FASI: Funding Aid Strategies Investments

EU proposes a new instrument to protect single market during crises

European Union, 2022 / Photographer: Claudio CentonzeEnsuring that the single market remains functional in times of crises. It is the goal of the new Single Market Emergency Instrument (SMEI) presented today by the EU Commission, which include measures to secure free movement of goods and services during future emergency situations, while preventing governments from acting unilaterally on trade of critical product.

"The COVID-19 crisis has shown that we need to make our single market operational at all times, even in times of crisis”, said Executive Vice-President in charge of competition Margrethe Vestager, explaining how the SMEI is aiming at avoiding disruptions in essential supplies as happened over the first months the pandemic, when some countries blocked the export and transit of medical devices and equipment, with the result of fragmenting the market, exacerbating the crisis to the detriment, in particular, of SMEs.

The new instrument defines a crisis governance architecture for the single market, providing for a new mechanism to monitor the single market, to identify different levels of risk and coordinate an appropriate response comprising several steps: emergency preparedness, surveillance and emergency.

The Commission and Member States will set up a coordination and communication network, and whether a threat to the single market has been identified, it may activate the surveillance mode. In case of a crisis with a wide-ranging impact on the single market, the Council may activate the emergency mode.

In the surveillance phase, Member States, in cooperation with the Commission, would focus on monitoring the supply chains of identified and strategically important goods and services, as well as on building strategic reserves in these sectors. When the emergency mode was activated, free movement in the single market would be maintained through a blacklist of prohibited restrictions and, more generally, through enhanced and rapid monitoring of unilateral restrictions.

The Commission may also recommend Member States to ensure the availability of crisis-relevant assets by facilitating the expansion or reuse of production lines or by accelerating authorisations. Finally, it can also recommend Member States to distribute strategic reserves built up during the supervisory phase in a targeted manner. New rules will also apply to facilitate the procurement of relevant goods and services by the Commission on behalf of Member States in both surveillance and emergency modes.

In extraordinary circumstances and only when the emergency mode has been activated, the Commission may also make use of instruments that will require a separate activation phase. In that case, the Brussels may address targeted requests for information to companies, which may be made binding. Brussels can also ask them to accept priority orders for crisis-relevant products, in response to which the companies must either comply or explain the serious reasons for refusal: this is one of the passages of the proposal that raises alarmed reactions from industry.

"Instead of relying on ad-hoc improvised actions, the single market emergency instrument will provide a structural response to preserve the free movement of goods, persons and services in adverse times," said the Commissioner for Internal Market and Industry, Thierry Breton. "The EMSI will ensure better coordination with the Member States”, he assured.

The proposed regulation will now have to go through the Parliament and the Council.


Single Market Emergency Instrument