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Why have a Services Directive?

Services constitute Europe's, and Spain's, most important sector in economic and employment terms, and they represent the area of the economy that has enjoyed the fastest growth in recent years. The Treaty of the European Community undoubtedly contributed to this expansion, as in 1957 it had already confirmed both the freedom of establishment and the freedom of movement of services within the Union...However, four decades after the Treaty, it was clear that the progress of these freedoms, which had been pursued on a sector-by-sector approach, were insufficient. The fragmentation existing in the internal market for services continued to have a negative impact on the growth of the European economy, particularly on the creation of employment and the competitiveness of Small and Medium Enterprises (SMEs), while at the same time it prevented consumers from accessing a greater variety of services at lower prices.Against this backdrop, the approval of theLisbon Strategy Open in new windowby the European Council in March of 2000 represented a considerable change with regard to the approach that had been followed previously. Thus, the Lisbon Strategy or Lisbon Agenda put forward a series of measures aimed at converting the economy of the European Union into “the most dynamic and competitive ... economy in the world, capable of sustainable economic growth with more and better jobs and greater social cohesion ... by 2010”. To achieve this goal, it was essential to make the sector with the most weight in the European Union more dynamic. To do so, the Council asked the European Commission to prepare a report on the situation of the internal market for services, thereby identifying the main barriers and obstacles to success in that market, as well as the possible solutions.In July 2002, after an extensive consultation period kicked off by the “Communication from the Commission on the Strategy for the Internal Market for Services”Open in new window issued in December 2000, the Commission published a report on “The State of the Internal Market for Services” , which reached the conclusion that, ten years after the time when internal market should have been a reality, there were still numerous barriers, meaning it was still not possible to talk about a single market in services. Moreover, the sector-by-sector approach that had previously been followed was insufficient to cover all the activities of the service sector.In this context, a true internal market for services needed to be configured by adopting a global approach and not by adopting sector-specific directives or on the basis of case law from the European Court of Justice as a result of infringement proceedings initiated in response to breaches of Articles 43 and 49 of the TEC, which refer to the freedom of establishment and the freedom to provide services within the Community, respectively.Following a global strategy made it advisable to adopt a horizontal approach that, through a single directive, would consistently and effectively take on the barriers and obstacles that unfairly restricted service providers' access and their ability to conduct their business across the European Union. It was therefore necessary to adopt a Directive that pertained to the internal market for services as a whole.Thus, the Commission drafted a Directive proposal, published on 13 January 2004, which was reviewed by the European Parliament and Council over several readings, and at the same time an agreement was reached with the agents involved until, finally, the Council definitively approved the Directive on 12 December 2006. On the day following its publication in the Official Journal of the European Union, 27 December 2006, Directive 2006/123/EC of the European Parliament and of the Council of 12 December 2006 on services in the internal market (Services Directive) came into force Open in new window. Member States have a transposition deadline of three years, which ends on 28 December 2009.

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