What is at Stake with Labelling the EU Goods?


The “Made in…” labelling goes back to the Merchandise Act of the British House of Commons dating 1887 was to protect the British population from cheap, low-quality goods, in particular from Germany. The warning notice however has become a hallmark of quality and the EU Parliament created the “Made In…” labelling mandatory for all non-food products in the EU.

Following several requests from the European Parliament and actions from different EU countries, the European Commission decided to propose a new regulation requiring that consumer products bear an indication of the country of origin. Compulsory labels of origin have already proved very effective to increase consumers’ confidence in food products, as they made it easier to trace their producers. Extending origin labels to all consumer goods will give a further boost to the EU’s internal market. This is how the Commission have announced the optimistic plan for labelling the EU goods with “MADE IN THE EU” trademark. But not everything went so easily.

Trust is the pillar of the economy. If consumers do not trust a product, they do not buy it. In a market of 500 million people, personal knowledge of a seller or of a manufacturer can guide consumers’ choices only for a limited number of goods. For all others, we need to have indicators that make products more traceable, and therefore more trustable. If buyers can easily trace the origin of a product, they feel safer and have one more reason to shop. A recent Commission proposal for introducing a compulsory ‘Made in’ label for all consumer products sold in the EU is an important response to such a request from the market.

At the moment, there are hardly any rules, and manufacturers have no obligation to indicate on their labels the exact origin of their products. This is an advantage for unfair businesses which use fake labels or no labels at all. And it is a danger for consumers, as it means that hazardous goods face fewer hurdles to freely circulate in the EU’s market. National authorities are still unable to trace the provenance of one in ten of all dangerous products seized in the EU.

To end this chaotic situation, many EU countries have tried in the past to introduce rules on national origin labelling. But if these attempts were turned into real laws, as national rules may differ from country to country, there would be a risk of further confusion and harm to legitimate businesses.

The Commission proposal aims to prevent this. Consumers will get a better protection all across the EU and at the same time common rules will prevent new national barriers being caused by diverging national legislation on origin labelling. Information on product origins is crucial to take concrete action against wrongdoers, and therefore represents a powerful deterrent against the sale of unsafe products. Honest manufacturers should welcome this proposal, as it will increase consumer trust and in parallel their appetite for shopping. Producers should also be aware that the use of the ‘Made in’ label will not generate extra red tape or costs. The label will allow a great level of flexibility. The general “Made in the EU” label can be used for all goods which underwent their last substantial transformation in an EU country.

But European manufacturers will remain free to choose a relevant national label, such as ‘Made in Germany’ or ‘Made in the UK’, if they wish to do so.


A 2004 initiative

Walpole, a lobby group representing 100 of Britain’s most famous luxury brands, embarked on a media campaign to stop Brussels introducing a generic “Made in EU” label in 2004. The new label could have led to the banning of the decades-old “made in Britain” label on products such as Scottish whisky or stilton cheese. Many Walpole members, such as Burberry and Jaguar Cars, trade on their Britishness. The group was teaming up with Italian and French lobbyists to fight the proposals. One of the companies to speak out was the luxury shoe brand and Walpole member Jimmy Choo, which was transformed into a household name after it was taken over by London socialite Tamara Mellon in 1996. Its chief executive, Robert Bensoussan, said: “EU means UK, Italy, France and their wealth of high-end craftsmanship, tradition and expertise. But it also means Poland, Portugal and Turkey, which cannot be compared. An EU label will only favour cheating and will hurt the final consumer.”


„Made in Germany“, A Current Legal Situation

Until now there has generally been no obligation for goods in the EU to denote geographical indication. Certain designations of origin had to be made only in the food and beverage sector (particularly for wine) and as well for exports to non-EU member states due to specific local regulations.

So far there are no safe criteria or an explicit legal basis when the quality attribute “Made in Germany” can be used. Instead there are currently conflicting court decisions where the Higher Regional Court (Oberlandesgericht – OLG) of Dusseldorf last specified a quantitative and qualitative assessment criterion: pursuant to recommendations from the Chambers of Commerce (Industrie- und Handelskammer) a value creation share of 45 % should be necessary. A further focus could be placed on the fact that those services are rendered in Germany which are essential for the features of the goods which are of paramount importance to the market for creating added value. In contrast the Federal Court of Justice (Bundesgerichtshof – BGH) and the OLG Stuttgart require that all substantial stages of production from construction to completion of the goods take place in Germany, whereas the OLG Dusseldorf refers to Art. 24 German Customs Code (Zollkodex) and allows the last substantial processing stage to be sufficient. And the OLG Hamm uses all substantial stages of manufacture and/or the one stage of manufacture where the goods obtain their primary features as a basis.


Practical Effects

It remains to be seen how the adopted version of the new regulation will be, of course. However, it will certainly guarantee consistent rules regarding the use of the “Made in …” labelling and offers a little more legal clarity particularly with respect to the current legal situation for the “Made in Germany” labelling.

Probably not much will change for manufacturers who have hitherto used the “Made in Germany” labelling on a voluntary basis as long as the principles thus far prescribed by established court practice are maintained. Although it is feared in many places that the obligation to place the label of origin will lead to a watering down of the “Made in Germany” designation of quality, negative effects will probably not be the result since the EU regulation also foresees strict specifications for the claim to the respective indication of origin.

It should be noted with respect to the “Made in the EU” labelling which will be allowed by the new EU regulation that this broad indication of origin is currently not acknowledged as a nationally prescribed designation of origin by some countries, including the USA, Ecuador, Qatar, Mexico, Saudi Arabia, Syria, Venezuela and the Ukraine. Manufacturers who export to such countries should therefore initially refrain from using this designation.

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