Italy extends labelling law in protectionist stance

Recent regulatory measures by Italy against imported wheat, chocolate and poultry have raised questions in recent months over whether the country is using the EU's food safety and labelling laws to batter down foreign competition.

Now the country is using its country-of-origin (COOL) labelling laws to try and keep out foreign tomato paste. The minister of agriculture, Gianni Alemanno, announced on 5 March that he had just signed new provisions applying the law to "passata", which refers o skinned, seedless, unflavored, uncooked tomato pulp, either slightly chunky or smooth.

Producers will have to indicate on the label not only the country, but also the area within the country of origin of the product. The measure is directed particularly at imports from China, which have risen significantly over the past five years.

The new labelling requirement falls under the COOL labelling law, passed by the Italian parliament on 24 July 2004. The law mandates that food processors indicate the country of origin of all ingredients used in their preparations. In cases when processors use multiple ingredients, only the “prevalent ingredient” origin need be listed, according to an analysis by the US government's Foreign Agricultural Service (FAS).

Under EU regulations COOL is mandatory in Italy for beef, fish and seafood, fruit and vegetables. National regulations also exist for olive oil, honey and poultry meat.

Originally Italy's legislation set detailed COOL standards only for olive oil with the Ministry of Agriculture and the Ministry of Productive Activities are responsible for implementing decrees with product-specific labeling standards for other products.

Now government is implementing the mandatory COOL labeling on some tomato products in an attempt to protect domestic production from Chinese imports, according to FAS.

"The 2004 COOL law received strong support from farmer organizations and minister of agriculture Alemanno,"​ the FAS stated in its report. "The food processing sector, on the other hand, was strongly opposed as it feared a serious threat to the image of their products, many of which are made of both domestic and imported ingredients, in domestic and foreign markets."​

Federalimentare, Italy's food industry association, has said it would file a petition with the European Court of Justice in a bid to overturn the restrictive law on the basis that it is a bloc to intra-EU trade.

As member of state of the EU, Italy is subject to EU internal market competition regulations. Under the rules countries cannot implement national laws that discriminate against products imported from other EU countries.

The only way for an EU member state to impose mandatory COOL is to propose that it be made mandatory EU wide, the FAS noted.

The recent regulatory action relating to tomatos is largely the result of rising concern among Italian farmer and tomato processor associations over rising imports of tomato paste from China, FAS stated.

A share of the product from China is imported under a temporary import regime at zero duty for reprocessing and re-exporting to third countries. Italian producers claim that some processing plants are using the Chinese paste as an ingredient for products that are then marketed as “Made in Italy” – whether they are re-exported as required for the duty reduction, or not, the FAS reported.

Imports of tomato paste into Italy rose by 115 per cent in the five years to 2005, with China accounting for 79 per cent of the current total, according to the FAS figures.

Attempting to limit the use of imported Chinese paste in processed products, the Italian government also included in the July 2004 law a stricter definition of “passata”. Up until July 2004 passata could be produced either by the direct processing of fresh tomatoes or by mixing dehydrated tomato paste with tomato sauce. Dehydrated tomato paste is imported from China.

The revised Italian definition now limits passata to product deriving from the processing of fresh tomatoes. The EU Commission has ruled that such a requirement could only be imposed on domestic products, but not on imported ones.

Since the new definition the level of Chinese tomato paste imported by Italy has fallen, but not by enough according to government, hence the change to a more tougher labelling.

"While this may gratify domestic tomato producers, the competitive position of Italian tomato processors has not been enhanced,"​ the FAS stated.

The announcement of mandatory COOL for passata, and possibly also for other tomato products, fells just two days before an important meeting in Rome of all the tomato farmer and industry representatives, who gathered to sign processing contracts for the 2006 campaign.

"Despite its popularity with the domestic farm lobby, the EU Commission could question this measure for compliance with EU internal market competition rules,"​ the FAS stated.

The regulatory moves on passata follows recent measures against imported wheat, chocolate and poultry.

In January government confiscated 58,000 tonnes of Canadian durum wheat at the port of Bari. Most of the wheat was destined for use in pasta making. Police also arrested Francesco Casillo, the head of Molino Casillo, one of Europe's largest millers.

The arrest followed the discovery that wheat imported from Canada had three times the allowable limit of ocratoxin, a carcinogenic substance.

However Canadian Wheat Board spokesperson Maureen Fitzhenery was quoted in the Globe and Mail newspaper as stating that the wheat had been tested and found safe before leaving for Italy. She cast doubt on Italy's testing methods and speculated over whether there was a political motive behind the grain seizure. Fitzhenry noted the results came up in a durum-producing region of Italy where local farmers are known to be unhappy about the importation of foreign wheat.

Italy also cited food safety concerns last October to put in place a law requiring all poultry products to be labelled using COOL, along with the the ID code of the farm where the animal was raised, the ID code of the slaughter plant, and the expiry date or the lot number.

Since the law also applies to poultry from EU member countries the European Commission has since officially raised concerns about the compliance of the measures with the bloc's internal market competition rules.

The EU Commission observed that the Italian measures breach article 28 of the Treaty establishing the EU as it would pose extra burdens on products imported from other member states, therefore being equivalent to a quantitative restriction, according to an analysis by the FAS.

Italy is also in another labelling dispute with the European Commission over the definition of "pure chocolate". The Italian parliament voted in January to uphold its definition of ‘pure chocolate' in the face of opposition from the Commission.

The vote upholds Italy's definition of who may use the 'pure chocolate' label. The definition only allows chocolate products with 100 per cent cocoa butters to be called 'pure chocolate.' Natural flavourings and soya lecithin are allowed.

Italy introduced the special ‘pure chocolate' label in 2003 to protect domestic chocolate makers. Products containing vegetable fats other than cocoa butter, originating in the UK, Ireland and Denmark, had to be marketed within Italian territory as “chocolate substitute”.

The EU allows chocolate makers to use up to five per cent vegetable cocoa substitutes and thus has ruled that the labelling is discriminatory against foreign imports.

The European Court of Justice ruled against Italy in 2003 over the attempt to make "pure chocolate" even purer. On 11 January he Italian Ministry for EU Policies presented a proposal to parliament to make Italian chocolate labelling and marketing rules compliant with the EU competition regulations.

The parliament rejected the proposal with a bipartisan vote.

Members of Italy's ruling government and the opposition have been particularly keen on a campaign to convince the public that they are behind domestic producers.

Government recently convinced some foreign and domestic supermarkets to put in "Buy Italian" food sections in the stores.