1 EUROPEAN PARLIAMENT PUBLIC HEARING ON THE PROPOSAL FOR A DIRECTIVE ON SERVICES IN THE INTERNAL MARKET Problems of transposition and Members States “screening ” process and timetable

As requested by the Committee on the Internal Market and Consumer Protection, this note focuses on Articles 14 and 15 of the proposed Directive on services. These two provisions are crucial: they define the “screening ” process and the timetable which will make operational the “country of origin ” principle (Article 16) on which the Directive crucially relies. As these two provisions raise economic more than legal questions, this note focuses on the economics of the Directive. The Single Market: an elusive target The objective of the proposed Directive is the creation of a functioning Single Market in services. This goal may seem strange, since it is often claimed that the Single Market has already been achieved. But, the past fifty years of the European Union (EU) shows that creating a Single Market has proven to be much more difficult and slow than expected. This is true for the Single Market in goods. The remaining barriers between the markets of the Members States are still high: their lowest average level (estimated in ad valorem equivalent, like a tariff) is roughly 8 percent [de Serres, Hoeller and de la Maisonneuve, 2001]. This estimate is surprising all the more because it concerns only goods highly tradable (that is, goods for which barriers should be expected to be insignificant) and because “cross-border ” trade in goods was liberalized in the very early years of the EU, forty years ago. Hence, it underlines the crucial importance for a functioning Single Market in services of the proposed Directive which precisely focuses on the liberalisation of cross-border trade of services