Commission seeks an end to services battle

By Simon Taylor

Date: 30/03/06

The European Commission will seek a quick end to the two-year battle over the services directive when it presents a revised proposal next week (4 April) which is very close to the European Parliament's compromise agreement.

The revised proposal follows MEPs' demands to drop the controversial country-of-origin principle and to exempt from the directive certain sensitive sectors such as healthcare, social services and temporary workers' agencies. It also keeps the Parliament's list of criteria which member states can use to justify preventing certain companies entering their domestic markets.

But the Commission has rejected some of the Parliament's amendments on the grounds that they would increase the administrative burdens on companies which want to sell their services in other member states.

The Commission rejects the MEPs' demand that, when a company has to register formally in another country, it should be able to do so electronically through a single point of contact, co-ordinated by the Commission. It also rejects an MEP amendment that would grant authorisation to a company where the regulating authority fails to respond within a certain time. The Commission wants the directive, when approved, to be implemented by member states within two years, rather than three as the Parliament proposed.

UK MEP Malcolm Harbour, who drafted the centre-right EPP-ED group's position on the directive, said the Commission's new draft would "open up the path to agreement by member states and the conclusion of the second reading by early 2007". He expressed satisfaction that the Commission had not extended the list of grounds for exceptions beyond reasons of public security and order, social security, health and the environment.

Irish Socialist MEP Arlene McCarthy, chairwoman of the internal market committee, welcomed the Commission's support for restrictions on the freedom to provide services in line with European Court of Justice (ECJ) case law. She added that issues such as the single point of contact were important for MEPs and they would look at the Commission's revisions on this issue.

The new text will be discussed at the informal competitiveness ministers meeting on 21-22 April.

While some governments have called for a directive which goes further than the Parliament's position, the UK government seems to be increasingly willing to accept a final deal around the MEPs' compromise. A UK government official said: "It [the Parliament's position] goes a long way to achieving what we wanted in terms of the freedom of establishment."

But another diplomat from a state which would like to see a more ambitious directive said there were still concerns that the scope of the directive was too restrictive. There was also a need for greater legal certainty in the directive so that workers sent abroad would be clear about which country's legal rules they came under rather than asking the ECJ to decide.

EU leaders gave their backing to the Commission drafting a compromise text based on Parliament's position at last week's summit.

This week Ernest-Antoine Seillière, president of European employers' federation UNICE, wrote to Internal Market Commissioner Charlie McCreevy saying that many of the changes proposed by the Parliament would "deprive the directive of much of its expected added value".

But John Monks, general secretary of the European Trade Union Confederation, warned that "any move to reverse the hard-won consensus" would bring further delays "in achieving an acceptable opening of the EU market for services".

Article anticipates the adoption of a revised proposal for the EU Services Directive by the European Commission on 4 April 2006. The new draft followed the European Parliament's compromise agreement of 16 February 2006 and was to take into account most of the amendments suggested by MEPs.

• Primary Source

European Commission: PreLex: COM(2004)2: Proposal for a Directive of the European Parliament and of the Council on Services in the Internal Market http://eur-lex.europa.eu/legal-content/EN/TXT/?uri=COM:2002:002:FIN

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