The new system could ban member states from restricting the trade of critical goods and services when they are most needed.
EU countries could be banned from restricting the flow of critical products and services in times of crisis, according to new emergency powers proposed by the European Commission.
Brussels is keen to avoid a repeat of the unilateral and chaotic decisions taken during the first months of the COVID-19 pandemic, when governments scrambled to secure masks, gloves and ventilators to protect their citizens from the virus.
In a matter of weeks, the EU's internal market, which is based on the free movement of people and goods, was fractured and upset by a rapid and often improvised succession of commercial checks and border closures.
"The COVID-19 crisis showed our single market is not perfect. It's strong but not unbreakable," said Margrethe Vestager, the Commission's executive vice-president, while unveiling the draft legislation.
"A lack of coordination and transparency damaged our supplies and increased the shortages."
The proposed Single Market Emergency Instrument (SMEI) aims to strike a balance between the need to keep the single market working seamlessly while addressing collective threats and crises.
The overall goal is to replace ad-hoc decision-making with greater coordination and planning so as to minimise disruption for both citizens and companies.
The instrument envisions three different action modes:
- Contingency mode: the regular stage where the single market functions normally. The Commission and member states can send early warnings if a crisis or threat is detected.
- Vigilance mode: the preventive stage when a crisis or threat has the potential to disrupt the market but the damage is not yet severe. This will enable closer surveillance of strategic goods and services, and the establishment of common reserves to prevent shortages.
- Emergency mode: this stage will be triggered when a crisis or threat begins having a negative impact on the single market. The emergency mode will ban member states from adopting restrictions on critical goods unless this is justified as a "last-resort measure." They will also be asked to inform in advance of any other unilateral action, such as border closures.
Additionally, under the emergency mode, the Commission will be able to procure goods on behalf of all 27 countries – as it was the case with the COVID-19 vaccines. They will also oversee the distribution of strategic reserves and recommend the repurposing of certain production lines.
In extreme circumstances, the executive will be empowered to slap fines on companies that commit to carrying out "priority orders" of critical products and fail to deliver on expectations.
"This is not a planned economy," said Thierry Breton, European Commissioner for the internal market, speaking next to Vestager. "This [instrument] is to not to close supply chains but to keep them open."
The legislation is still a proposal and needs to be negotiated and amended by the European Parliament and member states, who tend to be wary of any legislation that can be seen as a "power grab" by Brussels.
Vestager and Breton insisted governments will be consulted and involved at all times through an advisory group. Triggering the emergency mode will require a qualified majority vote in the Council, they explained.
Eurochambres, an industry association that represents 20 million businesses in Europe, welcomed the announcementand the focus on preventing "arbitrary restrictions" but warned the legislation "goes beyond what is needed and risks creating legal uncertainty."