This article was co-authored with Anthony Brzoska.
With the rapid globalisation of trade and commerce, Australian-based businesses are increasingly turning to overseas manufacturers to fulfil domestic consumer demand. Illustrating this point, the Australian Government’s Department of Foreign Affairs and Trade (DFAT) Composition of Trade Australia, reported that the value of Australia’s imports of goods & services grew by 6.5% to $421.4 billion during the 2018-191 financial year.
Importations of chemicals and chemical-based products were no exception to this rule, with all classes of chemical importations showing year on year increases during that period. Particularly strong performers included refined petroleum (up 15.7%), crude petroleum (up 14.3%), pharmaceutical products (excluding medicaments) (up 9%), and essential oils, perfumes, and cosmetic products (up 14.7%).
Based on the above year on year increases, it clear that Australian business have established that overseas manufacturers represent a cost-effective resource that may be utilised to fulfil domestic demand for chemical and chemical-based industrial or consumer goods. Indeed, the advantages of importing goods from overseas are well documented and may include2:
- Reduced cost per unit, which is achieved by comparative advantages harboured by overseas chemical manufacturers (including lower workforce overheads, reduced levels of taxation, and lower production costs);
- Higher quality products, which can sometimes be achieved by overseas manufacturers through industrial specialisation; and
- Unique production profiles of overseas producers, which allows producers to manufacture chemical products or formulations for which the technology does not presently exist in Australia (a recent example being the Pfizer COMIRNATY COVID-19 vaccine, which is presently only manufactured in licenced facilities in Europe and the United States).
Although the importation of manufactured or unprocessed chemical materials clearly presents significant advantages to Australian businesses, care must be taken by prospective Australian importers so as to not contravene Australia’s stringent chemical importation regulations.
In order to assist businesses navigate Australia’s complex chemical laws, we provide below a brief guide to the importation of chemicals and chemical-based products into Australia. In our guide, we present a series of questions that prospective importers may work through in order to quickly assess the laws and regulations that apply to them, and to make informed and risk-mitigated decisions for the importation of industrial and consumer chemical goods into Australia.
Are you importing an industrial chemical?
In Australia, ‘industrial chemicals’, or products containing industrial chemicals, are regulated by the Industrial Chemicals Act 2019 (Cth) (IC Act). Under the IC Act, an ‘industrial chemical’ is defined extremely broadly, and includes all types of chemicals other than chemicals that are specifically used for agricultural, veterinary, and therapeutic use, and as food additives (these items are regulated by separate legislation and statutory authorities). Such is the breadth of the definition of ‘industrial chemicals’ that even certain ingredients used in cosmetic applications are considered to be such.
The IC Act requires businesses importing industrial chemicals into Australia to register with the Australian Industrial Chemicals Introduction Scheme (AICIS). Broadly, businesses importing chemicals into Australia will need to register with the AICIS if3:
- the chemicals are being imported for a commercial purpose;
- the chemicals are not pesticides, veterinary products, therapeutic goods, or food additives for humans or animals; or
- the chemicals are not an excluded introduction (which includes, amongst other chemical categories, unprocessed naturally occurring chemicals, chemicals incidentally produced during the manufacture of another chemical, intermediate chemicals produced when manufacturing another chemical, and chemical products made by blending of locally sourced ingredients4).
Business intending to import industrial chemicals are required to search AICIS’s database of chemicals (also known as the Inventory) with the names of each chemical they intend to import. Chemicals that are present on the Inventory are known as ‘listed chemicals’, and the importation of these chemicals are subject to the conditions noted on the Inventory. Chemicals that are not listed on the Inventory must be categorised by the importer themselves, using a risk-based questionnaire available from the AICIS5.
Prospective importers of industrial chemicals must register before an industrial chemical is introduced in any given registration year. Importers must pay a fee for registration that is based on the importer’s registration level, which is determined by the value of the chemicals they wish to import into Australia. If a business fails to register, AICIS may prevent the importer from importing the chemicals in question, and penalties may apply.
Does your chemical product comply with the Australian Consumer Law?
Labelling and packaging of chemicals destined for consumer use must comply with the Australian Consumer Law (ACL). The ACL is contained within Schedule 2 of the Competition and Consumer Act 2010 (Cth), and imposes general obligations on businesses who intend to supply consumer goods to the public. These obligations include:
- Compliance with Consumer guarantees. The ACL stipulates that consumer goods must6:
- Be of acceptable quality (section 54 of the ACL). Goods must be ‘safe, durable, and free from defects’ and ‘do what they are ordinarily expected to do’.
- Be fit for purpose (section 55 of the ACL). Goods must be able to perform the purpose they were intended to perform.
- Match any description given to them (section 56). Goods must match how they are described, either on the product’s packaging, or verbally.
- Prohibition on misleading or deceptive conduct. Sections 18-19 of the ACL prohibit businesses from making statements that are misleading or deceptive, or are likely to mislead or deceive. The public must not be misled as to the nature, manufacturing process, characteristics, suitability for purpose, or quantity of goods.
- Country of origin labelling. The ACL contains general provisions against making false or misleading claims regarding the country of origin of imported goods. Representations with respect to country of origin may be conveyed via words, images, or a combination of both.
- Sales of products, unfair contract terms, and product safety. The ACL also covers a wide array of other obligations that are placed on businesses, and includes laws relating to sales practices, unfair contract terms, product safety recalls, and mechanics of how the ACL is enforced.
Does your product comply with Australia’s Trade Description and Trade Measurement Laws?
Australia’s Commerce (Trade Descriptions) Act 1905 (Cth) (CTD Act), along with the Commerce (Trade Descriptions) Regulation 2016 (Cth) (CTD Regulation) (together, the Trade Description Laws) governs how goods, including chemicals, that are to be imported into Australia are labelled. Goods that do not comply with the Trade Description Laws will be seized by Australian Border Force (ABF)7.
A trade description means ‘any description, statement, indication, or suggestion’ relating to ‘how or by whom the goods were made, produced, selected, packed, or prepared.’ Under the Trade Description Laws, a trade description must:
- Be written in the English language, in prominent and legible characters;
- Include the country of origin;
- Include a true description of the goods
- For prepacked goods, must feature the trade description on the packaged in which the goods are packed, or on a label attached to the package.
The National Measurement Act 1960 (Cth), the National Trade Measurement Regulations 2009 (Cth) and the National Measurement Regulations 1999 (Cth) (together, the National Trade Measurement Laws) ensure that consumers ‘get what they pay for’8. Importers of chemical goods must comply with the National Trade Measurement Laws if they sell chemical goods by measurement, or imports pre-packaged chemical products.
Under the National Trade Measurement Laws, importers of pre-packaged goods must ensure that9:
- Packages are correctly labelled;
- Packages are correctly marked with the appropriate measurement marking;
- The measurement marking does not include the weight of the packaging material;
- Have in their possession appropriate measuring instruments used to perform compliance sampling; and
- Assist trade measurement inspectors with any enquiries.
Measurement information must be positioned appropriately with respect to the size and the shape of the package, must comply with minimum character and size requirements, and must be in metric units. More information regarding how imported packaged products are required to be labelled under the National Trade Measurement Laws can be found in the Australian Government’s Department of Industry, Science, Energy and Resources ‘Guide to the sale of pre-packaged goods’, available here.
Are you importing a poison?
Many chemicals that are commonly imported into the Australia are classified as poisons under Australian law. For example, methylated spirits, kerosene, and petrol – all common consumer goods – are classified as poisons under the relevant Australian legislation. Poisons are regulated in Australia by the Uniform Scheduling of Medicines and Poisons (SUSMP, or the Poisons Standard). The SUSMP is a legislative instrument made under paragraph 52D(2)(b) of the Therapeutic Goods Act 1989 (Cth), and is a compilation of decisions made by the Secretary of the Department of Health to classify poisons into Schedules. Scheduling of poisons by the Secretary ‘sets the level of control and availability of poisons’, which, in turn, is regulated by specific State and Territory legislation.
In addition to classifying poisons according to Schedules, the SUSMP provides guidance for the labelling, storage, containment, disposal, record-keeping, sale, supply, and possession of poisons. These guidelines provided within the SUSMP are intended to be adopted by each of Australia’s State and Territory jurisdictions.
Importantly, poisons that are packed and sold solely for industrial, manufacturing, laboratory, or dispensary use are not covered by SUSMP guidelines. Instead, poisons for intended for these uses are regulated by State and Territory work, health and safety laws. For an overview on the importation of industrial chemicals into Australia, please see section 1 of this article above.
Table 1 below (reproduced from Poisons Standard No. 33 (June 2021)) contains a general description of each of the Schedules. Poisons belonging to these Schedules have different requirements for their packaging and sale. For example, in NSW, containers of 2 litres or less harbouring Schedule 5 poisons must be embossed with the word ‘POISON’, ‘NOT TO BE TAKEN’, or ‘NOT TO BE USED AS A FOOD CONTAINER’, and labelled with ‘CAUTION’, ‘KEEP OUT OF REACH OF CHILDREN’, and ‘READ SAFETY DIRECTIONS BEFORE OPENING OR USING.’ Care must be taken to ensure that products classed as poisons are correctly labelled, as penalties may apply to importers contravening poisons labelling regulations.
Importation of chemicals into Australia presents lucrative opportunities for Australian businesses to take advantage of comparative advantages, market specialisation, and technologies that are available through overseas manufacturers. However, business must take care to make sure the chemical products comply with a vast array of Australian consumer, trade, industrial chemicals, and poisons laws. If your business is thinking about importing chemicals or chemical-based products into Australia, please get in touch with our team.
Table 1: Classification of poisons under the SUSMP
||Pharmacy Medicine – Substances, the safe use of which may require advice from a pharmacist and which should be available from a pharmacy or, where a pharmacy service is not available, from a licensed person.
||Pharmacist Only Medicine – Substances, the safe use of which requires professional advice but which should be available to the public from a pharmacist without a prescription.
||Prescription Only Medicine, or Prescription Animal Remedy – Substances, the use or supply of which should be by or on the order of persons permitted by State or Territory legislation to prescribe and should be available from a pharmacist on prescription.
||Caution – Substances with a low potential for causing harm, the extent of which can be reduced through the use of appropriate packaging with simple warnings and safety directions on the label.
||Poison – Substances with a moderate potential for causing harm, the extent of which can be reduced through the use of distinctive packaging with strong warnings and safety directions on the label.
||Dangerous Poison – Substances with a high potential for causing harm at low exposure and which require special precautions during manufacture, handling or use. These poisons should be available only to specialised or authorised users who have the skills necessary to handle them safely. Special regulations restricting their availability, possession, storage or use may apply.
||Controlled Drug – Substances which should be available for use but require restriction of manufacture, supply, distribution, possession and use to reduce abuse, misuse and physical or psychological dependence.
||Prohibited Substance – Substances which may be abused or misused, the manufacture, possession, sale or use of which should be prohibited by law except when required for medical or scientific research, or for analytical, teaching or training purposes with approval of Commonwealth and/or State or Territory Health Authorities.
||Substances of such danger to health as to warrant prohibition of sale, supply and use – Substances which are prohibited for the purpose or purposes listed for each poison.