EU Reaches Deal to Lift Service Sector Restrictions

European Union member states agreed to dismantle borders for service providers such as construction firms, accountants and travel agencies to open up competition in the greatest part of the EU’s $14-trillion economy.

National industry ministers agreed to the final wording in Brussels on Monday to seal a compromise with added safeguards for workers’ rights. Those protections helped overcome opposition to the measure that fueled France’s vote against an EU constitution last year.

Proponents said the scaled-back initiative, originally touted as boosting the economy by 1% to 3% a year, still attacked barriers blamed for dragging service industry growth below the U.S.’ pace. Backers said it would help create hundreds of thousands of jobs.

“If we are to galvanize the European economy, it must be in the area of services,” EU Internal Market Commissioner Charlie McCreevy said at a news conference after the agreement.

The services compromise also bridged a split between Eastern European countries that joined the bloc in a wave two years ago and richer countries in Western Europe that voiced fears of an influx of cheaper, less-regulated labor.

“We were able to close a gulf that seemed to be opening up between the old and new member states,” said Austrian Economic Minister Martin Bartenstein, chairman of the meeting under the EU’s rotating presidency. The measure “is the symbol of new power within Europe.”

To become law, the compromise would need approval by the European Parliament. The assembly voted in February to scale back the measure and ensure that service providers obeyed local labor laws. That version won tentative backing from the governments April 22, leaving Monday’s debate centered on final wording in areas such as how national governments can exercise restrictions on some services.

The measure excludes businesses in such categories as temporary work, healthcare, private security, gambling, broadcast media, notaries and social services, such as housing and child care for the poor. The bill also carves out businesses subject to other EU laws, including financial services, telecommunications and energy utilities.