A critique of the EC green paper on Services of General Interest
-stage 1: comments and suggested answers to questions

by
David Hall
d.j.hall@gre.ac.uk

June 2003

This paper was commissioned by EPSU

1 COMMENTARY
1.1 COMMENTS ON INTRODUCTION
1.1.1 Why SGI matter (paras 2-4)
1.1.2 Paras 5 and 6: excessive claims for liberalisation
1.1.3 Para 8-11: European values
1.1.4 Ignoring the question of a framework directive (paras 9-12)
1.1.5 The four issues
1.1.6 Background and definitions (paras 15-26)
1.2 COMMENTS ON 2: SCOPE OF EC ACTION/SUBSIDIARITY
1.2.1 No treaty remit for SGI (para 29-31)
1.2.2 Categorisation of SGEI/SGI (para 32)
1.2.3 Regulation: paras 34-35
1.2.4 Generalising from sector legislation? Paras 37-41
1.2.5 Economic and non-economic services (paras 43-47)
1.3 COMMUNITY CONCEPT OF SGI
1.3.1 Common obligations: paras 50-63
1.3.2 Specific obligations (paras 65-74
1.4 GOOD GOVERNANCE
1.4.1 Obligations and choice of organisation (paras 77-83)
1.4.2 Financing
1.4.3 Evaluation of services
1.5 GLOBALISATION AND GATS
1.6 OPERATIONAL CONCLUSION
1.7 ANNEX

2 SUGGESTED RESPONSES TO QUESTIONS

3 BACKGROUND: RELEVANT PSIRU, OTHER AND EPSU PAPERS
3.1 CURRENT PAPERS BY PSIRU FOR EPSU
3.2 PREVIOUS PAPERS BY PSIRU FOR EPSU
3.3 OTHER PAPERS FOR EPSU CONFERENCES ON PUBLIC SERVICES IN EUROPE 2001, 2002
3.4 EPSU STATEMENTS AND PAPERS

1 Commentary
The paper consists of a main body of text, 29 pages long, followed by a summary of the questions asked; and a long annex "Public service obligations and instruments of Community policy in the area of services of general economic interest", also covering 29 pages.

The paper "consists of five main parts plus an introduction and an operational conclusion" (para 13). However the introduction does not start by setting out the objective of the paper, and the 'operational conclusion' (part 6, para 107) consists of nothing except an invitation to all interested parties to submit comments and answers to questions.

1.1 Comments on Introduction

1.1.1 Why SGI matter (paras 2-4)
Paras 2-4 outline why the EC thinks that SGIs matter, and includes references (para 2) to shared values and European social model; quality of life and overcoming social exclusion; economic importance for competitiveness and regional development; role in functioning of single market and economic integration; and part of citizens' rights and good governance.

In para 4 there is a different set of reasons for their importance: the core role of public authorities in a market economy, supporting smooth operation of the market and 'compliance with rules of the game by all actors', and safeguarding "the general interest" which is defined as "citizens' essential needs and the preservation of public goods where the market fails".

· The evaluation in para 4 seems to confuse the role of SGI themselves with the limitations placed on them by the EU competition and internal market rules and the liberalisation directives. It is not the role of SGI themselves to seciure smooth operation of the market or enforce the rules of the game, rather these are rules that SGI have to conform too.

· The second half of para 4, on the general interest, seems a promising basis for establishing the value of SGI. But it is not consistently developed.

1.1.2 Paras 5 and 6: excessive claims for liberalisation
Para 5 includes a claim that "Liberalisation stimulated the modernisation, interconnection and integration of these sectors. It increased the number of competitors and led to price reductions, especially in those sectors and countries that liberalised earlier."

· These sweeping claims are contentious and there is contrary evidence. On modernisation, for example, public sector agencies like EdF in France or Stockholm Vatten in Sweden have played very important roles in modernising and integrating their sectors; whereas the liberalisation of railways in the UK has represented a backward step in interconnection and integration. In relation to competition and price changes, the experience in the UK, one of the first to liberalise, is that effective competition barely exists, and that a global fall in fuel costs was translated into price cuts only for businesses, not for domestic consumers.

Para 5 then more cautiously admits that "there is as yet insufficient evidence to assess the long-term impact of the opening to competition of services of general interest, there is, based on the available information, no evidence supporting the thesis that liberalisation has had a negative impact on their overall performance, at least as far as affordability and the provision of universal service are concerned": and it claims that the EC has always promoted "controlled" liberalisation to protect the general interest.

· Again, this can be challenged: there is strong evidence that rail liberalisation has worsened performance in the UK, with a series of crashes attributable to precisely to the fragmented structure introduced by liberalisation. And the EC is pushing forwards as fast as possible with introducing similar liberalisation of railways elsewhere in Europe - the recent DG Markt strategy paper said "The Council and Parliament should rapidly adopt the "second railway package"….The Commission will rapidly bring forward proposals for passenger transport market opening in order to complete the Internal Market in the railway sector."

Para 6 continues with more contentious generalisations: "Initial fears that market opening would have a negative impact on employment levels or on the provision of services of general economic interest have so far proved unfounded. Market opening has generally made services more affordable."

· This is not true in electricity, for example, where a quarter of a million jobs have been lost in Europe in the last decade, much of it attributable to liberalisation and responses to it such as outsourcing of work; and in both the UK and Sweden, early liberalisers in electricity, have had to warn major companies about cartel behaviour forcing prices up.

The final sentence of this paragraph (para 6) claims that liberalisation of the network industries has created nearly 1 million new jobs in the EU, a claim which it sources to the paper on 10 years of the internal market , which itself refers (slightly incorrectly) to the edition of European Economy containing the 'EU Economy 2002' .
· There is no sign of such a claim in that paper. Presumably the claim would be based on the supposed lowering of input prices for industries - which European Economy 2002 estimates as being half a percentage point for the business sector - making them more competitive and so theoretically increasing output and employing more people, but (a) any such gain would have to be offset against job losses in the industries themselves (b) to the extent that price cuts for businesses have been accompanied by domestic prices higher than might have been the case under a unified regime, there is a further loss of jobs from loss of consumer demand to be offset.

1.1.3 Para 8-11: European values
The paper acknowledges the Amsterdam treaty's recognition of SGI as amongst the EU's 'shared values', and refers to the 'European model of society'. Further, in para 11 it recognises the diversity of practice in member states and regions, and says that "The European Union respects this diversity and the roles of national, regional and local authorities in ensuring the well-being of their citizens and in guaranteeing democratic choices regarding, among other things, the level of service quality".

· This recognition needs to be offset against the fact that the EC currently treats the internal market as taking priority over SGI decisions. This is not a particularly European value: the same priority of trade ahead of public services can be seen in for example NAFTA, and globally in the GATS provisions of the WTO.
· The EC's current practice also restricts the rights to make democratic choices. One clear example is the electricity directive, which as the paper itself says later prohibits any member state from deciding against liberalisation. This is a much greater restriction on democratic decisions than exists in the USA, for example: following the California energy crisis, most US states froze or reversed their plans to liberalise electricity markets, but no EU country can legally take such a decision without being in breach of the Electricity Directives.

1.1.4 Ignoring the question of a framework directive (paras 9-12)
The paper does acknowledge that there are specific requests to draft a framework directive: "The European Parliament suggested the Commission should present a proposal for a framework directive on services of general interest and the Council also asked the Commission to look into this question" (para 9). It then says that the Green Paper is intended to 'launch a debate', on four issues, (para 12).only one of which concerns "a possible framework directive"

· The paper gives no reason for mentioning, and then ignoring, explicit requests from both the parliament and the council.
· It is possible that the Annex, which has sections on 'Public Service Obligations' and 'Policy Instruments' including regulation, financing, evaluation and GATS, is in effect a draft answer to the question on a framework directive.

1.1.5 The four issues
The four issues mentioned in para 12 are:
- "the scope of possible Community action that implements the Treaty in full respect of the principle of subsidiarity" (discussed in part 2.2 of the paper, paras 38-42)
- "the principles that could be included in a possible framework directive or another general instrument concerning services of general interest and the added value of such an instrument" (discussed in section 3)
- "the definition of good governance in the area of organisation, regulation, financing and evaluation of services of general interest in order to ensure greater competitiveness of the economy and efficient and equitable access of all persons to high-quality services that are satisfying their needs" (discussed in section 4)
- "any measures that could contribute to increasing legal certainty and to ensuring a coherent and harmonious link between the objective of maintaining high-quality services of general interest and rigorous application of competition and internal market rules" (it is not clear where this is addressed: section 5 of the paper is concerned with trade and development policies and globalisation, mainly GATS, which is not mentioned in the four key issues in para 12)
· The paper does not really explain where this agenda came from, and specifically where the first, third and fourth of these issues came from.
· On the third issue - why should the EC need to take a position on governance until it has established whether it has any role in respect of SGI?
· The fourth issue seems abstract. One simple answer to it might be that the procurement regime is sufficient to create a "coherent and harmonious link" - wherever SGI's contract with the commercial sector for goods or services, then they have to follow rules of non-discrimination and transparency.
· The rest of the paper does not reach any specific conclusions on these issues, but asks questions in relation to them.

1.1.6 Background and definitions (paras 15-26)
The paper correctly states that the term SGI is not in the treaty, it is rather extrapolated from SGEI, which is in the treaty (para 16). It offers a definition of SGEI as covering "any economic activity subject to public service obligations" (para 17). It rejects the notion of "public services" as being 'less precise' and states that it will not be used (para 19).
· The definitions fit with an approach that treats economic activity as basic and SGI as some form of interference with it.
· The notion of 'public service' is not really any less precise than SGI, but it does have a positive connotation e.g. of an activity which is run by elected public authorities to serve the public interest and not commercial operations. This kind of positive definition poses more of a challenge to 'the market' than a definition of SGI as just a sub-category of economic activity with a special kind of contractual clause. In any case the EC is content to use the phrase "public service" throughout the paper both when describing broadcasting and when describing the obligations inserted in directives as "public service obligations".

Para 22 is a statement of belief that markets deliver but SGI has to fill in the gaps where services are too expensive for the poor and too crucial to leave unfulfilled: The market usually ensures optimum allocation of resources for the benefit of society at large . However, some services of general interest are not fully satisfied by markets alone because their market price is too high for consumers with low purchasing power …………it has always been the core responsibility of public authorities to ensure that such basic collective and qualitative needs are satisfied and that services of general interest are preserved wherever market forces cannot achieve this".
· This rationale connects with the last part of para 4 (see 1.2.1 above), which also mentions this 'market failure' concept. It leaves open the key political issue of who, and how, decides if the services are adequately satisfied or preserved.
1.2 Comments on 2: scope of EC action/subsidiarity
1.2.1 No treaty remit for SGI (para 29-31)
The section correctly points out that "The Treaty does not mention the functioning of services of general interest as a Community objective and does not assign specific positive powers to the Community in the area of services of general interest." (para 29) . It then acknowledges that states, regions and local councils are responsible for arranging SGI; but the community has "competencies in areas that are relevant for SGI, such as : the internal market…"; and then adds that "The competencies and responsibilities conferred by the Treaty provide the Community with a whole range of means of action to ensure that every person in the European Union has access to high-quality services of general interest." (para31).

The next paragraph adds a restatement of state, regional and local responsibility for SGI but adds that: "Nevertheless, there is a recognised role for the Community in promoting co-operation and co-ordination in these areas. A particular concern for the Commission is promoting the co-operation by Member States in matters related to the modernisation of social protection systems." (para 31)

· The logic of para 31 is hard to follow. Just because the community has responsibilities for internal market etc relevant to SGI, it does not follow that this provides it with means to ensure that all citizens get high quality services. The last paragraph gives a different but equally difficult rationale for EC interest, that the EC (specifically the Commission) has to promote the modernisation of social protection systems.

1.2.2 Categorisation of SGEI/SGI (para 32)
Para 32 sets out a triple classification of SGI .

The first category is SGEI in the large network industries, where there are directives opening the markets. It then adds that "At the same time, the Community has adopted a comprehensive regulatory framework for these services which specifies public service obligations at European level and includes aspects such as universal service, consumer and user rights and health and safety concerns. These industries have a clear Community-wide dimension and present a strong case for developing a concept of European general interest."

· This seems a historically incorrect account. The directives had to address service issues in order to get agreement to liberlaise them. There was not a systematic programme of comprehensive regulation specifying public service obligations - the original electricity directive for example only mentions these in a restrictive manner as an option available to states: Article 3, section 2 states: "Having full regard to the relevant provisions of the Treaty, in particular Article 90, Member States may impose on undertakings operating in the electricity sector, in the general economic interest, public service obligations which may relate to security, including security of supply, regularity, quality and price of supplies and to environmental protection. Such obligations must be clearly defined, transparent, non-discriminatory and verifiable…"
· The reference to "a concept of European general interest" offers yet another rationale for EC intervention. This has been used by the EC at least since its communication on SGI in 1996 , to refer to these sectors where liberlaisation directives have been accompanied by clauses on public service obligations

The second category is other SGEI, which do not have specific directives but may be affected by others.
The third category where the EC has no remit is defined quite precisely as "Services of general interest of a non-economic nature and services without effect on trade"

Para 33 then points out, correctly, that the EC practice has had impact on SGEI without guaranteeing services for citizens (the responsibility of states), and so the EC is taking "specific direct measures to enforce Community rules in the areas of competition and State aid. This could give the impression of an imbalance in Community action that could ultimately affect its credibility."

1.2.3 Regulation: paras 34-35
A detailed section on regulation is inserted in paras 34 and 35, which suggests that there are problems with leaving regulation of sectors to states, because of the danger of political interference. Therefore, since exchange of best practice is encouraged anyway:"the creation of European regulators for services of general interest …. has not yet been widely discussed and could raise questions."

1.2.4 Generalising from sector legislation? Paras 37-41This section is the one part of the paper which effectively discusses the possibility of a services directive. It does so by suggesting that there could be an attempt to generalise from the existing public service obligations in various sector directives in SGEI (para 38-39): "A general instrument could set out, clarify and consolidate the objectives and principles common to all or several types of services of general interest…". It then suggests it could be used as a template for further sectoral directives: "thus simplifying and consolidating the internal market in this field".

It points out that such a statement "could also have important symbolic value in that it would clearly demonstrate the Community's approach as well as the existence of a Community concept of services of general interest". It notes the disadvantage that "a framework instrument setting out common objectives and principles would be general in nature, as it would have to be based on the common denominator of different services with very different characteristics" (para 40) and so might lower standards for some.
It also correctly points out that the Treaty would need amending, as otherwise the existing language would only justify coverage of SGEI: "a framework instrument based on this provision [art 95] would have to be limited to services of general economic interest having an effect on intra-Community trade….. If Community legislation [in other] sectors is considered desirable, an amendment of the Treaty might be the best way of providing an appropriate legal basis." (para 40)
· The annex includes a longer attempt to flesh out the detail of a 'common set of obligations', with the list of contents indicating the key elements:
o A common set of obligations: Universal service; Continuity; Quality of service; Affordability; and User and consumer protection.
o Further specific obligations: Security of supply; Network access and interconnectivity; Requirements aiming to ensure media pluralism
· the annex also adds considerable detail on policy instruments, with interesting headings: Organisation of regulatory intervention; Financing of services of general interest; Evaluation of services of general interest; The international dimension: trade policy

1.2.5 Economic and non-economic services (paras 43-47)
Para 43 makes the accurate and useful point that whereas SGI in general are only subject to the genral rules of the EC, including non-discrimination, free movement of persons, and procurement directives; whereas SGEI alone are also subject to "the freedom to provide services, the right of establishment, the competition and State aid rules of the Treaty" (para 43). This section discusses the structure of economic activity around a sector, and says that even SGI may have "an upstream market where undertakings contract with the public authorities to provide these services. The internal market, competition and state aid rules apply to such upstream markets." (para 44). It also points out that the boundary of economic activity changes over time for various reasons, and so "it would neither be feasible nor desirable to provide a definitive a priori list of all services of general interest that are to be considered "non-economic"" (para 45) . It then notes that there are still concerns over legal uncertainty, and that European concern may be related to the European social model, and to the presence of voluntary groups.

1.3 Community concept of SGI
This section extends the discussion of the EU notion of SGI, and suggests that existing directives have identified the key headings grouped as universal service, continuity etc (see 2.2 and the Annex).

1.3.1 Common obligations: paras 50-63
This discussion covers the headings of Universal service; Continuity; Quality of service; Affordability; and User and consumer protection.

Para 53 introduces some new implicit objectives when it says that the concept of universal service "has allowed public interest requirements to be addressed in various domains, such as economic efficiency, technological progress, environmental protection, transparency and accountability, consumer rights and specific measures regarding disability, age or education. The concept has also contributed to reducing the levels of disparity in living conditions and opportunities in the Member States." (para 53)

Para 58 concerns quality and mentions some standards as laid down in liberalisation directives.
· It could also note the standards laid down in more general, non-market related directives such as the environmental and water directives.

Paras 62 and 63 on comsumer protection suggest that horizontal consumer protection rules apply as in other sectors, and that, inter alia, transparency (eg on contracts…) is one of the principles laid down by the EC.
· The paper should at least note a conflict here with the commercial confidentiality which most firms expect to be prioritised over consumer rights to transparency

1.3.2 Specific obligations (paras 65-74
No comments.

1.4 Good governance
1.4.1 Obligations and choice of organisation (paras 77-83)
This section discusses forms of provision. Para 79 sets out the usual statements that states can decide for themselves whether to provide services through an in-house body or via a third party (para 79).
However it then asserts in effect that existing EU law means that inhouse operations are economic undertakings and therefore subject to competition requirements (and therefore, by implication, they cannot be assigned to service provision without it being offered to other (private) bidders. The para refers to three old ECJ cases (from 1989, 1991, and 1999) and reads: "However, providers of services of general economic interest, including in-house service providers, are undertakings and therefore subject to the competition provisions of the Treaty. Decisions to award special or exclusive rights to in-house service providers, or to favour them in other ways, , can amount to an infringement of the Treaty, despite the partial protection offered by Article 86. Case law shows that this is true, in particular, where the public service requirements to be fulfilled by the service provider are not properly specified; where the service provider is manifestly unable to meet the demand; or where there is an alternative way of fulfilling the requirements that would have a less detrimental effect on competition ."
· This seems quite contrary to most views of the current legal position. For example, even the DG Comp report on water (Dec 2002) refers to the BFI case in 1998 where the ECJ held that in cases where certain needs in the general interest could not be rendered sufficiently by private companies, the State may require that activity to be carried out by public authorities or organisations over which it wishes to retain a decisive influence.
· It would effectively impose the same regime as the Thatcher compulsory tendering 1989-1997, which required any municipality to offer work to tender before assigning it to an inhouse operator.

Para 83 says that public authorities have a lot of freedom to organise services themselves, but that sometimes: "the absence of specific legislation can lead to legal uncertainty and and market distortions" ; and claims, referring to the DG Comp water report, that: "For instance, in the water sector the absence of specific, relevant regulation has led to very different industry structures across Member States.".
· This is usually described as the product of different histories, and regarded as one sort of evidence of the cultural and political diversity between states that the EU can and should support.
· The implication is that a directive could or should be introduced to impose a single model structure across Europe. The question then is why would they want to do this, and who would benefit? As the DG Comp paper on water (or DG Markt on internal market strategy) concedes, there is no basis for action by the Ec except in respect of cross-border trade of which there is little or none.

1.4.2 Financing
Para 85 says that many SGIs cannot be provided on the basis of market revenues and so "specific arrangements are necessary in order to ensure the financial equilibrium of the provider"(presumably meaning subsidies). Para 86 gives a wider view of financing SGI which includes solidarity mechanisms, tariff averaging etc. Para 87 says that states have increasingly withdrawn exclusive rights and opened markets. Para 88 says that the EC has promised "to establish a Community framework for state aid granted for services of general economic interest, and then, if and to the extent justified by the experience gained with the application of this framework, adopt a block exemption regulation in the area of services of general economic interest. Work on guidelines on the application of state aid rules to services of general economic interest is currently underway".
· The EC project on state aid rules may give cause for concern. At present it is clear that the EC is frustrated that states have too much exemption for SGI, so presumably the intention is to restrict it further.
· The section is not an adequate discussion of all the issues concerning financing of SGI/SGEI. It also treats as a 'trend' the growth of liberalisation, which has been driven by the EC's own directives.

Para 91 makes interesting observations that "Other relevant criteria for selecting a financing mechanism, such as its efficiency or its redistributive effects, are currently not taken into account in Community legislation. Neither have the effects of the selected mechanism on the long-term investment of providers of services and infrastructure and on security of supply been specifically considered." However para 92 then asks whether the EC "should take measures in favour of specific financing mechanisms".

· It is not clear what is envisaged by this

1.4.3 Evaluation of services
See earlier paper.

1.5 Globalisation and GATS
Para 101 states that in the GATS negotiations the "European Community has freely decided to undertake binding commitments in respect of certain services of general interest already open to competition within the internal market. Through these commitments, foreign services suppliers are granted market access to the European Community". It does not specify which these services are, but it claims that the commitments "have so far had no impact on the way in which services of general interest are regulated in Community law. They have also had no impact on the way in which they are financed."

1.6 Operational conclusion
"The Commission invites all interested parties to comment on the questions set out in this Green Paper….. Comments should be sent to the Commission by 15 September 2003 at the latest".

1.7 Annex
The paper's long annex goes into more detail on the principles and instruments, including GATS.

2 Suggested responses to questions

What kind of subsidiarity?
(1) Should the development of high-quality services of general interest be included in the objectives of the Community? Some revision of the Treaty to specify the role of public services would help redress the present imbalance between the market and the public interest. But the "development of high quality SGI" remains focussed on individuals as consumers of services, rather than general interest considerations which imply solidarity and pooling mechanisms that may be against the interests of some individuals (health is the main example here, but in principle even SGEI is affected: eg electricity, where the market has almost certainly allowed business consumers to gain by withdrawing from 'pooled pricing' which forced them to support consumers. So the Treaty should refer to public interest or public services. Should the Community be given additional legal powers in the area of services of general economic and non-economic interest? Not without a clear new base for public services in the treaty.
(2) Is there a need for clarifying how responsibilities are shared between the Community level and administrations in the Member States? Yes short-term by re-asserting the principle of subsidiarity in relation to SGI (so the EC and ECJ should not be seeking to limit the states discretion on SGI issues); long-term by positive Treaty statement on public interest/public services, but implemented by states etc (is this a possible combination?). Is there a need for clarifying the concept of services without effect on trade between Member States? If so, how should this be done? Yes, through elaborating the concept of public interest/public services as something distinct from, and potentially in conflict with, internal market and competition rules etc (the areas of conflict may not be great)..
(3) Are there services (other than the large network industries mentioned in para. 32) for which a Community regulatory framework should be established? Maybe many public services could benefit from some framework, different from regulation based on internal market/competition: the environmental legislation could perhaps be used as the example here? The point is then not to regulate sectors as such, but to lay down EU-wide aspirations and standards which have to be met/pursued by everybody (via a lot of compulsory public expenditure). A public services directive, perhaps.
(4) Should the institutional framework be improved? How could this be done? What should be the respective roles of competition and regulatory authorities? Is there a case for a European regulator for each regulated industry or for Europe-wide structured networks of national regulators? It is difficult to see how EU-wide regulation could be useful without infringing subsidiarity.
Sector-specific legislation and general legal framework
(5) Is a general Community framework for services of general interest desirable? What would be its added value compared to existing sectoral legislation? Which sectors and which issues and rights should be covered? Which instrument should be used (e.g. directive, regulation, recommendation, communication, guidelines, inter-institutional agreement)? Treaty amendment is the first step to set out public interest/public services as EU objectives.
(6) What has been the impact of sector-specific regulation so far? Has it led to any incoherence? Yes. E.g. in energy it has limited policy options (excluding vertically integrated public services) , and also led to regulatory insistence on preserving the form of competition even when it is not happening: e.g. the UK OFGEM regulator recently blamed consumers for not switching suppliers often enough.)
Economic and non-economic services
(7) Is it necessary to further specify the criteria used to determine whether a service is of an economic or a non-economic nature? No. The key point is to define public services. Should the situation of non-for-profit organisations and of organisations performing largely social functions be further clarified? No, they can be treated as undertakings.
(8) What should be the Community's role regarding non-economic services of general interest? Encouraging economic, social and regional equality and development through solidarity financing and provision of universal public services and public goods, in the public interest, not for profit, by politically accountable, transparent public authorities.

A common set of obligations
(9) Are there other requirements that should be included in a common concept of services of general interest? A useful concept of public services would in addition include at least the principle of solidarity financing. How effective are the existing requirements effective in terms of achieving the objectives of social and territorial cohesion? Not very, probably: they have grown up haphazardly, and enforcement procedures are unclear. Have there been any successful ECJ cases brought by citizens against states or contractors for failure to meet public service obligations?
(10) Should all or some of these requirements be extended to services to which they currently do not apply? The problem remains of the 'lowest common denominator" effect.
(11) What aspects of the regulation of these requirements should be dealt with at Community level and which aspects left to the Member States? All such regulation should follow subsidiarity principles and remain at state or lower level, wherever is the responsibility for providing the service is where it should be regulated. So unless the EC develops as a provider of health services…
(12) Have these requirements been effectively implemented in the areas where they apply? See (9)
(13) Should some or all of these requirements also be applied to services of general interest of a non-economic nature? Not using this approach of fitting principles into an environment of compulsory liberalisation.
Sector-specific Obligations
(14) Which types of services of general interest could give rise to security of supply concerns? Energy; water; pharmaceuticals… Should the Community take additional measures? Allow member states to decide how best to protect security of supply
(15) Should additional measures be taken at Community level to improve network access and interconnectivity? In which areas? What measures should be envisaged, in particular with regard to cross-border services? ………..
(16) Which other sector-specific public service obligations should be taken into consideration? It is too problematic and complex to try and deal with principles sector by sector at EU level (unl;ess the responsibility for provision lies at EU level). E.g on a current major issue: what principles could the EC set out on the provision of pensions, in general and for employees, that would help resolve the current disputes and have a credible chance of being observed and respected? Only really if the EC took responsibility for provision of pensions to all its citizens…
(17) Should the possibility to take concrete measures in order to protect pluralism be re-considered at Community level? What measures could be envisaged? ……….
Definition of Obligations and Choice of Organisation
(18) Are you aware of any cases in which Community rules have unduly restricted the way services of general interest are organised or public service obligations are defined at national, regional or local level? Yes. Energy directives, railways directives - constrain the ability of states to decide and choose what they regard as the best way to organise their electricity industry in the public interest. Are you aware of any cases in which the way services of general interest are organised or public service obligations are defined at national, regional or local level constitutes a disproportionate obstacle to the completion of the internal market?.........
(19) Should service-specific public service obligations be harmonised further at Community level? For which services? No
(20) Should there be an enhanced exchange of best practice and benchmarking on questions concerning the organisation of services of general interest across the Union? Who should be involved and which sectors should be addressed? This question does not seem connected to much in the text. There are real problems of evaluation, and positively harmful if restricted to conformity with market opening. But could be very good to encourage and support public conferences and exchanges between policy-makers and practitioners at EU level….
Financing
(21) Are you aware of any cases in which Community law, and in particular the application of State aid rules, has impeded the financing of services of general interest or led to inefficient choices? Yes: energy, where pressure to break up eg Enel, EdF has removed many financing options which may be the most efficient eg direct govt borrowing to invest in new capacity underwritten by govt guarantees and long-term internal end-user.
(22) Should a specific way of financing be preferred from the point of view of transparency, accountability, efficiency, redistributive effects or competition? Not in general; states should choose for themselves. If so, should the Community take appropriate measures? No the EC should not take such an initiative, financing mechanisms will bvary accorsing to place and time.
(23) Are there sectors and/or circumstances in which market entry in the form of "cream-skimming" may be inefficient and contrary to the public interest? Yes: health, education, electricity
(24) Should the consequences and criteria of solidarity-based financing be clarified at Community level? What does this mean? Again, it bears little relation to the text. If it is suggesting that the EC should rule on the true and correct way of financing social security, the answer should probably be no (unless it takes responsibility for provision)
Evaluation
(25) How should the evaluation of the performance of services of general interest be organised at Community level? Which institutional arrangements should be chosen?
(26) Which aspects should be covered by Community evaluation processes? What should be the criteria for Community evaluations? Which services of general interest should be included in an evaluation at Community level?
(27) How could citizens be involved in the evaluation? Are there examples of good practice?
(28) How can we improve the quality of data for evaluations? In particular, to what extent should operators be compelled to release data?
See earlier critique on evaluation
Trade Policy
(29) Is there any specific development at European Community internal level that deserves particular attention when dealing with services of general interest in international trade negotiations? Please specify. Yes, the common problem of trade rules (GATS, internal market) being imposed so as to undermine sovereignty/subsidiarity, and public services/public interest
Development Co-operation
(30) How can the Community best support and promote investment in the essential services needed in developing countries in the framework of its development co-operation policy? Develop machinery to support capacity-building in public authorities in developing countries, making use of mechanisms such as PUPs; and through supporting the development of municipal financing mechanisms eg bonds, revolving funds.

3 Background: relevant PSIRU, other and EPSU papers
3.1 Current papers by PSIRU for EPSU
EC Internal market strategy - implications for water and other public services (May 2003) May 2003
CEER Position Paper Principles on regulatory control and financial rewards for infrastructure:Analysis and comments prepared for the European Federation of Public Service Unions (EPSU) (March 2003) May 2003
The European Commission's Guide to Successful Public-Private Partnerships - a critique (March 2003) May 2003
Water and DG Competition - Study On The Application Of The Competition Rules To The Water Sector In The European Community" (December 2002) May 2003

3.2 Previous papers by PSIRU for EPSU
Critique of the EC paper on Horizontal Evaluation of SGI September 2002
Are Health Systems National? April 2002
EU competition policies and public service December 2001
Services of General Interest in Europe - an evidence-based approach February 2001

3.3 Other papers for EPSU conferences on public services in Europe 2001, 2002
Universal Access and Citizens Rights: Willy Palm, AIM December 2001
Health Systems Solidarity and other European policies (Meri Koivusalo) December 2001
Democracy and Regulation - How the Public can Govern Privatised Essential Services (Gregory Palast, Jerrold Opponeheimer, Theo McGregor) December 2001
Services of General Economic Interest in Europe: Regulation-Financing-Evaluation Good Practices (CIRIEC, for CEEP) December 2001
3.4 EPSU statements and papers
Services of General Interest must be integrated into the Constitutional Treaty 29 April 2003
2003: a crucial year for public services in Europe 09 January 2003
Conference "Services of General Interest and European Convention," December 2002
Services of General Interest and the European Convention. Joint contribution by the European Federation of Public Service Unions (EPSU), the European Transport Federation (ETF), the European Trade Union Committee for Education (ETUCE), UNI Europa.
Pre-draft CEEP-ETUC Proposal for the Structure of a Framework Directive Establishing a Legal Framework for Services of General Interest in the European Union. July 2001