On 12 October the House of Commons Science & Technology and Health and Social Care Committees published their report into the UK Government’s handling of the Coronavirus Pandemic (the Report).

The Report focused on six main areas

  • the UK’s pandemic preparedness;
  • the use of border controls, social distancing and lockdowns to control the pandemic;
  • the use of test, trace and isolate;
  • the social care impact of the pandemic;
  • the impact of the pandemic on specific communities; and
  • the procurement and roll-out of covid-19 vaccines.

The Report was highly critical of the Government’s decision to delay a lockdown in the UK and failure to prioritize social care.  It found that Covid had resulted in more than 150,000 deaths in the UK, one of the world’s highest per capita tolls. The report calls the strategy to back ‘herd immunity’ and the consequent delay to implementing a lockdown “one of the most important public health failures the United Kingdom has ever experienced.”

The main points of the Report are set out below:

  • The UK’s pandemic planning was over-focused on a ‘flu model’ which had not absorbed the lessons from SARS, MERS and Ebola.
  • The Government’s early approach involved trying to manage the spread of Covid, rather than to stop it spreading. This was effectively a policy of seeking herd immunity by infection.
  • Stopping community testing early in the pandemic was a ‘serious mistake’. This was compounded by a failure to share data effectively across the UK.
  • Testing capacity should have been increased earlier as a priority.
  • There were major deficiencies in the machinery of Government, which lacked resourcing, transparency, challenge to group think and scientific capacity.
  • UK policy changes failed to take account of emerging international best practice. This group-think attitude reflected ‘a UK-centric attitude’ which led to a lethal delay to the inevitable lockdown.
  • Given concerns about the damage a lockdown would do to the economy, other strategies should have been in place, including rigorous case isolation, a meaningful test and trace operation, and robust border controls,
  • It was a significant failure that there was no early public target for testing capacity.
  • The NHS adapted to the demands of treating Covid patients, but at the cost of continuity of care for other patients, including cancer patients, for whom the treatment was time critical.
  • The Test and Trace operation did not represent good value for money (given the ‘vast amounts’ of public money directed at it) and failed to prevent subsequent lockdowns.
  • Testing and contract tracing operations were ‘slow, uncertain and chaotic’ and their failure was compounded by over-centralisation. The report labelled this failure an “inexcusable oversight.”
  • The UK did not put in place adequate support for those in self-isolation and the requirement for contacts to remain in isolation, even if they tested negative, led to lower compliance.
  • Inadequate attention was paid to the risks to the social care sector. Staff shortages, a lack of sufficient testing and PPE, and the structure of many residential care buildings (which provide for communal living facilities) hampered isolation and infection control, leading to unnecessarily high deaths in the sector.
  • The rapid discharge of elderly patients from hospitals to care homes without adequate testing or rigorous isolation was a mistake and it led to ‘many thousands of deaths which could have been avoided’.
  • Ministers were unjustifiably optimistic in the summer of 2020 that the worst was over.
  • Social, economic and health inequalities were exacerbated by the pandemic and contributed to unequal outcomes including unacceptably high death rates amongst people from BAME communities.
  • The pandemic also highlighted the health inequalities faced by people with learning disabilities and autistic people. The high death-rate amongst this community was partly caused by inadequate access to the care as a result of restrictions on non-covid hospital activity. Unacceptable “Do not attempt CPR” notices were routinely issued for people with learning disabilities.

The Report was did note some positives, including: the success of the UK’s vaccine taskforce and vaccine rollout was efficient; the rapid development of effective trials treatments and global sharing of the results; the flexibility of the NHS in adapting to the demands of treating the virus; and the effective performance of the UK’s MHRA and JCVI (including the innovation of allowing the results of clinical trials to be submitted on a rolling basis and extending the interval between doses, which allowed more people to be vaccinated more quickly).

The Report noted the lessons to be drawn from the contrast between the effectiveness of the vaccines programme which relied on “effective collaboration between public and private sectors and research institutions” and the Test and Trace programme which followed a centralised model that rejected assistance from universities and other laboratories outside Public Health England and failed to use local public health teams effectively to trace contacts.

Comment:

The Joint Committee’s Report was the first of a number of reports which will look into the UK Government’s handling of the pandemic (including the Public Inquiry that the UK Government has repeatedly promised, but not yet set up). The conclusions and evidence that the Joint Committee drew and received will be made available to future Inquiries, which are also likely to focus on the same or similar areas.

Companies operating in these areas should consider whether they are likely to be called to give evidence to the future Public Inquiry and should ensure they are properly prepared for giving evidence to such an inquiry.

Covington’s mixed legal and public policy teams have significant expertise in helping companies prepare for such appearances and would be delighted to work with your company if you consider you are likely to be called to give evidence.

On Wednesday, October 6th, Governor Gavin Newsom signed SB 41, the Genetic Information Privacy Act, which expands genetic privacy protections for consumers in California, including those interacting with direct-to-consumer (“DTC”) genetic testing companies.  In a recent Inside Privacy blog post, our colleagues discussed SB 41 and the growing patchwork of state genetic privacy laws across the United States.  Read the post here.

Under the January 2021 “Made in America” Executive Order 14005, President Biden established a new Made in America Office to oversee and administer domestic preference requirements in federal procurements.  Housed within the Office of Management and Budget (“OMB”), the Made in America Office was tasked with, among other things, reviewing and approving agency waivers of any Made in America Laws—including, for example, waivers of the Buy American Act (“BAA”) and Trade Agreements Act (“TAA”), as well as developing a publicly available website to post the descriptions of the proposed waivers and justifications for each.  Last week, the Made in America Office launched its new website, establishing for the first time a centralized, government-wide database of all proposed waivers of Made in America Laws.

The current website, madeinamerica.gov, is a beta version that “will continue evolving and incorporating more information,” with real-time waiver data expected to become available by mid-November.  Among other things, the website currently includes a general overview of the Office, some Frequently Asked Questions, and a list of certain active and historical waiver requests.  The FAQ indicates that members of the public can challenge non-availability waivers by sending comments to MadeInAmerica@omb.eop.gov, and further indicates that the Office expects the website to expand significantly in the future.

The active non-availability waivers included on the website include requests by the Occupational Safety and Health Administration; the Defense Logistics Agency; and Transportation Security Administration (TSA).  The items sought to be procured represent a diverse array of products including cerium carbonate powder; tactical pants; fluke laser distance meters; Fourier Transformation Infrared Spectroscopy Analyzer; Powered Air Purifying Respirator and HEPA filter; and Laboratory Information Management System Integrated Analytical Balance.  Notably, all but one of the waivers sought a one-time waiver; only the TSA sought a multi-procurement waiver for the aforementioned tactical pants.

These waiver requests will be reviewed pursuant to OMB guidance established in June 2021.  Under that guidance, agency waiver requests must provide details regarding the end item being acquired, the country of origin, U.S. content, estimated value of the procurement, and the market research activities conducted by the agency.  The Made in America Office plans to review the majority of waiver requests within 3 to 7 business days.

Separately, it appears that the Made in America Office will be archiving historical BAA, TAA and other waiver requests in a spreadsheet that includes approximately 106,000 waiver requests from various agencies dating back to 2016.  These historical waivers encompass a range of justifications, including non-availability, commercial item technology, public interest determination, and unreasonable cost.  Aside from illustrating the range of products that previously have secured waivers, this historical data may provide useful precedents for agencies and contractors that are considering whether to pursue—or challenge—a potential waiver in the future.

As discussed in prior articles, the centralized review and public disclosure of all waiver decisions likely will increase the both the scrutiny of waiver requests and the uniformity of these determinations.  However, it remains to be seen just how much detail the Made in America Office will make public regarding the rationale for its determinations, including instances in which a waiver is denied or rescinded.  We will continue to monitor these developments closely and provide additional updates as new information becomes available.

Last month, the US-EU Trade and Technology Council (TTC) held its inaugural ministerial in Pittsburgh: US Secretary of State Antony Blinken, Commerce Secretary Gina Raimondo, and Trade Representative Katherine Tai met with European Commissioners Margrethe Vestager and Valdis Dombrovskis. Only three months after the TTC process was launched at the US-EU summit, the two sides committed to significant steps in coordinating policy on issues such as investment screening, export controls, artificial intelligence (AI), semiconductors, and global trade challenges. The meeting also included stakeholder outreach with industry and labor groups, and was followed with further engagements with the private sector and civil society.

Leveraging Half of Global GDP

The TTC’s core logic is that the US and EU can jointly shape the global economic rules for the 21st century, given that the two sides continue to collectively represent nearly half of the world’s income. To be sure, a broader format such as the G-20 represents an even larger proportion of global GDP. But the G-20 also includes authoritarian states such as Russia and China, which do not share the same values and interests as Europe and America. Arguably, the TTC could benefit from the participation of other leading democracies, such as the United Kingdom or Japan, but there are no current plans to expand its membership.

The reinvigorated commitment towards a strong US-EU partnership also saw room for more topical issues to be included into the discussions. The EU seized the opportunity to highlight the importance of climate change for trade, which was welcomed by the US. Both sides agreed that trade policies could not substitute climate legislation, but that the two policy areas should reinforce each other.

Broad Agenda, Periodic Deliverables

Ten working groups span the TTC’s broad agenda: tech standards, climate and clean tech, secure supply chains, information and communication technology services security and competitiveness, data governance and tech platforms, tech misuse threatening security and human rights, export controls, investment screening, SME access to digital tools, and global trade. Although it may be difficult to develop a clear benchmark for success for these efforts—akin to jobs and growth yielded from a trade agreement—US and EU officials expect to be able to announce periodic deliverables, e.g., coordinated subsidies for semiconductors or complementary approaches to AI regulation. These gradual developments might not capture public headlines, but will be of crucial interest to affected firms and organizations.

For instance, the global shortage of semiconductors and their fragile supply chains was high on the TTC’s agenda. Both the EU and US have been adversely affected by semiconductor shortages, especially given that both rely primarily on Taiwan, which holds a near monopoly on production. The two sides have already begun to take legislative steps towards rebalancing their dependence with the European Chips Act and CHIPS for America Act. The Pittsburgh meeting, however, provided the opportunity for both to express their commitment toward coordinating measures to further enhance transparency in this area.

Furthermore, trade distorting and non-market practices provided the transatlantic partners with several common points of interest. There was general agreement to share information on certain sectors, especially new and emerging technologies. China’s presence and increasing dominance in these areas provided additional motivation for both sides to agree to come together to maintain their competitive advantage. It was agreed that a joint effort would be more likely to mitigate China’s efforts than two uncoordinated policies.

Moreover, the US particularly emphasized the importance of developing domestic measures to combat non-market practices. The EU’s investment screening tool was considered a step in the right direction, but there still exists a significant gap in capabilities between the two. Closer cooperation and coordination between the respective domestic policies was agreed to provide the best chances of countering distortive practices.

Cooperation on key future technologies is also set to continue to determine the TTC’s agenda, given China’s significant strides in fields such as AI. As one of the most significant issues during the meeting, the US and EU agreed to tie the joint cooperation on the development of AI to the maintenance and defense of their “shared values and fundamental freedoms.”

TTC’s Separate Track from US-EU Technology Competition Policy Dialogue

Alongside the TTC is another US-EU dialogue on technology competition policy. Whereas the former is about coordinating policies, the latter is about coordinating enforcement actions, e.g., between the Federal Trade Commission and DG Competition, or between the Justice Department and European counterparts. Although at the surface the two dialogues might appear to overlap, they are intentionally kept separate and involve different groups of individuals from the US and EU.

*           *           *

The TTC’s next ministerial is planned for sometime next year, perhaps in the spring during the French presidency of the Council of the EU. Although the diplomatic fallout from the AUKUS deal continued to cast a shadow over the Pittsburgh meeting and precluded a more vigorous commitment from France, it would be arguably in President Macron’s interest to host the TTC in an old factory turned tech hub in the run-up to the French presidential elections. Furthermore, it may be in the EU’s interest to balance the ministerial participation with the inclusion of HRVP Josep Borrell as counterpart to the US Secretary of State and, more importantly, to leverage the TTC initiatives as part of a broader foreign policy agenda.

The team at Covington is well placed to advise you on these policy developments, and how to engage with the relevant decision-makers in these areas.

Last Friday, October 1, the Protecting DNA Privacy Act (HB 833), a new genetic privacy law, went into effect in the state of Florida establishing four new crimes related to the unlawful use of another person’s DNA.  While the criminal penalties in HB 833 are notable, Florida is not alone in its focus on increased genetic privacy protections.  A growing number of states, including Utah, Arizona, and California, have begun developing a net of genetic privacy protections to fill gaps in federal and other state legislation, often focused on the privacy practices of direct-to-consumer (“DTC”) genetic testing companies.  While some processing of genetic information is covered by federal law, the existing patchwork of federal genetic privacy protections do not clearly cover all forms of genetic testing, including DTC genetic tests.

Florida’s Protecting DNA Privacy Act

HB 833 was introduced in the Florida House of Representatives in February 2021 and signed by the governor in June.  HB 833 applies to DNA samples collected from a person in Florida, and regulates any person’s use, retention, disclosure, or transfer of another person’s DNA samples or analysis.  HB 833 amended Florida’s previous genetic privacy law, s. 760.40, F.S., to require that a person from whom the DNA is extracted gives “express consent” for a specified use of their genetic information.  Under the previous law, analyzing a person’s DNA without their informed consent was a first degree misdemeanor; however, under HB 833, unlawful use may be a felony, depending on the provision of the law violated.  Additionally, HB 833 states that the genetic information of the person from whom it is extracted is the “exclusive property” of that person to control.  While HB 833 does impose notable criminal penalties for those that violate it, there are a number of exceptions (e.g., criminal prosecution or other legal processes, medical diagnosis or treatment, or conducting or preparing research subject to federal law, including the Common Rule and the Health Insurance Portability and Accountability Act (“HIPAA”)).

HB 833 is not the only change to genetic privacy protections recently made in Florida.  In July 2020, Florida enacted HB 1189 that extended existing protections barring health insurers’ use of genetic information to long-term care and life insurers, including those that issue policies with disability insurance.  Specifically, HB 1189 prohibits these insurers from canceling, limiting, denying, or differing premium rates based on genetic information.  Further, HB 1189 bars the insurers from requiring or soliciting genetic information or test results, or using a consumer’s decision as to whether to take any actions related to genetic testing “for any insurance purpose.”

Additional DTC Genetic Privacy Laws and Bills

Earlier this year, Utah enacted SB 227, the Genetic Information Privacy Act, which imposes restrictions on DTC genetic testing companies, requiring specific privacy notices, security processes to protect consumer data, and the ability of a consumer to access and delete their own personal genetic data.  Similar to Florida’s HB 833, Utah’s SB 227 contains a requirement that DTC genetic testing companies obtain express consent for the collection, use, or disclosure of consumer genetic data.  Additionally, SB 227 specifically creates data de-identification requirements, including that the company in possession of the data impose specific measures to ensure data cannot be re-identified and “enters into legally enforceable contractual obligation that prohibits a recipient of the data from attempting to reidentify the data.”

Arizona also recently enacted HB 2069, the Genetic Information Privacy Act, which became effective last week on September 29.  HB 2069 also focuses on DTC genetic testing companies and is similar to Utah’s SB 227 in many respects (e.g., initial consent must be obtained to collect and use genetic data, followed by certain separate express consents for purposes beyond the initial use), but not all (e.g., the standard de-identifying genetic data).

The California state legislature has passed SB 41, its own Genetic Information Privacy Act, which has many of the same consent, privacy, and security mechanisms present in the Utah and Arizona laws.  The bill is currently sitting on the governor’s desk for signature.  SB 41 creates its own de-identification standard similar to that created in Utah’s SB 227.  Additionally, SB 41 requires a DTC genetic testing company to comply with a consumer’s revocation of consent and to destroy a consumer’s biological sample within 30 days of that revocation.  SB 41 is almost identical to a bill vetoed by the Governor last year due to concerns over interference with COVID-19 test result reporting to public health authorities.  However, SB 41 attempts to address the governor’s concerns by providing a carve-out for tests to diagnose a specific disease as long as genetic information obtained through this diagnostic test is treated as medical or protected health information.

Federal Genetic Privacy Landscape and Efforts

Current federal genetic privacy protections stem from several laws, including HIPAA, the Genetic Information Nondiscrimination Act of 2008, and the Federal Trade Commission’s ability to bring actions against “unfair” or “deceptive” business practices.  However, these laws do not cover all forms of genetic testing that a consumer may engage with, including DTC genetic tests.  There have been recent attempts to pass federal legislation to protect American’s personal health data.  In January 2021, Senators Amy Klobuchar and Lisa Murkowski introduced S.24, the Protecting Personal Health Data Act, which aims to broadly protect personal health data not covered by HIPAA.  Under S.24, “personal health data” includes “genetic information . . . that relates to past, present, or future physical or mental health or condition of an individual that identifies the individual or with respect to which there is a reasonable basis to believe that the information can be used to identify the individual” and states that DTC genetic testing services are covered as “services” under the bill.  However, to date, since being introduced, S.24 has been referred to the U.S. Senate Committee on Health, Education, Labor, and Pensions, but it has not otherwise moved.

 

The European Commission Vice President and Co-Chair of the Europe-UK Joint Committee, Maroš Šefčovič,  spoke to a meeting of the Irish Institute of International and European Affairs yesterday about the Ireland/Northern Ireland protocol.  He spoke of the political risk and the efforts being made to reach a compromise between the EU and the UK on the implementation of the Protocol. He referred to the €5bn Brexit support from the EU, over €1bn of which was for Ireland.  He sees as “unprecedented” the fact that the EU had, under the Protocol, agreed to have the UK carry out border checks on its behalf.

The proper implementation of the Protocol was, he said, necessary to protect EU consumers and to pave the way for investment in Northern Ireland.  A failure to abide by it would not, he continued, make the problems go away.  While the EU were ready to do everything possible to solve the practical issues around implementation, this was without having a hard border and while maintaining peace and stability in Northern Ireland.  If this is rejected, he said, “we then have a problem” .

He welcomed the constructive engagement with Lord Frost saying their teams talk to each other “all the time”.   Far reaching proposals were being put forward by the EU, but the Vice President referred to threats still being made regardless.  Without a solution, political tension and business disadvantage will continue.  He is doing his best not to be distracted by political statements, which he accepted as part of politics, but spoke of the EU having other areas that they also need to put political energy into.  He referenced climate change, energy and security issues in particular.

It has taken 5 years to negotiate the protocol now in place and it was worked on line by line.  He has yet to hear the alternative which he says is not a hard border nor doing away with checks on goods.  Quoting the former Unionist politician and Northern Ireland First Minister Paisley, as referring to cows in Northern Ireland being Irish cows rather than Northern Ireland cows, he said public health and animal safety across the Irish border was a paramount issue which the EU is going to enormous lengths to provide practical solutions to.

He didn’t regard doing away with the role of the ECJ, which he referred to as a ‘late addition’, as being one of the solutions.  He spent two days recently in Northern Ireland speaking to a variety of stakeholders and this issue was only mentioned once. He sees access to the EU market by Northern Ireland as a huge advantage which requires ECJ oversight.

The EU will present a paper next week with compromise proposals which he hopes will prompt a solution by the end of 2021 or early 2022.

On October 4, 2021, U.S. Trade Representative Katherine Tai announced during a speech at the Center for Strategic and International Studies in Washington, D.C., that the United States would be launching a new trade strategy toward China.  Tai’s announcement comes on the heels of a months-long, comprehensive review of the U.S. trade policy toward China, announced earlier this year by the Biden Administration. We understand that a report on the review is forthcoming.

Initial Elements of the New China Trade Strategy

Tai highlighted four elements of the revised U.S. approach:

The first element will involve renewed diplomatic engagement with China to assess the state of the bilateral trade relationship and discuss China’s compliance with the “Phase One” trade agreement, which was signed by the Trump Administration in January 2020 and entered into force on February 14 of the same year.  In her speech, Tai refrained from declaring China to be in violation of its commitments under the deal to purchase a certain amount of U.S. goods, perhaps to provide diplomatic space for the talks with China.  According to Tai, this renewed engagement with China, which is expected to take place between her and Chinese Vice Premier Liu He as well as at lower levels, will also involve “honest” discussions about China’s “state-centered” trade and industrial policies.

A second element involves the launch of a new, but narrowly limited, exclusion review process for Section 301 tariffs on Chinese exports.  The tariffs, implemented by the Trump Administration under Section 301 of the Trade Act of 1974 and estimated to affect some $360 billion in annual trade, were rolled out in four tranches between July 2018 and September 2019.  In her speech, Tai indicated that a “targeted” exclusion process would allow U.S. companies to request tariff exclusions for products not available within the United States, though she declined to provide specifics.  The next day, the Office of the U.S. Trade Representative (“USTR”) formally launched a public consultation process, issuing a Federal Register notice to invite public comments on whether 549 previously extended Section 301 product exclusions should be reinstated.  USTR is currently not accepting requests for new exclusions, nor is it now considering extensions for the vast majority (more than 75%) of previously granted product exclusions, which were not extended.  For the 549 product exclusions that were extended, the public comment period will be open from October 12 through December 1, 2021.  [For more information on the Section 301 exclusion process, see our separate post here.]

The third element of the revised U.S. approach will seek to address China’s “state-centered” trade policies and practices, including what USTR deems to be trade-distorting industrial policies.  These “structural issues” were not addressed in the Phase One deal. While Tai said these issues would be raised in USTR’s discussions with China, she did not commit to formal negotiations toward a “Phase Two” agreement.  Moreover, Tai underscored that the United States will also consider using all available policy tools — as well as creating new ones — to address China’s non-market policies.  While Tai provided no specifics on which tools may be used, likely to keep her options open, this could conceivably involve new U.S. actions under Section 301, the filing of new disputes at the World Trade Organization (“WTO”), as well as working with Congress to legislate new authorities under which USTR may take action against China.  That Tai declined to announce imposition of any major trade actions against China during her speech suggests that a renewed escalation of tensions in the U.S.-China trade relationship is not imminent. While U.S. trade enforcement actions against China are likely in the near term, they are not likely to be as disruptive or sudden as those of the previous administration.

Finally, a fourth element of the new U.S. strategy will focus on working will allies and like-minded countries to address issues of mutual concern relating to China, and to shape the rules for fair trade to facilitate “a race to the top” for market economies.  This will involve coordination with third-countries through bilateral, multilateral, and regional fora, including the G7, the G20, the U.S.-EU Trade and Technology Council, the “Quad” (U.S.-Japan-India-Australia), the Organisation for Economic Co-operation and Development (“OECD”), and the WTO.  In response to questions regarding the current status of the WTO, namely the partial paralysis of its dispute settlement function stemming from a U.S. refusal to agree to appointments to the WTO Appellate Body under the Trump Administration, Tai expressed the Biden Administration’s support for the organization and its reform, but emphasized that relying solely on WTO mechanisms to address China’s non-market policies had not been an effective approach in the past. Notably, Tai gave no hint of plans for major new trade negotiations in the Asia-Pacific as a counter to China’s assertiveness in seeking to join regional trade pacts.  When asked whether the Administration would consider joining the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (“CPTPP”) — which China recently applied to join and which is the successor to the Trans-Pacific Partnership (“TPP”) previously championed by the United States — Tai only said that the United States would continue to engage with partners to address common challenges.

Assessment of Past Approaches Suggested a New Strategy is Needed

Tai laid out the rationale for a new approach by describing what the review of U.S. trade policy had concluded were shortcomings of previous approaches.  She noted that, following China’s accession to the WTO at the end of 2001, the United States had pursued a dual track approach to addressing issues with China.  First, through senior-level dialogue, the United States regularly negotiated commitments that China would, among other things, implement market reforms and increase market access for U.S. exports.  She said that as time went on, however, it became increasingly difficult to obtain China’s commitments and follow-through on such issues under this approach.  At the same time, the United States also rigorously pursued enforcement of China’s WTO obligations by filing disputes against China at the WTO, often in coordination with allies.  Though the United States was successful in every such dispute, she said, the results were similarly disappointing, as China would modify discrete policies or regulations, but not the underlying non-market practices that were of real concern to U.S. businesses and policy makers.

Tai said that in more recent years, as China doubled down on its non-market policies, the Trump Administration turned to unilateral tools, such as Section 301 of the Trade Act of 1974.  This approach, which led to the imposition of U.S. tariffs and Chinese trade retaliation, culminated in the conclusion of the Phase One agreement in January 2020.  However, she said, while this agreement brought stability to U.S.-China trade relations, it did not meaningfully address China’s practices, and China continues to shape its economy through state industrial policies and massive subsidies.  Tai noted China’s policies affecting the global steel, agriculture, solar panel, and semiconductor industries as particularly illustrative.

Based on this assessment of the results of prior approaches, and the Administration’s conclusion that “China is not reforming,” Tai said that the Biden Administration has concluded that a new approach is needed to further U.S. strategic and economic objectives.  In addition to the specific actions she outlined, Tai said this approach would emphasize dealing with China “from a position of strength” by first and foremost strengthening the competitiveness of the United States at home through investments in infrastructure, incentives for accelerating technological innovation, human capital development, supply chain resiliency initiatives, and Buy American policies.  Her remarks suggested that negotiating expanded market access for business is not a the top priority in the Administration’s “worker-centric” trade policy.

Looking Ahead

Tai’s speech contained few additional details or specific timeframes for implementation of the new U.S. trade strategy toward China.  USTR is reportedly planning to issue a detailed report in coming weeks on the results of its comprehensive review of U.S. trade policy toward China.  In the meantime, U.S. companies with business interests in China should be on the lookout for upcoming announcements regarding USTR’s forthcoming exclusion process for Section 301 tariffs on Chinese exports, monitor the results of USTR’s engagement with China for signals that issues of concern to specific industries may be raised, and be prepared for potential U.S. trade actions against China — and possible Chinese government responses —in the near term.

The Irish authorities are currently preparing a number of interesting pieces of new legislation – some to simply deal with Covid or to comply with European requirements, others relating to more domestic issues and a number will implement international obligations.  However surprisingly few are Brexit related.

Traditionally there are an average of over 60 new Acts of primary legislation passed each year in Ireland.  Some years there are more and some less – depending on the issues of the day but the average for the decade to 2018 was 62.  While difficult to ascertain with any precision, generally about one third of legislation enacted in Ireland is European based.  Efforts have been made to cull and control the making of legislation and there are screening mechanisms in place to ensure that legislation is passed only where it is necessary to do so and where there is no more effective way to tackle the problem being addressed.  The decline in the numbers of new Acts over the Covid period is noticeable with just 38 last year and 32 this year so far.

Primary legislation – Acts of the Oireachtas (called Bills when in preparation)- require the signature of the President to sign them into law and so the President is the final screen for any controversial new law.   He has 7 days within which to refer a Bill for review to the Supreme Court if he considers there is a potential conflict between its provisions and the Irish Constitution.  He can summon the assistance of an advisory council (the Council of State) to assist but the timeframe for a Supreme Court referral remains just 7 days from when he receives the Bill and the decision is all his.  Unusually, the President criticized the pace and quantity of legislation that he was asked to sign last July.  He was concerned that a rush to legislate before the summer holidays, subsequently blamed largely on Covid, could compromise his ability to properly review the then 19 proposed new laws.  It was a rare intervention and it resulted in each Government department being asked to address their relevant processes.

A review of the current and planned pipeline of new legislation continues to reflect the times we’re living in.  Of the 62 new Acts enacted so far by the current government, 32 of which have been passed this year, about one sixth related to each of the areas of health, justice, financial issues and a combined business and employment related tranche.  The Gender Pay Gap Information Act was one of these new laws for 2021, however it has yet to be commenced.

Many of the new Acts (and also a considerable number of secondary legislation), as might be anticipated, are Covid related.  Just one is directly Brexit related. The remaining one third of the 2021 Acts are spread over other particular domestic and societal issues, including planning, education and climate laws.

The planned pipeline of 46 further new Acts tagged as priority for the current government and which will spill over into 2022, covers a number of key areas of interest to business.  In the mix is:

  • a streamlined arrangement for large scale residential developments to deal with housing shortages,
  • a Sick Leave Bill to provide for a statutory sick play scheme,
  • the establishment of an Office of Food Ombudsman,
  • a revision of competition law enforcement and immunity arrangements,
  • a Bill to regulate on line political advertising during elections, and
  • the establishment of a Media Commission (replacing the Broadcasting Authority of Ireland) to regulate online safety and to implement the revised EU Audio Visual Media Services Directive.

Late last week, the Supreme Court indicated that it intends to review a challenge by Senator Ted Cruz (R-TX) to federal limits on the use of post-election contributions to repay pre-election loans that candidates make to their own campaigns.  This follows an earlier three-judge district court decision that struck down those limits as unconstitutional under the First Amendment.  Although the question presented in Federal Election Commission v. Ted Cruz for Senate relates most directly to the relatively obscure rules governing the repayment of candidate loans, the case represents a continuation of the steady shift in the courts towards a less restrictive federal campaign finance system.

For decades, courts considering constitutional challenges to federal campaign finance regulations have weighed the government’s interest in preventing actual or perceived corruption against individual speech rights protected by the First Amendment.  Most famously, in Buckley v. Valeo, the Supreme Court upheld federal contribution limits as a means of preventing even the appearance of quid pro quo corruption while at the same time striking down campaign expenditure limits that the Court found did little to prevent actual or perceived political corruption.  Since Buckley, this emphasis on the degree to which a challenged regulation serves as an effective check on actual or perceived corruption has been a central feature of federal campaign finance law.

Though never explicitly retreating from this basic proposition, in recent years the Supreme Court has taken an increasingly cramped view of what actually constitutes political corruption.  For instance, the Supreme Court has rejected as insufficiently compelling the prevention of “generic favoritism or influence” (McConnell v. FEC) or merely seeking “influence over or access to” elected officials (Citizens United v. FEC).  Most recently, in McCutcheon v. FEC, the Court struck down aggregate individual contribution limits on the grounds that those limits did “little, if anything,” to address explicit quid pro quo corruption.  Cruz may be the latest example of this trend.

Indeed, a close reading of the earlier district court decision suggests that the case may have significant implications well beyond the loan-repayment rules themselves.  Most notably, the district court imposed a remarkably high factual burden in considering whether the loan-repayment rules serve to prevent demonstrable corruption.  The “appearance” of corruption, in either the form of how the public perceived these payments, or what donors expected, carried nearly no weight in the analysis.  Instead, it was actual corruption the government needed to show.  In striking down the rules, the court noted that the government did “not identif[y] a single case of actual quid pro quo corruption” in the context of the loan‑repayment limit, which the court contrasted with prior cases in which the government put forward evidence of an anti-corruptive effect through witness testimony and detailed factual findings.  According to the court, even “[a] lengthy record may not be sufficient to demonstrate corruption, but the absence of any record of such corruption undermines the government’s proffered interest.”

While the fate of the loan-repayment rules may be of little interest to those not currently running for office, the Court’s consideration of these little-noticed rules may offer important insights into the future of campaign finance regulation more broadly.  If the Supreme Court affirms the district court’s approach, rules that currently may have a weaker connection to threats of “actual corruption”—for example, spousal contribution limits and the remaining restrictions on independent corporate political activities (facilitation of contributions, communications to all employees, etc.)—may be the next to face a challenge.

In the meantime, if the district court decision stands, we would expect all future candidates to cease “contributing” to their campaigns and recast those payments as loans, with a suitable rate of interest.  Striking down the limits on post-election contributions to repay loans may also incentivize candidates who believe they can win to boost late-race self-funding.  This change could also mean that incumbent officeholders with such loans on the books will be more attentive to the fundraising needed to ensure that the loans are repaid.

This post was written with research assistance from Summer Associate Jacob Lichtenstein.

 

On 22 September 2021, the UK Government published its 10-year strategy on artificial intelligence (“AI”; the “UK AI Strategy”).

The UK AI Strategy has three main pillars: (1) investing and planning for the long-term requirements of the UK’s AI ecosystem; (2) supporting the transition to an AI-enabled economy across all sectors and regions of the UK; and (3) ensuring that the UK gets the national and international governance of AI technologies “right”.

The approach to AI regulation as set out in the UK AI Strategy is largely pro-innovation, in line with the UK Government’s Plan for Digital Regulation published in July 2021.

The UK AI Strategy is centred around three pillars:

(1) Investment and planning

This pillar focuses on the need to invest in the skills and resources that lead to AI innovation with the aim of increasing the type, frequency and scale of AI discoveries in the UK. The Pillar has twelve action points, with an emphasis on the importance of access to and availability of data. The Action Points include (among others):

  • Publishing a policy framework setting out the Government’s plans to enable better data availability in the wider economy. This framework will include supporting the activities of data intermediaries, including data trusts, and providing stewardship services between those sharing and accessing data.
  • Exploring how privacy-enhancing technologies can remove barriers to data sharing by more effectively managing the risks associated with sharing commercially sensitive and personal data.
  • Continuing to publish open and machine-readable public data on which AI models for both public and commercial benefit can depend.
  • Considering what datasets the Government should incentivize or curate to accelerate the development of valuable AI applications.
  • Consulting on the potential of expanding the UK’s capability in “cyber-physical infrastructure”: how common, interoperable digital tools and platforms, as well as physical testing and innovation spaces, can be brought together to form a digital and physical shared infrastructure for innovators (e.g., digital twins, test beds, and living labs).
  • Subject to the outcomes of the public consultation Data: A new direction, the Government could more explicitly permit the collection and processing of sensitive and protected characteristics data to monitor and mitigate bias in AI systems.

(2) Supporting the diffusion of AI across the whole economy

This pillar aims to ensure that the benefits of AI innovation are shared across all sectors and regions of the UK economy. An important element of this pillar is ensuring that businesses are capable of commercializing their intellectual property (“IP”) rights in AI technologies. The UK Government has already launched a consultation on AI and IP (see here) and will seek to launch a further consultation on copyright and patents for AI through the Intellectual Property Office (“IPO”). This will enable businesses to understand and identify their AI-related intellectual assets, as well as protecting, exploiting, and enforcing their rights in AI technologies.

Other actions to be taken by the Government under the second pillar include:

  • The imminent publication of the Ministry of Defence’s AI strategy, which will explain how the UK can achieve technological advantage in defence, including details on establishing a new Defence AI Centre and how to galvanize a stronger relationship between industry and defence.
  • The publication of the National Strategy for AI in Health and Social Care. This will set the direction for AI in health and social care up to 2030, and is expected to be published in early 2022.
  • Considering how the UK can use climate technologies to support the delivery of the Government’s net zero targets. This will also be complemented by the extension of UK aid to support local innovation ecosystems in developing AI nations.
  • Extending the UK’s science partnerships in international development and diplomacy to ensure that collaboration unlocks AI’s potential to accelerate progress on global challenges, from climate change to poverty reduction.

(3) Regulatory and governance framework

The AI Strategy recognizes that building a trusted and pro-innovation system necessitates addressing the potential risks and harms posed by AI. These include concerns around fairness, bias, accountability, safety, liability, and transparency of AI systems.

The AI Strategy notes that, while the UK currently regulates many aspects of the development and use of AI through cross-sectoral legislation (including competition, data protection, and financial services legislation), the sector-led approach can lead to overlaps or inconsistencies. In order to remove these inconsistencies, the Strategy’s third pillar proposes a number of measures including:

  • The Office for AI will publish a White Paper on regulating AI in early 2022, which will set out the risks and harms of AI and outline proposals to address them.
  • The Centre for Data Ethics and Innovation (“CDEI”) will publish a roadmap to ensure that AI systems are safe, fair and trustworthy. The roadmap will clarify the activities needed to build a mature assurance ecosystem and identify the roles and responsibilities of different stakeholders across these activities.
  • Working with The Alan Turing Institute to update existing guidance on AI ethics and safety in the public sector to ensure it remains relevant with the continuing developments in responsible AI innovation.
  • Piloting an AI Standards Hub to coordinate UK engagement in AI standardization globally, and explore the development of an AI standards engagement toolkit to support the AI ecosystem to engage in the global AI standardization landscape.
  • Developing a cross-government standard for algorithmic transparency of AI systems used in the public sector.
  • Continuing the UK’s engagement on the international stage in helping to shape international frameworks, norms and standards for governing AI to reflect human rights, democratic principles, and the rule of law.
  • The Government is also considering reforming the UK data protection framework within the broader context of AI governance through the Data: A new direction public consultation (see our previous blog post here).

Political analysis

The Parliamentary Under Secretary of State at the Department for Digital, Culture, Media and Sport, stressed this vision when he highlighted the UK Government’s intent to keep regulation to a minimum, including through using existing frameworks and structures. The rationale of this approach is that less regulation will encourage innovation in the sector.

The UK’s de minimis position on regulation is at odds with the EU’s stance. In April 2021, the European Commission published its proposal for an AI Regulation (see our blog on this issue), making clear that it intends to strictly regulate “high risk” AI. The UK views AI as a sector of major economic competitive advantage for the UK. It was this vision that lay behind the UK-Japan Trade Agreement, which among other things was intended to facilitate Japanese access to UK AI, and UK access to Japanese robotics. However, divergence from the EU on key points, such as those related to data, may ultimately make it harder for UK AI developers and companies using AI technologies to operate in the EU (and vice versa) and could have an impact on the EU’s willingness to continue to grant the UK a Data Adequacy Decision (see our blog on this issue).

The timelines for AI regulation also play a key role. The European Commission’s AI proposal is now going through the legislative stages in the European Parliament and Council. By the time the UK publishes its regulatory AI proposal, it is likely that the EU would have already adopted its legislation, which would mean the EU would have taken first mover advantage, depriving the UK of the opportunity to act as a trendsetter for AI regulatory standards. The UK could find itself obliged instead to align with EU standards.

Next steps

The UK AI Strategy sets out the short, medium, and long-term plans for achieving each of the three pillars. The Office for AI, which sits under the Department for Digital, Culture, Media & Sport and the Department for Business, Energy & Industrial Strategy, will be responsible for overall delivery of the strategy, monitoring progress and enabling its implementation across Government, industry, academia, and civil society. Additionally, the AI Strategy outlines how the UK Government envisages the various consultations and policies relating to data and innovation will work together to create a pro-innovation environment for AI.

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Covington regularly advises the world’s top technology companies on their most challenging regulatory, compliance, and public policy issues in the UK and other major markets. We are monitoring the UK’s developments very closely and will be updating this site regularly – please watch this space for further updates.