EU vote setback for IT services

A vote in the European Parliament this week on liberalizing the European Union’s services market is “a missed opportunity” for the 25 member states of the EU to develop a competitive IT services industry, a representative of leading European IT companies said Friday.

On Thursday, Members of the European Parliament (MEPs) voted by an overwhelming majority to open up national markets for services to companies from other member states by approving a revised version of the services directive, dubbed the “Bolkestein directive” by its opponents. MEPs rejected a key element of the directive, the so-called “country of origin” principle, which would have meant that companies offering their services in another EU country would be subject to the laws and regulations of the country in which they were based. This would have enabled them to bypass a series of legal and bureaucratic hurdles to doing business in another EU country.

“There is sheer disappointment in our sector”, said Mark MacGann, director-general of EICTA, the European Information & Communications Technology Industry Association. “Without the country-of-origin principle it isn’t very attractive for companies to set up in other countries,” he said.

MacGann said that watering down the directive would prevent the EU developing a competitive IT services industry. Referring to the former Communist countries which joined the EU in 2004, he said that the new member states had a “very dynamic IT services sector,” especially in countries like Poland, Hungary and the Czech Republic.

But the percentage of companies which were able to set up shop in the fifteen longer-standing EU countries was “minute” because of internal barriers to trade in national legislation, according to MacGann.

The version of the directive MEPs approved this week includes a reference to the “freedom to provide services,” which in theory should require countries to remove obstacles to companies wishing to provide services. But EICTA’s MacGann said that this paragraph would have little effect. “The freedom to provide services is one of the four basic freedoms of the EU This directive was intended to turn that freedom into a reality,” he said.

However, the outcome of the vote has been welcomed by IT professionals. A representative of the French IT consultants association MUNCI said it would help protect consultants from being undercut by IT workers from non-EU countries. “The [version of the] directive will give more possibility of controls,” said R

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