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Monday, 22 June 2009
Page: 6736

Mr BURKE (Minister for Agriculture, Fisheries and Forestry) (5:36 PM) —I move:

That this bill be now read a second time.

The Australian Wine and Brandy Corporation Amendment Bill 2009 amends the Australian Wine and Brandy Corporation Act 1980 (AWBC Act) to allow the Australia-European Community Agreement on Trade in Wine to enter into force, improve the Label Integrity Program and update the compliance provisions of the act.

The agreement was signed on 1 December 2008 in Brussels by the Minister for Foreign Affairs, Stephen Smith, and the European Commissioner for Agriculture, Mariann Fischer Boel, who said ‘the agreement achieves a balanced result for Europe and Australia’.

It is a significant improvement on the first wine agreement between Australia and the European Community signed in 1994 which left several items of negotiation unresolved and exposed a number of loopholes. These have been addressed in the replacement agreement through protracted negotiations over the last 14 years and extensive consultations with the Department of Foreign Affairs and Trade, the Attorney-General’s Department, IP Australia and the Australian Government Solicitor, all of whom support the amendment bill. In particular the Australian wine industry played a key role in the negotiating process and are keen to realise the benefits of the agreement.

Most notably, the agreement clarifies the original intention of the agreement by redefining, expanding and strengthening a number of provisions, the most notable intention being that of ensuring Australia’s reputation as a producer of wines of quality and integrity is preserved whilst promoting and enhancing access to this large and valuable market.

The key benefits to the Australian industry from the agreement include:

  • European recognition of 16 Australian winemaking practices;
  • a simpler and improved process for the approval of winemaking techniques that may be developed in the future;
  • European protection of 112 Australian registered geographical indications including the Hunter, South Burnett, McLaren Vale and Bendigo;
  • labelling requirements for Australian wine sold in European markets; and
  • an effective dispute resolution system for trade related disputes.

In broad terms, the implications of these benefits mean that Australian producers will have to make fewer changes and concessions to sell their wine in the European Community through the easing of trade barriers that previously existed. It also means that the European Community implicitly recognises the provenance and prestige of Australian wines, which means our wines do not need to hide behind European names; they can market themselves independently.

To bring the agreement to fruition, a number of proposed amendments were essential to the AWBC Act, and the Trade Marks Act, to realign our domestic legislation with our new international obligations. The first set of amendments is required to implement the agreement. The second set is a range of changes (non-agreement related) to update and modernise the act by making the provisions more clear and comprehensive thus enabling the industry to operate more efficiently and effectively.

Schedule 1 of the bill amends the AWBC Act so that Australia’s domestic laws comply with the agreement. The bill provides rules for the protection of geographical indications (GIs), translations of foreign country GIs and traditional expressions.

A geographical indication identifies a good where a given quality, reputation or other characteristic of the good is essentially attributable to its geographic origin, for example Champagne.

The bill also resolves issues around the meaning of false, misleading and deceptive practices in relation to GIs, traditional expressions and protected terms. This includes providing exceptions from the false and misleading provisions relating to the sale, export or import of wine, as they relate to GIs, for common English words.

The bill amends the Trade Marks Act 1995 so that its interpretation is consistent with that of the AWBC Act. This will entail amending common definitions relevant to the agreement and provide circumstances in which the Registrar of Trade Marks can amend the representation of a trademark or an application to register a trademark. The bill will clarify that trademarks which include a common English word that coincides with a geographical indication can be registered.

Some geographical indications are also common English words. Under the current system, using such words to present and describe a wine, even with their common meaning, may leave the owner open to prosecution in Australia. This is despite the fact that it would be unlikely consumers would be misled about the origin of the wine.

The AWBC Act and the Trade Marks Act are being amended so that this situation is avoided. The amendments will make it possible for common English words that are also geographical indications to be used as parts of the description and presentation of a wine, including in a trademark, as long as the use does not deceive or mislead the public as to the origin of the goods.

To give effect to our agreement obligations, the amendments provide a scheme to prevent the use of translations of registered geographical indications. The amendments provide for the registration of these translations on the new Register of Protected Geographical Indications and Other Terms so that Australian winemakers know the words they need to avoid using. For example, Burgundy, the translation of Bourgogne, will be registered.

Australia’s protection of geographical indications mean that registered trademarks containing a word or expression that is a registered geographical indication are in some circumstances not able to be used in the description and presentation of a wine. With additional geographical indications to be protected, more trademarks may be affected.

Currently, where a registered trademark contains a word or expression that is to be protected:

  • as a registered geographical indication,
  • as a registered translation of a registered geographical indication, or
  • as a registered additional term

the trademark may in some circumstances not be used in the description and presentation of a wine.

Consequently, the Trade Marks Act is also being amended to enable trademark owners to amend their marks without the need to apply for a new trademark. They will be able to remove the protected word or expression or substitute another term for it.

Minor changes are also being made to align the Trade Marks Act with the relevant provisions in the AWBC Act including the revised definition of geographical indications.

The act will provide the opportunity for producers in all foreign countries to register geographical indications and translations of those indications in Australia. The bill clarifies that the AWBC Act gives effect to Australia’s obligation, under other relevant international agreements, not to discriminate between countries—the most favoured nation obligation.

Geographical indications are determined by the Geographical Indications Committee (GIC), an independent statutory committee under the AWBC Act.

This bill extends the powers of the GIC to enable it to determine geographical indications, and translations of such indications, from foreign countries, regions and localities, while also providing the power to omit foreign geographical indications from the register.

The procedure for the determination of foreign country geographical indications and translations will be provided for in the Australian Wine and Brandy Corporation Regulations 1981.

However, it is clear that this increased level of responsibility for the GIC represents an increase in the amount of work that it has to do. Therefore, this bill amends the act to allow the AWBC to charge cost based fees in relation to the work of the GIC.

The AWBC already has the capacity to recover costs in relation to determining Australian geographical indications, so this extension of the corporation’s ability to charge fees does not mark a significant change in operating procedures.

Traditional expressions are words or expressions used in the description and presentation of the wine to refer to the method of production, or to the quality, colour or type, of the wine; for example, claret.

While protection of these terms was agreed in the 1994 agreement, the new agreement clarifies the nature and extent of the protection provided.

Since 1994, industry and government have developed a greater understanding of what constitutes a traditional expression and agree it is not a concept that Australia wishes to use with relation to Australian wine. The provision for Australian traditional expressions has been removed from the new agreement and consequently the amendments remove it from the act.

The amendments implement Australia’s commitment in the agreement to protect European Community traditional expressions. Traditional expressions get a lower level of protection than geographical indications so:

  • business owners and trademark owners can continue to use, in Australia, business names and trademarks that contain or consist of a protected traditional expression and
  • producers from countries not party to this agreement can use traditional expressions under certain conditions.

Currently Australia protects geographical indications, traditional expressions and other terms through the Register of Protected Names. This bill replaces the existing register with a new Register of Geographical Indications and Other Terms that is structured to meet the needs of the Australian wine industry. It will include geographical indications, translations of geographical indications, traditional expressions, quality wine terms and additional terms.

Quality wine terms are terms that Australia would not otherwise be able to use because they are European traditional expressions. For example, makers of fortified wines can use the term vintage, which the Portuguese claim as a traditional expression for fortified wine.

Additional terms are words which will only be able to be used in accordance with registered conditions of use.

As for geographical indications, and in line with our other international obligations, the act will provide the opportunity for producers in all foreign countries to register traditional expressions and additional terms.

The bill also amends the offence provisions in schedule 1 to make it an offence to sell, export or import wine and be reckless to the fact that the wine has a false or misleading description and presentation. The purpose of this change is to ensure that the geographical indications, traditional expressions, quality wine terms and other terms that are protected under the agreement have adequate protection against misuse. The amendment also brings the offence provisions in line with the Criminal Code Act 1995.

To elaborate, under the current system the penalty provision for selling a wine with a false or misleading description and presentation is subject to the mental element of intention. The mental element of intention could allow a person to avoid liability by giving incontestable evidence that they had no intention to mislead. This barrier to prosecution has been the catalyst for this change.

Of course, this offence provision applies to all elements of the supply chain. However, the risk of prosecution for those who conduct their business in accordance with the rules and act in good faith is negligible.

For example, if a small wine retailer bought a bottle of wine with a false or misleading description and presentation, in good faith, from a wholesaler and sold that wine in their store, I am advised that they are unlikely to be liable for prosecution under the amended provision. To be liable for prosecution under the amended provision, the small wine retailer would need to be aware of a substantial risk that the wine from the wholesaler had a false and misleading description and presentation, and irrespective of that risk, sold the bottle of wine with that description anyway.

Schedule 2 of the bill amends the AWBC Act to strengthen the provisions of the Label Integrity Program (LIP).

The bill extends record-keeping requirements for those members of the grape and wine supply chain whose actions are captured by the Label Integrity Program. The amendments will benefit both consumers and the Australian wine industry by helping to ensure that Australian wine labels are truthful and accurate with regard to their origin and their characteristics.

Australian wine is known for the clarity and integrity of its labelling. The government is ensuring that this effective marketing advantage is retained by implementing a more robust LIP.

As there is no objective way to test wine to determine its origin, variety or vintage, the only way to give confidence to consumers that what they are getting is as displayed on the label is to have the information recorded.

The current LIP is limited to wine manufacturers and does not cover other players in the wine supply chain, such as people who crush grapes on behalf of others, people who bottle wine on behalf of others, agents, growers, wholesalers and retailers.

The current LIP does not ensure adequate traceability through the wine supply chain. This bill contains amendments to rectify this situation.

The bill aims to ensure that the AWBC can verify wine label claims by requiring people in the supply chain to make and keep records of the supply and receipt of wine goods and changes to wine goods (including volume or storage changes), ensuring an auditable trail along the supply chain from harvested grapes to the sale of the wine.

The proposed changes will:

  • amend the LIP to provide that those involved in the production, distribution and sale of wine and grapes used to make wine must keep a record of the date of receipt, quantity, vintage, variety, geographical indication and the identity of the supplier of those goods. Similar records must be made upon despatch of those goods, thus ensuring a traceable trail throughout the wine production process, and
  • create a new offence applying to a person who makes a claim relating to vintage, variety or geographical indication of wine goods when that claim is not supported by their records.

A retailer or other person making a direct sale to a consumer is not required to keep a record of the person to whom the sale was made but must keep records including details of the total quantity and the vintage, variety and geographical indication of the wine goods sold.

The LIP only requires people in the wine supply chain to keep a record of the delivery to them and the supply from them. This information will allow the AWBC to audit the supply chain.

The changes to the LIP are significant but they will not place onerous requirements on the industry. Under current legislation, for every wine grape delivery the grower should be asked to declare the vintage, variety and geographical indication of the grapes because the wine manufacturer has to record that information.

While many wine grape growers make and keep their own records, the standard grape delivery docket issued by receiving wineries to wine grape growers and standard payment records provided by wineries will in most instances be sufficient record in themselves.

I do not expect that the amended LIP provisions will add to the administrative workload of growers, winemakers and others required to keep records but they will significantly enhance the ability of the AWBC to verify label claims.

Growers will be required to keep records for seven years. The records will typically be in the form of a grape delivery docket which is already kept by growers or their accountants for tax purposes.

Wholesalers and retailers typically keep the required records through bar codes or on paper. Most billable material should contain the information. Therefore, it is expected that the amended LIP provisions will not add to the administrative workload of wholesalers and retailers.

Schedule 3 of the bill amends the compliance provisions of the AWBC Act. The bill includes changes to the compliance provisions which will strengthen the AWBC’s ability to stop a person from engaging in action that may be contrary to the AWBC Act.

In particular the changes will expand the injunction powers so that the AWBC can apply for an injunction to stop or to direct a person engaging in action that may be contrary to:

  • the label integrity program,
  • the provisions relating to the protection of geographical indications and other terms,
  • the export control offence provision, or
  • the regulations made for the purposes of these provisions.

These amendments also align the penalties in the AWBC Act with government policy regarding offence provisions and the use of penalty units as a replacement for fixed dollar amounts.

The Australian wine industry is an incredible success story. It is an industry which has become increasingly export focused with more than 714 million litres of wine (about 60 per cent of production) exported in 2007-08 at a value of $2.67 billion by approximately 1,800 licensed exporters of Australian wine.

In the global marketplace, Australian wine is in demand because of its reputation for quality and value for money.

Europe is Australia’s largest export market and accounted for over half of all of Australia’s wine exports in 2007-2008. In fact, more wine is exported to Europe than any other Australian commodity (over and above dairy, meat and other horticultural products).

The Australia-European Community Agreement on Trade in Wine will protect and improve market access to our major wine export market and the Australian wine industry is eager to see the agreement enter into force.

The Joint Standing Committee on Treaties has recently reported on the wine agreement and recommended that binding treaty action be taken. The chair of the committee, the member for Wills, said ‘Accession to the agreement would strengthen trade between Australia and the European Community and will provide Australian winemakers with greater, and more secure, access to European wine markets.’

This bill is an essential step in the process of Australia acceding to the treaty and the Australian industry obtaining those benefits.

The industry will benefit from the enhanced Label Integrity Program and improved compliance provisions that will help prevent fraud that has damaged wine industries in other countries.

This bill has been developed in consultation with the Winemakers Federation of Australia and industry representatives on the Australian Wine and Brandy Corporation’s Legislation Review Committee.

The Winemakers Federation supports the agreement and the bill, and has written to me to express its view by stating, ‘The wine agreement will significantly improve market access to one of our key export markets and the Australian wine industry is keen to see the entry into force of the agreement.’

The Legislation Review Committee also supports the bill and has advised that ‘the industry will derive considerable benefit from the enhanced Label Integrity Program and improved compliance provisions that will assist in preserving Australia’s reputation as a producer of wines of quality and integrity’.

I commend this bill to the House.

Debate (on motion by Mr Hunt) adjourned.