An EP success story: providing services in another EU Member State
From the end of this year, service providers (from travel agents to office maintenance staff) will be able to pursue their occupation anywhere in the EU. The so-called ‘Services Directive’, which was proposed in 2004, initially aroused deep concern throughout the EU. As a result, it was completely rewritten by the EP, ultimately achieving an acceptable result.
The aim of this directive is to ensure that one of the EU's fundamental freedoms (the free movement of people, goods, capital and services) becomes a reality for its citizens, without lowering Member States' social standards. The services sector accounts for almost two-thirds of the EU economy.
In early 2004, European Commissioner Bolkestein proposed the 'Services Directive' which eventually caused so much controversy as to affect the French rejection of the draft EU Constitution. The challenge faced by MEPs negotiating this law in the European Parliament and Ministers in the Council of the EU was to balance the interests of consumers, workers and service providers, against a background of conflict between advocates of liberalisation and defenders of social standards. Following protracted and difficult discussions, the European Parliament's Political Groups managed to reach a compromise which was accepted by Ministers in the Council. The compromise reached ensured that the EU's internal services market could be opened up more widely to cross-border competition whilst protecting the European social model.
Country of origin principle
The main issue of contention was the so-called ‘country of origin principle’, which would have allowed service providers to operate in another Member State under the laws from their own country. MEPs in the European Parliament, together with members of the public, feared that this would pave the way for unhealthy competition between Member States and ultimately 'social dumping'.
What happened to the law while it was in the European Parliament?
At least ten of the European Parliament's Committees discussed the draft directive over the course of a year and a half. The debate – at times very heated – ended in February 2006 with an agreement between the Parliament's largest Political Groups – the EPP-ED (Fine Gael is a member of this Group) and the PES (the Labour Party is a member of this Group).
The compromise included a specific statement that the directive would have no effect on labour law in the Member States, nor on working or employment conditions or contractual relations between employer and employee, be they based on national law or on collective agreements. The key parts of this compromise were subsequently accepted by the Member States and confirmed by a large majority of MEPs during the its November 2006 Plenary Session. The GUE/NGL Group (Sinn Féin is a member of this Group), the Greens/EFA and the French PES Members opposed the directive.
What will the 'Services Directive' do and when will it take effect?
The Services directive should be implemented throughout the EU by 28 December 2009 at the latest. It should make it significantly easier for a service provider to set up business in another EU Member State. For example, a company which wants to manage a hotel in another EU country will no longer have to deal with several different authorities (national, regional or local), but with a single ‘one-stop shop’ for all administrative formalities.
The directive explicitly prohibits any restrictions on the freedom to provide services. It will therefore be easier than before to provide services temporarily in another EU country. For instance, countries will no longer be able to demand that a mountain guide must become a resident of the country in which he wishes to temporarily pursue his occupation, but he/she will be subject to the labour and social laws of the country in which he/she is working.
Which services are excluded from this directive?
A number of services have been excluded from the scope of the directive, such as services of certain social services, services that are already covered by sectoral legislation (audiovisual, financial or transport services) or non-economic services which come under the 'general interest' heading. As regards the issue of services of general interest, the Treaty of Lisbon, currently under ratification, addresses this issue to some extent, in that it recognises the specific characteristics of those services.
Health services are also not covered by the directive. During April 2009, the European Parliament voted on the European Commission’s proposal of July 2008 on patients’ cross-border healthcare rights. The Parliament's position on this law now has to go before the Ministers in the Council. The aim of the cross-border healthcare directive is to facilitate the reimbursement of medical services provided in another Member State. Here too, a balance must be struck between social and market interests on the one hand and Community and national competences on the other.
What did the MEPs say?
According to the German MEP Evelyne Gebhardt (PES), who drafted the European Parliament’s position on the Services Directive, the new law ensures "a symbiosis between the interests of employees and consumers and those of the economy. We have succeeded, with this text, in making a real contribution towards putting people more in the centre of politics." British MEP Malcolm Harbour (EPP-ED) added that "sometimes, when we talk about concepts like the internal market we forget that we are engaging people at the heart of what goes on and in our political work here. This directive is about improving the standard of living of all citizens in the European Union and encouraging growth and dynamism in the economy."
