Smith told Fox, if they're wrong, FedEx can face big fines.

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SMITH: If we make an error on any one of them, without a trial, without any due process, we can be fined $250,000 per piece.

ZARROLI: FedEx is suing both the Commerce Department and several department officials, including Secretary Wilbur Ross. It wants the administration to give it a waiver from complying with the rules. General Counsel Mark Allen spoke in a FedEx conference call this afternoon.

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MARK ALLEN: By requiring us to police the contents of packages moving through our global network, the government is placing an unreasonable burden on a common carrier.

ZARROLI: There's a lot at stake for FedEx. China has threatened to retaliate by barring U.S. companies from doing business there, and that could include FedEx. One problem for FedEx is that its biggest rival, UPS, isn't joining in on the suit, and it says it intends to comply with all government regulations wherever it does business. As for the Commerce Department, it released a statement saying officials there hadn't yet read the FedEx complaint, but, it added, we nevertheless look forward to defending Commerce's role in protecting national security.

Jim Zarroli, NPR News, New York. Transcript provided by NPR, Copyright NPR.