A Single Market for Services
Services
are crucial to the European Internal Market. They are everywhere, accounting for
over 70% of economic activity in the European Union of, and a similar (and
rising) proportion of overall employment.
The
central principles governing the internal market for services are set out in
the EC Treaty. This guarantees to EU companies the freedom to establish
themselves in other Member States, and the freedom to provide services on the
territory of another EU Member State other than the one in which they are
established.
Overall, the Internal Market has resulted in real benefits. For instance, in
the 10 years since the completion of the first Single Market programme in 1993,
at least 2.5 million extra jobs have been created as a result of the removal of
barriers. The increase in wealth attributable to the Internal Market in those
10 years is nearly € 900 billion; on average about € 6000 per family in the EU.
Competition has increased as companies find new markets abroad. Prices have
converged (in many cased downwards) and the range and quality of products
available to consumers have increased.
The principles of freedom of establishment and free movement of services have
been clarified and developed over the years through the case law of the European
Court of Justice. In addition, important developments and progress in the field
of services have been brought about through specific legislation in fields such
as financial services,
transport,
telecommunications,
broadcasting and the
recognition of professional qualifications
However, despite progress in some specific service sectors, the overall
Internal Market for services is not yet working as well as it should. Most notably, the Lisbon summit
of EU leaders in March 2000 asked for a strategy to remove cross-border barriers
to services. Following an in-depth
legal and economic analysis and a consultation with Member
States, other European institutions and stakeholders, the Commission published a
Report on the State of the Internal Market for Services in July 2002. This
report identified the most common obstacles to
the free movement of services in the EU. It concluded that there
was still a huge gap between the vision of an integrated EU economy and the
reality as experienced by European citizens and service providers.
The work done by the Commission shows clearly that these barriers have a
serious negative effect on the cost and quality of services. Small and medium sized enterprises (SMEs)
in particular,
are disproportionately affected by complex administrative and legal
requirements and therefore more likely than larger firms to turn down
cross-border opportunities because of them. Given the predominance of SMEs in
service operations, this has clearly acted as a considerable hindrance the
development of the Internal Market for Services. A recent Eurobarometer
survey has shown that currently only 8% of SMEs engage in cross-border
activities because of such difficulties.
Following the report and further legal
analysis, in January 2004 the Commission made a
proposal for a
Directive on services in the Internal Market. The
Services Directive was finally adopted by the European Parliament and the
Council in December 2006 and needed to be transposed by the Member States by
the end of 2009. This directive is aimed at eliminating obstacles to trade in
services. Its full implementation should remove red tape and significantly
facilitate the
establishment of service providers at home or abroad. It should also
significantly facilitate the cross-border provision of services into other EU
countries. The Directive also strengthens the rights of service
recipients, in particular consumers, and should ensure easier access to a wider
range of services.
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