One year after its announcement during the State of the Union speech in September 2021, the European Commission presented, on Monday 19 September, its Single Market Emergency Instrument (SMEI), a complex instrument with more or less binding provisions depending on the “criticality” of the crisis, amending more than ten European legislative texts.
Based on a reflection on the disruptions and shortages experienced in the EU during the pandemic and since the start of the Russian invasion of Ukraine, as well as an analysis of the instruments put in place in other states around the world (notably by the US, Japan and Korea), this proposal provides a “progressive and balanced” response, depending on “how close we find ourselves to a possible new crisis”, said European Commission Executive Vice-President Margrethe Vestager. The instrument is thus linked to existing crisis response mechanisms and does not cover, for example, energy or health issues.
A three-stage engine
The Commissioner for the Internal Market Thierry Breton, immediately sought to reassure certain Member States, worried about too much interventionism (see EUROPE 12975/14), insisting that this instrument was much less coercive than the American, Japanese or Korean systems.
However, citing the Hungarian case and the practice of differential pricing based on the origin of the customer (see EUROPE 12971/10), the Commissioner indicated that the Commission must sometimes intervene. The Commission “will be able to take back control from the Member States and prohibit decisions that would obviously be contrary to the interests of the internal market”, he said.
The instrument is thus based on a range of voluntary actions and cooperation, but also includes binding arrangements in times of serious crisis.
As we reported (see EUROPE 13003/6), the instrument provides for three levels of response depending on the severity and proximity of the crisis: - a framework for contingency planning in normal times; - a framework for single market vigilance when a potentially serious incident occurs but has not “escalated”; - finally, a framework for single market emergencies when the single market is directly affected in a systemic way by a major incident.
Ms Vestager explained in broad terms how it works. Outside of crises, the idea is “to establish the necessary protocols to better prepare ourselves”. This means setting up crisis management simulations with early warning exercises in case of supply disruption of products that Member States “consider critical”.
When a situation becomes more pressing, the European Commission may ask “Member States to voluntarily share information on their supply chain of strategically important goods and services”, she continued, addressing the vigilance framework.
Finally, only “in exceptional circumstances”, the Commission may ask Member States to establish reserves of goods and services considered strategic. Here, Ms Vestager insists on an emergency mechanism to be activated by the EU Council.
The first objective will be to “ensure that Member States limit the free movement of goods, services or persons to what is absolutely necessary to deal with the crisis”. “To do this, we will ask Member States to notify any restrictions they may have”, she said.
In “emergency mode”, the European Commission may request information from economic operators by means of a binding decision. It may also invite companies to accept priority requests for necessary products, or even require companies to comply with such requests. In case of refusal, companies will have to justify it.
For Thierry Breton, companies will have no trouble playing the game. “These days all boards spend at least one or two sessions a year analysing risks and what would happen in terms of risks”.
Article 28 provides for fines (albeit capped at 1% of daily turnover) for operators for failure to respond to mandatory information requests or to comply with Commission priority production orders. These fines should not exceed two or three years, depending on the case.
At the heart of the system, the Advisory Group
This step-by-step system is based entirely on a new collective steering body, the Advisory Group. This group will be chaired by the European Commission and composed of one representative from each Member State. Its composition will vary according to the nature of the crisis.
Its role will be to advise the Commission on measures to prevent or, where necessary, to deal with the effects of a disturbance or crisis that could potentially affect the single market, while ensuring coordination between Member States.
This group does not replace the Single Market Enforcement Task Force (SMET Task Force - see EUROPE 12718/32). The former is indeed a permanent mechanism that focuses on permanent obstacles in the internal market, while the advisory group is an ad hoc mechanism, an internal source explained.
Right to strike
Responding to EUROPE on the European trade unions’ concern about the repeal of the ‘Strawberry’ Regulation (see EUROPE 13017/8), the Commissioner assured that the European Commission’s aim was to enable tensions between Member States to be resolved more effectively.
“The right to strike is obviously a fundamental right and the SMEI does not interfere in any way with this right”, he added, assuring that the proportionality of the instrument had been “carefully studied”, in conjunction with the cabinet of Commissioner for Jobs and Social Rights Nicolas Schmit.
To view the proposal: https://aeur.eu/f/35p (Original version in French by Pascal Hansens)