This is an extract from Ragtrader's September edition. For more expert industry advice, subscribe here.
Jaimie Wolbers of K&L Gates investigates changes to labelling laws in Australia.
It may be the case that you have never given much thought to the label on the inside of your shirt, beyond whether or not it provided the right size information or whether or not it was irritating the back of your neck. However, a label with the incorrect information can cause more than an irritated neck to clothing manufacturers and retailers.
As a general rule, businesses must remember that under the Australian Consumer Law (ACL), they cannot: make a false or misleading representation about a good; or engage in misleading or deceptive conduct.
Additionally the Commerce Trade Descriptions Act 1905 (Cth) and the Commerce (Trade Descriptions) Regulations 2016 (Cth), prescribe that imported textile products and clothing must contain a trade description which includes the name of the country in which the goods were made or produced and a true description of the goods in prominent and legible characters.
This must be in the form of a label that is attached in a permanent and prominent position on the goods.
However, it can sometimes be tricky to convey accurate messages regarding an item's country of origin in a world of global supply chains, particularly when a label only offers a limited space to include brand, size and care information.
The consequences of including incorrect or misleading information on a label or in your product advertising can include significant fines, the inconvenience and expense of recalling and relabelling products, not to mention damage to your reputation for being found to have engaged in misleading or deceptive conduct.
Globalised garments
Fortunately, section 255 of the ACL provides a number of rules that assist in ensuring country of origin representations are correct.
Grown in…
You may wish to identify where natural fibres like cotton, wool, or bamboo were grown if they comprise a significant component of your garments.
A representation that goods were "grown in" a particular country should only be made where:
(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 of the goods happened in that country.
If the fibres are from mixed origins, or the supply chain changes through the course of production (perhaps due to changes in crop quality over a particular season) it might be best to steer clear of "grown in" country of origin claims unless you are prepared to update your labels to represent the true state of affairs relating to your products.
Product of…
A representation that goods are a "product of" a particular country should only be made where:
(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 in the production or manufacture of the goods happened in that country.
In many respects "product of" representations are similar to "grown in" representations, although they can obviously extend to synthetic fibres and components.
Made in…
A representation that goods are "made in" a particular country should only be made where the goods were last substantially transformed in that country.
Goods can be considered to be "made in" a particular country if they meet the criteria to be considered "grown in" or a "product of" that country, or if, as a result of one or more processes, they are fundamentally different in identity, nature or essential character from all of the ingredients or components that were imported in order from them to be created.
The concept of "substantial transformation" requires more than merely finishing off or adding a decorative element to a product. For example, printing a design on a T-shirt in the USA would not be sufficient for it to be "substantially transformed" in the USA (presuming the shirt was imported from another country).
However, importing leather from Italy and then cutting, sewing, constructing and finishing off a pair of shoes in Australia, could lead to a "made in Australia" representation as the final product, the shoes, are fundamentally different and have been "substantially transformed" from the imported component, the leather.
For more information about issues relating to garment or product labelling please contact Jaimie Wolbers, Lawyer at K&L Gates (jaimie.wolbers@klgates.com). This article is for informational purposes and does not contain or convey legal advice. The information herein should not be used or relied upon in regard to any particular facts or circumstances without first consulting a lawyer.