‘Made in’ Labeling Law Divides EU Members

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Brussels–Despite split opinions within the European Union (EU), long-debated legislative proposals to introduce compulsory origin labeling in all EU member states are at last starting to look like becoming law. All clothing, footwear and textile products imported into the European Union (EU) would have to carry origin labels under a harmonized EU-system approved by a European Parliament vote on October 21.

But the regulation backed by the international trade committee, must maintain support at the EU Council of Ministers to come into force. The proposed law is intended to protect EU manufacturers from cheaper third country imports and allow consumers to make informed choices. There are currently no harmonized regulations in regards to origin marking rules at EU-level, despite the fact that many of the EU’s main trading partners, including China, the United States and Japan already require mandatory origin marking for imported goods.

The Commission’s planned regulation states that the words “made in” together with the country of origin, must be written in the local language of sales (or in English) on all goods and packaging, and that harmonized penalties should be enforced upon those who do not oblige. The regulation will apply only to products meant for end consumers, and as well as clothing and footwear also covers non-food items such as glassware, pharmaceutical products, and tools.

But the proposed new rules will apply only to goods destined for consumers but not to products from the European Union, Turkey, Norway, Iceland or Liechtenstein.

Consumer Protection

The “made in” labels will aim to ensure that customers and manufacturers are protected against possible health risks, counterfeiting and unfair competition. “I’m absolutely positive about the [legislation] because this regulation offers to consumers essential information about the origin of the product,” Mario Boselli, president of the National Chamber of Italian Fashion says.

But not all member states are quite so enthusiastic about it. The Commission originally submitted a draft regulation in 2005 for mandatory origin labels, but the procedure was put on hold, having been blocked by some governments. Countries that primarily import and distribute foreign clothing and textile products have, in the past, been vocal about wanting optional labeling to remain in place to avoid losses in sales and profits for retailers. But those with large manufacturing bases, such as Italy and Spain, have long advocated mandatory labeling to help cut down on growing low-cost imports from third countries.

“This is a purely protectionist measure,” believes Jan Eggert, secretary general of the Foreign Trade Association (FTA), which represents retailers and importers. “This compulsory declaration of origin only serves the interests of a minority of south European manufacturers seeking to improve their competitiveness.”

The actual use of declarations of origin is also seen as questionable. For example, a shoe may be labeled as “Made in Italy” even if its sole is produced in Albania and its upper parts are made in India, so long as the components are combined mechanically in Italy. This is arguably even more a deceptive to consumers.

Compulsory origin labeling entails additional costs to producers and retailers too. And controls to prevent misuse and false labeling would cause additional costs and place a higher administrative burden on firms.

Refusing to Take Sides

Stuck in the middle of this dispute, Euratex, the voice of the European textile and clothing industry has refused to take a position on the proposed legislation potentially becoming law. “This is a very sensitive issue for us and our members,” says Luisa Santos, head of international trade at Euratex. “Part of the industry is in favor of the legislation and part is against it.”

Dr. Christoph Schäfer, of the Confederation of the German Textile and Fashion Industry notes, however, that the EU-wide debate on origin labeling has not been quite as clear cut as that. “The member states have split opinions on the topic, but the majority of them are not in favour of the mandatory labeling,” he says. Dr Schäfer said that is has been overwhelmingly Italy that has been pushing for the legislation to become law, while the other member states do not really see an advantage to the proposal. If adopted, the regulation will be applicable in all member states one year after its publication in the EU Official Journal.

–By MJ Deschamps.

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