Transborder Provision of Services and 'Social Dumping': Rights-Based Mutual Trust in the Establishment of the Internal Market

Abstract

This article reexamines the debate between harmonization of social laws and regulatory competition in the EU. The recent case-law of the European Court of Justice allows companies to provide services across the EU from the member State of their choice, with only limited possibilities for the host State to impose compliance with certain standards that go beyond the minimum provisions listed in the 1996 Posted Workers Directive. This, combined with the enlargement of the EU, has given rise to renewed fears about ‘social dumping’ in the EU, and it has shed doubt about the optimistic view that the EU member States would progressively converge towards higher social standards. This article discusses the plausibility of the ‘race to the bottom’ scenario in this context. It seeks to move beyond the usual dichotomy opposing de-regulation at domestic level to re-regulation at EU level. Instead, it shows that mechanisms allowing for an improved monitoring of the EU member States' behavior and for learning across jurisdictions could constitute a more promising avenue, provided certain institutional conditions are created.

Keywords: Regulatory Competition, Social dumping, Mutual trust, Posted Workers