Changes from report parliamentary committee draft to plenary report

1. Introduction

On 19 September 2022, the European Commission published the proposal for the “Single Market Emergency Instrument” (SMEI) and two legislative proposals with targeted amendments to sectoral legislation. SMEI provides a general framework for EU crisis response in the internal market and complements other sector-specific crisis response mechanisms such as the Union Civil Protection Mechanism and sector-specific crisis frameworks in the areas of health, semiconductors or food security.

SMEI was drawn up in response to the fragmentation of the internal market during the Covid-19 pandemic where ad-hoc, unilateral border closures impinged on the freedom of movement of goods, services and workers, and exacerbated supply chain disruptions. The unprecedented crisis led to a chaotic initial response by the Member States, marked by a lack of coordination and solidarity, and the introduction of unjustified restrictions, without fully taking into consideration their devastating effect on the proper functioning of the internal market. The new instrument provides for a horizontal crisis governance framework to make sure that the internal market remains open and that supply chains are more resilient.

2. The Draft Report

The Rapporteur fully supports the objective of the Regulation of safeguarding free movement of goods, workers and services. At the same time, the Rapporteur believes that resilience is key to ensuring that the internal market delivers on its ultimate goal of supporting the EU’s economy. The Rapporteur therefore proposes to change the title to “Internal Market Emergency and Resilience Act” (IMERA) and to introduce additional changes to strengthen the Union’s resilience. The Rapporteur welcomes IMERA’s approach to preserving the free movement of goods, services and workers. During the Covid-19 pandemic, the rights of workers and companies as enshrined in the Treaties were disproportionately limited. The Rapporteur would like to highlight that the Treaty freedoms are not suspended in times of crises: unilateral limitations to free movement often even hampered the crisis response, such as limiting the mobility of health workers, hospital machinery maintenance service providers or the availability of food supplies. Therefore, the Rapporteur emphasizes the important role that “Fast lanes” played during the pandemic and highlights that the new instrument should further develop such measures.

During the Covid 19 pandemic and the EU’s response to Russia’s illegal war in Ukraine, the government-led crisis responses were complemented by the rapid adjustments companies made to their supply chains and production lines. The Rapporteur believes that market interventions must remain instruments of last resort, while market-based mechanisms such as procurement and cooperation between the government and the industry are better, faster and more efficient crisis responses.

In view of these considerations, the Rapporteur strengthens some elements, in particular pertaining to resilience and the free movement of workers, goods and services. At the same time, he wants to ensure that during a crisis, the spirit of cooperation and solidarity governs the relationship between governments and companies willing to help.

2.2 Resilience during the contingency mode

The Rapporteur believes that IMERA must increase the resilience of supply chains by fostering cooperation between businesses, the Commission and Member States on a voluntary basis. The Rapporteur therefore proposes to ensure the crisis-preparedness of all actors through biennial stress tests, trainings and crisis protocols involving not only all relevant national authorities, but also stakeholders such as businesses, social partners and experts.

Companies possess critical knowledge and resources for crisis responses, as highlighted by the Covid pandemic. In the Rapporteur’s opinion, the inclusion of companies must be an integral part of any crisis response mechanism. The Rapporteur wants to foster greater involvement of companies by allowing them to provide advice on crisis-measures through an online platform. Moreover, to address common sector-specific vulnerabilities at a European level, the Commission should conduct supply chain stress tests on a voluntary basis, thereby giving both the Commission and businesses the opportunity to develop best practices on supply chain resilience.

The Rapporteur believes that strategic reserves must become a more permanent consideration in increasing the Union’s resilience, and increased cooperation and exchange of best practices between the Commission and the Member States is needed. At the same time, the Rapporteur notes that the pro-cyclical creation of reserves during the “Vigilance Mode” or “Emergency Mode” risks increased scarcity, rising prices, affecting competition and the level playing field, and an exacerbation of the situation. Moreover, strategic reserves require established relationships between economic operators and administrative arrangements specific to each sector. Member States are better placed to accomplish that as they already have well-established mechanisms to administer strategic reserves. Therefore, the Rapporteur suggests giving the Commission a permanent role in ensuring coordination, information exchange and promoting solidarity between Member States in the administration of strategic reserves, while removing the empowerment to prescribe mandatory stockpiles during the “Vigilance Mode”.

2.3 Emergency Mode

The Rapporteur believes that the focus of IMERA during a crisis must be to safeguard the free movement of goods, services and workers as enshrined in the treaties, especially in case of emergencies. The Rapporteur proposes to strengthen the elements of the first chapter of the emergency mode and align it with the treaties and with case law. Moreover, the Rapporteur wants to draw more attention to the situation of border regions as they are the most affected by limitations to free movement. Hence, he would like to aim for a unified definition of “working from home”.

To the Rapporteur, companies and market forces are central to any crisis response in the Internal Market. While he sees the necessity for priority rated orders, he suggests improvements to provide further leeway to companies and ensure more legal certainty. Since businesses delivered despite uncoordinated actions by public authorities during the pandemic, the Rapporteur suggests more limited and voluntary requests for information. Moreover, to provide legal certainty, the Rapporteur improves the rules governing the use of data and the protection of trade and business secrets, and of intellectual property. Furthermore, the Rapporteur proposes procedural elements to ensure that priority rated orders remain an instrument of last resort and will not endanger the economic viability of companies. Recalling that companies during the Covid pandemic were under a heavy strain, the Rapporteur suggests adjustments to the sanctions regimes to reflect the lower revenues likely generated during a crisis.

The Rapporteur considers solidarity to be the key for the mutual trust and, ultimately, for the smooth free movement of goods, services and workers. Therefore, he suggests a mechanism whereby Member States may launch a call for solidarity in case of shortages of crisis-relevant goods and services. During Covid, export restrictions and joint procurement pitted EU-members against like-minded neighbours that were equally in need of crisis-relevant goods. To avoid such situations in the future and to strengthen European solidarity, the rapporteur proposes to open up the joint procurement to Andorra, Monaco and San Marino, accession candidate countries and countries of the European Free Trade Area.

2.3 Digital Tools and harmonisation of administrative procedures

During the Covid pandemic, nationally divergent requirements and administrative procedures for entering another Member State created great confusion and frustration for citizens, especially workers and service providers, in particular in border regions. The Rapporteur therefore foresees that the Commission must immediately develop digital tools similar to the successful interoperable Covid-19 certificate to guarantee the functioning of “fast lanes” for critical goods and services. The Commission must provide a digital portal, covering all registration or authorisation forms for cross-border activities, especially for crisis-relevant declarations similar to Covid Certificates, and for crisis-relevant professional services to accelerate authorisation, registration or declaration procedures.

2.4 Governance

Covid highlighted the importance of good cooperation between all governments in the EU’s internal market, but also the importance of parliamentary scrutiny. Therefore, the Rapporteur proposes to model the advisory group after an expert group within the well-known and established rules for such groups, thereby giving the European Parliament and EEA/EFTA countries a more permanent seat at the table as observers. Given the general nature of IMERA, the Rapporteur also suggests improvement to key definitions, thereby increasing legal certainty and predictability.

3. Accompanying proposals

The Rapporteur suggests targeted changes to the two accompanying proposals to make sure that free movement of harmonised and non-harmonised goods is facilitated across the EU. As regards the crisis instruments at the Commission’s disposal, the Rapporteur suggests providing a mechanism also for the rapid placing on the market for non-harmonized products, which would have increased the availability of safe personal protection equipment during the Covid pandemic. Furthermore, to incentivize companies to ramp up production during a crisis, the Rapporteur proposes to permit the continued sale of goods that were put on the market under emergency procedures for a limited period of time after the end of the single market emergency, without compromising on the safety of the products.

It is the Rapporteur’s belief that IMERA should primarily improve the resilience of the internal market, ensuring constant coordination between Member States and ensuring readiness for the event of sudden shocks at all times. Thereby, in times of crisis, the Internal Market must stay open and functional and protect consumers, workers and businesses alike from emergencies.