Brussels has proposed broad powers to require companies to stockpile supplies and cancel delivery contracts to strengthen supply chains in the event of a crisis such as the coronavirus pandemic.
The bill, seen by the Financial Times, gives the European Commission considerable leeway to declare a state of emergency, triggering a series of interventionist measures aimed at preventing product shortages in key industries.
Firms are unhappy after being briefed on plans aimed at protecting the single market from supply shocks.
Martynas Barysas, Director of Internal Markets at BusinessEurope, which represents employers in the bloc, said: “We would be very concerned if this proposal were adopted in such an interventionist manner.
“Under any kind of crisis decided by the Commission, it will force Member States to invalidate contract laws, compel companies to disclose commercially sensitive information, share stockpiled products, It could be mandated to direct production,” Barysas said.
Of greatest concern to businesses is the system of ‘priority orders’ that allows Brussels to dictate what businesses produce and to whom they sell, potentially violating contracts with customers.
Barrisas said businesses had agreed to a proposal for a mechanism to prevent a recurrence of the disruptions suffered during the coronavirus pandemic, when some member states closed borders and restricted exports. But he said the current plan is too intrusive and companies think businesses should be given more flexibility.
The plan, devised by Internal Market Commissioner Thierry Breton, is subject to internal opposition and change.
As one EU official said: [a] Massive crisis. Now, it has grown into a planned economy octopus, and we imagine it can reach and control entire global supply chains. ”
The final version of the proposal will be adopted by the EU Commissioner on 13 September and will be the centerpiece of European Commission President Ursula von der Leyen’s State of the Union address the following day.
According to the draft, the commission will first declare “alert” if it detects that a crisis may be coming, consulting member states. This allows you to ask relevant companies for information about your supply chain and customers. It may ask governments to build strategic stockpiles. In some circumstances, these measures can be enforced by imposing a fine.
The second stage, which requires Member State approval, empowers the Commission to direct market activities and directly source goods.
During the pandemic, the EU passed a law allowing a vaccine export ban in retaliation to the US for blocking shipments of shots to Brock. The government has also asked companies to shift production to masks, gowns and ventilators amid global shortages.
EU officials say today that there are similar problems with fertilizers. Rising gas prices cut production by 70% across the block, driving up prices for farmers. One person said, “Over the past few years, we have been at risk of running out of masks, ventilators, vaccines, grain and fertilizer. We need to be ready.”
Officials said several countries are taking steps for strategic stockpiles and high-priority orders, including the U.S. Defense Production Act.
“We’ve taken a lot of our inspiration from Americans,” the official said. “I am not listing any products because I do not know what the next crisis will be. not.”
