Boost the economy – liberalise cross-border trade in services

Open Europe 6.6.13 024The European economy is in serious trouble. Forecasts predict that the EU’s share of global GDP in 2017 is set to drop to 17% – over a third less than in 1990. It is vital that Europe looks at a range of different ways to kick-start growth to reverse this trend and regain competitiveness in the global race. The Friedrich Naumann Foundation for Freedom together with Open Europe held a panel discussion on the way forward in liberalising trade in services.

Gustav Blix, member of the Swedish parliament claimed that to boost economic growth and create jobs it is time to liberalise cross-border trade in services and explores several different avenues to achieve this. According to him the first step should Open Europe 6.6.13 021be clear: start with properly implementing the Services Directive. According to a study published by Open Europe and presented at the event by Stephen Booth, implementation of the Services Directive throughout the EU along the lines of the member states that are most advanced, could boost the EU economy by some €230bn.

The Services Directive was adopted in 2006 after intense debate between member states and in the European Parliament. The directive established a deadline for implementation at the end of 2009. However, there is still great heterogeneity in the transposition of the directive at the national level. Now, some member states have decided to go further in liberalising trade in services. Under leadership of Great Britain and the Netherlands 12 members states called for more liberalisation in a pro-growth letter to the presidents van Rompuy and Barroso in February 2012.

Open Europe 6.6.13 032Stephen Booth, Research Director of Open Europe, argued in favour of additional steps to promote service liberalisation. According to him, to overcome the economic downturn, enhanced cooperation, especially in the field of the “country of origin principle”, is needed. Derk-Jan Eppink, MEP and former member of the cabinet of Commissioner Bolkestein, said it is crucial to bring as many countries on board in the negotiations on further trade in services liberalisation. He also reminded that the outcome of next year’s elections to the European Parliament would have an impact on possible negotiations for more service liberalisation. According to him bringing Germany into the negotiations would be a great gain. Dr. Corinna Bölhoff, from the German Permanent Representation to the EU, argued that in the case of such a broad issue as the liberalisation of trade in services, enhanced cooperation might not be the best way to go forward. She rather suggested trying to negotiate within the council with all member states and resort to enhanced cooperation only in case no agreement can be found in the Council. In principle Dr. Bölhoff agreed with the positive impact further liberlisation in trade in services could bring, however she also underlined that it is crucial to bring all member states and citizens on board to avoid another “polish plumber”-rhetoric on the issue.

You can download the study of Open Europe here.

Julie Cantalou