Opinion on the Community initiative on the modernization of the textile and clothing industry of Portugal

(94/C 217/04)

On 22 March 1994 the European Commission decided to consult the Committee of the Regions on the Community initiative on the modernization of the textile and clothing industry of Portugal.

At its third Plenary Session, held on 17 and 18 May 1994, the Committee of the Regions unanimously adopted the following Opinion prepared by the Rapporteur-General, Mr Couto.

THE COMMITTEE OF THE REGIONS

Whereas 30 % of Portuguese exports derive from the textile industry, which is heavily concentrated in regions where 70 % of the working population depends on this industry and which are currently experiencing a severe recession;

Whereas the Treaty provides for greater efforts to reduce the disparities in prosperity between the various regions in Europe, particularly those in which the standard of living is abnormally low or where there is serious underemployment (Article 92 of the Treaty);

Whereas the Maastricht Treaty expands the Union's scope for intervention to industry and economic and social cohesion (Articles 130 et seq of the Treaty), while observing the principles set out in Article 2 of the Treaty;

Whereas the new Community industrial policy allows the Council to adopt specific support measures for Member States with the aim of speeding up the adjustment of industry to industrial economic changes at international level (Article 130 of the Treaty);

Whereas the existence of a common commercial policy has now been enshrined (Article 110 of the Treaty), culminating in the GATT agreement;

Whereas the GATT agreement has serious implications for the Portuguese textile industry, given the latter's structural shortcomings:

- weak net fixed capital formation;

- poor design and international marketing capacity;

- general absence of own trademarks;

- competitiveness based on high labour intensity, with incomes far below the European average;

- obsolete plant;

Whereas the recent readjustment of the Structural Funds states that local and regional authorities and partners are essential elements in preparing, implementing and assessing initiatives, in proper application of the principle of partnership;

Whereas the Union Treaty explicitly establishes the principle that the Union must have the financial resources with which to achieve its objectives and successfully implement its policies (Article 201a of the Treaty);

Whereas the Council undertook, on 15 December 1993, to assign a supplementary allocation of ECU 400 million to Portugal for the purposes of a specific programme for its textile and clothing industry;

Whereas the basic question is which budget line this allocation can be drawn from, it being understood that it is additional to the allocations already decided for Portugal; and

Whereas Article 11 of Council Regulation 2082/93 lays down the legal basis for Community initiatives and the provisions establishing that financial measures must be of significant interest to the Community and may be considered to be compatible with the common market [Article 92(3)(a)];

Whereas guidelines have been established for operational programmes for regions heavily dependent on the textile and clothing sector (RETEX); and whereas it is proposed to extend the programme until 1999;

Whereas ERDF rules provide guidelines for Community initiatives under ERDF auspices on questions relating to the implementation of other Community policies;

considers that:

(a) the initiative's objectives recognize the significance of the textile and clothing industry to the Portuguese economy, in terms of both employment and exports;

(b) these objectives give substance to the undertaking made by the Council during the GATT discussions;

(c) there is no contradiction or incompatibility with any Community provision, particularly those under Title XIII of the Treaty on European Union (Industry);

(d) the objectives set out in Article 130 of the Treaty on European Union are pursued, particularly those concerning speeding up the adjustment of industry to structural changes;

(e) while it is arguable whether this heading should be included under Category 2 of the Financial Perspectives, this cannot prejudice the undertakings made by the Council, as pointed out in the European Parliament Resolution (Fitzgerald Report).

The Committee therefore confirms the relevance and importance of the initiative, and endorses the Commission's referral.

However, it urges that the restriction on increases in production in terms of volume be reviewed, since the textile industry has been identified as a strategic element in the Portuguese economy.

The Committee recommends that the eligible measures safeguard the flow of financial resources from banking bodies other than the EIB alone, granting them interest rate subsidies under the same conditions as those granted to the EIB.

It recalls that according to the Commission's Green Paper, innovative and modernizing initiatives should be given priority: the exclusion from the initiative of support for the establishment of new industrial units and plants is therefore open to argument.

The Committee considers it essential that this initiative be coordinated with those under RETEX and other initiatives with an industrial dimension, such as ADAPT and SMEs, as well as others included in the second Community Support Framework (CSF). These must be coordinated by the Member State in question within the framework of the Regional Development Plan, the Specific Programme for the Development of Portuguese Industry (PEDIP) and, in particular, the planned Integrated Development Operation for the region most dependent on the textile industry, the Ave Valley.

The Committee calls upon the Commission to require that the recipient Member State must involve the social partners and local authorities in the preparation, implementation and evaluation of initiatives.

In view of the current serious situation, the Committee urges the budget mechanisms to be applied during the course of 1994.

Done at Brussels, 17 May 1994.

The Chairman

of the Committee of the Regions

Jacques BLANC