Berlin, Madrid, Amsterdam fought Commission
An outcry from major European cities – like Amsterdam, Berlin, Madrid, Barcelona and Budapest – helped put aside a European Commission takeover over the service sector.
In a little-noticed procedural move, last month the commission was forced to withdraw a known as “Service notification procedure” – which would have given it an advanced right of veto over new laws of regional and local governments, and could have further limited local democratic initiatives in areas as diverse as affordable housing, energy supply and waste management .
The commission should learn this lesson and help municipalities adopt social and environmental measures, respect their democratic right to regulate and remove barriers that prioritize business interests over local residents.
The objective of the committee was to strengthen the application of EU provisions 2006 Services Directive.
But negotiations with EU governments have stalled amid growing concerns about the freedom of regulation of local, regional and national authorities.
It was ultimately withdrawn when, in the commission’s words, there was “no foreseeable deal” possible.
A key factor, though underestimated, was resistance from progressive cities and civil society groups across Europe.
The reason they mobilized was simple: the directive would have required local, regional and national authorities to notify the European Commission of any new draft regulations affecting the service sector three months in advance (rather than afterwards as this is currently the case).
This would have resulted in a delay, while municipalities waited for the commission to use its early veto power to reject or approve the planned by-law.
One of the first outspoken critics was the Amsterdam City Council, whose September 2018 resolution said the directive would “seriously undermine the autonomy of local governments”, posing “a threat to local democracy”.
The mayors of Amsterdam, Berlin, Madrid, Barcelona, Budapest and Riga have drafted a firm letter to EU negotiators, criticizing the proposed directive for creating administrative burdens and undermining their ability to act and regulate in the public interest.
Another open letter against the directive was signed by more than 160 civil society groups, unions, mayors and municipal progressive parties.
Cities against the “single market”
At the heart of the battle over the directive is the clash between cities fighting for their democratic right to regulate and protect the interests of their citizens, and a European Commission obsessed with ‘completing the single market’ and the removal of what multinational companies consider to be “regulatory barriers”.
The Commission’s Single Market Department (DG GROW) tends to favor service sector lobby groups when they complain that local regulations they dislike are “violations” of the Services Directive. services.
Many very legitimate regulations have been targeted by the commission as “regulatory barriers” meant to “discriminate” against non-national companies.
For example, DG GROW has repeatedly clashed with cities trying to restrict the expansion of AirBnB and other short-term rental platforms in order to prevent skyrocketing rents.
DG GROW has a very warm relationship with AirBnB lobbyists; and industry lobby groups BusinessEurope, EuroCommerce and EuroChambres were VIP treatment in the drafting of the directive on the service notification procedure.
This conflict between business-friendly single market rules and the right of municipalities to regulate in the public interest intensifies as cities become increasingly ambitious and proactive actors in problem solving, emergency climate to the lack of affordable housing.
Municipalist cities like Barcelona, Grenoble and Amsterdam are turning their backs on neoliberalism and introducing bold and innovative local solutions.
The corona crisis has further underlined the crucial role of cities in solving societal problems.
The withdrawal of the directive on service notifications is an important victory for European cities and should be a wake-up call for the committee.
Instead of trying to restrict the regulatory space of cities, it should step up their efforts to tackle social and environmental issues. Unfortunately, the attitude of the European Commission seems unchanged, as evidenced by its new measures.
In March 2020, the committee launched a Single Market Enforcement Action Plan (SMEAP), with new ‘measures to ensure that Member States comply with the existing notification obligation under the Directive on services to identify and remove potential new regulatory barriers ”.
One of these steps is the commission launch of a new website where it publishes all service sector regulatory notifications received from the national level.
He then solicits comments on the notifications from governments, but also from corporate lobby groups.
In November 2019, the Commission actively advised the retail industry lobby group EuroCommerce about this site, noting that interest groups “are welcome to provide their feedback.”
An example of how this new mechanism works in practice are the complaints lodged by the European Holiday Home Association (EHHA) and its group of German members in February 2020.
A Spanish island retaliates
Freedom of Information requests show that this lobby group (an AirBnB spokesperson) has targeted further restrictions on vacation home rentals on the small Spanish island of Formentera.
The measures (including an annual maximum of 60 days for the short-term rental of primary residences) aim to tackle severe drinking water shortages and reduce the rapidly growing volumes of household waste on the island, both exacerbated by tourism, as well as lower fuel consumption.
In addition, the demand for tourist accommodation has left the local population without affordable housing options. Yet the EHHA complained that the rules impose “discriminatory, unjustified, disproportionate and unsuitable measures for short-term rentals in the Balearic Islands”.
The commission immediately sent a letter to the island council of Formentera with a long list of critical questions, demanding “justification and proportionality” around what they have argued “constitutes a restriction on the economic freedom to rent”.
In July 2020, the island council sent a 16-page legal response.
It remains to be seen whether the commission decides to initiate infringement proceedings against the Spanish government or takes further action against Formentera’s rules.
The commission’s aggressive questioning of Formentera’s council (on behalf of narrow business interests) shows how the service deregulation agenda conflicts with the EU’s stated social and environmental goals, including the Green Deal European.
It is high time for the commission to redefine its priorities, abandon outdated neoliberal assumptions and respect the right to regulate of local authorities.