2013 Investment Climate Statement
Bureau of Economic and Business Affairs
April 2013
Report

Openness to, and Restrictions Upon, Foreign Investment

Italy’s economy, the eighth-largest in the world, is fully diversified and dominated by small and medium-sized firms (SMEs), which comprise 99.9 percent of the number of businesses in Italy. It is an original member of the 17-nation eurozone. Germany, France, the United States, Spain, Switzerland, and the United Kingdom are Italy's most important trading partners, with China continuing to gain ground. Tourism is an important source of external revenue. Italy continues to lag behind many industrialized nations as a recipient of direct foreign investment.

Italy’s high level of public debt, negative economic growth, and rising sovereign debt yields led the government to introduce austerity measures and structural reforms in 2011 and 2012. Most of these actions took place under the leadership of Mario Monti, who led a non-elected, technical government until his resignation in December 2012. Monti’s actions included addressing Italy’s rigid labor markets, opaque tax and commercial laws, rampant tax evasion, and excessive regulation through seven reform packages that were approved by the Italian parliament.

The Ministry of Economy and Finance reported that, despite the weak economy, tax revenues for the first 11 months of 2012 were up €13.8 billion, or 3.8 percent, compared to the same period a year earlier, largely due the new real estate tax (IMU). New anti-tax-evasion measures, such as company audits, generated a 9.3 percent increase from the same period in 2011. However, government measures have had little immediate impact on growth, as the Italian economy remains solidly in recession and unemployment has risen at the time of publication.

Despite facing decades of norms and entrenched interest groups, the Monti government was able to introduce labor and pension reforms during its tenure. However, red tape and a lack of transparency, including the presence of organized crime in many parts of the country, persist as major obstacles to investment. In 2012, Italy ranked below nearly all its EU peers in international benchmarks of regulatory transparency and ease of doing business. According to official data from Italy’s central bank, the Bank of Italy, net investment flows rose from €6.9 billion (USD 9 B) in 2010 to €24.7 billion (USD 32 B) in 2011, while Italian investment abroad rose from €24.6 billion (USD 32 B) to €38.6 billion (USD 50 B) in 2011.

In 2012, the government suspended its “fiscal federalism” project (intended to reform the public finance system by devolving decision-making and accountability from the central government to regional and local entities) as it had come to be seen as a source of additional and inefficient layer of bureaucracy. The government continued its push to attract investment in the south, partially through improved targeted use of EU structural funds, to address the region’s high levels of corruption, unemployment, and lack of infrastructure. In January 2013, the Ministry of Territorial Cohesion announced that in the previous 14 months, Italy had spent €9.3 billion (USD 12 B) – equivalent to 0.6 percent of GDP – of EU structural funds for economic development projects, reflecting effective coordination between central and local governments. Furthermore, Italy’s improved capacity for navigating the processes for obtaining and spending EU structural funds appears to give Italy increased access to EU transfers: Italy now has an additional €31.2 billion (USD 40.5 B) in EU funds to spend over the next three years.

Italy’s relatively affluent domestic market, proximity to emerging economies in North Africa and the Middle East, and assorted centers of excellence in scientific and information technology research, remain attractive to many investors. The government of Italy (GOI) in 2012 remained open to specific foreign sovereign wealth funds to invest in shares of Italian companies and banks, and continued to promote investment opportunities online. GOI efforts to sell Italy as a desirable direct investment destination were overshadowed in large part by the eurozone financial crisis, Italy’s economic downturn, and setbacks to Monti’s reform program. However, as Italy’s fiscal situation stabilized in 2012 and reforms were implemented, international investor interest rose in Italy’s sovereign debt auctions. Legislation passed in 2012 provided investment and tax incentives which bolstered infrastructure spending in targeted areas.

U.S. Companies in Italy

The largest U.S. companies in Italy, based on number of employees, are: IBM, General Electric, Pfizer, Whirlpool, Electronic Data Systems (EDS), Lear, and United Technologies.

Global Benchmarks

The World Bank Report on Doing Business 2013, based on the criteria of the International Finance Corporation (IFC), ranks Italy 73rd out of 185 countries in terms of business friendliness. (Italy ranked 87th in 2012.) Italy falls below all other industrialized OECD countries, as well as countries such as Belarus (58th) and Rwanda (52nd). Several specific indicators relating to Italy have deteriorated, including building permits (103rd), access to credit (104th), enforcing contracts (160th), and high corporate taxes (131st). On a positive note, Italy ranks 31st on resolving insolvency, possibly due to Italy’s 2007-2009 reforms to its bankruptcy procedures that promoted debt restructuring and pre-bankruptcy agreements.

The World Economic Forum’s (WEF) 2012-2013 Global Competitiveness Guide ranks Italy 42nd out of 144 countries with a score of 4.5 on a seven-point scale. Italy was the lowest ranked G-7 country, but scores better on the sophistication of its business environment where it ranks 2nd in the world for its business clusters and 2nd in the world for breadth of the value chain executed in-house by companies. The WEF ranks Italy 127th in labor market efficiency. The report indicates high tax rates, inefficient government bureaucracy, and limited access to financing are the top three “most problematic factors for doing business.” Other institutional weaknesses include high levels of corruption and organized crime and a perceived lack of independence within the judicial system – all of which increase business costs and undermine investor confidence. The WEF ranks Italy 97th overall for its institutional environment.

The government began trying to reduce many market rigidities in early 2012, by issuing a “liberalization” decree aimed to, inter alia, opening up the energy and transportation sectors; introducing a “simplification” decree aimed at reducing red tape for companies and increasing online government services; and commencing a dialogue on labor reforms. Full implementation and enforcement of these measures could significantly improve Italy’s economic freedom index.

Transparency International's (TI) Corruption Perceptions Index 2012 ranked Italy 72nd out of 176 countries evaluated, down from 69th in 2011. Italy lags behind most of its G-8/EU/OECD partners and countries such as Turkey (54th) and Saudi Arabia (66th), and is tied with Bosnia and Herzegovina and Sao Tome and Principe. (TI’s International Corruption Perceptions Index is an annual poll of polls ranking countries for perceived public-sector corruption.)

According to TI’s latest Global Corruption Barometer Report, which is based on a survey performed 2010-2011, less than 30 percent of Italy’s population believes the government is effective in fighting corruption. In the same survey, Italians rated their Parliament and political parties as “very corrupt.” In TI’s latest Bribe Payers Index, based on a 2011 survey, Italy ranked 15th out of the 28 largest global economies in perceptions of bribe paying, and last among the countries of Western Europe. The NGO Global Integrity (GI) noted in 2010 that Italy had poor mechanisms to fight corruption in public administration and lacked effective laws on conflict of interest. GI also found serious weaknesses in the protection of “whistle-blowers” and in the regulations governing political party financing, but they have not performed a follow-up study since. Italy began implementing some new anticorruption measures in late 2012.

Openness to Foreign Investment

Italy actively seeks foreign direct investment. As an EU member, Italy is bound by EU treaties and laws, including those directly governing or indirectly affecting business investments. Under the EU treaty’s Right of Establishment and an Italy-U.S. Friendship, Commerce and Navigation Treaty, Italy is generally obliged to provide national treatment to U.S. investors established in Italy or in another EU member states. Exceptions include access to government subsidies for the film industry; capital requirements for banks domiciled in non-EU member countries; restrictions on non-EU-based airlines operating domestic routes; and restrictions in the shipping sector.

Additionally, GOI introduced an unusually broad national security screening system in early 2012 that applies to energy, transport, and communications sectors “in cases where an acquisition or other form or transaction triggers a threat of severe prejudice to essential interests of the State.” This reflects a longer trend of GOI protection of these sectors, including a 2007 blocking of AT&T’s bid for Telecom Italian.

EU and Italian anti-trust laws give EU and Italian authorities the right to review mergers and acquisitions over a certain financial threshold. The government may block mergers involving foreign firms for "reasons essential to the national economy" or if the home government of the foreign firm applies discriminatory measures against Italian firms. Foreign investors in the defense or aircraft manufacturing sectors are likely to encounter an opaque process and resistance from the many ministries charged with approving foreign acquisitions of existing assets or firms, most of which are controlled to some degree by the parastatal defense conglomerate Finmeccanica.

The GOI retains controlling interest (approximately 30 percent of shares) in former monopoly operators ENEL (electricity), ENI (oil/gas), Finmeccanica (industrials/defense), as well as Terna (electricity transmission -an ENEL post privatization spin-off.) Some maintain that, while not formally, government policy in these key economic sectors tends to favor the interests of these specific firms, and not necessarily the broader economic good. As part of government reforms to liberalize some services in Italy’s economy, in early 2012 the government approved the unbundling of natural gas distribution.

Capital Conversion and Transfer Policies

In accordance with EU directives, Italy has no foreign exchange controls. There are no restrictions on currency transfers; there are only reporting requirements. Banks are required to report any transaction over €15,000 (USD 22,500) due to money laundering and terrorism financing concerns. Profits, payments, and currency transfers may be freely repatriated. Residents and non-residents may hold foreign exchange accounts. A tax-evasion measure in force since December 2011 requires all payments over €1000 (USD 1,300) to be electronic. The law exempts e-money services, banks and other financial institutions, but does not exempt payment services companies (such as those who can perform wire transfers abroad).

Expropriation and Compensation

The Italian constitution permits expropriation of private property for "public purposes," defined as essential services or measures indispensable for the national economy, with fair and timely compensation.

Dispute Settlement

The World Justice Project’s “Rule of Law Index” scores Italy in the bottom three (out of the 16 countries in the Western Europe and North America Region) in each of the eight factors it evaluates.

Though notoriously slow (civil trials average seven years in length), the Italian legal system meets generally recognized principles of international law, with provisions for enforcing property and contractual rights. Businessmen and travelers to Italy should be aware, however, that the Italian legal system does not protect some of the basic rights found in U.S. and other European laws. Jury members are randomly selected, but are not vetted for prejudices or sequestered during trials; accordingly, negative or inaccurate news stories can prejudice outcomes of trials. Italy has a written and consistently applied commercial and bankruptcy law. While the Italian judiciary is considered independent of the government, parties to disputes sometimes accuse Italian judges of political partisanship. Foreign investors in Italy can choose among different means of dispute resolution, including legally binding arbitration.

Slow and expensive court processes over contract-related disputes, in part a product of the immense backlog of nearly ten million legal cases, have discouraged some companies from doing business in Italy. In January 2012, the GOI introduced new “business tribunals,” intended to expedite the resolution of business disputes. The GOI also introduced measures designed to streamline the legal system, and to promote alternative dispute resolution techniques, such as mediation and decriminalization of minor offenses.

The government mandated steps to speed up civil trials in August 2011, but did not complete implementation before the end of the Monti administration in December 2012. In a positive sign, a civil court in Torino halved the average duration of its arbitration cases simply by implementing two new internal practices: requiring judges to follow only one case at a time and requiring judges to transfer incomplete cases to a colleague if going on an extended leave.

Italy is a party to the World Bank's International Center for the Settlement of Investment Disputes (ICSID). Italy has signed and ratified the Convention on the Settlement of Investment Disputes Between States and Nationals of Other States and is a signatory of the New York Convention of 1958 on the Recognition and Enforcement of Foreign Arbitral Awards (UNCITRAL).

Italy’s bankruptcy regulations are somewhat analogous to U.S. Chapter 11 restructuring, and allow firms and their creditors to reach a solution without declaring bankruptcy. In recent years, the judiciary’s role in bankruptcy proceedings has been reduced in an attempt to simplify and expedite proceedings. This reflects Italy’s 2007-2009 reforms to its bankruptcy procedures that promoted debt restructuring and pre-bankruptcy agreements, a move that prompted the World Bank’s “Doing Business” Index to raise Italy’s ranking to 31 out 185 of on resolving insolvency.

Performance Requirements and Investment Incentives

The GOI is in compliance with WTO Trade-Related Investment Measures (TRIMs) obligations. Foreign investors face specific performance requirements only in the telecommunications sector.

The GOI offers modest incentives to encourage private sector investment in economically depressed regions, particularly southern Italy. The incentives are generally available to both domestic and foreign investors on a non-discriminatory basis, and U.S. companies can usually access grants if the planned investment is located in priority (less developed) regions and if the companies have subsidiaries in the EU or are partnered with local firms.

A “liberalization” decree of January 2012 provided limited incentives for entrepreneurs under age 35 starting a new businesses, including cutting the registration fee to one euro and reducing filing requirements. In December 2012, the GOI passed a decree providing tax credits for startups and incubators, as well as for private infrastructure investment. The decree also authorized creation of a new “Desk Italia” at the Ministry of Economic Development to promote exports and attract FDI, but it did not yet have a budget, a staff, or a website as of early 2013.

GOI has codified a Digital Agenda aimed at reducing Italy’s digital divide and increasing Italian computer literacy and usage via incentives and regulatory support for developing high-speed Internet.

The Minister of Education, University and Research has identified, funded, and signed Framework Program Agreements with eleven "Technology Districts" and public-private joint laboratories focused on strategic sectors. The GOI has created Technology Districts to facilitate cooperation between public and private researchers and venture capitalists, support the research and development of key technologies, strengthen industrial research activities, and promote innovative behavior in small- and medium-sized enterprises.

Taxation

In part to increase tax revenues, Italy will introduce new financial transactions taxes as of March 1, 2013. Financial trading in regulated markets will be taxed at 0.12 percent (declining to 0.1 percent on January 1, 2014) and in unregulated markets it will be taxed at 0.22 percent (declining to 0.2 percent in 2014). The tax will apply to daily balances rather than to each transaction. As of July 1, 2013, a financial transactions tax will also apply to trade in derivatives. The fee will be from €.025 to €20.0 for non-speculative transactions and from €12.5 – €100 for speculative transactions. Also beginning in July, high frequency trading will be subject to a 0.02 percent tax on trades occurring every 0.5 seconds or faster (e.g., automated trading).

These financial transactions taxes will not apply to “market makers,” pension and small cap funds, donation and inheritance transactions, purchases of derivatives to cover exchange/interest-rate/raw-materials (commodity market) risks, and financial instruments for companies with a capitalization of less than €500 million .

The Italian tax system does not discriminate between foreign and domestic investors. Corporate income tax (IRES) rates are 27.5 percent, however, the World Bank estimates Italy’s effective tax rate on commercial profits at 68.3 percent, the highest rate in the EU. Austerity packages implemented in 2011 increased the local value-added (IRAP) tax rate from 3.9 to 4.2 percent for companies with government contracts (agriculture, highway management and tunnels contracts were exempted), to 4.65 percent for banks and financial companies, and to 5.90 percent for insurance companies. Project financing through bonds for companies undertaking public infrastructure projects is granted the same tax advantages as direct government debt. Companies hiring women and youth or hiring in the south are exempted from part of IRAP. IRAP produced €32.5 billion in tax revenue for the GOI during 2011.

To offset the effect of corporate tax cuts on public revenue, in 2011 the GOI introduced compensatory measures that keep effective rates of taxation high. They include:

  • setting new limits to the deductibility of interest;
  • abolishing accelerated depreciation; and
  • revising the tax treatment of consolidated reporting.

The government has sought to curb rampant tax evasion by improving enforcement and changing prevailing attitudes. The GOI actions include a public communications effort to reduce tolerance of tax evasion; increased and very visible financial police controls on businesses (e.g., raids on businesses in vacation spots at peak holiday periods); and audits requiring individuals to prove claims that they make less than the tax authorities believe. The GOI is also engaged in limiting tax avoidance.

In 2009 the U.S. and Italy enacted an income tax agreement to prevent double-taxation of each others’ nationals and firms, and to improve information sharing between tax authorities.

See “Free Trade Zones” section below for additional information on the tax-free zones of the city of L’Aquila and the Province of Caltanissetta in central Sicily.

Right to Private Ownership and Establishment

There is generally no limitation in the Italian constitution or civil law on foreigners’ right to private ownership of personal property and establishment of investments. However, only citizens of countries which allow Italian citizens to purchase real estate assets in their territories can buy property in Italy (principle of reciprocity). U.S. citizens fall into this category.

Protection of Intellectual Property Rights

Inadequate enforcement of Intellectual Property Rights (IPR) remains a serious problem in Italy. While anti-piracy and anti-counterfeiting laws on the books are generally regarded as adequate, relatively few IPR cases are brought to trial. Judges still regard IPR violations (and copyright violations in particular) as petty offenses, and the magistracy is a weak link in combating piracy in Italy. The Italian Finance Police (GDF) and Customs Police are active in combating IPR theft, but few cases reach final sentencing.

Copyrighted works sold in Italy generally must bear a sticker issued by SIAE, Italy's royalty collection agency operating under loose authority from the Ministry of Culture. Business software is exempted, though obtaining this exemption requires some (tedious) paperwork. The music and film industries previously supported application of the sticker, but are now dissatisfied with the system, asserting it has become overly burdensome, costly, and has failed to provide adequate protection from piracy.

Italy remained on the Watch List in USTR’s 2012 Special 301 Report, primarily due to ongoing concerns about piracy over the Internet, including the Italian Communications Authority’s (AGCOM) failure in issuing new regulations to combat digital copyright theft. Additional concerns cited in the 2012 report included a Data Protection Agency opinion concerning the monitoring of peer-to-peer networks; the lack of an expeditious legal mechanism for rights holders to address piracy on the Internet; and a systemic lack of deterrent sentences.

At the same time, the United States welcomed signs of a renewed government commitment to tackling IPR issues, especially with respect to Internet piracy. In early 2012, AGCOM devoted considerable time and attention to preparing regulations to address online piracy, which included provisions for a notice-and-take-down system. However, the outgoing AGCOM commissioners never finalized the regulations, and they are pending in front of a newly appointed board as of early 2013.

Italy is a member of the Paris Union International Convention for the Protection of Industrial Property (patents and trademarks), to which the United States and about 85 other countries adhere. U.S. citizens generally receive national treatment in acquiring and maintaining patent and trademark protection in Italy. After filing a patent application in the United States, a U.S. citizen is entitled to a 12-month period within which to file a corresponding application in Italy and receive rights of priority. Patents are granted for 20 years from the effective filing date of application and are transferable. U.S. authors can obtain copyright protection in Italy for their work first copyrighted in the United States, merely by placing on the work, their name, date of first publication, and the symbol (c).

Transparency of the Regulatory System

Italy is subject to single market directives mandated by the EU, which are intended to harmonize regulatory regimes among EU countries. This process has at times introduced additional uncertainty for U.S. companies.

Italy is slowly tackling some of the red tape and other obstacles that have hampered business in the past. However, the 2013 “Doing Business” Index ranks Italy 73rd out of 185 countries; only Greece ranks lower among EU countries. According to the same report, an entrepreneur wishing to start a business in Italy must follow 6 procedures, spend an average of 6 days, and pay around USD 7,350 in fees. The GOI issued a simplification decree in early February 2012 to cut red tape and fees by eliminating 15 obsolete laws.

Various foreign firms, including some U.S. ones, have in the past reported alleged difficulties instigated by politically connected competitors, especially at the local government level. A web of sometimes contradictory laws and regulations serves as a useful tool for vested interests to use against foreign rivals. In addition, in some industries, such as new media and financial services, investors have complained that local judicial authorities seem to lack the technical capacity to enforce Italian laws on, for example, consumer protection, IPR, and competition.

Capital Markets and Portfolio Investment

The banking system in Italy has consolidated significantly as a result of several major 2007 mergers. At the end of 2011 there were 24 subsidiaries and branches of foreign companies or banks operating in Italy, out of 740 total banks. Two of these foreign subsidiaries figured among Italy’s top ten banking groups, holding 9.3 percent of total Italian assets. Forty-four foreign shareholders – mainly from EU countries – held equity positions of at least five percent in 49 banks.

Despite major strains to the financial system during the Eurozone crisis, the Italian banking system appears relatively sound. Tensions in the sovereign debt market, enforcement of European rules for evaluating bank assets, and required increases in banks’ capital bases have squeezed bank profit margins. Italian bank loans to businesses as of November 2012 declined 3.4 percent from a year earlier, the fastest pace since records began in 2001, reflecting both rising reluctance from banks to lend and declining demand from business. Non-performing loans accounted for 11.2 percent of all loans at the end of 2011, and preliminary data suggests this percentage rose during 2012. Private sector bank loans in 2012 also decreased from 2011 levels. Banks are buying government bonds and stockpiling cash, according to BOI statistics, instead of lending. What limited lending does occur is largely aimed at companies with established export records.

Financial resources flow relatively freely in Italian financial markets and capital is allocated mostly on market terms. Foreign participation in Italian capital markets is not restricted. While foreign investors may obtain capital in local markets and have access to a variety of credit instruments, access to equity capital is difficult. Italy has a relatively underdeveloped capital market and businesses have a long-standing preference for credit financing. What little venture capital that exists is usually provided by established commercial banks and a handful of venture capital funds.

The Italian stock exchange ("Borsa Italiana") is relatively small -- fewer than 300 companies -– and is effectively an inaccessible source of capital for most Italian firms, which seem to prefer to obtain capital from banks. The London Stock Exchange owns the Milan Stock exchange. The Italian Companies and Stock Exchange Commission (CONSOB), established in 2005 after a spate of scandals, is the Italian securities regulatory body. In January 2011, the EU established three EU-level regulatory agencies for financial services and related activities: A London-based banking oversight institution (EBA), a Paris-based financial market oversight institution (ESMA), and a Frankfurt-based insurance and pension funds oversight institution (EIOPA).

Financial services companies incorporated in another EU member state may offer investment services and products in Italy without establishing a local presence. Cross-EU standardization of regulations should address U.S. and other foreign banks’ complaints that Italian interpretation of EU financial regulations tends to be stricter than in other countries. Europeans have yet to resolve the question of authorizing non-EU financial services firms to operate under one comprehensive regulatory regime, as opposed to several dozen national ones. Most non-insurance investment products are marketed by banks, and tend to be debt instruments. Italian retail investors are conservative, valuing the safety of government bonds over most other investment vehicles. Less than ten percent of Italian households own Italian company stocks directly. Of those who do own stocks, the weight of direct stock shareholding in their portfolios averaged 14 percent in 2011. A few banks have established private banking divisions to cater to high-net-worth individuals with a broad array of investment choices, including equities and mutual funds.

There are no restrictions on foreigners engaging in portfolio investment in Italy. Any Italian or foreign investor acquiring a stake in excess of two percent of a publicly traded Italian corporation must inform CONSOB, but does not need its approval. Any Italian or foreign investor seeking to acquire or increase its stake in an Italian bank equal to or greater than ten percent must receive authorization from the Bank of Italy. See http://www.informazione.it/a/A6D77212-C268-4CA2-B0DA-05AB91CD21F4/Banche-autorizzazione-Bankitalia-adesso-solo-per-quote-oltre-10

State-Owned Enterprises

The GOI has in the past owned and operated a number of monopoly or state-owned enterprises (SOEs) in certain strategic sectors. However, beginning in the 1990s and through the early 2000s, most of these state owned enterprises were privatized. Notwithstanding this privatization effort, as noted above, GOI still retains a de facto controlling interest in several key industrial firms, e.g., Finmeccanica (a defense/aerospace/security conglomerate), ENI (oil and gas), ENEL (electricity), and Terna (utilities). GOI fully owns Trenitalia (transportation) and Poste Italiane (financial services operations). Regarding Telecom Italia (telecommunications), although the GOI owns no stock, it can restrict who can buy large stakes in the company. In practice, these parastatal firms still benefit from their past monopoly status and, sometimes, ownership of infrastructure. Existing laws and practices give them an advantage in public procurement decisions and other critical areas affecting their business. In some cases, particularly in the industrial sectors, U.S. firms seeking to do business in these strategic areas have found it advantageous to form partnerships with the parastatals rather than to try to compete head-to-head. Some opportunities have emerged for new firms in recent years, such as NTV, which began operating high-speed trains across Italy in 2012, breaking Trenitalia’s monopoly.

Corporate Social Responsibility

Italy is an adherent to the OECD Declaration on International Investment and Multinational Enterprises. As such, Italy has promotes the associated Guidelines for Multinational Enterprises (“Guidelines”), which are recommendations addressed by governments to multinational enterprises operating in or from adhering countries. They provide voluntary principles and standards for responsible business conduct, in a variety of areas including employment and industrial relations, human rights, environment, information disclosure, competition, taxation, and science and technology. The Italian National Contact Point (NPC) for encouraging observance of the Guidelines is located in the Ministry of Economic Development.

Italian National Contact: http://pcnitalia.sviluppoeconomico.gov.it/en/

OECD Guidelines: http://www.oecd.org/dataoecd/56/36/1922428.pdf

Political Violence

Political violence is not a threat to foreign investments in Italy, but corruption, especially associated with organized crime, can be a major hindrance, particularly in the south – see next section.

Corruption

Corruption, including bribery, raises the costs and risks of doing business. Corruption has a corrosive impact on both market opportunities overseas for U.S. companies and the broader business climate. It also deters international investment, stifles economic growth and development, distorts prices, and undermines the rule of law.

Corruption and organized crime are significant impediments to investment and economic growth in parts of Italy. Corruption costs Italy an estimated €60 billion annually in wasted public resources, and effectively combating corruption has been a goal for successive Italian governments. In October 2012, the Italian parliament passed an anti-corruption law promoting transparency in public administration and prohibiting persons found guilty of serious crimes from holding public office. The law also provides for the appointment of an Anti Corruption High Commissioner to head the new National Anti-Corruption Authority (CiVIT), which is responsible for adopting an anti-corruption plan; monitoring its implementation; recommending measures to be taken by other agencies; and conducting inspections and investigations in conjunction with the financial police. A potential lack of adequate funding provisions, however, could limit CiVIT’s ability to carry out its mandate. In November 2012, the parliament passed legislation that expanded CiVIT’s investigative powers and reorganized it as the National Anti-Corruption Authority. The legislation included stiffer penalties for those convicted of bribery-related offenses, protective measures for whistleblowers, and requirements for greater transparency in public contracts. It also prohibits anyone convicted of a serious crime from holding certain public administration positions.

Organized crime is particularly prevalent in four regions of the south (Sicily, Calabria, Campania, and Apulia). Organized crime (Mafia, Camorra, ‘Ndrangheta and Sacra Corona Unita) had an estimated 2011 turnover of €140 billion (USD 182B, including legitimate commercial activities accounting for €92 billion/ USD 120B), or 7 per cent of Italy's GDP. Organized crime is involved in murder, racketeering, loan-sharking, drug smuggling, illegal toxic waste disposal, money laundering, corruption of public officials, illegal construction, the manufacture and distribution of pirated and counterfeit products, and prostitution. There is anecdotal evidence that organized crime groups may be profiting from the tight credit climate, by increasing their loan-sharking activities. However, organized crime is not limited to the south; in fact, the main crime syndicates are heavily involved in money laundering and drug trafficking throughout the country and abroad. There is increasing organized crime influence in the northern regions, particularly Lombardia, Emilia Romagna and Liguria. The statutes of Italy’s main business association (Confindustria) require it to expel members found to be paying protection money and to assist those in reporting extortion attempts to authorities.

It is important for U.S. companies, irrespective of their size, to assess the business climate in the relevant market in which they will be operating or investing, and to have an effective compliance program or measures to prevent and detect corruption, including foreign bribery. U.S. individuals and firms operating or investing in foreign markets should take the time to become familiar with the relevant anticorruption laws of both the foreign country and the United States in order to properly comply with them, and where appropriate, they should seek the advice of legal counsel.

The U.S. Government seeks to level the global playing field for U.S. businesses by encouraging other countries to take steps to criminalize their own companies’ acts of corruption, including bribery of foreign public officials, by requiring them to uphold their obligations under relevant international conventions. A U.S. firm that believes a competitor is seeking to use bribery of a foreign public official to secure a contract should bring this to the attention of appropriate U.S. agencies, as noted below.

U.S. Foreign Corrupt Practices Act: In 1977, the United States enacted the Foreign Corrupt Practices Act (FCPA), which makes it unlawful for a U.S. person, and certain foreign issuers of securities, to make a corrupt payment to foreign public officials for the purpose of obtaining or retaining business for or with, or directing business to, any person. The FCPA also applies to foreign firms and persons who take any act in furtherance of such a corrupt payment while in the United States. For more detailed information on the FCPA, see the FCPA Lay-Person’s Guide at: http://www.justice.gov/criminal/fraud/fcpa/

Other Instruments: It is U.S. Government policy to promote good governance, including host country implementation and enforcement of anti-corruption laws and policies pursuant to their obligations under international agreements. Since enactment of the FCPA, the United States has been instrumental to the expansion of the international framework to fight corruption. Several significant components of this framework are the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions (OECD Antibribery Convention), the United Nations Convention against Corruption (UN Convention), the Inter-American Convention against Corruption (OAS Convention), the Council of Europe Criminal and Civil Law Conventions, and a growing list of U.S. free trade agreements. Italy is party to the OECD Antibribery Convention and the UN Convention, and has signed but not ratified the Council of Europe Conventions. Generally all countries prohibit the bribery and solicitation of their public officials.

OECD Antibribery Convention: The OECD Antibribery Convention entered into force in February 1999. As of April 2012, there are 39 parties to the Convention including the United States (see http://www.oecd.org/daf/briberyininternationalbusiness/anti-briberyconvention/40272933.pdf). Major exporters China and India are not parties, although the U.S. Government strongly endorses their eventual accession to the Convention. The Convention obligates the Parties to criminalize bribery of foreign public officials in the conduct of international business. The United States meets its international obligations under the OECD Antibribery Convention through the U.S. FCPA. Italy ratified the 1997 OECD Convention on Combating Bribery and implemented its provisions in September 2001.

UN Convention: The UN Anticorruption Convention entered into force on December 14, 2005, and there are 165 states to it as of December 2012 (see http://www.unodc.org/unodc/en/treaties/CAC/signatories.html). The UN Convention is the first global comprehensive international anticorruption agreement. The UN Convention requires countries to establish criminal and other offences to cover a wide range of acts of corruption. The UN Convention goes beyond previous anticorruption instruments, covering a broad range of issues ranging from basic forms of corruption such as bribery and solicitation, embezzlement, trading in influence to the concealment and laundering of the proceeds of corruption. The Convention contains transnational business bribery provisions that are functionally similar to those in the OECD Antibribery Convention and contains provisions on private sector auditing and books and records requirements. Other provisions address matters such as prevention, international cooperation, and asset recovery. Italy enacted the United Nations Convention against Corruption in 2009.

Council of Europe Criminal Law and Civil Law Conventions: Many European countries are parties to either the Council of Europe (CoE) Criminal Law Convention on Corruption, the Civil Law Convention, or both. The Criminal Law Convention requires criminalization of a wide range of national and transnational conduct, including bribery, money-laundering, and account offenses. It also incorporates provisions on liability of legal persons and witness protection. The Civil Law Convention includes provisions on compensation for damage relating to corrupt acts, whistleblower protection, and validity of contracts, inter alia. The Group of States against Corruption (GRECO) was established in 1999 by the CoE to monitor compliance with these and related anti-corruption standards. Currently, GRECO comprises 49 member States (48 European countries and the United States). As of January 2013, the Criminal Law Convention has 50 parties and the Civil Law Convention has 42. Italy is a party to both.

(See http://www.coe.int/t/dghl/monitoring/greco/default_en.asp.)

Local Laws: U.S. firms should familiarize themselves with local anticorruption laws, and, where appropriate, seek legal counsel. While the U.S. Department of Commerce cannot provide legal advice on local laws, the Department’s U.S. and Foreign Commercial Service can provide assistance with navigating the host country’s legal system and obtaining a list of local legal counsel.

Assistance for U.S. Businesses: The U.S. Department of Commerce offers services to aid U.S. businesses seeking to address business-related corruption issues. For example, the U.S. and Foreign Commercial Service provide services that may assist U.S. companies in conducting their due diligence as part of the company’s overarching compliance program when choosing business partners or agents overseas. The U.S. Foreign and Commercial Service can be reached directly through its offices in major U.S. and foreign cities, or through its Website at www.trade.gov/cs.

The Departments of Commerce and State provide worldwide support for qualified U.S. companies bidding on foreign government contracts through the Commerce Department’s Advocacy Center and State’s Office of Commercial and Business Affairs. Problems, including alleged corruption by foreign governments or competitors, encountered by U.S. companies in seeking such foreign business opportunities can be brought to the attention of appropriate U.S. government officials, including local embassy personnel and through the Department of Commerce Trade Compliance Center “Report a Trade Barrier” Website at tcc.export.gov/Report_a_Barrier/index.asp.

Guidance on the U.S. FCPA: The Department of Justice’s (DOJ) FCPA Opinion Procedure enables U.S. firms and individuals to request a statement of the Justice Department’s present enforcement intentions under the anti-bribery provisions of the FCPA regarding any proposed business conduct. The details of the opinion procedure are available on DOJ’s Fraud Section Website at www.justice.gov/criminal/fraud/fcpa. Although the Department of Commerce has no enforcement role with respect to the FCPA, it supplies general guidance to U.S. exporters who have questions about the FCPA and about international developments concerning the FCPA. For further information, see the Office of the Chief Counsel for International Commerce, U.S. Department of Commerce Website at http://www.commerce.gov/os/ogc/international-commerce. More general information on the FCPA is available at the Websites listed below.

Anti-Corruption Resources

Some useful resources for individuals and companies regarding combating corruption in global markets include the following:

  • Information about the U.S. Foreign Corrupt Practices Act (FCPA), including a “Lay-Person’s Guide to the FCPA” is available at the U.S. Department of Justice’s Website at: http://www.justice.gov/criminal/fraud/fcpa.
  • Information about the OECD Antibribery Convention including links to national implementing legislation and country monitoring reports is available at: http://www.oecd.org/department/0,3355,en_2649_34859_1_1_1_1_1,00.html. See also new Antibribery Recommendation and Good Practice Guidance Annex for companies: http://www.oecd.org/dataoecd/11/40/44176910.pdf.
  • General information about anticorruption initiatives, such as the OECD Convention and the FCPA, including translations of the statute into several languages, is available at the Department of Commerce Office of the Chief Counsel for International Commerce Website: http://www.ogc.doc.gov/trans_anti_bribery.html.
  • Transparency International (TI) publishes an annual Corruption Perceptions Index (CPI). The CPI measures the perceived level of public-sector corruption in 176 countries and territories around the world. The CPI is available at: http://cpi.transparency.org/cpi2012/results/. In the CPI report, TI placed Italy in 72nd position alongside Bosnia and Sao Tome. Italian authorities claim that the CPI index is misleading and unfair to Italy. While highly publicized anti-corruption enforcement activities have been underway for years, there is general agreement that a high level of corruption limits Italy’s economic growth and ability to attract foreign investment. TI also publishes an annual Global Corruption Report (GCR) which provides a systematic evaluation of the state of corruption around the world. It includes an in-depth analysis of a focal theme, a series of country reports that document major corruption related events and developments from all continents and an overview of the latest research findings on anti-corruption diagnostics and tools. See http://www.transparency.org/research/gcr.
  • The World Bank Institute publishes Worldwide Governance Indicators (WGI). These indicators assess six dimensions of governance in 215 countries, including Voice and Accountability, Political Stability and Absence of Violence, Government Effectiveness, Regulatory Quality, Rule of Law and Control of Corruption. See http://info.worldbank.org/governance/wgi/index.asp. The World Bank Business Environment and Enterprise Performance Surveys may also be of interest and are available at: http://data.worldbank.org/data-catalog/BEEPS.
  • The World Economic Forum publishes the Global Enabling Trade Report, which presents the rankings of the Enabling Trade Index, and includes an assessment of the transparency of border administration (focused on bribe payments and corruption) and a separate segment on corruption and the regulatory environment. See http://www.weforum.org/s?s=global+enabling+trade+report.
  • Additional country information related to corruption can be found in the U.S. State Department’s annual Human Rights Report available at http://www.state.gov/g/drl/rls/hrrpt/.
  • Global Integrity, a nonprofit organization, publishes its annual Global Integrity Report, which provides indicators for 109 countries with respect to governance and anti-corruption. The report highlights the strengths and weaknesses of national level anti-corruption systems. The report is available at: http://report.globalintegrity.org/.

Bilateral Investment Agreements

Italy has bilateral investment treaties (BITs) with the following countries:

Albania - Algeria - Angola - Argentina - Armenia - Azerbaijan - Bahrain - Bangladesh - Barbados - Belarus - Bolivia - Bosnia and Herzegovina - Cameroon - Chad - Chile - China - Congo -Croatia - Cuba - Dominican Republic - Ecuador - Egypt - Eritrea - Ethiopia - Gabon - Georgia - Guatemala - Guinea - Hong Kong - India - Indonesia - Iran - Jamaica - Jordan - Kazakhstan - Kenya - Korea - Kuwait - Lebanon - Libya - Macedonia - Malaysia - Mexico - Moldova - Mongolia - Morocco - Mozambique - Nigeria - Oman - Pakistan - Panama - Peru - Philippines - Qatar - Russia - Saudi Arabia - Serbia - South Africa - Sri Lanka - Syria - Tanzania - Tunisia - Turkey - Uganda - Ukraine - United Arab Emirates - Uruguay - Uzbekistan - Vietnam - Yemen.

Italy has BITs signed but not ratified and thus not in force with the following countries:

Belize – Brazil - Cape Verde - Cote d'Ivoire - Democratic Republic of Congo - Djibouti - Ghana - North Korea (DPR) - Malawi - Mauritania - Namibia - Nicaragua - Paraguay - Senegal - Sudan - Turkmenistan - Venezuela - Zambia – Zimbabwe.

OPIC and Other Investment Insurance Programs

The U.S. Overseas Private Investment Corporation (OPIC) does not operate in Italy, as it is a developed country. Italy’s Export Credit Agency, SACE, is a member of the World Bank's Multilateral Investment Guarantee Agency (MIGA).

Labor

Italy's unemployment rate, which reached 11.1 percent in November 2012, has crept up steadily as a decade of low growth and the slowing world economy have taken their toll. While Italy’s unemployment rates are the highest ever registered in the last eight years, they are still below the EU average of 11.8 percent. Most observers expect the unemployment rate to increase in 2013 and 2014 because of the projected economic contraction through 2013. The official unemployment data does not include temporarily laid-off employees who receive benefits from the “wage guarantee fund” (for struggling or restructuring companies) and people who are discouraged and do not look for a job. The Bank of Italy asserts that the real unemployment rate is at least two percentage points higher than official data. Italy continues to suffer from chronically low rates of employment and participation in the labor market, which are among the lowest in the industrialized world, especially among women, the young and the elderly.

Traditional regional labor market disparities remain unchanged, with the southern third of the country posting a significantly higher unemployment rate compared to northern and central Italy. Despite these differences, internal migration within Italy remains modest, while industry-wide national collective bargaining agreements irrationally set equal wages across the entire country. Shortages in the north of unskilled and semi-skilled labor are often filled by immigrants from Eastern Europe and North Africa. Skilled labor shortages are also a problem in the north. On paper, companies may bring in a non-EU employee after the government-run employment office has certified that no qualified, unemployed Italian is available to fill the position. In reality, the cumbersome and lengthy process acts as a deterrent to foreign firms seeking to comply with the law. Work visas are subject to annual quotas, although intra-company transfers are exempt from quota limitations.

There are substantial legal obstacles to hiring and firing workers although in recent years, the Italian labor market has become slightly more flexible. A series of legal reforms has encouraged the hiring of part-time employees by reducing employer social security contributions for these workers. New laws have also created opportunities for outsourcing, job-sharing, and use of private employment services. New types of contracts now exist that allow for reduced labor costs. However, high costs and legal obstacles associated with laying off workers still remain a disincentive to adding permanent employees. The GOI implemented measures to increase labor market flexibility in 2012 with mixed results to date.

In November 2012, the unemployment rate for youth between the ages of 14 and 25 reached 37.1 percent, the highest level since record keeping began in 1992. The level is well above the EU average; only Spain, Greece, Slovakia, and Portugal have higher rates. An estimated 2.2 million Italians between the ages of 15 to 34 do not study, do not work, and are not looking for a job. Of those who do find work, most are hired under temporary contracts. Anecdotal evidence suggests that companies hesitate in giving new hires full-time contracts because job protection laws make it difficult to later fire them. “Brain drain” is also a problem, particularly among the well-educated. Firms interested in investing in Italy may have difficulty finding specialized and experienced young employees.

Italy is a member of the International Labor Organization (ILO). Terms and conditions of employment are periodically fixed by collective labor agreements in different professions. Most Italian unions are grouped into four major national confederations: the General Italian Confederation of Labor (CGIL), the Italian Confederation of Workers' Unions (CISL), the Italian Union of Labor (UIL), and the General Union of Labor (UGL). The first three organizations are affiliated with the International Confederation of Free Trade Unions (ICFTU), while UGL has been associated with the World Confederation of Labor (WCL). The confederations negotiate national level collective bargaining agreements with employer associations, which are binding on all employers in a sector or industry irrespective of geographical location.

Foreign Trade Zones/Free Ports

The main free trade zone (FTZ) in Italy is the port of Trieste, in the northeast. At Trieste FTZ, customs duties are deferred for 180 days from the time the goods leave the FTZ and enter another EU country. The goods may undergo transformation free of any customs restraints. An absolute exemption is granted from any duties on products coming from a third country and re-exported to a non-EU country. Legislation to create other FTZs in Genoa and Naples exists, but has yet to be implemented. An FTZ did operate in Venice for a period but is currently being restructured. Goods of foreign origin may be brought into Italy 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. The FTZ law also allows a company of any nationality to employ workers of the same nationality under that country's labor laws and social security systems.

An “urban tax-free zone” has also been set up in the city of L’Aquila that was hit by the earthquake in April 2009. Small and medium sized enterprises that set up activities in the city will pay no or reduced corporate income tax, property tax and payroll taxes for five years. The incentives are not automatic and must be applied for at the beginning of each calendar year, until the €50 million total set aside is committed, and will not exceed €200 thousand per company.

A “tax free zone” has also been approved and financed by the Government of Italy for the Province of Caltanissetta in central Sicily with €50 million in European structural funds. It should take effect in 2013 but the exact incentives were not known at the time of publication.

Foreign Direct Investment Statistics

Net direct investment inflows to Italy in 2011 totaled USD 29 billion (UNCTAD). In its latest available figures, the Italian Trade Commission (ICE) reported that 8,492 foreign companies operated in Italy in December 2011 (up from 8,396 in December 2010), employing 886,254 workers (down from 900,019 in 2010), with overall sales of €498.5 billion (USD 647.4 B; in line with €498 billion in 2010). According to ICE, the stock of foreign investment in Italy equals 15 percent of GDP, which is lower than in many EU countries. Approximately 82 percent of foreign companies operating in Italy are located in the north, a percentage that has grown in recent years as the number of companies in the southern Italy have closed, reflecting a less business-friendly environment. The ICE study cites as key obstacles to foreign investment: taxes on labor, lack of labor flexibility, bureaucratic red tape, and high corporate taxes.

Further data on Italian investment inflows (direct and portfolio) is available at:

http://www.unctad.org/sections/dite_dir/docs/wir11_fs_it_en.pdf

Table 1: Italian FDI Inflows by Economic Sector (Net) 2009-2011

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USD Millions (1)

2009

2010

2011

Agriculture and Fishing

238.2

76.1

-20.6

Mining

1070.3

576.1

2315.7

Manufacturing

2657.1

5072.2

13391.8

Electricity, water and gas

1558.1

836.0

346.7

Constructions

558.1

779.5

1699.7

Trade

522.2

8500.0

3350.5

Transportation/Communication

5846.5

-5077.4

105.7

Hotel and restaurant

133.4

1523.6

-81.2

Banking/Insurance

2533.7

1559

6329.9

Real Estate, Renting and R&D

3757.5

2721.8

1679.1

Other Services

12235.3

7816.3

3394.3

Total

20728.8

9097.1

31818.3

Table 2: Italian Direct Investment Outflows by Economic Sector (Net) 2009-2011

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USD Millions (1)

2009

2010

2011

Agriculture and Fishing

4.3

47.2

622.4

Mining

13417.5

1976.4

3497.4

Manufacturing

7344.3

13573.5

14192

Electricity, water and gas

20977

4221.8

1574.7

Constructions

3984.2

3199.5

6371.1

Trade

384.5

391.1

895.6

Transportation/ Communication

3856.5

4657.5

11871.1

Hotel and restaurant

2027.3

-3207.4

193.3

Banking/Insurance

10642.8

2351.7

10433

Real Estate, Renting and R&D

2050.2

2124.7

1082.5

Other Services

6812

2011.8

2019.3

Total

21968.4

32342.5

49711.3

Table 3a: Stock of Foreign Direct Investment in Italy by Major Investors; Year End 2009-2011

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USD Millions (1)

2009

2010

2011

United States

20215

10254

5298

EU of which:

288457

269072

312140

Belgium

13833

20682

23618

France

53266

48932

67128

Germany

29458

27748

36587

Luxembourg

86764

69245

69857

Netherlands

70236

58870

67241

Spain

9511

11674

10549

Sweden

5030

4114

3452

United Kingdom

20359

27807

33708

Liechtenstein

2687

193

210

Switzerland

15106

13339

15790

Canada

576

362

416

Japan

2177

3470

2046

Argentina

116

159

209

Brazil

455

540

545

Other

28017

27796

27917

Total

357806

325187

364679

Table 3b: Stock of Foreign Direct Investment in Italy by Major Investors; Year End 2009-2011

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(Percentage of Total)

2009

2010

2011

United States

5.7

3.2

1.5

EU of which:

80.6

82.7

85.6

Belgium

3.9

6.4

6.5

France

14.9

15.0

18.4

Germany

8.2

8.5

10.0

Luxembourg

24.2

21.3

19.2

Netherlands

19.6

18.1

18.4

Spain

2.7

3.6

2.9

Sweden

1.4

1.3

1.0

United Kingdom

5.7

8.6

9.2

Liechtenstein

0.8

0.1

0.0

Switzerland

4.2

4.1

4.3

Canada

0.2

0.1

0.1

Japan

0.6

1.1

0.6

Argentina

0.0

0.0

0.0

Brazil

0.1

0.2

.2

Other

7.8

8.5

7.7

Total

100.0

100.0

100.0

Table 4a: Stock of Italian Direct Investment Abroad by Major Recipient; Year End 2009-2011

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USD Millions (2)

2009

2010

2011

United States

28953

25495

26790

EU of which:

282173

272410

294984

Belgium

13484

18675

17812

France

33934

35978

33102

Germany

48624

42553

44288

Luxembourg

3096

14657

33765

Netherlands

99893

99190

102538

Spain

60631

42893

39379

Sweden

2263

2182

2149

United Kingdom

20248

16282

21806

Liechtenstein

138

126

145

Switzerland

11310

9889

11060

Canada

2019

2342

2398

Japan

-673

1039

1479

Argentina

1727

1519

1823

Brazil

7747

7072

6736

Other

150999

160384

174638

Total

484393

480275

519908

Table 4b: Stock of Italian Direct Investment Abroad by Major Recipient; Year End 2009-2011

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(Percentage of Total)

2009

2010

2011

United States

6.0

5.3

5.2

EU of which:

58.2

56.7

56.7

Belgium

2.8

3.9

3.4

France

7.0

7.5

6.4

Germany

10.0

8.9

8.5

Luxembourg

0.6

3.1

6.5

Netherlands

20.6

20.7

19.7

Spain

12.5

8.9

7.6

Sweden

0.5

0.5

0.4

United Kingdom

4.2

3.4

4.2

Liechtenstein

0.0

0.0

0.0

Switzerland

2.3

2.1

2.1

Canada

0.4

0.5

0.5

Japan

-0.1

0.2

0.3

Argentina

0.4

0.3

0.4

Brazil

1.6

1.5

1.3

Other

31.2

33.4

33.6

Total

100.0

100.0

100.0

Table 5a: U.S. Investment in Italy by Economic Sector Year End 2009-2011

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USD Millions (2)

2009

2010

2011

Agriculture and Fishing

199

132

132

Mining

0

0

3

Manufacturing

4253

2721

2730

Electricity, water and gas

0

0

0

Construction

0

153

116

Trade

1085

1689

2424

Transportation/ Communication

9648

566

455

Hotel and restaurant

0

3

0

Banking/Insurance

3666

3116

-3564

Real Estate, Renting and R&D

803

31

1383

Other Services

851

1734

317

Total

20505

10146

3996

Table 5b: U.S. Investment in Italy by Economic Sector Year End 2009-2011

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(As a Percentage of Total)

2009

2010

2011

Agriculture and Fishing

1.0

1.3

3.3

Mining

0.0

0.0

0.0

Manufacturing

20.8

26.8

68.3

Electricity, water and gas

0.0

0.0

0.0

Construction

0.0

1.5

2.9

Trade

5.3

16.7

60.7

Transportation/ Communication

47.1

5.6

11.4

Hotel and restaurant

0.0

0.0

0.0

Banking/Insurance

17.9

30.7

-89.2

Real Estate, Renting and R&D

3.9

0.3

34.6

Other Services

4.2

17.1

7.9

Total

100.0

100.0

100.0

Table 6a: Italian Investment in the U.S. by Economic Sector -- 2009-2011

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USD Millions (2)

2009

2010

2011

Agriculture and Fishing

0

368

327

Mining

135

111

16

Manufacturing

7023

5742

5820

Electricity, water and gas

-1

1

17

Construction

106

97

126

Trade

7600

6509

6688

Transportation/ Communication

3608

2595

2668

Hotel and restaurant

304

311

311

Total

5997

5187

4748

Real Estate, Renting and R&D

2933

545

2136

Other Services

1248

4029

3935

Total

28953

25495

26790

Table 6b: Italian Investment in the U.S. by Economic Sector -- 2009-2011

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(Percentage of Total)

2009

2010

2011

Agriculture and Fishing

0.0

1.4

1.2

Mining

0.5

0.4

0.0

Manufacturing

24.3

22.5

21.7

Electricity, water and gas

-0.1

0.0

0.0

Construction

0.4

0.4

0.4

Trade

26.2

25.5

25.0

Transportation/ Communication

12.5

10.2

10.0

Hotel and restaurant

1.1

1.2

1.2

Banking/Insurance

20.7

20.3

17.7

Real Estate, Renting and R&D

10.1

2.1

8.0

Other Services

4.3

15.8

14.7

Total

100.0

100.0

100.0

(1) Annual net investment flow data compiled by Embassy Rome Economic Section, based on Bank of Italy data and converted at the following year-average exchange rates:

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2009

2010

2011

Euro/Dollar

0.707

0.755

0.719

Net = New Investment Less Disinvestment. The volatility and huge changes from year to year in some sections can be explained in part by the fact that listed data are "Net": New Investment Minus Disinvestment.

(2) Compiled by Embassy Rome Economic Section, based on Bank of Italy data and converted at the following year-end exchange rates:

If a scroll bar appears below the following table, swipe the table to move left/right of the dashed line.

2009

2010

2011

Euro/Dollar

0.697

0.763

0.773

Sources: Bank of Italy

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