The services directive marches on

Date: 26/05/05

The battle resumes. German Socialist Evelyne Gebhardt presented MEPs with the second and final part of her report on the EU services directive on Tuesday (24 May).

Gebhardt has had an unenviable task. Launched last year as the final of 'four freedoms' in the EU single market, after goods, people and capital, the European Commission's directive to open up its cross-border service industry has since been vilified by the trade unions and others wanting to defend European social protection.

Dubbed the 'Bolkenstein directive' by the French, after the former commissioner Frits Bolkestein who presented it, in some people's eyes the law would single-handedly destroy Europe's social fabric. It could yet destabilise the EU, as arguably it has added fuel to the fire of the 'No' camp in the French referendum campaign.

At the same time, others argue that opening up the services sector is a vital part of the EU single market and without it Europe can never achieve its aims for growth and jobs.

In her second report, Gebhardt has backed the Commission's call for a single point of contact for service providers wanting to operate in another member state. But she has taken it further to ensure that the contact point would inform a service provider of all the laws and administrative requirements of the country in which he or she wanted to operate, even on a temporary basis.

She recommends drafting EU-wide forms for workers to make it easier for them to register in another member state.

"We are talking about less red tape for workers," she emphasised, although she added that it would mean more work for those working in the contact point.

Registration requirements would be tightened under Gebhardt's draft, as she says that the Commission abolished too many that could be essential for protecting the social framework. "For example in France, pharmacies have to set up in a certain area where there is a need for them," she explained. "If this is scrapped as in the Commission's directive, it will pose problems for social cohesion."

Gebhardt's draft also strengthens how member states would co-operate with one another to oversee the movement of service providers.

The first part of her report covered the more controversial aspects of the proposed legislation, such as which sectors it would cover and how national laws would be recognised. The second part packs less punch but its completion will allow the real debate to begin.

The initial session of Parliamentary discussion opened on Tuesday with fireworks in the European Parliament's internal market committee. Deputies were angry that they had only received the report two hours earlier. Some were also unhappy that Gebhardt had given a press conference the previous day, albeit without the draft text.

Those who did express views on the report were on the whole negative about its content, with British and German MEPs Malcolm Harbour (EPP-ED), Joachim Wuermeling (EPP-ED) and Alexander Lambsdorff (ALDE) opposing the text most vocally.

"I challenged her to show how her directive would stimulate Europe's economy and I don't think that she convinced us," said Harbour after the meeting.

Gebhardt has excluded sensitive sectors such as healthcare from the directive and would allow member states to decide which other sectors should be exempt on the grounds that they are of general rather than economic interest.

She has also deleted the 'country of origin' principle - under which a service provider would be subject to the laws of his own country when operating elsewhere - and replaced it with 'mutual recognition', whereby a member state would have to accept other member states' laws for service provision. In parallel, Gebhardt would lay down EU-wide minimum standards for a broad list of services to ensure that mutual recognition would work.

The country of origin principle is controversial as some fear it could encourage a downward spiral in social protection.

Harbour said that he regretted that the discussion over the services directive had become "bedevilled by slogans", but insisted that "any trader legally operating in one member state should be allowed to trade in another, and part of that is the country of origin principle".

But according to some MEPs Gebhardt has still not gone far enough. German Green MEP Heide Rühle is worried that mutual recognition and the country of origin principle could amount to the same thing. "Above all, we ask, what should be the objective of mutual recognition?" she asked.

Josef Niemiec from the European Trade Union Confederation said that he was pleased with Gebhardt's changes. "Unlike the country of origin principle, mutual recognition is more likely to harmonise standards upwards," he said.

Yesterday (25 May), Luxembourg premier and EU president Jean-Claude Juncker said that certain sectors could be exempted from the country of origin principle but only by exception.

"We should say yes to the country of origin principle, but we should say explicitly where it does not apply," he told an audience of business people in Brussels.

"We should reflect on exemptions to the application of the country of origin principle, but we should not make the country of origin principle itself an exception," added Juncker.

MEPs will have a second chance to debate the report on 12 June, having gained an extension for proposing amendments until 10 June.

Internal Market Commissioner Charlie McCreevy will attend the debate and give his comments.

He said: "With the services directive, as with any major new proposal, there is much to be discussed and the Commission will not take a dogmatic line...The one option not on the table is standing still."

National governments will consider the text at the next Competitiveness Council on 6 June.

The rapporteur to the European Parliament on the proposed Directive on Services in the Internal Market, German Socialist Evelyne Gebhardt, presented MEPs with the second and final part of her report on 24 May 2005.