Origin Rules, Origin Power
When the Financial Times reported that Chinese manufacturers are building an industrial base in Morocco to serve Europe’s electric-vehicle market, it looked like another chapter of “China shock 2.0” and another Brussels anxiety about deindustrialisation. The deeper story is different. Morocco is becoming a test case for how rules of origin - the criteria that decide where a product is “from” - will shape the next phase of trade and industrial competition.
Photo: Abdou EL Amri
Rules of origin used to be a technical detail. Today, they help decide where businesses invest, how value is shared across regions, and whether a supply chain is seen as fair regional integration or a backdoor for subsidised imports. The EU-Morocco Association Agreement has established free trade in most industrial goods, while Morocco also has trade agreements with the US and others. Combined with Tangier Med’s port network and an active industrial policy, this makes Morocco a regional hub where Chinese capital and know-how, Moroccan labour and infrastructure, and European demand meet under preferential rules.
In this world, “made in” is increasingly “made through”. A battery module can be designed in Europe, use Chinese-processed materials, be assembled in Morocco and enter the EU as a Moroccan product if local transformation meets the agreement’s rules. For boards, the question is no longer whether China is part of the supply chain - it is. The question is how much non-local content a hub such as Morocco can host while still qualifying for trade preferences and political acceptance.
That moves rules of origin from the customs desk to the C‑suite.
First, network design has become regulatory design. Decisions on plant location, supplier mix and process steps now determine not only cost and resilience but also whether products enjoy free-trade benefits or risk anti-circumvention cases.
Second, traceability is now a strategic asset. As customs authorities digitise procedures and use risk-based controls, companies need detailed visibility on where value is created. Technology is changing what that visibility looks like: digital trade documents, sensor-enabled logistics and emerging product passports for batteries and other goods allow firms to track inputs and transformations in near real time, from mine to motor. Used well, these tools do more than tick compliance boxes; they help establish the factual record on which regulators, investors and societies will judge whether a network is playing by the rules and whether its legitimacy is earned or only claimed.
Third, reputation matters. Supply chains that appear to use partner countries simply as low-value assembly platforms, without building local jobs and skills, are more exposed to political backlash and sudden policy shifts.
A sceptic will say this is just old-fashioned arbitrage. Companies have always routed goods through favourable jurisdictions and designed production around trade agreements. But three changes make today different: the return of activist industrial policy in strategic sectors; governments’ improved capacity to audit supply chains; and a geopolitical lens that turns sourcing decisions into security questions.
From a macroeconomic perspective, rules of origin cut both ways. Research shows they can protect the integrity of free-trade areas but also tilt the field towards incumbents if drawn too tightly. Stricter rules may help some European producers and jobs in the short term, but they raise costs for consumers and make it harder for smaller actors to join cross-border value chains. The test is whether rules are calibrated to stop blatant circumvention and subsidy arbitrage, rather than serving as covert protectionism that undercuts the openness on which Europe’s prosperity still relies.
The European Commission’s 2025 decision to impose countervailing duties on aluminium wheels from Morocco on the grounds that they were unfairly subsidised and threatened some 16,600 EU jobs is a warning. Whatever one’s view of that case, the message is clear: when policymakers believe the spirit of a trade deal is being abused, they will intervene.
Morocco is not alone. It is one of several “connector countries” - alongside Mexico, Vietnam, Turkey and others - that sit between major blocs in an increasingly regional global trading system. Supply chains rarely stop when a new barrier appears; they tend instead to reroute through different corridors and platforms. Efforts to push Chinese industrial capacity out of Europe’s orbit will mainly change where and how Chinese companies plug into Europe-facing networks, not whether they do. The strategic choice for Europe and its partners is whether to shape those routes through shared standards and partnerships or to let them evolve with little influence.
For companies, the opportunity is to design supply chains around three simple tests:
Legitimacy: can the network withstand political and regulatory scrutiny as fair and transparent?
Local value: does the partner economy gain real capabilities, rather than just hosting final assembly?
Line of sight: can the company demonstrate, with credible data, where inputs come from and how they are transformed?
If the answer is “yes” to all three, a Moroccan hub is more likely to be seen as a genuine step in regional integration rather than a workaround.
Fragmentation need not mean retreat. It can lead to a more deliberate form of globalisation, in which resilience, neighbour development and respect for agreed rules are built into supply‑chain design. The companies that master this new grammar of origin rules will not just survive the next trade order. They will help define it.