EU countries agree on trans-border service directives

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EU countries agree on trans-border service directives

Brussels, May 30 (DPA) European Union members have agreed on rules to promote a single market for service providers, ending an acrimonious dispute that has divided old and new EU nations for three years.

The directive aims to boost economic growth and competition in the 25 EU nations in fields ranging from computers to plumbing, though many sectors were exempted under pressure from western European governments and labour unions, who feared a flood of cheap eastern workers.

Economics Minister Martin Bartenstein of Austria, which holds the six-month EU presidency, announced the breakthrough after eight-and-a-half hours of talks Monday.

As services account for some 70 percent of Europe's economy, breaking down national barriers that kept out foreign service providers is seen as a key to boosting growth.

After the collapse of the EU's proposed constitution, agreement on cross-border services also became a test of whether Europeans could agree on major projects for the bloc's more than 450 million people.

But the European Parliament in April scrapped a key clause that would have allowed companies to offer their services in another EU country on the basis of the home country's labour and other laws.

Germany and France led opposition to the so-called country-of-origin principle, fearing 'social dumping' - code for cheap labour from the new EU members that could put downward pressure on wages and welfare state protections in the old EU.

EU newcomers, including Poland and others, argued that removing the country-of-origin principle would gut the directive's intent and accused the richer western countries of protectionism.

'This is a delicately designed balance between market opening on the one hand and social and environmental protection on the other,' said Joachim Wuermeling, a state secretary in Germany's Economics Ministry.

After the April vote, the EU's executive commission narrowed the scope of the bill decisively by exempting health care and social services - exclusions championed by Germany.

Services covered by the new rules include management consultants, advertising and temporary employment agencies and construction services. Exemptions include financial services, transport and utilities.

After the European Parliament signs off on detailed provisions to be worked out after Monday's compromise, EU countries will have three years to adopt the changes into law. On that basis, partial liberalisation of services in the EU is unlikely to arrive before late 2009.

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EU countries agree on trans-border service directives