EU actions in response to COVID-19 pandemic

Below is copy via EFCEM’s membership of ORGALIM. It contains details regarding the free movement of goods, border control measures, financial and accounting developments across the EU in relation to the COVID-19 crisis:

COVID-19 Crisis
The European Union has developed a series of actions to fight and overcome the sudden sanitary, economic and social crisis resulting from the COVID-19 pandemic.


These were presented on Friday 13 March by the European Commission in a Communication on a Coordinated economic response to the COVID-19 Outbreak, outlining a series of measures to mitigate the consequences of the pandemic, using all the instruments at its disposal, in order:  

• To ensure the necessary supplies to the EU’s health systems by preserving the integrity of the Single Market and of production and distribution of value chains;
• To support people so that income and jobs are not affected disproportionately and to avoid permanent effects of this crisis;
• To support firms and ensure that the liquidities of the EU’s financial sector can continue to support the economy and
• To allow Member States to act in a coordinated way, through using the full flexibility of the EU’s State Aid and Stability and Growth Pact Frameworks.

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Maintaining the free circulation of goods within the EU Internal Market
On 16 March, the European Commission published a set of Guidelines aiming at guaranteeing the continuous flow of goods and services throughout the Internal Market. The main objective is to prevent “Member States from undertaking measures that jeopardise the integrity of the Single Market for goods, in particular of supply chains, or engage in any unfair practices”. On the other hand, Member States are allowed to considerably limit the free circulation of people, while facilitating that of transport professionals. These measures concern in particular:

• The transport of goods and services, particularly but not only those related to food and health (installation of “Green Lanes”)
• The supply of goods, which should not be submitted to any limitation beyond those in place under normal circumstances,
• Health
• External borders (see below)
• Internal borders, with a framework to restrict the free circulation of persons while maintaining the non-discrimination principle and guaranteeing the person’s health (avoidance of queues)

 
These Guidelines were completed on 23 March by new practical advice on how to implement them, particularly to keep freight moving across the EU. In a Communication, the Commission fine tunes the rules applicable to the “Green Lanes” and requires from Member States:

• To cooperate to ensure that all freight, and not only essential goods such as food and medical supplies, gets quickly to its destination without any delays.
• To designate immediately all the relevant internal border-crossing points of the trans-European transport network (TEN-T) and possibly additional ones as Green Lane border crossing - for land (road and rail), sea and air transport. A map of the TEN-T is part of the Annex to the Communication. The objective is that any checks at the internal EU land borders should not exceed 15 minutes for all freight vehicles carrying any type of goods.
• To act immediately to temporarily suspend all types of road access restrictions in place in their territory (week-end bans, night bans, sectoral bans, etc.) for road freight transport and for the necessary free movement of transport workers.
• To allow all transport workers, irrespective of their nationality and place of residence, to cross internal borders. Restrictions such as travel restrictions and quarantine of transport workers, should be waived, (without prejudice for competent authorities to take proportionate and specifically adapted measures to minimise the risk of contagion).

 
Closing the external Schengen borders
On Tuesday 16, the Commission presented in a Communication a recommendation  to the European Council to adopt a coordinated decision to apply a temporary restriction (30 days) of non-essential travel from third countries into the EU. This recommendation was approved by the European Council on 17 March, to be enforced only by Member States under national law. 
 
Macroeconomic Measures
State Aid 
On 19 March, the Commission adopted a Temporary Framework to help Member States support  the economy in the context of the COVID-19 outbreak, as foreseen by article 107(3)(b) TFEU to remedy a serious disturbance across the EU economy. The Temporary Framework aims to enable Member States to : 
(i) set up schemes for direct grants (or tax advantages) up to €500,000 to a company that has experienced difficulties after 31 December 2019, 
(ii) give subsidised State guarantees on bank loans, 
(iii) enable public and private loans with subsidised interest rates and 
(iv) ensure that aid channelled via the banks is not considered as direct aid to the banks but to the banks’ customers, giving guidance on how to minimise any undue residual aid to the banks in line with EU rules. 
 
Stability and Growth Pact
On 20 March, the European Commission proposed in a Communication that the Council decides upon the activation of the Stability and Growth Pact specific articles allowing Member States to undertake budgetary measures “in periods of severe economic downturn for the euro area or the Union as a whole”. In such circumstances, Member States may be allowed temporarily to depart from the adjustment path towards the medium-term budgetary objective, provided that this does not endanger fiscal sustainability in the medium term”.
As stated in the Communication, “the general escape clause does not suspend the procedures of the Stability and Growth Pact. It will allow the Commission and the Council to undertake the necessary policy coordination measures within the framework of the Pact, while departing from the budgetary requirements that would normally apply”.
 
The ECOFIN Council endorsed the Commission views on 23 March.
Over the most recent time, the Commission approved specific state aid measures undertaken by Denmark, Spain, France, Germany, Italy, Latvian, Luxemburg and Portugal to support their economy.
 
Coronavirus Response Investment Initiative 
The Coronavirus Response Investment Initiative (see here summary by the European Parliament’s services) coordinates all possible means available within the existing EU budget to support EU countries and consists of three main elements:

• €37 billion of European public investment: this money will be gathered from the Commission not asking Member States to reimburse €8 billion unspent pre-financing for the European Structural and Investment Funds for 2019. To this will be added co-financing from the EU budget of some €29 billion, without requiring any money from the national budgets
• Maximum flexibility in applying EU spending rules: the Commission proposes to make Coronavirus related expenditure eligible under the structural funds. This will allow healthcare costs to be eligible for reimbursement. Member States will be able to: a) use money from the European Regional Development Fund and the European Social Fund to invest in their healthcare systems: purchase of health and protective equipment, disease prevention, e-health, medical devices (including respirators, masks and similar), securing of the working environment in the health care sector and ensuring access to health care for the vulnerable groups ; b) use the European Regional Development Fund to help companies tackle short-term financial shocks linked to the Coronavirus crisis. This could for example include working capital in SMEs, with special attention to the sectors which are hit particularly hard by the crisis; c) Use the European Social Fund to temporarily support national short time working schemes
• Access to the EU Solidarity Fund: the Commission proposes to include public health crises in the emergencies that the EU Solidarity Fund finances.

The Commission package is expected to be adopted both by the European Parliament and the Council using both institutions’ fast track procedure.
 
European Central Bank
The European Central Bank announced on 18 March a new “temporary asset purchase programme of private and public sector securities” or Pandemic Emergency Purchase Programme (PEPP) of up to €750 billion which will last at least until the end of the year.  
 
Accounting

• The European Market and Securities Authority issued a public statement on accounting implications of the COVID-19 outbreak on the calculation of expected credit losses in accordance with IFRS 9
• The European Banking Authority issued several documents (see press release) to provides clarity to banks and consumers on the application of the prudential framework. ​