Contributing Lawyers

Canada

Cyndee Todgham Cherniak

United States

Susan Kohn Ross

Australia

Andrew Hudson



Canada Announces Proposed Labelling Guidelines for Claims on Food Products as "Made in Canada"

On May 21, 2008, Prime Minister Harper announced that Canada would introduce new food labelling guidelines covering when food products may be labelled as "Made in Canada" or "Product of Canada".  Affected parties may submit their views about the proposed guidelines before June 11, 2008.  A Discussion Paper found on both the Trade Lawyers Blog (http://tradelawyersblog.com) and the Government of Canada website (http://www.healthycanadians.ca/pr-rp/dp-dt_e.html) sets out the proposed guidelines. 

The NAFTA leaders agreed in Montebello in 2007 and New Orleans in 2008 to implement legislation, regulations and rules to improve product safety.  The new guidelines further that objective.  The purpose of the new guidelines is to provide accurate information to consumers so that they can make informed decisions. In the Prime Minister's announcement of the proposed guidelines, he stated:

“Our new guidelines are designed to redefine Canadian food content labels to better reflect the true origins of products in today’s global marketplace …Our government is tightening the definitions of these familiar labels, so Canadians know exactly what they’re getting, and get exactly what they want.”

As a result, the initiative is clearly a consumer protection measure, which is a legitimate objective under Canada's international obligations (such as the WTO Technical Barriers to Trade Agreement, NAFTA and other free trade agreements).

Canada’s existing food labelling guidelines, which have been in place since the 1980s, do not clearly reflect the actual Canadian content in foods sold in Canada.  The current version of the guidelines state that two basic criteria must be met before manufacturers use Canadian content statements:

  1. The last substantial transformation of the goods must have occurred in <st1:place w:st="on"><st1:country-region w:st="on">Canada</st1:country-region></st1:place>; and<o:p></o:p>
  2. That at least 51 per cent of the total direct costs of producing or manufacturing the goods are Canadian. <o:p></o:p>

Under the current rules, when assessing "Made in Canada" or "Product of Canada" claims, the Canadian Food Inspection Agency takes a case-by-case approach, balancing all factors and taking into account the nature of the product and consumer expectations.  For more information, please visit the website for the Office of the Prime Minister at http://www.pm.gc.ca/eng/media.asp?id=2112

The proposed guidelines are intended to update and redefine the familiar “Product of Canada” and “Made in Canada” food labels to better reflect the true origins of products in the modern marketplace.

Proposed Guidelines

"Product of Canada"

The proposed guidelines change the criteria for entitlement to label a food product as a "Product of Canada" from the direct cost or value of a product to focus on the contents and ingredients of a product.

The proposed guidelines replace the current 51 per cent direct cost threshold for "Product of Canada" claims with a requirement that "all or virtually all" of the contents of a food product are Canadian.  A food product that is labelled as “Product of Canada” would include very little or no foreign content (with the exception of minor additives or spices which may not be sourced from Canada). This approach is similar to the approach to food product labelling used in a number of other countries (such as the United States).  Under the proposed rules, all significant components, ingredients, processing and labour used to make the product would need to be Canadian.

For example, wine fermented and bottled in Canada, but made from Chilean grapes, likely would not qualify to be labelled as "Product of Canada".  Similarly, apple juice bottled in Canada, but made from apples or apple juice concentrate from China, likely would not qualify to be labelled as "Product of Canada".

A difficult example would be corn cereals (or high fructose corn syrup) made from both Canadian and U.S. corn.  It may be that the guidelines would not be easily applied in these cases and in cases of processed foods made by Canadian manufacturers who must rely on foreign sources of seasonal agricultural inputs.

Qualified "Made in Canada"

If a processed food product does not satisfy the “Product of Canada” criteria, it may be labelled as “Made in Canada”; however, that label would have to include a qualification in order to minimize confusion as to the difference between “Product of Canada” and “Made in Canada”.  If the processed food product has undergone a “substantial transformation” and that transformation has occurred in Canada, the label may indicate that the processed food product was "Made in Canada" with a qualifying statement. For example, if the last substantial transformation occurred in Canada but foreign ingredients were used in whole or in part, the manufacturer/processor could indicate either that the food product was "Made in Canada from domestic and imported ingredients" or "Made in Canada from imported ingredients".

Other Qualified Claims

The Government would not specifically prohibit the use of qualified claims for imported or other food products that do not meet the "Product of Canada" or "Made in Canada" guidelines.  "Roasted in Canada", "Packaged in Canada", or "Processed in Canada" could be used provided they are not false or misleading.  However, the Government of Canada would encourage the use of "Product of Canada" and "Made in Canada" for those products that meet the guidelines.

If manufacturers/processors of food products would like the guidelines to list other acceptable qualifying statements, they should participate in the consultation process.

Commentary

Some Canadian manufacturers will be negatively affected by these rules because an educated Canadian consumer will look for the "Product of Canada" label and may not purchase goods with qualified "Made in Canada" claims.  In addition, it is reasonable to expect that there will be situations where there is a need to import food ingredients during an off-season. For example, Canadian corn is not available during the winter months to manufacture high fructose corn syrup or corn cereals, and therefore the "Product of Canada" tests may not be satisfied year round.  Many Canadian food processors will need to engage in the consultation process in order to address real business issues and find solutions that are consistent with the legitimate objectives of the guidelines.

At first glance, the proposed guidelines appear to satisfy Canada's international obligations as there is a legitimate consumer protection objective.  However, it is possible that the proposed labelling rules will cause controversy as it is possible that there will be cases of discrepancies between (1) marking rules for customs purposes and (2) rules of origin for the purposes of preferential duty treatment and (3) the issuance of valid certificates of origin.

Canadian food processors should determine whether they must change their labels and whether there are different results depending on the focus of the origin question (customs marking, preferential tariff treatment, and food labelling). For example, the United States imposes marking requirements for customs duty purposes for most goods.  It is possible that the U.S. laws/rules would require that the good be marked for customs purposes as a good of Canada. However, it is possible that the proposed guidelines would not allow the processed food product to be labelled as a "Product of Canada".  Depending on the applicable rule of origin, it is possible that the good may or may not be considered to be originating in a Canada or another NAFTA Party.

Please contact Lang Michener's International Trade Group for more information.

Cyndee Todgham Cherniak is counsel in the International Trade Group. Please contact her directly at 416 307-4168 or cyndee(at)langmichener.ca

Michael Flavell is Chair of the International Trade Group. Please contact him directly at 613 232-7171 or mflavell@langmichener.ca

Geoff Kubrick is counsel in the International Trade Group. Please contact him directly at 613 232-7171 or gkubrick@langmichener.ca

Martin Masse is a partner in the International Trade Group. Please contact him directly at 613 232-7171 or mmasse@langmichener.ca

We would be pleased to identify information requirements and assist in the preparation of responses to the Government of Canada consultation process (which must be submitted by June 11, 2008).

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