April 19. 2024. 8:23

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LEAK: EU Council legal opinion slams Single Market Emergency Instrument

The legal service of the EU Council considers important parts of the European Commission’s proposal for the Single Market Emergency Instrument (SMEI) to contradict EU law, saying that a lot of it would have to be amended or deleted, according to an opinion produced by the legal service and seen by EURACTIV.

The SMEI regulation was proposed by the Commission in 2022 in an effort to secure the supply of essential goods in the single market and protect the integrity of the single market in emergencies.

Among other measures, the proposed regulation would allow the Commission to monitor supply chains based on data that companies would have to provide to it, and in emergencies, the Commission could force companies to prioritise some orders for emergency-relevant products over other orders.

Moreover, member states would have to set up national reserves for some of the most important materials and products under the regulation.

The proposal was written with the experience of the pandemic in mind, when EU countries were caught off guard and medical equipment was hard to come by, leading to closed borders and critical shortages.

Many member states criticised the proposal for the competences it would give to the European Commission, with some even thinking that, contrary to its intent, the proposal might actually lead to a fragmentation of the single market.

To check the legal soundness of the proposal and of its legal basis, more specifically, member states tasked the EU Council’s Legal Service (CLS) to study it and draft a legal opinion on it.

“Significantly amend or delete”

The opinion, sent to member states on 4 April, throw many of the core measures of the SMEI into doubt.

Basing itself on case law from the European Court of Justice, the Council Legal Service (CLS) wrote that “the proposed measures go beyond what the Court has so far found compatible,” referring to the legal basis that the Commission chose to base its proposal on.

“If the co-legislators nevertheless decide to adopt the proposed measures […], they should significantly amend the main provisions of SMEI,” the legal opinion stated, mentioning the subject matter, the objectives, the definitions, and the criteria triggering the vigilance and emergency modes specifically.

The co-legislators refers to the EU member state governments in the EU Council and to the European Parliament.

The criticism is even harsher regarding the SMEI’s provisions for national strategic reserves, the information requests to economic operators and priority-rated orders, which co-legislators should “delete or significantly amend,” according to the CLS opinion.

The CLS argued that the SMEI should be much more targeted. However, this would risk defeating the purpose of the SMEI, which was drafted to be applicable for unforeseen crises, just as the pandemic was not foreseen by many.

The Commission’s SMEI proposal also includes measures that should ensure that the free movement across borders is secured even in an emergency. These measures are viewed a little more positively by the CLS. Nevertheless, the CLS also argued for their redrafting “in order to ensure legal certainty”.

Member states defang the SMEI

The SMEI proposal is currently being discussed by both the European Parliament and member states.

In a draft compromise text for the common position of member states, seen by EURACTIV, the articles that received the most criticism from the CLS have been deleted from the Council position.

Namely, these are the measures on strategic reserves on the national level and the measure on priority-rated orders that would allow the Commission to force companies to prioritise certain orders in an emergency.

The measures relating to mandatory information requests from the Commission to companies will also be either deleted or heavily edited, according to the leaked compromise text.

Meanwhile, the first draft, which the EU Parliament’s rapporteur on the file, Andreas Schwab, presented for the Parliament’s negotiating position, remains much closer to the original proposal by the Commission.

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