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Built-in standard dumping

The European Parliament's Single Market Committee has adopted a contentious service directive.


The proposal for a services directive was considered by the European Parliament's Internal Market Committee on 22 November. With 25 to 10 votes, the committee adopted a proposal that also approves the most contentious part of the directive, the principle that it is the country of origin that should control its own companies when providing services in other countries.

Euro-LO has condemned the decision in the parliamentary committee and believes it will give green light to extensive social dumping. Financial Times hopes, on the other hand, that the European Parliament will follow in the same direction when the directive is to be discussed in plenary over the New Year. If so, it will be "A triumph for those who have supported the directive despite the fierce attacks from France and from the European trade union movement."

Mirrored counter-proposal

Social Democrat Evelyne Gebhardt from Germany was the committee's mayor for the directive. She accepted the principle that any company that is allowed to provide specific services in one EU country should be able to provide these services in any other Member State. But it must be done in accordance with the rules of the country in which the services are provided, and it is this country that has the right to control the services.

At this point, Gebhardt's proposal received support from the Social Democrats, the Greens and the Left Socialist group. But the parties on the right won the voting 21-16 with 3 abstentions.

This means that it is tempting for service providers to register in countries with weak regulations and poor control of compliance, if the company wants to provide services in other countries.

The Social Democrats split

When the proposal for a directive came up for voting in its entirety, Evelyne Gebhardt abstained, while several other Social Democrats voted for the directive. At the final vote, 25 voted in favor of the directive, 10 voted against and 5 abstained. This means that many of the Social Democrats are willing to reconcile with the control of their country of origin only if there is increased trade in services across the EU's internal borders.

The same Social Democrats have also accepted a long list of demands like that not is allowed to provide a company that provides services in other EU countries than where the company is registered. For example, there is no requirement that a company must have a contact person, yes, not even an address in the country where the services are provided. It is enough that the company has an address in the country in which it is registered. Nor can it be required that such a foreign company enter any register in the country where the services are provided.

Governments are stepping down resistance

The Committee on the Internal Market is perhaps the parliamentary committee that is most "blue", so opposition to the Services Directive may be greater in plenary than in this committee. But even if the Social Democrats were to stand together against the directive when it is voted in plenary, it will be a long way to go to get a majority against the directive in the European Parliament. Following the June 2004 elections, the right-wing parties have a clear majority in the European Parliament.

New EU laws must be adopted with exactly the same wording both in the Council of Ministers and in Parliament. The ministers responsible for the internal market met – as of this writing – in the EU Council of Ministers 28-29. November to prepare its position on the Services Directive.

The governments of Sweden and Germany have previously rejected the directive in some powerful word laws. Now the tone is tighter. Swedish LO reports that Minister for Enterprise Thomas Östros is pleased with the decision in the Internal Market Committee. He tells Swedish media that Sweden wants to liberalize trade in services.

It therefore leads to a strong confrontation with the trade union movement in many EU countries – if the Council of Ministers also accepts the country of origin principle.

The proposal for a Services Directive

The European Commission has presented a proposal for a services directive that will ensure that there is more competition to provide services across borders in the EU and EEA area. This is needed to achieve the goal of the so-called Lisbon process to make the EU the most dynamic and competitive area in the world by 2010 – according to the European Commission.

The proposal for a Services Directive is based on two main principles, the principles of mutual approval and country of origin control. This means that companies that are allowed to provide certain services in one EU or EEA country must be able to offer the same services in all other EU and EEA countries according to the home country's standards. And that means that the responsibility for controlling companies that provide services in other countries should be placed with the country where the company is registered – and not in the country where the services are performed.

The proposal has triggered fierce opposition in the trade union movement in many countries. Euro-LO also strongly warns. The same goes for the European consumer organization BEUC and organizations in the health sector around Europe.

The Directive applies to Norway because of the EEA Agreement. The Soria Moria Declaration by the three governments states that "The government will work to ensure that the EU does not implement a services directive that leads to social dumping." It says at the same time that "If other instruments fail, the Government will consider using the right of reservation in the EEA Agreement if particularly important Norwegian interests are threatened by legal acts that are planned to be incorporated into the EEA Agreement."

The rules of the country of origin shall apply

The European Parliament's Internal Market Committee approved the so-called November 22nd “Country of origin principle” of the Services Directive. It has the following wording (translated from Swedish):

"Member States shall respect the right of service providers to provide services in a Member State other than that in which the provider is registered. When providing services, they shall only be subject to the provisions on the start and performance of service activities in the State in which they are registered, in particular the requirements concerning the establishment, operation and conduct of the service provider, the quality and content of the services and standards and certification. "

However, the state in which the services are provided should be able to ensure that this is taken into account "Public order and safety or health and environmental protection are safeguarded to prevent special risks at the place where the service is provided."

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