A landmark proposal to open up the European Union’s services market to cross-border competition passed an important hurdle on Tuesday, when a European parliament committee voted in favour of breaking down national barriers to service providers.

The vote draws a line under months of acrimony, and means parliament is now likely to approve the EU services directive early next year. Such an outcome would mark a triumph for supporters of the law, which has faced fierce attacks from the French government and European trades unions.

Proposed by the previous European Commission in 2004, the services directive seeks to dismantle the myriad obstacles faced by European companies wishing to offer their services in another member state. Business leaders have long complained that thousands of professions – from accountants and consultants to caterers and plumbers – are at present barred from offering their services abroad.

The directive’s supporters claim the greater competition and bureaucratic streamlining would provide a massive boost to the European economy, pointing out that services account for two-thirds of the EU’s economic activity and employment.

But trades unions and member states such as France have campaigned furiously against the directive. Critics say it would undermine social and labour standards and lead to an influx of low-wage labour from new EU member states.

That split was mirrored in Tuesday’s vote in parliament’s internal market committee, which has taken the lead in examining and amending the draft legislation. In the end, however, a coalition of centre-right, liberal and eastern European lawmakers succeeded in pushing through a version of the law that emphasises cross-border freedom.

Crucially, they voted to back a provision termed the internal market principle, which makes clear that a service provider is in principle subject only to home country regulation. The clause is designed to ensure that member states do not impose arbitrary regulations to keep out service providers from abroad.

The committee also voted to include so-called services of general economic interest in the scope of the directive. This means that providers of services such as postal delivery, water, waste, electricity and gas could in future face fewer obstacles when trying to win business outside their home state.

However, in what appeared to be the only defeat for supporters of greater cross-border competition, the committee voted to exclude healthcare.

Joachim Wuermeling, a German Christian Democrat member of the European parliament, welcomed the outcome of Tuesday’s vote, saying it would help job creation and growth. “We managed to get a balanced framework for trade in services under way,” Mr Wuermeling said, adding that the committee was likely to be backed by the parliament.

Chris Sherwood of the American Chamber of Commerce to the EU said: “Overall, we think this as good a deal as we could have expected.”

Following approval in the European parliament, the services directive will also need to be waved through by the EU’s 25 member states.

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