The European Union has long accepted that a single
market in manufactured goods is fundamental to the EU, creating
a market of 450 million people, bringing greater competition and
increased choice for consumers. But trade in services across the
EU remains subject to a large number of restrictions, limiting
choice for consumers and businesses, holding back growth, output
and employment. The Council of Ministers says that this must change
if the Lisbon goals of improved growth in output and employment
are to be realised.
The Commission has therefore proposed a Directive
which seeks to encourage greater cross-border trade in services
by providing a legal framework that will eliminate obstacles to:
- The freedom for service providers to establish
their business in any Member State; and
- The free movement of services between Member
It seeks to give "both providers and recipients
of services the legal certainty they need in order to exercise
these two fundamental freedoms enshrined in the Treaty."
Our Report concentrates on the second objective,
namely the free movement of services between Member States. This
subject has raised the most controversy, much of which arises
from the Country of Origin Principle. Under this, a business which
provides services in the Member State in which it is established
is qualified to provide services on a temporary basis in any other
Member State according to the regulations of its home Member State.
The draft Directive proposes a substantial number of exceptions
to the application of the Principle and of derogations from the
draft Directive which meet many of the concerns that might arise.
Even so the Commission's proposal has been criticised.
Our Report considers these criticisms. In our view, the draft
Services Directive does not pose a threat to the health and safety
of employees or consumers. It does not pose a threat to environmental
standards, nor does it pose a threat to consumer protection. Services
of general economic interest should not be excluded from the Directive.
Many of the arguments raised against the draft Directive appear
to be either based upon misunderstanding or seek to obstruct change
and the effective operation of the free movement of services in
the EU. The effect of such obstructions will be to hold back the
dynamic contribution of a single market in services which would
bring with it greater competition and innovation, increased choice
and lower prices for consumers and business.
The draft Directive offers opportunities for small
businesses in all 25 Member States of the European Union. The
thrust of the draft Directive should be supported. The Services
Directive is essential to remove unnecessary and unjustified obstacles
to trade and to flexible markets thereby making the European Union
more competitive in a global economy.
1 Proposal for a Directive of the European Parliament
and of the Council on Services in the Internal Market SEC (2004)