EU proposes supply chain emergency powers

Margrethe Vestager

The European Commission has proposed a new Single Market Emergency Instrument (SMEI) to protect supply chains.

The new emergency tool proposal — if approved — would give the EU executive new powers.

The plan would allow the Commission to force EU states to reorganize supply chains, build up reserves of critical goods and prioritize production of key goods during a crisis.

The new powers could involve the stockpiling of critical goods and could require companies to prioritize some orders.

The proposal is a response to bottlenecks caused by the COVID-19 pandemic and Russia’s invasion of Ukraine.

The proposal could face opposition from businesses and some EU countries.

“This crisis governance framework aims to preserve the free movement of goods, services and persons and the availability of essential goods and services in the event of future emergencies, to the benefit of citizens and businesses across the EU,” said the Commission.

“While the Single Market has proven to be our best asset in crisis management, the COVID-19 pandemic has highlighted structural shortcomings hampering the EU’s ability to effectively respond to emergency situations in a coordinated manner.

“Unilateral measures caused fragmentation, worsening the crisis and affecting particularly SMEs …

“The Single Market Emergency Instrument complements other EU legislative measures for crisis management like the Union Civil Protection Mechanism, as well as EU rules for specific sectors, supply chains or products like health, semiconductors or food security, which already foresee targeted crisis response measures.”

Commission Executive-Vice President Margrethe Vestager said: ”The COVID-19 crisis made it clear: we must make our Single Market operational at all times, including in times of crisis. We must make it stronger.

“We need new tools that allow us to react fast and collectively.

“So that whenever we face a new crisis, we can ensure that our Single Market remains open and that goods of vital importance remain available to protect European people.

“The new Single Market Emergency Instrument makes it possible.”

Commissioner for the Internal Market Thierry Breton said: “In the sequence of crises of the past few years, we worked hard to preserve a smoothly functioning Single Market, keep our borders and supply chains open and ensure the availability of products and services that our citizens needed.

“But we must be better prepared to anticipate and respond to the next crisis.

“Rather than relying on ad hoc improvised actions, the Single Market Emergency Instrument will provide a structural answer to preserve the free movement of goods, people and services in adverse times.

“The SMEI will ensure better coordination with Member States, help pre-empt and limit the impact of a potential crisis on our industry and economy, and equip Europe with tools that our global partners have and that we lack.”