Compromise Reached On Services Directive

by Ulrika Lomas, for LawAndTax-News.com, Brussels

24 March 2005

European leaders meeting in Brussels earlier this week have reportedly reached a compromise on the controversial Services Directive.

The proposed legislation has faced strong opposition from member states such as Germany and France, which have argued that the 'country of origin' principle which would allow businesses to establish in member states other than their own, but to operate under their national rules, could lead to social dumping and wage dumping.

In France, debate on the matter has become entangled with the issue of the EU Constitution, with critics of the Directive arguing that an effective way to show opposition to the legislation would be to vote against the proposed Constitution in May's referendum.

Under the terms of the compromise agreed on Tuesday, the EU has stated that although it supports the liberalisation of the services market, the European Social Model must be protected.

"Nobody can sensibly dispute the fact that we need to open up the services sector in Europe," Luxembourg's Prime Minister, and the head of the EU Presidency observed, going on to add: "But it must be done with respect for certain sensitivities and convictions."

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