Economics
Studies
A report
commissioned by the DTI on the 'Impact of the proposed EU Directive
on Services in the Internal market: case studies of UK businesses'
 (950 kb)
was published
on 20 September 2005.
A report
commissioned by the DTI on the "Economic Importance
of the Country of Origin Principle in the Proposed Services
Directive" was published on 12 October 2005.
This study builds on work carried
out by Copenhagen Economics for the European Commission
and DTI are grateful to the Commission for permitting this
use of their work.
It offers an interesting insight
into the economic importance of the country of origin principle,
and some other Articles, in the proposed EU Directive on
Services Directive in the Internal Market. As with the original
study for the Commission, the predictions of the economic
benefits are likely to be considerable underestimates.
Copenhagen Economics use the approach
regarded by the OECD and WTO as the most exact method developed
to date for eliminating the economic benefits of trade liberalisation
in services. But the OECD noted recently that the model
does not capture those dynamic effects that deliver most
of the benefits of stronger competition. Due to problems
with data availability, the model omits one third of the
service sectors covered by the proposed Directive (most
notably construction) and may not fully take account of
all the possible barriers to service provision.
With these caveats, and taking
a narrow interpretation of the impact of the country of
origin principle, the study finds that the country of origin
principle accounts for useful gains of some €2-4bn per annum
across the EU. These figures are derived from the current
very low levels of cross border trade in services in the
EU. Were cross-border trade levels to increase significantly,
so too would these gains.
The study also indicates that Article
29 of the Directive (on commercial communications by the
regulated professions) and certain provisions in Article
15 (notably on price-setting) are likely to have particular
economic significance.
The report and a summary are available for download:
Economic Importance of the Country of Origin Principle in the
Proposed Services Directive
(480 kb).
A summary of a study by Copenhagen Economics for the DTI
(125
kb).
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