The European Internal Market for Business Services: No Open Borders Yet

A cornerstone of the European Union (EU) is the principle that goods, services, capital and labour can move freely between the member states. The internal market for goods seems to function well, following the implementation of the Single Market programme in 1992. That is, however, not yet the case for the internal market in services. Service providers often experience obstacles if they want to export their services to other EU member states, or when they want to start a subsidiary company in another EU member state. The European Commission (2002a) concluded that these impediments are to a considerable degree caused by national regulations for service exporters, foreign investors in services, and for the service product itself. Such regulations are mostly made for domestic purposes without much regard for the interests of foreign service providers. The result, however, is a European maze of different regulations for firms that provide their services in other EU countries. Especially the markets for knowledge-intensive services — among which many business services — still tend to be highly regulated in national markets, with strong differences in regulation.