What is the famous Services Directive?

The Services Directive seeks to eliminate barriers to the free establishment of service providers and the free circulation of services between EU Member States. The Commission proposal sought to use the ‘Country of Origin' principle as the general rule for service providers.

The debate quickly escalated between the defenders of the ‘Country of Origin' principle and those in favour of the ‘Country of Destination' principle. The parliamentary rapporteur, Ms. Gebhardt, proposed the ‘third way' with the rule of free provision of services, which was eventually adopted by the Parliament on 16 February 2006. The free movement of companies is encouraged by the removal of a number of administrative obstacles, but companies will have to apply on the same territory the same rules regarding the working conditions of their employees, protection of the environment and safety and health.

EBC was satisfied with the vote at the European Parliament, which removed the ‘Country of Origin' principle. This principle, which appeared simple and interesting to some, provocative and worrying to others, was considered by the craftsmen and SMEs from the construction sector to carry the risk of unfair competition due to the important differences between national legislation in the Member States.

GRTU has throughout actively supported a pragmatic outcome to the debates and promoted understanding of the benefits of this much mis-understood directive in creating a true Internal Market and therefore making the EU economy as a whole more competitive.

GRTU believes that creating the conditions for companies and their workers to better benefit from the European single market and from the achievement of its major objectives lead to economic development and thus job creation. In particular we consider that cutting red tape, improving legal certainty for companies and reducing unnecessary costs are the kind of objectives that through the implementation of the Services Directive should be achieved.

A number of rules will be particularly beneficial for European SMEs if properly applied at national level. Clauses setting up "single points of contact" in each Member State, for instance, will support small businesses operating at national and cross-border level.  The Directive now allows Member States to keep their regulations on the establishment of retail stores and the prohibitions to sell below cost, both of which were of the utmost importance for small firms and retailers. On the other hand, screening and notification requirements will ensure that national legislation is assessed for compliance and amended when necessary, thus removing pointless red tape while at the same time giving Member States the possibility to protect their general interest.