Opening speech at the Stakeholder conference on the Services Passport, Brussels, 6 September 2016

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Introduction

Dear State Secretary,

Dear Mr Schwab,

Ladies and Gentlemen,

Thank you for coming here.

You cannot have a modern economy without a modern services sector

We called this conference for a very simple reason. And that reason is that growth in Europe is not what it should be. Unemployment is not declining as it should. And underpinning that, productivity in Europe is not what it should be. The productivity of the EU economy is just 70% of the productivity of the US economy. And the rest of the world is catching up with the EU.

We all want to change this. All of us have our theories about what is going wrong and what the right medicine is. Some believe in stimulating demand. Some believe in stimulating supply. Some say that the focus should be sustainability and clean technologies. And some say that the focus should be on digital technologies or Industry 4.0.

But ladies and gentlemen, whichever way you look at it, the performance of the services sector is crucial. You cannot address the productivity problem in Europe without addressing services. Some key services sectors such as business services, retail and construction have had flat or even negative productivity growth over the last 15 years.

And the services sector has been much slower to adopt technology and to innovate. Competition has not sufficiently driven quality and growth. Even if you believe that the answer is a modern industry, you cannot get there without addressing services. Because in the twenty-first century, industry and services are totally intertwined.

Yet far too often, the way in which we regulate services does not reflect that. Too much of it is outdated. There is too much bureaucracy and stifling procedures. We have to change this.

For service providers, certainly. For consumers, of course. But also for our manufacturers, our job creators and our future. We have got to end the pretence that we can somehow deliver Industry 4.0 with Services 1.0 and Bureaucracy 1.0. That means a modern, efficient services market. And it means a cross-border services market.

Practical solutions

Delivering that means partnership with Member States. But it also means partnership with service providers, manufacturers and consumers. It means a practical approach. Using what is already there rather than introducing mountains of new legislation.

But when we need to, acting firmly and effectively. That is how our approach is structured. First, we want to get the most out of existing legislation. And that is not yet happening. The Services Directive set up a regulatory framework for all Member States.

But ten years on, we still see that barriers that are not justified or disproportionate keep on being introduced. Some are directly infringing the Directive. This has negative consequences: less cross-border activity, markets less open, higher prices for customers and clients.

In practice, this also means more restrictions for service providers. At the end, this results into a poorer offer for customers of services. And many of those customers are our industrial players. I made it clear that I would have zero tolerance for this. Many Member States have felt that.

I will work through the infringement and enforcement process. But remedying a problem through enforcement of legislation comes inevitably late in the process. We need to discuss more before national regulations are introduced. This is already what happens in the area of goods. And it works. 

So let's do it for services. This is what I want to do with the notifications initiative. More upstream communication and problem-solving mechanisms. More transparency on regulatory activities in the field of services. I would much prefer if we could do that without legislation. But it hasn't worked.

Frankly, some Member States have abused it. So I will put forward a proposal in the coming months. That will be fair to everyone. Getting the most out of existing legislation also means being clear how it applies to new developments. So that is exactly what we did on the collaborative economy.

It is our responsibility not to stifle innovation but to promote it. But we have to ensure that the innovation takes place in a balanced way and is fair to existing players. That is why we adopted a Communication on how current instruments of EU law can be used to address the collaborative economy.

But ladies and gentlemen, sometimes the issue is not with the treatment of new actors. The problem is that existing actors face outdated or restrictive requirements. So we need to review these too.

We have already made much progress on regulated professions. We have run a comprehensive peer review. And many Member States have acted on that review or are acting. They are finding more efficient and modern ways of regulating. We are building on this.

We want to introduce a proportionality test to help guide future changes to regulation. We will also pursue Member States’ work on targeted guidance. Again, I expect these initiatives to be launched in the coming months.

The Services Certificate initiative.

Ladies and gentlemen, these three sets of initiatives will help. But we need to do more. Companies which would want to expand cross-border still face too many hurdles. Complex administrative procedures and formalities. Specific regulatory requirements which incoming providers cannot comply with or only at huge cost.

As a result, companies in particular in business services and construction just do not move. These sectors have unusually low cross-border trade intensity. Just 1% for architectural services and construction! Only 4% for accounting services and 5% for engineering services.

And we have seen that national administrations are not addressing these issues. They are not prepared to trust the judgement of their counterparts in other Member States. And they have not done anything to build that trust.

Service providers with a clean track-record in their home country and with a clear plan of development in another country get penalised. And through them, we penalise consumers and manufacturers and our entire economy. So we need to change this.

And this is what I want to do. Some people fear a debate on the country of origin. This is not what I want. We have consulted extensively on the underlying issues. We will continue our reflections together with you today both on problems and possible solutions.

I know that some of you found the name "passport" misleading. So we have looked for a new name for the initiative. And I am happy to hear your ideas. Our starting point is an electronic certificate issued by a Member State.

Just as we have done with the European Professional Card. And it has worked. Since we launched the Card in January, over 370 cards have been issued. And we have had applications from professions in every single Member State. And applications across all five of the professions that we started with.

This is why we need to discuss our solutions together: How to design such a certificate? How to best address administrative and regulatory reform in business services? What about insurance when going cross-border? Difficult issues – I know.

But I also know that we need to make a difference. I look forward to today’s discussions. This will help us deliver proposals soon.

Conclusion

State Secretary, Mr Schwab, Ladies and Gentlemen. What we are doing goes beyond the implementation of the Services Directive. It is about practical solutions to help our service providers, consumers and manufacturers. Modern solutions for a modern services sector in a modern economy.

Services 4.0, administration 4.0 contributing to Industry 4.0.

I need your ideas. I need your support.

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