Warsaw, 24 June 2022 

 

A ZPP commentary: The European taxonomy is staring into an abyss. It’s own power generation sources based on atom and gas are today as important for Europe as before the war, if not more important

 

In February this year, the European Commission announced that projects based on natural gas and nuclear energy could be considered compatible with the EU’s climate and environmental objectives once the relevant criteria are met. This compromise was intended to support the acceleration of Europe’s departure from electricity produced from coal. On 14 June, the European parliament’s combined committees – Committee on the Environment, Public Health and Food Safety (ENVI) and Committee on Industry, Research and Energy (ITRE) – raised objections to the treatment of these two fuels as sustainable within the framework of taxonomy of green finances. In the first week of July, the EP will resolve this issue, thereby prejudging the direction of the development of energy mix in Europe.

The objective of the EU taxonomy, and in fact the objective of the sustainability systematics, is primarily to support the cash flow toward sustainable activities. Without investors directing their capital toward greener technologies and business transformation, achieving climate neutrality by 2050 would become an unrealistic commitment. The EU sustainability systematics offers a uniform interpretation on the basis of which entrepreneurs can invest in projects and economic activities that generate positive impact on the climate and the environment. Taxonomy also imposes additional disclosure obligations on financial market participants in order to make it easier to assess projects against the criteria set.

While climate objectives are considered common to the EU as a whole, the energy mix of individual countries varies, and its shape can be decided by the Member States individually. The huge differences in the start point in terms of energy sources between countries have led to a compromise whereby gas and atom were to be used as transitional and stabilizing fuels for electrical power systems. In the opinion of the Union of Entrepreneurs and Employers (ZPP), this provision was a widely-expected and fair approach, giving the opportunity for countries with a carbon mix to lay a reasonable path to becoming decarbonized.

Moreover, as the European Commission has underlined in the justifications to the complementary delegated act on climate change systematics, including atom and gas in sources covered by EU support. Achieving climate neutrality by 2050 will require a large number of private investments. The EU sustainable systematics aims to target private investment toward the actions that are necessary to achieve climate neutrality. Taking into account scientific opinions and current technological developments, the Commission believes that private investment in natural gas and nuclear activities plays an important role. The delegated act supports the European economy in a fair energy transition. Strengthening private investment in transformation is key to meeting our energy targets. – claimed EC.

Projects in the nuclear field, which have been mentioned by the EU taxonomy, are:

• pre-commercial stages of advanced nuclear power generation technologies with minimum fuel cycle waste;
• the construction and safe operation of new nuclear power plants for the generation of electricity and/or heat, including for the production of hydrogen, using the best available technologies;
• production of nuclear electricity from an existing installation.

The eligibility of the identified activities as sustainable was subject to obtain a building permit by 2045. Investments should also meet the requirements of nuclear and environmental safety and, since 2025, accident-proof fuel is to be used in nuclear installations. The investor must also demonstrate that the nuclear waste will be disposed of without damaging the environment.

For gas projects, the document lists:

• the production of electricity from fossil gas fuels;
• high efficiency cogeneration of heat/cooling and fossil gas fuels;
• production of heat/cooling from fossil gas fuels in an efficient heating and cooling system.

In order to qualify as a climate change mitigation activity, the European Commission has indicated that the life cycle emission threshold should be below 100gCO2e/kWh and for installations for which construction permits were issued before 2030 – below 170gCO2e/kWh. Installations should also be designed and constructed in such a way as to use renewable and/or low-carbon gas fuels. The transition to full use of renewable and/or low-carbon gas fuels was expected to take place by 31 December 2035, so natural gas was to be considered as a bridge/transition fuel.

It was assumed that gas projects would be funded by the EU by 2030 and nuclear projects by 2045, with EU-supported gas installations having been able to use over time “green” hydrogen, produced with the support of renewable energy sources, thus gas fuel was clearly supported in this case on a conditional basis. Among the EU countries that opposed to such taxonomy, there were countries such as Germany, Austria, Luxembourg and Denmark; in turn France, Poland, the Czech Republic, Slovakia, Slovenia, Romania, Finland and Hungary have strongly supported this shape of the EU taxonomy. The dispute was also of a financial (apart from ideology) dimension, as it concerned about EUR 17.5 billion from EU funding programs that could have been acquired or lost by nuclear and gas projects.

Since the new taxonomic wording was to enter into force from 1 January 2023, a large proportion of private investors, whose involvement is important for the EU legislator in this case, have already been able to include gas and atom projects in investment strategies. It should be suspected that part of the investment decisions and actions have already been taken due to the severe time pressure from climate objectives. Infrastructural investments in energy are not only capital intensive but also spread over the years. They require a number of administrative permits, but also often partnership or consortia agreements. This kind of preparation in many companies started already in February this year and gained momentum in the face of Russia’s invasion of Ukraine, for the obvious need to become independent of Russian hydrocarbons as soon as possible.

It is therefore totally incomprehensible that the position of the ENVI and ITRE committees may block a significant number of private investment streams that have already been allocated. It is true that the direction indicated by the two parliamentary committees will be decided in the next weeks in the EU. The EU co-legislators, namely the European Parliament and the Council, had 4 months to examine the document and express their objection. In order for this objection to be binding, the Council would have to obtain a negation of the act by an enhanced qualified majority, which means that at least 72% of the Member States – at least 20 Member States – representing at least 65% of the EU population would have to object to the delegated act. In turn, the European Parliament may object, if a majority (i.e. 353) of Members vote against it in a plenary meeting. The vote on the leaving of gas and atom in the EU taxonomy is scheduled between 4 and 9 July.

Russian policy has forced Europe to redefine both energy security and the current needs for green transformation. Following the rather demanding Fit for 55 package, the REPowerEU program is presented, which envisages an even more intensive investment in RES development, energy efficiency improvements and the reduction of consumption of fossil fuels or energy in general. In the case of gas, there is already a clear decline in the consumption of this fuel in industry. Although this is primarily due to the high prices of this fuel which have been in existence since 2021, the war in Ukraine and Russia’s reduction in gas supply to the European market have exacerbated this. The side effect is, however, that the prospect of carbon leakage has extended considerably and the current demand for this raw material is breaking records, as a result of the huge number of carbon blocks that work in recent months in Europe. This phenomenon is very apparent among others in Germany, which is the most blatantly defending climate objectives and which also have nuclear power, and yet still trigger more coal blocks in recent times.

The EU taxonomy was to promote activities for which there are no yet alternative low-carbon solutions that are technologically and economically feasible, but support the transition to a climate-neutral economy or contribute to climate change mitigation. In this sense, these projects were to be considered compatible with EU objectives and indirectly supporting the implementation of low-carbon solutions.

In the opinion of the Union of Entrepreneurs and Employers, the rejection by the European Parliament of the sustainability systematics adopted by the European Commission on 2 February will have a negative impact on many energy transformation processes. Many investments in infrastructure that was intended to bridge the path to climate neutrality will be hampered and, in the absence of sufficient capacity, the least efficient carbon blocks will be integrated into the system. While we see a clear need to review and maintain European coal assets as long as it is necessary to guarantee energy and heat to EU citizens, such a role for conventional energy should only be stabilizing and, where we have the possibility to replace the exploited and inefficient installations with new powers that are slightly more sustainable, it is the direction where community or state resources should be channeled.

Private investors need a transparent policy in this respect. They cannot learn every few months about such important changes in EU priorities, such as the inclusion or exclusion of gas and atom from taxonomy. This leads to far-reaching confusion and increases the assessment of the risk of investments that may not be made as a result. As a result of this situation, already today, the demanding climate targets will become completely unrealistic and are only present on the paper of EU declarations; such a situation will in turn undermine the authority of the analyzes and findings at European level. This is a highly dangerous direction for the unity of Europe which, in the present geopolitical situation, needs mutual understanding, operational efficiency and good cooperation between administrations and the home business.

 

See more: 24.06.2022 A ZPP commentary: The european taxonomy is starting into an abyss. It’s own power generation sources based on atom ans gas are today as important for Eyropean as before the war, if not more important

 

Warsaw, 16 May 2022 

 

The minimum CIT must either be radically simplified or abandoned – commentary of the Union of Entrepreneurs and Employers

 

The process of ‘fixing’ the Polish Deal has been underway for several weeks. In recent weeks, we have been discussing the proposals for PIT changes put forward by the Ministry of Finance but we already know that in the near future we can expect a draft of amendments to CIT. Out of those, the topic of the so-called minimum CIT is particularly controversial. In our view, the situation is very simple – this solution should either be radically simplified or abandoned altogether.

The Union of Entrepreneurs and Employers has been promoting the idea of abolishing CIT and replacing it with a simple revenue tax for years. We are unable to understand why we insist on keeping a system whereby the tax may simply not be paid, as exemplified by certain multinational corporations that successively pay CIT at an absolutely marginal rate. In the course of the discussion on the Polish Deal, in response to the plan for total financing of this reform by increasing the burden on Polish business and the middle class, we have proposed a solution consisting in the introduction of a uniform, universal minimum CIT of 1% of revenue. The Ministry of Finance has decided to take inspiration from our idea and include it in the forthcoming draft, yet in a completely altered version, completely incompatible with the original concept. 

Our idea for a revenue tax – regardless of whether it would replace CIT (in the ideal scenario) or whether it would provide a systemic guarantee that the corporate tax will be paid to the budget at a fair rate –is extremely simple. We are in favour of a universal mechanism covering all taxpayers, with no exclusions or exemptions. Similarly, the very method of calculating the amount of tax should be maximally simplified – 1% of revenue, without reliefs or any separate, special accounting methods.

Meanwhile, the Ministry has proposed a very complex minimum tax design under which the tax base is the sum of a part (4%) of revenue other than revenue from capital gains and, inter alia, debt financing costs incurred on behalf of affiliates exceeding 30% of EBIDT. The subjective scope of the minimum CIT means that it is not a universal tax and, in addition, the legislator has included the possibility of applying reliefs and deductions that reduce the tax base, which has further increased the complexity of the provisions in question.

Moreover, the tax calculation mechanism thus constructed generates a number of initially unintended consequences – as is usually the case with such complex solutions. We drew attention to this during the legislative process – complicating the regulations on minimum CIT will reduce their effectiveness and, even worse, contribute to a deterioration in the competitive position of entities that will be effectively covered by the solution. The market signals that reach both us and the Ministry of Finance clearly indicate that these concerns are now materialising and there is a serious risk that the minimum CIT in the current form will hit Polish business, not being an effective tool against aggressive optimisation.

The idea behind the proposal to introduce a minimum CIT was to take effective action against international tax optimisation schemes which thus far allow some companies to pay marginal CIT in Poland. The solution adopted by the Ministry of Finance had no chance of achieving this objective. In view of the above, we see two possible ways out of the situation. The first is to radically simplify the design of the minimum CIT so that it becomes a universally binding mechanism whereby CIT paid in a given year cannot be lower than 1% of revenue achieved. The second is to abandon it altogether – introducing small adjustments and corrections is the easiest way to add to the chaos.

 

See: 16.05.2022 The minimum CIT must either be radically simplified or abandoned – commentary of the Union of Entrepreneurs and Employers

Warsaw, 10 May 2022 

 

Commentary of the Union of Entrepreneurs and Employers (ZPP) on the proposal for establishing minimum gas storage obligations

 

EU leaders met at an informal meeting of heads of state and government in Versailles on 10 – 11 March 2022. The main reason was the response to the Russian invasion of Ukraine. The leaders adopted the Versailles Declaration which sets out a joint EU action plan for bolstering defence capabilities, reducing energy dependencies; building a more robust economic base and supporting investments. As a result of the above, on 22 March 2022, the European Commission proposed a regulation to establish minimum gas storage obligations (Gas Storage Regulation). On 23 March 2022, the Committee for Industry, Research and Energy (ITRE Committee) of the European Parliament adopted the above-mentioned regulation and called for the application of the urgent procedure to the project, which will be voted on in a plenary session from 4 – 7 April 2022. The rapporteur of the draft regulation in the European Parliament is Professor Jerzy Buzek. The appointed rapporteurs in the European Economic and Social Committee were Marcin Nowacki, Vice-President of ZPP, and Mateusz Szymański from the “Solidarity” trade union.

Under the new rules, EU Member States will have to ensure that their gas storage facilities will be filled to a minimum of 90 per cent by the first day of November each year. The exception would be 2022, when the target would be 80 per cent. In addition, the intermediate targets would guarentee that the tanks are filled all year round. Another provision is the mandatory certification of storage system operators to reduce the risks arising from the influence on critical infrastructure. The third arrangement is an incentive for further use of storage capacity and possible exemptions from transmission tariffs at entry or exit points of storage facilities.

The Union of Entrepreneurs and Employers supports the proposal for the regulation as a tool which can really contribute to the increased energy security of the EU. We particularly commend the fast reaction rate and work progress of the EU institutions. At the same time, ZPP calls for the following points to be added to the draft regulation.

Firstly, in our view, it is necessary to introduce a short-term investment vehicle in order to develop a hydrogen-ready infrastructure. The success of the common gas storage policy depends largely on the ability to transport gas efficiently. Therefore, in order to increase Europe’s energy security in the long term, investments in infrastructure are necessary, including infrastructure suitable for hydrogen transmission, and especially interconnectors and storage facilities. This postulate is particularly important given that the recently completed revision of the TEN-E Regulation ended the possibility of supporting investments in gas infrastructure.

Infrastructure investments will enhance EU energy security in the long term but due to the long implementation period, they will not solve the problems caused by Russian aggression right here and right now. Therefore, in the short term, the EU should consider cooperating with non-EU countries bordering the EU on the use of existing gas storage facilities. In our opinion, cooperation with non-EU countries, in particular Ukraine, can quickly lead to adequate gas storage filling levels and should therefore be given high priority.

Next, ZPP calls for the expansion of the burden-sharing mechanism proposed by the Commission and for the supplementation of the Regulation with plans for the individual Member States, which would take account of the size of storage facilities, consumption in a given country and the warehouse’s capacity to serve other countries in the region, so as to avoid unbalanced sharing of burdens, risks and costs. We fear that a lack of proper coordination could lead to high gas price fluctuations in some Member States.

ZPP supports the introduction of mandatory certification of storage system operators. Despite the short deadlines provided for in the Regulation and because of the possibility of appealing against an administrative decision, it will take several years to issue a final decision revoking the licences of storage facility operators. Therefore, we note that the mandatory certification of storage system operators is a measure which will improve EU energy security in the long term, and not in the short term. In light of the above, we consider it necessary to adopt an early implementation mechanism which will allow national regulatory authorities to start their preparatory work on the mandatory certification process as soon as possible. At the same time, we call on the EC to quickly issue guidelines that will ensure uniform implementation of the provisions of the Regulation by all Member States.

See: 10.05.2022 Commentary of the Union of Entrepreneurs and Employers (ZPP) on the proposal for establishing minimum gas storage obligations

Warsaw, 15 April 2022

 

Commentary of the Union of Entrepreneurs and Employers (ZPP) on the progress of work
on the Digital Services Act

 

Digital Services Act (DSA) will soon amend the E-Commerce Directive that has been in place for more than 20 years. Work on the new regulation has been ongoing continuously since late 2020. The trilogue – a trilateral negotiation between key EU institutions – is expected to conclude early this month. However, we are now seeing the emergence of numerous proposals that were not included in the negotiators’ original mandate.

The disproportionality of the crisis response mechanism

Among the most recent proposals is the Crisis Response Mechanism (CRM), which was created to enable institutions to counter Russian disinformation attacks efficiently. We welcome that the EU institutions take decisive steps to fight against Russian propaganda. Nevertheless, we have some doubts as to whether introducing the proposed provisions in DSA at this stage of the negotiations is the best way to tackle this problem.

At the request of the French Presidency, the Commission has proposed introducing provisions that could force large technology companies to quickly adapt their platforms and increase the number of staff moderating content during major crises such as natural disasters, terrorist attacks or war. The new DSA Article 25(a) would empower the Commission to require specific actions only based on a recommendation from a Council of European National Regulators. Paris has suggested that a two-thirds majority of regulators would be needed. Technology companies’ efforts to tackle disinformation or problems related to a specific crisis would be legally limited to three months. At the same time, the Commission would have to keep its decisions transparent.

This proposal has been protested against by 24 citizens’ organisations, who point out in their open letter that the European Commission should not be empowered to declare an EU-wide state of emergency unilaterally. Furthermore, these organisations note that the CRM is far from respecting international human rights standards of legality, legitimacy, necessity and proportionality, and they call for reformulation.

Moreover, the new Article 25a of DSA is intended to empower national digital coordinators to require smaller platforms to comply with risk mitigation obligations that usually fall on very large platforms only. Such a provision appears to place a disproportionate burden on smaller platforms, whose ability to comply with the requirements mentioned above will be limited in practice, especially in the short term.

Ultimately, attempts to combat Russian disinformation may be undermined by other provisions found in DSA. Article 15(2) requires platforms to provide information on the facts and circumstances as well as the means used whenever content-related activities are undertaken. This will provide disinformation actors with full knowledge of how platforms combat disinformation and reduce the visibility of harmful content. As a result, in an effort to increase transparency, DSA will make it easier for bad actors to fool security systems and, consequently, more complex to fight disinformation. In the current situation, the EU institutions should create instruments that allow platforms to fight against disinformation actions carried out by third countries on a massive scale, rather than introducing new solutions to a horizontal regulation such as DSA at such a late stage.

Return of the ban on targeted advertising

In a plenary vote in the European Parliament, MEPs rejected a complete ban on targeted advertising. As a result, they voted to restrict the targeting of minors and targeting using sensitive data. We welcomed the EP decision. We believe it strikes the right balance between user protection and business rights. A total ban would have hit SMEs, depriving them of a cost-efficient way to reach their customers and severely limiting their growth opportunities. Therefore, we watch with concern the amendments tabled by MEPs aimed at achieving a de facto ban on targeted advertising.

Before discussing the EP’s latest proposals, it is first necessary to draw attention to the so-called ‘known minor problem’. Platforms would have to verify minors’ age to be able to restrict the use of targeted advertising. In the absence of general age verification on the Internet, platforms have to process user traffic data to determine age based on activity. Paradoxically, a ban on targeting could, in theory, lead to more tracking of children’s online activities.

To address this issue, the EP proposed an amendment to Article 24(1)(b), which states that ‘compliance with the obligation set out in the first subparagraph shall not entail the processing by online platforms of additional personal data on minors in order to verify the age of the recipient of the service’. Whilst we recognise the need to promote child safety through data minimisation, we believe that a provision worded in this way will be difficult to implement in practice and will reduce targeted advertising across all age groups. We propose that the provision be amended to prohibit excessive, rather than an additional, collection of personal data for age verification purposes.

Moreover, MEPs propose to extend the ban if the platform has doubts about whether the recipient is a minor (Article 24(1)(c)). This also means expanding the prohibition to the user when age verification is not possible. Given the current state of technology, such a provision could lead to a de facto ban on personalised advertising. This provision should be limited to cases where the platform has serious grounds, not just doubts, to believe that the recipient is a minor to avoid negotiators walking out their mandate. A provision worded in this way will simultaneously protect minors.

Extension of know-your-business-customer

As a final point, attention should be drawn to the proposal to extend the know-your-business-customer rule, which obliges Internet Service Providers (ISPs) to collect information that identifies business users in order to verify their identity. KYBC aims to improve online security by halting certain entities from using legitimate services to conduct illegal business anonymously. Assuming that the list of information required to be obtained from ISPs is proportionate and not an unreasonable administrative burden, the proposal should be viewed positively. However, during the January negotiation rounds, it was proposed to extend this principle to all types of ISPs, thus covering market places and social media, instant messaging, or streaming services.

In order to understand the implications of the KYBC extension, it is important to remember that DSA, like the E-Commerce Directive, is based on a prohibition of general internet monitoring. Such an injunction has been rejected from both the E-Commerce Directive and DSA, as it undermines fundamental values such as freedom of expression and could lead to censorship (i.e. excessive blocking or removal) of lawful content. Extending the KYBC to all intermediate service providers means extending it to all content that appears on the Internet. Therefore, it is hard to imagine in practice how the application of such a rule would take place without general monitoring of the Internet while still meeting DSA’s stringent requirements for human factors provision.

The Union of Entrepreneurs and Employers actively participated in the work on the Act and, from the very beginning, called for solutions that would not overburden digital businesses. At the end of DSA negotiations, we maintain this call and urge policymakers not to place impossible demands on digitally active companies.

 

See more: 15.04.2022 Commentary of the Union of Entrepreneurs and Employers (ZPP) on the progress of work on the Digital Services Act

Warsaw, 17 March 2022 

 

Business commentary and recommendations on the economic risks associated with the war in Ukraine

 

The Russian aggression against Ukraine and its consequences have specific economic effects also felt by Polish businesses. Considering that further developments are difficult to predict and that some difficulties are already present, the Union of Entrepreneurs and Employers (ZPP) gathered comments, risk assessments and recommendations related to the current situation from affiliated industry organisations and companies. The material, broken down by sector, is presented below and submitted for the consideration of public administration bodies in the context of potential legislative and organisational measures to be taken.

 

1. Transport

Urgent amendment of regulations governing the employment of foreigners

A significant threat to companies is the shortage of lorry drivers. Until now, Ukrainian drivers have constituted a large and growing group of drivers employed by Polish transport operators. We are already receiving indications from our transport operators that:

• drivers on leave do not return to work in Poland,
• drivers who have families in the danger zone want to return to their families,
• drivers called up for military service also return to Ukraine.

This may cause both problems with the availability of transport services and further increases in transport prices (operators are already increasing service prices due to soaring fuel prices and extended service times at petrol stations).

The introduced Act on assistance to Ukrainian citizens has made it possible to employ refugees and legalise their stay. However, problems may arise in international transport. During checks, the driver must often show a passport, which includes a visa and work permit. In the current situation, it should be possible to quickly obtain documents enabling cross-border work so that a driver employed in Poland could easily travel to other EU countries and beyond, for example, to the United Kingdom.

1. Motor vehicle rental

There is currently a large group of US citizens involved in helping refugees in our country. The military presence of our American ally in connection with the protection of NATO’s eastern borders is also increasing. In many cases, these people want to rent a car for their activities from a car rental company. Unfortunately, they usually do not have an international driving licence required in Poland for US citizens (the US driving licence is invalid). In such cases, rental companies are legally prohibited from renting cars to persons without a valid licence.

Given the above, to make it easier for United States citizens to function in Polish, it is desirable that US driving licences should be recognised in our country as a matter of urgency and treated the same as those issued in the European Union.

1. Pharmacy

• Enabling pharmacists and pharmacy technicians to access the labour market

The Act of 12 March 2022 on assistance to citizens of Ukraine in connection with armed conflict on the territory of their country has enabled doctors, dentists and nurses to access the Polish labour market. Given the current labour needs in the pharmaceutical sector, we are requesting that pharmacists and pharmacy technicians be granted a temporary licence to work on the same basis.

• Allowing mail-order sales of prescription drugs

Currently, pharmacies are only allowed to carry out mail orders and delivery of medicines, but only over-the-counter medicines and only as far as online pharmacies are concerned. The most critical prescribed (Rx) medicines must be picked up by the patient in a pharmacy. The introduction of delivery of Rx medicines and other reimbursable products (e.g. adult nappies, which are difficult to transport for the elderly) is beneficial from the point of view of patients – in particular, those who need them the most (e.g. elderly and/or disabled individuals). Importantly, pharmacy employees could monitor the correct delivery and temperature, which is important for some products.

• Amendments to the Pharmaceutical Law regarding advertising of pharmacies and pharmacy outlets

The Pharmaceutical Law provisions regarding the prohibition on advertising pharmacies make it very difficult to inform patients about the services provided. Pharmacists are faced with different interpretations of the law and different interpretations by the pharmaceutical inspection authorities. These regulations have been in place for ten years without any amendments and are not adequate in the current situation in the pharmacy market and the country as a whole. New services have been introduced in selected pharmacies, including immunisations and diagnostic tests. Moreover, further services, e.g. drug review, are planned to be implemented. For example, because of the advertising ban, pharmacists are afraid to advertise that people can be vaccinated against COVID-19 in their pharmacy, assuming that the pharmaceutical inspectorate will consider this prohibited advertising. Also, in the face of the war in Ukraine and the influx of refugees crossing Poland’s eastern border, placing information in Ukrainian on a pharmacy window or providing help to the needy may be treated as an “encouragement” to visit the indicated pharmacy. As a result, its owner and manager may face the consequences imposed by the pharmaceutical inspectorate. The most problematic issue is not the law itself but its interpretation. It is necessary to rationalise and standardise the ban on advertising in pharmacies so that entrepreneurs know how to operate in the market and so that their pro-patient initiatives are not blocked. Particularly in a state of emergency, war or natural disaster, it is essential for the patient to be adequately informed about the services available in a given establishment. Currently, the patient is deprived of such information.

• Speeding up administrative procedures conducted by pharmaceutical inspectorates that prevent pharmacies from opening

More than 200 pharmacies are currently closed to patients due to suspended operations. In many cases, the prolonged suspension is due to an administrative procedure by a pharmaceutical inspectorate. As a result, the establishment cannot provide its services and stocks medicines that cannot be delivered to patients. In cases where the administrative procedure does not concern matters where the pharmacy endangers patients’ safety or health, there should be a specific time frame for a final administrative decision, which allows the opening of the pharmacy to patients. Currently, there are known cases when administrative procedures, e.g. concerning the transfer of a licence to operate a pharmacy, last even a dozen or more months, while according to the Code of Administrative Court Procedure, they should last two months at most. This results in reduced access to medicines, huge costs for businesses and losses for the State Treasury. In case of a possible crisis or armed conflict, as many establishments as possible should be put into operation. The actions of the pharmaceutical inspectorates should not hinder and cause the prolonged closure of pharmacies that can help patients.

• Developing ICT systems and official applications to confirm product availability in pharmacies

To confirm that a particular medicinal product is available in a given establishment, you need to contact the pharmacy directly – in person or by telephone or using a commercial app. Commercial applications only cover selected establishments that have chosen to make information on their stocks available on a paid basis. In recent years, the Polish pharmacy market has been facing the problem of shortages of goods and frequently selected particularly scarce products are available in only a few pharmacies. Introducing a central system indicating a pharmacy convenient to the patient where all the medicines needed are available would be extremely useful.

1. Drug manufacturing

In case of a crisis or state of emergency, to ensure continuity in the production of medicines, it is necessary to ensure:

• the possibility for workers in the domestic pharmaceutical industry to move to work;
• keeping doctors, pharmacists employed in the domestic pharmaceutical industry in their jobs, fulfilling the obligations of the applicable laws, including but not limited to the pharmaceutical law, so that they are not transferred by the government administration to other tasks;
• refraining from recruiting pharmaceutical workers in the event of military mobilisation;
• maximum security of supply chains at the domestic, EU, non-EU and continental levels;
• in the event of the reintroduction of internal borders within the European Union, the creation of the so-called “medical corridors” for the transport of medicines, active substances and materials necessary for their manufacture;
• maintaining the mobility of workers within and outside the EU;
• stopping all legislative work that would worsen the condition of the domestic pharmaceutical industry, including revisions of the Reimbursement Act, and introducing the so-called price corridors if need be;
• enabling Responsible Persons, Skilled Persons and Competent Persons to work remotely;
• actively and effectively counteracting speculation on the price of materials necessary for the manufacture of medicines by the institutions set up for this purpose;
• access for drug manufacturers to the necessary materials for the manufacture of medicines;
• simplification of procedures and electronic communication in all regulatory and administrative procedures, including the submission of all documents with a certified electronic signature;
• providing pharmaceutical companies with the opportunity to purchase currency for raw materials for production at the pre-war exchange rate, which will enable the price of medicines to be maintained at its current level;
• continuity of gas and energy supply to domestic manufacturers.

1. Waste management

In providing continuous waste collection and management services (particularly hazardous waste) for both residents and institutions, one of the key issues is securing fuel for the motor vehicles of the services involved in this activity. The massive influx of refugees to Poland also requires additional capacity in plants and waste treatment facilities. Due to delays in the processing (due to the pandemic) of the relevant applications submitted by entrepreneurs, there is a very serious risk that the operations of almost 50% of waste treatment plants and facilities in the country will be unreasonably suspended.

1. Hospitality and catering

Amendment of sanitary regulations to facilitate opening accommodation and catering facilities for refugees (hospitality and catering sector).

1. Metallurgy

Manufacture of specialised machinery and equipment – metallurgy sector

• Government-level economic meetings/missions to countries that can support steel supply (Moldova, China, India). Emergency supply agreements are needed.
• Joint action with the EU on maritime transport to identify priorities for the EU in compliance with WTO rules.

1. Research and development (R&D)

Laboratory tests (physical and chemical, microbiological tests, analyses and measurements)

Recommendations	Justification	Applicable regulations
Accreditation, permits, licences, other applicable regulations
Renewal of accreditation without periodic evaluation	Polish Centre for Accreditation (PCA) is a domestic accreditation body authorised to accredit conformity assessment bodies under applicable law. No PCA assessment is equivalent to the loss of accreditation for testing/sampling. Law regulates the areas where accredited methods are required. In case of difficulties related to the PCA operations, the legal possibility of extending the validity of licences already granted seems appropriate.	Act of 13 April 2016 on conformity assessment and market surveillance systems (consolidated text of Dz.U./Journal of Laws/ 2022, item 5)   Polish Centre for Accreditation Procedures/Policies   Act of 27 April 2001 – Environmental Law (consolidated text of Journal of Laws of 2021, item 1973).
Reducing the frequency of testing of the working environment and pollutant emissions/imissions	The frequency of testing is regulated by law; if the laboratories’ capacity to carry out tests and measurements concerning the working environment and emissions is reduced, it is reasonable to reduce their frequency temporarily.	Ø Regulation of the Minister of Climate and Environment of 7 September 2021 on the requirements for measuring emission levels (Journal of Laws of 2021, item 1710);   Ø Regulation of the Minister of Climate and Environment of 11 December 2020 on the evaluation of levels of substances in ambient air (Journal of Laws of 2020, item 2279)   Ø Regulation of the Minister of Health of 2 February 2011 on tests and measurements of health risk factors in the working environment (Journal of Laws of 2011, No. 33,  item 166).
Renewal of other permits held by economic operators (e.g. water permits), licences (e.g. ones issued by sanitary and epidemiological stations)	In case of difficulties related to public administration operations, the legal possibility of extending the validity of licences already granted seems appropriate.
Continuity of key services
Ensuring access to chemical reagents and consumables for key economic operators	Lack of access to chemical reagents and consumables will result in an inability to provide services to: Ø process line entities; Ø local government administration, the population in the area of testing water for consumption and food.
Simplification of customs procedures for the purchase of reagents and consumables outside the EU	In the case of the need to supply essential inputs from outside the European Union, it would seem advisable to simplify customs procedures or even reduce customs duties and fees.
Environmental protection
Provision of hazardous waste collection	In case of armed conflict – given the possibility that authorised entities may cease to provide services in this area – takeover of the provision of services relating to the disposal of hazardous waste, including veterinary waste, by municipalities.	Act of 14 December 2012 on Waste (consolidated text of Journal of Laws of 2021, item 779)
Energy security
Ensuring access to electricity for key economic operators	In case of armed conflict – giving priority to energy consumers who are key economic actors to maintain production continuity.
Finance and taxation
Simplification and extension of deadlines for the settlement of corporate taxes (CIT, VAT)   Extension of the reporting deadline.	In case of armed conflict, communication problems with the public administration will affect the ability to settle taxes on time.	Act of 15 February 1992 on Corporate Income Tax (consolidated text of Journal of Laws of 2021, item 1800).

 

1. Sports

• Keeping activities and procedures to a minimum;
• Systematic monitoring of the course of actions in Poland and Ukraine (support of services responsible for public security, cooperation of administration bodies, entrepreneurs, groups of companies, etc. support of security divisions);
• Efficient communication (including crisis communication), defining a list of communication priorities;
• Designation of alternative venues for major sports activities/meetings/events;
• Designation of a crisis centre coordinator and responsibilities for individual persons;
• Creation of a backup of IT resources;
• Periodic workplace safety procedure refreshers for employees, i.e. information on emergency exits, muster areas, first aid kits, etc.

1. Glassmaking, glass packaging

Risks associated with reduced gas supply to the glass packaging industry

It is necessary to ensure a continuous (uninterrupted) gas supply to the glass packaging industry. A potential interruption of supply, even a short one, can cause irreparable damage and jeopardise safety. 

1. Potential effects of a natural gas shut-off on the industry

1. Due to the very high temperatures (approx. 1500°C), the sudden interruption of the operation of glass-melting furnaces as a result of restrictions on the supply of gas poses an immediate danger to the workers’ life and health and also threatens to destroy industrial facilities used in the manufacture of glass.
2. There are over 40 large and many smaller glass-melting furnaces in operation in Poland. In the largest ones, there are approx. 400 tonnes of liquid glass.
3. Shutting off the natural gas supply to a glass-melting furnace means:
   – the solidification of liquid glass in the furnace;
    – the irreversible destruction of the entire furnace – the most important part of a glass factory that typically operates continuously for 15 to 20 years.
4. Due to the nature of the production process and the design of the furnaces required, it is impossible to empty them of liquid glass within a short period (e.g. several hours).
5. Draining glass from the furnace takes several days, preceded by many days of preparation and constructing a dedicated system.
6. Bearing in mind the potential scale of the problem (number of systems, availability of ceramic and refractory materials from which the glass-melting furnaces are built and availability of specialist companies), the time for reconstruction of the systems should be counted in years (making a very optimistic assumption that in such conditions the owners will decide to reinvest in them at all).

1. Potential economic effects

1. In case of the destruction of most Polish glassmaking facilities, these consequences would potentially affect not only around 20 glass factories but would also result in the dismissal of several thousand workers and the bankruptcy of the owners of these factories.
2. The associated damage would include months of halting or significantly reducing the production of the food and beverage industries, which are vital to the functioning of the country and life. The number of domestic customers for glass products ranges from a few dozen to more than a hundred per glass manufacturer.
3. Import substitution of domestic production of glass products destined for other industries must be considered impossible in practice.
4. The vast majority of recipients of glass products are not in a position to store glass packaging for the manufacture of their products in large quantities – greater than the stock corresponding to their production of a few days.
5. Poland is the fifth largest producer of glass in Europe. Production is carried out on a very large scale – in the case of container glass, it amounts to approx. 1.8 million tonnes per year and approx. 8.5 billion pieces of glass packaging. 
6. Polish glassworks also have a positive impact on the balance of trade. A large proportion of the glass industry’s products is sold on foreign markets.
7. The glass industry also supplies a number of key sectors for the foreign trade balance (e.g. producers of premium spirits, beer, processed foods).
8. The number of regular suppliers of raw materials, packaging, spare parts for machinery and equipment and specialised services can reach up to 50 per glassworks. Natural and chemical raw materials of domestic origin predominate among the raw materials. The stoppage of production at glassworks also means production cuts and probably a reduction in employment at these suppliers.
9. Due to the consumption of around 700,000 tonnes per year of recycled raw material (cullet) – keeping glassworks running is crucial not only for the glass recycling industry but for the entire waste management system.

 

See: 17 March 2022 Business commentary and recommendations on the economic risks associated with the war in Ukraine