Italy Import: Non-Tariff Barriers
Italy is a member of the European Union (EU) and, as such, presents most of the trade barriers applicable to the EU. General overviews of such barriers to trade for EU in general, and for Italy in particular, are given below.
Accreditation Rules
The EU accreditation regulation, which applies to all sectors, became effective in 2010. It requires each member state to appoint a single national accreditation body and prohibits competition among member states’ national accreditation bodies. The regulation further specifies that national accreditation bodies shall operate as public, not-for-profit entities. This means that only a single, government entity in each member state shall be permitted to accredit conformity assessment bodies in the EU. Because the regulation gives member states discretion regarding whether to recognize non-European accreditation bodies and whether to accept conformity assessments issued by otherwise accredited bodies, the EU regulation raises serious questions as to whether the EU or its members will continue to recognize non-EU accreditation bodies and will continue to accept conformity assessments performed by such bodies.
Industrial Chemicals and Substances
Borates and Nickel Compounds—Classification and Labeling Requirements
In December 2008, the EU replaced its Dangerous Substances Directive with a regime for classification and labeling called the Regulation on the Classification, Labelling, and Packaging of Substances and Mixtures (CLP Regulation). Under this legislation, the EU continues to classify borates and other nickel compounds in a stringent category known as Category 1B, which subjects them to product and packaging restrictions, including a requirement to use labels showing a picture of an "exploding man" along with warning and risk phrases.
Chemicals—REACH Regulation
The EU regulation known as Registration, Evaluation, Authorization and Restriction of Chemicals (REACH) impacts virtually every industrial sector, from automobiles to textiles, because it regulates chemicals as a substance, in preparations, and in products. It imposes extensive registration, testing, and data requirements on tens of thousands of chemicals. REACH also subjects certain chemicals to an authorization process that would prohibit them from being placed on the EU market except as authorized for specific uses by the European Commission (EC). REACH requires polymer manufacturers and importers to register reacted monomers in many circumstances. The reacted monomer registration requirement provides an incentive for distributors to stop importing polymers and switch to EU polymer suppliers.
Moreover, REACH contains notification and communication obligations with respect to substances on the Candidate List, a list of substances that may become subject to authorization. Differing interpretations between the Commission and several member states regarding when these obligations apply has created uncertainty about how to comply with these obligations.
Other problematic issues with the EU’s REACH regime include inadequate transparency, differing registration requirements for EU and non- EU entities, and substantial data requirements. More information on REACH is available from the European Chemicals Agency (ECHA) at www.echa.europa.eu/en/web/guest/regulations/reach/understanding-reach.
Hazardous Substance Restrictions
The EU’s directive on the Restriction of the Use of Certain Hazardous Substances in Electrical and Electronic Equipment (RoHS) prohibits placing certain categories of electrical and electronic equipment on the EU market that contain chemicals such as lead, mercury, cadmium, and hexavalent chromium. The RoHS directive includes certain application-specific exemptions from the prohibitions. The EU considers requests for additional exemptions on an ongoing basis.
Difficulties are created by lack of transparency and predictability of the EU’s process and timing for considering exemption requests and the absence of a common approach to enforcement in all EU member states.
Greenhouse Gas (GHG) Emissions
The EU has implemented a cap-and-trade system for greenhouse gas (GHG) emissions, known as the European Union Emissions Trading System (EU ETS). The system applies in the entire European Economic Area (EEA), encompassing Norway, Iceland, and Liechtenstein in addition to EU member states. It covers somewhere in excess of 40 percent of all GHG emissions on EEA soil, including intra-EEA aviation, most of the manufacturing industry, and all power plants with an installed effect of at least 20 megawatts.
Automotive Sector
To curb GHG emissions in transportation, the EU has mandated, since 2015, maximum CO2 emission targets for new passenger cars sold in EU member states. For each calendar year from 2020 to 2030, EU Regulation 2019/631 specifies target CO2 emission rates for each pool of manufacturers bringing new passenger cars or light commercial vehicles to the EEA market. The target in 2020 and 2021 was 95 g CO2/km, as weighed together over all manufacturers selling passenger cars in the EEA.
Wine-Labeling Requirements
In May of 2002, the EU adopted regulations to make labels on wine produced in its member states more consistent and easier to understand. Labels must include the alcoholic strength of the wine, name of the producer, and name of the importer. Standards have also been set for certain other information that producers can choose to list on wines with a geographical indication, such as varietal, vintage, and sugar levels. However, appellation designations and definitions for many other terms remain the responsibility of individual member countries.
For example, if a producer wishes to include the varietal and vintage on a label, the wine must include a minimum of 85 percent of grapes from that year. If the label lists two or three grape varieties (such as Cabernet Sauvignon-Merlot), the wine must be made entirely from those varieties. If a term denoting a level of dryness or sweetness—such as trocken or moelleux—is used on the label, the wine must fall within the residual sugar levels specified in the regulations. The EU is also offering more trade protection for several so-called traditional expressions that are used for types of wines typically associated with a specific region, such as "ruby" and "tawny" for Port and "Amarone" for Valpolicella. Certain bottle shapes associated with particular regions or types of wine—such as the narrow, cylindrical "flûte d'Alsace" and the squat, pot-bellied "bocksbeutel"—are also protected under the regulations.
Beginning in 2022, wine labels also must include calorie information as well as any additives such as tartaric acid or water.
Market Access Issues
Pharmaceutical Products
Some EU and member state policies affecting market access for pharmaceutical products may inhibit trade, including procedural non-transparency and a lack of stakeholder access to the rationale underpinning pricing and reimbursement processes.
Uranium
Some EU policies may unjustifiably restrict the import into the EU of enriched uranium, the material from which nuclear power reactor fuel is fabricated. Since 1992, the EU has maintained strict quantitative restrictions on imports of enriched uranium. Since 1994, these restrictions have been applied in accordance with the terms of the Corfu Declaration, a joint European Council and European Commission policy statement that has never been made public or notified to the World Trade Organization or WTO (www.wto.org).
Textile Import Licensing
With the exception of a small group of agricultural items, practically all goods originating in foreign countries can be imported without import licenses and free of quantitative restrictions. There are, however, monitoring measures applied to imports of certain sensitive products. The most important of these measures is the automatic import license for textiles. This license is granted to Italian importers when they provide the requisite forms.
Agricultural and Food Products
Meursing Table Tariff Codes
Many processed food products—such as confectionary products, baked goods, and miscellaneous food preparations—are subject to a special tariff code system in the EU. Under this system, often referred to as the Meursing Table, the EU charges a tariff on each imported product based on the product's content of milk protein, milk fat, starch, and sugar. As a result, products that third countries might consider equivalent for tariff classification purposes would each receive a different rate of duty in the EU depending on the particular mix of ingredients in each product. The difficulty in calculating Meursing duties imposes an unnecessary administrative burden on, and creates uncertainty for, exporters, especially those seeking to ship new products to the EU.
Food and Feed Derived from Genetically Modified Organisms
In the EU, all food and feed produced from genetic engineering, including products that no longer contain detectable traces of agricultural products derived from biotechnology, must be labeled. The allowable adventitious presence level is set at 0.9 percent for EU-approved products. All products testing above these levels must be labeled. The regulation does not require labeling of products that are not food ingredients, such as processing aids. Meat, milk, or eggs obtained from animals fed with products derived from biotechnology or treated with medicinal products derived from biotechnology do not require additional labeling.
Biotechnology
In accordance with the EU guidance document on the coexistence of biotechnology and conventional crops that recommends a regional approach to coexistence issues, a number of member states (including France, Spain, Denmark, Germany, Italy, the Netherlands, and Austria) have drafted new coexistence laws or have chosen to provide guidance to the industry.
While the decrees and laws vary substantially from country to country, they generally require extensive control, monitoring, and reporting of biotechnology crop plantings. The strict and cumbersome coexistence regulations further discourage the adoption of biotechnology crops within the EU.
In 2006, the Italian high court ruled that coexistence legislation enacted by the Italian Parliament was unconstitutional and that Italy’s regions are responsible for the development of coexistence legislation. Although several regions, particularly those representing the major corn growing areas, have worked to draft regulations that allow the introduction of biotechnology crops, there remains concern that the legislation enacted in many regions discourages biotechnology crop planting.
Geographical Indications (GI)
The EU's system for the protection of Geographical Indications (GI) raises concern. A WTO panel found that the EU regulation on food-related GI was inconsistent with EU obligations under the TRIPS Agreement and General Agreement on Tariffs and Trade (GATT) 1994. The panel determined that the EU regulation impermissibly discriminated against non-EU products and persons, and held that the EU could not create broad exceptions to trademark rights guaranteed by the TRIPS Agreement. In response, the EU published an amended GI regulation, but concerns persist.
Intellectual Property Rights (IPR) Protection
The EU and its member states generally support strong protection for intellectual property rights (IPR). However, concerns remain regarding the implementation of key provisions of the EU IPR Directives and overall IPR protection in some member states. Despite the fact that patent filing costs have decreased in the EU, patent filing and maintenance fees in the EU and its member states remain significantly higher than in other countries.
In December 2009, the EU ratified the Copyright Treaty (WCT) and Performances and Phonograms Treaty (WPPT) of the World Intellectual Property Organization (WIPO)—collectively known as the WIPO Internet Treaties. This marks a significant step forward for international norms to protect IPR, particularly with regard to internet-based delivery of copyrighted works.
Italy has one of the highest overall piracy rates in Western Europe, lacks deterrent-level sentences for IPR crimes imposed by Italian courts, and there is an increasing problem with internet piracy. While judicial branch and law enforcement agencies now have IPR training programs, senior government officials have urged stronger enforcement and sentencing. In 2009, the Italian Parliament raised the penalties for IPR infringement. Additionally, an Intellectual Property Directorate was established and tasked with coordinating all domestic anti-IPR infringement activity. Attention to trademark counterfeiting seems to be increasing, but the same cannot be said for copyright piracy.
Services Barriers
Telecommunications
All EU member states have made WTO commitments to provide market access and national treatment for voice telephony and data services. The EU's Common Regulatory Framework for Electronic Communications Networks and Services (Framework Directive) imposes additional liberalization and harmonization requirements on member states. While implementation of these requirements has been uneven across member states, a major EU telecommunications reform package adopted in 2009 is designed to resolve many of these issues.
Enforcement of existing telecommunications legislation by national regulatory authorities (NRA) has been characterized by unnecessarily lengthy and cumbersome procedures in some member states. The EC has also found that some member states have slowed the development of competition by systematically appealing their NRA's decisions. The EU telecommunications reform package helps address these concerns by strengthening the EC's oversight of national regulators.
Telecom Italia is the largest telecommunications operator in Italy. In the past, there has been political pressure to prevent foreign entities from gaining a controlling interest in this operator. Telecom Italia owns most of Italy’s fixed-line telecommunications infrastructure, and competitors have complained about the lack or high costs of access. In 2009, Telecom Italia established an independent supervisory board aimed at ensuring equal access to the country’s fixed-line infrastructure. In addition, in 2009 the Italian antitrust authority fined Telecom Italia twice, totaling about €600,000, because of unfair practices aimed at retaining customers. The fines were later reduced due to quick action and cooperation from Telecom Italia to remedy the situation.
Television Broadcasting and Audiovisual Services
The EU's Audiovisual Media Services Directive (AVMSD) amends and extends the scope of the Television without Frontiers (TVWF) Directive (which already covered traditional broadcasting, whether delivered by terrestrial, cable or satellite means) to also cover audiovisual media services provided on-demand, including via the Internet. European content quotas for broadcasting remain in place. On-demand services are subject to somewhat less restrictive provisions than traditional broadcasting under the AVMS Directive, which does not set any strict content quota but still requires member states to ensure that on-demand services encourage production of, and access to, European works. This could be interpreted to refer to the financial contribution made by such services to the production and rights acquisition of European works or to the prominence of European works in the catalogues of video-on-demand services.
In July 2009, Italy implemented a broadcasting law that reserves 50 percent of the monthly programming time for EU-produced works. Ten percent of monthly "prime time" transmissions (20 percent for state-owned network Rai) must be reserved for works produced in the EU during the last five years. Within this quota, 20 percent of the time must be reserved for Italian movies. For telecommunications companies that receive revenue from audiovisual content, new investment quotas stipulate that five percent of revenues from audiovisual content must be invested in the production and acquisition of EU works.
Sky Italia, a pay-television subsidiary of the Australian-American company News Corp, has complained about the unfair business practices of Italian media companies Mediaset and state-owned Rai, which Sky Italia says are designed to prevent it from gaining market share. Mediaset owns three of the main television channels in Italy and also offers pay television services. Sky Italia also asserts that recent government measures have had the effect of favoring Mediaset and Rai and penalizing Sky Italia. For example, Sky Italia believes that an increase in the VAT for subscription pay TV appears to specifically target its business, as it applies overwhelmingly to Sky Italia’s customer market, and a recent proposal from the government to lower advertising limits for pay-television appears to target Sky Italia business. A court in Milan recently ruled in Sky Italia’s favor, finding that Mediaset had engaged in anticompetitive practices by refusing to air Sky Italia advertisements on its channels.
Financial Services
Firms incorporated in EU countries may offer investment services in Italy without establishing a presence. Other firms that are from non-EU countries may operate based on authorization from Commissione Nazionale per le Società e la Borsa (CONSOB), the securities oversight body. CONSOB may deny such authorization to firms from countries that discriminate against Italian firms.
Foreign companies are increasingly active in the Italian insurance market, opening branches or buying shares in Italian firms. Government authorization is required to offer life and property insurance; this authorization is usually based on reciprocal treatment for Italian insurers. Foreign insurance firms must prove that they have been active in life and property insurance for not less than 10 years and must appoint a general agent domiciled in Italy.
Italy imposes some limits on foreign ownership in banks. According to the Banking Law, a foreign institution wanting to increase its stake in a bank to above five percent needs authorization from the Bank of Italy.
A similar provision requires government approval for foreign entities’ purchases of five percent or more of an Italian credit institution's equity. The government retains a potentially blocking "golden share" in industrial companies privatized thus far.
Investment Barriers
The EU requires national treatment for foreign investors in most sectors and, with few exceptions, EU law requires that any company established under the laws of one member state must—as a community undertaking—receive national treatment in all member states, regardless of the company's ultimate ownership. However, as discussed below, EU law does impose some restrictions on foreign investments and, in many instances, individual member state policies and practices have had a more significant impact on foreign investment than EU-level policies.
Prior to the Treaty of Lisbon being entered into force in 2009, the EC shared competence with member states on investment issues. Member states negotiated their own bilateral investment treaties (BIT) and generally retained responsibility for their investment regimes, while the EU negotiated investment provisions in EU economic agreements.
The Lisbon Treaty brings foreign direct investment (FDI) under the umbrella of Europe's common commercial policy, making it the exclusive competence of the EU. However, FDI is not defined in the treaty, leaving the practical implications for EU external investment policy to be defined. If FDI is defined broadly, the EU could have greater authority to negotiate investment agreements and set EU investment rules. If member states and the EC cannot agree on a common definition of FDI treatment under the Lisbon Treaty, it would fall to the Court of Justice of the European Union (CJEU) to provide clarity.
EU regulations have helped the EU to achieve one of the most hospitable climates for foreign investment in the world, but some restrictions on foreign investment persist. The EC is reviewing member state investment laws and proposals for compliance with EU Treaty language on the free movement of capital and the right of establishment.
Ownership Restrictions
The Italian government and Bank of Italy continue to shape merger and acquisition activities involving those Italian financial and non-financial firms that are considered "key" to the economy and/or employment. Business surveys continue to cite a heavy bureaucratic burden as one of the main impediments to investing or doing business in Italy.
In 2007, the government approved a legislative decree incorporating the EU's Directive 2004/25/EC on Takeover Bids into Italian law. The regulation requires the target of a hostile takeover or merger bid to obtain authorization from shareholders before undertaking defensive measures. It also includes a "breakthrough rule" on the most common pre-bid defensive tactics (i.e., shareholder voting agreements). The new regulation is aimed at protecting minority stockholders and permitting Italian companies to defend themselves from takeover attempts by companies from countries whose merger and acquisitions laws do not provide similar protection for shareholders.
Italian antitrust law gives the Italian Competition Authority (AGCM) the right to review mergers and acquisitions over a certain threshold value. The government has the authority to block mergers involving foreign firms for "reasons essential to the national economy," or if the home government of the foreign firm does not have an antitrust law similar to that of Italy or applies discriminatory measures against Italian firms.
A similar provision requires government approval for foreign entities’ purchases of 5 percent or more of an Italian credit institution's equity. The government retains a potentially blocking "golden share" in industrial companies privatized thus far.
Government Procurement
Agreement on Government Procurement (GPA)
The EU is a party to the WTO's Agreement on Government Procurement (GPA), which it implements through the EU's Public Procurement Directive 2004/18/EC. EU member states also must comply with the EU’s obligations under the GPA. The EU does not cover all of its government procurement under the GPA. Accordingly, member states maintain their own national practices in certain areas, including in defense procurement, where several member states require offsets. The GPA defines an offset as a condition or undertaking that encourages local development or improves a party’s balance of payments accounts—such as requirements for domestic content, technology licensing, investment, and countertrade. Foreign suppliers participate in EU government procurement tenders, but it is difficult to accurately assess the level of non-EU participation.
A revised GPA took effect in 2014. Generally based on the same principles as the original 1994 agreement, the revised text:
- Provides a complete revision of the wording of various provisions in order to streamline them and make them easier to understand.
- Takes into account developments in current government procurement practices, notably the use of electronic tools, by establishing related requirements to ensure that the general principles of the GPA are fully respected in the electronic era. It also incorporates additional flexibility for parties' procurement authorities, such as shorter notice periods when electronic tools are used.
- Clarifies and improves the special and differential treatment provisions (S&D) that are available to developing members acceding to the GPA. This is expected to facilitate their accession, thus expanding the membership of the agreement and market access opportunities.
- Introduces a specific new requirement for participating governments and their relevant procuring entities to avoid conflicts of interest and prevent corrupt practices. This signals a belief on the part of the parties that the GPA can play a part in promoting good governance.
- Acts as an important tool for promoting a transparent and relatively corruption-free environment in the economies that are in the process of acceding to the agreement.
The e-GPA is an electronic portal of the WTO that provides GPA market access information. It is available at https://e-gpa.wto.org.
Utilities Directive
In 2014, the EU adopted a revised Utilities Directive covering purchases in the water, transportation, energy, and postal services sectors. This directive requires open and competitive bidding procedures, but discriminates against bids with less than 50 percent EU content that are not covered by an international or reciprocal bilateral agreement.
The EU content requirement applies to foreign suppliers of goods and services in the following sectors:
- Water (production, transport, and distribution of drinking water)
- Energy (gas and heat)
- Urban transport (urban railway, automated systems, tramway, bus, trolley bus, and cable)
- Postal services
Procurement authority in Italy is widely dispersed, with over 22,000 contracting agencies at the national, regional, and local level, including municipalities, hospitals, and universities. Italy’s public procurement sector is noted for its lack of transparency and its corruption, which have created obstacles for some foreign firms. Laws implemented in the mid-1990s have reduced corruption, but industry asserts that it still exists, especially at the local level.
Subsidies for Aircraft
Government Support for Airbus
Over many years, the governments of France, Germany, Spain, and the United Kingdom have provided subsidies to their Airbus-affiliated companies to aid in the development, production, and marketing of Airbus large civil aircraft. These governments have financed between 33 and 100 percent of the development costs for all Airbus aircraft models (launch aid). The beneficiary of more than $6 billion in subsidies, the Airbus A380 is the most heavily subsidized aircraft in history.
Airbus SAS, the successor to the original Airbus consortium, is owned by the European Aeronautic, Defense, and Space Company (EADS), which is now the second largest aerospace company in the world. Accounting for more than half of worldwide deliveries of new large civil aircraft, Airbus is a mature company that should face the same commercial risks as its global competitors.
Regional Aircraft
In July 2008, Bombardier Aerospace announced an investment of £519.4 (519.4 British pounds) million in Northern Ireland to support the design and manufacture of the wings for its 110- to 130-seat CSeries family of aircraft. In an agreement with the Bank for International Settlements (BIS), the Northern Ireland Executive offered assistance to the investment of £155 million.
Customs Administration
Notwithstanding the existence of customs laws that govern all EU member states, the EU does not administer its laws through a single customs administration. Rather, each member state's customs authority is responsible for the administration of EU customs law in each of the member states. The Modernized Community Customs Code (MCCC), which formally entered into force in 2008, streamlines customs procedures and applies uniformly throughout the customs territory of the EU.
Where customs agencies in different states administer EU law differently, the matter may be referred to the Customs Code Committee (Committee), whose purpose is to help reconcile differences among member state practices and help to achieve uniformity of administration.
The EU also lacks tribunals or procedures for the prompt review and EU-wide correction of administrative actions relating to customs matters. Review is provided separately by each member state’s tribunals, and rules regarding these reviews can vary from state to state. Separate appeals must be made in each member state whose agency rendered an adverse decision. Additionally, administrative decisions of the member states are limited in effect to that member state, nor are the decisions of one state’s customs authority binding on the customs authorities of the other member states. Ultimately, questions of interpretation of EU law may be referred to the CJEU, and those decisions apply to all member states uniformly.
In the trade facilitation negotiations, WTO members are considering proposals that would clarify a GATT 1994 provision that all WTO members—including WTO members that are customs unions, such as the EU—uniformly apply and give effect to a member’s customs laws, regulations, procedures, administrative decisions, and rulings.
Electronic Commerce
General Data Protection Regulation (GDPR)
In 2016, the EU adopted its General Data Protection Regulation (GDPR) aimed at making Europe fit for the digital age. The regulation is an essential step to strengthen individuals' fundamental rights in the digital age and facilitate business by clarifying rules for companies and public bodies in the digital single market. A single law will also do away with the current fragmentation in different national systems and unnecessary administrative burdens.
Data Protection Law Enforcement Directive
The EU's Data Protection Law Enforcement Directive allows the transmission of EU data to third countries only if those countries are deemed by the EC to provide an adequate level of protection by reason of their domestic law or of their international commitments. As of 2022, the EC recognizes Andorra, Argentina, Canada, Faroe Islands, Guernsey, Israel, Isle of Man, Japan, Jersey, New Zealand, Republic of Korea, Switzerland, the United Kingdom, and Uruguay as third countries that provide an adequate level of protection. For countries lacking an adequacy finding, the EC may recognize specific and limited programs and agreements as providing adequacy; outside of the programs that explicitly enjoy an adequacy finding, foreign companies can only receive or transfer employee and customer information from the EU under one of the exceptions to the directive’s adequacy requirements or if they demonstrate that they can provide adequate protection for the transferred data. These requirements can be burdensome for industries that rely on data exchange between their countries and the EU.
United States
A number of US companies have faced obstacles to winning contracts with European governments and private sector customers because of public fears in the EU that any personal data held by these companies may be collected by US law enforcement agencies. The US is working to inform European stakeholders on how personal data is protected in the US.
Note: The above information is subject to change. Importers and exporters are advised to obtain the most current information from a customs broker, freight forwarder, logistics professional, or the local customs authorities.
Sources: European Commission (www.ec.europa.eu); Italian Customs and Monopoly Agency (Agenzia Dogane e Monopoli or ADM) (www.adm.gov.it); US Department of State (www.state.gov); World Trade Organization (www.wto.org); International Trade Administration (www.trade.gov)
Article written for World Trade Press by Brielle Burt, Jennifer Goheen, and Nina Bellucci.
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