Why the “Made in the EU” label can be misleading

Ever experienced that little sense of contentment when purchasing a pair of jeans containing the “Made in the EU” label? It’s funny (and slightly misleading) how this label has become one of virtue, morality and a clean consciousness. We’re here to provide you with an understanding of why the “Made in the EU” does not mean what you might think. In addition, we explain why the supply chain makes everything more complicated. Lastly, we will present our recommendations for consumers, employees in the industry, or if you are working at a political level. 

Made in the EU: Quick context 

The fast fashion industry is dependent on cheap labour and low manufacturing costs. This is why our clothes, with a few exceptions, are produced in Asia. However, with an increasing focus on social and environmental sustainability, a growing number of consumers are looking for more locally produced clothes. Unlike the clothes produced in Asia, those produced in the EU are manufactured in countries where national laws protect workers rights and ensure a certain level of environmental consideration. Thus, there is a trend that clothes sold in Europe are also being manufactured in Europe.

Speaking of product origin, it is much easier to determine where, e.g. a tomato comes from, than to determine the origin of a piece of clothing. The complicating factor is that clothes consist of different elements and often also accessories. Thus, they may therefore undergo several manufacturing stages across several countries and even continents. A label of origin, such as “Made in the EU” does not always tell the whole story about where your clothes come from. 

Labelling rules 

First, let us introduce you to the technical part. It’s short, so hang in there. 

The EU commission differentiates between two scenarios when it comes to rules of origin; There are so called “wholly obtained” products, and products that have undergone a “last substantial transformation”.

If all parts of a piece of clothing are made in one country alone – which is quite rare – it is classified as a “wholly obtained” product. In this case, the manufacturer can freely choose whether to give it a national label – e.g. ‘Made in Germany’  – or a ‘Made in the EU’ label.

If a piece of clothing was produced and/or put together in two or more EU countries, it can carry a ‘Made in the EU’ label.

However, certain rules apply once the manufacturing involves a non-EU country. The item can carry a “Made in EU” label if the product’s last substantial transformation took place in an EU country. A ‘substantial transformation’ must result in a new product or represent an important stage of the manufacturing process. This could be sewing the piece of clothing together. A smaller detail, like sewing on buttons or adding shoelaces, does not qualify as ‘substantial’.

“Made in the EU” – The loopholes 

While criteria for ‘substantial transformation’ exist, it can still be vague. This can create problems. 

In 2009, the news agency Reuters found that factories across Serbia, Albania, Bosnia and Macedonia sew and assembled clothing sold abroad, bearing tags that said the clothing is made in the EU, or a member country such as Greece or Italy”. In one of the cases investigated, a small Albanian factory received an order from Greece, which supplied them with the material, the model design and the labels. These operations were in accordance with the labelling laws at that time.

It is a legal loophole that allows manufacturers to cut production costs. Labour in the above mentioned countries is cheaper and there are fewer responsibilities to uphold rights. According to our research, similar stories have not been reported recently. But this does not mean that the practice is not ongoing. It may just not have reached the news. 

The EU labelling rules were updated in 2015. However, despite having conducted research on this matter, we do not know whether similar loopholes still exist. Finding out may be increasingly relevant. More and more socially conscious consumers request clothes that are “made in the EU”. Both on ethical and environmental grounds. 

The complexity of supply chains 

The difficulty of determining the origin of a piece of clothing lies in the complexity of the supply chain.  As the illustrations below visualise, garments go through many manufacturing steps. The vast majority of these can be outside an EU country. Still, according to law, they can be classified as “made in the EU”.

Looking at the production stages of a cotton T-shirt. All stages up to “the cloth being cut into pieces” can take place outside of the EU. Thus, the ‘last substantial transformation’ in this journey is when the pieces are sewn together. The same applies to a t-shirt made out of polyester. 

It means that the cotton can be harvested in for example India. Or that the oil for making polyester can be extracted from Iran. The actual material – whether made out of cotton or polyester – can, according to the labelling rules, be produced outside of the EU, while still wearing a “made in the EU” tag. As long as the last part is made within the Union. That the components for our clothes are made in various countries is not necessarily a bad thing. However, for a consumer, it is easy to believe that the majority of the steps happen inside the Union.

“Made in the EU” – A symbol of good working conditions? 

Since “Made in the EU” has become somewhat an indicator of better working conditions and responsible management of resources, it is worth paying attention to these rules. 

Quite a few of the labour processes prior to the “substantial transformation” are quite labour intensive. For example, harvesting cotton, extracting oil, spinning and ginning yarn. These can have a negative impact on both the surrounding environment and the climate. 

In short, whilst the thought behind the “Made in the EU” label is a move towards a more socially and environmentally conscious direction, it does not actually guarantee protection for the environment or from human rights violations. Not in all stages of production. If you’re more interested in reading about issues regarding working conditions in the textile industry, read our article on the subject here.