14 February, 2017
On 8 February 2017, the Senate passed the long awaited Competition and Consumer Amendment (Country of Origin) Bill 2016.
The new laws supplement the recent country of origin labelling reforms for food businesses.
Under the new laws, businesses will be able to make representations that goods have been made or manufactured in, or otherwise originate in, a particular country if the goods were last substantially transformed in the stated country. It is no longer necessary to also demonstrate that 50% or more of the total cost of producing or manufacturing the goods is attributable to production or manufacturing processes occurring in the stated country.
The new laws also introduce a new definition for "substantial transformation". Going forward, goods will be "substantially transformed" if, as a result of one or more processes undertaken in the stated country, the goods are fundamentally different in identity, nature or essential character from all of their ingredients or components that were imported into that country. The Government retains the right to pass regulations that prescribe processes or combinations of processes deemed not to be "substantial transformation". The Government may also provide examples of processes or combinations of processes that amount to "substantial transformation".
While the new laws will be welcomed by many businesses to the extent that they simplify and clarify the position with respect to "Made in" claims, it remains to be seen whether any regulations will be passed to clarify what does (or does not) amount to substantial transformation. Until then, the operation of the safe harbour for "Made in" claims will continue to be an area of uncertainty for many businesses.
The new laws are awaiting royal assent to commence.
Other trade labelling developments
A reminder that the new Commerce (Trade Descriptions) Regulation 2016 commence on 1 April 2017 (to update and replace the Commerce (Imports) Regulations 1940). These regulations identify mandatory country of origin and other commerce labelling requirements applying to listed goods and prepacked articles. Most of the covered goods are consumer goods.
For further information, please contact:
Elisabeth White, Partner, Baker & McKenzie
elisabeth.white@bakermckenzie.com
