EU auditors on Services Directive: Barriers for cross-border trade still exist

The European Commission should be bolder in its support for EU businesses and consumers. They are still not able to buy or sell services across borders as readily as they should be, according to a new report from the European Court of Auditors published yesterday (14 March). 

The European Court of Auditors (ECA) is considered as the watchdog of the EU and the guardian of its finances. The Services Directive was adopted in 2006 with the aim of reducing legal and administrative barriers to both providers and recipients of services.

While the single market for goods is well-developed, the services market is still widely recognised as not having achieved its full potential. The Services Directive should have increased transparency and made it easier for businesses and consumers to buy and sell. But some years after the deadline for implementation, barriers still remain. 

The Directive covers activities which contribute about 46% of EU GDP and should have eliminated obstacles for cross-border trade in services. The deadline for transposition of the Directive was set for 2009, but according to a Commission report from 2013, Europe is still falling short of its ambitions to fully liberalise trade in this area. 

‘’The European Commission is not looking after the interests of Europe’s consumers or service providers as well as it should,” said Neven Mates, the ECA Member responsible for the report. “It is reluctant to pursue legal proceedings, partly due to the length of the judicial procedure, but also due to lack of confidence in the legislation’’.

The auditors visited seven Member States: Portugal, the Netherlands, France, the United Kingdom, Austria, Germany and Slovakia. “Has the Commission ensured effective implementation of the Services Directive?” was the overall audit issue and judging from the report the answer is negative.

“The Commission has been only partially effective in ensuring the implementation of the Directive”, the auditors summarize the report.

The auditors found among others that the Commission and Member States had not started to compile statistics on trade in services covered by the Directive.  Due to the lack of detailed data on sectors affected by the Directive, there is still no reliable quantification of its impact on reducing trade barriers.

Points of Single Contact, a key element in the Service Directive, had been delayed in being set up and were of mixed quality across Member States. Information was still difficult to find and business awareness remained low.

The Commission had used infringement procedures sparingly and had referred only one case to the European Court of Justice. According to the data provided by the Commission, the average duration of the infringement cases related to the Directive was about 20 months.

The report ends with a number of recommendations to the Commission to address the shortcomings found in the audit. The Commission should be bolder in enforcing the Service Directive by following up results from exercises such as the mutual evaluation and performance checks in order to resolve non-compliance and, along with Member States, addressing the most economically significant issues.

The ECA was established to audit the EU’s finances.  The starting point for its audit work is the EU’s budget and policies. Its reports provide an input for the annual discharge debate in the European Parliament.

The audit reports include recommendations for improvement and are intended for the audited bodies, EU policy makers, journalists and citizens.

Besides financial audits, ECA is also carrying out performance/effectiveness auditing. Often the reports look at both financial, regularity and effectiveness aspects. Audits of different types contribute to improving accountability, transparency and performance in the EU.

The Brussels Times

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