Services Directive causes further EU headaches

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Member states are struggling to bring the EU Services Directive into national law while carefully watching other countries' development, a EURACTIV round-up has found.

The European Commission has long viewed the Services Directive as a crucial step in completing the EU's single market, but member states' failure to put it in place before the recently expired December 2009 deadline led to much hand-wringing and debate in Brussels.

The argument centres on how the Commission will respond should infringement procedures be launched to force member states to speed up their efforts. The question floating around is whether a "softly-softly" approach would be more appropriate given the complexities of this troublesome dossier.

During his hearing before the European Parliament, French commissioner-designate for the Internal Market Michel Barnier said he favoured negotiations rather than binding legal pressures. He said he planned to visit each of the 27 member states to discuss with governments and economic and social representatives the slow implementation of the directive.

"I was not proud when the tale of the Polish plumber was bandied about in my country. It would be better in any case to speak of the Luxembourg plumber, who has to grapple with four different legal systems if he wants to work in a 40-kilometre radius," Barnier admitted.

France tops list of failing states

Some observers claim that Barnier's gentle approach can be explained by the fact that his own country is faring poorly in its implementation of the directive.

In January 2010, EURACTIV France reported widespread concern about the methods used to transpose the directive into law, with no deadline or even timetable in sight for 2010. Critics also said there was a lack of transparency in the authorities' working methods.

In response, the French government released a 16-page progress report, outlining which measures have already been put in place and specifying expectation completion dates for those in the pipeline.

The text politicises the debate a step further by describing the benefits brought by the directive, which the text claims will add to France's already "positive history" of having an economy of open services.

Germany: Still a 'patchwork rug' of regulations

Germany has had similar problems. The main obstacle to implementing the directive in the EU's largest economy is the obligation to set up points of single contact through which service providers can access information and administrative formalities.

Due to the federal system of 16 states, there is a 'patchwork rug' of different regulations, socialist MEP Evelyne Gebhardt told EURACTIV Germany. Gebhardt, who has been dealing with the services regulation for many years as a rapporteur in the European Parliament, explained that Germany's federal system makes implementation very complicated.

"This makes it very difficult for entrepreneurs from abroad. The different German states did not really simplify the transposition of the directives," Gebhardt MEP said.

The Federal Ministry for Economic Affairs in Berlin had started to coordinate the issue together with the 16 German states. State representatives did make statements in favour of greater cooperation, but ultimately, "everybody knows that the German states are used to doing what they want anyway," according to EURACTIV Germany. "Maybe it would be an exaggeration to speak about coordination," Gebhardt added.

According to officials in Berlin, it is amazing "and even ironic" that new Eastern European member states – Poland, for instance – are the ones pushing stringly for further liberalisation.

In a nutshell, it seems to be too early to verify if Germany's transposition is better than that of other problematic countries like France and Italy. It will be up to the European Commission to receive and examine all member states' reports, officials said.

Poland still grappling with all details

The Services Directive came into force in Poland on 28 December 2009, after the government had approved a draft special services law on 8 December.

However, the entrepreneurs' organisation, Lewiatan, criticised the Polish government for not being on time with all the regulations required to make the directive work. Jacek Adamski from Lewiatan warned in a conversation with the Polish Press Agency (PAP) that the delay may last months or years.

"Too little, too late," Adamski concluded, arguing that decisions made by the Polish government were poor given that the December 2009 deadline was set several years ago.

Smooth implementation in the Czech Republic

Implementation was smooth in the Czech Republic. The Czech parliament adopted the Free Movement of Services Act on 17 June 2009 and it came into force six months later, on 28 December.

Since then, foreign entrepreneurs can temporarily offer their services in the Czech Republic provided they have permission from their home country authorities. Moreover, single contact points were created at local trading offices, where entrepreneurs can get all the information necessary for starting up a company (contact points can also be accessed electronically).

The law also includes the principle of tacit authorisation and many other simplifications of administrative procedures, most notably recognition of certain documents – insurance papers, for example – from abroad. Business experts claim that the law fulfils all the requirements of the Services Directive.

According to the Confederation of Industry of the Czech Republic (SP?R), domestic implementation of the directive was successful. However "correct and unified adoption" in other European states will be vital for Czech businesses.

The chairman of the International Chamber of Commerce (ICC Czech Republic), Jaromír Drábek, confirmed that "there was no problem either in the legislative process or implementation" of the Free Movement of Services Act. However, he pointed out that some European states, notably Austria, still have to bring their legislation in line with parts of the directive's principles.

Romania worries about delays in other countries

Romania's Department for European Affairs, the government department charged with implementing and monitoring EU legislation, told EURACTIV Romania that the general principles of the directive were transposed ahead of the deadline.

As such, officials argue, they have created the right legislative framework for amending sectorial laws, adopting implementation measures necessary for the creation of the unique contact point, and cleared the way for Romanian authorities to cooperate with other member states.

Cristian Ghinea, director of the Romanian Center for European Policies, a think-tank, believes the directive would only be interesting for Romania if it would insure free access of Romanian companies to West European markets, "but in the present form, as it demands reauthorisation, the directive does not represent progress from that point of view".

"Having a naturally open market – the administrative barriers are the same for all companies, regardless of where they come from – and a cheap local labour force, applying the Services Directive in Romania, will only have a minor impact; we are more interested in how it's implemented in other countries, where Romanian companies could look for oportunities," said Ghinea.

E-government is the biggest hurdle in Slovakia

The Slovakian government adopted an internal market services law on 13 January 2010, which is currently on the table of relevant parliamentary committees. The deadline for examination is March 2010, after which "an intensive national debate," is expected, according to EURACTIV Slovakia.

The issue of e-government is likely to prove the biggest problem during the transposition period, sources said.

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 providing cross-border services.

The original deadline for member states to fully implement the directive into national law was 31 December 2009.

A November 2009 debate in the European Parliament's internal market and consumer protection committee (IMCO ) saw a number of MEPs express misgivings over the directive's implementation in EU member states, not merely in terms of timing but also concerning the methods used by individual countries (EURACTIV 13/11/09).

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