Opinion - Editorials   

Liberalising services within the EU

The European Parliament's recent approval, by a huge majority, of a draft directive that seeks to liberalise markets in the services sector within the European Union (EU) comes after its emphatic rejection in January of the directive to open port services for competition. Together, they represent a temporary victory for the champions of the so-called social model over the advocates of free market in the ongoing debate to recast an enlarged Europe in a globalising world. Given the serious social ramifications of the absence of a uniform legal framework governing labour markets in the EU's old and new member-states, it is hardly surprising that the Parliament should have focussed more on further diluting the watered-down version of the original Bolkestein Directive of 2004 under its consideration — resulting in the removal of the contentious country of origin principle and the inclusion of fresh restrictions on trade in services on grounds of public health and environmental safety.

The controversial principle was at the centre of the French and German resistance to the original service directive authored by former Internal Market Commissioner Fritz Bolkestein, culminating in its rejection by the EU Council in the 2005 Spring Summit. It had raised legitimate fears over the likely consequences. First, it led to an outcry that businesses from the industrialised west would relocate to the relatively under-developed economies of the former Eastern Europe to escape the stringent domestic labour, environmental, and social protection regulations. Secondly, European trade unions were apprehensive that, governed by weak regulatory regimes obtaining at home, firms from the east would undercut the cost of labour. While the country of origin principle is unlikely to be revived in any future version of the directive, EU institutions are expected to grapple in the coming months with the question whether public services should at all be brought within the purview of the directive. It is obvious that a harmonised legal regime across the entire union alone could be an effective counter to the tendencies for protectionism and the surest guarantee of realising one of the core objectives of the 1957 Treaty of Rome — the creation of a Europe-wide market in services, in addition to those in goods, capital and people.

Printer friendly page  
Send this article to Friends by E-Mail

Stories in this Section

After Vaiko's crossover
Liberalising services within the EU
Vaccinating against avian influenza
New tensions on the political scene
The age of permanent Net revolution
Blair, Iraq, and the hand of God
How can I calculate my `eco footprint'?
Corrections and Clarifications
Modi should quit
The nuclear deal
Protests
Security arrangements

Copyright © 2006, The Hindu. Republication or redissemination of the contents of this screen are expressly prohibited without the written consent of The Hindu