European Diary: MEPs will debate the services directive today, one of the most controversial pieces of legislation to come before the European Parliament in recent years.
The draft directive, which proposes to liberalise the market for services in Europe, has been bitterly opposed by trade unions and member states such as France and Germany since it was published in 2003.
Dubbed the "Frankenstein directive", after its original author, the ex-internal market commissioner Frits Bolkestein, it has highlighted the ideological divide between advocates of unrestricted free markets and those who favour protecting wage rates and working conditions.
At its heart, the directive proposes to enable European companies to offer services in any EU state. It would extend the free market that exists for the sale of goods in the EU to service providers such as hotels, advertising services, estate agencies and construction firms.
The European Commission says that liberalising the EU services market would create 600,000 jobs and boost economic growth, while unions believe it could result in the displacement of workers in rich member states with those from poorer states.
"Freedom to provide services is a right," says Avril Doyle, Fine Gael MEP, a staunch supporter of the directive. "It is really a right to equal treatment with nationals of the host member state. It is also the essential motor for Irish competitiveness within the single market and a prerequisite for European competitiveness."
Freedom of movement for services, as well as people, is enshrined in the 1957 Treaty of Rome but in practice a host of legal, logistical and technical barriers exist to frustrate services providers from setting up shop in other EU states. One example highlighted by the business lobby is that of a tourist guide licensed in Germany, who was for many years prevented from accompanying her tour group to Venice because local laws meant that tour guides had to pass a local exam to prove they knew the town well enough.
In another case a British property sales firm that occasionally operated in Cyprus was forced out when the government passed a law in December 2004, which provided that estate agents must be "physical persons" located in Cyprus.
The proposed directive seeks to enshrine the right to provide services across EU borders in law and sweep away many of these technical and legal difficulties. Up until last week trade unions and socialists were deeply opposed to the directive on the basis that this could lead to a "race to the bottom" in which local workers' wages and conditions in the service industry would be eroded by new providers from eastern Europe.
But following a last-minute compromise on proposed amendments to the directive between the two biggest political groups in the European Parliament, the Socialists and EPP-ED, the directive should get the simple majority that it needs to pass its first reading in the European Parliament.
Most people are asking how the amendments will affect the proposed directive.
"The Socialist position has won out," says Labour MEP Proinsias De Rossa, who notes the amendments mean that service providers in any member state must comply with labour conditions in that member state rather than their country of origin.
"They [ firms] must respect local consumer and environmental regulations. And the provision of those services will be monitored by the domestic authorities - not those of the country from which the service provider comes from."
The amendments also exclude most public services from the scope of the directive and mandate that existing local labour law and collective agreements must be respected in the state where a firm provides a service to the public.
But declaring a socialist victory could be premature. Some MEPs from the EPP-ED group are understood to have serious concerns about the amendments and could vote against the compromise directive. There are also rumours that MEPs from eastern European states are planning to vote en masse against the amendments.
The main political groups will hold a meeting today to discuss the vote but as party discipline is far weaker in the European Parliament than in national parliaments, a sizeable majority in favour of the directive is not guaranteed. Meanwhile, six EU states that back the directive - Britain, Spain, the Netherlands, Poland, Hungary and the Czech Republic - have also expressed their discontent at the amendments, suggesting a rough ride for the directive when it passes to the council.
"It is important to get a strong majority in favour of the directive," says Arlene McCarthy, the Belfast-born Labour MEP and chairman of the internal market committee that is steering the directive through the parliament. "From the commission perspective this would enable them to drive it through with member states."
After the debate today all eyes will turn to the vote on Thursday, which will be critical to the future of the directive, which will then become the responsibility of EU commissioner Charlie McCreevy to steer it through the rest of the EU legislative process.