EU loosens cross-border trade

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European ministers have backed a watered-down plan to boost cross-border competition in the EU's lucrative market in services, opening up a host of sectors, ranging from construction to private health care.

A deadlock was broken after the EU's new eastern European countries, which wanted to maximise the impact of the legislation, struck a deal with more cautious countries such as France.

The so-called "services directive" is the EU's most controversial draft law for years, and worries about it fuelled the "No" vote in France's referendum on the European constitution last year. French campaigners argued that the directive would mean an influx of cheap labour from former Communist countries that joined the EU in 2004.

In February, the European Parliament watered down the text and removed the controversial "country of origin" principle, under which firms could have operated in any of the EU's 25 member states as long as they abided by their home country's rules.

Yesterday, EU member states agreed on a host of technicalities, including the degree of effort member states should make to ensure that existing national laws do not erect barriers to companies from other EU states offering services.