The future of our common internal market

The Lisbon summit of March 2000 laid the ground for the adoption by the EU of a programme of economic reform that would eventually make the Community the most competitive in the world by 2010. This was followed by the adoption in December of the same year of a document entitled An Internal Market Strategy for Services aimed at bringing about the free movement and access of services across national borders of the Union. After various other related initiatives, the Commission announced in May 2003 its intention of submitting by the end of the year a proposal for a directive on services in the internal market that would "establish a clear and balanced legal framework aiming to facilitate the conditions for establishment and cross-border service provision".

The proposed directive was to be based on a mix of mutual recognition, administrative cooperation, harmonisation where strictly necessary, and encouragement of European codes of conduct and professional rules. This initiative led, in turn, to the proposal by the Commission in January 2004 for a directive on services in the internal market. Internal Market Commissioner Frits Bolkestein is on record as stating that these new proposals are "potentially the biggest boost to the internal market since its launch in 1993".

The purpose of the directive is to remove all obstacles to achieving the full economic benefits of the internal market in a Europe without borders, now further expanded after May 1, 2004 by the inclusion of 10 new member states. One of the main aims of the directive is in fact that of removing the archaic bureaucratic systems that still prevail in Europe and that do not allow the market to fully develop its economic potential.

The directive covers all services provided to consumers and businesses except those services provided directly by public authorities for no remuneration in fulfilment of their social, cultural, educational or legal obligations. It also leaves out services covered directly by EU law, such as financial services, telecommunications and transport.

A few days ago I launched a consultative paper on a proposed EU directive on the provision of services within the internal market. Now that Malta forms an integral part of the European Union the government wants to get feedback from the public on the proposed legislation that is currently being reviewed by the institutions of the EU within which Malta is actively participating as a member state. With this objective in mind the Ministry for Competitiveness and Communications has commissioned a report on the provision of services within the internal market so that it can initiate a public consultation exercise.

We want to ensure that all the interested parties in Malta are aware of what is being proposed so that they will be in a position to form an opinion and come up with comments, suggestions and proposals for discussion. This is still a proposed EU directive and as such it is far from being the finished article, aimed at improving the freedom of establishment of service providers and cross-border movement of services by making it easier for European citizens and businesses to conduct trade in services. The focus of the directive is the reduction of regulatory requirements and the simplification of administrative procedures.

The Commission's proposal for a directive on services in the internal market is a major step forward in the implementation of the Lisbon Agenda which was drawn up with the scope of making Europe one of the most competitive, dynamic and knowledge-based economies in the world by 2010. It is common knowledge that services constitute a large segment of all EU economies and the internal market cannot be said to be functioning efficiently if market imperfections remain in the services sectors. The aim of the proposed directive is precisely to ensure that the market for services operates flexibly and efficiently, thereby delivering better value for money to European businesses and citizens alike. In turn this should promote economic growth and foster the international competitiveness of the EU.

The ever-increasing global competition among the major trading blocs such as the United States and Asia means that the biggest trading bloc in the world, the European Union, has to develop its single market further in order to facilitate business processes which will thrive in the ever-increasing reality of stiff global competition.

The Ministry for Competitiveness and Communications has also initiated discussions with a number of other ministries that are responsible for various sectors of the civil society that fall within the scope of this proposed directive. Each of these ministries will approach the constituted bodies in its area of remit with the aim of eliciting their reactions and suggestions. This process will continue in parallel with the public consultation exercise.

At this early stage in the consultation process, it is important that we raise some pertinent questions to draw the attention of providers and recipients on these issues.

The provisions could have a number of positive implications for the conduct of services business in Malta. Particular areas which may be affected include the limitations on the imposition of quantitative and territorial restrictions, the simplification of business licensing procedures, the setting up of one-stop-shops and the composition of the bodies granting the licences.

The directive is a mix of regulatory techniques, including the following: the country of origin principle by which service providers will be subject only to the law of the country in which they are established and member states may not restrict services provided by operators established in another member state; the derogations from the country of origin principle in order to take account of differences in the level of protection of the general interest in certain fields; the establishment of obligations of mutual assistance between national authorities; the protection through targeted harmonisation of the general interest in certain fields where wide divergence in the level of protection exist, such as consumer protection and the adoption of alternative methods of regulation, such as codes of conduct, for the regulation of certain services activities.

With the creation of a specific ministry entrusted with competitiveness Malta strongly highlighted the government's commitment towards achieving the aims of the proposed directive, mainly that of exploiting the country's full potential for economic growth by sustaining competition and removing the obstacles that hinder business growth and development.

I hope that all those interested will take up this unique opportunity of consultation and give their views, in writing or otherwise, to ensure that all sides - the government, business and consumers - fully benefit from these discussions so that the final Maltese document in response to the proposed directive would in general reflect Malta's overall position to the maximum advantage of all concerned.

Mr Galea is Minister for Competitiveness and Communications.