Report: Lessons from the pandemic – designing a Single Market crisis management mechanism

Despite being heavily tested during the COVID pandemic, the Single Market proved to be resilient. But even more can be done to strengthen the Single Market in times of crisis.

Disrupted supply chains, export restrictions on health-related products and border controls affected negatively three of the four freedoms that constitute the backbone of the Single Market. In addition, the huge financial support to businesses in the form of State aids as well as measures aiming at promoting local goods or companies, may have distorted the competition within the Single Market.

Yet, our review of these national measures shows the resilience of the Single Market in maintaining the freedom of movement and the free flow of food and other essential consumer goods. The bulk of the countermeasures affecting the freedom of movement were motivated by the protection of public health and are likely in line with EU law.

But, even if the Single Market proved itself to be resilient at large, our survey of the national countermeasures also reveals the need for technical improvements to strengthen it in times of crisis.

Increased transparency

In a crisis, it is particularly important that all parties have access to real time, accurate and exhaustive information on the restrictions put in place by the Member States. We therefore recommend strengthening the existing notification regimes for goods, services and persons. We also propose to consider a horizontal information mechanism adapted to crisis situations.

Better enforcement

The Single Market already suffers from a huge compliance deficit and the risk of violations of EU law is exacerbated in times of crisis. Improved enforcement in normal time is therefore critical to building the norms and discipline that helps maintaining the freedom of movement and securing the supply of goods and services in emergency situations. It is therefore crucial that the Member States take greater responsibility in the enforcement of Single Market rules. We recommend integrating an ambitious enforcement dimension along these lines in any future crisis management proposal.

Stronger cooperation mechanisms

Additional crisis mechanisms may also be considered. Their shape and efficiency will vary depending on the type of crisis envisaged and the EU’s competence for each situation. A prerequisite for efficient, relevant, and flexible mechanisms is to provide an in-depth analysis of relevant crisis scenario based on evidence from a wide range of areas - including health management, defence affairs, environmental science or food security.

A more distinct focus on planned emergency instrument

The EU Commission has plans for a Single Market Emergency Instrument (SMEI). We recommend that any SMEI proposal focuses on strengthening the Single Market by integrating the three dimensions: Increased transparency, better enforcement, and stronger cooperation mechanisms. In addition, it shall rely on experiences from the pandemic, take into account existing crisis management initiatives and an in-depth analysis of the crisis scenarios that it seeks to address. In addition, the instrument shall not undermine the openness of the Single Market towards third countries, and it should not put an unnecessary burden on businesses.