The European Parliament (EP) adopted on Thursday in Strasbourg of France a first-reading report on legislation opening up the EU single market for services, a major issue for the European Union (EU).

The European Commission (EC)'s initial proposal has been thoroughly revised, but the objective, however, remains the same: the elimination of obstacles to the free movement of services.

The amended text was adopted by 391 votes in favor to 213 against, with 34 abstentions.

However, EP voted to reject a controversial measure, or so- called "country of origin", which would have enabled EU service firms to operate in another member state without being bound by the host country's laws.

The rejection followed large-scale protests by trade unionists from across the EU against the reforms outside the European parliament building in Strasbourg, France, on Tuesday.

Despite the dilution of the reforms, European commissioner for internal market and services Charlie McCreevy, believed they will help to cut bureaucracy, create jobs and increase economic activity within the EU.

"I believe that today's vote demonstrates that there is a willingness in Europe to pursue measures to deliver more jobs and growth," he said.

"I am convinced that we can have a workable services directive which will provide real value added. This is the balance we are all working for," he added.

Under the terms of the diluted directive, EU firms will still be able to establish operations in any member state, but will have to abide by the laws of the host nation.

The EC, which brought the directive before the EP, suggested that it would create up to 600,000 new jobs and boost the EU's economic output by up to three percent a year.

However, critics had warned that the "country of origin" clause would see wealthier EU states flooded by an influx of service- sector companies and workers from eastern Europe, as they would be able to establish operations anywhere in the EU subject only to their home country laws.

The clause was cited as a major reason for France's rejection of the proposed EU constitution last year, with the "no" camp fueling fears of an invasion of "Polish plumbers".

With Thursday's vote, EC President Jose Manuel Barroso announced that the EC would revise its original proposal as quickly as possible on the basis of the text adopted by EP.

It is now up to the EC Council, as a joint legislator with the EP, to decide its position on the directive and the amendments adopted by the EP.

If all EP's amendments are acceptable to the EU Council, the legislation will be adopted in its modified form.

If the council rejects any of EP's amendments or adds any of its own, the text will return to the EP for a second reading.

Source: Xinhua