SP rejects cosmetic compromise on Services Directive

9 February 2006

SP rejects cosmetic compromise on Services Directive

The compromise between the Christian Democrats and Social Democrats in the European Parliament on the Services Directive is cosmetic, making little real difference to the actual contents of the measure. The core of the directive remains intact: competition on the policy level between member states and the setting in motion of a downward spiral ending at the lowest common denominator of current European standards. SP Euro-MP Kartika Liotard: “Of course we will vote for every little softening amendment, but even then in the end rejection of the whole directive will be the best decision.”

By Kartika Liotard, Member of the European Parliament for the SP

The compromise mainly concerns the limiting of the directive's scope and the removal of the controversial country-of-origin principle. Yet the amendments that the two biggest political groups have now agreed leave the core of the Services Directive intact.

Instead of unequivocally excluding concrete matters such as health care, education, culture and social security from the directive, the amendments propose that 'the directive shall have no effect on national legislation in these areas’. Yet this was never the problem. The core of the matter is – and remains – that this national legislation will be in part rendered ineffective by the country-of-origin principle, which will increasingly be seen as a 'just-let-the-courts-decide-principle’. This is because of the exceptionally vague formulation of the compromise proposal, which will first and foremost lead immediately to a situation where the courts must make law, to innumerable cases in which in the end the European Commission or the European Court of Justice (ECJ) will be in a position to fill in the gaps left in the definitions and criteria guiding the law. The history of both institutions makes it clear that they will give preference to interpretations of all of these rules which are as favourable as possible to market liberalism.”

Some parties are claiming that an important aspect of the compromise is the exclusion from the directive's scope of 'Services of General Economic Interest'. Yet there is no question of such an exclusion, because the way in which the relevant amendment is formulated misses the core of the problem. Only the ‘liberalisation of services of general economic interest' is declared to be outside the directive's scope, but such an exclusion was contained in the the original proposal (in the explanatory section of Chapter 5). This apparent exclusion is therefore no more than a Pyrrhic victory which in reality leaves intact the downward pressure on services of general economic interest through the working of the directive. In addition, the definition of what constitutes such a service will remain tied to Article 49 of the Treaty, so the member states will not be nearly so free to define these services as the amendment makes it appear. Not for nothing is this exclusion nowhere to be found in Article 2, which deals with exclusions, but instead is contained in Article 1, which states in general the directive's purposes. The fact that the PES – the social democratic group in the European Parliament – is bringing pressure to bear for a regulation on services of general interest speaks for itself.

The compromise proposal does not on the whole concern itself with the freedom of establishment for enterprises from other member states, the second barb in the Services Directive's armoury. Not one amendment addresses Articles 9 to 15 which cover this aspect, meaning that it will remain the case that foreign firms will no longer be required to fulfil the range of rules, conditions and regulatory demands which in a particular member state apply to all indigenous companies. The drive henceforth to establish one's business in a member state which has the least or weakest regulation and, from that base, to operate in all other member states with the aim of reaping unfair competitive advantages remains unaffected. In this respect then, the spiral downwards towards a sort of 'dumping ground of Europe' will remain the norm.

The exceptions proposed in the compromise in relation to the directive's scope as regards child care, social housing and other 'welfare functions' are not taken up in any of the measure's articles, but only as remarks added to the recitals which preface it. The real exceptions, which can indeed be found in the Services Directive's articles, remain therefore limited. The addition of “urban transport, taxis and ambulances” to Article 2 makes it clear that this would be the correct place to list exceptions, at the same time demonstrating which exceptions will not apply. These include regional transport, parcel services, transport for disabled people, and others.

The compromise proposals excluding labour law and rules relating to terms of employment and working conditions from the directive's scope are not only ambiguously formulated, but on the whole do nothing to allay the worries of workers and their trade unions regarding the so-called 'self-employed people without personnel' who remain entirely outside of the scope of application of all of these specifications. This is the case when it comes to the compromise proposals concerning collective bargaining agreements as well as fundamental freedoms such as the right to participate in collective bargaining negotiations, to be a member of a trade union, or to take strike action.

Just as ambiguous is the amendment to Article 4 that stipulates that 'reasons for a public interest' must be understood to include the provision of “balanced medical care” or “fair trade agreements”. No-one can make head or tail of this, and it will quickly lead to legal procedures and in the end to the Court of Justice which will be in a position to define with jurisprudence what exactly is meant by 'balanced' or 'fair'. The United Left Group (GUE-NGL) in which the SP participates, will next week itself propose amendments to add clear definitions to the directive. I assume that the big groups will support these. In addition, the SP will bring forward proposals to limit the directive's scope and exclude as much of the public sector as possible from its working.

Because none of the political groups, even the proposers, are completely happy with the compromise and there remain, moreover, divisions within them, a record number of amendments will be voted. . The vote on these will last for several hours and during the course of it, it will become ever less clear what the eventual cobbled together text is going look like. Each political group will have as a consequence scarcely ten minutes to look at all of the incorporated amendments before the final proposal is brought to the vote. It cannot be ruled out that as a consequence of this chaos we will end up putting together a bureaucratic nightmare.

The proposed changes agreed yesterday behind the scenes by the Social Democrats and Christian Democrats give the Services Directive a kinder, gentler sound. The expression 'country-of-origin principle' is no longer to be found, changed instead to 'freedom to provide services', an amendment which in this context means nothing at all. The huge number of real problems concerning the consequences of this kind of liberalisation of trade in services to which trade unions, political parties and social organisations have for the last two years drawn attention have scarcely been addressed. The proposal for a European Services Directive remains therefore what it always was: the giving of complete freedom to the market, without harmonisation, leading in consequence not to a higher level of quality in all member states but, on the contrary, to a race to the bottom. The European trade unions' reaction is just as negative. That is why we will be joining them on a demonstration next Tuesday in Strasbourg : to let it be known that Europeans will not tolerate the further breaking up of the European social model. This would not be the first time that elected representatives underestimated the voice of citizens and of their own supporters in relation to important European subjects.

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