APPENDIX 4: BRIEFINGS ON THE SERVICES
DIRECTIVE
The Department for Trade and Industry (now the Department
for Business, Enterprise and Regulatory Reform)
Text used by the Services Team during an informal
briefing for EU Sub-Committee B on 11 June 2007
The final text of the Directive was published in
the Official Journal on 27 December 2006. At that point the
three year countdown to implementation began.
As this Committee has already noted, implementation
is a complex process. We will need the help and cooperation of
all Whitehall Departments, local authorities and regulators, and
must keep in close step with business, consumers and trade unions
to ensure that we fully understand their requirements as consumers.
Indeed we have established a regular meeting of key stakeholders
from these groups to discuss implementation.
Essentially, there are 4 workstreams:
- Screening legislation and administrative practices
to ensure that they comply with the Directive and amending and
simplifying where necessary. We are carrying out an exercise with
Other Government Departments to determine which pieces of legislation
fall within the scope of the Directive. Legislation within scope
is being assessed against a check list to see whether it complies
with the Directive. Any provisions which are non-compliant will
need to be amended or abolished as the case may be.
- Setting up a Point of Single Contact, a website
through which service providers will be able to find out what
they need to know about operating in the UK and complete the necessary
formalities to do so. We have commissioned a short study to find
out what potential users of the site want and expect from it.
Provisional findings suggest, amongst other things, that the site
needs to be proactive and integrate with existing business services
and provide basic information free of charge. Once the study is
finalised Ministers will be able to consider the findings along
with the costs and practicalities before narrowing down the options.
- Setting up administrative cooperation arrangements
between our competent authorities (supervisory or regulatory bodies
such as professional bodies or local authorities) and those in
other Member States. Competent authorities will be obliged to
offer each other Mutual Assistance to enable the effective supervision
of service providers. Mutual assistance requests will either be
routed to competent authorities via National Liaison Points, or
directly through the IMI (Internal Market Information) system
currently being developed by the Commission. The IMI system will
help authorities identify the correct corresponding authority
in other Member States and will provide automatic translation
of queries. The system is currently being piloted with the Mutual
Recognition of Professional Qualifications Directive and once
properly up and running we will be training our competent authorities
in its use.
- Implementing the provisions in the Directive
on quality of services, so that, for example, service recipients
have access to some basic information on providers and can easily
discover what the means of redress are in different Member States.
This is a major project by any standards. We have
adopted project planning disciplines with clear milestones and
deadlines and have identified key risks to ensure that we can
implement on time and anticipate possible issues. We also have
a Project Steering Board to advise us on implementation, comprising
representatives of large and small businesses, consumers, those
who will be involved in delivering the Directive, the Treasury
and the Better Regulation Executive.
We intend to run a full public consultation on our
plans, which we hope to launch in November. Following analysis
of the responses, Ministers will need to take decisions on the
policy issues and subsequently any amending legislation will need
to be drafted and introduced. If any primary legislation is necessary,
then work contributing to that Bill will have to be completed
to meet fourth session deadlines.
Effective implementation is not just an internal
matter. We also need to keep a close eye on and influence the
implementation process in other Member States to ensure that the
full benefits accrue to UK businesses and consumers. This is a
strong message that we have been receiving from our business stakeholders
in particular.
To this end, we have been participating actively
in a series of implementation working groups organised by the
Commission, sharing our views and ideas. Three have been held
to date with more planned for the future. We have had bilateral
discussions with the Commission and informal meetings with a wide
range of Member States, both to discuss common points of interest
and also to provide advice to those several Member States who
have asked for it. In this way we can indirectly influence the
implementation process across the EU.
We are also keen to provide opportunities for UK
business groups and others to find out about implementation elsewhere.
Today, Christian Storost from the Ministry responsible for implementing
the Directive in Germany, has come to talk to a large gathering
of our stakeholders and subsequently held discussions over lunch
with a smaller group of business representatives.
That is a very brief summary of the current position.
We would be happy to amplify these points in discussion or to
try to answer any questions which you may have.
Letter dated 31 July 2007 from Mr Gareth
Thomas MP to Lord Grenfell
Re: 15482/06—Services in the internal market
The Chairman of Sub-Committee B, Lord Freeman, wrote
to my predecessor, the Rt Hon Ian McCartney MP, on 25 June
2007 following a meeting of Sub-committee B of the Select Committee
on the European Union, which took place on 11 June. His letter
discussed the implementation of the Services Directive and asked
for additional information on the following points:
1. The Department's plans for the dissemination
of information about the requirements for compliance with the
Directive, in particular to small and medium-sized firms
We will be raising awareness of the Directive by:
- Publishing a consultation document setting out
our proposals for implementation. This is planned for November
this year.
- Updating information on the BERR website. Current
information can be found at: http://www.berr.gov.uk/europeandtrade/europe/services-directive/page9583.html
- Continuing our regular e-bulletin alerting stakeholders
to developments. There are currently over a thousand subscribers.
- Holding meetings and events for stakeholders.
For example we held an event on 11 June attended by over 100 stakeholders.
This particular event included presentations by officials from
both BERR and the German Federal Government implementation teams,
as well as from Panlogic Ltd, who undertook a survey for us on
likely user requirements for the Points of Single Contact. We
also undertake presentations and briefings for individual organisations
when asked.
- Regular meetings with a core group of key stakeholders
representing all sizes of business, consumer groups and the unions
and including the CBI, BCC, IoD and FSB. These organisations in
their turn disseminate information to their members.
- Writing articles to appear in stakeholders' journals,
magazines and newsletters where appropriate.
- Our policy concerning the implementation of any
obligations on service providers under the Directive (for example,
the information obligations in Article 22) will be formulated
through consultation with stakeholders. Information on any such
obligations developed will be disseminated through the routes
set out above.
2. The tools available to the European Commission
to police the Directive
The European Commission is organising regular meetings
with Member States in order to encourage effective and consistent
implementation, for example through the sharing of best practice,
and it will be issuing Member States with guidance on implementation
later this summer. Immediately after the deadline for implementation,
Member States will commence a six-month peer-review of other Member
States' compliance with the Directive based on their submitted
implementation reports. BERR is working with the Commission and
other Member States to ensure that this process is as robust and
transparent as possible. Additionally, once the deadline has passed,
the Commission will be able to commence infraction proceedings
against any Member State that has not implemented the Directive
properly.
3. Services omitted from the Directive and which
would benefit from inclusion in the future
A broad summary of some of the sectors excluded from
the Directive is set out below. The detail of these provisions
is in Articles 1 to 3.
Sectors and groupings excluded from the scope of
the Directive:
Non-economic services of general interest (SGIs)
Financial services
Electronic communications
Transport services
Temporary work agencies
Healthcare
Audio visual
Gambling
Exercise of official authority
Certain social services
Private security services
Notaries and bailiffs
Taxation
Article 17 also sets out a long list of sectors and
groupings derogated from the provisions concerning the Freedom
to Provide Services.
Some areas unaffected by the Directive are criminal
law, labour law and private international law.
The Sub-Committee will recall the controversial history
of this Directive and that negotiations were protracted. The final
text represents a good outcome for the UK and our priority now
is to ensure that the Directive is implemented effectively and
on time across the EU. Some areas that are excluded from the scope
of the Directive or derogated from the freedom to provide services
provisions are covered by other EU internal market directives.
However, the Government considers that further measures are needed
in some of these key sectors such as energy, telecoms, financial
services and postal services. Key barriers include continued existence
of protected national monopolies, as well as legislative requirements
and burdensome administrative practices.
I hope that you and the Chairman of Sub-Committee
B will find this information useful.
Clifford Chance
Text used by Clifford Chance during an informal
briefing for EU Sub-Committee B on 11 June 2007
1. What is the implementation Deadline?
Member States have until 28 December 2009 to ensure
all elements of the Directive are implemented.
2. What are the "four pillars" of the
Directive?
- ART. 9-13 screening—ensure
all legislations/licences and administrative practices relating
to service providers comply with the Directive, meaning remove
or amend any laws and practices which create unjustifiable barriers
to trade. ART 14, 20—prohibition; ART 15—evaluation
- ART 6-8 point of single contact—setting
up an online portal through which businesses will be able to complete
the formalities and procedures needed to set up a business or
provide a service on a temporary basis
- ART 28-29 mutual assistance—Regulators
will be enabled to co-operate more efficiently with their counterparts
in other Member States.
- ART 26 Quality of services—the
Directive also includes provisions on rights for service recipients,
such as making information on redress schemes more readily available.
3. Role of the Commission, Parliament and Council
In addition, each Member State is required to report
back to the Commission on what legislation and practices they
have retained and the justification.
The Commission have planned to hold several Working
Groups during the course of the implementation stages with Member
States, to discuss aspects of the Directive and share best practice.
The UK will be playing an active role in these.
On 4 June 2007 the Commission invited national and
European professional associations and their members to provide
information on existing and planned codes of conduct.
The Parliament will host an open hearing on implementation
in mid-2008
The Commission is to report to Parliament on the
application of the Directive at the end of the implementation
period and every three years thereafter (ART 41)
4. Consequences of non-implementation
After the implementation date (28 December 2009)
the Directive will have direct effect against a Member State.
This means that its provisions can be invoked by
individuals provided those provisions are (i) clear, precise and
unconditional and (ii) not dependent on further implementation
by the Member State
A directive does not generally create rights and
obligations between individuals. HOWEVER,
- UK Courts will have an obligation to interpret
UK legislation in the light of the Directive; and
- UK Courts have a duty to cooperate.
5. What measures can a UK service provider take
if he encounters legal obstacles in other Member States which
are not compatible with the Directive
Option 1: Complain to the European Commission
Option 2: Complain to the DTI
Option 3: Go ahead and ignore the legal requirement
6. What sanctions are available against a Member
State that fails to implement
Option 1: The UK could take another Member State
to Court
Option 2: The European Commission could take another
Member State to Court
Option 3: The service provider could claim damages
against the Member State in question
Additional information submitted to Sub-Committee
B by Clifford Chance
Background
On 19 January 2004, the European Commission (the
Commission) published a draft Directive aimed at creating a single
market in services industries. The proposal faced significant
political opposition and was subject to significant amendments
by the European Parliament (the Parliament).
In 2005, the Internal Market Sub-Committee B of the
House of Lords Select Committee on the European Union (the Committee)
conducted an inquiry on the proposal and considered the criticisms
in its report "Completing the Internal Market in Services".[43]
The Committee concluded that the proposal did not pose a threat
to the health and safety of employees or consumers, nor did it
pose a threat to consumer protection or environmental standards.
It also concluded that services of general economic interest should
not be excluded from the Directive. According to the Committee,
many of the arguments raised against the proposal appeared to
be either based upon misunderstandings or were seeking to obstruct
change and the effective operation of the free movement of services
in the European Union (EU).
On 5 April 2006, the Commission published an amended
draft of the Directive, in which it largely incorporated changes
made by the Parliament to the original proposal. For instance,
the "country of origin principle" was removed from the
text of the new draft in favour of a "freedom to provide
services".
On 24 July 2006, the Committee conducted a follow-up
inquiry and published a report, "The Services Directive
Revisited", which compared the Commission's revised draft
Directive to the original proposal in the light of the findings
of their previous report.[44]
While the Committee concluded that the revised draft Directive
should be supported, it expressed concerns that the DTI may be
underestimating some of the potential problems in implementing
the legislative and registrative changes in the UK.[45]
The Directive was finally adopted at the Transport,
Telecommunications & Energy Council on 11 December 2006 and
thereafter published in the Commission's Official Journal on 27
December 2006.
Summary of previous oral evidence given to the
Committee by Oliver Bretz and John Osborne
Country of Origin Principle
The Country of Origin Principle is a fundamental
principle recognised under settled case law of the European Court
of Justice (ECJ) and can still be invoked regardless of the precise
wording of the Directive. In the absence of any harmonisation
in the field of services across the EU, a restriction can only
be based on rules justified by overriding requirements relating
to the public interest and applicable to all persons and undertakings
operating in the territory of the Member State where the service
is provided, but only insofar as that interest is not safeguarded
by the rules to which the provider of such a service is subject
in his home Member State.
The Directive is still a useful legal instrument
because it will offer those service providers who operate across
national boundaries on a temporary basis far greater confidence
than would otherwise exist through the case-by-case application
of the rules and general criteria established in the case law
of the ECJ. Although its provisions do no more than reflect the
case law, following the expiry of the deadline to transpose the
Directive they will have direct effect in national laws and make
it considerably easier for individuals who wish to provide services
cross-borders to allege a breach of their freedom to do so.
The Directive almost switches the burden to the Member States
by forcing them to adopt certain measures into national law. If
a Member State fails to do so, the individuals concerned can rely
upon the provisions of the Directive against the Member State
in question. In this respect, the Directive will be effective
because specific articles can be invoked as opposed to general
principles set out by the Community courts, which by their nature
are much more difficult to interpret and much more open to debate.
In addition, the Directive encourages service providers to go
cross-border by amongst other measures requiring Member States
to set up single points of contact.
Temporary nature of services v Established
nature of services
The ECJ has consistently held that the temporary
nature of an activity should be determined in the light not only
of the duration of the provision of the service, but also of its
regularity, periodical nature or continuity. This settled-case
law has rendered the notion of services on a "temporary provision"
very difficult to define in a meaningful manner. The meaning of
"temporary provision" may vary depending upon the specific
activity and how it is actually delivered on a cross-border basis.
Under the Directive, which does not provide a definition of "temporary"
in Article 4, as long as the services are not being provided on
an indefinite basis, it can be interpreted that they will be provided
on a temporary capacity.
The Directive has instead focused on the notion of
establishment. A business established in one Member State could
provide services and have infrastructure in another Member State
without being established in that Member State (free movement
of services).[46] Alternatively,
a business could form a second establishment and therefore become
subject to the same conditions as the nationals of that Member
State (freedom of establishment).
Mutual recognition of professional qualifications
The Directive on the recognition of professional
qualifications applies a Country of Origin Principle to professional
qualifications.[47] It
is a major door-opening exercise to provide services in Member
States where there are very high barriers to entry in terms of
qualification.
Posting of Workers Directive
Where service providers post workers to another Member
State their main employment conditions will be governed by the
rules of the host Member State, which remains entirely competent
to define who qualifies as a worker (and who is to be regarded
as a "false independent").
Legal obligations to change legislation
arising under the provisions set out in the directive
| Services Directive Requirements
| UK Implementation |
Commission cooperation |
Scope
|
| Services of general economic interest (Art. 1.3.2)
| What would the definition cover under UK law (regulated professions, business services, and distributive trade)?
| Communication from the Commission on services of general interest in Europe (2001/C 17/04)
|
| | How should they be organised and financed?
| |
Access to a service activity
|
| Authorisation schemes (Art. 9-13) | What services will require authorisation for reasons of public policy, public security, public health or the protection of the environment?
| |
| | What administrative procedures and formalities will be required for granting authorisation (licences, approvals or concessions)? Would interviews be required (Recital 53)?
| |
| | What will be the established selection procedures where the number of authorisations for a given activity is limited?
| |
| Points of single contact (PSC) (Art. 6-8) |
What facilities the PSC will require (electronic procedures)?
| |
| | What information will be easily accessible to providers and recipients?
| |
| | How will the PSC communicate/interact with competent authorities?
| |
Exercise of a service activity
|
| Multidisciplinary activities (Art. 25) |
| |
| Quality of services (Art. 26) | What will the UK require in terms of information & transparency?
| On-going consultation on codes of conduct |
| Mutual assistance—Enforcement and Regulatory Cooperation (Art. 28 & 29)
| How many UK liaison points will be involved? (Art. 28.2)
| Internal market information (IMI)[48]: requests for information; checks; inspections or investigations
|
| | Where will the UK liaison point be located?
| |
| | Supervision procedures—factual checks and controls (Art. 28.4)
| |
| Alert mechanism (Art. 32) |
| IMI
The Commission can consider publishing a communication similar to the Communication from the Commission to the Council and the European Parliament—Civil protection—State of preventive alert against possible emergencies (COM/2001/0707 final)
|
Implementation process
The UK is required to give effect to the Directive
in its national law preferably before 28 December 2008 and no
later than 28 December 2009.[49]
A period of two years is proposed for implementation of laws,
regulations and administrative provisions necessary to comply
with the Directive. A period of a further year is allowed for
the Commission's evaluation of reports on the implementation supplied
by Member States.
What will be the involvement of the EU institutions
in the implementation process?
European Commission
Since early 2007, the Commission has been hosting
and coordinating working group meetings with the Member States
on different implementation issues.
Implementation is also monitored and reviewed yearly
by the Heads of State and Government at the EU Spring Summit Meetings
(European Council).[50]
On 4 June 2007, the Commission invited national and
European professional associations and their members to provide
information on their existing and planned codes of conduct and
to give their opinions on how best to develop codes of conduct
at European level.
By 28 December 2008, the UK (and other Member States)
will be required to report back to the Commission on what legislation
and practices it has retained and the justifications.
Following the expiry on 28 December 2009 of the deadline
to transpose the Directive and by 28 December 2011 and every three
years thereafter, the Commission will be required to report to
the Parliament on the application of the Directive, accompanied
where appropriate by proposals for additional initiatives.[51]
European Parliament and Council of Ministers
The Parliament will be hosting an open hearing on
the Directive's implementation in mid-2008.
How will the UK proceed with implementation?
Screening and initial proposals
The Department of Trade and Industry (the DTI) is
the UK government department responsible for implementation of
the Directive. The DTI has set up a Services Team to coordinate
a thorough and careful review of existing UK relevant legislation
regarding the supply of services to ensure that it complies with
the market-opening criteria in the Directive. The Services Team
is working to identify (i) any provisions of the Directive that
have already been given effect in the UK by existing legislation
and other rules as well as any provisions which would have to
be repealed or amended in order to comply with the principles
set out in the Directive; (ii) set out rules on regulatory and
administrative requirements concerning access to and the exercise
of a service activity; (iii) determine those specific requirements
that are subject to an absolute prohibition in the proposed Directive
(e.g., under Articles 14, 20) and those which are subject to evaluation
(e.g., under Article 15). The Services Team is also working on
two other main strands to implementation, namely the establishments
of points of single contact and liaison points for mutual assistance.
The requirements of the Directive are complex and
implementation will require the involvement and co-operation of
a number of other government departments and public bodies. An
interdepartmental group may be required to examine the draft legislation
and identify any difficulties regarding land-use planning obligations
and the identification of a competent authority.
Public consultation
The DTI will publish an implementation plan, the
Services Directive implementation project, providing a comprehensive
update on how it also intends to approach implementation of the
Directive in the UK. This plan should explain the policy reasons
behind the proposed implementation.
Stakeholders should be invited to comment on the
benefits and the costs, which they consider, may be derived from
the proposed implementation plan and be kept up to date with this
work.
In the autumn of 2007, the DTI will run a three-month
formal public consultation on the proposed legislative changes
necessary to implement the Directive and publish a feedback statement
on responses to the consultation on the DTI's website when the
rest of the implementing regulations are laid.
Revision of the proposals
The DTI will revise its proposals in the light of
responses to the consultation.
The Better Regulation Executive in the Cabinet Office
should scrutinise DTI's own proposals to identify any instances
of over-implementation.
The DTI will lay down before Parliament new laws
in the form of a bill if primary legislation is required or in
the alternative it may proceed by way of statutory instruments
(orders, rules or regulations).[52]
Explanatory memorandums will be required to explain the key changes
the statutory instruments will make to existing legislation. In
addition, impact assessments will be carried out in order to enable
the Government to weigh up and present the relevant evidence.[53]
43 European Union Committee, 5th Report (2005-06):
Completing the internal market in services (HL 23) Back
44
European Union Committee, 38th Report (2005-06): The Services
Directive Revisited (HL 215) Back
45
Ibid. page 26. Back
46
Establishment is "the actual pursuit of an economic activity
through a fixed establishment of a provider for an indefinite
period" (Article 4 of the Directive). Back
47
Directive 2005/36/EC of the European Parliament and of the Council
on the recognition of professional qualifications (Official Journal
L255 of 30 September 2005. Back
48
IMI will also include computer applications specific to a particular
area such as Electronic Commerce or Professional Qualifications. Back
49
Article 44 of the Directive. Back
50
The last EU Spring Summit Meeting took place in Brussels on 8
and 9 March 2007. Back
51
Article 41 of the Directive. Back
52
Statutory Instruments are a form of legislation, which allows
the provisions of an Act of Parliament to be subsequently brought
into force, or altered without Parliament having to pass a new
Act. They are also referred to as secondary, delegated or subordinate
legislation. Back
53
Impact assessments were previously known as the Regulatory Impact
Assessment. Back
| 
