EU not doing enough to unblock cross-border services, auditors say

By Jan Strupczewski

BRUSSELS, March 25 (Reuters) - The European Commission is not doing enough to remove internal EU barriers to cross-border services, a major source of economic growth for the 27-country European Union, the European Court of Auditors said on Wednesday.

Services account for around 70% of the EU's gross domestic product, but only 20% of them are provided across borders because of big differences in authorisation and certification requirements for service companies between countries.

The ECA, an independent external auditing institution of the EU, said 60% of all the obstacles to cross-border services identified in 2002 were still there in 2023, showing their removal had not been a priority.

"Businesses in the EU continue to face an uphill struggle in providing services in a cross-border capacity," said Hans Lindblad, the ECA member leading the audit. "The Commission’s efforts to do away with barriers are still insufficient."

GROWTH COULD BE 2.5% HIGHER WITHOUT BARRIERS, ECA SAYS

The International Monetary Fund said its research showed internal legal and administrative obstacles between EU countries were equal to 110% tariffs on services offered across borders.

According to the ECA, the European Commission's own research showed that if existing barriers to cross-border services were removed, the bloc's economic growth could be 2.5% higher within a few years.

The Commission said last year the issue was one of the main barriers to making the EU's single market of 450 million consumers work better at a time of increased economic competition with the U.S. and China.

EU governments are often not keen to promote cross-border services due to pressure to protect their labour markets and vested interests, especially in the bloc's 5,700 regulated professions, from lawyers and engineers to carpenters or beauticians.

The Commission is not keen to make proposals that would be shot down by national capitals.

The ECA said the Commission should identify the economically most significant barriers to cross-border services and push EU countries to address them by linking their removal to access to EU money - the strongest leverage it has.

The Commission should also review EU laws on cross-border services to make them less ambiguous, crack down on enforcement, and speed up the processing of complaints by service companies denied business in other EU countries, the ECA said.