Cosmetics ban means testing times for supply chains

Leonie Ferretter, Director, Tax

Last week, the Australian Government notified the World Trade Organization of its intention to ban the importation and sale of cosmetic products that contain ingredients which have been tested on animals.

This welcome notification is the first step in the Liberal Coalition Government bringing to fruition its pre-election promise to ban the sale of cosmetic products that have been tested on animals.

The impending ban recognises the shift in Australian community attitudes towards animal cruelty and, whilst it has been some time coming, I know it is one that will be welcomed by most Australians.

Cosmetics include many more products that the average person would think. As regulated products, cosmetics extend to more than just “make-up” and for the purposes of this importation ban, products impacted will include, but are not limited to:

  • hair dyes
  • soaps, deodorants, body washes
  • baby care products
  • certain hygiene products
  • oral care products
  • moisturisers, face creams and shaving creams and
  • eye shadows, lipsticks, foundation, mascara

The banning of animal testing on ingredients for cosmetics and cosmetic products is not new to the global trading community.  Once the ban has been implemented, Australia will be joining the European Union, New Zealand, India and Israel which have introduced bans of varying degrees, and many other countries are considering introducing a similar ban.

The Australian position has significant bipartisan support, with bills of a similar nature introduced by the Greens and Labor, in 2014 and 2016 respectively. The Department of Health has substantially concluded the consultation process and is currently analysing feedback from key stakeholders and the general public. So there is little likelihood that such a ban, and the corresponding changes to law required to implement the ban, will not be achieved.  Whilst a number of countries have introduced these bans, it is still anticipated that the prohibition on importations will have a substantial impact on supply chain management and product development decisions for manufacturers and importers.

According to the Department of Health, which relied upon the IBIS World Industry Report G4271b, Cosmetic and Toiletry Retailing in Australia (May 2016), the majority of Australian cosmetics are manufactured in and imported from China, Thailand, the United Stated of America, France and the United Kingdom. Only two of these countries have existing bans on the importation of cosmetics which contain ingredients tested on animals and China requires animal testing on imported cosmetics.

Therefore, with a likely implementation date of 1 July 2017, businesses must consider the impact this prohibition will have and put changes in place as a matter of priority, or risk the potential seizure of goods at importation.

Based on prior introduced bills, it is possible that the new legislation will include a “dominant purpose” test with the ban only extending to ingredients with a primary end use for cosmetics. This will require the full list of the substance’s animal test history to be supplied to the regulator, which will likely fall within the ambit of the Department of Health.

Whilst draft legislation is not yet available, the significance of this change to global supply chains should be considered immediately as the ban will not only impact sourcing of ingredients, business practices and shipping arrangements.

Businesses’ entire supply chains, entry to market and cost to serve the Australian market will be affected and certainly no company wants to receive a seizure notice for its products from Australian Border Force.

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