Economic protectionism stoked by fears of social dumping is preventing EU countries from taking full advantage of the EU services directive, says MEP Anna Maria Corazza Bildt. Ahead of her 15 March report, she tells EURACTIV how the rules, which chop down barriers to the sale of services across borders, curb discrimination and could result in a 2.6% rise in European GDP.
Anna Maria Corazza Bildt is a Swedish Christian Democrat, MEP in the European Parliament’s European People's Party group and rapporteur on the EU's Services Directive. She spoke to EURACTIV's Marc Hall. This interview was edited into a shorter form.
Tell us about the Services Directive…
The services sector represents about 70% of EU GDP and total employment. The service directive is about opening the market for service to have a borderless market for services. I always say remove the barriers, the borders and the burdens to free movement in the EU.
There are all sorts of different barriers, and some of them are hidden, like double standards requirement, economic tests requirements, legal form requirements from one member state to another, economic needs tests, discrimination from digital downloads, price restrictions.
For example if you want to establish your company in another member state you cannot use the insurance company you’re using but you’re forced to have another insurance from the member state you want to establish [your company in]. If you’re a company in France and you want to set up in Germany, the insurance you have in France is not recognised, so you have to set up a new insurance in Germany. I’m not saying it’s just France and Germany, it happens all over the place.
A service which already has a recognised standard in one member state, they want you to do additional tests in another member state by another standard.
So it’s a lot of administration, red-tape, costs.
And wasted time…
Of course. But also for the consumer there is a lot of discrimination. We are receiving more and more over the past years claims, information from consumers that they feel discriminated.
One good example is travel packages. If you buy a travel package in one member state and you’re a resident in that member state, you pay ten; if they see that you are resident in another member state you pay 12, both on the net and physically. So the travel service providers are discriminating based on your nationality and your place of residence.
It can be both difference in price and access to the service. They can tell you, this package for a group to travel for three days somewhere is not accessible to non-residents of the member state where the company is, which is totally against the service directive and the single market.
Why have there been so many difficulties in implementing the service directive?
Well, just to remind everyone that the services directive was adopted in 2006. It has been transposed. The deadline was 2009. But the problem is that it’s not been correctly and fully transposed. The focus should be on incorrect enforcement by the member states.
Why don’t member states implement it?
They don’t do it because of protectionism, because of protecting local corporations.
You really get into the crunch of how member states operate, protecting their national market versus the internal market. Well it’s the other way round; to create growth and jobs you have to open up and really implement the full freedoms on which the internal market lies.
My line [of argument] is really going to increase the accountability and transparency and really confront the member states with the cost of non-implementation, how many jobs in Europe are we losing.
Which member states haven’t implemented the directive?
The majority of the member states have not fully and correctly implemented the services directive.
The majority. Which ones have then?
All the member states have transposed the services directive but transposed doesn’t mean fully implemented. The Commission has already started pre-infringement procedures, the whole machinery or procedure for infringement of the internal market – sending letters etc. What I would like to say is that I very much support the Commission commitment to a zero-tolerance policy to non-full implementation of the services directive.
Then if there is a need for naming and shaming individual member states I will not refrain from it. At the moment, as a first resort I have engaged in dialogue with the Irish presidency in a very tough and public dialogue where I said that I want to have concrete action.
The Commission and others have given us ample examples of all sorts of [hindrances] and the consumer organisations have given also on legal requirements, economic tests, price restrictions, etc.
What action can and will the Commission take against member states for non-compliance with the directive?
I support that the Commission has a zero-tolerance policy.
What does a zero-tolerance policy mean in practice?
Zero-tolerance means that if you don’t implement full and properly the services directive the Commission is ready to launch an infringement procedure.
In the European Court of Justice…
Yes. And they have. They have started. They have sent letters already.
Which countries have they started infringement procedures against?
For an update on the infringement procedures I think you should ask the Commission. I think they have sent a letter to 12 member states. Others have received other kinds of letters with questions.
Will you be presenting the facts and figures in your 15 March report on the service directive?
[The European Commission] provided me, and others in the consultation, with stunning figures of how many jobs we are losing and why.
According to the Commission’s latest estimates, the potential for growth is 2.6% GDP in 5-10 years. This figure is well known.
The citizens of Europe have the right to know why this services directive is not implemented, which means they are deprived of jobs.
In your report are you calling for a revision of the service directive?
No. I don’t think we should open a new legislative process, because as you know that takes years. In my report I will have an urgent call on a full, correct and proper enforcement throughout the member states. The focus now should be on implementation.
I’m not reopening the directive but since 2006 a lot has been happening with the new technologies. So we need to adjust to the modern way of selling goods and services. And therefore I will stretch the directive in the sense of including all the new generation of digital services that couldn’t be included in 2006, mobile service and digital services, and the fact that a number of services are now sold together with good and services. It’s a mixed package.
I assume modern technology means e-commerce? What has changed since 2006? What insurances are there for consumers buying goods from another member state?
With modern technology, I mean the growing mixture of goods and services, the close interlink between manufacturing and services, the "servicification" and the speedy development of digital services.
In terms of guarantees for the consumers, we fully harmonised the right of withdrawal for online purchases with the new consumers rights directive adopted two years ago. As a result, the rule of 14 days withdrawal right is now applicable for all consumers throughout Europe. This is one example of enhanced legal certainty thanks to EU-wide harmonisation.
You said you would not want to open up the legislative process but that you would "extend" the services directive to take into account modern technology. What does "extend" mean in practice if not rewriting the legislation? What can you do?
Since the adoption of the Services Directive in 2006, new forms of services – such as digital services – have developed very quickly. In my report, I do not want to open up for a revision of the legislative framework, but I would like to encourage everyone to interpret the provisions of the directive to the maximum extent possible, to make sure that we also apply the existing rules in a consistent and constructive manner to new forms of services – in order words, to make the implementation future-proof. Unfortunately, there are currently still too many examples of barriers hindering the development digital services.
The first proposal for a services directive ignited fears that it would lead to competition between workers in different EU countries and hence social dumping, the infamous “Polish plumber” issue. Is it not a politically impossible task to get member states to implement services legislation without EU-wide social harmonisation, of social security, pay and conditions etc?
I don't see why it would be politically impossible to get member states to implement a directive that will bring growth and jobs without costs? Right now, in a time of rising unemployment and competitiveness gap in Europe, we cannot afford to neglect the potential of the internal market for services.
I will definitely put pressure on member states, make them fully understand that they cannot continue to impose double regulations and obstacles, and find ways to hold them accountable for their inadequate enforcement of internal market rules.
I agree that a balance with the social dimension is important, but article 1 of the services directive clearly states that the scope is not about labour law. We need to be pragmatic and result-oriented, we need targeted actions. Now, the focus of my report is very clear: how to create jobs.