Made in EU -- fashion's legal loopholes

Wed Jun 17, 2009 10:49pm EDT
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By Adam Tanner and Maja Zuvela

GJIROKASTER, Albania/TRAVNIK, Bosnia (Reuters) - The road to the continent's high fashion boutiques often leads through little-known towns in the Balkans, but you wouldn't know it from reading the labels.

Blerza Kallajnxhi held up a cluster of labels saying 'Made in E.U.' at her factory in Gjirokaster, Albania -- birthplace a century ago of Enver Hoxha, the Communist dictator who isolated Albania from the rest of Europe -- as she explained how she fills orders from abroad.

"We get an order from Greece and they send the material, the model design and the labels," said Kallajnxhi, who bought the small factory in the mountain stronghold of Gjirokaster with her husband two years ago.

Greece -- unlike Albania -- is in the European Union.

In the eyes of many consumers, a product made in Europe might be of better quality than one made in China, Bangladesh or Thailand, where many fashion groups have outsourced manufacturing. But few know what 'made in Europe' really means.

"Nothing says 'Made in Albania,'" said Kallajnxhi. "Of course we are proud of our country, but that's what the client wants."

Global fashion brands are doing nothing illegal in labeling clothes this way, provided the manufacture includes inputs from within the 27-country bloc.

Under EU rules that are obscure to most consumers, goods made in more than two countries are said to originate in the place of "their last, substantial, economically justified working or processing."   Continued...

<p>A Bosnian worker sews at the Borac garment maker in the central town of Travnik June 3, 2009. The factory assembles clothing for labels such as Hugo Boss, Pierre Cardin and Burberry, using their fabrics and designs. REUTERS/Danilo Krstanovic</p>