Thursday, August 2, 2007

A Quiet Revolution

Back to one of my favourite topics: the Services Directive. This isn't an excuse for me to publish that picture of the Polish plumber again, although I suppose I might secretly be hoping that readers think he's me...!

No, I really want to share my views and hopefully stimulate some discussion on the effects of the Directive. My line of argument is essentially that the Directive's main benefits will come in areas completely unrelated to the subjects of heated political debate. I remember distinctly the times when PES (Socialist) and EPP-ED (Christian Democratic) groups stopped talking to each other in the European Parliament's internal market committee. I remember the tortuous negotiations that addressed the precise wording of the Country of Origin Principle (now renamed the Freedom to Provide Services Principle). I remember the painfully detailed discussions on precisely what administrative requirements for establishment of new businesses should be banned or reviewed or allowed. I remember the farcical horse-trading that went on over the scope: health services, public services, education, gambling, temporary or out?

There was also a surreal moment when I saw a news item on Belgian television about the anti-Services Directive demonstrations in Brussels organised by the trades union movement. The journalist interviewed a Polish union member holding a placard written in French, who said that he was against the Directive because he, as a Polish worker, wanted to be able to work in Germany for German wages and not Polish wages. It was surreal because he clearly had been bussed to Brussels on the basis of a plain lie about the contents of the Commission proposal - the proposal specifically said that workers posted in other Member States would work under local labour conditions, specifically including wages. He was actually fighting against the cause he claimed to be fighting for. But the irony didn't stop there. It was of course even more surreal because it was widely believed (and in fact explicitly claimed by the trades unions movement) that Polish workers overwhelmingly wanted to come to the West to work for lower wages than locals.

Joking apart, it was a significant moment in my life, when my view of politics changed abruptly, and I saw much more clearly than ever before how cynical people could be when seeking to achieve a political goal. hroughout he debate on the Services Directive, it mattered little to the unions or their opponents what logic they used, as long as they could make a big media impact. It was media coverage the politicians were counting on to win their battles on the Services Directive, and not the strength or consistency of their arguments.

All this is really to set the scene for my main point. Which is that while these battles were being fought, the parts of the Directive that I think will have the biggest long-term impact on the single market were being quietly nodded through. I suspect this was partly because the articles concerned were quite boring and therefore less likely to make good press. I am, of course, referring to the articles on administrative simplification and administrative co-operation.

The Directive's high profile provisions on freedom of establishment, freedom to provide services, and the restrictions on administrative requirements, were essentially re-statements by the Commission of its interpretation of the Treaty and ECJ case law. None of this, despite the claims of the more passionate advocates and opponents of the proposal, was really innovative. It was simply an attempt by the Commission to force the pace of opening of the internal market for services by directly attacking common practices by protectionist Member State administrations through legislation. Had these proposals not been made, the ECJ and the Commission would have done the job eventually through case law and infringement proceedings.

The parts of the proposal that were new and innovative were those that addressed the most fundamental workings of national administrations. These will entail nothing short of a revolution in the way public administrations work in the EU. The Directive contains no less than 13 articles (well over a third of the content of the Directive) that touch on the way national administrations must change to serve the market and the citizen. I won't bore readers with a detailed list, so here are some headlines:

  • simplification of procedures;
  • points of single contact for businesses;
  • rights to information for economic actors;
  • procedures by electronic means;
  • detailed obligations on mutual assistance for Member State administrations;
  • rules on which Member State is responsible for supervision of various aspects of cross-border service provision;
  • alert mechanisms when fraud is suspected.

The Commission is given some pretty impressive powers to harmonise implementation through comitology, particularly as regards the IT systems that will have to be set up to make all this work. The whole philosophy that drives these provisions is one that will strike those of you who are familiar with European public administrations as quite alien. National administrations will be obliged by the Directive to modernise and become more efficient, and to communicate systematically with counterparts in other Member States. The primary driver of all of this is the idea that the administration should facilitate, rather than control, economic activity. That philosophy is going to be a shock to most of the national administrations I have come across. Expect strikes and demonstrations as the Commission and Member States push modernisation through. ..

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