In November 1997, the Hon. Warren Truss MP, the then Minister for Customs and Consumer Affairs, announced that the Commonwealth government would move to address industry and consumer uncertainty over origin labeling claims. The minister said:

Due to recent court decisions, considerable confusion has been created in the minds of the industry and consumers alike, undermining both the value of origin claims in the marketplace. The government is acting to address this uncertainty, and set rules that the industry can follow and consumers can understand.

Consequently legislation was established by the Commonwealth Parliament to make the legal standing of corporations that make representations regarding the country of origin of goods they supply clearer. The Australian Competition and Consumer Commission (ACCC) regulates the Country of origin claims under the Australian Consumer Law (ACL) that sets regulations for claims such as ‘product of’ and ‘made in’. The ACL replaces previous Commonwealth, state and territory consumer protection legislation in fair-trading acts.

The Australian Consumer Law contains provisions of relevance to country of origin claims made by businesses. (Refer to Appendix A)

Sections 151(1)(a), 151(1)(k) and 155, are offence provisions and make conduct outlined in ss. 29(1)(a), 29(1)(k) and 33 respectively, offences.

Section 29(1)(a) and 151(1)(a), are relevant because a representation as to the country of origin of goods is a representation of the history of those particular goods.

Section 33 and 151 are relevant because a representation about the country of origin may be a representation of the nature, manufacturing process or the characteristics of particular goods.

These provisions cover all forms of representation and imply that businesses must be cautious when making representations about the origin of goods. It is a breach of the sections mentioned above in the ACL for a corporation to make misleading, false or deceptive representation about the place of origin of goods. Usually origin claims are about the country of origin, for example ‘Made in Australia’.

There are four general classes of country of origin representation recognised in part 5-3of the ACL.

General country of origin claims is a provision that covers terms used to indicate origin, for example, ‘Made in Australia’. The general country of origin test is set out in the s.255 (1) item 1, which states that if a representation as to the country of origin of goods meets the following requirements:

(a) The goods have been substantially transformed in that country; and
(b) 50 percent or more of the total cost of producing or manufacturing the goods as worked out under section 256 is attributable to the production or manufacturing processes that occurred in that country; and
(c) The representation is not a representation to which product of/produce of representations or prescribed logo representations apply.

A person does not contravene ss.18, 29(1)(a), 29(1)(k), 151(1)(a) or (1)(k) by reason only of making the representation.

What this means is that goods must pass two tests to qualify for the general country of origin defence. They must be substantially transformed in the country that is the subject of representation and 50 percent or more of the costs of production or manufacture of the goods must be incurred in relation to the processes that occurred in that country. If goods pass both of these tests for a particular country, the manufacturer may make a claim that the goods are made in that country with the full confidence that this claim will not attract liability under the relevant sections of the ACL.

A Federal court case in 1989, Thorp v C.A. Imports Pty Limited , illustrates three important points:
1) Certain simple procedures carried out in a country(in this case Australia) do not qualify goods for the claim ‘Made in Australia’
2) Certain costs, even if incurred before the manufacture of the goods is complete, may not be attributable to the production of the goods
3) The importance of getting the correct advice

In this case C.A. Imports’ toy koalas were designed and finished in Australia, but the skins were made in Korea. It was ruled in this case that the work done in Korea meant that the koalas ‘were not correctly described as having been made in Australia.

Product of/produce of claims is a provision that applies to representation that goods are the produce of a certain country. It also applies to the variations of the term. The ‘product of…’ is a premium claim about a good’s origin. Section 255(1), item 2, sets out the tests for representations that goods are the produce of a particular country. It provides that if a representation that goods are the produce of a particular country meets the following requirements:

(a) The country was the country of origin of each significant ingredient or significant component of the goods; and
(b) All, or virtually all, processes involved n the production or manufacture happened in that country.

A person does not contravene ss.18, 29(1)(a), 29(1)(k), 151(1)(a) or (1)(k) by reason only of making the representation.

This provision establishes that, to qualify for the ‘product of Country of origin’ defence, all of the significant ingredients or components of the goods in question must come from the country of the representation and virtually all of the production or manufacturing processes associated with the goods must occur within the country of the representation. The term ‘product of’ are regarded as being a higher claim than such claims as ‘made in’. The legislation also picks up any variation of the term ‘product of’.

The ‘Use of a prescribed logo’ provision applies to representations that goods are the produce of a particular country. Logos are frequently used to promote goods to build the brand recognition, or to associate the goods with desirable characteristics that may include their origin. A prescribed logo will signify that both substantial transformation and a certain percentage of costs of producing the goods occurred in a given country. Section 255(1) sets out the test for representations made by the use of a prescribed logo. Item 3 of section 255(1) requires that representation that is specified by the regulation in the ACL that:

(a) The goods have been substantially transformed in the country represented by the logo as the country of origin o the goods; and
(b) The prescribed percentage of the cost of producing or manufacturing the goods are worked out under the section 256 is attributable to the production or manufacturing processes that happened in that country.

This means that if a corporation makes a representation as to the country of origin of the goods by means of a prescribed logo, the goods must pass both the substantial transformation test and meet the prescribed percentage of production or manufacturing costs that apply for that logo, as set out in the regulation.

This provision allows industry sectors, consumers or other interested parties to develop distinctive marketing schemes that give consumers additional information about the source of contents. Businesses may be able to use industry-driven information schemes to gain a marketing advantage based on supplying consumers with accurate, relevant and useful information.

The ‘grown in claims’ is a provision that applies to representations that goods, or the ingredients or components of goods, are grown in a particular country. ‘Grown in…’ is the most recent country of origin representation defence introduces as part of the ACL changes of 1 January 2011. A ‘Grown in’ claim provides growers, processors and retailers with a premium origin claim for foods. Section 255 sets out the tests for the representations that goods are grown in a particular country. Item 4 of subsection 255(1) requires a representation that goods were grown in a particular country to meet the following requirements that:

(a) Each significant ingredient or significant component of the goods was grown in that country; and
(b) All, or virtually all, processes involved in the production or manufacture happened in that country.

Item 5 of subsection 255(1) further requires that a representation that ingredients of components of goods were ‘grown in’ a particular country must meet the following requirements:

(a) Each ingredient or significant component that is claimed to be grown in that country was grown only in that country; and
(b) Each ingredient or significant component that is claimed to be grown in that country was processed only in that country; and
(c) 50 percent or more of the total weight of the goods is comprised of ingredients or components that were grown and processed in that country.

This provision establishes that to qualify for the ‘Grown in country of origin’ defence all of the significant ingredients or components of the goods in question must come from the country of the representation and virtually all of the production or manufacturing processes associated with the goods must occur within the country of representation.

According to the article ‘Citrus growers call on Federal Government to change country of origin labeling laws’, Mr. Mancini is drafting a proposal to unravel the confusion that consumers face when products like juices are labeled Australian made. Conferring to the legislation of the ACL the product must pass two tests to be claimed as ‘Made in Australia’:

(a) The goods must be substantially transformed in Australia; and
(b) 50 percent or more of the cost of production or manufacture of the goods must be carried out in Australia.

According to the tests, as long as most of the costs are incurred in Australia, then the product can be called ‘Made in Australia’. Mr. Mancini argued that most of the costs will result from packaging and therefore the actual product may be foreign. However Geoff Parker from the Australian Beverages council argued that the legislation is correct however consumer awareness and understanding of the legislation is an issue to be looked at. Mr. parker then stated that the onus is on consumers to be more informed about the products they are purchasing. Therefore it can be stated that the legislations provide adequate protection for consumers, whether consumers are aware of the legislations is the principal issue.

The most common problem for consumers is the unclear or ambiguous representations. An example is the ‘Made in Australia from local and imported ingredients’ labeling. On one hand the phrase is truthful, as the product may have been made in Australia however it does emphasise the presence of local product when it is unclear what the local percentage is, or what relative roles the imported and local products play in the final product.

There are many legislations that applies to the ‘country of origin labels’, however the fact that a claim is ambiguous, does not necessarily mean that it is misleading, this meaning that no civil action can be brought up. With new research showing that consumers are looking to buy Australian products more than ever, it is solely up to the consumers to educate themselves on legislations to ensure they buy the correct product.