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Words or pictures that are an essential part of the goods are not necessarily a representation about a country of origin, such as a t-shirt with a 'Made in Australia' label makes a representation about the country of origin, however a t-shirt with the word 'Australia' as part of the design does not.
A business must not make false or misleading represenatations about the country of origin of goods. When there is no country of origin representation, a business must not imply one by other statements or signs associated with the goods. An example of which is a person may buy a 'Genuine Turkish rug' believing it is made in Turkey, when it is actually made in China.
Representations about country of origin claims include:
'made in' a specified country;
'produce of', 'product of' or 'produced in' a country;
use of a prescribed logo; or,
claims that goods, ingrediants or components, were 'grown in' a specified country.
Businesses have to meet certain criteria when making these claims. These criteria apply to claims about country, not region, for example, they do not apply to 'made in Tasmania' or 'made in California'. A business accused of making a false or misleading claim about country of origin has to give evidence that its claim meets the relevant criteria.
For a business to claim goods were 'made in' a particular country:
the goods must be substantially transformed in that country; and,
50% or more of the total cost of producing or manufacturing the goods must be incurred in that country.
For a business to claim goods are 'produced in', produce of' or 'product of' a particular country:
all or virtually all of the production or manufacturing processes must happen in that country; and,
all of the significant ingredients or components must come from that country.
An ingredient or component does not have to be a certain percentage to be 'significant'. For example an apple and cranberry juice bottle can carry a 'produce of Australia' label only where both juices are from Australia, even though the cranberry juice is only 5% of the total volume, it is 'significant' to the product and the label would be misleading if the cranberry juice was imported. The final product may contain imported preservative and still be 'produce of Australia' as the preservative is not 'significant'.
If a business labels a product with a prescribed logo, such as the 'made in Australia' brand, the goods must:
pass the substantial transformation test; and,
meet the prescribed percentage of production or manufacturing costs that appy for the logo.
A business can lawfully claim goods are 'grown in' a particular country when:
at least 50% of the total weight comprises ingredients or components grown and processed in that country;
virtually all production or manufacturing processes happened in that country; and,
each significant ingredient or component was grown and processed only in that country, however each ingredient or component does not have to be a certain percentage to be 'significant'.
The country of origin may also be represented by a certification trademark, such as the 'Australian Made, Australian Grown' (AMAG) logo. The AMAG logo and other certification trademarks may only be used by businesses licensed by the owner of the trademark.
Making false or misleading representations is an offence. The maximum fine is $220,000 for an individual and $1.1 million for a body corporate. Criminal penalties for the same amount apply.
Substantial transformation means the product undergoes a fundamental change in the country represented. The changes can be to the product's appearance, operation or purpose. Processes that lead to substantial transformation include:
processing ingrediants from the claimed country of origin and another country into a finished food product, such as the production of a cake using sugar from the claimed country of origin with spices, fruit and flour and sugar from another country;
production of a newspaper using imported ink;
moulding sheet metal into a car panel; or,
milling flour from wheat.
It does not include:
reconstituting imported fruit juice concentrate into fruit juice for sale, whether or not water, sugar, preservatives and packaging from the claimed country of origin were used; or,
assembling imported components into household or other items, such as white goods, furniture or electronic goods.
The total cost of producing and manufacturing goods include the producer or manufacturer's expenditure on:
Material to produce or manufacture the goods. This includes:
purchase price;
overseas freight and insurance;
port and clearance charges; and,
inward transport to store.
It does not include:
customs and exise duty;
sales tax; or,
goods and services tax.
Labour related to, and reasonably allocated to, the production or manufacture of the goods. This includes:
manufacturing wages and employee benefits;
supervision and training;
quality control; and,
packing goods into inner containers.
Overheads related to, and reasonably allocated to, the production or manufacture of the goods. This includes:
inspection and testing of goods and materials;
insurance and leasing of equipment;
vehicle expenses; and,
storage of goods at the factory.
For example, to use the 'Made in Australia' label, more than half of the total cost of making the product must be incurred in Australia.
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