EU Commissioner stresses importance of exploiting potential of Services Directive

'Liberating the Power of Services', the second Bruges European Business conference, a one-day conference hosted by the College of Europe and supported by Deloitte
30 Mar 2011

Bruges, 30 March 2011 - The EU's Internal Market Commissioner Michel Barnier has come out strongly in favour of exploiting the potential of the EU's Services Directive in a keynote speech at the second Bruges European Business conference on 24 March at the College of Europe. "I do not want to reopen the debate on the Services Directive when we have not fully used the current directive, which has huge potential," he said.

The aim of the Services Directive is to remove unnecessary and burdensome obstacles to the provision of services across the EU. The Directive covers a wide variety of services representing around 40% of the EU's gross domestic product (GDP) and employment. A dynamic EU services sector is a key priority for the Commission - as services are a driving force for the EU's economy.

He added that the Commission would include services in the EU's single market as one of twelve key areas of focus that the Commission would propose within the next few weeks to promote the Single Market Act.

Barnier sees the 'Points of Single Contact' in the Member States (which are intended to allow businesses to more easily process paperwork electronically), the SOLVIT centres (for mediating and resolving disputes) and the Internal Market Information centres (linking up national administrations) as important tools in the Directive.

Earlier, Isabel Grilo from the European Commission's Directorate General for Economic and Financial Affairs, said that "services can offer another opportunity for external competition in manufacturing by allowing differentiation beyond price". Eric Desomer, Partner at Deloitte echoed this view and went further, arguing that "services provided by manufacturing companies can become more important than the quality of their product". His key point was that manufacturing companies have a tendency to miss out on much of this potential business from after-sales services.

"Automotive industries are good in terms of their captive market by following cars and servicing them for the three years of their warranty. But what about after the three years?" he said. "If companies don't go beyond their captive market, they will leave the benefits to others," Desomer warned.

On the specific example of servicing cars, Norman Rose, Chairman of the European Business Services Roundtable, drew attention to the issue of cost, arguing that, "after three years, people don't use the main dealer because of costs" as "the customer wants a cheaper deal if the quality is the same".

Rose said the single market in services is "clearly not working" and that "there is a need for real commitment to break down the barriers". He stressed how important it was to complete the single market in services, noting that there are around 120 million jobs in the EU in the services sector and that liberalisation could lead to a 4% growth in the EU's gross domestic product. Moreover, he pointed out that 70% of jobs in manufacturing industries are in reality services jobs. He also stressed the need for a High Level Group on business services, an idea currently being considered by the European Commission, to beef up the level of attention given to this crucial growth opportunity.