EU seeks emergency powers to prevent supply chain crisis
According to plans unveiled by the European Commission on Monday, Brussels is requesting emergency powers to force member states to stockpile key products and break contracts during a crisis such as the war in Ukraine or the coronavirus pandemic.
The legislation, designed to facilitate public procurement of critical goods and services, would prevent the world’s largest exporters, such as China, from taking similar measures without first informing the committee.
The “single market emergency instrument” would give the European Commission, the EU’s executive body, all the leeway to declare an emergency. Brussels could then take a number of interventionist measures to ensure the availability of goods, for example by facilitating the expansion or repurposing of production lines, the EU said.
Internal Markets Commissioner Thierry Breton said the new legal instrument would “provide a structural response to preserve the free movement of goods, people and services in adverse times”.
“The best way to manage a crisis is to anticipate, reduce or prevent its impact,” he said on Monday, adding that the new rules would allow companies to request information about their production capacity. and inventory.
The proposals, now to be discussed with member states and the European Parliament, are likely to be turned into law in a few months’ time, but could enter into force before the current committee ends its mandate in 2024. They are likely to require the approval of a qualified majority of EU countries.
Breton said the new instrument would also enable regulators to avoid fragmentation of the internal market. “We have clearly seen that in times of crisis Member States are tempted to introduce internal restrictions in the internal market (restrictions on the export of masks, grains, border closures) and discriminatory measures (double fuel prices), thus reducing the effect of the crisis is aggravated. .”
Margrethe Vestager, EU Executive Vice-President responsible for competition, said: “The Covid-19 crisis has made it clear: we need to make our single market operational at all times, including in times of crisis. We have to make it stronger. We need new tools that allow us to respond quickly and collectively.”
While member states agreed on the need to protect the single market in times of crisis, diplomats said many expressed concern when commission officials presented the plans last week, with some saying they would go too far to allow Brussels. to intervene in business activities. Others accused Brussels of wanting to increase its powers without carrying out a proper impact assessment of the proposed measures.
Former Eastern Bloc countries in particular were wary of a “command economy”, said an EU diplomat, adding: “It is a very sensitive issue. Member states have many questions.”
During the Covid crisis, regulators in Brussels passed legislation allowing export bans on vaccines in response to the US blocking the shipment of shots to Europe. Member States also forced companies to shift production to ventilators and face masks as they faced supply bottlenecks.
There are currently similar problems in the fertilizer market, EU officials said. High gas prices have pushed up costs for producers and slowed production across the EU by 70 percent.
Officials said the bloc needed to be better prepared to respond to the next supply chain crisis. Several other countries have already taken action on strategic reserves and priority orders, such as the US Defense Production Act.
Additional coverage by Andy Bounds in Brussels