The Services Directive 2006/123/EC Towards more competitive Markets in the EU Martin Frohn

The Single Market for Services Importance of services for the European economy 70% GDP, 68% employment, 96% new jobs The reality today Services = 20% of the intra-EC trade only Reasons behind Services are much more prone to Internal Market barriers than goods Barriers arise from national, regional and local regulations as well as from the behaviour of the administration Barriers arise, to a large extent, because of lack of confidence between Member States and protectionist tendencies Barriers arise at every stage of the business process: establishment, use of input necessary for the provision of the service, promotion, distribution and sale, after-sale SMEs hardest hit

Main Features of the Directive Objective: remove barriers to the establishment of service providers and the cross border provision of services. Build on and consolidate ECJ case-law on Arts. 43 and Art. 49 ECT Horizontal nature, Framework Directive: large variety of services covered such as consultancy services, legal or fiscal advice, estate agents, engineering, construction, commerce and retailing, tourism, leisure sector, etc. Freedom of establishment: simplification of the business environment, screening, removal and lightening of restrictions to the access and exercise of service activities Freedom to provide services: strong reduction of application of host Member States ’ requirements to cross-border temporary services Quality of services ( “ light touch harmonisation ” ): information requirements, codes of conduct on European level Complements the existing Community “ acquis ”

Scope Initial exclusions: –financial services, –telecommunications, –transport services. Further exclusions: –healthcare services (including, but not limited to, the reimbursement of health care services), –certain social services, –audiovisual services, –temporary work agencies, –private security services, –gambling services, –services provided by notaries and bailiffs Plus the proposal does not affect labour law (removal of rules on the posting of workers)

Administrative simplification Points of single contact – service providers have to be able to complete all procedures and formalities relating to access to and exercise of a service activity through the PSCs. Organisational issues up to MS to decide Procedures by electronic means – MS have to make possible the completion of all formalities and procedures by electronic means, incl. for service providers from other MS

Freedom of Establishment Simplification of authorisation schemes –justification for overriding reasons of general interest, screening + report to Commission, –transparency, –simplification (validity for the entire territory, tacit authorisations, etc) Requirements to be eliminated (black list - Art.14) –discriminations, –prohibitions on having establishments in other MS, –economic tests and involvement of competing operators in authorisations, etc Requirements to be evaluated against proportionality and overriding reasons of general interest (grey list - Art.15) screening + report to Commission: –quantitative and territorial restrictions, –fixed tariffs, –reserve of activities, –specific legal form, –capital of companies, etc

Free Movement of Services (I) Freedom to provide services clause (Art.16): Clear prohibition for Member States to apply their legislation on services provided from other Member States unless non- discriminatory, proportionate and justified for one of the following reasons: –public policy (ordre public), –public security, –public health, –protection of the environment

Free Movement of Services (II) Screening of national legislation susceptible to fall under the four reasons (Art. 39) Additional derogations (Art. 17): –SGEI (network services, water distribution and waste water treatment) –Employment conditions for posted workers (Dir. 96/71/EC) –Social security (Reg. EEC/1408/71) –Professional qualifications (Title II of Dir. 2005/36/EC) –Intellectual Property Rights, etc. Rights of recipients of services Administrative cooperation and IMI

Administrative cooperation Logic behind: –complementary to freedom to provide services clause –allocation of tasks between MS –main principle that the MS of establishment ensures compliance with its requirements in case of a temporary movement of its service provider to another MS (except in cases of derogations in Art. 16 and 17) –does not mean that the MS of establishment needs to carry out factual checks and controls in another MS, done at their request by other MS ’ competent authorities

Quality of Services Information on providers and their services Commercial communications for professions Multidisciplinary activities Handling of disputes Codes of conduct at Community level

Services of General (Economic) Interest and the Services Directive Directive only applies to economic services Directive does not deal with liberalisation or privatisation Directive does not affect definition, organisation and financing of SGEI in MS Exclusions from scope: –(public) transport –healthcare –certain social services Special rule for mutual evaluation (Art. 15.4) Exclusion from Freedom to Provide Services Clause (Art. 17.1)

Services of General (Economic) Interest and Community Law in general SGEI covered by Community law (Art ECT): –freedom of establishment (Art. 43 ECT) and free movement of services (At. 49 ECT) –public procurement –competition law (state aids) No horizontal secondary law on SGEI Sectoral directives (postal services, telecommunication services, gas, electricity) Several non-legislative activities: –White paper on SGI in general (2004) –Communication on social services of general interest (2006)

Going forward (Now…) The Directive was published on 27 December As from the day after publication the three years implementation period starts to run (deadline ) Because of the complexity of the exercise: the process requires major efforts and has started in almost all MS The Commission stands ready to assist and organize exchange of best practices between MS –Bilateral meetings with governments in MS –Expert workshops on particular issues (points of single contact, electronic procedures, screening of national legislation, etc)

Where do I come in? Be aware! –Follow implementation work in Hungary and abroad Be active! –Talk to your government –Talk to your lobby organisations (Chamber of Commerce, Industry federation) –Talk to others Alert –the Commission if things go wrong

What’s in it for me? Administrative simplification internally Facilitation of establishment in other MS Easier to provide cross-border services –Less requirements imposed by host MS  more legal certainty  less legal and compliance cost More and better possibilities to get input services

Thank you for your attention Martin Frohn European Commission DG Internal Market