FOREWORD—What this
Report is about
In 2004, the European Commission published a draft
Services Directive aimed at creating a single market in services
industries. We reported on the proposal in 2005, when we concluded
that the Directive was essential to the removal of unnecessary
and unjustified obstacles to trade and to flexible markets thereby
making the EU more competitive in a global economy.
The original draft Directive provoked vocal opposition
in a number of Member States. In some countries with higher per
capita incomes, concerns about the impact of liberalising services
were encapsulated in the phrase "a race to the bottom",
implying concerns that in some important senses, liberalisation
would lead to a lowering of standards. This opposition struck
a chord in the European Parliament, where the text of the Directive
was extensively revised, and the Commission's revised draft Directive
appears to accept the bulk of these changes.
This follow-up report compares the Commission's revised
draft Services Directive to the original Directive in the light
of the findings of our previous report. The Committee heard evidence
from a number of key stakeholders, who also contributed to our
original inquiry, on how they viewed the revised Directive.
Our report focuses largely on those parts of the
revised Directive that deal with the provision of services on
a "temporary basis." We are pleased that the Directive
remains horizontal in nature, covering a wide range of service
sectors although there remain too many derogations and exclusions
from the scope of the Directive.
The basis on which services may be provided temporarily
or occasionally without establishment in another Member State
has changed from a Country of Origin Principle, in the original
draft, to a Country of Destination Principle, in the revised draft.
We regret this change which is a backward step, but understand
the reasons behind it.
The new basis of the freedom to provide services
is accompanied by a framework that aims to set limits to host
country regulatory requirements. There is a risk that this may
still provide barriers to small and medium size firms wanting
to enter new markets across the EU for the first time.
Much emphasis is placed upon the provision of single
points of contact in each Member State to help ease the way for
businesses entering new markets. Much depends upon the effectiveness
of such a service in all 25 Member States. Finally, as in all
single market regulation, implementation lies at the heart of
success. The Commission must be supported in its efforts to ensure
a robust implementation of the directive, leading to a vigorous
and competitive market in services across the EU.
Overall, we believe that
the revised draft Directive should be supported. We regret some
of the changes but we also recognise that many of them have helped
to meet real concerns about issues wider than the single market
and helped to achieve what is a workable compromise for all parties.
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