EU ministers agree on services directive

24-08-2006

European Union (EU) ministers yesterday agreed on a landmark deal to open-up Europe's market in services to cross-border competition.

The new rules will allow providers of a range of services, from plumbers to caterers, to carry out their business across Europe's trading bloc with fewer restrictions than they currently face.

The services directive is seen as a key move towards the completion of the EU's single market, with services currently making up 70 per cent of the region's economy, but accounting for just 20 per cent of trade.

Yesterday's compromise deal follows months of controversy over the planned reforms, with an earlier draft of the directive held partly responsible for the decision by French and Dutch voters to reject the EU constitution in referendums held last year.

Under the original version of the directive, companies providing services throughout the EU would have been allowed to operate under the rules of their home country, prompting fears that firms from new-member states would undercut their rivals in richer EU nations.

Twenty-four of the EU's 25 member states voted to back a revised draft of the proposals yesterday, following the European Parliament's decision to vote against the so-called "country or origin" principle in February.

Lithuania was the only country to reject the watered-down version of the rules, arguing that stronger provisions were needed to ensure the greater integration of new-member states within the EU.

France, which had been a major opponent of the proposed rules, agreed to accept the revised draft following a decision to phase in the new provisions over three years instead of the usual two year-period for implementing EU legislation.

Under the deal reached between member states yesterday, legal services will also come within the scope of the directive, which will now go back to the European Parliament for a second reading, possibly before the end of the year.

The agreement has been welcomed by Austria, current holders of the EU's rotating presidency, which had been pressing member states to come to an agreement over the controversial proposals.

Welcoming the deal, Austrian economy minister Martin Bartenstein said the new rules would "hundreds of thousands" of jobs.

"We show citizens we can take decisions which will help growth and employment," he said.

The UK government says the new legislation will be worth around £5 billion a year to the country's economy and will boost service industries such as, advertising, construction, retail and plumbing.



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