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Country of origin principle As it stands, the proposed services directive would apply the "country of origin principle" to all aspects of the free circulation of services. Service providers would no longer be subject to the laws and regulations of the country where the activity takes place, but to those of the country where they are headquartered. In the absence of harmonisation at European level, there is a risk of some companies setting up in those member states where requirements are least stringent, leading to de facto social dumping and a so-called 'race to the bottom'.
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http://greens-efa.org/pdf/documents/Servicesdirective/index_EN.php