Ref. Ares(2020)2514114 - 12/05/2020
Ref. Ares(2020)3731150 - 15/07/2020
DG GROW
Virtual meeting between Commissioner Thierry Breton and AmCham EU Executive Council
28 April 2020
Influence of the pandemic crisis on business in Europe and globally
BRIEFING NOTE
Scene setter
Your discussion with the Executive Council of AmCham EU should
focus on COVID-19: challenges and barriers they face, responses to
the crisis and exit and recovery.
The Executive Council is a group of 20 European CEOs who lead the
European operations of some of the world’s largest multinational
companies, among them Cisco, Dell, Hewlett Packard, Intel and
Raytheon. VP Jourova had a videoconference with the AmCham
digital economy committee on April 17, including representatives
from IBM, Cisco, Microsoft and AT&T.
Objectives
COVID-19 crisis impact on businesses
Response to the crisis
Exit and recovery including business involvement
KEY messages
Keeping the Single Market functioning, PPE supply
The Single Market remains the cornerstone of the EU economy.
Any disruptions to the free movement of people, goods, services
and capital imposed due to COVID-19 must be lifted as soon as
possible without endangering the health of our citizens.
A new regulation is in the final stages of adoption on export
authorisation schemes. It will be limited to protective masks,
mouth-nose-protection equipment and protective garments and
for a period of 30 days (as of 26 April 2020) (TBC, after adoption in
the week 20 – 24th April 2020). The schemes now meet the test of
being targeted, proportionate, transparent and time-limited.
We have also taken measures to temporarily suspend EU import
duties on COVID-19 related products.
Fiscal support and recovery plan
The Commission is mobilising the EU budget to help citizens and
businesses survive this crisis. Measures include support for job
retention with funding to Member States of up to €100 billion,
liquidity or public investment.
We are applying maximum flexibility to EU budgetary rules and
State aid conditions. We support measures taken by Member
States such as generous fiscal stimuli and guarantee schemes for
companies and funds to ensure production and supply of medical
devices and masks.
We have mobilised up to €140 million to develop vaccines, new
treatments, diagnostic tests and medical systems to prevent the
spread of the coronavirus and save lives.
Also in its global response to the crisis, the EU will team up with
partners around the globe to hold a pledging moment, with the
aim of reaching €7.5 billion of funding.
The re-start of the economic activity should be phased in. During
the exit phase, we will create a rapid alert function to identify
supply and value chain disruptions, relying on various sources
including from businesses.
Recovery is key. The new Industrial Strategy will be highly relevant
in guiding the EU policy response to the crisis and relaunching the
economy.
For the longer term, we will reinforce our strategic approach to
industrial ecosystems to increase their ability to become greener
and more digitals.
Platforms
I call to join forces to create fair market places for consumers, and
a functioning supply chain. We have to cooperate further to make
sure that we do not create any obstacles for SMEs to develop their
business online.
Artificial Intelligence
• The Commission is taking a risk-based approach to AI, i.e. we
would only regulate high-risk AI systems. For all other AI systems,
a voluntary label could be considered. The goal is to intervene only
where this is strictly needed and in a way that minimises the
burden for the economic operators.
• We will work with like-minded partners to promote its values
across the world. We welcome feedback from public and private
organisations on the ideas presented in the White Paper.
Defence
The European Defence Fund is expected to boost the EU’s ability
to take better care of its own security and thus contribute to
improve transatlantic burden-sharing.
The Commission is in regular contact with the US authorities to
explain and clarify the rules applicable to the participation of third
country entities. We are ready to continue this dialogue as long as
necessary, in full transparency towards the Member States.
Questions to the interlocutors:
1. How are your firms in the EU dealing with the crisis? What are the key
problems you face now?
2. You are all multinational corporations; based on your global experience
could you tell me about best practice solutions in other countries that could
be implemented in the EU to help business?
3. What are your companies focus and priorities? What role do you see your
firms play in the recovery efforts? In what ways do you think your firms
could help EU citizens in fighting this crisis?
Defensives
The EU’s regulatory certification procedures is seen by many as a major
bottleneck limiting the possible supplies of protective equipment from third
countries. What actions are taken by the Commission to address this?
Protective equipment is of course subject to strict certification procedures. But
protective equipment also needs to quickly reach those who need it most. This
is why, the Commission adopted on 13 March a recommendation to
streamline the certification procedures and in exceptional circumstances even
setting them aside completely. Also, the Commission is providing guidance to
the economic operators on the conformity assessment procedures via various
channels, including by publishing a dedicated Q&A document on 30 March
2020.
Implementing Regulation 2020/402, which introduced an EU-wide export
authorisation regime for PPE. We understand that the Commission now
intends to prolong this regime. How will you address the industry’s concerns?
Allow me again to make clear that this export authorisation regime is
temporary. Its adoption, combined with other measures taken by the
Commission, allowed the lifting of national export restrictions which emerged
within the EU in early March.
A new regulation is up for adoption. This measure will again be temporary and
will apply for 30 days. The Commission is proposing to limit the product scope
to cover only face masks, mouth-nose-protection equipment and protective
garments used in the COVID context. Products such as gloves and coveralls are
thus no longer subject to any export authorisation
. [TBC, after adoption in the
week 20 – 24th April 2020]
What did the Commission do against the various export restrictions put in
place by Member States?
I have had bilateral contacts with national governments and persuaded many
of them to lift their export restrictions or to replace them with a more lenient
system that takes into account shortages on their national markets.
The US is expressing worries that the conditions for third country entities and
third country controlled entities in the EDF will de facto lead to the exclusion
of US subsidiaries in the EU and of US based entities and will limit the
chemicals (raw materials, industrial and consumer); nuclear facilities; the operation
of dams, water and wastewater treatment; emergency services; and the aviation,
security, space and defence industrial base.
welcomes the message of openness and cooperation. Initial discussions on
technological sovereignty were seen as a cause for concern, but these concerns are
now fewer, as the discussion has been understood as more about building capacity
than about closing the EU market. AmCham companies also regularly participate in
public consultations on EU policy areas.
IMF World economic output
The April IMF projections estimate a drop in EU27 GDP by -7.1% in 2020 (Euro Area -7.5%),
and return to growth in 2021 with an increase of +4.8% (Euro Area +4.7).1
EU Support measures
Transport: Guidelines on
green lanes: On 23 March 2020, the Commission issued guidelines
on 'green lanes' to Member States to ensure speedy and continuous flow of goods across
the EU and to avoid bottlenecks at key internal border crossing points.
Airlines: Airlines do not have to fly empty to keep their slots at the airports. The Commission
is inviting EU Member States to support air cargo operations in order to keep essential
transport flows moving, including medical supplies and personnel.
SMEs: The EIB Group will aim to create an additional €20 billion of investment in small and
medium-sized businesses, partly using its own capital and partly backed by the EU budget.
The Commission will make available €1 billion in an EU budget guarantee to the European
Investment Fund (EIF), so it can provide liquidity to SMEs, mobilising €8 billion in all to help
at least 100,000 companies
Fiscal stimuli by Member States: The Commission has adopted temporary state aid rules so
governments can provide liquidity to the economy to support citizens and companies, in
particular SMEs, and save jobs in the EU. Flexibility of the European fiscal framework: The
European Commission has triggered the 'escape clause' to allow exceptional fiscal support.
This will allow applying the maximum flexibility to our budgetary rules to help national
governments financially support healthcare systems and businesses, and to keep people in
employment during the crisis.
Emergency measures
The COVID-19 pandemic raised liquidity concerns for businesses across industries,
threatening their immediate and long-term health.
To bring immediate relief to hard-hit SMEs, the Commission has redirected €1 billion from
the EU budget to incentivise banks to provide working capital loans to companies. To
reach this €1 billion, the existing loan guarantees under COSME – the EU programme for
SMEs Competitiveness – is boosted with additional €714 million from the European Fund
for Strategic Investments (EFSI). Additionally, the InnovFin SME Guarantee providing
1 https://www.imf.org/en/Publications/WEO/Issues/2020/04/14/weo-april-2020
finance for innovative companies under Horizon 2020 is reinforced with €300 million
from EFSI.
On the 6th of April our implementing partner, the European Investment Fund (EIF)
published a revised call for the expression of interest for financial intermediaries
interested to participate in the scheme. SMEs will be able to apply directly to their local
participating bank.
On 16th April, the EIB Group proposed the creation of a €25 billion COVID-19 guarantee
fund, to be backed by the Member States. Provided that Member States agree, the fund
will enable to scale up support for European companies up to €200 billion – with a focus
on SME - with a broad mix of products (debt, equity, securitisation) to make sure that it
responds to market needs and requirements to respond to the crisis.
The Commission also continues to support European start-ups and scale-ups that may
struggle more than ever to raise financing they need to grow. A newly launched
instrument ESCALAR will provide up to €300 million, aiming to increase the investment
capacity of venture capital and private equity funds and triggering investments of up to
€1.2 billion.
Burden reduction
One-in, one-out is a principle to reduce burdens when new legislation is proposed. This
means concretely: “Every legislative proposal creating new burdens should relieve people
and businesses of an equivalent existing burden at EU level in the same policy area”.
While the Commission must have the leeway to act where it is needed, the rigorous
application of the “one-in, one-out” principle will provide further incentives to ensure
that new regulations do not impose any unnecessary recurrent burdens on businesses
and citizens. The enhanced quantification of costs is a key element to support burden
reduction and the implementation of this principle.
US economic measures in response to Covid-19
The Senate approved on 25 March a $2 trillion + rescue plan (roughly 10% of US GDP) to
respond to the economic and health crisis caused by the coronavirus pandemic.
The main elements of the package are as following:
About $500 billion for loans, loan guarantees or other aid to larger corporations, states
and municipalities—including the possibility that the government will take direct equity
stakes in distressed companies. The programme comprises the following lines:
o $17 billion in loans for companies deemed critical to national security, which is
intended to assist Boeing Co. though the legislation doesn’t mention the
company by name.
o $25 billion for airlines (including $3 billion to airline contractors providing ground
staff such as caterers), while cargo haulers would see $4 billion in grants.
o The remaining $454 billion would go to backstop losses in lending facilities
established or expanded by the Federal Reserve. This will empower the U.S.
Federal Reserve to extend direct loans and buy municipal and corporate bonds
(on the primary and secondary market) for up to $4 trillion.
$350 billion for loan guarantees to small and medium businesses with less than 500
employees (That fund has already been exhausted this week). The programme would be
implemented by the small business administration. Up to $10 million for each loan spent
on payroll, rent or utilities will be converted into grants, conditional on business not
firing workers.
$221 billion in a variety of tax benefits for businesses, including allowing businesses to
defer payroll taxes, which finance Medicare and Social Security, for the rest of the year.
It would also temporarily allow businesses to claim deductions using today’s losses
against past profits to claim quick refunds for cash infusions.
$300 billion in direct payments to low and middle income households
$250 billion for increasing and extending the unemployment benefits: $600 per week
would be added to normal state benefits for up to four months with an extra 13 weeks of
benefits — adding up to 39 weeks of regular unemployment insurance "through the end
of 2020." The deal extends to gig economy workers.
$150 billion in direct aid to states, distributed according to population size. A
municipality could apply to receive aid directly, reducing the amount available to the rest
of the state.
$340 billion in supplemental federal spending, which includes $117 billion for hospitals
and veterans’ care. It also includes $25 billion mostly for public transit to make up for
revenue lost because of dwindling ridership.
On Tuesday 21 April the White House and congressional leaders have reached a deal on a
$484bn stimulus package that $320 billion to replenish the Paycheck Protection Program
(PPP). In total the PPP totals now $669 billion, to provide interest free bridge loans to small
businesses.
The bill adds $60 billion to the Small Business Administration's disaster relief fund - $50
billion in loans and $10 billion in grants. The aid for small businesses is thus $729 billion so
far.
The Paycheck Protection Program is very much criticized. For the first $349 billion depleted
by 14 April, loans of less than $150,000 represented 74% of the volume but 45% of the value
has gone to loans above $1 million.
Source: EU Delegation to Washington D.C.
On the measures adopted by the Commission to tackle the shortage of PPE
On 13 March 2020, the Commission issued Recommendation (EU) 2020/403 on the
conformity assessment and market surveillance procedures to facilitate the rapid uptake of
new products on the EU market without compromising on health and safety standards. The
Recommendation provides for the possibility in some exceptional scenarios to place non-CE
marked equipment on the market if the conformity assessment procedures are being
finalized or have not been initiated. If no conformity assessment procedures have been
initiated, the non-CE marked equipment may only be made available to healthcare staff only
after it has been assessed by the relevant market surveillance authority of the importing
Member State.
In order to facilitate ‘alternative’ production of PPE, like masks, gloves and surgical gowns,
upon request of the Commission, on 20 March 2020 the European Standardisation
Organisations CEN and the CENELEC have made, via their national member standardisation
organisations, all the relevant European harmonised standards freely and fully available for
all interested companies.
On 30 March 2020, the Commission published a series of guidance documents to assist
manufacturers in launching new or ramping up existing production of essential medical
equipment and material in three areas: the production of masks and other personal
protective equipment (PPE), leave-on hand cleaners and hand disinfectants and 3D printing
in the context of the coronavirus outbreak. These documents also aim to assist economic
operators in making sure that these products comply with necessary safety standards and
are effective.
On 15 March 2020, the Commission adopted the export authorisation scheme to preserve
the integrity of the Single Market and more broadly of production and distribution value
chains, to ensure the necessary supplies to our health systems. An amendment of the export
authorisation scheme was adopted on 20 March, alongside dedicated guidelines for the
application of the said scheme. This export authorisation scheme is applicable for a limited
duration (six weeks after its publication, i.e. 26 April 2020). On 14 April 2020, the European
Commission started consultations with EU Member States on a draft regulation to adjust this
export authorisation scheme. The new regulation is set out to apply for a limited period of
30 days (as of 26 April 2020), and it covers protective masks, mouth-nose-protection
equipment and protective garments. [TBC, after adoption in the week 20 – 24th April 2020]
Platforms
As Member States (MS) are taking strict measures to prevent spreading of COVID-19, some
sectors of the economy are hit more significantly than the others, digital economy including.
As regards SMEs, although the current crisis helped some sectors to literally outperform,
others struggle, mostly e-retail, mobility, travel, advertising, and some others are having high
potential to be crucially affected as well (app developers,…). Initial data projects that in
some countries, almost 40% of start-ups will have to reduce their employees and almost 50%
will run out of money in three months2.
Large companies should not accept measures that will crucially affect their business users, as
this will have an impact on all the economy in the very end. These actions are having
negative impact on smaller businesses, whose operation might be significantly
disadvantaged and lead even to a bankrupt, and should be raised during the call that is
prepared for 28 April with leading EU and non-EU platforms. Therefore, the Commission and
the AmCham members should jointly seek its members to commit themselves to help their
business users/SMEs survive and do their best as regards striking a fair approach towards
their business users and initiate concrete actions to help them.
Proposal for a SME Digital Business Continuity Vouchers Scheme to encourage digital
solutions to all sectors including tourism during the crisis
DG CONNECT proposes the setting up of a regional digital business voucher scheme. With
2 Impact of the Corona crisis on startups & tech. Dealroom, 24 March 2020.
this scheme SMEs can apply for a voucher to implement a concrete plan to use digital
services in order to support continuity or adaptation of their business model. The submitted
plan should include the estimated cost of the services chosen and may refer to a list of
digital service providers.
5G and cybersecurity
Stress the importance of maintaining the momentum on implementing the 5G toolbox as an
EU coordinated approach. Through the toolbox, Member States are committing to move
forward in a joint manner based on an objective assessment of identified risks and of
corresponding mitigating measures.
These measures will apply to everybody, without targeting any actor or country. Everyone
who complies with our rules can access the EU market. EU Member States will decide on
whether or not to exclude companies for national security reasons.
COM will support the implementation of toolbox measures and will act using all its
instruments, to the extent necessary to address the identified security considerations
(cybersecurity cooperation, Telecoms Code, standardisation, certification, FDI screening,
trade defence instruments, competition rules, EU funding, public procurement rules,
industrial development and deployment). ENISA continues to play a highly welcome and
central role in the implementation of the Toolbox.
Immediate next steps remain on track: Member States to take concrete, measurable steps to
implement key measures by 30 April 2020. By 30 June 2020, Member States should prepare
a report on the implementation of key measures.
By 1 October 2020, Member States – in
cooperation with COM – should assess the effects of the Recommendation in order to
determine whether there is a need for further action. This assessment should take into
account the outcome of the coordinated European risk assessment and of the effectiveness
of the measures.
Mobilisation of aerospace/defence industry in support of the Coronavirus crisis
management
At services level, Copernicus is a valuable tool to quantify the industrial and environmental
impacts of the lockdown, particularly because data is available for over 20 years and to
support the management of the unfolding crisis. The imagery provided by Copernicus
satellites was used to better understand the impact on traffic at borders between EU
Member States and to measure how the levels of air pollution or (coastal) water quality
above or around global cities and industrial areas significantly dropped as lockdown
measures took effect. In addition, Copernicus may offer to epidemiologists air quality and
climate data, allowing them to investigate the repercussions of the air quality on the spread
of the Coronavirus.
Galileo provide precise geolocation services to map contagion areas, manage the flux of
people to shops in quarantined areas, warn about restricted/quarantined areas, alert
authorities in case of major gatherings, while fully preserving personal data privacy.
Currently the European Union GNSS Agency (GSA), with the Commission’s support, is putting
in place a new Galileo-enabled application “Galileo for Green Lane”. The App will allow
border control authorities and truck drivers to visualise in real-time the overall border
situation.
Executive Council membership list
3M
Europe/Middle East and Africa
AES
AES EMEA and CIS
BOEING
, Boeing Europe and
, Boeing UK
and Ireland
CISCO SYSTEMS
, EMEAR Region
DELL TECHNOLOGIES
International Markets
(Chair of the Executive
Council) DOW CHEMICAL
Dow Coatings EMEAI President and
, Dow Benelux
ECOLAB
Ecolab Europe
EY
EMEIA
GILEAD SCIENCES
Commercial Operations, EMEA
GOODYEAR
EMEA
(Vice-Chair of the Executive Council)
HOWMET
AEROSPACE
HEWLETT PACKARD
ENTERPRISE
HP INC
INTEL
Intel Ireland
(Vice-Chair of the Executive Council) MARS
, Mars Petcare Europe
METLIFE
MetLife Europe
SAS INSTITUTE
, South West Europe
STEELCASE
EMEA,
(Vice-Chair of the Executive
Council) RAYTHEON TECHNOLOGIES
UPS
Ex Officio Members 3M
(Chairman, AmCham EU)
AMCHAM EU