Germany welcomes amended EU services rules

16th February 2006, Comments 0 comments

16 February 2006, BRUSSELS - European Union plans to break down barriers in its multi-billion-euro services market secured the backing of the European Parliament on Thursday - but the heavily amended bill fell far short of ambitious initial goals.

16 February 2006

BRUSSELS - European Union plans to break down barriers in its multi-billion-euro services market secured the backing of the European Parliament on Thursday - but the heavily amended bill fell far short of ambitious initial goals.

The parliamentary vote was immediately welcomed by Germany which had strongly criticized the original draft over fears it would trigger further job losses. Unemployment in Germany is currently over 12 per cent.

"National standards in key sectors are being maintained," Chancellor Angela Merkel's government said in a statement, adding, "Key sectors have been removed from the impact of the directive."

The watered-down version of the legislation approved by a majority of EU lawmakers represents a hard-fought compromise between the parliament's socialist and conservative groups, but falls far short of ambitious initial goals.

Euro MPs diluted original proposals by the European Commission for a totally free cross-border flow of services to ease fears of job losses and lower standards in the sector voiced by West European trade unions.

Significantly, the new version does not contain the controversial "country of origin" principle, allowing a company to offer its services in another member state on the basis of rules applicable on its home territory.

The clause had pitted free marketeers such as Britain and East European member states against leaders in France, Germany and Austria.

Many in France were especially outraged at the prospect of an influx of "Polish plumbers" and other cheap workers from eastern Europe.

Parliamentarians replaced the "country of origin" principle with a clause obliging EU states to ensure free access to services supplied by other countries.

However, companies have to respect the labour, health, safety and environmental standards of the host country, not their home base.

Euro MPs also slimmed down the scope of the bill substantially by removing social, health and transport services from its ambit. Other exemptions include gambling, legal, audiovisual and tax services.

Water and gas suppliers as well as commercial services in education and culture are covered by the directive. It also includes areas such as catering, advertising, architects, the construction industry, accountants, hairdressers and the computer industry.

The German government welcomed the axing of the "country of origin" principal, saying that member states can continue to set their own social standards. Germany will continue to defend its labour market against "wage-dumping," Berlin underlined.

The EU directive is seen as a key element in the bloc's efforts to build a frontier-free single market but its adoption by the EU parliament follows months of tough and often acrimonious negotiations.

Under EU rules, the European Commission must now take another look at the new version of the bill and then submit it again to the assembly for a second reading. EU leaders are expected to approve the legislation in June.

Parliamentarians voted by 394 in favour and 215 against the legislation, with 33 abstentions.

The European Trade Union Confederation hailed the vote as "a real victory for European workers", saying the directive allows the opening up of the services market while also safeguarding European social standards.

But improvements must still be made, the confederation said.

However, Europe's main business lobby, UNICE, criticized the directive for excluding too many sectors and said it would allow member states to restrict services for reasons beyond public interest.

EU Commissioner Charlie McCreevy welcomed the vote, adding that the European Commission - which tabled the original draft of the directive in 2004 - would begin work on a new proposal on the basis of the parliament's vote.

"It is a solid basis for going forward," McCreevy said, adding that the challenge lies in getting the right balance between easier cross-border provision of services and ensuring public policy.

The commission estimates the freeing up of services will create 60,000 jobs in the EU, increase the bloc's economic output by up to 3 per cent and improve the quality and choice of services for consumers.

The EU already has a free market in goods. But barriers in the services sector, which represents about 70 per cent of the bloc's gross domestic product (GDP), have yet to be broken down.

Services account for more than two thirds of economic activity and jobs in the EU.


Subject: German news

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