Background Paper on the "Bolkestein" Directive
BLUE 21 (Berlin Working Group on Environment and Development)
Author: Thomas Fritz
Berlin 2004
Contents
1. Introduction: Touring Europe with a wrecking ball
2. Scope of the Directive
2.1 Covering all services
2.2 Cancelling the debate about services of general interest
3. Freedom of establishment
3.1 Rat race to the bottom
3.2 Cutting requirements - mutual evaluation
3.3 Non-profit-making undertakings under fire
3.4 Regulation under tutelage
4. Free movement of services
4.1 Country-of-origin principle - causing chaos among legal systems
4.2 Wage dumping and social security fraud
4.3 Anti-democratic market radicalism
4.4 Attack on the health care systems
5. Stop the Directive!
6. Bibliography
1. Introduction: Touring Europe with a wrecking ball
With the publication in January 2004 of its proposal for a directive on services in the internal
market, the European Commission launched its most radical and most comprehensive attack
to date on welfare states within the European Union. The proposal is the brainchild of DG
Internal Market headed by Commissioner Frits Bolkestein, and essentially covers all services.
The only services excluded from its scope are those provided by the State in fulfilment of its
social, cultural, educational and judicial obligations where the “characteristic of remuneration
is absent”. However, since access to a large number of public services requires the payment of fees, the bulk of theses activities fall within the scope of the Directive.
The Directive pursues its aim of deregulation by gradually eliminating national restrictions
and by systematically undermining national law through the so-called “country-of-origin”
principle. Once the Directive has been adopted, service businesses in the EU will have to
comply solely with the requirements of their country of origin. The other member states in
which they trade or provide services will not be permitted to impose any restrictions or
controls whatsoever. The Commission even wants to prohibit mandatory registration when a
company opens for business in another member state. That being the case, the country-of-
origin principle actually abolishes any effective supervision of entrepreneurial activity in the
European Union. In future, any undertaking will be able to avoid tiresome national
restrictions by relocating its registered office or by simply establishing a shell company in
another Member State. Local collective wage agreements, requirements relating to
qualifications, and environmental or consumer protection standards may be circumvented
simply and cheaply.