Country Of Production Labels Are Costly

See “Made in …” Where, Exactly? by Daniel Griswold of Cato.

"Whenever you shop for clothes or furniture or any other consumer item, you can always find the “Made in Such a Place” label. It’s actually a requirement of U.S. law. Vital consumer information, of course. How can we make an intelligent choice on what suit or computer or grapes to buy if we don’t know where they were made or grown?

Quite easily, as a matter of fact. Consumers in the otherwise more regulated European Union do it all the time. Unlike the United States, the EU has no requirement that goods contain a label of where they were made. According to a story in today’s Wall Street Journal,

It is odd that the heavily regulated EU doesn’t already have country-of-origin labeling. Similar tags are mandated around the world, including in Japan and China, as a way to help domestic producers compete against foreign manufacturers. The U.S. has had origin labeling since the 1930s. Roughly a quarter of consumers make choices based on where a product was made, according to EU surveys.

The EU is currently reconsidering imposing such labels, prompted by domestic textile firms and other producers looking for an edge over their foreign rivals. Country of origin labels allow them to play on anti-import biases even though imported products, in the EU as in the United States, must meet all domestic safety and quality requirements.

Country of origin labeling raises costs to consumers—up to $3 per item, according to an EU study cited in the story. The Swedish furniture company IKEA must employ 70 people just to handle all international labeling requirements, a cost of doing business that can only drive up final prices for consumers.

Those requirements also raise perplexing questions of determining just where an item was actually made. As my Cato colleague Dan Ikenson has examined in a paper entitled, “Made on Earth,” the growing complexity of global supply chains means that a single imported product can in fact be “made” in lots of different countries.

If companies want to voluntarily tell consumers where their products are made, including all component parts, they are always free to do so, but the government should not force them to include information that is increasingly irrelevant in our more complex and interconnected world."