When efficiency results in redistribution: the conflict over the sin-gle services market

Abstract

The discussion of the Services Directive from 2004 onwards showed an unprecedented extent of politicization of a single-market issue. Coinciding with the 2004 Eastern Enlargement round, the easing of the services freedom through the directive raised significant redistributive issues, given the differences in labour costs. The arti-cle analyzes why mutual recognition is so controversial in services, arguing that the relationship among member states, between governments and their citizens, and among differently regulated EU citizens matters. Partly, the directive lessens the risk of redistribution through the institutionalization of administrative cooperation between the home and the host member state. Partly, the directive fails, as member states may be forced to discriminate against their population in the name of the internal market.