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Hopes of a single free European market for IT and software service providers have been “seriously diminished” after MEPs ruled companies should not trade on the continent solely under their home regulations. Voting in the European Parliament, a majority of 178 ministers passed the controversial Services Directive that paves the way for the freedom of services, but watered it down by rejecting the ‘country of origin principle.’ This permitted a UK IT consultant to trade in any of the 25 member states without the need for a professional license or the burden of taxes, such as paying foreign national insurance contributions. But allowing IT management, consultancy and testing companies to temporarily provide services to member states adhering just to the rules of their home country would be “premature,” MEPs said. Critics of the liberalisation, also known as the Bolkestein directive, are joyous at Europe’s vote to remove ‘country of origin’, for fear it would have resulted in lower wages, less job availability and an influx of rogue companies. Instead, they have embraced MEPs bid to ensure service providers will be governed by the rules and regulations of the host country, by amending the Directive to “freedom to provide services.” According to the European Union, this dictates all member states must guarantee the provider "free access to and free exercise of a service activity within its territory". Furthermore, the movement of services is to be encouraged by no longer making it possible to require a service provider to open an office in the country where they are temporarily providing a service, nor to prevent them setting up "certain infrastructure" in that country. As it stands, providers must not be forced to register with a professional body nor be banned from using his normal equipment at work. In addition, member states must not apply "contractual arrangements between the provider and the recipient which prevent or restrict service provision by the self-employed". Such clauses are to be reviewed by the Council of Ministers, a joint legislator with Parliament, before they apply to business services across Europe that demonstrate “general economic interest.” This includes management consultancy, certification and testing, facilities management (including office security), advertising and services of commercial agents. Excluded by MEPs and therefore not covered by the directive are services of a “general interest”, including temporary work agencies, legal and financial services, healthcare, transport, gambling, audiovisual services and electronic communications services and networks. Other amendments tabled include an expansion of the list of reasons allowing member states to restrict the freedom of a service provider from another state to provide services on their territory. MEPs also proposed to set up a central database for professionals who have lost the licence to practice their professions and to enforce insurance where appropriate. Enterprise groups have voiced a mixed reaction to the Directive, with the majority accusing ministers of blocking the creation of a single free market, and the potential to create up to 800,000 new jobs, in light of the amendments. “Cross-border services will not be facilitated,” said Ernest-Antoine Seilličre, president of Unice, ‘the voice of business in Europe.’ “Application of legislation of the provider’s country of establishment is undermined by many derogations. It leaves excessive power for member-states to restrict services for multiple reasons which go way beyond well-founded reasons of public interest and could lead to protectionism. This will create a great legal uncertainty for both companies and customers.” Ann Marie Sigmund, president of the European Economic and Social Committee, welcomed the “compromised solution” that is the Directive, but said she was concerned consumers would find it difficult to receive the service and support they require and deserve. Meanwhile, Unice condemned the removal of temporary employment agencies from the Directive, saying the posting of workers directive “already adequately regulates the conditions for sending workers on temporary missions abroad.” Britain’s largest employers’ organisation, the CBI said: “The compromise voted through delivers only an emasculated version of a Directive that had promised a single, open European market for services. “The likelihood of the European Union achieving free movement of services – one of its founding principles – in the near future has now seriously diminished, but the EU will have to do the best it can.” John Cridland, deputy director-general added: “One more positive element that has survived is the creation of single points of contact and more simple procedures for establishing in another member state. This will help reduce cost and bureaucracy for businesses.” Feb 20, 2006 Email this article Printer friendly page Previous Page
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