Bolkestein directive

The Directive on services in the internal market (commonly referred to as the Bolkestein Directive) is an initiative of the European Commission aimed at creating a single market for services within the European Union. It is seen as an important kick-start to the Lisbon Agenda which, launched in the year 2000, is an agreed strategy to make the EU “the world's most dynamic and competitive economy" by 2010. With the proposed legislation, the Commission wants to reduce the barriers to cross-boarder trade, principally by doing away with the service industry regulations of individual EU Member States, unless those regulations are non-discriminatory; objectively justified on the grounds of public interest; and proportionate. The Commission argues that regulations which do not meet this criteria are unnecessary and pose a barrier to service providers wanting to provide services in other Member States in addition to their country of establishment.

The Directive was drafted under the leadership of the former European Commissioner for the Internal Market Frits Bolkestein, and hence his name has come to be associated with it.

The Services Directive proposes several important changes in the EU services market. These can be grouped into three interrelated pillars. The first is what is referred to as the "freedom of establishment". This means that if a company or individual is able to provide a service in one EU country, should they wish to provide the same service in another Member State, there should be little, if any, legal or administrative restrictions on them doing so i.e. they should be free to set up shop in any other Member States in the same way as a company or individual is able to in h/er Member State of origin. The second is the application of the "country of origin principle". This is a rule that would facilitate the free movement of service providers on a temporary basis to encourage cross-boarder competition or, more specifically, to encourage individuals or companies to test other markets without first having to establish. What makes this different from the freedom to establish is that the company or individual may provide services to consumers in another Member State on the basis of the laws of its country of establishment/ origin and without registering with the regulators in the host Member State. Hence the term "country of origin principle". In practice, this would mean that a company providing services in France (established there), for example, would be free, for a limited period, to provide services in the UK under French laws.

The third component is designed, in part, to support the first two freedoms; particularly the country of origin principle. Proposals include measures to promote "mutual assistance" between Member States for enforcement purposes; harmonisation measures with respect to consumer protection; and other measures to promote and up-hold the quality of services.

Both proponents and opponents alike agree that the Directive, if enacted, could have a far-reaching impact in the services sector across the EU, which represents 70% of EU economic activity.

Criticisms

The Bolkestein Directive has provoked intense debate and mass protests various EU countries, including France, Belgium, Sweden and Denmark. On 21 March 2005 nearly one hundred thousand marched in Brussels to protest the Directive. The crowd was primarily working people and trade unionists from Belgium, France, Germany, Italy, and the Netherlands. ¹

Critics argue that the Directive will erode many of the member state regulations governing industry and the environment, and lead to competition between workers in different parts of Europe, resulting in a downward spiral in income levels. They also charge that the Directive is a sign that “Anglo-Saxon” style economics are running rampant over the EU, and they warn that the directive will lead inevitably to "social dumping" -- companies and jobs relocating to the low-cost and less regulated economies of eastern Europe.²

The process of "accelerated liberalization" will shift the burden of proof from the liberalisers to regulators, they argue. Assuming every piece of regulation to be burdensome by default, the Directive requires member states to justify all existing legislation on the grounds that it is non-discriminatory, necessary and proportional.³

Writing in The Guardian of 20 January, David Rowland argued that the Directive posed a threat to the British health care system:

The directive is controversial because it applies the same rules to healthcare and social services as it does to estate agents, fairground providers, advertising companies and private security firms. The commission no longer sees the services provided by doctors to patients as a special public good to be enjoyed by all citizens, but as an "economic activity", a commodity to be traded across the EU much like any other.

He also pointed out the implications for the building trade and environmental protection:

The trade union movement is worried that construction companies will no longer have to abide by UK health and safety laws on building sites, and environmental campaigners fear that local planning rules, which govern where supermarkets can open, will be judged to be an illegal barrier to market entry. Attempts to stem the growth in the number of bars and nightclubs in city centres will also be thwarted by a number of clauses.⁴

Another critic of the Directive, Graham Copp, commented in Red Pepper:

any company in any services industry (be it health, building, advertising or whatever) that was set up in one of the EU’s less regulated economies -– perhaps in one of the new eastern European member states -– could also set up in the UK; and the laws that would govern wages, standards, contracts, etc, for that business in Britain would be those of the eastern European country, for example, not the UK.⁵

The European Trade Union Council argued that the Directive

could speed up deregulation, seriously erode workers’ rights and protection, and damage the supply of essential services to European citizens.³

Derek Simpson, general secretary of Amicus, has said:

UK health and safety standards are hard won, and this directive threatens to dilute those high standards and compromise British workers and public safety without any redress to UK law or regulatory bodies.³

Future

On 22 March 2005, EU leaders, led by France, agreed on a "far reaching" revision of the Services Directive to preserve the European social model. French President Jacques Chirac told an EU summit in Brussels that the changes planned by the Directive were "unacceptable". 6. However, modifications to the Directive will be introduced within the normal course of the EU legislative process, at a later stage. The Directive will not disappear from the pipeline because the leaders agreed on the need to "open up" the EU services sector.

"If France wishes to eliminate the risk of social dumping, this will be addressed in the framework of the legislative procedure and of co-decision, which has been initiated," declared Jean-Claude Juncker of Luxembourg.⁷

On 1 July 2005 the UK, which is pro-liberalisation and thus in favour of the Services Directive, took up the chair of the EU Presidency. Among other things, under the UK Presidency the Services Directive looks likely to raise temperatures in the EU, particularly among those in favour of a more social Europe, such as France, Belgium and Germany. In Tony Blair's speech to the European Parliament on 23 June, he committed the UK Presidency to try to "resolve some of the hard dossiers", of which the Services Directive is one. 8 However, whether the UK is able to retain the key liberalising aspects of the Directive and achieve agreement in Council during its Presidency remains to be seen.

The European Parliament is expected to consider the Directive sometime in October 2005.

References

1. "Huge protest against Bolkestein Directive". 21 March 2005. {{cite news}}: Unknown parameter |org= ignored (help) (retrieved 27 March 2005)

2. "Bolkestein blasts French protest against his services directive". 20 March 2005. {{cite news}}: Unknown parameter |org= ignored (help) (retrieved 27 March 2005)

3. "Briefing: Commission Framework Directive on Services". November 2004. {{cite news}}: Unknown parameter |org= ignored (help) (retrieved 27 March 2005)

4. Rowland, David (january 20, 2005). "In the health trade". {{cite news}}: Check date values in: |date= (help); Unknown parameter |org= ignored (help) (retrieved 27 March 2005)

5. Copp, Graham (April 2005). "The Bluffer's Guide to the Bolkestein directive on services". {{cite news}}: Unknown parameter |org= ignored (help) (retrieved 27 March 2005)

6. "EU agrees to reform services plan". 23 March 2005. {{cite news}}: Unknown parameter |org= ignored (help) (retrieved 27 March 2005)

7. "'Bolkestein directive' to stay, but will be watered down". November 21 2005. {{cite news}}: Check date values in: |date= (help); Unknown parameter |org= ignored (help) (retrieved 27 March 2005)

8. "http://www.number-10.gov.uk/output/Page7714.asp", Prime Minister's speech to the European Parliament on 23 June 2005.