Saving the face of social Europe

At the start of Germany’s presidency of the EU, several member states were pushing for the negotiations on a new treaty to give a stronger emphasis to social policy, possibly by adding a social protocol. But the deal reached at the European Council (21-23 June) on a precise mandate for the intergovernmental conference (IGC) that is to finalise a treaty, stripped out or watered down provisions that were contained in the (now rejected) constitutional treaty.

The only genuine additions last month were clauses on climate change and energy solidarity.

However, some observers are attaching particular importance to the addition of a protocol - a kind of explanatory clause - on services of general interest. They hope that it will bring much needed clarity to how internal market and competition rules are applied to the provision of public services like housing, transport and healthcare.

The Socialist group in the European Parliament has been asking for legislation to set out how the rights of local and regional authorities to organise the provision of public services can be reconciled with EU internal market and competition rules.

The Socialist group even took the unprecedented step of drafting its vision of what a framework directive on services of general interest should look like, to put pressure on the European Commission, which is the initiator of legislation in the EU, to present a draft directive.

Ieke van den Burg, a Dutch Socialist MEP who drafted the Socialist group’s ‘directive’ welcomed the new protocol.

"It [the protocol] fits very well with what we’ve been asking for. It’s necessary to have more clarity and certainty about how rules for the internal market are applied," she said.

Services of general interest, broadly speaking public services provided by non-profit-making entities in areas such as housing, transport and healthcare, have been an increasingly controversial political issue as EU internal market and competition rules such as those on public procure-ment have encroached on local models of service provision.

The subject has risen up the political agenda in the Netherlands where a state aid investigation into social housing provision and the public transport directive currently being debated in the Council of Ministers have fed resentment at what is seen as interference from Brussels. France and Belgium have also been pushing for greater legal protection of public services though there are fears that they are motivated by a desire to protect their companies from competition.

The EU constitution, which was rejected by Dutch and French citizens in 2005 and which the reform treaty seeks to replace, contained an Article (122) stressing the importance of services of general interest. But the Dutch government decided that that article was not enough and made the issue one of its four ‘red lines’ in the negotiations on the mandate for a new treaty.

Dutch Prime Minister Jan Peter Balkenende visited European Commission President José Manuel Barroso on 20 June on the eve of the EU summit that adopted the mandate, to press his demands and to explore options for addressing his concerns.

During the 36-hour- long summit on 21-23 June, the Dutch delegation negotiated directly with the Commission to find appropriate language on services of general interest. The French and Belgian delegations wanted to go further towards giving public service providers an exemption from competition and state aid rules but the Commission opposed this.

The protocol does not change the substance of EU law. In particular, it does not state that services of general interest should enjoy any exemption from internal market or competition rules. Like many of the other ‘changes’ negotiated at the summit the protocol is there to give visibility to the issue. The protocol can also be used by governments, for domestic political consumption, to show that they put up a fight for an important principle.

Van den Burg said that the Commission should now respond to the political signal contained in the protocol and draft new legislation which would bring clarity to how EU law is applied to non-economic actors.

The protocol recognises the importance of regional and local authorities in providing services of general economic interest as well as the "differences in the needs and preferences of users that may result from different geographical, social or cultural situations". It could have helped solve the dispute in 2005 between Competition Commissioner Neelie Kroes and the Dutch authorities over social housing. Kroes launched her investigation into housing organisations in her homeland, arguing that the provision of social housing should only apply to those unable to afford to house themselves in the private sector. But van den Burg pointed out that the notion was wider in the Dutch context and social housing projects were used to promote urban development and to further social integration, especially of ethic minorities.

Van den Burg insisted that the Socialist group was not simply trying to protect public services from liberalisation. "We are against protectionism," she said. She suggested that new legislation could reassure those who were worried about the deletion of the clause on "free and undistorted competition" as one of the EU’s objectives, by clarifying how internal market rules apply.

The call for legislation is supported by the European Trade Unions, the Committee of the Regions and the Economic and Social Committee. It is not clear how the Commission, which has been reluctant to legislate in this field in the past, will respond to this call following the summit deal. Some EU officials believe that the Commission may issue clarifications or guidelines rather than hard law but the protocol will have an informal political influence as decisions, including those in the European Court of Justice, will increasingly refer to Article 122 of the rejected constitution and the spirit of the protocol. "There will be references [to them] before 2009 [when the new treaty is supposed to be ratified). People will be front-loading this," one EU official said.

Services of general interest

"Interpretative provisions" of the protocol on services of general interest from the draft IGC mandate:

• The shared values of the Union in respect of services of general economic interest within the meaning of article 16 EC Treaty include in particular:

• the essential role and the wide discretion of national, regional and local authorities in providing, commissioning and organising services of general economic interest as closely as possible to the needs of users;

• the diversity between various services of general economic interest and the differences in the needs and preferences of users that may result from different geographical, social or cultural situations;

• a high level of quality, safety and afford-ability, equal treatment and the promotion of universal access and of user rights.

At the start of Germany’s presidency of the EU, several member states were pushing for the negotiations on a new treaty to give a stronger emphasis to social policy, possibly by adding a social protocol. But the deal reached at the European Council (21-23 June) on a precise mandate for the intergovernmental conference (IGC) that is to finalise a treaty, stripped out or watered down provisions that were contained in the (now rejected) constitutional treaty.