Proposal for a Decision of the European Parliament and of the Council on the mobilisation of the European Globalisation Adjustment Fund
Date: 2009-03-26
Institutions: European Commission
Subjects: Spain, commitment of expenditure, dismissal, fund (EU), globalisation, import, motor vehicle industry, reintegration into working life

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COMMISSION OF THE EUROPEAN COMMUNITIES 

Brussels, 26.3.2009 
COM(2009) 150 final 

Proposal for a 

DECISION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL 

on the mobilisation of the European Globalisation Adjustment Fund 

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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  application 
submitted  by  Spain  in  accordance  with  Regulation  (EC)  1927/2006  and  in  particular  with 
Articles  2,  3,  4,  5  and  6  thereof.  At  its  initiative  the  Commission  proposes  to  mobilise 
technical assistance in accordance with Article 8 of Regulation (EC) 1927/2006. 

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

Case EGF/2008/004 ES/Castilla y Léon and Aragón 

1. 

2. 

3. 

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The application was received by the Commission from the Spanish authorities on 29 
December 2008 and complemented by additional information received on 8 January, 
17  and  23  February  2009.  It  was  based  upon  the  specific  intervention  criteria  of 
Article 2(b) of Regulation (EC) No 1927/2006 of the European Parliament and of the 
Council  on  establishing  the  European  Globalisation  Adjustment  Fund,  and  was 
submitted within the deadline of 10 weeks referred to in Article 5 of that Regulation.  

Spain submitted this application under the intervention criterion of Article 2(b) of the 
EGF Regulation, which requires at least 1,000 redundancies over a 9-month period in 
a  NACE  2  (statistical  classification  of  economic  activities)  REV  2  division3  in  one 
region  or  two  contiguous  regions  at  NUTS  II  (nomenclature  of  territorial  units  for 
statistics)  level.  The  application  demonstrates  that  a  total  of  1,082  redundancies 
occurred  in  twelve  enterprises  classified  in  the  NACE  2  REV  2  division  29 
('manufacture  of  motor  vehicles,  trailers  and  semi-trailers')  and  all  located  in  two 
contiguous regions at NUTS II level during the 9-month period of reference (from 31 
January 2008 to 31 October 2008). 

Analysis  of  the  link  between  the  redundancies  and  the  major  structural  changes  in 
world trade patterns is based on the following information. Spain argues that for nine 
of the dismissing enterprises the redundancies result from an increase in imports of 
motor  cars  and  their  components  into  the  Community  and  a  decrease  in  the 
Community  market  share  in  the  production  of  motor  vehicles.  For  the  remaining 
three  dismissing  enterprises,  also  affected  by  the  deteriorating  position  of 
Community  motor  car  production  on  the  world  market,  the  dismissals  are  a  direct 
result  of  a  delocalisation  of  production  to  countries  outside  the  Community:  Lear 
Corporation is moving its production from Avila to Morocco, Iberian Nissan Motor 
from Avila to Taiwan and Delphi Packard Spain from Zaragoza to Turkey. 

OJ C 139, 14.6.2006, p. 1. 
OJ L 406, 30.12.2006, p. 1. 
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 L 393, 30.12.2006, p. 1 

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4. 

The application uses EUROSTAT trade statistics for the Community-25 to illustrate 
a  substantial  increase  (in  value)  between  2003  and  2007  of  imports  into  the 
Community of motor vehicles in general and passenger cars in particular. For motor 
vehicles imports increased by 45 % and exports by 31 %, for passenger cars imports 
increased by 44 % and exports by only 22 %. Spain, in particular, which until 2004 
was  a  net  exporter  of  motor  cars  and  motor  vehicle  components,  became  a  net 
importer and this trend is continuing, with a trade deficit growing annually. 

The applicant further refers to motor vehicle production statistics4 to demonstrate a 
decrease of the Community market share between 2004 and 2007. The Community-
27 market share in the world production of motor vehicles decreased from 28.4 % in 
2004  to  26.9  %  in  2007.  In  the  same  period,  the  production  in  absolute  terms 
increased  by  7.5  %  in  the  Community-27,  against  a  growth  rate  of  13.3  % 
worldwide.  As  has  been  shown  in  the  Commission  assessment5  on  previous  EGF 
cases, this decrease in Community market share is part of a lasting trend. In 2001 the 
Community-27 share in world car production was still 33.7%. 

5. 

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

The  territories  concerned  by  the  redundancies  are  the  autonomous  communities  of 
Castilla  y  León  and  Aragón,  within  which  the  provinces  of  Avila,  Salamanca  and 
Zaragoza  are  the  most  affected,  given  a  strong  presence  of  the  motor  vehicle 
manufacturing  industry  in  these  areas.  The  number  of  workers  in  the  motor  car 
industry as a whole in Spain decreased significantly over the last four years. In 2007 
alone, about 10,000 jobs were lost in this sector, and the applicant expects that, for 
2008, this number will be even higher. In the motor car component industry alone, 
the  number  of  workers  decreased  from  more  than  251,000  in  2004  to  245,000  in 
2007.  Given  the  strong  presence  of  the  motor  car  industry  in  some  provinces  in 
Castilla  y  León  and  of  Aragón,  these  provinces  are  significantly  impacted  by  the 
reduction of employment in this sector. 

In Castilla y León, the number of registered unemployed workers increased by 3 % 
from  117,479  in  January  2008  to  121,182  in  September  2008.  For  the  province  of 
Avila that is the most affected by the dismissals in this application, in particular those 
in Lear Corporation and in Nissan Motor Ibérica, the number of unemployed workers 
increased during the same period by 12 % from 7,993 to 8,976. 

In  Aragón,  the  number  of  registered  unemployed  workers  increased  by  23  %  from 
41,192 in January 2008 to 50,818 in September 2008. For the province of Zaragoza, 
which  is  the  most  affected  by  the  dismissals  in  this  application,  the  number  of 
unemployed  workers  increased  during  the  same  period  by  26  %  from  30,446  to 
38,431. 

In  conclusion,  in  these  circumstances,  the  redundancies  can  be  seen  to  have  a 
significantly negative effect on the local economy. 

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Statistics provided by the International Organisation of Motor Vehicle Manufacturers 
SEC(2007)881  on  application  EGF/2007/02  FR/Renault  and  SEC(2007)882  on  application 
EGF/2007/01 FR/PSA 

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6. 

7. 

Of  the  1,082  workers  made  redundant,  Spain  decided  to  target  588  workers  for 
assistance,  namely  the  workers  made  redundant  by  Lear  Corporation  and  Nachi 
industrial, both located in Castilla y León and by Delphi Packard España Automotive 
Connections  and  Equipments,  Auxiliar  de  Componentes  Eléctricos  located  in 
Aragón.  The  applicant  explains  that,  for  the  redundant  workers  in  the  other 
enterprises in the Castilla y Léon, where smaller number of redundancies occurred, it 
has not been possible to reach agreement with the representatives of the workers and 
the  enterprises  on  a  package  of  measures  for  their  re-integration  into  the  labour 
market,  because  of  their  profile,  their  predisposition  to  find  a  new  job  or  other 
reasons.  As  regards  the  workers  made  redundant  in  the  region  of  Aragón,  the 
applicant  states  that  the  workers  with  the  biggest  difficulties  for  re-integration  into 
the labour market are targeted for assistance from the EGF. The criteria used for the 
selection were not only the economic characteristics of the area concerned, but also 
the skills, the capacity to adapt, the gender and the previous work experience of the 
workers concerned. 

As regards the fulfilment of the criteria set out in Article 6 of Regulation (EC) No 
1927/2006 the application provided the following elements: The Spanish authorities 
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 demonstrated that the actions provide support for individual workers 
and are not to be used for restructuring companies or sectors. The Spanish authorities 
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  application 
EGF/2008/004  ES/Castilla  y  León  and  Aragón  submitted  by  Spain,  relating  to  the 
redundancies  in  twelve  enterprises  involved  in  manufacturing  activities  in  NACE  2  REV  2 
division  29  ('manufacture  of  motor  vehicles,  trailers  and  semi-trailers')  in  two  contiguous 
NUTS II regions Castilla y León (ES41) and Aragón (ES24), 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,  affecting  employment  and  the  local  economy.  A 
co-ordinated  package  of  eligible  personalised  services  has  been  proposed  of  which  the 
requested contribution of the EGF is EUR 2 694 300. 

Technical Assistance at the initiative of the Commission 

Article 8 (1) of Regulation (EC) 1927/20066 of the European Parliament and the Council of 
20  December  2006  on  establishing  the  European  Globalisation  Adjustment  Fund  provides 
that: 

"At the initiative of the Commission, subject to a ceiling of 0.35 % of the financial resources 
available  for  that  year,  the  EGF  may  be  used  to  finance  monitoring,  information, 
administrative  and  technical  support,  audit,  control  and  evaluation  activities  necessary  to 
implement this Regulation." 

The  contribution  will  be  used  for  expenditure  mentioned  in  Articles  8  (1)  and  9  (2)  of 
Regulation (EC) 1927/2006, as detailed hereunder. 

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OJ L 406, 30.12.2006, p. 1 

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8. 

9. 

10. 

11. 

12. 

Information  :  The  EGF  web  site,  which  the  Commission  is  required  to  set  up  and 
maintain under Article 9(2) of Regulation (EC) 1927/2006, will be regularly updated 
and expanded, each new element also being translated into all Community languages. 
The press folder will be printed, and the annual report of the EGF will be produced, 
translated,  printed  and  distributed.  The  EGF  will  also  be  covered  in  various 
Commission  publications  and  audio-visual  activities.  Costs  for  these  items  are 
estimated at EUR 160,000 in 2009. 

Administrative and technical support : The Expert Group of Contact Persons of the 
EGF7, with 27 members, one from each Member State, will be holding two meetings 
in 2009, budgeted at EUR 35,000 per meeting, therefore for a total estimated at EUR 
70,000. 

The  Commission  will  be  organising  the  exchange  of  best  practices  among  the 
Member  States,  enabling  participants  with  experience  of  EGF  implementation  to 
network with each other, and be assisted by an expert preparing documentation and 
reports. The networking activity is estimated at EUR 160,000.  

Evaluation  :  Preparatory  activities  for  the  mid-term  evaluation  of  the  EGF,  as  laid 
down  in  Article  17  paragraph  1(a)  Regulation  (EC)  1927/2006,  will  be  started  in 
2009. Following a call for tenders, the first commitments for EUR 300,000 will be 
made  in  early  2009.  Payment  appropriations  of  EUR  300,000  will  also  be  required 
for these evaluation activities. 

As  regards  monitoring,  audit  and  control  :  No  contribution  of  EGF  technical 
assistance is planned for these categories in 2009. 

The  ceiling  of  0.35  %  mentioned  in  Article  8  (1)  of  Regulation  (EC)  1927/2006, 
when  applied  to  EUR  500  million,  provides  that  a  maximum  of  EUR  1.75  million 
can  be  made  available  for  technical  assistance  at  the  initiative  of  the  Commission 
each year. The amount of EUR 690,000 being proposed for mobilisation as technical 
assistance  at  the  initiative  of  the  Commission  in  2009,  stays  well  below  this 
maximum. 

In conclusion, for the reasons set out above, it is proposed to allocate technical assistance at 
the initiative of the Commission for a total of EUR 690,000.  

Financing 

The  total  annual  budget  available  for  the  European  Globalisation  Adjustment  Fund  is 
EUR 500 million.  

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

On  the  basis  of  the  application  for  support  from  the  Fund  submitted  by  Spain  in  which  the 
motor vehicle sector was affected, total estimates of the coordinated packages of personalised 
services to be funded and the amount for technical assistance at initiative of the Commission 
are as follows: 

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http://ec.europa.eu/transparency/regexpert/detail.cfm?ref=2100 

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Spain/Castilla y Léon and Aragón 

Technical Assistance 

Total 

 (in EUR) 

2 694 300 

 690 000 

3 384 300 

In the light of the examination of these 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 3 384 300, to be allocated under heading 1a of the financial framework. 

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  2009  budget 
specific  commitment  and  payment  appropriations,  as  required  in  Point  28  of  the 
Interinstitutional Agreement of 17 May 2006. 

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Communication  to  the  Commission  on  an  application  to  mobilise  the  European  Globalisation 
Adjustment Fund introduced by Spain (SEC(2009) 322) setting out the analysis of the Commission on 
the  request  and  Communication  on  technical  assistance  at  the  initiative  of  the  Commission  from  the 
European Globalisation Adjustment Fund (SEC(2008)2986). 

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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) 

(4) 

(5) 

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. 

Spain submitted an application to mobilise the Fund, in respect of redundancies in the 
motor  vehicle  sector,  on  29  December  2008  This  application  complies  with  the 
requirements for determining the financial contributions as laid down in Article 10 of 
Regulation (EC) No 1927/2006,  therefore  the  Commission  proposes  to  deploy  an 
amount of EUR 2 694 300. 

Furthermore, the Commission proposes to deploy an amount of EUR 690 000 from the 
Fund 
of 
in 
Regulation (EC) No 1927/2006. 

accordance  with  Article 

assistance 

technical 

for 

8 

The Fund should, therefore, be mobilised in order to provide a financial contribution 
for  the  application  submitted  by  Spain  as  well  as  to  address  the  need  for  technical 
assistance, 

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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  2009,  the  European 
Globalisation  Adjustment  Fund  shall  be  mobilised  to  provide  the  sum  of  EUR 3 384 300  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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