Proposal for a Decision of the European Parliament and of the Council on the mobilisation of the European Globalisation Adjustment Fund
Date: 2007-07-12
Institutions: European Commission
Subjects: EU aid, France, commitment of expenditure, dismissal, fund (EU), globalisation, motor vehicle industry, reintegration into working life

COMMISSION OF THE EUROPEAN COMMUNITIES 

Brussels, 12.7.2007 
COM(2007) 415 final 

Proposal for a 

DECISION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL 

on the mobilisation of the European Globalisation Adjustment Fund  

(presented by the Commission) 

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EXPLANATORY MEMORANDUM 

The  Interinstitutional  Agreement  of  17 May  20061  allows  for  the  mobilisation  of  the 
European Globalisation Adjustment Fund (EGF) through a flexibility mechanism, within the 
annual  ceiling  of  EUR 500  million over  and  above  the  relevant  headings  of  the  financial 
framework.  Eligibility  rules  applicable  to  the  contributions  from  the  Fund  are  laid  down  in 
Regulation (EC) No 1927/20062 of the European Parliament and the Council. 

The  Commission  services  have  carried  out  a  thorough  examination  of  the  two  applications 
submitted  by  France  in  accordance  with  Regulation  (EC)  1927/2006  and  in  particular  with 
Articles 2, 3, 4, 5 and 6 thereof. 

The most important elements of the assessments can be summarised as follows: 

Case EGF/2007/01/FR/Peugeot SA 

1. 

2. 

3. 

4. 

The  application  was  presented  by  the  French  authorities  to  the  Commission  on 
9 March 2007. It was based upon the specific intervention criteria of Article 2 (a) of 
Regulation (EC) No 1927/2006 and was submitted within the deadline of 10 weeks 
referred to in Article 5 of that Regulation. 

The  application  demonstrates  a  total  of  1 345  notified  redundancies,  involving 
18 different  enterprises,  operating  at  38  different  sites  in  eleven  French  regions, 
amongst the industry supplying car parts to Peugeot SA (PSA) during the four-month 
period  of  reference  (1  September  2006  to  31  December  2006).  The  application, 
however,  proposes  to  provide  assistance  co-financed  by  the  EGF,  only  to  the 
267 workers made redundant by one of these suppliers, the Ateliers de Thomé Génot 
in Nouzonville (Département des Ardennes), which has gone into liquidation and is 
no longer in a position to provide effective assistance to its workers. 

Analysis  of  the  link  between  the  redundancies  and  the  major  structural  changes  in 
world trade patterns is based on the following information. For the period 2001-2005 
the annual world car production increased by 14% from 58.3 million to 66.5 million 
units, whilst the increase in production in the EU was only 5%. In terms of share in 
the world car market, the market share of Asia increased by 8 points from 30.7% in 
2001 to 38.8% in 2005, that of the American continent decreased by 1.7 points from 
30.7% in 2001 to 29.0% in 2005 and that of the EU 27 decreased by 3.7 points from 
33.7%  in  2001  to  29.9%  in  2005.  At  the  same  time,  Korean  and  Japanese 
manufacturers  gained  in  competitiveness  on  the  European  market.  The  number  of 
cars manufactured in Japan and Korea and imported into the EU increased by 27% 
during  the  period  from  2001  to  2005.  These  increased  imports  were  mainly 
competing with the production of smaller cars in the EU.  

The increase of imports into the EU is confirmed by the statistical data available to 
the Commission. In 2002 the imports into the EU of cars manufactured outside the 
EU represented 9.3% of car sales in the EU. In 2006 this share had risen to 13.9%. 
This  phenomenon  is  confirmed  for  the  lower  market  segment  where  the  share  of 

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OJ C 139, 14.06.2006, p. 1 
OJ L 406, 30.12.2006, p. 1  

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5. 

6. 

imports into the EU of cars manufactured outside the EU in total car sales in the EU 
was 5.2% in 2002 and 9.2% in 2006. 

Although  new  registrations  in  the  lower  segments  of  the  market  decreased  slightly 
between  2002  and  2006,  new  registrations  of  imported  cars  in  these  segments 
increased by around 70%. 

As car production by PSA is to a large extent concentrated in these lower segments, 
France  claims  that  these  changes  in  world  trade  patterns  have  affected  this 
manufacturer  and  led  to  a  serious  economic  disruption.  The  effect  of  the  increased 
imports of small cars, in particular from Asia, and the increased competition on the 
world  market  has  contributed  to  a  certain  extent  to  a  reduction  of  its  production  in 
volume (aggregate number of cars and light utility vehicles produced) in France by 
14.3% in 2006. This has not resulted in large-scale redundancies in PSA, but has led 
to the disappearance of several thousands of jobs previously filled by temporary or 
contract  workers.  However,  in  the  firms  that  supply  PSA  with  components,  the 
reduction  of  activities  and  pressure  on  component  prices  have  led  to  many 
redundancies, giving rise to this application. 

As  regards  the fulfilment of the criteria set out in Article 6 of Regulation (EC) No 
1927/2006 France confirmed inter alia that the financial contribution from the EGF 
does  not  replace  measures  which  are  the  responsibility  of  companies  by  virtue  of 
national law or collective agreements. France indicated that if an enterprise has gone 
into judicial liquidation, as is the case of Ateliers de Thomé Génot, the enterprise is 
no longer subject to its obligation to put in place re-employment measures ("mesures 
de reclassement"). In France the national and local authorities do not have any legal 
or  conventional  obligation  to  intervene  in  the  costs  of  re-employment  measures. 
According  to  the  French  authorities,  State  intervention  in  favour  of  the  redundant 
workers  of  a  company  that  has  gone  into  judicial  liquidation  seems  unavoidable. 
EGF  assistance  is  complementing  the  financial  efforts  made  by  France.  France 
confirmed that the envisaged actions provide support for individual workers and are 
not used for restructuring of companies or sectors. France has confirmed that actions 
funded  under  the  EGF  will  not  receive  assistance  from  other  Community  financial 
instruments.  

In  conclusion,  for  the  reasons  set  out  above,  it  is  proposed  to  accept  application 
EGF/2007/01/FR/PSA  submitted  by  France  relating  to  the  redundancies  in  the  suppliers  of 
Peugeot  SA,  as  evidence  has  been  provided  that  these  redundancies  result  from  major 
structural  changes  in  world  trade  patterns  which  have  led  to  a  serious  economic  disruption, 
which, in the case of the Ateliers de Thomé Génot, the company for whose workers assistance 
is sought, affects the local economy. A coordinated package of eligible personalised services 
for the amount of EUR 5 116 500 has been proposed of which the requested contribution of 
the EGF is EUR 2 558 250.  

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Case EGF/2007/02/FR/Renault SA 

1. 

2. 

3. 

4. 

5. 

The  application  was  presented  by  the  French  authorities  to  the  Commission  on 
23 March 2007. It was based upon the specific intervention criteria of Article 2 (a) of 
Regulation (EC) No 1927/2006 and was submitted within the deadline of 10 weeks 
referred to in Article 5 of that Regulation 

According  to  the  details  provided  by  the  French  authorities  1 057  redundancies 
amongst 10 different suppliers to Renault SA, have come into effect during the four-
month  period  between  01/12/2006  and  31/03/2007.  EGF  support  is  only  requested 
for  the  628  workers  of  Cadence  Innovation,  with  production  sites  in  Burhaupt-le-
Haut  (Alsace),  Vernon  (Haute  Normandie),  Noeux-les-Mines  (Nord-Pas-de-Calais) 
and Pouancé (Pays de la Loire). This enterprise is being wound-up by court order and 
as such is no longer in a position to provide effective assistance to its workers 

Analysis  of  the  link  between  the  redundancies  and  the  major  structural  changes  in 
world trade patterns is based on the following information. For the period 2001-2005 
the annual world car production increased by 14% from 58.3 million to 66.5 million 
units, whilst the increase in production in the EU was only 5%. In terms of share in 
the world car market, the market share of Asia increased by 8 points from 30.7% in 
2001 to 38.8% in 2005, that of the American continent decreased by 1.7 points from 
30.7% in 2001 to 29.0% in 2005 and that of the EU 27 decreased by 3.7 points from 
33.7%  in  2001  to  29.9%  in  2005.  At  the  same  time,  Korean  and  Japanese 
manufacturers  gained  in  competitiveness  on  the  European  market.  The  number  of 
cars manufactured in Japan and Korea and imported into the EU increased by 27% 
during  the  period  from  2001  to  2005.  These  increased  imports  were  mainly 
competing with the production of smaller cars in the EU.  

The increase of imports into the EU is confirmed by the statistical data available to 
the Commission. In 2002 the imports into the EU of cars manufactured outside the 
EU represented 9.3% of car sales in the EU. In 2006 this share had risen to 13.9%. 
This  phenomenon  is  confirmed  for  the  lower  market  segment  where  the  share  of 
imports into the EU of cars manufactured outside the EU in total car sales in the EU 
was 5.2% in 2002 and 9.2% in 2006. 

Although  new  registrations  in  the  lower  segments  of  the  market  decreased  slightly 
between  2002  and  2006,  new  registrations  of  imported  cars  in  these  segments 
increased by around 70%. 

As car production by RSA is to a large extent concentrated in these lower segments, 
France  claims  that  these  changes  in  world  trade  patterns  have  affected  this 
manufacturer  and  led  to  a  serious  economic  disruption.  The  effect  of  the  increased 
imports of small cars, in particular from Asia, and the increased competition on the 
world  market  has  contributed  to  a  certain  extent  to  a  reduction  of  its  production  in 
volume (number of private cars produced) in France by 3.8 % in 2005 and 14.7% in 
2006.  This  has  not  resulted  in  large-scale  redundancies  in  RSA,  but  has  led  to  the 
disappearance of several thousands of jobs previously filled by temporary or contract 
workers. However, in the firms that supply RSA with components, the reduction of 
activities  and pressure on component prices have led to many redundancies, giving 
rise to this application. 

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6. 

As regards the fulfilment of the criteria set out in Article 6 of Regulation (EC) No 
1927/2006 France confirmed inter alia that the financial contribution from the EGF 
does  not  replace  measures  which  are  the  responsibility  of  companies  by  virtue  of 
national law or collective agreements. In the specific case of "Cadence Innovation", 
which  is  being  wound-up  by  court  order,  France  indicated  that  in  such  a  case  the 
enterprise  is  no  longer  subject  to  its  obligation  to  put  in  place  re-classification 
measures ("mesures de reclassement"). In France the national and local authorities do 
not  have  any  legal  or  conventional  obligation  to  intervene  in  the  costs  of  re-
employment  measures.  According  to  the  French  authorities,  State  intervention  in 
favour of the redundant workers of a company that has gone into judicial liquidation 
seems unavoidable. EGF assistance is complementing the financial efforts made by 
France.  France  confirmed  that  the  envisaged  actions  provide  support  for  individual 
workers  and  are  not  used  for  restructuring  of  companies  or  sectors.  France  has 
confirmed that actions funded under the EGF will not receive assistance from other 
Community financial instruments.  

In  conclusion,  for  the  reasons  set  out  above,  it  is  proposed  to  accept  application 
EGF/2007/02/FR/Renault submitted by France relating to the redundancies in the suppliers of 
Renault  Société  Anonyme  (RSA),  as  evidence  has  been  provided  that  these  redundancies 
result  from  major  structural  changes  in  world  trade  patterns  which  have  led  to  a  serious 
economic  disruption,  which,  in  the  case  of  Cadence  Innovation,  the  company  for  whose 
workers  assistance  is  sought,  affects  the  local  economy.  A  coordinated  package  of  eligible 
personalised  services  for  the  amount  of  EUR 2 516 060  has  been  proposed  of  which  the 
requested contribution of the EGF is EUR 1 258 030.  

Financing 

The  total  annual  budget  available  for  the  European  Globalisation  Adjustment  Fund  is 
EUR 500 million. In 2007, no resources have already been earmarked for earlier applications 
leaving the full amount available. 

The  Commission's  proposed  allocation  under  the  Fund  is  based  on  the  information  made 
available by the applicant. 

On the basis of the two applications for support from the Fund submitted by France in which 
the automobile industry was affected by redundancies carried out by suppliers of Peugeot SA 
(PSA) and suppliers of Renault SA (RSA), including two bankruptcies, total estimates of the 
coordinated packages of personalised services to be funded are as follows: 

Personalised services to be funded (in EUR) 

France: PSA 
01/2007 
France: RSA 
02/2007 
Total 

2 558 250 

1 258 030 

3 816 280 

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In the light of the examination of these applications3, and considering the maximum possible 
amount of a grant from the Fund established in accordance with Article 10 of Regulation (EC) 
No 1927/2006 as well as the scope for reallocating appropriations, the Commission proposes 
to  deploy  the  European  Union  Globalisation  Adjustment  Fund  for  a  total  amount  of 
EUR 3 816 280, to be allocated under heading 1a of the financial framework 2007-2013. 

The requested amount of support will leave more than 25% of the maximum annual amount 
earmarked for the European Globalisation Adjustment  Fund  available for allocations during 
the  last  four  months  of  the  year,  as  required  by  Article  12 (6)  of  Regulation  (EC)  No 
1927/2006. 

The Commission will present a transfer request in order to enter in the 2007 budget specific 
commitment  and  payment  appropriations,  as  required  in  Point  28  of  the  Interinstitutional 
Agreement of 17 May 2006. 

3 

Communication  to  the  Commission  on  an  application  to  mobilise  the  European  Globalisation 
Adjustment Fund introduced by France in the case of Peugeot (SEC(2007) 882) and Communication to 
the Commission on an application to mobilise the European Globalisation Adjustment Fund introduced 
by  France  in  the  case  of  Renault  (SEC(2007)  881)  setting  out  the  analysis  of  the  Commission  of  the 
requests. 

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Proposal for a 

DECISION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL 

on the mobilisation of the European Globalisation Adjustment Fund  

THE EUROPEAN PARLIAMENT AND THE COUNCIL OF THE EUROPEAN UNION, 

Having regard to the Treaty establishing the European Community,  

Having  regard  to  the  Interinstitutional  Agreement  of  17 May  2006  between  the  European 
Parliament,  the  Council  and  the  Commission  on  budgetary  discipline  and  sound  financial 
management4, and in particular point 28 thereof,  

Having  regard  to  Regulation  (EC)  No  1927/2006  of  the  European  Parliament  and  of  the 
Council  of  20 December  2006  establishing  the  European  Globalisation  Adjustment  Fund5, 
and in particular Article 12(5) thereof,  

Having regard to the proposal from the Commission,6 

Whereas: 

(1) 

(2) 

(3) 

The  European  Union  has  created  a  European  Globalisation  Adjustment  Fund  (the 
"Fund")  to  provide  additional  support  to  redundant  workers  who  suffer  from  the 
consequences  of  major  structural  changes  in  world  trade  patterns  and  to  assist  them 
with their reintegration into the labour market. 

The Interinstitutional Agreement of 17 May 2006 allows the mobilisation of the Fund 
within the annual ceiling of EUR 500 million. 

In March 2007 France submitted applications to mobilise the Fund, in respect of two 
cases  concerning  redundancies  in  the  automobile  sector,  specifically  suppliers  to 
Peugeot  SA  and  Renault  SA.  The  Commission  considers  that  the  two  applications 
meet the intervention criteria and other requirements laid down in Regulation (EC) No 
1927/2006. 

(4) 

The proposed amount of EUR 3 816 280 determined in accordance with Article 10 of 
Regulation (EC) No 1927/2006 should, therefore, be mobilised,  

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OJ C 139, 14.06.2006, p. 1. 
OJ L 406, 30.12.2006, p. 1. 
OJ C […], […], p. […] 

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HAVE DECIDED AS FOLLOWS: 

Article 1 

For  the  general  budget  of  the  European  Union  for  the  financial  year  2007,  the  European 
Globalisation  Adjustment  Fund  shall  be  mobilised  to  provide  the  sum  of  EUR 3 816 280  in 
commitment and payment appropriations. 

Article 2 

This Decision shall be published in the Official Journal of the European Union. 

Done at Brussels,  

For the European Parliament 
The President 

For the Council 
The President 

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