Written by 5:31 am Europe Economy

Businesses, trade unions criticise upcoming EU supply chain tool – EURACTIV.com

The Single Market Emergency Instrument (SMEI) – a new regulation that the EU Commission is expected to propose on Monday (19 September) – is under fire from stakeholders before the Commission has even formally proposed the text.

While business associations fear too much meddling into businesses’ entrepreneurial freedom, trade unions are worried about the right to strike that might unexpectedly be affected by the new instrument.

Using the SMEI, the Commission wants to make the EU single market more resilient against crises that might endanger its integrity or the supply of strategically important goods.

To secure this, the Commission will propose measures by which companies could sometimes be forced to hand over information about their supply chains to public authorities. In emergency situations, the Commission could even make companies prioritise specific orders over others, thus interfering with what companies regard as their entrepreneurial freedoms.

A danger to the credibility of EU businesses?

“It is good that with the plans for a European Emergency Instrument, the EU Commission is putting the focus back on the single market,” Thilo Brodtmann, executive director of VDMA, an association of the mechanical engineering industry, said in a statement.

“However, the VDMA rejects those elements in the emergency instrument that constrain entrepreneurial freedom,” he added.

While the association agrees with the measures of the SMEI that should ensure that intra-EU trade remains open, it vehemently rejects the more intrusive measures, especially the possibility for the Commission to redefine the priorities in the order books of European companies.

“This kind of crisis policy is a ‘no-go’ because it damages the reputation of Europe as a business location and the competitiveness of European companies,” Brodtmann said about the provision laid out in article 29 of the draft proposal seen by EURACTIV.

Andreas Brunsgaard, senior consultant for the largest Danish business association Dansk Industri made a similar point when he told the Danish media organisation Watch Medier that the provision “undermines the credibility of European companies complying with their contractual obligations towards trading partners outside the EU.”

It seems likely this provision will be a bone of contention during the European Parliament’s and EU Council’s legislative process.

Fearing for the right to strike

Trade unions, meanwhile, are worried about another point of the legislative proposal.

The new regulation could also repeal an older regulation from 1998 that aimed to remove obstacles to the free movement of goods in the single market. Crucially, however, the old regulation had a provision explicitly guaranteeing the right of workers to strike, while there is no such provision in the proposed draft regulation.

The European Trade Union Confederation (ETUC) now worries that a strike might be considered a “crisis” under the framework of the SMEI and that this would undermine collective action in the EU.

“Respect for labour rights is fundamental to the EU social market economy and can never be treated as an obstacle to the functioning of the Single Market,” Isabelle Schömann, confederal secretary of ETUC, said in a press statement, calling on the Commission to strengthen workers’ rights in the proposal.

Which of the many other provisions of the SMEI will also be fought over will become evident in the days after September 13, when the EU Commission is expected to present its proposal.

[Edited by Alice Taylor]

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