The legislative resolution was adopted by 394 votes in favour to 215 against, with 33 abstentions. Rapporteur Evelyne GEBHARDT (PES, DE) said during the debate preceding the vote, "We are dealing with the most important piece of EU legislation apart from the Constitution. Services in Europe must be as free and open as goods and capital."
From "country of origin principle" to "freedom to provide services clause"
The crucial "country of origin principle" has been dropped from the key article. In its place MEPs have put a clause with the title "freedom to provide services". Parliament also voted to limit the scope of the directive. It now covers fewer services than the original text. MEPs expanded the list of reasons allowing Member States to restrict the freedom of a service provider from another Member State to provide services on their territory. The text also now clearly says that the directive does not affect labour law in the Member States.
The clear result will strengthen Parliament's position vis-à-vis the Commission and Council. Commission President José Manuel BARROSO has already announced that the Commission will revise its original proposal as quickly as possible on the basis of the text adopted by Parliament.
If the free movement of services in the European market - a principle laid down in the EC Treaty - is to become a reality, certain barriers must be removed, for example the obstacles preventing a service provider from setting up shop in another Member State or imposing an obligation on the provider to possess an identity document issued by its competent authorities specific to the exercise of a service activity
Compromise between Socialists and EPP-ED political groups
A terminological, legal and political battle resulted from differences between political groups on the aim of the directive. A few days before the plenary session, a compromise was reached between the PES and the EPP-ED which overturns the approach proposed by the Commission. This compromise was backed by the Parliament in its first-reading vote.
In the key article of the text adopted by Parliament, devoted to the freedom to provide services, neither the country of origin nor the host country are now specifically mentioned.
The rule of the freedom to provide services replaces the country of origin principle. It requires the Member States to respect the right of the service provider to supply services and to guarantee the provider "free access to and free exercise of a service activity within its territory". This guarantee is underpinned by a ban on a number of obstacles to the free movement of services. For example, in general it will no longer be possible to require a service provider to open an office in the country where he/she is temporarily providing a service nor to prevent him/her from setting up "certain infrastructure" in that country. The provider 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".
Thus on the one hand the text bans the Member States from erecting obstacles to the free movement of services. But, at the same time, it stipulates grounds which would allow Member States to limit this freedom through national rules. These grounds are public policy, public security, environmental protection and public health.
Member States will also continue to apply their own rules on conditions of employment, including those laid down through collective bargaining agreements. Nevertheless the requirements imposed on cross-border service providers by the Member States using the above justifications must comply with the principles of the treaty: non-discrimination (for example on grounds of nationality), necessity (public policy, public security or protection of health or the environment) and proportionality (the requirements must be appropriate for achieving the objective).
In certain provisions of the text adopted by the Parliament the reference is made to "overriding reasons relating to the public interest" which allow the Member State to limit, on its territory, the freedom to provide services both by the way of permanent or temporary establishment.
Lastly, the text adopted by the Parliament opens up the prospect of harmonisation of national legislation on the provision of services five years after the directive enters into force.
What's covered and what's not by the proposed directive
The following sectors are covered by the proposed directive:
Services of general economic interest, as defined by the each Member State, such as postal services, water supply, electricity, waste treatment are included in the scope of the directive. Nevertheless these services are not subject to the rule of freedom to provide services. Consequently, only the stipulations relating to establishment in another Member State would be applied there and not those relating to the temporary cross-border services' provision. Business services such as management consultancy, certification and testing, facilities management (including office maintenance and security), advertising, services of intellectual property rights and the services of commercial agents.
Services provided both to businesses and to consumers, including real estate services such as estate agencies, construction (including the services of architects), distributive trades, the organisation of trade fairs, car rental, and travel agencies. Consumer services such as tourism, leisure services, sports centres and amusement parks are also included.
The following sectors are not covered by the proposed directive:
First of all, services of general interest have been excluded from the future directive's scope. The power to decide which services belong to this category has been stipulated to the Member States. Parliament voted also to exclude both public private healthcare and social services (such as social housing, childcare and family services) from the directive. Industries covered by legislation specific to their sector are also excluded, e.g. financial services, electronic communications services and networks, and transport. Other areas excluded are legal services, audiovisual services, gambling and lotteries, and professions and activities linked to the exercise of public authority (e.g. notaries) and tax services.
What's next?
It is now up to the Council of Ministers, as joint legislator with Parliament, to decide its position on the directive and the amendments adopted by MEPs. If all Parliament's amendments are acceptable to the Council, the legislation will be adopted in its modified form. If the Council rejects any of Parliament's amendments or adds any of its own, the text will return to Parliament for a second reading.
