Wind turbines are seen at a wind farm 23 km (14 miles) off the coast of Ijmuiden, Netherlands September 3, 2007. REUTERS/ Michael Kooren
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BRUSSELS, Sept 19 (Reuters) – Europe-based companies could be forced to prioritize production of key products and stockpile goods under draft EU rules that would give Brussels emergency powers to deal with supply chain crises. supply.
The Single Market Emergency Instrument presented by the European Union executive on Monday is a response to disruptions caused by the COVID-19 pandemic and the Russian occupation of Ukraine.
The proposal, which echoes similar measures adopted by the United States and Japan, is expected to face a strong backlash from businesses and some European Union countries, concerned that it constitutes an overreach by the European Commission.
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“We need new tools that allow us to act quickly and collectively in whatever kind of risk we face,” Commission Vice President Margrethe Vestager said at a press conference.
Vestager sought to ease concerns that the draft rules could force companies to breach trade agreements, saying they would not override agreements subject to third-country jurisdictions, unlike those bound by European contract laws.
Lobby group BusinessEurope outlined its concerns in a document published ahead of the EU’s announcement.
“A mandatory ex-ante monitoring of the intervention market for ‘something that may or may not happen under certain conditions that may change beyond our control’ fails to meet the principles of proportionality and necessity,” the group said.
“The same applies to some of the possible measures to mitigate a crisis,” BusinessEurope said.
The draft rules empower the Commission to order EU states to reorganize supply chains and increase supplies of crisis-related goods as quickly as possible, including expanding or reusing existing production capacity or setting up new ones. and placing crisis-relevant goods on the market.
Companies could be forced to prioritize production of certain critical goods under the rules, which critics say could breach contractual obligations and expose corporate secrets.
Businesses that provide inaccurate or misleading information risk being fined up to 300,000 euros ($299,220). Those who fail to comply with an order to prioritize core products may face periodic daily penalty payments of 1.5% of average daily turnover.
($1 = 10026 euros)
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Reporting by Foo Yun Chee; editing by Philip Blenkinsop and Alexander Smith
Our Standards: The Thomson Reuters Trust Principles.
