EP approves amended services directive

On February 16, the European Parliament voted the Services Directive through its first reading. The adopted directive is heavily modified when compared to the original 'Bolkenstein Directive'.

On February 8, the Parliament's two biggest political groups negotiated a compromise, which introduced fundamental changes in the Commission's proposal that are unlikely to satisfy the proponents of the liberalisation of the EU market in services while obtaining a comfortable majority in the Parliament's plenary vote.

The Directive secured 394 'Yes' votes in the Plenary - 70 fewer than the two big groups taken together. This number corresponds roughly to two-thirds of both groups. As is usual under the co-decision procedure, the directive now passes to the European Commission and then to the Council of Ministers, which both have the right to make further changes, before it goes back to the Parliament.

Among the most significant alterations made to the directive was the removal of the "country of origin principle" under which service providers could have operated in any of the EU's 25 member states as long as they abided by their home country rules.

In its place Members of the European Parliament have inserted a clause with the title "freedom to provide services". It requires the member states to respect the right of the service provider to supply services and to guarantee the provider "free access to and free exercise of a service activity within its territory".

One of the foremost criticisms was that this provision might still allow the member states to conjure up a variety of potential hindrances and obstacles to service providers since one of the provisions relates to the rules countries can impose on potential service providers on the grounds of overriding reasons of public safety, public policy and the protection of consumers.

Among the services covered by the amended directive are those of a general economic interest, such as postal services, water and electricity supplies and waste treatment.

Also included are business services, such as management consultancy, certification and testing, facilities management (including office maintenance and security), advertising, recruitment services and the services of commercial agents; services provided both to businesses and to consumers, including real estate services such as estate agencies, construction (including the services of architects); distributive trades, the organisation of trade fairs, car rental and travel agencies.

Consumer services such as tourism, leisure services, sports centres and amusement parks are also included.

Conversely, sectors not covered by the proposed directive include public and private healthcare, industries covered by legislation specific to their sector, e.g. financial services, electronic communications services and networks, and transport.

Other excluded areas include legal services, healthcare, audiovisual services, gambling and lotteries, most professions and activities linked to the exercise of public authority (e.g. notaries) and tax services.

There were, of course, a myriad of different reactions to the vote. Internal Market Commissioner Charlie McCreevy welcomed the vote, underlining that the Community "needs a directive that will facilitate the cross-border provision of services and, at the same time, ensure that legitimate public policy considerations can be safeguarded".

ETUC, the European Trade Union Congress, similarly echoed this view. Most conservative delegations were also content with the outcome. The French Conservative UMP delegation's comments were: "The text is well balanced between economic efficiency, the opening of services markets and social equity by safeguarding existing social standards."

Other parties expressed their reservations; the main criticism being that by accepting it in its amended form "the European Parliament has deprived the directive of most of its capacity to create growth and jobs in Europe.

"Cross-border services will not be facilitated. Too many sectors are excluded from its scope." This was the view expressed by the European Employer's Association (UNICE) and Eurochambers.

Malta must try to take advantage of this new freedom limited as it already is, beginning first by investing more in certification and testing.