Directive On Services In The Internal Market

Objective and main features

The objective of the Directive is to provide the necessary legal framework that will eliminate the obstacles to the freedom of establishment for service providers and the free movement of services between the Member States, giving both the providers and the recipients of services the legal certainty they need to exercise these two fundamental freedoms enshrined in the Treaty. Some provisions of the Directive relate to freedom of establishment only, some to free movement of services only and some to both. The Directive also gives affect to decisions of the European Court of Justice.

Obstacles to the freedom of establishment will be eliminated through:

• Administrative simplification measures in Member States, to make it easier for a service provider in one Member State to become established in another Member State;
• Certain principles which authorization schemes must respect, i.e. they must not discriminate against a service provider on grounds of nationality, the authorisation schemes must be objectively justified (they must be in the public interest) and the objective cannot be attained be means of a less restricted measure (Article 9);
• The prohibition of particularly restrictive legal requirements (Article 14);
• The obligation to assess further certain other legal requirements (Article 15).
  

In order to eliminate obstacles to the free movement of services the proposal provides for:

• The free movement of services under which Member States would respect the right of service providers to provide services in a Member State other than that in which they are established;
• The right of recipients, including consumers, to avail of services from other Member States. Irish consumers will benefit from more suppliers offering increased competition into different sectors of the economy;
• Rights for recipients who obtain services from a provider established in another Member State, including information on services and their providers.

The proposal aims to establish mutual trust between Member States through:

• Mutual assistance between national authorities with a view to effective supervision of service providers and the services they provide; this is known as administrative co-operation;
• Harmonization of some legislation e.g. professional insurance, dispute settlement, exchange of information, etc;
• Measures for promoting the quality of services;
• Encouraging the drawing up of codes of conduct, in particular for certain services such as the regulated professions and estate agents.

Services Trade

Services account for only around 20% of total OECD trade, though the figure is somewhat larger for Ireland. Ireland had a 2.2% share of world services exports in 2004, out of all proportion to our share in world economic output. Potential growth sectors identified in the Enterprise Strategy Group Report (the O'Driscoll Report), which would benefit from implementation of the Directive, include education, intellectual, franchising, international sales and marketing, creative services, shared and outsourced business processes, supply chain management, construction related services, agriculture and bloodstock services and professional and consultancy services.

The main barriers faced by Irish exporters of services are of two types. There may be difficulties in setting up overseas affiliates, together with restrictions on Irish personnel gaining free access to these affiliates. Also, differences in the regulatory environment across countries mean that firms face difficulties and increased costs in establishing subsidiaries to provide services abroad.

The main barriers faced by Irish consumers of services offered by providers in other Member States are outright prohibitions on access to that service, the difficulty in ensuring that the service is adequately supervised by one or other of the regulatory bodies of the Member States involved and the complexity of taking legal action in case of conflict.

For any queries regarding the Services Directive, please contact:

Michael Clarke
Internal Market Unit,
Department of Enterprise, Trade and Innovation,
Room 307B,
Kildare Street,
Dublin 2.

Telephone: +353 1 631 3878
Fax: +353 1 631 3853
Email: michael.clarke@deti.ie

Or

Jimmy Behan
Internal Market Unit,
Department of Enterprise, Trade and Innovation,
Room 307B,
Kildare Street,
Dublin 2.

Telephone: +353 1 631 3874
Fax: +353 1 631 3853

Email: jimmy.behan@deti.ie