Proposal for a decision of the European Parliament and of the Council on the mobilisation of the European Globalisation Adjustment Fund
Date: 2009-09-30
Institutions: European Commission
Subjects: Belgium, Ireland, commitment of expenditure, dismissal, fund (EU), globalisation, information technology industry, reintegration into working life, textile industry

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COMMISSION OF THE EUROPEAN COMMUNITIES 

Brussels, 30.9.2009 
COM(2009) 515 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) N° 1927/2006 of the European Parliament and of the Council of 20 December 20062 on 
establishing  the  European  Globalisation  Adjustment  Fund  .  This  Regulation  has  been  last 
amended by Regulation (EC) N° 546/20093 which broadens the scope for application of the 
EGF. The amended Regulation is applicable for applications received from 1 May 2009.  

The  Commission  services  have  carried  out  a  thorough  examination  of  the  applications 
submitted by Belgium and Ireland 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: 

Cases  EGF/2009/004  BE/Oost  en  West  Vlaanderen  textiles  and  EGF/2009/005 
BE/Limburg textiles 

1. 

2. 

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The two applications were received by the Commission from the Belgian authorities 
on  5  May  2009,  and  supplemented  by  additional  information  submitted  by  the 
Member  State  up  to  29  June  2009. They 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 on establishing the European Globalisation Adjustment Fund, and 
were  submitted  within  the  deadline  of  10  weeks  referred  to  in  Article  5  of  that 
Regulation.  

Since these applications were received after the 1 May 2009, they were assessed (in 
accordance  with  Article  2  of  Regulation  (EC)  No  546/2009  of  the  European 
Parliament  and  of  the  Council  of  18  June  2009  amending  Regulation  (EC)  No 
1927/2006  on  establishing  the  European  Globalisation  Adjustment  Fund4)  on  the 
basis of the new rules laid down in Regulation (EC) No 546/2009. 

Belgium submitted these applications under the intervention criterion of Article 2(b) 
of  the  EGF  Regulation,  which  requires  at  least  500  redundancies  over  a  9-month 
period in a NACE (statistical classification of economic activities) Revision5 division 
13 ('manufacture of textiles') in two contiguous NUTS II (nomenclature of territorial 
units for statistics) regions of East (BE230) and West Flanders (BE225) and a single 
NUTS II region, Limburg (BE220), respectively. The two applications demonstrate 
that a total of 2 199 redundancies occurred in 46 enterprises operating in the Belgian 
textiles sector during the period of reference: 

OJ C 139, 14.6.2006, p. 1. 
OJ L 406 of 30.12.2006, p. 1. 
OJ L 167of 29.06.2009, p. 26. 
OJ L 167, 29.6.2009, p. 26 
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 of 30.12.2006). 

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3. 

4. 

5. 

For  application  EGF/2009/004  BE/Oost  en  West  Vlaanderen 
textiles, 1 568 
redundancies occurred during the nine-month period of reference from 31 May 2008 
to 28 February 2009, of which 881 in East Flanders and 687 in West Flanders. 

For  application  EGF/2009/005  BE/Limburg  textiles, 631  redundancies  occurred 
during the eight-month period of reference from 1 August 2008 to 31 March 2009. 

In  order  to  establish  the  link  between  the  redundancies  and  the  major  structural 
changes in world trade patterns, Belgium argues6 in both applications that there has 
been an increase of 23 % of imports of textiles into the Community-25 for the period 
2003  –  2007;  for  the  same  period  the  export  of  textiles from  the  Community-25  to 
the rest of the world only increased by 3.6 %. The trade balance for textiles for the 
Community-25 decreased from a surplus of EUR 2,3 billion in 2003 to a deficit of 
EUR  744,8  million  in  2007.  The  applicant  further  uses  statistics  from  the  World 
Trade Organisation to demonstrate a decrease of the Community-27 market share in 
textiles from 37.9 % in 2003 to 33.9 % in 2007. The textiles industry in Belgium has 
also  been  directly  affected  by  a  delocalisation  of  production  to  third  countries,  in 
particular Turkey and China, due to significantly lower labour costs. 

The  Belgian  authorities  argue  that  the  impact  of  the  rapid  liberalisation  of  the 
Chinese  import  quota  in  2002  and  2005  on  the  European  textiles  sector  was  not 
foreseen. This situation was further exacerbated by the liberalisation of import quotas 
for  Chinese  textiles  and  other  third  countries  such  as  Turkey  and  by  high  import 
duties  on  textiles  from  the  Community  in  countries  such  as  Brazil  and  India. 
According to the applicant, the situation was further exacerbated by the collapse of 
the  real  estate  market  in  the  United  Kingdom  (UK)  since  November  2007  and  the 
resultant drop  in  UK  imports of  textiles, such as carpets, upholstery and furnishing 
fabrics. The recent economic and financial crisis added further to the downturn. 

6. 

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

The  applicant  states  that  86.6 %  of  the  jobs  in  the  textiles  industry  in  Belgium  are 
located  in  the  three  NUTS  II  regions  concerned  by  the  two  applications.  Between 
2005 and 2007, 3 419 jobs were already lost in the textiles industry, i.e. a reduction 
of  12.5 %,  whereas  in  the  same  period  the  reduction  was  only  0.7 %  for  the 
manufacturing  sector  as  a  whole.  The  current  number  of  direct  job  losses  in  the 
textiles  industry,  covered  by  both  applications,  as  well  as  the  ensuing  number  of 
indirect job losses in sectors such as transport, maintenance and catering will have a 
significant  impact  on  local  and  regional  employment.  The  situation  will  be  further 
exacerbated by the low job mobility in the textiles industry (the internal mobility in 
the  textiles  industry  is  only  2 %  against  5.5 %  for  the  Flemish  labour  market  as  a 
whole).  In  addition,  as  a  result  of  the  current  economic  and  financial  crisis  a  large 
number of job losses in other sectors have occurred in the regions concerned. 

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

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EURATEX – SITC Nomenclature. 

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7. 

8. 

The  applications  concern  2 199  redundancies  in  BE/Oost  en  West  Vlaanderen 
textiles,  and  in  BE/Limburg  textiles.  Belgium  decided  to  target  the  total  of  2 199 
workers for assistance. 

As regards the fulfilment of the criteria set out in Article 6 of Regulation (EC) No 
1927/2006 the applications provided the following elements:  

The Belgian 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 Belgian authorities demonstrated that the actions provide support for individual 
workers and are not to be used for restructuring companies or sectors.  

The Belgian 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  applications 
EGF/2009/004 BE/Oost en West Vlaanderen textiles and EGF/2009/005 BE/Limburg textiles 
submitted  by  Belgium,  relating  to  the  redundancies  in  39  enterprises  in  East  and  West 
Flanders  and  7  enterprises  in  Limburg  involved  in  manufacturing  activities  falling  under 
NACE Revision 2 division 13 ('manufacture of textiles') in two contiguous NUTS II regions 
of  East  (BE230)  and  West  Flanders  (BE225)  and  in  a  single  NUTS  II  region  Limburg 
(BE220),  respectively,  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  the  regional  or  local  economy.  A  co-ordinated  package  of  eligible 
personalised  services  has  been  proposed  of  which  the  requested  contribution  of  the  EGF  is 
EUR 7 519 625 for application EGF/2009/004 BE/Oost en West Vlaanderen textiles and EUR 
1  679  249  for  application  EGF/2009/005  BE/Limburg  textiles,  that  is  EUR 9 198 874  in 
total..  

Case EGF/2009/08 IE/Dell  

9. 

The  application  was  received  by  the  Commission  from  the  Irish  authorities  on 
29 June 2009 and supplemented by additional information submitted by the Member 
State  in  June  and  July  2009.  It  was  based  upon  the  specific  intervention  criteria  of 
Article 2(a) 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. 

Since  this  application  was  received  after  the  1  May  2009,  it  was  assessed  (in 
accordance  with  Article  2  of  Regulation  (EC)  No  546/2009  of  the  European 
Parliament  and  of  the  Council  of  18  June  2009  amending  Regulation  (EC)  No 
1927/2006  on  establishing  the  European  Globalisation  Adjustment  Fund7)  on  the 
basis of the new rules laid down in Regulation (EC) No 546/2009. 

10. 

Ireland  submitted  the  application  under  the  intervention  criteria  of  Article  2(a)  of 
Regulation (EC) No 1927/2006which requires at least 500 redundancies over a four-
month period. This period of four months runs from 3 February 2009 to 2 June 2009. 

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OJ L 167, 29.6.2009, p. 26 

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The  application  EGF/2009/08  IE/Dell  concerns  a  total  of  2 840  redundancies  of 
whom  1 135  were  made  redundant  during  the  reference  period  and  a  further  1 705 
before  and  after  the  reference  period.  The  application  states  that  Dell  Products 
(Manufacturing)  Limited  is  situated  in  the  NUTS  3  Region  of  the  Mid-West  .  The 
region comprises the counties of Limerick, Clare and North Tipperary, as well as the 
city of Limerick, Ireland's fourth largest urban area.  

11. 

In  order  to  establish  the  link  between  the  redundancies  and  the  financial  and 
economic  crisis,  Ireland  argues  that  world  trade  patterns  in  the  computer 
manufacturing industry have been significantly impacted by the global economic and 
financial  crisis.  This  has  exacerbated  the  effects  of  changes  already  occurring  in 
world  trade  patterns,  and  has  resulted  in  major  manufacturers,  such  as  Dell,  being 
forced  or  encouraged  earlier  than  they  might  otherwise  have  planned,  to  seek  out 
countries with lower production and labour costs. 

Dell's model for the production of desktop computers included a customisation centre 
close  to  its  markets.  Given  the  size  of  desktop  computers  it  was  economical  to 
customise  them  in  relatively  high-cost  production  centres  like  Ireland,  as  the 
shipping cost to their European customers was significantly lower than it would have 
been from Asia. The company's competitive advantage since its inception had been 
its  'Direct  Model'  where  it  sold  directly  to  customers,  customising  the  finished 
product  to  the  customer's  requirements.  As  global  notebook  computer  shipments 
topped  those  of  desktops  for  the  first  time  in  the  third  quarter  of  2008,  and  as 
notebooks  offer  less  option  for  customisation,  production  can  more  easily  be 
outsourced to Asian locations and shipping costs are less. 

The scheduled redundancies in Dell in Limerick, and its suppliers in the region, were 
caused by the company's decision to transfer 'mobile PC'8 production from Limerick 
to  Asian  original  design  manufacturers,  largely  based  in  China.  With  mobile  PC 
production  gone,  the  Limerick  site  would  have  been  left  with  a  small  amount  of 
desktop manufacturing which would not have had the economies of scale to remain 
viable  –  the  decision  was  therefore  made  to  also  cease  desktop  manufacturing  in 
Limerick.  Dell's  production  of  PCs  in  Europe  is  now  limited  to  the  company's 
existing  factory  in  Łódź,  Poland  (for  notebooks  and  desktops).  The  move  to 
outsourcing  to  China  was  driven  by  three  key  industry  developments:  competitive 
cost pressure from Asia; the growth of mobile PC sales and the use of retail channels; 
and  the  growth  of  the  BRIC  (Brazil,  Russia,  India,  China)  markets,  which  are 
typically more price sensitive and less brand-aware. 

12. 

impact 

local  and  regional 

is  set  out  as  follows 

The 
the  application: 
The  scale  of  Dell's  importance  in  Limerick  is  highlighted  by  their  share  of 
manufacturing  employment  and  total  employment  in  the  Mid  West  Region.  Of  the 
30 700 employed in the manufacturing sector, approx. 10.4 % were employed within 
Dell. This represents 1.7 % of total employment in the Region in 2008. Studies have 
shown9  that  there  was  an  approximate  ratio  of  170  jobs  dependent  on  every 
100 permanent fulltime Dell employees in 2007. 

in 

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A category that includes laptops, notebooks and netbooks. 
Sources: Dell - An outline impact evaluation, 23 December 2008 (Forfás) and Employment and Value 
of Dell Operations, 24 February 2009 (Forfás). 

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The number of persons on the 'Live Register', which is a barometer of unemployment 
levels,  in  the  Mid  West  Region  showed  an  increase  of  7 848  persons  between 
3 January 2009 and 10 May 2009 (from 26 272 to 34 120 persons registered). 

The loss in the region of over 2 800 jobs from the redundancies at Dell and ancillary 
enterprises is estimated to equate to at least a 10 % drop in regional manufacturing 
employment and a 1.7 % drop in total employment. 

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

The  application  concerns  2 840  redundancies  in  Dell  Ireland,  of  which  2 400  are 
targeted for assistance. Of the 2 840 workers made redundant, a proportion has found 
alternative  employment,  or  is  following  training  outside  the  package  proposed  for 
EGF  funding.  Ireland  therefore  decided  to  target  a  total  of  2 400  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  Irish  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  Irish  authorities  demonstrated  that  the  actions  provide  support  for 
individual workers and are not to be used for restructuring companies or sectors. The 
Irish  authorities  confirmed  that  the  eligible  actions  do  not  receive  assistance  from 
other Community financial instruments. 

13. 

14. 

In  conclusion,  for  the  reasons  set  out  above,  it  is  proposed  to  accept  application 
EGF/2009/08 IE/Dell submitted by Ireland, relating to the redundancies in Dell, as evidence 
has been provided that these redundancies result from major structural changes in world trade 
patterns, exacerbated by the global economic and financial crisis, which have led to a serious 
economic  disruption,  affecting  the  regional  and  local  economy.  A  co-ordinated  package  of 
eligible  personalised  services  has  been  proposed  of  which  the  requested  contribution  of  the 
EGF is EUR 14 831 050.  

Financing 

The  total  annual  budget  available  for  the  EGF  is  EUR 500 million.  An  amount  of 
EUR 13 077 700 has already been mobilised for prior applications in 2009 leaving an amount 
of EUR 486 922 300 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 Belgium and Ireland 
in which the textiles sector and the computer manufacturing industry were affected, the total 
estimates of the coordinated packages of personalised services to be funded are as follows: 

EGF/2009/004 BE/Oost en West Vlaanderen textiles 
EGF/2009/005 BE/Limburg textiles 
EGF/2009/08 IE/Dell 

 (in EUR)
7 519 625 
1 679 249
14 831 050

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Total 

24 029 924

In the light of the examination of these applications10, and considering the maximum possible 
amount of a grant from the EGFestablished 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 EGF for a total amount of EUR 24 029 924, to be allocated under heading 1a of 
the financial framework. 

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

10 

Communication  to  the  Commission  on  an  applications  to  mobilise  the  European  Globalisation 
Adjustment Fund introduced by Belgium (SEC(2009) 1154) and Ireland (SEC(2009)1207) setting out 
the analysis of the Commission. 

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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 
management11, 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  Fund12, 
and in particular Article 12(3) thereof, 

Having regard to the proposal from the Commission13, 

Whereas: 

(1) 

(2) 

(3) 

(4) 

(5) 

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 scope of the EGF was broadened for applications submitted from 1 May 2009 to 
include  support  for  workers  made  redundant  as  a  result  of  the  global  financial  and 
economic crisis. 

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

Belgium submitted two applications to mobilise the EGF, in respect of redundancies in 
the textiles sector, on 5 May 2009. These applications comply with the requirements 
in  Article  10  of 
for  determining 
Regulation (EC) No 1927/2006,  therefore  the  Commission  proposes  to  deploy  an 
amount of EUR 9 198 874. 

the  financial  contributions  as 

laid  down 

Ireland submitted an application to mobilise the EGF, in respect of redundancies in the 
computer manufacturing industry, on 29 June 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 14 831 050. 

11 
12 
13 

OJ C 139, 14.6.2006, p. 1. 
OJ L 406, 30.12.2006, p. 1. 
OJ C […], […], p. […]. 

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(6) 

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

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 24 029 924 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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