Voluntary Report - public distribution

**Date:** 3/7/2006

**GAIN Report Number:** IT6015

IT6015

**Italy**

**Trade Policy Monitoring**

**Italy makes COOL Mandatory on Tomato Products**

**2006**

**Approved by:**

![](media/image1.wmf)Geoffrey Wiggin

**Prepared by:**

Alberto Menghini

**Report Highlights:**

The Italian government is implementing mandatory country-of-origin
labeling on some tomato products in an attempt to protect domestic
production from Chinese imports. The basic legislation was passed in
2004 but specific regulations are only now being issued. It is likely to
meet resistance from the domestic food processing sector and EU
Commission.

Includes PSD Changes: No

Includes Trade Matrix: No

Unscheduled Report

Rome \[IT1\]

\[IT\]

Table of Contents

[**The Italian COOL framework law 3**](#the-italian-cool-framework-law)

[High imports of Chinese tomato paste
3](#high-imports-of-chinese-tomato-paste)

[COOL now mandatory for (at least some) tomato products
4](#cool-now-mandatory-for-at-least-some-tomato-products)

[Comments 4](#comments)

# The Italian COOL Framework Law

On July 24, 2004 the Italian Parliament approved a framework law on
mandatory country-of-origin (COOL) labeling of food products. The law,
effective August 2004, mandated that food processors indicate the
country of origin of all ingredients used in their preparations (except
where there are multiple ingredients, only the "prevalent ingredient"
origin need be listed), but it set detailed COOL standards only for
olive oil. The development of implementing decrees with product-specific
labeling standards for other products was left to the Ministry of
Agriculture, in collaboration with Ministry of Productive Activities. It
is important to note that as of this reporting, COOL is mandatory in
Italy for beef, fish and seafood, fruit and vegetables under EU
regulations, while national regulations exist for olive oil, honey and
poultry meat (see IT6002 and IT6010).

The 2004 COOL law received strong support from farmer organizations and
Minister of Agriculture Alemanno. The food processing sector, on the
other hand, was strongly opposed as it feared a serious threat to the
image of their products (many of which are made of both domestic and
imported ingredients) in domestic and foreign markets. The food industry
association Federalimentare announced that it would file a petition with
the European Cohort of Justice. Several members of the Italian
Parliament, both from the majority coalition and the opposition, called
for a flexible implementation of the new COOL law by the government in
the interests of the Italian food-processing sector.

The implementation of mandatory COOL was also delayed because Italy, as
member of state of the European Union, is subject to EU internal market
competition regulations. These assert that Italy, under existing
agreements, cannot implement national laws (including labeling rules)
that discriminate against products imported from other EU countries. As
already noted in IT6002, with very few exceptions, the only way for an
EU member state to impose mandatory COOL is to propose that it be made
mandatory EU wide.

# High imports of Chinese Tomato Paste

As already reported in IT4013, the regulatory activity in the tomato
sector is largely the result of rising concern among Italian farmer and
tomato processor associations over rising imports of tomato paste from
China. It must be noted, however, that a good share of the product from
China is imported under a temporary import regime (at zero duty) for
re-processing and re-exporting to third countries. Italian producers
suspect that some processing plants use the Chinese paste as an
ingredient for products that are then marketed as "Made in Italy" --
whether they are re-exported as required for the duty reduction, or not.

Table 1. Italian imports of tomato paste -- 5 years trend (Tons)

+------------+--------+--------+--------+--------+--------+--------+
|            | **J    | **J    | **J    | **J    | **J    | **J    |
|            | an-Nov | an-Nov | an-Nov | an-Nov | an-Nov | an-Nov |
|            | 2000** | 2001** | 2002** | 2003** | 2004** | 2005** |
+------------+--------+--------+--------+--------+--------+--------+
| # China    | 39,111 | 69,405 | 86,009 | 1      | 1      | 94,634 |
|            |        |        |        | 10,669 | 34,141 |        |
+------------+--------+--------+--------+--------+--------+--------+
| **Greece** | 11,571 | 12,736 | 7,105  | 13,332 | 8,812  | 13,034 |
+------------+--------+--------+--------+--------+--------+--------+
| **Spain**  | 0      | 640    | 3,884  | 8,241  | 3,193  | 6,343  |
+------------+--------+--------+--------+--------+--------+--------+
| **United   | 0      | 9      | 1      | 9,929  | 5,893  | 4,632  |
| States**   |        |        |        |        |        |        |
+------------+--------+--------+--------+--------+--------+--------+
| **Other**  | 4,905  | 2,086  | 22,935 | 10,074 | 3,387  | 603    |
+------------+--------+--------+--------+--------+--------+--------+
| **Total    | 55,587 | 84,876 | 1      | 1      | 1      | 1      |
| import**   |        |        | 19,934 | 52,245 | 55,426 | 19,246 |
+------------+--------+--------+--------+--------+--------+--------+

In an attempt to limit the use of imported Chinese paste in processed
products, the Italian government also included in the July 2004 law a
stricter definition of a product known as "passata" (see IT4013).
Passata is skinned, seedless, unflavored, uncooked tomato pulp, either
slightly chunky or smooth. Up until July 2004 passata could be produced
either by direct processing of fresh tomatoes or by mixing dehydrated
tomato paste (such as that from China) with tomato sauce. According to
the revised Italian definition only product deriving from the processing
of fresh tomatoes can be labeled as "passata". The EU Commission
instructed that, because of EU internal market rules, such a requirement
could be imposed on domestic products, but not on imported ones. It can
be seen by the table above, that the level of Chinese tomato paste
imported by Italy has fallen since 2004. While this may gratify domestic
tomato producers, the competitive position of Italian tomato processors
has not been enhanced.

# COOL now Mandatory for (at least some) Tomato Products

The Italian Minister of Agriculture, Mr Gianni Alemanno, announced to
the press on March 5, 2006 that he and the Minister of Productive
Activities, Scajola, had just signed new provisions for mandatory COOL
for passata. The new regulations have not yet been published, so it is
not possible to say if they will be restricted to passata or if other
tomato products are included. However, according to Minister Alemanno's
press release, producers will have to indicate on the label not only the
country, but even the area within the country of origin of the product.

# Comments

The announcement of mandatory COOL for passata, and possibly also for
other tomato products, falls just two days before an important meeting
in Rome of all the tomato farmer and industry representatives gathered
to sign processing contracts for the 2006 campaign. The new rule will
certainly bring to Minister Alemanno more farmer support in the upcoming
April 2006 elections.

Despite its popularity with the domestic farm lobby, the EU Commission
could question this measure for compliance with EU internal market
competition rules. FAS Rome will report on future developments.