Tough ride ahead for services directive

By Véronique Vallières

Date: 10/11/04

THE draft law from the European Commission to create a true internal market in services is one of the most controversial pieces of legislation currently before the European Parliament.

Tomorrow (11 November) a parliamentary hearing in Brussels will give a platform to some of the various interest groups that have been riled by the Commission's proposal.

The Commission argued when it launched its draft law back in January that a cross-sectoral approach was justified because many of the barriers to an internal market were common to various activities and that a sector-by-sector approach to legislation would be too burdensome and time-consuming.

The Commission pointed out that the services affected by the proposal accounted for half of all economic activity in the EU, arguing that it could provide a significant boost to economic growth.

What follows from the Commission's arguments is that the services directive proposal is so wide-ranging that it can disturb many interest groups and provoke many opponents to band together.

Anne van Lancker, a Flemish socialist MEP, who will be drafting the conclusions from the hearing, said: "It is a difficult piece of legislation. The health sector is very worried as is the building sector. The scope of the directive is very scary for some sectors."

"There have to be major changes to the directive if the Commission wants to take into consideration what has been said in Parliament so far," she added.

The construction industry was one of the earliest to agitate against the 'Bolkestein directive', as it was known in the run-up to the summer's regional and European elections in Belgium.

In a speech to Flemish employers this autumn, Frits Bolkestein, European Commissioner for the internal market, accused the Belgian socialist leader Elio di Rupo of stoking up fears about the services directive so as to undermine liberal opponents. (Bolkestein is a liberal.)

The European Construction Industry Federation (FIEC) agrees with the directive in general, but condemns the "incompatibility" and "counterproductivity" of certain articles of the proposal.

FIEC is also opposed to the widely contested country of origin principle, according to which a service provider is subject to the law of the country in which it is established. FIEC said the principle would favour "unfair competition, social dumping and undeclared labour".

According to the European Broadcasting Union (EBU), the directive could threaten cultural diversity in Europe and should therefore not apply to the audiovisual sector.

And the British Medical Association warns that the directive would pose a "serious threat" to patient safeguards and health standards if national health services were deregulated.

The Commission counters that, on healthcare services, the directive is only codifying the state of EU law as interpreted by the European Court of Justice. On the construction industry, it says that the posting of workers rules apply. On broadcasting, it says that the sector is covered by the Television Without Frontiers directive so that the proposed services directive does not apply.

The Commission's internal market spokesman, Jonathan Todd, said that such concerns were "entirely nonsensical".

But privately, Commission officials concede that the proposal might have been more carefully drafted.

After complaints that criticised the ambiguity of the directive text, the Commission has issued an array of clarifications and explanatory notes, in an attempt to calm things down.

FIEC's President Wilhelm Küchler said: "The Commission should amend its text or exempt the construction sector from certain articles."

Briquemont said that if EBU's qualified jurists had misunderstood the text, it was too complex and "the Commission should rewrite it".

Author says that the draft law from the European Commission to create a true internal market in services is one of the most controversial pieces of legislation before the European Parliament. It is facing severe criticism from various interest groups.