By Henrietta Billings - 3rd March 2005
EU internal market chief Charlie McCreevy has confirmed that Brussels plans to amend controvesial laws to open up Europe's market in services.
The European Commissioner acknowleged that present levels of opposition to the draft services directive plans meant that the current proposals "would not fly".
"It is crystal clear to me that there are real problems with the services directive - as drafted it is not going to fly."
The most controversial aspect of the plans remains the "country of origin" principle, which would allow a company offering a service in another member state to operate under its own national laws.
"I want to address the country of origin concerns in as balanced way as possible," said McCreevy, hinting that the country of origin principle would be re-written.
McCreevy also confirmed that certain sectors, including health would be exempt from the legislation.
The directive - adopted under the previous Prodi Commission - has come up against stiff opposition from France and Germany and there is strong hostility to the proposals in the European Parliament.
France is keen to protect it's public services from the legislation, and Germany is concerned about the effects of "social dumping".
On Wednesday French prime minister Jean-Pierre Raffarin blasted the directive as "unacceptable", adding that his government would "take every measure to oppose this directive."
Brussels has been accused of bending over backwards to accomodate French and German concerns, and critics argue that without key provisions, like the "country of origin" principle, the directive will loose its teeth.
McCreevy also hinted at divisions within the European Commission.
UK trade chief Peter Mandelson is openly behind the plans, whereas German industry commissioner Gunter Verheugen has voiced caution.
"We will hopefully end up with a directive with economic impact," added McCreevy. "I don't want to labour for so long and produce a mouse. That would be a waste of time," he added.
McCreevy told reporters that the services sector accounted for two thirds of Europe's gross domestic product and accounted for about 600,000 jobs in the services sector.
The European Parliament and a qualified majority of EU states must agree on the proposal before it can become law.
The draft directive will now come before MEPs at first reading where the Parliament is expected to heavily amend the text incorporating the revisions outlined by the Irish commissioner.
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