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A418 FAR - Exec Summ

FINAL ASSESSMENT REPORT AND REGULATION IMPACT ASSESSMENT

(INQUIRY - S.17)

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EXECUTIVE SUMMARY

1.1 Background

The Australia New Zealand Food Authority (ANZFA) received an application on 12 June 2000 from the Distilled Spirits Industry Council of Australia (DSICA) to amend the Food Standards Code to exempt from the labelling requirements of the Code, spirit and liqueur products sold through duty free shops for export, or in the case of in-bound duty free, for personal import ( ' domestic duty free sale' ).

In August 2001, the Board undertook a Draft (Full) Assessment of the Application, and prepared draft variations to the Food Standards Code which exempted spirits and liqueurs sold in duty free outlets from standard drink and name and business address labelling requirements.

These draft variations to Standard 1.2.2 and 2.7.5 were then released for a final round of public comment. This comment closed on 30 October 2001.

1.2 Issue

Currently, the Code imposes labelling requirements in relation to spirits and liqueurs, regardless of where these are sold, and whether they are imported or manufactured domestically.

Many specialty spirit and liqueur products imported for sale in duty free stores do not comply with labelling requirements under the Code, in particular, the standard drinks labelling requirement. To date, the Australian Quarantine and Inspection Service (AQIS) has not enforced the relevant labelling provisions for spirits and liqueurs destined for sale through Australian duty free shops. However, AQIS had advised that it intends to enforce these provisions, and will consider such products to be ' failing food ' under the Imported Food Control Act (IFC Act).

This situation appears to be partially inconsistent with the treatment of similar products within Australia under some State and Territory food legislation. Under this legislation, food for sale in duty free stores must comply with the labelling requirements of the Code, and to this extent it is consistent with the IFC Act. However, this legislation provides persons selling products to outbound travellers with an ' export defence' to the offence of selling duty-free spirits and liqueurs in Australia that do not comply with the labelling requirements of the Code.

To enable these products to continue to be imported into Australia without re-labelling, an amendment to the Code was sought to exempt from labelling requirements spirits and liqueurs for domestic duty free sale.

1.3 Consultation- Final Assessment

A total of thirteen submissions were received in relation to the Draft (Full) Assessment draft variations to the Code. The majority of submitters (seven), mostly from industry, supported the draft variations. Four submitters were opposed to the proposed amendments. One industry submitter suggested the proposed labelling exemption be extended to all alcoholic beverages, including beer sold in duty free stores.

Mr Preston, on behalf of the Applicant, submitted that the draft (full) assessment variations should include an exemption from the country of origin labelling requirements until the review of that area has been resolved.

Opposition to the amendment argued that the move might prejudice the important public health initiative of standard drink labelling.

The New Zealand Ministry of Health (MoH) also shared this view, adding that the issue of exemption should be considered in the broader context of labelling requirements for food sold in duty free stores.

An assessment of these submissions is contained at 2.6 of this Paper.

1.4 Policy

In the assessment of all applications, ANZFA has regard to Section 10 of the Australia New Zealand Food Authority Act 1991 and respective Australian and New Zealand trade competition policies.

1.5 Draft Assessment Drafting

In August 2001 the Authority conducted a Draft (Full) Assessment of the Application. Whilst the Application sought a general exemption from the labelling requirements in the Code for spirits and liqueurs sold at duty free outlets, the Authority decided that the exemptions should be limited to standard drink labelling requirements and the requirements for the name and address of the supplier.

1.6 Consequential amendments

None

1.7 Regulatory Impact Statement and World Trade Organization

As the preferred regulatory option involves no change to the current labelling requirements for standard drink labelling and name and address in Australia or New Zealand of the supplier of the product, no World Trade Organization (WTO) notification is considered necessary.

1.8 Conclusions

This report provides a Final Assessment (Inquiry) of Application A418 - Labelling of Duty Free Spirits, proposing that the Authority make a recommendation to the Ministerial Council that it reject the draft variations to the Code.

It is proposed that spirits and liqueurs for domestic duty free continue to be subject to standard drink labelling requirements in Standard 2.7.1 and the requirement to label the food with a name and address of the supplier in Australia or New Zealand in Standard 1.2.2.

The preferred option does not address the potential trade disparity between Australian and New Zealand duty free shops on the one hand and foreign duty free shops on the other. However, this decision recognises the primacy of the Authority' s first statutory priority - the protection of public health and safety.

Relevantly, this objective was advanced by the implementation of standard drink labelling in 1994. The potential trade disparity, in the standard drink labelling sense, was created in 1994, and justified on public health grounds.

The Authority, in weighing the conflicting objectives does not consider there to be a sufficiently persuasive case to interfere with this important public health initiative. Nor does the Authority find sufficient justification to interfere with the public health and safety provision of name and address requirements.

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