Supply Chain

Following our recent overview of key topics to watch in the National Defense Authorization Act (“NDAA”) for Fiscal Year (“FY”) 2024, available here, we continue our coverage with a “deep dive” into NDAA provisions related to the People’s Republic of China (“China” or “PRC”) in each of the House and Senate bills.  DoD’s focus on strengthening U.S. deterrence and competitive positioning vis-à-vis China features prominently in the 2022 National Defense Strategy (“NDS”) and in recent national security discourse.  This focus is shared by the Select Committee on Strategic Competition Between the United States and the Chinese Communist Party (“Select Committee”), led by Chairman Mike Gallagher (R-WI) and Ranking Member Raja Krishnamoorthi (D-IL). 

It is no surprise, then, that House and Senate versions of the NDAA include hundreds of provisions—leveraging all elements of national power—intended to address what the NDS brands as China’s “pacing” challenge, including many grounded in Select Committee policy recommendations.  Because the NDAA is viewed as “must-pass” legislation, it has served in past years as a vehicle through which other bills not directly related to DoD are enacted in law.  In one respect, this year is no different—the Senate version of the NDAA incorporates both the Department of State and Intelligence 2024 Authorization bills, each of which includes provisions related to China. 

To get a flavor of the approach to China in this year’s NDAA, look no further than the “Ending China’s Developing Nation Status Act” in Section 1399L of the Senate bill, which would require U.S. opposition to granting China “developing nation” status in treaties under negotiation and by international organizations of which the U.S. and China are members, such as the World Trade Organization.  Classification as a “developing nation” affords China access to preferential loans and other economic benefits intended to increase trading opportunities, notwithstanding its current status as an upper-middle income country (as determined by the World Bank), and the world’s second largest economy, trailing only the U.S.  Not to be outdone, Section 155 of the House bill contains a provision mandating expedited deployment of advanced radars to track high-altitude balloons and other potential threats to the U.S., in direct response to the incident earlier this year in which a Chinese balloon flew across the U.S. before being shot down by the Air Force.

Given these provisions, and many more (some we discuss below), this year’s NDAA strikes us as different.  It incorporates many more China-related provisions and many of these would impose greater obligations on government contractors to limit their interactions with the PRC and entities affiliated with the PRC Government.  Whether the laundry list of China-related provisions in the current NDAA survive, and in what form, will be determined by the conference process currently underway.  But these provisions have the potential to impose significant near-term burdens on contractors—requiring them to assess their obligations and make adjustments to ensure compliance.  Indeed, these provisions may be far more disruptive than requirements imposed by prior year NDAA China provisions that contractors have navigated by reassessing supply chains and increasing due diligence.  All government contractors and suppliers to government contractors with any connection to China would be well advised to monitor how the NDAA conference approaches resolution of this legislation over the coming months.Continue Reading Not to Be Outpaced: NDAA Presents Measures Addressing China

This is the twenty-sixth in a series of Covington blogs on implementation of Executive Order 14028, “Improving the Nation’s Cybersecurity,” issued by President Biden on May 12, 2021 (the “Cyber EO”).  The first blog summarized the Cyber EO’s key provisions and timelines, and the subsequent blogs described the actions taken…

Continue Reading June 2023 Developments Under President Biden’s Cybersecurity Executive Order and National Cybersecurity Strategy

2022 and 2023 may be remembered as pivotal years for efforts against so-called “greenwashing.”  In this article, we look at some recent developments in the regulation of “green claims” in the UK, the US, and the EU that corporates should be aware of.  We provide a broad summary and comparison snapshot of the UK, US and EU regimes to help companies navigate these rules.  Now is a critical time for companies to get up to speed: authorities in all three jurisdictions are focusing more and more intently on this issue; company reputations will increasingly rise and fall with the strength of their green claims, and national regulators are set to get new powers (including the power to levy significant fines) to tackle companies found in breach.

I.  Summary of recent developments: What’s new in greenwashing?

In January 2022, the UK’s Competition & Markets Authority (“CMA”) launched a sector‑by‑sector review of misleading environmental claims.  The CMA started with the fashion sector, and called out a number of high‑profile, fast‑fashion companies for their practices.  Twelve months later, the CMA announced that it was expanding the investigation to greenwashing around “household essentials”, including food, drink, toiletries and cleaning products.  The CMA’s review is the first concerted application of the CMA’s new Green Claims Code, published in September 2021, which gives guidance for any business (wherever based) making environmental claims in the UK.

Meanwhile, in December 2022, the US Federal Trade Commission’s (“FTC”) launched a review of the “Guides for the Use of Environmental Claims” (“Green Guides”), which was last updated in 2012.  The initial comment period closed on April 24, 2023.  The FTC plans to update the Green Guides to reflect developments in consumers’ perception of environmental marketing claims.  As a part of its ongoing review, the FTC also announced a workshop to examine recyclable claims.  The workshop is scheduled for May 23, 2023 and the public can submit comments on the subject of recyclable claims through June 13, 2023.  For more detail on the review, please see our dedicated blog post, here.

Finally, the EU has proposed two Directives to modernize and harmonize the rules on green claims across the bloc (together, the “EU Green Claims Proposals”).  Currently, EU law does not specifically regulate environmental claims.  Instead, environmental claims are subject only to general consumer protection and advertising rules (set out in Directive 2005/29 on Unfair Business-to-Consumer Practices and Directive 2006/114 on Comparative Advertising).  Admittedly, the EU has published guidance on interpreting and applying the general rules in the context of green claims (see the guidance here, and see our previous blog post discussing the guidance here).  However, in practice, EU Member States approach interpretation and enforcement in a variety of different ways.  On March 3, 2022, the European Commission published a Proposal for a Directive Empowering Consumers for the Green Transition, also known as the “Greenwashing Directive.”  The Greenwashing Directive amends the EU’s existing consumer protection rules, and bans a number of general green claims, such as “climate neutral” or “eco-friendly.”  It also imposes some rules on the use of non-environmental sustainability claims or “social impact” claims, such as “locally produced” or “fair labour.”  One year later, on March 22, 2023, the European Commission presented a Proposal for a Directive on Green Claims (“Green Claims Directive”), which we discussed here.  The Green Claims Directive proposes a new and strict framework, applicable to all companies operating in the EU/EEA, to harmonize the rules on the substantiation of voluntary green claims. 

Below, we outline the key aspects of the different legislative frameworks.Continue Reading The Green Claims Global Drive: Developments in the UK, US and EU

As part of the EU’s General Pharmaceutical Legislation amendment proposal, published on 26 April 2023 (“theProposal”), the European Commission (“Commission”) has introduced a series of measures aimed at securing the supply of critical medicinal products across the EU and at preventing shortages.  In particular, there are new obligations for Marketing Authorization Holders (“MAH”) and competent authorities are given more power to better monitor and control the availability of medicines on the market.

As we have discussed previously, these measures aim to tackle the broader problem of security and robustness of pharmaceutical supply chains, which became especially prominent during the COVID-19 pandemic.  In this blog, we briefly explore some of the changes introduced by the Proposal.

Preventing Supply Disruptions and Shortages

Critical Medicinal Products

The Proposal expands the monitoring of “critical medicinal products” beyond emergency situations.  Now, medicinal products “for which insufficient supply results in serious harm or risk of serious harm to patients” will be included in the “Union list of critical medicinal products” (“Union list”), and the Commission will have the power to implement measures such as stockpiling of active pharmaceutical ingredients or finished dosage forms.  Continue Reading EU Pharma Legislation Review Series: Supply Security and Shortages Control