WRITTEN QUESTION E-0376/03 by José Ribeiro e Castro (UEN) to the Commission. Closure of Clarks factory in Portugal and Community funds.
Date: 2003-02-13
Institutions: European Parliament, Provisional data
Subjects: EU aid, Portugal, business policy, cessation of trading, footwear industry, fund (EU), multinational enterprise, subcontracting, use of aid

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of the guidelines for maintenance of the investment begins when the investment for which the aid has
been granted is completed, i.e. from the moment when the investment is used in the undertaking (1);

(cid:1) second, along the same lines, the general Regulation on the Structural Funds (1999) provides that
productive activities retain the contribution from the Funds only if the location of these activities does
not change in the five years following the decision to award the contribution (2);

(cid:1) third, for a major project (i.e. over EUR 50 million) to receive cofinancing under a European Regional
Development Fund programme, a specific request must be submitted to the Commission, and the
Member States must complete a questionnaire containing a question on the possibility of it giving rise
to a relocation. This aspect is taken into account by the Commission in deciding on the level of ERDF
cofinancing (up to 35 % in the Objective 1 regions) which may be awarded, if any.

In relation to the period covered by the Community support frameworks 1994-1999, the five-year rule did
not enter into force until 1998, but Regulation (EEC) 2082/93 (3) applied as of 1993, and Article 24 of this
Regulation provides for reduction or cancellation of the assistance where the measure carried out does not
justify the assistance. The Commission must examine this within its partnership with the Member State.

In any case, in the event of aid being used illegally, it is primarily up to the Member State to undertake
legal action based on the agreements made with the undertaking when the aid was awarded. Therefore, if
the undertaking which received the aid has not complied with Community rules on State aid,
it is
primarily up to the Member State to ensure that the authorities which granted the aid are reimbursed.
Moreover, if the aid if cofinanced by the Structural Funds, the Member State is required to repay the
corresponding amount to the Community budget.

(1) Guidelines on national regional aid:

http://europa.eu.int/eur-lex/pri/en/oj/dat/1998/c_074/c_07419980310en00090031.pdf. These guidelines apply as
of the date of publication in the Official Journal (cid:1) OJ C 74, 10.3.1998.
4.10. Aid for initial

investment must be made conditional, through its method of payment or through the
conditions associated with its acquisition, on the maintenance of the investment in question for a minimum
period of five years.

(2) Council Regulation (EC) No 1260/1999 of 21 June 1999 laying down general provisions on the Structural Funds,
Article 30(4)(b) (cid:1) OJ L 161, 26.6.1999 http://europa.eu.int/comm/regional_policy/sources/docoffic/official/regu-
lation/pdf/l_16119990626en00010042.pdf
4. The Member States shall ensure that an operation retains the contribution from the Funds only if that operation
does not, within five years of the date of the decision of the competent national authorities or the managing
authority on the contribution of the Funds, undergo a substantial modification:
(a) affecting …; and
(b) resulting either from a change in the nature of ownership in an item of infrastructure or a cessation or

change of location in a productive activity.

(3) Council Regulation (EEC) No 2082/93 of 20 July 1993 amending Regulation (EEC) No 4253/88 laying down
provisions for implementing Regulation (EEC) No 2052/88 as regards coordination of the activities of the different
Structural Funds between themselves and with the operations of the European Investment Bank and the other
existing financial instruments (cid:1) OJ L 193, 31.7.1993.

(2003/C 192 E/219)

WRITTEN QUESTION E-0376/03

by José Ribeiro e Castro (UEN) to the Commission

(13 February 2003)

Subject: Closure of Clarks factory in Portugal and Community funds

The announcement of the forthcoming closure of a shoe factory belonging to the British multinational
C & J Clark, in Castelo de Paiva in northern Portugal, has received widespread coverage in the Portuguese
media. This unexpected closure will make almost 600 workers redundant, with extremely severe
repercussions on the social
level for the households of those who live and work in the municipality
(which is, furthermore, located in a region classified as ‘Objective 1’ under the Structural Funds).

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This company received substantial amounts from both national and Community funds in connection with
the establishment of this factory in 1988 and its operations in Castelo de Paiva, on the understanding that
it would continue its activities up to at least 2007.

It appears from numerous sources that the company C & J Clark is an ‘old hand’ at this kind of financial
opportunism: it is claimed that it has on several other occasions received Community funds aiding its
operations at different plants in a number of EU Member States, only to close many of those plants at a
later date, with adverse social and economic consequences for the Member States and regions where it had
operated.

In addition, it has also been stated that those direct or indirect Community aids were granted despite the
fact that this multinational was resorting to subcontracting on a large scale. It has been claimed,
in
particular, that, while the Clarks group sells 40 million pairs of shoes every year (with an estimated annual
turnover of EUR 1,5 billion), a good 7 million pairs out of that total come from orders placed by the
group with other firms under subcontracting arrangements.

Is the Commission aware of the existence of subcontracting practices (i.e. the farming-out of footwear
production to other firms) on the part of the group Clarks or C & J Clark, despite it being in receipt of
financial aid? Even if subcontracting of this nature is theoretically legal, does the Commission not believe
that it should be prohibited in cases involving financial
incentives or support originating directly or
indirectly in Community funds?

Answer given by Mrs Diamantopoulou on behalf of the Commission

(1 April 2003)

The Commission has no knowledge of any subcontracting practices on the part of the Clarks group or
C & J Clark, to which the Honourable Member refers in his question.

It is up to the Member State to ensure compliance with the agreements it concludes with undertakings, in
accordance with the national and Community legislation in force.

(2003/C 192 E/220)

WRITTEN QUESTION E-0390/03

by Alexandros Alavanos (GUE/NGL) to the Commission

Subject: Job experience schemes and labour rights

(13 February 2003)

Greek workers involved in job experience schemes co-funded by the European Union are being deprived of
basic labour rights and social security rights, such as annual and parental leave, both during the training
period and more particularly when they are actually working. As a result, there has been a case of a school
caretaker in Greece going to work with her baby and working normally a mere three days after giving
birth.

Given that Article 3 of Council Directive 89/391/EEC (1) of 12 June 1989 on the introduction of measures
to encourage improvements in the safety and health of workers at work defines ‘worker’ as ‘any person
employed by an employer, including trainees and apprentices but excluding domestic servants’ and that the
provisions of Directive 93/104/EC (2) concerning certain aspects of the organisation of working time are
currently in force, will the Commission say what measures it intends to take to ensure that all workers
involved in job experience schemes enjoy all the labour and social rights to which they are entitled?

(1) OJ L 183, 29.6.1989, p. 1.
(2) OJ L 307, 13.12.1993, p. 18.