Taoiseach Bertie Ahern has warned that the EU leaders' agreement today to water down the controversial Services Directive will not be the end of the issue.
The leaders agreed in principle at the end of the EU Summit in Brussels today to follow a compromise adopted by the European Parliament in the face of strong union opposition.
The European Commission will present a reworked draft based on the parliament compromise on April 4th. "I think this is the only realistic basis for a final decision," Commission President Jose Manuel Barroso told a briefing.
Austrian Chancellor Wolfgang Schuessel, whose country holds the rotating EU presidency, said there had EU leaders had given their "unanimous backing" for the compromise.
But there is still considerable political and lobby business support for the directive, which aims to increase EU-wide competition in the supply of services.
Mr Ahern warned: "I do not see complete agreement on the services directive being passed by the time the Austrian presidency finishes. I expect an even more tougher round of negotiations when the commission comes back with the new proposal."
The country-of-origin principle was removed from the directive because unions feared it would allow companies set up in low-wage EU economies while serving the established higher-wage states.
It would also allow firms to follow the laws and regulations that pertain one state while operating in another. This would have several - potentially unforeseen - implications, including a lowering of wages and working standards in states where it took years to improve working conditions, the unions argued.
The diluted directive still provides for open competition in services as diverse as hairdressing, computer software and plumbing.
Britain was disappointed by the compromise, but Prime Minister Tony Blair said it was a step in the right direction.
Additional reporting Reuters