COMMISSION CHECKLIST ON ITS PROPOSAL FOR A DIRECTIVE ON SERVICES

The Single Market Directorate of the European Commission has produced a checklist to ‘clarify the effect’ – and clear up potential misunderstandings of the aims and objectives of its proposal for a Directive on Services.  The proposal was presented on 13^th January 2004.  Below we have set out some background information to explain why the Commission has felt the need to produce a check-list and so that civil engineers who operate, or plan to operate, across borders may be aware of how this proposal could affect their professional lives.

BACKGROUND TO THE PROPOSED DIRECTIVE  [Ref: COM(2004) 2 final/3]:

Europe launched its 2003-2006 Internal Market Strategy on 7^th May 2003 as part of measures to meet the 2000 Lisbon targets.  At the 2000 Council summit in Lisbon it had been decided to prioritise making the Internal Market a reality by 2010 - for services as well as for goods.  The service sector accounts for approximately 2/3 of EU GDP.

Who and what would be covered by a Directive?: Services provided to businesses, by consumers, or both.  Services provided by an operator who has travelled to the Member State of the recipient, services provided at a distance, such as by internet, services provided in the country of origin following travel by the recipient, or services provided in another Member State to which both the provider and the recipient have travelled (e.g. tourist guides).

Why has a Directive been proposed?: Although a decade has passed since the Single Market was put in place, there are still significant trade barriers in place.  Potential benefits of removing non-tariff barriers would be: more specialisation and competition, leading to a more efficient allocation of resources; more investment and innovation; more choice and lower prices for recipients of services (businesses and private individuals).

What might prevent such benefits occurring?: Language or cultural barriers may still impede trade; small and medium-sized enterprises may still not have the resources or desire to trade across borders.  The ‘country of origin principle’ (Article 16 of the proposal) will need to be accepted and that will require a high degree of mutual trust: if this does not happen, service recipients may lose faith in the system and cross-border trade will not increase.  This principle may be a major stumbling block in promoting the directive. 

What is the country of origin principle?: When providing services on a temporary basis, a service provider will be subject only to the law of the country in which he/she is established. Member States may not restrict services from a provider established in another Member State.  The Member State of origin is responsible for supervising the provider and the services provided by him even where these are provided by him in another Member State. There are exemptions to this principle which are either general, temporary, or which may be applied on a case-by-case basis.

What is the European Parliament view of the proposal?: The European Parliament rapporteur is Evelyne Gebhardt MEP.  Her Working Document dated 30^th March 2004 (PE 343.503) considers that the directive is concentrating too one-sidedly on the elimination of national provisions and might imply the creation of a European-wide regulatory framework.  In her view the proposal goes beyond its task of eliminating obstacles to a genuine internal market for services.  It “even declares as inadmissible national provisions and practices intended to ensure minimum standards and guarantee public safety”.

With regard to the country of origin principle (see above), the rapporteur notes that the introduction of the country of origin principle means that the responsibility for supervision on the one hand and actual access to means of supervision and information on the other hand are split between different Member States.  She queries whether a Member State can really perform its supervisory duty effectively without suitable inspection facilities – thus leading to a deterioration in quality standards, the undermining of national rules and the endangerment of public safety.  She proposes that instead regulatory mechanisms are put in place in parallel at Community level to enforce minimum standards and guarantee public safety.

What happens next?: The directive must be agreed by a qualified majority of Member States in the Council and by a majority of the European Parliament in order to become law.  The European Commission seeks adoption of the proposal by Member States by end 2005 with a view to the Directive coming into effect by the end of 2007.

THE EUROPEAN COMMISSION CHECKLIST:

Some Things the Proposed Services Directive Would Do

• help boost economic growth and sustainable jobs by laying the foundations for a real European Internal Market for services (the Internal Market for goods has since 1993 created nearly 1,000 billion euros of prosperity and 2,500,000 jobs and the same can happen with services)
• make it easier for businesses, especially SMEs, to provide services throughout the EU, thus improving quality and choice for consumers
• improve cooperation between national authorities to protect and inform consumers and to combat rogue operators, illegal work etc
• ensure that a service company posting workers to another Member State fully applies that Member State's employment laws - including minimum wages - in order to avoid "social dumping"
• remove pointless red tape in a measured and gradual way, by Member States working together
• help stop discrimination against companies and customers on grounds of nationality
• clarify under which conditions patients are reimbursed for medical care obtained in another Member State

Some Things the Proposed Services Directive Would Not Do

• force Member States to liberalise or privatise "public services" or open them to competition
• affect the freedom of the Member States to define what they consider to be "public services", or how they should be organised and financed
• change the way Member States choose to organise health and social security services
• impose extra costs on Member States social security systems
• allow social dumping by bringing in "cheap" workers
• prevent Member States from checking and controlling companies and workers operating on their territory

§         endanger national laws that genuinely protect health, safety and consumer rights