Warning shot for the European Commission in its failure to seize power over local services

The Commission continues its deregulation efforts, targeting the efforts of the Spanish island of Formentera to limit the adverse effects of mass tourism

Cheers from municipal authorities and civil society activists welcomed the announcement in October 2020 of the withdrawal of the Commission’s proposal for a directive on the service notification procedure. The Commission’s aim was to strengthen the application of the 2006 EU 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 It was eventually withdrawn when, in the words of the Commission, there was “no foreseeable agreement” possible.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 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 Opposing the directive was signed by more than 160 civil society groups, unions, mayors and progressive municipal parties.

At the heart of the battle over the Service Notifications 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 ‘finishing the market. unique ”and remove what multinational corporations see as“ 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” supposed to “discriminate” against foreign companies. For example, DG GROW has repeatedly encountered cities trying to restrict the expansion of AirBnB and other short-term rental platforms in order to prevent soaring 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 is intensifying 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 coronavirus crisis has further underscored 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 Commission. 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 Commission seems unchanged, as evidenced by its new measures. In March 2020, the Commission launched an Action Plan for the Implementation of the Single Market (SMEAP), with new ‘measures to ensure that Member States comply with the existing notification obligation under the Services Directive in order to identify and remove potential new regulatory barriers ”. One of these measures is the launch by the Commission 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 on this site, noting that interest groups “are welcome to provide comments”.

An example of how this new mechanism works in practice are the complaints lodged by the European Holiday Home Association (EHHA) and its German member group in February 2020. Freedom of information requests show that this group of pressure (an AirBnB spokesperson) new restrictions targeted on the rental of holiday homes on the small Spanish island of Formentera (12,000 inhabitants). The measures (including an annual maximum of 60 days for the short-term rental of primary residences) aim to address critical shortages of drinking water and reduce the rapidly growing volumes of household waste on the island, both exacerbated by tourism, as well as by the decline in fossil fuels. use. In addition, the demand for tourist accommodation has left the local population without affordable housing options. Yet the EHHA complained that the rules imposed “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 issues, demanding “justification and proportionality” around what they 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 the Formentera rules.

The Commission’s aggressive questioning of the Formentera council (on behalf of narrow business interests) shows how the program to deregulate services is at odds 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 of local authorities to regulate.

The Municipalize Europe! conference Thursday November 5e will present sessions on how cities are tackling the covid-19 crisis, the housing crisis and the climate crisis, and explore what EU institutions should do to support these efforts.

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