Appropriate information on quality requirements, accredited certifications required and opportunities that derive from it, is a key factor for the success of companies in foreign markets. We talk about it with dr. Riccardo Landi, Director of the Italian Trade Agency (ICE), during the Panel Discussion organized by Accredia last May 14th for the presentation of its Osservatorio research “International trade, the value of accreditation and standardization”.
What is meant by the internationalization of companies?
It is a broad concept, which since 1926, the year ICE was established, has expanded to include, in addition to the original objective of promoting export, various activities. Among these: the support of production and commercial roots abroad, through the establishment of distribution networks that allow even small and medium-sized companies to better enter the markets, and the promotion of strategic import, which helps companies to make use of raw and semi-processed materials purchased on international markets to rationalize and improve their production chain. It also includes policies and actions to attract foreign investments in Italy, both productive investments and financial acquisitions, making Italian companies more efficient.
How does ICE support companies that intend to export?
In the group of Italian companies that go abroad, we find the large, structured and experienced company, but also the small one, which does not always have a thorough knowledge of the problems, nor of all the opportunities. Non-tariff barriers can hinder access to a market if the product does not comply with the quality requirements demanded by the regulations of the destination country.
There are different situations; if in some cases ISO certification is sufficient, for some types of products and some markets local certification is a mandatory requirement. Companies that find it difficult to adapt or find the information they need can contact ICE – 78 offices around the world – for assistance. Even in the presence of mutual recognition agreements for certifications, a support can be decisive. The success of companies is proportional to their level of knowledge of the facilitations introduced, and of the administrative procedures to be followed to obtain all the advantages.
EU bilateral commercial agreements break down non-tariff barriers and facilitate free trade. An agreement of this type is the one with Canada. What are the effects of these agreements and which sectors in Italy benefit the most?
The agreement with Canada has been in force since 2017 and already the macro numbers of the Canadian customs authorities tell us that from 2016 to 2018 Canadian international imports grew by 10%. This figure is even more significant if compared to the trend in world exchanges over the same years. In the same two-year period, Canada’s imports from Europe increased by just under 20% and imports from Italy by 20%: this means that Italy has gained market share in Canada. For the agri-food sector, in particular, the statistics give an increase in imports of even more than 20%.
In general, the agreements provide basic measures that facilitate all sectors. The rest depends on the market. If on a market there is a high potential demand for social reasons or buying habits, the reduction of non-tariff measures can lead to a rapid increase in imports. Returning to Canada, the potential demand for Italian food products was high, also due to the presence of an Italian ethnic component in the Canadian population. Before the agreement, consumers turned to Italian sounding, i.e. those foreign products that by name, colors, etc. recalled an Italian product, but lower in quality and price. Now, thanks to the reduction of duties and non-tariff measures, the price of Italian products becomes more competitive, and this clearly facilitates the purchase. It must be said that the negotiators of the Ministry of Foreign Affairs, within the EU working group, always require the inclusion in the agreements of clauses that fight Italian sounding because unfair competition.
Another important agreement is the one with Japan, which came into force a few months ago. Previously, non-tariff barriers had a very high impact on the cost of the final product imported from Europe, around 10-30%, depending on the sectors. Also in this case we can expect significant results soon to the benefit of Italian exporting companies.
Specifically, what are the advantages of Italian companies that apply international standards and benefit from the mutual recognition of accredited certifications?
Mutual recognition agreements have a positive impact from many points of view. I would take the example of Brazil, a country that still does not fully enjoy these advantages and where I worked. Until a few years ago, to export an agri-food product of animal origin (such as dairy products, cold cuts) to Brazil, a mission of the Brazilian phytosanitary certification body in Italy was necessary, to certify the production process according to Brazilian legislation and obtain authorization to export. Because of such a long and expensive procedure for the potential exporter, many companies preferred to give up the Brazilian market. In general, a free trade agreement with mutual recognition of quality or phytosanitary certifications, certainly simplifies everything, in terms of procedures, time and costs.