The draft regulation was adopted by the Parliament at first reading on Tuesday (18 May) by 528 votes in favour and 18 against, amid 108 abstentions.
"The most important aspect of the report concerns the indications of the country of origin and to specify criteria for the use of 'Made in' labels for products manufactured in the EU," said Toine Manders, a Dutch liberal MEP (ALDE) who drafted the report for the Parliament.
Manders said the new rules are intended to ensure that claims of origin are not misleading by requiring that at least two out of four stages of manufacturing are carried out in a country before obtaining the 'Made in' label of that country.
"This means that we can no longer write 'Made in Italy' for example, on a product of which only 25% is manufactured in that member state," said Lara Comi, an Italian MEP from the centre-right European People's Party (EPP).
The new criteria also aims at creating reciprocity with trade partners like China and the US, which already have origin marking in place.
But it may also carry the potential to create a new trade dispute. "Some will probably consider this mildly protectionist," admitted a Parliament source, before adding that the proposal was not intended at "banning Chinese textiles".
'Made in' labels are currently voluntary in the EU but in practice their use depends on national laws, the European Parliament explained. In comparison, country of origin labelling is strictly regulated in the USA, Canada and Japan, it said.
The new rules were introduced with an update of an existing EU labelling scheme that was initially intended as a technical update aimed at cutting the time it takes to place new fibres on the market. There are currently 48 fibres (18 natural and 30 synthetic) sold on the single market, the Parliament said.
Lawmakers also asked the European Commission to produce a report within two years and propose new legislation if necessary to impose a harmonised labelling requirement across the bloc.
The report should consider for instance instructions for care, size indicators and possible ecological and social factors in the manufacturing processes, MEPs said.
The draft regulation still needs backing by ministers from the 27 member bloc if it is to become law.