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Directive On Services In the Internal Market Information

The Directive on services in the internal market (commonly referred to as the Bolkestein Directive) is an EU law aiming at establishing a single market for services within the European Union (EU). Drafted under the leadership of the former European Commissioner for the Internal Market Frits Bolkestein, it has been popularly referred to by his name. It was seen as an important kick-start to the Lisbon Agenda which, launched in 2000, was an agreed strategy to make the EU "the world's most dynamic and competitive economy" by 2010.

The Bolkestein Directive was harshly criticised by left-wing European politicians, who stated that it would lead to competition between workers in different parts of Europe — hence the expression "Polish plumber" — resulting in social dumping. The proposal, after the 2004 original draft had been substantially amended, was approved on 12 December 2006 by the European Parliament and Council, and adopted as the Directive 2006/123/EC.

Contents

Targets

With the Directive, the EU aims to reduce the barriers to cross-border trade, principally by doing away with the service industry regulations of individual EU Member States, unless those regulations are non-discriminatory; objectively justified on the grounds of public interest; and proportionate. The EU argues that regulations which do not meet these criteria are unnecessary and pose a barrier to service providers wanting to provide services in other Member States in addition to their country of establishment.

History

2004 original proposal: the three pillars

Devised by the European Commission in 2004, the first draft of the Services Directive propounded several important changes in the EU services market. These were grouped into three interrelated pillars: "freedom of establishment", "country of origin principle" and "mutual assistance".

Freedom of establishment

The "freedom of establishment" pillar meant that if a company, or individual, were able to provide a service in one EU country, should they have wished to provide the same service in another Member State, there should have been little -if any- legal or administrative restrictions on them doing so, i.e. they should have been free to set up shop in any other Member States in the same way as a company or individual was able to in his/her Member State of origin.

Country of origin

The "country of origin principle" was a rule that would have facilitated the free movement of service providers on a temporary basis to encourage cross-border competition or, more specifically, to encourage individuals or companies to test other markets without first having to establish.

What makes this different from the "freedom of establishment" is that the company or individual may provide services to consumers in another Member State on the basis of the laws of its country of establishment/ origin and without registering with the regulators in the host Member State.

In practice, this would have meant that a company providing services in France (established there), for example, would have been free, for a limited period, to provide services in the UK under French laws.

However, this would have not applied to the professional rules (where according to the Directive on the Recognition of Diplomas, the rules of the country where the services are provided apply), nor - contrary to popular belief (fearing for example that a Polish Plumber could work in France under Polish labour law) - to Social Legislation and to Health and Safety at Work (HSW).

In these social fields the Posting-of-Workers Directive takes over and determines that short-term social protection such as minimum wages and HSW, are governed by the rules of the country where the services are provided (the host country), while long-term benefits, such as pension and unemployment contributions remain with the country of origin (to which the posted workers returns after the service).

Mutual assistance

The third component was partly designed to support the first two pillars; particularly the country of origin principle. The proposal included measures to promote "mutual assistance" between Member States for enforcement purposes; harmonisation measures with respect to consumer protection; and other measures to promote and up-hold the quality of services.

Pros and cons

Arguments in favour of the primal version

Legally, the Directive did not bring anything into EU law that had not already been existing in the EC Treaty as interpreted by the Court of Justice. The "Country of Origin" principle has been gradually introduced into EU law of the freedom of movement of goods in Cassis de Dijon case of 1979 and into other areas (services, establishment) soon after.

Secondary legislation, in principle, cannot introduce rights and obligations that do not already have a basis in the Treaty. In this respect, the original draft of the Services Directive was not a novelty but a clarification of the case law of the European Court of Justice and the continuation of the Country of Origin principle that had already been introduced in the TV Without Frontiers Directive, the Second Banking Directive, the Third Insurance Directive, the E-Commerce Directive and others.

Criticisms on the early draft

Protest against Frits Bolkestein in Brussels on March 19, 2005 French and Belgian trade unions protesting against the directive in Brussels on March 19, 2005

The first proposal of the Bolkestein Directive provoked intense debate and mass protests in various EU countries, including France, Belgium, Sweden, and Denmark. On 21 March 2005 nearly one hundred thousand marched in Brussels to protest the Directive. The crowd consisted primarily of working people and trade unionists from Belgium, France, Germany, Italy, and the Netherlands according to a contributor to Spectrezine weblog.

Critics argued that the so-devised Directive would erode many of the Member State regulations governing industry and the environment, and would lead to competition between workers in different parts of Europe, resulting in a downward spiral in income levels. The expression "Polish Plumber" became famous during the French debate about the directive, meaning that under this legislation, a Polish plumber would able to work in France under Polish labour laws. Critics also charged that the Directive was a sign that "Anglo-Saxon" style economics was running rampant over the EU, and they warned that the directive led inevitably to "social dumping" -- companies and jobs relocating to the low-cost and less regulated economies of eastern Europe.

The process of "accelerated liberalisation" would have shifted the burden from the liberalisers to regulators, they argued. Assuming every piece of regulation to be burdensome by default, the Directive required member states to justify all existing legislation on the grounds that it was non-discriminatory, necessary and proportional.

Writing in The Guardian of 20 January, David Rowland argued that the Directive posed a threat to the British health care system:

The directive is controversial because it applies the same rules to healthcare and social services as it does to estate agents, fairground providers, advertising companies and private security firms. The commission no longer sees the services provided by doctors to patients as a special public good to be enjoyed by all citizens, but as an "economic activity", a commodity to be traded across the EU much like any other.

He also pointed out the implications for the building trade and environmental protection:

The trade union movement is worried that construction companies will no longer have to abide by UK health and safety laws on building sites, and environmental campaigners fear that local planning rules, which govern where supermarkets can open, will be judged to be an illegal barrier to market entry. Attempts to stem the growth in the number of bars and nightclubs in city centres will also be thwarted by a number of clauses.

Another critic of the Directive, Graham Copp, commented in Red Pepper:

any company in any services industry (be it health, building, advertising or whatever) that was set up in one of the EU’s less regulated economies -– perhaps in one of the new eastern European member states -– could also set up in the UK; and the laws that would govern wages, standards, contracts, etc, for that business in Britain would be those of the eastern European country, for example, not the UK.

The European Trade Union Council argued that the Directive

could speed up deregulation, seriously erode workers’ rights and protection, and damage the supply of essential services to European citizens.

Derek Simpson, general secretary of Amicus, said:

UK health and safety standards are hard won, and this directive threatens to dilute those high standards and compromise British workers and public safety without any redress to UK law or regulatory bodies.

2005 developments

On 22 March 2005, EU leaders, led by France, agreed on a "far reaching" revision of the Services Directive to preserve the European social model. French President Jacques Chirac told an EU summit in Brussels that the changes planned by the Directive were "unacceptable". However, modifications to the Directive were introduced within the normal course of the EU legislative process, at a later stage. The Directive did not disappear from the pipeline because the leaders agreed on the need to "open up" the EU services sector.

"If France wishes to eliminate the risk of social dumping, this will be addressed in the framework of the legislative procedure and of co-decision, which has been initiated," declared Jean-Claude Juncker of Luxembourg.

On 1 July 2005 the UK, which was considered pro-liberalisation and thus in favour of the Services Directive, took up the chair of the EU Presidency. Among other things, under the UK Presidency the Services Directive looked likely to raise temperatures in the EU, particularly among those in favour of a more social Europe, such as France, Belgium, and Germany. In Tony Blair's speech to the European Parliament on 23 June, he committed the UK Presidency to try to "resolve some of the hard dossiers", of which the Services Directive was one. However, UK was unable to retain the key liberalising aspects of the Directive and agreement in Council was not achieved during its Presidency.[1]

Parliamentary amendments on the primal version

Protests against the directive in Strasbourg on February 12, 2006

On February 14-16, 2006, a plenary session of the European parliament carried out its first reading of the Directive in Strasbourg.[2][3]

On February 16, 2006, MEPs (Members of European Parliament) voted 391-213 in favour of a proposed revision to the Directive, although it has been 'watered down' from the original directive read to the European Parliament on February 14, so much so that Socialist MEP Evelyne Gebhardt said the directive had been 'turned upside-down', a claim contested by labour organisations.

Meanwhile, about 50 000 people demonstrated against the "country of origin principle" in Strasbourg, according to the left wing L'Humanité newspaper.

The majority of members of the two largest groupings in the parliament, the conservative European People's Party (EPP) and the centre left Party of European Socialists (PES) voted in favour of the revised bill.

The Party of the European Left, the European Green Party as well as the French Socialist Party voted against the new revision.

Suggested inclusions

The proposed directive would have covered:[4]

Suggested exclusions

The following however would have been excluded:

The controversial "country of origin principle" was explicitly left over, but there was no "country of destination principle" to replace it either. The European Court of Justice would therefore be charged of deciding, through jurisprudence, which country's labour laws apply themselves in each case.

Comments on the amended draft

Proponents of liberalisation

Business groups stated that the new directive would have limit the benefits that the early version of the Directive would have provided.

The European Commission estimated that this proposed version of the Directive would have created an additional 600,000 jobs in the EU, would have boosted economic growth and would have increased quality and choice for consumers.

The Wall Street Journal estimated that the revised directive would have failed in its objective: the liberalisation of services at the heart of the EU.

D. Godefridi (Hayek Institute) wrote in le Figaro : "Services represent 70% of the European economy. In not liberalising these the EU remains below the objective of the founding treaties of 1957: there is no common European market. For ten years European economic project has moved backwards. On 30 May 2006, the European political elite buried the very essence of the European project".[5]

Opponents of liberalisation

Left-wing and labour organisations underlined that the new version were not as favorable to workers as it pretends to be, and that the "country of origin principle" would have probably been applied by the European Court of Justice, as a record of its preceding decisions led believe. They especially pointed out that member states were prohibited from demanding any type of administrative authorisation to companies, thus making control of labour laws close to impossible.

Green MP Gérard Onesta declared: "the Bolkestein directive had become a monster... It is now a monster missing a few teeth, but it is still a monster".

MEP Francis Wurtz (European United Left - Nordic Green Left) declared to L'Humanité that, as European Commissioner Charlie McCreevy (who had succeeded Bolkestein) had pointed out, the European Court of Justice jurisprudence systematically favorised the "country of origin principle".

Conservative MEP Philippe de Villiers also declared to Le Figaro: "The new Bolkestein directive is a lie"; "In its original form, the directive threatened social dumping for 5,000 professions, the current version still targets 4,000". Henceforth, in the absence of a defined "country of destination principle", the "country of origin principle" would have still applied itself.

Final revision

On 5 April 2006 the European Commission presented a new version of the directive to the Council of Ministers including most of the modifications voted by the MEPs, in accordance to the codecision procedure.

On 29 May 2006 the Council approved the revised text, which subsequently was resubmitted to the parliament for its second and final reading.

Approval and implementation

The Directive, after being substantially amended from the original proposal, was adopted on 12 December 2006 by the Council and the European Parliament, and published on the Official Journal of the European Union on 27 December 2006 as the Directive 2006/123/EC.[6][7] It covers a range of services provided to businesses and consumers such as legal and tax advice, management consultation, real estate services, construction, trade services, tourism, and leisure services. However, the Directive does not deal with labour law or the posting of workers within the EU (which are matters specifically dealt in another EU law, i.e. the Posting of Workers Directive) and the following services are excluded from its scope: financial services, healthcare, certain aspects of telecommunications services, transport and port services, social services relating to social housing, childcare and aid for persons in need, activities of a non-economic nature provided by the state, temp agencies, private security services, gambling and audiovisual services. After a lot of negotiations, the "country of origin principle" was dropped.[8] Although the final version did not include that principle, the Directive instead reminded Member States of the principle of free movement, while accepting inroads when free movement collides with other public interests. However, before making such inroads, authorities have to verify and recognize any protection already provided in the country of origin - under the mutual recognition principle, they need to take into account what takes place in other countries before proceeding.

The Directive makes it easier for businesses in one Member State to establish a business in another Member State, by reducing administrative formalities and allowing online registration of businesses through one or several points of single contact in each Member State.

After the Directive entered force, various Member States' authorization schemes had to be monitored to check that they were necessary, justified, proportionate and non-discriminatory. If they were not, they had to be removed or replaced. A number of other restrictions such as nationality requirements or economic needs tests also had to be abolished. Other restrictions also had to be reviewed, such as those limiting the numbers of outlets or imposing fixed tariffs.

Under the so-called "freedom to provide services" clause, Member States are required to respect service providers' rights to furnish services in a Member State other than that where they are established, and to ensure that they receive free access to a service activity and can exercise it freely.

Member States can no longer insist that a service provider be established in that Member State, that it only use the national language of that Member State, or that it be incorporated in a particular form of legal entity. However, Member States may impose restrictions on grounds of public security and protection of public health or the environment, and may impose their rules on employment conditions. There are also specific derogations to the freedom to provide services in sectors such as postal, electricity, water and gas.[9]

Delays on full implementation

The Directive on services in the internal market should have been completely implemented by the Member States within the 28th December 2009. On 24 June 2010 however, a reasoned opinion concerning the lack of full implementation of it was sent from the European Commission to the 12 Member States (i.e. Austria, Belgium, Cyprus, France, Germany, Greece, Ireland, Luxemburg, Portugal, Romania, Slovenia and the United Kingdom) which have not yet notified to the European Union the adoption of all the regulatory changes required by the Directive.[10]

Business obligations and benefits

Benefits

Obligations

This article uses second-person ("you") inappropriately. Please rewrite it to use a more formal, encyclopedic tone. (January 2011)

You have to make certain information available to your customers as follows:

You have to supply certain information if a customer asks for it.

You may provide this information on your website, in any documents you supply to customers or where the service is provided.

You must resolve complaints as quickly as possible, doing your best to find a satisfactory solution, and inform customers of any codes of conduct or dispute-resolution procedures you follow.

You must not discriminate on the grounds of nationality or place of residence in the general conditions you make publicly available.[11]

EUGO logo and branding

The Services Directive, which came into force on the 28th December 2009, requires all EU Member States to establish web portals so anyone who provides a service will have a "point of single contact" where they can find out what legal requirements they would need to meet to operate in the country in question. Service providers can also use the web portals to apply for any licence or permit they would need.

The Directive should make it easier for EU service providers to operate in any other EU Member State. The UK's Department for Business, Innovation and Skills (Services Directive implementation team), working with marketing consultants, created the EUGO brand for use on point-of-single-contact portals across Europe.[12][citation needed]

See also

References

  1. ^ "Q&A: Services Directive". BBC News. 15 November 2006. http://news.bbc.co.uk/2/hi/europe/4698524.stm.
  2. ^ "?". http://www.stopbolkestein.org/index.cfm?Content_ID=1484657.
  3. ^ "?". http://nantes.indymedia.org/article.php3?id_article=7473.
  4. ^ "?". http://www.euractiv.com/en/innovation/services-internal-market/article-132241.
  5. ^ "?". http://www.lefigaro.fr/debats/20060531.FIG000000250_directive_services_liberalisation_zero.html.
  6. ^ http://www.edilportale.com/news/2007/01/lavoro/servizi-nella-ue-pubblicata-la-direttiva_9145_33.html
  7. ^ http://www.edilportale.com/normativa/direttiva-cee/2006/2006-123-ce/direttiva-del-parlamento-europeo-e-del-consiglio-relativa-ai-servizi-nel-mercato-interno-%28ex-bolkestein%29_9956.html
  8. ^ http://www.euractiv.com/fr/europe-sociale/cedag-confusion-rgne-directive-services/article-184963
  9. ^ http://www.lexology.com/library/detail.aspx?g=2bc515ee-b254-42ef-94e9-143a4931249a
  10. ^ http://europa.eu/rapid/pressReleasesAction.do?reference=IP/10/821&format=HTML&aged=0&language=EN&guiLanguage=fr
  11. ^ http://www.berr.gov.uk/policies/europe/eu-services-directive
  12. ^ http://ec.europa.eu/internal_market/eu-go/

External links

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News

Categories: European Union directives | International trade | 2006 in law | 2006 in the European Union

 

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