Analyse EU-Observer: de Dienstenrichtlijn en de Europese Grondwet (en)

EUOBSERVER / COMMENT - A new controversy threatens to embroil the European Union's institutions in a bitter battle. The Commission, representing the interests of Europe, is being opposed by important national elements in the European Parliament and Council of Ministers. How the issue is resolved will be an important indicator of the power balance between the old Europe of the 15 and the new Europe of the 25. It could also materially affect the result of the French constitutional referendum on May 29.

At stake is the 'Services Directive.' According to your point of view this measure either offers the opportunity to kick-start the EU's economy, creating more than half a million jobs; or, alternatively, the measure will undermine the very fabric of the European Social Model with its comfortable welfare systems and employment protection. Scarcely anywhere is the division between the Anglo-Saxon and continental approach to economics more starkly marked.

The Commission and in particular its President, José Barroso i, see the Services Directive as just what the European economy needs to generate the necessary growth to pay the pensions of an ageing population demanding ever more expensive healthcare. It will also help to pay for the costs to industry of increasing but necessary environmental regulation. According to one study, the economic benefits from a free market in services would amount to 37 billion euros (£25 billion), real wages would rise by 0.4 per cent, while the price of services would drop by more than 7 per cent.

At what cost?

But at what cost, ask the Commission's opponents? Opening the services market, they say, would undermine national standards by allowing lowest common denominator provision. Qualifications and standards that professional and trades people had trained long and hard to achieve would be swept aside. Guarantees of professionalism that the public had come to depend on would go. Low wage service providers, based in whatever country allowed the basest standards, would force local companies out of business.

At heart the proposal is simple. The original 1957 Treaty of Rome, the founding treaty of today's European Union, envisaged an economic community with four great freedoms: goods, capital, people and services. To a greater or lesser extent we have achieved three of them. We have a single market in goods, we have free movement of capital, EU citizens have the right to live and work in any EU country. Only in the area of services has virtually nothing been achieved in half a century.

The reason is not hard to find. The Commission has identified 91 separate barriers to trading services across frontiers. As a result the level of such trade is no more than it was in 1992, the symbolic opening date of the Single Market.

Seventy per cent of the EU's wealth

Services are important because they generate 70 per cent of the EU's wealth. As the Irish Internal Market Commissioner, Charlie McCreevy put it to the European Parliament last week: "if 70 per cent of the EU's economy comes from services, you do not need a higher degree in economics to realise that you must do something about services in Europe in order to galvanise the European economy."

The proposal for a free market in services came originally from Frits Bolkestein i, the Dutch Commissioner who had Charlie McCreevy's i job in the last Commission. Hardly had it seen the light of day when it ran into a political sandstorm so thick that the measure was quietly buried. In the van of the objectors was France, but other states with advanced systems of social protection were right behind.

A key objection to the original Bolkestein proposal was the 'country of origin' principle. This means that a firm based in Eastern Europe, say, could supply plumbing services to French households while paying its workers Eastern European wages, insurances and social costs - a practice known as 'social dumping.' Other objections centred on the right of countries to enforce traditional standards and to protect publicly provided services.

Meeting in Portugal in 2000, European leaders agreed to a broad ten year plan - known as the Lisbon Agenda - aimed at making the European economy the most competitive and knowledge driven in the world. If the plan was somewhat long on aspiration, it has proved short on delivery. At the half-way point we are a long way adrift from the Lisbon goal.

Laying down the gauntlet

Mr Barroso is determined to breathe new life into Lisbon. And how! In his first few months of office he has taken a more forceful and strategic grip on the Commission than his predecessor, Sr Prodi, was ever able to manage. Seized of the political imperative of reviving the flagging European economy, Barroso has proposed a series of targeted measures with both national and European dimensions. At their heart is the proposal to revive the Services Directive. We are not here - he has said - to protect Europe of the 15. Individual interests will have to give way for the greater good.

The new directive will be amended substantially. The original version, as Mr McCreevy has acknowledged stood 'not a snowball's chance in hell' of getting through the Parliament and the Council of Ministers - an admission that should be noted by those who believe that the Commission is all powerful. The 'country of origin' principle will however remain. The directive just wouldn't work without it, says Mr Barroso. However, he has promised 'appropriate guarantees' to prevent social dumping.

So the battle is on. Mr Barroso has laid down the gauntlet. Government heads will formally review the Lisbon Agenda at the European Council's Spring meeting next week. The economic arguments are compelling. But the devil will be in the detail and the stage is set for a long and powerful rearguard action by many who already accuse Mr Barroso of selling out to the Anglo Saxons.

With the French referendum on the Constitution only weeks away, Mr Chirac can't afford to give ground. The 'no' campaign, steadily gaining ground in France, already argues that the document provides too little protection against just such measures as the Services Directive. Mr Chirac can't be too pleased with Mr Barroso's timing. The French referendum may turn out to be far closer than many predict.

The author is editor of EuropaWorld