EUROPEAN COMMISSION Brussels, 19.9.2022 COM(2022) 459 final 2022/0278(COD) Proposal for a REGULATION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL establishing a Single Market emergency instrument and repealing Council Regulation No (EC) 2679/98 (Text with EEA relevance) {SEC(2022) 323 final} - {SWD(2022) 288 final} - {SWD(2022) 289 final} - {SWD(2022) 290 final}



EXPLANATORY MEMORANDUM 1.CONTEXT OF THE PROPOSAL •Reasons for and objectives of the proposal The Single Market is one of the EU’s greatest assets and provides the backbone for the EU’s economic growth and wellbeing. Recent crises, such as the COVID-19 pandemic or Russia’s invasion of Ukraine, have demonstrated some vulnerability of the Single Market and its supply chains in case of unforeseen disruptions and, at the same time, how much the European economy and all its stakeholders rely on a well-functioning Single Market. In the future, in addition to geopolitical instability, climate change and resulting natural disasters, biodiversity loss, and global economic instability may lead to other, new emergency situations. For this reason, the functioning of the Single Market needs to be guaranteed in times of emergency. The impact of a crisis on the Single Market can be two-fold. On the one hand, a crisis can lead to the appearance of obstacles to free movement within the Single Market, thus disrupting its functioning. On the other hand, a crisis can amplify the shortages of crisis-relevant goods and services if the Single Market is fragmented and is not functioning. As a result, supply chains can swiftly become interrupted, companies face difficulties in sourcing, supplying or selling goods and services. Consumer access to key products and services becomes disrupted. Lack of information and legal clarity further exacerbate the impact of these disruptions. In addition to direct societal risks caused by the crisis, citizens, and in particular vulnerable groups, are confronted with strong negative economic impacts. The proposal therefore aims to address two separate but interrelated problems: obstacles to free movement of goods, services and persons in times of crisis and shortages of crisis-relevant goods and services. In close cooperation with all Member States and other existing EU crisis instruments, the Single Market Emergency Instrument (SMEI) will provide a strong agile governance structure as well as a targeted toolbox to ensure the smooth functioning of the Single Market in any type of future crisis. It is likely that not all of the tools included in this proposal will be needed simultaneously. The purpose is rather to brace the EU for the future and equip it with what may prove to be necessary in a given crisis situation severely affecting the Single Market. The European Council in its Conclusions of 1-2 October 2020 stated that the EU will draw the lessons from the COVID-19 pandemic and address remaining fragmentation, barriers and weaknesses of the Single Market in facing emergency situations. In the Update of the Industrial Strategy Communication, the Commission announced an instrument to ensure the free movement of persons, goods and services, as well as greater transparency and coordination in times of crisis. The initiative forms part of the Commission Work Programme for 2022. The European Parliament welcomed the Commission’s plan to present a Single Market Emergency Instrument and called on the Commission to develop it as a legally binding structural tool to ensure the free movement of persons, goods and services in case of future crises. •Consistency with existing policy provisions in the policy area A number of EU legal instruments lay down provisions which are relevant for the management of crises in general. On the other hand, certain EU frameworks and recently adopted Commission proposals lay down more targeted measures which focus on certain aspects of crisis management or are relevant for specific sectors. The Single Market Emergency Instrument will apply without prejudice to the provisions put forward by these targeted crisis management instruments, which are to be considered as lex specialis. Financial services, medicinal products, medical devices or other medical counter-measures and food safety products in particular are excluded from the scope of the initiative due to the existence of a dedicated crisis-relevant framework in these areas. Interplay with horizontal crisis response mechanisms The integrated political crisis response mechanism (IPCR) is among the horizontal crisis response mechanisms. The Presidency of the Council of the EU uses the IPCR to facilitate information sharing and political coordination among the Member States in responding to complex crises. The IPCR scrutinised for the first time in October 2015 the refugee and migration crisis and it has been instrumental in monitoring and supporting the response to the crisis, reporting to Coreper, the Council and the European Council. The IPCR operated the Union response to major crises caused by cyber-attacks, natural disasters, or hybrid threats. More recently, the IPCR has also operated after the outbreak of the COVID-19 pandemic and the Russian brutal aggression on Ukraine. Another EU mechanism for general crisis response is the Union Civil Protection Mechanism and its Emergency Response Coordination Centre (ERCC). The ERCC is the Commission’s central operational 24/7 hub for first emergency response, the establishment of strategic stockpiles at the EU level for emergency response (“rescEU”), disaster risk assessments, scenario building, disaster resilience goals, EU wide overview of natural and man-made disaster risks, other prevention and preparedness measures, such as training and exercises. Interplay with horizontal Single Market mechanisms When appropriate and necessary, coordination should be ensured between the Single Market Emergency Instrument and the activities of the Single Market Enforcement Task-Force (SMET). In particular, the Commission shall refer notified obstacles that significantly disrupt the free movement of goods and services of strategic goods and services for discussion/review to the Single Market Enforcement Task Force (SMET). •Consistency with other Union policies Interplay with measures targeting specific aspects of crisis management The above-mentioned horizontal crisis response mechanisms are supplemented by other more targeted measures, focusing on specific aspects of the Single Market such as the free movement of goods, common rules on exports or public procurement. One such framework is the Regulation (EC) No. 2679/98 setting up a response mechanism to address obstacles to the free movement of goods attributable to a Member State leading to serious disruptions and requiring immediate action (‘The Strawberry Regulation’). This Regulation provides for a mechanism of notification as well as a system of information exchange between the Member States and the Commission. (See sections 8.1 and 8.2 for more details.) The Regulation on common rules for exports allows the Commission to subject certain categories of products to an extra-EU export surveillance or to an extra-EU export authorisation. The Commission was subjecting certain vaccines and active substances used for the manufacture of such vaccines to export surveillance on this basis.

Other economic measures include negotiated procedure and occasional joint procurement by the Commission on behalf of the Member States. Interplay with sector-specific crisis measures Certain EU frameworks lay down more targeted measures which focus only on certain specific aspects of crisis management or only concern certain specific sectors. The Commission communication “Contingency plan for ensuring food supply and food security” draws lessons learnt during the COVID-19 pandemic and previous crises with the objective to step up coordination and crisis management including preparedness. To this end, the contingency plan puts forward key principles to be followed to ensure food supply and food security in the event of future crises. To ensure the implementation of the contingency plan and the key principles therein, the Commission in parallel established the European Food Security Crisis preparedness and response Mechanism (EFSCM), a group composed of Member States and non-EU countries representatives as well as of food supply chain stakeholders chaired by the Commission to strengthen coordination, exchange data and practices. The EFSCM was convened for the first time in March 2022 to discuss the impacts of the energy and input price increases and the consequences of Russia’s invasion of Ukraine for food security and supply. The market observatories and the civil dialogue groups are other fora that ensure transparency and the flow of information in the food sector. The Commission communication “Contingency plan for transport” has the objective to ensure crisis preparedness and business continuity in the transport sector. The plan establishes a “crisis manual” that includes a toolbox consisting of 10 actions aimed at mitigating any negative impact on the transport sector, passengers and the internal market in the event of a crisis. These include among others measures rendering EU transport laws fit for crisis situations, ensuring adequate support for the transport sector, ensuring free movement of goods, services and people, sharing of transport information, testing transport contingency in real-life situations etc. Regulation (EU) No 1308/2013 establishing a common organisation of the markets in agricultural products (CMO Regulation) as well as the sister CMO Regulation for fisheries provide the legal basis for collecting relevant information from Member States to improve market transparency. Regulation (EU) No 2021/1139 1308/2013 establishing the European Maritime, Fisheries and Aquaculture Fund (EMFAF Regulation) provides the legal basis for supporting the fisheries and aquaculture sector in case of exceptional events causing a significant disruption of markets. Regulation (EU) 2021/953 establishing the EU Digital COVID Certificate sets out a common framework for the issuance, verification and acceptance of interoperable certificates for COVID-19 vaccination, test or recovery certificates to facilitate free movement of EU citizens and their family members during the COVID-19 pandemic. Furthermore, based on Commission proposals, the Council adopted specific recommendations on the coordinated approach to the restriction of free movement in response to COVID-19 pandemic. The Commission also announced in the 2020 citizenship report that it intends to review the 2009 guidelines on free movement in order to improve legal certainty for EU citizens exercising their free movement rights, and to ensure a more effective and uniform application of the free movement legislation across the EU. The reviewed guidelines should address among others the application of restrictive measures on free movement, specifically those that are due to public health concerns. Regulation (EU) 2022/123 on a reinforced role for the European Medicines Agency in crisis preparedness and management for medicinal products and medical devices provides a framework to monitor and mitigate potential and actual shortages of centrally and nationally authorised medicinal products for human use considered as critical to address a given ‘public health emergency’ or ‘major event’ . Finally, the Commission Decision of 16 September 2021 established the Health Emergency Preparedness and Response Authority for coordinated action at Union level to respond to health emergencies, including monitoring the needs, swift development, manufacturing, procurement and equitable distribution of medical countermeasures. Interplay with ongoing initiatives In parallel, a number of initiatives, which have been recently proposed and are currently being discussed, concern aspects relevant for the crisis response and preparedness. These initiatives however have a limited scope covering specific types of crisis scenarios and are not intended to set up a general horizontal crisis-management framework. To the extent these initiatives include a sectoral crisis response and preparedness framework, that framework will take precedence over the Single Market Emergency Instrument as lex specialis. The Commission proposal for a Regulation on serious cross-border threats to health, repealing Decision No 1082/2013/EU (the 'Cross-border Health Threats Decision') aims at strengthening the EU's health security framework, and reinforcing the crisis preparedness and response role of key EU agencies with respect to serious cross-border health threats. When adopted, it will strengthen the preparedness and response planning and reinforce epidemiological surveillance and monitoring, improve data reporting, strengthen EU interventions. The Commission proposal for a Regulation of the European Parliament and of the Council amending Regulation (EC) No 851/2004 established a European Centre for disease prevention and control. The Commission proposal for a Council Regulation on a framework of measures for ensuring the supply of crisis-relevant medical countermeasures in the event of a public health emergency at Union level provides for crisis response tools such as joint procurement, mandatory information requests for businesses about their production capacities, and repurposing production lines in case of public health crises once a public health emergency would be declared. The declaration of an EU emergency situation would trigger increased coordination and allow for the development, stockpiling and procurement of crisis-relevant products. The proposal covers medical countermeasures defined as medicinal products for human use, medical devices and other goods or services that are necessary for the purpose of preparedness and response to serious cross-border threats to health. The Commission proposal for the European Chips Act aims to strengthen Europe’s semiconductor ecosystem. One important pillar of this strategy is to set up a mechanism for coordinated monitoring and response to shortages in the supply of semiconductors, aiming to anticipate and swiftly respond to any future supply chain disruptions, through a dedicated emergency toolbox, together with Member States and international partners. The planned mechanism is specific to a possible semiconductor crisis and will apply in an exclusive way if the crisis mode is activated. The Commission proposal for a Data Act will allow public sector bodies to access data held by the private sector that is necessary for exceptional circumstances, particularly to implement a legal mandate if data are not otherwise available or in case of a public emergency (i.e. exceptional situation negatively affecting the population of the Union, a Member State or part of it, with a risk of serious and lasting repercussions on living conditions or economic stability, or the substantial degradation of economic assets in the Union or the relevant Member State(s)). The Commission proposal to amend the Schengen Borders Code aims to provide a common response at the internal borders in situations of threats affecting a majority of Member States. The proposed amendment will also put in place procedural safeguards in case of unilateral reintroductions of internal border controls and provide for the application of mitigating measures and specific safeguards for cross-border regions in cases where internal border controls are reintroduced. Such controls affect in particular people crossing the border for their daily life (work, education, health care, family visits) as evidenced during the COVID-19 pandemic. The proposal promotes increased use of effective alternative measures to address the identified threats to internal security or public policy instead of internal border controls, for instance increased checks by police or other authorities in border regions, subject to certain conditions. The proposal also includes the possibility for the Council to quickly adopt binding rules setting out temporary travel restrictions for third country nationals at the external borders in case of a threat to public health. It also clarifies which measures Member States can take to manage the EU's external borders effectively in a situation where migrants are instrumentalised by third countries for political purposes. The proposal for a Directive on the resilience of critical entities adopted by the Commission in December 2020 has the objective to enhance the resilience of entities providing services that are essential for the maintenance of vital societal functions or important economic activities the EU. With this initiative, the aim is to create a comprehensive framework to support Member States in ensuring that critical entities providing essential services are able to prevent, protect against, respond to, resist, mitigate, absorb, accommodate and recover from significant disruptive incidents such as natural hazards, accidents or terrorism. The Directive will cover eleven key sectors, including energy, transport, banking and health. The Joint communication of 18 May 2022 on the Defence Investment Gaps Analysis and Way Forward, identified several issues including the ability of the EU's Defence Technological and Industrial Base (as well as the global Defence Technological and Industrial Base) to address upcoming defence Member State procurement needs, and putting forward several measures.

In the context of the General Product Safety Directive 2001/95/EC revision, the Commission intends to examine the questions whether and to what extent, or by what modalities, the production issues that are addressed by the Omnibus rules as regards goods covered by various harmonised regimes could be addressed in the distinct context of non-harmonised goods. Consistency with the EU’s external action The European External Action Service will support the High Representative in her/his function, as Vice-President of the Commission, to coordinate the Union’s external action within the Commission. Union delegations under the authority of the High Representative will exercise their functions as external representatives of the Union and assist, as relevant, in external dialogues. Interplay with other instruments The Commission can support Member States in designing and implementing reforms to anticipate, prepare and respond to impacts of natural or man-made crises on the Single Market through the Technical Support Instrument (TSI). 2.LEGAL BASIS, SUBSIDIARITY AND PROPORTIONALITY •Legal basis The proposal is based on Articles 114, 21 and 45 TFEU. Within the context of a crisis, the Single Market can be impacted both by the appearance of the specific disruptions and shortages inherent to the said crisis, as well as by the possible intra-EU restrictions to the free movement of goods, services and persons, which may emerge in an attempt to address the said crisis. The general objective of the initiative is to lay down the mechanisms and procedures, which would allow to prepare for and to address potential crises and disruptions to the proper functioning of the Single Market. Such measures are also aimed to minimise the intra-EU obstacles to the free movement in times of crisis. Whereas the measures concerning free movement of goods and freedom to provide services are covered by the internal market legal basis, the free movement of persons’ provisions require the Regulation to rely additionally on Articles 21 and 45 TFEU. In the case of a crisis that affects the supply chains of the Single Market, measures have to be taken to address any identified shortages and to safeguard the availability of crisis-critical goods and services across the entire EU. A number of measures in this proposal derogate from or complement existing EU harmonisation legislation, based on the general internal market legal basis. Measures such as facilitating the ramping up of production capacities for crisis relevant goods and service activities, accelerating the permitting procedures, prioritising orders and the building-up and distributing strategic reserves are of exceptional nature and aim at ensuring a coherent response to future crises and to avoid the fragmentation of the Single Market. In cases where there are substantial risks to the functioning of the Single Market or in cases of severe shortages or an exceptionally high demand of goods of strategic importance, measures at EU level aimed to ensure the availability of crisis-relevant products, such as strategic reserves or priority rated orders, may prove to be indispensable for the return to the normal functioning of the Single Market. Such measures have a gradual, stepped approach, whereby the resort to more binding measures follows inaction of economic operators to tackle the crisis at stake. •Subsidiarity (for non-exclusive competence) The economic activities across the Single Market are deeply integrated. Interaction between companies, service providers, clients, consumers and workers located in different Member States that rely on their free movement rights, is increasingly common. The experience of past crises has shown that often the distribution of production capacities across the EU is uneven. In parallel, in the case of a crisis, the demand for crisis-relevant goods or services across the EU territory may also be uneven as some EU regions are disproportionally vulnerable and exposed to supply chain disruptions, in particular the EU outermost regions located thousands of kilometres away from mainland Europe The objective of ensuring the smooth and undisrupted functioning of the Single Market cannot be achieved by means of unilateral national measures. Moreover, even if measures adopted by the Member States individually may be able to address to a certain extent the deficiencies resulting from a crisis at the national level, they are in fact more likely to further exacerbate the said crisis across the EU by adding further obstacles to the free movement and/or additional strain on products already impacted by shortages. The introduction of rules which govern the functioning of the Single Market is a competence shared between the EU and the Member States. A significant number of EU frameworks governing various aspects are already in place and they contribute to the smooth operation of the Single Market by laying down coherent sets of rules which apply across all the territories of the Member States. However, the existing EU frameworks generally lay down rules concerning the day-to-day functioning of the Single Market, outside of any specific crisis scenarios. There is currently no horizontal set of rules and mechanisms which address aspects such as the contingency planning, the crisis anticipation and monitoring and the crisis response measures, which would apply in a coherent manner across economic sectors and the entire Single Market. The emergency instrument has the objective of ensuring a coordinated approach to anticipate, prepare for and respond to crises that have important effects across borders or specifically in border regions or both and threaten the functioning of the Single Market, and where no EU instrument already exists or where the existing instruments do not lay down crisis-relevant provisions. Putting in place contingency and vigilance measures across the Single Market can facilitate the coordination of the response measures in the case of a crisis. Furthermore, such measures can be complemented by effective and efficient coordination and cooperation between the Commission and Member States during the crisis in order to ensure that the most appropriate measures to address the crisis are taken. The Single Market Emergency Instrument is not intended to lay down a detailed set of EU level provisions which should be exclusively relied upon in the case of crisis. Instead, the instrument is intended to lay down and ensure the coherent application of possible combinations between provisions taken at EU level together with rules on the coordination of the measures taken at the level of the Member States. In this respect, the measures which may be taken at EU level on the basis of the Single Market Emergency Instrument would be coordinated with and complement the response measures adopted by the Member States. In order to allow for such coordination and complementarity, the Single Market Emergency Instrument sets out specific measures which the Member States should refrain from imposing once a Single Market emergency has been activated at EU level. In this context, the EU added value of this instrument would be to lay down the mechanisms for a swift and structured way of communication between the Commission and Member States, coordination and information exchange when the Single Market is put under strain, and to be able to take necessary measures in a transparent and inclusive way – accelerating existing mechanisms as well as adding new targeted tools for crisis situations. It would also ensure transparency across the internal market, ensuring that businesses and citizens that rely on their free movement rights have at their disposal appropriate information about the applicable measures in all the Member States. This will increase legal certainty allowing them to take informed decisions. A further advantage of action in this domain would be to equip the EU with the resilience tools needed to sustain the competitiveness of the EU industry in a geopolitical context in which our international partners and competitors can already rely on legal instruments allowing for a structured monitoring of supply chain disruptions and for the adoption of possible response measures such as strategic reserves. •Proportionality The measures contained in this Regulation are carefully tailored in order to ensure that they do not go beyond what is necessary for the achievement of its objective of ensuring the smooth and undisrupted functioning of the Single Market. The measures complement Member States’ action where the aims of the Regulation cannot be achieved by means of unilateral action by the Member States. They take into account the need for the economic operators to be able to manage the normal business risks, to have their own contingency plans and to come up with initiatives for resolving supply chain issues. This is catered for in particular by means of obligations of the Commission to consult the economic operators before resorting to mandatory Single Market emergency measures such as mandatory information requests and priority rated orders. •Choice of the instrument

The Single Market Emergency Instrument initiative takes the form of a Proposal for a Regulation of the European Parliament and of the Council. Considering that in the case of provisions laid down in a Regulation, there is no need for the Member States to transpose them into their respective national legislation, this specific legal instrument would allow to ensure that the provisions are applied in a consistent manner. The proposed Regulation will introduce procedures which are complementary to the Single Market Transparency Directive or the Services Directive and are to be applied in the emergency mode. The Regulation clarifies the relationship between the relevant legal frameworks but without amending the respective legal frameworks. 3.RESULTS OF EX-POST EVALUATIONS, STAKEHOLDER CONSULTATIONS AND IMPACT ASSESSMENTS •Ex-post evaluations/fitness checks of existing legislation The Regulation (EC) No. 2679/98 setting up a response mechanism to address obstacles to the free movement of goods attributable to a Member State leading to serious disruptions and requiring immediate action (‘The Strawberry Regulation’) will be repealed. According to its evaluation finalised in October 2019 and supported by an external study, this mechanism is rarely used and its information exchange system is insufficient as it is too slow and outdated. •Stakeholder consultations As outlined in Annex 2 to the Impact Assessment accompanying this proposal, stakeholder consultation activities were conducted between October 2021 and May 2022. The consultation activities included: a call for evidence published on the “Have your say” portal and open from 13 April to 11 May 2022, a public consultation conducted via a questionnaire published on the same portal in the same period, a stakeholder workshop on 6 May 2022, a Member State survey in May 2022 and targeted consultations conducted by means of meetings with Member States and specific stakeholders. Stakeholders largely agree with the need to ensure free movement as well as greater transparency and coordination in times of crisis. Most experiences described by stakeholders came from the COVID-19 crisis. When it comes to ensuring availability of crisis-relevant goods, Member States have expressed support for measures such as coordination of public procurement, fast-track conformity assessment and improved market surveillance. A number of Member States have voiced concern about including broad crisis preparedness measures when no crisis is looming on the horizon, without specifying targeted supply chains. While some business stakeholders voiced concerns about mandatory measures targeting economic operators, others have expressed support for a greater coordination and transparency, measures to ensure free movement of workers, fast-track notifications of national measures, fast track procedures for development and publishing of European standards, EU and national single points of information, emergency simulations for experts. •Collection and use of expertise Evidence and data that were used for the development of the Impact Assessment included: –“The impact of COVID-19 on the Internal Market”, study at the request of the EP IMCO Committee; –Evaluation of the “Strawberry Regulation” (EC) No 2679/98 and its supporting external study; –Evaluation of the New Legislative Framework; –Relevant information and/or evidence collected in the context of preparation of existing or proposed EU crisis response initiatives and mechanisms, including through consultation activities or impact assessment studies (e.g. the Data Act, Single Market Information Tool (SMIT), the EU Health Security Framework, Schengen Borders Code, Contingency plan for ensuring food supply and food security, the integrated political crisis response mechanism (IPCR), Contingency plan for transport, EU Digital COVID Certificate Regulation, Council Recommendation (EU) 2020/1475 on a coordinated approach to the restriction of free movement in response to the COVID-19 pandemic and its adaptations); –Academic studies and literature on the effect of previous crises on the functioning of the Single Market, as well as existing position papers and other documents drawn up by relevant stakeholders; –Newspaper articles and press materials. The Impact Assessment further relied on the information received from consultation activities as detailed in the synopsis report contained in Annex 2 of the Impact Assessment. The evidence base of the report is strongly limited due to the relatively low number of responses to the call for evidence and the public consultation, and the lack of a supporting study. To remedy this situation, on 6 May 2022 the Commission conducted a stakeholder workshop attended by a large number of stakeholders and conducted a series of targeted consultations, especially with Member States and stakeholders. •Impact assessment In line with its ‘Better Regulation’ policy, the Commission conducted an Impact Assessment. The Impact Assessment evaluated three policy options establishing a governance body and a framework for contingency planning, vigilance and emergency modes. Both Single Market vigilance mode and Single Market emergency mode would be activated according to specific criteria and triggering mechanisms. Certain measures in the toolbox would need additional activation.

On the basis of analysis of problem drivers and gaps in the relevant sector-specific legislation, eight building blocks of measures were defined by grouping measures into blocks applying at different times (at all times, in vigilance mode and in emergency mode). For each building block, three policy approaches were analysed ranging from non-legislative measures (approach 1) to a hybrid approach (approach 2) to a more comprehensive legislative framework (approach 3). On the basis of this analysis, some or all approaches were retained for each building block and were combined into three realistic policy options reflecting different levels of political ambition and stakeholder support: Mode Building blocks Policy Option 1 TRANSPARENCY Policy Option 2 COOPERATION Policy Option 3 SOLIDARITY All times 1. governance, coordination and cooperation Approach 2 Formal Advisory Group as the technical-level forum and obligation of the MS to share information within the group in anticipation and during the crisis All times 2. crisis contingency planning Approach 2 Recommendation to the MS for risk assessment, training and drills & compendium of crisis response measures Approach 3 - Recommendation to MS for risk assessment & compendium of crisis response measures and - Obligation of the Commission for Union level risk assessment - Obligation of MS to train their relevant crisis management staff regularly Vigilance 3. Single Market vigilance Approach 2 - Recommendation to the Member States on information gathering concerning identified strategic supply chains - Recommendations to the Member States for building up strategic reserves of goods of strategic importance Approach 3 - Obligation to MS to gather information concerning identified strategic supply chains - Obligation of the Commission to draw up and regularly update list with targets for strategic reserves - Obligations to MS to build up strategic reserves for selected goods of strategic importance if the MS strategic reserves fall significantly short of the targets Emergency 4. key principles and supportive measures for facilitating free movement during emergency Approach 2 Reinforcing key principles of free movement of crisis-relevant goods and services in binding rules where appropriate for effective crisis management Emergency 5. transparency and administrative assistance during emergency Approach 3 Binding full-fledged fast-track notification mechanism, flash peer review and possibility to declare the notified measures incompatible with EU law; contact points and electronic platform Emergency 6. speeding up the placing of crisis-relevant products on the market during emergency Approach 2 Targeted amendments of existing Single Market harmonisation legislation: faster placing of crisis-relevant products on the market; Commission can adopt technical specifications; MS prioritise market surveillance for crisis-relevant products Emergency 7. public procurement during emergency Approach 2 New provision on joint procurement/common purchasing by the Commission for some or all Member States Emergency 8. measures impacting crisis-relevant supply chains during emergency mode Approach 1 Guidance on ramping up production capacity; speeding up permitting procedures; accepting and prioritising orders of crisis relevant goods Recommendations to businesses to share crisis-relevant information Approach 2 Recommendations to MS for the distribution of stockpiled products; speeding up permitting procedures; encouraging economic operators to accept and prioritise orders Empowering MS to oblige economic operators to ramp up production capacity and to address binding information requests to economic operators Approach 3 Obligations of MS to distribute products previously stockpiled; speeding up permitting procedures, Obligations of businesses to accept and prioritise orders; ramp up production capacity and provide crisis-relevant information The Impact Assessment did not present a preferred option, instead leaving the choice of options for political decision. The measures chosen in the legal proposal correspond to Policy Option 3 for all building blocks with the exception of building block 8. For building block 8, a combination of Policy Option 1 (for ramping up production), Policy Option 2 (for distribution of stockpiled products and for speeding up permitting procedures), and Policy Option 3 (for obligations of businesses to accept and prioritise orders and to provide crisis-relevant information) has been chosen. On 15 June 2022, the Commission submitted the Impact Assessment to the Regulatory Scrutiny Board (RSB). The RSB gave a negative opinion, noting in particular (1) the need to provide clear and detailed information related to the foreseen Single Market emergency including a definition, the criteria and decision-mechanisms for establishing and terminating it and the measures which would be implemented during it; (2) the need to provide a thorough assessment of the impacts of the policy options; and (3) the need to present alternative combinations of relevant policy options, in addition to the policy approaches, and to link the comparison to the analysis of impacts. To address these findings, the Commission provided a clear definition of a Single Market emergency, specified the criteria and decision making mechanisms, explained the three modes of functioning of SMEI and specified which building block of SMEI would be activated under which mode. It further elaborated the assessment of impacts to cover more types of impacts i.e. economic impacts for key stakeholders (businesses, Member States and Commission), impacts on SMEs, impacts on competitiveness, competition, international trade, and differentiated which impact would occur with the immediate effects and which could be expected under the vigilance and emergency modes. Further, the Impact Assessment defined three alternative policy options based on a combination of different approaches to some of the building blocks, provided an assessment of impacts of these options and extended the comparison of options to cover proportionality and subsidiarity. On 29 July 2022, the Commission submitted the revised Impact Assessment to the RSB. The RSB then gave a positive opinion with comments. These comments related to the need to further explore the different types of crisis that may impact the functioning of the Single Market, to more clearly set out the interplay with possible measures taken on the basis of Article 4(2) TFEU and to sufficiently justify some of the measures proposed from the subsidiarity and proportionality point of view. To address these comments, indications on effects of potential future crises were added, interplay with potential measures under Article 4(2) TFEU was better explained and further details were added on the obligatory measures foreseen under emergency mode. Further information on how the RSB recommendations are reflected in the Impact Assessment report can be found in Annex 1, point 3, of the Impact Assessment. •Regulatory fitness and simplification According to the Commission’s Regulatory Fitness and Performance Programme (REFIT), all initiatives with the objective to change existing EU legislation should aim to simplify and deliver stated policy objectives more efficiently (i.e. reducing unnecessary regulatory costs). The proposal provides a toolbox of measures to address Single Market emergency, consisting a set of measures applicable at all times as well as certain measures only applicable in vigilance or emergency modes, to be separately activated. There are no administrative costs for businesses and citizens that would apply with immediate effect and during the normal functioning of the Single Market. For measures likely to lead to strong impacts and potential costs for SMEs, in particular measures such as mandatory information requests, requests to ramp up production and to accept priority-rated orders, during the additional activation of such measures specific analysis and assessment will be done as to their impact and proportionality, in particular their impact on SMEs, by the Commission. This assessment will be part of the process of additional activation of these specific measures by a Commission implementing act (additional to the overall activation of the emergency mode). Depending on the nature of the crisis and the concerned strategic supply chains and crisis-relevant products, specific accommodations will be provided for SMEs. While it is not possible to except microenterprises completely from the scope of measures such as mandatory information requests, as these enterprises may have specific unique know-how or patents of critical importance in a crisis, specific accommodations will include simplified survey designs, less onerous reporting requirements, and longer deadlines for responses, to the extent possible in view of the need for urgency in the context of a specific crisis. The Regulation (EC) No. 2679/98 setting up a response mechanism to address obstacles to the free movement of goods attributable to a Member State leading to serious disruptions and requiring immediate action (‘The Strawberry Regulation’) will be repealed. This will lead to the simplification of the legal framework. •Fundamental rights This Regulation and in particular the priority rated orders and the measures facilitating the repurposing of production lines as well as the measures facilitating the expansion of production capacity affect the freedom to conduct business set out in Article 16 of the EU Charter of Fundamental Rights of the economic operators active on the Single Market during the Single Market emergency. Such restrictions have been carefully tailored and are balanced against the vital interests of the society. The provisions on priority rated orders provide for a number of safeguards for the economic operators subject to such orders, in order to balance the intensity of the restriction. The mandatory information requests to economic operators may also affect the protection of business secrets and other sensitive information of economic operators. However, the Regulation provides for safeguards and guarantees that such information requests will be only made in case the relevant information is indispensable for resolving the Single Market emergency and is not available on a voluntary basis or from publicly accessible sources, and the obtained information is handled carefully, ensuring secrecy and non-disclosure of sensitive business information, such restrictions are proportionate and justified. Finally the sanctions which are foreseen for breaches of the mandatory information requests to economic operators and the priority rated orders constitute restrictions to the right to property set out in Article 17 of the EU Charter of Fundamental Rights. Given the fact that the amounts of fines have been set at appropriately dissuasive, but not excessive levels, and the period of their application is limited in time, with a possibility to contest them before the CJEU, they amount to proportionate and justified restrictions of the right to property. The Regulation respects the right to an effective judicial remedy and to a fair trial as provided for in Article 47 of the Charter. It reiterates the right of economic operators subject to information requests and priority rated orders to defend their rights before the CJEU and provides for possibilities of contesting such requests of the Commission in administrative procedures before that. 4.BUDGETARY IMPLICATIONS The budgetary implications of the proposals would relate to three expenditure categories. The recurrent costs of staff within the Commission would be in principle covered under the heading “Administrative expenditure” while costs for the foreseen training activities and the necessary extension of the IT tool used for the notification system would be covered under the Single Market Programme. Under the current set-up, the costs related to the emergency mode, namely building up of strategic reserves, the secure supply, such as those related to procurement of goods and services of strategic importance and crisis-relevant goods, or to priority rated orders would be borne exclusively by the Member States and there would be no impact on Union resources. The additional management costs in the Commission deriving from the occurrence of a crisis, which are unpredictable by nature, would be covered in principle via internal redeployment of Union resources under the heading 1 “Single market, innovation and digital” and/or heading 7 “Administrative expenditure”. 5.OTHER ELEMENTS •Implementation plans and monitoring, evaluation and reporting arrangements

The Commission will carry out an evaluation of the effectiveness, efficiency, coherence, relevance and EU added value of this legislative initiative and present a report on the main findings to the European Parliament, the Council, the European Economic and Social Committee, and the Committee of the Regions five years after the date of application of the legislative acts. The Commission may propose based on the evaluation report how to improve the Single Market Emergency Instrument. The European Anti-Fraud Office (OLAF) shall be consulted for all the contracts and financing agreements issued on the basis of this Regulation, to ensure that antifraud clauses are appropriately integrated. •Detailed explanation of the specific provisions of the proposal The SMEI aims to establish a comprehensive preparedness and crisis-response architecture composed of the following main components: –an advisory group; –a framework for contingency planning; –a framework for Single Market vigilance and –a framework for Single Market emergencies. 1.The advisory group The role of this group will be to advise the Commission on the appropriate measures for preventing or addressing the impact of the crisis on the Single Market. It can be involved in the activation and in determining the scope of the Single Market vigilance and emergency modes and analyse the relevant information gathered by voluntary or mandatory means, including from the economic operators. This central body will be composed of one representative of each Member State with expertise in Single Market matters as permanent members, and observers representing other crisis relevant bodies such as the Integrated Political Crisis Response group of the Council, the Health Crisis Board, the Health Security Committee, European Semiconductor Board, European Food Security Crisis preparedness and response Expert Group, etc. The Commission will organise and chair the meetings. 2.The framework for contingency planning In normal times where no sudden event is likely to have or is already having severe disruptive effects on the Single Market, market forces ensure the functioning of the businesses and the Single Market. The framework of contingency planning does not require an activation step and consists of: (a)Arrangements for crisis protocols and crisis communication and training and emergency simulations in view of ensuring timely cooperation and exchange of information between the Commission, Member States and relevant Union level bodies and organising trainings and rehearsals on potential scenarios of Single Market emergencies. (b)Ad hoc alerts for early warning system for any incidents that significantly/ seriously disrupt or have the potential to significantly/seriously disrupt the functioning of the Single Market and in its supply chains of goods and services. In determining the significance or the seriousness of the disruption, pre-determined parameters will be taken into account such as the number of economic operators affected, geographical area or duration of the disruption. 3.The framework for Single Market vigilance This will be the framework for impacts of significant incidents that have not yet escalated into a full-blown Single Market emergency. It requires activation when an incident that has occurred has the potential to significantly disrupt the supply chains of goods and services of strategic importance that are dependent on non-diversifiable and non-substitutable inputs or which causes firsts signs of severe shortages of such goods and services. This framework includes a set of measures such as: (a)Monitoring of the supply chains of goods and services of strategic importance that have been identified in the Union level risk assessment referred in the framework for contingency planning and whose supply could be significantly disrupted due to the occurrence of an incident. Such monitoring will be carried out by the Member States on the basis of voluntary requests for information about factors impacting the availability of the selected goods and services of strategic importance (such as production capacity, stocks, suppliers limitations, possibilities for diversification and substitution, demand conditions, bottlenecks) to all actors along the relevant supply chain of goods and services of strategic importance and other relevant stakeholders established in Member States national territory. (b)Building-up of strategic reserves, which is a measure subject to additional activation by means of additional Commission implementing acts. The Commission may draw up lists of individual and non-binding targets for the strategic reserves that the Member States should maintain. The Member States, acting jointly in a spirit of solidarity, shall deploy their best efforts to build up strategic reserves of the goods identified as being of strategic importance. The Commission might, in exceptional circumstances, on its own initiative or if asked by 14 Member States, assess the need to take further measures to build up strategic reserves of such goods. Following such assessment supported by objective data, the Commission may adopt an implementing act to render the individual target for one or more Member States mandatory; (c)Public procurement: i) procurement of goods and services of strategic importance by the Commission on behalf of Member States and ii) procurement of goods and services of strategic importance by the Member States 4.The framework for Single Market emergencies

The activation of the Single Market emergency will immediately activate the application of a number of emergency-response measures, which include: (a)Measures to improve transparency: Member States obligations to notify any draft measures relating to crisis-relevant goods and services and goods and services of strategic importance as well as crisis-relevant restrictions of free movement of persons, together with the reasons for those measures; (b)Actions for re-establishing and facilitating free movement: general requirements for free movement restrictions during a Single Market emergency (list of key principles) as well as provisions on prohibited restrictions. (c)The banning of restrictions to free movement rights during a Single Market emergency requiring Member States to refrain from, for example, introducing intra-EU export bans of crisis-relevant goods or services and any export restriction of products or services that –hamper their free movement; –disrupt their supply chains and –create or increase shortages in the Single Market; (d)Public procurement: i) procurement of crisis-relevant goods by the Commission on behalf of Member States and ii) procurement of crisis-relevant goods by the Member States (e)Actions to ensure the availability and supply of crisis-relevant goods –facilitating the expansion or repurposing of existing or the establishment of new production capacities for crisis-relevant goods; –facilitating the expansion of existing or the establishment of new capacities related to activities; –the introduction of measures ensuring regulatory flexibility, including on permitting, aimed at facilitating the production and placing on the market of crisis-relevant goods (f)Targeted and coordinated distribution of strategic reserves The Commission may recommend the Member States to distribute Union strategic reserves and, where those are not available or sufficient, Member States strategic reserves in a targeted way, where there is concrete and reliable evidence of serious disruptions in the supply chain of crisis-relevant goods leading to dire shortages of goods of strategic importance, including in geographical areas particularly vulnerable to such disruptions such as the EU outermost regions (g)Emergency measures of exceptional nature requiring additional activation: –information requests to economic operators The Commission shall, if necessary in case of severe shortages of crisis-relevant goods or services or an immediate threat thereof and after consulting the designated Advisory Group, request representative organisations of economic operators or, if necessary individual economic operators in crisis-relevant supply chains to provide targeted information to the Commission in relation to their production capacities and current supply chain disruptions. The Commission shall present aggregate information based on any targeted information requests to economic operators or representative organisations of economic operators to the designated Advisory Group. –priority rated orders In the first stage, the Commission may invite economic operators to accept and prioritise an order of inputs for production of crisis-relevant goods or orders for the production or supply of crisis-relevant goods as final products.

In the second stage, the Commission may, in exceptional circumstances, on its own initiative or if asked by 14 Member States, assess the necessity and proportionality of resorting to priority rated orders of such goods, taking into account the position of the economic operator and potential affected parties. Following such assessment, the Commission may address an implementing act requiring an economic operator to accept and prioritise orders of inputs for the production or supply of crisis-relevant goods or orders of crisis-relevant goods as final products. Economic operators may, within 10 working days, decline to accept such obligation, and provide an explanation of duly justified reasons for doing so. The Commission may make such reasoned explanation or parts thereof public. The obligation, if accepted, shall take precedence over any performance obligation under private or public law. –The Commission shall have regard to the circumstances of the case, including the principles of necessity and proportionality. The priority rated order shall be placed at fair and reasonable price;targeted amendments of harmonised product legislation (b)This measure will allow an accelerating placing on the market of the identified crisis-relevant goods by introducing emergency procedures for conformity assessment, adoption of common technical specifications and market surveillance in the context of a Single Market emergency. 2022/0278 (COD) Proposal for a REGULATION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL establishing a Single Market emergency instrument and repealing Council Regulation No (EC) 2679/98 (Text with EEA relevance) THE EUROPEAN PARLIAMENT AND THE COUNCIL OF THE EUROPEAN UNION, Having regard to the Treaty on the Functioning of the European Union, and in particular Articles 114, 21 and 45 thereof, Having regard to the proposal from the European Commission, After transmission of the draft legislative act to the national parliaments, Having regard to the opinion of the European Economic and Social Committee, Having regard to the opinion of the Committee of the Regions, Acting in accordance with the ordinary legislative procedure, Whereas: (1)Past crises, especially the early days of the COVID-19 pandemic, have shown that the internal market (also referred to as the Single Market and its supply chains can be severely affected by such crises, and appropriate crisis management tools and coordination mechanisms are either lacking, do not cover all aspects of the Single market or do not allow for a timely response to such impacts. (2)The Union was not sufficiently prepared to ensure efficient manufacturing, procurement and distribution of crisis-relevant non-medical goods such as personal protective equipment, especially in the early phase of the COVID-19 pandemic and the ad-hoc measures taken by the Commission in order to re-establish the functioning of the Single Market and to ensure the availability of crisis-relevant non-medical goods during the COVID-19 pandemic were necessarily reactive The pandemic also revealed insufficient overview of manufacturing capacities across the Union as well as vulnerabilities related to the global supply chains. (3)Actions by the Commission were delayed by several weeks due to the lack of any Union wide contingency planning measures and ofclarity as to which part of the national administration to contact to find rapid solutions to the impact on the Single Market being cause by the crisis. In addition it became clear that uncoordinated restrictive actions taken by the Member States would further aggravate the impacts of the crisis on the Single market. It emerged that there is a need for arrangements between the Member States and Union authorities as regards contingency planning, technical level coordination and cooperation and information exchange. (4)Representative organisations of economic operators have suggested that economic operators did not have sufficient information on the crisis response measures of the Member States during the pandemics, partly due to not knowing where to obtain such information, partly due to language constraints and the administrative burden implied in making repeated inquiries in all the Member States, especially in a constantly changing regulatory environment. This prevented them from making informed business decisions as to what extent they may rely on their free movement rights or continue cross-border business operations during the crisis. It is necessary to improve the availability of information on national and Union level crisis response measures

(5)These recent events have also highlighted the need for the Union to be better prepared for possible future crises, especially as we consider the continuing effects of climate change and resulting natural disasters as well as global economic and geopolitical instabilities. Given the fact that it is not known which kind of crises could come up next and produce severe impacts on the Single Market and its supply chains in the future, it is necessary to provide for an instrument that would apply with regards to impacts on the Single Market of a wide range of crises. (6)The impact of a crisis on the Single Market can be two-fold. On the one hand, a crisis can lead to obstacles to free movement within the Single Market, thus disrupting its normal functioning. On the other hand, a crisis can amplify shortages of crisis-relevant goods and services on the Single Market. The Regulation should address both types of impacts on the Single Market. (7)Since any specific aspects of future crises that would impact the Single Market and its supply chains are hard to predict, this Regulation should provide for a general framework for anticipating, preparing for, mitigating and minimising the negative impacts which any crisis may cause on the Single Market and its supply chains. . (8)The framework of measures set out under this Regulation should be deployed in a coherent, transparent, efficient, proportionate and timely manner, having due regard to the need to maintain vital societal functions, meaning including public security, safety, public order, or public health respecting, the responsibility of the Member States to safeguard national security and their power to safeguard other essential state functions, including ensuring the territorial integrity of the State and maintaining law and order. (9)To this end, this Regulation provides: –the necessary means to ensure the continued functioning of the Single Market, the businesses that operate on the Single Market and its strategic supply chains, including the free circulation of goods, services and persons in times of crisis and the availability of crisis relevant goods and services to citizens, businesses and public authorities at the time of crisis; –a forum for adequate coordination, cooperation and exchange of information; and –the means for the timely accessibility and availability of the information which is needed for a targeted response and adequate market behaviour by businesses and citizens during a crisis. (10)Where possible, this Regulation should allow for anticipation of events and crises, building on on-going analysis concerning strategically important areas of the Single Market economy and the Union’s continuous foresight work. (11)This Regulation should not duplicate the existing framework for medicinal products, medical devices or other medical counter-measures under the EU Health Security Framework, including Regulation (EU) …/… on serious cross-border health threats [SCBTH Regulation (COM/2020/727)], Council Regulation (EU) …/… on a framework of measures for ensuring the supply of crisis-relevant medical counter-measures [Emergency Framework Regulation (COM/2021/577)], Regulation (EU) …/… on the extended mandate of the ECDC [ECDC Regulation (COM/2020/726)] and Regulation (EU) 2022/123 on the extended mandate of the EMA [EMA Regulation].Therefore, medicinal products, medical devices or other medical counter-measures, when they have been placed on the list referred to in Article 6(1) of the Emergency Framework Regulation, shall be excluded from the scope of this Regulation, except in relation to the provisions relating to free movement during the Single Market emergency, and in particular those designed to re-establish and facilitate free movement as well as the notification mechanism. (12)This Regulation should complement the Integrated Political Crisis Response mechanism operated by the Council under Council Implementing Decision (EU) 2018/1993 as regards its work on Single Market impacts of cross-sectoral crises that require political decision-making. (13)This Regulation should be without prejudice to the Union Civil Protection Mechanism (‘UCPM’). This Regulation should be in complementarity with the UCPM and should support it, where neessary, as regards availability of critical goods and free movement of civil protection workers, including their equipment, for crises that fall into the remit of that mechanism. (14)This Regulation should be without prejudice to Articles 55 to 57 of Regulation (EC) No 178/2002 on the general plan on crisis management in the area of food and feed, implemented by Commission Decision (EU) 2019/300. (15)The Regulation should be without prejudice to the European Food Security Crisis preparedness and response Mechanism (EFSCM). Nevertheless, food products should be governed by the provisions of this Regulation, including those concerning the notification mechanism and concerning restrictions to free movement rights . The measures concerning food products notified under this Regulation may be also reviewed for their compliance with any other relevant provisions of EU law. (16)In order to account for the exceptional nature of and potential far-reaching consequences for the fundamental operation of the Singe Market of a Single Market emergency, implementing powers should exceptionally be conferred on the Council for the activation of Single Market emergency mode pursuant to Article 281(2) of the Treaty on the Functioning of the European Union. (17)Article 21 TFEU lays down the right of EU citizens to move and reside freely within the territory of the Member States, subject to the limitations and conditions laid down in the Treaties and the measures adopted to give them effect. The detailed conditions and limitations are laid down in Directive 2004/38/EC. This Directive sets out the general principles applicable to these limitations and the grounds that may be used to justify such measures. These grounds are public policy, public security or public health. In this context, restrictions to freedom of movement can be justified if they are proportionate and non-discriminatory. This Regulation is not intended to provide for additional grounds for the limitation of the right to free movement of persons beyond those provided for in Chapter VI of Directive 2004/38/EC. (18)As regards the measures for re-establishing and facilitating free movement of persons and any other measures affecting the free movement of persons provided under this Regulation, they are based on Article 21 TFEU and complement Directive 2004/38/EC without affecting its application at the time of Single Market emergencies. Such measures should not result in authorising or justifying restrictions to free movement contrary to the Treaties or other provisions of Union law. (19)Article 45 TFEU lays down the right to free movement of workers, subject to the limitations and conditions laid down in the Treaties and the measures adopted to give them effect. This Regulation contains provisions which complement the existing measures in order to reinforce free movement of persons, increase transparency and provide administrative assistance during Single Market emergencies. Such measures include setting up and making available of the single points of contact to workers and their representatives in the Member States and at Union level during the Single Market vigilance and emergency modes under this regulation. (20)If Member States adopt measures affecting free movement of goods or persons, goods or the freedom to provide services in preparation for and during Single Market emergencies, they should limit such measures to what is necessary and remove them as soon as the situation allows it. Such measures should respect the principles of proportionality and non-discrimination and should take into consideration the particular situation of border regions. (21)The activation of the Single Market emergency mode should trigger an obligation for the Member States to notify crisis-relevant free movement restrictions.

(22)When examining the compatibility of any notified draft or adopted measures with the principle of proportionality, the Commission should pay due regard to the evolving crisis situation and often limited information that is at the disposal of the Member States when they seek to reduce the emerging risks in the context of the crisis. Where justified and necessary in the circumstances, the Commission may consider based on any available information, including specialised or scientific information, the merits of Member State arguments relying on the precautionary principle as a reason for adoption of free movement of persons restrictions. It is the task of the Commission to ensure that such measures comply with Union law and do not create unjustified obstacles to the functioning of the Single Market. The Commission should react to the notifications of Member States as quickly as possible, taking into account the circumstances of the particular crisis, and at the latest within the time-limits set out by this Regulation. (23)In order to ensure that the specific Single Market emergency measures provided for in this Regulation are used only where this is indispensable for responding to a particular Single Market emergency, such measures should require individual activation by means of Commission implementing acts, which indicate the reasons for such activation and the crisis-relevant goods or services that such measures apply to. (24)Furthermore, in order to ensure the proportionality of the implementing acts and due respect for the role of economic operators in crisis management, the Commission should only resort to the activation of the Single Market emergency mode, where economic operators are not able to provide a solution on a voluntary basis within a reasonable time. Why this is the case should be indicated in each such act, and in relation to all particular aspects of a crisis. (25)Information requests to economic operators should be used by the Commission only where the information which is necessary for responding adequately to the Single Market emergency, such as information necessary for procurement by the Commission on behalf of the Member States or estimating the production capacities of manufacturers of crisis-relevant goods the supply chains of which have been disrupted, cannot be obtained from publicly available sources or as a result of information provided voluntarily. (26)The activation of the Single Market emergency mode, where needed, should also trigger the application of certain crisis-response procedures which introduce adjustments to the rules governing the design, manufacture, conformity assessment and the placing on the market of goods subject to Union harmonised rules. These crisis-response procedures should enable products, designated as crisis-relevant goods to be placed swiftly on the market in an emergency context. The conformity assessment bodies should prioritise the conformity assessment of crisis-relevant goods over any other ongoing applications for other products. On the other hand, in cases, where there are undue delays in the conformity assessment procedures, the national competent authorities should be able to issue authorisations for products, which have not undergone the applicable conformity assessment procedures to be placed on their respective market, provided that they comply with the applicable safety requirements. Such authorisations shall be only valid on the territory of the issuing Member State and limited to the duration of the Single Market emergency. In addition, in order to facilitate the increase in supply of crisis-relevant products, certain flexibilities should be introduced with respect to the mechanism of presumption of conformity. In the context of a Single Market emergency, the manufacturers of crisis-relevant goods should be able to rely also on national and international standards, which provide an equivalent level of protection to the harmonised European standards. In cases where the later do not exist or the compliance with them is rendered excessively difficult by the disruptions to the Single Market, the Commission should be able to issue common technical specifications of voluntary or of mandatory application in order to provide ready-to-use technical solutions to the manufacturers. (27)The introduction of these crisis-relevant adjustments to the relevant sectorial Union harmonised rules requires targeted adjustments to the following 19 sectorial frameworks: Directive 2000/14/EC, Directive 2006/42/EU, Directive 2010/35/EU, Directive 2013/29/EU, Directive 2014/28/EU, Directive 2014/29/EU, Directive 2014/30/EU, Directive 2014/31/EU, Directive 2014/32/EU, Directive 2014/33/EU, Directive 2014/34/EU, Directive 2014/35/EU, Directive 2014/53/EU, Directive 2014/68/EU, Regulation (EU) 2016/424, Regulation (EU) 2016/425, Regulation (EU) 2016/426, Regulation (EU) 2019/1009 and Regulation (EU) 305/2011. The activation of the emergency procedures should be conditional upon the activation of the Single Market emergency and should be limited to the products designated as crisis-relevant goods. (28)In cases where there are substantial risks to the functioning of the Single Market or in cases of severe shortages or an exceptionally high demand of goods of strategic importance, measures at Union level aimed to ensure the availability of crisis-relevant products, such as priority rated orders, may prove to be indispensable for the return to the normal functioning of the Single Market. (29)In order to leverage the purchasing power and negotiating position of the Commission during the Single Market vigilance mode and the Single Market emergency mode, Member States should be able to request the Commission to procure on their behalf. (30)Where there is a severe shortage of crisis-relevant products or services on the Single market during a Single Market emergency, and it is clear that the economic operators that operate on the Single market do not produce any such goods, but would in principle be able to repurpose their production lines or would have insufficient capacity to provide the goods or services needed, the Commission should be able to recommend to the Member States as a last resort to take measures to facilitate or request the ramping up or repurposing of production capacity of manufacturers or the capacity of the service providers to provide crisis-relevant services. In doing so the Commission would inform the Member States as to the severity of the shortage and the type of the crisis-relevant goods or services that are needed and would provide support and advice in relation to the flexibilities in the EU acquis for such purposes. (31)The measures ensuring regulatory flexibility would allow the Commission to recommend that Member States accelerate the procedures for granting permits that would be necessary for enhancement of the capacity to produce crisis-relevant goods or provide crisis-relevant services. (32)Additionally, to ensure that crisis-relevant goods are available during the Single Market emergency, the Commission may invite the economic operators that operate in crisis-relevant supply chains to prioritise the orders of inputs necessary for the production of final goods that are crisis relevant, or the orders of such final goods themselves. Should an economic operator refuse to accept and prioritise such orders, following objective evidence that the availability of crisis-relevant goods is indispensable, the Commission may decide to invite the economic operators concerned to accept and prioritise certain orders, the fulfilment of which will then take precedence over any other private or public law obligations. In the event of failure to accept, the operator in question should explain its legitimate reasons for declining the request. The Commission may make such reasoned explanation or parts of it public, with due regard to business confidentiality. (33)Furthermore, to ensure availability of crisis-relevant goods during the Single Market emergency, the Commission may recommend that Member States distribute strategic reserves, having with due regard to the principles of solidarity, necessity and proportionality. (34)Where the activities to be carried out pursuant to this Regulation involve the processing of personal data, such processing should comply with the relevant Union legislation on personal data protection, namely Regulation (EU) 2018/1725 of the European Parliament and of the Council and Regulation (EU) 2016/679 of the European Parliament and of the Council. (35)In order to ensure uniform conditions for the implementation of this Regulation, implementing powers should be conferred on the Commission as regards the possibility to adopt supportive measures for facilitating free movement of persons, for establishing a list of individual targets (quantities and deadlines) for those strategic reserves that the Member States should maintain, so that the objectives of the initiative are achieved. Furthermore, implementing powers should be conferred on the Commission as regards activating the vigilance mode and vigilance measures in order to carefully monitor the strategic supply chains and coordinate the building up of strategic reserves for goods and services of strategic importance. Moreover, implementing powers should be conferred on the Commission as regards activation of specific emergency response measures at the time of a Single Market emergency, to allow for a rapid and coordinated response. Those powers should be exercised in accordance with Regulation (EU) No 182/2011 of the European Parliament and of the Council. (36)This Regulation respects fundamental rights and observes the principles recognised in particular by the Charter of Fundamental Rights of the European Union (the ‘Charter’). In particular, it respects the right to privacy of the economic operators enshrined in Article 7 of the Charter, right to data protection set out in Article 8 of the Charter, the freedom to conduct business and the freedom of contract, which are protected by Article 16 of the Charter, the right to property, protected by Article 17 of the Charter, right to collective bargaining and action protected by Article 26 of the Charter and the right to an effective judicial remedy and to a fair trial as provided for in Article 47 of the Charter. Since the objective of this Regulation cannot be sufficiently achieved by the Member States and can rather, by reason of the scale or effects of the action, be better achieved at Union level, the Union may adopt measures in accordance with the principle of subsidiarity as set out in Article 5 of the Treaty. In accordance with the principle of proportionality as set out in that Article, this Regulation does not go beyond what is necessary in order to achieve that objective. The Regulation should not affect the autonomy of the social partners as recognised by the TFEU. (37)The Union remains fully committed to international solidarity and strongly supports the principle that any measures deemed necessary taken under this Regulation, including those necessary to prevent or relieve critical shortages, are implemented in a manner that is targeted, transparent, proportionate, temporary and consistent with WTO obligations. (38)The Union framework shall include interregional elements to establish coherent, multi-sectoral, cross-border Single Market vigilance and emergency response measures, in particular considering the resources, capacities and vulnerabilities across neighbouring regions, specifically border regions. (39)The Commission shall also where appropriate enter into consultations or cooperation, on behalf of the Union, with relevant third countries, with particular attention paid to developing countries, with a view to seeking cooperative solutions to address supply chain disruptions, in compliance with international obligations. This shall involve, where appropriate, coordination in relevant international fora. (40)In order to put in place a framework of crisis protocols the power to adopt acts in accordance with Article 290 TFEU should be delegated to the Commission to supplement the regulatory framework set out in this Regulation by further specifying the modalities of cooperation of the Member States and Union authorities during the Single Market vigilance and emergency modes, secure exchange of information and risk and crisis communication. It is of particular importance that the Commission carry out appropriate consultations during its preparatory work, including at expert level, and that those consultations be conducted in accordance with the principles laid down in the Interinstitutional Agreement of 13 April 2016 on Better Law-Making . In particular, to ensure equal participation in the preparation of delegated acts, the European Parliament and the Council receive all documents at the same time as Member States' experts, and their experts systematically have access to meetings of Commission expert groups dealing with the preparation of delegated acts. (41)Council Regulation (EC) 2679/98 which provides for a mechanism for bilateral discussions of obstacles to the functioning of the Single Market has been rarely used and is outdated. Its evaluation demonstrated that the solutions provided by that Regulation are not able to cater for the realities of complex crises, which are not limited to incidents happening at the borders of two neighbouring Member States. It should therefore be repealed.

HAVE ADOPTED THIS REGULATION: Part I

General Provisions Title I

Scope Article 1

Subject matter 1.This Regulation establishes a framework of measures to anticipate, prepare for and respond to impacts of crises on the Single Market, with the purpose of safeguarding the free movement of goods, services and persons and of ensuring the availability of goods and services of strategic importance and crisis-relevant goods and services in the Single Market. 2.The measures referred to in paragraph 1 include: (a)an advisory group to advise the Commission on the appropriate measures for anticipating, preventing or responding to the impact of a crisis on the Single Market; (b)measures for obtaining, sharing and exchanging the relevant information; (c)contingency measures aiming at anticipation and planning; (d)measures for addressing Single Market impacts of significant incidents that have not yet resulted in a Single Market emergency (Single Market vigilance), including a set of vigilance measures and (e)measures for addressing Single Market emergencies, including a set of emergency response measures. 3.Member States shall regularly exchange information on all matters falling within the scope of this Regulation among themselves and with the Commission. 4.The Commission may obtain any relevant specialised and/or scientific knowledge, which is necessary for the application of this Regulation. Article 2

Scope of application 1.The measures set out in this Regulation apply in relation to significant impacts of a crisis on the functioning of the Single Market and its supply chains. 2.This Regulation shall not apply to the following: (a)medicinal products as defined in Article 2, paragraph 2 of Directive 2001/83/EC; (b) medical devices as defined in Article 2, point (e), of Regulation (EU) 2022/123 of the European Parliament and of the Council; (c) other medical countermeasures as defined in Article 3, point (8), of Regulation (EU) …/… on Serious Cross-Border Threats to Health [the SCBTH Regulation] and included in the list established in accordance with Article 6(1) of the proposal for] Council Regulation (EU) …/… on a framework of measures for ensuring the supply of crisis-relevant medical countermeasures ; (d)semiconductors as defined in Article 2(1) of the Regulation of the Council and of the European Parliament establishing a framework of measures for strengthening Europe's semiconductor ecosystem (Chips Act);

(e)energy products as defined in Article 2, paragraph 1, of Directive 2003/96/EC, electricity as defined in Article 2, paragraph 2 of that Directive and other products as referred to in Article 2, paragraph 3, of that Directive. (f)financial services, such as banking, credit, insurance and re-insurance, occupational or personal pensions, securities, investment funds, payment and investment advice, including the services listed in Annex I to Directive 2013/36, as well as settlement and clearing activities and advisory, intermediation and other auxiliary financial services. 3.By way of derogation from paragraph 2, points (a), (b) and (c), Articles 16 to 20 and Article 41 of this Regulation shall apply to the products referred to in those points. 4.This Regulation is without prejudice to the Union Civil Protection Mechanism set out in Decision 1313/13/EU and the general plan on crisis management in the area of food and feed in accordance with Regulation (EC) No 178/2002. 5.This Regulation is without prejudice to Union competition rules (Articles 101 to 109 TFEU and implementing regulations), including antitrust, merger and State aid rules. 6.This Regulation is without prejudice to the Commission: (a)entering into consultations or cooperation, on behalf of the Union, with relevant third countries, with particular attention paid to developing countries, with a view to seeking cooperative solutions to avoid supply chain disruptions, in compliance with international obligations. This may involve, where appropriate, coordination in relevant international fora; or (b)assessing whether it is appropriate to impose restrictions to exports of goods in line with the international rights and obligations of the Union under Regulation (EU) 2015/479 of the European Parliament and of the Council . 7.Any actions under this Regulation shall be consistent with Union’s obligations under international law 8.This Regulation is without prejudice to the responsibility of the Member States to safeguard national security or their power to safeguard essential state functions, including ensuring the territorial integrity of the State and maintaining law and order. Article 3

Definitions For the purposes of this Regulation, the following definitions apply: (1)‘crisis’ means an exceptional unexpected and sudden, natural or man-made event of extraordinary nature and scale that takes place inside or outside of the Union; (2)‘Single Market vigilance mode’ means a framework for addressing a threat of significant disruption of the supply of goods and services of strategic importance and which has the potential to escalate into a Single Market emergency within the next six months; (3)‘Single Market emergency’ means a wide-ranging impact of a crisis on the Single Market that severely disrupts the free movement on the Single Market or the functioning of the supply chains that are indispensable in the maintenance of vital societal or economic activities in the Single Market; (4)‘strategically important areas’ means those areas with critical importance to the Union and its Member States, in that they are of systemic and vital importance for public security, public safety, public order or public health, and the disruption, failure, loss or destruction of which would have a significant impact on the functioning of the Single Market; (5)‘goods and services of strategic importance’ means goods and services that are indispensable for ensuring the functioning of the Single Market in strategically important areas and which cannot be substituted or diversified; (6)‘crisis-relevant goods and services’ means goods and services that are indispensable for responding to the crisis or for addressing the impacts of the crisis on the Single Market during a Single Market emergency ; (7)‘strategic reserves’ means a stock of goods of strategic importance for which building a reserve may be necessary to prepare for a Single Market emergency, under the control of a Member State. Title II

Governance

Article 4

Advisory group 1.An advisory group is established. 2.The advisory group shall be composed of one representative from each Member State. Each Member State shall nominate a representative and an alternate representative. 3.The Commission shall chair the advisory group and ensure its secretariat. The Commission may invite a representative of the European Parliament, representatives of EFTA States that are contracting parties to the Agreement on the European Economic Area, representatives of economic operators, stakeholder organisations, social partners and experts, to attend meetings of the advisory group as observers. It shall invite the representatives of other crisis-relevant bodies at Union level as observers to the relevant meetings of the advisory group. 4.For the purpose of contingency planning under Articles 6 to 8, the advisory group shall assist and advise the Commission as regards the following tasks: (a)proposing arrangements for administrative cooperation between the Commission and the Member States at the time of the Single Market vigilance and emergency modes that would be contained in the crisis protocols; (b)assessingment of significant incidents that the Member States have alerted the Commission to. 5.For the purpose of of the Single Market vigilance mode as referred to in Article 9, the advisory group shall assist the Commission in the following tasks: (a)establishing whether the threat referred to in Article 3(2) is present, and the scope of such threat; (b)gathering foresight, data analysis and market intelligence; (c)consulting the representatives of economic operators, including SMEs, and industry to collect market intelligence; (d)analysing aggregated data received by other crisis-relevant bodies at Union and international level; (e)facilitating exchanges and sharing of information, including with other relevant bodies and other crisis-relevant bodies at Union level, as well asthird countries, as appropriate, with particular attention paid to developing countries, and international organisations; (f)maintaining a repository of national and Union crisis measures that have been used in previous crises that have had an impact on the Single Market and its supply chains 6.For the purposes of the Single Market emergency mode as referred to in Article 14, the advisory group shall assist the Commission in the following tasks: (a)analysing crisis-relevant information gathered by Member States or the Commission; (b)establishing whether the criteria for activation or deactivation of the emergency mode have been fulfilled; (c)advising on the implementation of the measures chosen to respond to Single Market emergency at Union level; (d)performing a review of national crisis measures; (e)facilitating exchanges and sharing of information, including with other crisis-relevant bodies at Union level, as well as, as appropriate, third countries, with particular attention paid to developing countries, and international organisations.

7.The Commission shall ensure the participation of all bodies at Union level that are relevant to the respective crisis. The advisory group shall cooperate and coordinate closely, where appropriate, with other relevant crisis-related bodies at Union level. The Commission shall ensure coordination with the measures implemented through other Union mechanisms, such as the Union Civil Protection Mechanism (UCPM) or the EU Health Security Framework. The advisory group shall ensure information exchange with the Emergency Response Coordination Centre under the UCPM. 8.The advisory group shall meet at least three times a year. At its first meeting, on a proposal by and in agreement with the Commission, the advisory group shall adopt its rules of procedure. 9.The advisory group may adopt opinions, recommendations or reports in the context of its tasks set out in paragraphs 4 to 6. Article 5

Central liaison offices 1.Member States shall designate central liaison offices responsible for contacts, coordination and information exchange with the central liaison offices of other Member States and Union level central liaison office under this Regulation. Such liaison offices shall coordinate and compile the inputs from relevant national competent authorities. 2.The Commission shall designate a Union level central liaison office for contacts with the central liaison offices of the Member States during the Single Market vigilance and emergency modes under this Regulation. The Union level central liaison office shall ensure the coordination and information exchange with the central liaison offices of the Member States for the management of the Single Market vigilance and emergency modes. Part II

Single Market contingency planning Article 6

Crisis protocols 1.The Commission taking into consideration the opinion of the advisory group and the input of relevant Union level bodies, is empowered after consulting the Member States, to adopt a delegated act to supplement this Regulation with a framework setting out crisis protocols regarding crisis cooperation, exchange of information and crisis communication for the Single Market vigilance and emergency modes, in particular: (a)cooperation between national and Union level competent authorities for the management of the Single Market vigilance and emergency modes in vigilance and emergency modes across the sectors of the Single Market; (b)general modalities for secure exchange of information; (c)a coordinated approach to risk and crisis communication also vis-à-vis the public with a coordinating role for the Commission; (d)the management of the framework. 2.The Commission and the Member States shall put in place detailed administrative arrangements for ensuring timely cooperation and secure exchange of information between the Commission, the relevant Union-level bodies and the Member States concerning: (a)an inventory of relevant national competent authorities, the central liaison offices designated in accordance with Article 5 and single points of contact referred to in Article 21, their contact details, assigned roles and responsibilities during the vigilance and emergency modes of this Regulation under national law; (b)consultation of the representatives of economic operators and social partners, including SMEs, on their initiatives and actions to mitigate and respond to potential supply chain disruptions and overcome potential shortages of goods and services in the Single Market; (c)technical level cooperation in the vigilance and emergency modes across the sectors of the Single Market; (d)risk and emergency communication, with a coordinating role for the Commission, adequately taking into account already existing structures; 3.In order to ensure the operation of the framework referred to in paragraph 1, the Commission may conduct stress tests, simulations and in-action and after-action reviews with Member States, and propose the relevant Union-level bodies and the Member States to update the framework as necessary. Article 7

Trainings and simulations

The Commission shall organise the training on crisis coordination, cooperation and information exchange referred to in Article 6 for the staff of the designated central liaison offices. It shall organise simulations involving the staff of the central liaison offices from all Member States based on potential scenarios of Single Market emergencies.



Article 8

Ad hoc alerts for early warning 1.The central liaison office of a Member State shall notify the Commission and the central liaison offices of other Member States without undue delay of any incidents that significantly disrupt or have the potential to significantly disrupt the functioning of the Single Market and its supply chains (significant incidents). 2.The central liaison offices and any relevant national competent authorities shall, in accordance with Union law and national legislation that complies with Union law, treat the information referred to in paragraph 1 in a way that respects its confidentiality, protects the security and public order of the European Union or its Member States, and protects the security and commercial interests of the economic operators concerned. 3.In order to determine whether the disruption or potential disruption of the functioning of the Single Market and its supply chains of goods and services is significant and should be the object of an alert, the central liaison office of a Member State shall take the following into account: (a)the number of economic operators affected by the disruption or potential disruption; (b)the duration or anticipated duration of a disruption or potential disruption; (c)the geographical area; the proportion of the Single Market affected by the disruption or potential disruption; the impact on specific geographical areas particularly vulnerable or exposed to supply chain disruptions including the EU outermost regions; (d)the effect of the disruption or potential disruption on non-diversifiable and non-substitutable inputs. Part III

Single Market Vigilance Title I

Vigilance mode Article 9

Activation 1.Where the Commission, taking into consideration the opinion provided by the advisory group, considers that the threat referred to in Article 3(2) is present, it shall activate the vigilance mode for a maximum duration of six months by means of an implementing act. Such an implementing act shall contain the following: (a)an assessment of the potential impact of the crisis; (b)list of the goods and services of strategic importance concerned, and (c) the vigilance measures to be taken. 2.The implementing act referred to in paragraph 1 shall be adopted in accordance with the examination procedure referred to in Article 41(2). Article 10

Extension and deactivation 1.The Commission, if it considers that the reasons for activating the vigilance mode pursuant to Article 9(1) remain valid, and taking into consideration the opinion provided by the advisory group, may extend the vigilance mode for a maximum duration of six months by means of an implementing act.

2.Where the Commission, taking into consideration the opinion provided by the advisory group, finds that the threat referred to in Article 3(2) is no longer present, with respect to some or all vigilance measures or for some or all of the goods and services, it shall deactivate the vigilance mode in full or in part by means of an implementing act. 3.Implementing acts referred to in paragraphs 1 and 2 shall be adopted in accordance with the examination procedure referred to in Article 42(2). Title II

Vigilance measures Article 11

Monitoring 1.When the vigilance mode has been activated in accordance with Article 9, national competent authorities shall monitor the supply chains of goods and services of strategic importance that have been identified in the implementing act activating the vigilance mode. 2.The Commission shall provide for standardised and secure means for the collection and processing of information for the purpose of paragraph 1, using electronic means. Without prejudice to national legislation requiring collected information including business secrets to be kept confidential, confidentiality with regard to the commercially sensitive informationand information affecting the security and public order of the Union or its Member States shall be ensured. 3.Member States shall set up and maintain an inventory of the most relevant economic operators established on their respective national territory that operate along the supply chains of goods and services of strategic importance that have been identified in the implementing act activating the vigilance mode. 4.On the basis of the inventory set up pursuant to Article 6, national competent authorities shall address requests for voluntary provision of information to the most relevant operators along the supply chains of goods and services identified in the implementing act adopted pursuant to Article 9 and other relevant stakeholders established in their respective national territory. Such requests shall in particular states which information about factors impacting the availability of the identified goods and services of strategic importance is requested. Each economic operator/stakeholder that voluntarily provides information shall do so on an individual basis in line with the Union rules on competition governing the exchange of information. The national competent authorities shall transmit the relevant findings to the Commission and the advisory group without undue delay via the respective central liaison office. 5.National competent authorities shall have due regard to the administrative burden on economic operators and in particular SMEs, which may be associated with requests for information and ensure it is kept to a minimum. 6.The Commission may ask the advisory group to discuss the findings and prospects of evolution based on the monitoring of supply chains of goods and services of strategic importance. 7.On the basis of the information collected through the activities carried out in accordance with paragraph 1, the Commission may provide a report of the aggregated findings. Article 12

Strategic reserves 1.The Commission may, among the goods of strategic importance listed in an implementing act adopted pursuant to Article 9(1),, identify those for which it may be necessary to build a reserve in order to prepare for a Single Market emergency, taking into account the probability and impact of shortages. The Commission shall inform the Member States thereof. Capacities which are a part of the rescEU reserve in accordance with Article 12 of Decision No 1313/2013/EU are excluded from the app