The European Commission is sticking to its sanctions policy to the last breath

The European Union would oblige Member States’ companies to produce crisis products. The plan also includes a production and stockpiling obligation, Mandiner reports.

The European Commission is sticking to its sanctions policy to the last breath, and is now producing various contingency plans to mitigate the effects of the crisis. On Monday, Margrethe Vestager, the European Commission’s executive vice-president for competition, came up with a new proposal to prevent the total collapse of supply chains, the portal reports.

“We need new tools that will allow us to act quickly and collectively in the face of emerging risks.” – said Margrethe Vestager. The proposal is justified by the supply problems caused by the coronavirus epidemic and the economic situation created by the war between Russia and Ukraine, and if adopted, the Commission could instruct EU countries to reorganise supply chains, increase production of certain priority goods, stockpile and even create new production capacity.

Thus, individual firms would have to produce what and as much as the Commission tells them to.

The idea is not unprecedented, the Mandiner reminds us, in the United States it has been known as the Defense Production Act since 1950. It allows the president to delegate economic control in certain cases, including the power of the government to set production volumes for certain goods and to order private companies to change their production capacity. The European Union has not yet passed a law in this form that would allow it to directly interfere with the economic capacity of individual member states, but during the epidemic, for example, it has imposed an export ban on coronavirus vaccines.

Critics of the plan outlined by the European Commission say that operating the system would mean a degree of monitoring of companies that could seriously breach the taboo of commercial confidentiality and could also override companies’ contractual obligations.

The portal quotes the lobby group BusinessEurope as saying that aggressive and mandatory market surveillance does not comply with the principles of proportionality and necessity in a situation based on assumptions. But the Commission has already designed the penalties: companies that provide misleading information about their activities could face fines of up to €300,000, and those that do not comply with instructions on capacity or production could be fined 1.5% of their average daily turnover if they vote in favour.