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Tourism Professionals Against EU Directive on Services

The Hellenic Association of Travel and Tourism Agencies last month expressed concern on how the European Union’s Bolkestein directive, which is designed to open up the EU service sector, will impact the group’s members.

“Large EU enterprises will impose their own policy on tourism aiming at profiteering and resulting in the downgrading of the Greek tourism product,” said the association. It cited the confusion stemming from the possible use of 25 different types of national legislation in the country of reception and said tourists will not be protected from illegal practices as monitoring will be impossible.

However, last month the EU agreed to a watered down version -301 in favor, 213 against and 34 abstentions- of the core part of the services directive. Changes will be introduced within the normal course of the legislative process, at a later stage.

For the moment, the compromises allow member states to bar any service provider on several grounds, provided such intervention is non-discriminatory and proportionate. Another, for the moment, insists that all local rules be applicable to service providers, which means that companies are free to provide most services in other EU countries, including tourism services, but have to respect the labor, health, safety and environmental standards of the host country, not their country of origin.

This compromise considerably waters down the disputed “country of origin” principle in the Commission’s draft directive, which states that the laws of a service provider’s home country apply even when services are provided in another member state. Under the compromise, this principle would be preserved, though no longer explicitly named as such, and social and labor law would be exempt from its application. In addition, member states would be free to define a number of so-called services of general economic interest, for which the country of origin principle would not apply either.

The Commission argued that the proposed directive would resolve the problems of excessive red tape for service companies wanting to operate across borders, thus boosting cross-border competition and increasing choice, improving quality and reducing prices for both consumers and businesses.

According to the Commission draft, the Country of Origin principle meant  that service providers could, temporarily, be subject to the laws of their country of origin rather than of the country where the service is provided. They could thus test a new market without having to register with the authorities. This principle was one of the most controversial parts of the directive.

The compromise amendments avoid naming this contended principle (Article 16), where it is laid down in the Commission’s draft. It is renamed to “Freedom to provide services” and member states are asked to “ensure free access to and free exercise of a service activity within its territory.”

The principle is maintained in a watered-down version along the same lines as amendment 155 adopted in the internal market committee. The compromise amendment introduces the reservation that member state’s “requirements with regard to the provision of a service activity, where they are justified for reasons of public policy, public security, social policy, consumer protection, environmental protection and public health” still apply. All such requirements must be “non-discriminatory, necessary and proportional.”

EU parliamentarians say the amendments change totally the Bolkestein  directive as the new draft legislative package takes into consideration the social legislation of the country of destination. The Commission now has to analyze the results of the package proposed by the Parliament and to give a proposal to the Council of Ministers. Then the Draft legislative package will return to the European Parliament in autumn. Foreseen timetable to the entering into force of this new legislation: 2011.

The Directive on Services in the Internal Market was presented by the Prodi Commission in January 2004 as one of the key elements of the Lisbon reforms agenda. It is aimed at breaking down barriers to trade in services across the EU.

Proponents argued that this would have boosted European competitiveness, as the services sector accounts for over 70% of jobs in the EU. Critics had attacked it for leading to “social dumping.”

Originally, the European Commission, the EU’s executive, said opening up services could generate 600,000 jobs and boost the bloc’s economy by between 1 and 3 percent.

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