EU: What is the services directive? The directive proposes to liberalise the services market across the EU by enabling firms to offer services across all member states. Although this is already enshrined as a fundamental right in the EU treaties, in practice states have erected legal barriers. It will benefit a host of service sectors from advertising firms to real estate agents.
Why is it so controversial?
The directive pits liberals (who want to extend the EU's free market) against socialists (who are eager to protect wages and work conditions). Unions feared the original directive would cause a flood of east European firms to offer services in old Europe.
What are the key parts of the compromise?
Under the compromise agreed by the parliament the "country of origin" principle was deleted. This clause may have enabled firms to provide services in another country but only be regulated by their home state.
Debate continues on whether private healthcare or privatised public services now fall within the scope of the directive.
What happens next?
EU commissioner Charlie McCreevy will now redraft the directive accommodating the compromise. EU leaders will discuss the directive in March and may seek to find a political agreement. If states agree on the text, it can then be adopted. However, it is likely the council will add some of its own amendments. This would require MEPs to vote a second time before the directive comes into force.