Internal Market Emergency and Resilience Act (IMERA)
What is the Internal Market Emergency and Resilience Act (IMERA)?
The Internal Market Emergency and Resilience Act (IMERA) is intended to anticipate, prepare for and respond to the impact of future crises. It builds on lessons learned during recent emergencies such as COVID, Russia’s war in Ukraine and the energy supply crisis.
The IMERA provides for continuous monitoring for possible upcoming crises, establishes a vigilance or emergency mode to be activated whenever a threat becomes clear, and puts in place governance so that member states can coordinate their response.
It also creates an ‘advisory group’ formed by the Commission and the member states to assess a given situation and recommend responses.
As a last resort, the IMERA provides for emergency measures such as targeted information requests to economic operators, priority-rated requests for crisis-relevant products, a fast-track procedure to bring certain products onto the market and derogations from product-specific rules.
Together with the IMERA, the Commission presented a package of proposals (the ‘IMERA omnibus’) which updates the current legislation on conformity assessment rules and introduces common specifications and market surveillance rules to enable the IMERA to be operational in times of crisis.
IMERA asks the Commission to undertake stress tests and simulations to anticipate and prepare for crises and assess the possible impact on the free movement of goods, services and people. Economic operators will be encouraged to develop crisis protocols and conduct training and crisis simulations, on a voluntary basis.
Source: (c) European Union, European Commission, Council of the European Union.
26 June 2024 - The Council has adopted its negotiating mandate.
Next step:The compromise text agreed formalises the Council's negotiating position, providing the Council presidency with a mandate for negotiations with the European Parliament.
Important developments: The Council has adopted its negotiating mandate on compulsory licensing for crisis management. A compulsory licence is the possibility for a government to allow a third party to use an intellectual property right without the authorisation of the rights-holder. The Council’s position redefines the decision-making procedure, reinforces the rights of rights-holders, and limits the number of legislative acts that can activate the crisis or emergency mode under which a Union compulsory license can be issued.
In crisis situations (i.e. a pandemic or a natural disaster), compulsory licensing can help provide access to key products and technologies, when, for example, the holder of a patent does not have the capacity to produce the necessary amounts of a key product, and a voluntary agreement is not available or feasible. Currently, compulsory licensing mechanisms are regulated only at national level, which could result in a fragmented approach in cases of cross-border crises or emergencies and does not consider the cross-border supply chains inherent to the internal market. For this reason, it was necessary to set up a compulsory licensing mechanism at EU level (‘Union compulsory licence’).
The Commission’s proposal aimed to allow the EU to rely on a compulsory licensing framework for crisis management applicable in the whole territory of the EU. The Union compulsory licence would be closely linked to crisis instruments, such as the internal market emergency and resilience act (IMERA, known before as single market emergency instrument or SMEI). The proposal made sure that the Union compulsory licence would only be granted after the activation of an emergency or crisis mode at EU level.
The determination of the existence of a crisis or emergency is therefore not defined by the regulation on compulsory licensing but rather by the relevant EU crisis instrument. The Union compulsory licensing mechanism will serve as an alternative in crises when voluntary agreements are not available, and it will ensure an appropriate territorial reach of compulsory licensing to cover cross-border supply chains.
The Council’s negotiating mandate restructures the procedure of granting a compulsory licence at EU level to protect the rights of the intellectual property rights-holders and ensures that they are better informed throughout the procedure. The roles of the advisory body and the national intellectual property experts are also strengthened in the decision-making process. Furthermore, the negotiating mandate establishes that, when a license is granted to a licensee during a crisis, the rights-holder must be remunerated. In the Council’s negotiating mandate, this remuneration, to be established by the Commission on a case-by-case basis, can go beyond the cap of 4% of the total revenue generated by the licensee, as proposed by the Commission.
The Council’s position underlines the ‘last resort’ nature of any compulsory licensing decision, meaning that it should only be used when voluntary agreements are not available or adequate.
The mandate reduces to three the number of legal instruments that can activate compulsory licensing: IMERA, the regulation on serious cross-border threats to health, and the regulation on measures for ensuring the supply of crisis-relevant medical countermeasures in the event of a public health emergency. The Council’s position also clarifies that the regulation will not apply to defence-related products. In addition, the mandate protects rights-holders from having to disclose trade secrets.
24 April 2024 - Position of the European Parliament adopted on the Internal Market Emergency and Resilience Act
The European Parliament approved the provisional agreement on the regulation establishing the Internal Market Emergency and Resilience Act (IMERA).
According to the text adopted, in order to ensure that the framework of measures laid down by this Regulation is able to deploy its full effect in the context of the internal market vigilance and the internal market emergency modes, the Commission should be empowered to set out detailed arrangements regarding crisis preparedness, cooperation, exchange of information and crisis communication.
Those detailed arrangements, taking the form of a contingency framework, should set out the specific technical and operational aspects of the mechanisms for exchanging information between the Commission and the Member States. Furthermore, it should lay down arrangements for operational coordination between the Commission and the Member States regarding crisis communication.
In this context, a dedicated inventory of all the competent authorities of the respective Member States involved in the implementation of the framework laid down by this Regulation should be set up on the basis of the information communicated by the Member States. That inventory should indicate, in particular, the roles and responsibilities assigned to the competent authorities in their respective Member States during the internal market vigilance and emergency modes in accordance with national law. The arrangements between the Commission and the Member States should also cover the secure exchange of information concerning consultation of the economic operators and social partners with respect to their respective initiatives and actions to mitigate and respond to the effects of a potential crisis.
As part of crisis preparedness, this Regulation should allow for anticipation of events and crises for which it would be possible to carry out stress tests and simulations, building on ongoing analysis concerning critically important sectors of the internal market economy and the Union’s continuous foresight work.
In particular, the Commission should develop scenarios and parameters in specific sectors that capture the particular risks associated with a crisis. In order to ensure the crisis preparedness of all actors, it is necessary to set out rules on stress tests, which should be conducted at least every two years.
Events linked to the COVID-19 crisis have highlighted the need for the Union to take a coordinated approach and be better prepared for possible future crises, especially considering the continuing effects of climate change which result in natural disasters, as well as global economic and geopolitical instabilities.
Other crises which require a quicker response to prevent barriers to free movement in the internal market and to avoid severe disruptions to supply chains that are indispensable in the maintenance of activities in the internal market include, for example, forest fires, earthquakes or large-scale cyber attacks. The fact that such crises constitute exceptional and sudden events of extraordinary nature and scale implies that such events are reasonably unexpected. As it is not known what kind of crises could arise next and have a severe impact on the internal market and its supply chains in the future, it is necessary to provide for an instrument that would apply in the event - of a wide range of crises having an impact on the internal market.
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 within or outside of the Union, that has or may have a severe negative impact on the functioning of the internal market and that disrupts the free movement of goods, services and persons or disrupts the functioning of its supply chains;
(2) ‘internal market vigilance mode’ means a framework for addressing the threat of a crisis that has the potential to escalate into an internal market emergency within the next six months;
(3) ‘internal market emergency mode’ means a framework for addressing a crisis with a significant negative impact on the internal market which severely disrupts the free movement of goods, services and persons or, where such a severe disruption has been or is likely to be subject to divergent national measures, the functioning of its supply chains;
(4) ‘critically important sectors’ means sectors that are of systemic and vital importance to the Union and its Member States for upholding public security, public safety, public order or public health, and the disruption, failure, loss or destruction of which can have a significant negative impact on the functioning of the internal market in times of a threat of a crisis;
(5) ‘goods of critical importance’ or ‘services of critical importance’, together referred to as ‘goods and services of critical importance’, means goods or services that are non-substitutable, non-diversifiable or indispensable in the maintenance of vital societal functions or economic activities in order to ensure the proper functioning of the internal market and its supply chains in critically important sectors and that are listed in an implementing act adopted by the Council pursuant to Article 14(1);
(6) ‘crisis-relevant goods’ or ‘crisis-relevant services’, together referred to as ‘crisis-relevant goods and services’, means goods or services that are non-substitutable, non-diversifiable or indispensable in the maintenance of vital societal functions or economic activities in order to ensure the proper functioning of the internal market and its supply chains and that are considered essential for responding to a crisis and that are listed in an implementing act adopted by the Council pursuant to Article 18(4);
(7) ‘significant incidents’ means incidents that significantly disrupt or have the potential to significantly disrupt the functioning of the internal market and its supply chains;
(8) ‘relevant economic operator’ means an economic operator along the supply chain that has the ability or capacity to produce or distribute any of the following:
(a) goods and services of critical importance;
(b) crisis-relevant goods or crisis-relevant services;
(c) components of the goods referred to in points (a) and (b).
Article 12, Stress tests
1. The Commission, taking into consideration the opinion of the Board, shall conduct and coordinate stress tests, including simulations that aim to anticipate and prepare for a crisis in the internal market.
2. In particular, the Commission shall:
(a) develop scenarios and parameters in a specific sector that capture the particular risks associated with a crisis, in order to assess the potential impact on the free movement of goods, services and persons in that sector;
(b) facilitate and encourage the development of strategies for emergency preparedness;
(c) identify, in cooperation with all actors involved, risk mitigation measures after the completion of the stress tests.
3. In order to identify the specific sector referred to in paragraph 2, point (a), the Commission, in cooperation with the Board, shall make use of all the existing tools at its disposal, including mapping exercises.
4. The Commission shall conduct stress tests regularly, and at least once every two years, at Union level. To that end, the Commission shall invite staff from the central liaison offices of all Member States to participate in simulations. The Commission may also invite other relevant actors involved in the prevention of, preparedness for and response to internal market emergencies to participate on a voluntary basis.
5. On the basis of a request by two or more Member States, the Commission may conduct stress tests in specific geographical areas or border regions in those Member States.
6. The Commission shall communicate the results of the stress tests conducted pursuant to this Article to the Board and publish a report thereon.
1 February 2024 - Council and Parliament strike a provisional deal
The Council and the European Parliament reached a provisional agreement on the regulation for a single market emergency instrument (SMEI), which after the agreement will be renamed Internal Market Emergency and Resilience Act (IMERA). Council and Parliament have also agreed on several accompanying legislative proposals (IMERA omnibus) to anticipate, prepare for and respond to the impact of future crises using the strength of the internal market.
Internal Market Emergency and Resilience Act (IMERA), compromise final text in view to an agreement
Next step - The provisional agreement now needs to be endorsed and formally adopted by both institutions.
The need for the Internal Market Emergency and Resilience Act (IMERA)
In 2023, the EU celebrated the 30th anniversary of the single market, often considered to be the cornerstone of European integration. The 'four freedoms' (free movement of goods, capital, services, and persons) have been at its heart since 1993.
Initially home to 345 million people, the single market today numbers 447 million consumers and 23 million companies. It consists of the 27 Member States of the EU, as well as Iceland, Liechtenstein and Norway under the European Economic Area (EEA) Agreement; Switzerland has partial access by means of bilateral agreements. On 1 January 2021, the United Kingdom left the EU single market.
The COVID-19 pandemic has disrupted the single market in many ways. From May to June 2020, intra-EU trade fell by 24% and GDP by 7%, with differences across Member States. These dramatic falls were worsened by the unilateral introduction of a range of restrictions by Member States – for instance, controls or restrictions at borders, the first measures to be introduced in 2020 in almost all Member States.
Restrictions were not implemented consistently across the EU. These measures resulted in disruptions to the free flow of goods, services and people, affecting supply chains, economic activity and the level of employment. In addition, they were frequently and unpredictably updated, leading to legal uncertainty and pushing some Member States to carry out national stockpiling. In its 2021 annual single market report, the Commission noted that companies complained about the difficulty of finding relevant information on restrictions, which was often only available in the national language of the Member State.
Businesses also pointed to the fact that Member States had different approaches regarding the measures to apply, even in similar epidemiological situations. Furthermore, Member States did not notify the Commission of numerous measures (or only notified them after they had been adopted), which hindered the Commission and other authorities from raising potential concerns. The Commission also reported that overly cumbersome border controls restricted the free movement of people, causing significant delays in freight traffic and, in some cases, blocking the delivery of goods to other Member States. In addition, forced temporary closures of 'non-essential businesses', travel restrictions and a lack of clarity on applicable rules affected the free movement of services.
The sectors particularly affected include construction (e.g. posting of workers), retail (e.g. difficulties for frontier workers to reach the workplace), agri-food (e.g. lack of seasonal workers), health (e.g. hospitals in border regions having staff from across the border) and energy-intensive industries (e.g. engineers unable to carry out urgent cross-border maintenance services on industrial equipment).
The Commission concluded that 'the single market needs to be better prepared to face a future crisis, based on forward-looking and structural solutions that allow for predictability and legal certainty'.
The single market is still developing and adapting to new challenges. Recent shocks have shown how vulnerable to crises the single market is, and the extent to which the EU economy relies on a well-functioning single market. It is now considered to be a key driver of EU resilience.
In its resolution of 17 September 2020 on COVID-19: EU coordination of health assessments and risk classification and the consequences for Schengen and the single market, Parliament stressed that it is crucial that essential goods such as food, medical devices and protective equipment continue to be delivered across the EU at all times. Parliament also insisted that the EU needed a comprehensive strategy to ensure the free circulation of goods at all times, and to avoid unilateral restrictive measures. Parliament believes that, while respecting public security and public health measures, the strategy should foster economic recovery to strengthen the resilience of the internal market and prepare for new crises. In its resolution of 25 November 2020 on a new industrial strategy for Europe, Parliament highlighted that a well-functioning single market should be at the very core of all Union strategies. In its resolution of 17 February 2022 on tackling non-tariff and non-tax barriers in the single market, Parliament welcomed the Commission's intention to present a SMEI. It also called on the Commission to develop the SMEI as a legally binding structural tool to ensure the free movement of persons, goods and services in case of future crises.
In its resolution of 18 January 2023 on the 30th anniversary of the single market: celebrating achievements and looking towards future developments, Parliament highlighted that the single market was a key tool in times of crisis if Member States can act in a coordinated way. Parliament believes that the SMEI should be central to ensuring such coordination, in order to prevent shortages and ensure the smooth functioning of the single market, including the free movement of essential goods and services throughout the EU. Parliament is committed to advancing the SMEI to ensure the EU's security of supply, crisis management and resilience.
In its conclusions of 1-2 October 2020, the European Council stressed that lessons from the COVID19 pandemic should be drawn, and that remaining fragmentation, barriers and weaknesses of the single market should be addressed. In its conclusions of 23 November 2021 on enhancing preparedness, response capability and resilience to future crises, the Council stressed that the COVID-19 pandemic showed the need to strengthen the resilience of the single market to disruptions, particularly in key EU supply chains and economic sectors (such as pharmaceuticals, medical devices and semiconductors).
The Council believes that the situation of cross-border communities and vital transit regions should be taken into account. The Council also highlighted that crisis-related measures should be temporary, proportionate and fully coordinated, with the aim of resuming, as soon as possible, the normal functioning of the single market, including the free movement of persons, goods, services and capital as envisaged in the Treaties.
In its communication of May 2021 updating the 2020 new industrial strategy, the Commission stressed that EU industry needed a stronger and well-functioning single market to lead the twin green and digital transitions. As announced by Commission President Ursula von der Leyen in February 2021 at the EU Industry Days, the communication explained that the Commission would propose a single market emergency instrument to provide a structural solution to ensure the availability and free movement of persons, goods and services in the context of possible future crises.
A call for evidence for the preparation of the impact assessment (IA) was open between 13 April and 11 May 2022 and resulted in 55 feedback instances. A public consultation took place in parallel, leading to 25 feedback instances. The impact assessment carried out by the Commission recalled that the general objective of the SMEI was to enhance the single market's vigilance for and response to crises, and its smooth functioning in times of crisis.
The Commission put forward a 'SMEI package' on 19 September 2022. It included one main proposal for a regulation establishing a SMEI, and two accompanying proposals (one amending 14 directives and the other one amending five regulations) concerning emergency procedures for the conformity assessment, adoption of common specifications and market surveillance for certain products. The SMEI package is one of the key priorities included in the joint declaration on EU legislative priorities for 2023 and 2024, on which the EU co-legislators and the Commission aim to achieve the best possible progress by the next European elections in 2024.
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