The Bolkestein Draft Directive

in:

12th November 2004

"a fatal blow to the quality of life in the European Union"

By Marco Rizzo, MEP

Probably the major task facing trade unions, left parties and other workers' organisations as we approach 2005 is the defeat of the so-called Bolkestein Directive. This proposal on "Services in the Internal Market" represents a major assault on some of the most important gain of the last century, on much of what underpins a civilised and humane society. Recently Spectre published a major analysis of the proposal( here ) Below, Euro-MP Marco Rizzo explains why it must be opposed.

The Bolkestein draft Directive on services in the internal market is intended as part of the economic reform process initiated by the Lisbon European Council with a view to making the EU one of the most competitive and dynamic knowledge-based economies in the world by 2010. It has not hitherto been possible to exploit the considerable potential for economic growth and job creation afforded by the services sector because of the many obstacles hampering the development of service activities in the internal market.

But what are these "obstacles", as the draft Directive terms them? In many cases, they are measures adopted by public authorities in an attempt to improve services as fully as possible from the point of view of the use of public funds, universal access to services (according to the principle of the universality of rights), service quality guarantees, the right to employment, prices, and the rules on transparency.

The consequence is that, in the name of unbridled competition espoused almost as an ideology, there is a desire to move rapidly to dismantle what little is left of the European social model by seeking to impose the rules of commercial competition on the 25 Member States in all service-related activities not already covered by other European legislation.

In this light, it is easy to understand how the countries that in certain respects are most directly affected by the Bolkestein Directive are those which entered the Union last, because they have weaker economies and fewer regulations governing rights.

In order to eliminate the obstacles to the free movement of services, the proposal envisages the introduction and application of the country of origin principle, according to which a service provider is subject only to the law of the country in which he is established and Member States may not restrict services from a provider established in another Member State.

In terms of the immediate practical repercussions of this principle, the danger lies in the by no means remote possibility of its providing a legal incentive for private companies to re-locate in countries with the most permissive fiscal, social and environmental requirements. As a consequence, the new principle, once it became European law, would exert a strong downwards pressure on countries whose standards at present guarantee and protect the general interest.

Another serious cause for concern is that the "country of origin" principle breaches Article 50 of the Treaty establishing the European Community, according to which the supplier of services may temporarily pursue his activity in the State where the service is provided, under the same conditions as are imposed by that State on its own nationals. Using the pretext of simplifying administrative and bureaucratic procedures that enable service providers to carry out their activities in another Member State, supporters of the draft Directive have also called for the introduction of the right of recipients to use services from other Member States without being hindered by restrictive measures imposed by their country or by supervision by public authorities. In the case of patients receiving health care, for example, the proposal lists the circumstances in which one Member State may make reimbursement of the cost of treatment provided in another Member State subject to authorisation, the consequence being a probable reduction in access to free treatment.

To eliminate what it improperly calls obstacles, the proposal envisages:

  • administrative simplification measures, particularly involving the establishment of "single points of contact", at which service providers can complete the administrative procedures relevant to their activities;
  • certain principles which authorisation schemes must respect;
  • the prohibition of certain particularly restrictive legal requirements that may still be in force in certain Member States;

There are, of course, also some positive features, which however are expressed in ambiguous terms, such as :

  • the harmonisation of legislation (which in actual fact will no longer be possible if the Bolkestein Directive comes into force) in order to guarantee equivalent protection of the general interest on vital questions, such as consumer protection (but workers are never taken into consideration in this respect), particularly as regards service providers’ obligations concerning information, professional insurance, multidisciplinary activities, settlement of disputes, and exchange of information on the quality of the service provider;
  • stronger mutual assistance between national authorities with a view to effective supervision of service activities on the basis of a clear distribution of roles between the Member States and obligations to cooperate;
  • measures for promoting the quality of services, such as voluntary certification of activities, quality charters or cooperation between the chambers of commerce and of crafts;
  • encouraging codes of conduct drawn up by interested parties at Community level on certain questions, including in particular commercial communications by the regulated professions.

But if each firm is able to regulate itself in accordance with the legal framework of the individual Member States, it is clear that the principle of harmonisation will, in actual fact, be immediately disregarded. This would be a fatal blow for the European Union which, regardless of declarations on the need for a common legislative framework for all its Member States, would, on the contrary, end up in practical terms with 25 different frameworks.

Thus, in spite of all the declarations and fine words in the draft Directive – hard to implement and difficult to verify – the end result would be to initiate a process where the European welfare system would gradually be dismantled.

The Bolkestein draft Directive, unfortunately, is fully on the side of business interests: there is an irreconcilable contradiction between its declared intention of respecting social and employment rights and the draft itself, which is inspired by privatisation and the market economy. This can be seen even in its wording: the draft Directive often deliberately distorts the meaning of words. Thus, "supervision of public activities" becomes "discriminatory behaviour", while "policies for the protection of rights" are transformed into "restrictive measures", and so on.

In actual fact, this draft is liberal in the extreme and withdraws the right of public, national and local authorities to guide the organisation of activities and the development and economic expansion of their country.

Its entry into force would be a fatal blow to the quality of life in the European Union because it would lead to the imposition of an economy based solely on the laws of the market, with the consequent cancellation of public assistance and social rights, which would be subject solely to profit. It is no coincidence that the Bolkestein draft does not say clearly what type of services it aims to address: it is not entirely clear whether it is intended for private firms only or also for the public sector as service provider. In the latter case, it would be a first step in the complete privatisation of the services. And that is not all: the Bolkestein draft could even leave itself open to interests such as organised crime that could use potential loopholes in the draft to recycle dirty money and expand their areas of control and influence, starting with the new Member States.

The risk would thus be increased of fragmenting the labour market and dismantling the established rules for the protection of workers. Negotiated contractual rules would disappear; there would be no more guarantees or adequate supervision in essential sectors such as health and safety and environmental impact, as laws and regulations would be governed by the country of origin principle.

The present draft Directive would also, and inevitably, create very strong restrictions on the right of Member States to take action against abuses in matters of employment law and the supervision of the working conditions of workers temporarily posted to third countries.

The European Commission has still not produced a study on the real impact of the draft Directive on the working conditions of the interested parties and its repercussions on the economic conditions that would come into play, especially in Member States with more advanced welfare systems and frameworks of rights.

There has, essentially, been no evaluation at all by the European Commission, not even in the form of consultation with the social partners and the parties affected by the draft Directive. The Bolkestein approach is purely commercial: it creates a protection for internal market values, but not for social ones.

The Bolkestein draft Directive penalises national legislative systems by harmonising them downwards, taking as a reference those States with the lowest protection in terms of social and individual rights: the exact opposite of the Europe of rights that we are seeking to build.

Marco Rizzo is a Member of the European Parliament for the Communisti Italiani, one of two Italian parties affiliated to the United Left Group (GUE-NGL). He is Vice President of the Parliament's Internal Market and Consumer Affairs Committee, where the proposed Directive will initially be debated.