How Free Is the Free Movement of Services?

The creation of a common European market of services, with free movement of goods, persons, services and capital lies at the heart of the European Community project. Whilst free movement of goods was more or less completed in the late 1960s, free movement of services lagged far behind. Now, a good decade later a common market for services is much closer. Still, a lot remains before the aim is achieved. What is the cause of this slow development? Well, the main reason is that the constantly expanding service sector contains such a multitude of activities; some of great importance for society and economy, while others are deeply rooted in national traditions. The concept of services includes all kinds of activities; from editing books to professional sports. Still, a lot has been achieved. For a large number of service sectors there now exist common EC-legislation; e.g. for the banking and insurance sectors EC directives set minimum provisions making it possible to establish and perform services within the whole Common Market. The general Directive for services on the Common Market (henceforth referred to as the Service Directive) was adopted in 2006, and although far from attaining the high expectations it will unquestionably facilitate the free movement of services. Large service sectors are excluded, such as gambling and services of general economic interest. These and other so-called unregulated services, i.e. services not included in common market secondary legislation, are regulated by the EC Treaty rules of free movement of services, articles 49 and 50. The fact that these services are called unregulated has caused some confusion, in that they are believed to be outside the ambit of EC-law. In fact, all economic activity is embraced by the EC Treaty rules. For unregulated services it is therefore the Court’s interpretation of the EC Treaty that decides the extent of the free movement.