Services Directive: a victory for European democracy

The European Parliament’s vote on 16 February on the Services Directive is good news for Europe and for France.

The text of the directive adopted in Strasbourg by 394 votes to 215 faithfully reflects our conception of the economy and of Europe: there can be no prosperity without an efficient single market, but the competition must be between economic players, not between national systems of social protection. And it must respect national identities.

. High stakes for the economy

Of the 25 EU countries, France stands to gain most in terms of market outlets and job creation, being the world’s second exporter of services. Services today account for 70% of wealth creation and 100% of net employment growth.

Yet 50 years on from the founding of the Common Market, countless red-tape barriers still fence off many services activities in Europe. A Cypriot law passed in 2004 forbids foreigners from setting up as estate agents, just as (for example) Austrian legislation bans non-nationals from the jobs of ski instructor and dentist, a Greek act declares that all guides to the Parthenon and all diving instructors must be Greek, Italy reserves the profession of industrial property advisor to its own nationals and Germany keeps the mail order business strictly German.

It was Lisbon European Council of 2000 that asked Romano Prodi’s Commission to propose a strategy to demolish these barriers. Bear in mind that the French Prime Minister of the day was one Lionel Jospin, whose Cabinet included the Communist Marie-Georges Buffet, the Green Dominique Voynet and the left-wing royalist Jean-Pierre Chevènement – and was joined just three days later by Laurent Fabius – so this was certainly no ultra-liberal initiative. The Commissioner in charge of the project, Frits Bolkestein, came up with the ultimate weapon: allowing all service providers, whether individuals or companies, to establish themselves in the country of their choice and offer their services throughout the EU, governed by the regulations (on tax, social protection, technical criteria, professional conduct, quality and respect for the environment) of the country of establishment. This became generally known as the ‘country of origin principle’. Proposed as a blanket rule, taking no account of the huge range of activities concerned, it provoked fierce opposition. In both France and the Netherlands, the referendum campaign gave people a chance to voice legitimate fears – and the European Parliament took note.

After a year of deliberation, the Parliament in Strasbourg entirely rewrote the draft directive, imbuing it with a new philosophy. The ‘country of origin principle’ was abandoned and replaced by the principles of freedom of establishment and freedom to provide services, with the requirement that each service provider must respect the laws of the country where the service is provided. Each country thus remains free to regulate service activities carried out on its territory in the interests of public order, national security, public health, and protecting the environment and the financial equilibrium of social security schemes. It will no longer be permissible, however, to subject citizens of other European countries to rules that do not apply to national service providers.

. All social entitlements secured

In addition and most importantly, every precaution has been taken to prevent competition between different systems of social protection, which could result in ‘social dumping’. The directive has explicit exemptions for the following:

– all provisions of labour law. The posting of workers to other countries (for example, by a Warsaw-based public-works company to France) will continue to be governed by a 1996 directive under which persons working on site in France are subject to French law with regard to the minimum wage, maximum working time and minimum holiday entitlement. In an effort to prevent abuses of the type that take place under current legislation, the directive provides for much more effective coordination between the national administrations of the countries concerned;

– temporary employment agencies, with a provision that freedom to provide services will not apply in this sensitive sector until the law governing its activities has been harmonised at European level;

– public services regarded as non-commercial, namely education, health and audiovisual services;

– commercial public services already covered by other European laws, namely transport, power supply, telecommunications and postal services.

As a further precaution there is a clause providing for a review after five years of the directive’s practical impact.

The size of the European Parliament majority is the best guarantee that the provisions of the text will now be agreed by the European Commission and then by the Council of Ministers. With two-thirds of MEPs in favour, the majority was larger than legally required and it included all the non-sovereigntist right, the centre and all the European Socialists with the sole exception of the French Parti Socialiste (PS).

. French left is pathetically isolated

The vote on this highly symbolic piece of legislation – coming as it did eight months after France rejected Europe’s proposed new constitution in the referendum of 29 May – was inevitably a moment of truth for all the national political parties.

Ranged on one side were those from right and left alike who are ready to work together to give Europe fresh impetus. The UMP was there and it intends to be a driving force in the process: on the date of the Strasbourg vote, Nicolas Sarkozy and a team from UMP headquarters were in Berlin meeting Angela Merkel and their CDU counterparts to plan together for the future. On the other side were the blinkered followers of narrow ideologies and nationalism.

It may not have been unduly difficult for the German Socialists and Christian Democrats now sharing power in Berlin to come together and back the compromise text. In other countries, however, it was impressive to see how a similar decision was taken by parties more accustomed to permanent confrontation on the national stage. The British Conservatives were not too proud to vote alongside their Labour colleagues, just as the Spanish Partido Popular, PSOE and PNV set their differences aside in Strasbourg despite the virulent tone of current political debate in Madrid. The Portuguese left and right, fresh from doing battle in a presidential election, also made common cause, as did the enemies of Silvio Berlusconi and his Forza Italia MEPs – in the middle of an Italian election campaign, no less! Outside Parliament, the compromise was publicly supported by the President of the European Trade Union Confederation, the head of the French CFDT and, among others, the Eurocinéma association which welcomed the directive’s protection of cultural identity.

The French PS – with the honourable exceptions of Michel Rocard and Gilles Savary – chose to spurn this alliance and vote ‘no’. Turning its back on the European Socialist family, the party ultimately felt more at home with the Communist and former Communist left, Le Pen’s far right, de Villiers’ sovereigntists, the Italian neo-Fascists, the liberal ideologues who are Mr Bolkestein’s spiritual heirs and, outside Parliament, the official face of the European employers’ lobby – for UNICE, headed by Frenchman Ernest-Antoine Seillière, issued an inflammatory press release declaring that ‘This is not the services directive Europe needs’. So, as Europe gathers momentum again, taking its combined Socialist movements forward with it, the rallying cry for the French left is ‘All aboard to go backwards!’

Alain Lamassoure, 17 February 2006