1 An internal market for
services
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6174/04
+ ADD 1
COM(04) 2
| Draft Directive on services in the internal market
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| Legal base | Articles 47(2), 55, 71 and 80(2) EC; co-decision; QMV
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| Department | Trade and Industry
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| Basis of consideration | Minister's letter of 15 December 2004
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| Previous Committee Report | HC 42-xii (2003-04), para 4 (10 March 2004)
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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 | For debate in European Standing Committee C
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Background
1.1 In March 2004 we considered 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 respect of these two freedoms.
1.2 The scope of the draft Directive is broad, applying
to all economic services (except 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.
1.3 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.
1.4 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.
1.5 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.
1.6 This is an important proposal which, as the Government
told us when we first examined it, could be of significant benefit
to UK consumers and businesses. We said we would want to consider
this document again when we had an account of the outcome of the
Department's consultations and the consequences for the Government's
negotiating stance on the proposal.[1]
The Minister's letter
1.7 The Minister of State for Trade, Investment and
Foreign Affairs, Department of Trade and Industry (Mr Douglas
Alexander) now sends us a detailed summary of the response to
the Department's public consultation, details of the Government's
published negotiating stance, which has evolved since the consultation
exercise, and an updated partial Regulatory Impact Assessment.
The consultation, based on a comprehensive consultation document
and presentations in London and five regional centres, elicited
116 responses from a wide variety of interest groups. The Department's
summary of responses, categorised by the 46 articles of the draft
Directive, is published on its website.[2]
1.8 The Government's negotiating stance is to achieve
several main objectives with amendments to 38 of the articles
of the draft Directive. In introducing its stance it says:
"The UK strongly supports the aims of
this Proposal, both in opening the Internal Market and in contributing
to better regulation. We believe that it will deliver significant
benefits for businesses, consumers and employees here in the UK
and across Europe. We are committed to the country of origin principle
as critical to delivering liberalisation, though we regard it
as vitally important that nothing in the proposed Directive compromises
our standards of health and safety or the protection of workers,
consumers, the environment and animals."
1.9 Of its principal aims the Government says:
"During the negotiations, we will seek
to achieve the following main objectives:
— Strongly support the market opening
objectives of the proposed Directive, in particular through:
— simplification and better regulation;
and
— support for the country of origin
principle;
— Ensure that the proposed Directive
does not cover taxation, publicly funded health services
and occupational pensions;
— Ensure that the proposed Directive
does not impinge upon UK criminal law and policy or on immigration
and social security policy;
— Clarify the relationship with
sector-specific legislation;
— Uphold UK standards on health
and safety in all circumstances;
— Maintain high standards of protection
for workers, consumers, the environment and animals;
— Ensure that the proposed Directive
does not affect sensitive policy areas where regulation is principally
not for economic motives; and
— Negotiate an acceptable outcome
as regards Private International Law.
"We recognise that considerable work
will be needed to develop workable practical solutions in many
areas, including single points of contact and the mutual assistance
procedures governing the supervision of providers of temporary
services (particularly in cases of urgency)."
1.10 The Minister's revised initial Regulatory Impact
Assessment, like the version we saw previously, makes a cautious
and qualified assessment that "the benefits are expected
to exceed the costs". Whilst noting the issues which might
limit the benefits, it says "even if the benefits for the
UK are at the lower end of expectations, they are likely to be
non-trivial and could be worth many £millions to the UK".
Conclusion
1.11 As we noted previously, this is a proposal
which could be of significant benefit to UK consumers and businesses.
Now that the Minister has told us of the Government's policy on
the draft Directive, for which we are grateful, we think it is
timely to recommend the document for debate in European Standing
Committee C.
1.12 Such a debate could consider, in addition
to the likely benefits:
- the possible scope of the
proposed framework Directive;
- the possible pitfalls in the proposal as presently
drafted; and
- the need, given the uncertainties as to some
of the possible effects of the proposal, for a Commission policy
review after three years experience of the legislation.
1 See headnote. Back
2
See http://www.dti.gov.uk/ccp/topics2/servicesdirective.htm Back
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