EU to Put Service Sector Reform to the Test

European Union lawmakers are battling to hammer out a final draft of the plans before putting them to a debate on Tuesday and a vote next Thursday in a plenary session in Strasbourg.

The services sector generates half the economic activity in the 25-nation EU and 60 percent of its jobs. The European Commission -- the bloc's executive arm -- says a shake-up is urgently needed to spur employment and growth in Europe's long-flagging economy.

Despite deep divisions in the past over the new EU laws, the main political groups in the parliament say that views are converging ahead of the long-awaited vote.

The emerging consensus only became possible after the European People's Party (EPP) and the Socialists, the two biggest groups, agreed last week to strike out the most controversial proposal, which would let service providers operate in other member states under the rules of their home country.

That article stoked fears in older member states such as Belgium, France and Sweden of an influx of service providers -- epitomized by 'Polish plumbers' -- from newer, low-wage EU members undercutting local competitors.

Fragile compromise

But the compromise between right and left is fragile and the text is likely to evolve in the days ahead of the vote as tough haggling gets underway to cement a broader position in the parliament.

Some hard bargaining is also in store over which services should be excluded from tougher cross-border competition.

Although the most controversial element has been excised from the proposed text, unions want further changes to the plans. They want public services like water distribution to be excluded and have promised a big demonstration on Tuesday in Strasbourg to keep the pressure up.

But talk of raising the number of exclusions has also fuelled concern that that too many would empty the reform of substance.

"Too many exceptions would rip the heart out of the directive and undermine its original objective," a spokesman for the Liberal Democrat group said.

Staying on track

Britain, the Czech Republic, Hungary, the Netherlands, Poland and Spain voiced concern on Feb. 10 that the plans risked losing sight of their original aim if they were watered down too much.

"In the quest for compromise, we must remain focused on the key objective of an effective internal market, while ensuring that legitimate concerns are met," they said in a joint letter to the European Commission.

If EU lawmakers give the green light to the plans in a first reading, the package will then go to the Commission and member states for review.

Austria, which currently holds the EU's rotating presidency, has said it wants an agreement on a text more or less in its final form before it hands over the EU reins to Finland in June.

By then, the package will have traveled a long way and stirred up much controversy since former Internal Market Commissioner Frits Bolkestein put the plans on the table in early 2004.

Although they went largely unnoticed at first, they became the emblem of perceived Brussels neo-liberalism for leftwing campaigners against the EU's draft constitution ahead of referenda in France and the Netherlands last year.