CEDAG: ‘Confusion’ as EU services directive deadline nears

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The European Services Directive, which EU member states must transpose into law by the end of this year, is a flawed agreement, according to Patrick de Bucquois of CEDAG, a European umbrella group for non-profit organisations.

Patrick de Bucquois represents CEDAG, a European umbrella group for non-profit organisations.

To read a shortened version of this interview, please click here

You have been following the evolution of the Services Directive debate closely. Can you offer us an overview of how the legislative debate has unfolded, and where, in your opinion, it has gone awry?

As regards the Services Directive, let's start with the basics. I remember a very exciting moment in 2003 when the then head of DG Employment met with the Social Platform (of which I was a board member at the time), during the time when there'd been a consultation on the Green Paper on Services of General Interest. 

We put the question to the Commission of whether they had considered the inclusion of Services of General Interest in the overall plan for their directive on services, and the response we received was that these were two completely different issues that had nothing to do with each other. 

As a result, around a year later, there were some 20,000 people on the streets of Strasbourg, protesting against the Services Directive. So it was very clear that it did in fact have something to do with it! 

The two issues are not easy to relate, but obviously there was a link between both. If you speak about services of general interest, you are talking about a very broad range, but there are some distinctions: on the one hand, you have what I would term "economic services of general interest" - i.e. telecommunications, electricity, energy - and on the other hand, there are services that you wouldn't spontaneously consider as economic because they have a predominantly social nature, such as health services, social services, and even, to a certain extent, education. 

Higher education, in particular, is seen more and more as having an economic nature. 

One of the innovations in the original directive (then called the Bolkestein Directive, named after the then Dutch commissioner) was the 'country of origin' principle – the idea that if you work in one country, you can freely provide your services in another country, provided you respect the conditions of your home country, whether that be paying taxes or having the correct licence to operate. 

At the time, there was huge opposition to the directive from various sources: trade unions, of course, but also from academics. 

After a lot of negotiations, this 'country of origin' principle was dropped. A second thing to be removed – one of the three strands of the original directive – was the provision for cross-border health services. 

So what emerged was a new tool – no longer the 'Bolkestein Directive' but the 'Services Directive', which was quite different from the original legislation. And now, we are in the process of implementing it in the different member states. 

The deadline for member states to transpose the directive into national law is the end of 2009. So the focus needs to move from the European to the national level. 

Each member state has a process for transposing the directive, and it's not always easy. Belgium, for example, like all the EU's federal states, has to transpose at different levels, both nationally and regionally. 

Where, then, does CEDAG see difficulties arising as the directive is transposed at national level? What specific aspects are you focusing on? 

We are especially concerned that specific service providers which are non-profit organisations be taken into account correctly. In Belgium, for instance, you cannot operate a hospital if you are for-profit. 

So in a given region, a hospital can be the biggest employer, and a huge player. So we're not talking about the margins of the economy, we're talking about its centre, a really big sector. 

This sector is not fully developed in all European countries, sometimes it is given different names, such as 'social economy enterprises', but overall it's the same idea across borders. 

So what we lack at European level is a clear recognition of what it means to be a non-profit service provider. Currently, there are some ideas, but there is more confusion than agreement. 

At CEDAG, we tried to achieve this recognition through a European Statute for Non-Profit Organisations, and we thought we would succeed. But there was a long process which ended up with the adoption of a European Statute for Co-operatives, which was quite close to non-profits but not exactly the same. 

Eventually, they decided to drop the process leading to a European Statute for Non-Profits, which is something I can understand because politically speaking, it was a difficult dossier. A lot of energy would have had to be invested by the Commission to raise awareness about what it was, but ultimately it's a question of political will. 

Essentially, you're saying that the Services Directive in its current guise is insufficient, and was flawed to begin with. 

Exactly. 

So even now, as we move towards the deadline for transposing the directive, the question of non-profits has not been sufficiently addressed. What then can be done? Do non-profits require a separate legislative process? 

I think there is a two-track process. On the one hand, we have to accept the Services Directive as it is, and understand that within its current framework there is some room for manoeuvre, which could lead to very unsatisfactory results. 

Most member states realised all the things we've discussed above, but from a national perspective, and wanted to leave some room for exceptions, according to their own national definition of what constitutes a non-profit. 

As a consequence, in the Services Directive, you have exceptions which are phrased differently according to the national language, and therefore many different definitions of what a non-profit is. For example, the British idea of a 'charity' has nothing to do with the German definition of a non-profit organisation. 

So on the one hand, we have to use this, it's what we have. 

The second thing is that there is a huge debate on a framework directive for services of general interest. There is a big push to achieve this from the social economy/non-profit sectors in a number of countries - particularly France, Italy, Spain, Belgium and Luxembourg – but I don't think there is any chance of it happening anytime soon. 

However, this remains a problem. We still need something to better cope with services of general interest. It seems that currently, the Commission is in a waiting mode, saying that it doesn't have a clear mandate from member states and doesn't want to take any initiatives. 

Can you explain to us what type of problems arise from the lack of a directive for services of general interest? 

There are two kinds of problems. The first is that member states at all levels, including local authorities at times, do not have very good knowledge of European rules, which in turn leads to uneven application of these rules. 

Sometimes what we call 'golden plating' occurs, which leads to countries adopting national legislation which is even more demanding than EU rules. 

Between 2003 and 2005 there was a lot of progress at EU level, including an excellent communication on Social Services of General Interest, which debated quite well the issues we had raised. But there has been nothing since, which is why we believe the new European Commission now needs to show some initiative and leadership. 

Would an EU under the Lisbon Treaty allow any of these stalemates to move forward? 

That's a tricky issue because in the Lisbon Treaty you have a new provision which goes much further than everything that was asked for by the social economy/non-profit sectors. 

It's an article that says the Council and the Parliament shall adopt a regulation on services of general interest. It's not just a legal basis, it's a commitment that they have to adopt. 

The problem is that a directive is more flexible – you have a general principle which is then adopted at national level according to national specificities. A regulation is much more difficult to adopt because people will say "we don't even agree on the basic definitions so how can we adopt a regulation?". 

I think therefore we have three possible scenarios: the first is that nothing will happen; the second is that the Commission will adopt something so basic and counterproductive that it might actually do more harm than good; and the third possibility – which still exists, though I wouldn't bet a lot of money on it - is to have a good instrument which is well elaborated. 

With a new European Commission about to come into being, can you offer us an assessment of the five-year performance of outgoing Internal Market Commissioner Charlie McCreevy vis-à-vis your areas of interest? 

First of all, it should be noted that he inherited the process from his predecessor, so he had to manage what he was given. 

In our sector, we find it a bit odd that the finance sector was excluded from the directive. When you see what is happening at the moment [in reference to the global economic and financial crisis] you see that this was a sector that more than most required overall rules from the European level. Therefore, to exclude it from the directive doesn't make a lot of sense. 

Another example is that at the start of the process that led to the directive, there was huge lobbying by the gambling industry to ensure that it was not touched by the directive. This would effectively have created a kind of free market for gambling, but it was blocked, because of national protectionism. It's such a big source of national income that each country wants to preserve its own gambling sector – it's crazy! 

I would say that the commissioner cannot bear the whole responsibility for that, because there are so many influences, including the Parliament, which clearly played a key role in this process. Overall, I would say that he could surely have done better, but from CEDAG's point of view, we didn't get much attention from him and couldn't really make these things evolve positively for the non-profit sector. 

Are there any indications who the next commissioner will be? 

Difficult question. I think it will probably be one of the big countries – I wouldn't be surprised if it was Germany. 

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