Member Article

Do you still trust “country of origin” labels?

“Made in”, two words that can change your perception of a product. Have you ever doubted merchandise because it was “made in China”? Or ever bought something because the country of origin was home country and you wanted to support the local economy? But did you know all of the elements, parts, components of these products may have been manufactured elsewhere? And how not to get it wrong between ‘country of origin’ and ‘country of assembly’?

Last year, the U.S Congress repealed the country-of-origin labeling rule (COOL) for beef and pork. Meaning that for many Americans, their pork chops or tenderloin could either come from down the street or from Mexico or Argentina, and they would never know. The pressure came from the World Trade Organization (WTO) which imposed $1 billion in retaliatory import tariffs against the U.S. if the rule was not overturned. The “COOL idea” mandated labels on packaging to reveal the country (or countries) where the farmyard animal was born, raised and slaughtered.

“Some people just want to spend their dollars closer to home” said Patty Lovera, assistant director of Food & Water Watch, which supports COOL. “But there are also countries that we take products from that have had problems with mad cow disease. Some folks might look at that and think this is a risk, but how are they supposed to know if it’s not labeled?” (1)

Today, if the pork you eat was born in Guatemala, raised in Mexico and slaughtered in the U.S, you have no way of finding out, all you see is a USDA label. Overturning the COOL requirements goes against what most of Americans want regarding labeling. In 2013, a survey showed that 90% of Americans favored country-of-origin labeling for fresh meat sold in stores (2). “If meat comes from another country direct to retail it must be labeled from that country,” says Eric Mittenthal of the North American Meat Institute. “That has long been the law”. (2)

But muscle cut, ground beef and pork aren’t the only area where country of origin labels are a problem. For many of us buying a car “made in our home country” is a source of pride.

German cars used to be a major source of pride but what if we told you that they may very well not be made in Germany?

For decades the hallmark “made in Germany” of three of Europe’s leading luxury automakers has lost its exclusivity as BMW AG made the decision to join rivals Audi and Mercedes-Benz in establishing a manufacturing footprint in Mexico. “Mexico’s location facilitates exports to North America as well as South America, which we think will be a future growth market,” said Frank Biller, a Stuttgart, Germany-based analyst at LBBW. “If a cluster of carmakers starts production in Mexico, this will create a local industry.” (3)

In the past, it used to be pretty obvious which cars were built in the U.S., there were Detroit’s Big Three: Ford, GM and Chrysler (made in USA), and the rest of world (built elsewhere). But in the 1980s Japanese started building cars in the U.S., the U.S. started to import pieces from Asia and Europe and today it remains complicated to know if your car is made in America or not.

You may have heard something like ‘I have a Jeep Patriot, I support the American economy’, well, this is wrong. The Jeep Patriot is ‘built in Belvedere, Illinois’ but its transmission also originates in Mexico, some engine pieces in Japan and others are from Germany. Same goes for the Mustang, assembled in Michigan with parts from China, France, the U.K. and Mexico. What is more American that the Ford Mustang?

It is surprising that what is considered top of the class automotive products are born of such a mix of production systems. The cars are supposed to be built to high standards but can a company really controls all of these production lines all across the world? It is unlikely. By the time we realize that one of the parts of a vehicle series wasn’t manufactured properly, the cars are often out and running and that is the reason why we have seen so many ‘car safety recalls’ or call-back in the recent years.

Safety and security should be the consumers’ number one concern and that is why they should always be able to know where products are made, built and assembled before buying them. Ironically, even some items that are usually the official symbols of a country are nowadays being made abroad even if it isn’t publicly advertised.

It’s the case for banknotes for which safety concerns are crucial from design, holograms, paper, ink to the assembly line. Country of origin is also a thing for bills as many place national pride in their banknotes, since they illustrate the country’s history… but sometimes it might be made far away from home, with the ink coming from one country, the paper from another, etc.

One of the world’s largest banknote printers De La Rue, providing bills for many central banks across the world is now subcontracting its production in Sri Lanka, Malta and Kenya. De La Rue is taking advantage of Sri Lanka’s sluggish economy, Kenya’s low production prices in order to remain competitive (4) but banknotes are a summary of state-of-the-art technology, absolute security and tailor-made supply chain. Banknote printing is a fastidious and costly task and is the reason why several printers decide to make their notes abroad. It is also the case for De La Rue competitor, Crane Currency, which recently opened factories in Indonesia. Crane CEO, Stephen DeFalco, presented it as a technical partnership even if it seems to be for obvious production costs reasons (5).

Just like everyone uses clothing, everyone uses banknotes and knowing exactly where they were made could become a national debate in many countries. We contacted Ton Ross, Banknote director for the European Central Bank (ECB) who declined to answer our questions; “due to security reasons the ECB does not communicate where and how the euro banknotes are produced”. Some other Central banks in Europe are looking more and more at the importance of where their bills are produced and giving importance to the country of origin label.

In Germany, for example, “Regarding the banknote procurement by Deutsche Bundesbank, all manufacturers taking part in Bundesbank tenders are obliged to denominate the facility in which the euro banknotes would be printed” said Stefan Hardt, head of the Cash Management at the Deutsche Bundesbank. The Central Bank of Norway also requires to control the printing process from the components to the assembly lines. “We know where the paper is produced because we are present for the control from the moment where it starts to the end” says Trond Eklund, Director Cashier at the Central Bank of Norway “it is very transparent where all the material comes from” he added (6). What is true for strong Central Banks may be uncertain for smaller countries, since they have little or even no access to information from their banknote printers on the actual printing location and security measures.

In the past years, even the powerful “made in Japan” label was considered to be ‘under assault’ as the age of electronics was shifting and the “made in Japan” label progressively overtaken by “made in Korea” or “Made in Taiwan”. Next time you look at a piece of clothing, a steak, a car or even the banknote you are using to buy them with, remember to think about where they are truly from. It might take come investigation as the “Made in” doesn’t necessarily reflects it accurately… Our daily consuming habits are largely influenced by these labels and we should be able to trust them. Today it’s not the case but many consumers’ associations are already working on changing the laws before we buy our Mexican steaks in our Japanese cars with our Sri Lankan bills, all “Made in America”?

1. New Rules on how meat is labeled: What you should know, Monica Eng, Chicago Tribune, January 4th 2016
2. Quashing consumers’ right to know, Congress repeals country of origin labeling for beef and pork, Nancy Fink Huehnergarth, December 21st 2015, Forbes
3. ‘Made in Germany’ loses more luster as BMW, Audi, M-B expand footprints, Automotive News, July 4th 2014
4. From the community, Banknote printers, a quest for competitiveness, Chicago Tribune, Friday August 12th 2016
5. Banknote printers, a quest for competitiveness, March 31st 2016, Chicago Tribune
6. Interview with Trond Eklund, Director Cashier at the Central Bank of Norway, August 2nd 2016

This was posted in Bdaily's Members' News section by Lance Austin, journalist and documentary director .