Thursday

28th Mar 2024

Softened EU services bill proves flexible to interpretation

  • Advocates of the services directive claim it will remove national restrictions and red tape in the services sector (Photo: www.freeimages.co.uk)

Most key players sighed with relief as the controversial EU services law got the go-ahead in the European Parliament, in a first reading vote on Thursday (16 February).

But critics argue the slimmed down version of the bill will allow member states to keep the current status quo and avoid liberalisation of the sector.

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The initial directive proposed by the European Commission in 2004 aimed at removing national barriers to cross-border services by allowing firms to offer their services accross the EU according to rules valid in their home country.

However, this so called "country of origin" principle has been dropped from the original proposal, and replaced by a formulation stating that member states must allow foreign companies in, but they can keep "necessary" restrictions as part of their public policy.

Right after Thursday's vote, different interpretations of those restrictions emerged from prominent parliamentary speakers on the issue.

German socialist rapporteur Evelyne Gebhardt argued the new version basically means that foreign firms would still need to follow "destination country" laws when offering their services across borders.

But the UK conservative MEP Malcolm Harbour countered her statement by saying the country of origin principle is alive and kicking.

"The Compromise package on Freedom to Provide Services ensures that businesses have the rights to trade cross border. The country of origin principle is part of the European Treaties - it still continues to apply."

Too much flexibility leads to EU Court

Meanwhile, business leaders argue the vague formulation of the directive makes it possible for member states to avoid a real liberalisation if they wish to do so.

"It will be again up to the European Court of Justice to rule in cases where the law is too broad, so overall, the adopted draft does not add up too much to the current status quo," said Carlos Almaraz from UNICE, the Brussels-based industry group.

Business groups also lament the extensive list of exemptions from the scope of the directive, pointing out that several commercial activities - such as private social and health care, security services or temporary work agencies would not benefit from the open market.

European trade unions (ETUC), on the other hand, welcomed the parliament vote's result.

"This vote shows clearly that MEPs have succeeded in finding a compromise that allows for the opening up of the services market, while at the same time safeguarding the European social model," said ETUC secretary general John Monks.

But some unionists still protest against the retaining of education and cultural services within the scope of the services law, even those provided on a commercial basis.

All eyes on the Commission

The European Commission is expected to unveil its revised version of the services law by the end of April.

Brussels has promised to base its new evaluation on the amendments widely supported by the MEPs, on which member states will then give their view.

According to one diplomat, the Strasbourg vote has shown "it is probably not worth for those member states that wanted to push for a more radical liberalisation to do so, as they would be outvoted again in the chamber."

Similar scepticism came from a number of centre-right MEPs form central and eastern Europe who failed to convince their colleagues from "old" member states against the compromise solution with the socialists.

"It is regrettable that many in the European Union seem only to be advocates of competition in words, but not in deeds," they stated in a joint statement.

"It remains our clear opinion that the services market of the EU must be opened up to competition if we are serious about achieving the Lisbon goals, boost the growth of our economies and create jobs."

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