The European Commission proposed on Tuesday (10 January) a fine-tuning of the Services Directive in order to address the over-protection of certain professions in the member states.
The Services Directive is far from unleashing its full potential, a fact accepted by Commission Vice-President for Jobs, Growth and Investment, Jyrki Katainen, and his colleague Elżbieta Bieńkowska, in charge of the Internal Market portfolio.
While goods move freely across EU borders, the Commission has pointed out that more than 5,000 regulated professions across Europe represent an obstacle to the freedom of movement of professional workers in the Union.
With more than 90% of all jobs coming from the services sector, “making better use of the single market for services will help European businesses create jobs and growth across borders”, Katainen said.
In order to overcome the member states’ longstanding reluctance to alter their national laws regulating some professions, from legal services to ski instruction, the Commission stressed that proposals put forward would not alter the “balance” between increasing competition and the job protections in order to guarantee the quality of services.
“We don’t want to change the rules,” said Employment Commissioner Marianne Thyssen, who was involved in drafting the Services Directive when she was an MEP more than ten years ago.
Accordingly, the College of Commissioners adopted a package of measures to cut red tape for businesses, seen as the main obstacle to growth beyond national borders.
But the executive also proposed that member states open up some sectors with high growth potential that are still affected by unnecessary constraints.
The institution listed architects, engineers, lawyers, accountants, patent agents, real estate agents and tourist guides as the priority services, given their economic potential.
Citing the positive example of the reform affecting lawyers in Poland, the Commission underlined that some legal services do not require fully trained lawyers.
Therefore, national governments should limit the activities that they allocate exclusively to certain professions in order to foster competition and improve the offer for customers.
Waving the stick
At this stage, the executive will only provide guidance to member states on opening up various sectors.
But EU officials said that they would be ready to pursue “enforcement action” (i.e infringement procedures) if the problem remains.
In this line, the proposal also called on member states to conduct a proportionality test before adopting new rules or amending old ones affecting professional services.
At the same time, the Commission will improve the mechanism by which member states notify changes to national rules on services to Brussels and other national governments, in case concerns are raised.
Juncker Commission officials insisted that the package is not about deregulation, but about opening up opportunities for businesses and better and cheaper services for customers.
“We are not telling any member state how to regulate professions,” said Katainen.
However, officials admitted that the anti-foreign workers discourse championed by populist forces across the EU, to be tested over the coming months in various national elections including in France and Germany, could impede efforts to lift some of these barriers in the months to come.
In order to avoid “misunderstandings” with the aim of its proposal, the college postponed the adoption last December to take time to fine-tune the package.
Our only target is “to reduce bureaucracy and make it easier for business to operate services cross-border in Europe,” he added.
But the Finnish Commissioner warned that “we need to completely change our mindset when talking about the Services Directive”.
He stated that Europeans need to “get rid of the old-fashioned thinking” and the fear of workers coming to offer cheaper services or entrepreneurs to circumvent national legislation.
As services are not only local but global, services should operate across borders as easily as goods move across the EU, Katainen told reporters.
“But we must make sure the rules are fair and socially responsible,” he said.
As the main novelty red tape-cutting novelty, the proposal includes a European service e-card, to simplify the bureaucracy required for providing services abroad.
Through this simpler and fully electronic procedure, the worker would contact one single authority in their home country and in their own language. The responsible authority in this member state would then verify the data and transmit it to the host member state.
Arnaldo Abruzzini, CEO of EUROCHAMBRES welcomed the e-card, “but recent history – notably in relation to the Services Directive’s Points of Single Contact – demonstrates that several member states are either unwilling or unable to deliver such simplification tools.” "While we welcome the new e-Card, let’s not kid ourselves that it’s a silver bullet," he added, recalling that many areas of the services sector are not covered by the Services Directive, so regulatory barriers don't fall under its scope.
The Services Directive was adopted in 2006 and is seen as a key tool to removing barriers to operating in Europe's internal market. Currently, only 5-10% of EU GDP is generated by cross-border services.
The original deadline for member states to fully implement the directive into national law was 31 December 2009.
The services sector makes up some 70% of Europe’s gross domestic product and total employment, yet discrimination, administrative burdens, red-tape, and the costs that come with selling services across the EU’s single market, are holding the sector’s growth, particularly among SMEs.
The freedom of establishment and the freedom to provide services are both central principles governing the single market for services. The rules entitle EU entrepreneurs to establish a business in any EU country or to temporarily supply services across borders, to other EU countries, without setting up an establishment there, for example by moving across borders, or via the Internet, the Commission says.
- European Commission:' memo explaining the package