DOING BUSINESS IN ITALY

4/11/2012

 
I.  ITALY AND ITS ECONOMY
 
CURRENT SITUATION AND OUTLOOK
 
Industrial economy of Italy is diversified and its production indicates deterioration lately as a result of the current financial crisis that brought the Italian industrial production into the lowest level in March 2009 since 2005’s increase, though the trend seemingly began to ascend again in 2010 by the increase of industrial production of non-durable consumer goods. Gross Domestic Product (GDP) across Italy is moreover projected to rise by 1.0 percent in 2010 and by 1.3 percent in 2011, according to the Organisation for Economic Co-operation and Development’s (OECD) prediction in November 2010. The Italian market economy is subdivided into the more developed North and the South, where agriculture still plays a very important role; in spite of this, the gaps between the two parts are shrinking because of welfare policies, which help Southern regions. Most materials and energy required for the industrial sector are imported.
 
Since 1992, policies have been issued that have been a great effort to comply with the parameters required for the European Economic and Monetary Union. They include strict controls on inflation and external debt: these measures have taken Italy to similar levels to those of other European countries.

However, additional reforms are required, mainly to the employment system (the "Marco Biagi" employment reform has been implemented since 2004/2005) and the pension reform.
 
The Italian economic context is characterized by the absence of giant and large corporations. In general, the economic strength of Italy is based on small and medium-sized enterprises (SMEs) and their skill to form consortia. However, the limited number of large corporations directly affects financial activity and the money market structure: structural deficits of SMEs can only be faced by the bank system and not through an efficient stock market, which needs large companies to develop with accessible accounts.

Consequently, bank credit is the most widespread, and the consequence is that the new financial funds are more costly and limited (banks tend to grant less loans than they might do with their structure). In recent years, Italian Government nevertheless has been significantly involved in attempts of supporting the development of SMEs in Italy, for example their appeal to bank and other financial institutions, asking to accommodate and fund each investment of Italian SMEs.
 
The institutional/economic context aggravated with the global financial crisis affects both the current situation and the outlook for the future of Italy, which to some extent does not seem to improve, since there are no signs of quick changes.
 
Additionally, no budgets have been allocated for new resources required for the technological change and development, since Italy maintains insufficient public expenses for survey and development area compared to other industrialized countries. This control on public expenses reflects the Italian government’s effort to keep their national debt from rising up drastically.
 
INTERNATIONAL TRADE
 
Italy, together with the other Eurozone countries has presently gone through recession’s period, which extensively influences the economic development and international trade lows of Italy. Italian imports, although they declined slightly during the crisis in 2009, have been increasing since then due to a drop in domestic demand caused by the rise of inflation rate in the beginning of 2010. Also foreign demand has been limited by the steady loss of competitiveness of Italian products caused by cheaper foreign products, mostly from the Far East, which directly compete with average-quality Italian products. Even if this competition is a steady threat, it has not affected luxury and top-quality Italian products yet.
 
Moreover, even though Italian exports showed improvement between the period of 2005 and 2008, they were pushed down again by the decrease of industrial production in 2009. Exports were in general hurt by the global recession, but the scale of their decline was greater than that in foreign demand, pointing to a loss of market share at both current and constant prices. Yet, as of January 2010, Italian exports and imports are on track for recovery even with deficit in its trade balance. Italian consumer confidence - perceived as one of measures to determine domestic consumption - has also declined because of recent high unemployment rate, while investments in contrast have been progressively mounting since early 2009, particularly in direct investments.
 
MAIN TRADING PARTNERS OF ITALY
 
The most important trend of Italian foreign trade in the past years is the slowdown of the growth in its commercial trading with its traditional partners, the founding countries of the European Union, the USA and Switzerland. The new trading flows are shifting towards developing countries. China, Russia and Libya stand out from among them in terms of import flows, while exports flow to commercially less known countries, such as Poland and Romania. Likewise, trading flows have also expanded with the Far East and Middle East, regions to which exports are increasing because of the exceptional economic development of some countries and the oil price growth. Regardless its commercial development with Italy which was disturbed by a considerable decrease in trade during the first eight months of 2009, Turkey still remains one of the main trading partners of Italy.
 
A slump has been recorded in the commercial flows with South East Asia’s countries, particularly during economic crisis in 2009, in which exports Italy to this region decreased by more or less 71.5 percent compared to its total exports in 2008. However, as a result of modest recovery of Italy’s economic indicators over the first 6 months of 2010, export flows to South East Asia’s countries have been then resurging. Impact of global recession towards import flows from this region was also noticeable, given that there was decrease of 75.4% in imports in 2009 corresponding to the previous year. The main commercial partners of Italy in the South East Asia’s countries are Thailand, Indonesia and Vietnam.
 
 
II.   INDONESIA AND ITALY
 
INDONESIA AND EUROPEAN ECONOMIC COMMUNITY
 
The relations between Indonesia and Italy should be first addressed in the context of the links between Indonesia and European Economic Community (EC), of which Italy is one of the founding members. The collaboration between Indonesia and the EC has been framed into The European Union’s trade and economic cooperation.
 
The main objective underpinning the EU's trade and economic cooperation with Indonesia is to assist Indonesia as well as other developing countries better integrate into the world economy and reap the benefits of international trade. It is specifically aimed at addressing technical issues affecting bilateral EU-Indonesia trade relations, in particular in the areas of EU standards, quality control of Indonesian exports, supporting the integration of Indonesia into the international trade negotiation system (WTO), improving the efficiency of customs operations to facilitate trade flows, backing the public finance management’s improvement and promoting interaction of EU and Indonesian business communities.
 
To meet these commitments, a technical assistance is provided to the Indonesian Government and other parties through several realisations, such as:
 
•   Trade Support Programme – aims at supporting the economic and social recovery of Indonesia by improving bilateral trade flows with the European Union (EU), thus stimulating economic growth and contributing to the alleviation of poverty.
 
•   Customs Improvement Project
 
•   Public Finance Management Trust Fund – seeks to improve the effectiveness of public finance management in Indonesia through the support to the Government Financial Management and Revenue Administration Programme (GFMRAP)
 
• Asia Trust Fund
 
The objective of strengthening, deepening and diversifying the relations between Indonesia and the EC is also outlined by the Generalized System of Preferences (SPG), which is a complementary mechanism to the GATT multilateral liberalization: Indonesia and other developing countries may access the EU market with a full or partial exemption from export duties on some of its products.
 
In spite of this good cooperation, there is criticism within the EC (particularly in Italy) about imports of products from extra-EC countries: for instance, some products are claimed to have been manufactured by minors, are sold at dumping prices or do not comply with the authorized quantity limit. Exporters and consumers should improve information about production and trading terms of exported products.
 
INDONESIAN PRODUCTS WITH GOOD OPPORTUNITIES TO ACCESS THE ITALIAN MARKET
 
Among many Indonesian commodities exported to Italy, the following list of products is proved to have good opportunities to enter the Italian market.
 
1. Shrimp                       
2. Coffee                               
3. Crude Palm Oil                  
4. Rubber & Rubber Products  
5. Textile & Textile Products  
6. Footwear    
7. Electronic Components  
8. Automotive Components  
9. Furniture    
10. Cacao    
11. Handicrafts
12. Fish & Fish Products
13. Medicinal Herbs
14. Leather & Leather Products
15. Processed Food
16. Jewellery
17. Essential Oils
18. Spices
19. Non Paper Stationery
20. Medical Instrument & Appliances
 
Information on Tariffs
 
Every product exported to Italy is subject to an imposition of tariffs or customs duties. Relevant percentage of common tariffs applied for countries outside the EU can be directly found on http://exporthelp.europa.eu/index_en.html (the website of the Export Helpdesk of the European Commission). Go to ‘Import tariffs’, Click on ‘Input form’, Insert 4 to 10 HS (Harmonised System) number of a preferred product, and then select ‘a country of origin’.
 
 
III.   CUSTOMS: THE GENERAL ASPECT
 
GENERAL IMPORT PROCEDURES
 
The signature of the trading agreement between the Indonesia exporter and the Italian importer gives the goods the rights to enter Italy, considering that notification to the Italian customs authorities must be given in advance. However, the following additional obligations must be met:
 
•   Goods must be identified by the TARIC code;
•   Agreements on purchase and dispatch established by Incoterms (CHAPTER V) must be complied with;
•   Goods must be accompanied by the quality certificates required by the specific and origin regulations, and must comply with labelling regulations as well (CHAPTER VI);
•   The consumer protection must be guaranteed (CHAPTER IX).
 
THE TARIC

Italy, as a member of the European Union, enforces the Integrated Community Tariff (TARIC) when importing from countries that are not EU members. The customs value must be based on the CIF (cost, insurance, freight) price; for agricultural produces, customs tariffs are usually proportional to weight.
 
Additionally, most agricultural goods require a permit. The TARIC uses the harmonized system, a worldwide accepted coded goods classification system. Legislation is primarily an EU one and consists of:

• EC regulations 2913/92 (Community Customs Code);
• EC regulations 2454/93 (CAC Implementation Regulations).
 
INCOTERMS
 
Incoterms is the acronym for International Commercial TERMS. Incoterms are a set of international rules, governed by the International Chamber of Commerce, that establish the scope of the commercial terms included in the international purchase and sale agreement, except for the payment method of the operation. The purpose of Incoterms is to provide a set of international rules for the interpretation of the most common terms in international trade. Incoterms are also called price clauses, because each term indicates different forming elements; therefore affects the cost of the agreement. In general, Incoterms establish that the exporter/seller and the importer/buyer share liability on shipping documents, possible transport risk and shipment cost. In addition, Incoterms used in this Guide Book are the eighth version of the Incoterms Rules revised in 2010, which according to the International Chamber of Commerce, has entered into force on 1 January 2011.
 
Types of Incoterms:
 
In general, Incoterms specifically determine:
• The moment when and the place where risks on the goods are transferred from the seller to the buyer;
• The goods delivery place;
• The party that negotiates and pays for the cost of transportation;
• The party that negotiates and pays for the cost of insurance;
• The documents to be dispatched by each party and their cost.
 
EXW (Ex-Works) – (named place)
Once the seller has complied with its delivery obligation by placing goods in its factory, workshop, etc. at the buyer’s disposal, the seller is responsible for neither loading goods on the vehicle supplied by the buyer nor delivering it to the customs for export, except for any agreement otherwise. The buyer bears all costs and risks of collecting goods from the seller’s place to its final destination; so, this term implies the seller’s smallest obligation.
 
FCA (Free Carrier) - (named place)
The seller complies with its obligation by placing the goods in the named place, into the carrier’s custody, after the customs clearance for export. If the buyer has established no specific point, the seller may choose, within the established area, the place where the carrier will take responsibility for the goods. This term may be used with any type of transportation.
 
FAS (Free Along Ship) - (named loading port)
The seller’s responsibility ends when the goods are delivered alongside the ship at the named port of embarkation. This means that the buyer will bear all costs and risks of loss or damage to the goods from that moment on. The price of the goods is quoted for goods placed alongside the ship at the named port, on the wharf or on barges, with the seller bearing all costs and risks until this point. The buyer must clear the goods from the customs. This term may be only used for shipments by sea or inland waterways.
 
FOB (Free On Board) - (named loading port)
The seller’s responsibility ends when the goods being delivered when they are on board the vessel in the named port of embarkation. The buyer will bear all costs and risks of loss of or damage to the goods from that point onward. The term requires the seller to clear the goods for export. This term may be only used for shipments by sea or inland waterways.
 
CFR (Cost and Freight) - (named destination port)
For the seller, the obligations are the same as the FOB quote, and the only difference is that the company must contract the ship hold and pay the freight to destination. The risk of loss of or damage to the goods, as well as any additional cost caused by possible events after delivery, are transferred from the seller to the buyer. The CFR term requires the seller to clear the goods from the customs for export. This term may be only used for shipments by sea or inland waterways.
 
CIF (Cost, Insurance and Freight) - (named destination port)
The seller delivers the goods once they are on board the vessel at the named loading port. The seller must pay the cost and freight required to take the goods to the agreed destination port and also take out insurance and pay the corresponding premium in order to cover the risk of loss or damage the goods may suffer during transportation. The buyer must observe the seller is obliged to take out insurance with minimum coverage only. If the buyer wants a larger coverage, it will have to explicitly arrange it with the seller or take out its own additional insurance. The CIF term requires the seller to clear the goods from the customs for export. This term may be only used for shipments by sea or inland waterways.
 
CPT (Carriage Paid To) - (named destination place)
The seller delivers the goods to the carrier appointed by him, but must also pay the transportation costs to take the goods to the agreed destination. The buyer takes on all risks and any additional costs that may arise after the goods have been delivered this way. The CPT term requires the seller to clear the goods for export. This term may apply to all types of transportation.
 
CIP (Carriage and Insurance Paid to) - (destination place)
The seller’s obligations are the same as under the CPT, but it must also take out insurance at its expense.
 
DAT (Delivered at Terminal) - (named destination port or place)
The seller delivers when the goods, having been unloaded from the arriving means of transport, are placed at the buyer’s disposal at a named terminal at the named port or place of destination. DAT requires the seller to clear the goods for export where applicable but the seller has no obligation to clear the goods for import, pay any import duty or carry out any import customs formalities.
 
DAP (Delivered at Place) - (named destination place)
The seller complies with its obligation to deliver once the goods have been delivered / placed at the buyer’s disposal on the arriving means of transport at a named destination place. A seller under DAP bears all the costs (other than any import clearance costs) and risks involved in bringing the goods to the named destination.
 
DDP (Delivered Duty Paid) - (named destination place)
The seller takes on the same obligations as in the DDU plus duties, taxes and charges required to take the goods to the agreed place.
 

IV.   CONDITIONS TO ACCESS THE ITALIAN MARKET
 
CERTIFICATIONS
 
There are a number of certifications that, although not compulsory, are imposed by the market. Internationally acknowledged types are used as domestic frames. The most important ones include ISO 9000 quality standards on the technical production rules, the IMQ certificate for domestic appliances and the CESI (Italian Experimental Electronic Center) certificate for industrial machinery and equipment.
Environmental issues are very important in Italy. This can be proved by the increasing demand for biological and organic products and in environmental certifications. Currently, the most commonly demanded regulations are those of the Environmental Management System.
 
SHRIMP & FISH
 
Imported shrimps and fishes from Indonesia are subject to following controls:

• Control of residues of veterinary medicines in animals and animal products for human consumption (based on Council Directive 96/23/EC)

• Control on illegal fishing (based on Council Regulation (EC) No 1005/2008, establishing a Community system to prevent, deter and eliminate illegal, unreported and unregulated (IUU) (fishing)
 
• Health control of fishery products for human consumption, which is in line with general health requirements related to Country Health Approval, Approved Establishment, Health Certificate and Health Control

• Labelling for fishery products (according to the general rules laid down by Council Directive 2000/13/EC) Additionally, a reduced value added tax rate (VAT) of 4% is applicable to prepared and value-added fishery products in Italy, while a VAT rate of 10% applies to fresh and frozen fish.
 
AGRICULTURAL PRODUCTS
 
In general, Italy like any other EU countries entails several requirements when it comes to the importation of agricultural products from non EU countries. Such agricultural products as coffee, cacao, tea, crude palm oil, and rubber obviously must undergo several controls and meet standardized EU rules, for example:
 

• Control of pesticide residues in plant and animal products intended for human consumption (based on Council Directive 91/414/EEC regarding plant products)

 

• Health control of foodstuffs of non-animal origin, which follows the general rules of:

- General principles and requirements of Food Law established in Regulation (EC) No 178/2002 of the European Parliament and of the Council;
- General foodstuffs hygiene rules according to Regulation (EC) No 852/2004 of the European Parliament and of the Council;
- General conditions concerning contaminants in food;
- Special provisions on Genetically Modified (GM) food and Novel food of Regulation (EC) No 1829/2003 of the European Parliament and of the Council and Regulation (EC) No 258/97 of the European Parliament and of the Council;
- General conditions of preparation of foodstuffs;
- Official control of foodstuffs;


 • Labelling for foodstuffs


• Products from organic production, citing that organic production methods of live or unprocessed agricultural products, processed agricultural products for use as food, animal feed, seeds and vegetative propagating material must comply with the rules laid down by Council Regulation (EC) No 834/2007 and Commission Regulation (EC) No 889/2008, which cover mainly the following aspects:

- Production, processing, packaging, transport and storage of products;
- Use of certain products and substances in processing of food;
- Prohibition of use of genetically modified organisms (GMO) and of products manufactured from GMO in organic production;
- European Union organic production logo;
- Inspection measures and specific control scheme to be applied for this type of products by the appointed authorities in the Member States
 
• Regarding Crude Palm Oil, there are also marketing requirements for dangerous chemicals, pesticides and biocides, in which only required when intended to be used in plant protection products and/or biocides. The marketing requirements laid down by the EU legislation designed to ensure a high level of protection of human health and the environment and explained in General procedures for the Registration, Evaluation, Authorisation and Restriction of Chemicals (REACH)

• Eco label for bed mattresses, which is only applicable for such latex product as latex foam to be used in bed mattresses.
 
Moreover, there are also packaging criteria to be taken into account while transporting certain agricultural products to EU member states.
 
Coffee beans are usually transported in bags. Currently, most coffee is transported in 20-foot dry containers, which is a considerable improvement over the old break-bulk method, but still involves extensive handling. Coffee is also transported in bulk in polypropylene fitted containers. Container shipment is not suited for lengthy stretches unless containers are ventilated: this is a condition which can be specified in contracts by EU traders and roasters.
 
Cocoa beans have been traditionally shipped in bags or sacks, which are often stored in ventilated containers during shipment. Cocoa powder is also transported, and often also stored, in bags from 25 kilos upwards, but is also supplied in bulk. Important aspects to monitor are air humidity (to avoid
lumping), temperature fluctuations (to avoid crystallisation), pressure (to avoid lumping), and transport in odour-free environments. The storage temperature should be between 15°C and 18°C and not more than 20°C and the air humidity below 50%.
 
Cocoa butter is transported in moulded slabs or as liquid in tanks. The standard packaging of cocoa butter during intercontinental transport is 25 kilos in polypropylene or polyester sacks. These are then put in cardboard boxes and allowed to cool into moulded slabs. Cocoa butter has a low content of unsaturated fatty acids, especially polyunsaturated, and therefore the shelf life of the fat is relatively good. According to ICCO (International Cacao Organisation), if cocoa butter is moulded into slabs directly after production and the slabs are well packed in order to prevent oxidation, the shelf life should be several years.  Cocoa butter could also be transported in liquid form in tankers. This happens mainly for short stretches. More care must be taken if the shelf life is to be maintained. Factors to watch are temperature (below 45°C), air/oxidation (air coming into contact with the cocoa butter causes rancidity), storage in the dark, and humidity (between 50% and 60%). In addition, after the tanks are emptied all residues of cocoa butter must be removed, as they will go rancid and contaminate the next batch to be delivered.
 
SPICES & HERBS
 
Similar to agricultural products, imported spices and herbs must also comply with identical laws and controls set by the EU Commission, such as Control of pesticide residues in plant and animal products intended for human consumption, Health control of foodstuffs of non-animal origin, Labelling for foodstuffs, Condition of products from organic production, and Marketing requirements for dangerous chemicals, pesticides and biocides. However, there is also additional regulation set for herbs called CITES that is corresponding to EU wildlife legislation, Council Regulation (EC) No 338/97, in case the imported herbs fall into category of endangered species. In attempt of controlling the health of imported plant products, the EU Commission requires another control on spices specifies that the imports into the European Union (EU) of plants, plant products and any other material capable of harbouring plant pests (e.g. wooden products and containers, soil, etc) may be subject to the following protective measures, as established by Council Directive 2000/29/EC:
• Import Bans;
• Phytosanitary certificate and/or phytosanitary certificate for re-export;
• Customs Inspection and plant health checks;
• Importers Register;
• Advance notice on imports.
 
FURNITURE & HANDICRAFT
 
When exporting furniture or handicraft products to Italy, the EU regulation on general product safety is very important to be taken into account, as it includes:

• General safety requirement that emphasizes:
- the characteristics of the product, including its composition, packaging, instructions for assembly and for installation and maintenance;
- the effect on other products, where it is reasonably foreseeable that it will be used with other products;
- the presentation of the product, the labelling, any warnings and instructions for its use and disposal and any other indication or information regarding the product;
- the categories of consumers at risk when using the product, in particular children and the elderly.

• Additional manufacturer and distributor obligations, in which they must take measures to be informed of risks posed by the products and take the appropriate measures to prevent such risks (e.g. withdraw products from the market, warning consumers, recall products which have already been supplied to consumers, etc)

• Market surveillance, which gives authorisation to the Member States to check if the products meet the applicablesafety requirements or not.
Furthermore, for any imported furniture or handicraft of wooden material, it should be prudent to act in accordance with EU Eco label for wooden furniture and EU regulation on CITES.
 
FOOTWEAR
 
In order to export footwear products to Italy successfully, one should comply with the EU requirements in terms of provision of:

• EU Eco label for footwear that includes criteria set out in the Annex to Commission Decision 2009/563/EC referring to:
- Dangerous substances in the final product
- Reduction of water consumption (only for the tanning of hides and skins)
- Emissions from the production of material
- Use of hazardous substances (up until purchase)
- Use of volatile organic compounds (VOCs) during final assembly of shoes
- Energy consumption
- Packaging of the final product
- Information on the packaging
- Information appearing on the eco-label
- Parameters contributing to durability

• Labelling for footwear. The labelling must describe the materials of the three main parts of the footwear (the upper, the lining and sock, and the outer sole), stating in each case whether the material is “leather”, “coated leather”, “ textile” or “ other”. If no single material accounts for at least 80% of the product, the label should convey information on the two main materials used. The labelling has also to be placed, at least, on one article of footwear in each pair. This can be done by printing, sticking, embossing or using an attached label. The labelling must be visible, securely attached and accessible, and the dimensions of the pictograms must be sufficiently large to make it easy to understand.
 
• Prohibition of footwear products containing fluorinated greenhouse gases that is accordance with Regulation (EC) No 842/2006 of the European Parliament and of the Council on products and equipment containing fluorinated greenhouse gases listed in Annex II.
 
LEATHER & LEATHER PRODUCTS

Imports of leather or leather products into the EU must meet with the following requirements:

• Health control of products of animal origin not intended for human consumption, where leather or leather products must obtain health approval by the EU Commission's Directorate General for Health and Consumers (DG SANCO), approved establishments, health certificates signed by the representative of the competent authority of the exporting third country certifying that the products in question are suitable to be exported to the EU, and are subject to health control.
• Regulation on CITES (Endangered Species Protection).
 
TEXTILES
 
According to the EU labelling requirements, textile products are subject to certain labelling requirements in order be placed on the European Union (EU) market. At large, textile products must convey a label clearly identifying the manufacturer, the type (name) and the quantity of their materials (composition).

Available information

All items must carry a label or mark indicating the fibre content, which shall be clear, legible, in uniform lettering and separate from all other information. Member States' legislation can require the information in their respective national languages.

By way of derogation, textile products listed in Annex III to the Directive 2008/121/EC of the European Parliament and of the Council do not require any labelling or marking bearing the name or composition.

Composition of textile products
 
• Products with just one component: the description "100%", "pure" or "all" shall only be used for products exclusively composed of one fibre.

• Products with two or more components:

- a textile product composed of two or more fibres, one of which accounts for at least 85% of the total weight, shall be designated:
1) by the name of the latter fibre followed by its percentage by weight, or
2) by the name of the latter fibre followed by the words "85% minimum", or
3) by the full percentage composition of the product
- a textile product composed of two or more fibres, none of which accounts for as much as 85% of the total weight, shall be designated by the name and percentage by weight of at least the two main fibres
 
- fibres that account for less than 10% of the total weight, may be specified either by their name and percentage of total weight or simply as "other fibres"

- where the name of a fibre which accounts for less than 10% of the total weight of a product is specified, the full percentage composition of that product shall be given.
 
• Products composed of two or more parts which do not have the same fibre composition should carry a label stating the fibre content of each one of these parts. These labelling is not compulsory for parts which account for less than 30% of the total weight of the product, with the exception of the main lining which composition shall always be stated.
 
Authorised names
 
• The term "cotton" shall be reserved exclusively for the fibre obtained from the bolls of the cotton plant (Gossypium)
 
• The term "cotton linen union" is reserved for products having a pure cotton warp and a pure flax weft, in which the percentage of flax accounts for not less than 40% of the total weight of the fabric. This name must be accompanied by the composition specification "pure cotton warp - pure flax weft"
 
• The terms "virgin wool" or "fleece wool" may be used only for products composed exclusively of a fibre which:

- has not previously been part of a finished product,
- has not been subjected to any spinning and/or felting processes other than those required in the manufacture of that product,
- has not been damaged by treatment or use.

These names may be used to describe fibre mixtures subject to certain conditions. The full percentage composition must be given in such cases. While the trend for green consumerism has been extended to textile and apparel products, the European Parliament and of the Council has also set up various directives pertaining to restricted and banned substances to be incorporated in textile products. They comprise of:

The EU AZO Colorants Directive 2002/61/EC. This regulation sets out that Azo dyes which may release one or more of the 22 aromatic amines (see table below) in detectable concentrations, above 30 ppm in the finished articles or in the dyed components may not be used in textile and leather articles which may come into direct and prolonged contact with the human skin or oral cavity;
 
The EU Pentachlorophenol (PCP) Directive 94/783/EC. Due to its toxicity to the aquatic environment, pentachlorophenol (PCP) is banned in textile products worldwide;

The EU Directive on Allergenic Disperse Dyes and Carcinogenic Dyes. Allergenic disperse dyes (around 19 substances) and carcinogenic dyes (around 10 substances) are banned in textile materials from synthetic fibres with skin contact;

The EU Nickel Release Directive 2004/96/EC. It sets out that all articles that may have contact with skin are forbidden to plate nickel, including dress accessories such as buttons and slide fastener.

The EU PFOS Directive 2006/122/EC.
- PFOS shall not be used as a substance or constituent of preparations in products with a concentration equal to or higher than 0.005 % by mass. Otherwise, products will be restricted to be placed on the market;
- Semi-finished products or articles, or parts shall not be placed on the EU market if the concentration of PFOS is equal to or higher than 0.1 % (1000ppm) by mass;
- For textiles or other coated materials, the concentration shall not be higher than 1 µg/m2.

The EU TBT & DBT - Directive 2009/425/EC. In the textile industry, organotin compound have been used for preventing the bacterial degradation of sweat and the corresponding unpleasant odour of socks, shoes and sport clothes. Dioctyltin (DOT) compounds shall not be used after 1 January 2012 in articles for supply to, or use by, the general public, where the concentration in the article or part thereof, is greater than the equivalent of 0.1% by weight of tin.

The EU REACH Regulation 2006/1907/EC. Since its introduction on 1 June 2007, REACH has replaced some aforementioned directives, including Azocolourants Directive 2002/61/EC and Nickel Directive 94/27/EC. However, in relation to the textile industry, REACH additionally defines substance of very high concern (SVHS). Substances that are one of the following can be regarded as substance of very high concern(SVHC):
- carcinogenic, mutagenic or toxic to reproduction (CMRs);
- persistent, bio-accumulative and toxic (PBTs);
- very persistent and bio-accumulative (vPvBs);
- seriously and / or irreversibly damaging the environment or human health, as substances damaging the hormone system;
 
Nevertheless, notification to European Chemical Agency (ECHA) must be submitted if any SVHC on candidate list present in an article has a concentration above 0.1% (w/w) and the total amount of the SVHC exceeds 1 tonne per annum per producer or importer.
 
LABELLING OF RETAIL PRODUCTS

The labelling requirements are complex and vary depending on the products. Some adaptation is nearly always necessary. The label should include information regarding origin, identity, quality, composition and conservation of the product. It must be in Italian, and/or English or French.
 
Basic labelling requirements in Italy:
• name of products (physical condition or specific treatment);
• name and address of manufacturer, packer, seller or importer in the Italian language;
• name and address of liable in Italy (commercial entity);
• country and place of origin;
• ingredients in descending order of weight;
• metric weight and volume;
• additives by category name;
• special storage conditions;
• minimum shelf life date;
• expiry date;
• lot number;
• indication of allergens;
• indication of maximum limits of fats for meat based products;
• net quantity in volume for liquids and in mass units for all other products;
• instructions for use, if necessary.
 
SPECIAL PRODUCTS
 
Biological products

In order to import biological products to Italy, export companies must comply with the following requirements:

• Holding a domestic certification equivalent to the European certification provided for in EC regulations 2092/91;
• Being inspected by the competent national authorities of the exporting company;
• The competent national authorities of the exporting company must send an inspection report to the competent national authorities of the importing company, proving the above-mentioned equivalence;
• After getting the export/import authorization, the company will be under the full control of EC;
• Compliance with the transport criteria: closed packing, with identification label and sheet of the exporting company.
 
Fair Trade Products

Producers and exporters that are interested to participate in fair trading system must share the same objectives set by the Italian Charter of Fair Trade. Any processed products that come from more than one raw material must comply with the following criteria:

• At least 50 percent of the product (weight or cost) must come from the Fair Trade system;
• The product must be processed in the country of origin by companies participating in the fair trade system;
• The label must show the percentage of ingredients from the fair trade system;
• Production and marketing respect the environment and promote the sustainable development of economy.
 
All detailed information concerning conditions or requirements to access the Italian market can be found on http://exporthelp.europa.eu/index_en.html (the website of the Export Helpdesk of the European Commission). Go to ‘Requirements and taxes, Click on ‘Input form’, Insert 4 to 10 HS (Harmonised System) number of a preferred product, select ‘a country of origin’ and ‘a destination country’.
 
 
V.    ESTABLISHING ENTERPRISES IN ITALY

DEFINITION OF BUSINESSMAN/ENTERPRISE

In the Italian legal system, the definition of business comes from that of businessman; “a businessman is a person who carries out professionally an organized economic activity for the production or trade of goods or services”. The definition is important, because it sets the beginning of the activity and the application of the Italian law: an enterprise starts with its actual exercise of the activity.

THE STATUTE OF THE COMMERCIAL BUSINESSMAN
 
The businessman who works in international trade is represented by the figure of the commercial businessman, which is regulated by the Statute of the Commercial Businessman. The purpose of the regulations is to guarantee that the public gets true information and that operations are safe. In order to achieve this result, a legal publicity system has been established with the Trade Register. The Trade Register is established in each Chamber of Commerce. Foreign enterprises, whose administration and/or main purpose are in Italy, must register in the ordinary section of the Register (Article 25 of law number 218 dated May 31, 1995). This formality must be accompanied by documents that change according to the corporate structure.
In general, the following data must be filed with the Register of the Province where the enterprise’s headquarters are located or the enterprise carries out its activity:

• the businessman’s personal details;
• the enterprise’s data (denomination, scope, headquarters and branches, dates of beginning and end of the activity, etc.);
• enterprise’s structure and organization (articles of incorporation, directors, auditors, etc.). Enterprises must also comply with another obligation, that is keeping accounting records; books must comply with some formalities established by law and practice that guarantee they are true.

COMPANIES
 
The company is the structure through which business is usually carried out. The various types of companies meet the diversified needs of businesses, depending on their size, activities, public and customers.

Companies are controlled in two ways: an internal one through the auditors (who control the directors’ activity), and an external one that is mostly carried out through the Court’s homologation judgment on the changes to the articles of incorporation. This way, the judicial authority has the opportunity to check the entire management in case of serious irregularities; in this case, accounting records can be used for public controls and as evidence in court. In order to guarantee that the accounting records are true, they are monitored by an auditing system, whose activity must be independent and continuous (articles 155-165, Consolidation Act on Finance).

RULES GOVERNING COMPETITION
 
There are two main issues in the rules governing competition: the legislation of monopolies and the discipline of unfair competition. A new enterprise that is established in Italy must keep in mind that in general it is considered unfair competition when an enterprise operates according to principles contrary to the professional ethics (article 2598 of the Civil Code). The most common cases from among new enterprises from developing countries are:

• Parasitic competition: full or partial imitation of another enterprise or its distinctive marks;
• Dumping: permanent sales under the production cost with the purpose of gaining considerable arket shares until a monopolistic position is achieved;
• Misleading advertising: when advertising is not clear, true and correct.

These cases are important, because, when they are recognized by the competent authorities, they result
in the payment of damage, and even the suspension of the activity.
 
CONSUMER PROTECTION
 
Consumers are “the individuals who buy or use goods or services for purposes not connected with the business or professional activity they may carry out”. In order to guarantee individual and collective rights, the following authorities have been established by law:

• Authority for Communications Guarantees;
• Guarantor Authority for Competition and Market;
• Regulatory Authority for Electricity and Gas;
• Guarantee office for the protection of personal data
 
These bodies are important because each consumer that holds his/her rights are infringed may demand for a direct action against the infringing activity. This action may be asked for through the Consumers’ Union (Unione dei Consumatori).