EU TFEU: Freedom to provide services

Services represent between 60 and 70 per cent of economic activity within the single market of the European Community (European Union), and the free movement of services is one of the four fundamental market freedoms of the internal market. But actually achieving a free flow of services is proving to be a continuing endeavour for the European Commission and the European Court of Justice, as witnessed by the laborious birth of new legislation and the abundance of infringement procedures.

The Treaty of Lisbon preserves the treaty level provision opening up the Chapter on Services in the Treaty on the Functioning of the European Union, and extends co-decision to measures aimed at third country nationals.

We look at the different stages of the treaty reform process, and we list resources for further reading regarding the freedom to provide services.


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Arriving at Article 49 of the Treaty establishing the European Community (TEC), the intergovernmental conference (IGC) made the following amendments in the Treaty of Lisbon (OJ 17.12.2007 C 306/55):

SERVICES

56) Article 49 shall be amended as follows:

(a) in the first paragraph, the words ‘State of the Community’ shall be replaced by ‘Member State’;

(b) in the second paragraph, the words ‘The Council may, acting by a qualified majority on a proposal from the Commission, extend’ shall be replaced by ‘The European Parliament and the Council, acting in accordance with the ordinary legislative procedure, may extend’.

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The current Article 49 TEC forms the basis, so we turn to the latest consolidated version of the treaties, in OJ 29.12.2006 C 321 E/62:

CHAPTER 3
SERVICES

Article 49 TEC

Within the framework of the provisions set out below, restrictions on freedom to provide services within the Community shall be prohibited in respect of nationals of Member States who are established in a State of the Community other than that of the person for whom the services are intended.

The Council may, acting by a qualified majority on a proposal from the Commission, extend the provisions of the Chapter to nationals of a third country who provide services and who are established within the Community.

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We noticed from the TEC provision that we entered a new Chapter, and the Tables of equivalences confirm that the same holds true concerning the Treaty of Lisbon (ToL) and the Treaty on the Functioning of the European Union (TFEU).

We make the few retouches agreed by the IGC 2007 expressly or horizontally to present the consolidated version of the provision:

Part Three ‘Policies and internal actions of the Union’

Title III (renumbered Title IV) ‘Free movement of persons, services and capital’

Chapter 3 ‘Services’

Article 49 TFEU (ToL), renumbered Article 56 TFEU

Within the framework of the provisions set out below, restrictions on freedom to provide services within the Union shall be prohibited in respect of nationals of Member States who are established in a Member State other than that of the person for whom the services are intended.

The European Parliament and the Council, acting in accordance with the ordinary legislative procedure, may extend the provisions of the Chapter to nationals of a third country who provide services and who are established within the Union.

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The European Convention extended ‘European laws or framework laws’ (the ordinary legislative procedure) to the second paragraph of Article III-29 of the draft Treaty establishing a Constitution for Europe (OJ 18.7.2003 C 169/33):

Subsection 3
Freedom to provide services

Article III-29 Draft Constitution

Within the framework of this Subsection, restrictions on freedom to provide services within the Union shall be prohibited in respect of nationals of Member States who are established in a Member State other than that of the person for whom the services are intended.

European laws or framework laws may extend this Subsection to nationals of a third country who provide services and who are established within the Union.

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The Treaty establishing a Constitution for Europe made a small change to the wording in the second paragraph of Article III-144, ‘to service providers who are nationals of a third state and’, but nothing else.

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We can see that the one substantive amendment was proposed by the European Convention.

Readers who enjoy a telegraphic style can, in this and other cases, turn to the Foreign and Commonwealth Office’s (FCO) ‘A comparative table of the current EC and EU Treaties as amended by the Treaty of Lisbon’ (Cm 7311). The text on Article 56 TFEU (49 ToL) sums it up neatly (page 9):

“Draws on Article 49 TEC. QMV already applies, decision-making moves to co-decision regarding extension to third country nationals.”

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Students of European Community (European Union) law have their texts, cases and materials to turn to, and they are available to everyone, but let us think of a general reader, for instance a person or business providing services, who wants to find relevant information on the web.

Here are a few pointers, taking into account that some readers may be interested in general principles, while others would prefer sector-specific information.

The Commission’s Internal Market web page ‘General principles: Freedom to provide services / Freedom of establishment’ offers a succinct introduction:

http://ec.europa.eu/internal_market/services/principles_en.htm

There is a link to a ‘Guide to the Case Law of the European Court of Justice on Articles 49 et seq. EC Treaty: Freedom to Provide Services’, dated 1 January 2001, but with an update promised shortly.

Despite the late date of the last update of the page mentioned above (28 January 2008), we feel the need for fresh information. The web page ‘A Single Market for Services’ (last update 28 January 2008) offers a little bit more on the importance of services and secondary legislation:

http://ec.europa.eu/internal_market/top_layer/index_19_en.htm

But the main attraction of this web page is its collection of links to thematic pages starting to offer more specific answers:

General principles, leading on to infringement procedures 2005 – 2008:

http://ec.europa.eu/internal_market/services/infringements/index_en.htm

Services Directive, while just an opening page, it contains links to specific questions and the related Posting of workers directive:

http://ec.europa.eu/internal_market/services/services-dir/index_en.htm

Transparency of regulations, includes information on standards in the area of services:

http://ec.europa.eu/internal_market/services/transparency/index_en.htm

Professional qualifications, opens up more specific links on the new system for recognition of professional qualifications and to sources of practical information and problem solving:

http://ec.europa.eu/internal_market/qualifications/index_en.htm

Financial services, deals with three major areas of economic activity – banking, insurance and securities – through links leading to more detailed information:

http://ec.europa.eu/internal_market/top_layer/index_24_en.htm

Postal services, a short introductory page with a host of links:

http://ec.europa.eu/internal_market/post/index_en.htm

Business-related services, follows the pattern of general information and links to further information:

http://ec.europa.eu/internal_market/services/brs/index_en.htm

E-commerce, basic information and additional links on electronic commerce:

http://ec.europa.eu/internal_market/e-commerce/index_en.htm

Media, where the opening page ‘Media in the information society’ has a few additional links:

http://ec.europa.eu/internal_market/media/index_en.htm

Gambling, a highly lucrative and therefore contested area of services, where governments at all levels and private service providers vie for the money willingly offered by a gullible public. The Commission page contains links to a study on gambling and a list of infringement procedures:

http://ec.europa.eu/internal_market/services/gambling_en.htm

Pharmacy services, contains links to a study on pharmacy, but you may remember that for instance Sweden has been forced to re-think its state monopoly following an ECJ ruling:

http://ec.europa.eu/internal_market/services/pharmacy_en.htm

Services of general interest, links to a web site dedicated to services of general interest and to a few more related web pages:

http://ec.europa.eu/internal_market/top_layer/index_41_en.htm

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All in all, I would say that the European Commission is not bad at presenting information about the different policy areas of the European Community (European Union), and many of the web pages are fairly well updated, but it is not always easy to find the specific information you need, and you may need both time and patience to find your way in the maze.


Ralf Grahn