The European Parliament and Council are about to formally adopt a General Product Safety Regulation (“GPSR”), which will repeal and replace the General Product Safety Directive 2001/95 (“GPSD”)Just like the GPSD, the GPSR sets out the basic rules on the safety of products placed on, or made available in, the EU market and intended for, or likely to be used by, consumers.  While the GPSR builds on the existing legal framework of the GPSD it introduces several changes and new requirements that aim to enhance the protection of consumer’s health and safety, and adapt its requirements to new technologies.

This blog post outlines 16 changes and new requirements that the GPSR introduces and that industry should carefully take into consideration.

Changes Introduced by the GPSR

The GPSR will introduce the following 16 changes:

Continue Reading Sixteen Changes of the Upcoming EU General Product Safety Regulation

The House of Representatives formally established the new “Select Committee on the Strategic Competition Between the United States and the Chinese Communist Party,” with a bipartisan vote of 365-65. The Select Committee, to be chaired by Rep. Mike Gallagher (R-WI), a former military intelligence officer who also serves on the House Intelligence Committee, has been in the works for some time. The Select Committee will be heavily focused on oversight and investigations and is expected to scrutinize, among other things, U.S. businesses operating in China, businesses in China on which the United States is perceived to depend, and other areas where Congress sees opportunities for private industry to bolster America’s competitive position against China. The Select Committee’s objectives are clear—companies, entities, and individuals with significant cross-border business with China should get ready for expected oversight now. 

We outline key knowns and unknowns about the Select Committee, and offer suggestions to prepare for its expected activities, in this client alert.

Regulation (EU) 2022/2560 of the European Parliament and of the Council of 14 December 2022 on foreign subsidies distorting the internal market (FSR) entered into force on 12 January 2023 and will start to apply as of 12 July 2023.

The FSR creates a brand new instrument to fill a regulatory gap, by preventing foreign subsidies from distorting the European Union (EU) internal market. Whereas companies receiving public support in the EU are subject to strict State aid rules, companies obtaining public support outside the EU are generally not. This was perceived as putting companies in the EU at a disadvantage compared to companies that obtained subsidies outside the EU, but that also engaged in economic activity in the Union.

The FSR’s scope extends far beyond the obvious State support, to cover common types of benefits that are granted all over the world, including in countries driven by a market economy. Its obligations will inevitably place an additional administrative burden on companies engaging in an economic activity in the EU. Acceptance of a foreign subsidy distorting the EU internal market may have far-reaching consequences for the company. The FSR places additional compliance obligations on companies, and for many will entail a thorough assessment to identify and justify foreign subsidies received. For companies considering transactions in the EU, the FSR effectively creates a third layer of deal conditionality, besides merger control and Foreign Direct Investment laws. This is adding a further unique set of thresholds, timings and factual considerations, to be included in companies’ strategies to invest in the EU. This will require expertise in EU antitrust and State aid law, and a good understanding of the details of the FSR.

Key things you need to know:

Continue Reading The EU Foreign Subsidies Regulation enters into force

Recent legislation allows employers to continue offering first-dollar telehealth coverage without jeopardizing the ability to contribute to a health savings account (“HSA”), but only through the end of the 2024 plan year.

Background – HSA Eligibility

Employees can make and receive pre-tax contributions to HSAs to use for qualified medical expenses. To be “eligible” to make or receive contributions to an HSA, you (a) must be covered by a high deductible health plan (“HDHP”), and (b) may not have other non-HDHP coverage that covers benefits before the HDHP deductible has been met.

Certain types of coverage, like dental and vision care, is disregarded in determining whether an individual is “eligible” to contribute to an HSA. Disregarded coverage does not have to be coordinated with HDHPs. This means that participants can receive “first-dollar” coverage for disregarded coverage and still be eligible to make or receive contributions to an HSA.

Telehealth is Disregarded Coverage Through 2024

Under prior legislation, telehealth coverage provided (i) during plan years beginning before December 31, 2021; and (ii) during the period beginning April 1, 2022 and ending December 31, 2022, is disregarded coverage under the HSA rules. See the CARES Act and the Consolidated Appropriations Act, 2022. 

Continue Reading Employers Can Continue to Cover Telehealth Benefits Before HDHP Deductible Is Met

A Re-cap

The Good Friday Agreement (GFA)

The 1998 GFA brought an end to the 30 years of violent sectarian strife, euphemistically known as ‘The Troubles’. The GFA was carefully constructed so as to balance the competing positions of both communities and to remove all infrastructure on the border between N and S Ireland.  Importantly, it also created a power-sharing system in N Ireland, with the largest political party appointing the First Minister and the second largest party appointing the Deputy First Minister. 

The GFA was ‘guaranteed’ by the UK and the Republic of Ireland both being members of the EU and therefore subject to the same trading and legal arrangements. When the UK left the EU, it became necessary to work out a new arrangement for Northern Ireland which did not risk re-creating a border between N and S Ireland, but still enabled the UK as a whole to be treated as a third-country outside the EU.

The Northern Ireland Protocol (NIP)

A third country outside the EU requires a land border. The solution to squaring this complex and sensitive this circle (one of the most difficult elements of the UK’s departure from the EU, along with the status of Gibraltar) was The Northern Ireland Protocol (the NIP), an integral part of the broader Trade and Cooperation Agreement between the UK and the EU (The TCA).

The NIP allows N Ireland to remain in the EU Single Market, but takes it out of the Customs Union.  This deliberate fudge imposes the requirement to carry out checks on goods coming from GB to N Ireland to  avoid them entering the EU’s Single Market via the ‘back door’ of N / S Ireland trade.  Since the GFA means there can be no infrastructure on the N/S Ireland Border, those controls have to be carried out ‘in’ the Irish Sea – in practice on arrival of goods in N Ireland.

Continue Reading The Northern Ireland Conundrum: A Path Forward?

In 2022, the European Union announced the creation of Digital Partnerships with three Asian countries: Japan, South Korea and Singapore. This is in line with the EU’s Digital Compass strategy which seeks to make the European Union the most connected continent by 2030. The European Commission is expanding its connections between Europe and the rest of the world to address the digital divide and further develop a sustainable digital economy with trusted partners.

Below we set out the key points from the Digital Partnerships that the European Commission has announced with Japan, South Korea and Singapore, respectively.

EU-Japan Digital Partnership

During the EU-Japan Summit organised on May 12, 2022, the European Union and Japan concluded the EU-Japan Digital Partnership, the first digital cooperation initiative to advance economic growth and provide a safe and inclusive space to solve digital issues. This effort furthers the “Data Free Flow with Trust” agenda, aimed at facilitating safe and secure cross-border data flows.

The EU-Japan Partnership will also focus on the following areas:

  • 5G/6G technologies;
  • Ethical considerations for Artificial Intelligence (“AI”);
  • Global supply chains in the semiconductor industry;
  • Green data infrastructures and data innovation;
  • Development of digital skills for private and public sectors; and
  • Facilitation of digital trade and application of global interoperable standards.

As part of the common vision, the Digital Partnership identified a number of key action items, as follows:

  • Collaborating on the development of innovative technologies through research;
  • Implementing concrete pilot projects in cutting-edge areas such as AI and digital identity;
  • Establishing mechanisms for international collaboration and common approaches to digital transformation; and
  • Developing common principles and rules through regulatory cooperation on key technology enablers for digital trade.

All the above will reflect the highest standards of data protection and follow the objectives set out by the EU-Japan mutual adequacy arrangement. The implementation of the EU-Japan Digital Partnership will start in 2023 and the countries will review their targets and progress on an annual basis.

EU-South Korea Digital Partnership

On November 28, 2022, the European Union and the Republic of Korea launched a new Digital Partnership to boost the cooperation between the two countries in the digital field. This collaboration will mainly focus on:

  • Semiconductors;
  • Next generation mobile networks;
  • Quantum technology;
  • High Performing Computing (“HPC”);
  • Cybersecurity;
  • AI;
  • Digital platforms and standardization; and
  • Data and digital skills.

The key action items from the EU-Korea Digital Partnership include:

  • Engaging in collaborative research activities, facilitating access to, and participation in, international standardisation relating to emerging technologies in the digital sector.
  • The sharing of information on: (i) cybersecurity threats and other aspects of cybersecurity, (ii) data-related laws and systems, which build on the existing adequacy decision that the European Commission granted to Korea (and ensuring data free flow of data between Korea and the EU) and working towards identifying commonalities between their existing regulatory approaches, (iii) views on a 6G roadmap and future 6G spectrum needs, (iv) the laws and systems aimed at the development and global use of trustworthy and human-centric AI (e.g., definitions, use cases, high risk AI applications, and response measures) and coordinating positions on AI governance, (v) platform policies, and (vi) approaches to protectionist measures in the digital space.
  • The Digital Partnership will also establish a Korea-EU forum for semiconductor researchers to (i) discuss and share information on the latest technologies and trends, (ii) identify gaps and potential disruptions to the global supply chain, and (iii) explore potential opportunities for international standardisation of trusted chips and chip security.

EU-Singapore Digital Partnership

The European Union and Singapore announced on December 15, 2022 a new partnership that will focus on the digital sector and its issues. The EU-Singapore Digital Partnership will be formally signed and launched in 2023 and aims at reinforcing existing relationships between the European Union and Singapore in the digital realm to achieve sustainable economic growth. The range of digital issues the collaboration will focus on are:

  • Trade facilitation;
  • Trusted data flows and data innovation;
  • Digital trust and standards;
  • Digital skills for workers;
  • Digital transformation of businesses and public services; and
  • Emerging technologies (e.g. 5G/6G, AI and digital identities).

In contrast to the other partnerships, the EU-Singapore Digital Partnership is the first one to agree on the development and application of Digital Trade Principles (“Principles”). These Principles are designed to provide a common framework for digital strategies, which will in turn be used contribute to the ongoing OECD discussions on establishing rules regarding electronic commerce.

What are the next steps?

In announcing these Digital Partnerships, EU Commissioner, Thierry Breton mentioned that these Digital Partnerships are likely to:

  • impact recent EU proposals, such as the EU Chips Act or AI Act; and
  • help achieve interoperability between the EU and Asia, as the EU Commission and ASEAN countries continue to cooperate in the digital space.

As mentioned above, all three Digital Partnerships will be formally launched in 2023. We expect that the Digital Partnerships will be used as a strategic pathfinder for closer region-to-region digital connectivity and to develop enhanced cooperation with other ASEAN countries such as Thailand, Malaysia, among others.

If you would like to learn more about these Digital Partnerships, or how Covington could help you participate in related policy initiatives, please do not hesitate to contact us.

Continue Reading EU Digital Partnerships with Asia: A New Path Towards Enhanced Digital Collaboration and Opportunities

In a new post on the Inside Tech Media blog, our colleagues discuss the “Quantum Computing Cybersecurity Preparedness Act,” which President Biden signed into law in the final days of 2022.  The Act recognizes that current encryption protocols used by the federal government might one day be vulnerable to compromise as a result of quantum computing, which could allow adversaries of the United States to steal sensitive encrypted data.  To address these concerns, the Act will require an inventory and prioritization of vulnerable information technology in use by federal agencies; a plan to migrate existing information technology systems; and reports to Congress on the progress of the migration and funding required. 

The post discusses these requirements in further detail.

As we discussed in a previous post, effective January 1, 2023, California employers must include pay scales in job postings, and a similar bill in New York was awaiting signature by Governor Kathy Hochul. The California Labor Commissioner has now issued guidance to assist employers in complying with the new law, and the New York State bill was signed into law on December 21, 2022 and is set to take effect on September 17, 2023.

California

The California Labor Commissioner recently published FAQs (adding to existing FAQs under the state’s equal pay law) with insights for employers on some gray areas in the new law:

Threshold for coverage.The FAQs clarify that an employer is covered by the pay transparency requirements if it reaches the threshold of 15 employees at any point in a pay period they compensate their workers at the minimum higher wage rate for the duration of the entire pay period and going forward as long as they have a minimum of 15 employees. Also, all employees, regardless of the number of hours worked or geographical location, will be included in the count, so long as there is at least one employee located in California.

Job postings for remote positions.The Labor Commissioner interprets the new law to mean that the pay scale must be included on a posting if the position may ever be filled in California, whether in-person or remote.

Information to include in job postings.The FAQs confirm that “pay scale” means the salary or hourly wage range that the employer reasonably expects to pay for a position, and can include just a set hourly or piece rate, rather than a range, if that is what the employer intends to pay. If the position’s hourly or salary wage rate will be based on a piece rate or commissions, the piece rate or commission range must be included in the job posting; however, the posting does not need to include bonuses, tips, or other compensation or tangible benefits provided in addition to a salary or hourly wage. Finally, the Labor Commissioner states that the pay scale must be expressly stated in the posting, and it will not be sufficient to comply with the new law to take shortcuts such as linking the salary range in an electronic posting or including a QR code in a paper posting that will then take the applicant to the salary information.

Continue Reading Update on California and New York Pay Transparency Laws

On December 20, 2022, the Federal Trade Commission (“FTC”) announced its issuance of Health Products Compliance Guidance, which updates and replaces its previous 1998 guidance, Dietary Supplements: An Advertising Guide for Industry.  While the FTC notes that the basic content of the guide is largely left unchanged, this guidance expands the scope of the previous guidance beyond dietary supplements to broadly include claims made about all health-related products, such as foods, over-the-counter drugs, devices, health apps, and diagnostic tests.  This updated guidance emphasizes “key compliance points” drawn from the numerous enforcement actions brought by the FTC since 1998, and discusses associated examples related to topics such as claim interpretation, substantiation, and other advertising issues.

Identifying Claims and Interpreting Advertisement Meaning

The updated guidance first discusses how claims are identified and interpreted, including the difference between express and implied claims.  The updated guidance emphasizes that the phrasing and context of an advertisement may imply that the product is beneficial to the treatment of a disease, which in turn would require that the advertiser be able to substantiate the implied claim with competent and reliable scientific evidence, even if the advertisement contains no express reference to the disease.

In addition, the updated guidance provides examples of when advertisers are expected to disclose qualifying information, such as when a product is targeted to a small percentage of the population or contains potentially serious risks.  When the qualifying information is necessary to avoid deception, the updated guidance contains a discussion of what constitutes a clear and conspicuous disclosure of that qualifying information.  Specifically, the guidance states that a disclosure is required to be provided in the same manner as the claim (i.e., if the claim is made visually, the disclosure is required to be made visually).  A visual claim should stand out, and based on its size, contract, location, and length of time is appears, must be easily noticed, read, and understood.  An audible disclosure should be at a volume, speed, and cadence so as to be easily heard and understood.  On social media, the guidance states a disclosure should be “unavoidable,” which the FTC clarifies does not include hyperlinks.  The qualifying information should not include vague qualifying terms, such as that a product “may” have benefits or “helps” achieve a benefit.

Continue Reading FTC Issues New Guidance Regarding Health Products

Section 5949 of the James M. Inhofe National Defense Authorization Act for Fiscal Year 2023 (“FY2023 NDAA”) contains two significant prohibitions regarding the procurement and use of semiconductor products and services from specific Chinese companies and other foreign countries of concern (the “Semiconductor Prohibitions”). Although many aspects of the prohibitions remain unclear, the legislation portends noteworthy obligations in the coming years for government contractors, their suppliers, and those who may be interested in entering into agreements with the United States.

A timeline of noteworthy events and requirements associated with the Semiconductor Prohibitions is available here.

I. The Prohibitions

A. Prohibition Text

The Semiconductor Prohibitions are divided into two subsections:

  1. Section 5949(a)(1)(A) (“Part A”) provides that the head of an executive agency may not “procure or obtain, or extend or renew a contract to procure or obtain, any electronic parts, products, or services that include covered semiconductor products or services.”
  2. Section 5949(a)(1)(B) (“Part B”) provides that the head of an executive agency may not “enter into a contract (or extend or renew a contract) with an entity to procure or obtain electronic parts or products that use any electronic parts or products that include covered semiconductor products or services.”
Continue Reading NDAA Prohibits Government Purchase and Use of Certain Semiconductors