EU services proposals need changes - McCreevy

The services directive will never be accepted in its proposed form, the EU commissioner for the internal market and services, Charlie McCreevy, said yesterday. He said he had informed European Commission president José Manuel Barroso of this.

Mr McCreevy said yesterday that this had become clear to him following contacts he'd had in EU members states.

But he said the directive would have to maintain its added economic value. "When the process [ of agreeing the directive] is complete, I hope we have a directive that is worthwhile," he said.

Mr McCreevy was speaking at a lunch in Dublin organised by the American Chamber of Commerce in Ireland.

"There was a culture in Brussels that tended to value regulation for its own sake but I think Brussels is changing," he said.

Services is the most important remaining gap in the internal market, he said.

Dutch research had shown that there would be a significant increase in bilateral trade and direct foreign investment in commercial services in the EU if the services directive was implemented.

He said it had been estimated that the directive could create up to 600,000 jobs in the EU.

"Red tape and bureaucracy is strangling cross-border initiatives for service providers," he said.

With services accounting for up to 70 per cent of economic activity in the EU, "it does not take an advanced degree in economics to conclude that, if we want to achieve the levels of growth necessary to maintain and enhance our quality of life, then a vibrant services sector is a prerequisite."

Mr McCreevy said there was a need for better regulations governing trade between the US and the EU as well as within both markets. Incompatible regulations in the two markets can impose huge costs on transatlantic companies, he said. "Business has gone global and regulators need to catch up."

The chief executive of the American chamber, Joanne Richardson, said that, without the implementation of the services directive, the internal market would never become a reality for the majority of consumers and businesses operating in the EU.

"The services sector accounts for about 70 per cent of the EU's GDP and employment. This is a vast sector with considerable potential for economic growth and job creation. To date, however, it has not been possible to exploit this potential because of the many obstacles hampering the development of services activities in the internal market.

"Commissioner McCreevy must show strong leadership and use all his powers of persuasion to ensure that this directive is not watered down or, worse, left on the shelf altogether," she said.

The implementation of the services directive would encourage further foreign investment in the EU and the challenge for the Irish Government was to ensure that the Republic was well positioned to take advantage of the opportunities presented by the directive, she said.