10/03
16 July 2003
INITIAL/DRAFT ASSESSMENT REPORT
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DEADLINE FOR PUBLIC SUBMISSIONS to FSANZ in relation to this matter: 27 August 2003 (See 'Invitation for Public Submissions' for details) |
Full report [ pdf 231kb ]
Executive Summary and Statement of Reasons
Regulatory Problem
The current regulations allow for spirits to be bottled and sold at 37% alcohol by volume (ABV) in Australia and New Zealand. For spirits with geographic indications (GI spirits) the regulations require products bottled in the country of origin, Australia or New Zealand to be bottled at a % ABV required by the laws of the country of origin. For example, Scotch whisky bottled in Scotland, Australia or New Zealand must comply with the laws of the United Kingdom which state that the product must be bottled at no less than 40% ABV. However, a potential 'loophole' exists where a GI spirit bottled in a third country would not have to comply with the laws of the country where it is produced and so could be bottled at 37% ABV.
Objectives
The three specific objectives of this assessment are to:
- ensure that consumers can make informed choices about spirits;
- promote fair trade through the development of a consistent and fair regulatory system for all involved in the spirits industry; and
- prevent misleading and deceptive conduct among manufacturers and bottlers of spirits for consumption in Australia and New Zealand.
Regulatory Options
The issues assessed in this paper are considered to be of a minor technical nature and the range of options is limited.
- maintain the status quo approach; or
- amend Standard 2.7.5 in the Code to close a 'potential loophole' in the drafting to prevent bulk GI spirits being bottled in a third country at a % ABV below that permitted by the laws of the country of origin and then imported and sold in Australia or New Zealand under that geographic indication.
Impact
The preferred Option is 2 because this option satisfies the objectives of the Assessment and the benefits outweigh the costs.
Consultation
Pursuant to Section 36 of the Food Standards Australia New Zealand Act 1991, the Authority has opted to omit one round of public comment prior to making a Draft Assessment as it is satisfied that this application raises issues of minor complexity or significance only and can be addressed through minor technical amendments to Standard 2.7.5.
FSANZ plans to consult on this assessment with all submitters to FSANZ's review of Alcoholic Beverages and Alcohol Labelling of Foods containing Alcohol (P204) which was undertaken during the review of the Code. Other key stakeholders who will be targeted for consultation include key stakeholders in the spirits industry, consumers and government agencies.
Conclusion and Statement of Reasons
It is recommended that subclause 4(2) of Standard 2.7.5 be amended to close a potential 'loophole' in the drafting to prevent bulk spirits with geographic indications being bottled in a third country and then imported and sold in Australia and New Zealand at a % ABV that is below that permitted by the laws of the country of origin. It is concluded that the benefits of this approach outweigh maintaining the status quo, where bottlers in Australia and New Zealand may be disadvantaged. No costs have been identified from taking the preferred approach.
The benefits of closing the potential 'loophole' to prevent GI spirits being bottled in a third country at a lower % ABV and then sold in Australia and New Zealand include:
- creating an even playing field for all bottlers of GI spirits; and
- enabling consumers to make informed choices about GI spirits.
The New Zealand Ministry for Foreign Affairs and Trade (MFAT) and the Department of Foreign Affairs and Trade (DFAT) have given preliminary advice that suggests that the proposed amendments are compliant with the Trade Related Aspects of Intellectual Property Rights Agreement (TRIPs).
Full report [ pdf 231kb ]