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Case Title:

European Union's 'Services Directive': The Franco-German Resistance

Publication Year : 2003

Authors: Susmita Nandi & Sumit Kumar Chaudhuri

Industry: General Business

Region:China

Case Code: GBE0043

Teaching Note: Not Available

Structured Assignment: Not Available

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Abstract:
In January 2005, the European Commission put forward a proposal, the European Union (EU) Services Directive, to ensure free flow of services across the borders of its 25 member states and transform Europe into a ‘dynamic and knowledge-based economy’ by 2010. The country of origin clause, which is one of the key principles of the directive, has sparked a vigorous debate in certain political groups, like the trade unions and the EU parliament, which are strongly supported by France and Germany as they fear that free flow of services would lead to heavy social and fiscal dumping, which in turn would lead to dilution of social and health benefit standards. However, most East European nations view the directive favourably as they expect to rake in profits by doing business with the West European nations and leveraging on their cheap labour.

Pedagogical Objectives:

  • To focus on the issues that have stirred a major controversy over the EU services directive
  • To discuss the role of the European Commissioner, and his role in shaping the future of the services directive.

Keywords : European Union (EU) and its member states, Government and Business Environment Case Study,The EU Services Directive, Social and fiscal dumping, Lisbon Economic Reform Agenda, Barriers to trade, Unemployment rate, Administrative red tape and restrictions, Minimum wage standards, Social and healthcare benefits, Annual gross domestic product (GDP) growth, Country of origin clause, Exchange rate and its role in the exports market, Welfare states, Comparative advantage and cheap labour

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