Country of Origin Labelling for Complementary Healthcare Products - A Guide for Business


Changes to Australian Consumer Law “Safe Harbours”

In February 2017 the “Safe Harbour” provisions of the Australian Consumer Law (ACL) relating to country of origin claims were amended.

Following 12 months of consultation the ACCC (Australian Competition and Consumer Commission) issued new guidelines titled “Country of Origin Labelling for Complementary Healthcare Products - A Guide for Business“, on March 29, 2018. These guidelines will also be used by the “Australian Made Campaign Ltd” to determine eligibility of companies to use the Australian Made logo.

The amendments for “made in” claims included removal of the 50% cost of production requirement and also a new definition of the concept of ‘Substantial Transformation’.

ie.

New definition of substantial transformation

The previous definition was:

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

The new definition of ‘substantial transformation’ is:

“Goods are substantially transformed in a country if … 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 ingredients or components that were imported into that country.”

For the cosmetic industry, the new guidelines do not greatly affect the current situation, the effects being mainly seen in complementary medicine areas. Specific areas where there is an effect are (quoted from the reference);

Essential oils

“Similar to herbal extraction, the ACCC considers that the processing of imported raw plant material in Australia to draw out its volatile aromatic compounds (ie the small organic molecules that give the plant material its aroma) is likely to result in a substantial transformation of the raw imported product.

On the other hand, a business that imports essential oils and bottles them in Australia would not meet the test for substantial transformation.

Within the practice of aromatherapy, different essential oils are commonly blended together with the aim of producing certain desired responses in the user. In the ACCC’s view, blending imported essential oils would not result in a substantial transformation of those imported ingredients.

Semi-solid formulations (mostly creams or ointments)

The processing of raw imported ingredients into a semi-solid preparation that has been chemically and physically modified to penetrate the skin or mucosa by the active may support a ‘made in’ claim.

However, if a cream or lotion is imported in bulk and combined with other minor ingredients like fragrances, pigments or preservatives, the mixing of the imported ingredients in Australia would not amount to a substantial transformation and a ‘made in’ Australia claim should not be made.

What is unclear is the approach the ACCC will take to grey-areas such as if you import individual oils including vegetable oils, paraffin liquids and essential oils then blend these into a massage oil, is this substantially transformed? Similarly with water based serums and solutions.
In these grey-areas a case-by-case approach to the ACCC will be necessary.

The complete pdf “Country of Origin Labelling for Complementary Healthcare Products - A Guide for Business“ is located on the ACCC website under “Publications”, and the link is;

https://www.accc.gov.au/publications/country-of-origin-labelling-for-complementary-healthcare-products-a-guide-for-business