Article 20 (2) of the Services Directive : A prohibition against consumer discrimination

Abstract: Abstract The EU has introduced a prohibition against consumer discrimination in Article 20 (2) of the Services Directive (SD). The provision obliges services providers not to discriminate against service recipients on grounds of nationality or place of residence. The EU argues that this provision is important in order to combat consumer frustration and promote cross-border trade in services. The objectives of this thesis is to investigate the current scope of Article 20 (2) SD and to evaluate Article 20 (2) SD as a policy (strategy) for improving cross-border trade in services. In order to achieve these objectives I will not only consider conventional legal sources, but also consult empirical studies and economic theory. My investigations reveal that there are large interpretative uncertainties regarding the scope of Article 20 (2) SD and that these uncertainties may explain why the Article is currently not being enforced. This enforcement failure is of course a significant set-back for the Article, but not an unrepairable problem. What is worse is that my evaluation also indicates that the very idea (theory) behind the Article might be flawed. It is in fact questionable if combating consumer discrimination in the suggested manner will lead to an increase in cross-border trade. This finding leads to the conclusion that we should not enforce Article 20 (2) SD, even if we could. Focus should instead lie on creating positive incentives for cross-border trade.