The main focus of the Single Market Emergency Instrument (SMEI) must be to maintain free movement functioning at a time of a crisis. Consequently, the definition of a crisis is fundamental. Therefore, it is important that the Council, not the European Parliament, agrees on when a crisis can be declared.
The European Commission closed the open consultation on the proposal for the Single Market Emergency Instrument, (SMEI), on 11th May 2022.The proposal is not defined in detail, but the structure of the public consultation questionnaire suggests that the crisis preparedness and crisis management (response) sections as possible “pillars” of the future initiative. The questions under both pillars address the modalities of major public sector interventions, monitoring “strategic supply chains” at the same time as potentially putting considerable responsibilities on private operators which may already be under extreme pressure at a time of a crisis.
The Confederation of Swedish Enterprise answered the consultation by welcoming the idea of an instrument ensuring free movement within the Single Market but rejected any idea which involves granting the European Commission with increased powers for mandatory information retrieval from companies, either directly or via member states’ authorities. Any reporting to enable such monitoring must be voluntary for the private sector and would be acceptable only in specific circumstances when it is relevant to prevent a severe situation from becoming a crisis.
Additionally, the definition of strategic supply chains cannot lie in the hands of politicians or civil servants because a supply chain is not a constant; rather, it is a dynamic process that changes according to market conditions and the actors involved.
Furthermore, such monitoring would be too costly as it would require dedicated resources from the Commission and member states on a permanent basis. The outcome of such an exercise is highly uncertain and ineffective, as even continuous monitoring would not predict nor prevent crises such as the pandemic or the war in Ukraine. The Confederation of Swedish Enterprise is concerned about the current direction of the EU’s industrial policy, which is also reflected in the SMEI. The focus is increasingly shifting from creating favourable conditions to detailed regulation. We are currently experiencing increased government intervention in the European economy and a growing political will to control European industry’s supply chains to replace various import dependencies with domestic production capacity.
The main focus of the SMEI must be to maintain free movement functioning at a time of a crisis. Generally, the SMEI should only focus on the crisis response pillar and not the crisis preparedness pillar. The best crisis preparedness is a well-functioning Single Market. Consequently, the definition of a crisis is fundamental. For example, it cannot refer to a long-term problem such as the climate crisis or to a situation caused by structural change. It is important that the Council, not the European Parliament, agrees on when a crisis can be declared and that measures have to be taken accordingly.
It is a never-ending task for business organisations to explain to national and EU experts how a market economy makes companies prosperous and resilient. And how subsidies and similar interventions by public entities may distort the market and make companies less efficient.