European Parliament votes for compulsory "Made in …" labels

17 April 2014

Dr. Ulrike Grübler, Michael Schidler

In April 2014 The European Parliament voted that manufacturers should be required to label all non-food goods with their country of origin. The new law will not only make the labelling mandatory, it may also change well-established rules already in place in several member states of the EU.

Country of origin labels are currently voluntary in the European Union. There is no central body setting standards or being in charge of handing out the label. Companies renowned for their manufacturing skills frequently use the label for their products not only in Europe, but all over the world. There are strict rules applying for example for the products “Made in the U.S.” or Swiss made watches but nothing similar exists for the EU. The practice of the EU member states is mainly driven by customs regulations and general rules regarding the advertising of products.

Looking back in history the "Made in …" slogans were not necessarily meant to serve as a marketing tool. The slogan "Made in Germany" for example was introduced by the British Merchandise Marks Act in 1887. Back then, Britain feared cheap continental imitations of Sheffield cutlery that flooded the market and wanted non-British products to be labelled.

The new law only applies for non-food goods and also contains a few exceptions, e.g. for the labelling of medicine. To determine the country of origin the new regulation refers to current provisions of the Council Regulation (EEC) No 2913/92 establishing a Community Customs Code.

According to this regulation the country of origin is where the product was produced. For goods produced in more than one country, the country of origin will be the one where it underwent "the last substantial, economically justified processing" resulting in a new product or representing "an important stage of manufacture". Depending on the result of this test the products have to state the country of origin with a "Made in" + country label. They can also opt for a "Made in the EU" label but this is only admissible for products having its country of origin in an EU country or being produced across several European countries.

With this strict specification the EU intends to improve the coherence of the rules regulating consumer products identification and traceability. It will also improve the way authorities may check products and enforce product safety rules across the European Union.

Some reports have suggested that redefining the country of origin could have a serious impact on the marketing of famous brands that use foreign components or assemble their products outside the EU. Therefore, it does not surprise that concerns are raised across the EU. A group of 16 member states including Britain, Germany, the Netherlands and several Scandinavian countries have already announced they will block the European Parliament's proposal from being adopted by the European Council. They regard the rules as anti-free-trade and protectionist. It is also feared that compulsory "Made in" signs could damage companies that rely on global supply chains. In contrast to that, southern European countries like Italy, Spain and France favor the law. They hope it will provide a market advantage against cheaper products coming from Asia and India in particular in the fashion, footwear and ceramic industries.

The legislative procedure will be continued after the next election of the EU Parliament. In 2005, a similar proposal for compulsory 'Made in' labelling was blocked by EU governments.

To read the full press release from the European Parliament click here.