Federal Department of Industry to apply Country of Origin requirements to New Zealand products

Federal Department of Industry to apply Country of Origin requirements to New Zealand products

By Joe Lederman (FoodLegal Managing Principal)

© Lawmedia Pty Ltd, April 2018

The Australian Government Department of Industry, Innovation and Science responded to FoodLegal's article published in the March 2018 edition of FoodLegal Bulletin by communication to FoodLegal dated 16 March 2018. The FoodLegal Bulletin article had been published on 12 March 2018. In its communication to FoodLegal, the Department of Industry says that it intends that the new Australian Country of Origin requirements will apply to products from New Zealand, despite a free trade arrangement existing between the two countries. This article examines the extraneous nature of the points made by the Department of Industry and the ineffectual aspects on New Zealand imports.

Previous FoodLegal Bulletin article

In the March 2018 FoodLegal Bulletin, my article “Australia’s new Country of Origin Information Standard: a competitive advantage for New Zealand?” addressed the economic trade advantage of food products that have been wholly imported from New Zealand, compared with an Australian-sourced product being disadvantaged by the bureaucratic rigour of the ‘substantial transformation’ test to be eligible for a kangaroo logo on its pack under the new Country of Origin (Food Labelling) Information Standard (the Information Standard).

Specifically, my article said that New Zealand, which does not require mandatory Country of Origin labelling, is nevertheless a country whose food products also enjoy a clean, green reputation. The article also considered the impact of the free trade arrangements between Australia and New Zealand under the Trans-Tasman Mutual Recognition Act (TTMRA) on the application of the Information Standard. Broadly, the TTMRA provides that goods legally sold in New Zealand can be sold in Australia without being subject to further labelling obligations. My article had suggested that the TTMRA may apply to obviate any need for products being imported from New Zealand from having to comply with the Information Standard.

Australian Department of Industry response

On 16 March 2018, the Australian Government Department of Industry, Innovation and Science (Department of Industry) issued its response with the following criticisms:

The article [Australia’s new Country of Origin Information Standard: a competitive advantage for New Zealand?, FoodLegal Bulletin, March 2018] states that, due to the Trans-Tasman Mutual Recognition Agreement (TTMRA), the new Country of Origin Food Labelling Information Standard 2016 does not operate as a mandatory requirement for New Zealand food products being sold in Australia.

The department would like to clarify that, under section 16 of the Commerce (Trade Descriptions) Regulation 2016, imported packaged food is required to bear a statement of the country of origin of the food determined in accordance with the Country of Origin Food Labelling Information Standard 2016. If the food comes from more than one country, a statement indicating that the food is of multiple origins or that it is comprised of imported ingredients is required. For imported priority foods, these statements must be written in a clearly defined text box. The Commerce (Trade Descriptions) Act 1905 provides customs controls, which are explicitly excluded from the operation of the Trans-Tasman Mutual Recognition Arrangement Act 1997 (Schedule 1, Part 1.1(a) - Excluded laws). As such, food imported from New Zealand must comply with the Commerce (Trade Descriptions) Act 1905 and the Commerce (Trade Descriptions) Regulation 2016.

Is the TTMRA able to be exploited?

The TTMRA does include a number of self-protective exclusions to the general permission for New Zealand products to be sold in Australia without additional labelling burdens.

These exclusions are contained in Schedule 1 and include the following overriding laws that will nonetheless still apply for New Zealand-sourced products imported into Australia:

·         Customs controls and tariffs (but only to the extent that the laws provide for the imposition of tariffs and related measures and the prohibition or restriction of imports)

·         Intellectual property

·         Taxation and business franchises

·         The implementation of international obligations

Schedule 1 goes on to specify a number of pieces of Australian legislation that fall under each category.

The Commerce (Trade Descriptions) Act is expressly listed as an excluded customs control/tariff law in Schedule 1 of the TTMRA.

The Department of Industry says that this mechanism means that the Information Standard falls outside the operation of the TTMRA, and that this would mean that imported food from New Zealand will be required to comply with the Australian Country of Origin laws set out in the Information Standard relating to imported foods.

However, let me explain the practical position:

1.    There is actually no Australian requirement to specify the percentage of New Zealand ingredients in a New Zealand food, by contrast to the new Australian legal requirement for an Australian-packed food to specify the percentage of Australian ingredients.

2.    The pre-existing excellent reputation of New Zealand food products means that New Zealand food companies have no incentive not to be transparent about declaring New Zealand as the origin of their New Zealand packed products. By contrast, an Australian-based manufacturer who wants the kangaroo logo must demonstrate that the last substantial transformation of the end product occurred in Australia. There is no such requirement for a New Zealand company to demonstrate that the last substantial transformation was in New Zealand.

3.    When referring to the Schedule 1 exclusions from the operation of the TTMRA, the Department of Industry refers to the Commerce Act and the Commerce Regulations, which were drawn as restrictions on imports. Other than the imposition of the Information Standard for imported food products, the specific requirements are merely that imported foods bear a description of what the goods are, that this description be in English, and that non-food items simply indicate the name of the country in which they were made or produced. In the case of an imported food meeting the definition in the Information Standard of a 'priority food', the reference to New Zealand would have to be delineated in a clearly defined box. Big deal. This is all that is required from a distributor of a New Zealand product in Australia.

How will it actually be enforced?

While the Australian Department of Industry was responsible for the policy underpinnings and legal drafting of the Information Standard, enforcement is solely the responsibility of the Australian Competition and Consumer Commission (ACCC). The ACCC is tasked primarily with enforcing competition and consumer laws in the Australian market but does not scrutinise the labels of food products at point of entry into Australia. The latter is the responsibility of the Australian Department of Agriculture.

The ACCC is therefore only concerned with the compliance of products after they are already in the Australian market. Once the Information Standard has become mandatory from 1 July 2018, it will become more apparent whether or not the ACCC will adopt the same approach as the Department of Industry in relation to food products imported into Australia from New Zealand.

FoodLegal maintains the view that New Zealand remains an advantageous jurisdiction to make and sell products destined for the Australian market without bearing the same regulatory burden as Australian products face under the new Country of Origin regime applicable to Australian packaged foods.

This is general information rather than legal advice and is current as of 13 Aug 2021. We therefore recommend you seek legal advice for your particular circumstances if you want to rely on advice or information to be a basis for any commercial decision-making by you or your business.