Questions and Answers: Single Market Emergency Instrument

@European Union, 2019@European Union, 2019
  1. Why is a Single Market Emergency Instrument necessary?

Recent crises, such as the COVID-19 pandemic, have shown how such events can disrupt the Single Market and the extent to which businesses and the European economy rely on its normal functioning. Thanks to European unity and solidarity, the EU has been able to successfully address and weather these crises. However, these have also highlighted the need for Europe to be better prepared for possible future crises, especially when considering the continuing effects of climate change and resulting natural disasters as well as global economic and geopolitical instabilities. In particular, preparing for possible future crises means better addressing new obstacles to free movement or shortages of crisis-relevant goods and services that can affect the functioning of the Single Market. To this end, SMEI proposes a well-calibrated toolbox that will permit a rapid and effective crisis response.

  1. What is the relationship between SMEI and other EU crisis response instruments?

A number of EU legal instruments lay down provisions which are relevant for the management of crises in general, for example the Union Civil Protection Mechanism. The SMEI will focus on removing obstacles and preserving the free movement of goods, services and persons and on ensuring the availability of critical products on the Single Market in case it is activated. In this way, it will complement other EU frameworks and recently adopted Commission proposals, which lay down more targeted measures on certain aspects of crisis management or are relevant for specific sectors, for example the European Health Emergency Preparedness and Response Authority (HERA), the Contingency plan for ensuring food supply and food security and the European Chips Act.

  1. What are the main measures in SMEI?

SMEI aims to establish a comprehensive crisis-response architecture, relating to different levels of impacts to the Single Market. This will be based on the following main components: 

  • an advisory group;
  • a framework for contingency planning;
  • a framework for Single Market vigilance mode;
  • a framework for Single Market emergency mode.
  1. What is the role of the advisory group and how will it be set up?

The role of the advisory group is to advise the Commission on the appropriate measures for preventing or addressing the impact of a threat of disruption or of a crisis on the Single Market, while ensuring adequate coordination. More specifically, the advisory group will assist the Commission in assessing the scope of the threat or of the crisis and the need to activate the Single Market vigilance or emergency modes respectively. The advisory group will also analyse the relevant information gathered by the Member States, the Commission or from economic operators.

The advisory group is chaired by the Commission and composed of one representative from each Member State. Representatives of other crisis-relevant instruments such as of the HERA Board or of the Integrated political crisis response (IPCR), the European Parliament, EEA states, or economic operators and stakeholder organisations could be invited to participate as observers. 

  1. What measures are foreseen under the framework for contingency planning?

In normal times where no sudden event is likely to have severe disruptive effects on the Single Market, market forces ensure the functioning of businesses and of the Single Market. However, the framework of contingency planning allows the Commission to undertake several measures at all times to prepare for possible crises, without requiring specific activation.

These measures include the possibility of preparing crisis protocols and crisis communication, training and simulations for Member States officials, and the establishment of an early warning system for any incidents that could disrupt the functioning of the Single Market, to be reported by Member States.

  1. What is the vigilance mode and what measures does it foresee?

As part of the SMEI, the vigilance mode can be activated when there is a threat of significant disruption in the supply of goods or services of strategic importance with the potential to escalate into a Single Market emergency.

The main measures foreseen under the vigilance mode include monitoring by Member States of the supply chains of strategically important goods and services. Furthermore, the proposal provides a framework for building up strategic reserves in these areas. To do so, the Commission will first identify the goods for which reserves may be necessary. It may also ask Member States for information about their own reserves, coordinate their efforts, exchange information and draw up lists of targets. If those indicative targets are not reached, but the critical circumstances demand it, the Commission may also adopt an implementing act requiring one or several Member States to build up reserves. The reserves of economic operators are considered throughout the whole process. 

  1. What is the emergency mode and what measures does it foresee?

The Single Market emergency mode can be activated in cases of a wide-ranging impact of a crisis on the Single Market that severely disrupts free movement on the Single Market or the functioning of the supply chains that are indispensable for societal and economic activities.

The emergency mode establishes principles to be followed by Member States in facilitating and, if needed, re-establishing free movement, while banning Member States from adopting specific restrictions to the free movement of crisis-relevant goods and services, unless these are a justified last-resort measure. As part of the efforts to improve transparency, Member States will also be required to notify any new restrictions as soon as possible and set up single points of contact for citizens and companies. The Commission will also be able to facilitate public procurement of crisis-relevant goods, following requests from Member States to do so on their behalf. In addition, the Commission can recommend Member States to ensure the availability of crisis-relevant goods and services by facilitating the expansion or repurposing of production lines or accelerating permitting for such goods. Finally, there is the possibility for the Commission to recommend Member States to facilitate the distribution of strategic reserves in a targeted way.

  1. What are the dual activation measures foreseen under emergency mode?

The emergency mode also makes available additional extraordinary measures, which can only be activated under more stringent procedural requirements. This requires the Commission to activate them by means of a further Commission implementing act, following the activation of the emergency mode (so called dual activation). These measures would always follow a consultation with the industry and a voluntary request. Dual activation would ensure the appropriate checks and balances and that such measures would only be used as last resort.

Such measures include the possibility for the Commission to request information from economic operators by binding decision. They also include the possibility for the Commission to invite firms to accept priority rated orders of crisis-relevant goods and, under exceptional circumstances, to require firms to either comply with such requests or explain the grave reasons justifying refusal. They also include targeted derogations from harmonised product legislation.

  1. How will the vigilance and emergency modes be activated and deactivated?

The Commission, assisted by the SMEI advisory group, can activate the Single Market vigilance mode when it establishes that the criteria for this mode have been met. To do so, it should adopt a Commission implementing act, activating the vigilance mode for a maximum of six months, with the possibility of prolongation or deactivation. The Commission implementing act will be subject to the examination comitology procedure[1].

The Commission, assisted by the advisory group, can also propose to the Council of the European Union to activate the Single Market emergency mode when it establishes that the criteria have been met.  Activating the emergency mode requires a Council implementing act, adopted via the qualified majority voting procedure which is justified by the exceptional character of the crisis and the related crisis response tools. The emergency mode should then be activated for a period of six months, with the possibility of prolongation or deactivation, according to the circumstances. 

  1. How will SMEI amend harmonised product legislation to enhance crisis response?

The SMEI package includes a proposal for a Regulation and a Directive that aim to amend the harmonised rules laid down by a number of existing EU sectorial frameworks. These frameworks currently do not provide for the possibility to derogate from the harmonised rules in case of emergency. The new proposals aim to introduce such a possibility by amending 14 Directives and 5 Regulations. These 19 product areas include for example machinery equipment, fertilisers and construction materials.

The amendments which this Proposal aims to introduce to the relevant frameworks cover the following aspects:

  1. prioritisation of the conformity assessment of products designated as crisis-relevant by the notified bodies;
  2. possibility for national competent authorities to issue temporary authorisations for crisis-relevant products which have not undergone the standard conformity assessment procedures, under certain conditions;
  3. possibility for the manufacturers to rely on relevant international and national standards during an emergency if no harmonised standards are available and if the alternative standards ensure an equivalent level of safety;
  4. possibility for the Commission to adopt voluntary or mandatory common technical specifications for crisis-relevant products via delegated acts;
  5. prioritisation of the market surveillance activities for crisis-relevant goods.
  1. Can you give an example of when in the past you would have expected to use this instrument, had it existed then?

A number of different provisions of SMEI could have been used during the COVID-19 crisis.

Firstly, had SMEI been in place, it would have provided a transparent coordination mechanism with a focus on the impact of the crisis on the Single Market, which would have streamlined the coordination between the Commission and the Member States on free movement of goods, services and persons. For example, it would have provided for fast reactions and response to measures such as intra-EU export restrictions for personal protective equipment such as masks and gloves, preventing the Member States from taking measures that would aggravate the shortages of such products further. Furthermore, the personal protective equipment products could have been placed on the market faster and in a bigger quantity, without compromising the safety requirements.

With the use of provisions on transparency, SMEI would have given the Commission and the economic operators a very good overview of any free movement restrictions, allowing them to save resources spent for looking for information and compliance costs. The economic operators could have received adequate information on free movement restrictions and administrative assistance for complying with the formalities.

It would have been clearer to the Member States which travel restrictions they should not put in place at the time of the pandemic (such as travel restrictions applicable for health care workers, health care service providers, for workers and business representatives involved in production of personal protection equipment, for the staff of the notified bodies that need to make cross-border conformity checks).  The Commission could have required Member States to remove non-compliant travel restrictions in a fast-track procedure. The Commission could also have issued templates for attesting that workers, service providers and business representatives are involved in production of crisis-relevant goods or provision of crisis-relevant services, facilitating cross-border work, service provision and production. This could have allowed the healthcare workers to travel to the Member States which were dependent on frontier or cross-border workers and service providers, and the public health crisis could have been addressed more adequately.