Select Committee on European Union Sixth Report


1. Sub-Committee B (Internal Market) of the House of Lords Select Committee on the European Union is undertaking an inquiry into issues raised by the European Commission's Proposal for a Directive on Services in the Internal Market (6174/04).

2. The Directive aims to make it easier for service providers to establish in other Member States and to increase the free movement in services across the European Union. In particular, the Commission proposes to:

  • Eliminate obstacles to freedom of establishment;
  • Abolish barriers to the free movement of services; and
  • Establish mutual trust in services provided between Member States.

3. The Directive's definition of Services is broad and its ramifications are considerable. While considering some wider issues, the inquiry will have a particular focus on the Country of Origin Principle. We welcome evidence from all service industries but we particularly welcome evidence from firms in business services and in construction and related services.

4. The Sub-Committee seeks evidence in particular in the following areas:

A. The current state of the Single Market in services.

  • Are there significant barriers to firms seeking to offer their services in other Member States of the European Union? If so, what are the most important of those barriers? What measures are needed to overcome those barriers? Does the Commission's proposed Directive adequately address those issues?

B. The Country of Origin Principle

  • Is the principle that a company registered to provide services in one country is automatically qualified to provide those services in any community country on the basis of home country regulation a reasonable and/or realistic starting point? What significant benefits to businesses and consumers are likely to occur as a result of the adoption of the Country of Origin Principle? Is the Principle workable in practice?
  • Will the application of the Country of Origin Principle move business in favour of firms based in Member States with the least stringent regulatory regimes? What issues does this raise for businesses and consumers? How might those issues be resolved?
  • The application of the Principle relies on the development of an extensive mutual assistance framework, whereby Member States cooperate in supervising enterprises based in their country in respect of their operations in other countries. Is this a workable framework?
  • What other significant concerns are there regarding the practical implementation of the Country of Origin Principle and how might these be addressed?
  • Assuming efficient operation of the Country of Origin Principle, what significant barriers to trading in other Member States are likely to remain, so far as firms in the relevant business sectors are concerned?

C. The future

  • Do you expect the implementation of the Commission's proposed Directive to have a significant impact upon trade in the services sector within the European Union? In which services industries do you expect the least and the largest movement towards a European Union single market in the next five to ten years?

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