Proposal for a Decision of the European Parliament and of the Council on the mobilisation of the European Globalisation Adjustment Fund
Date: 2009-07-16
Institutions: European Commission
Subjects: Catalonia, Spain, commitment of expenditure, dismissal, economic recession, employment policy, fund (EU), globalisation, reintegration into working life, textile industry

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COMMISSION OF THE EUROPEAN COMMUNITIES 

Brussels, 16.7.2009 
COM(2009) 371 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 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 1927/2006 of the European Parliament and the Council of 20 December 2006 establishing 
the European GlobalisationAdjustment Fund (EGF) 2. 

The  Commission  services  have  carried  out  a  thorough  examination  of  the  applications 
submitted  by  Spain  and  Portugal  in  accordance  with  Regulation  (EC)  N°  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/2008/005 ES/Cataluña 

1. 

2. 

3. 

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2 
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The application was received by the Commission from the Spanish authorities on 29 
December  2008,  and  supplemented  by  additional  information  submitted  by  the 
Member  State  up  to  13  March  2009.  It  was  based  upon  the  specific  intervention 
criteria of Article 2(b) of Regulation (EC) No 1927/2006, 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 
Regulation  (EC)  N°  1927/2006,  which  requires  at  least  1 000 redundancies  over  a 
nine-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 
1 269 redundancies  occurred  in  30  enterprises  classified  in  the  NACE  (revision  2) 
division  13  ('manufacture  of  textiles')  during  the  nine-month  period  of  reference 
(from 28 February 2008 to 27 October 2008). An additional 451 redundancies in the 
two months following the period of reference were also cited in the application. 

Analysis  of  the  link  between  the  redundancies  and  the  major  structural  changes  in 
world trade patterns is based on the following information. The increasing openness 
of the world market in textiles following the expiry of the World Trade Organisation 
Multifibre  Arrangement  at  the  end  of  2004  has  allowed  imports  from  lower  cost 
producers, primarily in Asia and North Africa, to replace Community production. In 
order to establish the link between the redundancies and the major structural changes 
in  world  trade  patterns,  Spain  argues,  using  EUROSTAT  trade  statistics  that  the 
Community  trade  balance  in  textiles  has  deteriorated  substantially  over  the  period 
2004-2007. Although Community textile exports increased by 10 % over the period, 
imports  of  textiles  to  the  Community  increased  by  21 %,  from  EUR 73 billion  to 
EUR 88 billion,  while  textile  exports  grew  by  only  EUR 4 billion,  leaving  the 
Community textile market share in a deteriorating situation. 

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 strength of the Euro vis-à-vis the US dollar in the recent past has also reinforced 
the  negative  effect  on  the  exports  of  Community  produced  textiles,  while 
encouraging  imports  into  the  Community  of  textiles  produced  in  countries  in  the 
dollar zone. 

The  application  refers  to  the  labour  intensity  of  the  textile  sector,  and  thus  to  its 
sensitivity  to  non-wage  costs,  such  as  the  costs  of  social  protection  in  the 
Community,  which  ensure 
low-wage  countries  without 
Community  levels  of  social  protection  are  at  an  advantage  both  within  the 
Community and on the world market. 

imports  from 

that 

5. 

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

The  territories  concerned  by  the  redundancies  are  all  within  the  autonomous 
community  of  Cataluña,  and  are  concentrated  in  twelve  comarques  (roughly 
equivalent  to  counties)  in  the  contiguous  provinces  of  Barcelona  and  Girona:  Alt 
Penedès,  Anoia,  Bages,  Baix  Llobregat,  Barcelonès,  Conca  de  Barberà,  Garrotxa, 
Gironès, La Selva, Maresme, Osona, Ripollès and Vallès Occidental. Of the twelve 
comarques,  five  are  particularly  affected  by  the  redundancies,  as  they  have  areas 
where  the  textile  sector  is  particularly  concentrated.  The  greatest  number  of 
redundancies  during  the  reference  period  took  place  in:  Maresme  (three  closed 
businesses  and  290  redundancies),  Bages  (three  closed  businesses  and  279 
redundancies), Gironès-La Selva (three closed businesses and 246 redundancies), and 
Vallès Occidental (181 redundancies in nine businesses).  

In  Cataluña,  the  number  of  unemployed  workers  in  the  textile  industry  increased 
significantly  over  the  last  five  years.  Between  2004  and  2008  this  number  has 
increased by 42 %, and in the latest year for which comparative data is available the 
numbers of unemployed workers in this sector increased by 14,5 %. Because of the 
concentration of the sector in a small number of areas, the impact is locally greater 
than these figures show. In some of the affected comarques the proportion of the total 
unemployed population attributable to the textile sector exceeds 50 % of the total for 
all  industrial  sectors  (e.g.  Maresme,  where  56 %  of  all  industrial  unemployed  are 
from the textile sector, or Ripollès where the figure is 51 %). As a proportion of the 
total unemployed, textile workers exceed 10% in six comarques, and reach 20 % in 
Ripollès. 

The redundancies that are the subject of the current  application are largely, but  not 
entirely,  contained  within  these  figures.  Those  occurring  after  the  reference  period 
for the application are not included, and thus demonstrate that the impact of textile 
redundancies is stronger than shown by the unemployment figures, and that there is 
little  opportunity  for  re-employment  within  the  industry  for  redundant  workers.  As 
several of the comarques are heavily dependent upon the textile sector the impact on 
the  local  economies  will  be  hard.  In  Maresme  over  25 %  of  the  local  industrial 
production  is  accounted  for  by  the  textile  sector.  In  Anoia  that  proportion  reaches 
28,4 %. 

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

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6. 

7. 

Of 
the  1 720 workers  made  redundant,  a  proportion  has  found  alternative 
employment,  or  are  following  training  outside  the  package  proposed  for  EGF 
funding. Spain therefore decided to target a total of 1 100 workers for assistance. 

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/2008/005  ES/Cataluña  submitted  by  Spain,  relating  to  the  redundancies  in  the 
enterprises  involved  in  manufacturing  activities  in  NACE  (revision  2)  division  13 
('Manufacture of Textiles') in the NUTS II region of Cataluña (ES51), 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 3 306 750. 

EGF/2009/001 PT/Norte-Centro 

8. 

9. 

The application was received by the Commission from the Portuguese authorities on 
23 January 2009. It was based upon the specific intervention criteria of Article 2(b) 
of  Regulation  (EC)  No  1927/2006,  and  was  submitted  within  the  deadline  of  10 
weeks referred to in Article 5 of that Regulation. 

Portugal submitted this application under the intervention criteria of Article 2(b) of 
Regulation  (EC)  No  1927/2006  which  requires  at  least  1 000 redundancies  over  a 
nine-month  period  in  a  NACE  2  REV  2  division  in  one  region  or  two  contiguous 
regions  at  NUTS  II  level.  The  application  is  based  on  1 588 redundancies  in  49 
companies in a NACE (revision 2) division 13 ('manufacture of textiles') during the 
nine-month period of reference (from 16 February 2008 to 15 November 2008). Of 
the  49  companies  included  in  the  application,  39  are  located  in  the  Norte  region 
(1 413 redundancies)  and  10  in  the  Centro  region  (175 redundancies).  In  the  ten 
weeks following the period of reference, an additional 138 redundancies occurred in 
17 of these enterprises. 

10. 

Analysis  of  the  link  between  the  redundancies  and  the  major  structural  changes  in 
world trade patterns is based on the following information. Portugal argues that the 
redundancies are following a general trend in the clothing and accessories industry in 
the Community towards a delocalisation of production to lower-cost non-Community 
countries, such as China, India and Turkey. 

It further highlights that, according to EUROSTAT 4, the Northern region of Portugal 
is  the  most  specialised  of  the  Community-27  in  the  textiles  and  clothing  sector  in 

4 

EUROSTAT,  Statistics  in  Focus,  37/2008,  http://epp.eurostat.ec.europa.eu/cache/ITY_OFFPUB/KS-
SF-08-037/EN/KS-SF-08-037-EN.PDF, page 4.  

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terms of employment – in this region, the sector represents over 14 % of the labour 
force. 

11. 

Community-27  external  trade  statistics  from  EUROSTAT5  reproduced  in  the  table 
below,  provide  further  evidence  of  growing  textile  imports,  with  the  percentage 
growth in imports at 18,4 % between 2004 and 2007 being four times higher than the 
growth in exports.  

Textiles 
(EUR 
million) 

2004 

2005 

2006 

2007 

% growth 
2004 / 2007 

Imports 

17,610 

18,074

19,867

20,855

Exports 

18,537 

18,482

19,218

19,380

18,4 

4,6 

Balance 

927 

408

-649

-1,475

The main supplier was China (an increase of 66,8 % during 2004 - 2007), followed 
by  other  emerging  economies  such  as  Turkey  (+20,7 %),  India  (+21,2 %)  and 
Pakistan (+ 9,4 %). This increase can be primarily related to the expiry of the World 
Trade  Organisation  Multifibre  Arrangement  at  the  end  of  2004.  In  2007,  China 
accounted for 26 % of total imports of textiles into the Community in terms of value. 

The  local  and  regional  impact  is  set  out  as  follows  in  the  application  : 
The  application  describes  the  impact  of  the  redundancies  on  the  regional  labour 
market. At the local level it finds that, in November 2008, those municipalities most 
affected  by  unemployment  in  the  textiles  sector  (e.g.  Guimaraes  with  9,0 %  and 
Santo Tirso with 11,7 %) post much higher rates of unemployment than the average 
for  mainland  Portugal  (5,8 %)  or  even  for  the  Norte  region  as  a  whole  (7,0 %).  It 
adds that those areas particularly dependent upon textile production have few other 
job  opportunities  that  are  easily  available  for  those  made  redundant.  Taking 
unemployment  in  the  Portuguese  textiles  sector,  it  notes  that  97,8 %  of  the  total 
figure comes from the Norte and Centro regions combined. 

New  registrations  of  persons  unemployed  in  the  textiles  sector  rose  in  the  two 
regions, with particularly large increases in July and September 2008 (i.e. during the 
reference  period),  of  67,7 %  and  49,1 %  respectively  over  the  same  months  of  the 
previous year. 

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

The Portuguese authorities have estimated on the basis of past experience that, of the 
1 504 workers  eligible  to  participate  in  the  EGF  measures,  about  30 %  may  either 
find another job without needing the support of the EGF measures, or withdraw from 

Already cited in Commission Communication on applications to mobilise the European Globalisation 
Adjustment Fund introduced by Italy (SEC(2008)2414) setting out the analysis of the Commission on 
the request. 

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the  labour  market.  The  EGF  package  of  measures  is  therefore  designed  for  an 
average of 1 000 workers spread over the implementation period. 

14. 

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  Portuguese 
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.  The  Portuguese  authorities  have  given  assurances  that  the 
actions  provide  support  for  individual  workers  and  are  not  to  be  used  for 
restructuring  companies  or  sectors.  The  Portuguese  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/2009/001  PT/Norte-Centro  submitted  by  Portugal  relating  to  the  redundancies  in  49 
companies manufacturing in NACE 13 sector (textiles) in the two contiguous regions of Norte 
and Centro in Portugal (NUTS II regions PT11 and PT16), as evidence has been provided that 
these  redundancies  result  from  major  structural  changes  in  world  trade  patterns  which  have 
led  to  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 isEUR 832 800.  

Financing 

The  total  annual  budget  available  for  the  EGF  is  EUR 500 million.  An  amount  of 
EUR 3 384 300 has already been mobilised for prior applications in 2009 leaving an amount 
of EUR 496 615 700 available.  

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

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

Spain/Cataluña 

Portugal/Centro-Norte 

Total 

 (in EUR) 

3 306 750 

 832 800 

4 139 550 

In the light of the examination of these applications6, 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 EGF for a total amount of EUR 4 139 550, to be allocated under heading 1a of 
the financial framework. 

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Commission Communication on applications to mobilise the European Globalisation Adjustment Fund 
introduced  by  Spain  (SEC(2009)826)  and  Portugal  (SEC(2009)824)  setting  out  the  analysis  of  the 
Commission on the request. 

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This amount of support will leave more than 25 % of the maximum annual amount earmarked 
for the EGF available for allocation during the last four months of the year 2009, 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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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 
management7, 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  Fund8, 
and in particular Article 12(3) thereof, 

Having regard to the proposal from the Commission9, 

Whereas: 

(1) 

(2) 

(3) 

(4) 

The  European  Globalisation  Adjustment  Fund  (EGF)  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 EGF, in respect of redundancies in the 
textiles sector, on 29 December 2008. This application complies with the requirements 
in  Article  10  of 
for  determining 
Regulation (EC) No 1927/2006,  therefore  the  Commission  proposes  to  deploy  an 
amount of EUR 3 306 750. 

the  financial  contributions  as 

laid  down 

Portugal submitted an application to mobilise the EGF, in respect of redundancies in 
the  textiles  sector,  on  23  January  2009.  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 832 800. 

(5) 

The  EGF should,  therefore,  be  mobilised in order to provide a financial  contribution 
for the applications submitted by Spain and Portugal, 

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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 4 139 550  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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