At the end of August, Germany celebrated an obscure birthday: the “Made in Germany” label turned a hundred and twenty-six years old. The label originated when England, in 1887, passed a law forcing foreign companies—which had been manufacturing copycat British products—to make the origins of their products clear. The British wanted to stigmatize imitation goods from Germany, in particular.

By the late nineteenth century, though, the quality of German manufacturing had vastly improved; eventually, the “Made in Germany” label was a source of cachet. In 1896, the British historian Ernest Edwin Williams published a book titled “Made in Germany,” lamenting England’s manufacturing decline at the hands of the Germans—whose society, in its “industrial infancy,” was able to beat the British by paying attention to “matters of detail.”

Later on, the First and Second World Wars devastated Germany’s economy and tarnished—to put it mildly—its reputation. German companies, too, were implicated. IG Farben, a German chemical conglomerate, was broken up after the Second World War—into modern companies that include Bayer and BASF—because it produced a chemical used in Nazi gas chambers, among other war crimes.

Still, the German reputation for well-made products has persisted, and German companies have taken advantage of that—especially in recent decades—to sell everything from cars to knives. Think of German carmakers like Volkswagen and Audi. They’ve had a complicated relationship with their German heritage over the years—but lately, both have played up their roots with global advertising taglines: “Das Auto” for Volkswagen and “Vorsprung durch Technik” for Audi. (Five years ago, the French automaker Citroën even parodied campaigns of its German rivals with a television spoof claiming that its C5 was “unmistakably German.”)

The thing is, it’s rare these days for German products to be made entirely in Germany; like major companies in other industrialized countries, German firms have outsourced a lot of their production to developing countries where wages are low. In response, the European Union is now considering more stringently regulating how manufacturers label where their products are made.

Today, companies in Europe apply origin labels only if they want to—with the exception of food companies, which are more heavily regulated—and if a German clothier does most of its production of a shirt in, say, North Africa or Asia, but puts the final details on the item in Germany, it can still use a label claiming the item was “Made in Germany.” Two members of the European Commission, Tonio Borg from Malta and Antonio Tajani from Italy, instead want manufacturers to carefully track the location of each production stage and then label their products as being made in the place where the most value was added.

Thomas Picard, whose company makes leather bags and wallets, told me that this plan is “absolute hogwash.” Picard, of course, prefers the current flexibility; his company, Picard, charges more than twice as much for its premium “Made in Germany” line as for its standard products—though the former includes, for example, a purse that is partially assembled in Tunisia from Italian leather and then finished in Germany. For products finished in other parts of Europe—say, Ukraine—Picard uses a “Made in Europe” label. For items manufactured at its Bangladesh factory, it keeps things vague: “Made by Picard.”

With the new rules, Picard will no longer be able to choose labels as he wants. That “Made in Germany” purse might have to name Tunisia as its place of origin—even though “the most important steps happen in Germany,” according to Picard.

The origin-labelling proposal could go into effect later this year if passed. The E.U. says the rules are about untangling intricate knots of modern globalization. Indeed, shouldn’t German companies get the benefit of saying their products were made in Germany only if they truly were made there? Many smaller German companies whose manufacturing processes occur entirely within the country are in favor of stricter rules. The ministers who proposed the law say that precise labelling will also ease product recalls and give consumers more insight into the items they buy.

Some German companies, not surprisingly, put it differently: they see an agenda to reverse the marketing bump that the label has long given German exporters, a plot to give other European companies a competitive edge. With the euro crisis now in its fourth year, and growth in the euro zone lagging, German companies are looking to shoppers in China and other emerging markets. In August, the country’s Federal Statistics Office reported that German exports to non-euro-zone countries rose by 1.1 per cent in the first six months of 2013 compared with the first six months of 2012 (while exports to E.U. member states fell 1.7 per cent). Germany’s healthy trade balance has created friction with its European neighbors. While the German economy marches on, Chancellor Angela Merkel is asking Greece, Spain, and others already struggling with crippling unemployment to make deep spending cuts.

Whatever happens next, the proposed rules make it clear that the “made in” label is losing its relevance. Now that it’s commonplace for a single purse to be made in three countries, any label that names a single place is likely to be misleading—under the old system or under a new one.

Photograph by Heiko Specht/laif/Redux.