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Standard fact sheet.

Country of origin claims 

What is a country of origin representation? 

A business must not make false or misleading representations about the country of origin of goods.

Claims about country of origin include:

  • 'made in' a specified country
  • 'produce of', 'product of' or 'produced in' a country
  • use of a prescribed logo
  • claims that goods, or ingredients or components, were 'grown in' a specified country.

A representation about country of origin includes words, a picture or both, either:

  • attached to the goods - for instance, on a label
  • in promotional material linked to the goods.

It does not include a representation that is a necessary part of the good.

For example - representation about country of origin. A t-shirt with a 'Made in Australia' label makes a representation about country of origin. A t-shirt emblazoned with the word 'Australia' as part of its design, does not.

A business must ensure absence of a country of origin representation does not imply one, because of other statements or signs associated with a good.

For example – implying a country of origin. A person may buy a genuine Turkish rug believing it is made in Turkey, when it is actually made in China.

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Criteria for country of origin claims 

There are criteria for claims about the country of origin of goods.

The 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 must point to evidence that suggests a reasonable possibility the products originated in that country.

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'Made in' claims 

For a business to claim goods are made in a particular country:

  • the goods must be substantially transformed in that country, and
  • at least half of the cost of producing or manufacturing the goods must be incurred in that country.

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‘Product of’ claims 

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 – 'product of' claims - when is an ingredient 'significant'? An apple and cranberry juice bottle can carry a 'produce of Australia' label only if both juices are from Australia.

Even though the cranberry juice is about five per cent 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 an imported preservative and still be 'produce of Australia'; the cranberry juice is 'significant', the preservative is not.

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Claims of origin based on use of a prescribed logo 

If a business labels a product with a prescribed logo (for example, the 'Made in Australia' brand), the goods must:

  • pass the substantial transformation test.
  • meet the prescribed percentage of production or manufacturing costs that apply for that logo. 

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'Grown in' claims 

A business can lawfully claim goods are 'grown in' a particular country when:

  • at least 50 per cent 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 significant component was grown and processed only in that country. An ingredient or component does not have to be a certain percentage to be 'significant' – see above Example – 'product of' claims - when is an ingredient 'significant'?.

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Substantial transformation 

This 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 imported and Australian ingredients into a finished food product, such as the production of a cake from imported spices, fruit and flour and Australian sugar
  • production of a newspaper using imported ink
  • moulding sheet metal into a car panel
  • manufacturing flour from wheat.

It does not include:

  • reconstituting imported fruit juice concentrate into fruit juice for sale - whether or not Australian water, sugar, preservatives and packaging were used
  • assembling imported components into household or other items - for example: white goods, furniture or electronic goods.

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Costs of producing or manufacturing goods 

The cost of producing and manufacturing goods includes the producer or manufacturer's expenditure on materials, labour and overheads.

Materials

The expenditure on materials to produce or manufacture the goods includes:

  • purchase price
  • overseas freight and insurance
  • port and clearance charges
  • inward transport to store.

It does not include:

  • customs and excise duty
  • sales tax
  • goods and services tax.

Labour

The expenditure on labour related to and reasonably allocated to the production or manufacture of the goods includes:

  • manufacturing wages and employee benefits
  • supervision and training
  • quality control
  • packing goods into inner containers.

Overheads

The expenditure on overheads related to and reasonably allocated to the production or manufacture of the goods includes:

  • inspection and testing of goods and materials
  • insurance and leasing of equipment
  • vehicle expenses
  • storage of goods at the factory.

Example - calculating cost of production

An item that has material costs of $45, labour costs of $25 and overheads of $15 has a production cost of $85.

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