'Made in Canada' or 'Product of Canada' - What's the Difference?

Donalee Moulton for The Lawyers Weekly

February 12, 2010

According to the Competition Bureau of Canada guidelines, Made in Canada means that at least 51 percent of the content is Canadian. For a Product of Canada, that figure is only 98 percent. "Product of Canada" claims will be subject to a higher threshold of Canadian content (98%), while "Made in Canada" claims will remain subject to a 51% threshold of Canadian content but should be accompanied by a qualifying statement indicating that the product contains imported content. In both cases, the last substantial transformation of the product must have occurred in Canada.

While one category may be new, the law itself has not changed. The Competition Act, the Textile Labelling Act, and the Consumer Packaging and Labelling Act all prohibit the making of false or misleading representations with respect to a product.

The primary purpose of the guidelines, said Duane Schippers, deputy commissioner of competition, Legislative and International Affairs, with the Competition Bureau in Gatineau, Que., "is providing greater guidance to business as to what the bureau will consider to be a material false or misleading representation when a product is claimed to be a 'Product of Canada' or 'Made in Canada.' "

Legal experts are quick to point out that the Competition Bureau's guidelines are just that - guidelines. "This isn't regulation," stressed Kevin Wright, a partner with Davis LLP in Vancouver.

"Those guidelines aren't binding on a court," he added. "It will be an interesting case if someone wants to take it on."

Indeed, the guidelines are not law until a court or a tribunal adopts them. That does not mean they are not useful, however. "They are helpful to businesses. They signify when the Competition Bureau will take enforcement action," said Barry Zalmanowitz, a partner with Fraser Milner Casgrain LLP in Edmonton and co-chair of the firm's national competition law group.

"They provide more clarity," he added, "and they are an attempt to provide some [direction]."

That is the intent, said Schippers. "Businesses will clearly know what the bureau considers to be a false or misleading representation and when the bureau may take enforcement action.

"There is likely to be less confusion in the marketplace for both businesses and consumers when similar standards are applied by government enforcement authorities," she added.

The law may not require compliance with the guidelines, but common sense well might. "The costs of responding to a Competition Bureau investigation can be quite high," said Wright. "If it doesn't really cost you anything to follow the guidelines, it might be a business advantage to do so."

That advantage may well translate into greater revenue. "If a company can say that their product is made in Canada, there is some quality issue that may be implied of presumed by the consumer, and this leads to increased sales," said Richard Taylor, a partner with Deloitte & Touche LLP in Toronto.

"Consumers are willing to pay more for quality," he added, noting that there is also a "halo" effect. Consumers may want to support their local economy or have other patriotic and philosophical reasons for buying products that are made in this country (or mostly made here).

Fear, however, is what's driving the Competition Bureau and other agencies to look closely at labeling claims. Canadians are concerned about what is in the food they are eating and the products they are purchasing. "People were outraged with the pet food scandal and the baby food scandal," said VanderElst. "Authorities want to send a message that they are looking out for the safety of Canadians."

"Generally we live in an era where a lot of representations are made," said Wright. "There's probably a sense in the public as to what you can trust. Place of origin can be very important."

Devising a new category and ensuring enforcement is an expensive solution to the problem, noted Zalmanowitz, who is the immediate past chair of The Canadian Bar Association's national competition law section. "Is there any reason to think children's toys manufactured in Canada would be any safer than toys manufactured in Sweden or Australia? There are safety standards that must be met [to sell here]. You are putting businesses to a lot of expense."

They may be getting used to that. The Competition Bureau is not the first federal government agency to devise these product categories. In the fall of 2008, the Canadian Food Inspection Agency issued guidelines concerning "Made in Canada" and "Product of Canada" claims relating to food products. In the absence of new guidelines, said Schippers, "the differences in interpretation between the current Canadian Food Inspection Agency's Guide and the bureau's guidelines could create confusion in the marketplace."

The bureau's new guidelines, she noted, adopt the CFIA's approach. It's an approach used in other countries. Australia, for example, has a similar regime that provides for a distinction between "Product of Australia" and "Made in Australia" claims. Both types of claims are subject to conditions that are very similar to the conditions proposed in the bureau's draft guidelines.
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