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Country Commercial Guides FY 1999: Italy

                   
VI. TRADE REGULATIONS AND STANDARDS

TRADE BARRIERS

Broadcast Directive and Motion Picture Quotas

Italy passed legislation in 1998 to significantly tighten
European content requirements (TV quotas).  The new law replaces
Italy's previous requirement that a majority of television
broadcast time for feature films be reserved for EU-origin films,
and that half of the European quota be dedicated to Italian
films.  The new quota goes beyond the EU "Broadcast without
Frontiers" Directive by applying quotas specifically to prime
time broadcasting, and by excluding talk shows from the types of
programming that may be counted towards fulfilling the quota.
(The Directive excludes only news, sports, game shows,
advertising, teletext and teleshopping.  The Italian law excludes
these categories as well, but additionally excludes talk shows.)

A separate but related issue concerns films shown in Italian
theaters.  The film sector law approved by parliament on February
23, 1994, eliminated obligatory screen quotas for Italian films
(heretofore 25 days per quarter subject to closing of the
theater, under a 1965 law), and in their place substituted
discretionary rebates on Italy's box office tax for theaters that
show Italian films.  The rebates and eligibility thresholds
(percentages of screenings required to qualify) vary according to
the category of the film.  The United States continues its
efforts both to obtain elimination of discriminatory laws and
regulations in the audiovisual sector and to limit their impact
in the interim.

Civil Aviation

Since 1990, the United States/Italy civil aviation relationship
has undergone some liberalization, including the entry of new
U.S. carriers in 1991, 1992, and, most recently, in 1996.
Nevertheless, the market remains somewhat restrictive.  U.S.
carriers have expressed concern over a range of issues, a number
of which relate to the lack of competition in the provision of
certain ground handling services at international airports.
Discussions that may lead to a liberal "open skies" civil
aviation agreement between the U.S. and Italy are scheduled to
begin in the summer of 1998.

Government Procurement

In Italy, fragmented, often non-transparent government
procurement practices and previous problems with corruption have
created obstacles to U.S. firms' participation in Italian
government procurement.  Italy has, however, made some progress
in making the laws and regulations governing government
procurement more transparent, although Italy has not yet fully
updated its government procurement code, nor has it completely
implemented EU directives on government procurement.  The
pressure to reduce government expenditures while increasing
efficiency is resulting in increased use of competitive
procurement procedures and somewhat greater emphasis on best
value rather than automatic reliance on traditional suppliers.
This trend should benefit U.S. firms.

CUSTOMS VALUATION

Prior to signing a long-term contract or sending a shipment of
considerable value, it may be prudent for a U.S. exporter to
first obtain an official ruling on the customs classification,
duty rate, and taxes. Such requests should be sent to: Ministry
of Finance, Rome, Italy. The request should describe the product,
the material it is made from, and other details needed by customs
authorities to classify the product correctly. While customs will
not provide a binding decision, the advance ruling usually will
be accepted if the imported goods are found to correspond exactly
to the full description provided when requesting the ruling.

IMPORT LICENSES

With exception of a small group of largely agricultural items,
practically all goods originating in the United States and most
other free-world 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.

Various apparel and textile products, and controlled items such
as arms and munitions are the most frequently regulated items.
Import licenses are generally rapidly granted for goods of U.S.
origin and delays are usually from lack of proper documentation
or information.

Licenses are not transferable. They may be used to cover several
shipments within the total quantity authorized. In general, the
goods involved are indicated on the license by the Harmonized
System classification number and the corresponding wording of the
tariff position.

EXPORT CONTROLS

For the purpose of national security, foreign policy, or the
short supply of materials, the United States controls the export
of goods and technology by two broad categories of export
licenses -- general and validated.

The vast majority of U.S. exports are shipped abroad under
general licenses that do not require formal application or
approval. To determine which kind of export license is required,
exporters should consult the U.S. Export Administration
Regulations for complete details or obtain assistance from the
local U.S. Department of Commerce district office.

As an overview, the first step in the export licensing process is
to determine whether a product requires a general or validated
license. Determine what is being exported, the destination of the
product, its end-use, and the organization that will be using the
product. Check the schedule of Country Groups listed in the U.S.
Export Administration Regulations to determine the destination
category; check the Commodity Control List to determine if the
product requires a validated license for shipment to that
particular country; and determine if any special restrictions are
in effect.

If the product is not on the control list, then it can be
exported under a general license. The U.S. exporter simply
completes the "U.S. Shippers Export Declaration", Form 7525-V,
providing details of the shipment; includes a commercial invoice;
and exports the goods. If the product is on the control list, a
validated license is needed.  An application must be made and an
export license granted. As a general rule, an exporter will need
a validated license (1) if the products are controlled or in
short supply regardless of the country of destination; (2) for
any commodity to a destination with foreign policy concerns; or
(3) for unpublished technical data to certain destinations.
Certain special licenses are also issued to cover large projects
or repeated sales through a foreign distributor.

For assistance in determining what type of license is needed and
to initiate the processing of an application, contact your local
Department of Commerce district office or the Bureau of Export
Administration, Office of Export Assistance, Room H-1099D, U.S.
Department of Commerce, Washington, DC 20230, (202) 482-4811.

IMPORT/EXPORT DOCUMENTATION

Documents required for exporting include the usual shipper's
commercial invoice and the bill of lading or air waybill, none of
which require consular legalization. For textiles and apparel, it
is good practice to provide a certificate of origin, available
through most state chambers of commerce. For other products,
however, if substantive proof of U.S. origin is provided through
other accompanying documents as well as through characteristic
trademarks, a certificate of origin is not normally necessary.
For additional information or assistance on export documentation,
readers should consult publications such as the Exporter's
Encyclopedia, published by Dun's Marketing Services or contact a
local U.S. Department of Commerce International Trade
Administration Export Assistance Office.

TEMPORARY ENTRY

Temporary Imports
Material may temporarily be imported into Italy without payment
of duties and tax if such material is to be used in the
production or manufacture of a product that is to be exported.
The importer gives security, usually in the form of a guarantee
from a bank or insurance company, for the amount of the usual
duties and taxes. Upon exportation of the finished product, the
guarantee is released or the deposit returned.

Temporary entry of goods intended to be reexported in the same
condition is permissible free of import duties and taxes upon
approval of an application by Italian Customs.

Samples without commercial value are admitted free of duty and
taxes. Product literature should be marked "product Literature -
no commercial value".  Samples with commercial value are also
admitted duty and tax free, provided that the following
conditions are complied with:

(a)  The samples are accompanied by a representative of the U.S.
firm with a statement, notarized by an Italian Consulate,
identifying the commercial traveler and attesting to the
intention that the samples are being imported into Italy for the
purpose of being shown or demonstrated and they are to be
reexported in due course.

(b)  A certificate of origin from a recognized chamber of
commerce is submitted to identify the source of the goods.

(c)  A deposit or bond, in the amount of the applicable customs
duties and taxes, is made at the point of entry. This will be
refunded when the goods are reexported.

(d)  A list (in duplicate) with a full description of each
sample, including weight and value, is submitted. It is helpful
to have such a list in Italian.

U.S. traders should be aware of another and more simplified
procedure in the form of a carnet for the temporary importation
of samples without posting guarantees.  See the "Carnets" section
in this chapter (under SPECIAL IMPORT PROVISIONS).

In practice, samples valued in excess of lira 1 million (or about
1,250 USD) are practically impossible to clear through Italian
customs.  In such cases, it is advisable to engage the services
of a local freight forwarder.

Goods in Transit
Goods may clear customs with an EU transit procedure that
provides for the issuance of a single transit document under
which the goods may be easily shipped across frontiers of the EU
member states. These transit documents are completed for the
importer by a freight forwarder in Italy. The EU transit document
provides the basis for a single, comprehensive procedure covering
the goods within the Community.  Since single transit document is
an EU form, the European importer, customs house broker, freight
forwarder, or shipper must prepare the document at the point of
entry.

Inward and Outward Processing
Inward processing is the temporary importation of raw material or
products for additional manufacture or processing.  Merchandise
imported for additional processing and eventual reexport out of
the EU is eligible for custom-free treatment.

The reexported goods may be partly or totally processed. The
import duty and taxes are levied only on those goods that are not
reexported and are finally sold in the EU.

To qualify for inward processing, an Italian (or EU) firm must
satisfy customs that it is necessary to use imported goods
instead of EU goods; state an intention to export products
manufactured from the imported goods (or equivalent goods
available in the EU); and assure that, upon reexportation, the
conditions set forth in the authorization are satisfied, the
exported products are accounted for, and the entered goods are
identifiable and relate to specific importations.

In outward processing, a firm in Italy may export goods for
further manufacture or processing from the EU customs area and
then reimport the final product.  Duties and taxes are levied
only on the increased value added by the expatriate manufacturing
or processing when the goods are returned to Italy and not to the
total value of the product.  Only firms located in Italy or
another EU country are eligible to take advantage of this option,
and they should first gain approval of the Customs authorities.

LABELING, MARKING REQUIREMENTS

There is no general requirement that imports be marked as to
country of origin. Under Italian legislation, the origin of
imported merchandise is established through documentation
accompanying the shipments arriving in Italy and not through
marking of products or their containers.  Certain specified
commodities, however, must be marked or labeled to show
composition, and name and location of manufacturer, in accordance
with various laws and regulations.  The following articles are
subject to special marking or labeling regulations:  lime, cement
and similar binding agents; pianos, automatic pianos, harmonicas
and similar instruments; clinical thermometers; ethical
medicines; cosmetics.  Hallmarking of gold and silver articles is
required before they can be offered for sale. Only small
tolerances are allowable for manufacturing errors. The
hallmarking may be done by a hallmarking office after
importation.

Imports of certain commodities such as packaged foods, distilled
spirits, beer, wine, vinegar and foodstuffs) are subject to
special regulations regarding the manner in which they must be
labeled to show manufacturer, composition, content (in metric
units), and country of origin.  In view of the complexity of
these regulations and changing requirements, information should
be requested from the importer prior to shipment.  When the
services of an importer are not available, information can be
obtained directly from the appropriate Italian Government
authority listed at the end of this publication. or agricultural
and food products, see  "Trade Regulations and Standards for
Agriculture" below.

PROHIBITED IMPORTS

There are a number of Italian regulations and European Community
directives that prohibit certain foodstuffs, food colorings,
drugs and narcotics, animal products, plants, seed grains,
alcohol, cosmetics and toiletries, etc.  It is therefore
recommended American exporters contact the Italian importer prior
to the shipment or use their freight forwarder to make the
determination.

STANDARDS

As a member of the EU, Italy applies the product standards and
certification approval process developed by the European
Community. Italy is required by the Treaty of Rome to incorporate
approved EU directives into its national laws. However, there is
frequently a long lag in implementing these directives at the
national level.  In addition, in some sectors such as pollution
control, the uniformity in application of standards may vary
according to region, further complicating the certification
process.  Italy has been slow in accepting test data from foreign
sources, but is expected to adopt EU standards in this area.
U.S.-EU negotiation of mutual recognition agreements should, over
time, reduce problems in this area.  In the Spring of 1997 the
U.S. and EU concluded mutual recognition agreements in the
following areas: network and electromagnetic compatibility (EMC)
for telecommunications and information technology equipment and
radio transmitters; EMC and electrical safety for electrical and
electronic products; good manufacturing practices inspections for
pharmaceutical products and certain medical devices; product
assessment for medical devices; and safety of recreational craft.

As part of the unification program to establish common standards
for all member countries, key product areas are being regulated
by the Community.  Mandatory requirements to protect the health
and safety of consumers, as well as the environment are
constantly being developed and implemented. To indicate
conformance to the mandatory EU requirements, a CE mark must be
placed on all regulated products by the manufacturer or a
representative before they can be sold on the EU market. The
applicable product testing and certification requirements for
individual product categories are specified in the various EU
directives. The CE mark relates only to the mandatory health,
safety, and environmental requirements established by the EU; it
does not indicate conformity to European product standards. Thus,
national marks of conformity with product standards remain
compatible with the CE mark and both may be applied to the
product. It should be noted, however, that the CE mark does
replace all national safety marks for the regulated products.

U.S. firms exporting to Italy are confronted with both national
and EU product standards. Further, these regulations occasionally
change to meet new technology and more stringent demands.
Exporters can stay fully informed of the latest EU technical
standards activities by contacting the Standards Information
Service of the National Institute of Standards and Technology
(NIST) at (301) 975-4040. A part of the U.S. Department of
Commerce, NIST offers industry an in-depth reference system on EU
standards information gathered from the two European standards
bodies tasked to write the EU norms --the European Committee for
Standards (CEN) and the European Committee for Electrotechnical
Standardization (CENELEC).  NIST also can provide updated
information from the EU which will elaborate on directives and
provide assistance in identifying EU and member state standards
and regulations. For more information, contact NIST at (301)
975-4038.

Other valuable sources of information with regard to Italian
standards include: the American National Standards Institute,
1430 Broadway, New York, NY 10018, (212) 354-3300; the Department
of Commerce's National Technical Information Service,
Springfield, VA 22161, (703) 557-4733; UNI, Ente Nazionale
Italiano di Unificazione, Via Battistotti Sassi, 20133 Milan
(Italian National Bureau of Standards) or through the American
National Standards Institute, 1430 Broadway, New York, NY 10018,
(212) 354-3300; as well as various trade associations that follow
international activities for their membership.

Electrical power supplies are generally 220 volts, 50 cycles,
single-phase and 380 volts, 50 cycles, three-phase.  Electricity
at 60 cycles is not available.  American appliances, such as
electric shavers or hair dryers, do not work and will be damaged
if used without a transformer.

Service interruptions are rare and the frequency of the current
is stable. The electrical plug is the standard plug B. This is a
plug that has two round pins instead of the flat prongs. Some
outlets may require different plugs in other parts of the
country.

Italy uses the metric system of weights and measures, which is
called the International System of Units (SI). The European
Community has established standardized packaging units for
numerous products which should be consulted by U.S. exporters.
Labeling must be in metric units for all imported products to be
sold in Italy. Products are allowed to be imported and then
labeled in SI metric units prior to sale. Dual labeling
information is permitted, but the nonmetric information must not
predominate. The U.S. exporter would be well advised to first
check with the Italian importer to ensure that the package size
and labeling complies with all requirements prior to shipment.

FREE TRADE ZONES / WAREHOUSES

There are two free trade zones in Italy located in Trieste and
Venice.  Goods of foreign origin may be brought in without
payment of taxes or duties, as long as the material is to be used
in the production or assembly of a product that will be exported.

Benefits of a free-trade zone include:

- customs duties deferred for 180 days from the time that the
goods leave the free-trade zone to enter another EU country;
- the goods may undergo any transformation free of any customs
restraints;
- absolute exemption from any duties on products coming from a
third country.

The free-trade zone law also allows a company, of any
nationality, to employ workers of the same nationality, under
that country's labor laws and social security.

Italy also has numerous general warehouses that are located
throughout Italy in all the port areas and cities.   There are no
limitations as to the type or origin of merchandise that can be
stored in free trade zones or bonded or customs warehouses. The
time limit for such storage is 5 years.  Merchandise deteriorated
while in storage can be destroyed without payment of duty.

The advantage of a free trade zone or bonded warehouse to
American firms is having a European base of supply to assure
customers prompt delivery and service.  Being able to maintain
inventory at low cost with a minimum of customs paperwork is also
a distinct advantage.

SPECIAL IMPORT PROVISIONS

Italy participates in the International Convention to Facilitate
the Importation of Commercial Samples and Advertising Materials.
Samples of negligible value imported to promote sales are
accorded duty-free and tax-free treatment. Prior authorization is
not required. To determine whether the samples are of negligible
value, their value is compared with a commercial shipment of the
same product. Granting of duty-free status may require that the
samples be rendered useless for future sale by marking,
perforating, cutting, or other means.

Imported samples of commercial value may be granted a temporary
entry and exemption from custom charges. However, a bond or cash
deposit may be required as security that the goods will be
removed from the country. This security is the duty and tax
normally levied plus 10 percent. Samples may remain in the
country for up to 1 year. They are not permitted to be sold, put
to their normal use (except for demonstration purposes), or
utilized in any manner for remuneration.  Goods imported as
samples may be imported only in quantities constituting a sample
according to normal commercial usage.

Carnets

As a result of various customs agreements, simplified procedures
are available to U.S. business and professional people for the
temporary importation of commercial samples and professional
equipment.  A carnet is a customs document that facilitates
customs clearance for temporary imports of samples or equipment.
With the carnet, goods may be imported without the payment of
duty, tax, or additional security. The carnet also usually saves
time since formalities are all arranged before leaving the United
States. A carnet is usually valid for 1 year from the date of
issuance and is issued at moderate cost. A bond or cash deposit
of 40 percent of the value of the goods covered by the carnet is
also required. This will be forfeited in the event the products
are not reexported and duties and taxes are not paid.

Carnets are sold in the United States by the U.S. Council for
International Business at the following locations: 1212 Avenue of
the Americas, New York, NY 10036, (212) 354-4480; 3345 Wilshire
Boulevard, Los Angeles, CA 90010, (213) 386-0767; and 1930
Thoreau Drive, #101, Schaumburg, IL 60173.

MEMBERSHIP IN FREE TRADE ARRANGEMENTS

Italy has been a member of the European Union (EU) since its
inception in 1958. The other EU members are Belgium, Denmark,
France, Germany, Greece, Ireland, Luxembourg, the Netherlands,
Portugal, Spain, the United Kingdom, Austria, Finland and Sweden.
Other countries have applied for membership.  The EU forms a
customs union and a large unified market having free trade among
the member states. It levies a common tariff on imported products
coming from non-EU countries such as the United States, Japan,
and Canada. The EU also has a common agricultural policy, joint
transportation policy, and free movement of goods and capital
within the member states. Other aspects of commercial activity
are being harmonized.

The EU grants tariff preferences to more than 100 developing
countries and about 40 overseas territories under the EU's
Generalized System of Preferences (GSP). Imports of nearly all
semimanufactured and manufactured goods originating in these
countries and territories enter the Community duty free. Annual
duty-free quotas are established for those products and a system
of providing  certificates of origin has been established to
ensure that goods are not diverted through the GSP countries to
take advantage of the lower tariff concessions.

Free trade agreements have been developed between the European
Union and the European Economic Area (EEA), which includes
Norway, Iceland, Liechtenstein, and Switzerland. Under the terms
of these agreements, most industrial products and certain
processed agricultural products are exempt from import duties if
traded within this trading bloc. The result of the agreements
reached between the EU members and the EEA members is an open
trading area for most industrial products of 19 nations with an
affluent population of 380 million.

While customs duty rates are the same for all 15 EU countries,
the value-added tax (VAT) and excise tax on products and services
usually differ from country to country. These taxes are levied in
the country of final destination. See the "Value-Added Tax"
section for the Italian rates.

TRADE REGULATIONS AND STANDARDS FOR AGRICULTURE

Since Italy is a member of the European Union (EU), virtually all
of its agricultural sector is governed by the Common Agricultural
Policy (CAP).  Similarly, Italy employs the same tariffs, levies
and other EU regulations as the other fourteen member states.
For example, Italy imposes variable levies (on grain products)
and quotas (on meat, cheese, bananas) as required by the European
Union.  Italy also applies a value added tax on most
food/agricultural items (ranging from 4 percent for semi
processed commodities to 19 percent for "luxury" high value food
items).

In general, if a U.S. food product is imported into one EU member
state it can be transhipped to Italy, provided it has a label
written in Italian, and provided the product does not present a
public or animal/plant health risk.  However, if the product is
directly imported into Italy it must meet all Italian food safety
and quality standards, as well as Italian labeling and packaging
regulations.  Many of these standards and regulations have been
harmonized within the European Union.  For example, the EU has
adopted a number of regulations covering production standards,
analytical characteristics, product specifications, allowable
additives, and labeling.  Specific EU regulations exist for cocoa
and chocolate products, sugars, fruit juices, fruit jams and
jellies, milk and casein products.

However, where EU standards do not exist, Italy can set its own
national requirements and some of these have been known to hamper
imports of game meat, processed meat products, frozen foods,
alcoholic beverages, and snack foods/confectionary products.
U.S. exporters of "health" foods, weight loss/diet foods, baby
foods and vitamins should work closely with an Italian importer,
since Italy's labeling laws regarding health claims can be
particularly stringent.

Italian legislation sets forth orders, obligations and criminal
sanctions for violations.  Food law is divided into two basic
categories: rules dealing with hygiene/sanitary issues and rules
governing labeling and packaging.  All laws apply equally to
domestically produced and imported goods.

Italy is still working on specific sectors of the food law to
bring the regulations up to date scientifically in the areas of
hygiene/sanitation.  In the case of food additives, coloring and
modified starches, Italy's laws are considered to be close to
current U.S. laws, albeit sometimes more restrictive.

Basic labeling requirements in the EU/Italy:

Name of products (physical condition or specific treatment)
Name/address of manufacturer, packer, seller or importer in
EU Local language
Country of origin
Ingredients in descending order of weight
Metric weight and volume
Additives by category name
Special storage conditions
Minimum shelf life date
Special preparation instructions

U.S. exporters should be aware that any food or agricultural
product transhipped through Italian territory must meet Italian
requirements, even if the product is transported in a sealed and
bonded container and is not expected to enter Italian commerce.