Battle lines drawn over voting on trade in services

Date: 24/06/1999

By Simon Taylor

THE stage is set for another battle between the EU's free-trading spirits and those who take a softly softly approach to liberalisation.

The new area of conflict is the unlikely subject of qualified majority voting on trade in services.

EU countries, with their advanced and services-based economies, might be expected to speak with a single voice in the struggle to pry open lucrative markets across the globe.

But a bid by the incoming Finnish presidency to improve the EU's ability to strike deals on services looks likely to fall foul of the foot-dragging tendencies of more protectionist member states.

Helsinki has said it will raise the issue as talks get under way on the next round of EU institutional reforms, which have to be agreed before the Union enlarges to take in up to 12 new members.

Governments fear that trying to get agreements between 26 countries will bring decision-making to a standstill unless member states lose their right to veto proposals. Finland therefore wants to make all agreements on trade in services subject to qualified majority voting.

But experts predict that this will run into fierce opposition from France, Belgium and Spain, which want to reserve the right to block any deal which they are unhappy with. Their stance partly reflects the fact that shipping agreements would be covered by the new rules, and all three countries fear their national industries - often centred in economically weak and politically sensitive areas - would be undermined.

Insiders predict that France and Belgium may try to head off the Finnish plan by launching a counterbid to remove countries' right to veto changes in taxation levels. This would provoke a storm in several member states, with the UK sure to lead the opposition because of the outcry it would spark back home.

Article forms part of a survey 'Financial Services'.