The European Union has taken the next step toward a mandatory system for “made-in” labeling on non-food consumer products in Europe, replacing the current voluntary system.

In April 2014, the European Parliament adopted a proposal to amend an existing proposed regulation dealing with consumer product safety that would have the effect of implementing mandatory made-in labeling. The aim is to improve traceability of goods and strengthen consumer protection.

At present, a voluntary system of made-in labeling exists in the EU, and it is this system that would be replaced by the current proposal when it becomes adopted. The European Parliament believes that mandatory made-in labeling should apply to almost all goods sold on the EU market with a few exceptions, such as medicine.

The new system will apply to products whether produced inside the EU or imported into the EU from a third country. EU manufacturers may be able to choose whether to label products with “made in the EU,” or specify a particular country. At present, however, “made in the EU” may not satisfy other countries, particularly the United States, where that label would not be accepted as a sufficient indication of a particular country.

More controversially, the European Parliament has also proposed the introduction of rules that would require the European Commission to draw up a public EU-wide blacklist of firms that are repeatedly found intentionally to infringe EU product safety rules.

To pass, the proposed regulation needs to be jointly adopted by the European Parliament and the Council. The Commission believes that the regulation will start to apply in 2015.  Because it is a regulation, it will have direct effect in EU Member States and will not need to be separately implemented by national implementing legislation.

In relation to goods produced in more than one place, the “country of origin” for the purposes of mandatory labeling would be the country where the manufactured product underwent the last substantial processing resulting in the eventual product, or the last important stage of the manufacture. This presents the potentially difficult task of identifying where and when that might be.

The European Parliament also wants to increase the penalties for breach of these new regulations to take into account the seriousness, duration, and intention or recurring nature of any infringement, as well as the size of the company. Interestingly, however, the penalties will be determined by the national enforcement authorities of each Member State, and so could vary between different EU countries.

The European Parliament has suggested that penalties should not exceed 10% of annual total revenues for the worst offenses, although given the size of most companies involved in the supply of consumer products, that could be a huge amount.

Although the issue of penalties can be expected to be clarified over the next few months in the EU legislative process, the basic labeling requirement of the new regulations is unlikely to be modified. Affected manufacturers should take steps now to adjust to the forthcoming requirements on products sold into the EU market.