A model presents a creation by Italian designer Frida Giannini for Gucci during the Spring/Summer 2008 collections of the Milan ready-to-wear fashion shows Photo : Christophe Simon/AFP

ROME, Dec 24, 2007 (AFP) - Hurt by ambiguous legislation and buffetted by globalisation, "Made in Italy" fashion is losing its time-honoured credibility, to the dismay of unions and business leaders.

This month a programme on Italian state television alarmed the fashion world by showing undocumented Chinese workers stitching together handbags for Prada, Dolce and Gabbana and Gucci in clandestine workshops in central Prato and southern Naples.

The bags, each costing some 20 euros (30 dollars) to produce, sell for more than 400 euros in luxury goods stores.

Gucci however refuted the TV report, saying in a statement: "Whenever Gucci finds a situation that is not consistent with the internal policy and (independent watchdog) Bureau Veritas' standards, the non-compliant suppliers are immediately suspended."

Luca Marco Rinfreschi, a member of the Prato chamber of commerce, said: "You can't deny that this kind of situation exists. But it exists everywhere. Globalisation has affected Italy like the rest of the world."

Moreover, the "Made in Italy" label is not controlled by Italian law, but by European Union-wide customs regulations.

"Goods whose production involved more than one country shall be deemed to originate in the country where they underwent their last, substantial, economically justified processing," the EU rules state.

Valeria Fedeli, secretary general of the textile union Filtea-CGIL, said: "So it is the country where the last phase of production takes place that gets the 'Made in' label, even if the material comes from another country and only the assembly or finishing took place here."

Italy is asking for "more transparency and traceability," said Fedeli, who is also president of the European Trade Union Federation for Textiles, Clothing and Leather.

"To enter the United States or China each product must be labelled, that's the law," she said. "But not in Europe, where 65 percent of the products that come into the EU aren't labelled."

Fedeli said experts estimate that about one-third of the work is illegal. "But the figure is the same for fashion as for every other sector," she said. "This very serious problem has worsened in recent years because of stiffer competition and more globalisation."

Decrying a "widespread culture of illegality" in Italy as well as the "reluctance of some" to demand more transparency, she said that textile companies should report abuses and "do more internal checks, especially when it comes to the ethics of their sub-contractors."

Rinfreschi lamented that the "Made in Italy" tag, "one of the strengths and identities of this country," is imperiled by products whose quality cannot be assured because of unethical practices.

In 2005, Prato's chamber of commerce joined forces with those of 20 other cities to set up Italian Textile Fashion with the goal of tracing manufacturing steps, from spinning to finishing, to fill the gaps in Italian and EU legislation.

"With a label spelling out the different sites and stages of manufacture of the garment, this certification will help the consumer be more aware of what he's buying," Rinfreschi said.

Other craftsmen have taken matters into their own hands, such as dozens of small leather businesses that have joined the Centopercentoitaliano (100 percent Italian) consortium, with labels certifying that their goods are made entirely on Italian soil.

by Katia Dolmadjian