4 An internal market for services
| (25354)
6174/04
COM(04) 2
+ ADD 1
| Draft Directive on services in the internal market; and Commission Staff Working Paper on extended impact assessment on the draft Directive
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| Legal base | Articles 47(2), 55, 71 and 80(2) EC; co-decision; QMV
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| Document originated | 13 January 2004
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| Deposited in Parliament | 13 February 2004
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| Department | Trade and Industry
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| Basis of consideration | EM of 3 March 2004
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| Previous Committee Report | None
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| To be discussed in Council | Not known
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| Committee's assessment | Politically important
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| Committee's decision | Not cleared; further information awaited
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Background
4.1 As part of the response to the Lisbon Strategy, the Commission
published "An Internal Market Strategy for Services"
setting out a two-stage
process — the first identifying barriers to cross-border
trade in services and the second developing appropriate solutions
to the problems identified.[7]
In July 2002 the Commission reported on 'The State of the Internal
Market for Services". Based on consultation with business,
this report completed the first stage of the process and gave
an extensive list of barriers that exist in the internal market
for services.[8]
The document
4.2 This document is a draft framework Directive
to make it easier for service providers to exercise the freedom
of establishment in Member States and to facilitate the free movement
of services across the EU, offering service providers and recipients
the legal certainty they need in relation to these two freedoms.
4.3 The scope of the draft Directive is broad, applying
to all economic services (save for some exceptions or derogations)
supplied for remuneration by providers established in a Member
State. The draft Directive does not include services provided
by public authorities not for remuneration. Nor does it apply
to certain services covered by specific initiatives already in
place to complete the internal market or for which there are other
reasons for the exclusion. These are:
- financial services;
- electronic communications services and networks
in so far as they are already covered in relevant legislation;
- transport services to the extent that they are
already covered in relevant legislation;
- the field of taxation; and
- activities which are connected, even occasionally,
with the exercise of official authority.
4.4 To eliminate the obstacles to the freedom of
establishment the draft Directive would provide for:
- administrative simplification,
particularly involving the establishment of "single points
of contact", at which service providers could complete procedures
necessary for access to and exercise of their service activities;
- principles, including proportionality and objective
public interest justification, which authorisation schemes applicable
to service activities must respect;
- prohibition of certain particularly restrictive
legal requirements; and
- an obligation to assess the compatibility of
certain other legal requirements, particularly as regards proportionality.
4.5 To abolish barriers to the free movement of services
the draft Directive would provide for:
- application of a country of
origin principle whereby, generally, a service provider would
be subject only to the requirements for access to, and exercise
of, its service activity of the country in which it is established.
Member States would not be able to restrict services from a provider
established in another Member State;
- the right of recipients to use services from
other Member States without being hindered by restrictive measures
imposed by their country or by discriminatory behaviour on the
part of public authorities or private operators;
- consumer protection assistance to those using
a service provided by an operator established in another Member
State; and
- allocation of tasks between the Member State
of origin and the Member State of destination and the supervision
procedures applicable related to the posting of workers in the
context of the provision of services.
4.6 The draft Directive would also provide for:
- harmonisation of legislation
in order to guarantee equivalent protection, such as consumer
protection;
- stronger mutual assistance between national authorities
to ensure effective supervision of service activities;
- promotion of the quality of services, such as
voluntary certification of activities or cooperation between chambers
of commerce; and
- encouragement of Community level codes of conduct.
4.7 The Commission presents with the draft Directive
an Extended Impact Assessment. This considers five alternative
policies — no policy change, voluntary removal of barriers
by Member States, infringement procedures launched by the Commission,
a large number of draft legislative measures based on a sectoral
approach and a horizontal approach. The horizontal approach could
be through a draft Recommendation, a draft Regulation or a draft
framework Directive. A draft Directive could be single-stage
or phased. The Commission rejects the first three policies as
being already shown to be inadequate. It rejects a sectoral approach
as being too complex and slow moving. In relation to a horizontal
approach it rejects a draft Recommendation as merely voluntary
and a draft Regulation as too complex and prescriptive. In opting
for a draft framework Directive the Commission also opts for a
phased approach on the grounds that it would be easier and quicker
to secure agreement by Member States than for a single-stage proposal.
The Government's view
4.8 The Minister of State for Industry and the Regions
and Deputy Minister for Women and Equality, Department of Trade
and Industry (Jacqui Smith) tells us:
"Successful liberalisation of this sector is
likely to be of significant benefit to UK businesses and consumers
and would make a major contribution to the Lisbon targets for
EC growth, competitiveness and employment. In addition, the removal
of red tape, which would follow this approach, is in keeping with
the Government's support for the principles of Better Regulation.
The UK, therefore, strongly supports the objective of opening
up the market for services in Europe.
"There are areas, such as tax, health and immigration
that will require further consideration. The Government will
conduct negotiations on the basis of the responses it receives
to the consultation on the proposal it will launch very shortly."
4.9 On the financial implications the Minister says:
"The costs to service providers are expected
to be low because the proposals mainly provide for removing red
tape and lowering the costs of trading in services or establishing
across borders. The more significant costs are expected to fall
on Government and regulators due, for example, to the need to
regulate UK service providers providing services in other Member
States, the setting up of 'single points of contact' for service
providers to facilitate their establishment in the UK, the simplification
of administrative requirements and the screening of existing legislation
for prohibited requirements. Service recipients are expected
to benefit from more choice and lower prices. Overall, the costs
are expected to be of a lower order of magnitude than the benefits.
However, given the inherent uncertainties in this area, we recommend
that the Commission review this policy in three years, in line
with the Government's commitment to review all major regulations
within three years."
4.10 The Minister also gives us the Department's
initial Regulatory Impact Assessment which, whilst it makes a
cautious and qualified preliminary assessment that "the benefits
are expected to exceed the costs", poses 80 questions
for the consultation exercise the Minister has mentioned to us.
Conclusion
4.11 This is an important proposal, which, as
the Minister says, could be of significant benefit to UK consumers
and businesses. We will want to consider this document again
when we have a full account of the outcome of the Department's
consultations and the consequences for the Government's negotiating
stance on the proposal. Meanwhile we do not clear the document.
7 (22045) 5224/01; see HC 28-ix (2000-01), para 11
(30 March 2001). Back
8
(23742) -; see HC 152-xxxviii (2001-02), para 37 (16 October 2002). Back
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