After years of debates, reviews and inquiries, Australia’s country of origin food labelling regime is set to change.
The Federal Government was finally pushed into pursuing urgent reform earlier this year, after community pressure in the wake of the frozen berries hepatitis outbreak in February 2015. While this was a food safety issue rather than a question of labelling, it nonetheless triggered an inquiry by the House of Representatives’ Agriculture and Industry Committee into food labels.
The Federal Government has since announced the outcome of that inquiry – new mandatory labels to be affixed to food packaging, and changes to what those labels mean – including significant changes to the definition of “Australian Made”.
The key elements of the regime include:
- new mandatory labels advising consumers where foods are grown, made or packaged. Products “made in” or “grown in” Australia will be able to feature the well-known green and gold kangaroo and triangle icon. The proposed labels will also include a bar chart that illustrates what proportion of ingredients are from Australia. It seems likely that there will be some requirements regarding the prominence and legibility of these logos, but some flexibility on their colour and size.
- clarification of the definition of “Australian made”: at present, a product can be described as “made in Australia” even where it has been imported and subjected to minimal processing (such as slicing), so long as this results in a “substantial transformation” and more than 50% of the costs of producing that item are incurred in Australia. This is set to change, but we are still awaiting further details as to how. The Australian Food and Grocery Council has indicated that the 50% costs rule will be abolished, but further clarification about the “substantial transformation” rules is required.
- “packed in Australia”: products imported into Australia and re-packed locally will now need to identify the origin of the product, for example, "Packed in Australia, made in Canada."
- seasonal variability: different labelling options will be available where the Australian content of the product varies between the seasons. Businesses will be able to either refer to a "seasonal average" of Australian ingredients, make an "at least" claim, or change labels seasonally.
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The new regime has been subject to some criticism. For example, while the meaning of “Australian made” is set to be clarified, a product that is Australian made from 0% Australian ingredients will still be able to carry the green and gold kangaroo logo. This may lead to consumer confusion.
While companies will be “encouraged” to provide additional information in relation to the origin of key ingredients, there will not be any obligation on food businesses to specify the country from which non-local ingredients are sourced from. This may do little to alleviate community concerns about consumers’ inability to know where their goods are sourced from. For businesses, however, this will significantly lighten the regulatory burden, given that ingredient sources may change regularly.
Global businesses that supply products into Australia can continue to rely on a generic claim of “made from local and imported ingredients”, in order to satisfy country of origin requirements in both Australia and in foreign jurisdictions. However, that claim must be set out in a box on the label, meaning that some businesses may need to develop new, Australia-specific packaging.
The new regime is set to become mandatory from mid-2016, although companies are encouraged to voluntarily adopt the new labels earlier. Transitional arrangements are expected to vary from 3 months to 24 months depending on shelf life. The Federal Government is consulting with States and Territories, as their agreement is necessary before the Federal Government’s proposed new regime can be rolled out.
Businesses will need to be careful not to fall foul of the new system, as the ACCC has continued to demonstrate that country of origin labelling remains an enforcement focus.
The ACCC has taken a number of enforcement actions in relation to misleading country of origin labelling. Recently, the ACCC issued an infringement notice to Conroys Pty Ltd for making a false or misleading representation about the place of origin of its Breakfast Bacon – which it labelled as a ‘Product of Australia’ when it was produced using imported meat. Conroys paid a $10,200 infringement notice and gave a court-enforceable undertaking in relation to its future compliance with labelling laws and the Australian Consumer Law.
Of course, the introduction of any new regime inevitably gives rise to issues of interpretation and scope – the new regime will be untested and it may be some years before guidance from regulators and courts is provided, thus generating legal uncertainty for some time to come.
Labelling laws and trade law concerns
Australia is a party to numerous Free Trade Agreements and other multilateral trade agreements which can protect foreign companies from Australian laws that attempt to discriminate against imported goods in favour of Australian goods. The purpose of these agreements is to ensure fairness in international trade. If country of origin laws are found to go beyond what is fair and reasonable for the purpose of providing consumer information, then they may be considered to be discriminatory and a technical barrier to trade. The United States has been drawn into dispute settlement proceedings in the World Trade Organisation on multiple occasions for enacting country of origin labelling requirements for meat products, and on each occasion these requirements have been found to be discriminatory.
As a result, while a stringent country of origin labelling system is clearly in the interests of Australian producers, the Federal Government faces a delicate balancing exercise in attempting to meet the needs of Australian consumers and producers, and comply with its international obligations.