Proposal for a Decision of the European Parliament and of the Council on the mobilisation of the European Globalisation Adjustment Fund
Date: 2008-10-02
Institutions: European Commission
Subjects: EU aid, Italy, commitment of expenditure, dismissal, fund (EU), globalisation, reintegration into working life, textile industry

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COMMISSION OF THE EUROPEAN COMMUNITIES 

Brussels, 2.10.2008 
COM(2008) 609 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 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  four  applications 
submitted  by  Italy  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: 

Cases EGF/2007/05/IT/Sardegna, EGF/2007/06/IT/Piedmont, EGF/2007/07/IT/ 
Lombardy and EGF/2008/01/IT/Tuscany  

1. 

2. 

The applications were presented by the Italian authorities to the Commission on the 
following  dates:  Sardinia  9  August  2007,  Piedmont  on  10  August  2007,  Lombardy 
17  August  2007  and  Tuscany  12  February  2008.  All  four  applications  were  based 
upon  the  specific  intervention  criteria  of  Article  2(b)  of  Regulation  (EC)  No 
1927/2006 of the European Parliament and of the Council and were submitted within 
the deadline of 10 weeks referred to in Article 5 of that Regulation.  

Italy submitted all four applications under the intervention criterion of Article 2(b) of 
Regulation (EC) No 1927/2006, which requires at least 1,000 redundancies over a 9-
month  period  in  a  NACE  (statistical  classification  of  economic  activities)  rev  2 
sector3  in  one  region  or  two  contigious  regions  (NACE  rev  2  Division  13 
"Manufacture  of  textiles"  in  companies  in  the  Regions  of  Sardinia,  Piedmont, 
Lombardy and Tuscany). 

3. 

The four applications demonstrate the following number of definitive redundancies: 

•  Sardinia:  1,044  redundancies  during  the  nine-month  period  of  reference  27 
October 2006 to 26 July 2007 in NACE 2 Sector 134 (manufacture of textiles), in 
the NUTS II ITG2-Sardegna Region.  

•  Piedmont:  1,537  redundancies  during  the  nine-month  period  of  reference  1 
September 2006 to 31 May 2007 in NACE 2 Sector 13 (manufacture of textiles), 
in the NUTS II ITC4-Piemonte Region. 

1 
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3 

4 

OJ C 139, 14.6.2006, p. 1 
OJ L 406, 30.12.2006, p. 1 as corrected in OJ L 48, 22.2.2008, p.82 
Regulation (EC) No 1893/2006 of the European Parliament and of the Council of 20 December 2006 establishing 
the  statistical  classification  of  economic  activities  NACE  Revision  2  and  amending  Council  Regulation  (EEC) 
No 3037/90 as well as certain EC Regulations on specific statistical domains OJ C 393, 30.12.2006, p. 1 
The  Italian  authorities  have  confirmed  that  their  national  classification  of  sectors  uses  the  ATECO-ISTAT  2002 
categorisation,  which  is  based  on  NACE  rev.  1.1  (the  NACE  legislation  in  force  until  1  January  2008).  All  the 
companies included in their lists (in all three applications) are in the "second level ATECO (and NACE) sector 17 – 
'Manufacture of textiles'". This corresponds to NACE sector 13 in the new NACE rev.2 categories. 

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•  Lombardy:  1,816  redundancies  during  the  nine-month  period  of  reference  1 
September 2006 to 31 May 2007 in NACE 2 Sector 13 (manufacture of textiles), 
in the NUTS II ITC4-Lombardia Region. 

•  Tuscany:  1,558 redundancies during the nine-month period of reference 1 March 
2007 to 30 November 2007 in NACE 2 Sector 13 (manufacture of textiles), in the 
NUTS II ITE15-Toscana Region. 

Analysis  of  the  link  between  the  redundancies  and  the  major  structural  changes  in 
world trade patterns is based on the following information. The applications describe 
the  redundancies  in  the  four  regions  against  a  background  of  radical  change  in  the 
distribution  of  textile  production.  Third  countries,  (specifically  China  and  India) 
increasingly dominate the world trade in textiles and clothing, and countries such as 
Turkey and Bangladesh continue to increase their share of world production. Large-
scale  restructuring  in  the  European  textiles  and  clothing  industries  from  the  1990s 
onwards  had  already  led  to  an  increase  in  productivity  and  a  reorientation  of 
production  towards  high  quality  products,  combined  with  a  reduction  of  the 
workforce by approximately one-third between 1990 and 20045. 

Alongside the global changes in the market, textile producers in the Community have 
faced  specific  and  increased  competition  following  the  end  of  the  Multifibre 
Arrangement  (MFA);  the  MFA  imposed  quotas  on  the  amount  of  clothing  and 
textiles that developing countries could export to developed countries. The end of the 
MFA  (and  the  Agreement  on  Textiles  and  Clothing  (ATC)  which  followed  it)  in 
2005, opened Community textile and clothing markets to free competition from the 
developing world. Between 2004 and 2006, the volume of clothes imported into the 
Community  showed  an  annual  increase  of  about  10%.  This  is  primarily  related  to 
much higher imports from China, following the expiry of the MFA. 

The  Italian  redundancies  follow  the  general  trend  in  the  clothing  and  accessories 
industry in the Community towards a delocalisation of their production to lower cost 
non-EU countries, already demonstrated in a previous application for Malta6. In their 
applications,  the  Italian  authorities  have  provided  statistical  evidence  that  the 
redundancies  are  a  direct  result  of  the  evolving  situation  in  the  global  textiles 
industry. 

The Italian authorities have used the same justification for all four applications, i.e. 
that  while  the  end  of  the  MFA  and  the  ATC  was  not  unforeseen,  the  economic 
impact this had on the textile industry in Italy generally, and specifically in the four 
regions  was  far  harsher  than  could  have  been  predicted.  The  Italian  authorities 
predicted that the end of the MFA would, overall, have a low impact on production 
and employment. This has not been the case. As a result of the impact of the end of 
the  MFA  and  the  consequent  reduction  in  demand  for  Italian  textiles,  many  of  the 
companies  where  redundancies  occurred,  invested  in  a  series  of  technological 
upgrades in the production process in an attempt to reduce costs and diversify their 

European Monitoring Centre on Change (EMCC). Sectors Futures – Textile and Leather in Europe: the end of an 
era or a new beginning? (2004) 
http://www.eurofound.europa.eu/emcc/content/source/tn04004a.htm  
SEC(2008)1657 

4. 

5. 

6. 

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product range. These have, however, failed to counter a steep reduction in orders and 
increased competition from third country textile manufacturers. 

7. 

The local and regional impact is set out as follows in the four applications : 

•  Sardinia : The Province of Nuoro, where the redundancies occurred, is the main 
hub of textile production in Sardinia. It has a high rate of unemployment (10.8 % 
in 2006, compared to the national average in the same year of 6.8 %), with highest 
rates  amongst  both  the  youngest  and  the  oldest  age  categories.  In  2005,  the 
employment rate in Nuoro was 51.6 %, against the national rate of 57.5 %.  The 
Italian authorities stated that the impact of these redundancies is strongly felt in an 
already fragile and isolated workforce.  

(Piedmont's 

•  Piedmont's  economic  competitiveness  is  based  on  the  construction  and  service 
industries, rather than textiles. However, half of the workforce in the Province of 
Biellese 
the 
geographical area where about 35 % of the applications redundancies occurred) is 
involved in manufacturing, of which a third work in the manufacture of textiles. 
The impact of the redundancies in Piedmont has been reflected in the increase in 
requests from assistance from the Extraordinary Wage Guarantee Fund (CIGS). 

textile  manufacturing  "basin"  and 

traditional 

•  Lombardy  :  The  Italian  authorities  have  presented  a  contrasting  picture  between 
the  general  competitiveness  of  non-textile  sectors  in  the  Region,  against  a 
downward  trend  in  the  competitiveness  of  textiles  manufacturers.  The  greatest 
concentration  of  textile  companies  is  in  Milano,  Brescia,  Varese,  Bergamo  and 
Como and these have already been in decline for a number of years. The Italian 
authorities  use  INAIL7  data  to  illustrate  the  worsening  situation  in  the  textile 
sector in these areas : the number of people employed in the sector in Lombardy 
dropped from 22,426 in 2000 to 17,267 in 2004, a reduction of some 23 % in four 
years.  

•  Tuscany : The number of textile firms in the province of Prato, fell by nearly 20 % 
between 2002 (5,508) and 2006 (4,429). The numbers of workers in Prato textile 
companies fell too during the same period, by 25 % (28,600 in 2002, compared to 
21,436  in  2006).  Latest  regional  statistics  show  that  while  generally,  regional 
employment trends are stable, the number of textile workers is falling (-5.7 % in 
the third quarter of 2007, compared to the previous year). 

In  conclusion,  in  these  circumstances,  the  redundancies  can  be  seen  as  having  a 
significantly negative effect on the local economy in the four concerned regions. 

As regards the fulfilment of the  criteria set out in Article 6 of Regulation (EC) No 
1927/2006 the application provided the following elements: Italy has confirmed 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  and 
has given assurances that the actions provide support for individual workers and are 
not  to  be  used  for  restructuring  companies  or  sectors.  The  Italian  authorities 

INAIL:  Istituto  nazionale  per  l'assicurazione  contro  gli  infortuni  sul  lavoro  (Italian  Workers'  Compensation 
Authority) 

8. 

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confirmed that the eligible actions do not receive assistance from other Community 
financial instruments.  

In  conclusion,  for  the  reasons  set  out  above,  it  is  proposed  to  accept  applications 
EGF/2007/05/IT/Sardegna, EGF/2007/06/IT/Piedmont, EGF/2007/07/IT/ Lombardy and 
EGF/2008/01/IT/Tuscany  submitted  by  Italy relating  to  the  textiles  sector, as  evidence  has 
been  provided  that  these  redundancies  result  from  major  structural  changes  in  world  trade 
patterns  which  have  led  to  serious  economic  disruption,  which  affects  the  local  economy. 
Coordinated packages of eligible personalised services for a total amount of EUR 70 316 150 
have  been  proposed  for  the  four  regions  of  which  the  requested  contribution  of  the  EGF  is 
EUR 35 158 075.  

Financing 

The  total  annual  budget  available  for  the  European  Globalisation  Adjustment  Fund  is 
EUR 500  million.  An  amount  of  EUR  3 106 882  has  already  been  mobilised  for  two 
applications  and  a  further  two  cases  for  a  total  amount  of  EUR  10 770 772  have  been 
proposed,  giving  an  aggregated  amount  of  EUR  13 877 654  leaving  an  amount  of  EUR 
486 122 346 available.  

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

On the basis of the four applications for support from the Fund submitted by Italy in which 
the  textile  sector  was  affected,  total  estimates  of  the  coordinated  packages  of  personalised 
services to be funded are as follows: 

Personalised services to be funded (in EUR) 

Italy /Sardegna 2007/005 

Italy/Piemonte 2007/006 

Italy /Lombardia 2007/007 

Italy/Toscana 2008/001 

Total 

10 971 000 

7 798 750 

12 534 125 

3 854 200 

35 158 075 

In  the  light  of  the  examination  of  these  four  applications8,  and  considering  the  maximum 
possible  amount  of  a  grant  from  the  Fund  determined  in  accordance  with  Article  10  of 
Regulation  (EC)  N°  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 35 158 075,  to  be  allocated  under  heading  1a  of  the  financial 
framework. 

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Communications  to  the  Commission  on  four  applications  to  mobilise  the  European  Globalisation 
Adjustment Fund introduced by Italy (SEC(2008) 2414) setting out the analysis of the Commission of 
these requests. 

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This amount of support will leave more than 25 % of the maximum annual amount earmarked 
for the European Globalisation Adjustment Fund available for allocation during the last four 
months of the year 2008, as required by Article 12 (6) of Regulation (EC) N° 1927/2006. 

By  presenting  this  proposal  to  deploy  the  Fund,  the  Commission  initiates  the  simplified 
trialogue  procedure,  as  required  by  Point  28  of  the  Inter-institutional  Agreement  of 
17 May 2006, in view of securing the agreement of the two arms of the budgetary authority 
on the need to use the Fund and the amount required. The Commission invites the first of the 
two  arms  of  the  Budgetary  Authority  that  reaches  agreement  on  the  draft  mobilisation 
proposal,  at  appropriate  political  level,  to  inform  the  other  arm  and  the  Commission  of  its 
intentions. 

In  case  of  disagreement  by  either  of  the  two  arms  of  the  budgetary  authority,  a  formal 
trialogue meeting will be convened.  

The  Commission  will  also  present  a  transfer  request  in  order  to  enter  in  the  2008  budget 
specific  commitment  and  payment  appropriations,  as  required  in  Point  28  of  the 
Interinstitutional Agreement of 17 May 2006. 

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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  Inter-institutional  Agreement  of  17 May  2006  between  the  European 
Parliament,  the  Council  and  the  Commission  on  budgetary  discipline  and  sound  financial 
management9, 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  Fund10, 
and in particular Article 12(3) thereof, 

Having regard to the proposal from the Commission11, 

Whereas: 

(1) 

(2) 

(3) 

The European Globalisation Adjustment Fund (the "Fund") was established 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. 

Italy submitted four applications to deploy the Fund, in respect of redundancies in the 
textile sector, on 9 August 2007 for Sardinia, on 10 August 2007 for Piedmont, on 17 
August 2007 for Lombardy and on 12 February 2008 for Tuscany. These applications 
comply with the requirements for determining the financial contributions as laid down 
in Article 10 of Regulation (EC) No 1927/2006.  

(4) 

The Fund should, therefore, be mobilised in order to provide a financial contribution 
for the applications, 

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OJ C 139, 14.6.2006, 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  2008,  the  European 
Globalisation Adjustment Fund shall be mobilised to provide the sum of EUR 35 158 075 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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