A dispute over pasta is set to shape the future of the EU's single market.

Unsurprisingly for a battle over spaghetti, it was Italy that fired the first shot. Rome last week passed two laws demanding that all food producers label packs of pasta and rice to indicate what country the ingredients come from.

Italy's legislative bombshell on August 21 is a blatant challenge to the guardians of the internal market at the European Commission, who have insisted for years that these kinds of "made in" labels undermine the single market by encouraging consumers to buy local. The pasta battle presents European Commission President Jean-Claude Juncker with a strategic dilemma over whether to allow member countries to take a protectionist approach to support struggling domestic industries — like Italian rice and durum wheat farmers — even if those measures endanger the sanctity of the single market.

Rome's new laws are part of a growing Continent-wide movement toward more defensive economic policy, led by French President Emmanuel Macron, who wants Brussels to fight anti-EU populists by granting countries more leeway to protect workers against the ravages of borderless free markets. Following that logic, Juncker would not want to fight Italy over the almost sacred issue of food while groups such as the anti-establishment 5Star Movement and the far-right Northern League are looking to make waves in next spring's general election.

Juncker will have to fight off charges of double standards if he green-lights Italy's new labels. The European Commission zealously cracks down on Central European countries when they introduce laws in the agri-food sector seen as undercutting the single market. Brussels slapped infringement cases on countries from Poland to Bulgaria, arguing that former communist states unfairly support local farmers with restrictions on big foreign retail and farm investors.

"The damage to the rule of law in the area of labeling is significant" — Luca Bucchini, a Rome-based food industry consultant

Italy is unapologetic about its move and is ready for a showdown.

"We are ready to deal with the Commission," Agriculture Minister Maurizio Martina said last week. “Italy has the right … to protect its consumers and its producers," he added.

Going rogue on rigatoni

In a sign it is fully aware it is throwing down a gauntlet to the Commission, Italy did not formally notify Brussels of its new origin labels, as the law demands.

Despite this open disregard for procedure, a Commission spokeswoman said Brussels needed more information on what had happened before deciding whether to hit Italy with an infringement procedure — the process it follows when it believes a member country has broken EU law.

“Once all the relevant information has been acquired, the Commission can decide on the next steps,” she said.

Luca Bucchini, a Rome-based food industry consultant, said he thought Rome went rogue because it supposed Brussels would block its plans. "The way the decrees were adopted with no regard for legal deadlines and European Commission opinions makes the decrees illegal," he said, adding that the move was "shameful."

"The damage to the rule of law in the area of labeling is significant," Bucchini said.

Several nations have already indicated that they are unhappy with Rome. Italy notified Brussels of the pasta and rice schemes earlier this year but the government then withdrew its notification during the three-month period given to the Commission and EU governments to scrutinize potential damage to the single market. A summary of a June meeting, at which governments discussed Italy's proposed schemes, show that 11 countries "strongly criticized" them. The document did not list which member countries objected.

But while Rome's move is unusually combative, its push for labels is by no means unique. Several countries argue that origin labels promote food safety and help give consumers information that they have every right to know.

In a surprising change of heart, Brussels last year allowed Italy — as well as a string of other countries, including France — to roll out origin labels for milk for a two-year trial period. That concession came in response to the dairy crisis of 2016 that sank milk prices to rock-bottom levels.

That move did trigger some hostility, however. Belgium, for example, complained that the French labeling regime on dairy and processed meat, and the ensuing gastro-nationalism, severely harmed its milk and meat exports to France. Belgian sales to France dropped 17 percent in 2016, compared with 2015.

European framework sought

Paolo De Castro, a member of the European Parliament and former Italian agriculture minister, argued that the Belgian complaint showed why the EU could not allow piecemeal labeling but should issue clearer Continent-wide rules on mandatory labels. He styled Italy's move as an attempt to push Brussels to roll out guidelines on when to allow origin labels.

Italy is at the forefront of demanding these labels, with the country's powerful farmers' union Coldiretti egging it on.

"We need the Commission to face the situation and put forward a legislative proposal to set up a transparent system, equal for everyone, within the market, to indicate the origin of raw materials," De Castro said.

The Commission is due to provide some new guidelines for food labeling later this year — but this will map out a framework for voluntary, rather than mandatory rules.

De Castro added that he did not expect the Commission to try to stop Italy, given the precedent set in the dairy crisis. He also reckoned the country would be ready to face any infringement procedure from Brussels.

"It is quite difficult for the Commission to say 'no' since it has agreed on dairy. It said 'yes' to eight countries, including Italy, for the dairies, so it’s unclear why it should say 'no' for rice and durum."

Rome may simply have seen a perfect window before Brussels outlined its labeling plans to flex its muscles in a show of strength to its own farming and food sector, said Alberto Alemanno, a law professor at HEC Paris.

It was "an unmissable opportunity for the Italian government to show its support to its own industries," Alemanno said.

In a case last year, Romania unilaterally introduced dairy origin labeling. The European Commission intervened, saying that the scheme did not follow the proper notification procedure. Bucharest then had to make significant amendments to the law.

As a food-producing heavyweight, Italy will almost certainly also cause problems for the EU on the international trade stage.

The Romanians, however, subsequently issued a new version of their original labeling plan without notifying Brussels. The Commission has yet to respond formally to this move.

Italy's planned labels are far more controversial than Romania's milk scheme partly because of the significantly higher stakes. And as a food-producing heavyweight, Italy will almost certainly also cause problems for the EU on the international trade stage.

Canada, for example, is the world's largest exporter of durum wheat and ships a significant amount to Italy's pasta makers. Ottawa, alongside seven other large agricultural exporters such as the U.S. and Brazil, raised concerns about Italy's planned pasta labels at the World Trade Organization in March.

Cam Dahl, the head of Canada’s cereals lobby, said earlier this year that farmers would push Ottawa to challenge Brussels at the WTO should it allow the pasta labels.