Bolkestein legacy ‘too radical’ for new Commission

Date: 03/02/05

The EU's new internal market chief Charlie McCreevy says he is committed to a services directive, but not as all-encompassing as the one proposed by his predecessor, Frits Bolkestein, champion of the free market. Yesterday (2 February), the European Commission announced that, working with the European Parliament, it would revise the proposal to address fears that have been expressed since it was adopted in January 2004.

But why did 'the Bolkestein directive' fail to take off? Those involved in the directive from the beginning agree that it could have been clearer. Such a wide-reaching proposal, which rather than taking a sector-by-sector approach opens up all services, was inevitably going to be a political 'biggie'.

In an effort to clear up a few of what were described as the Commission's misconceptions, it published a series of 'Frequently Asked Questions' on its website (now totalling 40 clarifications on the latest October revision). The explanatory notes detailed the Commission's position on the most controversial new rules and a checklist laid out what the Brussels executive called "myths" surrounding the proposal. Towards the end of 2004 a list of problems that the services industry was facing in Europe also appeared, together with "how the directive would solve them".

But none of it was enough to allay serious concerns from many quarters. Fears that the directive would lead to an influx of cheap labour and a decline in social standards as companies took advantage of workers from poorer member states continued to abound, despite the Commission's insistence that workers would have to comply with employment rules, including minimum wages, in the country where they work.

Sweden and Germany worried that their non-legislative labour relations would be undermined by the proposal. Belgian trade unions claimed that the Czechs would steal their jobs and as late as last month the European Socialists warned of a "race to the bottom" with service operators scouring Europe to find the lowest social protection.

National governments began to panic that their healthcare spending would spiral out of control when they had to foot the bill for EU citizens crawling across their borders in order to seek routine medical treatment. The Commission argued that rewarding efficient providers with more customers was the best way to improve the standard of treatment across the EU.

On a more fundamental level, lawyers warned that the proposal covered so much of the EU's economic and social structure that it might "seriously reduce" the scope of international private law.

Others said that the 'country of origin' principle, under which service providers would only have to adhere to their own country's legal requirements when working anywhere in the EU would be impossible to supervise because Europe's administrations were incapable of co-operating at such an advanced level.

Some in Bolkestein's camp have complained that the proposal has been subject to propaganda and sabotage, particularly on the issue of healthcare. Some say that the demonstrations against the directive seen last summer were simply a convenient rallying point for some European Parliament election campaigns.

Some observers have seen it as significant that McCreevy's current chef de cabinet, Martin Power, set up a cross-border healthcare group when working for the then health commissioner David Byrne, which effectively scared governments off the idea of opening up healthcare markets.

But as a former finance minister, McCreevy is understandably sensitive to anything that could affect national budgets. And given such deep misgivings across the board, it is perhaps understandable that he might choose to start again with the directive rather than try to battle with the Bolkestein legacy.

The new European Commissioner for the Internal Market, Charlie McCreevy, says he is committed to a services directive, but not as all-encompassing as the one proposed by his predecessor, Frits Bolkestein. On 2 February 2005, the European Commission announced that, working with the European Parliament, it would revise the proposal to address fears that have been expressed since it was adopted in January 2004.

European Commission: DG Internal Market: Services and Establishment: The Internal Market for Services http://ec.europa.eu/comm/internal_market/services/index_en.htm

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