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Think-Tank-Australian-made-claims-Oct-17.pdf (1 MB)

Australia is highly regarded for its quality products, strictly regulated health and safety standards and clean environment. It is therefore no surprise that there is significant demand for Australian made products both nationally and internationally.
These products also include Australian made Complementary Medicines (CMs).
A perfect example of a country seeking high quality CMs is China, where vitamins, minerals and supplements of Australian origin are promoted to be ‘clean, green and safe’.
In fact, Chinese daigous (buying agents/personal shoppers who buy Australian products to sell to Chinese consumers) are increasingly being urged to purchase goods with the Australian Made logo to avoid ‘fakes’ and fraudulent products.

Many overseas consumers are actively looking for ‘Made in’ claims on such products to ensure they are consuming products which are safe and trustworthy. In addition to international consumers,
Australians are increasingly making the effort to search for Australian made products due to their association with health and safety.

Changes to ‘Made in’ Claims

On 23 February 2017 the Competition and Consumer Amendment (Country of Origin) Act 2017 was amended to ‘simplify the tests used to justify a country of origin ‘made in’ claim’. It included the
following updates:

  • A revision to the definition of ‘substantial transformation’
  • Removal of the 50 per cent production cost test.

What is ‘Substantial Transformation’?

Prior to February 2017, the definition of ‘substantial transformation was:
Goods are substantially transformed in a country if they undergo a fundamental change in form, appearance or nature such that the goods existing after the change are new and different goods from those existing before the change.

In the context of the manufacture of CMs, this step included all encapsulation and tabletting processes, regardless of the number of active ingredients in the product.
However, on 23 February 2017, the definition was changed by the Australian Competition &
Consumer Commission (ACCC) to:
Goods are substantially transformed in a country if:

  • they were ‘grown’ or ‘produced’ in that country, or
  • as a result of one or more processes undertaken in that country, the goods are fundamentally different in identity, nature or essential character from all of their imported ingredients or components that were imported into that country.

Why was the definition changed?

The Department of Industry advised ‘the proposed changes to the substantial transformation test are aimed at providing business with greater certainty about what activities constitute, or do not constitute, substantial transformation’.
The changes are intended to ‘simplify the tests used to justify a country of origin ‘made in’ claim’ and are similar-to those implemented by major trading partners such as NZ, the USA and the EU.

Impact on the Complementary Medicines industry

Further clarification has been provided by the ACCC who have advised ‘The encapsulation of imported marine oil is unlikely to constitute a ‘substantial transformation’.
For CM sponsors and manufacturers, this means soft gel capsules containing imported oil (including fish, squalene, cod liver or krill oil) can no longer satisfy the criteria for the Australian made claim.

Action to be taken

Sponsors have been advised to review their list of products and remove those carrying the Australian Made logo which no longer comply with the amended regulations. It is also recommended to review and amend labelling of the affected products. Changes should be made in a timely manner to avoid non compliance.

Substantial Transformation – Update to the definition

Prior to 23 February 2017:

Goods are substantially transformed in a country if they undergo a fundamentalchange in form, appearance or nature such that the goods existing after the change are new and different goods from those existing before the change.

After 23 February 2017:

Goods are substantially transformed in a country if:

  • they were ‘grown’ or ‘produced’ in that country, or
  •  as a result of one or more processes undertaken in that country, the goods are fundamentally different in identity, nature or essential character from all of their imported ingredients or components that were imported into that country.

Author: Aastha Mathur

 

References:

https://www.australianmade.com.au/for-business/changes-to-%E2%80%98australian-made%E2%80%99-criteria/
https://www.accc.gov.au/business/advertising-promoting-your-business/country-of-origin-claims/country-of-origin-labelling-faqs
https://www.australianmade.com.au/media/732238/AMCL%20Complementary%20Healthcare%20Guide%20July%202017.pdf
https://www.austrade.gov.au/news/latest-from-austrade/2017/austrade-launches-new-guide-to-exporting-complementary-medicines-to-china