Brussels, 30/05/06 (Agence Europe) - After more than eight hours of negotiations, the 25 Economy Ministers of the EU reached political agreement on Monday evening on the proposed directive on services in the internal market. One by one, almost all of the delegations (Germany, Cyprus, Denmark, Spain, Estonia, France, Greece, Hungary, Italy, Luxembourg, Netherlands, Portugal, Czech Republic, Slovenia and Sweden) indicated that they supported the compromise text in the last tour de table. No delegation rejected it and only Lithuania and Belgium abstained. The final proposal by the Austrian Presidency modified the misgivings of the most reluctant Member States, including those in favour of a more radical opening-up of the services sector and those recommending that the specific nature of a given service be taken into account. The Austrian Presidency has achieved one of its principal objectives, coming symbolically one year to the day after the French rejected the constitutional treaty, for reasons partly due to the original version of the "services" directive. Once the common position of the Council is formally adopted, the dossier will be submitted to the European Parliament, which will have a maximum of four months to deal with it. An agreement at second reading at the end of the year seems to be a reasonable objective.
"It is with the greatest satisfaction that I inform you of our breakthrough" on the "services" directive, said Martin Bartenstein, the Austrian Minister for the Economy and Employment, after the Competitiveness Council. We reached a "political agreement without any vote against" and we "avoided a clash, a rift between the old and the new Member States", he added. He noted that the date of the agreement "also has its own importance". Describing this 29 May as a "great day for Europe", Charlie McCreevy, European Commissioner in charge of the Internal Market, congratulated the Austrian Presidency on this "wonderful result": "what Mr Bartenstein has done is far in excess of any second-hand comments". "Today we have taken a great step", said Catherine Colonna, the French Minister for European Of affairs. This is a "good text which respects the social dimension of the EU and allows the development of the services sector". She stressed the "collective spirit" it appealed to among the Member States. José Manuel Barroso "welcomed" the agreement reached by the Council, his spokesperson announced on Tuesday. According to the President of the Commission, this agreement proves that there is "no paralysis of Europe" and that "the period of reflection may well bring results" on "tricky" dossiers.
Make sure to tell the EP that the Council's agreement is as "precarious" as the Parliamentary compromise, said the Luxembourg minister during the negotiations, addressing this comment to Charlie McCreevy. Several delegations (Hungary, the Netherlands and the Czech Republic) expressed their dissatisfaction with the text, but gave their agreement in a spirit of realism and compromise. "The text is a long way from what we had hoped for", said the Lithuanian delegation, which abstained. During the negotiations, Latvia had expressed its "astonishment" at a "directive which is getting weaker" and may be of greater benefit to lawyers than to business. The provisions on the cross-border provision of services is "not an example of good legislation", the delegation added.
The Council's text is very close to the European Parliament's compromise, voted on at first reading and itself largely taken up by the Commission in is modified proposal, which is a sign of the EP's muscle in the Community institutional process (see EUROPE 9133 and 9167). It respects the net reduction of the scope of application of the directive and enshrines the principle of freedom to provide services, which removes the principle of country of origin on the cross-border provision of services.
In order to reach an agreement, the Austrian Presidency had to move towards the majority of Member States, which took the view that the Parliamentary compromise is too restrictive (see EUROPE 9150). It reintroduced the idea of a screening mechanism for national requirements for the cross-border provision of services. "Any Member States with approvals and authorisations" will have to communicate these to the Commission, said Mr Bartenstein, acknowledging that this element has been "one of the most controversial". It was a "crucial point" to the Czech Republic and Slovakia. Together with Estonia, Italy, Hungary, Lithuania, the Netherlands, Poland and Slovenia, they wanted to see more obligations for the Member States and an increased role for the Commission. Greece saw this measure as an access of bureaucracy. Germany, although not entirely won over, showed plenty of goodwill, whilst Denmark and Ireland had no very firm position.
By the deadline for the transposition of the "services" directive, each Member State will present a report on the national requirements for the cross-border provision of services put in place for political, health and public security, environmental protection and employment reasons. This report will also state the reasons why it is considered that these national requirements fulfil the criteria. It will report on any modification made to these obligations and any further obligation brought in. Each report will include the Member States' identification of the authorisation systems inherent in certain services. However, the compromise text does not indicate that the Commission will compile these reports into a public European register. The Commission will communicate the requirements transmitted by each Member State to all of the others. Every year, it will carry out an analysis and define orientations on the application of these provisions within the framework of the "services" directive. Charlie McCreevy's spokesperson confirmed to EUROPE on Tuesday that the Commission's intention was to make this information public for the safety of European business within the internal market.
The Council gave its agreement on the general objectives of the directive contained within the Commission's modified proposal. It does not challenge the existence of public monopolies providing services, nor the mode of organisation and funding for services of general economic interest (SGEI). Any interference in social and employment rights or with the directive on worker secondment has been ruled out. On this point, Sweden and Denmark insisted that their "employment market model", which is based, amongst other things, on "collective conventions", be taken into account. The "services" directive will not take priority over European sectorial legislation. The Council specified the provision whereby the directive will not affect the criminal law of the individual Member States, by preventing them from using their criminal legislation to overturn the directive and restrict the freedom of others to provide services.
The Council excluded non-economic services of general interest, a new term brought in as distinct from the services of general economic interest (SGEI), themselves covered by the directive. The European Parliament had excluded services of general interest (SGI) as defined by the European Parliament, with the Commission only excluding SGI. The Council excluded social services related to social housing, child care, family support and people with temporary or permanent requirements. These social services are provided by the State, approved suppliers or voluntary organisations recognised as such. Defending the opinion of the EP on regulated legal professions, France managed to get notaries and bailiffs excluded. In response to an Italian request, it made a gesture by agreeing to include the profession of appeal court solicitor. The following services are also excluded from the scope of application of the legislative proposal: Healthcare, transport services, port services, audiovisual services, including cinematographic services, gaming, temporary employment agencies and private security services.
Services of general economic interest (SGEI) remain within the scope of the directive. In all matters relating to establishment, the requirements to be assessed related only to the extent to which these provisions will affect their performance, in law or in fact, in the particular task assigned to them. The Council will maintain the indicative list of SGEI (postal services, electricity, gas, the distribution and processing of water, waste management) which are excluded from the provisions on the cross-border provision of services. As for the principle of the freedom to provide services, this point was "untouchable", Martin Bartenstein confirmed on Monday, on pain of bringing the entire Parliamentary compromise down. He was supported on this point by Charlie McCreevy, who believes that any change would "endanger the consensus obtained at the EP". Nonetheless, Estonia, Lithuania, Luxembourg, Poland, the Czech Republic and Slovakia fought until the very end to have this point overturned.
On company establishment, the Council took up the requirements to be assessed, featuring in the modified Commission proposal. It also respects the provisions on administrative simplification, bringing in single points of contact in the Member States for the administrative formalities incumbent on businesses.
The Council took the side of the European Parliament, in granting the Member States three years to transpose the "services" directed into their international law. Germany, Cyprus, Spain, Finland, France and Greece made requests to this effect. The Commission had proposed two years.
Once it is formally adopted, the Council's common position will be put to the European Parliament for second reading. Martin Bartenstein stated his view that the Council's text "is unlikely to pose any problems at the European Parliament's second reading". Charlie McCreevy, who agrees with him, said that "the Parliament will be pleased to note that we have respected its compromise to the letter".
The German Social Democrat MEP Evelyne Gebhardt, the rapporteur of the EP on this dossier, told EUROPE that she described the agreement as a "great victory for the Parliament". The Council's text is "directed more strongly" towards the Parliamentary compromise than towards the modified proposal of the Commission, she said, particularly on the "scope of application". She spoke of her "high hopes that we will be able to complete (the legislative process) at second reading at the end of the year". Nonetheless, she said that the EP would have due take a very close look at the wording on "social services" and " the non-economic services of general interest", as well as on the scope of the new mechanism to excess national requirements in case of cross-border service provision.