WARNING: VENEZUELA'S NEW LABELING LAW HAZARDOUS TO

C O N F I D E N T I A L CARACAS 001406 SECSTATE PASS AGRICULTURE ELECTRONICALLY E.O. 12958: DECL: 09/22/2023 TAGS: ECON ETRD EAGR PGOV VE SUBJECT: WARNING: VENEZUELA'S NEW LABELING LAW HAZARDOUS TO FOOD TRADE REF: CARACAS 1127 Classified By: Randall Hager, Agricultural AttachQ, for reasons 1.4 (b) and (d) ¶1. (C) SUMMARY: Venezuela's new food labeling law requires that original food product packaging be printed in Spanish, and prohibits the use of add-on Spanish-language stickers for imported goods. This requirement is contained in the set of 26 new decrees issued at the end of July, and came as a complete surprise to industry representatives. Imported products from the United States have already been affected, and leading traders and food processors believe that our exports to Venezuela could be hurt by this law. END SUMMARY. ¶2. (C) On July 31, the Bolivarian Republic of Venezuela released an extensive package of new decrees (REFTEL),one of which requires that all food products imported into or sold in Venezuela be packaged with Spanish information. Until now, the common and accepted practice was for exporters to add a Spanish-language sticker to the package containing required product information. According to our contacts at La Granja (protect),a leading food processor, imported raw materials from the United States such as potatoes have already been inspected by government officials and found to be outside the law. COMMENT: Venezuela imports a significant amount of raw materials for food processing from the United States. However, representatives from La Granja told us that their suppliers were hesitant to change their product labeling because it increased costs, a real example of how this law could damage U.S. exports to Venezuela. END COMMENT. ¶3. (C) Supermarkets are also concerned, and have felt the long arm of the law around their business. Mr. Alberto Lucas (protect),director of a Centro Maderiense supermarket in Porlomar, told Ag AttachQ recently that his store had been visited by government inspection authorities and required to remove from sale candy bars and other products because they were not labeled correctly. COMMENT: Fortunately, Lucas was allowed to use stickers for the short term and return the product (Milky Way bars and other candies) to the shelf, but the message was clear--violations to the new law would not be allowed in the future. END COMMENT. ¶4. (C) According to Mr. Jose Manuel Capobianco (protect),a purchasing manager for SIGO, a hypermarket chain on Margarita Island, the industry has expressed its concern about this law directly to local government authorities. In fact, leading companies met recently with regulators to propose a six-month delay in implementation. Their hope is that either a more workable law can be developed, or better, the requirements would be revoked. COMMENT: We believe that revocation is unlikely, as it would be seen as weakness on the part of the government. Further, a recent conversation with Mr. Enrique Itriago (protect),president of Alfonso Rivas, Venezuela's second largest food processor, leads us to believe that the requirement will be kept in place. Thus, importers and exports need to develop a plan that addresses Venezuelan law as written. END COMMENT. ¶5. (C) COMMENT: Importers and supermarket owners were universal in their criticism of the new law, finding it either unworkable or unnecessary at best, and at worst, a purposeful trade headache designed to limit goods from the United States. However, several of them insisted that American exporters should "see the light" and begin to either develop packaging that met Venezuelan requirements, or develop multi-language labels like those often seen in Europe. In the end, American businesses will have to balance the additional cost against the gains to be made in a growing food market. CAULFIELD